KENMARE Resources said it would resort to arbitration if it failed to reached an agreement with Mozambique on a licence for its mineral processing and exports produced at the Moma mineral sands mine.
The licence, known as an Implementation Agreement, expired in December 2024. However, the Government of Mozambique extended the licence pending an extension.
Nearly a year later, Kenmare has not yet been able to reach a new agreement, – which the company’s MD Tom Hickey described on Wednesday as “a concern”.
Commenting in Kenmare’s third quarter production report, the company said negotiations continue with the Government of Mozambique, while “… reserving the right to safeguard its contractual entitlements, up to and including arbitration, if an agreement cannot be reached”.
Hickey met with Mozambique’s mineral resources and energy minister during the quarter under review following a meeting in the previous period with Daniel Chapo, Mozambique’s president.
The Implementation Agreement does not govern mining at Moma. Kenmare said mining is “conducted under a separate regulatory framework, which is not impacted in any way by the IA process”.
Kenmare said in its third quarter report that ilmenite production was likely to be at the lower end of its 930,000 to 960,000 tons guidance range owing to upgrade work that started later than anticipated.
Ilmenite in used to make paint pigments. Another mineral recovered at Moma is zircon which is used in the ceramics industry. The Moma mine also produces titanium metal which comprises a fifth of total sales whereas ilmenite, zircon and another mineral, rutile, are collectively known as heavy mineral concentrates.
Commenting on trading conditions, Hickey said that global market conditions remained “challenging”. In addition, one of Kenmare’s customers said it was unable to take its contracted volumes in the fourth quarter.
“Besides this, demand for our products remains in line with expectations, with strong, high-value zircon sales volumes expected in the fourth quarter,” he said.
Kenmare announced in July it would book an impairment of no more than $125m on its first half accounts as it expected long-term prices for its minerals to be “slightly lower” than forecast.
Shares in the company are down 13% year-to-date. They were last trading around £2,78 per share, just over 30% lower than the £4/share level in June when the company turned down a £5.30 per share offer.
