Australia’s Base Resources said on Thursday it had signed a purchase agreement with DuPont Titanium Technologies for the U.S. company to buy products from Base’s titanium mining project in Kenya.
DuPont Titanium, of part E.I. du Pont de Nemours and Company , is the world’s largest producer of titanium dioxide pigment and has announced plans to expand its capacity with an additional line at its Altamira plant in Mexico.
Base Resources expects its Kenyan project’s annual production of titanium ores to include 330,000 tonnes of ilmenite, about 10 percent of the world’s supply, and 80,000 tonnes of rutile, or 14 percent of global output.
Titanium is an important pigment for industrial, domestic and artistic applications. Titanium is also a choice material for joint replacement, tooth implants and body piercing.
Base also expects to produce 40,000 tonnes of zircon, another type of mineral, mainly used in the ceramics industry.
The company said the off-take deal will see DuPont purchase a minimum average of about 72 percent of annual rutile output from the project near the east Africa nation’s port city of Mombasa for a period of six years once production starts.
In addition, Base has the option of selling up to a further 25,000 tonnes per annum of rutile over the six year period.
The company said earlier this year it expected production at the Kenyan mine to start in late 2013 with the first shipments in 2014.
“The off-take agreement with DuPont is obviously a very significant milestone for Base as it underpins approximately 35 percent of the annual revenue for the Kwale Project as forecast in the enhanced feasibility study, or up to 47 percent of annual revenue if the additional optional volume is supplied,” Tim Carstens, Base Resources managing director, said in a statement.
In May, the Australian firm increased its ore reserve estimates for the Kenyan project by 20 percent after a feasibility study. The miner said it now projects 140.6 million tonnes of viable ore reserves at Kwale.
In the last four years of the off-take agreement, DuPont has the right to reduce the volume proportional to any reduction in DuPont’s overall high-grade titanium dioxide feedstock requirements, Base Resources said.
“Pricing is to be derived from an agreed quarterly index of market prices,” the company said.
The Australian firm said it expected to seal more product purchase deals for its Kenyan project in the coming months as several agreements under negotiation are finalised.