|Base avoids Kenyan gov't grab|
|THE WEST AUSTRALIAN|
|Friday, 11 January 2013 13:11|
Shares in Base Resources have soared after the mineral sands miner convinced the Kenyan government not to enforce new nationalist laws on it requiring local ownership.
The Australian company's share price has been decimated in recent months in response to the Kenyan government's 35 per cent local equity participation regulation.
Now attorney general Githu Muigai has told Base Resources that its Kwale Mineral Sands Project will not be subject to the law after Base resisted it on the basis that its mining licence was issued before the law existed.
The shares shot up 8.5 cents, or 34 per cent, to 33.5 cents at noon.
The company's share price nearly halved from 43 cents when its market capitalisation was $240 million after the government announced the new law in October.
Base Resources believes it has made an enemy in Kenya's environment and resources minister Chirau Ali Mwakwere after he revoked three of its mining licences in other areas in the country.
Base Resources managing director Tim Carstens said he was confident the company would get the licences back, saying he believed Mr Mwakwere had been angered by the miner's actions over the direct equity laws, but lawyers had advised there was no legal basis for the requirements.
Resources nationalism - whether direct equity or higher, mining taxes - is being increasingly pursued by governments globally, including in Africa, as tension rises with mining companies opposed to restrictions on their earnings.
Mr Carstens said while he supported the government's desire to use mining to drag its economy out of poverty, he thought the environment minister was "getting ahead of himself".
Kenya did not currently have a mining industry or a history of one and there wasn't the money or appetite there to sell 35 per cent of the project to local investors, he said.
"There simply isn't $150 million in Kenya to put into it, it would be completely impossible to implement and would benefit the privileged few which I am not prepared to participate in," he told AAP.
Mr Carstens said he wanted more Kenyan investors on the company's registry and would be conducting a roadshow there next month, but it would take more time to deepen its capital pools and understanding of mining.
He described resources nationalism as a problem and due to a perception that the industry was making super profits, which he said was not occurring most years.
"The debate is valuable: how do you balance the dual needs of enticing foreign investment in a naked industry where you don't have expertise to develop it yourself and balance it against making sure the Kenyan people get maximum benefit from exploitation of their minerals," he said.
The $300 million project is due to make its first bulk shipments in November.
The company says the project is still robust, despite heavy falls in prices for mineral sands, which are used variously in ceramic tiles and to make titanium dioxide for pigments for paints, plastics and paper.
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