Australia's Base Resources begins titanium mining in Kenya


* Project is country's first large-scale mining

* Kenya seeking more revenue from nascent mining sector

By Joseph Akwiri

MOMBASA, Kenya, Oct 11 (Reuters) - Australian miner BaseResources has started mining at its long delayed Kenyatitanium project and expects to start exporting minerals inDecember, it said on Friday.

Ranked as Kenya's first large-scale international miningproject, the mine has been delayed since 2006 due to financingconstraints, environmentalist protests, disputes with localfarmers over compensation for land and government red tape.

East Africa's largest economy is seeking to derive a biggershare of earnings from its relatively modest and undevelopedmining sector, and the launch of the flagship $305 millionproject is seen as integral to that plan.

"Base Resources Limited is pleased to advise thecommencement of ore processing through the mining unit and wetconcentrator at the Kwale Project," Joe Schwarz, the project'sgeneral manager for external affairs and development, said in astatement.

"While some small container shipments are planned duringDecember, the bulk shipments of finished product are nowscheduled to commence in January."

Titanium is resistant to corrosion and can be used as analloy with other metals to produce lightweight metals for jetengines.

Base Resources Limited said it would ramp up mining over thenext several weeks and increase the processing rates to build upa stockpile of concentrate, before the commissioning of themineral separation plant, which processes the ore.

Much of the mineral produced at the project will be exportedto China and the United States, it said.

The project is funded through a combination of debt andequity with lenders including commercial banks and developmentfinancial institutions, and has an estimated lifespan of between11 and 14 years.

Some 330,000 tonnes of ilmenite a year, about 10 percent ofworld supply, will be produced at the mine located south of theIndian Ocean port and tourist city of Mombasa.

The mine will also churn out 80,000 tonnes of rutile peryear, representing 14 percent of global output, and a further30,000 tonnes of zircon. The minerals are used as pigment inpaper, plastics, ceramics and titanium metal.

Kenya also has gold and coal deposits, and a subsidiary ofCanada-based minerals and metals firm Pacific Wildcat Resources is scouring the coastal region for niobium, which isalso used to make alloys for jet engines and to strengthensteel.

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