Tiomin halts titanium mining in Kenya over land disputes

Canadian mineral exploration firm Tiomin Resources said it had halted a massive titanium mining operation in Kenya over land issues and access to the site.

In a statement, the company said a disagreement over land had spawned delays, causing costs to rise, forcing the project’s lenders to withdraw a 155 million dollar (120 million euro) debt facility that was in place.

“The project development is expected to be on hold for a minimum of seven months but Tiomin expects that strong product prices (for zircon and rutile) and reduced capital spending will revive lender interest at the appropriate time,” it said in a statement released here.

Toronto-based Tiomin has been struggling since 1995 to start mining titanium in Kenya’s coastal district of Kwale, believed to have some of the world’s largest titanium deposits.

But in December, the firm said Nairobi had failed to deliver land it leased for 150 million dollars in 2004.

In February of 2005, the company said it hoped to begin construction on the sites by that September and begin extracting titanium within 18 months.

But the project has since been dogged by disputes with local residents, some of whom have complained about compensation offered for their land and sued to stop the 21-year lease.

“Tiomin anticipates completing the resettlement of the farmers displaced by the project by the end of the first quarter,” the statement.

“The company will work towards the evaluation of substantial technical and contractual cost saving measures to improve the economics of the Kwale project,” it added.

Titanium is a silvery-grey metallic element which is added to various steel alloys and used in the manufacture of jet engines and missiles because of its heat and corrosion-resistant qualities.

Source: AFp via news.yahoo.com