Oct. 25 (Bloomberg) -- Cortec Mining Kenya Ltd., a Nairobi-based exploration company, will start production at its niobium project in southeastern Kenya by 2016, Managing Director David Anderson said.
Cortec plans to invest about $160 million to $200 million to extend a drilling program at its Mrima Hill prospect, analyze samples and build a mineral processing test plant within two years, he said yesterday in a phone interview from Nairobi, Kenya’s capital.
Output, once at full capacity, is expected to reach 2,900 metric tons to 3,600 tons of niobium concentrate a year, he said. The deposit is estimated to hold the world’s sixth-largest reserve of the rare metal and it has an initial mine-life of 16 years to 18 years, Anderson said. Niobium is used in high-temperature alloys for jet engines and to strengthen steel for cars, buildings and oil pipelines.
World production of niobium grew to 100,000 metric tons in 2009. Brazil accounts for about 95 percent of output, followed by Canada, according to the British Geological Survey.
Kenya’s Cabinet this month approved a mining law meant to strengthen the country’s legal framework for mineral exploitation and boost revenue from natural resources, which accounted for 0.7 percent of the gross domestic product last year, according to the Kenya National Bureau of Statistics.
Investment in Kenya’s mining, oil and natural gas industries lags behind other countries in the region, including Tanzania, Africa’s third-largest gold producer, and Uganda, where Tullow Oil Plc expects to start pumping crude by 2016. Tullow, with partner Africa Oil Corp., made Kenya’s first oil discovery in March.
Cortec’s application to convert a special prospecting permit for the Mrima Hill site, about 75 kilometers (47 miles) outside the port city of Mombasa, to a full development license is awaiting approval by Kenya’s National Environment Management Authority, Anderson said.
Pacific Wildcat Resources, a mineral explorer publicly traded on the Toronto Stock Exchange, has a 70 percent indirect interest in CMK’s holding companies; Cortec Mining U.K. Ltd. and Sterling Capital U.K., Anderson said.
Kenya also has “significant” deposits of soda ash, fluorspar and titanium, according to the Ministry of Environment and Mineral Resources. Gold, iron ore, coal, gemstones and other minerals also exist, according to the ministry.
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