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Cortec to Produce Kenya Niobium Next Year After Winning Approval

July 15 (Bloomberg) -- Cortec Mining Kenya Ltd. will start producing niobium, used to make alloys for jet engines and to strengthen steel, next year after gaining the final approval it needs from environmental regulators to begin digging the ore.

“This is a great step forward, paving the way for mining of one of the largest such deposits in the world,” Managing Director David Anderson said today in Nairobi.

The decision allows Cortec, based in the Kenyan capital, to build a $3.5 million pilot plant processing about 5 metric tons of niobium ore an hour, he said. Output will increase to 7,000 tons of concentrate a year processed from 750,000 tons of ore.

The mine may generate more than $300 million for the state during its 15-year life. Cortec will pay a 3 percent royalty on gross niobium sales and 5 percent on rare earths, Anderson said.

Kenya plans to repeal a law requiring businesses to cede 35 percent of local assets to domestic investors and instead give the state a minimum 10 percent, Mining Secretary Najib Balala said July 9, as the country seeks investment. Kenya has deposits of soda ash, gold, fluorspar, titanium, iron ore, coal and gems, the Ministry of Environment and Mineral Resources says.

Investment in the mining, oil and natural gas industry lags behind nations 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 its partner Africa Oil Corp., made Kenya’s first oil discovery in March.

“Changes to the ownership law will enhance investment as foreign investors will not have to wait for local investors to raise required capital,” Anderson said. “The new proposal of the state holding a 10 percent stake is more practical.”

Cortec’s mining license was extended for 21 years in March.

Pacific Wildcat Resources, an explorer traded in Toronto, has a 70 percent indirect stake in Cortec holding companies Cortec Mining U.K. Ltd. and Sterling Capital U.K., he said.

To contact the reporter on this story: Johnstone Ole Turana in Nairobi at jturana@bloomberg.net

To contact the editor responsible for this story: Sarah McGregor at smcgregor5@bloomberg.net

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