The record prices that boosted titanium miner Kenmare Resources’ first-half profits to almost €68 million could continue for the rest of the year, according to its managing director, Michael Carvill.
Kenmare, which operates the Moma titanium minerals mine in Mozambique, said on Wednesday that pre-tax profit rose 36 per cent to $68.6 million (€67.4 million) in the six months to the end of June from $50.6 million during the same period in 2021.
Speaking after it published the results, Mr Carvill noted that demand remained strong, while global supplies of titanium ore remained limited.
“Prices are a bit higher in the third quarter; we’ve continued to see strong pricing,” he said. He cautioned that this could ease in 2023, when most countries expected economic growth, which drives titanium demand, to slow.
However, Mr Carvill also pointed out that meeting world demand for titanium ores would require the opening of new mines.
Kenmare said it received a record average price of $429 a tonne in the first half of the year, which supported revenues at its Moma mine in Mozambique.
Problems including two tropical storms and difficulties with miniature, unusable particles known as “slimes” slowed production up to May.
Mr Carvill noted that production improved from that point and has continued for the 12 weeks since then.
Kenmare’s main vessel, the Bronagh J, was in scheduled dry dock in Durban, South Africa, which would have prevented the company from shipping quantities of ore had production been higher.
“We’ve built finished goods inventories to a good level and we will release that inventory for delivery to the market in the second half,” Mr Carvill pointed out.
Kenmare intends to increase its interim dividend to shareholders by 51 per cent to 10.98 cent a share. Investors have also benefited from an $81.6 million share buy-back completed in December 2021, he noted.
Mr Carvill predicted that at current rates, the company was on track to meet forecast production for the full year, but at the bottom of the range, he added.
That guidance included a forecast that Moma would produce between 1.125 million and 1.225 million tonnes of ilmenite, the mine’s main mineral.
Sales rose 8.4 per cent to $182.1 million in the first half from $168 million during the same period in 2021. Kenmare cut net debt by $17.3 million in the first half of the year to $65.5 million.
The company remains committed to maintaining a strong balance sheet, according to its managing director.
Kenmare mines titanium ores, ilmenite, zircon and rutile from Moma. Strong demand and low stocks have kept prices for these minerals high since the end of June, the company said.
Titanium is mostly used in pigments, which end up in paints and dyes in products from clothes to plastics and packaging, and processed foods, toothpaste and milk.
Kenmare has an electricity supply contract with Mozambique state utility EDM. While costs increase the more power it uses, its energy bills have not been subject to recent inflation.