Kenmare Resources is laying off 15 per cent of staff working at its key Moma mine in Mozambique and suspending its final dividend as its gross profit plunged 79 per cent amid a slump in shipments and prices of its titanium minerals.
The Dublin-based group also swung into a net loss of $325 million (€280 million) last year, driven by a $301.3 million impairment charge taken against it Moma assets as it lowered its long-term revenue assumptions amid uncertainty over pricing, it said in a statement on Wednesday.
Kenmare has in recent months let 200 employees go at Moma, and is targeting a further 20 redundancies under a cost-cutting plan, chief executive Tom Hickey told The Irish Times.
Kenmare Resources said earlier this month that it may have no choice but to bring international arbitration proceedings against Mozambique after tax authorities there sought to “unilaterally” impose a new regime on royalties and VAT on the titanium miner’s processing and exporting activities in the country.
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However, the financial results statement struck a more optimistic tone, saying that “following recent meetings, we continue to believe there is scope for a mutually acceptable negotiated outcome, which would avoid the need for arbitration”.
“In light of the challenging market conditions, we have had to make some difficult but responsible decisions, including retrenching 15 per cent of our Moma employees and suspending the 2025 final dividend,” Hickey said.
“This is in line with our commitment to maintaining balance sheet flexibility and ensuring the group’s long-term financial stability. The board recognises the importance of the dividend to many shareholders, and we are focused on resuming dividend payments as soon as it is prudent to do so.”
This is the first time that Kenmare has not proposed a final dividend since it made a maiden payout in 2019.
Revenues fell 20 per cent last year to $312 million last year due to a 13 per cent fall in shipments and a 6 per cent decline in the average price received for Kenmare’s products to $338 per tonne.
Gross profit slid to $18.4 million from $95.4 million. Adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) slipped 63 per cent to $58 million.
Kenmare’s Moma mine in Mozambique is the group’s key asset. It produces about 6 per cent of global titanium stocks. Its main product, ilmenite, is used in the manufacture of everything from paints to plastics and textiles.
Kenmare’s African lenders, Absa Bank, Nedbank, Rand Merchant Bank and Standard Bank, agreed last year to ease its debt-to-Ebitda covenant. It said that it may need a further tweak this year in light of prevailing market conditions. Net debt was $158.8 million in December.
Hickey noted that Kenmare has more than $150 million of inventories, trade receivables and other current assets that are expected to be converted into cash within 12 months. It also has no debt maturities until 2029.
While ilmenite prices have fallen in each of the past three years, Hickey said the price zircon, which accounts for about a quarter or revenues and is used to make ceramic tiles, has stabilised and is starting to increase again. The hope is that ilmenite prices will follow, he said though he added that it was “too early” to make a prediction.
Asked about the impact of the Iran war, Hickey said the main concern was the price of diesel, used for mining activities, remaining elevated.
The Dublin-based group has been in talks for more than three years with Mozambique on a new so-called implementation agreement. The previous 20-year accord expired just before the end of 2024, though the terms were to remain in place until a new one was reached.
However, tax authorities in the country in recent months sought to impose new VAT and customs charges on Kenmare imports and increase the Moma production and exports royalty rate – even with a new agreement. Hickey said that Kenmare is now “in constructive negotiations and both sides appreciate the importance of a near-term resolution”.
Kenmare shares were down more than 9 per cent in London afternoon trading.
