Kenya’s hope for titanium billions were shattered on Thursday after the Jinchuan Group – the Chinese company that was to buy a controlling stake in the mines from Canada’s Tiomin Resources — abandoned the deal, citing lack of full disclosure by the vendor.
Jinchuan, the state-controlled mining giant, said the talks had collapsed because of unnecessary delays which it blamed on Tiomin Resources in the latest setback to hit the project that has had numerous false starts for nearly 10 years since the Canadian firm acquired controlling rights over the mineral deposits in Kwale District.
The entry of Jinchuan into the mining project had raised hopes that it would bring in the money and technical skills needed for the take-off that has been delayed by Tiomin’s thin financial backbone.
The Kenya government, which granted Tiomin full rights over the titanium deposits, accused the Canadian firm of using a string of excuses to undermine the takeover talks.
“We have told Tiomin that we are tired of the continued delay. As a government we have done everything possible to facilitate the process but the Canadians keep coming up with flimsy excuses,” said Shadrack Kimomo, the chief geologist in the Environment ministry on behalf of the mines commissioner.
But Tiomin accused Jinchuan of acting in bad faith.
“This decision by Jinchuan to terminate the deal two days before closing should be of considerable interest to anyone contemplating a transaction with them,” said Robert Jackson, the Tiomin Resources chief executive.
“We find this astonishing given that the Government of Kenya finally delivered on its material commitments to getting the deal done.”
Jinchuan pulled out despite having pumped in Sh490 million to sustain Tiomin’s Kenya office for nearly five years.
More recently, delays in commencement of mining have been attributed to the failure by Tiomin to acquire a “comfort letter” from the Kenya government as demanded by the Chinese firm.
The letter was to assure the Chinese that Tiomin’s rights over the minerals were intact despite the 10-year delay.
Kenya issued the “comfort letter” this week stating its support for the mining project but Jinchuan Group walked out accusing the Canadians of dragging out the sale process.
“We have battled bureaucracy and corruption in Kenya for over a decade and our only remaining concern was to obtain the letter from the government” said Mr Jackson.
Source: Business Daily