Kenmare Resources says 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.
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.
Kenmare’s Moma mine in Mozambique is the group’s key asset. It produces about 6 per cent of global titanium stocks. Its main products, ilmenite and rutile, are used in everything from paints, plastics and paper to aircraft, medical equipment and golf clubs.
“Kenmare’s implementation agreement is foundational to Moma’s long-term success. We are very concerned by the Mozambique Tax Authority’s recent attempt to impose terms that have not been mutually agreed with Kenmare,” said Tom Hickey, chief executive of Kenmare.
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“This action contrasts with the outcome of a meeting with various ministers and other government representatives last month where it was agreed we would work together to conclude negotiations by 20th March. We are seeking urgent clarification from the government.”
He added: “After almost four decades of deeply collaborative partnership with local communities and the government of Mozambique, we would be disappointed to have to resort to arbitration to assert our contractual rights; however, we may be compelled to do so if we can’t reach a timely agreement.”
Kenmare said it proposed last April increasing the royalty rate from 1 per cent currently to 3.5 per cent over the course of another 20-year agreement. It also proposed applying withholding tax on payments to suppliers outside the country, including Kenmare’s head office in Ireland, and investing more in capital and community development projects.
The company said it understands Mozambican customs officials were instructed by the tax authority in late January 2026 to restrict exemptions from VAT and customs duties on imports by Kenmare – consistent with terms for renewal set out by the country’s council of ministers last July but which had not been agreed, as required. The activities have been VAT-exempt until now under the mine’s status as an industrial free zone.
The tax authority also requested Kenmare pay a royalty rate of 2.5 per cent in March, in accordance with the yet-to-be-agreed July 2025 terms. Those terms also call for an accelerated path to 3.5 per cent by 2031.
“While some or all of these potential implications may not have been intended, or may not ultimately be implemented, no clarity of application or confirmation of intent has to date been provided by the government to Kenmare,” the company said.
Shares in Kenmare have fallen 40 per cent in the past 12 months, following the collapse of takeover talks with a consortium led by its former managing director, Michael Carvill, concerns over the royalty agreement and declining ilmenite prices.
