The same disclaimer as you've probably seen all day, so I won't bore you by reading it. Who are Kenmare? What do we do? What should you be thinking about? Well, Kenmare is the owner and operator of the Moma Titanium Minerals Mine in Mozambique. We've been there for nearly 40 years, producing for nearly 20 years. We're a big part of the province where we operate, the biggest single industrial business. We're even 6% of Mozambique in exports. We're a very big part of the national economy as well. We have a Tier 1 asset, over 100 years of mineral resources at our current production rate. Because we're so important in the region where we operate, we endeavor to be a very good corporate citizen, and also because we're going to be there a long time.
We were included in the FTSE4Good Index as of June 2025. We do a lot of community investment, community empowerment, community enablement, sanitation, et cetera, to improve the lives of the people, our neighbors, and indeed, many of our employees who live nearby. We produce titanium minerals, ilmenite, zircon, rutile. They're key materials in the manufacture of, in the case of ilmenite and rutile, paints, paper, plastics, and titanium metal, in the case of zircon, ceramics and ceramic tiles. We're 6% of global supply. We're probably the fourth biggest producer, the biggest being Rio Tinto, although Rio is evaluating a sale of its titanium minerals division. Titanium is on the critical minerals list in the E.U., U.K., and the U.S., so tariffs aren't so much of an issue.
In fact, trade measures have probably been a net benefit to us in that the E.U., Saudi Arabia, most likely India, have erected trade barriers to imported Chinese pigments, which are protecting many of our customers. Although we have a modest enough market capitalization, south of $300 million, we have invested north of $1 billion in our assets. We're probably sitting at the moment at a low point in our pricing cycle, which is probably not something you've heard from many of the other presenters here. We've just come through a significant capital investment program, which prepares us for the next number of decades of mining. Mineral sands, a quality-of-life asset and very correlated to income and economic activity.
As you can see here in the bottom right, significantly greater consumption per capita in developed economies, North America, Western Europe, China catching up a little bit. A lot of the growth coming out of the developing world, India, in particular, is an area where we see a lot of growth potential. Titanium feedstocks are non-recyclable, difficult to substitute. As people get richer, they use more. Certainly, we're seeing that correlation come through over 50 years-60 years per the graphic there. We do have a small exposure to the energy transition. We produce a small amount of monazite, which is used in magnets for renewable energy applications. Because we're very centered in an emerging market, we endeavor to employ and upskill as many of the population as possible. We're 97% Mozambican. Our General Manager is Mozambican.
We have a very small cadre of expats, 40-50, who come in six weeks on, three weeks off. We have a very well-skilled workforce and the next generation of leaders for Kenmare are certainly Mozambican. We've got a Tier 1 asset, an asset that we can plan for multi-decades of life. We want to be in a low-cost position within the industry revenue-to-cost curve. That means we can survive the troughs, and we're in a trough at the moment. We need to invest for the long term, and that's what we've been doing over the last number of years. We need to allocate our capital efficiently. In the good times, this is a very cash-generative business. In 2022, we had a 60% EBITDA rate. We're in significantly weaker pricing now, so we made a modest loss in 2025.
We are starting to see some of the signs of market improvement emerging. Unfortunately, having made a major capital investment, we are at a slightly higher level of net debt, so we're taking the necessary measures you do expect producers to take, deferring non-essential capital, cutting operating costs, focusing on our shipments and our sales rather than just tons. Certainly, during the good times, we're very committed to paying dividends and giving strong shareholder returns. Kenmare has been the biggest buyer of Kenmare stock in the last 10 years. We've bought over 15% back on the market. I talked about how important sustainability is for us. 2025 was a really safe year for us.
The last two years have been outstanding in terms of safety performance, and the development project that we've just done went five years without an LTI, which is phenomenal given we had over 500 people there for multiple different contractors. We work closely with the local community. Local hospital, 80% complete. We've equipped many schools, lots of microfinance initiatives, lots of supplier upskilling to support our activities. The return from that and the licensed operate benefit from that was seen during 2024, 2025, when during a period post the election of some civil unrest, our operations were unaffected, and the assets that we put into the community were untouched. We are very committed to a healthy environment. 90%+ of the energy we use is renewable energy from the Cahora Bassa Dam, and we are a very low carbon footprint player.
Look, we want to be a long-term player in Mozambique with a good partnership with the government. A mine like Moma, it's self-contained. We dredge mine the sands. About 95% of the material goes back behind us and is handed back to the community 18 months later. The 4% or 5% of heavy mineral concentrate goes into our processing facilities, is separated into its constituent minerals, and sold from our port facilities on-site direct to end customers. It's very much from sand to end customers, all at Moma, and all under our control. We have had, because of our capital investment in 2025, that reduced our production very slightly, and we were 20% down on ilmenite production in 2025 and 15% on heavy mineral concentrate.
We do expect to see those numbers pretty much there, thereabouts for 2026, but significantly increasing as we move to the new ore body and ultimately our target is to get to 1.2 million tons of production per annum, which is the capacity of our processing plant. As I touched on, trough pricing or falling pricing in our space has impacted on our revenue, impacted on our EBITDA, impacted on our profitability. I suppose combined with the very significant capital has led us into a net debt position. Our capital, we're very much through our capital at this point. Our capital in 2026 will be 30% of last year's figure. Why do we make that investment? Well, we're going with our biggest mining plant, which is the one you can see there on the graphic, to our biggest ore body.
The Nataka ore body is 70% of our reserves. All our three mining plants will end up there and will end their commercial lives there. To equip this particular plant to mine at Nataka, it needed an upgrade and it needed two new powerful dredgers, which you can see in the foreground of the picture there. Each of them is as long as a jumbo jet. This is a very significant operation in terms of its scale. Our other two plants don't need to be upgraded in the same way. This is just our biggest plant, which needs to be upgraded. While we've had significant CapEx in the last couple of years, we've no obligatory CapEx going forward other than sustaining CapEx. Our cash flows from the business are unencumbered from 2026-2027 onwards. I've talked about the capital program. We're pretty much through it.
80% of the way through it at the end of 2025. The project's been handed over to operations. We're finishing the commissioning at the moment. The remaining spend is over the next five, six years. We really are over the hump. We have delivered a project safely. We have delivered a project that works, and we're just completing the commissioning at the moment. Maybe just to switch on to the markets a little bit, and I've touched a little bit on the impacts of market movements on Kenmare. Of course, those impacts are not isolated to Kenmare. If you think back to 2021, 2022, during COVID, post-COVID, people were stuck at home. All their disposable income wasn't being spent on holidays, wasn't being spent on entertainment, wasn't being spent on going out. It was being spent on DIY. Interest rates were lower.
People were moving houses or redecorating houses. That's happened a lot less in the intervening period. Of course, you don't paint your house every year. You might paint it every five years, so you do have a natural painting cycle. Of course, we've got higher interest rates. We've had the Chinese economy or Chinese property market stagnating, and we've obviously had conflict, regrettable conflict, in a number of areas. That has certainly impacted demand, but of course, when you do have pricing spikes like this, you have new entrants, and we did see new supply coming into the market. We have seen a little bit of oversupply coming into the market over the last couple of years, principally from artisanal or less complex Chinese producers who are coming in, picking out the sweet spots of ore bodies, and with quite rudimentary low CapEx, low-cost approaches.
Those approaches aren't scalable to the full ore body. They will only take the 20%-30%, which is the most attractive, highest grade, easiest to mine. We've seen this in previous cycles as well, certainly in 2012, 2013, 2014. An equivalent set of behaviors happened in Indonesia and Vietnam. They came on very strong, came on very quickly and declined equally quickly. Now, from Kenmare's perspective, actually, while these things impact the market, they don't impact our ability to sell. The customers that we've had from the outset are still our customers. If you're building a pigment plant, if you're building a metal plant, if you're building a smelter, you want the same input, you want consistent quality, you want guaranteed availability, you want long-duration assets. Kenmare's products are typically the first tons of products that people buy.
The customers we had when we started in 2008, 2009 are still the customers we have today and will be our customers into the future. About 60% of our products are sold on long-term contracts. Those contracts are volume certain, but price revised every or twice a year. We're well-positioned in our market. We're seeing certainly for our principal product, ilmenite, weakened significantly in 2025, stabilizing a little bit at the moment in 2026, because all producers, Kenmare included, are taking the necessary measures to address oversupply and address low prices. In our secondary product, zircon, which is a smaller market, we actually saw zircon stabilize towards the back end of 2025, and we've just in the last couple of weeks, started to see pricing tick up, and we're certainly seeing better pricing being invoiced by us for Q2. Hopefully, zircon will foreshadow a recovery in ilmenite.
We're not budgeting on it right now. We're planning for 2026 to be a challenging year and for prices to stay broadly where they are. Certainly, the leading industry commentator, TZMI, in its first quarter outlook, changed its forecast significantly more positively for both ilmenite and zircon for the coming years. That may also be a foreshadowing of price improvements, but not just yet. Maybe one thing that we've heard a lot about and we've spoken a lot to our shareholders and existing and prospective about over the last number of months is our significant agreement with the government of Mozambique called the Implementation Agreement. The original agreement, which governs our processing and export activities, was signed in 2002. It was part of the framework that enabled the project to be built. We got a very good deal.
One percent royalty, no corporation tax, no VAT, no customs duties. While we have the right to renew on those terms, that might be what the agreement says, but pragmatically, that's not really the way that we should operate with our partner government. We've proposed to the government a significant uplift in the royalty overall on a blended kind of 4% rate. I've met the president twice, I've met the Minister many times. The government views Kenmare as effectively a case study of how to co-participate effectively with international capital. Natural resources agreements for emerging governments can be controversial things, and it's taken a long time to get this sorted. There's been a few ups and downs on the way. We're very hopeful that we will be able to make progress on this.
The government has said, and even the president said himself when he visited Brussels in the E.U. a couple of weeks ago, that they're committed to completing it. The challenge, of course, is that while everybody we speak to is very rational, the permanent civil servants, the technical team, the ministers, including the President, at a certain point in time something stops being commercial and becomes either political or ideological. Mozambique has a number of challenges. USAID has taken away a large swath of the health budget. They've had catastrophic floods over recent months. They have Islamic insurgency in the north, nowhere near our operations. They're seeking to renegotiate or to advance LNG projects with Total and Eni. When we have their attention, we need to capitalize on it.
Certainly, we have made progress in recent weeks and engaged in constructive discussions, and hopefully we'll get a negotiated outcome. If we don't, we have the right to go to arbitration. That will be very much a last resort, and that will be international arbitration in Washington. Wrapping up where we are with Kenmare, in previous years, we would have targeted tons and production as our big target. For 2026 in particular, because of where we are in the market and because we have slightly elevated stocks, we're looking at shipments being our principal target. Ship as much as we can, generate as much revenue as we can, start to pay down our debt hopefully towards the back end of the year. Increase our production over coming years to bring our operating costs and our cost per ton down, and position ourselves for the recovery.
Overall, what have we got with Kenmare? A Tier 1 asset, 100 years of resources, proven team, proven technology, proven resource base. We've got a low-cost industry position, and we're investing to maintain it. We're preferred supplier to all our customers who've been with us for many, many years. Even when, as happened to us last year, one of our customers goes out of business, we still end up supplying the plant under the new ownership, and that's happened with at least one plant over recent months. Finally, very committed to generating value in the long term, both for the communities around us, for the government of Mozambique, and for our shareholders. Thank you very much. Happy to take any questions.
Thank you for that, Tom. I've learned a lot. I didn't know anything about titanium, and I feel like I know so much and can be dangerous to myself and others. I'm going to be very careful in some of the questions that I ask. Before that, are there any questions from the audience? Okay, that's a no. I will ask some questions. I'm interested in the titanium market. You said you're the fourth largest producer. You said, I think Rio was the largest. Is there cooperation between the four large or five large companies in terms of being able to take supply off the market to help stabilize the price, or how does that work?
I mean, that would arguably be anti-competitive, Tanya.
Well, you know.
It's quite an opaque market.
Okay.
What we do see is that we have a lot of customers in common. The market itself is maybe 16 million-17 million tons, so it's quite finite and it's quite opaque. It's very hard to get a reference price. We would sell the same product to two different people at different prices for different reasons, because they have different needs or even in different locations. What we are seeing is that when pricing is weaker, certainly the bigger producers, Rio would be one, Iluka on the zircon side in Australia would be another. They certainly would take volume off or try and manage supply to accelerate price recovery. Actually, we're seeing this year, because of all those measures, TZMI says there'll be a production deficit in ilmenite, and that will absorb a lot of this inventory, maybe not all of it, but a lot of it.
I don't have any mining companies I follow that have operations in Mozambique, so I would be very interested in, you mentioned your contract. Most mining companies in Africa usually have participation or carried interest or something by the government.
Yeah.
It doesn't look like Mozambique has that with you.
It does now.
It does, okay.
It does now, but it didn't have it when we originated this project. Because we've got fiscal stability, there's no avenue for them to gain it, so their principal participation is taxes, royalties, and obviously the indirect benefit of payroll taxes from the employees.
They don't have a 10% or 15% carried interest?
No, they don't. And they didn't at the outset. They weren't carried in development. We didn't buy it back off them. It just didn't exist at the time. It is provided for in the current legislation.
I think I also heard that you were not paying taxes in the beginning?
On one part of our operations.
Okay.
Our mining company pays corporation tax. This processing and export business doesn't pay corporation tax, but if our proposal is accepted we'll pay an elevated royalty.
Okay. There would be an elevated royalty, and then longer term there would be some corporate tax.
There is some corporate tax, but not within this business.
Okay.
It depends on what agreement we ultimately reach. Look, I'm very hopeful we will reach an agreement.
In terms of, because I don't know much about this titanium market, but what is an average EBITDA for such a product in normal times for your production?
For us, and I mentioned a 60% EBITDA margin in 2022, but in the years prior to it and the years following it, we were more like 40%. Certainly, this is a business that certainly has had reinvestment obligations, albeit they're fewer in the future. It is a cash generative business, and obviously it's very much a kind of volume business because a lot of our costs are fixed, and if you can cover those fixed costs and then sell extra tons, you're making a very good margin.
You have a long-life ore body. You have a port for shipping. Are there any issues on the shipping front, given everything that's going on?
Certainly some of the routes we use may be more challenging. We have a customer in Oman at the moment who'd love to take volume but whose port is blockaded. Diesel and heavy fuel oil, like any shipping venture, will be a challenge for our customers and potentially ourselves. We certainly have enough diesel on site for the next two months or so, and who knows what the world will bring in the next two months. Yes, we have an exposure to it, but it's a modest enough one on a day-to-day basis.
Any other questions? Oh, we have a question from the audience.
Thank you, Tom.
Thank you.
I was fascinated with your slide on sustainability goals.
Sure.
We are aware of the risks in certain parts of Africa. I mean, of course, we see that in the gold industry. For titanium, what are the kind of risks you're seeing, and what are you doing around the sustainability?
We're very fortunate. Firstly, if you came to Moma, we'd be very happy if you tried to steal and run away with as much ilmenite as you could carry because it's a bulk commodity. We're selling it in thousands of tons. Nobody could take it away and sell it, right? That's first. We operate over a very large footprint. To go from one end of where we operate to the next, driving will take nearly an hour. We're in and out with the community every single day. When we go to site, when I go to site, I go for a run. I go to the local village. Our team go out cycling at weekends. We've been on the beach buying seafood off local fishermen.
You don't do stupid stuff, but 99.9% of the time, it's very, very safe, and the community appreciates that we're the biggest game in town, the biggest provider of direct and indirect employment. The alternative is subsistence agriculture or fishing. We don't take that for granted. We invest in economic empowerment initiatives, educational initiatives, water and sanitation initiatives. We're building hospitals, clinics, and we do that year on year. We spend $3 million-$4 million a year through a not-for-profit organization, and people value it. I would never take it for granted, but it is something that I think we do well. When visitors come to Moma, we've had our board there this year. We've had investors there every year. It's one of the things they're very struck by.
Look, maybe we're fortunate because of the commodity space we're in, but we do our best to make sure that we try and keep it that way.
Okay. Well, thank you so much for that, Tom. Thank you very much.
Thank you.
Thank you for that informative presentation. That ends my session for today. Thank you everybody for attending, and please note there is a panel discussion at 5:30 P.M. on Mining and Markets in Transition. Thank you very much
Nice to meet you. Thanks very much, Tanya. Nice to meet you. Thank you.