Kenmare Resources is set to get going on its first project in Mozambique, writes Claire Shoesmith

Dublin and Mozambique may be thousands of miles apart and completely different environments, but they are both crucial to Michael Carvill's business.

The African state is home to one of the largest titanium deposits in the world and Dublin is near to the investment community - two things that are essential to the smooth running of Kenmare Resources, the company he helped set up back in 1987 and of which he is now managing director.

Over the intervening 20 years he's searched for gold in the Philippines and found nothing and discovered gold in Sudan but been unable to commercialise the project. He has settled on mining for ilmenite in the east African country of Mozambique as the first major project for what is currently one of the shoal of minnows in the mining world.

If all goes to plan, Kenmare, which is listed in Dublin and London, could be producing 6 per cent of the world's titanium by the middle of next year from its own Moma Titanium Minerals Project.

For Carvill, it all started when he decided that moving around Africa on different hospital development projects wasn't something for the long term. While rewarding at the time, he felt he needed to put his mechanical engineering skills to another use.

So, an MBA and a thesis on setting up an exploration company behind him, he returned to Ireland where Tara Mines had just been sold, leaving several businessmen, including his father Charles, with some money to spare.

Before long this was put to use in the purchase of Kenmare Oil, a dormant company that was quickly sold on and the proceeds used to create Kenmare Resources.

"We decided if we were going to create any value, we had to look at places the majors weren't looking at," says Carvill of the decision to focus on Africa. "If you put £1 million into mining in Australia, you would probably get less than that back, whereas £1 million invested in Africa has much more resource potential."

It was this punt - and the drilling of more than 3,000 holes - that helped Kenmare on its way to being what it is today, a near €400-million mining company about to commence its first production.

According to the contractor, Multiplex, which unlike with London's Wembley Stadium, is pretty much on time and on budget, about 96 per cent of the plant was complete as of last week and is on course to start extracting resources next month.

It will take about a further month to create a stockpile before real production can begin. All being well by the middle of next year, production should be in full flow.

The site for which Kenmare has a licence to drill is estimated to contain about 101 million tonnes of ilmenite, which is used to produce titanium and titanium dioxide.

The metal itself is used in products ranging from surgical instruments to fighter aircraft. The oxide is used as a whitener for products ranging from paints and plastics to cosmetics.

While the sex appeal of titanium leaves something to be desired when compared to diamonds or gold, and the increase in value over the past 12 months lags behind the surge seen in the oil and gas sector - ilmenite trades at an average of $90 a tonne. This has increased by about 20 per cent over the past 18 months. There is certainly value to be had in the industry.

"We are seeing a very, very big increase in consumption in the developing countries, particularly China and India," says Carvill, adding that future demand looks very strong. In fact, the global market for titanium pigment is forecast to increase by about 4 per cent this year and by a further 3.5 per cent annually between now and 2015.

Add to that the fact that Kenmare has 60 per cent of its first five years of revenues already under contract and Carvill seems to be on to a sure thing.

So sure in fact that back in March the company raised its forecasts for resource at the site by 40 per cent and has recently announced plans to expand the plant at least twice once production has begun.

By 2009, the Moma plant is forecast to be producing 800,000 tonnes of ilmenite, 56,000 tonnes of zircon - a byproduct of ilmenite mining that's used to manufacture ceramic tiles - and 21,000 tonnes of rutile - a resource similar to ilmenite but of a higher quality.

However, it hasn't all been an easy ride. In fact, according to Carvill, one of the hardest parts was actually negotiating the contract for the licence to drill.

"We were so far apart in our thinking, it was impossible to find any middle ground," he says. Eventually the Mozambique government came round to Kenmare's way of thinking and awarded it the licence.

Even then, things didn't happen quickly. As far back as 1991 Kenmare had its first feasibility study showing there was indeed material to be mined. Fifteen years later the group is about to start producing its first material, generating its first revenue.

In Dublin, Carvill heads up a team of about seven which is responsible for the overall running of the company. In Mozambique, he leaves the day-to-day running of the plant pretty much to those who were hired to do just that.

Kenmare employs about 65 people at the Moma plant and plans to take on a further 430 over the next few months. The majority of the workers will be from Mozambique, with about 65 expatriates initially, a number that Carvill estimates will decline to about 30 within the first three years.

Recruiting locally has been a challenge. Of the 18 million people living in Mozambique, only 500,000 are officially employed, meaning that demand for skilled workers is high. As a result, Kenmare has been forced to poach workers from other mining companies, a move that has brought the benefit of experience to its team.

Confident in this knowledge, Carvill is now looking to his next challenge, one that is taking the form of uranium exploration. "People are becoming more aware of the need to cut carbon emissions and, at some point, we are going to need other resources," he says.

So while nuclear power may not be the future in everyone's eyes, the mere thought of it is enough to keep Carvill and his colleagues busy for now.

Factfile

Name: Michael Carvill

Age: 47

Family: Married with three children

Education: Studied mechanical engineering at Queen's University in Belfast, followed by an MBA from Wharton College at the University of Pennsylvania

Hobbies: Sailing

Why he is in the news: Dublin-based exploration group Kenmare Resources is about to start production at its titanium mine in Mozambique which, by the middle of next year, could be producing 6 per cent of the world's titanium stocks. Titanium is used in fighter jets and medical equipment, while titanium pigment is used as a whitener for everything from paint to cosmetics.