UAE royal Sheikh Tahnoon-linked IRH bids for Mozambique titanium miner Kenmare

International Resources Holdings, the Abu Dhabi mining company in Sheikh Tahnoon bin Zayed Al Nahyan's business network, has made a takeover approach for Kenmare Resources, the London-listed company that runs one of the world's largest titanium mines in Mozambique.

Kenmare confirmed on Tuesday that it had received a non-binding proposal from IRH regarding a possible cash offer for the whole company. It did not disclose a price and said talks were continuing, with no certainty that a firm offer would be made. Under Irish takeover rules, IRH has until 5 p.m. on Nov. 17 to announce a firm offer or walk away.

Kenmare shares jumped as much as 41% to 255.5 pence in London, from 181.4 pence the day before, and closed at 220 pence.

A titanium mine with a long life

Dublin-based Kenmare operates the Moma Titanium Minerals Mine in northern Mozambique, about 160 kilometers from the city of Nampula. It produces ilmenite, rutile and zircon, minerals used in paints, plastics and ceramic tiles, and ranks as the world's fourth-largest producer of titanium feedstocks. The mine has an estimated life of more than 100 years at current production rates.

The company has had a difficult two years. It has dealt with project delays and has struggled to extend its implementation agreement with Mozambique's government. To win the extension, Kenmare offered to raise its royalty to 2.5% from 1% and to pay a withholding tax worth about $4 million a year. In August, it reported lower half-year revenue and an adjusted loss.

Deep pockets in Abu Dhabi

IRH has been expanding quickly in African mining, with investments in Zambia and the Democratic Republic of Congo, including a controlling stake in Zambia's Mopani copper mine. It is backed by International Holding Co., the $216 billion Abu Dhabi conglomerate chaired by Sheikh Tahnoon, the UAE's national security adviser and brother of President Sheikh Mohammed bin Zayed.

A deal would give Abu Dhabi a source of titanium as it builds up strategic industries at home.

Dan Coatsworth, head of markets at AJ Bell, noted that Kenmare has attracted several bids over the years but none has ever been completed. He said IRH's backing by International Holding Co. "suggests deep pockets to finally get a deal done on Kenmare."

The approach comes days after Azura Power, which another company in Sheikh Tahnoon's network agreed to buy in August, took a majority stake in a South African electricity trader.