News
Foreign demand for local granite rises, vested interests downplay value addition
Foreign interest in Sri Lanka’s granite—among the purest in the world—is rising. The number of companies seeking exploration licences from the Government has increased, while new players have also entered the mining market.
Statistics obtained from the Geological Survey and Mines Bureau (GSMB) shows that 14 companies now hold valid licences for graphite exploration.
These permits cover 986 square kilometers of land. Six companies have valid mining permits, including longtime players Bogola Graphite Lanka Ltd and Kahatagaha Graphite Lanka Ltd.
At present, all pits are located in Kalutara, Kegalle and Kurunegala districts, while others have been earmarked.
The demand for local graphite is high because of its quality. Sri Lanka is the only country in the world that produces super grade, lump and chippy dust graphite containing between 95% and 99% pure carbon.
With the Government having opened up the mining sector to overseas investment, interest has peaked.
But the sector has been slow in attracting value addition. Despite a policy decision to demand a certain percentage of value addition in the minerals sector, Sri Lanka continues to allow the export of raw graphite.
This has allowed other countries to stockpile graphite and create lucrative domestic industries that bring in significantly high revenues than the export of unprocessed minerals.
Particularly lucrative is the production of graphene, known as one of the materials of the future.
However, GSMB Chairman, D.M.D.O.K Dissanayake said most companies were reluctant to attempt value addition, saying the cost of electricity was high. Most processes needed considerable inputs of energy.
However, local scientists have said claims of high expense are exaggerated, and have repeatedly urged the Government to push for value addition within the country.
The quality of Sri Lanka’s graphite is so high that foreign entities that have entered the market—either in exploration or mining—continue to make grandiose statements abroad about their stakes in Sri Lanka.
Industry sources pointed out that this helped increase the stock value of their respective ventures. Foreign companies are not permitted to hold mining or exploration licences in Sri Lanka.
At present they exploit a loophole in the law which allows a local company to acquire these permits and then transfer the shares of the company, often for large amounts, to the overseas entity.
This practice, which takes place also in other industries, has not been looked at by the Government. Hence, vast amounts of money have changed hands, unchecked by any regulatory authority.