Japan firm eyes Pulmoddai rare earth mineral deposit
With the aim of adding value to Sri Lanka mineral exports, a leading Japanese conglomerate headed by a billionaire businessman has finalised a deal with local authorities to soon take over strategic mineral production, especially ilmenite at the Pulmoddai deposit.
Lanka Mineral Sands Ltd (LMSL) will be restructured under a public private partnership with this Japanese company, informed official sources said.
Cabinet approval is being sought for this purpose as this state owned entity is currently running at a loss and the Treasury has to share the burden of the monthly salary bills of employees.
LMSL has already mined a massive stock of mineral sands over the past 50 years along the beach from Pulmoddai-Kokilai exhausting mineral sands and therefore the company is not making much money at present, a senior official of the Ministry of Industry and Commerce said.
The market value of a kilogram of Titanium (processed from ilmenite) is in the region of US$1.6 million (Rs.256 million).
However the employees of the company are up in arms against this attempt to divest the mineral resources at Pulmodai as they are public assets and also strategic Rare Earth Elements (REE), generating foreign exchange income for the country.
Disregarding these protests, an agreement has been reached by the top level authority of the country to award the Public Private Partnership (PPP) contract to the Japanese company through an unsolicited bid, LMSL employees alleged.
This deal was a major outcome of President Maithripala Sirisena’s March 2018 visit to Japan where he wooed proactive investment by Japanese companies into Sri Lanka.
A Presidential envoy who visited Japan several times has negotiated the deal to hand over a fraction of the Pulmodai deposit.
This Japanese conglomerate will be stepping in for value added mineral production such as making Titanium dioxide used to produce Titanium from ilmenite, the valuable metal of the present and future, a source closely connected to the deal said.
The LMSL sells its main mineral products such as Ilmenite, Rutile, Zircon, Hi Ti ilmenite, etc through the international competitive bidding procedure; he said adding that the Japanese firm has agreed to transform the local company into a profit-making entity.
The present production is now limited to 90,000 tons of ilmenite, 9,000 tons of Rutile and 5,500 tons of Zircon annually.
LMSL is not in a position to enter into value added production such as making Titanium dioxide, the valuable metal of the present and future as it has no financial and human resources as well as necessary expertise, the source disclosed.
According to the cabinet memorandum the only option is to enter into a joint venture with local or foreign investors to produce value added mineral products. LMSL currently exports mineral sand to Russia, Japan, US and the UK.
However the employees noted that modification and upgrading of the present plant in Pulmoddai has been completed, and the company is contributing large sums of money to the national coffers but it cannot carry out its functions with maximum productivity due to lack of human resources and other facilities.
Minerals and deposits are found along the eastern coastal belt from Mullaitivu to Pulmoddai and from there to Kotuwakambi. This is one of the most treasured natural resources of Sri Lanka.