Controversy over Lanka Mineral Sands limonite tender
Lanka Mineral Sands Ltd (LMSL) that had mined mineral sands over the past 61 years is operating without making targeted revenue from mineral exports due to violation of tender procedures, a recent investigation report highlighted.
Accordingly the productions of the company are exported to Japan, the UK, Europe, the US, India, Pakistan, China etc.
However the company has not exported limonite directly to the genuine buyers identifying such buyers and therefore the company has lost opportunity to maximise its income as a result of selling its productions through local and foreign buyers violating proper procedures.
Limonite is an ore of iron and is used as a pigment in the manufacture of paints. Limonite is an iron ore consisting of a mixture of hydrated iron oxide-hydroxides in varying composition
Approval of the Cabinet of Ministers has not been obtained before commencing activities of tenders for the sale of 9000 MT of limonite by the top management of the company, the government audit query unearthed.
However all activities relating to the tender such as calling of tenders, obtaining quotations, making technical evaluations, granting approval of the tender board for tender etc have been performed before obtaining the Cabinet approval, audit report revealed.
However the Cabinet Memorandum has been submitted by the Ministry just before awarding the tender to selected bidder, the audit inspection detected.
Further the price for one MT of limonite with 54 per cent of titanium dioxide (TIO2) was at the highest price of US$215 at the world market during that time.
The then Cabinet of Ministers has ordered the Secretary of the Ministry to take necessary action to sell limonite stocks by calling international bids considering the price escalation in the international market.
At that time the price received was at a lower level of $163.80. However without considering the market trends at that time, which showed a decline in prices for limonite, that tender has also been cancelled without selling the stock even at that price, the audit report revealed.
At the final and the third tender calling action has been taken to sell limonite stocks at a lower price of $150 per MT.
As a result of selling this limonite stocks at a lower price without taking proper decisions at the correct time, the company has lost $476,010 (Rs. 72.35 million), the audit query highlighted.