Financial Times

Firm to mine new iron ore deposit
A local entrepreneur with experience in quartz mining and export has formed a new company to exploit a major new iron ore deposit found by university geologists in the island's southern region. The new company, called Uva Magnetite, has been formed to carry out more detailed exploration work with the aim of eventually mining the iron ore (magnetite) and exporting it.

The deposit, found on a hillock in Wellawaya, has a purity that exceeds 90 percent and is estimated to be about 90 million tonnes in size. Peradeniya University geologists who found the deposit believe it holds the prospect of developing a new iron industry in the island. Uva Magnetite is to embark on detailed geophysical surveys to get a better idea of the extent and nature of the deposit "Drilling work is to start very soon," said an official connected with the project. "After the drilling, the investors will apply for a mining licence."

The company is expected to use the open pit or cast mining technique. The initial project cost for mining is expected to be around Rs 600 million. The company is considering crushing the raw material and making reasonably sized powder that can be exported. Uva Magnetite is considering exporting the product in three or four years and believes there is a good market for iron ore, particularly given what has been described as China's 'insatiable' appetite for iron ore for its rapidly growing steel industry.

Uva Magnetite is looking at transporting crushed iron ore by either road or rail and shipping the bulk commodity through the ports of Galle or Trincomalee. "We have to examine the economics of the operation since Galle is not big enough to handle bulk carriers while Trincomalee has security problems," the official said.

Officials said the company is also thinking of making steel as a long-term prospect but added that a lot of power would be needed for smelting. Sri Lanka's annual requirement of steel is in the region of 10,000 metric tonnes. "If we want to meet local requirements we need to produce about 15-20,000 MT of iron ore," said the official. "This means a very low rate of mining is required to support only the local steel industry."

To break into the export market the company would have to "make a name for itself," he added. Uva Magnetite is planning to improve infrastructure facilities such as schools, hospitals and water supply schemes in the vicinity of the deposit.
There would not be any need to relocate villagers as the nearest village is about a kilometre away from the deposit. The iron ore deposit was found by two scientists of the Peradeniya University, Dr.Atula Senaratne and Dr. H.A. Dharmagunawardene, during a field trip undertaken as part of the department's new exploration programme.

The iron ore is in several bands sandwiched between ordinary rock on the surface and can be exploited without too much difficulty by the open quarry method. Deposits found previously were not economically feasible to extract with the present techniques. Deposits like the one at Panirendawa, south of Chilaw, on the northwest coast, is 30 metres below ground while others are mixed with unwanted rocks.

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