End of the road for local industry?

The lengthy and exhausting Supreme Court battle between the local activated carbon industry and foreign owned Jacobi Carbons Lanka (Pvt) Ltd, came to a disappointing end this week for the local industry. Supreme Court judges N. Jayasinghe, S. Thilakawardene and N.E. Dissanayake closed the case as to the original settlement which was issued on 13 February 2006. In it, the plaintiff, Prime Carbons Lanka (Pvt) Ltd was given the opportunity to apply for Board of Investment (BOI) status which the judges concluded would level the playing field.

At the core of the issue, the local activated carbon industry felt that foreign companies should not have been given entry into the market due to a shortage in raw materials. Furthermore, they felt that a foreign company with BOI status which would have the benefit of tax concessions and other allowances would have a great advantage over the local industry. On this issue, Prime Carbons filed action in the Supreme Court where the Coconut Development Authority (CDA) was ordered to file and gazette regulations pertaining to the purchase and import and export of local raw materials. The regulations were subsequently gazetted but without the concurrence of Minister of Trade, Jeyaraj Fernandopulle, as required by the CDA Act. Therefore, they could not be implemented.

At the previous inquiry on 5 November 2006, the Supreme Court learned that the Minister would not be giving his concurrence to the regulations and had gone a step further by ascertaining cabinet approval for his decision.

Coconut shell based activated carbon is most commonly used in water, gas and air purification as well as solvent and gold recovery. There are currently five local manufacturers - Prime Carbons Lanka (Pvt) Ltd, Haycarb Ltd, Bieco Link Carbons (Pte) Ltd, JB Carbons (Pvt) Ltd and Newco Carbons (Pvt) Ltd (formerly Tajit & Co Ltd). Sri Lanka has the capacity of producing approximately 50,000 tonnes of charcoal a year but on average, produces between 35-45,000 tonnes. Since the combined factory capacity of all activated carbon manufacturers in the country is 60,000 tonnes of charcoal a year, some companies have been forced to import the raw materials.

D.J.U. Purasinghe, Chairman of the CDA, had earlier told The Sunday Times FT that he is trying his best to resolve this matter by safeguarding the local industry as well as the investor. The CDA is to now call a meeting of the stakeholders in an attempt to sort out some of the issues. (NG)