Haycarb issue: Activated carbon issue resolved

A comprehensive judgement was handed down by the Supreme Court this week directing Jacobi Carbons, a Swedish company manufacturing activated carbon to comply with conditions stipulated in their agreement with the Board of Investment (BOI) regarding the use of local raw materials.

According to the court ruling made by Chief Justice Sarath N. Silva and Supreme Court Justices Raja Fernando and Saleem Marsoof, Jacobi Carbons would be bound by the ceiling on the sourcing of coconut charcoal and activated carbon as imposed by the BOI of Sri Lanka, in respect of both processes of making activated carbon and value added activated carbon.
Jacobi Carbons is barred from purchasing more than 450 metric tons of coconut charcoal in order to produce the stipulated 183 metric tons of activated carbons, either imported or from the local market. With reference to value added activated carbon, the company is restricted to purchasing the required quantity of 750 metric tons of coconut charcoal in order to produce the approved 310 metric tons of specialist value added activated carbon. This raw material can only be purchased from Tajit, a Sri Lankan manufacturer. Furthermore, any shortfall within that ceiling will have to be imported and not sourced from the depleted local market, the ruling said.

The lengthy Supreme Court battle, which was extensively reported by The Sunday Times FT, finally concluded after Haycarb, a subsidiary of Hayleys Group and the largest manufacturer of activated carbon, filed a Fundamental Rights application in the Supreme Court through its attorney, Sudath Perera Associates, citing severe shortages of local raw material. Jacobi Carbons had been granted BOI approval to manufacture specific quantities of activated carbon and value added carbon, exceeding the ceilings imposed by the BOI and thereby making serious inroads into the already depleted raw material market in Sri Lanka.
Moreover, the local activated carbon industry felt that foreign companies with BOI status which would have the benefit of tax concessions and other allowances would have a greater advantage over the local industry.