News
British firm takes Mines Bureau to court over cancellation of licences
View(s):By Namini Wijedasa
A listed British mineral sands company has, through its local partner, petitioned Sri Lanka’s Court of Appeal (CA) against the Geological Survey and Mines Bureau (GSMB)’s unexpected cancellation of its industrial mining licences (IMLs), reportedly acquired after an investment of around US$ 11mn on preparatory activities which started 2017.
Capital Metals Plc has also issued a formal notice of dispute on the Sri Lanka Government after having enlisted the international law firm Boies Schiller Flexner (BSF) to advise it on the GSMB’s conduct in the context of Sri Lanka’s international treaty obligations.
Lead lawyers in the case include Timothy L. Foden, a mining disputes specialist, who recently acted for subsidiaries of Indiana Resources in its US $109 million victory over the Tanzanian Government. A formal notice of dispute has been issued on the Sri Lankan Government.
Damsila Exports (Pvt) Ltd last month instituted legal proceedings in the CA on behalf of Capital Metals Plc, seeking the court’s intervention in respect of the cancellation of IMLs (in May this year) issued by the GSMB to Damsila, said a statement from Capital Metals seen by the Sunday Times. It also draws attention to other attempts by the Government agency, allegedly, “to frustrate the company’s right to conduct industrial mining”.
The respondents include Environment Minister Naseer Ahamed, Environment Ministry Secretary Anil Jasinghe, the GSMB and its Board of Management. Damsila is asking the court, inter alia, to quash any decisions to temporarily suspend and cancel the IMLs and prevent the respondents from issuing to any third-party licences which impinge upon its own permits.
“We believe the net is closing in on the small number of individuals within the GSMB and Government who are frankly out of control and whom we believe are seeking to illegally hand the company’s rights to favoured third parties,” Greg Martyr, Capital Metals’ Executive Chairman, said.
Procedural reforms for mineral licensing may be on the horizon, Mr. Martyr, who recently visited Sri Lanka, has learned. “We are continuing our efforts to accelerate that outcome while simultaneously protecting the interests of shareholders through local writs and international arbitration,” he said.
Capital Metals has separately engaged in “extensive lobbying actions”–including at the “highest level of the Sri Lankan Government”–with a view to resolving its issues amicably with the GSMB. This, along with complaints, appears to be having a positive impact, the company said in a statement.
For instance, the conduct of the GSMB Chairman and the Environment Minister recently came under “intense scrutiny” from the Sri Lanka Parliament’s Committee on Public Enterprises. An independent sub-committee has been appointed to investigate misappropriation.
Capital Metals believes there might be, at some point, implementation of reforms in the mineral licensing process for foreign investors.
Damsila carried out detailed environmental assessments, exploration and development activities between 2017 and 2022. In August last year, it was issued initial two licences to mine heavy mineral sands in the Eastern Province, containing industrial minerals including ilmenite, rutile, zircon, and garnet. But the permits were suspended in December 2022 and subsequently cancelled (under appeal).
Despite this, Capital Metals will start an environmental impact assessment under a separate exploration licence it holds for the southern region of its project area (which is not subject to the GSMB’s actions), stretching over 26 km from Panama to Komari in the East.
The GSMB has long been beset by reports of irregular activity. In December, its Chairman Senarath Hewage was removed and Director General Sajjana De Silva sent on compulsory leave over alleged corruption.
In June, COPE ordered the appointment of a sub-committee to probe the GSMB’s process of issuing licences. All permit requests are sent every day to the Minister for approval, which COPE pointed out undermined the Bureau’s administrative independence in violation of the law. The Act empowers the GSMB to issue licences independently.
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