News
BOI tasked to get foreign investors for mines
The Cabinet has approved several proposals by President Ranil Wickremesinghe aimed at promoting foreign and local investment in the country’s mineral resources sector in a bid to boost revenues earned through the long-neglected and stagnant sector.
In an effort to curb what industry sources said was rampant corruption, the Cabinet has further sanctioned shifting the authority for accepting and appraising investment proposals related to mines and minerals to the Board of Investment (BOI) from the Geological Survey and Mines Bureau (GSMB).
It has also been agreed to increase the royalties required to be paid by an investing party on the value of minerals for sale. The proceeds are to be shared with the GSMB and the Consolidated Fund through a regulation to be promulgated under the Mines and Minerals (Amendment) Act “to facilitate Treasury cash flow and to contribute to the achievement of a primary surplus in the public budget”. The relevant memo was submitted by President Wickremesinghe in his capacity as Investment Promotion Minister as part of a major drive to mobilise income through the long-neglected industry and also to formulate a policy “on effective ways of utilizing Sri Lankan mineral resources for national development”.
Investors will be requested to remit 10 percent of their proposed input upfront through an inward investment account or local bank account; and to submit documentary evidence to the BOI prior to approvals being granted for mining projects and before a mining licence is issued. Conditions will be imposed to receive the total investment within two years of signing the BOI agreement.
The minimum investment threshold to start a mining project that exports heavy mineral sands and minerals in raw form will be US$ 50mn. Nevertheless, the Cabinet has agreed to allow the BOI to determine the threshold case-by-case, depending on the mineral type and processing activity of the project.
A Cabinet decision dated 2012 stopped the export of mineral sand in raw or mineral form without value addition, with exploration or mining licences to be issued only to investors willing to add value locally.
However, under the latest Cabinet decision, investors will be granted mining licences and will have two years from then to complete setting up their heavy mineral concentration, refining and separation (CRS) plants. Within those two years–known as a due diligence period–they will be allowed to export mineral sands as individual minerals (such as ilmenite, rutile, zircon, garnet, silminite and mozanite) in their pure form “to a maximum of 30% of the total proven reserve”.
As decided by the Cabinet, GSMB will function chiefly as a regulatory body under the provisions of the Mines and Minerals Act, retaining the power to issue licences for exploration, mining, processing, transport, storing, trading and export. It will also be tasked with evaluating the commercial viability for mining, processing and export of mineral deposits, etc., “to facilitate viable investment on mineral sands”.
Environment Minister Naseer Ahamed, under whose purview the GSMB lies, made a strong push to cancel all existing exploration and mining licences previously issued for export minerals. The Cabinet approved this but with the proviso that it will be in relation to investors who have “not taken meaningful action towards implementing the project with due compliance of the provisions of the Mines and Minerals Act”.
Separately, the Cabinet also granted approval to instruct the Legal Draftsman to draw up legislation to establish a Geological Survey and Mineral Research Council and a Mineral Resources Regulatory Commission of Sri Lanka.
The recommendations of an 11-member expert committee headed by R.H.S. Samaratunga, the President’s Senior Economic Advisor, on the effective use of Sri Lankan mineral resources for national development are to be adopted. This includes “restructuring prevailing multiplicity of the institutional and legal framework, the establishment of a Mineral Intelligence Unit, the setting up of a Mineral Research and Development Fund and creation of skilled manpower for the mineral sector.
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