News
Corruption and red tape keep out substantial foreign investment into mining industry
Sri Lanka had failed to attract substantial foreign investment in the mining industry during the last 50 years mainly due to the high sovereign risks associated with Sri Lanka, Chirantha Weerawardena, a mining engineer, said during a seminar, titled ‘Blueprint for Developing a Sustainable Sri Lankan Mining Industry by Attracting Foreign Investment,’ organised by the Institution of Engineers Sri Lanka (IESL) recently.
Eng. Weerawardena said that mining was a long term investment and investors in the mining sector werevery concerned about the political and economic stability of a country. “They are worried about abrupt changes to mining related law and regulations, significant and abrupt changes to tax and royalty regimes, the lack of rule of law which can result in losing mining rights without valid reasons and the lack of an independent mechanism for appeal or arbitration against the regulator’s or minister’s decisions.”
Eng. Weerawardena said for a mining company exploration is a high risk investment because significant funds need to be spent before hitting an ‘economic deposit.’ Given that mining is an investment spanning 10 to 40 years, once an investment is made, a mining company is “trapped” as it can’t leave easily.
“A few years ago a London Stock Exchange registered company spent about 16 million US dollars to carry out initial exploration of three sites they acquired in Sri Lanka. Then the Geological Survey & Mines Bureau (GSMB) suspended the licence citing an issue with the local ownership requirement of the mining licence holder. In Sri Lanka there is a rule saying an exploration license can be taken by anyone, but the mining licence can be only taken by a company with majority local ownership. The company went to court. I have no problem with this law, but the GSMB should have brought this up at the start. And then the licences were reinstated by the Secretary to the Ministry of Environment under statutory appeal process. Now the issue has been sorted out and the company signed an MOU with the LB group in China – the second largest company in the world in TIO pigment manufacturing, who will invest 81 million dollars to build a mining separation plant at Oluvil,” he said.
That had been one of the two serious investments in the mining sector in the last 50 years, Weerawardena said, adding that the above case demonstrated that Sri Lankan officials and politicians were not interested in facilitating foreign investments and sometimes went of their way to make life difficult for investors. Such actions mainly stem from corruption, especially when they want kickbacks.
Weerawardena said resource nationalism, which was the tendency of people and governments to assert control over natural resources located in their territory, was also tied with sovereign risk. However, resource nationalism is based on several valid and good points and this is not inherently bad.
“However, we must realise politicians and some ‘experts’ sometimes overestimate in-situ value of mineral deposits for various reasons. There is also a widespread anti-mining sentiment among the people as well.
“We have to also be scientific when we estimate the in-situ value of deposits. There are various costs associated with extracting the minerals in the ground. There are ship loading costs, transport costs, processing costs, mining costs, brownfield drilling cost, overheads and amortisation of capital. We have to take these costs into consideration before we value the mineral deposits we have,” he said.
He added that mining is an economic multiplier. In Australia, each mining job creates at least four others in the form of support services.
However, mining can also have a negative impact if a country does not manage its operations properly, he said.
“You can end up degrading a non-renewable resource without much to show. This has happened in Latin American and African countries. Because mining is so profitable, it can lead to corruption and social disharmony among stakeholders and communities. The worst-case scenario is that there can be foreign interference in the country. If we understand both the positives and negatives of mining, the country can go through the correct process to harness the benefits of mining.”
He added that Sri Lanka is a country with high sovereignty risk. Despite opening up the economy in 1977 and although Sri Lanka has several world-class deposits, the country has only got a few mining investments because of this.
“We need to understand that mining companies prefer stable policies. They can’t be lured by promises of cheap minerals. You also need less corruption and red tape. Then mining companies will come to Sri Lanka,” he said. (RK)
Latest News
Sun directly overhead Pomparippu, Anuradhapura, Mihinthale, Galenbindunuwewa, Agbopura and Serunuwara about 12:11 noon today (11)
On the apparent northward relative motion of the sun, it is going to be directly over the latitudes of Sri Lanka from 05th to 15th of April in this year.
The nearest areas of Sri Lanka over which the sun is overhead today (11th) are Pomparippu, Anuradhapura, Mihinthale, Galenbindunuwewa, Agbopura and Serunuwara about 12:11 noon.
News
Opposition NCM against Energy Minister defeated
A no-confidence motion brought by the Opposition against Energy Minister Kumara Jayakody was defeated in Parliament yesterday by a majority of 104 votes.At the end of the debate, 49 members voted in favour of the motion, while 153 voted against it.
The motion, submitted to the Speaker on 19 March, was signed by Opposition Leader Sajith Premadasa, SJB MPs, and other Opposition members.
It accused Minister Jayakody of failing to ensure the procurement of adequate and quality coal for the Lakvijaya Coal Power Plant in Norochcholai, alleging that such negligence amounted to a breach of ministerial responsibility over a critical national energy asset.
The motion also cited ongoing legal proceedings against the Minister, noting that he has been indicted by the Commission to Investigate Allegations of Bribery or Corruption and produced before the Colombo High Court under Section 70 of the Bribery Act, in connection with alleged acts of corruption during his tenure as Procurement Manager of the Ceylon Fertiliser Company Limited.
The motion read: Vote of No Confidence against Kumara Jayakody, Minister of Energy,— Whereas the Provision in Section 6 of the Part III of the Code of Conduct for Members of Parliament which states that: “The Members shall on all occasions act in accordance with the public trust entrusted with them and shall always behave with probity and integrity, including the use by them of any public resources.” has been violated; And whereas the following rules of conduct set out in Section 9 of the Part V of the Code of Conduct for Members of Parliament have prima facie been breached, namely:- “(a) to be conscience; (c) to act so as to merit the trust and respect of the people; (e) to hold themselves accountable for the conduct and duties for which they are responsible;” And whereas it is observed that the Minister has failed, in his capacity as a Minister of the Cabinet of Ministers, to discharge the fundamental duties incumbent upon him in accordance with Article 28 of the Constitution;
And whereas it is established that the Minister of Energy has failed to discharge his primary duty of ensuring the procurement of adequate and good quality coal for the Norochcholai Lakvijaya Coal Power Plant;
And whereas such gross negligence in overseeing a critical national energy asset constitutes a fundamental breach of ministerial responsibility;
And whereas the Minister of Energy has failed to carry out the subjects and functions vested in him by the Notification of Gazette Extraordinary No. 2412/08 of 25th November 2024 of the Democratic Socialist Republic of Sri Lanka, including taking necessary steps to reduce the losses at the institutional management level and technical damages that occur to the electricity generation and distribution system and reduction of costs for generating electricity and removal of uncertainties during generation;
And whereas the Commission to Investigate Allegations of Bribery or Corruption has filed formal indictments before the Colombo High Court against the incumbent Minister of Energy under Section 70 of the Bribery Act (Chapter 26) for the offence of “corruption” in connection with acts of corruption allegedly committed while he was serving as the Procurement Manager of the Lanka Fertilizer Company;
And whereas, in light of the foregoing, the Minister of Energy has irretrievably forfeited the confidence of Parliament and the people of Sri Lanka by causing losses to public finances, endangering national energy security, corruptly mishandling the procurement process, being subjected to active judicial proceedings for the offence of “corruption”, and betraying the Government’s own “anti-corruption mandate”, and his continued tenure as the Minister of Energy is contrary to the public interest, the rule of law, and the principles of good governance;
That this Parliament resolves that it has no confidence in the competence of Kumara Jayakody, Minister of Energy to function as a Minister of the Cabinet of Ministers any longer.”
by Saman Indrajith
News
Chinese Ambassador assures Lanka China will not allow a fuel crisis to develop here
Chinese Ambassador to Sri Lanka Qi Zhenhong yesterday assured that China would not allow a fuel crisis to arise in Sri Lanka, under any circumstances, reaffirming Beijing’s continued support to the country.
The Ambassador made these remarks addressing the media after attending a dry ration distribution programme for 350 low-income families at Sri Chandananda Buddhist College, at Asgiriya, in Kandy.
Highlighting the longstanding ties between the two countries, Ambassador Qi said China has consistently stood by Sri Lanka and remains ready to extend assistance whenever required.
Amid concerns over global energy disruptions, stemming from the ongoing Middle East conflict, he noted that several countries are already facing difficulties, but stressed that China is prepared to support Sri Lanka at any time.
He said that any potential fuel shortage in Sri Lanka could be managed with the involvement of China’s Sinopec.
Reiterating Beijing’s commitment to Sri Lanka’s economic recovery and development, the Envoy also expressed hope that the current ceasefire in the Middle East would hold, while assuring that China stands ready to respond to any future developments and assist Sri Lanka as needed.
By SK Samaranayake
-
Features7 days agoRanjith Siyambalapitiya turns custodian of a rare living collection
-
News7 days agoGlobal ‘Walk for Peace’ to be held in Lanka
-
News5 days agoLankan-origin actress Subashini found dead in India
-
News3 days agoAG: Coal procurement full of irregularities
-
Business2 days agoIsraeli attack on Lebanon triggers local stock market volatility
-
Features7 days agoBeyond the Blue Skies: A Tribute to Captain Elmo Jayawardena
-
Features7 days agoAspects of Ceylon/Sri Lanka Foreign Relations – 1948 to 1976
-
Business3 days agoHayleys Mobility introduces Premium OMODA C9 PHEV
