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Minister of Industry and Commerce Rishad Bathiudeen (far right) discusses with officials of LMSL under him led by Chairman & MD Dr. Mahinda Moragolle (second from right) on 9 July at EDB
Export prospects for Sri Lanka’s industrial mineral of ‘remarkable durability’ suddenly brightened for the first time when a ministerial order was issued towards immediate value addition work – and Sri Lanka’s mineral sands monopoly LMSL is shining with a huge sales windfall, as revealed on 9 July in Colombo.
“Due to corruption and politicisation, many government-owned businesses are incurring losses. I am pleased that LMSL is not in this category,” stressed Minister of Industry and Commerce of Sri Lanka Rishad Bathiudeen.
Minister Bathiudeen was addressing the management and technical team of Lanka Mineral Sands Ltd. (LMSL) operating under his Ministry on 9 July at EDB. Joining the session was LMSL Chairman and MD Dr. Mahinda Moragolle. The LMSL team was briefing Minister Bathiudeen on the latest mineral sand trends and new technological additions needed to go for higher value addition for Non-Magnetic Heavy Mineral Concentrates (NMHMC) produced by LMSL.
The NMHMC (current market price at $ 164 per MT) produced by LMSL consists of major mineral sand products used globally – zircon, rutile and high-titanium ilmenite, each of which are extracted separately from NMHMC by LMSL. The only mineral sand producer monopoly in Sri Lanka, LMSL delivers both types of major mineral sand products in the world – ‘titanium dioxide minerals’ and ‘zircon’. Sands mined by LMSL have 80% titanium dioxide content, making it one of the few producers in the world that creates high quality mineral sands.
Remarkable durability
The industrial mineral zircon is considered to be a material of ‘remarkable durability.’ As for Lankan zircon, though many other global zircon mineral producers’ zirconiam dioxide (ZrO2 – the element sought in zircon mineral by buyers) levels are around 50-55%, Sri Lankan zircon mineral produced by LMSL is considered to be in the 65% ZrO2 range. This, in combination with Sri Lankan zircon’s very low moisture (at 0.2-0.5% maximum) makes it a premium zircon mineral for high thermal applications such as advanced ceramics and nuclear power plants sought globally.
At LMSL’s ‘freshly extracted’ stage (but prior to any ‘further processing’ stages) one MT of LMSL made Zircon fetches $ 850 from the global market. If it is further processed to ‘Zircon flour’ stages and zircon flour extracted, the same one MT of Zircon forex revenue climbs to $ 1,600 per MT, thereby immediately doubling Zircon export revenues. Currently however, LMSL does not have the ‘Zircon flour’ processing technological capacity with it. The 9 July LMSL’s meeting with Minister Bathiudeen is to secure his nod for Zircon and other value additions.
“Zircon is considered to be a ‘valuable’ mineral sand, with ‘low magnetic susceptibility and electrical conductivity. One third of present Zircon production is used in ceramics,” said Moragolle, addressing Minister Bathiudeen, and added: “Almost all the annual 2000Mt produced in Sri Lanka are processed by LMSL and exported. We are also pleased to report you of strongly increased revenues in 2014 at Rs. 1,220 million!”
LMSL reported $ 5 million (Rs. 679 million) sales revenue in 2013 and saw it surging by a huge 80% to $ 9 million (Rs. 1,220 million) in 2014. Its net profit in 2014 reported at $ 2.4 million.
Chairman Moragolle added: “Chemicals, foundries and refractories are other key uses of Zircon. We need your directions to start evaluating zircon flour production which can double our export earnings and we look for your directions.”
Corruption and politicisation
“Due to corruption and politicisation, many government-owned business undertakings are incurring losses and burdening the taxpayers. I am pleased that LMSL is not in this category since I have been given to understand that LMSL is a profit earning venture,” said Minister Bathiudeen addressing the LMSL team, and added: “Before we embark on investing in such ventures it is important to see whether such loans and interests that burden the taxpayer would occur. And there are times when, for the sake of technological development of the industry and the country, such loans could be useful.
“If LMSL cannot invest on its own, a Private Public Partnership for a venture of this nature can therefore bring benefits. We need to explore these options. I believe that we should not waste any more time and LMSL should promptly advance towards higher grade Zircon Flour production and other extract value additions so that we can double our mineral revenues. LMSL team should immediately study and find ways to upgrade to zircon flour production and if feasible, I shall help to add this technology immediately.”
Global Zircon use is forecast to grow 5% annually till 2019 but the global zircon supplies have been falling. According to Australian mining giant Iluka (called as the ‘world’s Zircon Miner’ and a major producer) which mines 27% of global zircons, its supplies are shrinking – 1.6 million MT produced in 2011 which fell to 1.3 million MT in 2012 and by 2013, declined to 1.06 million MT. Meanwhile, world zircon demand is forecast to grow by 3.7% per year between 2014 and 2019 and currently stabilising global market prices are expected to pick up by 2015/’16. Due to growing demand in China, Zircon suppliers find a surging market for their exports.
Minister Bathiudeen and LMSL team also explored other ways of enhancing mineral sand export earnings on 9 July.
