State company seeks exclusive mining rights

State-owned Lanka Mineral Sands asks that northeastern coastline deposits not be allocated to other private institutions, seeks mining rights for 68 grids

A Parliamentary committee has decided to issue the necessary recommendations on matters relating to the granting of mining rights for 68 grids to State-owned Lanka Mineral Sands Ltd., (LMSL). The company has sought exclusive mining rights over mineral sand deposits along the northeastern coastline.

LMSL submitted a request to the Sectoral Oversight Committee on Economic Development and International Relations seeking these exclusive rights, and asked that the deposits not be allocated to other private institutions, the Parliament Secretariat said yesterday.

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 The Committee, chaired by MP Lakmali Hemachandra, also considered the provision of operational support to the company.

The review of mineral mining licences issued in the past, the necessary action to be taken regarding irregular licences, and the transfer of the relevant mineral deposits to LMSL were also discussed. It was noted that steps had been taken to forward information concerning certain irregularities identified in the recent past to the Criminal Investigation Department (CID).

Discussions focused on ensuring a long-term and uninterrupted supply of raw materials for value-added industries by utilising mineral sand deposits along the eastern coastline. In line with the Government’s policy of exporting mineral sands as value-added products rather than merely as raw materials, the Committee also considered implementing value-addition projects by attracting both local and foreign investors.

Attention was also drawn to implementing a multi-agency committee mechanism to ensure transparency and coordination among relevant institutions when issuing mineral mining licences in the future.

The Committee’s deliberations follow the Government’s push to turn Sri Lanka into a mineral processing hub. Addressing the Mineral Sands Technical Conference in June, Industry and Entrepreneurship Development Minister Sunil Handunnetti said the Government’s new National Mineral Policy was aimed at transforming Sri Lanka from a supplier of raw mineral resources into a competitive mineral processing hub (https://www.ft.lk/top-story/Global-experts-map-path-to-unlock-Sri-Lanka-s-mineral-wealth/26-793436).

Industry assessments presented at the Conference indicated the country possesses around 604 million tonnes of mineral sands, although experts noted that the resource potential remains underexplored in the absence of a comprehensive islandwide geophysical survey. Sri Lanka’s mineral export potential is estimated at $ 778 million under the International Trade Centre’s Export Potential Map, while a Pathfinder Foundation report estimated the longer-term opportunity could approach $ 2 billion if downstream processing, value addition, and mineral-based manufacturing are developed.

Speaking at the same forum, Australian High Commissioner Matthew Duckworth cautioned that attracting long-term investment into the sector would require transparent regulation, predictable approval processes, policy consistency, and strong environmental governance.

The private sector has warned that policy ambition alone will not unlock investment. The Chamber of Mineral Exporters (CME), representing exporters and explorers of quartz, graphite, mineral sands, and mica, has described the National Mineral Policy as a welcome first step.

However, it argued that the real test lies in how the Geological Survey and Mines Bureau (GSMB) and the Industry and Entrepreneurship Development Ministry implement it through regulations, licensing reforms, and institutional change.

The Chamber cited previous mineral allocation exercises in which companies with established processing facilities and export operations lost access to deposits to proposals promising sophisticated downstream manufacturing that ultimately failed to materialise. It argued that such experiences have weakened confidence in the credibility of regulatory decision-making.

The CME also raised concern over licensing uncertainty. It said exploration and mining companies have invested millions of dollars, recruited staff, and completed geological work only to find projects effectively frozen while the Government finalises new procedures. It warned that prolonged regulatory pauses risk damaging Sri Lanka’s reputation among international investors, particularly when companies have already committed capital in good faith.

The Chamber argued that the State should focus on creating a stable regulatory environment rather than attempting to direct commercial outcomes. In its view, the Government’s role is to establish clear rules, uphold environmental standards, and provide investment and policy certainty, while allowing businesses to determine where commercially viable value addition can occur (https://www.ft.lk/top-story/Mineral-exporters-urge-GSMB-reforms-to-unlock-investment-potential/26-794883).

The meeting was attended by MPs Lakshman Nipuna Arachchi, Sagarika Athauda, Kanthasamy Prabhu, Thilina Samarakoon, Wijesiri Basnayake, Suranga Rathnayake, and Sivagnanam Sritharan, along with officials from the Industry and Entrepreneurship Development Ministry.