• Key challenges: licensing procedure, land access, workforce training/safety
• Industries' Min.’ Minerals & Related Industries Sectoral Advisory Comm. Chair & Chamber of Mineral Exporters’ Secy., Dr. Sandun Dalpatadu notes legal, policy, procedural, practical obstacles to industry growth 

Sri Lanka’s mineral industry has the potential to generate more foreign revenue and to improve its recognition as a minerals exporter. However, the industry is still recovering from the impacts of the economic downturn experienced during the past few years. In addition, there are legal, policy, procedural, and practical obstacles that need to be addressed without delay in order for the industry’s growth.

Noting this at an interview with The Daily Morning, Ministry of Industries’ Minerals and Related Industries Sector Advisory Committee Chairperson and the Chamber of Mineral Exporters’ Secretary Dr. Sandun Dalpatadu explained that providing solutions to the above-mentioned issues will help the industry to attract investors, provide quality raw materials, streamline and expand ongoing operations, and have skilled and professional workers. While certain steps are underway to look into these concerns, he emphasised that Sri Lanka needs to pay more attention to the growth of the industry.

Below are excerpts from the interview:

What are the key challenges faced by the mineral industry?

One of the key challenges we face as an industry is the extended licensing procedure. Mining is a highly regulated industry, and it should be because we are dealing with the environment, various socio-economic conditions, and locals in various areas. However, the process of obtaining licences including environmental clearances takes a long time because various Government institutions are involved in this process. This applies both when an investor wants to invest in a new project and when an existing company wants to expand its projects. The duration may range from around six months to two or more years or it could be even longer. It depends on the scale of the project, and other factors such as the social, economic, and environmental conditions in the relevant areas. 

If an investor or a company could start a project by dealing with just one or two institutions and if the Government could handle the rest of this process, that would be effective. Obviously, this has to be a time-bound process. A foreign investor would not wait for a long period of time for a licence. 

Another concern is the necessity of dedicated and accredited testing laboratories for the mineral industry, regarding which the Government has paid some attention. There are routine tests that need to be done when it comes to exporting various minerals. That is because we are at the beginning of the value chain and there are more stages and phases involved such as refinement. In such stages, we need to conduct tests in order to give the customer certain assurances regarding the quality of our material. certification. The Chamber of Mineral Exporters has given a proposal to the Ministry of Industries, and attention has been paid to the matter with a focus on the existing infrastructure. We don’t necessarily need to invest in getting new laboratory equipment. But, attention needs to be paid to find out whether we could expedite testing with the existing infrastructure. It has to be an accredited lab, because it has to be accepted internationally. 

Another issue is difficulties relating to land access. A private party or one or more parties within the State may own the land in which the minerals are found. When it comes to the licensing duration, one reason for delays is obtaining land access from the land owner. The Government could step in and look at how it could assist us. There should be a single body to handle it rather than getting the project proponent to go to various institutions. If it is a private land, you can talk to the landowner and have an agreement. But, if it is State-owned land, it is somewhat of a tricky situation, because sometimes there could be confusion about which institution truly owns a State owned land. These are a few key challenges that we face mainly due to the said bureaucratic process. If it can be expedited, there could be more players entering the industry as well.

What are the key challenges concerning workers, especially their safety?

Mining is a specialised industry. When you go underground, obviously there is a way you have to work. At present, we are discussing in the Chamber and also with the education sector as to how to have specialised training for workers. Larger companies can hire and train them in-house, but if you look at the smaller operations, they may not have the resources to do that. Therefore, in that sense, we feel that vocational training institutes should look at training the workers, particularly on mining operations, because mining involves a considerable amount of labour. This is a concern because we do not have large-scale mines to have massive automated operations. 

We have to ensure that the workforce is properly trained to handle the hazardous conditions involving the industry. However, workers’ attitude towards safety is a challenge, and we need to educate them properly. We have a good workforce. But sometimes, they are focused more on getting the product out, and sometimes, they don’t like to adhere to safety precautions such as wearing a helmet which could save their lives in certain instances. Again, it is a matter of proper education and training. One thing that we see in the world is sustainable mining and ethical mining practices. Once these practices become more mainstream than they are now, obviously workers will also have to adhere to these. Having the right safety training and skills is important. To do that, we have to have a formal, regularised training process. We are currently discussing this matter.

How did the economic crisis affect the mineral industry?

Just like any other manufacturing industry, the economic crisis affected us too. Mining involves a lot of investments into steel, cement, timber, fuel, and workers, and therefore, the impact was considerable. Power cuts also affected us, compelling us to rely on generators for operations. When the economic crisis hit us, we were coming out of the impacts of the Covid-19 pandemic as well. However, during the pandemic era, the Geological Survey and Mines Bureau (GSMB) was quite supportive to mineral exporters because we had to adapt to the situation. We had to use WhatsApp to get some of our export licences in order to continue the operations smoothly, and the exporters had the support of the GSMB to continue exports with minimal delays. Mostly of the delays were with curfews and other similar restrictions. But overall, I am very happy with the way that things turned out. 

Larger exporters like us, being foreign income earners, were allowed the option to procure fuel using foreign currency. That helped a lot and the process continued. However, our cost of production went up. The rupee devalued. Despite the cost going up, we were able to somehow manage this process. But now, right after the economic crisis, we are facing issues due to the strengthening of the Rupee. Earlier, the United States Dollar (US $) was converted to around Rs. 365-370, whereas now, it is around Rs. 300. But the cost of production has not come down to the pre-crisis level. That is a major issue that we are facing. 

At the same time, we are all part of a supply chain. Our customers rely on us to provide raw materials for their products. Now, when an economic crisis such as this breaks out, naturally, customers become concerned as to whether we can maintain the supply. Luckily, most of the companies somehow managed to maintain the supply. The impacts of the economic crisis on our industry’s reputation were more damaging than the currency issue and the cost of production related issues. We had to assure our customers that they didn’t have to worry about these issues, and that we will supply the materials on time. We never slashed the workers’ salaries. We ensured that they were paid on time. Later, we had to increase their salaries, and this also contributed to the increased cost of production. 

Interest rates are another concern. Interest rates went up. It has come down but not to the expected level. Therefore, we expect the Government to do something about it. For us to get out of this crisis, we need to improve our manufacturing sector, exports, and industries such as tourism. I don’t think that it is going to be easy for us without taking such measures. The Government should look at helping the exporters, not only us, but even other exporters.

What sort of policy or legal reforms are necessary for this industry to grow?

There is potential for the industry to grow, provided that we have the right policies in place. The policy has now improved. I have seen the new policy and there are discussions in that regard. I think that for the first time in my experience, the industry was called to comment on and actively contribute towards the mineral policy which we think is a good thing because at the end of the day, policymakers listening to the industry is something that is important if the industry needs to progress. Otherwise, if you work in silos, things don’t move forward. We are hoping that the Government would share this policy with us as well before it is approved. 

At the same time, something that we need to look at is the application of our policies and laws. We have a Mines and Minerals Act (No. 33 of 1992). But, if we look at mineral projects, they are of various scales ranging from half or one acre to hundreds of square kilometres. I am particularly referring to heavy mineral sand projects and similar projects. When it comes to large scale projects, the investor cannot purchase the entire land and apply for a mining licence for the entire area. That is not practical. Any investment into a mining project will be in tens of millions of $s or hundreds of millions of $s in certain cases. The investor is looking at around 20 or 30 years of operations. So, if we want to attract such investments, either internationally or locally, we have to have the right policies in place to address the concerns that they have. 

Access to land is another policy-related issue. How do you ensure that an investor will have access to an area beyond which they intend to mine in 10 years’ time? If you don’t give that assurance to the investor, would they want to come and invest here? That is something we have to look at. There are some provisions in the regulation in this regard. But, it needs to be strengthened to ensure that it is more investor friendly. 

In addition, in our existing mineral export operations, having a single window for the clearance process is a concern. We have to deal with two or three entities when exporting minerals. We pay a 9% royalty for international sales and a 7% royalty for local sales, which means that we pay an extra 2% for exports. In such a context, we propose that we be given at least a process where exporters have a separate counter for export licence issuance and related services. That would make things much more efficient, and having efficient processes like these are the things that can attract more people into this industry. You have to as much as possible remove the barriers to enter into the industry. The more players that join the industry, the better it is for the industry, because we can produce more volume and we get noticed. To do that, we need to have investor friendly policies in place. Moreover, we can look at digitising some of these approval processes. It can be easily done without much investment.

Does Sri Lanka have minerals that are yet to receive adequate attention?

I feel that minerals that can be found locally receive enough attention. However, it depends on the resource related quantities. The larger the resource and the better the quality, the more attention it gets. It is not a bad thing. For example, Sri Lankan graphite gets more attention because of the purity of our graphite. Overall, I do not see any mineral that is being left out at present except those that have not been found in commercial quantities.

Do you think that Sri Lanka conducts adequate mineral-related studies? What do you think about mineral related education and discourses?

Earlier, there were problematic situations because researchers were not adequately engaging with the industry. These research projects were all focused on the available literature and tried to look at what has been done overseas and tried to mimic that in Sri Lanka. Various limitations that we have in Sri Lanka were not taken into consideration those days. At the laboratory level, you may be able to produce high-end products. But, when you scale it up to the commercial scale, it may not be viable because of the other limitations that we have here. What happened is that the industry blamed the academia because the academia would say that we are merely exporting raw materials and would ask why we don’t manufacture final products, without even speaking to the industry. But, that situation is slowly changing now. 

The Colombo University is doing a project where they engage with the industry, so student research projects are based not only on academic advisors but also on the advice that they receive from the industry. In fact, if they can solve some of the limitations that we are facing in our current operations, that will directly contribute to our output. So, that engagement is now slowly taking place. The Sri Jayewardenepura University is also involved in research with the industry, focusing on graphite. Mining engineers are coming out, and they get industry placements as well now. 

In fact, there is another opportunity for us here. We are focused on sending doctors, marketers, nurses, and various professionals overseas. Why don’t we think about sending mining engineers or miners overseas as skilled workers? For example, Australia has a huge mining industry, and it is a booming industry there. I personally know some of our former employees, who are mining engineers, who have gone to Australia and joined mining companies. There are some who have gone to Saudi Arabia and joined mining companies. Training workers for the mining industry did not have much attention those days, however, it is changing now. Also, this trend of academia working with the industry to this level did not exist earlier as everyone used to work in silos. It is now improving as well.