Transparency International Sri Lanka (TISL) filed a complaint with the Human Rights Commission of Sri Lanka (HRCSL) on July 19th, requesting an investigation into the alleged corruption, malfeasance and abuse of power by the Sri Lanka Cement Corporation (SLCC) in a proposed mineral sands mining project in Puttalam. The HRCSL has requested a detailed report on the project from the SLCC, in response to the formal complaint filed by TISL.
The SLCC has entered into a 30-year agreement with a private limited company last year, for the extraction of mineral sands in the Aruwakkalu area. In its complaint, TISL refers to the allegations that the said agreement has been entered into without following standard procurement guidelines, competitive bidding, or obtaining necessary approvals from relevant authorities.
It is revealed that the said company, which is fully owned by a single individual, and which has a nominal share capital of Rs. 1,000, lacks technical qualifications and experience in the minerals sector. The lack of transparency regarding this project raises concerns of unequal treatment and corruption risks, and thereby, amounts to a violation of the fundamental rights of the people of Sri Lanka, TISL has mentioned in its complaint.
TISL is reliably informed that a company named Puttalam Ilmenite Ltd. (PIL) had conducted systematic exploration in this location for almost a decade, under a license issued by the Geological Survey and Mines Bureau (GSMB). TISL is also informed that in line with the 1992 Mines and Minerals Act, PIL had legitimate expectations of securing the exclusive right to proceed to commercialization.
Therefore, it appears that SLCC may have undermined the role of the GSMB as the regulatory authority in relation to minerals, given that there is a distinction between land rights and mineral rights. In addition, the controversial project site has already been leased out to Siam City Cement Lanka (Pvt.) Ltd. for 50 years in 1993.
PIL also claims that it was planning to bring in the largest Foreign Direct Investment (FDI) ever into the minerals processing sector in Sri Lanka, with the approval by the Board of Investments (BOI). PIL’s value-added processing would generate foreign currency earnings of $100 Million USD annually via sales to a Fortune 500 group customer, who is also an investor in the project. In addition, PIL claims that this investment would introduce new industrial technologies to Sri Lanka to enable the processing of low-grade inland minerals, whilst adopting international best practice in safety and sustainability. PIL forecasts the creation of up to 400+ jobs, and the development of technical skills in rural Eluwankulam and Puttalam.
Therefore, due to the agreement between the SLCC and the said company, the country has lost an estimated $300 Million USD of desperately needed foreign currency earnings over the past years, in addition to royalties and taxes. There is also the loss opportunity of export diversification. In addition, this context will erode investor confidence in apex project approving entities such as the BOI and GSMB.
TISL stresses that the alleged disregard of procurement guidelines and violation of due process by administrative bodies have far-reaching negative consequences on the country’s natural resources, economy and the people.
Therefore, TISL urges the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) to use its powers and initiate a comprehensive investigation on the matter in the public interest. TISL also calls upon the Government to take steps to uphold transparency and accountability in this critical, mineral sands mining project and act in the best interest of the Sri Lankan people.