Sri Lanka’s mineral-sands industry presents one of the clearest examples of the country’s failure to transform valuable natural resources into a competitive domestic manufacturing and export industry, despite possessing commercially important deposits of ilmenite, rutile, zircon and other heavy minerals.
The Government’s decision to allocate 58 mineral-sand grids along the eastern coastal belt to Lanka Mineral Sands Limited and establish committees to identify an investor for a value-addition project could mark an important turning point. However, the country’s previous experience in managing mineral-sand resources raises serious questions about whether additional allocations and foreign investment alone can deliver the expected economic transformation.
The financial and operational performance of Lanka Mineral Sands Limited deserves particular scrutiny.
The Auditor General’s 2024 audit report revealed a disturbing deterioration in the company’s sales performance. Its mineral-sand sales declined from 81,137 metric tons in 2021 to 64,380 metric tons in 2022, 32,071 metric tons in 2023 and just 1,490 metric tons in 2024.
Despite holding 187,951 metric tons of mineral-sand stocks at the beginning of 2024, the company produced another 26,744.1 metric tons during that year while selling only 1,490 metric tons.
The resulting storage difficulties forced the company to keep approximately 15,000 metric tons at the Trincomalee Port warehouse from March 2024, incurring monthly storage expenses of Rs.1.5 million. The Auditor General attributed the continuing decline in sales income partly to weaknesses in the company’s sales methodology and highlighted the absence of an effective plan to increase sales.
The latest available 2025 export statistics also demonstrate uneven performance across the mineral-sands category. Ilmenite exports increased by 134.8% to 2,437.27 metric tons, generating Rs.174.44 million, while rutile exports declined by 52.9% to 856.05 metric tons, with export earnings falling by 67.9% to Rs.263.97 million.
These figures underline the importance of improving commercial management, market development and domestic processing capacity rather than measuring performance simply through mineral extraction and export volumes.
Lanka Mineral Sands currently lists annual production capacities of 90,000 metric tons of ilmenite, 9,000 metric tons of rutile, 5,500 metric tons of zircon and 4,000 metric tons of high-titanium ilmenite. These products provide the raw-material foundation for developing titanium dioxide, titanium-related industrial products, zirconium chemicals and specialised ceramic materials.
The critical question is why Sri Lanka should continue exporting valuable mineral concentrates without developing the industrial facilities needed to manufacture more sophisticated products locally.
The proposed eastern coastal mineral-sand investment must therefore be structured around domestic processing, technology transfer and export-oriented manufacturing. Foreign investors should be encouraged to establish processing plants in partnership with capable Sri Lankan businesses, rather than receiving access to deposits primarily to export raw materials.
Equally important is the need to strengthen local industrial participation. Small and medium-scale manufacturers should receive access to development financing, technical assistance, mineral-testing laboratories, industrial land, energy infrastructure and international certification facilities.
The Government must also ensure that mineral extraction complies with strict environmental safeguards, particularly along sensitive eastern coastal ecosystems. Independent monitoring, transparent licensing, public disclosure of production and export contracts, and proper valuation of mineral resources are essential.
Sri Lanka’s mineral-sands industry cannot achieve its full potential through investor selection committees alone. It requires a comprehensive industrial strategy that connects mineral extraction with local manufacturing, technological innovation and international markets.
The ultimate objective must be to export products manufactured in Sri Lanka, not simply the mineral wealth extracted from its soil.