By: Staff Writer
May 25, Colombo (LNW): Indian state-owned companies are gearing up to enter Sri Lanka’s critical mineral sector following the introduction of a new national policy aimed at encouraging foreign investment and joint ventures.
This policy shift, combined with duty-free benefits under the Indo-Sri Lanka Free Trade Agreement (ISLFTA), has opened doors for Indian firms to access Sri Lanka’s rich mineral deposits using imported machinery without customs duties.
A delegation led by India’s Ministry of Mines, which included top public sector mining firms, recently visited Sri Lanka. They toured key mining locations and met senior Sri Lankan officials, including Industries Minister Sunil Handunnetti.
Discussions were also held with heads of major state-owned enterprises such as Kahatagaha Graphite Lanka Ltd., Lanka Mineral Sands Ltd., and the Geological Survey and Mines Bureau (GSMB), focusing on potential collaborations, advanced mining technologies, and joint value addition initiatives.
This visit followed an earlier meeting in New Delhi between India’s Minister of State for Coal & Mines, Satish Chandra Dubey, and Minister Handunnetti in February 2025. The engagements underscore India’s long-standing interest in Sri Lanka’s mineral-rich regions, particularly its coastal and northern areas.
According to the Board of Investment (BOI), Sri Lanka has approximately 7.5 million metric tons of Ilmenite, Rutile, and Zircon in Pulmudai and Puttalam, along with 45,000 MT of graphite and 60 million MT of apatite. The country also holds unique deposits of high-purity crystalline vein graphite, crucial for lithium-ion battery production, with reserves estimated at 1.3 million tonnes.
In 2023, Sri Lanka exported around 2,500 tonnes of graphite, earning $6 million. However, overall mineral exports dropped to $25 million in 2024—less than half of 2022 figures—highlighting the sector’s underperformance.
The government aims to revitalize it by easing restrictions: mining companies are now permitted to export up to 30% of raw minerals or operate for 24 months before setting up local value addition facilities.
The previous administration led by former President Ranil Wickremesinghe attempted reforms, including policy changes to attract foreign direct investment and address corruption. These included prioritizing landowner rights to mineral exploration and easing value addition regulations.
Despite these efforts, concerns persist. Environmentalists warn that the fast-tracked foreign mining push could lead to ecological harm. Nonetheless, interest remains strong, especially from Indian firms like Ola Electric, Hindalco Industries, and Gujarat Mineral Development Corporation, which are exploring graphite mining opportunities.
With Sri Lanka exporting to key markets like the U.S., U.K., China, India, and Pakistan, the government is now pushing to leverage its mineral wealth to stimulate economic growth and maximize the creation of value-added products. As regulatory frameworks evolve, the country is positioning itself as a regional hub for critical mineral extraction and processing.
