By Zahrah Imtiaz
Sri Lanka currently exports 4,000 metric tons of graphite every year, a small amount compared to the 960,000 tons of graphite exported by the world's largest exporter of the mineral – China. However, Sri Lanka takes the lead when it comes to purity. Up to 99% of carbon, it is the only source of lumpy and chippy dust graphite in the world. This high quality graphite is also called plumbago.
At the beginning of 20th century there were 3,000 graphite mines operating in the country, contributing to the First World War effort in Britain and Sri Lanka used to supply 35% of the world's graphite supply at the time. Today there are two major graphite mines: one in Kahatagaha which is owned by the Sri Lankan Government and other in Bogala, where the German company 'Graphit Kropfmuhl' has a 90% stake.
Kahatagaha operates at a depth of 1,100 ft and produces 100 tons per month and Bogala operates at a depth of 2,300 ft and produces 250 tons per month.
On 4 November graphite mining in Sri Lanka came to the forefront with JVP Parliamentary Group Leader, Anura Kumara Dissanayake, making a statement said, "A land area of 207 square kilometres in the areas of Matale, Dambulla and Kandy had been surveyed from 14 October to 4 November. It was called Versatile Time Domain Electro-Magnetic Survey and was done to search for minerals."
The surveys were conducted by the Australian company Bora Bora Resource Limited and their local partners Plumbago Lanka (Pvt.) Ltd., who in turn had contracted the surveys to Geotech Airborne Limited and Senok Aviation.
Dissanayake questioned the government as to how a private investor could obtain a license for such a large area and if the officials were monitoring the activities of this company during their surveys. The more important question however was that of the nominal 5% royalty fee the government charged on any mineral found by the private entity before it was exported out of the country.
Aiming for the largest exporter
In response to such a query, the Minister for Environment, Susil Premjayantha announced that he would be submitting a gazette notification to Parliament soon seeking approval to charge an extra tax on any minerals excavated in the country based on its market value.
In April 2013, Bora Bora Resources acquired a 75% stake in the company Plumbago Mining Pvt. Ltd of Plumbago Lanka, which holds 24 square kilometers of tenements surrounding the Kahatagaha Graphite Mine (KGM).
Plumbago Pvt. Ltd. on their official website claim that they are targeting to excavate an amount of 350 tons of graphite per month with an initial investment of US$ 15.2 million, if successful, they would be the largest exporter of graphite in Sri Lanka.
The September Quarterly Report of Bora Bora Resources reveals that they have been successful in obtaining exploration licenses for 197 square kilometres of land in the areas of Baduraliya, Neluwa and Paragoda (in the Central and Southern parts of Sri Lanka). Furthermore, the report states that Geotec Airborne Ltd. was contracted to conduct Versatile Time Domain Electromagnetic (VTEM) surveys over an area of 1,587 square kilometres in Sri Lanka. The approval for such activities was granted by the Geological Survey and Mines Bureau of the Ministry of Defence and the Urban Development Authority of Sri Lanka.
Ceylon Today contacted the Geological Survey and Mines Bureau, Director General, Anil Peiris, on the issue and he said,
"The Bureau has the authority to issue exploration licences to an approved party and each licence should not exceed 100 square kilometres. However, regulations do not specify the number of licences which can be granted to one party, thus one party can receive several licenses and the total land area covered by that party can be quite large. I must also add that though the area covered can be large, the probability of finding graphite in the area is quite low, so you have to survey vast areas to find a bit of graphite.
"We have only issued exploration licenses to the company Bora Bora Resources and they are still conducting explorations in the area. Once they find anything they will have to reapply for a mining license and that would require an environmental impact assessment and economic viability report. The exploration license also specifies the mineral which they are allowed to explore.
"We are monitoring their activities but I admit we do not have precise knowledge of everything they do.
"Though the company and various parties claim that they will be excavating a large amount of graphite in future, it is not that easy to find it, especially at one location."
Private sector to enter mining sector
According to the Mines and Minerals Act No. 33 of 1992, the government liberalized mining activities in the country allowing private companies to enter the mining sector. Peiris acknowledges that this has both positive and negative implications. As the government lacks the strength and funds to explore potential mining sites, it can get the private sector to explore the area; on the other hand the government may lose a lot in terms of revenue and taxes which could have been made if it had carried out explorations on its own steam.
Peiris added, "The Minister for Environment announced that he will increase the taxes levied on the private mining sector but we also need a balance where the cost of investing in the mining sector will not be too high, thus discouraging private investors in the country.
The government does not know the extent and potential of graphite mining in Sri Lanka because we do not have the resources to conduct explorations. In my personal view, there is no harm in inviting foreign or private companies to invest in mining as long as we can ensure they comply with our regulations and we can exert some form of control over their activities."
When it comes to environmental hazards of conducting large scale graphite mining in the country, Peiris said, "The environmental impacts of graphite mining are minimal as it takes place in underground mines. The major impact would be to those who are employed in the mines, we must ensure that they have proper health and safety standards in place for their employees."
An analysis of the current economy of graphite around the world confirms Dissanayake's claim that the market for graphite (especially that of Plumbago) is going to grow exponentially.
The annual demand of graphite around the world in 2012 was 1.2 million tons and it generated revenue worth US$ 2.5 billion that year. A ton of lump or chippy graphite would fetch on average US$ 1,300-2,200 in the open market. Graphite of lesser quality, like that of China would fetch a much lower price.
Sri Lanka exports raw graphite at a price of Rs 200 per kilogramme, while a finished product such as a carbon nano tube could fetch up to Rs 150,000 per gramme (source: Investing News 2013, online).
Graphite is mainly used in electronic items like smartphones, laptops, televisions, lithium-ion batteries, aerospace and in industrial metallurgy. In addition to this, it is predicted that the renewable energy sector would create a greater demand for high quality graphite. The hybrid car, Nissan Leaf, already uses 40kg of graphite in its battery (source: Wind and Energy Electrical Vehicle Review 2012, online).
Given the current growth of developing economies like China and India, the thirst for the carbon mineral is not expected to lessen.
Revenues earned through graphite mining in future is predicted to be phenomenal, however, the question of whether the Sri Lankan Government alone would be able to garner the resources needed for graphite mining on a larger scale remains to be answered.
Courtesy - http://www.ceylontoday.lk/59-47979-news-detail-graphite-mining-vigorously-pursued.html