Japanese conglomerate enters into deal with Sri Lanka to take over production of several minerals
A leading Japanese conglomerate headed by a billionaire businessman has reportedly finalised a deal with Sri Lankan authorities to soon take over strategic mineral production, especially ilmenite at the Pulmoddai deposit.
A local media report has stated that the deal is aimed at adding value to Sri Lanka mineral exports.
The Business Times report quoting an informed official source has said that Lanka Mineral Sands Ltd (LMSL) will be restructured under a public private partnership with this Japanese company.
Cabinet approval is being sought for this purpose as this state owned entity is currently running at a loss and the Treasury has to share the burden of the monthly salary bills of employees, the report notes.
LMSL has already mined a massive stock of mineral sands over the past 50 years along the beach from Pulmoddai-Kokilai exhausting mineral sands and therefore the company is not making much money at present, a senior official of the Ministry of Industry and Commerce has been quoted as saying.
The market value of a kilogram of Titanium (processed from ilmenite) is in the region of US$1.6 million (Rs.256 million).
An agreement has been reportedly reached by the top level authority of the country to award the Public Private Partnership (PPP) contract to the Japanese company through an unsolicited bid.
This deal was a major outcome of President Maithripala Sirisena’s March 2018 visit to Japan where he wooed proactive investment by Japanese companies into Sri Lanka.
A Presidential envoy who visited Japan several times has negotiated the deal to hand over a fraction of the Pulmodai deposit.
This Japanese conglomerate will be stepping in for value added mineral production such as making Titanium dioxide used to produce Titanium from ilmenite, the valuable metal of the present and future, a source closely connected to the deal said.
The LMSL sells its main mineral products such as Ilmenite, Rutile, Zircon, Hi Ti ilmenite, etc through the international competitive bidding procedure.
According to the report, the Japanese firm has agreed to transform the local company into a profit-making entity.
The present production is now limited to 90,000 tons of ilmenite, 9,000 tons of Rutile and 5,500 tons of Zircon annually.
LMSL currently exports mineral sand to Russia, Japan, US and the UK.
OSL take:
The deal between the Japanese conglomerate and Lanka Mineral Sands would result in the commencement of a lucrative business venture. Sri Lanka also has a large phosphate deposit that could also be utilized in the manufacturing sector. Foreign businesses could explore similar opportunities like the Japanese conglomerate where mutually beneficial joint ventures could be formed between foreign and local ventures.
| Article Code : | VBS/AT/29012019/Z_2 |