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Monday, 8 April 2013 00:00 - - {{hitsCtrl.values.hits}}
In the wake of the successful visit of the Chinese business delegation to Sri Lanka, is the newest development that will make an impact on a strategic Sri Lankan export to the world – the country’s mineral sands and rare earth element sector.
“Sri Lanka wants to upgrade its mineral sector, especially our mineral export production so that our exports integrate high value addition rather than exiting as mere raw material. We warmly welcome keen Chinese firms in these industries for joint ventures here,” said Rishad Bathiudeen, Minister of Industry and Commerce.
Bathiudeen was addressing Wu Jianghao, China’s Ambassador in Sri Lanka when he called on the minister at the Ministry of Industry and Commerce premises in Colombo 3. A Chinese trade and business delegation led by Ding Shaoxiang, the Vice Governor of Yunnan Province, visited Sri Lanka only a week earlier, which was the first high level Chinese team to arrive here since the appointment of China’s new Premier Li Keqiang and in less than two weeks’ of Keqiang’s ascension on 15 March.
“There is considerable scope for partnership for Chinese firms in this sector here,” said Bathiudeen, adding: “Lankan produced graphite, crystals, and ilmenite are of international standards. In 2012, China exported $ 2.56 billion worth of goods to Sri Lanka which is highest in trade history. But Sri Lanka’s exports to China were only $ 108 million, about 1% of Sri Lanka’s total exports.
“This shows that there is yet unrealised export potential at our end which we can explore jointly. We now believe that boosting mineral sands and rare earth exports from Sri Lanka, among others, is a good first step in changing our bilateral trade imbalance.”
Sri Lanka’s mineral sands and rare earth exports to China (alone) which stood at a mere $ 4.47 million in 2008 rose by a huge 239% in 2012 (to $ 15.14 million). Mineral sands are amongst the dominating elements within the five types of minerals exported from Sri Lanka to China. In 2012, Sri Lanka’s overall rare earth and mineral exports to the world totalled $ 42.7 million, rising by a strong 30% from 2011’s $ 32.86 million.
65% of 2012’s exports consisted of mineral sands followed by silica and quarts (20%), graphite (10%), mica (3%) and other natural sands (2%). China was the lead buyer of Lankan mineral sands in 2012. The lead buyer of ‘other natural sands’ was India. Zircon is the other well-known rare earth element (REE) found in Sri Lanka, but due to its diamond-like quality, instead of being exported as a metal, is exchanged as a precious stone, fetching premium prices abroad.
A former Sri Lankan economic affairs officer with ESCAP suggested that “the Government of Sri Lanka should obtain the assistance of the Ministry of Land Resources in China to assist in carrying out surveys in target areas for REE. Assistance should also be sought from the Ministry of Industry and Information Technology (MIIT) in China on the application of REE for manufacture of high tech products.”
The Geological Survey and Mines Bureau of Sri Lanka advises prospective investors on matters concerning mineral exploration, establishment of industries and exports in Sri Lanka – including graphite. In addition to being the lead buyer of Sri Lanka’s silica, quarts and mica, Japan was the lead buyer of Lankan graphite in 2012.
Graphite (which is a well-known Sri Lankan export due to Sri Lanka’s unique graphite qualities) is considered ‘the next big thing among future elements.’ Two professors from the University of Manchester were awarded the 2010 Nobel Prize in Physics for their work with graphene, the single layer graphite. Sri Lanka annually produces around 4,000 metric tons of graphite. As the demand for modern technologies (including mobile phones, laptops, consumer electronics-driven by lithium-ion batteries as well as fuel efficient automotives) continue to increase by leaps and bounds, so does the demand for commercial graphite which is a key ingredient in such applications.
The global market for graphite is now projected at $ 7.5 billion by 2015 and $9 billion by 2018 with an estimated annual growth rate of 20% by 2020. According to Global Industry Analysts Inc, China leads the ‘emerging market’ for graphite, acting as the biggest importer.
Meanwhile, graphite suddenly received prominence in the global strategic frontlines due to graphite’s strong resistance to high heat-making it a sought after input in nuclear technology as well as fabrication of missile war heads. Graphite and diamonds are the only two natural polymers of carbon.
Both are very strong, can withstand extreme heat, and resist attack from chemicals and corrosion. Use of high grade and quality graphite in uranium-graphite reactors and rocket expansion nozzles are now very common. In the global graphite supply map, Sri Lanka has a strong reputation as a rare supplier of vein graphite on a commercial scale. Sri Lankan-made vein graphite has high purity levels (ranging from 80-99% carbon). Kahatagaha Graphite Lanka Limited (KGLL), a graphite firm in Sri Lanka, operating under the Industry and Commerce Ministry, mines graphite through several mines that have proven deposit reserves.
In 2005, KGLL was vested as a public enterprise (in keeping with the ‘Mahinda Chintana’ policy to not to privatise any state owned enterprise), revived and strengthened in 2007 and succeeded in producing 4,016 metric tons of graphite. KGLL successfully exported 2,972 metric tons of graphite from 2005/06 to 2011/12. In 2012, the three top buyers of Lankan graphite were Japan, Germany and Pakistan respectively. “China welcomes more export product diversity from Sri Lanka,” said Jianghao, addressing Bathiudeen. “The expansion to mineral sands will certainly help in this direction for quality made Chinese products,” he said and stressed: “China also experienced stages of economic growth in its journey and industrial development played a key role in this regard. We too want a more pragmatic trade relationship with Sri Lanka.”
Bilateral trade between Sri Lanka and China stood at $ 2.676 billion in 2012, increasing by 19.5% from 2011. Exports to China in 2012 stood at $ 108.12 million. China has now become the largest development partner and an important investor in Sri Lanka.
Also present during the session were P.D. Fernando, Director General of Commerce, with top officials of the Department of Commerce.
