China’s long-term views on Sri Lanka and untangling the corruption mix

Despite BOI approval and licencing from the Geological Survey and Mines Bureau, the Aruwakkalu project faces challenges to commence mining operations due to restrictions with access 

By A Special Correspondent

China has constantly taken a long-term view to its strategic investments, and is even seen willing to endure short-term hits for the promise of future gains. Sri Lanka’s Hambantota Port is a prime example, where a Public-Private Partnership to operate the Port with China Merchant Port Group came into place in December 2017. Colombo’s Port City is another such landmark project that demonstrates China’s willingness to invest heavily for the longer-term. Despite criticisms, these projects have been considered catalytic landmark investments fostering sustainable economic growth that Sri Lanka is looking for.

President Anura Kumara Dissanayake’s recent visit to Beijing highlighted China’s continued commitment to Sri Lanka, with 15 government agreements signed for cooperation in economic development, education, media and culture with a view on China’s Belt and Road Initiative and Sri Lanka’s 2030 digital economy blueprint. This reflects China’s broader investment strategy, where substantial resources are deployed with a patient, long-term perspective even amidst short-term challenges.

Amidst these developments, a wholly-owned business of China’s Triumph Group is poised to commence value added mineral processing operations in Aruwakkalu, Sri Lanka. Along with local partner, Dilmah, the project has received approval from Sri Lanka’s Board of Investment for a landmark investment into Sri Lanka, via Puttalam Ilmenite Ltd. that holds exclusive mineral sands rights issued by the Geological Survey and Mines Bureau (GSMB) in Aruwakkalu. The Triumph Group, with annual revenues of $ 4.8 billion, is a wholly-owned entity of the China National Building Materials Group (CNBM), a Fortune 500 company and the largest building materials business in China with assets of over $ 87 billion and annual revenues of over $ 51 billion.

The minerals sector lends yet another opportunity to bolster investment and industrial growth in Sri Lanka like port and logistics and offshore services that the Port City project is dedicated to. Absence of policy stability and lack of cohesion amongst State institutions present numerous challenges to the sector, whilst political interference and corruption have long slowed down and thwarted investments into this sector. Foreign investment and expertise coupled with a strategic partner with a long-term perspective is crucial for sustainability of projects in the mineral sector.

Despite BOI approval and licencing from the Geological Survey and Mines Bureau, the Aruwakkalu project faces challenges to commence mining operations due to restrictions with access. The Aruwakkalu land is vested with the Sri Lanka Cement Corporation, and their concurrence is essential for the mining licence to be issued. In that backdrop, granting land access had become a bargaining opportunity for politicians and officials in the past. 

A petition is already under consideration at the Supreme Court of Sri Lanka, including reports by Transparency International to the Human Rights Commission, where a former Chairman of the Sri Lanka Cement Corporation under the Ministry of Industries took an unsanctioned decision to afford rights to minerals for 30 years to Asha Minerals, a hitherto unknown company with no expertise in the mineral trade. Allegedly, this was done with direct influence from a politician of the previous regime, who has multiple other cases pending against him now. The Secretary of the Ministry of Industries at the time, along with the Treasury representative on the board of the Sri Lanka Cement Corporation objected to the rogue agreement. The Attorney General has thus declined to represent the Sri Lanka Cement Corporation and filed objections against Asha, and the new Government is expected to rectify these misappropriations.

Now that a new Government has come into power with a clear mandate to eliminate corruption and improve governance, the much spoken about ‘system change’ everyone is expecting is awaited. The public watches how fast such corrupt entanglements would be resolved to ensure the true potential of the mineral sands and other sectors are unleashed for the greater good of the country. Sri Lanka watches with anticipation if the new President alongside the Minister of Industries and the new Chairman of the Sri Lanka Cement Corporation, an ex-banker, can deliver on their promise for a cleaner and prosperous Sri Lanka.