Sri Lanka: $300 Million Corruption Exposed in Puttalam Mining Deal

Transparency International Sri Lanka (TISL) has revealed that alleged corruption in the management of the mineral sands mining project in Puttalam may have resulted in a staggering loss of $300 million USD.

Transparency International Sri Lanka (TISL) has escalated its concerns regarding a proposed mineral sands mining project in Puttalam, filing a formal complaint with the Human Rights Commission of Sri Lanka (HRCSL) on July 19. The complaint requests a thorough investigation into potential corruption, malfeasance, and abuse of power by the Sri Lanka Cement Corporation (SLCC).

Aruwakkalu Lime Stone Quarry Site, Puttalam

The complaint centres on a 30-year agreement between the SLCC and a private company for mineral extraction in the Aruwakkalu area, which TISL alleges was established without proper adherence to procurement guidelines, competitive bidding processes, or necessary approvals from relevant authorities.

According to TISL, the company involved is wholly owned by an individual with minimal share capital and lacks significant technical qualifications and experience in the minerals sector. These details, TISL argues, point to a lack of transparency and potential corruption, which could infringe on the fundamental rights of  Sri Lankan citizens.

Further complicating the issue, TISL claims that Puttalam Ilmenite Ltd. (PIL) had previously conducted systematic exploration in the same area under a license from the Geological Survey and Mines Bureau (GSMB). PIL, having adhered to the 1992 Mines and Minerals Act, was expected to secure the exclusive rights to commercialize the project. This raises questions about the legitimacy of the SLCC’s agreement with the private company and whether it undermines the GSMB’s role as the regulatory authority.

Additionally, the project site was leased to Siam City Cement Lanka (Pvt.) Ltd. for 50 years back in 1993, which could further complicate the legality of the new agreement. PIL also alleges that it had plans to inject significant Foreign Direct Investment (FDI) into Sri Lanka’s minerals processing sector, forecasted to bring in $100 million USD annually and create over 400 jobs while introducing advanced industrial technologies.

The alleged mismanagement of the project has reportedly cost Sri Lanka an estimated $300 million USD in lost foreign currency earnings, alongside royalties and taxes. This situation may also undermine investor confidence in critical approving bodies such as the Board of Investments (BOI) and the GSMB, affecting future foreign investments and project approvals.