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Mineral exploration in Mannar: GSMB cracks down on illegal mining    

01 May 2021

Investigations conducted by the Geological Surveys and Mines Bureau (GSMB) have revealed that the controversial Australian mineral exploration company, Titanium Sands Ltd. (TSL), was engaging in illegal mineral explorations in the country’s northern coastal belt by using licenses issued for eight local companies, The Sunday Morning learnt.  The company was earlier engaged in mineral exploration on a 26-kilometre by 5-kilometre stretch on Mannar Island in the country’s northern coastal belt. The explorations were said to be conducted by Titanium Sands under its Mannar Island Project, which is based on a single dredge, a primary concentrator, and a mineral separation plant.  The company came under huge criticism following the revelations made by local media last year.     Illegal mining   Speaking to The Sunday Morning, GSMB Director (Minerals) Hema Liyanarachchi said the bureau had cancelled eight licenses that it had previously issued to eight local companies, under which the TSL had carried out mining activities in Mannar.  She said the licenses have been cancelled under Section 37 of the Mines and Minerals Act No. 33 of 1992.  It states the Bureau may cancel a licence issued under this Act, if it is found that the licensee has contravened any term or condition attached to said licence; has not carried out any lawful direction given to them by the Bureau; carries on wasteful mining despite prior warning given in writing by the Bureau against such mining; has suspended, curtailed, or ceased to carry on any activity authorised by such licence for a period of over six months without the permission of the Bureau; has surrendered their licence subject to satisfaction of the requirements of this Act; or has been convicted of an offence under this Act or of any regulation made thereunder.  Nevertheless, Section 37 (2) of the Act stated that the cancellation of a licence under this subsection shall not take effect until the time for appealing against the decision of the Bureau under section 39 has expired, or, if an appeal has been made within time, unless and until the appeal has been disallowed.   “If the company is not satisfied with the Bureau’s decision, it can appeal to the Ministry of Environmental and Natural Resources Secretary,” she added.  According to Liyanarachchi, the local companies had not complied with the criteria specified under the Act to apply for a joint venture with a foreign company to engage in mining activities in Sri Lanka.  Foreign companies are not allowed to explore minerals in Sri Lanka alone, but through joining a local component which owned more than 50% of shares in the joint venture, she added.  When asked whether the GSMB is going to take any legal action against TSL, Liyanarachchi said such a decision had not been taken as yet, that the bureau had cancelled the licenses, and further action would be taken by the Ministry if the company appeals for the decision.     Appeal     According to Section 39 of the Act, the applicant or licensee, as the case may be, who is aggrieved by a decision of the Bureau refusing the issue or renewal of a licence under section 35 or section 36; (b) or cancelling their licence under section 37, may appeal against that decision to the Secretary within 14 days of the date on which the decision was communicated to them.  “The Secretary may, on an appeal made to him, in subsection (1) under (a) allow the appeal and direct the Bureau to issue or renew the licence which is the subject of the appeal; (b) disallow the appeal. (3) The Bureau shall comply with any direction issued to it under subsection (2) by the Secretary. (4) Where an application for a licence or the renewal of a licence is refused under any of the preceding provisions of this Act, the Bureau shall refund to the applicant or the licensee, as the case may be, the fee accompanying such application,” it states.   It further states, in subsection (5) that the Secretary shall communicate to the appellant hill decision on any appeal made to him under subsection (1), together with reasons therefore by registered post. (6) Any decision required to be communicated to the appellant shall be deemed to have been communicated to him after the expiry of a period of three days from the date of dispatch of such communication, by registered post, to the usual place of business or residence of such appellant.  According to Section 40 of the Act, any person aggrieved by a decision of the Secretary under subsection (2) of section 39 may therefore go to the Supreme Court. The Supreme Court may, on an appeal made under subsection (I), affirm or reverse the decision against which such appeal has been made.  Mannar Island is an ilmenite feedstock project with minor credits from other mineral components, and the product is expected to find a ready market with titanium slag and sulphate route pigment producers in the Middle East, Korea, India, and China.  As per statistics, the GSMB has already issued licenses for 3,919 companies to engage in mining activities in Sri Lanka.     Suspension   However, according to TSL, the company holds five exploration licences for heavy mineral sands located in North West Sri Lanka on Mannar Island and the adjacent mainland coast.  Last year, following the local media reports alleging that TSL is engaging in illegal mining, the company clarified, claiming that the exploration activities are being carried out on exploration licences in accordance with a work programme submitted to, and consequently authorised by, the GSMB.  TSL’s tenure is owned and operated by local companies that are ultimately wholly-owned subsidiaries of TSL and all activities are properly reported to the GSMB under the requirements of each exploration licence. The company is not mining on Mannar Island and does not have the equipment or regulatory approvals to do so. Activities are currently limited to exploration activities, the company states.  Meanwhile, on 21 April 2021, the Australian Security Exchange (ASX) placed TSL on trading halt at the request of TSL, pending it releasing an announcement.  It stated that unless the ASX decides otherwise, the securities would remain in a trading halt until the earliest commencement of normal trading on Friday, 23 April 2021, or when the announcement was released to the market.  However, on 23 April 2021, the ASX suspended the securities of TSL from quotation immediately under Listing Rule 17.2 at the company’s request, pending the release of an announcement regarding an update on TSL’s Mannar Island Project.  The suspension has been issued by Listings Compliance (Perth) Advisor Daniel Nicholson.   

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