A 15-member Cabinet-approved committee has commenced physical progress interviews with mineral exploration licence holders across the country, marking the start of a sweeping overhaul of Sri Lanka’s decades-old mineral licensing system.
The review, launched by the Geological Survey and Mines Bureau (GSMB), aims to dismantle what officials describe as a speculative licensing regime and replace it with a transparent, competitive procurement process built around a strict value-addition national policy. The physical interviews ran daily from 8.30 a.m. to 5.30 p.m. last week, GSMB Director General Kithsiri Bandara said.
Speaking to The Sunday Morning, Bandara said that the country’s mineral licensing framework had been heavily exploited for financial speculation rather than genuine industrial development since 1999.
Over the past 27 years, the GSMB has issued 470 exploration licences islandwide covering deposits of sand, graphite, phosphate, quartz, and vein quartz. Of these, Bandara revealed, only eight had ever transitioned into active mining operations – six of them State-owned entities, leaving just two private sector operators that have brought an exploration project to fruition.
“The remaining 462 licences have been used for something entirely different, something we cannot see openly,” Bandara said.
He explained that speculative entities frequently registered dummy companies to secure five-year exploration licences. As a licence neared expiration, instead of investing in mining, holders would let it lapse, only for a front or shell company to reapply for the same plot.
“They put these prospects on the stock market, use them for business promotions, and inflate their share values to make money off promotions. They have treated exploration licences like a marketplace commodity,” Bandara said. “For 27–30 years, there has been no actual mining, processing, or export revenue generated for the country from these licences. If they were genuine, mining should have commenced years ago.”
For decades, Sri Lanka’s mineral licences were distributed on a first-come, first-served basis – a system the Director General criticised as unfair and exclusionary.
“Under the first-come, first-served rule, it wasn’t fair or transparent. The only people who could secure these valuable assets were those who personally knew a high post-holder. If you had no connections, you simply couldn’t enter the industry,” he said.
To address this, the GSMB is restructuring how mineral resources are allocated. Under the planned reform, the GSMB itself will take over primary exploration, mapping deposits, drilling to estimate depth and areal extension, analysing mineral purity and quality, and building economic models on each mine’s potential lifespan and commercial viability. Mapped deposits will then be published in the Government gazette to declare them protected mineral zones, preventing unauthorised land use, before being opened to a transparent public procurement process.
“We will go through a competitive procurement process to select the most suitable, capable, and responsible party to execute the mining and processing,” Bandara said. “Anyone can apply, and we will select the most responsive and qualified bidder. You won’t need to know me, the Minister, or anyone else.”
The 15-member committee is currently sorting all 470 exploration licences into four categories to determine their fate: inactive applicants who have made zero progress; licensees in early exploration stages; companies in advanced stages conducting Environmental Impact Assessments (EIAs) and securing community agreements; and companies that have met all compliance requirements and are positioned to begin processing and value addition. “We can easily deal with them and cancel these licences,” Bandara said of the inactive category.
Over the next one to three weeks, the committee will assess whether licensees violated their licence terms or standard norms, based on findings from last week’s hearings. Its recommendations will then be forwarded to the Cabinet of Ministers for endorsement.
“We cannot make overnight decisions. We must evaluate them systematically, support those who are genuine, and phase out those who have done nothing,” the Director General said.
The revival of mineral exploration licences began in parallel with the Government’s official launch of the updated National Mineral Policy in 2026. Overseen by the Ministry of Industry and Entrepreneurship Development, the new policy came into effect on 1 June, replacing the 27-year-old framework introduced in 1999. The policy prohibits the export of raw minerals without prior local value addition and brings rare earth minerals under a single framework covering the entire mineral lifecycle, from exploration and extraction to processing and export.