A national mineral policy is currently being developed with multiple agencies to strengthen Sri Lanka’s mineral economy.
Recently, the Board of Investment (BOI) announced that 14 foreign investors had expressed interest in mineral exploration, for which investors were awaiting the policy framework. These proposed investments are valued at around $ 1 billion, and the majority is focused on mineral sand exploration and processing.
Industry stakeholders have highlighted the need for the policy framework to coherently address procedural delays along with strong governance mechanisms.
Policy formulation in progress
Geological Survey and Mines Bureau (GSMB) Chairman J.M.S.N. Jayasinghe explained that matters involving the policy framework for the mineral industry would be concluded in a few weeks’ time, after which it would be submitted to the Cabinet. He noted that areas of focus and content were still under discussion and in the draft stage, and yet to be finalised.
He also noted that currently, exploration licences had not been issued, since the process of formulating a new procedure for exploration with fresh guidelines was underway simultaneously with the formulation of policy.
Due to the industrial implications of the mineral sector, the policy framework-related work is currently being attended to by the Ministry of Industry and Entrepreneurship Development.
Speaking to The Sunday Morning Business, Deputy Minister of Environment Anton Jayakody explained the core policy requirements. On mineral exploration, he noted the need to effectively assess how economically valuable minerals should be directed towards industries and how value addition should be carried out to integrate with Sri Lanka’s overall economy when formulating policy.
Adhering to global standards
Speaking to The Sunday Morning Business, Chamber of Mineral Exporters (CME) Secretary Dr. Sandun Dalpatadu highlighted that Sri Lanka needed a clear policy framework for its mineral resources sector.
“From what we hear, the policy is now at its final stages. The goal should be to use our mineral resources efficiently to boost GDP significantly over the next 10–35 years. At the same time, the country should avoid overly protectionist resource nationalism that could deter foreign investment,” he added.
Dr. Dalpatadu noted that a key part of this policy framework should emphasise strong governance mechanisms, which would help ensure that decision-makers were transparent and accountable to the public. For this, Sri Lanka can look to established global standards like the Extractive Industries Transparency Initiative (EITI).
“We could explore adopting these principles by adjusting them to the Sri Lankan context. Rather than starting from scratch, the policy should learn from successful international models. Policymakers must also understand that mineral resource development needs significant investments over many years. Therefore, the framework should stress long-term sustainability and stability to ensure lasting economic benefits,” he added.
On mining licence duration concerns, he explained that mineral resource development, especially mineral sands, which includes exploration, mining, beneficiation, and downstream processing, involved long-term projects that could last for several decades.
With investors committing millions of dollars to such projects, Dr. Dalpatadu stated that issuing mining licences for short periods posed too much risk. He added that regulators’ promises of renewal for compliant holders did not ease investor concerns about possible delays or uncertainties. Hence, ideally, the regulatory body should have technical expertise, experienced professionals, and strong enforcement tools to manage licence conditions effectively.
Dr. Dalpatadu noted that this would allow for longer durations of 15-20 years, while highlighting that a portion of Government mineral royalties should support the regulatory abilities of the State sector. He added that this would help create a skilled team familiar with global best practices, suited to Sri Lanka’s context and linked to the Government’s digitisation efforts to speed up services and reduce red tape.
Moreover, in order to increase funds flowing into the sector, Dr. Dalpatadu highlighted the need for the Government to focus on building capacity by providing decision-makers in the public sector with thorough training on the global minerals industry and economic connections.
Addressing licensing period concerns
Meanwhile, Bogala Graphite Lanka PLC CEO Amila Jayasinghe noted that a crucial step was to address licensing duration concerns, and possibly match the licensing period with India and other regional peers.
Under the current act for mining minerals (Mines and Minerals Act No.33 of 1992 amended as the Mines and Minerals (Amendment) Act No.66 of 2009) and its regulations, the GSMB issues licences for exploration, mining for minerals, transport, process, store, trade-in, and export.
Even for an exploration licence, Jayasinghe noted that it was required to visit 17 places to obtain a licence, which also needed fixing and streamlining. He added that it was not possible to expect foreign investors to inconveniently visit several places to obtain approval.
“Furthermore, the ownership regulations must also be addressed. While this has been done to a certain extent, this must come through clearly, especially regarding whether Sri Lanka is going to allow 100% foreign ownership or not,” he added.
In Sri Lanka, under the existing National Mineral Policy, the export of minerals may be allowed after value addition. However, depending on the mineral to be exported, the GSMB, at its discretion, will decide on the need to enter into an appropriate Mineral Investment Agreement (MIA).
In addition to licensing process-related concerns, Jayasinghe also raised royalty rate concerns, pointing out that Sri Lanka had one of the highest royalty rates in the world. In Sri Lanka, royalty should be paid by the mining licence holder in respect of all minerals mined and processed.
Jayasinghe noted that Sri Lanka only allowed five minerals to be exported and the associated royalty charges were among the highest in the world. The royalty fees are thus calculated based on the invoice values, and royalty should be paid for any value addition done within the country.
“This is not very conducive for value addition in Sri Lanka, and it would likely lead investors to export the minerals and set up processing plants in a different country with better conditions. Royalty should only be paid for material cost, ideally. These concerns need to be addressed,” he added.
Further, according to Jayasinghe, while these policy matters require prompt attention, effective implementation is equally important. He noted that implementation should be undertaken in a manner wherein local parties could not interfere with the process unnecessarily, resulting in investors leaving the country. He stressed that first establishing strong policy and then ensuring proper adherence were both essential moving forward.
Need for a unified, practical approach
Speaking to The Sunday Morning Business, Alchemy Heavy Metals Director/CEO Fahim Naufel noted that Sri Lanka had significant mineral resources with strong potential for both domestic value addition and export.
However, he said that the existing mineral policy framework was constrained by excessive bureaucratic procedures and the absence of a single authority capable of evaluating and implementing investment proposals effectively. This fragmentation has prevented large-scale mineral projects from reaching execution, despite repeated investor interest.
Explaining challenges in the current framework, Naufel highlighted that mineral projects in Sri Lanka typically fell under the purview of multiple ministries, departments, and Government institutions. The lack of coordination among these entities results in overlapping jurisdictions, administrative delays, and the absence of clear accountability.
“Over the years, various investors have attempted to initiate mineral-based projects but have been deterred by these structural inefficiencies. The result is a stagnation in the sector’s growth, with limited progress in achieving downstream value addition or large-scale industrial development,” he added.
According to Naufel, the leading requirement is the creation of a single-window authority empowered to evaluate, coordinate, and expedite all mineral investment proposals. This authority should have the legal mandate to intervene and resolve bottlenecks across ministries and departments.
He noted that it should facilitate decision-making and provide a unified platform for investors to engage with Government stakeholders. Additionally, he noted that it must be equipped with technical, environmental, and legal expertise to ensure practical, timely solutions to challenges that arise during project implementation.
Given Sri Lanka’s compact geography and population distribution, Naufel said that project-related challenges such as land access or environmental impact were inevitable. Hence, it is essential to have a dynamic, solution-oriented institution to balance development and sustainability.
On reviewing land and mining rights, he emphasised that there was an urgent need to clarify and modernise the framework governing land and mining rights. This is especially crucial because ambiguities in ownership, leasing, and usage rights often lead to legal disputes and delays in project execution. Thus, he highlighted that clear guidelines, supported by legislation, were essential to safeguard both State interests and investor confidence.
Naufel also addressed how Sri Lanka could learn from regional success stories, noting: “Sri Lanka can benefit immensely by studying the policy frameworks of successful mining nations in the region. Countries such as India, Australia, Indonesia, and Malaysia have implemented effective regulatory and governance models that ensure both investor security and environmental responsibility. Adapting such best practices to Sri Lanka’s scale and context would enable a more practical and balanced approach.”
Furthermore, he observed that the cost of power and energy remained a major obstacle to developing value-added mineral industries, adding that if Sri Lanka aimed to process and refine minerals locally, energy affordability and reliability must be prioritised.
For meaningful value addition within the country, Naufel said that supporting industries such as chemical supply chains, waste management systems, and logistics needed to be strengthened. Since processing and transformation of minerals require access to specialised chemicals and efficient waste treatment facilities, he noted that sustainable development must go together with proper environmental safeguards and waste disposal mechanisms.
Moreover, mining licence duration has also been raised as one of the key concerns of the industry. Short-term mining licences are a key deterrent for investors, particularly in mineral sands and similar long-cycle projects. Given that exploration, feasibility, and production cycles can span over a decade, Naufel added that licence tenures of at least 15-20 years were essential to ensure project viability and attract large-scale investments.
Further, he highlighted that a dedicated Government body must take full responsibility for managing and developing the country’s mineral resources.
He explained that the private sector had repeatedly demonstrated its willingness to collaborate closely with State agencies, provided that those agencies showed dynamism, accountability, and a practical approach to problem-solving. He added that such a partnership model would be crucial to overcoming operational challenges and building a strong and a globally competitive mineral sector.