Financial Times

PERC mum as Eppawela erupts again
A call for expressions of interest by the Public Enterprises Reform Commission to develop the Eppawela phosphate deposit is being opposed by villagers and environmentalists.

They insist that a full survey of the deposit be done before it is exploited, as ordered by the Supreme Court in its judgement in a previous case where activists challenged government efforts to sell the deposit to a foreign mining firm.

PERC called for expressions of interest by April 25 for the development of the Eppawela phosphate deposit on a public-private partnership basis. Ruana Rajepakse, a civil rights lawyer who appeared as junior counsel in the previous case, said it was important to first establish whether a comprehensive survey of the deposit has been done.

"If so, we would like to see it, as members of the public, and then see what the various projects could be," she said."We must find out the extent of the deposit before starting a project to exploit it." Rajepakse said that if a survey was not done then it could be an infringement of the court judgement.

PERC chairman Nihal Sri Amarasekera was not available for comment despite repeated attempts to contact him. The Supreme Court judgement said the government should desist from entering into any contract relating to the Eppawela phosphate deposit until a comprehensive exploration and survey of the extent of the deposit, proven reserves and quality of apatite and other phosphate minerals in Sri Lanka is made by the Geological Survey and Mines Bureau.

This was to be done in consultation with the National Academy of Sciences and the National Science Foundation, and the results published. The court also ruled that any project proponent obtains the approval of the Central Environmental Authority. Professor P. G. R. Dharmaratne, chairman of the Geological Survey, said they were aware of the court ruling and were trying to see how the survey could be done.

Mineral exploration is high-risk activity and is usually done by mining companies who bear the costs and risks and get first mining rights if they discover commercially exploitable deposits. "If we to do the exploration then the question is who bears the cost as it would cost millions to cover the whole island," said Prof Dharmaratne.

The Eppawela phosphate is considered as one of the richest such deposits in the world. The state-owned Lanka Phosphate Ltd. has exploration rights for the deposit and supplies part of phosphate fertiliser requirement of the island, with the rest being imported.

PERC also invited employees of Lanka Phosphate Ltd or any other interest group to submit proposals for the development and exploitation of the deposit. Ruana Rajepakse said that according to the court ruling the resource should be used in a sustainable manner that would benefit future generations.

The court had criticised the previous project to extract phosphate and exhaust the deposit in 30 years while scientists have said the deposit could be used for much longer if mined gradually. "There's no point in an agreement allowing a company to export phosphate and then to import fertiliser," Rajepakse said.

The previous project by the foreign mining firm was to export phosphate out in its raw state, process it and sell fertiliser back to Sri Lanka at a high price. The high grade nature of the Eppawela deposit attracted interest of foreign mining companies in India, Pakistan and Australia. Lanka Phosphates Ltd had even held talks with a Japanese firm to make triple super phosphate.

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