Financial Times

Row over Eppawela phosphate
The Public Enterprises Reform Commission (PERC), has stirred a hornet's nest by reviving plans to mine the Eppawela phosphate deposit, described as one of the richest such deposits in the world.

Its announcement calling for expressions of interest (EOI) to exploit the deposit has predictably met with a storm of protest by opposition parties and the public alike. The PERC ad has revived memories of the insidious attempt to sell the rights to mine the deposit on a previous occasion. Fortunately, well-publicised and long-drawn-out protests by villagers living near the deposit, environmentalists and public-minded citizens, and a subsequent legal challenge, led to that attempt being shot down by no less an institution than the Supreme Court.

According to the Supreme Court ruling, a full survey of the Eppawela deposit was required before proceeding with plans to exploit it. The government's Geological Survey and Mines Bureau is well aware of the Supreme Court mandate but has not done such a survey apparently because of lack of funds and red tape. Such mineral surveys are high-risk ventures that are usually undertaken by mining companies who acquire exploration rights for a fee, bear the risk, and cost, of finding nothing, and are given first choice of mining if they do come across commercially exploitable deposits.

The state-owned Lanka Phosphate Ltd has exploration rights for the Eppawela deposit and supplies part of phosphate fertiliser requirement of the country, the rest being imported. The government has said it wants to exploit the Eppawela deposit to develop the capability of manufacturing phosphate fertiliser for domestic and export markets. The problem is that such sentiments have been voiced for years by successive governments and nothing has come of it. In this context it is not unnatural for the public to fear that this latest attempt by PERC is a hidden form of privatisation that would enable foreign mining firms to exploit our mineral wealth with no long-term benefit to the country.

On the face of it, PERC's ad calling for EOIs seems reasonable given that it specifically mentions that it would be done on the basis of public-private partnership. It is also significant that PERC has even invited proposals from employees of Lanka Phosphate Ltd or other interest groups to develop and exploit the deposit.

This is in keeping with this government's policy of not privatising what it calls strategic enterprises and also revamping state organisations through joint ventures between the government and private sector. It makes good sense that the country exploits its mineral wealth, especially where it can make substitutes for imports, and not let such wealth lie dormant for years or decades.

However, it seems as if PERC is going ahead with plans to exploit the Eppawela phosphate deposit without a comprehensive survey of its extent being done as required by court. This raises the question whether PERC is ignoring the Supreme Court mandate, either deliberately or accidentally. Environmental activists and villagers have already voiced their opposition to PERC's move. It is a pity that senior officials of PERC, which boasts of its commitment to transparency, were either not willing to discuss the Eppawela phosphate issue or simply did not make themselves available to the media.

The fate of Nauru, a tiny Pacific island state just south of the equator, comes to mind when discussing the exploitation of the Eppawela deposit. For some time, when the going was good and mining was raking in the dollars, Nauru's phosphate made the country's per capita income the highest in the world, after Saudi Arabia. However, phosphate mining is said to have virtually destroyed the country's ecology, turning its tropical vegetation into a barren, rocky wasteland.

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