By Oliver A. Ileperuma  –

Prof. Oliver A. Ileperuma

During the last presidential election, former President and the UPFA had been continuously asking for a mandate for the third time in order to continue with the developmental projects that they started. It is important to understand what is meant by this term “development”. Is it the beautification of the Colombo city or the construction of super highways on borrowed money? Or else, is it the construction of a mega tower which is the tallest in Asia? At this juncture, it is pertinent to examine the true meaning of development. Wikipedia defines economic development as “the sustained, concerted actions of policy makers and communities that promote the standard of living and economic health of a specific area. Economic development can also be referred to as the quantitative and qualitative changes in the economy. Such actions can involve multiple areas including development of human capital, critical infrastructure, regional competitiveness, social inclusion, health, safety, literacy, and other initiatives”. Economic development differs from economic growth and as Amartya Sen points out, “economic growth is one aspect of the process of economic development”. In particular, economic development should focus on the expansion of people’s entitlements and their corresponding capabilities, morbidity, nourishment, literacy, education, and other socio-economic indicators.

Malyasia developed as an economic tiger owing to the far sighted vision of its leaders, particularly Dr. Mahathir Mohamed. He was a leader who truly cared for the upliftment of the quality of life of the people of Malaysia and did not go for personal monetary gains for him and his family kith and kin in his agenda. A separate Japanese medium of instruction in schools was also started. He started by inviting the Japanese manufacturing giants to start assembling factories in Malaysia. The result is, Japanese brand names such as Sony, Panasonic, Fujitsu and Sharp have massive factories in Malaysia to manufacture their products for distribution to the entire south-east Asian region and the world. Highways were also built to accompany increased industrial activities.

In Sri Lanka we have not started a single major factory with a reputed manufacturer for several decades. It is an open secret that our politicians demand exorbitant commissions from prospective investors who come here to invest. The investors in turn leave in disgust and start their ventures in business friendly countries like Vietnam, Malaysia, Thailand and Cambodia. Such corruption at the highest levels in the previous governments resulted in a number of lost opportunities for Sri Lanka. It is essential for the new Government to have an honest minister in charge of foreign investment promotion to entice new investors to start factories in Sri Lanka. It is also essential to have a clean BOI to promote this type of activity since corruption percolates to officers of such institutions at all levels. When they know that those at the top seek gratifications on a mega scale, those at the lower levels also feel that demanding at least a small piece of the pie is acceptable.

The per capita income of Sri Lanka has increased over the last few years but this is mainly due to the huge influx of loans which have to be paid over a period of time. In order to pay even the interest on loans, the Government has to increase taxes on virtually every product and service. As a retired Income Tax Commissioner once stated that for every rupee we spend 60 cents are for various taxes, both direct and hidden. For real development, we should see increased productivity from the industrial sector, particularly utilising both natural resources and human capital. Human resources are increasingly used, particularly in the IT sector and this is not due to the involvement of the state but the initiatives of the private sector. However, an often neglected area is the use of our natural resources, particularly mineral resources for economic development. We still have to see whether the present government feels the need for increased industrial development and productivity for economic development. The main theme of this letter is to highlight how our natural resources, particularly mineral resources can be utilised for economic prosperity.

Mineral based industry

Sri Lanka has an abundance of good quality mineral deposits which have not been effectively utilised for economic development of the country. While some have not been exploited to their full potential, others are sold at a pittance to overseas buyers. Our industrial policies have never entailed using mineral resources for economic development. We simply promote “screwdriver industries” where raw materials from abroad are put in place partly due to cheap labour available here. Many of the policy decisions on industry are taken by politicians or those administrators without even a rudimentary knowledge of science and technology. No wonder that we are still a least developed country when it comes to industrialisation. Our policy planners have never seen the rich potential of minerals as a resource to achieve economic prosperity and Industrial policies formulated by the Ministry of Industries makes no mention of a chemical industry or industries utilising our mineral resources.

Exploitation of mineral resources without the concomitant development of a chemical industry is meaningless; neither is possible without the other. At the present time we do not have a single chemical industry in Sri Lanka going by the true definition of “chemical industry”. Actually we have gone on the reverse gear on chemical industry since at one time when the Paranthan chemical factory was functioning, we manufactured caustic soda for the soap industry and even manufactured hydrochloric acid and chlorine for a brief period. Similarly, this factory had the capacity to produce hydrochloric acid and also bleaching powder which we import in thousands of tonnes for the chlorination of our water supplies. These can be conveniently manufactured in Sri Lanka if we plan an integrated chemical industry. Commissioning a sulphuric acid plant can supply the requirement for a superphosphate plant to manufacture phosphate fertiliser from Eppawela apatite. In addition, such a plant could provide the acid required to fill the lead acid batteries used in vehicles which we import at the present time. Sulphuric acid is one of the cheapest acids since the raw material sulphur removed from petroleum at refineries is available at a very cheap price.

We have an abundance of high quality minerals which can be exploited if there is a chemical industry in Sri Lanka which will supply the basic chemicals required for such exploitation. A case in point is the utilisation of our Eppawela phosphate deposit to produce superphosphate fertiliser. If we produce sulphuric acid, then it is possible to produce single superphosphate from apatite which can then be used to supply all our phosphate fertiliser requirements. Unfortunately the lucrative offers of gratification made by some foreign companies were more attractive to our politicians and the proposals made by Sri Lankan scientists on Eppawela phosphate have been rejected. During the time of a previous Chairman of Lanka Phosphate Ltd. 20 tons of single superphosphate (SSP) was made using a second hand steel container and a wooden paddle by mixing the mined ore from Eppawela with sulphuric acid. These were tested in all agricultural regions of the country. The SSP produced was found to be better even compared to the imported triple superphosphate (TSP) because the SSP contained sulphur in addition to phosphate and sulphur is an essential nutrient to plants. SSP plants are much cheaper and a complete factory for SSP production including the sulphuric acid plant can be built for 900 million rupees. What is attractive is that the whole cost can be recovered in about 3 years while providing phosphate fertiliser at half the current selling price. Our politicians do not like this project because TSP projects are much costlier thereby increasing their commissions. The earlier McMoran proposal was 450 million US dollars in 1996. Our politicians promoted the McMoran proposal because the commissions they can get is much higher had this proposal was implemented. Luckily the Supreme court stopped this on a case filed by some villagers at Eppawela. When this former Chairman planned to implement the SSP proposal through a loan from the Bank of Ceylon, the politicians unceremoniously removed him from the chairmanship. Meanwhile, Sri Lanka exports around 60 thousand tonnes of triple superphosphate yearly spending a massive amount of foreign exchange. This is the way our politicians ruin the economy through such bad planning and because they think every resource in Sri Lanka belongs to them to make money.

Another mineral based industry that could be developed is the mineral sands industry. At the moment we export mineral sands such as rutile and ilmenite at dirt cheap prices to overseas companies. After value addition through chemical industry, products manufactured using our own minerals are sold back to Sri Lanka at costs sometimes one thousand times the cost of the raw material. Also, we have an abundance of a mineral sand deposit of monazite containing thorium and rare earths at Beruwela. Thorium found in monazite can be used in the production of nuclear fuels. At one time we had a small processing plant at Katukurunda for processing monazite and the rare earth phosphates of lanthanum, cerium and yttrium found in this type of sand. Unfortunately during a previous UNP regime, this factory was scrapped and the premises given to the Police Department. Now, China is trying to restrict the sale of rare earths to Japan and this will severely affect the electronics industry of Japan. This is the time we should get activated and try to use our resources to get economic benefits.

Most people including geologists are perhaps not aware that thorianite, an extremely pure form of thorium oxide was exported from Sri Lanka during early 1900’s from mines at Nelluwa in the Galle district. Marie Curie’s fundamental work on radioactivity was based on thorianite from Ceylon. Some other discoveries using our thorianite are; the radioactive decay law, discovery of polonium and radon. The Sri Lankan origin of thorianite is clearly mentioned in her published research papers.

High quality quartz is found from many locations in the country and these are currently exported in the raw form without any value addition. It is the raw material used in producing silicon used for the huge semiconductor industry today. Of course silicon production from quartz is simply out of the question in Sri Lanka since it is technologically very complex and the electricity requirements are very high. However, there are many other smaller industries which can be started with quartz as the raw material such as water glass (sodium silicate), quartz lenses and other quartz glass items which involves simple melting and reforming of quartz.

There are a number of other minerals where value addition can be carried out in Sri Lanka. The best quality graphite in the world have always come from Sri Lanka and only about 5% of the total graphite mined is used in Sri Lanka. Also, the Ceylon Ceramics Corporation at one time had a small crucible factory where graphite was used to make crucibles for the foundry industry. This industry too died as a result of the post 1977 economic liberalisation policy. All graphite we mine now is exported and we happily buy the finished products of graphite such as carbon brushes for motors and electrodes for dry batteries from abroad at exorbitant prices. Sri Lanka can do well by starting a graphite based industry to manufacture carbon brushes, electrodes for torch batteries and graphite greases. At one time graphite was sold at a price of US$ 800 a tonne when the market price was around US$ 1200. I am sure someone pocketed US$ 400 per ton out of this deal. This is how these highly profitable ventures are ruined by our politicians.

There was a well-developed iron industry in Sri Lanka before the British Colonial times. Archaeological evidence points out to a well organised steel industry dating as far back as 1200 A.D. long before Europe’s first bellow driven iron manufacturing plants came into operation. It is believed that the famous swords of Damocles were made from steel manufactured in Sri Lanka. There is evidence for a large steel manufacturing facility in the southern slopes of the Samanalawewa area where wind tunnels were used to create the high temperatures required for the iron making process. A British archaeologist working in the Samanalawewa area actually produced iron by reconstructing such wind tunnels using iron ore available here. This work has been published in the prestigious science journal Nature and the front page of this journal showed the molten slag flowing out of the furnace she built for this process. Unfortunately this steel industry died soon after the British came into power. Recently a good quality magnetite ore has been discovered off Buttala by geologists of the University of Peradeniya. This ore contains about 60 –70% iron in quite a pure form and found at the surface and far superior in quality to already recorded iron ore deposits found elsewhere in the country. Even if we export this ore without value addition, we can earn considerable earnings.

There are other minerals which can be used to make some of the chemicals we currently import. For example, the drug industry uses magnesium carbonate and calcium carbonate as bulking components of drugs. Toothpaste manufacture also involves calcium carbonate and we import nearly 40,000 tons of precipitated calcium carbonate per year and it is a crime to spend so much on calcium carbonate because we have ample deposits of calcium carbonate. We have a calcite deposit at Balangoda which is pure calcium carbonate. Precipitated calcium carbonate required by many industries can be made starting with this deposit of calcite. Yet no initiative has ever been taken by those at the Ministry of Industries regarding the commercial exploitation of any of these resources.

At the present time we import an enormous amount of clinker from abroad to manufacture cement. This involves simple grinding of clinker with gypsum. We can be self-sufficient in cement if we get the Kankesanthurai Cement factory operational again. This is now in a high security area and the new Government should take steps to release this part of land without compromising on our security for the proposed activity. This has to be located at KKS since the raw materials for cement manufacture are found in this area.

As a nation we are suffering from a lethargic syndrome, “can’t do”, “why bother if it can be bought from some other country”, “there is no market”, “it is too expensive to produce here”. These are the attitudes which kill us. Meanwhile at the ministry of industries important decisions are taken by administrators who have not even the rudimentary knowledge about the mineral or chemical potential of Sri Lanka. In most developed countries, ministries are headed by technocrats and not beaurocrats and most secretaries to ministries have Ph.D.’s in their respective fields. This is true even in India where the ministry secretaries are well qualified and have the stature to advise their respective ministers on the best policy. In Sri Lanka when a technocrat is appointed outside the SLAS cadre to head a ministry, these SLAS officers run hue and cry over such appointments. Unless some technically qualified officers head key ministries such as industries, science and technology, these ministries will never make an impact on the future economic development of the country. Even if such officers are available, our politicians will not allow the development of the mineral industry unless there is some personal benefit for them.

*Prof. Oliver A. Ileperuma (University of Peradeniya, Sri Lanka)