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Thursday April 18th, 2024

Sri Lanka to optimize investments in mineral resources

ECONOMYNEXT – Sri Lanka is exploring the optimal utilization of its mineral resources to bolster the nation’s economic growth, and the potential for creating value-added products from these resources, a state minister said.

“Given our nation’s rich mineral resources, we have devised plans to expand investment opportunities,” State minister of Urban Development and Housing, Arundika Fernando said.

“We have taken the decision to extend investment prospects along our coastline, collaborating closely with agencies such as the Investment Promotion Board and the Ministry of Lands,” Fernando said.

The minster said they were considering the introduction of a specialized bank dedicated to the development of domestic industries and introducing new legislation.

“We are committed to introducing a new environmental protection and ocean protection bill in our country. This legislation will play a vital role in safeguarding our natural resources.”

“The Department of Coastal Conservation actively participates in initiatives aimed at enhancing the value of our mineral resources. These resources have the potential to yield significant value through the production of value-added goods.”

“Our primary focus must centre on pioneering innovative programs that contribute to our country’s economic recovery. Timely and effective resource management is crucial for initiating income-generating initiatives.

From a geographical standpoint, Sri Lanka occupies a strategically vital position in Asia.

India has been eyeing Trincomalee, the mineral resource rich district, for decades. A mineral sand deposit in its northern part contains Ilmenite, Rutile, Zircon, Monazite, Garnet, Sillimanite, and other heavy minerals, Export Development Board (EDB) data shows.

Sri Lanka’s state-run Lanka Mineral Sands Limited is to export 60,000 metric tonnes of ilmenite to China this month after a shipment of 30,000 tonnes of Zircon mineral sands was shipped out of Trincomalee harbour earlier this month.

The EDB said it had identified the value-added mineral products sector as a potential sector to be developed and promoted in the international market, and met with members of the Chamber of Mineral Exporters (CME) to discuss growing the mineral-based industry in Sri Lanka.

CME members requested the government foster foreign investments and proposed that the state conduct a comprehensive ore reserves study to maintain transparency and informed decision-making within the industry.

They asked for government support in research and development, and a 300% tax rebate for research and development activities in collaboration with Sri Lankan educational institutions.

They also requested revising royalty systems grounded in pithead value, in line with international norms and pointed out the need for an equitable approach to royalty calculations to ease the financial burden on mining entities.

Securing international accreditation for the Geological Survey and Mines Bureau laboratory in collaboration with the Sri Lanka Standards Institution to enhance global credibility was also discussed.

CME pointed out the untapped potential of numerous pocket mines in Sri Lanka, and advocated for the development of support industries equipped with state-of-the-art technology.

Members also urged the government to consider duty waivers for the import of new technology and pertinent spare parts to foster innovation and elevate the sector to international standards. (Colombo/Sep26/2023)

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Sri Lanka’s discussions with bondholders constructive: State finance minister

ECONOMYNEXT – Sri Lankan authorities continue to engage all debt restructuring negotiations in good faith, within principles of equitable treatment among creditors, and with maximum transparency within the norms of such negotiations, State Minister of Finance, Shehan Semasinghe has said.

“It is standard practice, when a representative group of bondholders is formed, to entertain confidential discussions with such group and its appointed advisors. In the case of Sri Lanka, the Ad Hoc Group of Bondholders represents holders controlling more than 50% of the bonds, which make them a privileged interlocutor for Sri Lanka,” Semasinghe said on X (twitter).

“It is well understood that given the price sensitive nature of the negotiations, and according to market regulations, discussions with the Group and its advisors are to be conducted under non-disclosure agreements. This evidently restricts the ability of the Government to unilaterally report about the substance of the discussions.

“The cleansing statement, which was issued on the 16th of April, at the conclusion of this first round of confidential discussions with members of the Group, aims at informing the Sri Lankan people, market participants and other stakeholders to this debt restructuring exercise, about the progress in negotiations. It provides the highest possible level of transparency within the internationally accepted practices in such circumstances.

“As informed in this statement, confidential discussions held in recent weeks with bondholders’ representatives proved constructive, building on the restructuring proposals presented by both parties. During the talks both sides successfully bridged a number of technical issues enabling important progress to be made. Sri Lanka articulated key remaining concerns that need to be addressed in a satisfactory manner.

“The next steps would entail further consultation with the IMF staff regarding assessments of the compatibility of the latest proposals with program parameters. Following these consultations, we hope to continue discussions with the bondholders with a view to reaching common ground ahead of the IMF board consideration of the second review of Sri Lanka’s EFF program.”

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Sri Lanka rupee weakens at 301.00/302.05 to the US dollar

ECONOMYNEXT – Sri Lanka’s rupee closed at 301.00/302.05 to the US dollar in the spot forex market on Tuesday, from 299.00/10 on Tuesday, dealers said. Bond yields were broadly steady.

A bond maturing on 15.12.2026 closed stable at 11.30/35 percent.

A bond maturing on 15.09.2027 closed at 11.90/12.05 percent up from 11.95/12.00 percent.

A bond maturing on 15.12.2028 closed at 12.10/20 percent down from 12.10/15 percent.

A bond maturing on 15.07.2029 closed at 12.25/40 percent.

A bond maturing on 15.03.2031 closed at 12.30/50 percent. (Colombo/Apr17/2024)

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Sri Lanka Treasury Bill yields down across maturities

ECONOMYNEXT – Sri Lanka’s Treasuries yields were down across maturities at Wednesday’s auction with the 3-month yield moving down 7 basis points to 10.03 percent, data from the state debt office showed.

The debt office sold all 30 billion rupees of 3-month bills offered.

The 6-month yield fell 5 basis points to 10.22 percent, with 25 billion rupees of bills offered and 29.98 billion rupees sold.

The 12-month yield dropped 4 basis points to 10.23 percent with 18.01 billion rupees of bills sold after offering 23 billion rupees. (Colombo/Apr17/2024)

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