Please note this is a June/2014 article.
To most mining mavens, Sri Lanka was a land of mystery, onerous state intervention and certainly not one of mining. Sri Lankan graphite deposits are some of the richest on the planet. Under British colonial rule in the early 1900s, the nation was a significant graphite producer and exporter. Independence came in the 1950s and then there was a distinct socialistic trend in governments in the following decades culminating in the nationalization of the graphite sector in 1971.
The private sector was allowed back into Sri Lanka’s graphite industry in the early 1990s, but by that time, problems with the civil war were preventing development on a large scale. Additionally many of the State owned mines had been over-exploited, allowed to deteriorate and had not been subject to meaningful exploration to find new reserves.
The opening of the mining sector in recent years presents an opportunity for foreign companies to pursue Sri Lankan graphite on a significant scale.
Sri Lanka is known to be underlain up to 90% by Proterozoic high grade metamorphic rocks with Proterozoic sediments, particularly along the coastal regions. According to the US Geological Survey Sri Lanka currently produces a very small amount of graphite, about 4,000 metric tons per annum. Sri Lanka’s graphite is a unique product.
The country produces lump and chippy dust graphite and is the world’s only source of these particular materials. Lump and chippy dust graphite are the highest-value graphite products found globally. These unique and comparatively higher margin vein (lump) deposits currently make-up less than 1% of the world graphite production. In 2012, prices for Sri Lankan lump and chip graphite averaged $1,990 per metric tonne, significantly higher than prices reported for other products, such as flake or amorphous graphite.
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