The Lanka Mineral Sands (LMS), the country’s mineral producing organisation, is looking at securing its future by establishing a new fund to finance its daily operational costs amidst plans to modernise machinery and purchase plants to increase production.
LMS Chairman Maithri Gunaratne told the Business Times on Monday that they were able to secure a sale of Rs.1.23 billion worth of mineral sands by calling for an international tender for which they received five bids. It was finally awarded to Alchemy Heavy Metals.
This amount was generated by calling for tenders for the sale of varied amounts of Rutile, Zircon, Hi Ti ilmenite and ilmenite except the tender floated amounting to the sale of one stock of 9000 MT of ilmenite that was cancelled earlier by the Industry and Commerce Ministry, Mr. Gunaratne said.
Out of the total sale amount, LMS deposited Rs.900 million in a high interest Fixed Deposit (FD) account with Seylan Bank for their future operational requirements. The newly set up fixed deposit is expected to generate earnings in the range of Rs.123 million per year.
The Chairman noted that the FD earnings would be allocated to undertake the much-needed repairs, refurbishment, and replacement of the obsolete machinery currently available at the Pulmoddai plant as well as “value addition”.
It was noted that carrying out value addition required at least 10, 000 mt of ilmenite which was previously unavailable. In future, however, this amount could be obtained if production continues smoothly following the purchase of new machinery.
Mr. Gunaratne pointed out that machinery at the Pulmoddai plant had not been maintained for the last 20 years and as a result the efficiency of this machinery had dropped by about 40 per cent thereby causing a reduction in the quality of the minerals processed.
He noted that due to a drop in production levels they were today looking at increasing this by purchasing new machinery and modernizing the equipment to ensure uninterrupted power supply to the organisation’s main plant at Pulmoddai.
Moreover, he said they also found Rs.2 billion worth of stock at the plant where minerals were not accounted for and were said to have become contaminated as well.
Mr. Gunaratne explained that they would be re-modeling the machinery by purchasing new machinery from Australia at a cost of approximately Rs. 20 million for the plant at Pulmoddai.
He noted that modernisation of the electricity equipment would incur a spend of Rs.12 million due to the continuous breakdown in power supply resulting in a loss of about Rs.3 million to the organisation’s production process.
In addition, the company has also invested about Rs.10 million in a new mineral extracting and processing plant in Pulmoddai.
LMS has also called for tenders for the sale of 1000 mt of Hi ti ilmenite, 1000 MT of rutile, and 400 MT of zircon with tenders scheduled to close on November 21. Another tender calling for the sale of another stock of 9000 MT of ilmenite closes on November 30.