Sri Lankan political deviations hinder vein graphite rebound

By Shruti Salwan
Published: Tuesday, 28 April 2015

New mining reforms to govern market; downstream expansion remains priority while domestic entrepreneurs to take lion’s share.

Sri Lanka’s vein graphite industry is likely to register steady performance in 2015 as the new government revisits mining policies, licences and governance approved by the former regime. 

IM sources said that the new government, which came to power in January 2015, is expected to make essential amendments to its Mines and Minerals Act in order to protect and preserve the country’s resources for domestic entrepreneurs.

The new administration aims to preserve the majority of ownership of mining projects in the hands of national players, while encouraging foreign investment for downstream expansion and securing premiums on raw material through value addition.

These changes are likely to be followed by a new regulatory framework, which will be devised for foreign companies keen to venture into Sri Lankan mining, with further renewals to be subsequently evaluated.

The government has also asked to replace the old administration responsible for governing the mining industry in order to close any loopholes in the system. 

Exploration for, and development of, minerals is governed by the Mines and Minerals Act 1992 and subsequent revisions – and is administered by the Geological Survey and Mining Bureau (GSMB).

Although these developments are yet to influence the Ceylon graphite industry, it is likely to prevent any uptick in a market presently struggling with weak industrial demand, domestic mining chaos and strong price competition.

Sri Lanka is the only commercial producer of a rare form of high purity vein graphite, having a total capacity of 6,000 tpa from only two active producing mines – Kahatagaha and Bogala – all of which is destined for export markets. 

Besides these established producers, the country has several existing licence holders engaged in the exploration of the unique form of graphite. 

A few off-take shipments were also reported from Ragedara and Queen’s mines last year, which have been intermittent producers since over a decade.

The uncertainty presiding over the vein graphite industry at present is likely to shake investor confidence in the market, making it difficult for existing explorers to manage funding for their projects, which in turn will limit contributions to domestic expansion. 

Vein graphite prices, which have remained stable at current levels since 2012, are still on the radar and an unprecedented price adjustment, in the light of the above scenario, cannot be ruled out.

Ceylon graphite: market overview

Sri Lanka is the only major commercial producer of crystalline vein graphite from its two active mines – Kahatagaha Graphite Lanka and Bogala Graphite – located in the centre of the country, northeast of Colombo.

The quality of vein graphite produced in Sri Lanka is well known for its high purity carbon content, naturally occurring in the ground above 90% C and requiring little processing to yield a saleable product. 

In 2014, Sri Lanka produced 3,100 tonnes vein graphite, bearing the brunt of industrial slowdown and inefficient mining conditions. 

Nevertheless, this unique form of natural graphite has gained interest among many foreign companies in  recent years trying their hands at developing these exclusive resources for downstream consumption.

Major producers and juniors in Sri Lanka

Active producers




Operational belt

Mine depth

Kahatagaha Graphite Lanka Limited

100% government-owned

150 tpm

Kurunegala district

1,500 feet (457 metres)

Bogala Graphite

90%-owned by Graphit Kropfmuhl AG; 10% by the government

200 tpm

Kegalle district

2,200 feet (671 metres)

Upcoming projects

Foreign companies

Sri Lankan collaboration


Operational belt

Total graphite content

MRL Corp. Ltd.






Palinda Nuwara

Kegalla/Walallawita /Kandy/Galle districts


Saint Jean Carbon

Han Tal Holdings Pvt. Ltd.

Han project

Southwest of Sri Lanka


Bora Bora Resources

Plumbago Lanka Pvt. Ltd.



Kandy/Galle districts


Bora Bora Resources

RS Mines

Queen’s mine

(intermittent producer)

Kahatagaha/Kurunegala district


Elcora Resources

Sakura Graphite

Ragedara mine

(intermittent producer)




*TBD – To be disclosed
Source: IM