Resistance grows to Sri Lanka/TNCs mining deal

A mining deal which the government of Sri Lanka proposes to sign with two transnational corporations will destroy some 26 villages in the country's north-central province. The proposed joint venture to mine apatite will not only cause irreparable social and ecological damage, but also rapidly deplete the country of a valuable natural resource and contribute little in 'value-added' to the economy. Resistance against the project is being mounted by farmers, workers, trade unionists, Buddhist monks and social activists.

by Mallika Wanigasundara

FOR 12,000 members of 2,600 farmer families, the US$425 million mining deal which the government of Sri Lanka proposes to sign with two multinationals will spell doom. Under the proposed agreement, the world's largest producer of fertiliser, IMC Agrico of the USA, and Tomen Corporation of Japan will combine in a joint venture with the puny local Lanka Phosphate Ltd to exploit the apatite mine at Eppawala in the Anuradhapura district in the north central province.

The apatite, raw ingredient for the manufacture of phosphate fertiliser, lies under 26 villages which will disappear in holes and craters, trenches and gullies, when this most valuable of natural resources is dug up.

The rock phosphate was discovered by the Geological Survey department of Sri Lanka in 1971. Explorations show a proven reserve of 25 million metric tons and inferred reserves of 60 million tons. If the agreement goes through, IMC Agrico will exhaust these reserves in around 30 years or so, say the experts. The government will permit the combine to export raw rock phosphate for the first 12 years, and then the manufactured fertiliser.

The project company will manufacture 600,000 metric tons of fertiliser per annum, of which 400,000 will be for export. The project is initially due to run for 30 years, with a possibility of an extension, says the Report of the Negotiating Committee for the Joint Venture.

Sri Lanka's apatite reserves are estimated by experts to last for a minimum of 200 years and a maximum of 1,000 years. The fact remains that if the apatite is exploited only for local use, Sri Lanka will not have to import phosphate fertiliser for many years in the future.

The lion's share of the joint venture will come under the control of IMC Agrico, which will get an initial equity of 65%; Tomen will get 25%, and, as could be expected, Lanka Phosphate Ltd a paltry 10% - but free equity. In this push by multinationals to gain control of the natural resources of poor Third World countries, the government of Sri Lanka is more than a willing partner.

To soften the blow somewhat, the negotiating document says that there will be no transfer of shares for the first 12 years. But even here, after that period, the partners will be free to dispose of their shares, but they will have to 'inform' the Secretary, Ministry of Industrial Development of the prospective buyers and their technical and financial capabilities. That's about it, and nothing more is said about the transfer of control.

Lanka Phosphate Ltd will be reduced to the role of a distributing agent of fertiliser manufactured by the project combine, for Sri Lanka farmers. To keep it going, some rock phosphate will be supplied, but its operation will be restricted to crushing and selling it to local fertiliser mixers. Lanka Phosphate now manufactures 40,000 metric tons of fertiliser.

The mine itself will cover 56 sq kilometres. The processing plant will be in Trincomalee, which is one of the world's most unique natural harbours and a prime destination for tourists in peacetime. Four hundred and fifty acres of land with a beach front for a jetty and terminal building, will be earmarked in Trincomalee for the processing plant, a phosphorous acid plant, a sulphur acid plant, a granulation plant and a support facility.

Large tracts of forest

A further 350 more acres set apart for tourist development will be kept on hold until a feasibility study indicates whether the project company will need more land. Sweetening comes in the form of rail and road development, a deep water dock, loading facilities at Trincomalee and township development.

No mention is made of the fact that large tracts of forest will have to be removed to make way for all this 'development'.

Meanwhile, farmers, workers, trade unionists, Buddhist monks and the Committee for the Protection of the Phosphate Mine have launched a protest campaign. The Ven. Mahamandawala Piyaratana, a Buddhist monk who is leading the campaign, has told journalists that the villagers will not leave their land and soldiers will have to be used to move them out.

S D Gnanatilleke, Co-ordinator and Treasurer of the All Sri Lanka Farmers Awakening movement, a paddy and vegetable farmer, recalls a conversation that a deputation had with the President of Sri Lanka, Chandrika Bandaranaike Kumara-tunga.

At their protests, she asked: 'Are you asking me to close down the Treasury?' The Ven. M Piyaratana retorted: 'Are you telling us that you are sacrificing the poor farmers of these "purana" (ancient) villages in order to fill the Treasury? Or are you committed to protecting the people of this country?'

Freeport McMoRan Resources Partners of the US came in first with the mining proposal, but has since merged with IMC Global Inc of the US and become known as IMC Agrico.

The President was reminded of human rights violations and/or environmental damage caused by Freeport McMoran in three countries (see page 15). The President assured them that she would not permit such violations in Sri Lanka.

Deputation: So, what is the guarantee?

President: Do you think I am Premadasa (former President accused of human rights violations and disappearances)?

Monk: If you are Premadasa, do you think we would have walked from house to house to canvass for you?

The environmental and sociological upheaval would be enormous. Hemantha Vithanage, environmental scientist of the Environmental Foundation of Sri Lanka, a public interest law firm dealing in environmental issues, says that within the project area in Eppawala, six schools, many homes, government buildings and infrastructure, temples, 23 new and old reservoirs for irrigation, 5 km of the newly-constructed irrigation channel-Jayaganga+ under the multi-purpose (land development, irrigation and power) Mahaweli river diversion scheme, 100 km of small irrigation channels, two small towns, 26 villages, and rich agricultural land would be destroyed.

This is very rich, high-yielding paddy land, says Prof. O A Illeperuma of the Faculty of Science, University of Peradeniya. A very sharp critic of the project, he says that the paddy yield in these lands is 10,000 kg per hectare, as against the national yield of an average of 7,000 kg per hectare.

The rock phosphate is said to have 36-37% P2O5 and contains certain impurities which affect quick solubility. It is also said to contain high levels of chlorides, oxides and aluminium, depending on the location, thus making it unsuitable for short- term crops like paddy and vegetables.

It seems ironic, but perhaps not so strange, that government spokesmen are quick to highlight these drawbacks of the product they are trying to sell, in the very first and second paragraphs of the Report of the Negotiating Committee.


Prof. Illeperuma disagrees: he says that Prof. R P Gunawardene, now Dean of the Faculty of Science, University of Peradeniya, and Prof. Kapila Dahanayake have carried out research on the rock phosphate for more than two decades. They have found that simple acidulation, complete or partial, of the rock phosphate makes it suitable for short-term crops.

It can be efficiently converted into fertiliser for paddy and vegetables. The bottom line is low-cost, low-level technology, as against the high- level, expensive technology that IMC Agrico will import. At present Sri Lanka imports 80,000 - 120,000 metric tons of single super phosphate and 30,000 - 40,000 metric tons of triple super phosphate per annum.

These requirements, says Prof. Illeperuma, can be met by a plant manufacturing 150,000 metric tons of phosphate fertiliser, costing around US$21 million. The IMC Agrico project would cost US$425 million, plus rapid exhaustion of the reserves and great environmental and sociological damage.

The project company will be allowed what is called 'cash flow comfort', among other comforts and tax and exchange control concessions, by the export of unprocessed rock phosphate for 12 years at the rate of:

Year One: 250,000 metric tons per annum

Years 2-7: 350,000 metric tons per annum

Years 8-12: 250,000 metric tons per annum

There would be no value added to the country's economy, a concession which would go against stated current economic policies.

Prof. Illeperuma refers to a report by the New Zealand Fertiliser Technical Group, submitted to the government in 1997. Based on extensive laboratory testing and analysis, this report recommends exactly what the Sri Lankan scientists have been urging all along - a single super phosphate plant, which would have occupied 8-10 hectares.

According to reports coming out of three countries, Freeport McMoRan has a bad reputation in relation to human rights and environmental violations. In Florida, where IMC Agrico runs a massive mining operation, over 200,000 acres have been strip mined, leaving irreversible scars and damage on the landscape. The pits, craters and gullies fill up during rain and have become flourishing breeding places for mosquitoes.

Twenty stacks of phosphogypsum, a radioactive waste, have piled up in Florida and tower over the country with no known means of disposal. Here in Sri Lanka, some of it can be used in the manufacture of cement, but not all. In 1994, a new Agrico dam burst, discharging 500 million gallons of waste water into surrounding areas. Freeport McMoRan has also been cited for dumping radioactive gypsum into the Mississippi River in Louisiana.

The US Environmental Protection Agency states that phosphogypsum contains radium, which breaks down into radon, and these are carcinogenic. Mining companies have been ordered by the EPA to strengthen environmental protection measures before the year 2000.

Vithanage also cites human rights violations by Freeport McMoRan in New Guinea and a $6 million lawsuit for dumping 130,000 tons of toxic mining waste into local rivers. The indigenous peoples of Irian Jaya in Indonesia have been protesting against the dumping of waste into rivers and streams and the seizure of their lands for mining.

Freeport McMoRan is being accused of aiding the Indonesian government in human rights violations, says Vithanage, of tribes such as the Amungme, who have been subjected to threats and torture for their protests. In April 1995, the Australian Council for Overseas Aid reported that Freeport McMoRan was accused of having a hand in the disappearance of 22 civilians in Irian Jaya.

Sri Lankans characterise the signing away of this valuable natural resource to foreign control, as selling the family silver. More vehement critics call it a national crime.


Prof. Illeperuma says that sulphuric oxides and ammonia could pollute the Trincomalee bay and the surrounding seas. Emissions would pollute the atmosphere.

Vithanage says that groundwater levels will be lowered, and rich agricultural land lost, along with natural vegetation and wildlife habitat. With the clearing of jungles, elephants could get pocketed in patches of forest, as happened in Handapangala in the south when the Pelawatte sugar complex was built. Migratory birds would find the tanks where they roost, gone forever.

Meanwhile, the opposition United National Party has launched a campaign against the signing of the agreement with the multinationals. Thuggery and intimidation by armed thugs and hooligans, believed to be supporters of the Peoples Alliance government of President Kumaratunga, were unleashed at Eppawala when the UNP organised a rally and demonstration.

Cars were stoned, houses damaged and club-wielding mobsters wreaked havoc in the vicinity of Eppawala at the time of the rally. UNP politicians and their supporters were subjected to violence and intimidation. Despite the incidents, the protest rally was held. The UNP has started boycotting Parliament as a protest against this and other incidents of violence.

Earlier, another protest march and rally was held by farmers and members and supporters of the Maubima Arakshaka Sanvidanaya (Organisation for the Protection of the Motherland) at Eppawala. In this demonstration, several hundred Buddhist monks participated.

Anura Bandaranaike, brother of the President and who is a member of the opposition UNP, said that the disruption and intimidation of the Eppawala UNP meeting was carried out not by the Eppawala villagers, but by outsiders brought in by powerful politicians with the connivance of the police.

Subsequently, Ranil Wickrema-singhe, UNP and Opposition leader, announced that when the UNP comes to power, it would cancel the agreement on the Eppawala joint venture.

The government has spelt out the following financial benefits from the project. It amounts to around US$477 million in total economic benefits per year, according to the Minister of Industrial Development, Mr C V Gooneratne.

The project company will supply high-grade fertiliser to the farmer at around 50% of the normal imported price. This will mean a saving on the fertiliser subsidy, says the Minister.


Among other benefits are: US$37 million from the royalty payable on rock phosphate which will be 5.5% of the Morocco International price; US$74 million in taxes, despite the tax holiday, under a special arrangement; dividends from the 10% free equity for Lanka Phosphate Ltd amounting to US$70 million; from the defence levy - US$1.3 million; and earnings from the Sri Lanka Ports Authority for services rendered US$137 million.

As regards the fear about the damage to the environment, the Minister said that the company will be required to carry out a comprehensive study of the impact of its activities on the environment. It will also be required to contribute to an Escrow account amounting to US$500,000. It will be a bond in favour of the government as a guarantee for compliance with all laws relating to the environment during the exploration, construction and operation periods up to the end of the 10th year. (Third World Resurgence No. 93, May 1998)

Mallika Wanigasundara, a former journalist with the Observer and Daily News in Colombo, is a freelance writer on developmental and environmental issues. She has won the United Nations Environment Programme (UNEP)'s Global 500 award.