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Eppawala attracts greedy eyes
Grand Larceny

One would have thought that the phosphate deposit at and around Eppawala had been rendered safe from looters ten years ago, by the reasoned judgment of the Supreme Court. Delivered by Dr. A. R. B. Amerasinghe, that erudite judgment introduced and embedded the concept of Public Interest, long applied in India, as a foundation of our law. It was a courageous judgment as well, as it challenged the right of the State, whose mandate was, expressly, to protect our physical and cultural resources, not to put them up for sale. It also made pointed reference to the fact that in such matters the temporary nature of a political group that occupies the habitat of ‘Government’ does not permit such groups to bind the nation to Agreements that go beyond their life-span in office.

Nevertheless, there have been moves and murmurs of late, including Cabinet papers that have remained very hush-hush indeed, that point to a fresh intrusion in the Eppawala - Jaya Ganga - Anuradhapura complex which constitute a major artifact in the heritage of human-kind.

A cabinet paper was reported around April 2008, as was a discussion in November of that year with the top management of Lanka Phosphates Ltd., the wholly government owned owner of the Eppawala deposit, the richest in the world.

We have since had opinions on the matter by all kinds of people, most of them looking for a minor fall-out from a project at the bottom of which they have long held out their tongue. The last such I’ve seen occurred in the press last week. An early, but not the first, attempt by the present administration to revive that ‘sell-out’ has taken the form of a ‘learned’ and ‘concerned’ piece in a national newspaper last week: ‘Concerns for the mineral sector in Sri Lanka’ by Dr. M. M. J. W. Herath, one-time head of the department of Geological Survey and now a fully paid-up ‘consultant’ in that field.

The history of the attempts made by Freeport-McMoran, a US based mining company, to appropriate the phosphate deposits in and around Eppawala, bears re-telling in the context of such developments. Dr. Herath, then, as now, a ‘consultant’ whose professional and academic qualifications give the impression that he is a man in pursuit of ‘objective truth’, came up as a mimic or puppet of Freeport McMoran, the principal in the rush to grab Eppawala. Ten years ago he found his nose bloodied by our scientists, among whom I recall Dr. R O B Wijesekera, Chairman of the National Science & Technology Council (NASTEC), Professors Ileperuma and Danayake. NASTEC is statutorily entrusted with overall responsibility for advising the government on the development and protection of our natural resources,

Herath now tries to rubbish them and their assessments. Unfortunately for him, in the piece I’ve mentioned, Herath has spelt out his case for the despoliation of Eppawala. Briefly, he claims that our scientists should move with the times and help us bring in new technology so we could enter a globalised economy, exploit Eppawala for the good of our farmers and give them a superior product at less cost.

As perhaps he knows, he is wrong on all counts, and criminally so at that.

In 1992, the US Geological Survey and US Bureau of Mines assessed that the world’s known reserves will be depleted in 50 years, and that the known reserves plus the base reserves will be exhausted in 150 years.

Lanka Phosphates itself could produce our total national requirements of Single Super Phosphate [SSP] through a low-cost beneficiation process. What the principal potential ‘investor’ IMC-Agrico, a front for Freeport McMoran, (now appearing behind a façade of Chinese and Indian firms) proposes is the production of Di-Ammonium Phosphate [DAP], - of which OUR annual requirement has ranged from as little as 17 to 160 tons. It is also now recognized that DAP is a hazardous material with toxic properties that contaminate ground water when used in agriculture. That is the kind of cutting-edge technology that Herath has in mind.

Under the proposed project, there was no guarantee that the company would supply our farmers even the quantity of rock phosphate we now mine; indeed whether and when to provide supplies is left entirely to the discretion of the company!

Eppawala rock phosphate is of a very high grade, with a phosphorous content of 35% +, compared to, Florida (21.5%), Morocco [21.4%], and Ocean Islands [22.8%], - and of a formation that lends itself to an easy form of mining. As Freeport has acknowledged, "the Eppawala deposit is an igneous deposit as opposed to the sedimentary deposits in the US, Morocco, Jordan, China, Peru, Saudi Arabia, Togo, Senegal, Guinea Bissau, Nauru, Christmas Island, Kazakhastan and Queensland. Sedimentary deposits tend to be one or more thin layers spread out over large land areas while igneous deposits tend to be in the shape of vertical pipes or plugs on the earth’s surface."

But IMC-Agrico’s proposal is to dig as deep as possible: "the size and depth of the pit", says Freeport, "will only be known after the completion of Phases one and two of the project" - the period during which the people would have been evicted and the export of raw rock phosphate to ensure a favourable ‘cash-flow’ for this Big but Poor Foreign Investor.

We should note, to begin with, that the agenda of these criminal companies cannot be executed without the active support of those who wield State power, and this ‘collaboration’ is the factor that most threatens the vast majority of people, and why it needs to be brought into public focus.

Initiated in 1987 under a UNP administration, negotiations were renewed under Chandrika Kumaratunga despite her stated opposition to it in the run-up to the presidential election of 1994. Her assurances were implemented in reverse within a few years. At the next presidential election, Ranil Wickremsinghe and the UNP opposed the proposed heist. (It must be said that Ranil did not seek to revive it when he was Prime Minister for a second time).

Mrs. Kumaratunga, however, attempted to revive it. The Attorney General had advised the Ministry of Industrial Development that if the ‘Mineral Investment Agreement’ (MIA) was gone ahead with, "the Government’s expectations of increased foreign exchange earnings having a favourable impact on the balance of payments would not be realized."

The particulars of that advice relate, among others, to the following features of the draft /daft MIA proposed in 1997.

The Foreign Investor’s entire operation was to be financed by selling raw rock phosphate and by borrowing from our banks! The license for mining this area belongs to Lanka Phosphates Ltd., a wholly owned enterprise of the government. In other words, Lanka Phosphates Ltd. OWNS the right to mine and was to be required, under the draft MIA, to hand it over to the ‘Investor’ for a 10% share in the proposed new Joint Venture Company. The assets that Lanka Phosphates would have brought to such a ‘joint-venture’ amounted to over 80% of the total ‘investment.

In terms of the draft MIA, IMC-Agrico, had demanded and been offered a 5% rate of tax [though the Inland Revenue Law prescribes a minimum of 35% even for the smallest companies]; exemption from the withholding tax on dividends; exemption from the Advanced Company Tax; exemption from Sri Lanka Income tax for all IMC-Agrico employees, including ‘Management Consultants, Architects, Engineers, Quantity Surveyors, Construction Managers or in any ancillary field’ [that’s where the big jobs were supposed to be generated for Sri Lanka!].

The MIA was ‘supported’ by other agreements which were never made public. They included a Technical Advisory Services Agreement, an Export Distributorship Agreement, and a Shareholders’ Agreement.

The royalty payable for OUR rock phosphate was to be 5.5% of the ‘published Morocco price’, which IMC Global controls and could mis-report with a little help from friends in Sri Lanka. As noted above, the Moroccan phosphate is of a quality far inferior to that in Eppawala.

Income to Sri Lanka from the company’s road and rail transport development, for which our government would have had to evict more people and misuse existing laws, enact new ones and so on, would have been negative in relation to the costs to be incurred by the government and more directly by the people.

And what of poor risk-taking IMC-Agrico? What would be the extent of their losses in trying to bring us into the 21st century of High Technology and ‘globalized’ bank accounts?

Well, besides the profits they would make from the phosphate itself, and from other rare earths and minerals this deposit may contain [including gold, uranium and thorium], we would have to pay 4% of the construction fee plus 2% of net revenue from the sale of products. They would get 4.5% of gross selling price ‘in respect of ‘distributorship’ for the processed product and 2% for the export of raw rock phosphate.

They were to be protected ‘against minority share-holder interests’ - that means the government of Sri Lanka acting through Lanka Phosphates Ltd.!

Despite all the unlawful concessions on income tax, tariffs and total exemption from the application of other laws, the Joint Venture Company was to be registered in Sri Lanka. The Memorandum and Articles of Association could be changed at will by a majority of 80% of the shareholders - the foreign shareholders’ share proposed was 90%,

The Joint Venture Company could, however, take any "disagreement" with the Government or any resistance from the people, - either of the North Central Province, or from Trincomalee, (where a minimum of 750 acres of prime land by the harbour were to be reserved for IMC-Agrico), or from the rest of this country, before an international tribunal for "arbitration".

The agenda of these criminal companies cannot be executed without the active support of those who wield State power, and this ‘collaboration’ is the factor that most threatens the vast majority of people, and why it needs to be brought into public focus.

President Kumaratunga responded to the observations of the Attorney General by appointing a ‘negotiating committee’ headed by Sarath. N. Silva, the Attorney General in person. He has been quoted at length by Dr. Herath.:

‘The investment was in the region of $400 million, - the largest ever to be made by a foreign investor. This project was scuttled due to misguided interventions. . .’. (Actually, as a matter of fact’ the ‘investment’ was to be of the order of $14 million –and had been disbursed already among some decision-makers.) Evidently, a mastery of the law and its application in a manner that does not offend common sense, were insufficient for promotion within the judiciary.

When this matter came up for adjudication before the Supreme Court, with R. K. W. Goonasekera assisted by Ruana Rajapakse for the petitioners, Dr. A. R. B. Amerasinghe, who, along with Mark Fernando, was arguably the most erudite and fearless judge we have had since 1948, held against the State. His judgment, supported by Justices Gunasekera and Wadugodapitiya, drew attention to the above mentioned factors, declared that the State is but a custodian of the country, not its owner, and decreed that the project may not be proceeded with until a comprehensive cadastral survey and an assessment of the environmental impacts of the proposed project had been done and presented to Court.

The present note refers both to Dr. Herath’s intervention and to the reports of 2008 which revealed that moves were afoot to sell Eppawala to yet other front companies of IMC-Agrico hired for the purpose from China and/or India.

It is time such charades, into all of which treason is inbuilt, be abandoned unequivocally.

 The Eppawala project was designed to cover some 800 square kilometers, digging up all that land, destroying the intricate irrigation system that dates back some 1500 years and bringing the phosphate dig right up to the Ruvanveliseya. Those who supported the attacks on the Sri Maha Bodhi and the Maligawa have long looked forward to such acts of vandalism which the Portuguese were so hell-bent on.

What they would do, given the chance, is to uproot the people, have their lands compulsorily acquired by the government which will be obliged to use all the coercive powers at its disposal, including ‘informal’ ones, for that purpose; obliterate the archaeological remains and the living temples that encapsulate a culture which is part of the heritage of mankind; and destroy one of the most ancient systems of irrigated agriculture in the world - a system that ‘modern technology’ is yet to master.

The people await a formal statement on this and like matters from the President, Parliament and the judiciary.

The principle that any administration, in all its acts, be they legislative or executive, has as its primary responsibility, the protection of the common weal, has underscored the role of the judiciary as the final arbiter of the fate of the people.

Hence, perhaps, the decision of the Executive Committee of the People’s Alliance to entrust the prudent development of Eppawala to our engineers and scientists.

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