Local mining watchdog under fire as royalty missteps cost millions

Sri Lanka has lost millions of rupees in royalty income as weak enforcement by the Geological Survey and Mines Bureau (GSMB) has allowed under-reporting of mineral extraction, Parliament’s Committee on Public Enterprises (COPE) said. 

The COPE warned that the government is forgoing substantial revenue because royalties for stone quarries are being calculated based on the volume of explosives issued, rather than the actual rock excavated.

“Due to the use of explosives in an illegal manner, the actual volume of rock removed could not be calculated, resulting in a large loss of revenue to the government,” the COPE said following its review of the Auditor General’s reports for 2022 and 2023 on the GSMB.

The COPE pointed to examples where massive rock excavation takes place from stone quarries in different parts of the country; however, in reality, only a small revenue is received by the government.

The COPE also cited the irregularities in sand mining, including a case in Puttalam, where a private contractor had removed up to 45,561 cubic metres of sand but paid royalties on just 1,594 cubic metres. 

“Accordingly, it was pointed out by the COPE that a royalty of over Rs.12 million had been lost,” the report said.

The COPE urged the Environment Ministry and GSMB to strengthen monitoring beyond the issuance of mining licences and to introduce urgent amendments to the Mines and Minerals Act, to close the loopholes.

“This institution, which can perform as a massive national enterprise earning far greater revenue, should act with proper vision and systematic planning,” COPE Chairman Nishantha Samaraweera said, adding that the COPE would continue to track implementation of its recommendations.