Sri Lanka’s first semiconductor plant deal to be sealed soon
By Santhush Fernando in Colombo
Sri Lanka’s first semiconductor manufacturing industry project to exploit a super-quality vein quartz deposit in Mahagama, Moneragala, is to be concluded in the very near future.
It is believed that Toyota Japan, which had submitted the proposal for a total investment of Rs.18bn (US$ 160) will secure this strategic project- which is slated to become South Asia’s first semi-conductor fabrication plant.
“The deal will be finalized within the next few weeks. A fully-fledged semiconductor fabrication plant would undoubtedly accelerate Sri Lanka’s growth
Ministry of Environment and Natural Resources called for Request for Proposals (RFPs) on December 9, 2009, "from reputed manufacturers, as well as those having experience in mining and processing of Vein Quartz (Silica) to set up manufacturing plant(s) for value added high-tech products such as fused silica, poly-silicon for semiconductors, solar cells and micro chips". The deadline ended last January 25.
“Earlier, Mahaweli Authority posed a problem saying that the land belonged to it. But we managed to resolve by having one of its members on board the panel,” outgoing Secretary to the Environment Ministry, M.A.R.D. Jayathilake earlier said.
Asked as to why there was no ‘opening’ of proposals in the presence of the bidders, he said that since this was not a formal call for tenders or Expressions of Interest (EoI), the process was ‘not governed by government’s tender procedures and guidelines’. He added that he could not comment on the number of proposals received, off hand.
“They were just proposals and so there are no financial commitments indicated or any deadlines involved as such. However, there’s no secrecy and we are fully transparent.”
Jayathileke added that although there had been a previous cabinet memorandum to develop the quartz deposit, only one party had responded then, and furthermore there was no clear cabinet decision reached.
“A cabinet paper was submitted over six years ago. However, when Minister Champika Ranawaka was appointed as Minister of Environment, he wanted to go for fresh proposals as the requirements had changed,” he said.
Sri Lanka’s mining industry watchdog- Geological Survey and Mines Bureau had previously called for proposals by its advertisement dated November 20, 2008 but the process was later halted.
When inquired on the potential Sri Lanka would have in the semiconductor industry, an expert said on grounds of anonymity that, if the country was to become a commercial and knowledge hub, the government should opt for a high-yielding silicon fab project plan.
“Under the normal extraction and disintegration process only a powder can be obtained between the range of 15 and 18% of the raw vein quartz input whereas for higher returns we should target the manufacture of micro-powder which has a return of over 25% of the raw material,” he said.
It is learnt that Toyota Japan’s proposal anticipates achieving value addition levels of up to 1,700% and purity levels of 99.99999% essential for the manufacture of high-quality semi conductors.
Although a certain interested party had requested Toyota Japan to consider two other silica mines, one in the Matale District and another in the Ratnapura District, Toyota has reportedly turned down the alternate sites due to their small magnitude of less than half an acre, and had ruled out that the two sites were feasible. It is learnt that the party in question had also submitted a proposal with a mere Rs.200 as the total investment.
The Mahagama Vein Quartz deposit is located east of Embilipitiya and in close proximity to the Burusita Weva in the Udawalawe area within the Moneragala District and is about 270km from Colombo, about 75km from Hambantota and about 153km from the Port of Galle.
At present, only one company based in Kandy claims to be ‘the sole legitimate quartz processing industry in Sri Lanka’ with ‘the industrial infrastructure to practice a systematic and professionally managed operation.’ The company purports to export nearly 6,000 tonnes of processed quartz to Japan, South Korea, Singapore and other markets. Sri Lanka is recognised as a rich source of quartz and the company estimates the country to contain over 20 million tonnes of quartz deposits.
“It is shame that we are exporting very valuable quarts at a meager sum of Rs. 3,600 (~US $ 32) a ton whereas one kilo gram of the purified product is worth nearly US $ 50,000,” an expert said.
Despite the global financial crisis, the semiconductor industry grew from US$ 249 bn in 2008 to US$ 260 bn by 2009 and is dominated by USA, South Korea, Japan and the European Union.
- Asian Tribune -
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