How did an Australian firm acquire a Sri Lankan mineral project?

COLOMBO (News1st): A News1st investigation has uncovered a scheme that allows foreign entities to exploit Sri Lanka’s mineral deposits at a low cost. The scheme was unearthed during an investigation into a proposed mineral mining project on Mannar Islands involving an Australian company – Titanium Sands Ltd. Sri Lanka’s Mines and Minerals Act does not allow licences to be issued to companies not registered in the country for the exploration or mining of minerals.

How did the Australian company get involved in the project?

Five local companies hold nine licences to explore minerals on Mannar Islands in which a valuable deposit worth nearly 265 metric tonnes has been discovered. They are Kilsythe Exploration Pvt Ltd., Hammersmith Ceylon Pvt Ltd., Supreme Solution Pvt. Ltd., Sanur Minerals Pvt. Ltd. and Orion Minerals Pvt. Ltd. The local companies were sold off to two Mauritian shell companies – Bright Angel Ltd. and Srinel Holdings Ltd. The Mauritian shell firms were ultimately acquired by Australian company Titanium Sands Ltd. allowing it to take control over the exploration project that is underway. Three individuals identified as Kobiraman Balakrishnan, Priyantha Abeywardena and Robert Nelson figured prominently in the process. News 1st has seen documents that show how the licence holders had fallen into the hands of the Australian firm.

How did Titanium Sands Ltd. get hold of these licences?  

Kilsythe Exploration Kilsythe Exploration, that holds an exploration license, was set-up on the 3rd of September 2015. Since its establishment, all shares of the company were held by its parent firm Kilsythe Investments Pvt. Ltd. The initial director of the parent company Kobiraman Balakrishnan had resigned on the 12th of January 2016 paving way for two individuals named Priyantha Abeywardena and Robert Nelson to become directors. On the 10th of March 2016, Abeywardena and Nelson allowed all shares of the parent company Kilsythe Investments to be sold to a Mauritius firm named Srinel Holdings Ltd at a mere 1000 rupees. Srinel Holdings was ultimately acquired by Titanium Sands Ltd. Hammersmith Ceylon Hammersmith Ceylon, set-up on the 29th of September 2015, holds 2 licenses to explore Mannar Islands. In this firm as well, Kobiraman Balakrishnan who served as the first director, resigned on the12th of January 2016 paving the way for Priyantha Abeywardena and Robert Nelson to become directors. All shares of Hammersmith Ceylon, valued at just Rs 1000 were transferred by its initial shareholder Kobiraman Balakrishnan to a company named Singha Lanka Investments Pvt. Ltd. At that time, Singha Lanka Investments was owned by the Mauritius Company Srinel Holdings Ltd. Srinel Holdings was ultimately acquired by Titanium Sands Ltd. Supreme Solutions Supreme Solutions, set up on the 24th of November 2015, holds 2 licenses to explore Mannar Islands. The company had been registered as a subsidiary of Singha Lanka Investments a day after Priyantha Abeywardena and Robert Nelson became directors of the parent company. As Singha Lanka Investments was already owned by Mauritius Company Srinel Holdings Ltd., the licenses slipped into the possession of the foreign entity. Srinel Holdings was ultimately acquired by Titanium Sands Ltd. Orion Minerals Orion Minerals set up on the 7th of July 2015, owns 2 exploration licenses. All shares of the company valued at 6 million rupees were sold to a company named Rotim Investments Pvt. Ltd. At the time of selling the shares, Robert Nelson – a shareholder of Titanium Sands Ltd, was serving as a director of Orion Minerals Ltd. Priyantha Abeywardena and Robert Nelson were serving as directors of Rotim Investments that purchased the license holder. At that time Rotim Investments had been owned by a Mauritius company named Bright Angel Ltd. that was later acquired by Titanium Sands. Sanur Minerals Sanur Minerals, that holds 2 exploration licenses, had been established on the 29th of September 2015, under its parent company Sanur Asia Investments Pvt Ltd. All shares of Sanur Asia Investments valued at Rs 1000 was owned by Kobiraman Balakrishnan, who was also an initial director. Just as in previous occasions, Kobiraman Balakrishnan had resigned on the 13th of January 2016, paving the way for Priyantha Abeywardena and Robert Nelson to take over as directors. Following his resignation, Kobiraman had sold all shares of Sanur Asia Investments to Rotim Investments Ltd, in which Abeywardena and Nelson were directors. At that time, Rotim Investments had been owned by a Mauritius company named Bright Angel Ltd. that was later acquired by Titanium Sands Ltd.

Why did the Australian company go all the way to Mauritius?

When Titanium Sands Ltd purchased two Mauritian companies Srinel Holdings Ltd and Bright Angel Ltd, the Tax Treaty signed between Mauritius and Sri Lanka in 1996 seemed to favour the Australian establishment. This is because the Treaty grants tax concessions on dividends paid to the Mauritian shell firms. But the tax on dividends was removed by the government from the 1st of April last year, making the project even more lucrative for Titanium Sands Ltd. The exemption of taxes will result in potential revenue losses for Sri Lanka given the value of its mineral resources. In June 2020, Titanium Sands Ltd announced that it had discovered nearly 265  metric tonnes of valuable minerals such as Ilmenite, Rutile and Zircon on Mannar Island.

Involvement of Vuna Capital Trustees

Srinel Holdings Ltd., was a Mauritian shell company purchased by Titanium Sands Ltd to gain ownership of the exploration licences. Mauritius records indicate the address of Srinel Holdings Ltd., as Vuna House, 53 Duperre Street, Quatre Bornes. The address of Bright Angel Ltd., another Mauritian shell company purchased by Titanium Sands, has been indicated as Level 10, NeXTeracom Tower I, Cyber City, Ebene, Mauritius. Incidentally, these addresses belongs to a company identified as Vuna Capital Trustees.

Does Titanium Sands Ltd. hope to mine Sri Lanka's minerals?

Although, the Australian company has claimed that it has no plans to mine Sri Lanka's minerals, other documents filed by the company prove otherwise. Titanium Sands Ltd has already admitted commencing talks with parties in China, Japan, India and the UAE targeting the export of Sri Lanka's minerals. These discussions are taking place even before obtaining a mining licence from the Geological Survey and Mines Bureau.