Sri Lanka is making a renewed push to revitalise its underperforming graphite sector, with the government inviting private investors to develop the historic Kahatagaha mine under a new public-private partnership model.
Announcing the move, Cabinet Spokesman and Minister Nalinda Jayatissa said the state would retain ownership of the mine, while private partners would be brought in to invest in exploration, processing, and value addition.
The policy shift is aimed at attracting both capital and modern technology to an industry that has long struggled to fulfil its potential.
Kahatagaha Graphite Lanka Limited, the state-run operator of the 102-acre site, is among the country’s oldest industrial assets. Despite producing high-quality vein graphite primarily for export, outdated exploration techniques and limited value addition have kept earnings stagnant.
In 2024, graphite exports brought in just US$13 million — a figure largely unchanged over the past three years. By mid-September 2025, export earnings had fallen below US$10 million, raising doubts over the industry’s ability to capitalise on booming global demand for battery-grade graphite, driven by the electric vehicle and renewable energy sectors.
Critics point to deeper structural problems inclduing a lack of national strategy for downstream processing, an opaque and allegedly misused licensing system, and little investor confidence in the regulatory environment.
“Right now, we’re exporting raw material while other countries reap the value-added profits. If we want to compete with players like China and Mozambique, we need reforms — not just policy announcements,” one industry analyst said.
The government’s assurance that existing jobs at Kahatagaha will be protected is politically significant. However, analysts caution that long-overdue modernisation must not be stalled by bureaucratic inertia.
Sri Lanka’s graphite exports once earned over US$25 million annually in the late 1970s even without today’s surging industrial demand. Adjusted for inflation, current earnings mark a sharp decline in competitiveness.
Now, the success of the Kahatagaha initiative may prove pivotal. Done right, it could serve as a template for broader reform. Done wrong, it risks becoming yet another missed opportunity in a sector with untapped global potential.
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