Mining is carried out in both the public and private sectors. The most valuable products are precious and semiprecious stones, including sapphires, rubies, cats' eyes, topaz, garnets, and moonstones. Official exchange earnings from gems were negligible in the first two decades after independence because most of the output was smuggled out of the country. The setting up of a publicly owned State Gem Corporation in 1971 and export incentives for those exporting through legal channels brought a marked improvement. In 1986 legal exports were valued at Rs755 million, but many observers believed that a considerable quantity was still being exported illegally. In the late 1980s, Japan remained the most important market for Sri Lanka's gems. The Moors traditionally have played an important role in the industry (see Ethnic Groups , ch. 2).

Graphite also is of commercial significance. Almost the entire output is exported as crude graphite (plumbago). Ilmenite, a mineral sand used in the manufacture of paint and the fortification of metals, also is exported. Salt is produced by evaporation for the domestic market. Thorium deposits have been reported in Sabaragamuwa Province and in the beach sands of the northeast and southwest coasts. Exploration also has disclosed the presence of apatite (source of phosphate), dolomite (fertilizer component) and small pockets of economically extractable iron ore (see fig. 9).

Data as of October 1988