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Advertisers Barama Company Limited
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International mines show interest through massive investments in exploration and mining
Guyana's 93,000 square miles are situated on the Guyana Shield, one of the richest deposits of minerals in the world, and has attracted international interest among the largest mining companies in the world. The main interest is in gold, diamond and bauxite and, recently, semi-precious stones.
Prime Minister Samuel Hinds, also the minister responsible for mining, is confident that mining will continue to play a major role in moving Guyana's economy forward. "We are striving to exploit our natural resources while at the same time implementing through the Guyana Geology and Mines Commission sustainable mining practices enforcing regulations and regular environmental monitoring, constant policing and very importantly, training for the small and medium- scale miners."
Investment in mining pursued as a sustainable development
Investment in mining as a sustainable development is currently in joint ventures at the small-scale level between a number of Guyanese mines and mostly American companies, he said. Hinds cited the example of a medium-scale miner, Alfred Alfonso, and an American company in the Purrini area along the Mazaruni river as one of the more recent success stories but declared that a number of successful joint ventures exist in both small and medium-scale mining.
"With the fall in gold price many companies are looking at higher grades and expected lower costs that mean smaller volumes, and smaller operations so there may well be a rise in numbers." The prime minister cited partnership programs between Guyanese and Canadians from the Klondike that discuss joint ventures with help through a CIDA- supported program for sustainable mining practices.
According to Vice President and General Manager Rejean Gourde, "Guyana's natural resources have vast potential and we are looking to invest more as exploration proves even more fruitful." The company was formed in 1991, poured its first gold bar in January 1993 and has produced more than 300,000 ounces of gold annually.
Prime Minister Hinds said, "We've traditionally focused on gold and diamonds. Earlier on, it was bauxite. They're other potential minerals in Guyana. They have not yet come to the fore. We mined manganese some years ago in the Northwest District, and there were some other minerals mined along the Mazaruni River, but it has been gold and diamonds mostly.
"A South African group called Migrate Mining is doing the most interesting prospecting, said the prime minister. That group has been looking at the parallels between the Roraima Plateau that exist in Guyana and Brazil and Venezuela. The Roraima Plateau, geologically, is the estuary, the mouth of a huge river back in some very earlier time geologically in particular when the South America continent was up against the African continent. From the experiences in Africa, the group is hoping to be able to locate the same in these Pakaraima or Roraima mountains. We call them mountains now but at that time they were sediments at the bottom of a huge river. If you look at it, you see the layers of sediments. This area has been known as a producer of gold and diamonds and it is generally thought that these gold and diamonds are being released from the Roraima Plateau so that the group is looking to determine the stream flows in those ancient times."
Guyana's mineral policies, said the prime minister, "are quite similar to that which exists in other places in North America. We have a royalty that in some ways may be one of the higher ones. It's 5-percent royalty on gold and diamonds and it's about 1 percent on all other minerals. Recently, taking account of the fall of gold price, it has been modified in that it is now, when gold prices falls below $285 an ounce, 4 percent, and if it falls below $260 an ounce, it falls to 3 percent royalty."
Generally, mining companies would receive a waiver on all duties for all incoming equipment, process materials, spare parts and fuel. "We put 10 percent on fuel but they get duty waivers essentially on all things except maybe foodstuffs and clothing. They also have tax write-off from their capital spending."
Capturing markets for sand and industrial minerals
More recently, Mazaruni Granite Products Co., has put in a very modern, large, plant for stone products hoping to capture a big portion of the Trinidad market. A construction boom is expected there for industries relating to gas and other high-energy industries and Mazaruni Granite is hoping to capture a good portion of that market for stone construction.
Mazaruni Granite did win a contract and was successful in their performance for re-paving the runway in Suriname.
Petroleum exploration moving at a rapid pace
Petroleum exploration has been very exciting recently. Exxon-Mobil exploration has already conducted aeromagnetics over the virgin deep water off the Atlantic Coast. We have also a smaller company - Century Oil off the northwest. There is also another company, CGX Energy Inc. and its management seems to be quite excited with the results of their exploration. They are completing arrangements to drill. Century Oil seems pretty pleased, too. It is closer to shore so the well that it may drill would be much cheaper and it looks like more like a $1 million operation.
The Guyana Geology and Mines Commission has data available in the form of seismic, geophysical logs and other information, all supporting the opportunities existing to invest in hydrocarbon exploration in Guyana. The focus for such investment is the Takutu Basin, an inland rift basin of Jurassic age with proved source rocks and a discovery well that showed production of 42 degree API low wax, low sulfur crude at 409 bpd when tested by Home Oil Co. in 1981 and 1982. This acreage was also an attraction for Hunt Oil Co. 1989 to 1994 when that company conducted exploration efforts in Guyana.
Opportunities also exist in the Guyana offshore basin where an area seaward of the Essequibo River is open for license. In the offshore areas, joint venture arrangements are possible with some of the current operators.
The fiscal regime is very attractive with the production-sharing format being used. In this regime, companies during the exploration phase will benefit from a variety of incentives including waive of duty for imports of petroleum equipment and machinery, reduction of duty to nominal levels on fuel for exploration operations and exemption for the contractor from certain provisions of the Corporation Tax Act related to payments made by any affiliated companies or subcontractors. This latter concession is in connection with incentives on withholding tax requirements.
The government also has a minimum discretionary position in respect to the profit oil split, which is a maximum of 50 percent for the contractor and the cost recovery ceiling and which shall be no more than 75 percent of recoverable costs per month for the contractor.
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Table of Contents President Bharrat Jagdeo pursues foreign and local investment, builds confidence in private sector |
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I
n addition to being a country with many waterways that support the name "Land of Many Waters," Guyana is indeed the "Green Land of Guyana," as expressed in its National Anthem. In fact, Guyana is one of the greenest countries in the world! Yet mining of gold, diamonds, bauxite, stone products and sand and semi-precious stones is one of the main contributors to its growing economy.
The
prime minister said that mining is the second or sometimes third largest
foreign exchange earner. "You know, sugar is one, rice is another,
gold, diamond, bauxite all together, I think there have been times
when prices were good that it may have even been No. 1. As you know,
there is Omai producing in the order of 310,000 ounces in the area
of gold and other miners produce about 110,000 ounces of gold. We
have about 50,000 karats of diamond produced and in terms of bauxite,
we have about 3.3 million tons of dry bauxite produced."
Larger
investments include the Omai Gold Mines Limited, part of a Canadian
company, Cambior, which invests more than $285 million and employs
more than 1,000 Guyanese. It is the largest single contributor to
inland revenue in personal income taxes to the government. Omai Gold
Mines Limited has adopted the ISO 14001 standards and is soon to be
certified as its parent company has been. Omai has contributed significantly
toward equipping the Guyana Environmental Protection Agency in its
technical capability to monitor the environment by providing equipment
and training and setting up a laboratory.
According
to the prime minister, the patterns in the sediments in the mountain
indicate the layers in the mountain and the screen size distribution.
He said, "they then try to determine the best spots to look for any
gold and diamonds that might have been deposited in gravel back some
long time ago - 100 years or whatever."
"Also,
we hope to capture a market for sand and industrial minerals in the
mining world. Often it is pointed out that price on a world scale
taken altogether - industrial mineral, sand and stone and so on -
actually total more money than the industry itself, because they are
used in such volumes for all constructions - roads and buildings.
So we may be able to take a position in industrial minerals, building
materials - white sand or sand for construction site and also for
quarry store," said the prime minister.
Abundant
information available for hydrocarbon exploration