Canada’s interest in Guyana’s extractive sector remains substantial despite the drop in gold prices, according to Canadian High Commissioner Nicole Giles.
This, Giles says, is reflected in the fact that Canadian companies contribute 90% of the total Foreign Direct Investment (FDI) in these sectors in Guyana. She also noted that the investment figure is somewhat dated and that the actual figure is likely to be higher.
Giles says that while Canada is interested in deepening ties to ensure trade relations with regard to gold, bauxite, oil and gas continue to flourish, the Canadian government is also committed to ensuring Guyana and Guyanese benefit from the relationship.
During an interview with Stabroek News last week, she outlined her government’s intention to foster deeper trade relationships with the region, Guyana included.
Despite the absence of an Embassy, the Canadian Government maintains a physical presence in Guyana through the High Commission.
Retaining such a presence is monumentally expensive and while it is noted that the Government of Canada maintains this presence for several reasons, including supporting democratic principles and offering services to Canadians living and operating in Guyana, it is also clear that much of its efforts are geared toward making conditions conducive for Canadian investors to tap into Guyana’s various sectors, particularly the extractive sector.
Together, Canadian companies have about Cdn$3 billion invested in Guyana’s extractive sector. This figure represents a staggering 90% of the FDI pumped into the mining sector, particularly mining.
Canadian investors in Guyana’s mining sector include Guyana Goldfields Limited, which will be investing US$355 million in its Aurora Project in Region Seven. Giles noted that a substantial portion of the funding is coming from the World Bank’s International Financial Corporation (IFC) and she said the company’s success in sourcing the funds, considering the current international financial situation, coupled with current gold prices, is quite an accomplishment and a testament to the company’s commitment to invest in Guyana.
The project comprises an open pit and underground gold mine, a processing plant, a tailings management area and other associated facilities. A port facility at Buck Hall will be upgraded to accommodate ocean going vessels and will provide facilities for cargo, fuel and personnel handling during project construction and operations.
In addition to the inflow of capital, several hundred Guyanese stand to benefit from the job opportunities that will be created. The IFC has said it expects that between 700 and 900 jobs will be created. Guyana also stands to benefit from royalties and taxes paid to government. It is estimated that the Guyana government will collect around US$850 million over the 17 years the mine is expected to operate. This figure assumes the price of gold remains around US$1,300 per ounce.
In addition to these indirect contributions to Guyana’s economy Guyana Goldfields has made several contributions to society in keeping with what Giles says is her government’s policy of ensuring companies fulfil their social responsibilities. In January the company donated US$20 million to several NGOs to support their work.
Another mining company, Sandspring Resources Limited, is also making serious strides towards commencing its Toroparu Gold Project in Region 7. The company’s capital and operating costs are estimated at US$501 million for capital expenditure, and US$954 million over the expected 16-year life of the mine. The investors are looking to commence operations in 2015 and want to produce around 228,000 ounces of gold per annum.
They have noted that a hydroelectric plant would greatly support the operation and so there are plans to construct a US$300 million, 65-megawatt power plant. It is expected that the plant will benefit the company, the community of Bartica, as well as several other communities along the Essequibo River.
The company needs US$464 million in upfront capital to commence and Giles says it is in the process of putting this credit together.
Oil and gas
Giles also said that Canada remains interested in prospects for the extraction of oil and gas in Guyana. She noted that CGX, a Canadian oil company, is looking to begin drilling for oil in the Corentyne Block by the last quarter of this year. CGX, which has experienced several difficulties with its operations since coming to Guyana in 2000, was recently granted a five-month extension on its Petroleum Prospecting Licence (PPL) for the Corentyne Block.
The extension is to allow the Hakurya-12 rig to be used sufficient time to arrive in Guyana, the company had said. CGX also has a PPL for operations in the Demerara Block and has commenced the procurement process in an effort to complete its 2014 work commitments.
While CGX puts it operations together to commence drilling, Giles says the Canadian government is working with local officials to enhance legislation to regulate the oil and gas sector. “It is important to get the legislative framework in place before the operations start,” she explained. As the governments of Guyana and Canada pursue the necessary legislative provisions, officials from Guyana, including Natural Resources Minister Robert Persaud, as well as representatives of the Guyana Geology and Mines Commission (GGMC) and the Ministry of Finance, were flown to Alberta, Canada where they discussed several related matters with their Canadian counterparts.
Giles said there have been initiatives between Guyana and the Commonwealth Secretariat aimed at establishing the necessary regulatory framework needed to support the country’s oil and gas industry. She says the Canadian Government, through the High Commission, will be looking to continue training for Guyanese to enable them to participate in the economic benefits to be had. Such training, she told Stabroek News, will be needed as the industry is highly technical.
There are several other areas where Canada and Guyana share good relations, although they tend to be dwarfed by the extractive sector.
Giles noted that the most important travel document of any Guyanese, the passport, is actually printed in Ottawa, Canada, by Canadian Bank Note Com-pany Limited, a large Canadian printing services company. The bank of Guyana has also used the company to print some of Guyana’s currency. These facts are not known by many Guyanese.
