Gold yields US$517.1M in exports

-four times amount earned by sugar

Gold continues to lead Guyana’s economy, raking in US$517.1 million from exports last year and the industry is projected to expand this year.

For 2011, total gold exports represented a 49.3% increase over 2010 and is four times the amount earned by sugar exports.

In presenting the national budget for 2012 to the National Assembly yesterday, Minister of Finance Dr. Ashni Singh pointed out that the mining and quarrying sector recorded growth of 19.2% in 2011 and underlying this was a 17.7% increase in raw gold declaration to 363,083 ounces, which is the highest level since 2004, when Omai gold mines was still in operation. Gold production last year increased by 14.9% to 347 850 ounces.

The continuing favourable world market prices last year induced significant investment in the sector as both the small and medium scale miners expanded their operations, the minister said. He told the House that a moderate growth of 2.9% for gold is projected in 2012, even as price incentives continue to lure greater investment into the sector.

Last year was a record year for gold, with domestic mine production surpassing the Omai gold mine highest output by 2.5% and recording a third consecutive year above the 300,000 ounce mark. Over US$100 million was invested last year in the small and medium scale gold mining sector, mainly as a result of high gold prices and for 2012, the figure is expected to increase, Singh said.

New investments

He highlighted two significant new investments in the sector; namely, Guyana Goldfields Inc. and ETK Inc/Sandspring Resources Ltd, both of which are at the resource assessment stage. Guyana Goldfields Inc. has announced positive feasibility study results for its Aurora Gold Project in the Mazaruni, with the total investment expected to amount to US$600 million and about 250 jobs forecast to be created during the development phase, with an additional 200 created during the mine operation.

In the case of the Toroparu mine being developed by ETK Inc/Sandspring Resources Ltd., a total investment of US$400 million is projected, with 300 jobs expected to be created during development while another 200 jobs will be created during mining. The gold subsector is poised to continue to play a leading role in its contribution to growth, exports and job creation, Singh declared. Going forward, orderly growth and development and capacity building will be government’s focus, he said.

Meanwhile, bauxite production last year amounted to 1.8 million tonnes compared to 1.08 million tonnes in 2010. Bauxite exports earned US$133.3 million due to higher production levels at both bauxite operations, with the export volume increasing to 1.8 million tonnes compared to 1.1 million tonnes, outweighing the decline in the average export prices which contracted by 27% to US$73.4 per tonne.

The minister said that the bauxite industry has served as an important traditional contributor to overall economic performance. “Even as we promote diversification and creation of alternative job opportunities in and around the bauxite communities to reduce their dependence on this industry, efforts remain unabated to facilitate the emergence of a growing and more competitive bauxite industry despite challenging and unpredictable external circumstances,” he said.

Singh pointed out that the global market for bauxite continues to show mixed signs. In 2011, while the refractory market continued to recover, the metallurgical bauxite market in the Atlantic region faced a declining price for alumina in the face of excess capacity and supply. Nevertheless, 2011 saw an expansion of production for both companies operating in Guyana. Rusal’s BCGI production of 1.3 million tonnes represented a 61% increase over 2010, largely driven by improving production equipment and mining practices, he said. Bosai saw an expansion in refractory bauxite production by 10% in volume to over 203,000 tonnes in 2011.

Singh said that under the PPP/C government, the value of investment in the bauxite industry since privatisation has been in excess of US$200 million. “Over the next four years, a new wave of expansion is expected that will see even larger sums being invested. In 2012, Bosai will start construction of a third kiln aimed at expanding RASC production by 150,000 tonnes per annum, and the production of a facility to produce 75,000 tonnes per annum of mullite (a rare silicate mineral). These two projects alone will create 500 jobs during construction and see over US$100 million being invested. BCGI is similarly poised for expansion with over US$30 million of mining equipment being delivered to Guyana early this year,” the minister said.

“Over the next four years, more than US$80 million will be spent to expand the Berbice operation to a level capable of producing 5 million tonnes of bauxite per annum. BCGI projects that at least another 450 jobs will be created. A third bauxite company, First Bauxite Inc. is projected to start construction of its refractory operations in Bonasika in the latter part of 2012, with an investment in excess of US$120 million,” the minister said.

Looking forward, the bauxite industry is expected to decline slightly by 0.2% to a production level of 1.7 million tonnes due to expectations of some contraction in overseas markets especially for higher value grades of bauxite.

Diamonds

In the diamonds sub-sector, declarations grew by 4.7% to 52,273 carats last year despite the continued shift of productive capacity into the more lucrative gold industry. The industry is projected to contract by 5%, this year.

On the whole, the mining and quarrying sector is expected to moderate to 1.8% growth in 2012.

The minister also spoke of investments in manganese and rare earths. In terms of manganese, he pointed out that Reunion Manganese Inc., a subsidiary of Reunion Gold, a Canadian traded company has executed a mineral agreement with government last year. “It is expected that, providing the feasibility study and investment programme are completed as projected, Guyana could witness the development of one of the largest manganese mines in the region by 2013. This operation has already seen over US$50 million invested and some 250 jobs created. The development phase will see 1,000 jobs created and mature operations will create over 500 permanent jobs, and generate total investment in excess of US$300 million,” the minister said.

In terms of oil, the minister pointed to current exploration activities. “In 2012, the petroleum sector will continue with offshore exploration drilling by Repsol and CGX, the coastal onshore and Rupununi activity is expected to continue, and new venture interests are expected to result in licences being issued in the ultra-deep water offshore as well as nearer shore and on the basin fringe, all bringing with them the attendant forward linkage opportunities for growth in ancillary services,” he said.

Uranium

Singh stated too that in the area of uranium, there are three companies currently engaged in prospecting for radioactive minerals in Guyana. Prometheus Re-sources of Canada is at the most advanced stage, with drilling occurring in Kurupung, Middle Mazaruni area.

The company lists Guyana as one of three countries in South America that represent a promising new frontier for uranium exploration and development and in July last year reported 82% uranium recovery, the minister said. Further, two other companies are conducting reconnaissance surveys in the North West District and mid-western Guyana.

Guyana also offers new terrain for rare earth elements which are a vital component in the electronics industry, for items such as cell phones and present a new opportunity for investment with industrial countries actively pursuing alternative sources, Singh noted. “To this end, government has invited expressions of interest for two locations, one in southern Guyana and the other in Middle Mazaruni. This is likely to give rise to the development of exploratory activity in the first instance and subsequently, conditions permitting, extraction,” he said.