This week’s column and the next will wrap up this somewhat extended discussion I have been having on Guyana’s dependence on the export of minerals. This has been treated as part of a broader consideration of Guyana’s high level of economic dependence on extractive export industries more generally. In this regard, there is one sub-sector left to be considered namely, the forest sector. As I continue to pursue this, it is my hope readers will also continue to keep in mind that this analysis is specifically designed to illustrate the dangers and pitfalls that the country faces because of this heavy reliance on export extractive industries. As we now know, this dependence is expected to deepen sharply in the time of our petroleum and gas production and exportation.
Thus far, the discussion of the mineral extractive sector has specifically addressed the broad contours of the gold and bauxite industries. Presently, these are by far the two leading mineral sub-sectors. A decade or more ago, however, I would have had to include diamonds. Traditionally, this mineral has been viewed as one of a “vaunted triumvirate” of products (bauxite, gold and diamond) constituting the core of Guyana’s mineral wealth. Since then, the declaration/production of diamonds has precipitately declined, with no seeming prospect of revival to the former level of its glory years. Therefore, similar to the recent discovery of offshore petroleum and gas, this decline had added to a shift in the perception of the current and future core of Guyana’s mineral wealth.
The data reveal that, in 2004, annual diamond declaration/production was about 455 thousand carats. By 2010, this total had fallen to only 11 per cent of the earlier level. And, indeed, for the recent period (2010-14), the average total declaration/production of 61 thousand carats was less than one-seventh of the level of 2006. Indeed declarations had fallen to as low as 40 thousand carats in 2012, but have since risen to 100 thousand carats in 2014. Not surprisingly, the export value of diamonds had fallen to only US$8.2 million in 2012 and US$14.7 million in 2014. This compares to an export value of US$49 million in 2004.
Guyana’s mineral wealth
Guyana’s mineral wealth has always extended beyond the “vaunted triumvirate” of minerals, cited above. Two decades ago, the National Development Strategy, (1996), observed the several occurrences shown in Schedule 1 below:
As regards the Schedule, readers should also note: 1) recent discoveries of petroleum and natural gas resources have to be added, and 2) the array of minerals that are actually produced is reported in the National Accounts under the sector ‘Mining and Quarrying’. Details of GDP performance of this sector were provided last week.
The regulatory apex
Established in 1979, the Guyana Geology and Mines Commission (GGMC) forms the regulatory apex of the mining and quarrying sector of Guyana. As constructed, the GGMC’s general administration and financing departments operate through five technical divisions. The Website reports these as geological services, mines, environment, petroleum and land management.
Further, the GGMC identifies for itself eight principal roles, namely: 1) change agent in the diversification of the economy via the mineral sector; 2) facilitator of development opportunities, via an expanding mineral sector; 3) provider of a database on Guyana’s geology and mineral resources; 4) provider of advisory services, prospecting information, and technical assistance to the general public; 5) adviser to government on mineral policy matters; 6) regulatory supervision and enforcement; 7) responsibility for preserving the environment; and 8) collection of revenue, through various rentals, fees, charges, levies, and so on, under the Mining Act.
Too big to fail
My study, which I had earlier recommended (‘Too Big to Fail: A Scoping Study on the Small and Medium Scale Gold and Diamond Mining Industry, 2010’) discusses mining policy and the GGMC more substantially than I can attempt to do in a regular Sunday column series. I wish, however, to recall a key observation which is made in that document.
This observation is that the Guyana Mining Act (1989) is not a substitute for a mining policy and should therefore never be portrayed as such. As I argue more fully in the document, an effective mining policy is one that has public ‘buy-in’ and ownership of it: “Under modern best-practices, mining policy should be formulated as the product of a sustained, transparent and open process of consultations with key operators, major stakeholders, interested persons and organisations, as well as interested participants from the wider society”.
For readers’ information, Schedule 2 indicates 14 key areas, which a comprehensive mining policy, adapted to Guyana’s requirements should cover:
The discovery of significant petroleum and gas supplies together with the precipitate decline of the diamond industry has shifted perceptions of Guyana’s mineral wealth away from the traditional notion of a “triumvirate of mineral resources” (as celebrated in earlier studies of Guyana), to a more diverse array of minerals, hopefully, led by a robust energy sector. In this regard a broader notion of extractives’ sector dependence, as is being discussed in this series, seems a more pertinent approach than mineral dependence.
My next substantive topic of discussion will therefore be the forest sub-sector.