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Presentation for the_minister-mining_development_in_guyana2

  1. 1. Extractive Industry Opportunities in Guyana Hon. Robert M. Persaud, MBA, MPMinister of Natural Resources and the Environment PDAC International Convention, Trade Show & Investors Exchange – Mining Investment Show March 4–7, 2012, Toronto, Canada Metro Toronto Convention Centre – South Building
  2. 2. Overview  Guyana’s principal wealth are the natural resources both inland and offshore along with its forest and the assets therein. The Government have been able to sustainably manage our forests to derive economic benefits for the economy and create livelihood opportunities for our people while at the same time maintaining one of the lowest rates of deforestation in the world. In doing so we have also created a new economic opportunity through avoided deforestation (REDD+) for which Guyana is one of the first countries to be paid. This administration will continue to focus on expanding and diversifying the economy on the basis of rationale use of Guyana’s natural resources. To facilitate this effort, the Ministry of Natural Resources and the Environment (MoNRE) have responsibilities for forestry, mining, environmental management, wildlife, protected areas, land use planning and coordination, and climate change. 2
  3. 3. Prospects for Increase Investment  The mining sector has recorded a historically remarkable year as the price for gold increased tremendously and more than 350,000 ounces of gold was the declaration for 2011. The sector is set to take off over the next few years as four mineral agreements were inked between international investors with access to international markets already in place for the country’s minerals. Several companies have signed a partnership agreement for a large scale mining operation which has the potential of contributing approximately US$550M annually to Guyana’s Gross Domestic Product as an additional 250,000 to 300,000 ounces of gold are to be realized annually. Various mining areas including the aurora mines located in the Cuyuni River, Region 7 will be developed at a cost of US$1B by foreign investment (in particular Canadian companies) as an accord to see the investment was inked during the year. The construction phase of this project will provide job opportunities for an estimated 900 Guyanese and the ongoing exploration component will see more than 1,000 men and women being employed. Iron Ore Manganese Rare Earth Elements in the Southern and North Central part of Guyana 3
  4. 4. Physical Performance and Projections for the Extractive Industry  Large Scale Prospecting Licences issued in 2011 were 191, an increase of 40.4 % from 2010. One hundred and eighty nine Prospecting Licences are budgeted for 2012 covering 1,958,040 acres (792,390.7 hectares). In 2011 there were 191 Mining Licences in existence, exceeding the budget by 1.6 percent. Twenty nine Mining Licences are budgeted for 2012, covering 118,813 acres (48,081.9 hectares). There were 5 Reconnaissance permissions for Geological and Geophysical Surveys in existence in 2011, 62.5% of the budget. Fifteen Reconnaissance permissions are budgeted for 2012. Mining Permits in 2011 totaled 1,161, exceeding 2010’s total by 56.5%. Mining Permits however fell short of 2011’s budgeted amount by 2.4%. Mining Permits projected for 2012 are 1,738 covering 1,553,772 acres (628,789.2 hectares). Prospecting Permits (Medium Scale) in existence were 5,149, an increase of 5.5% from 2010 and fell short 2011’s budget by 12.4%. Projections for Prospecting Permits (medium scale) for 2012 are 7,053 covering 7,194,060 acres (2,911,332.7 hectares). The total number of Claims (verified and unverified) for Small Scale mining operations (gold and diamond) in existence in 2011 was 15,032 of which 3,826 were River Location licences. For 2012, 16,500 are budgeted, of which 12,000 are Land Claims and 4,500 are River Locations. 4
  5. 5. Natural Resources Contribution to Real GDP 16 14.8 15.114 14.3 3.7 13.6 4.2 3.1 12.512 3.1 12.2 3.0 2.910 3.0 2.5 2.0 3.4 1.2 1.1 8 6 5.7 6.1 6.8 6.8 6.6 5.3 4 2 2.7 2.6 2.0 1.7 1.5 1.6 0 2006 2007 2008 2009 Revised 2010 Budgeted 2011 Bauxite Gold Other Minerals Forestry Mining, Quarrying and Forestry 5
  6. 6. Guyanas Mining Output for 2011  363,083 metric ounces of gold were as declared which represents a 39.6 % increase over 260, 000 metric ounces than what was projected for the year. Bauxite production of 1,771, 284 metric tonnes was 4.04% above projection of 1,702,436 metric tonnes Stone production of 488,030 metric tonnes was 22.01% above projection of 400,000 metric tonnes. Diamond production was 52,273 metric carats Sand production was 354,828 metric tonnes Loam production was 12,133 metric tonnes 7
  7. 7. Guyana’s Gold Declaration  400,000 363,083 350,000 300,000 305,178 250,000 246,002Troy Ounces 200,000 205,970 162,527 150,000 110,131 117,240 100,000 105,289 87,101 50,000 - 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 8
  8. 8. Total Bauxite Output for 2011  250,000 211,716 200,000 202,336 178,249 167,423 169,462 164,569 169,418 161,235 150,000Tonne 122,618 126,493 100,000 72,467 72,414 50,000 0 January February March April May June July August September October November December Calcined (RASC) Chemical (CGB) Metal Grade (MAZ) Tailings Total Bauxite 9
  9. 9. Diamonds Declared in 2011 9,000  8,000 7,730 7,000 6,000 5,128M/Carats 5,000 4,511 4,678 4,271 4,337 4,335 4,000 3,871 3,696 3,237 3,227 3,252 3,000 2,000 1,000 0 10
  10. 10. Sand and Crushed Stone Declaration in 2011  80,000 70,000 60,536 60,000 55,638 52,001 53,332 50,000 43,615Tonne 40,000 29,550 30,000 20,000 14,650 11,100 12,567 8,700 9,500 10,200 10,000 22,105 32,305 37,197 10,479 73,724 39,953 27,527 58,500 28,532 65,801 33,387 71,033 0 Sand Crushed Stone 11
  11. 11. Development of a Gold Refinery been operating at a very The Guyana gold industry has favorable position over the last few years and this is primarily attributed to the high prices of the precious metal on the world markets and the level of increased investments from both local and foreign developers in the mining sector. Guyana is seeking to develop a gold refinery. This undertaking must be collaborated with the Guyana Gold Board and the Ministry of Natural Resources and the Environment. This will follow the path of our commitment to support value-added activities and to ensure that the industry delivers maximum benefits to the people of Guyana. 12
  12. 12. Petroleum Development  Monitoring of Apoteri K2 drill hole which was completed in June 2011. Investigation of Shallow Gas Occurrences on the E.B.D, West Demerara, Essequibo Islands and Pomeroon. Commencement of an exercise to determine the resistivity characterization of Shallow Gas Bearing sand intervals. Petroleum skills development opportunities provided i.e. seismic interpretation methods; and Managing Offshore resources. Exploration drilling of Apoteri K2 by Takutu Oil and Gas Inc/Canacol. On-going work for Jaguar 1 Exploration Well by Repsol et. al. On-going work for Eagle 1 Exploration Well by CGX Resources Inc. Acquisition of infill 2D Seismic data over the Esso/Shell Stabroek block. Nabi Oil and Gas Inc. Petroleum Prospecting Licence under consideration. Continuing negotiations for Petroleum Prospecting Licence and agreement in respect of Anadarko Petroleum Corporation. A variety of interests in speculative exploratory activities from significant international and major companies. 13
  13. 13. For the areas of Mining, Bauxite and Quarry 1. Promote growth in the bauxite industry, including by facilitating a major investment in developing new bauxite deposits, facilitating investment by the bauxite companies in increased production capacity including the construction of new kilns, encouraging the export of new products such as mullite and proppants, and working with the bauxite companies on establishing the feasibility of alumina production2. Facilitate growth in the gold industry, both by supporting the artisanal mining sector and by facilitating investment in a number of large scale projects that in maturity will more than double Guyana’s gold production within the next five years and that will introduce new technology including underground mining3. Promote the establishment of other minerals as an export sector, including manganese.4. Promote the growth of the quarry stone industry both for domestic purposes and to meet the needs of the nearby export market such as in the Caribbean5. Encourage more value-added forestry by working closely with all stakeholders on addressing constraints while continuing to support the development of our timber and non-timber resources in a sustainable way consistent with the LCDS6. Guyana has the potential to develop an oil and gas sector. The mere continuation of the on-going exploration activities will see hundreds of technical and administrative jobs created. If the exploration activities yield favourable results, thousands could be 14 employed once production commences.
  14. 14. Mining Opportunities in Guyana Several economic minerals are exploited in the Guiana Shield. The main mineralsmined or those with potential are gold, diamonds and bauxite. Gold: gold extraction and exploration has been reported in the Guiana Shield since the colonial expansion of the 16th century. Gold is mainly found in areas of greenstone belts. Placer – placer deposits are observed on most of the main rivers draining the greenstone terrain, which hosts most of the primary gold. The Barama-Mazaruni Greenstone belt has low relief, deep weathering, which accompanied by the tropical climate and a lack of a post-Proterozoic cover, are right conditions for mobilization of gold. Lode – this is frequently found in Precambrian terrains (notably the greenstone belts of the Barama-Mazaruni Group). In many cases, the gold is hosted in quartz veins, which dip at high angle to sub-vertical. In the Guiana Shield, gold occurs as macroscopic, irregular gold grains occurring in fractures within quartz veins, disseminated in country rocks and silicified shear zones, as inclusions in disseminated/vein-hosted pyrite, chalcopyrite and pyrrhotite, or intergrowths with sulphides. 15
  15. 15. Mining Opportunities in Guyana  Diamonds: these are only found in placer deposits in many of the main rivers of northwest Guyana. The alluvial diamonds seen in northern Guyana are thought to derive from the Pakaraima Mountains, though the main source is unclear. Bauxite: bauxite extraction is a major industry and the country is a main global producer. Linden, in the north, is the main centre for this mining. The mining area is defined by a coastal strip 30km wide from the Essequibo River south-southeast passing through Linden to the Suriname border, including the Kwakwani mining district. On the coastal plains lie two types of bauxite present: residual and alluvial. Residual bauxite derives from in-situ weathering of beadrock formed during the upper Oligocene unconformity. Orebodies are usually 8-10m thick. Alluvial bauxite comes from transported bauxite material. It is often interbedded with sub-bauxite clays up to 10m thick and also exists in intermediate elevations as in-situ bauxite, 5m thick, capping hills. Average deposits have 50% aluminium and 4% silica. In plateaux, bauxite forms from weathering of various rocks in situ, and orebodies can be up to 8m thick. 16
  16. 16. Mining Opportunities in Guyana  Aggregates and Gravel: aggregate quarries in Guyana are mainly within the Bartica Assemblage, in which biotite gneiss, granite gneiss, hornblende- biotite gneiss, medium-grained gabbro and black biotite schist are extracted and crushed. Aggregates are used for road and building foundations as well as sea defence construction. Gravel, extracted from alluvial deposits, is used in the construction industry as aggregate for concrete manufacture and road construction. Silica Sand: abundant in Guyana, this is found as the Pliocene-Pleistocene ‘white sand’ deposits covering many regions, notably the coastal area. Apart from areas stained by ferruginous ground water, the white sand is very homogeneous with few impurities (heavy mineral concentration rarely exceeds 0.1%) and an absence of clay. Silica sand can be used industrially, including: glass, ceramics, abrasives, silicon carbide, silica tetrachloride, activated silica, silica flour and filtration. 17
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  21. 21. Applicable Policies and Laws  Policy: Mineral and Petroleum Policies and Fiscal Regimes set out by the Minister in January 1997 and amended from time to time. Principal Legislation: Guyana Geology and Mines Commission Act 1979, which is read as part of the Mining Ac 1989; Mining Act 1989 and Regulations; Geological Surveys Acct; Occupational Safety and Health Act, Environmental Protection Act and Industries Aid and Encouragement Act 22
  22. 22. Effective Environmental Governance The Natural Resources and Environmental Governance sub-programme focuses on strengthening national, regional and localenvironmental governance to address agreed environmentalpriorities. The sub-programme has seven key goals:1. Sound science for decision-making:2. National and international cooperation3. Poverty alleviation4. National development planning5. National and international policy setting and technical assistance6. Sustainable national and regional development7. Strengthen and harmonization of national laws and institutions 23
  23. 23. Resources Efficiency The resource efficiency sub-programme focuses on reducingthe adverse environmental impacts of producing, processingand using goods and services, while also meeting humanneeds and improving well-being. The sub-programme hasfour key goals:1. Building capacity for policy action2. Seizing investment opportunities3. Stimulating demand for resource efficient goods and services4. Assessing critical trends: To strengthen the knowledge base on Resource Efficiency, the MoNRE will assesses and reports on trends in how resources are extracted, processed, consumed, and 24
  24. 24. Fiscal Incentives for the Extraction of MineralsMining on a Large ScaleGold and Precious Metals, Diamonds and Precious Stones  Royalty: 5% of production or of gross revenues Income Tax: 35% Depreciation: 20% Zero rates of duty on equipment, process minerals and spares to be used during and in the course surveys, prospecting and mining No free equity to State, but the State shall have the right to nominate a member of the Board Withholding tax set at 6.25% of dividends Stability clause - for each mine developed, all conditions maintained for the duration of 15 years from the start of commercial production or the life of the deposit, whichever is shorter, then general rules for duties, income tax and withholding tax applyForeign Companies Whenever the price of Gold is above US$1000 per ounce, they will pay the usual 5% of the net price plus an additional 3% of the net price. In total, royalty will be 8% for foreign companies. This additional 3% is known as a windfall royalty payment.Bauxite and other Minerals (except sand and stone) Royalty: 1.5% of product or of gross revenues or of production costs leaving plant, whichever is greater All other conditions are the same as for goldMedium Scale and Small Scale Royalty: 5% of gross revenue for gold; 3% of gross revenue for diamonds Income tax: 2% of gross revenue, in lieu of Income Tax. If the permit holder is a corporation, corporation tax is payable at the rate of 35% of taxable income. Duty and value added tax (VAT) exemptions on a range items 25
  25. 25. Sustainable Development  Economic growth and social development cannot be sustained with our current consumption and production patterns. Globally, we are extracting more resources to produce goods and services than our planet can replenish, while a large share of an increasingly urban world population is still struggling to meet basic needs. Therefore, Guyana will become resource efficient in order to allow for the critical opportunity to address this unsustainable path and build a green economy in which economic growth is decoupled from environmental harm. By enabling the design and production of low-impact products and services, resource efficiency can help us meet human needs while respecting the ecological carrying capacity of our nations and the earth, as a whole. From the Government of Guyana to the research community to business and consumer groups, we will use expertise, experience and convening power to create tools and build partnerships that accelerate the transition to the Green Economy and resource efficient societies. 26
  26. 26. Thank You for your Attention  Guyana: The Natural Resources Frontier of theCaribbean and South America 27