Bert Wilkinson
GEORGETOWN, May 31 2006 (IPS) – When the Montreal-based Cambior Inc. closed its depleted gold mine in western Guyana last year, authorities feared that the country would disappear from the map of major gold-producing nations.
After all, they figured that Guyana s brigade of about 20,000 miners, made up mostly of locals and Brazilians who have crossed the southwestern border, could never find the millions of dollars needed to move from small- and medium-scale mines to large projects the size of Cambior, which extracted 3.7 million ounces in 13 years at its Omai site on the western Essequibo River, until production ended last September.
But with gold prices hovering near 700 dollars per ounce, three times more than a decade ago, industry officials say the country is, like a pure nugget, gleaming in the distance to those wiling to invest in gold given predictions that surging prices might be around for a while yet.
We are passing through a golden period that the international analysts say will last quite a few years, said Tony Shields, executive director of the Guyana Gold and Diamond Miners Association. We have never had so much interest from people all over in the industry and this is clearly because of the price.
However, safety and environmental concerns about the gold mining industry linger here. Four small-scale miners working in open mud pits have died in recent years when poorly constructed walls collapsed and buried them.
The local environmental protection agency has complained about the use of heavy dredging machinery to extract gold-bearing ore, which is says has changed the courses of small inland rivers and disrupted local ecosystems.
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The Omai mine had also used cyanide to extract gold from ore. Though this process is widely touted as the most efficient system of extracting gold, spills into waterways have caused concerns that the heavy metal may linger for years to come.
In August 1995, two years after mining started, a storage pit holding 3.2 million cubic metres of cyanide-tainted mining waste broke open, spewing the waste for 100 hours into the Omai and nearby Essequibo rivers.
Non-governmental organisations sued the company for compensation for communities living downstream from the mine. Some of the cases have been settled, and others are still pending.
Local miners currently use mercury to extract gold, which is also toxic, but Shields said that campaigns are continuing to educate miners about proper usage of mercury in waterways where indigenous Amerindians and other communities live.
Meanwhile, in neighbouring Suriname, where less than two years ago Cambior opened the Gross Rosebel mine 160 kilometres south of the capital Paramaribo, the company is also cashing in, announcing record profits of 20.2 million dollars last year.
As an indication of how juicy the industry has become in recent months, Rosebel yielded up 341,000 ounces for Cambior at a production cost of a mere 208 dollars per ounce.
There is no doubt we are benefiting greatly from this period. Prices are good, said spokeswoman Seeta Mohamed.
Earlier this month, gold prices hit 730 dollars per ounce. Analysts say that with the insecurity in oil hot spots like Iraq and Nigeria, many investors are likely to stick with gold as a safe haven.
Eyeing Cambior s success across its eastern border, Guyanese officials have succeeded in convincing three Canadian companies to explore large areas in the western and northwestern regions of this former British colony, but none of the projects is expected to come to fruition in less than two years.
The three, Sacre-Coeur Minerals Inc. and Strata Gold, both of Vancouver, and Ontario-based Guyana Goldfields Inc., are expected to invest an estimated 20 million dollars by the time the mines get rolling. They already employ hundreds of skilled and unskilled labourers, and this workforce could double when mining actually starts.
Robeson Benn, head of the national geology and mines commission, says conservative estimates show that each of the three mines could produce a minimum of one million ounces of gold, putting the country back on the map of major producing nations.
Centuries ago, British explorer Sir Walter Raleigh and others had come to Guyana in search of the legendary city of gold, El Dorado, and found nothing but the country briefly lived up to that label between 1993 and September 2005 when Cambior operated Omai Gold Mines at its peak, one of the top three in the western hemisphere.
But even as the Canadians explore the mosquito-ridden Amazonian jungles in earnest, authorities have turned to small-scale miners to extract gold.
National production is expected to reach 200,000 ounces this year, 38,000 more than last year and 65,000 more than in 2004. Shields says that investors with money to spare are knocking on the doors of mining companies, betting that the surging prices will last. The same is true in Suriname, he says.
As an indication of how confident analysts are about prices holding steady, the World Bank recently invested 4.7 million dollars in the Guyana Goldfields project, even though commercial production is still two years away.
When Cambior s mines were rolling, gold had jumped from the fifth most important export earner after sugar, rice, bauxite and timber to second. It is now at number four ahead of timber.
Since the Omai disaster, Guyana has passed an environmental protection act that requires monitoring of the surface and ground water near mining operations, among other oversight measures.
But according to the World Wildlife Fund (WWF) in Guyana and Suriname, gold mining operations still use heavy equipment that damages soil and causes deforestation. They also use mercury to bind and purify the gold, much of which evaporates and is returned to the environment through rain or is dumped directly into surface waters.
Miners in turn are exposed to mercury vapour and can develop health problems, while the surrounding communities can be harmed through eating predator fish contaminated with mercury.
In March, the group launched a project with funding from the Inter-American Development Bank to create a national gold mining association in Suriname and to train thousands of gold miners in new and environment-friendly mining techniques.
We want to make these miners aware that there are methods of mining which will benefit them and the environment, said Michelet Fontaine, director of WWF Guianas regional programme office.
Hopefully, the miners will be persuaded to switch to more environment-friendly methods such as using mechanical means to extract the gold or replacing mercury with less harmful chemicals, he said in a statement.