Mining and development

Jun 30, 2008 Editorial

For most Guyanese who live on the coastlands (and that means almost ninety percent of the population), mining is outside their everyday radar.

The recent brutal slaying and immolation of eight diamond miners deep in our interior, however, has forced many to deal with the reality that life and “economic” activities go on continuously there, as the wealth under our soils are excavated in one manner or another.

Ever since the abolition of slavery, thousands of our citizens went into the interior to seek their fortunes, and in the process founded a new industry – gold mining. Diamonds were also discovered and became a subsidiary activity.

Almost a century ago, bauxite deposits were identified up the Demerara and Berbice Rivers, and Demba and Reynolds, Canadian and American multinationals respectively, hired or lured additional thousands and built townships near the mines. Manganese at one time was mined in the Northwest District (Region One), and once again Guyanese moved in to move earth.

Today, as we look at the sector, we notice that it is dominated by the production of gold and diamonds, and a lot of holes in the ground. Last year, some 247,000 ounces of gold and 270,000 carats of diamonds were declared with a total export value of almost US$200million.

Omai, the largest producer for several years, pulled out after extracting some three million, seven hundred thousand ounces of gold – and paying nary a penny of taxes – but leaving some massive lakes with deadly cyanide “tailings”. Some twenty-six other foreign companies have taken their place, and are going for the gold now that prices have risen to stratospheric levels.

The abandoned Omai facilities were recently overrun by poachers. With the bauxite industry falling on hard times since the eighties, a Chinese and a Russian company have taken over the Demerara and Berbice bauxite operations – but in the meantime the lives of the people in the mining areas have been devastated. No jobs are available.

One would have assumed that, against this historical background of human exploitation and disposal in our mining sector, our policy makers would have devised a more holistic approach that would balance the exploitation of our resources with the long-term development of the wherewithal of our people to earn a living.

The present approach, which focuses on the revenue generated and the short-term jobs created, is ameliorated only by token gestures to “environmental” concerns that the state has very little capacity in the first place to enforce. We are advised that they are in the process of hiring some new staff for this purpose.

The authorities glibly talk about “sustainable mining,” but factually, this is an oxymoron, since all ores are finite and non-renewable. However, we acknowledge that our mineral resources must be extracted and utilised for our economic growth. The challenge, we posit, is how to conduct mining in an environmentally and socially beneficent manner for the long term.

Economic growth models that incorporate natural resource constraints in economic activity stipulate “sustainable development” as non-decreasing consumption over time, and derive the result that all income from non-renewable resources’ extraction must be invested in man-made capital so as to keep the total stock of capital constant.

We cannot just consume the (meagre) gains that are thrown our way. Since our natural capital, like wildlife and sanctuaries, and certain ecosystems offer incomparable values, they must be protected.

But just as importantly, sustainable development requires that the prices of exhaustible resources should reflect their social costs, and that development must be inclusive in the sense that people displaced or having their lives disrupted because of mining should not be made worse off.

Right now very few are listening to the complaints of our Indigenous peoples. Because of the broad negative externalities from mining and the social necessities identified, a more intrusive role for the state is required.

Consequently, our mining laws and rules need to be re-evaluated, chiefly with respect to the acquiring of land, determination and use of royalties, linking penalties for violations of pollution standards to the damages, and the introduction of strict liability for mine closures.

A portion of the royalties must be identified for building physical and human capital to ensure sustainable livelihood for the displaced and other affected people – including people used for the present mining operations. The environmental impact must include the impact on people, too.

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Mining and development

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