Golden opportunity

Sep 30, 2008 Editorial

Fifteen years after Omai entered our country, it is about to officially bring down the curtain on its operations here, and hand over the mine back to the Government of Guyana.

Even though it had stopped mining gold since 2005, there were obligations that it had to fulfil in terms of making sure that the site was environmentally safe.

With Omai’s use of cyanide in its extraction process, the two huge ‘tailings’ ponds filled with the deadly substance, and the famous spill that nearly created an environmental disaster in Essequibo, this is only prudent.

In the words of the Commissioner of the Guyana Geology and Mines Commission, an integral aspect of the closure procedures, “involve biological monitoring, chemical monitoring, and physical monitoring”.

We hope that the most stringent scrutiny is exercised over the site before the Certificate of Compliance is issued tomorrow. Historically, Omai was the largest ever single operation in our gold sector, and it extracted some 3.7 million ounces of gold between 1993 and 2005.

It was also a cautionary tale of how not to invite a foreign company to “exploit” a country’s natural resources: their exploitation went way beyond the physical resources.

Guyanese have never been given a clear answer as to how much royalty and taxes the company actually contributed to our national coffers. Some assert that it was as low as zero.

While taxes would have been collected from the incomes of the employees employed during the period, this is an entirely different matter.

As we review the Omai episode, we have a golden opportunity to rethink our policies in the mining sector. Omai can best be utilised as a Business School case of what to avoid in negotiating future contracts with prospective large miners.

For instance, what if all the present environmental tests are passed, but ten years down the line someone dies, or we have some environmental disaster because of the residual effects of the cyanide in the tailings ponds?

Will we then have to prove negligence on Omai’s part, or do we insist on strict liability before issuing the Certificate of Compliance?

We have been informed that it is estimated that there are approximately two million ounces of gold below the holes in the ground that have been left after Omai’s surface mining.

The Government has invited and have received expressions of interest to mine this gold, and will soon examine the concrete proposals for the underground mining.

Gold recently crossed the US$900 per ounce line, and with the present meltdown in the financial markets, that price is sure to rise further as investors seek safer havens for their assets. But Omai has still elected to pass on this opportunity.

Why? We have previously asserted that “sustainable mining” is an oxymoron, since all ores are finite and non-renewable. While it is possible that there may be more gold below the holes left by Omai, those 3.7 million ounces of gold are assets that are gone forever.

However, what we can do for the future is to create a fund into which all, of most, of the income from mining (royalties especially) are placed.

This fund can then be used to create in man-made capital, such as factories, bridges etc, so as to keep our total stock of capital constant or growing.

The converse is to keep on creating holes all over the country and still remain as a “poor, underdeveloped country” fifty years down the road.

Just as importantly, since all gold mining is going to be conducted in the highland region, every contract with miners must include amelioration practices to mitigate the social devastation that is being inflicted on the indigenous peoples who inhabit that region. There are some who claim that there are no inhabitants for “thirty or forty” kilometres from the mining sites.

They are allowed to miss the whole point of the migratory lifestyles of our indigenous peoples. Additionally, there must be stipulations that a certain percentage of jobs in mining operations be reserved for indigenous peoples.

Our natural capital, like wildlife and sanctuaries, and certain ecosystems offer incomparable values for future eco-tourism benefits, and they, too, must be protected from the ravages of mining.

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