After 25 years… Barama pulls out of logging operations

Oct 20, 2016 News

-gives up its 1.6M hectares of forest concessions
-to concentrate on plywood manufacturing, sawmilling

By Leonard Gildarie
The country’s biggest forestry operator, Barama Company Limited (BCL), has announced plans to cut back operations and has reportedly given up its 1.6 million hectares.

Natural Resources Minister, Raphael Trotman and GFC’s Chairperson, Jocelyn Dow.

The Malaysian-owned company, which has been here for over 25 years, had been negotiating with the Coalition Government over the past year for a new investment agreement. However, the company has now signaled intentions to exit its forestry operations altogether, and concentrate instead on its plywood and veneer manufacturing and sawmilling.
The administration had vowed to clean-up the forestry sector while on its campaign trail. Already, the regulator had seized the forestry concessions of BaiShanLin, a Chinese company that had been under scrutiny for failure to develop a processing plant and not paying its fees, among other things.
Government had over the past year made proposals to Barama, with a new agreement expected by the end of last month. However, it appeared the Malaysian owner, Samling Global Limited, was still deciding on its future here.
And that decision has apparently now been made.
The company in a paid advertisement today announced that it will not be seeking the renewal/extension of its Forest Concession Agreement with government.

Barama says it is getting out of logging and will concentrate instead on its sawmilling and plywood manufacturing operations.

The agreement expired last Saturday, with Barama already informing Government of its intentions.
“The company will also not be seeking the renewal/extension of the investment agreement that mainly relates to the forest concession which expired on Saturday, 15th October, 2016. Barama however, will be continuing all of its other projects in Guyana, inclusive of veneering, plywood manufacturing and sawmilling.”
According to the company, it very much regrets having to make the decision to close its forest concession operations after having, over the past 25 years, invested approximately $45B in the development of Guyana’s forest industry.
Barama discloses in its advertisement today that it first approached Government on September 2, last year, with a proposal for the renewal of both the company’s investment and forest concession agreements, and has continued discussions with Government over this period.
However, it appeared that earlier this year Barama started to change its mind.
The company told Government that “the economic conditions influencing the company’s continuing investment in Guyana’s forest industry” were not encouraging.

Barama’s Buckhall operations, Essequibo River.

“Barama has, as a consequence, now regrettably concluded that it is no longer viable for the company to continue its forestry operations. The company looks forward to engaging with government to explore the continuation of its other operations to sustain our value-added and job creation potential in Guyana and to determine a new investment agreement.”
The company expressed gratitude to all of its stakeholders for their support over the years.
The statement by Barama did not immediately say what would happen to almost 800 workers that it had in its employ up to last year.
The company had insisted that while it has 1.6M hectares of forest lands, for all practical purposes it can only utilize about 1.1M hectares, with the rest being inaccessible and in swampy areas.
About $1.6B annually is paid out for local service and other goods providers.
Barama had also said that overtime it spent around $8.5B to date to construct over 3,000 kilometres of roads, which are in use by miners, loggers and others.
Minister of Natural Resources, Raphael Trotman, was not immediately available for a comment yesterday as he was out of the country and not likely to be back before this weekend. However, Chairperson of the Guyana Forestry Commission (GFC), Jocelyn Dow, disclosed that indeed Barama has signaled its intentions to reduce operations.
Representatives from Barama will meet with the GFC and Government next week to speak on the likely impact on staffers, among other things.
With Barama also doing business with suppliers, and transportation services, it is likely that there will be ripple effects. The company has been playing a significant role in road maintenance, in the Buckhall, Essequibo River area to North West, Region One.
Barama, a wholly-owned subsidiary of Samling Global Limited, was established in Guyana since 1991.
The company was granted a lowland, mixed tropical forest concession for approximately 1.6 million hectares in the Northwest region of Guyana.
While Barama initially started with the extraction of logs, it eventually ventured into manufacturing of plywood and evolved to include veneer and sawn timber operation.
In 1993, it established a plywood operation. This was followed by the setting-up of a sawmill operation in 1996 at its Land of Canaan, East Bank Demerara site and two others at the Buckhall site in 2006 and 2008.
Both sites are complemented with kiln dryers and moulders to produce finished lumber.
In recent times, pressure has been mounting on consecutive administrations for forest lands to be made available with observers pointing out that a majority of concessions are in the hands of a few.