Latest update November 13th, 2024 1:00 AM
Omai gold mine returns to Guyana
A pit in the Omai property area, Potaro, Region Seven
Kaieteur News – Minister of Natural Resources, Vickram Bharrat, revealed last week that Omai Gold Mines Limited (OGML) has signaled their intentions to return to Guyana. In adding to this, Minister Bharrat shared that OGML intends on recoiling to their old worksite in Region Seven (Cuyuni-Mazaruni).
Many have glorified the return of OGML, and that glorification was further fueled by the gold company touting to invest US$12M in phase one of their operations, as well as the employment of Guyanese offered on the table.
Even with these touted investments, the reader should not forget that for over two decades, Omai Gold Mines exploited Guyana, its resources and has caused severe environment damage.
Cyanide spill
On August 19, 1995, a man-made environmental disaster had occurred in the Omai River in Guyana; the walls of an earthen tailings pond, constructed to contain cyanide utilized in the gold-mining industry became breached. More than 400 million gallons of cyanide-laced material spilled into the Omai River and subsequently, into the Essequibo, the country’s largest river.
The spill resulted in severe environmental, ecological, social, economic and political consequences for the Guyanese community. The local and international media, government, politicians and environmental groups were actively involved in the matter. Due to local outcry and international outrage, gold-mining operations in the region were suspended for several months.
During the crisis, former President Cheddi Jagan had declared a stretch of 50 contaminated miles of the Essequibo River as an environmental disaster zone. While concentrations of cyanide of two parts per million (ppm) are fatal, the slag along the Omai River values reached 28 ppm during that disaster.
A government-mandated Commission of Enquiry investigated the matter and made recommendations. Nevertheless, gold-mining operations resumed fully at the spill site by March of the following year.
The mining company eventually shut down its operations in 2005 and its holdings passed from Cambior Resources to IAMGOLD before they made it into the hands of Mahdia Gold Corporation (MGC).
Concessions galore
From 1993, the company commenced actual extraction of gold, and during their 24 year run, the company extracted some 3.7 million ounces of gold, but only paid five per cent of that in royalties to Guyana. Had the terms of their contract for the lucrative gold mine entailed more benefits for Guyana, the country would have reaped in billions of US dollars.
In addition to this, the company benefitted from a slew of tax, fuel and vehicular concessions—totaling to millions of Guyanese dollars.
This wasn’t the only sweetheart deal that Omai Gold Mines reaped – in their contract was a clause which protected it against any future laws. In other words, not even Parliament could reduce the benefits which were due to Omai under that agreement.
However, because of the steep drop of gold prices in 2005, Omai decided that it was time for them to close up shop. The company had to stay on for three more years to fulfill its obligations as these related to ensuring that the site was environmentally safe given the wide scale use of cyanide.
Following OGML’s departure, a Canadian company, Mahdia Gold Corporation, in 2011 had revealed that they were awarded the world-class Omai goldmine by the Guyana Government. This meant that the corporation had officially acquired the renowned Omai gold property. Their acquisition followed after the price of gold had skyrocketed, thereby forcing the Omai Mines to reopen its doors.
At the time, data had showed that there were still significant gold deposits on the site. In fact, exploratory drilling into the bottom of the open Fennell pit suggested an additional deposit of 1.4 million ounces of gold still available for mining by the company.
Five years later, the site was not developed by MGC, with the company owing the Government of Guyana US$10M. Information states that it had only paid US$1.5M of the US$11.5M that the previous Government had asked for.
The Guyana Geology and Mines Commission (GGMC), as the regulator, wrote to the company for the fourth time demanding the US$10M. It is unclear whether those monies have been paid off by the company.
Nonetheless, Minister Bharrat maintains that OGML will go through all of the necessary regulations to ensure that Guyana does not suffer another loss.
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