The signing of the mineral agreement for the Toroparu mine, located between the Cuyuni and Mazaruni Rivers, between ETK Inc. Sandspring Resources Ltd and government marks another major prospective venture which could boost the mining sector and the national economy tremendously. The investment is expected to be in the vicinity of US$700 million, and is expected to employ in excess of 1,000 Guyanese workers.
It is expected to have an annual production of between 250,000 and 300,000 ounces of gold, and 20 million pounds of copper, with a mine life of 15 years.
Chairman of the Board of Sandspring Resources Ltd and ETK Inc., Mr. John Adams said the completion of this mineral agreement between ETK/Sandspring and the Government of Guyana “sends a clear message to the international mining community” that Guyana is a good place to do business.
“Government welcomes the development of its natural resources, when carried out in an economically fair and environmentally responsible fashion,” said Adams. “Sandspring believes that it is a fair agreement for both sides and could serve as a model for future mineral agreements,” he added.
This proposed investment is yet another one that puts to rest the argument by some among us that Guyana is not good for investment and the policies of the government is not investor-friendly.
According to Adams, the highlight of the agreement is a change in the royalty payments. He said government has required an increase in the gold royalty from 5 percent to 8 percent, when the gold price is above US$1,000 per ounce. “In light of the current price of gold, we understand their point of view,” he said. At the current gold prices, the mine is expected to contribute approximately US$550 million annually to Guyana’s GDP.
What has been noticeable in recent years is that mining has been playing an increasing role in the national economy which is very good because of our abundant mineral resources that remain largely untapped. But what has emerged is a growing interest by both local and foreign investors, in our mining industry.
However, the Chairman of the Guyana Geology and Mines Commission (GGMC) Major General (retired), Joe Singh has made some extremely pertinent observations with respect to the mining industry when he touched on the issues of the environment and the LCDS and the need to move in the direction of value added products.
“This is a step in the direction of having large scale mining operations. We do not currently have any operations after Omai closed, the tremendous contribution that the sector has been making to the economy of Guyana, should be recognized,” he said.
He added that last year, 9 percent of GDP was attributed to the mining sector and that 50 percent of export earnings were attributed to the mining sector.
“We want to make full use of the opportunities being presented through a favourable investment climate; but at the same time, ensuring that we do not compromise from the environmental standpoint the other initiatives that are being taken, such as the Low Carbon Development Strategy (LCDS),” Singh said. He said that the mining sector needs to also focus on value-added activities, instead of just primary products for processing elsewhere.
The Major General’s (retired) exhortations should be heeded and given serious consideration because we would not want a repeat of the disastrous cyanide spill which occurred at Omai several years ago.