UNDP Hands over Report on the Study of the Impact of Investment in the Extractive Sector in Guyana to the MNRE

Feb 13, 2015

Ms. Chisa Mikami, UNDP Deputy Resident Representative (right) handing over the report to Hon. Robert Persaud, Minister of Natural Resources and the Environment (Left)

On Wednesday, February 12, 2015, the United Nations Development Programme (UNDP) handed over the final report of the UNDP study on the Impact of Investment in the Extractive Sector in Guyana to the Ministry of Natural Resources and the Environment (MNRE). The presentation was done by UNDP Resident Representative, a.i. Ms. Chisa Mikami to the subject Minister, Hon. Robert Persaud, during a simple ceremony at the MNRE’s boardroom.


In her remarks Ms. Mikami highlighted that a number of impacts of Foreign Direct Investment (FDI) in the mining industry were uncovered during the study. These include raising Guyana’s profile, economic impacts, and environmental impacts.  Ms. Mikami noted that Guyana’s profile in international markets is likely to be raised as a result of FDI, which will create scope for more investments in the extractive sector. She said, “An improved profile will encourage other large-scale mining companies to participate in the Guyanese resource sector, which in turn, will lead to economies of scale being established.” Additionally, she noted that Government made a step in the right direction to initiate the Extractive Industries Transparency Initiative (EITI) candidacy process, which will aid in improving the country’s extractive profile.


In terms of economic impacts, the data shows that between 2015 and 2020, the government is potentially looking at an average of US$53 million per annum in natural resource revenues (subject to conditions). Additionally, potential fiscal revenues from new large scale gold mines are expected to be at their highest in 2020 (US$ 101 million) and then decline over the next decade (assuming no new projects are discovered). The study shows that with none of the large-scale gold mines currently in production, it appears that skills transfer and training will be the dominant impact of FDI, while production/manufacturing and product transfer will be limited. Also, the presence of five to ten large-scale gold mines can provide the necessary demand for inputs and services for local firms to invest in domestic capacity and expansion. Increased investment interest in the country will improve the ability of the extractive sector to contribute to the economy.


According to information from the study the cumulative environmental impacts include degradation of water quality in area watersheds due to increases in sediment loads and inevitable contamination, as well as general degradation of habitat and increased deforestation leading to a reduction of biodiversity over time. To this end, Ms. Mikami noted that many mining countries have seen infringement on protected areas that coincide with mineral reserves, as evidenced by historical changes in the boundaries of Kaieteur National Park due to expansion of mining activities.


In his remarks, Minister of Natural Resources and the Environment, Robert Persaud thanked the UNDP for responding to the request to conduct the study. He posited that every Guyanese would like to know and be assured that the utilization of natural resources, in particular mining resources, have maximum benefit to the county and the population.


He noted that it is always a concern whether the country is getting the best returns as it relates to FDI within the sector. The Minister said that it was against this backdrop that the UNDP was engaged to develop the study to determine:


 1. What the Ministry has been doing, if it is being done correctly and what else has to be done such as the formulation of new policy and arrangements that need to be developed;


 To lend a better appreciation to all stakeholders to know what is taking place and what has to be done collectively.


Minister Persaud said his Ministry intends to look at the study very closely and it will be sent to all stakeholders and relevant boards to examine elements such as environmental bond, updating mining policy and look at compliance and enforcement from the Environmental Protection Agency (EPA) and the Guyana Geology and Mines Commission (GGMC).


The Minister concluded on the premise that the report will serve as a useful guide and tool as they move forward to 2020 and systems will be put in place as soon as possible to effect some of the recommendations. He explained that the MNRE will also periodically review where they are and continue to engage the UNDP in ensuring that development of the sector is done in such a way that meets not only national requirements but it responds to the needs of the people and meets their expectations.


The study was conducted by the UNDP Guyana Country Office in collaboration with the MNRE and the UNDP Headquarters unit, the Bureau for Policy and Programme Support (BPPS).

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