Will development plans succeed?

Suriname, a resource-rich and developing nation, has embarked on an ambitions long-range development plan. Foreign direct investment is being welcomed. The two most prospective sectors: minerals and oil. The four-year-old government of President Desir Bouterse plans to boost revenues from those sectors - now 40 percent of GDP and plow them into development projects that benefit the population of 542,000.

Specifically, extra revenues from mining will be used to boost quality-of-life indexes including in education, health care, and housing, while simultaneously developing industries like agriculture, forestry, fisheries and tourism. Those industries are considered more sustainable than gold and oil and eventually more suitable to a tiny South American nation of vast and unspoiled rainforests and rivers. Suriname prides itself for its “green” policies.

Two multinational gold-mining companies are now involved in major joint ventures with the government: IAMGOLD Corporation of Toronto, and Newmont Mining Corporation of Greenwood Village, Colorado. Investments of $1.1 billion are anticipated. Suriname estimates that there is enough gold for six more medium-sized or large gold mines and is currently establishing a medium-sized gold mine through its fully state-owned mining company, Grassalco.

As for oil, Suriname has 80 million barrels of proven reserves, much of it off-shore. Several U.S. firms are now involved in offshore exploration with drilling likely in 2015. Some of the biggest players are: California’s Chevron, Houston-based Apache Corporation and Dallas-based Kosmos Energy, as are Norway’s StatOil and Britain’s Tullow Oil, who are implementing a joint off-shore exploration project, among others.

Will Suriname’s development plans work? Other developing and resource-rich nations undertook similarly idealistic projects, yet achieved outcomes that were disappointing or abject failures. Why will Suriname succeed?

Minister of Natural Resources Jim Hok explains why in an interview.

The so-called “resource curse” or “paradox of plenty” has negatively affected more than a few developing countries, which had sought to use their rich natural resources to boost their economies. Their outcomes were often disappointing and even abject failures.

What is Suriname doing differently to ensure that it wisely exploits its natural resources and, thus, meets its development goals for the benefit of all its citizens?

Suriname is not known for having the world’s biggest mineral reserves. What makes our mineral and oil sector attractive are other things like political stability; an educated work force; a relatively good infrastructure; and a friendly climate in general. Plus, we are known for keeping our end of a bargain. This may explain why the U.S. multinational Alcoa has been in Suriname for almost one hundred years, and why Toronto-based IAMGOLD Corporation re-invested in its mining operation even though gold prices had declined.

A fair amount of the government’s annual budget is made up of royalties and taxes from large investors in the gold-mining industry and our national oil company. This government has a socially motivated agenda that will use the wealth generated from the gold, oil and bauxite to invest in among others education, health care and housing.

Suriname wants to ramp up mining and oil production yet it also is committed to protecting its status as the world’s “greenest” country and respecting indigenous and tribal people in its interior. Please explain how Suriname intends to stay “green” while developing its natural resources.

We are convinced that Suriname’s future is not in mining and oil but in more sustainable sectors like agriculture, forestry, fisheries, tourism and eco-services. But to develop these sustainable sectors, the government made a conscious decision to accelerate the development of mining and oil.

We are trying to maintain a balance. We have over 10 different tribes living in the rainforest. They have their villages, hunting areas and cultural places that we are committed to respect. We are also committed to preserve our primary tropical forest of which we are proud to be co-guardians. To protect this world heritage, we established the Central Suriname Nature Reserve, which is one of the biggest of its kind in the world with 1.6 million hectares. In total, we have preserved 13.7 percent of our total land surface. We are very proud that researchers still find new species of insects, fish and mammals in our protected areas

Our mining area, known as the Green Stonebelt, accounts for about 15 percent of our surface. This presumes we would use all of it for mining, which we of course would not do because part of our population and vulnerable ecosystems are there; and you won’t mine effectively by just mining everywhere. So we need a balanced policy: where do we mine, and which areas do we protect and preserve?

Has Suriname’s effort to ramp up its oil and mining sector been done in a transparent manner?

All agreements that the government makes with foreign investors are accessible to the National Assembly (Parliament) and the public. When contracts would extend beyond the provisions of the law, Parliament must be involved to amend the appropriate laws, which transpired, for example, for the recent large mining contracts. As a result, nationwide discussions and research take place to make sure that nobody is left out.

How will the increase in mining activity translate into jobs and opportunities for ordinary people not working in the mines?

In our recent mining contracts, the government negotiated a community fund that the companies will finance, and this allows a district manager to fund projects in local communities. As for jobs: local workers are hired; local entrepreneurs deliver agricultural products to mine workers; local transportation companies are utilized; and management positions are gradually transferred to people with Surinamese nationality. We try to educate our own people about how to open and own a mine that will be owned 100 percent by Suriname in the future.

One very good example of how government earnings promote social equality, may be found in recent Laws that Parliament approved to guarantee social security. The government ensured that minimum wages shall be paid to workers; that every worker should be insured against illness and hospitalization and that workers should be in the position to save for their pensions.

Would you please discuss Suriname’s agreements with IAMGOLD and Newmont, the two multinationals now operating the two biggest gold mines?

As is evident in our recent Mineral Agreements with IAMGOLD and Newmont, the government actively participates in the exploitation of its natural resources via state-owned companies. From the perspective of foreign investors, this a stabilizing factor. In the case of IAMGOLD, the government has a 30 percent participation in the project’s expansion, and in the case of Newmont participation is 25 percent.

The State’s participation in the exploitation of our own natural resources is an important issue in the policies of the current Government, because we believe that every Surinamese citizen should own a part of their country’s wealth. So these are joint operations, with joint responsibilities.

Suriname now has two large gold mines, and there is room for six more. But what about independent gold miners?

“Currently, more than 20,000 people are directly or indirectly involved in the small-scale gold sector, and earnings from these small-scale gold miners are 60 percent of total gold earnings. The government established the Gold Sector Reform Commission to restore public order and reform this sector into a stable industry environment. Instead of fining or penalizing workers, the government made the choice to educate them first. As a result they at least have a chance to develop into a more sophisticated sector. We handed them the tools needed to create a prosperous future for themselves. And I mean this in terms of a financially savvy future, along with a healthy lifestyle in which they have respect for their environment.

One part of gold-sector reform was to get a better grip on small-scale production. To restore order to the sector and make sure it developed responsibly, the gold commission mapped all mining areas and made a database of miners and machines. They are educating people village by village, miner by miner, to inform them on how to work with waste water; how to explore more efficiently; and how to avoid working with mercury. Now, almost 3 years later, they have cleared an almost improbable job. They restored public order and brought government services closer to the miners. They made entrepreneurs out of these forgotten young Surinamese men that work hard searching for gold.

The royalties on small-scale production also were increased from 1 to 2 percent. Thanks to the registration process, the government can, for the first time, send tax forms to small-scale miners, concession-holders and machine owners to increase its income. In 2012, independent miners produced 740,753.20 ounces of gold worth $1.1 billion, with $27 million going to Suriname’s treasury.

A lot of work remains to be done. But our goal is to keep communicating with the people and balance everybody’s interests.

Would you please discuss the status of oil production in Suriname?

Staatsolie, Suriname’s state oil company, is designated by the government to deal with third parties. As such, Staatsolie has signed several production-sharing agreements with several companies. In general, foreign companies operate off-shore and Staatsolie operates on-shore, although Staatsolie recently started preparations to also drill in shallow sea waters.

A refinery built by Staatsolie is expected to come into production by the end of 2014 and early 2015. This refinery will be capable of producing all of the country’s diesel consumption and most of its requirements for unleaded fuel.

(This interview was edited and condensed.)

• This article was produced in conjunction with The Washington Times International Advocacy Department.