It’s Got the Minerals

According to the National Director of Mining, Alexander Medina, the Dominican Republic is reportedly sitting on over $60 billion worth of proven mineral and metal reserves based on 2014 prices. In order to expedite exploitation, the process of receiving a mining permit was shortened in 2013 for all applications registered that year. According to telling data in the Mining Journal, while in 2011 the sector contributed 0.4% of GDP, it posted a robust growth rate of 79.7%. Furthermore, in the first three-quarters of 2012, mining grew 4.1%, outpacing GDP growth of 3.9%. Mineral exports of $290 million for the year before, at 3.4% of the total, exceeded those of traditional Dominican exports such as sugar, tobacco, coffee, and cacao. In terms of reserves, Dominican Geology Society (Sodogeo) data identifies approximately 27 million ounces of gold, 168 million ounces of silver, 652 million pounds of copper, 6 billion pounds of zinc, and 25 million pounds of nickel. In 2013, two developments included the resumed bauxite extraction at Las Mercedes, an Xstrata Nickel project, and gold finds at San Juan and Restauracion. Non-metallic mining features limestone, ornamental rocks, calcium carbonate lime, and gypsum.

The Dominican Republic had a buoyant mining sector in the 1970s, with the advent of large ferronickel and gold-silver mines, where mining made up 5.3% of GDP. The Pueblo Viejo mine, opened in 1975 by Rosario Dominicano, was then the Western Hemisphere’s largest open-pit gold mine until its closure in 1999. Yet a slump in the 1980s depressed mineral production, including ferronickel, once the primary export commodity and third-ranked industry. The Falcondo ferronickel facility launched in 1971 with an annual capacity of 29,000 tons of nickel, and is the sole ferronickel miner in the Dominican Republic. Production for 2000 of 39,943 tons was the 10th largest in the world. Yet a slowdown in Chinese growth, coupled with its own advances in ferronickel processing, has impacted pricing. Majority-owned by operator Xstrata Falcondo, in response, suspended operations in October 2013 having also done so back in 2008, jeopardizing 1,000 jobs. Central Bank data indicates that ferronickel’s contribution to total exports had fallen to zero in 2009 from a peak of around 16%. Over the long term, however, the operations are set to deposit $1.5 billion in taxes and dividends in government accounts over the next two decades.

ALL THAT’S GOLD

One crucial Dominican mining component has a yellowish hue. The Spanish began gold mining in the 1500s, and the commodity has seen its own renaissance in recent years. By 1980, gold had approached sugar as the second largest Dominican export earner, and the Dominican Republic stands to rank as the sixth largest producer in Latin America and 20th globally.

A central player, Canadian mining enterprise Barrick Gold has operated the 11-square-kilometer Pueblo Viejo mine, which entered commercial production in January of 2013. Boasting bullion reserves of 23 million ounces valued at roughly $40 billion, it is one of the world’s largest gold deposits. The setup cost of $3.7 billion marked the largest single foreign investment in the Dominican Republic’s history. The mine employs 2,000 people, but is estimated to create a further 12,700 direct and indirect jobs as operations progress. According to Reuter’s, it could generate $1.3 billion in annual exports. Yet gold extraction has sparked controversy. President Danilo Medina in September of 2013 faulted the original licensing deal, stating that, “For every $100 of exports Barrick will receive $97 and the Dominican people $3; that is unacceptable.” A freshly negotiated contract means that the government now receives around 51% of gross profits, up from 37%. A year earlier the operations of Canadian Unigold were also challenged for potential damage to environmentally sensitive areas including the Manolo Tavárez Justo National Park.