PARAMARIBO, Suriname – Suriname has signed a Memorandum of Understanding (MoU) with the Chinese-based Aluminum Corporation of China Limited (Chinalco) for the mining of bauxite in West Suriname.
Finance and Planning Minister, Stanley Raghoebarsing and David Abiamofo of Natural Resources and Dong Jianxiong, vice president of Chinalco, signed the agreement on Monday night.
In a statement Tuesday announcing the signing of the agreement, the state-owned Suriname Communications Service (CDS) said that President Chandrikapersad Santokhi emphasized the great importance of these developments for Suriname.
“For years we have tried to revive the bauxite industry in West Suriname, but without success. I place my trust in Chinalco”, he said, adding “initially, the mining operation will employ five hundred workers and over fifteen hundred contractors”
The government will soon submit the MoU to the National Assembly to obtain the appropriate legislative support and approval and Danny Lachman, who chaired the Presidential Steering Committee, adding “the real work can then actually start”.
Various companies have shown interest in the Bakhuis area, after an international call was made for investors to respond. Last year, the ‘Presidential Commission Development West Suriname Bakhuis Bauxite’ was established with the government’s intention being to initiate the development of the area and add as much value by creating socio-economic opportunities.
The Santokhi government has stipulated that every potential investor continuously involves the local communities present in the activities in the area, that Suriname maintains its green image and that local content is stimulated.
Under the MoU, Suriname will participate with 13 per cent shares in the deal for which a mining and an infrastructure company will be established. Chinalco will invest US$426 in the project.
Lachman told reporters that under the agreement, Suriname will have to make do with royalty income and not so much count on large tax payments from the Chinese company. In monetary terms, the mine has a value that is expressed in three components. All calculations are made on a production capacity of six million tonnes of bauxite per year.
The area contains an estimated 324 million tonnes of lower quality bauxite. However, to produce six million a year it will take 50 years, while the deal is for30.
The three components and their estimated revenues are community development, estimated at US$800,000 annually, equity and royalties of US$29 million per year and that the life of the bauxite mine based on the current price should yield more than US$30.
Suriname can receive four per cent per ton of bauxite in royalties per year under the current situation. With every increase in the bauxite price, the percentage of royalties also increases.
Lachman said winning and exporting is only the beginning of the government’s intentions to develop West Suriname.
