Suriname: Economy

Suriname's economy has been dominated by the exports of gold and oil, and to a lesser extent, alumina. Other export products include bananas, rice, and lumber. On the heels of rising world prices for fuel and record prices for gold, these sectors have booked significant successes in 2010. The bauxite sector continued to struggle as world demand for aluminum remained weak. According to the Economic Council for Latin America and the Caribbean (ECLAC) Suriname’s economy grew by 3 percent in 2010, less than the Latin American average of 6 percent, but significantly better than the Caribbean average of .5 percent. ECLAC predicts that Suriname’s economy will continue to grow in 2011, but at a lesser percentage of 1.2 percent. Suriname’s bauxite deposits have been among the world's richest. After a long standing relationship with Australian owned BHPBilliton, Alcoa subsidiary Suralco became the 100 percent owner of all activities in the bauxite sector on August 1, 2009 after BHPBilliton departed Suriname. In the wake of the world economic crisis this sector has continued to struggle and alumina has lost the importance it once had for the Surinamese economy. In order to survive this world crisis Suralco was forced to postpone all non-essential maintenance, stop all capital investments, and lower production. Another reason cited for reducing production was the expected depletion of reserves in the mines, Kaaimangrasie and Klaverblad, from which the company was operating. Since then, the company has commenced preparations to prepare its concession in the Nassau area in Southeastern Suriname for mining. This new mine is expected to be ready for production in 2013. Additionally the company also launched a bauxite exploration division in 2010 to research possible bauxite residue in areas already mined. This residue is expected to be of a lesser quality, but will, with additional processes, provide sufficient bauxite to keep the refinery operational. The takeover of BHPBilliton assets also left Suralco managing 60,000 hectares of land, of which part is in use by the government. In 2010 the company embarked on a Land Management Program aimed at rehabilitating land no longer being used for mining purposes, and in the case of government-owned land, returning it to its owner. In January 2011 the Government of Suriname officially announced that it was interested in resuming negotiations with Suralco for 40 years worth of bauxite reserves in Western Suriname in the Bakhuys area.

In the formal gold sector, the Government of Suriname (GoS) has announced that it plans to sign an agreement with Surgold, the joint venture company between Alcoa subsidiary Suralco and Newmont Mining Corporation, later this year. The agreement will allow for the mining of gold in the Merian area in Southeastern Suriname in the Nassau Concession, as well as the building of a second gold refinery. This agreement has been under negotiation since 2008. The proven reserves in this area are 3 million troy ounces. At the country’s first gold refinery, Rosebel Gold Mine (owned by Canadian mining giant Iamgold), production for the first nine months of 2010 was 276,000 troy ounces at an average production cost of US$ 499 per troy ounce. The company invested approx. US$ 49 million in exploration. Per December 2009 the proven reserves at Rosebel were 2.6 million troy ounces, while the probable reserves were 2.2 million troy ounces. The Rosebel Gold Mine continues to be the most profitable mine in the Iamgold portfolio, with the highest production levels at the lowest production costs.

In January 2011 the GoS embarked on an ambitious plan to order the informal gold sector. Once considered small-scale this untaxed and unregulated sector is currently estimated at US$ 1 billion annually. Thousands of Brazilians, mostly illegal, and local maroons find employment in this sector. Chinese shop owners have also set up businesses, also unregulated, near the mining sites. The GoS has set up different commissions that will deal with organizing and registering miners, developing legislation to regulate the sector, and to work on making this sector not only sustainable, but also environmentally safe. In the first instance the miners, owners of equipment, concession holders and all others with activities in the sector were asked to register with a special registration office set up by the GoS. In its first week of operations 3,500 persons registered with this office and its 2 satellite sites. To further simplify the registration process, the government intends to open another 5 satellite sites. The government also intends to establish special one-stop centers in the interior for miners to conduct all their activities with the government. In a follow up process the government will also work on the status of the miners. Miners who do not have a permit to be in the country will be allowed to get their paperwork in order to stay.

2010 was a very successful year for Suriname’s oil sector. State-owned State Oil Company Suriname (Staatsolie) reported a gross income of US$ 568 million, which was up by 32 percent compared to 2009 and just US$ 8 million shy from the company’s record earnings of 2008. This was primarily due to increased production and favorable world market prices. Gross profits of US$ 285 million were an increase of 57 percent compared 2009. Tax and dividend payments to the government in 2010 totaled US$ 186 million. Staatsolie produced 5.8 million barrels at an average price of US$ 72 per barrel. Staatsolie is in the midst of implementing its US$ 1 billion expansion project. Of this amount 75 percent will come direct from internal investments. The company took out a US$ 235 million loan from international banks. A national bond issuance brought in US$ 55 million.

Suriname has attracted the attention of international companies interested in extensive development of a tropical hardwoods industry and possible diamond mining. However, proposals for exploitation of the country's tropical forests and undeveloped regions of the interior traditionally inhabited by indigenous and Maroon communities have raised the concerns of environmentalists and human rights activists in Suriname and abroad.

Although Suriname’s energy supply situation has improved, the country continues to have a shortage in affordable energy to support any major expansion of its economy. The bauxite refinery at Paranam depends primarily on diesel generated energy to support its refining operations. According to Surgold, any refinery built in southeastern Suriname will also have to be powered by diesel generated energy. The doubling of the capacity of the power generating plant of Staatsolie has helped in easing the demand for power in Paramaribo. Actualization of the Tapa-Jai project should further help ease demand issues.

Tourism figures for 2008 through 2010 have remained stagnant. The majority of tourists visiting Suriname continue to come from the Netherlands, with some “weekend tourists” from French Guiana. The number of tourists visiting Suriname from other Caribbean countries is on the rise. Tourist organizations have identified the lengthy visa process for Suriname as one of the obstacles to tourism growth, as well as logistics and infrastructure. The lack of organization within the sector has also been identified as playing an important role. In 2009 Suriname was named as one of the top ten destinations in the world for New Year’s Eve celebrations. Additionally the country was also named a top destination spot by Lonely Planet magazine. Suriname’s Ministry of Transport, Communication and Tourism actively takes part in different tourism fairs around the world, primarily Europe, in an effort to promote Suriname. Different private tourism companies are also making efforts to promote Suriname as a tourism destination.

Sources:

CIA World Factbook (June 2011)
U.S. Dept. of State Country Background Notes ( June 2011)

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