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Environment Magazine September/October 2008

 

May-June 2014

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Can Mining Be Part of a Low-Carbon, Low-Deforestation Development Strategy? The Case of Guyana

In August 2009, Bharrat Jagdeo, then President of Guyana, convened a meeting with local gold miners to address their open fears that his government's Low Carbon Development Strategy (LCDS)—a plan to put Guyana's economic development within a climate-compatible framework by preserving its rainforests—would put the gold-mining industry out of business.1 Government reassurances on mining's continued role in the economy have since reduced some doubts and concerns. Mining (especially for gold by the more than 10,000 local small- to medium-scale operations2) is a vital contributor to the country's socioeconomic growth, yet at the same time constitutes its largest and most rapidly growing driver of deforestation and forest degradation. Not surprisingly, its role and exact profile remain matters of protracted public debate. Indeed, in 2009, the local gold and diamond mining industry commissioned a study (titled “Too Big to Fail”) to argue the case for the industry's continued and unrestricted existence.3 And as recently as July 2013, two key environmental nongovernmental organizations (NGOs) published their own recommendations for integrating the mining sector into a low-carbon development strategy.4

Since their formal introduction on the international agenda in 2005, reducing emissions from deforestation and forest degradation in developing countries and the enhancement of forest carbon stocks (now referred to as REDD+) have emerged as defining challenges for national and international policymaking. According to the World Bank Institute:

Forests are the most diverse terrestrial ecosystems, preserve watersheds and soils, regulate local climates and provide wood, energy, food, medicines, fibres and clean water to society, especially to forest-dependent peoples, a large number of whom are poor. On the other hand, ongoing deforestation and forest degradation, which the FAO estimates to amount to 5.2 million hectares net per year (more than the size of Costa Rica), accounts for up to one-fifth of global anthropogenic carbon emissions.5

Preserving and enhancing forest carbon stocks are now considered critical priorities on the global climate change agenda. Guyana is particularly positioned from two perspectives: first, rising sea levels and changing rainfall patterns pose a threat to its low-lying coastlands where most of its population and agriculture production is located. Second, Guyana's near-pristine rainforests can contribute to reducing and offsetting carbon dioxide emissions.

Against this backdrop, the government of Guyana in 2009 placed the country on a low-carbon development strategy (LCDS) and thereby re-oriented the economy onto a climate-compatible trajectory. The details of the strategy are articulated in a policy paper, titled “A Low Carbon Development Strategy: Transforming Guyana's Economy While Combating Climate Change.” In the third draft of the document, released in May 2010, the executive summary states:

Guyana's pristine forests are its most valuable natural asset—the majority of the 15 million hectare rainforest is suitable for timber extraction and post-harvest agriculture, and significant mineral deposits exist below its surface. The value of the State Forest Estate—known as Economic Value to the Nation or EVN—is estimated to be the equivalent of an annual annuity payment of US$580 million.

However, generating this EVN, while economically rational for Guyana, would have significant negative consequences for the world. The deforestation that would accompany this development path would reduce the critical environmental services that Guyana's forests provide to the world—such as bio-diversity, water regulation and carbon sequestration.6

On November 9, 2009, in furtherance of this development strategy, the government of Guyana signed a memorandum of understanding (MOU) with the government of Norway regarding cooperation on “Issues related to the Fight against Climate Change, the Protection of Biodiversity and the Enhancement of Sustainable Development.” Among its resolution clauses, the MOU declares that “financial support from Norway for results achieved by Guyana in reducing emissions from deforestation and forest degradation will be used in full to support activities and investments within the framework of Guyana's LCDS.”7 Already, the Norwegian government has committed US$250 million over 5 years as compensation for the preservation of Guyana's rainforest stocks. High stakes are involved, therefore, in keeping Guyana's rainforests fully intact.

More than 80% of Guyana is covered by forest. A low-carbon development strategy therefore involves a massive commitment of land space and economic resources, a commitment that generates land-use conflicts and contentious cost–benefit computations.

Foremost among the complex issues is the policy stance on the country's natural capital, in particular its mineral resources. Guyana's extractive industries, such as gold mining at all scales, are a high-value use of forested lands. The vast portion of Guyana's mineral endowment (such as in gold, diamonds, manganese, and uranium) lies beneath these lands. To restrict or prohibit its exploitation carries massive opportunity costs. But mining and other extractive operations are inevitably accompanied by deforestation and forest degradation within their footprints (sites of operations) and areas of influence (encompassing off-site infrastructure such as roads, rails, wharves, and airstrips). The LCDS document states that mining activities will not be required to cease or be curtailed, but warns that they must now operate under international standards.8

What characteristics of mining should inform these standards and the government policy stance in a low-carbon/low-deforestation development framework? This article discusses several of these. Much of the following deliberation may hold relevance for mineral-rich developing countries other than Guyana.

To What Extent Is Mining a Driver of Deforestation?

The first important question is how potent a driver of deforestation is mining in Guyana? If we use the initial 1990 forest area as a reference layer, the forest cover change for the 1990–2009 period is estimated at 0.41% (i.e., <1%).9 The annual deforestation trend suggests that deforestation rates, though low, have increased since 1990 and may well continue to rise. Between 2000 and 2009, mining is identified as the leading contributor of deforestation (60% of the total). Moreover, in 2009, deforestation attributed to mining showed a sharp increase with more than 9,000 ha of forest removed, equating to 91% of all recorded deforestation in Guyana.

Mining, as the country's largest and fastest-growing driver of deforestation, should of necessity force policymakers to intervene to slow or reverse trends. The low overall deforestation rates in Guyana, however, should discourage overreaction in the formulation of policies and legislation.10

Business as Usual Projections

Deforestation/degradation trends, however, are not permanently fixed. Policies therefore have to consider projected changes in the impact of mining. This approach, labeled a business-as-usual projection, is defined as the expected likely development of emissions caused by current and future deforestation and forest degradation drivers in the absence of future REDD+ initiatives.11

Table 1 identifies the main drivers of mining at all scales in Guyana. The main consideration is that certain conditions can lead to a decrease in mining activity (and, therefore, to a reduction in deforestation) for prolonged periods. Would REDD+ initiatives be necessary in such a context? Policies, nevertheless, will have to be flexible and responsive to accommodate all scenarios.

Table 1.

Drivers of the Mining Sector in Guyana

Drivers likely to increase miningDrivers likely to depress mining
High world commodity prices (will lead to more exploration for new deposits, increased production from existing mines, and reworking of abandoned mine dumps or tailings).Low world market prices for minerals, especially gold (has led to extended periods of subdued mining activity in Guyana in the past).
Stable costs of inputs, especially fuel and mercury.Higher costs of inputs, especially fuel and mercury. (As the official policy to phase out mercury intensifies, its cost is likely to spike.)
Opening of state reserves to mining, and greater access to Amerindian titled lands.Exhaustion of surface and near-surface deposits, especially for gold.
More efficient mining and mineral recovery techniques (in relation mostly to small mining; the general consensus puts recovery rates in local gold operations under 50%).Stricter environmental regulations, in particular, the anticipated phasing out of mercury, currently the main means of gold recovery among local miners.
Continued influx of miners from neigboring countries, in particular Brazil. They are credited for increasing gold production in Guyana and introducing better technologies.Intensification of land use conflicts between, for example, Amerindians and miners; small- and large-scale miners; and miners and environmental groups.
New large discoveries (will depend on promoting factors such as positive assessments of geology by investors, improvement by government of geological datasets, and the number of current and anticipated exploration plays).Intensification of international and local pressure to move towards the standards of green mining. Local miners may find it financially and technically difficult to adjust.

Opportunity Costs of Forgoing Mining

Of great significance in the debate is the fact that mining is a high-value use of land. In the Guyana economy, gold has been the top export earner for the last several years. In 2012, it raked in US$716.9 million, a contribution of more than 50% to national export sales.12 The industry is also the employer of thousands of citizens. The opportunity costs of restricted mining include not only direct economic losses, but also a suite of sociocultural and indirect costs. These include the psychological and emotional impacts on miners of changing livelihoods and locations as well as finding new skills (sociocultural costs), and the indirect but devastating financial impacts on support or service businesses such as food producers and suppliers, transportation operators, and equipment repair and fabrication shops. Tax revenues from mining and its service industries will decrease. Mining is also a main catalyst for the opening up, occupation, and development of Guyana's poorly served and remote regions (see photo at right).

The calculation of the opportunity costs of forgoing or restricting mining will therefore involve a complex of measureable and immeasurable variables. Even at first approximation, such costs will be high and unlikely to be met by offsetting carbon credits, such as under the Guyana/Norway agreement.

Estimating Mining's Economic Value to the Nation

Economic value to the nation (EVN) is a measure of opportunity costs and seeks to place a real value on a forest country's best alternative to REDD+, allowing it to evaluate its development options.13 The current model to measure the EVN of mining in Guyana restricts its scope to gold mining only, a situation that reflects the unavailability of hard data on production or mineral potential for other minerals. Clearly, the EVN of mineral resources would be undervalued should focus be limited only to known mines or deposits.

Given the long-term nature of a low carbon development strategy, a poorly explored country (or territories within a country) runs the risk of denying itself either the economic benefits of possibly finding new deposits or of receiving inadequate compensation for forgoing exploration and exploitation.

The paucity of hard information on a country's mineral wealth presents obvious challenges in conducting such assessments of undiscovered but likely existing deposits. In better explored regions worldwide, quantitative assessments have been attempted to provide estimates of the number, size, grades, and market values of undiscovered deposits.14 In poorly explored regions, such a quantitative approach would be highly speculative. Nevertheless, mineral assessments have become urgently necessary to support decisions on land use policy and to calculate opportunity costs within a low-carbon development strategy. Pending more adequate data, qualitative assessments can provide a useful and more evidence-based assessment of the country's mineral endowment.

Mining Is a Temporary Use of Land

Mining is a temporary use of the land that can later be reclaimed or put to other uses. Extraction will cease when ore is exhausted or becomes economically or technologically unfeasible to mine. Mine life commonly can be 1–2 years for small operations, and 10–50 years for bigger operations. The Omai deposit in Guyana, considered at the time to be the largest gold deposit in South America, had a mine life of only 12 years.

While mining is a temporary use of the land, it is often a repeated use of the same land. Such situations are created when improved economic, political, or technological conditions encourage the reopening of closed operations or the reprocessing of mine tailings. In Guyana, the recent high gold prices spurred a return of local miners to old, abandoned work grounds. The downside has been the renewed destruction of naturally reforested lands.

In assessing the potential for undiscovered deposits in a data-poor country, the methodology could involve three steps: (i) selection of descriptive deposit models, (ii) identification and/or delineation of regions geologically permissive for such mineralization, and (iii) within each region, a qualitative assessment or rating of the extent to which components of the deposit models match local geological factors, identified from whatever geological and exploration data are available.

Policymakers therefore have to consider measures to enforce reclamation requirements and to remove the incentives for miners to return to old work grounds. To achieve the latter objective may mean the mandatory use upfront of highly efficient (but more expensive) recovery systems by local miners to ensure that any unextracted ore grades are unattractive (and are so perceived). Not only can better recovery systems avoid repeated reworking and deforestation, but also they allow miners to relinquish their properties much earlier than normal, allowing the quicker introduction of full-scale remediation measures.

Mining Is a Limited Use of Land

The years 2001–2005 mark one of the highest rates of mining-related deforestation in Guyana. Yet just over 0.001% of forested land was affected (21,438 of 18,452,127 ha of total forested land).15 Furthermore, this deforestation is concentrated in relatively small clusters amid vast forested territory, making monitoring and remediation of the problem more manageable.

Within a mining cluster, deforestation produces highly disfigured landscapes, which can lead to an overestimation of the scale of the problem nationally and possibly provoke anti-mining sentiments (see photo above). Mining (even in a business-as-usual scenario) leaves most of the forest carbon stocks untouched, a point that cannot be overemphasized. In this wider view of matters, however, environmental and social problems at the local level must not be ignored.

Natural Reforestation

In countries in the tropics, conditions are suitable for mined-out areas to revegetate. Issues remain, however, as to the rate of reforestation and its level of biodiversity. One study in Suriname concludes that forest recovery following mining is slow and qualitatively inferior compared to regeneration following other land uses.16 The study further states that large parts of mined areas remain bare ground, grass, and standing water. It concludes that given the slow forest recovery, small-scale gold mining will reduce local forest cover and ecosystem services in areas where mining is concentrated.

In Guyana, a study done in 2011 found that native species, such as Baromalli, struggled to regenerate in mined-out test sites in the mining community of Mahdia compared to introduced species, such as Acacia, over the same time frame (see photos at right).17 Comparison of before-and-after satellite images, however, suggest that natural regeneration is at times a viable, if temporary, do-nothing option for the restoration of forest carbon stocks.18

Conversion of Mined-Out Areas to Other Economic Land Uses

A common practice worldwide is to convert mined-out areas into other economic land uses, such as tree plantations, inland fishing (in mined-out pits), and agriculture. In Jamaica, for instance, much effort is directed to converting mined-out bauxite areas into agriculture farms for ground provisions and orchard crops. In Guyana, the Omai mining company was allowed to forgo mandated land reclamation, as the government considered using the mined-out site for nonforest activities such as tourism and skills training (see photo on page 10). The low-carbon development framework would suggest that in evaluating options, land uses that restore high carbon stock to the area should be given priority. This would suggest that the first choice should be tree plantations. If the opportunity costs, however, of forgoing other competing land uses are considered, the decision could become more difficult. This may be especially true if local communities could benefit more from nonforested use of the land, such as for recreational and tourist sites (capitalizing on relinquished assets such as dwellings and power generation facility) and for agriculture (capitalizing on the fact that much of the area has already been cleared).

Mitigation Measures: Options and Hurdles

The fate of Guyana's mining industry within a low-carbon development regime will depend significantly on the extent to which negative impacts can be mitigated. In Guyana, mining causes a range of environmental damage apart from deforestation. These include mercury pollution, river siltation and diversions, and disfigurement of the land. What is the scope for mitigation?

Mitigation measures are commonly considered within a decision-making framework known as the Mitigation Hierarchy.19 This framework prioritizes implementation of mitigation measures under four headings: first, avoid (preventing the environmental impact altogether), then minimize (partially avoiding the environmental impact), then restore/reclaim (stabilizing the site or returning it to its prior ecological function and structure), and, lastly, offset (compensating for the residual impact on the environment). This approach is advocated by WWF-Guianas and other environmental NGOs in their 2013 report on Guyana's extractive industry.20

This article briefly assesses the scope and feasibility of implementing the hierarchy of mitigation measures in the Guyana mining sector, characterized as it is by the presence of several thousand small gold operations using basic technologies. In our assessment, we recognize that the mitigation toolkit also includes other measures, such as education and awareness, and enforcement of regulations. The Mitigation Hierarchy, however, provides an organizing framework within which broad approaches could be assessed.

In the Guyana mining context, “avoid” mitigation measures will be difficult or impossible to implement. Four ways are identified to avoid impacts: changing the location of the activity, adopting alternative methodologies and technologies, changing the timing of project development, and not proceeding with the project.21

Mining by necessity occurs where ore deposits are found. Therefore, avoiding impacts through relocation of operations is not possible. Options are also limited as regards the possible locations of mineral processing facilities, as these have to be near the mining operation to make economic sense. Relocation of service roads, airstrips, and other transportation assets to other forested locations offers no net benefits because all trees in a low-carbon strategy carry the same environmental value. Only where an area has an additional environmental value would relocation of roads and other similar assets yield a net benefit.

Mitigation of mining impacts through the use of alternative technologies and methodologies offers greater possibilities in Guyana. The use of mercury-free mineral recovery techniques and use of better mine planning are not yet widespread and so offer much scope for avoiding impacts.

We see little chance of avoiding impacts in Guyana through the timing option (delaying, rescheduling, or slowing all or some activities). Very little scientific evidence exists in the country to show how such measures can protect environmental values.

Mitigation by not proceeding with the project has potential in Guyana, especially if high environmental values are involved. In 1993, for example, the government revoked a mining permit on Guyana's Shell Beach because of the beach's value as the habitat for endangered sea turtles.

In terms of measures to minimize impacts of mining, changing and modernizing technologies and methodologies offer the best opportunities. The campaign, for example, to get gold miners to conduct systematic exploration could significantly reduce the environmental damage caused by the mostly random “hit-or-miss” search for gold ground. Joint use or sharing by miners of mining facilities (such as settling ponds and tailings sites) and transportation arteries also offers some potential to minimize impacts.

Reclamation and restoration efforts in Guyana's mining areas are practically nonexistent outside of government and university pilot sites. Potentially, therefore, much scope exists at this level of the hierarchy to mitigate environmental damage. A host of barriers, however, have to be overcome, including operation costs and the attitude of local gold miners. The practice of miners of reworking old grounds also undermines restoration efforts, as whatever reforestation did take root is soon destroyed.

Mitigation by offsets has not received much attention in Guyana. The highly scientific and financial issues involved in offsets make the measure unattractive at the moment.

Conclusion

The Guyana REDD+ initiative is touted as a model for other developing countries and can become a source of best practices.22 Much could be learned, therefore, from the implementation of the country's LCDS. This article examined several perspectives and understandings that should inform mining policy in a REDD+ framework. Several of the issues are pertinent to other mineral-rich but developing countries in Africa and elsewhere.

While mining is the largest and fastest growing driver of deforestation in Guyana, several other considerations should discourage the imposition of stringent and restrictive policies and regulations. These considerations include mining's contribution to the economy, its characteristic as a temporary and limited occupier of land, and the relative ease of implementation and the effectiveness of mitigation measures, such as reforestation.

The debate need not be characterized by excessive uncertainties and alarm. An overview perspective needs to be adopted: how much land is being deforested by mining, and at what rate? Can factors such as low gold price lead to reduced mining and deforestation over extended time? Can natural reforestation in tropical countries repair the damage to a satisfactory extent? How reversible is the environmental damage at a national level? The answers to these and other similar questions provide the broad context within which the impacts of mining at the local level must of necessity be tackled.

Admittedly, this article is inclined toward supporting the continued encouragement and expansion of mining at all scales, including at the artisanal and small-scale level. Environmental standards will have to be enforced, as is currently the case, to ensure only minimum and reversible damage to ecosystems. We feel that the policy stance should be imbued with optimism that this could be achieved.

NOTES

1. See, for example, “Mercury in Mining Will Have to Go—Jagdeo,” Stabroek News, 2 August 2009, http://www.stabroeknews.com/2009/archives/08/02/mercury-in-mining-will-have-to-go-jagdeo (accessed 21 July 2013).

2. Legally, mining in Guyana is classified into three scales based on size of operation: small, medium (dominated by local or Guyanese miners), and large (for large international companies).

3. Clive Thomas, “Too Big to Fail: A Scoping Study of The Small and Medium Scale Gold and Diamond Mining Industry in Guyana” (University of Guyana, 2009).

4. The title of the report is “Guyana's Extractive Industry Sector (EIS)—A Synopsis of Issues and Recommendations for the mining sector as a Sustainable Element of Guyana's Low Carbon Development Strategy (LCDS).” Its NGO sponsors are the WWF–Guianas and Conservation International Foundation Guyana, http://awsassets.panda.org/downloads/extractive_industries_sector_final_report_1.pdf (accessed 11 July 2013).

5. World Bank Institute, Estimating the Opportunity Costs of REDD+: A Training Manual, Version 1.3 (Washington, DC, 2011), iii. http://wbi.worldbank.org/wbi/Data/wbi/wbicms/files/drupal-acquia/wbi/OppCostsREDD+manual.pdf (Accessed 11 July 2013).

6. Office of the President, Republic of Guyana, A Low-Carbon Development Strategy: Transforming Guyana's Economy While Combating Climate Change (Georgetown, Guyana, 2010), 7. http://www.lcds.gov.gy (accessed 18 June 2013).

7. MOU, http://www.lcds.gov.gy/images/stories/Documents/MOU.pdf (accessed 13 July 2013).

8. See note 6 above, p. 32.

9. Guyana Forestry Commission, Guyana REDD+ Monitoring Reporting & Verification System (MRVS) Interim Measures Report 01 October 2010 (Georgetown, Guyana, 2011), 59–60.

10. For comparison, some of the countries with the highest annual deforestation rates for 2000–2005 are Nigeria (3.12%), Honduras (2.88%), Indonesia (1.90%), and Ecuador (1.67%). Data from “Forest Resources Assessment 2005” by the Food and Agriculture Organization of the United Nations, http://fao.org/forestry/fra/fra2005/en/ (accessed 13 July 2013).

11. Coalition for Rainforest Nations, Developing a National REDD+ Strategy. Volume 2 on climate-compatible development, http://prod-http-80-800498448.us-east-1.elb.amazonaws.com/w/images/2/20/CCDP_National_REDD_Strategy.pdf (accessed 21 July 2013).

12. Bank of Guyana statistics.

13. See note 11 above, p. 11.

14. See for example, (i) D. A. Singer, “Estimating Amounts of Undiscovered Mineral Resources,” Proceedings for a Workshop on Deposit Modeling, Mineral Resource Assessment, and Their Role in Sustainable Development (Washington, DC: U.S. Geological Survey, 2000), Circular 1294, 79–84; and (ii) K. Rasilainen et al., “Quantitative Mineral Resource Assessment of Platinum, Palladium, Gold, Nickel, and Copper in Undiscovered PGE Deposits in Mafic-Ultramafic Layered Intrusions In Finland” (Geological Survey of Finland, 2010), Report of Investigation 180.

15. See note 9 above, pp. 59–60.

16. G. D. Peterson and M. Heemskerk, “Deforestation and Forest Regeneration Following Small-Scale Gold Mining in the Amazon: The Case of Suriname,” Environmental Conservation 28, no. 2 (June 2001): 117–126.

17. L. Lewis, “Rehabilitation of Mined-Out Gold Areas in Mahdia,” unpublished research paper (University of Guyana, 2009).

18. See note 9 above.

19. The mitigation hierarchy was formalized within the Convention on Biological Diversity in 1992, but has been active policy in Germany and the United States since the 1970s.

20. “Guyana's Extractive Industry Sector,” see note 4 above, pp. 31–32.

21. These categories are adopted from the guidelines published in Procedures for Mitigating Impacts on Environmental Values (Environmental Mitigation Procedures), Final Working Draft (St. John, BC: Ministry of Environment, British Columbia, June 11, 2012).

22. See note 6 above.

Sherwood Lowe is the Head of the Department of Mining and Geological Engineering, University of Guyana. This article has benefitted from informal and intermittent discussions with colleagues in the mining and forestry sectors.

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