Minister Jim Hok, Ministry of Natural Resources of Suriname

Could you please give your opinion to our American readers on the state of the economy in Suriname and what your evaluation is about the objectives achieved up to now? How would you evaluate the way the objectives were achieved?

To judge the state of the economy, I believe it is very important to note that Suriname comes a long way from Dutch aid to self-sustainability. It is not too long ago that the former administration was the last to receive hundreds of millions of Dutch aid, which had a certain negative impact on the country’s willingness to mobilize its own resources. The fact is that even with all this aid in hand, the economic activity in the country did not flourish. The Dutch aid had an impact on this country, whereby we did not develop our own possibilities. If we look at the situation at the moment, being one year in government, we see that things have stabilized; that there is trust and people are getting more and more convinced that this administration will be able to make a successful transfer from Dutch aid to self sustainability. 

One very important thing that you mentioned just before the start of the interview is that you noticed how the mining sector is booming, and you are right. The mining sector is indeed very important to us right now. Of course we know that mining results in depletion of the resource. One day you wake up and it’s all gone. But it is our aim to develop the more sustainable sectors, like agriculture, tourism, forestry, etc, with the earnings of this mining sector. That’s why you should not be surprised that we work towards accelerating the development of the gold sector. To that end we welcome investors such as Iamgold and Newmont with whom we are currently negotiating respectively about gold production expansion plans and mineral agreements.  

So, I would say the economy is in a quite stable situation at this moment. We have a very good outlook on what’s coming next. If you look at the world economy, the price of oil is relatively high, it has dropped a few points a short while ago, but it’s steady, and it’s eventually going up. The price of gold is still booming. At this moment these two are very important to our economy. The aluminum sector- although the production of aluminum itself was put to a stop in 2000 and the production volume of alumina has dropped 40% since 2009- is still very important for the economy of Suriname because a lot of people find work in the sector and we value its contribution to the government budgets.

What has been the evolution and development of the natural resources exploitation historically?

Gold has always played an intriguing role in history all over the world. This is also the case in Suriname. From the early days of the discovery of the continent by Christopher Columbus in 1492 we know the story about a fabulous land of gold called El Dorado. Rumor had it that the tribal Amerindian Chief of El Dorado regularly took a bath in fine gold-dust. The quest that followed to locate this El Dorado could be characterized as the earliest exploration for this precious metal that kept going on until current date.

Bauxite on the other hand was first discovered in 1898. At the time it proved to be very good material to pave roads. It was not until 1922 that the first shipments of bauxite to the United States took place as a primary material for aluminum. With some ups and downs the industry gradually expanded to such an extent that more than 75% of all the bauxite imported by the USA during World War II was of Suriname origin. The bauxite industry soon became the dominant industry in the mining sector and the largest contributor to the economy.

As an inseparable element of the development of the bauxite sector we should mention the Brokopondo Agreement of 1958 by which the Surinam Aluminum Company (Suralco) was granted the license to build a hydropower plant at Afobaka. This enabled Suralco to produce and export aluminum instead of just bauxite. The bauxite sector contributed significantly to the development of the country, due to contributing to government income, but also due to the creation of jobs and because of the spin-off effect to the rest of society. With the closing of the smelter in 2000 and the drop of production volume of the refinery to 60%, the importance of the bauxite sector diminished.

One natural resource, ever present and very impressive is our forest.

I think that the forest has always been very important because 95% of the land is covered by the forest. So, whatever activity you will be undertaking, you will have to deal with the forest first. 

Mr. Caldeira told us yesterday that this was one of the last countries with the least forests destroyed.

It still is; and that is, perhaps, due to our small population. But, forestry was always a natural resource that caught the attention of the developers. In the very early stages, 50-60 years ago, after the Second World War, when people came out of the war and the problems of accelerated development of the colony was the big story in those days, the first natural resources that they paid attention to was forests. They established forest services, created forestry development laws, and introduced a big Dutch company to spearhead the development of forestry resources. There were big ideas; there was a nationwide inventory of a large part of the country to see what they could do. At a certain time there were discussions to see whether they could convert the forests into parks, so this is the forestry story, but it didn’t work out for a lot of reasons. Forestry has always been on their minds, but it did not deliver to their expectation.

After the military takeover in 1980, there was a confrontation with the Dutch and a few of the leadership that depended predominantly on Dutch financial aid. It was in 1980 that the new leadership found it necessary to give a go on oil exploration. Until that time, we knew for more than 20 years that there was some oil in the ground somewhere, but no one found it necessary to look for it. But in 1980, Staatsolie, the state oil company, was founded and they started searching, for oil, producing oil and now they have a small refinery, which they are expanding. It is all still relatively small. Today, Staatsolie employs more than 700 people, has a great spin-off and is currently the number one contributor to the national budget. 

What are your forecasts for the future in terms of oil and mining exploitation?

The development of the oil sector is relatively young and is based on the onshore findings of Staatsolie. The company is working together with others in the offshore area but so far without a great breakthrough. However, expectations are still very high. This is especially the case with the recent extension of our economic sea zone of more than 80.000 square kilometers, because this part of the sea compares to the same area in Africa, where recently huge oil deposits have been found.
 
In 2012 we plan to renew the geophysical map of Suriname. The available geophysical information today is from a map made around 1958 with, of course, the technology of those times. But more than just the technical details of mining, the development of this sector will depend on the view that we hold to utilize the earnings from this sector to speed up the development of the countries as a whole and the more sustainable sectors in particular.

I think it is the way we look at things in terms of the consciousness of our people that is very important. We should realize that we have instruments available to us, which we have not been using up to now. Now that we have discovered that there is so much gold in the ground, people start thinking about manganese, thinking about iron, and I see for Suriname a very brilliant future.

Don’t think only of metals, think about water. We view water as one of the most promising natural resources for the future. Again, it’s the state of mind of people that is very important. It’s the idea, we as Surinamese people should know that our development as a nation is our responsibility. And we should realize that we were given all the instruments to successfully carry that out that responsibility, a beautiful country, a basket full of natural resources, a beautiful population and also worth mentioning, up until now Suriname has been free of natural disasters. It should also be said that this government, I believe more than any other government before, is willing, to step into the mud if necessary, together with our people, to work with them to develop whatever  we choose for.  

Let’s not forget our long term focus, the sustainable development of this country. We know that one day there’s going to be less gold in the ground, there’s going to be less oil, and by that time we should have developed the more durable and more sustainable sectors of our economy.

Using these sectors as a pillar of leverage of growth and development.

Absolutely. The mining sector is the stepping-stone.

Sustainability has been a common trend in Suriname.

It’s in the air; it’s the time we live in. It’s something that we cannot see that influences us. Even though we now chose to accelerate the development of the mining industry with all its consequences, I believe that this consciousness will guide us. That’s very important.

Why is the agricultural sector especially attractive for FDI?

If you look at the world, it’s not only iron that is going to be a scarce commodity in a couple of years, food is also going to be a commodity that will be hard to get in satisfying quantities and qualities. Foreign direct investments will undoubtedly focus on commodities that have an attractive market. Suriname on the other hand has an abundance of sun, land and fresh water, and we have a certain agricultural tradition in some specific crops. That’s where we need to find the right matches and then I believe that FDI in agriculture would mutually benefit the investors and the agricultural sector in Suriname. 

What role could the Natural Resources Ministry play in encouraging the creation of a strong country brand and disclose its products, people and country?

When you make a choice for a certain path of development, then it also imposes on you the responsibility to pave the way for that development. We decided that we should use our natural resources to accelerate our national development. Given also our choice for a long term sustainable development, it gives extra responsibility in the way we do things.

So if we choose to develop the gold sector, we should go for Green Gold. We have a problem now with the small-scale miners, but all the attention is focused on producing green gold. By the end of next year there will be a total ban on the use of mercury, it will be abolished completely by the end of next year. There will be no use of mercury. We started a program at the end of 2010 in which we are organizing the gold sector with the small-scale miners and the way they produce. We have a program coming up for teaching, educating them in modern small-scale techniques. One of the things that are killing the small-scale gold production is that they don’t have access to capital. If we can change that, we can make more stable structures, stabile organizations with them, stabilize production, and get them to extract more out of the ore.

A new mining law is being drawn up, to be presented to Parliament next year. We are currently working on a Standard Mineral Agreement, so that everyone knows up front what he or she can expect and what is expected of them. Things should be more transparent. It seems to me that the words ‘order, sustainability and transparency’, would be the proper way to describe what we seek for and how we should present Suriname internationally. 

Water is the gold of the future. You recently signed a contract with the Every Water Foundation in Suriname and the Suriname Water Company. What is this project based on, and what are the expected results?

I firmly believe that indeed water is more important than gold. Of course, at this moment we need the gold to organize everything and to pay for our water production, and so on. But, in the end, without water you cannot even produce gold.

In Suriname, we get our water from underground aquifers.  Some of these aquifers are depletive and they run dry. Some can be replenished by nature, but just a few. What we’ve noticed very early while in the office is that we are going to need, be it today or tomorrow, we are going to need a way to get fresh water from somewhere else. We have a lot of rainfall, so that could be one source, but another source of abundance is the river, the swamps, surface water which is already there. You cannot drink it like that, but it’s there, it is fresh water. The idea is that, sooner or later, we are going to need to use this fresh water for consumption.

We needed to find ways to purify this water. There are already techniques on the market. You can buy a machine, put in energy and put in water from the river, and then you get fresh, clean, potable water; but that is only for relatively small amounts and we do not want to rely on that kind of technology.

In the discussions with Every Water Foundation we talked about quantities of water that would be sufficient to also supply the Caribbean islands. We are talking about millions of liters, and the company that we signed this agreement with has the idea of getting this water from the river, filtering it through the ground – it was one idea, they had several options – filter this water and fill it into large tanks.  The idea is to use large plastic containers in the form of a cigar or a boat floating on the water. They will float on seawater, because fresh water is lighter than seawater, so they will float. If you connect four, five, six of them behind a vessel, you can take it to the islands or wherever.  But you could also use some of it here. We could use the system that we have that brings water from the south to Paramaribo. If we get the water there we can then pump it into the system and bring it to the city, and distribute it to the districts neighboring Paramaribo. If we have the blessing from above, water will always be available as it is has always been. What happens now is that all this fresh water runs off to sea, and we don’t do anything with it.

Guyana, the name Guyana, I’ve been told is the “Land of Rivers,” and that makes the Guyana’s a really important source of water.

What are the main trade agreements in which Suriname has recently taken part in, and how are they affecting the natural resources sector of the country?

There was a trade agreement signed not too long ago which, I would say, does not benefit Suriname. But, maybe if someone would explain it to me, I would better understand it. It’s the agreement with Europe in which there is free trade agreement between Europe and Suriname, coming up next year or this year. Free trade looks as if it is beneficial to all parties, but if I have got nothing to trade with you, you are the only one trading with me. It is nobody’s fault, it’s not the fault of France or Italy, and we are the ones that failed to produce something to trade. I would look at us for that. We did not develop our forestry, our industry, the rice industry, the vegetable industry, the flour industry, and finally we did not develop water production. I mean, gold is not something I need a treaty for; the things that we export, we already have a market for, this is no problem. The people who want a free trade treaty are the people who have a problem exporting their products.  It is very simply said, but if I don’t have anything to export, what do I need the treaty for?  It is not a good thing. We should develop all the sectors, but how do I deal with tourism in a free trade treaty, what do I do? 

Suriname and the U.S. engage in mutually beneficial relations based on principles of democracy, respect for human rights and the rule of law. The U.S. remains the first trade partner to Suriname; being the largest import provider and the third largest export market. In fact, Mr. Caldeira has told us yesterday that the U.S. has been the most important country in the economic development of Suriname. How would you evaluate the overall state of Suriname - U.S. relations today and the role the U.S. plays in Suriname’s economy?

I would say that the relation between Suriname and the United States is very good. Like Mr. Caldeira already told you, that, in fact, it is our major partner in development.  It has been up until now. Recently, the United States itself is suffering from all sorts of difficulties, but it is still our main development partner. What we should develop more are other sectors in Suriname, which can be of interest to the United States, like tourism. We should promote tourism more. That is a product we can sell to the United States.  We also believe that Suriname might well be of interest for the United States airlines, because, if you look at the map, Suriname is at a point in the map in Latin America that is on the North coast and that can be a vital connection between Europe, Africa and the rest of Latin America. If we can reach that point in opening up the sky and giving facilities to American airlines and Canadian airlines, I think that we will further develop the relations between Suriname and the United States.

It is not only that we buy products or that we sell alumina to the United States, I think that the development – for instance, Holland, the way that people from Suriname, because of colonization, have a connection with Holland, people of Suriname also have a connection with the United States. I mean, turn on the television. One may have never been to New York, but once you get to New York, you know what to expect. We have a connection with the United States. We speak English; we learn English at school, of course.

We have strong cultural ties. Through music, through everything, because of this media of communication, which is stronger than with the Netherlands, which is more personal – families, relatives. With the States, it’s television, radio, music, everything.

And that is a very important basis for American companies to do business in Suriname. In fact, we know them better than they know us, of course, but the fact they can come here and they are not strangers is a very important basis for American industry to come and invest in Suriname. 

We are looking at the oil industry, the offshore industry. American companies have so much experience in offshore drilling that they’ve got to be one of our partners, at least. They have to. We are going to try and interest them to come and join us in the offshore oil industry.

We are going to interest not only American, but also Canadian investors, the junior investment companies in the gold sector, but also those active in other minerals. The junior companies are the ones taking risk; identifying a field and making it attractive to the medium sized and larger companies, like Newmont and so on. One of the things that we have in mind for the near future is to attract the American and Canadian companies, especially the junior companies. Because once the junior companies come here, they will bring in the bigger ones. We need to focus on bringing the junior companies here to explore these fields with us and to identify the ore, identify the fields, and attract other investors. And, like I said, they won’t be strangers.

Could you give us a few examples of U.S. companies that have trusted Suriname, invested here, and have been successful?

It is strange to say that we have not had too many foreign direct investors in Suriname. Suralco/Alcoa of course in the bauxite / aluminum industry is the most famous. But we also have companies in somewhat smaller operations, like Esso and Texaco. And, in the offshore industry, I’m not really familiar with all the companies in the oil sector. Newmont, of course is another example. IAMGOLD now has 60% of its gold coming from Suriname. At the moment they are in negotiations with our government to expand the production. Suriname is the biggest source of their gold. We also installed a commission to deal Newmont, to negotiate with Newmont for operation in the East of Suriname. What happens with these activities is IAMGOLD and Newmont, they will tell people what they are doing, because they are looking for investors, they try to attract people to buy their shares, which will also give more awareness as to what is happening in Suriname. And I hope that they will also attract attention from the small companies.

Can you evaluate how the public and private sectors in Suriname are working together to achieve their mutual objectives?

I would like to distinguish between Suriname private sector and foreign private sector. What happened in our history is that due to colonization the Suriname private sector has always been underdeveloped compared with companies that came from abroad. The local companies   got sort of a second hand treatment; that is the reason why the private sector in Suriname is not a very strong sector. The government eventually found it necessary, just because of this development, to start a lot of companies by itself. When we are talking about public/private companies, we mainly now speak of foreign private companies. What we have in mind is, for instance, to participate in the gold production with Newmont and IAMGOLD, but also in the oil sector.

Up until now, Staatsolie is a company which was founded by the government and it is the only oil producing company in Suriname. Staatsolie works with production-sharing agreements that seem to be quite normal in the oil sector. The guest-company will be free to invest, eventually take out the investments, and come to production sharing with Staatsolie.

There is an example, which we considered very interesting of a company based in the U.S. called PetroAlgae, with which you are establishing farms for the production of renewable fuel and protein.

We aim at making this company for bio fuel. They already do this in America, but the temperature here is a bit higher, which will promote the growth of the algae. So they expect the production will be even higher here. They came here and we joined with them to start a pilot project in Commewijne. They’re already active in producing algae, and, in one or two months, we will know if the production of the algae is attractive enough, interesting enough, to go into a wider production. 

Bearing in mind the strong economic growth, the prudent monetary policy and the good economic prospects, Fitch Ratings has recently elevated Suriname’s risk rating to a level of B, comparing them to countries like Brazil or Colombia. Which are already in our campaign. Why do you think the Fitch Ratings have decided to improve the rating at this particular moment in time, and how would you value the importance of Suriname in increasing its credibility in the international community?

Again, it is only important because we have taken matters in our own hands.  It is important because we have to and want to deal with the rest of the world. We should not focus on the ratings, we should focus on the things we believe in, what we have and what we can achieve and then automatically we believe the ratings will be better. We should prove to be trustworthy partners, for instance, when we reach an agreement with IAMGOLD or with Newmont; we believe that both parties should profit. If it’s an agreement in which only Suriname would profit, it’s not a good deal; if it’s a deal only profitable for Newmont or IAMGOLD, then it is not a good deal. Someday, it’s going to break up, so, even in that, we need a sustainable agreement – something that will keep peace for everybody, something that will produce for everybody, will deliver for everybody. With this idea, we need to develop what we have, but with the future in mind for the next generation. I believe that we can change our whole being in Suriname, we can change people’s minds, we can change the economy, and we can make a relation with the rest of the world that gives confidence. It’s a mutual confidence. We are not focusing on doing things just for the ratings, but we believe that the things we are doing will improve the ratings.

We like to call Suriname the undiscovered gem of the Caribbean. How would you like your country to be perceived by the rest of the world and especially by the U.S. business community?

There are so many things to say. Let’s look at the standpoint of investors: Suriname has a relatively highly educated population. With a bauxite industry here for almost one hundred years, we have developed skills that I believe it would be beneficial to all of the mining sector and not only the mining sector. With this new attitude of a future for ourselves in our own hands, I believe we also offer a responsible people, we offer a responsible government, and we look at things not only from our side, but also from the side of people from abroad, because we want to live together with them, we want to live with the rest of the world. 

We have not developed everything to the full, for instance, tourism is still coming up.  We should keep in mind that we don’t spoil everything; we should use the experience of other countries. I believe that the development of tourism is just starting, but it has a very, very big future.

And then of course there is agriculture. The dream of the President is to be the main food supplier of the Caribbean. So you can imagine that we have plans, we have dreams, and all of this is just there, we have to go and get it. What I can say is that we would like to invite our friends from abroad to come and maybe open our eyes to the possibilities that we have not seen yet, like this PetroAlgae idea – we know the algae is there, they’re not using something from Mars or from Venus, it’s there in the water, but they put it to use so that it can benefit other developments, in this case bio fuel. Let’s invite our friends from abroad to come and see what we can do together.