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Extractive industries respect the environment

Article - May 26, 2015

The biggest players in Guyana’s mining and logging industries place sustainability at the heart of their operations, keeping the forests as intact as possible and engaging the local communities in economic activities and skills training

Countries rich in natural resources are, of course, a magnate to entrepreneurs in the extractive industries, yet Guyana has seen less exploitation than would be expected for such a virgin territory. This has enabled it to remain as one of the most forested nations in the world. And thanks to sustainable management policies put in place by the government, most of Guyana’s forestlands should remain virtually intact for the foreseeable future.

Guyana’s largest forest resource and wood products company, Barama, was in fact a step ahead of the government in terms of sustainable forestry. Established in 1991 as a Malaysian-Korean joint venture and wholly-owned subsidiary of Samling Global Ltd., Barama immediately partnered with the Edinburgh Centre for Tropical Forests (ECTF) to develop what became the country’s very first sustainable forest management model. In 2012, Barama received the highly coveted Verified Legal Original (VLO) certification from the U.S.-based independent NGO, Rainforest Alliance. Because the company’s license covers some 1.6 million hectares, this became the largest VLO-certified block of tropical forest in the world.

Having this certification means “the product sells itself”, says Barama CEO, Thomas Apun. Yet he wants to make it clear that seeking VLO was not part of a strategy to increase their prices. “We believe we are practicing a high standard of sustainable forest management and the only way to express that is through an independent re-verified source,” says the CEO. “That is what drives us. We have not demanded any increase of premium from our buyers. They get an added value without an added cost. Eventually I am hoping as a business entity that one day it may pay off but that is not our immediate focus.”

How does Barama keep logging compatible with forest conservation? The key is low intensity. In just a 2.5 acre-area, Barama removes just two or, at the very most, three trees. Stringent criteria, such as restricted tree diameter, determine which trees can be felled – and as logging experts point out, these trees would eventually die anyway. Removing the taller, older trees also creates gaps in the dense canopy that allows the shorter, immature trees to flourish with increased sunlight.

Barama is also a role model in adding value to its products. Whereas the majority of wood that Guyana exports is still in crude form, Barama transforms 60% of its wood into plywood, veneer, flooring and decking products. “We are the only ones who have a veneer and plywood factory in the whole country; others are just doing saw milling,” explains Mr. Apun.

Whereas Barama has the advantage of the expertise of its parent company, Samling, other Guyanese logging companies could benefit from foreign investment and knowledge sharing. “We have been operating with antiquated technology and equipment, particularly in the foresting industry,” says John Tracey, CEO of Guyana Bank of Trade and Investment (GBTI). “It has been estimated that we waste 40% of a log. We can’t afford to cut down a tree that is hundreds of years old and waste 40% of it. This is where there is room to learn from technological advancement.”

Mining is another industry that brings in important revenues to Guyana, and when done consciously, reduces the long-term harm to the environment. “We prioritize re-vegetation in historic mining areas,” says Scott Caldwell, CEO of the country’s premier gold producer, Guyana Goldfields Inc. (GGI). “This is not costly, but it is time consuming. The rainforest lacks topsoil, which extends the time it takes for vegetation to grow back. We are conducting many tests on our properties currently to evaluate techniques to enrich or replenish the topsoil in said historic areas.”

Premier mining companies in Guyana, such as Canada-based GGI and Australian firm Troy Resources, which also has large assets in Brazil and Argentina, also focus on a different kind of sustainability: infrastructure, indirect jobs, and skills for the Guyanese people.

GGI’s Aurora mine, expected to begin operation in mid-2015, has a 17-year life-span, though Mr. Caldwell foresees it being extended to 35 years. Over this time, the company is creating industries through partnerships. “For example, local companies transport our freights to the mines,” he says. “We source local companies to manufacture all of our work clothing and provide us with food. We leave behind skills, infrastructure and through our focus on the cottage industries, standalone businesses can continue to survive with or without us.”

Moreover, the Aurora mine is expected to contribute some US$1 billion in taxes over 17 years.

Ken Nilsson, CEO of Troy Resources, underscores that nearly all employees at its Karouni Mine, also expected to take off in mid-2015. “I use local resources as much as I can for a number of reasons; one being that we need the people to accept us as part of their daily life and be a part of their economy.”

Mr. Nilsson adds that Troy Resources is planning to open “probably the only kind of training facility in the Caribbean for heavy earth-moving machine operators and technicians.” As for the quality of the local talent, Mr. Caldwell says the Guyanese workers he has on his Aurora project team – maintenance, operations and technical supervision personnel – are “second to none”. “I would take them anywhere in the world and put them head to head with anyone in the U.S., Canada, Indonesia, or anywhere I have worked.”

For Troy’s CEO, Guyana represents a pioneering country. “I know Americans like remembering their pioneering days; this is a perfect place to do that.”