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Dominican Republic Mining
Like the economy at large, the mining industry enjoyed
extraordinary growth in the 1970s, when the country's
major
ferronickel and doré (gold and silver nugget)
operations
were inaugurated. Mining's contribution to GDP rose from
1.5
percent in 1970 to 5.3 percent by 1980, where it remained
in the
late 1980s. Although the mining sector employed only about
1
percent of the labor force throughout this period, it
became a
major foreign-exchange earner, increasing from an
insignificant
portion of exports in 1970 to as much as 38 percent by
1980, then
leveling off at approximately 34 percent in 1987.
Nonetheless,
mining companies struggled in the 1980s because of low
international prices for the island's key minerals--gold,
silver,
bauxite, and nickel. In the late 1980s, the government
strove to
tap new resources and to strengthen export diversification
by
actively seeking foreign investment in mining
(see table 6).
Gold and silver doré, which occur naturally in
the
Dominican Republic, played a central role in the rapid
emergence
of mining. Although the Spanish mined gold on the island
as early
as the 1520s, gold production in the Dominican Republic
was
insignificant until 1975, when the private firm Rosario
Dominicano opened the Pueblo Viejo mine, the largest
open-pit
gold mine in the Western Hemisphere. In 1979 the Dominican
government, then owner of 46 percent of the shares of
Rosario
Dominicano, purchased the remaining equity from Rosario
Resources, Inc., a New York-based company, thereby
creating the
largest Dominican-owned company in the country. Rosario's
huge
mining infrastructure, with an annual capacity of 1.7
million
troy ounces of gold and silver, impelled by rapidly
increasing
international prices for gold, had nearly succeeded in
pushing
doré past sugar as the country's leading source of
export
revenue by 1980. From 1975 to 1980, gold and silver
skyrocketed
from 0 percent of exports to 27 percent. Declining prices
for
gold and silver during the 1980s, however, curtailed the
extraordinary growth trend of the 1970s, and by 1987
doré
exports represented only 17 percent of total exports (one
percentage point above ferronickel exports, and one
percentage
point below sugar exports). Declining reserves also
limited
doré production. Japanese and United States
companies
actively explored new gold reserves on the island, but
gold
mining was shifting away from the search for oxide ores,
supplies
of which were dwindling, toward the more expensive process
of
exploiting sulphide ores. There were some alluvial gold
deposits
as well.
Ferronickel also contributed to the mining prosperity
of the
1970s. From 1918 to 1956, the United States Geological
Survey
performed a series of mineral studies in the Dominican
Republic.
These studies encouraged the Canadian firm Falconbridge to
undertake its own nickel testing starting at the end of
that
period. Falconbridge successfully opened a pilot nickel
plant in
1968, and by 1972 the company had begun full-scale
ferronickel
mining in the town of Bonao. In the late 1980s, the Bonao
ferronickel mine was the second largest in the world.
Buoyed by
high international prices, nickel exports rose from 11
percent of
total exports in 1975 to 14 percent by 1979. Although
nickel
exports, as a percentage of total exports, continued to
climb in
the 1980s, reaching 16 percent by 1987, lower world prices
for
nickel and a lengthy dispute between the government and
Falconbridge over tax payments hampered output throughout
the
decade. Unlike gold, nickel had been proven to exist in
large
reserves in the Dominican Republic, which meant bright
prospects
for mining.
The Aluminum Company of America (Alcoa) began bauxite
mining
in the southwest province of Barahona in 1958. Bauxite
output
peaked in 1974 when Alcoa surface-mined nearly 1.2 million
tons;
exports totaled as much as US$22 million as late as 1979.
As with
other minerals, however, the international recession of
the early
1980s caused bauxite prices to topple, as world supply
outpaced
demand. Alcoa closed its Dominican bauxite operations in
1982 and
its small limestone mine in 1985. The Barahona mine
remained
closed until 1987, when the government purchased Alcoa's
facilities and recommenced bauxite mining, selling the red
ore to
Alcoa for processing in Suriname.
The Dominican Republic also produced varying amounts of
iron,
limestone, copper, gypsum, mercury, salt, sulfur, marble,
onyx,
travertine, and a variety of industrial minerals, mainly
for the
construction industry. In the late 1980s, the National
Marble
Company was a profitable, but outmoded, government
monopoly that
mined marble, onyx, and travertine for the local
construction
industry. Corde's Minas de Sal y Yeso extracted salt and
gypsum,
generally at a loss. Salt mining was primitive, and its
product
was destined solely for the local market. The private
sector
mined and exported limestone, some of which went to the
United
States.
The government increasingly favored greater
participation by
the private sector in mining, so that the state's
resources might
be combined with the technology and the capital of foreign
firms.
Mining's promoters also sought to diversify the economy's
export
basis and to improve its international credit worthiness.
Through
Decree 900 of March 1983, the Jorge government further
defined
and limited the role of government in mining, by providing
broader incentives for private involvement. Nonetheless,
the
state retained exclusive rights to mine gold, gypsum, and
marble.
United States, Japanese, Australian, and European firms
explored
Dominican soils after 1987, when the government opened up
areas
previously closed to foreign investors.
Data as of December 1989
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