Gold and Diamonds
The bauxite sector attracted foreign investment in the late
1980s because companies knew about Guyana's vast reserves and the
country's previously formidable production capacity. Gold mining,
in contrast, attracted more speculative investment from companies
eager to explore the country's neglected potential. Gold production
peaked in 1894 at 4,400 kilograms per year but declined to an
officially declared level of 160 kilograms per year in 1983.
Declared production averaged 500 kilograms per year during the late
1980s, but undeclared production was thought to be five times as
high: an estimated 3,000 kilograms of gold were being extracted
each year. Individual miners working in southern Guyana smuggled
most of the gold they found to Brazil to avoid paying taxes and to
avoid receiving Guyana's low official price, which was based on an
artificially high exchange rate.
Lured by the prospect of a 1990s gold boom, at least ten
foreign companies began operations or preliminary explorations
within Guyana in the late 1980s. They brought with them industrial
equipment, such as powerful suction dredges, that could extract up
to 500 grams of gold from a riverbed in a twelve-hour shift. Three
of the largest companies were Canada's Golden Star Resources and
Placer Dome, and Brazil's Paranapanema. Others included Australia's
Giant Resources, Homestake Mining of the United States, and
Britain's Robertson Group. The Guyana Geology and Mines Commission
hosted potential investors' visits to the country, and the
government promised to pay the market value for gold (US$356 per
ounce in May 1991) in United States dollars. The government's
promise achieved measurable results in 1990: during the first half
of the year, declarations increased by 75 percent over the previous
Even if only a few of the proposed foreign investments reached
their expected output levels, the government projected that Guyana
would still be producing over 6,000 kilograms of gold per year
(presumably officially declared by the foreign companies) by the
mid-1990s. Paranapanema, drawing on experience in Brazil's tropical
terrain, expected to produce 1,500 kilograms per year at its
Tassawini joint venture on the northwest Barama River. In the
Mahdia region on the Essequibo River, Placer Dome and Golden Star
Resources reported that an operation capable of producing 2,000
kilograms per year was probably possible; the companies planned a
feasibility study before actually starting operations.
Information on diamond production in Guyana was sketchy because
the bulk of the mineral was reportedly smuggled out of the country.
Declared production fluctuated between 4,000 and 12,000 carats per
year in the 1980s. Undeclared production was probably much higher.
In 1966, the industry produced about 92,000 carats, 60 percent of
which were reported as gem quality.
Data as of January 1992