A Golden Age


The Mining Management Office of the Dominican Republic, under the new director Alexander Medina, has announced that the value of proven mineral reserves is now over $60 billion. With tourism […]

The Mining Management Office of the Dominican Republic, under the new director Alexander Medina, has announced that the value of proven mineral reserves is now over $60 billion. With tourism and agriculture the traditional economic drivers in the country, mining is now showing the potential to form a third pillar. In 2013, the mining sector’s contribution to GDP is estimated to grow to 2%, up 10 fold from 2012.

The country’s most significant mineral resource has historically been nickel, with gold now eclipsing the sector thanks to the coming online of the Pueblo Viejo project. Bauxite and silver are also produced in the country, while non-metallic minerals produced locally include limestone, ornamental rocks, calcium carbonate, and gypsum.

The Dominican Republic’s impending mineral wealth has not gone unnoticed among civil society, however, with talk of revising the country’s mining contract with Barrick Gold intensifying in early 2013. Canadian Ambassador Georges Boisse, however, has warned that international investors will be following developments in the issue closely before deciding to commit.


Barrick Gold assumed the Pueblo Viejo gold mine project in 2006, quickly beginning a renovation project on the mine, which had laid dormant for 14 years. By the end of 2011, the company had invested over $3 billion in the project and doubled reserves and forecasted revenues by close to 100%. As investment approaches $4 billion, the overall economic impact of the project is beginning to show. Local infrastructure has received a major boost, and in the long term the operation is set to be powered by two 215-MW power plants. Currently, 1,650 people are working on the project, with that set to drop to 1,200 on a permanent basis as infrastructure is completed. The company has also committed to educate the local workforce, with over 400 Dominicans currently receiving training. “Over the next 15 years, we will reduce our expatriate force to about 10% of its current size,” says Manuel Bonilla, Former President of Barrick Pueblo Viejo.

Currently, the presence of 23.7 million ounces of gold has been confirmed, an amount that could see production continue for 25 years. Additional reserves could extend the timeframe to 40 years; however, no decision has yet been made to extend the project. The company targeted the production of 200,000 ounces in 2012, with full production expected to begin in 2013.

According to current agreements, and based on a gold price of $1,600 per ounce, the government is set to potentially earn $9.6 billion over the course of the project. “If the price of gold continues to increase by $100 increments, the Dominican state could earn an additional $1.17 billion over 25 years,” added Bonilla. Indeed, once costs have been recuperated, 50% of net cash flows from the project will begin to fill the state’s coffers. The government also plans to inject 5% of its profits from the project back into the area surrounding the mine. Bonilla also remained bullish about the future of the mining sector in the Dominican Republic. “If these mines are done with the view of making the stewardship of the environment the prime focus, then they can operate in the country along with agriculture and tourism, which are our main industries,” he stated, concluding that, “the Dominican Republic certainly has potential to be a mining country.”

With a possible renegotiation of Barrick Gold’s contract looking set to drag into 2013, additional investors are likely to wait on the outcome. However, some have already taken the plunge, with Australia-based PanTerra Gold set to develop a gold, silver, and copper mining project in Las Lagunas in 2013.


Further additions to the country’s mining portfolio in 2013 include the resumption of bauxite extraction at Las Mercedes, as well as Xstrata Nickel’s new project and gold finds at San Juan and Restauracion. Non-metallic mining is carried out by 50 companies in the country, and is focused on limestone, ornamental rocks, calcium carbonate lime, and gypsum, as well as the production of cement and ceramics. However, metals such as nickel have traditionally been the mainstay of the sector. Falconbridge Dominicana, a subsidiary of Xstrata Nickel, is the primary producer of nickel in the country. The company, however, is only running at 50% capacity following a total shutdown in 2008 resulting from the high price of domestic energy and a lack of global demand. After a 30-month maintenance period, a deal was struck with energy group AES for gas-powered energy to start up production at 50% capacity. In 2012, the company produced 15,000 tons of nickel and ferronickel. Finding a partner for the generation of low-cost power will now be key to boosting production. “When we find the right partner, we will be able to reach 100% capacity, but this cannot be achieved unless we undertake a second project, which is the new nickel mine at Loma Miranda,” said Antonio Garcí­a, Former Manager at Falconbridge Dominicana. The Loma Miranda mine, for which the company is now awaiting an environmental permit from the Ministry of the Environment, could provide 20-23 more years of reserves.

The company currently employs close to 1,000 people directly, a number that will jump to 1,200 when it reaches 100% capacity. In 2007, the company paid $350 million in taxes after historically high nickel prices of $27 per pound saw record profits. Current prices remain much lower than that figure, and the company has now entered into an agreement with the government to pay tax as advances over sales and exports. Both the government and Falconbridge Dominicana look to be settling into the long game, with $1.5 billion in taxes and dividends set to flow into government accounts over the next 20 years. Attention will remain on the country’s new mines, as well as its foreign investors, as 2013 progresses. Government involvement also looks set to remain high, with revisions to contracts looking likely.

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