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World > South America > Suriname > Economy (Notes)

Suriname - Economy (Notes)


ECONOMY
Suriname?s economy has been dominated by the exports of alumina, oil, and gold. Other export products include bananas, shrimp and fish, rice, and lumber. In 2006 alumina accounted for approximately 46.2% of total exports. Government income from the oil sector, however, has surpassed that of the bauxite/alumina sector. Suriname's bauxite deposits have been among the world?s richest. Active in Suriname since 1916, SURALCO, a subsidiary of the Aluminum Company of America (ALCOA), has had a long-standing working relationship with the Australian-owned BHP Billiton.

After two years and an investment of approximately U.S. $130 million, BHP Billiton officially commenced its mining activities at the Kaaimangrasie and Klaverblad mines in 2006. These mines are expected to provide enough bauxite to cover the transition between the closing of the depleted Lelydorp Mine and the possible opening of a mine in the Bakhuis area with estimated reserves of 300 to 400 metric tons. Other proven reserves, sufficient to last until 2045, exist in the east, west, and north of the country. However, distance and topography make their immediate development costly. The government is currently in negotiations with SURALCO and BHP Billiton over the exploitation rights for the Bakhuis region. Parties expect to have a new bauxite agreement signed by 2008, with the companies commencing activities in that region in either 2010 or 2011.

The severe shortage of affordable energy sources has hampered Suriname?s ability to expand its industries. This goes for the bauxite sector as well. Currently running on diesel-fueled generators, SURALCO has indicated that any expansion of operations to include mining and refining reserves from West Suriname will depend on Suriname expanding its energy-generating sources. To alleviate some of Suriname?s energy woes, the state-owned oil company, Staatsolie, built a 14 megawatt (MW) diesel-generated energy plant in 2006. In its most recently updated expansion plan, the company intends to expand the capacity of the plant to 18 MW.

The gold mining sector is largely informal, unregulated, and small scale, but constitutes an important part of the informal economy (estimated at as much as 100% of GDP), and must be brought into the realm of tax and environmental authorities. In the official sector the Gross Rosebel Goldmines, wholly owned by the Canadian firm IAMGOLD, commenced its operations in 2004 and immediately positioned itself as the most productive and low-cost of all mines owned by IAMGOLD. A new player in the Surinamese gold sector is the U.S. firm Newmont Mining Corporation. Working in a joint venture with SURALCO, the company has indicated that it will be seeking a production license from the Government of Suriname by 2008. Newmont wants to be operational by 2010. The reserves in the company?s concession area are estimated to be 300 million troy ounces.

Suriname has also attracted the attention of international companies interested in extensive development of a tropical hardwoods industry and possible diamond mining. However, proposals for exploitation of the country's tropical forests and undeveloped regions of the interior traditionally inhabited by indigenous and Maroon communities have raised the concerns of environmentalists and human rights activists in Suriname and abroad.

The sector with the most promising outlook for rapid, near future expansion is the oil sector. A 2000 study by the U.S. Geological Survey suggests that there may be up 15 billion barrels of oil in the Guyana Plateau. The state-owned oil company, Staatsolie, is by law the only company with the right to operate in Suriname?s oil sector. Other companies can only access the market through production sharing agreements with Staatsolie. With its current output at 14,000 barrels per day (bpd), Staatsolie announced a robust expansion plan titled ?Vision 2020? that will seek to expand output to 18,000 bpd by 2012. Staatsolie also plans to expand its onshore exploration research in order to increase reserves by 30 million barrels per five years. In order to reach this goal, the company signed a production sharing agreement with the Australian company Hardman Resources. Staatsolie further intends to establish and develop near shore reserves. In its offshore activities the company signed a production sharing agreements with the Spanish Repsol YPF (2004), the Danish Maersk Oil (2004), and the American Occidental Petroleum Corporation (2005). A second U.S. firm, Murphy Corporation, is expected to sign a production sharing agreement with Staatsolie for offshore activities. Staatsolie expects 2008 to become the high point for Suriname?s offshore oil activities, with Repsol YPF drilling its first test well. In its ?Vision 2020? Staatsolie also announced major expansion plans for its downstream market. The company wants to expand its refining capacity from 7,000 bpd to 15,000 bpd. Staatsolie also plans to put up its own retail business.

In an effort to address the problem of Suriname?s ailing 110 parastatals, the government has introduced a plan that would strengthen them, after which they would be privatized. The first parastatals chosen for this experiment were the banana company, Surland, the wood processing company, Bruynzeel, and the rice company, SML. After closing for more than seven months in 2002, the banana company was reopened under the new name SBBS. After an initial attempt to privatize the company failed in 2005, the government continued the restructuring of the company. With heavy financing from the European Union the company has been revitalized, but is not yet out of debt. In 2006 SBBS produced and exported at record quantities. The management of the company is currently in the hands of a French company. The government has not announced any new plans for privatizing the company. The privatization attempt of the wood processing company, Bruynzeel, has failed. After months of negotiations, a memorandum of understanding, a letter of intent, and opposition protests against the deal, the government and the Dutch company Doorwin failed to reach an agreement on the terms of sale. The government is currently considering its options with this company. A British investment firm, the Emerald Investment Group, has expressed an interest in the company and has made a tentative offer to the government for Bruynzeel. The government has not indicated what it plans to do with the company. The restructuring of the heavily indebted rice company SML has failed. The company has also continuously been involved in legal proceedings brought by one of its largest creditors. In May 2007 the government announced that it would go ahead with the sale of the company. A call for proposals was published in the daily newspapers. Indications are that the government might go ahead and accept any bid that would cover the company?s extensive debt.


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Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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