Guyana: The Rise and Fall of Bauxite

Introduction

Many centuries ago, Guiana’s hinterland was fabled to be a golden city called Manoa, with its king, El Dorado. The European nations heard of this myth that the golden city possessed “innumerable gold, silver, and emeralds somewhere along the Orinoco or in the uplands of the Guianas.” Even though the golden city was never found, Guiana did possess a lot of natural resources, however, one of the greatest natural resource discovery was that of bauxite.

Bauxite

The natural resource or what was referred to as ‘red gold’ was initially unearthed in Guyana around 1876 – 77, stretching across the country from the North West District up to the Corentyne River, with huge deposits discovered around the Pomeroon, Bartica, Mackenzie, Ituni, Canje, and Orealla. 

This discovery sparked interest in the United States of America (USA), and the Aluminium Company of America (Alcoa) sent off their explorers and investigators to claim lands. However, during these times, people residing in Guyana had little or no interest in the resource because they did not know about its value and potential. Hence when the foreigners arrived they were able to purchase lands very cheap, claiming that they wanted it for soya beans cultivation. One notable person was the Scottish geologist, George Bain Mackenzie who came to the country and purchased lands claiming that he wanted to plant oranges, (approximately 60 miles up the Demerara river).

In 1916 Alcoa incorporated the Demerara Bauxite Company Ltd. (DEMBA) and bauxite mining began in Mackenzie’s vicinity, Alcoa then became the largest producers of aluminum. As a result of bauxite mining, hundreds of Guyanese from the coastal areas migrated to the mining area in search of employment. Furthermore, as the working class increased, many workers began to permanently settle in the areas.  These workers laboured under extremely cruel working conditions, for instance, each of them worked a 10-hour day, for six days a week.

By 1922, the bauxite operation was expanding, other discoveries were made which led to the setting up of other mining sites and the facilities for processing and shipping were erected at the head of the Demerara River, located at Mackenzie.

Shortly after Alcoa had passed the operations to its Canadian associate, Alcan, the company took control of DEMBA. Nevertheless, the production continued at a steady rate and at this time Guyana had become the world’s third-largest high-grade bauxite producer (after the USA and Suriname).

During the period of 1930 to 1936, the industry faced hardship but this ended before 1939 and specifically during the World War (1939-1945).  At this time the demand for aluminum was extremely high, with the continual expansion of the bauxite mining industry, such as the Berbice Bauxite Company, Guyana then became the second largest producer and by 1943, it accounted for seventeen percent of the world’s bauxite production.

But eventually, like most of the other industries, the ‘red gold’ industry began to face challenges which eventually led to its downfall. For instance, the industry suffered losses because of inefficient management, falling world prices and the continual strikes by the bauxite workers.

Another factor that eventually led to the collapse of the mining industry took place in the 1970s; efforts to nationalized the industry. The aim of this was to add value to the primary product through processing it into alumina, this resulted in considerable losses and led to the closing of the plant in Linden 1982.

As a result of nationalization, Guyana became an unreliable supplier of calcined bauxite and faced competition from China after 1981. China became the world’s largest source of calcined bauxite, consequently, this dislocated Guyana from being its major exporter regardless of the fact that it was closer to the markets – that is the North American and European markets.

These prolonged issues eventually drained the companies of their capital, plants, and equipment, hence, the country began exporting only unprocessed bauxite ore. While the demand for the ‘red gold’ dropped, the country only had small scale miners.

To date, Guyana, which had been known for having a 350-million ton bauxite reserve only have three mining companies: Rusal, Bosai Minerals Group and Aroaima Bauxite Mine.

In the Monthly Economic Bulletin by the Ministry of Finance, published in 2017, shows that “Production reached 361,033 tons during the first quarter of 2017, compared with 438,935 tons produced during the same period in 2016.” These figures compared to the 9,823,389 tons of bauxite that was produced between 1937 – 1947, definitely denotes that there has been a notable drop in production over the years.

Although, Guyana has seen a steady decline in the bauxite industry over the years, the government indicated that they would invest billions over the next few years for the revival of the industry.