Environment, community concerns seen holding back DomRep mining boom

Environmental and community concerns and policy uncertainty are seen holding back a planned mining boom in the Dominican Republic.

Most of the main mineral projects have hit environmental and social stumbling blocks in 2021, according to the latest company reports and statements.

These include permitting delays and stalled exploration programs, along with the withdrawal of one expansion project.

President Luis Abinader has pledged to deliver significant mining growth during his term, targeting soaring production and approval for a string of projects, including Barrick Gold and Newmont's US$1.3bn Pueblo Viejo expansion, which aims to extend the life of Latin America’s biggest gold producer into the 2040s.

But the scale of community opposition to mining – and public concerns over the industry’s potential environmental impacts – have put a dent in Abinader’s plans.

Permitting delays also reflect uncertainty over forthcoming legislation.

Abinader’s administration is planning to overhaul the Dominican Republic’s 1971 mining law to attract investment.

But the bill – expected to be drafted for debate within weeks – is also likely to include substantial strengthening of environmental regulations and a bigger share of benefits for mining communities.

PUBLIC OPPOSITION

The scale of public concerns over potential environmental damage appears to have come as a surprise to some.

Falcondo, a subsidiary of Americano Nickel, was forced to withdraw proposals to mine a 4.6km2 area of the Loma Miranda forest in February, following outcry by environmental, political and religious groups over potential environmental impacts. 

The company said operations will be exhausted in 4-5 years if it is unable to go ahead with the Loma Miranda expansion, which it said would extend ferronickel operations for 20 years.

Mining in Loma Miranda has been a sensitive topic after plans to declare the forest a national park were blocked by former president Danilo Medina in 2014.

COMMUNITY DEMANDS

Community concerns have also impacted Vancouver-based junior Precipitate Gold.

The company halted a 10-hole drill campaign for the Copey Hill gold zone on its Ponton project after just two holes in February, when some residents demanded additional information on the company’s exploration plans.

The decision was taken despite Precipitate having obtained all necessary government permits and licenses and surface access authorization by local owners.

PERMIT DELAYS

Delays have affected projects like Barrick’s Pueblo Viejo expansion, where environmental authorities are continuing to evaluate a planned overhaul of tailings storage capacity, an essential element of the investment.

The company’s tone in recent statements suggests permit approval is now urgent for it to advance the expansion on time.

Failure to greenlight the tailings expansion would result in output falling at Pueblo Viejo or even a closure of the mine, Barrick Pueblo Viejo president Juana Barceló was quoted as saying by local daily Listín Diario earlier in April.

Barceló also reinforced Barrick’s important role in public finances, with the company paying US$228mn in direct taxes and royalties since the start of 2021.

ROMERO PROJECT

Another project which has failed to secure a key environmental permit is GoldQuest Mining’s Romero gold asset.

The project has been paralysed for several years due to the lack of presidential approval to start formal environmental studies.

Romero ranks among the Dominican Republic’s most advanced pre-production mining projects, and is expected to produce 109,000oz/y gold over a 7.3-year mine life, with capex estimated at US$159mn.

GoldQuest said it was encouraged by a visit to local communities by energy and mines minister Antonio Almonte in January, and a letter to CEO Dave Massola apologizing for the delay.

Almonte later reported opposition to the project among some community leaders, but said the environment ministry would ultimately rule on the project’s permit application.

UNIGOLD PROGRESS

One company which has managed to advance its Dominican Republic projects in recent months is Unigold.

The Toronto-based explorer posted results of a PEA for its Candelones oxide project on the Neita property.

The study outlined a small but high-return project producing 31,040oz/y gold for initial capex of US$36mn, delivering a post-tax IRR of 34.9% at US$1,650/oz gold prices.

Unigold plans to advance Candelones ahead of a potentially larger sulfide project on the property.

“The economics are compelling enough that this is being considered as a stand-alone operation providing near-term cash flow as the company continues to expand and evaluate the larger sulfide resource which the company believes offers a longer-term development opportunity,” CEO Joseph Hamilton said in a release on April 26.

While Unigold has plotted out a potential path to production and longer-term growth, the company still requires environmental and social impact assessment (ESIA) approval to progress, as well as permits and authorizations for construction and operation.

The company plans to engage the environment ministry to develop a framework for the ESIA over the coming months.

Community consultations are underway and are expected to accelerate during 2021, the company added.

Given the backdrop of licensing delays and uncertainty ahead of the mining law shake-up, Unigold faces a potentially lengthy permitting process at Neita, with no guarantee of a successful outcome.

OUTLOOK

Permitting appears likely to remain slow or stalled until the bill to overhaul the country’s mining law is drawn up – and the bill will need to secure approval in both houses of congress to come into force.

In addition to political uncertainty, investors in the Dominican Republic’s mining sector will also need to take into account significant potential challenges relating to community support and public concerns over environmental impacts, which are unlikely to disappear if the bill comes into effect.