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Haiti’s Mineral Fortune: Deliverance from Destitution?

MJN Louis, Haiti's Fortune. Painting at Montana Hotel, Port au Prince, Creative Commons License
MJN Louis, Haiti’s Fortune. Painting at Montana Hotel, Port au Prince, Creative Commons License

Haiti — the poorest country in the Western hemisphere has been struck by natural misfortunes and malevolent foreign intervention for decades. As the first independent nation to emerge from resettled African slaves in 1804, Haiti held much promise at its inception. Yet the nascent Haitian state was beset by marginalization from its neighbors, particularly the United States. The American government did not even recognize Haiti until 1861 for fear that the slave rebellion against the French colonial masters that created the country might inspire similar upheaval in the Southern plantations. However, as America and the rest of the Hemisphere finally embraced civil rights in the twentieth century, Haiti became a major locus of interest for investment and development. During the Cold War, Western nations supported despotic elites to serve their own interests in the region but in recent years, there has been a more genuine commitment to helping Haiti climb its way out of poverty.

While foreign donors have become more supportive of Haiti’s development, natural disasters have not spared the land any reprieve. Haiti lies in the path of hurricanes and its mountainous terrain is vulnerable to landslides that have been made more frequent by anthropogenic deforestation. Yet, the 2010 earthquake which struck the country’s capital region was the worst calamity to strike the country in recorded history. Over 200,000 people were killed and over 1.6 million displaced in a country of just over 10 million. The aid effort was monumental but perhaps misguided. Cholera epidemics broke out due to mismanaged or negligent United Nations peace-keeping efforts and much of the aid funds did not reach Haitian organizations. A recent estimate indicates that over 9 billion dollars in aid came into Haiti since the earthquake but 89% of the funds went to non-Haitian organizations.

With this backdrop of despair and devastation, Haiti is ready for some better news. The discovery of mineral deposits with an estimated worth at current prices of around $20 billion has brought some cautious optimism in some quarters of the country. Yet some activists fear that the resource wealth that is currently being prospected by foreign companies will largely escape development prospects because of the country’s inability to manage revenue influx as exhibited by problems with aid absorption. As the country considers its options, earlier this month, the World Bank hosted the first international conference to deliberate ways of linking mining to development under the auspices of Haiti’s Council for Economic and Social Development. The conference was followed by a field tour organized by Oxfam Haiti to some of the mining regions where artisanal miners have already started to search for fortune following the trails of geologists.

Aerial view of Port au Prince - Can Mining Heal a Scarred Land? Photo by Saleem H. Ali
Aerial view of Port au Prince – Can Mining Heal a Scarred Land? Photo by Saleem H. Ali

As a speaker at this conference, I was tasked with comparing economic development impacts of neighboring Dominican Republic’s experiences with the Pueblo Viejo mine where our research centre conducted a study a couple of years ago. Since the publication of that study, the Dominican government has renegotiated its fiscal terms with Canadian gold company Barrick (the world’s largest gold producer), and highlights the importance of keeping agreements flexible according to changing price conditions. I also highlighted to importance of considering the trade-offs with tourism income potential if proper remediation and contingency measures are not considered. Haiti’s only major experience with modern mining was a bauxite mine run by Reynolds Corporation which ceased operations in 1982. That mine was in the Miragoane region with minimal tourism potential (similar to some of the Jamaican bauxite mines which do not interfere with tourism activity). However, some of the newer prospects are in the north of the country where there is the highest tourist potential. Indeed, the largest private service sector investment in Haiti thus far is the Royal Caribbean’s Labadee Cruise Ship resort, which I had an opportunity to visit a few years earlier on a family vacation. There are important ecological factors which should be considered before mining proceeds, and funding resources are available to Haiti through mechanisms such as the Critical Ecosystems Fund which has supported some grants in the Northern region of Haiti where mining is planned.

Prospects for development by Eurasian Minerals in partnership with US gold major Newmont appear most promising alongside another more modestly financed junior company called VCS. However, several speakers at the conference expressed concern that too much of a delay in approving permits would scare off investors and deprive Haiti of precious income that is desperately needed to rebuild the country. The national mining law which dates back to 1976 needs to be reformed to make it more aligned with current fiscal needs and international investment guidelines. At the same time the transparency of revenue flows and their direct link to development projects will need to be ensured, perhaps through efforts such as the Extractive Industries Transparency Initiative.

Mining does have much potential to move Haiti’s government coffers from aid to trade but the planning process will need care and persuasion. Civil society organizations should approach the sector with cautious and constructive criticism rather than entrenched cynicism. Haitians have endured far too many failed promises and it is incumbent upon the private sector, international donors and the elected government to ensure that the country’s mineral wealth is not squandered.

Acknowledgement: Special thanks to Remi Pelon, Susana Moreira, and the organizing team of the World Bank conference for inviting me to present at this important event

Comments

  1. Priti International
    kolkata
    October 5, 2013, 4:00 am

    Priti International is a kolkata (india) based turnkey project & Mineral water plant consultant caters their turnkey projects, water treatment plant design & Mineral water projects in turnkey Basis.

  2. Harry
    Washington DC
    August 24, 2013, 9:15 pm

    Twenty (20) billion is that much if the developers pocket more that half.

  3. EMMELISE CHANTEL
    CHICAGO
    July 1, 2013, 2:59 am

    YOU ARE ALL RIGHT BUT DO NOT FORGET THE NEW GOVERMENT IS NOT THE FIRST ONE TO POCKET THE MONEY AT LEAST ,HE IS DOING SOMETHING BUT HIS PREDECESSORS DID NOTHING EXCEPT CALL THE BANK,CALL HASCO ASK THEM TO BRING THE PROFIT MADE TO THEM AND IF THEY DON’T OR IF THEY TRY TO ADVISE THE HEAD ,THE NEXT THING YOU HEAR IS THEY ARE IN THE COFFIN,YOU ALL KNOW IT ,IF YOU DON;T FIND OUT OR ASK THOSE WHO ARE COWARD

  4. rick sraton
    haiti
    June 24, 2013, 11:39 am

    come to Haiti and you will see nothing but Porsche cayenne,and many suvs on the road with a value over $60,000 US dollars-the Ngo’s staying in the most expensive hotels with cost of over $200 dollars a day-they are driving rental SUV’s paying another $200 dollars a day-also eating at the most expensive restaurants spending another $125 aday-I can go on and on about the expenses of these Ngo’s, do you know that all these NGO’s have a private chauffer,and they feed them and pay their living expenses will they are here.Its all a big vacation while they are in Haiti.Their is know control on the money and the Haitian government is getting a cut.Do you know that over several years the US military has been minining for gold in Haiti ,at the entrance of Gonavie,Everyone in the area knows this and the Haitian government knows this for sure.They keep people in the blind in Haiti,the fgovernment really don’t wan to educate the public.Imagine if people got educated in Hait all this stealing will stop.

  5. Pierre C. Deshommes
    USA
    June 23, 2013, 6:58 pm

    It is very alarming to read about the situation of of our Country with so much potentials. As I always said, Haiti has never been poor and it will never be poor. Our Mineral Resources alone are enough to get us out of this situation if only we come to our sense to realize that it’s about time for us to come together to materialize it for the benefits of the Country and the People of Haiti.
    This will be possible only when we can call upon a team of Experts from all over including some of us with experience in this Field and the Management of these Funds with plan to develop a real Partnership between the Country and the Investors themselves. Furthermore, we should not forget that these Investors must include at least 50% of shareholders from the Country and His People with the understanding to develop and Create Jobs and the Infrastructures of the Country with a Sustainable and Durable Mega-Development Project with a Vision of no less than 25 to 30 years. With a such Vision we will see who is serious about the Development of Haiti.
    It’s about time we stop blaming others. It’s about time to call upon ourselves to make it happen, to make it a reality. If we have freed this Country from Slavery 200 years ago in face of the whole World, we can do it. Yes, I do believe that Haiti will rise again!

  6. clodi
    Haiti
    June 23, 2013, 12:37 pm

    Managing balance sheet revenues with private firms is an issue for any controlling institution with no involvement nor say in the management of operations. I strongly suggest a fix tax sort or revenue based on preset variable parameters. Governments need to budget and need to know what they can count on. On the other hand I completely agree that serious reforms and transparency need to be in place before even talking about these types of projects. Haiti is far from being ready for such lucrative projects although I see genuine efforts under way.

  7. Marc-André Bernier
    Chibougamau, Québec, Canada
    June 17, 2013, 10:09 am

    Sustainable mining can be one of the most powerful instruments of social and economic growth for Haiti. Mineral development and mining can generate the funds desperately needed to educate people, to bring new health care facilities and services, and through environmental substitution initiatives, funds needed to reclaim land devastated by deforestation. Mineral development brings about infrastructure development (power, roads, water) which benefits the entire population and for every direct job generates 3-5 indirect jobs in the community. Environmental organisations and other advocacy groups should know that the Agreements already in place with Canadian mining companies (signed over 17 years ago and available for consultation), stipulate that «Total taxes, royalties and other contributions paid to the state cannot be less or more than 50% of the net profit of the mining operations”. Developing a mining project to commercial production is a very high-risk economic venture which requires hundreds of millions if not billions of dollars of investments. No financial risk to the State, No Wold-bank financial support, 50-50 sharing of revenues and long term economic social and environmental benefits to the people of Haiti. Not a bad deal ?

  8. Wakatepe
    Sofia
    June 16, 2013, 11:10 pm

    Isn’t this island 700 miles away from the most powerful and whealthiest country in the world. I wonder why they are so poor?

  9. Saleem Ali
    June 16, 2013, 7:22 pm

    @Ingrid Indeed the Haitian government shares the blame but note that almost 90% of the aid was not even managed by them but rather directly by aid agencies. With regard to mining development, I have noted that the government has to take speedy legislative reforms and oversight.

  10. Ezili Dantò of HLLN
    Haiti / USA
    June 16, 2013, 1:10 pm

    (From- [ezilidanto] NGO false benevolence manufactures consent for the US occupation in Haiti:OXFAM & World Bank howling a wolf’s care for the sheep as if the US occupation of Haiti behind UN mercenary guns wasn’t always about pillaging and plundering Haiti oil, strategic minerals and gold/copper –

  11. Les
    California
    June 15, 2013, 7:51 pm

    I hope Haiti will consider Norway’s model of development for everyone’s long term benefit. However, I doubt that the country has the civil structure to provide an open, honest democracy to provide suitable leadership.

    Please prove me wrong!!!

  12. Ingrid Manchester
    June 15, 2013, 12:59 pm

    You forgot to blame the Haitian Gov’t. No country can function without gov’t doing something. Imagine a country that makes the decision not to build electrical plants b/c they don’t want the private sector to do it and profit from it, but they won’t do it themselves. The result is that only 12% of Haiti has electricity. And then take it down to the next level, where a country pockets every penny. In case you didn’t know it, there was no free school in Haiti until recently, b/c every penny given by donor countries was pocketed. Don’t blame just the NGOs. Natural disasters were more devastating than they had to be b/c the Haitian Gov’t did not fortify the country. Don’t blame that all on nature. Don’t blame the cholera entirely on the UN. Blame the Haitian Gov’t for stealing all the money that would have built water systems, sewerage systems, water treatment plants and other necessary systems in Haiti. If the Haitian Gov’t had done the job they were tasked to do as elected public servants, it would have been different. Don’t blame the earthquake for killing all those people. Blame the Haitian Gov’t for not mandating International Business Code standards and requiring seismic proof building codes with the right mix of cement to sand to water, not more sand than what is required and not the cheaper kind of sand. When you water concrete down with more sand than the recipe calls for, this is what you get. Blame the Haitian Gov’t for pocketing the money that should have been spent on protecting the people. Blame the Haitian Gov’t for not doing it’s job in creating jobs and industry for Haiti. That is the job of a government, to build conditions for private sector development. You can’t have a country without gov’t support and private sector growth. Period.