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Suriname Economy

Flag of Suriname

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 2007, gold, alumina, and oil accounted for 31.7%, 41.9%, and 7%, respectively, of Suriname's exports. Both the oil and gold sector continued their strong performances in 2008, while the world economic downturn instigated a restructuring of the bauxite sector. The International Monetary Fund (IMF) expected Suriname’s economy to grow in 2009 by 3%, while the Economist Intelligence Unit Country Report (April 2009) predicted the country’s GDP would contract by 2%. Even though some economic diversification has taken place, the country's economy remains dependent on its mineral resources.

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 BHPBilliton. The year 2008 was a turning point in the future of bauxite in Suriname. Talks between the government and BHPBilliton on the joint development of the Bakhuys Reserves in west Suriname broke down in October 2008. Soon afterwards BHPBilliton, citing a drop in the world demand for aluminum, severe losses by its parent company caused by the world economic downturn, and the uncertainty of future endeavors in Suriname, announced it would cease operations in Suriname. BHPBilliton announced it would end its 70-year presence in Suriname in 2010, departing after the conclusion of its joint venture agreement with SURALCO, which includes mining Kaaimangrasie and Klaverblad mines until depletion, predicted for 2010. BHPBilliton also announced it would turn over to SURALCO its 45% stake in the refinery. The government set up its own mining company, ALUMSUR, and on April 22, 2009 signed a memorandum of understanding (MOU) with the Swiss Glencore International AG which will finance the development of ALUMSUR to take over the BHPBilliton operations after 2010. Delays in the process of issuing new mining concessions will lead to a gap in refining operations in 2010; SURALCO announced a reduction in the refinery’s capacity in order to retain enough bauxite to keep the refinery operational after 2010. 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 gold mining sector has both a formal and an informal component. The informal component is a highly unregulated, untaxed, small-scale service gold mining sector that takes place primarily in the southern and southeastern parts of the country. Because of a crackdown on illegal small-scale mining in French Guiana, this sector has seen an influx of Brazilians. This sector also has been linked to different social, health, environmental, and criminal issues. To date, the government has been unable bring this sector under its control. In the formal gold mining sector Rosebel Gold Mine (RGM), a wholly-owned subsidiary of the Canadian firm IAMGOLD, remains the only operator. IAMGOLD reported that its earnings for the first quarter of 2009 rose to U.S. $155.48 million, with the Rosebel Gold Mine in Suriname accounting for almost 50% of those earnings (reportedly U.S. $67.48 million, an increase of U.S. $2 million compared to the same period last year). In 2008, the company commenced an expansion program estimated to cost approximately U.S. $40 million. This expansion will include a complete upgrade of its machinery and the installation of a second mill. An investment in exploration also led to RGM increasing its reserves in 2008 by 20% (673,000 troy ounces). A joint venture between SURALCO and Newmont Mining Corporation established Surgold, potentially the second operator in Suriname. Initial exploratory research indicated possible reserves of up to 3 million troy ounces in the Nassau Plateau in southeast Suriname. Surgold commenced negotiations with the government for a production license in 2008, but a downward revision in the estimated reserves in the area put these negotiations on hold.

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 estimates 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. In 2008 Staatsolie produced a record 6 million barrels, which was an increase of 8.5% over 2007. With record high prices for oil in the first half of 2008, the company reported record profits of over half a billion U.S. dollars. In its onshore activities the company commenced a U.S. $60 million exploration program across the coastal area to increase its reserves by 64 million barrels. The design project for the expansion of the Staatsolie refinery entered its final phase, and at a cost of $400 million will expand the company’s refining capacity from 7,000 bpd to 15,000 bpd and expand the company’s product line to include premium diesel and gasoline.

In April 2008 the Spanish Repsol YPF commenced test drilling off Suriname’s coast. In July the company reported that the results of the test drilling were inconclusive, and the complex configuration of the soil made it difficult to assess whether or not oil was present. In November 2008 U.S. company Murphy Oil Corporation and Staatsolie announced that Murphy Oil Corporation had contracted the Geo Celtic, the largest purpose-built seismic vessel in the world, from Fugro Norway in order to conduct 3D seismic research off Suriname’s coast in Block 37. This U.S. $50 million research project was expected to take place between November 2008 and January 2009. A month later, in December 2008, the Japanese oil company Tokeiku announced that it would piggyback on the Geo Celtic’s presence off Suriname’s coast and would commence its 3D seismic research immediately following the completion of Murphy’s research. Results are not available from either study. In November 2008 Staatsolie commenced a bidding round for two blocks offshore, which were expected to be awarded in July 2009.

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 shortage of affordable energy continues to hamper the expansion of the industrial sector in Suriname. The largest companies in the gold and bauxite sector, as well as larger manufacturing companies, run their operations primarily on diesel-powered generators. SURALCO indicated that any expansion of operations to include mining and refining reserves in western Suriname will depend on Suriname expanding its energy-generating sources. The primary energy sources Suriname has at present are the Afobakka Hydro Dam, with an installed capacity of 180 megawatts (MW); a diesel generator power plant owned by the State Electricity Company with a capacity of 45 MW; and a diesel generator plant owned by Staatsolie with a current capacity of 14 MW, which Staatsolie plans to expand to 18 MW. There is no indication that the Ministry of Natural Resources has any immediate plans to work on the expansion of the energy supply of the country.

Suriname’s tourism sector has seen growth. In the past seven years the number of hotels has grown by 200%, while the number of tour operators has grown by 170%. In 2007 approximately 163,000 tourists visited Suriname, with the majority coming from the Netherlands. Nearly 190,000 tourists arrived in Suriname in 2008, with the majority from the Netherlands but a growing number of “weekend tourists” from French Guiana. Suriname, French Guiana, and the three Brazilian states Amapa, Para, and Amazones entered into an Amazon Tourism Agreement that focuses on joint promotion of the Amazon as a tourism destination. Through the Tourism Foundation, the government is making significant efforts to structure this sector. Two major hotel chains, Marriot and Wyndham, are opening franchises in Suriname (Marriot: 2009; Wyndham: 2010). Major regional airlines, Caribbean Airlines and Insel Air, have increased their flights to Suriname, while the national carrier, Surinam Airways, is expanding its fleet and developing new destinations.

The government’s efforts to privatize three parastatals stagnated. Both the wood processing company Bruynzeel and the rice company SML were taken off the market. Privatization of the banana company, SBBS, may still move forward. After putting SBBS up for bid, the government entered into negotiation with the Belgian international fruits and vegetables conglomerate Univeg Group.

Information by U.S. Department of State

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