The gold rush is on. But who is benefiting?

Alfred Sasako | Islands Business

Gold discovery in Solomon Islands goes back more than 440 years.

The yellow stuff was first discovered in 1568 when Spanish explorer Alvaro de Mendana de Neyra arrived at the major island in the nation, Guadalcanal, and named the group Solomon Islands after the King of Israel who had built a great temple in Jerusalem and adorned it lavishly with gold.

Mendana’s expectation that these islands held huge amounts of gold was probably excited by being brought nuggets washed down by the Chovohio River, which emerges into the sea, just east of the present capital, Honiara.

Today, a gold rush of sorts is truly on, focusing largely on the island of Guadalcanal, where Mendana set foot 444 years ago.

Apart from the wealth, the rush also symbolises everything else—greed, promises of economic saviour for the nation and worst, dislocation of villagers who had lived in and around the Gold Ridge area, where Solomon Islands’ first commercial mine has begun exporting the yellow stuff —for more than two decades, perhaps more.

In its haste to get to the mother lode, the company acting on a High Court eviction order forcefully removed the villagers of Valebuti and Valebeabea in May and June this year, allegedly without even providing alternative accommodation for them.

Today, Islands Business has obtained details of gold export from Gold Ridge, which shows Allied Gold Ltd—the new owner of Gold Ridge—has been exporting gold since April 15, 2011.

The figures show that in the period of just 13 months (15 April 2011-15 May 2012), Allied Gold has exported more than 95,400 ounces of gold and 33,000 ounces of silver. Based on today’s going price for gold, that’s an earning of US$1.53 billion (about SB$10.7 billion) in just 13 months.Earnings from export of silver are additional.

Rumours have it that many of the shipments had gone out of the country without certification from the relevant authorities including Customs and the Mines Department.

Certification provides the basis for calculating export tax. If the rumours are true, the government could be losing a lot of money in unpaid taxes.

When the Mines Department was contacted, it said Customs was responsible for all outgoing export of gold, particularly from company production. Attempts to obtain a comment from Customs were unsuccessful.

It is not clear how much tax the government derived from the 22 shipments that had gone out of the country.

An indication comes from an interview given by Mark Caruso, the West Australian businessman who is the chairman of the Allied Gold—the new owner of Gold Ridge—a year ago.

It was reported then that earnings from Gold Ridge accounted for 30 percent of the Solomon Islands’ entire income between 1998 and 2000, when it was under Ross Mining.

The modern mine, of course, is sitting on the source of that gold in the mountains.

In the late 1990s, the mine was developed by Ross Mining. The project came under fire from Brisbane-based mining entrepreneur Denis Reinhardt and his Australian law firm Slater and Gordon. Their dispute wound up eventually in the Solomons’ Court of Appeal, which found for Ross.

But the bitter dispute with Reinhardt and Slaters and the start of the violent ethnic conflict in the country, undermined Ross’ success and the company was taken over by Delta Gold, a decade ago. After numerous changes in ownership since then, Gold Ridge Mining Ltd is now poised to start mining again, under its new owner Allied Gold Ltd, which is pouring A$160 million to its redevelopment.

First, it was vital to tackle issues that had remained unresolved since the three-year “tensions”—the acceptable contemporary gloss on the brutal war between rival gangs that hijacked the nation in the early 2000s.

Today, more gold deposits have been discovered, particularly at the Valebeabea Ridge, which bears the name Gold Ridge.

“The white man calls it Gold Ridge, we call it Valebeabea, where the village is,” one local man told Islands Business  in an interview in Honiara.

Whatever it is, Allied Gold appears to be in a rush of its own as well to get as much gold as possible before any trouble flares up again, given how angry evicted villagers are.

“It’s very high grade, says Caruso, who anticipates obtaining 220,000 ounces within the first 20 months.”

The mine is sitting on a volcanic basin and is located within a vast exploration lease area of 130sq km, which holds high prospects for further finds. Gazing over the mine site area, 500 metres high and thus slightly cool, Caruso says: “This is just beautiful.”

Beautiful it is indeed as the company rakes in thousands upon thousands of ounces of gold.

Islands Business has obtained details of the gold and silver export since April last year (See Figure 1).

 

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3 Comments

Filed under Financial returns, Human rights, Solomon Islands

3 responses to “The gold rush is on. But who is benefiting?

  1. an incidental, but not inconsequential, correction: Mendaña named the Solomons as a result of his desires and projections to find gold there. But the expedition that he led never found a trace of gold, nor did they ever even come close to the river Chovohio. All of which perhaps can help in to turn the metaphor of the longevity of gold discovery on its head, and serve as a reminder that gold rushes have a longer and usually more tragic than happy history – in terms of how they unfold in the imagination of non-local prospectors.

  2. Joe

    Minor correction. 95,000 ounces of gold is worth $150 million, not $1.5 billion. The so-called reporter is out by a factor of 1000……..He also ignores the fact that it actually costs money to mine gold…..

  3. buffalo

    It also cost money to tear and demolish ones domain and all the history that was destroyed, what is a value of that, tell us what book you find that price in, the only book is the one you should have read and paid attention to now you just wait for your time will come and wait could be full of many pleasures but deep in the back of your mind you should be wondering how pleasant the next journey will be.

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