VZCZCXRO4879
RR RUEHDT RUEHGR RUEHLMC RUEHMR RUEHPA RUEHPB
DE RUEHGE #1058/01 2832050
ZNR UUUUU ZZH
R 102050Z OCT 06
FM AMEMBASSY GEORGETOWN
TO RUEHC/SECSTATE WASHDC 4232
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUCNMCM/MCC WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 GEORGETOWN 001058 
 
SIPDIS 
 
COMMERCE FOR ITA - MICHELLE BROOKS 
SANTO DOMINGO FOR FCS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON PBTS EMIN ETRD EFIN EINV ENRG GY
SUBJECT: GUYANA ECONOMIC & COMMERCIAL ROUND-UP 
SEPTEMBER 2006 
 
 
Contents of September 2006 Guyana Economic & Commercial Highlights: 
 
¶1. Jagdeo Pursues Debt Relief, Treasury Ties in Singapore 
¶2. Guyana-Suriname Maritime Boundary Dispute: Legal Teams to begin 
Oral Arguments on December 7 
¶3. Russian Firm Interested in Linden Bauxite Operations 
¶4. Cambior/IAMGOLD Merger Could Affect Guyanese Mining Operation 
¶5. Stone Supply Shaky, Price Skyrockets - Cement Stable 
¶6. USAID Supports Verification System for Timber Products 
¶7. Inflation Watch: Consumer Price Index - August 2006 
 
-------------------------------------------- 
Jagdeo Pursues Debt Relief, Treasury Ties in 
Singapore 
-------------------------------------------- 
 
¶1. Following his return from the annual IMF/World Bank board meeting 
in Singapore, President Bharrat Jagdeo made Guyana's case for 
Inter-American Development Bank (IDB) debt relief in a September 26 
press conference. Jagdeo said Guyana is seeking the write-off of 
US$400 million in IDB debt by year's end and will lobby the 
governments of Brazil, Mexico and Colombia to that end. Jadgeo also 
said that the USG is "sympathetic" to Guyana's case following his 
meeting with Assistant Secretary for International Affairs Clay 
Lowery in Singapore. Jagdeo called for a closer working relationship 
with the Treasury Department, saying that issues that are brought up 
at the Executive Directors' meetings in international development 
institutions could be resolved earlier through mroe direct 
interaction with Treasury. 
 
--------------------------------------------- --------- 
Guyana-Suriname Maritime Boundary Dispute: Legal Teams to begin Oral 
Arguments on December 7 
--------------------------------------------- --------- 
 
¶2. Guyana's and Suriname's legal teams will begin oral presentation 
of their case before the UN International Tribunal on the Law of the 
Sea (ITLOS) arbitral tribunal at the Organization of American States 
(OAS) Headquarters in Washington, DC from December 7. A ruling is 
expected next year. The two-part ruling would include whether or not 
the tribunal has jurisdiction to decide on the merits of the dispute 
and the award, which would essentially consist of a boundary line 
from the point of the coast where the sea meets the land for a 
distance of 200 miles. The award would be binding on both states, 
and it would constitute the internationally recognized maritime 
boundary between Guyana and Suriname as well as the right to exploit 
the resources on each side that may lie within the sea or under the 
sea. Settlement of the long-simmering border dispute would likely 
pave the way for resumption of oil exploration in the region. 
 
--------------------------------------------- ------- 
Russian Firm interested in Linden Bauxite Operations 
--------------------------------------------- ------- 
 
¶3. The Russian Aluminium Company (RUSAL), which operates Aroaima 
Bauxite Mine in the Berbice River, has expressed interest in 
acquiring Canadian firm Cambior's 70 percent share in Omai Bauxite 
Mining Inc (OBMI). RUSAL will also engage the Government of Guyana 
in discussion to negotiate the possible purchase of the GOG's 30 
percent share in OBMI. RUSAL, which has a 90 percent holding in the 
Berbice River operation, is actively pursuing several ventures in 
Linden. This includes data collection and confirmation of existing 
bauxite deposits. The company has since received leases to advance 
its exploration and has commenced drilling of ore bodies to confirm 
location of deposits. RUSAL is conducting studies for the 
establishment of an aluminium plant in Linden with a production 
capacity of one million tons annually. RUSAL is reportedly also 
considering establishing a hydropower station in the Upper Mazaruni. 
The combined endeavours of RUSAL could see spending of US$10 million 
- US$20 million in feasibility and other studies over the next five 
years. 
 
--------------------------------------------- ------ 
Cambior/IAMGOLD Merger Could Affect Guyanese Mining Operation 
--------------------------------------------- ------ 
 
¶4. Meanwhile, IAMGOLD Corporation and Cambior Inc. agreed to a US$3 
billion transaction to create a new million ounce-plus gold producer 
and the world's tenth largest publicly-traded primary gold producer. 
A vote on the transaction is expected by Cambior shareholders in 
early November; a 75% favorable vote by Cambior's common 
shareholders is needed to approve the transaction. Cambior has 
operated in Guyana since 1990 as part of Omai Gold Mines Limited, 
and it also holds a significant stake in the Linden bauxite 
operations which it has indicated it is interested in selling. Of 
interest is how the merged business will approach these two 
 
GEORGETOWN 00001058  002 OF 002 
 
 
investments in Guyana. 
 
--------------------------------------------- ------- 
Stone Supply Shaky, Price Skyrockets - Cement Stable 
--------------------------------------------- ------- 
 
¶5. The price of stone outside Georgetown has increased by almost 50 
percent, and major users continue to complain of an unstable supply 
of stone. However, cement prices remain steady, retailing at G$1,600 
(US$8) per sack in Georgetown. The construction industry expected 
stone prices to decrease and supply shortages to ease following 
quarry operator BK International Inc's assumption of the operation 
of the former Mazaruni Granite Products Ltd in May 2006. During a 
severe shortage last year and earlier this year, caused by a supply 
gap (Mazaruni had been producing at half capacity) and increased 
demand due to several large-scale construction projects, stone 
prices rose sharply outside Georgetown, with imports from Suriname 
reportedly keeping the construction industry alive in the eastern 
region of Berbice. Stone continues to be in short supply, leaving 
the two other major quarries--Baracara Quarries Inc. and Toolsie 
Persaud Ltd (TPL)--struggling to meet the construction industry's 
heavy demand for the aggregate. 
 
--------------------------------------------- --------- 
Verification System for Timber Products being Craffted 
--------------------------------------------- --------- 
 
¶6. Minister of Agriculture Robert Persaud launched the process for a 
legal verification of timber products on September 15. Persaud noted 
that his ministry will look at making legislative and policy changes 
to foster the development of the forestry sector and to ensure 
sufficient due diligence checks on investors. The verification 
scheme is a joint effort between the Guyana Forestry Commission 
(GFC) and the Forest Products Marketing Council of Guyana, with 
assistance from USAID's Guyana Trade and Investment Support Project 
(GTIS), the World Wildlife Fund and the International Tropical 
Timber Organization. The development of the process is being carried 
out by ProForest, a natural resource management company from the 
United Kingdom. The process will last through to the end of this 
year. The verification process should facilitate efforts to harvest 
timber resources in a sustainable manner while enabling Guyanese 
exports to access environmentally conscious markets overseas. GTIS' 
support to Guyana's timber industry has resulted in $15+ million in 
signed and pending deals, with key international buyers considering 
establishing offices in Guyana and/or making direct investments in 
the wood products industry. 
 
-------------------------------- 
Inflation Watch: CPI-August 2006 
-------------------------------- 
 
¶7. The month of August 2006 recorded a 0.6% increase in the overall 
price level of consumer items monitored in the Urban (Georgetown) 
Consumer Price Index (CPI). The price index value accordingly moved 
from 218.3 in July to 219.6 in August 2006. This brings the 
year-to-date inflation rate to 4.4%, while year-on-year prices from 
August 2005 to August 2006 rose by 5.6% 
 
ROBINSON