Sector-specific Dossier Mining Sector  

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Sector-specific Dossier Mining Sector  

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SUMMARY The Dominican Republic’s geological profile has been an determining factor in its permanence as the American continent’s oldest mining industry. Currently, the country has the second largest gold deposit in the continent, and produces a wide range of mining resources, such as gold, silver, bauxite, ferronickel, clay, industrial materials —kaolin, feldspar and silica sands, among others—, larimar, amber, slabs, limestone rocks, gypsum and salt, among several metallic and non-metallic resources. Mining’s value added and its attractive for Foreign Direct Investment (FDI) have grown in the past few years, thanks to an increase in the production levels of gold, marble and most major construction aggregates.

Since 2013, our country has been host to five active mining operations for gold, silver, copper, ferronickel and bauxite. In the non-metallic mining category, 50 mining companies are currently enjoying the incentives and benefits of Law 146-71 on Mining.

SECTOR GROWTH AND OTHER TRENDS

The mining sector represents one of the main sources of income in the Dominican Republic. According to data from the Central Bank of the Dominican Republic, the mining sector has received more than $4,000 million in FDI since 2001, thus becoming the second largest recipient of foreign investment, only surpassed by trade and industry. In 2013, the mining sector registered an increase of 156 percent compared to the year before, with a participation of 1.2 percent in the country’s Gross Domestic Product (GDP).

Data: Central Bank of the Dominican Republic

Sector-specific Dossier Mining Sector  

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Foreign Direct Investment (FDI) Flow by Economic Activity 2010 – March 2014

(US$MM and participation percentage)

Economic Activity 2010 2011* 2012* 2013/1 Jan-Jun 2014**

Total %

Tourism 180.0 107.8 162.0 256.5 161.5 867.8 8.2

Trade/Industry 566.1 355.2 1,257.3 403.7 328.4 2,910.7 27.4

Telecom 500.2 53.6 (21.2) 187.8 168.2 888.6 8.4

Electricity 108.1 258.8 304.5 449.6 120.0 1,241.0 11.7

Finance 93.5 134.3 159.4 152.0 72.0 611.2 5.8

Free Zone 71.8 147.8 163.0 149.7 97.7 630.0 5.9

Mining 239.9 1,059.7 1,169.4 92.6 63.3 2,624.9 24.7

Real Estate 264.1 159.5 203.0 273.6 149.8 1,050.0 9.9

Transportation - - (255.0) 25.0 13.8 (216.2) (2.0)

FDI Flows 2,023.7 2,276.7 3,142.4 1,990.5 1174.7 10,608.0 100.0

Source: Central Bank of the Dominican Republic

(*) Amounts were compared to data provided by the source, but are subject to correction.

(**) Data available at the time of publication for the preliminary results of the Dominican Economy Report Jan-Jun 2014, subject to review.

Note: Negative values refer to operating losses and divestment.

GOVERNMENT INSTITUTIONS LINKED TO THE SECTOR • Ministry of Energy and Mines. The governing body of the national electrical sector. Its functions include the formulation, adoption, tracing, evaluation and control of policies, strategies, general plans, programs, projects and services related to the sector and its sub sectors —electric power, renewable energy, nuclear energy, natural gas and mining. • General Directorate of Mining. Government entity appointed by the Ministry of Energy and Mines. The Directorate has research functions in mining and any related fields that contribute to the knowledge, development and conservation of mineral resources. It is also charged with enforcing laws, regulations and contracts pertaining to mining and metallurgical activities in the country. The General Directorate is a dependency of the Ministry of Industry and Commerce. seic.gov.do | dgm.gov.do

Sector-specific Dossier Mining Sector  

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LEGAL FRAMEWORK - INCENTIVES I. General Mining Law, No. 146, dated June 4, 1971

II. Implementing Regulation 207-98, dated June 3, 1998

III. Decree 947-01, which creates Industrial Mining Parks

Other incentives for the mining sector include:

• Tax exemption on payment of royalties for mineral refineries and foundries, or utilities generated during the fiscal year.

• The Industrial Mining Park (IMP) regime: specialized international free trade zones for the mining industry. These zones are outfitted with port infrastructure and a fiscal regime compatible with the Free Zones for Export regime.

• Each concession is granted upon negotiation between the National Congress and the interested party. This means that any payment of royalties, as well as any exemptions or exonerations, rates or charges, will be outlined on a per-contract basis, depending on the type of concession, the investment amount, its financing method and its overall duration.

MAIN FOREIGN COMPANIES IN THE COUNTRY

35 mining societies were present in the country in September of 2013. According to economic forecasts, mining activity will invigorate the export sector, and thus, the country’s economy.

Company Origin of Capital Production Start Extracted Mineral

Glencore Xstrata (Falcondo)

Canada 1972 Ferronickel

Cemex Mexico 1999 Gypsum and lime

Barrick Pueblo Viejo - Goldcorp

Canada 2011 Gold, silver, zinc and copper

Panterra Gold – Las Lagunas

Australia 2012 Gold, copper and molybdenum

Perilya Limited (Cormidom)

Australia/China

2008 Gold, silver and copper

Source: Export and Investment Center of the Dominican Republic (CEI-RD)

Sector-specific Dossier Mining Sector  

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WHY THE DR?

• Traditionally, mineral extraction has been an important activity in the Dominican Republic –it is responsible for a wide range of mining resources, such as gold, silver, nickel, marble, bauxite, salt, granite and gypsum, among others. The importance of the country’s mineral resources has turned the sector into one of the country’s most interesting areas for investment.

• The country’s attractive mineral resources have turned mining into one of the most interesting sectors for FDI raising.

• Our country boasts a sizable and diverse range of deposits, with large reserves of gold, silver, nickel, bauxite, marble, limestone and granite. Likewise, the country extracts semiprecious stones such as amber and larimar, used in jewelry design.

• Several provinces have important mining deposits: Pedernales has bauxite, sodium carbonate and limestone; Barahona has salt, gypsum and larimar. Azua has gypsum, marble, calcium carbonate and limestone deposits, and Samaná has marble and granite. Puerto Plata has an amber deposit, while Dajabón provides limestone and granite. In addition, the Dominican Republic is set for new investments aimed at natural gas and oil.

• Mining is a high-priority sector for the national economy. The government has deployed a series of programs aimed at promoting the sector’s sustained development.