Development of the Pueblo Viejo mine, which started production in 2012, has been vital for the Dominican Republic’s external financial position since. It is expected to bring in more than $10 billion of export earnings over its 25-year life.

Already, it is having an effect: increases in gold shipments accounted for most of the island’s 5.8% export growth in 2013 and the 6.2% growth in the first three quarters of 2014.

That jump improved the Dominican Republic’s current account position, which in turn was central to Fitch’s upgrade of the sovereign from B to B+ in November. “The diversified export structure makes growth prospects more robust,” says César Arias, associate director at Fitch.

The Dominican Republic is sitting atop nearly $58 billion worth of unexplored minerals and metals, according to the local geological society. A new fillip to the country’s mining industry came in September when the government backed away from the creation of a new national park that would have impeded a planned expansion of a ferronickel mine, Falcondo, owned by Glencore Xstrata.

Production at the Pueblo Viejo mine was only possible after a six-year, $5 billion investment by Canadian firms Barrick Gold and Goldcorp. The project includes an electricity plant built specifically for the mine, to avoid relying on the local grid.

“Our investment represents the largest-ever foreign investment in the history of the Dominican Republic,” says Manuel Roche, the mine’s president. “The investment made possible 50% of [economic] growth [in 2013]. The positive contributions of this mega foreign investment are without precedent in the country and in the Caribbean region.”

As Roche’s comments imply, attracting investment in infrastructure necessary to get projects like Pueblo Viejo up and running will be vital to sustaining growth and exports across the Caribbean. If the cost of fuel imports rises with the possible end of Venezuela’s Petrocaribe subsidies, exports will become even more important.

The region “has tremendous resources, but we have never tapped into them,” says June Hughes, a representative of the environment ministry in Saint Kitts and Nevis.

Attracting new investment in mining is easy. Mines coming into production worldwide were commissioned when Chinese demand for metals was increasing more rapidly than it is today. Caribbean countries also pose higher barriers to mining investment than other resource-rich nations.

Jamaica is a case in point. It exports several hundred million dollars-worth of bauxite every year and is in negotiations with China’s Xinfa Group on a new $3 billion alumina plant in the country. It also has large reserves of limestone. But these are largely untapped because of an unstable macroeconomic environment and shortfalls in power generation capacity for limestone processing, says Joydeep Mukherji, analytical manager at Standard & Poor’s.

Meanwhile, Jamaican plans for new electricity plants have stalled. The country needs to rapidly follow the Dominican Republic’s lead, says Erich Arispe, an analyst at Fitch. The Dominican Republic, which also suffers frequent blackouts, has commissioned construction of two coal-fired plants, which are projected to be ready in late 2016. The plants, a public-private partnership with Brazil’s Odebrecht and Italy’s Maire Tecnimont, include a new coal unloading facility and will cost $2.4 billion.

“Jamaica’s high indebtedness and poor growth record have been big handicaps in the past, but conditions have changed,” says Arispe. Particularly as cheap oil from Venezuela may soon run out, “they need to replace old plants that burn expensive fuel oil with cheaper natural gas. This should be a priority.”

Reaching potential

Gregory Fisher, a managing director at Oppenheimer, says lower oil prices, which keep travel costs down, and a US recovery, mean a sunny outlook in another of the Caribbean’s main industries. “The climate is good for tourism, from Jamaica to Barbados,” he says.

Tourist arrivals are up in nearly all 25 island markets listed by the Caribbean Tourism Organization: Dominican Republic saw a surge of 9.4% in arrivals in the first three quarters of 2014 compared to the same period a year earlier, helped by an 11.1% increase in cruise passenger arrivals. Jamaica also saw smaller increases.

While tourism is typically a cyclical business, building infrastructure, including ports, can smooth the peaks and troughs. In Haiti, for example, GB Group is building the new Lafito port, complete with new resort hotels and beaches.

The Caribbean already hosts two of the top 10 ports for container movement in the Americas: Jamaica’s Kingston and the Bahamas’ Freeport. Haiti hopes to cash in on increased shipping traffic generated by an expanded Panama Canal with the Lafito development, but it is not the only country.

A proposed $1.5 billion project for a new transshipment facility at Kingston to accommodate ships too big to fit through the canal “will have a huge impact on the island,” says Mukherji. But even while Jamaica was negotiating a deal with China Harbor Engineering, the same company announced in March 2014 a $500 million agreement with Trinidad and Tobago for a transshipment port and dry dock facility.

“Jamaica has to hurry, because everyone in the Caribbean is scrambling to improve ports and get a share of the transshipment business,” says Mukherji.

Tough sell

Meanwhile, the Caribbean is keen for more investment in oil and gas, an industry that could be even more important for current account balances.

Investors will be harder to convince as oil prices fall. Still, deals are getting done. Ireland’s Tullow Oil agreed on a round of offshore exploration in a joint venture with Jamaica’s Petroleum Corp in November, for example. Trinidad and Tobago signed new exploration licenses earlier in 2014 with Canada’s Touchstone, Range Resources and Lease Operators, which should involve investment of around $1 billion.

Trinidad and Tobago is planning a new bidding round for exploration and production blocks in 2015. But Mukherji says the government also needs to be more aggressive with its downstream industries, focusing on petrochemical production. “They have been slow in [petrochemicals], partly because of a lack of exploration. No one is going to invest in petrochemical plants if they do not have confirmation of sufficient [natural gas],” he says.

Here, also, competition is unrelenting. Mexico’s new openness to foreign investment in its hydrocarbon sector offers a fresh option for oil and gas investors. LF