Jun 11, 2014 News
– country lost US$14M in five months
Angry mining officials are calling for a full blown investigation into a major gold smuggling racket, involving a prominent dealer, which is costing the country hundred of millions in lost revenues.
The dealer, a prominent named city businessman, is also said to have close links to the Office of the President.
Last week, Government expressed deep worry as declarations plunged by 20 per cent to 165,595 ounces, for the first five months of this year. For the first half, ending June 30, Guyana had been projecting a target of 242,281 ounces, which leaves the sector struggling to play catch up.
The smuggling, if proven true, is likely to have a major impact on the economy as gold has become the largest foreign currency earner and a significant revenue earner for Guyana, in recent years.
With sugar struggling and rice now steadying in the face of record production, gold has been a boon for the country, despite sliding prices.
While there have been speculations of hoarding, officials of both the Guyana Gold Board (GGB) and the Guyana Gold and Diamond Miners Association (GGDMA) yesterday described this as significant, saying that they have been investigating reports that at least one major dealer from the North Georgetown/Alberttown area has been smuggling large quantities of gold to neighbouring Suriname.
The attraction of Suriname as a market is not a secret. The country charges a mere one per cent tax on the gold that is being sold. Guyana, on the other hand, charges a total of seven per cent in royalties and taxes.
Both GGDMA and GGB officials, speaking on conditions of anonymity, said that the dealer has been buying at higher prices than other dealers, offering as much as $230,000 per ounce, about $10,000 above what his competitors are offering.
“In effect, from the reports we are getting, this dealer is attracting a lot of buyers because of his higher price. There is a reason why he can afford to pay more…he is getting good prices in Suriname, so miners with their gold are being paid more. However, the country is losing millions of dollars because of the greediness of this one dealer.”
Kaieteur News was told that the reason why an official complaint has not yet been made with President Donald Ramotar is because of the dealer’s links to the Office of the President.
“We are scared of the backlash. We are examining a number of options at this time as this is a sensitive matter. Let us make it clear that we are being blamed as miners for poor declarations, but it is this one dealer who is the cause of miners being blamed.”
It is estimated that at least 150,000 ounces of gold have been smuggled to Suriname by the dealer for the year, through an organized operation that may even involve protection from persons well placed in that neighbouring country. This meant that Guyana lost some US$14M in revenues from the non-declaration of the gold. A number of smaller buyers, not necessarily licenced ones, are reportedly said to be capitalizing also on the porous border between the two countries to smuggle the gold.
Suriname buyers are reportedly also paying in US dollars.
The dealer reportedly only acquired his licence two years now.
While other dealers have declared thousands of ounces of gold for the year, the North Georgetown dealer, has only declared a paltry 900 ounces to the Guyana Gold Board, an official from that state-owned entity confirmed yesterday.
“This is an extremely small country. Everybody knows what is happening. They talk when they are not being issued a receipt, so word gets around. We are hoping that the President is reading this and paying attention. He is a good man and will do the right thing to correct this situation,” a senior miner of the GGDMA told this newspaper yesterday.
Insiders estimate that in total, as many as 250,000 ounces may have been smuggled to Suriname this year by the dealer and other parties.
This newspaper was told that Government has seven licenced gold dealers across the country.
“With what he has declared, one small dredge and an excavator can produce that amount in three months. Is someone not seeing what is happening?”
Last week stakeholders met on the poor declaration. It was disclosed that the figures would represent a 20% decrease for the corresponding period of 2013.
The level of declaration up to May 2014 was only 34.17 per cent of the targeted amount for the year, which is set at 484,562 ounces.
GGMC had announced that as a major measure to clampdown, it will start enforcement of reporting obligations by miners. The police would have also been assisting in launching a crackdown on illegal gold trading entities across the country.
“Stakeholders pledged their support for these measures. The Minister emphasized that the Government of Guyana remains uncompromising in its efforts to ensure full compliance with the laws to deal with these issues of undeclared gold and reports of smuggling,” the Ministry of Natural Resources said in a statement last week.
Last year’s gold declaration was the largest ever at 481,087 ounces. Gold export earning was a massive US$648M as at December 31, last.
With sugar struggling and rice production holding up, surpassing a record 500,000 tonnes last year, Government would want gold to continue raking in its millions.
However, prices have plunged from US$1,800 per ounce high to just over US$1,200 last year.
Miners have been urged to lower their costs to sustain their operations.
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