By Leonard Gildarie
Gold declarations for the year have reportedly jumped to 450,000 ounces in 2015, more than 60,000 over last year’s production and significantly higher than the target of 390,000 that had been set. This should be considered quite an achievement for the Granger-led administration, since gold prices took a significant battering in 2014 reaching five-year lows in mid-year, trading at US$1,082.
While there was a slight recovery, the metal’s price has further depressed ending the year at around US$1,060. Figures obtained by this newspaper showed that gold output was at one period as much as 36 percent lower compared to output for the same period of 2014. However, it seemed to have started to improve by mid-year with the Bank of Guyana half-year report pointing to an output 16 percent lower compared to the previous year.
But even with that improvement, it should be noted that the high end-of-year declarations would not have been contemplated at June 30 when the bank’s report of 2015 stated that total gold declaration decreased by 16.2 percent to 165,976 troy ounces or about 42 percent of the 390,000 troy ounces targeted for the year.
Smuggling, according to local authorities, has been eating away at declarations, with the perpetrators in recent years looking at countries where taxes are lower, particularly neighbouring Suriname. Government responded to the news of smuggling by collaborating with the US and other governments.
The Bank of Guyana report spoke of 15,000 ounces being smuggled per week. On the lower end of estimates, the country would be talking about at least 500,000 ounces annually not being declared and making its way to Suriname and out to the European and American markets. The loss of seven percent in tax and royalties charged on every ounce of gold sold would be heavy for the economy of Guyana.
In the Bank of Guyana report, it was noted that, “… going forward, the full operationalisation of the Aurora Gold Mine, together with the incentives announced in the Budget 2015 and tighter monitoring of and enforcement within the industry is anticipated to help gold declarations improve to 390,000 ounces at the end of 2015 compared to 387,508 ounces in 2014.”
In fact, a significant portion of the declarations – more than 40,000 ounces- came from the Aurora mines of Guyana Goldfields Inc., a Canadian outfit that started commercial operations in the latter half of this year and Troy Resources, an Australian mining company. The operations of those companies have been highly anticipated not only because of the gold output prospects but importantly from an employment perspective.
A big worry for the Guyana Gold and Diamond Miners Association (GGDMA) is the falling production by small miners, which could only have an impact on spending power. The country cannot be totally reliant on these large scale mines. There needs to be total restructuring within the industry and more support for small and medium scale miners, who themselves have to take responsibilities and introduce technologies to improve recoveries and overall efficiencies in mining. It has been observed that long time operators have been forced out of business because of high operating costs and now the low world prices.
Of course miners would say that they do not have the resources to make the significant investments, even though recovery improvements would benefit them. It is perhaps an area that the Guyana Geology and Mines Commission (GGMC) can partner with the mining community and introduce accessible technologies to miners.
Miners have always been complaining about fuel prices – with fuel being a significant cost to them. Despite the drop of oil prices from over US$100 per barrel to now below US$40, the effects did not filter down much to the industry until late last year, when Government announced a number of incentives. And even now some are complaining of not getting access.
With the world oil prices the way they are, and miners badly needing a shot in the arm to boost their production, local analysts believe that a slash in the fuel taxes could be tantamount to a cash injection in the industry, but focus should also be on efficiency improvements.
Miners have also been angry at corruption, accusing mines officers of being in cahoots with big operators to give out the best lands.
GGMC itself has not reportedly been involved in any significant work to map the resources which will in the medium to long term affect mining prospects in this country. That entity needs to get back on the ball and do more geological surveys, insiders say.
Further, the government needs to have a fair system that would allow for miners to have opportunities to work on good lands.
The fact is that landlordism will not go away in the short term and is really plaguing the industry and must be tackled in a real way. Too long, small miners have been complaining of being evicted and targeted after a big find, by their landlords. Consecutive administrations have promised to look into this issue which has been conducted in a loose kind of arrangement for years now, and which has left many a small miner with a bitter taste.
Then there is the issue of improved access. Many of the road networks are controlled by both logging and big miners. Rightfully, nobody wants their roads to deteriorate, with miners complaining bitterly of access. The situation should become a priority of the GGMC as access to roads, GGDMA officials say, is critical.
As of December 23, according to figures provided by Government, while declarations were over 428,000 ounces, gold exports racked up US$486M, translating to anything between $5-$7 billion dollars in royalties and taxes collected.
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