May 30, 2018 News
On November 18, 2011, Aurora Gold Mine Incorporated (AGM Inc.) signed a mineral agreement with the Government of Guyana outlining very clearly what is expected by this country and the gold mining investor.
According to the section dealing with the “Conduct of Project Operations”, the company agreed that it shall, to the extent “feasible and acceptable to the company in view of the rates and conditions available and in accordance with good mining practices then in use in the international mining industry, maximize the use of vessels chartered in Guyana and other means of transport available in Guyana”.
The agreement went further, outlining what the Canadian-owned investor should do.
“If necessary, the company shall make joint arrangements with Guyanese firms for the transportation of its material needs.”
The issue would be pertinent amid the ongoing debate over local content and what Guyana is getting in return for the billions of dollars it gives up annually in duty free concessions and tax holidays to investors.
While concessions and tax holidays are normal for attracting investors, the debate is centering on how much Guyana should give up.
In the case of the Aurora Gold Mine in Cuyuni, Region Seven, which is operated by AGM Inc., the company reached commercial production in January 2016, becoming the largest gold operations in the country.
The company contracted a number of local companies to transport fuel, food supplies, chemicals and a host of other things. A number of the companies invested heavily in equipment, with a few taking loans.
About a year ago, as it started improving its cash situation, the company brought in its own fuel trucks, reportedly more than 15 of them.
Today, a number of the local companies are reporting a significant loss of work, with the majority of their equipment now parked.
It would not be dissimilar to the stance that the company has taken by bringing in its own plane.
Prior to commercial operations, the company had been contracting out significant business to the local aviation operators. It now has a Twin-Otter which is conducting several daily flights. It contracted the plane from a firm in Canada.
Yesterday, with several companies bidding, the Canadian-owned entity also announced that it has contracted a Peruvian company, Stracon, to help move the mountains of materials for the underground mining operation it is getting into by the end of this year.
According to the 2011 mineral agreement, the company agreed that it shall conduct operations in a workmanlike and responsible manner in accordance with good mining practices, using standards applicable in the international gold mining industry.
This is what it agreed to under the section “Conduct of Project Operations”- “In Guyana, the company shall use all reasonable efforts to give preference, to maximum extent compatible with efficient operations and good mining practices using standards applicable in the international mining industry, to products and services produced and offered in Guyana, provided these are offered at competitive terms and conditions.”
The company also agreed that within 90 days after the end of each fiscal year of operations, it shall submit a report to the Government setting forth the relative percentages of foreign-sourced and Guyanese-sourced goods and services used by the company; measures taken to enhance the role of Guyanese-sourced goods and services in the project and measures to be implemented so as to improve such performance.
The report will have to show the performance of the company in connection with its contribution to the economic development of Guyana over the years.
“The company shall constantly use all reasonable efforts to improve such performance,” the mineral agreement said.
In recent years, with little attention paid to agreements with investors, there have been criticisms about the adherence.
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