The Story Within The Story… Measures to steady the gold industry

By Leonard Gildarie

Guyana Goldfields Inc., a Canadian company, is set to start large-scale mining operations this year at Aurora, Region Seven.

In the past weeks we examined various aspects of the gold sector. From the rise when prices climbed to US$1900 per ounce, and the worrying drop, we have attempted from a layman’s perspective to bring the spotlight on an industry that has made many rich and, more than a few, heartbroken.

The vagaries of the market would make the sector a classic study case for a student.

The ‘gold bush’ is terribly beautiful and dangerous place that continues to draw fortune seekers by the hundreds.

This week we will focus on what Government has been saying with regards to the measures it has taken to help steady the sector.

As we speak, the issue has also started to attract the attention of the Opposition, with APNU stating that it lends support for miners.

According to the Ministry of Natural Resources and the Environment, Guyana’s gold mining sector has a sound footing and continues to grow. However, it is vulnerable to international market conditions, like prices.

The ministry acknowledged that the sector has been a major catalyst for economic growth in recent years. The rise in price on the world market has consistently helped in increasing declaration over the last decade.

“The importance of the gold mining sector to our economy cannot be over-emphasized since gold has been the largest earner of foreign revenue for the last seven years,” the Ministry said. The Ministry made it clear that it has not stood idly by. Rather, through the Guyana Geology and Mines Commission (GGMC) with collaboration with the Guyana Gold and Diamond Miners Association (GGDMA), several areas have been identified aimed at ensuring that the sector remains viable.

TAX WAIVERS

An Inter-Ministerial Task Force was created to undertake specific interventions aimed at supporting and streamlining the sector.

The interventions include duty free waivers on spares and equipment. According to the Ministry, a list of 19 suppliers of mining equipment and spares were approved for tax waivers. This is aimed to reduce the cost of spares and critical supplies for miners and is an addition to other items like pumps, flexes, and mattings.

Based on requests, Government has also granted a fuel licence to GGDMA. The association is reportedly still to start importing, although it was granted the licence last year.

It is unclear what happens now that the oil price has dropped significantly on the world market but is not fully filtering down in Guyana because of the current fuel tax in place.

Also in place is what is called a Mercury Free Mining Development Fund. According to the ministry, stakeholders of the sector are fully aware of the need to increase gold recoveries and eliminate the use of mercury in the gold extraction process. The ministry argued that the adoption and use of mercury-free and improved recovery technologies is even more critical now given the low gold prices experienced by the sector.

The Mercury Free Mining Development Fund with a $1B startup is aimed at promoting such technologies, the Ministry said. Already work has started between the miners association and GGMC to test mercury-free technologies. Any new technology will have to ensure greater recoveries, reduced costs, increased revenues and ultimately a sustainable gold mining sector.

According to the Ministry, it is also continuing to examine different ways to maintain the many miles of hinterland roads. This is against the background that monies and other resources are limited.

ROAD MAINTENANCE

“In pursuit of this, a combination of approaches was undertaken. GGMC is currently reviewing feasible road designs and construction methods that can be adopted bearing the constraint of financial resources in mind. Simultaneously, efforts are being made to implement Road Users’ Agreement for specific heavily traversed roads that are prone to destruction, since it is recognized that heavy usage of the road in wet conditions lead to damage and require continuous rehabilitation at significant cost.”

The Ministry insisted that the expenditure of funds on hinterland infrastructure is as a result of a collaborative effort with the key stakeholder, GGDMA. As a matter of fact, last year, the miners association provided a list of hinterland infrastructure for rehabilitation that it deemed critical. “These roads/bridges were rehabilitated and the same approach will be undertaken in 2015 whereby GGDMA will provide its considerable insight on areas for special focus.”

Also duty free concessions were granted on all terrain vehicles (ATVs), excavators, bulldozers and other machinery. “These waivers on duty are available to new entrants to the sector and for current miners based on production levels.”

Last year, according to the Ministry, it also approved the granting of waivers for double-cab pickups to miners based on their production levels which was used to determine the various categories and associated waivers that would apply. Three categories were established – Category A (Declarants with 5,000 ounces and above annually), Category B (Declarants between 2,000 – 4,999 ounces annually) and Category C (Declarants between 500 – 1,999 ounces annually).

Miners also have a concession on fuel where it only attracts 10% CIF Excise Tax.

According to the Ministry, through the interventions of the Inter-Ministerial Task Force, miners can now have access to 10% of their gold sales available in US Dollars to assist in retooling, capital acquisition and diversification of investments.

Last year also, GGMC held an auction where a total of 939 properties were placed for location. In addition, a lottery was held in Georgetown and at three interior locations won during the exercise.

WORK PERMITS

With regards to the contentious delays in work permits, the Ministry said that GGMC has worked in tandem with the Ministry of Home Affairs and GGDMA to streamline the process for applications.

“Measures were instituted to ensure that the process is expeditious and as transparent as possible so as to ensure that mining operations are not constrained by workers not having the requisite documentation. Given the interventions of the Ministry, the application and granting process for work permits was reviewed and the duration for completion was reduced. In addition, as was recommended by the GGDMA, the effective dates of the work permits were revised to be the date when it was granted and not the date of application.”

Also put in place was increased security using police with collaboration from the miners association.

“The Ministry facilitated meetings between the Minister of Home Affairs, the Guyana Police Force (GPF) and GGDMA. This has led to the understanding of the security concerns and constraints facing the sector and established a working relationship between GGDMA and the Guyana Police Force. In addition, a comprehensive security plan was developed and presented to the GGDMA outlining the measures that would be undertaken to provide adequate security for the sector.”

The Ministry has also been working with police to expedite firearm applications for bona fide miners. In terms of training, the Ministry said that the Mining School is working to prepare persons in the entry level skills for the mining sector.

In addition to the fuel importation licence that was granted to allow for the cheaper importation of fuel, the Ministry said that Government is currently reviewing the possibility of providing tariff waivers on imported fuel.

As mentioned before, these are the measures that Government has said are in place to help cushion the impact of the gold price fallout.

Next week we will be examining the situation of what happens as Guyana moves to underground mining.

Please do continue to send those photos and comments to gildarie@yahoo.com or call weekdays on 225-8491.