Rawle Lucas is a Guyanese-born Certified Public Accountant and Assistant Vice-President of the Lending Services Division.
Mr Lucas has agreed to serve as a columnist with the Stabroek Business and will be contributing articles on economic, financial and development matters.
Lack of Tolerance
A conflict-soup between small-scale miners and the administration that was simmering for sometime finally boiled over in Bartica on Wednesday February 3, 2010. Frustrated by the latest policy of insensitivity towards them, the small-scale miners, along with family and friends, took to the streets of Bartica to protest the decision by the administration for miners to delay production activity on new claims for a period of six months. The latest policy was induced by the low carbon development strategy (LCDS) that has as its drivers the agreement signed by the Governments of Guyana and Norway last year and anticipated funding from the Forest Carbon Partnership Facility of the World Bank. Speaking to an industry insider, the miners feel that the latest move, the introduction of the six-month notice period, shows a lack of appreciation and tolerance of the entrepreneurial efforts of small miners, and exposes a critical weakness in the LCDS and the Norwegian agreement.
Reallocation of Resources
The notice period is also accompanied by miners having to deposit substantial sums of money with the administration before starting work on any claim. These recent developments follow on the heels of the requirement that all miners must use costly capital equipment to prospect for the precious minerals, if their work in the gold and diamond industry is to comply with current government policy. One concern that surfaced during the conversation was a belief that the real aim of the new policy is to force a reallocation of resources from small-scale miners to the large-scale operators. The belief is that the larger operators are more likely to be compliant with environmental policy. They will be able to afford the more expensive but safer technologies that would be required for use in the mining industry as a result of the agreement signed with Norway. Also, the administration will require fewer resources to police the larger operators since they are far fewer in number than the small-scale miners, making it easier for the woefully understaffed Guyana Environmental Protection Agency and the Guyana Geology and Mines Commission to monitor the mining areas.
Mother Nature
In an industry where about 80 percent of the gold and diamonds are produced by small-scale miners, such a move could crush the ambitions and aspirations of those individual Guyanese who have turned or are willing to turn to mother nature for help. They see her bosom of precious metals as a place of succor that offers them the chance to escape the clutches of poverty and to create a sustainable livelihood for themselves and family. The gold and diamond industry has a mix of ownership and rental of mining claims and, with gold prices at record levels, the industry is seeing the rapid entry of many new entrepreneurs.
Long Wait Period
The thinking, therefore, is that the administration is using the low carbon development strategy (LCDS) as a means of slowing down the income that existing miners could earn. The prospect of having to wait long periods before tasting success could discourage existing miners and new entrants. This tactic also has the potential effect of indirectly forcing existing miners either to abandon their untouched claims or to forfeit the idea of starting work on new ones. As miners walk away from their claims, the claims become available for redistribution. The tactic of the administration is subtle but is potent, especially when coupled with prior measures that have already increased the cost of doing business to small-scale operators. To the administration that is good policy. To the miners, the policy could stifle the enthusiasm of Guyanese who are willing to challenge inhospitable conditions to demonstrate their zeal and pioneering spirit for entrepreneurship and adventure.
Abuse of Environment
Studies by foreign experts, who have taken aim at the gold and diamond industry in Guyana, accuse the miners of wanton abuse of the environment and reckless abandon of both fully exploited and unproven mines. The environmental threat from gold and diamond prospecting is real and those threats must be confronted if Guyana is to remain an environmentally sound place. Without a strong regime of enforcement, it becomes easy for miners to behave irresponsibly and make Guyanese pay dearly for their recklessness. But industry insiders seem to think that the new legislation was unnecessary and that the enforcement of existing rules would have been enough to help Guyana fulfill its obligations on the environment.
This awareness by the miners is striking and it reveals a realization by them that the creation of the LCDS suffers from a lack of incisive thought and sincere concern for the economic impact on a broad cross-section of Guyanese. In assessing the fix in which the miners currently find themselves, the agreement between Norway and Guyana looms large. That agreement requires the administration to carry out certain obligations to protect the environment. Though well-intentioned, the agreement ignores also the investment interests of Guyanese and is silent on possible alternatives for lost opportunity and how entrepreneurs like the small-scale miners could be compensated. The contribution of miners to Guyana is significant with their work resulting in export earnings of over US$300 million in 2009, an amount that exceeds the contribution of the heavily supported rice and sugar industries combined.
No Real Solution
Cash that goes into a general fund is no real solution for the miners. Despite being hurt by the low-carbon policy, they will have to compete with every other priority for the money obtained through the Norwegian agreement. Moreover, Norway will have veto powers over the decision of miners since it will have the option of withholding money from the administration if it does not agree with decisions or actions of the miners that it determines is inimical to the environment. In addition, Norway has backed up its bilateral power with support from international environmental entities that have significant global influence and could thwart gold exports. An instrument designed for human good could easily become an Achilles heel for Guyana. The miners need to keep these realities in mind from hereon as they tackle their current problems.
Inattentive
At the same time, the miners cannot say that they did not have an opportunity to have their concerns aired before the LCDS was finalized. The administration was very vociferous about its intentions to have an LCDS. It publicized its activities and it announced its intentions to hold consultations with various stakeholders on REDD, the reduction of deforestation and forest degradation. Most of their activities take place in forested areas of the country and the miners must wonder now how well their interests and concerns were represented in those consultations. Articles were published in the local newspapers about REDD and its likely impact on the ability of Guyanese, including the miners, to use the land for traditional economic endeavours of housing construction, agriculture and mining.
Increased Scrutiny
The miners should have been aware that these developments were not taking place in some remote location and should have realized that their activities would come under scrutiny. That scrutiny will only intensify as Norwegian payout increases and the marginal returns from environmental policies decrease.
To find themselves surprised by an obvious consequence of the LCDS exposes their own inattentiveness to the environmental debate and the lack of preparedness for the implementation of the strategy.
The miners are finally beginning to understand the consequences of the LCDS, and, to the administration, their protestation might be nothing more than an attempt to close the barn door after the horse has bolted. Their situation is not irretrievable and the challenges will not stop with them. The plight of the miners however should be a wake up call for entrepreneurs in other industries.
Future investments by Guyanese in their land for agriculture and housing construction are also poised to clash with the international commitments that the administration has made in their name.