Even as investor interest in Guyana’s gold mining industry seems set to grow further following last week’s gold price hike that took the precious metal through the US$1,500 an ounce barrier, the Guyana Gold and Diamond Miners Association (GGDMA) is expressing concern that “some difficult issues” could impact negatively on the industry’s ability to take advantage of the new record prices.
GGDMA Executive Director Edward Shields, during a telephone conversation earlier this week, said that the landmark gold price rise, resulting chiefly from investor fears over the resilience of the US economy, is likely to witness “an even greater interest in the gold industry” here in Guyana. But, according to Shields, “issues, some of them serious ones” need to be resolved if miners are to focus on producing gold in what he described as “an exciting market”.
Describing last week’s rise in the price of gold above US$1,500 as “an important psychological barrier”, Shields said that while the price will continue to fluctuate and will dip below the US$1,500 mark from time to time, “it is unlikely to stay there”. He said the latest increase in the price of gold could trigger an even greater interest in the sector here in Guyana.
“Even before gold prices reached that level, the generally upward price trend had seen an increased interest in investment in the sector among local entrepreneurs,” Shields told Stabroek Business. “Even conventional urban businessmen, most of whom have had no previous interest in mining gold are now regarding the industry as a good business investment. Remigrants are also expressing an interest in the mining sector. We receive enquiries from them at the rate of five or six per week,” he added.
According to Shields traditional miners have begun to express a fear that the high price of gold and the interest being shown in the industry by new players may very well “change the rules of the game” as far as the allocation of mining concessions are concerned. “The high price of gold may well be creating a situation in which people are seeking to circumvent the standard procedures associated with the acquisition of mining claims.”
Shields said that numbered among the concerns of the local miners is the issue of the granting by the state of licences to mine gold. He pointed out that a number of existing concessions were being rescinded by the authorities as a result of miners’ inability to pay mining fees, while some miners have been giving up their concessions “for one reason or another”. These concessions, he pointed out, were being placed in so-called closed areas and none of these properties have been allocated for mining since November 2009. “The point that should be made here is that these are not new properties but old ones,” Shields added.
Meanwhile, Shields told Stabroek Business that access of mining concessions is also being hampered by the holding of huge reconnaissance permits by companies, to areas of land which, in some cases, exceed 1 million acres. These permits, he explained, which effectively closed the areas to mining activity have, in some cases been held for several years though under the regulations 50% of the area should be surrendered after one year. After several years of doing absolutely nothing there is one particular company that has reapplied for another permit. Developments like these worry traditional miners. “They believe that these may be signs that they are being pushed out of the industry,” Shields said.
These concerns apart, Shields said, the issues relating to the future of gold mining within the paradigms of government’s Low Carbon Development Strategy (LCDS) still remain to be settled. Those issues include regulations governing the cleanup of mined areas and the controversial six-month notice required of miners prior to the commencement of mining operations.
While increases in gold prices may be a boon for the mining sector, jewellers to whom this newspaper spoke earlier this week have indicated that the increase in the price of raw gold will definitely see a spike in the price of gold jewellery. “Even the smallest pieces of gold jewellery are likely to become more expensive,” one jeweller told this newspaper. Shields has endorsed the views expressed by the jewellers pointing out that gold prices in the jewellery industry could rise to as much as $17,000 per pennyweight. “What we may well find is that jewellers may require their customers to bring their own gold out of concern that they may not be prepared to pay the increased cost of finished jewellery.”
Internationally, jewellery sales are reported to have collapsed in recent months following the relentless climb in the price of gold, making even small items too expensive for many shoppers. A recent survey carried out by the Wisconsin Jewelers Association has determined that the engagement and wedding rings of more than half of 428 married women are likely to be underinsured since they have not been apprised in more than 10 years.
International assessments of the impact of rising gold prices also point to a trend of reopening of small scale mines in several countries. In British Columbia, Canada’s westernmost province, several small scale mines that have been closed for considerable periods are now reopening in the face of rising gold prices.
Since 2001, 12 new mines have been opened in the province and eight in the last five years. The most recent gold mine to reopen in the province was the Bralorne Mine, which began producing in mid-April 2011 for the first time in nearly 40 years. Bralorne produces 100 tonnes a day, and could expand to 280 tonnes a day by 2013. The mine closed in 1971 when gold was $35 an ounce after producing 4 million ounces in its 50 years of operation.
