Charging that government has not done enough to cushion the impact of falling gold prices, the miners association yesterday called on its members to prepare to take action to ensure the survival of the industry even as gold declarations remain sluggish.
“The association has held several meetings on how the government can undertake to ensure the survival of the mining industry (but) to date, no meaningful action has been taken to alleviate the crisis,” the Guyana Gold and Diamond Miners Association (GGDMA) charged in an ad in yesterday’s Sunday Stabroek.
The association asked all miners “to start preparing to let their voices be heard by the Government.” In an apparent reference to protests across the major gold mining communities in 2010, the GGDMA asked miners to “to commence laundering their yellow shirts/jerseys to once again convince the government that the mining industry must be dealt with as a priority, during its present crisis due to the low price for gold.”On Saturday, in a statement released through the Ministry of Natural Resources and the Environment (MNRE), the Guyana Geology and Mines Commission (GGMC) outlined the assistance and concessions provided by the government to the small and medium-scale mining sector and emphasized the importance of the sector. “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 GGMC said.
It had listed concessions provided to miners but given the GGDMA ad yesterday, the miners are unhappy and they accused government of favouring big foreign companies over local miners.
For the past few years, gold has been a mainstay of Guyana’s economy but this year, miners, confronted with a variety of factors, have exited the sector. Minister of Finance Dr Ashni Singh has revised projected end-of-year gold declarations downwards to 450,000 ounces. The gold industry achieved total declarations of 481,087 ounces last year, representing the highest level of production in the history of the industry. However, up to this weekend, gold declarations for the year were 19% lower than for the corresponding period last year.
The GGDMA said that since last year, following the drop in the price of gold from US$1,800 to today’s price of USS 1,175, it has been meeting with government and submitting proposals that would ensure the sustainability of the mining industry. The association recalled that President Donald Ramotar at a meeting with miners on January 6, promised that certain action would be taken including the immediate establishment of an inter-ministerial committee that would report directly to him. The miners said that to date, only one meeting was ever scheduled. The ad noted that the rationale for the necessity of an inter-ministerial committee is that the granting of duty-free concessions for equipment and spares, and reducing taxes for fuel is the responsibility of the Minister of Finance.
Today’s world market price for one barrel of diesel is US$78 down from US$110 but the cost of one barrel of diesel at Bartica has increased from $40 795 to today’s price of $44 469, the GGDMA said. The GGMC on Saturday had pointed to the fuel licence granted to the GGDMA as well as a concession for miners where they only pay 10% CIF Excise Tax on the fuel.
Rental payments
Meantime, the GGDMA also recounted that the president had stated that he foresees no problem in approving a reduction of rental payments since it is within the mandate of the MNRE. The ad noted that this concession is only for small and medium scale miners. The association has also requested a reduction on the royalty paid on gold.
In this regard, the GGMC said that the GGDMA proposed to the Ministry and the Commission, the reduction of rental paid on mining properties and lowering royalty payments from the current 5%, given the low gold prices that prevailed. “In this regard, a meeting was held with the Association, GGMC and the Ministry to discuss the request of the Association and it was agreed that the Association will submit a proposal recommending the rates for royalty and rental payments which the Ministry and the Commission will review,” the GGMC had said.
The GGDMA pointed to last year’s production of over 481 000 ounces of gold and said that this “apparently is no longer necessary in the long term to the government, since foreign mining companies are promising to produce gold that would replace and surpass the Guyanese miners contribution, commencing in the second quarter of 2015.”
Consequently, the GGDMA said, the perception of miners is that government is “stretching” the Guyanese miners out and risking the future of the industry plus the economic viability of the country on promises of foreign mining companies. The question being asked by the miners is what is in the Mineral Agreements signed between government and foreign mining companies that has allowed two of these companies to state categorically, that their companies can be viable at US$800 per ounce of gold, the GGDMA declared.
“The major fact that profitability determines the cost of production, vis-a-vis the price of gold, it is obvious therefore, that these mining companies are receiving concessions from the government that will dramatically reduce their cost of production. It is to be noted that all concessions are a cost to the Guyanese taxpayers,” the GGDMA said.
“It is an insult that minimum concessions cannot be approved to save the Guyanese miner. Further, the concessions to the foreign mining companies are for the life of the mine; the minimum concessions being requested by the GGDMA is only temporary during this period of crisis,” the association declared.
“Guyanese miners must let their voices be heard, and government must act now to ensure their survival and that of the mining industry,” the GGMDA said.
