In the first half of 2017 gold production fell by 1.7 percent to 317,096 ounces, compared to the same period in 2016. In fact, the mining and quarrying sector contracted by 4.0 percent during this period.
Total earnings from gold exports also declined marginally from US$390.7 million, in the first half of 2016, to US$388.8 million, in the first half 2017, on account of falling production due to poor weather, despite a marginal increase in average export price over the period.
The 2017 Midyear Economic Report which was laid in Parliament yesterday explained that of the total gold declared, 65.7 percent came from small and medium-sized miners and dealers whose declarations were above projections while the two large gold companies were below projections.
In fact, the report noted that rent and royalties declined by 32.3 percent reflecting lower gold declaration from both Troy Resources and Guyana Goldfields.
Following declaration of more than 700,000 ounces in 2016 the Guyana Gold Board had projected that 2017 declarations would be even stronger based in part on the proposed expansion of the operations of Guyana Goldfields Inc.
However, the midyear report now notes that heavy rainfall and the switching to lower grade material by one of the producers, to facilitate remedial work at the higher yielding mine, affected production for the large companies.
It maintains however that despite the slight decline in the first half of 2017, overall production is still expected to surpass 2016 level, with the industry expected to grow by 1.7 percent in 2017.
The report further explains that the movement in global commodity prices continues to have a disproportionate impact given Guyana’s relatively undiversified production profile.
Prices for most of the commodities exported from Guyana, including gold, diamond, sugar, and timber, fell during the first half of 2017. Gold prices, specifically, declined from US$1,276.40 per ounce in June, 2016 to US$1,260.26 per ounce in June, 2017. Additionally, weak demand in China, along with greater global supplies, poses a threat to the recovery of gold prices. Diamond prices, as measured by the Diamond Prices Index also fell from 217 in June, 2016, to 216.2 in June, 2017.
Consequently export earnings from diamonds declined from US$8.2 million, in the first half of 2016, to US$7.7 million in the first half of 2017, as a result of lower international prices and lower declaration.
According to the report, falling global prices and a possible switch by some miners into the gold industry as a result of the favourable prices of gold, possibly led to reduction in the production of diamonds, sand, and stones which resulted in a contraction across several areas of the mining and quarrying industry. The first half of 2017 saw a contraction of 13.1 percent in these areas compared to a positive growth of 13.9 percent in the first half of 2016.
Contrastingly, the aluminium price rose from US$1,593.51 per tonne in June, 2016, to US$1,885.29 per tonne in June 2017, due to strong demand, anticipated supply-side contractions in China, and declining stock at the London Metal Exchange.
Also recording decreased earnings was the bauxite industry which declined by 11.5 percent, as a result of reduced production of higher valued grades.
The reports said that this reduced production was due to poor weather combined with mechanical issues at one of the mines even as production of metal grade bauxite increased by 97,016 tonnes or 21.3 percent.
“The favourable international price for aluminium in 2017 is expected to boost output of bauxite during the second half of the year,” the report projects.
Meanwhile export earnings from bauxite rose by US$4.4 million to US$50.7 million; this was attributed to an increase in both export volume and prices.
