The Guyana Gold and Dia-mond Miners Association (GGDMA) on Saturday rejected the recently-published Guyana-Extractive Industries Transparency Initiative (GY-EITI) report, calling it “largely inaccurate and uninformed” about the small and medium scale gold and diamond mining industry.
Among its criticisms is the claim that the GY-EITI, by demanding disclosures of ownership, valuations and profits, in a manner that it says is “outside of the law,” will expose local miners to further targeting by criminals, as it would create “an easy ledger” for bandits “to carve up” local operators.
The GY-EITI report prepared for the international mining transparency watchdog, EITI, states that 19 mining companies – Innovative Mining, R Mining Inc., Azeem Baksh, Gold Target Export, Milburn Mahadeo, Grey Wolf Resources, Tesouro Resources, J&D Mining, New East International, Higgins Winslow Theophilus, Wal Jays Mining, Harpy Investment, Troy Resources Guyana Inc., Guyana Goldfields (AGM), Bauxite Company of Guyana Inc. (BCGI), BOSAI Miners Group (Guyana) Inc., El Dorado Trading, SSS Mineral Trading Enterprise and Adamantium Holdings – refused to provide information on their beneficial owners.
The GGDMA, in a statement, maintained that all the necessary local agencies – the Guyana Geology and Mines Commission (GGMC), the Guyana Gold Board (GGB) and the Guyana Revenue Authority (GRA) – are in possession of the information requested by the GY-EITI and it said it could not see why an additional disclosure should be made that places miners in additional danger of being targeted by criminals.
“In addition to security concern… our nation is located next to the most destabilised country in South America where criminal gangs rule the land. Over the last few years there have been continuous incursions by these types of individuals over our porous borders, with reports of robberies taking place in the interior after which these criminals slip back over to Venezuela undeterred and no doubt emboldened,” the GGDMA added.
The GY-EITI report also addressed the allocation of licences and permits and reported that several mining permits, covering plots in the same location as per GGMC’s list of permits, had been awarded on the same date to the same applicant following the award process for medium scale mining permits instead of the process for large scale licences.
“The total combined acreage of several mining permits awarded during FY 2017 to (one) applicant exceeded 1,200 acres which is the maximum surface for a medium scale mining permit. If these plots had been combined they would have [exceeded the] 1,200 acre threshold and would have been categorised as being large scale tenures, which would involve paying higher rental fees and the licence award … requiring further approvals from other government agencies,” the report noted.
It added that the list of active mining permits shows that several plots were held by the same extractive entity and within the same location.
“The combined surfaces of these mining permits exceed [the] 1,200 acre threshold in several instances. Such mining permit holders may need to be categorised as large scale extractive operations as defined by current legislation whenever it is established that the relating plots run consecutively one after the other. The annual rental fees due by large scale operators is US$3 per acre as opposed to US$1 per acre for medium scale mining operators,” the report added, while stating that the total shortfall to the government as a result of such errors may reach considerable amounts per annum.
Clearly lacks
However, the GGDMA said the report “clearly lacks an understanding of the concepts for land allocation with respect to size of mineral property.”
Its statement explained that the requirements for a large scale mine are large capital investments, such as Omai Gold Mines, AGM and Troy Resources; large up-front investment for exploration, mineral inventory, environmental impact assessment, feasibility studies, mine plan, mineral processing plant design and others before reaching the production stage.
“These up-front expenses are often in the several millions USD (which is very much lacking in the local business sector, which is more often than not raised on the stock market or through funding via overseas based large private financial institutions) hence is mainly done by large multi-national companies,” the GGDMA added.
The statement further explained that in the cases where foreign large scale mining companies convert properties to large scale mining licences, the area has a massive proven reserve (in most cages 1,000,000 ounces or more) and the entire area converted will either be mined or utilised in a stage of the mine development.
It said that the notions that holding several medium scale permits together should be classified as a large scale operation and that rent should be increased point to a clear “lack of understanding.”
“The investment for a land dredge/excavator set up is probably around US$500,000 due to the intermittent occurrence of alluvial gold that is very difficult to quantify, work-ground flooding during rainy season and lack of water during dry season. These factors negatively impact the longevity of an operation in a specific area which makes return on investment for such an investment highly unpredictable. Coupled with this level of mining is the 5% royalty and 3% taxes off the gross production, the fluctuating gold and fuel prices, weather etc that an operator has to endure throughout the life of the mine to recover the initial and subsequent investments,” the GGDMA added.
It further explained that in most cases, a medium scale miner needs to work continuously for at least five years before gaining a profit and during that time funding is solely garnered from self-funding where miners put up their personal cash and assets to fund their operations.
“Medium scale permit holders are paying for most of the land and of which only 5% is mined,” the GGDMA argued, while also saying the sector is already in decline. It added that proposing to put additional burdens on the local entrepreneurs that operate with tremendous uncertainties will further impact the communities and villages that depend on it for sustenance. “The industry needs more roads to access mining lands, assistance with better techniques for recovery and environmental standards, access to finance and a regulatory system that is more modernised and freer from bottle-necks to ensure that the sector continues to contribute to Guyana’s economy. Raising the fees for mining permits are counter-productive and will be detrimental to the survival to this vital sector,” it further said.
