Govt may reduce purchasing price for gold

Last Updated on Thursday, 17 November 2016, 16:19 by Denis Chabrol

The headquarters of the Guyana Gold Board, Brickdam, Georgetown.

The headquarters of the Guyana Gold Board, Brickdam, Georgetown.

Medium and small scale gold miners may soon be paid three percent less than the world market price, a consideration that was Thursday condemned by Guyana’s two miners’ organisations.

Minister of Natural Resources, Raphael Trotman confirmed that the idea is being considered but no decision has been taken. “The discussion on asking gold miners to pay a percentage below the “London Fix” price has been ongoing for many years. There are advantages and disadvantages to it. No decisions have been taken on this as the matter is before the Cabinet,” he told Demerara Waves Online News.

He declined to respond to questions about whether the purchasing of gold at a price less than the world market price would result in smuggling to countries such as Suriname where the royalty and duty are lower than Guyana’s.

The Guyana Gold and Diamond Miners Association (GGDMA) and the Guyana Women Miner’s Organisation (GWMO) on Thursday called on government to “immediately remove from consideration the idiotic proposal to force local gold miners to accept 3% less than the world market price for gold produced.”

“No miner, under any circumstance will support this proposal. Our two associations are united in this position,” the miners’ organisations said in a joint statement.

The GDDMA and GWMO said if small and medium scale gold miners to sell their gold for 3% less than the world market price to the Guyana Gold Board they would lose GYD$8,000 for every ounce of gold sold.

The GGDMA and GWMO claimed that it is a fact that the Gold Board, due to mismanagement, lost over GYD $10 billion of tax payer dollars during the period of 2012 to 2014 and now the government want miners to subsidise this failing institution.

The GDDMA and GWMO contended that that move seeks to ensure that the incompetent and mismanaged Guyana Gold Board stays afloat at the expensr of the miners. “We the miners, see this as another move designed to cripple local small and medium scale miners in a continued move by the current administration to miniaturize the local sector,” the GGDMA and GWMO said

The foreign companies, who mainly export their gold won, will be exempt from this proposal, the organisations said.

They said if the Guyana Gold Board has to bring an end to the purchase of gold at world market price, then that entity should shut its doors. “If the Guyana Gold Board cannot run their operations and be profitable, in contrast to the privately licensed dealers, then they cease operations immediately,” the miners’ representatives said.

The GGDMA and GWMO noted that government has already proposed to remove all assistance to the industry, including VAT relief, fuel relief, duty-free vehicle concessions and tax relief on spares and mining equipment. “This along with potential hikes in rentals, more stringent regulations and additional taxation will certainly kill the already struggling local mining industry.”

The miners’ organisations calculated that “the new burden” will see miners now paying out almost 10% (GYD$25,700 for every ounce ) of the gold they earn to the Government of Guyana.

Contrary to claims by GGDMA and GWMO that there were no consultations, the Minister of Natural Resources said they were consulted as late as last month and those interactions would continue.

“In so far as the absence of consultation goes, the MNR believes that would be an unfair statement. We met with the executive of the GGDMA on Monday and this was one of the matters discussed. It was agreed to exchange documents and to meet again before any decisions are made. It seems as though the GGDMA prefers to consult through press releases. The Ministry will still meet with the GGDMA again,” Trotman said.

GGDMA and the GWMO charged that government has so far made only empty promises and has made life harder for the small and medium scale miners.

“Despite all the rhetoric about consultations, this proposal was secretly developed and put into motion. We are now suspicious of all our previous consultations and ask the government: Can we now trust your word?”.

The GGDMA and the GWMO say they will from next week be meeting with miners across Guyana to inform them about the impending changes and to discuss how it will affect their livelihood.

The GGDMA and GWMO warned that to purchase gold at three percent less than the world market price would worsen social and economic conditions in Guyana. “We are fully opposed to this proposal, which is under active consideration at the cabinet level and we urge the Government of Guyana not to take this foolish measure. This measure will not create jobs; it will kill employment and spending. It will plunge the already stagnant economy further down the spiral.”

“Mining is the leading economic driver of the Guyanese economy and this proposal will kill “the goose that lays the golden eggs”. No other private sector industry currently provides more employment than mining. Crime is tied to unemployment, and in an already slow economic situation, killing off the mining sector will not solve the current problems Guyana faces, but it will magnify them,” the GGDMA and GWMO added.

Gold is Guyana’s single largest private sector foreign exchange earner.