Highly indebted gold miners beg for concessions amid falling world price

Last Updated on Saturday, 25 July 2015, 23:21 by GxMedia

Grappling with a looming recession in the gold mining industry that has led to several small and medium-scale gold miners’ equipment and properties being repossessed by lenders, the Guyana Gold and Diamond Miners Association (GGDMA) wants government to provide concessions to cushion the impact of falling prices for the precious metal on the world market.

As representatives from the association and top government officials prepare to meet next week, small and medium-scale miners say they are taking a licking because the cost of production has remained stagnant while the price of gold continues to fall, closing on Friday at US$1,080.80 per ounce on the London Fix.

“At the current price miners are finding it extremely difficult to meet their obligations and the sector is now plagued with repossessions, of mining equipment and property, and defaulting bank payments as many of the smaller operations find it difficult to continue to subsidize the cost of production,” said the GGDMA in a statement.

The association called on government to ensure that “the upcoming high level meeting will be more than a talk shop.”

Arguing that small and medium-scale miners produce more gold than the large companies, the GGDMA signals that it will be lobbying for the same concessions as those being  granted to the large companies. They include reduced duties and taxes on fuel, vehicles and spare parts. Representatives of those miners say if their recommendations are accepted, it will avoid the need for a bailout of the industry.

“The GGDMA recognizes the contribution that these companies can make to Guyana but notes that the thousands of Guyanese in the local industry contribute far more in terms of gold production, spin off benefits and employment and should be entitled to assistance,” said the association.

With Guyana’s economic growth for last year already taking a battering due to a decline in the price of gold, the GGDMA warned of the “potentially devastating impact it can have on the Guyanese economy.

In the area of gold alone, production fell from 481,087 ounces in 2013 to 387,505 ounces in 2014.

If the price of the yellow metal falls below US$1,000, the GGDMA forecasts that the largely self-financing segment of miners – representing more than 90 percent of interior operations- can be ruined. “The new world market price could spell doom for many smaller operations which operate largely through self-financing and on very narrow margins,” the association said in its statement.

With mining regarded in some quarters as the largest creator of private wealth, the GGDMA says many can be reduced to poverty. The association says it has already observed a noticeable downturn in the economy of hinterland mining communities such as Bartica, Port Kaitima, Mahdia, and others.

It added that many other communities such as Linden, Diamond, Beehive, Ann’s Grove, Essequibo Coast and other coastal communities where miners reside have also seen a reduction in economic spending power.

The GGDMA is calling on its members to continue to examine methods of costs savings and increased efficiency without any compromise in safety or sound environmental practice.

The Association also reminds miners to continue to sell their gold to the licensed dealers or the Guyana Gold Board and to demand a receipt for gold sold.