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Falling gold prices pose threat to small scale miners
By Zena Henry
Minister of Natural Resources, Robert Persaud, told Kaieteur News yesterday, that any drop in gold prices is a need for concern. He was alluding to the dangers falling gold prices pose to the industry and the direct effect on small scale gold producers.
The Minister viewed with urgency the need to address the current situation, stating that, come next week, a meeting is scheduled to discuss measures to stay above the unfavourable decline. Minister Persaud said that his Ministry is closely monitoring the gold market and is regularly engaging the international community. 
He saw, too, the need to engage local stakeholders, adding that the views and concerns of the executive licensed gold dealers; the Guyana Goldfields will be looked at.
Persaud charged that Guyana has no control over the gold market, but precautionary measures could be taken to ride out the difficulties. Already pressure mounts over the reality that small miners could go out of business as operation cost increases.
Minister Persaud continued that the drop in price slows down the gold industry; which is a result of less revenue for local workers who will thus exit the industry. Remittances, the Minister included, will decline; meaning, less foreign currencies will enter the country.
The Natural Resource Minister acknowledged the importance of the gold industry and posited that companies will have to become more manageable and efficient by lowering production cost, diversifying and finding other means to stay afloat.
Newly re-elected President of the Guyana Gold and Diamond Miners Association (GGDMA) Patrick Harding also registered his concern about the falling prices. He told Kaieteur News that specific measures have to be put in place to cushion the drop. He too believes that the current situation will adversely affect, especially small scale miners.
Harding is optimistic that government’s intervention with a reduction in duty for fuel will aid large scale producers, but hope for a small operator is faint. These small producers will have to reduce operation cost which might seem impossible, especially with the already high and fluctuating fuel prices. With this in mind, Harding forecasted that some 10 percent of new miners could go out of business.
He said that the gold prices have gone from US$1,750 per ounce to about US$1,205 within six months. At the scheduled meeting next week, Harding plans to ask the Natural Resource Minister to rescue the fuel situation.
Harding further stated that it would be favourable for all miners to benefit from fuel duty reductions, but monitoring might be difficult. It was thus suggested that high level producers of the precious metal, selling to the gold board should get cheaper fuel.
From the records of a producer’s sales and production, it can be determined what fuel reduction or repayment is necessary based on output levels. The goldfields President suggested that duty reductions be based on certain levels of production.
Harding also feels that suppliers to the mining industry can also help by adjusting debt repayments. He proposed that these agencies depended upon by miners can relax repayment periods, extending it for small installments to be paid over a longer space of time. Harding did not say when the country could start panicking, but he admitted that the current situation must be addressed.
As of April last, gold stood at US$1400 per ounce ($280,000). Government was already eyeing the situation and suggested that some of the factors contributing to the decline noticed since the year began, resulted from the effects of the Cyprus bail out in the European Union and the selling of reserve gold by the central bank of that country, as well as the possibility of more gold reserves from other members of the EU being sold to cover the larger bail out of countries.
The Minister had recognized, too, the slowing down of the Chinese economy and the decision by the United States to move away from quantitative easing as well as lower consumer confidence. The Minister was at the time considering tax breaks and faster processing of work permits for gold miners.
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