Poor gold declaration…Guyana lost US$100M in foreign exchange, $1.5B in taxes for 2014

Jun 14, 2014 News

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The decline of gold declaration for this year has seen Guyana losing around US$100M in foreign exchange and $1.5B in royalties and taxes, says Chairman of the Guyana Gold Board, Dr. Gobind Ganga.

The official was part of a panel discussion along with President of the Guyana Gold and Diamond Miners Association (GGDMA), Patrick Harding, and Consultant, Edward Shields, which focused on developments in the sector.
The industry has been battling poor declarations of about 20%, as compared to the levels of last year.
The state-owned Guyana Gold Board was expecting between, 40,000 to 50,000 ounces more of gold, but actual declarations were a mere 165,595 ounces.
Officials have been blaming the poor showing on hoarding and smuggling.
According to Ganga, in a government statement yesterday on the recent panel discussion, the situation is threatening Guyana’s economy as gold has been helping the country’s fiscal policy to provide for economic sustainability.
“So with this decline it’s going to have an adverse effect, not with respect to the exchange rate per se in the immediate future, but later down the road it will have the effect.”
Ganga believed it is easy to conclude that the main causes are the continuous decline in the price for gold, some amount of hoarding and the possibility of illegal export.
Supporting his claims of possible hoarding of the mineral, Ganga said, “If you are looking at the export earnings from this sector you would find that the foreign exchange is not there, if you would have mined gold and sold gold, you would have expected the foreign exchange to come back in that is not there.”
He said that miners are producing more, declaring less, assuming that the declaration is not being sold, which makes it obvious that there is no foreign exchange earnings.
“There is a strong indication that indeed there is some level of hoarding.”
Ganga went on to explain that within the Gold Board Act, miners have 28 days to make their declaration and if this isn’t done then the gold is illegal.
“When land is being given to miners, it’s not their private operation, it is public asset which is given to recover an asset which is to provide revenue to the state in the form of foreign exchange, taxes and royalties which are to be used for every Guyanese, so when you withhold the production and it is not in the official stream then it is having an adverse effect on Guyanese as a whole.”
On the same issue, Shields said he would rather use the words ‘holding on’ as opposed to hoarding.
Shields said he is of the belief that the gold crisis has been brought on primarily by the low price of gold, and it caught everyone off guard.
“We have to accept there is a crisis, and we have to look to see how best one can survive this. It will not go away until such time the price of gold increases and until we start to get good returns. It is high risk business and this is because if you’re successful you get good returns, at the present moment you are not getting good returns.”
He said he also believes that affluent business owners and dealers in some instances are holding on to their production in anticipation of better days. He said he does not believe this is the case for most small and medium scale miners.
Harding also concluded that the falling gold price is a main contributing factor to the problem the gold industry now faces. He however, added that many miners were forced out of operation because of the current situation with the falling gold price.
“One of the things we look at is the amount of dredges that are registered. It doesn’t mean they are all working, maybe they are selling gold outside, but certain causes include the price, cost of production; so the miners are finding it very difficult to stay in business and are leaving.”
Harding pointed out that the cost of staying in business is very high and is not equitable with the cost of production.
“Equipment companies are taking back equipment, miners are giving back equipment, in addition miners are complaining that they don’t have proper lands to work, when the price was high, it’s difficult for them to survive.”
Meanwhile, speaking of a solution to the issue, Ganga called on miners to make their declaration to the relevant bodies so better policy measures can be put in place with regards to moving the sector forward.
“In addition to the need to increase production, we should have an effective way to help lower costs so the miners will have to utilise whatever technology is available and that will provide for much more profitability.”
Harding said while all stakeholders have reached consensus that there is a crisis in the sector, the relevant bodies have agreed to meet miners’ call for better lands to work on.
“They want better lands that have geological works on them, we are working on getting proper lands for them to work and at the same time we are encouraging miners to declare gold while we are looking at cost saving measures that will help miners,” Harding stated.

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