Miners to meet Govt. as gold tumbles to US$1,097 per ounce

Jul 26, 2015 News

As gold prices continue to tumble, recording a five-year low this past week, local miners are set to meet with President David Granger in the coming days to discuss possible measures to reduce the fallouts.
Gold prices on the world market reached US$1097 per ounce on Friday, bringing fresh fears not only in the gold mines, but also for locals who are involved in the industry.

Banks are clamping down on defaulting miners as worry continues into the gold industry.

Already for the year, it has become clear that miners are cashing out of the industry, with declarations falling by 20 percent for the first half of the year as compared to the period in 2014.
Gold prices had reached a high of US$1895 some four years ago, leading to a rush of investments in the sector which for consecutive years became the country’s biggest earner.
But it has all come crashing down now.
Friday’s dismal world prices have not been unnoticed by the mining community, which issued a statement yesterday, noting the potentially devastating impact it can have on the Guyanese economy.
Miners have been calling for a reduction of the fuel tax. The tax was reduced in January by the previous administration as world oil prices fell to US$50 per barrel.
Despite the prices remaining in the range, Government has raised the fuel tax in recent months, which saw reduced prices creeping up from $700 per gall of gas to back over $900 now.
According to the Guyana Gold and Diamond Miners Association (GGDMA), steps have been taken to actively engage the new Government at the highest levels to discuss and offer suggestions that would ensure that the industry and the 100,000-plus Guyanese, who depend on it, directly and indirectly, for a living, can continue to look to the sector for support.
“The engagement is to be seen as proactive and aimed at preventing the need for any bailout as the industry is heading into a recession. The GGDMA will actively pursue the long outstanding issues and concessions that can aid in cushioning the gold price drop,” the association said yesterday.
The gold situation would worry the David Granger administration which is already grappling with sugar that is operating at a massive loss, and rice which is likely lose it major market in Venezuela later this year.
According to the GGDMA, the cost of production, for the small and medium scale miners of gold and diamonds, has remained largely unchanged while the price of gold continues to fall, with some analysts predicting the price to drop to US$1,000 an ounce in the near future.
“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.”
The association reiterated that it will be pursuing with the Government, concessions similar to those granted to large scale mining companies.
“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. Small and medium scale miners, for the past few years, have been producing more gold than is currently projected to be produced by the large scale companies.”
The new world market price could spell doom for many smaller operations which operate largely through self-financing and on very narrow margins.
“The GGDMA members, who are mainly small and medium scale miners represent more than 90 per cent of the operations in the interior and almost all are financed via the personal pockets of the operators.”
GGDMA said that the current price and unmoved cost of production put at risk not only the direct employees of the sector but the thousands of other Guyanese who depend on the flow on effect on the industry.
“Mining remains the largest creator of private wealth among Guyanese and the current slump, if not checked, will result in poverty for many. There has already been a noticeable downturn in the economy of hinterland mining communities such as Bartica, Port Kaituma, Mahdia, and other. 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 called 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. The association is continuing to work in the interest of all miners, as it has been doing for the last 33 years, and hopes that the upcoming high level meeting will be more than a talk shop.”