$2,500 gold fee will send production costs higher, lead to more smuggling

Jul 30, 2017 News

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• operators beg for mercy

With just over a month before a $2,500 processing fee kicks in for the Guyana Gold Board, miners yesterday called on the administration to have “mercy” and rethink their decision.

Already for 2017, gold declarations have plunged at least 12 percent, as miners continue to battle some of the worst road conditions to hit the mining zones across the country in years.

Several small and medium scale operators insist that the fee makes absolutely no sense at this time, for the country and for an industry that has for the last decade been consistently the biggest foreign currency earner and a mainstay of the economy and job creation.

“Frankly, this will only put money in the pockets of the gold buyers…both legal and illegal ones. The reason for this is that no gold miner can afford to lose another $2,500 which is another way of placing more taxes on the sector,” one gold miner complained, yesterday.

In June, it was announced that a $4,000 fee would be charged by the state-owned Guyana Gold Board (GGB) on every ounce of raw gold sold.

However, the Guyana Gold and Diamond Miners Association (GGDMA) objected following a meeting with Minister Raphael Trotman, where it was agreed to have the decision halted.

More than a week ago, Government announced that the fee will be introduced but at $2,500 instead of the proposed $4,000.

The decision takes effect from September 1.

The operators pointed out that it was this same government, while campaigning in the opposition for the 2015 general elections that promised to ease the burden on miners.

“It appears that the administration had no intention to fulfill its promises. We had to contend with higher fuel prices…a major cost…, increased taxes like Tributors Tax (from 10 to 20 percent). We used to benefit from duty free concessions on excavators. That is all gone now. We have to pay an additional $9M to 10M more on every piece we buy. Is this the good life?”

For the past two months, the country has been hammered by heavy rains that have created havoc on the roads leading to the mining camps, with social media filled with photos of trucks overturned or stuck in the roads.

“We have a situation now where fuel, spare parts and rations are taking an extra five days to reach camp sites. I invite you (Kaieteur News) to go along with us on a trip and see for yourselves the conditions under which our miners have to operate.

“The miners use to pay 15 percent tax on fuel. Now it is 45 percent. Let the government tell us one sector that withstands the burden that we are facing and continue to experience daily and still survive. We are not even talking about the crime situation. All mining workers under the last administrations used to pay a Tributors Tax of 10 percent. This had doubled under this government to 20 percent.”

According to the miners, the conditions under which local miners operate are not on a level playing field compared with the foreign companies.

“We don’t get fuel concessions and little or no benefits. We spend back the millions and millions of dollars we make in Guyana training our people, on equipment, creating jobs for mechanics, drivers, cooks, vendors, river crossings, making houses and buying cars. On the other hand, foreign investors have been taking out their profits.”

The miners said that the Coalition Government is shortsighted to squeeze existing operations for a sector that has been leading the charge of making money for Guyana.

“Yes, we have oil coming. The question is should we neglect something that is working and proven in favor of oil whose benefits will not immediately come? We have persevered and all we are asking is for the government to pay attention to us.”

It was argued that gold miners would prefer to sell to dealers, including illegal ones.

“We know what happened in the past. Gold was being smuggled out. This fee would only force more smuggling and under-the-table transactions. This unilateral decision did not come with consultations and therefore must be reversed.”

The miners noted that the hardships with the current state of hinterland roads have further driven up costs.

“Our fuel costs have gone up 30 percent and there are delays in moving supplies and spares to the camps. All the roads- Puruni, Itaballi, Issano, Mabura and Port Kaituma are in a terrible state. We are asking for help to have these fixed. With $150 per pound for fuel on airplane, the increased cost will only eat away what little profit margins there was. It is no walk in the park in the gold bush.”

It was pointed that the $2,500 fee is a disincentive that will in reality drive direct taxes up to about 10 percent.

“We are also facing a major problem in the marked reduction of alluvial mining production so in essence we as miners are facing short and long term problems, which will affect the gold trade. Almost 100,000 benefit from the gold business,” one gold miner noted.

The miners said that they will be moving to address the matter.

“We just can’t afford to allow this fee to be forced on us.”

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