Latest update November 8th, 2024 1:00 AM
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Guyana loses billions $$$ worth in concessions to Troy Resources, Aurora Gold Mine annually
– While companies fail to live up to local content obligations
By Kiana Wilburg
Guyana’s looming oil industry has given birth to a profound opportunity for reflection on the extractive industry.
On an annual basis, foreign companies are given billions of dollars in tax breaks while locals are made to pay the full cost of duties charged on equipment, vehicles and fuel needed to support their operations. For example, a 4×4 four door Toyota Land Cruiser costs $14M. It attracts duty of $32M. Foreign entities like Aurora Gold Mine and Troy Resources Limited would only pay $14M. But local mining companies must pay $14M plus the $32M duty.
Furthermore, if the owner of a small mining company hopes to get at least one duty free concession, he or she must satisfy 13 benchmarks, one of which is the production of over 5000 ounces of gold which is worth more than U$5M. Only five Guyanese have the potential to do this.
GGMC Commissioner, Newell Dennison
Guyana Gold Board Chairman, GHK Lall
GRA Commissioner General, Godfrey Statia
Significantly, while billions of dollars worth in concessions are given to these foreign entities, little is known about how many indigenous companies are used to provide them with goods and services in contrast to the foreign conglomerates contracted to provide same.
In an exclusive interview with Kaieteur News yesterday, Commissioner General of the Guyana Geology and Mines Commission (GGMC), Newell Dennison said that there is an imbalance between the concessions granted to foreign companies and those granted to locals.
Dennison was asked if there has been any monitoring of local content in the mining sector by the Commission, he responded in the negative.
Heavy duty equipment
used in mining
The Commissioner General said, “In their (Troy Resources and Aurora) reporting, there is a section that speaks to employment; how many are Guyanese etc. But I don’t recall seeing that for this quarter, the company has expended x dollars using local companies versus foreign companies. Part of the reason I suppose, is that in the context of the mining sector, it has been considered easier to integrate one’s self into the value chain…”
He added, “But I agree with the point that you are making. There is no evaluation in this regard. I would have to check back with the reporting format again to see if this is done at the level you are speaking of…I don’t recall ever seeing Troy or Aurora saying that they used about 40 companies for the year to provide so and so but it is worth investigating. I am sure that is something that can be evaluated. And I do agree that this is something we should be doing on a more immediate basis…”
Table showing a sample of the heavy duty machinery acquired by Aurora Gold Mines this year, and the worth of the tax breaks given to this company. Locals do not enjoy these benefits.
Chairman of the Guyana Gold Board, GHK Lall told Kaieteur News that the Guyana Gold Board is also unaware of the details regarding local content efforts by foreign companies in the mining sector. He stressed that it is indeed a matter which needs more attention, especially when one considers the magnitude of the concessions which are granted on an annual basis.
Commissioner General of the Guyana Revenue Authority (GRA) Godfrey Statia also bemoaned the fact that there continues to be gross distortions between the concessions granted to local mining companies as opposed to foreign ones.
The tax chief said that he has considered time and again, just how much the nation is benefitting from the billions of dollars in concessions granted yearly.
He said, “There is a distortion to big miners versus small miners…But the story of gold is a web of problems and many unknowns which I agree should be highlighted.”
The Commissioner General said that being the patriot he is, he can certainly understand anyone’s call for equal opportunity in the mining sector as well as a strong dose of transparency and accountability.
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