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IDB flags auctioning of un-prospected lands to small miners
By Kiana Wilburg
The Inter-American Development Bank (IDB) is concerned about the challenges facing small and medium scale miners who often find it hard to access funds for their budding operations.
In its report titled, “Toward the Greening of the Gold Mining Sector of Guyana: Transition Issues and Challenges,” the Bank noted that one major issue is the fact that mining concessions are often let or auctioned without prospecting.
It said that small and medium-sized concessionaires assume higher risks and costs, acquiring parcels whose true mineral wealth is unknown.
The Bank argued that this adds to the economic and cost constraints of following sustainable and responsible practices and cleaner technology.
The Bank highlighted that currently, small miners lack the capacity to finance needed surveys and have to resort to the ‘hit or miss’ approach.
Given the risk associated with this method, the Bank said that small-scale miners invest in technologies that require minimal capital outlays to minimize potential losses if the operation is subsequently found to be uneconomical.
The Bank said, “Some also move to other locations outside their claims, thereby making it difficult to effectively regulate their operations.”
To address this issue, the IDB suggests that instead of the Guyana Geology and Mines Commission (GGMC) issuing claims to small miners whose operations are scattered across mining districts, the Government should encourage clusters in designated areas with proven minerals.
To make the clusters more attractive, the Bank proposed that GGMC with the support from international agencies, should undertake geological surveys in areas identified for small-scale mining.
Once the minerals are available in sufficient quantities, the IDB said that GGMC should then identify the best technology for harnessing them. At this stage, the Bank said that GGMC should develop an appropriate environmental management plan and/or environmental impact assessment to ensure that the environmental impact from mining is minimized.
The Financial Institution added, “The total cost for setting up the operation should then be determined and miners brought together to share expenses by forming a private limited company or partnership.
“Alternatively, the initial cost should be financed through the issuance of shares to the public, allowing small-scale miners to invest in the operation.”
The Bank said that the latter approach may allow the establishment of large-scale mining operations with small-scale miners and Guyanese generally. By organizing small-scale miners into clusters, the IDB said that several benefits may accrue.
It said, “First, it would allow the miners to benefit from economies of scale while sharing risk. Second, it would make monitoring easier for the regulatory agency (GGMC). Third, since the cost will be lower for each investor (miner), it would enhance the attractiveness of greener technologies.”
The Bank added, “Fourth, the cluster arrangement would allow the Guyanese people to benefit optimally from the wealth created by the mineral sector.
“Fifth, miners may be better positioned to negotiate for more fiscal concessions (e.g., tax waiver on fuel, parts).”
The Bank noted that access to credit for small and medium scale miners to finance the needed investments, could be improved by establishing a revolving credit as well as a partial guarantee scheme with commercial banks.
Once the financing is raised, the IDB said that the operation should be established with appropriate technologies and systems (e.g., tailing ponds) to harness the minerals.
Sixth and last, the Bank said that organizing smaller miners into clusters, companies, or cooperatives would allow those who implement “green practices” to certify and brand themselves in the international marketplace and demand a price premium for sustainably mined gold, i.e. “green gold”.
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