Concessions galore in secret contract…Chinese Co. gets waivers on all imports for self & sub-contractors

May 19, 2021 News

The entrance to one of the underground mines that was being developed at AGM.

Kaieteur News – The Chinese company – Zijin Mining Group – which acquired the largest gold mining operation in Guyana from Canadian owned Aurora Gold Mines enjoys waivers on all imports not only for itself, but any sub-contractor it employs as part of its operations in the Cuyuni-Mazaruni location.
The generous concessions come as a result of a contract that was inked in November 2011 with AGM’s original owners, Canada-based Guyana Goldfields, which sold to the Chinese owned mining company a little under a year ago.
The company in 2019 had begun underground mining before it announced that it was selling its operations. The feasibility study for the project was completed in January 2013 and first gold was poured in August 2015, while commercial production was achieved in January 2016.
The processing plant was commissioned in October 2015. The first gold sale also took place in the same month before it was later sold in August 2020 to the new Chinese owners.
A perusal of the contract illustrates at when it comes to imports, the company enjoys a wide range of waivers. For example, the company under the contract provisions is entitled to import into the country or purchase domestically, free of import duties, Value Added Tax (VAT) and any other direct or indirect taxes on all equipment, supplies and materials for the project.
It also provided under the contract provisions that, for greater certainty, the company or any local or foreign contractor retained for the project purposes shall not be required to pay any licence fees, duties or other charges related to importing or purchasing materials in Guyana for the purpose of the project. Additionally, the company shall also be entitled to import free of customs duties, VAT and other direct or indirect taxes on necessary personal items, including electronic and household effects.
These concessions come in addition to the arrangement that sees the company paying US$5 or G$1,000 rental for every acre of land it has in its claim. The Aurora gold project was first developed by Guyana Goldfields, located in Cuyuni-Mazaruni, as an open-pit and underground mining operation spread across an area of 12 kilometres squared or 2,965 acres. Under the terms of the contract, upon the granting of the licence, the company would pay in advance the Guyanese equivalent to US$5 per acre for each acre included in the licence, and should the Government reduce those fees, then the company’s obligation to pay the rent would be similarly reduced. It would mean that the company pays just about G$3M in rent to exercise its right over, and mine for gold from almost 3,000 acres of land.
Zijin Mining Group Co. Ltd. successfully acquired the operations of Guyana Goldfields Inc. (GGI) in August last year for US$238M and had committed to employing between 200 and 300 Guyanese workers. However, after the acquisition deal was finalised, the company had cut ties with a significant number of local businesses.

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