Govt. depending on small-scale local miners for majority of gold earnings

Jan 30, 2022 News

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– Hopes large foreign operators getting billion dollar concessions play bigger role soon

By Shervin Belgrave

Kaieteur News – During Wednesday’s budget speech, which was presented by Minister with responsibility for Finance in the Office of the President, Dr. Ashni Singh, it was quite clear that his government is depending on small and medium-scale local miners for most of Guyana’s gold revenue, while it continues to be optimistic that large-scale foreign operators, who are benefitting from billion dollar concessions, will eventually contribute significantly in the near future.

Dr. Singh highlighted to the National Assembly that Guyana’s gold sector did not do too well last year. According to him, it declined by 14.8 percent because of lower production from large-scale operators – mainly foreign mining companies operating in Guyana – and small and medium-scale miners – a category predominantly dominated by locals.
However, it should be noted that although the sector’s production dropped, the local miners still managed to declare more gold than their large-scale foreign counterparts.
Dr. Singh told the House that, “the combined output from the large operators declined by 31.7 percent in 2021 to 68,268 troy ounces.” With regard to small and medium-scale miners, Singh said that they “declared 11.3 percent less ounces in 2021, taking their total output for that year to 499,054 troy ounces.”
In other words, small and medium-scale operators produced 430,786 more ounces than all the foreign mining companies operating in the country. It means that locals produced more than 83 percent of the gold mined in Guyana for 2021 and despite their output was lower than the previous year; they still contributed significantly to the country’s Gross Domestic Product (GDP) and export earnings.
Dr. Singh, in his speech, made it known that gold accounted for 8.8 percent of Guyana’s GDP and proved to be the country’s third largest non-oil economy in 2021, accounting for more than 60 percent of its non-oil exports.
In moving forward, the Minister of Finance said that significant growth can be expected from gold mining in 2022 but the country will continue to depend on the small and medium-scale miners until larger operators can come fully on board.
His exact words were, “Significant growth can be expected from the sub-sector in 2022, with gold declaration envisaged to continue to be dominated by small and medium-scale producers operating 1,054 small scale mines and 25 medium scale mines.”
Regarding the large-scale operators that are currently benefitting from billion dollar concessions who rent thousands of acres of gold land for only $1000 per an acre, the Minister had this to say. “Large-scale operators are expected to come fully on stream in the medium term.”
One of these large-scale operators that government is expecting to come fully on board is Australian mining company, Troy Resources. The company operates the Karouni Mines in Region 7, a concession that spans some 3,000 hectares.

Dr. Singh in his speech noted that gold production from this mine “will be paused this year but the investor (Troy Resources) will forge ahead with exploration and development of underground prospect.”Kaieteur News had reported last year that the company had started firing local workers in order to hire expats to focus on the underground mining, which Dr. Singh referred to during his speech.
Other foreign mining companies operating in Guyana are Zijin Mining Inc, a Chinese company that owns the Aurora Gold mines – a concession considered to be one of the largest in the country encompassing almost 3,000 acres of gold land, Omai – a Canadian mining company that recently boasted of a US$3B gold find and Gold Source Inc.
Gold Source Inc. had announced last year, that it had hit the jackpot with a significant gold discovery on its Region 8 Gold concession that spans over a 1,000 acres of land.
Despite their significant discoveries, Omai and Gold Source Inc. are reportedly in the exploration phase and Guyana should not be expecting much gold production anytime soon. In the case of the Chinese company, representatives of the company had told Kaieteur News last year, it is still in the construction phase and works had been hindered by the floods earlier this year and the ongoing pandemic.

It must be noted however, that these foreign companies were granted an abundance of duty free concessions and tax waivers worth billions, while the small scale miners (locals) received none.
As the government awaits the large-scale operators to contribute significantly to Guyana’s gold revenue, Dr. Singh notified the House that his government is gearing up to grant yet another large plot of the country’s gold lands to another foreign investor.
He said, “Beyond this year, investment in the Toroparu area will finally result in long anticipated development of a full-fledged gold mine since an international mid-tier gold company has confirmed their interest in this project. Notably, development works to the tune of US$165 million are slated for 2022 and a further US$189 million in 2023, with production expected to commence in 2024.”

 

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