Changes in mining industry test state’s regulatory capacity, GGDMA says

Significant changes in the mining industry resulting from the profits that now accrue to investors continue to present challenges to the regulatory capacity of the state machinery, a Guyana Gold and Diamond Miners Association (GGDMA) senior official has told Stabroek Business.

While declining to comment on a recent pronouncement by the Guyana Human Rights Association (GHRA) that the Guyana Geology and Mines Commission (GGMC) is “overwhelmed” by developments in the sector, GGDMA Administrative Officer Colin Sparman said that it would be entirely fair to say that the GGMC is inadequately equipped to perform its monitoring functions effectively in a continually expanding gold industry.

Sparman told Stabroek Business that up to a year ago the GGMC employed around 50 mines officers in circumstances where the entity probably needed up to 150 such officers to cover the entire industry. Sparman said that while that number would probably have doubled since then, “that still leaves the GGMC well short of the numbers it should have.”

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Sparman attributes the shortage of mines officers to what he describes as “recruitment issues” as well as problems the GGMC faces in getting qualified people to do the job. According to Sparman, developments in the industry had rendered it necessary to require that mines officers possess additional skills, including those associated with verification of borders and water tests for pollution.

And the challenges facing the authorities in the administration of the gold industry are inextricably bound with the changing pattern of investment in the sector. Sparman argues that gold has become tied to the Guyana economy in a manner that goes beyond what it contributes to the country’s GDP. “There used to be a time when the industry attracted a particular group of investors, including the traditional pork knockers. Those days are gone. Mainstream businessmen now have interests in the sector. They want nothing to do with the bush per se, but they are quite happy to back a miner by investing four or five million dollars in a four-inch dredge. Under that kind of agreement, the miner would repay the investor, who would also have preference in terms of the sale of that miner’s gold. Of course, that is not the only type of arrangement that links the urban business sector to the gold industry,” Sparman told Stabroek Business.

And according to Sparman, the GGDMA was working closely with the GGMC and the new Ministry of Mines and Natural Resources, though he conceded that regulations associated with the Low Carbon Development Strategy (LCDS) had created “a certain amount of tension and concern” among small miners. He said that while the GGDMA considered it important to urge miners to adhere to the regulations, some miners appeared to be feeling “other pressures.”

LCDS apart, there exists the perception among some miners that government is seeking to exercise greater influence in the gold-mining industry, he said. “The perception is there and it has to do with the feeling that government wants to control access to the sector. Certainly, the feeling exists that
government may be looking for allies among some of the bigger players in the mining sector. The problem is that those big miners are independent operators who are difficult to control,” Sparman added.

Meanwhile, a miner, who declined to be named, told Stabroek Business that he believed the timing of government’s clampdown on illegal mining had to do with much more than seeking to better regulate the industry. “The truth is the problem of a lack of work permits which has affected the Brazilian miners has to do with official delays at the level of GGMC and the Ministry of Home Affairs. The thing to do is to speed up the issuing of the work permits, not stop the miners from working. We now hear that the ministries of Home Affairs and Mining are meeting. Why do they need to meet, anyway? It’s just a question of setting new regulations and creating new areas for corruption.”

Meanwhile, Sparman said he believed investment costs in the sector were likely to continue to increase as higher world market prices pushed miners towards seeking higher recovery levels. “It is a matter of obtaining better equipment and employing more efficient mining methods. The high cost of better equipment means that smaller miners are not likely to make those investments. What we find too is that often the equipment is promoted as having a capacity to accomplish things which it does not do in our terrain. What the GGMC is doing in some cases is acquiring some of the equipment and doing the actual testing,” Sparman said. He added that increasing gold yield was a priority in the sector at this time.

Asked to comment on the role which the new Mining Ministry will play in the administration of the sector, Sparman said it appeared that the GGMC, the technical arm of the state-run mining administration, will now be subject to direction and control by the ministry.

Meanwhile, Sparman said, positive developments were occurring in the sector; alluding to the proposed setting up of a mining school with Canadian assistance. “The fact is that the days of the pork knocker are long gone. There is no more digging a hole and moving on. Our miners need to raise their game if they are to maximize their production. Apart from that we need to prepare the industry for larger investments,” Sparman added.