Gold declarations for the first five months of the year have dropped 20% compared to the same period last year and President Donald Ramotar yesterday sounded the alarm at the “drastic” reduction and hinted that the authorities could go after gold hoarders.
“There has been a drastic reduction in declaration which means that there seems to be a lot of hoarding taking place,” the President said, responding to a question from Stabroek News during a news conference at State House yesterday. “That’s a very worrying situation at this point in time,” he said. Gold prices have fallen recently but Ramotar said that he believes that miners are making money. He said that they are “probably” hoarding and waiting to see if prices go up.
The President said it is a serious issue that can have impact on the economy and “I hope that we don’t have to use any coercion…that by persuasion they will make their declaration.”
Over the last several years, gold has been a mainstay of Guyana’s economy and a reduction in declarations could have severe impacts as Guyana earns the most foreign exchange from the mineral. Last year, total declaration was 481,087 ounces, a 9.7 per cent rise above 2012. The level of declarations represents the highest level of production in the history of the industry, exceeding production levels even when Omai gold mines were at their peak.
Gold exports amounted to US$648.5 million, a 9.5 per cent decline compared to 2012 which was due to a sharp decline in average realised prices to US$1,344 per ounce compared to $1,575 in 2012, outweighing the 6 per cent increase in export volume which amounted to 482,527 ounces.
Ramotar has blamed hoarding for the decrease in gold declarations and some industry insiders have agreed that this could be the case but others have different views.
President of the Guyana Gold and Diamond Miners Association (GGDMA) Patrick Harding told Stabroek News that he does not believe low production is responsible for the drop in declarations.
However, another official said that towards the end of last year and during the early part of this year, many Brazilians have left and gone to Suriname. Some have said that this is as a result of the enforcement crackdown: ‘Operation El Dorado.’ The official noted that Barticians have also complained that many Brazilian operations have moved out and it is affecting business. Stabroek News was also told that sales of gold mining equipment have dropped.
Ramotar said yesterday that smuggling could be a possibility and noted that it is known that there is some leakage in this regard.
The GGDMA has called on all miners to get more “aggressive” with gold declarations. In a statement, the GGDMA said that the recent shortfall in declarations, is having a negative impact on the Guyanese economy at a macroeconomic level. “As a consequence the association is calling on all miners to recognise that, despite the lowered gold price, declarations must continue to ensure that inflation and the rising foreign exchange rates are kept in check,” the statement said.
“The GGDMA reminds it members that gold is the stabilizing factor in Guyana’s economy and calls on miners, members and non-members, to embrace their national responsibility to ensure that devaluation and inflation do not become a reality that will cause all Guyanese to suffer,” it said.
The association noted that there are several issues which have been impeding increased declaration of gold by miners and called for these factors to be remedied to ensure that more declarations are made.
“A greater effort needs to be made by the Guyana Gold Board (GGB) to improve the services offered to miners who choose to use their facilities to sell gold. It is the perception of the miners that transactions times at the Guyana Gold Board and its various outlets are taking significantly longer than it takes at the private licensed traders and dealers. In some cases transactions are well over one hour while at private facilities 10 to 15 minutes is the norm. The GGDMA is calling for an improvement in this situation and a sensitization programme, for users, to ensure that there is a smoother flow at the state’s facilities,” the GGDMA said while adding that it hopes that the GGB’s Bartica office will be reopened as early as possible.
There needs to be greater monitoring of licensed dealers and buyers of gold, the GGDMA also said, while disclosing that it believes that some buyers are not adequately declaring their transactions and as a result are creating a negative impression about the true output of the industry. “To this end the association is also reminding all of its members to demand a receipt for all gold sales transactions made, if none is offered. The receipt will serve as proof of payment of taxes and is also necessary to access concessions offered by the Government to miners. Miners can also use the receipt to access financing and other facilities to develop their mining operations,” the statement said.
The association also urged the Guyana Geology and Mines Commission and the GGB to increase their monitoring of gold declarations not only from the miners but also from the buyers.
Last week, the Ministry of Natural Resources and the Environment said that government is pursuing measures to halt the decline in gold declarations, including a crackdown on illegal gold trading entities countrywide. Some of the measures to be pursued immediately to improve gold declaration include improving public sensitization of the gold mining regulations as stipulated by the Guyana Gold Board Act, a proactive monitoring and enforcement drive by the GGB regarding undeclared gold transactions, enhanced inter-agency coordination including law enforcement agencies and the Guyana Revenue Authority, stringent enforcement of reporting obligations by miners to be carried out by the GGMC, and a crackdown on illegal gold trading entities across the country with the assistance of the police, a statement from the ministry said.
In a separate statement, the GGB had said that the level of operations in the gold mining industry in Guyana has not slowed down as there is an improved level of mine site tasks. “It must be emphasized that the closure of the sub-office in Bartica should not be seen as the main reason for the lower levels of declarations that has been reported for Guyana for the comparative of the 2013 and 2014,” the GGB had said. In April, the GGB shuttered its Bartica sub-office and called in the police to probe allegations of tampering during the purchase of gold.
The GGB had appealed to all licensed dealers to provide the services for which they have been granted licences to the gold mining community so that the level of gold trade can be improved for the overall benefit of the local economy.