Falling gold prices on the international market amount to a mixed blessing for the country’s mining sector, according to Natural Resources and Environment Minister Robert Persaud.
While the sustained decline in prices since earlier this year has seen miners resort to engaging government at the level of President Donald Ramotar to seek import duty concessions on fuel and other requisites, Persaud told Stabroek Business there is evidence that the wake-up call resulting from the sudden drop has brought about positive change in the sector.
Persaud said that in his ministry’s discussions with them miners were being encouraged to see current falling gold prices as both “a challenge and an opportunity”. Noting that sometimes business entities are inclined to structure their business models to take account only of “sunny days”, Persaud declared that “it is good that the mining sector has had a reality check” that helps it to understand that if its business models take account of rainy days there will be no cause for concern on sunny days.
And according to Persaud, what the drop in prices has done is to create a much greater awareness in the sector of the importance of effective business management. “These days we have seen more and more miners paying dedicated attention to the business of mining rather than what is sometimes the habit of not paying attention to prices and inefficiencies and waste. [There is a] renewed emphasis on the business aspects of mining,” Persaud said.
Meanwhile, he told this newspaper that the sector could be pleased with the fact that declining gold prices had done nothing to reduce production levels or dampen the enthusiasm of the mining community. Notwithstanding the movement in prices (for the first half 2013), there has been a jump to 333,000 ounces, “a 24 per cent increase in production over the same period last year,” Persaud said.
He told Stabroek Business that the industry had set itself a target of between 450,000 and 455,000 ounces for the current year, though he added that the Guyana Gold and Diamond Miners Association (GGDMA) may have set its own unofficial production target as high as 500,000 ounces.
According to Persaud, while reduced gold prices would mean that the mining sector would have to raise its production levels in order to surpass or even match last year’s foreign exchange earnings, the extent of the effort made by miners this year meant that increased foreign exchange earnings was “a distinct possibility.”
Asked about the ongoing challenge of allowing the gold mining sector to flourish in an environment that places a high premium on responsible mining Persaud said that while, on the one hand, it was important to recognise the significant contribution that the sector continues to make to the country’s economy, this does not mean that the Government of Guyana will allow operators in the sector to compromise the country’s commitment to the sustainable management of the environment.
Meanwhile, Persaud is insisting that “due respect” should be paid to the role the country’s miners are playing in the national economy. “I am not saying that everyone is in full compliance with the laws governing the sector. But the sector needs to be given a chance; our miners need to be given a chance. We will take steps to ensure that the necessary safeguards are maintained but we need to understand that the sector is dynamic, that it is very critical to the health and growth of our economy, it creates jobs for tens of thousands of people and it needs to be given that due recognition.”