Tax incentives, better technology mooted to cushion gold price drop

Concerned about falling gold prices, government and mining industry representatives on Monday agreed to a series of measures to reduce operational costs and will consider other areas such as tax incentives.

According to a press release from the Ministry of Natural Resources and the Environment, the meeting was chaired by Minister Robert Persaud, who highlighted that since the beginning of 2013, the price of gold had been marginally declining but since Friday it has now fallen below the US$1,400 level – a new two-year low.

The release stated that stakeholders pointed out that the price of gold is sometimes very unpredictable and the quantity of gold declared in and exported by Guyana does not influence the global market since Guyana is a price taker in this situation.  However, they emphasised that the global price of gold affects the level of output, investment and earnings in Guyana. To reduce the impact of the falling price of gold on Guyana, a few short term measures were identified to be put in place.  This, the release said,  will require both private and public sector cooperation.

These included the use of better technology for recovery and production, improved methods of manufacturing local machinery for miners, the need for diversification of mineral extraction activities, the use of a revolving fund for new technologies where by both the public and private sector will contribute; and more effective tax incentives and duty free concessions for the mining sector.

Stakeholders meeting on Monday (Ministry of Natural Resources photo)
Stakeholders meeting on Monday (Ministry of Natural Resources photo)

The release said that stakeholders indicated that the inefficiencies in the processing of permits for various levels of operations, often affect the cost of production. Thus, as gold prices continue to lower, production costs will have to be reduced at each stage of development for the mineral.

The miners suggested that measures to reduce operational costs in the short term could include better roads and infrastructure in the various mining districts.

The release added that the Guyana Geology and Mines Commission will work with the mining stakeholders to gauge the cost of production for the various levels of operation.

The miners also requested that the GGMC consider the option of allowing persons who have applied for the Medium Scale Prospecting Permits to be converted to Mining Permits to begin to work without having to wait for the full process of the permit to be completed.

This would be subject to verification of the type of mining operations.
The release indicated that another issue highlighted was that foreign currency usage and availability are critical and the Bank of Guyana and the Ministry of Finance are exploring various options to ensure facilitation of foreign trade of the mining industry.

The meeting concluded with the formation of a working group consisting of representatives of the Ministry and its agencies (the GGMC and the Guyana Gold Board) and representatives of the Guyana Gold and Diamond Miners’ Association and licensed gold dealers to continue to monitor the effects of the world gold price on the industry.

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