Prospects for new foreign investments in gold mining

The extent of the Guyana economy’s dependence on the gold mining sector is set to grow significantly when two news investors, Guyana Goldfields Inc of Canada and Troy Resources Inc of Australia come on stream here in 2015. When the estimated annual gold yield of the two companies is added to what, by the end of next year is likely to be a total yield in excess of 500,000 ounces from local small and medium scale miners, the returns to the national treasury will further position gold to contribute to the country’s economy. That prognosis, however, must take account of the fact that gold prices are no longer on a sustained upward trajectory as they were just a few years ago, which means that we cannot arrive at an estimate of likely gold earnings at the end of next year by simply multiplying the number of ounces by some projected price per ounce at some point in the new year.

As an aside it should be noted that the growth of the country’s gold-mining sector is occurring hugely disproportionately to that of the manufacturing sector, for example, so that we must begin to seriously ask ourselves whether we are not, even now, threatened with the cataclysmic decline, perhaps even the virtual disappearance of manufacturing as a viable sector of the country’s economy. That, however, is simply a digression, albeit an important one from the central issue.

Gold has been good for the Guyana economy. Apart from its own inherent earning capacity, its spin-off effect into other sectors including the transportation, fuel, food, heavy duty equipment operators, and services sectors, among others, has meant that it has accounted for large numbers of jobs in a range of sectors. Additionally, resort to the ‘gold bush’ has helped to take the burden of unemployment off parts of coastal Guyana.

There are those who will argue of course, that the benefits of gold mining have accrued to individual miners much more than to the country as a whole. Unquestionably – and while there can be no gainsaying the deservedness of those miners who have reaped the rewards of their physical and material risks – there is a case to be made for the gold mining industry leaving a much larger developmental footprint in those regions of the country where gold is mined, particularly since there will come a time when the gold yield will be appreciably less than it currently is.

Then there is the question as to whether those amounts that accrue to the national treasury are being properly accounted for or whether the surfeit of rumours to the contrary should be taken seriously. This is by no means an issue on which we can afford to spare the feelings of the powers that be. We have long reached a point where those feelings must be subsumed beneath that greater due diligence which we have neglected to pursue for far too long. If the returns that accrue from gold are to make a meaningful impact on the nation’s economy then we can no longer afford ambivalence and equivocation in demanding that the keepers of the public purse properly account to us for the returns from the gold mining sector.

Still, there is much evidence that Guyana Goldfields and Troy Investments can make their mark. Goldfields, when it spoke to this newspaper in 2012, had said that its mining methods would not only require the recruitment of new skills and more modern equipment but would also require a significantly expanded labour force. The same, one assumes, goes for Troy Resources. That – as was mentioned earlier – would have spin-offs for other sectors including transport, food and services.

In 2012 Guyana Goldfields had also indicated a preparedness to invest in a local mining school. The creation of such an institution in the hinterland might be one way of ensuring that Amerindian communities benefit much more from the industry than they currently do.

Guyana Goldfields and Troy Resources are, in a sense, standard bearers for other potential investors in the international gold mining industry who have already sunk significant amounts into exploratory work here and who will be using the experience of the two forerunners as gauges that will help support their own eventual decision-making.

By this time next year, if all goes well, Guyana will have a much larger mining community and that will present the government with additional responsibilities that have to do with the creation of a more convivial environment in which to live and work in gold-mining communities. What this means is that the government will have to significantly raise its game beyond the present level. In this regard better policing is the first thing that comes to mind. While the two new investors will doubtless take responsibility for their operational security the Guyana Police Force will have to do a good deal more than it is doing at this time to ensure an enhanced regime of law and order in mining communities.

Perhaps the best thing about the announcement that Guyana Goldfields and Troy Resources will start exploitation work here next year is that it serves to counteract those external messages being disseminated to the effect that the political climate in Guyana bodes ill for foreign investment. That is not to say that the climate of political restlessness and insecurity that has been bedevilling us will automatically go away even though we can do no more than hope that the government, particularly, will read into this development the clear message that Guyana continues to have considerable investment potential; even though we also need to get a second message, that is, that the rest of the world is not sitting, waiting for investment opportunities here.

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