The portents, even this early in the year, suggest that 2015 could be an even tougher year for the gold-mining industry than 2014. This newspaper had warned on more than one occasion in 2014 about the challenges associated with the status of a ‘price-taker’– a country whose gold-production has no significant bearing, if any at all, on the world market price for gold–and true to form last year’s production fell well below the 500,000 plus ounces originally predicted.
All of this, of course, has implications not only for the wider performance of the economy but for the well-being of the thousands of Guyanese whose livelihoods have comes to be dependent on gold mining. This year, we have heard stories of mining operations shrinking, dredges being withdrawn from the production line, excavators being repossessed and employees of mining operations being retrenched. For the time being at least, the gold mining industry is not what it used to be.
The decline in gold production has led to discourses between government and the mining sector on possible concessions that might lower operating costs and make life easier for the miners at this time. Miners are seeking, among other things, duty-free concessions on terrain-friendly vehicles and access to cheaper fuel. These negotiations have been going on for some while without, in some cases, going anywhere. Simultaneously, there is evidence that government is exerting increasing pressure in the direction of seeking to hold the sector up to higher environmental standards, in the wake of its signing of the Minamata Convention in Japan in October 2013. The problem with higher environmental standards (mercury-free mining) is that the requisite equipment comes at a high price and there is little doubt that the strictest enforcement could force medium and small-scale mining operations out of business. Just last week, when asked about the sloth of the mining sector in accessing the billion dollar revolving fund set to the allow for the testing of mercury-free mining equipment, President of the Guyana Gold and Diamond Miners Association Patrick Harding alluded to equipment costs that are beyond the reach of small miners.
The challenge of finding a workable replacement for mercury in the sector–as the Ministry of Natural Resources and the Environment pointed out in a recent media release–is that it coincides with downturn in the price of gold, which places even greater pressure on the industry to produce more gold. Here, the question surely arises as to whether the reference by GGMC Board Chairman Clinton Williams to the involvement of the Institute of Applied Science and Technology and the University of Guyana in a mercury-free project, is at all practicable, given the tendency for these bureaucratically-driven initiatives to take ‘no ends of time’ to bear fruit. Solutions to the challenges of mercury in mining will not wait forever without having the industry either ignore those options altogether, or else, come to a shuddering halt.
Last year, too, witnessed the expression of increasing official concern over what is believed to be the smuggling of gold, a propensity which the authorities can ill afford at this time. Here, of course, the problem reposes in how little physical control the government exercises over the mining sector given, first, the challenge of proximity, secondly, the limited policing capacity provided by GGMC and, thirdly, the cloud of corruption that continues to hover over the sector.
There is of course little that Guyana can do but wait out the decline in the price of gold, and there is as yet no telling in which direction the price will go in 2015. What is certain is that the fortunes of the global gold industry could significantly alter the economic fortunes of Guyana in 2015 and that could have critical implications for its socio-political stability.
