Gov’t mulling buying gold at below world market price

-miners cry foul

Government is currently considering a proposal to pay miners less than the world market price for gold, prompting a warning from the Guyana Gold and Diamond Miners Association (GGDMA) and the Guyana Women Miners Organisation (GWMO), which say the move would do more harm to the mining industry.

Speaking to Stabroek News yesterday, Minister of Natural Resources Raphael Trotman said that the discussion for the Guyana Gold Board to pay below the “London Fix” price has been ongoing for many years. However, he said that no final decision has been made on the matter since it is before cabinet.

Trotman added that there are advantages and disadvantages to miners paying below the market price. “The London Fix price is the price paid for processed and refined gold. When GGB [Guyana Gold Board] and dealers buy raw gold and pay the refined (London) price, it means we still have to pay for refining. Hence we are buying at a loss,” he said, while noting that buying at a few percentage below the London Fix is an advantage to the buyer.

Conversely, Trotman pointed out that on the disadvantage side of the spectrum, there are higher taxes or costs to the producer, which becomes an incentive to smuggle in order to evade and avoid such payments.

However, a joint statement from the GGDMA and the GWMO yesterday called on the government to “immediately remove from consideration the idiotic proposal to force local gold miners to accept 3% less than the world market price.”

The statement pointed out that no miner, under any circumstance, would support the proposal along with the two associations.

“The GGDMA and GWMO wish to inform all miners that the Government of Guyana is seriously considering a scheme which would force small and medium scale gold miners to sell their gold for 3% less than the world market price to the Guyana Gold Board,” the statement said, while adding that under the proposal miners will lose $8,000 for every ounce of gold sold at the current market price.

“We, the miners, see this as another move designed to cripple local, small and medium scale miners in a continued move by the current administration to miniaturise the local sector. The foreign companies, who mainly export their gold …, will be exempt from this proposal,” it added.

The statement also pointed out that the proposal was tabled without any consultation with miners or the mining associations. “Despite all the rhetoric about consultations, this proposal was secretly developed and put into motion. We are now suspicious of all our previous consultations and ask the government: Can we now trust your word? As representatives of the industry, do our words carry ANY weight at all when considering the decisions that you are making that will affect our livelihood?  Or are these “consultations”, many times after the fact, just for show?” the organisations questioned.

However, Trotman said that the statement was unfair as consultations were done. “We met with the executive of the GGDMA on Monday and this was one of the matters discussed. It was agreed to exchange documents and to meet again before any decisions are made. It seems as though the GGDMA prefers to consult through press releases,” he said, while noting that the ministry will meet with the GGDMA again to further discuss the matter.

‘Kill’

The GGDMA and GWMO, however, urged an immediate halt to the proposal and a commitment from the government to being serious about meaningful consultations. Their joint statement also noted that they will be meeting with miners across the country to enlighten them on the pending changes and to discuss how it will affect their livelihood.

They also pointed out that with the government already proposing the removal of all assistance to the industry, including VAT relief, fuel relief, duty-free vehicle concessions and tax relief on spares and mining equipment, as well as potential hikes in rentals, more stringent regulations and additional taxation, the move to lower prices will certainly “kill the already struggling local mining industry.”

They argued that the new “burden” will result in miners having to pay out almost 10% ($25,700) for every ounce of gold they sell to the government. It pointed out that the proposal will not create jobs but will “kill employment and spending” and will make the already stagnant economy plunge. “This proposal will kill the goose that lays the golden eggs,” the statement said. “Crime is tied to unemployment, and in an already slow economic situation, killing off the mining sector will not solve the current problems Guyana faces, but it will magnify them,” it added.

The statement also accused the government of proposing the new payment in order to bail out the GGB. “This is a move to ensure that the incompetent and mismanaged Guyana Gold Board stays afloat,” it said.

It added that government, through the GGB, is planning to squeeze the blood out of the miners. “The Ministry of the Presidency has indicated that it will be applying more stringent measures to the industry and [State] Minister [Joseph] Harmon has said that they will put measures in place to ensure the survival of the Guyana Gold Board,” it said, while adding that the organisations did not anticipate that the miners would be “robbed” of an additional 3% to maintain the “GGB’s incompetence.”

The organisations stated that the GGB, due to mismanagement, had lost over $10B of taxpayer dollars during 2012 to 2014 and now the government is using the miners to subsidise the “failing institution.” “Buying gold from local miners at the fixed world market prices has been the norm for the Guyana Gold Board and Gold Dealers in Guyana for over 20 years,” the statement said, adding that if the board cannot run its operations and be profitable, then it should cease operations immediately. “We will not be burdened with the bill for the Guyana Gold Board,” the statement declared.