One of the first initiatives the PPP/C government undertook upon returning to office in 2020 was to offer generous concessions to the gold mining sub-sector.
This was likely a payback for the strong financial support several gold mining and trading companies offered to help the party win the 2020 elections. It is nothing abnormal. It is a very small example of the worldwide nexus between democracy and capitalism: businesses are always lobbying for various concessions -land, contracts, casino licences etc – and will back the party that promises them. However any responsible government will ask itself whether these concessions to special interests are for the overall benefit of the country, the economy and the environment.
Among the generous measures announced in September 2020’s “emergency” budget were: tax concessions for recapitalization; the reversal of Value Added Tax (VAT) on heavy-duty equipment/machines; and removal of requirements for licences on equipment and the transportation of fuel. The sector’s lobbying group, the Guyana Gold and Diamond Miners Association (GGDMA) called it “a shot of adrenaline” and that it was “satisfied with the partial fulfilment of the promises made by the new government while it was in opposition last year.” A quid pro quo has seldom been so blatantly expressed.
The government doubled down in June with even more concessions valued at $1.9B including the removal of the 10% tributors tax, the reduction of the final tax from 3.5% to 2.5% per cent and the removal of value added tax (VAT) on lubricating oils.
What have all these giveaways done for the industry, the economy and the country’s coffers?
In 2020, even with Covid-19, small and medium scale miners declared 485,552 troy ounces, 8.3% higher than the previous year. This was despite what Finance Minister Ashni Singh in his 2021 budget speech described as the coalition’s “neglect and callous policies designed to be unfriendly to the sector”. Among the so-called callous policies were tax regulations that all other businesses in Guyana are already required to follow, such as keeping proper financial records. Again the GGDMA’s members who are conveniently portrayed as innocent, struggling pork knockers (while the association is run by the wealthiest of miners) were said to be “outraged” in 2018, complaining that the logistics in the hinterland do not easily allow for “receipts with revenue stamps, bills and books”.
With the PPP/C now back in office, Singh assured growth for the gold subsector of 4.2% in 2021. Good news! Except, when it came to the 2022 budget the minister reported there had actually been a contraction of 14.8% for 2021, with small and medium scale operators declaring 11.3% fewer ounces.
Still the minister remained optimistic, predicting a turnaround in 2022 with a forecast increase of 12.2% “on account of higher expected declarations from one large operator, and the small and medium scale miners.” Alas, the Bank of Guyana dashed his hopes reporting that for the first half of 2022, declarations were down for small and medium scale miners by 6.4%.
But one would not be so naive to think that declarations equal production which goes to the heart of the argument that the gold business in Guyana is riddled with corruption. In 2016, then Minister of Natural Resources Raphael Trotman – to his credit – exposed that the FBI had estimated that between 50 to 60% – or 15,000 oz per week – were being smuggled out of the country with some not originating in Guyana but rather Colombia and Venezuela. This was the reasoning behind the Royal Canadian Mint’s decision in 2020 to stop accepting gold from El Dorado Trading.
Then there was the case of the 476 pounds of gold stolen during an armed robbery in Curaçao in November 2012 which had come to the island from Guyana aboard a small boat. To this date the general public does not know which dealer was involved but as French author Balzac noted “behind every great fortune is an equally great crime.” Most recently we learnt that one woman gold dealer had hidden a staggering $400m of gold in her home. It begs the question, is there any regulation at all?
And smuggling in the sector is not limited to just gold. Cheap fuel has been transported from Venezuela for decades in order to avoid excise taxes. There has also been the illegal importation of mercury.
Outside of the financial crimes, the gold industry routinely has catastrophic consequences for all involved. Take fatal mining accidents. Between 2010 and 2015 there were 75 fatalities primarily caused by pit wall failures, the most significant being that of 2015 when 10 miners were killed at Pepper Creek, Region 8. With no safety gear provided and often barefoot, young men are being sacrificed by gold operators who are seldom prosecuted for what is their blatant negligence. Murders and crime in general related to the industry are rampant in the interior, along with prosititution encouraging the spread of HIV. The effects upon some Amerindian communities has been disastrous despite laws designed to protect them. Both the Inter-American Commission on Human Rights and the UN Committee on the Elimination of Racial Discrimination have investigated violations at Isseneru and at Chinese Landing respectively.
As for the environment, the industry has paid lip service to the Minamata Convention on eliminating mercury while continuing to pollute our nation’s rivers and destroying our rainforests. It makes one wonder how this government can credibly oversee the oil industry when it has few financial, environmental and worker safety regulations over its own indigenous sub-sector.
All of this is allowed to go on because of the wealth and power of the industry, corrupting a compliant government who puts its own political survival above that of its people and the environment. And it may not stop until the last ounce of gold has been removed from Guyana.
