(Georgetown May 4th 2019) The Guyana Gold and Diamond Miners Association (GGDMA) rejects the recently published Extractive Industries Transparency Initiative (EITI) report as largely inaccurate and uninformed about the nature of the local small and medium scale gold and diamond mining industry. It is clear, that there were no competent local mining experts who worked on the EITI report.
This report puts the entire small and medium scale industry in jeopardy and once again it spotlights the government’s continued drive to miniaturise the local sector in favour of foreigners. This report is another salvo in the war against the small and medium scale miners. The report’s apparent purpose is to sway international opinion against local miners and clear a path for the government to implement more heavy-handed measures to favour allocation of lands to foreign investors. The GGDMA outrightly rejects the continued efforts to cripple the local industry, while foreign investment is necessary it cannot be done at the expense of local miners.
The Government of Guyana remains steadfast in its intent to brand local miners as villains, when the very miners have been carrying Guyana’s economy forward, even before oil was a thought. The new trend to abandon local development for new foreign friends is becoming more unpalatable to the local extractive sector. The GGDMA wishes to remind the Government of Guyana that all of the large-scale mines that have operated in Guyana would not have been possible were it not for the early prospecting work done by small and medium scale miners. The mining industry owns more than 60% share of the export earnings of Guyana. Local investment means no repatriation of capital or profits: money stays in Guyana.
The GGDMA also recognises that the EITI report, by demanding disclosures of ownership, valuations and profits in a manner outside of the law, will expose local miners to additional criminal targeting and security risks while also creating an easy ledger for bandits to carve up local operators. The GGDMA maintains that all the necessary local agencies (GGMC, Guyana Gold Board and the GRA) are already in possession of this information and cannot see why an additional disclosure should be made that only places miners in additional danger of being targeted by criminals. In addition to security concerns from local criminals, our nation is located next to the most destabilized country in South America where criminal gangs rule the land.
Over the last few years there have been continuous incursions by these types of individuals over our porous borders with reports of robberies taking place in the interior after which these criminals slip back over to Venezuela undeterred and no doubt emboldened. We cannot idly stand by and have information publicized that will further whet the appetite of these criminals to target specific miners’ operations and put them and their staff in the way of serious harm and death. All information is available via the Guyana Gold Board, the GRA or the GGMC and can be accessed by competent authorities if required.
There are several other specific areas which are particularly difficult for the GGDMA to understand how the “experts” came to the specific conclusion. The report refers to “the rampant abuse of the system that governs the allocation of mineral properties.” Firstly, while many lands are allocated through a “first come first serve” application process, the report conveniently makes no mention of the fact that many of the lands have also been acquired by open public bidding auctions, where over the last decade miners have bid and paid to GGMC billions of dollars for the right to prospect and mine these lands. Secondly, the report clearly lacks an understanding of the concepts for land allocation with respect to size of mineral property.
The requirements for a large scale mine are: large capital investment such as Omai Gold Mines, Guyana Goldfield and Troy’s resources, large up-front investment for exploration, mineral inventory, Environmental Impact Assessment, feasibility studies, mine plan, mineral processing plant design etc. before reaching the production stage. These up-front expenses are often in the several millions UDS (which is very much lacking in the local business sector, which is more often than not raised on the stock market or through funding via overseas based large private financial institutions) hence is mainly done by large multi-national companies. It also requires a mining licence to operate.
The small and medium scale mining on the other hand, requires some amount of exploration, less detail environmental assessment, the feasibility is determined by the operator and is not a requirement for permission to work, very little up-front costs and is very suitable for local investors. The maximum size of a medium scale permit is 1200 acres, however, less than 5% is exploited.
In the cases where foreign large scale mining companies convert properties to large scale mining licenses, this only occurs in instances where the area has a massive proven reserve (in most cases 1,000,000 ounces or more) and the entire area converted will either be mined or utilized in a stage of the mine development.
Also, in all cases, the massive reserves to be mined are typically located in a concentrated area as the occurrence of these ores are located horizontally (parallel to the top soil) and vertically (from the surface to deeper levels of the earth, hundreds of meters in most cases). Whereas in the case of alluvial/ placer mining practiced by small and medium scale miners, it must be recognized that in this model the ore deposits found are much smaller (hundreds to thousands of ounces), are located horizontally (parallel to the top soil) at very shallow depts (less than 50 meters) and the occurrence most often sporadic. Therefore, in the case of small and medium scale mining a much greater top soil/ surface area is required for mining operations.
The notion that holding several medium scale permits together should be classified as a large scale and rent should be increased to reflect such is a clear lack of understanding. The investment for a land dredge/excavator set up is probably around $500,000 USD (100MG$+); due to the intermittent occurrence of alluvial gold that is very difficult to quantify, work ground flooding during rainy season and lack of water during dry season, these factors negatively impact the longevity of an operation in a specific area which makes return on investment (ROI) for such an investment highly unpredictable.
Coupled with this level of mining is the 5% royalty and 3% taxes off the gross production, the fluctuating gold and fuel prices, weather etc that an operator has to endure throughout the life of the mine to recover the initial and subsequent investments. In most instances, a medium scale miner needs to work continuously for at least five years before realizing a profit. Funding for medium scale and small-scale alluvial mining is solely garnered from self-funding where miners put up their personal cash and assets to fund their mining operation. There are no private banks in Guyana or institutions that would risk funding an alluvial mining operation, this is the case for even the most well established and historically successful miners.
This aspect of mining contributes significantly to the GDP of Guyana. Directly, by employment – each operation employs between 6-12 persons per outfit, and indirectly by goods- fuel, groceries, spares and services-transportation, repairs, surveys etc.
From reviewing the report, the author of the report apparently thought that the entire 1200 acres are mineralized and has gold and as such, by separating the permits the government and people of Guyana is being short-changed. This is far from the case. The large-scale companies receive Investment Development Agreement (IDA) where duty free is granted for equipment, fuel, spares etc. which more than compensate for the extra fees. Medium scale permit holders are paying for most of the land and of which only 5% is mined.
The sector is already in decline, proposing to put such additional burden on the local entrepreneurs that operate with tremendous uncertainties will further impact the communities and villages that depend on it for sustenance. The industry needs more roads to access mining lands, assistance with better techniques for recovery and environmental standards, access to finance and a regulatory system that is more modernized and freer from bottle-necks to ensure that the sector continues to contribute to Guyana’s economy. Raising the fees for mining permits are counter-productive and will be detrimental to the survival to this vital sector.
