Lies, Damned Lies and Statistics… The hidden facts about the gold sector

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Spanning some 83,000 square kilometers, Guyana continues to standout within the South American and Caribbean regions as one of the gold-rich envies of the world.
Already, the sector has been showing unprecedented production and has even buttressed the nation in the soil of economic growth for over two consecutive years.
In fact, national statistics show an upward trend in the declaration of gold in the sector.
According to Guyana’s Bureau of Statistics, the latest data on gold production showed that there was a total declaration of 63,089 ounces for February alone, a massive increase from 58,485 ounces which was attained during the same month last year.
While investors are indeed in their right to be enthralled by this booming sector and its rich potential, there are some worrying factors which statistics do hide. In this piece, we shall highlight just a few.

CORRUPTION/ POOR MONITORING
Natural Resources sectors across the world are notorious for attracting elements of corruption, and in Guyana’s case, the situation is no different. Guyana’s authorities and the relevant officials within the sector have been grappling with the various forms of corruption taking place, with the most worrying being smuggling.
Guyana’s mining sector abounds with a large number of small and medium scale producers. But the desire to have a higher price for their valuable yellow metal leads to miners being lured over Guyana’s borders into neighbouring markets like Suriname, Venezuela and Brazil. Most do this to also avoid paying the required seven percent royalties to the state.
There have also been instances of collusion to defraud the state between miners and officials who are expected to monitor the system. Additionally, there are reported incidents in the local media of gold being smuggled by the millions to foreign borders. Unfortunately, the investigations into these incidents remain at a standstill. But corrupt acts within the sector are just one of the many problems affecting this sector.
Due to the large scale of mining in Guyana’s interior region, one of the biggest problems facing the authorities of the day is the lack of adequate manpower to patrol the sector. This has resulted in a constant flouting of mining regulations. Guyana’s Forestry Commission, Guyana’s Miners Association and even the Government have bemoaned the fact that resources to properly patrol and keep those within the sector in line are limited. To date, Guyana is still unaware of how much it has been losing in this sector, in terms of revenue, to other neighbouring states.

NON-COMPLIANCE
Non-compliance by miners to regulations remains one of the biggest challenges facing mining administrations. The fact that mining activity in Guyana is geographically scattered over vast, mostly uninhabited, heavily-forested territory creates its own set of difficulties. Efforts to increase compliance levels may be beneficial if the causes of non-compliance among small miners are differentiated. These distinctions are important in designing education and enforcement tactics. Non-compliance can be due to or facilitated by four conditions:
— total or considerable ignorance of the laws;
–total or considerable disregard for the laws, even though the miner is aware of the laws;
–total or considerable ignorance of the harmful effects to oneself, to others, and to the environment when the unlawful action is practiced; and
— total or considerable disregard for the harmful effects to oneself, to others, and to the environment when the unlawful action is practiced, even though the miner is aware of the consequences.
The limiting factor to the Guyana Geology and Mines Commission (GGMC)’s ability to enforce regulations is its manpower and financial resources. Despite its best intentions, too few officers are on the ground, a situation that has led to sporadic enforcement of the present regulations. With the imminent enactment of more complex mining and environmental regulations, the inadequacy of GGMC’s capacity as a monitoring and enforcement agency must be dealt with urgently.
In the last decade, the industry has introduced new technologies and methods that have ravaged the environment more than previously. Missile dredging, hydraulicking, large earth-moving equipment, and the reported liberal use of mercury by Brazilian miners have placed greater strain on the environment and on regulatory agencies.

ECONOMIC DECLINE
The most reputable global organisations, such as the International Monetary Fund (IMF) and the World Bank, have projected a downward decline in growth, not only for the global economy, but for the Caribbean Region as well. As such, Guyana has been caught in the fray.
As mentioned earlier, the outstanding performance of the gold sector is what has supported the economy’s continued positive growth rate from 2015 to now. The gloomy nature of the economy’s performance in 2016 saw government forecasting a 2.6 percent growth rate. Gold, however, saved the day and pushed the growth rate up, thereby leaving government to revise the growth rate upward to 3.3 percent. In fact, gold’s performance is even responsible for Government projecting a rather bold 3.8 percent growth rate for 2017.
Once again, this is testimony that the gold sector, in particular, is doing a fantastic job. But if we were to remove the production figures of the gold sector, what picture would be before us regarding the health of Guyana’s other traditional revenue earners?
The production figures of the nation’s other traditional revenue earners such as rice, sugar, timber and bauxite all showed startling declines from 2015 to now with no improvement possible in the near future.
On the surface, one might think that the economy, with its 3.8 percent projected growth rate, is in the clear or is in good standing, but if you are to remove the current production figures of the gold sector, you would be left with a worrying picture. In fact, the nation’s growth rate would not be projected to show an increase but rather a decrease for 2017.
Even though the gold sector has been performing at an outstanding level each month, the Government has not been blindsided by this. It has assured citizens, and even the nation’s investors in this sector, that it is certainly determined to address issues within the industry.
Towards this end, the Government has announced that it will be looking to reform a number of the laws guiding the sector so as to remove loopholes for abuse. Also completed is a policy paper and a strategic plan of action to strengthen the monitoring and enforcement arms of the industry.
It has also been noted that, of the range of environmental problems in mining, the investigation and implementation of corrective measures to deal with turbid waters have clearly been given priority by the Government. This is according to the Ministry of Natural Resources and the Guyana Geology and Mines Commission.
In a detailed report, it was noted that clear deadlines were set by which the issues affecting the sector must be resolved.

 

(Article taken from the Guyana Inc Magazine Issue 27)

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