GGDMA: 2017 Budget has no good news for miners

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…calls on Govt to re-examine measures to prevent collapse of industry

The Guyana Gold and Diamond Miners Association (GGDMA) has joined the flurry of critics of the proposed $250 billion 2017 National Budget, presented last Monday by Finance Minister Winston Jordan.

The Miners Association, along with the Guyana Women Miners Association (GWMA), called on Government to re-examine measures placed in the budget to ensure that the local Gold and Diamond Mining Industry does not collapse. It said the 2017 National Budget, along with the previously proposed three per cent reduction in the gold board price for gold and the removal of concessions to the sector, can only lead to lower declarations and a decline in the sector that would take the economy into a negative spiral.

“We would like to congratulate all the hard-working small- and medium-scale miners, without whose effort the country would have undoubtedly recorded negative growth. Despite the removal of our concessions, gold kept Guyana moving, when all other sectors have slowed down,” the Association said in a statement.

The Association also said however, that it is saddened that the 2017 Budget has no good news for miners.

“Despite championing the valiant efforts of miners, the Minister of Finance in the 2017 Budget has brought proposed measures that will hasten the sector’s decline. Already, despite the high declaration figures, there are clear signs of decline,” the GGDMA said.

It said the declarations this year were propped up by the two international companies, which contributed one-third of the gold won.

“Our figures indicate that local mining was down. The Minister himself has recognised that there has been a significant slowdown in investment in the mining sector. In the budget speech, the minister recognised the threats the industry will face in 2017 and stated: ‘The threat of gold prices declining in 2017, combined with rising oil prices and global issues such as de-risking and climate change, will pose a major risk to our economy that will demand enlightened management.’ We are shocked that despite this statement, no measures have been placed to help the industry regain its footing.”

Compliance challenges

The GGDMA said the 2017 Budget affects it in several ways. It went on to say that for some 30 years miners have been paying their taxes at the source and that there was no need to file additional taxes: “Now we are given the few remaining days of 2016 to completely realign the sector. A sector that, because of its reactive nature and remoteness of operation, has cash culture.”

GGDMA President Terrence Adams
GGDMA President Terrence Adams

According to the mining body, the sector is dominated by non-accountants and persons who are more familiar with machines than with books.

“We cannot see how the Government of Guyana expects compliance in such a short time. The cultural norms of the sector prevent us from adjusting to this new measure overnight. We cannot be placed on the same level of compliance with coastal based business, which have ready access to non-cash financial instruments. This move will target the compliant larger miners and force the small miners (who contribute the bulk of gold production) underground.

Guyana will lose in the long-term and our associations will be powerless to convince them to become compliant outside of their capacity. We urge the Minister to rethink this strategy. We remind the minster of his statement “one, one dutty build dam”. The men who are supplying the ‘one, one dutty’ cannot, overnight, comply with your requirements,” it said.

Hardships

The organisation said that while Government has forecasted a 35 per cent growth in the sector in 2016, careful examination will show that there has been a slowdown in the local small- and medium-scale operations. This, it said, is because of the hardships the sector has been facing. These include the removal of several concessions from the industry. It said despite the Minister’s utterances, none of these have been returned.

“The sector in 2015 did not have to pay VAT on heavy-duty equipment, matting, spares and other material used directly in the gold mining sector. In 2016 VAT was required on heavy-duty vehicles and a phased removal of all other concessions was implemented. We cannot do more with less,” the GGDMA lamented.

The GGDMA and the GWMO hopes Government understands clearly that without the restoration of concessions, the gold mining sector will see a decline rather than growth.

“If the concessions are not restored there will be a definite contraction of production. We will find it difficult to replace aging vehicles (an excavator has a lifespan of three to five years in the interior).

“The sector will see additional downtime due to additional costs for quality equipment and fuel. The sector will see higher costs for start-up and upkeep due to additional VAT on items previously acquired at concessionary rates.

“This downturn will see a significant spillover effect that will affect every sector of the Guyanese economy. There will be a fall in production and spending all around. This will make 2017 a very dismal year, one which we feel the government will not be able to tax itself out of.”

miningThe GGDMA said it is obvious the Finance Minister has not been properly briefed about what transpires in the gold and diamond mining areas of Guyana, since, if he did, he would understand that additional pressures do not help the industry.

“We are therefore extending an invitation to the Minister of Finance and the head of the GRA to accompany the GGDMA and the GWMO on a familiarisation visit to mining areas. This is an open invitation and we remain willing to facilitate the Minister at his convenience,” the body stated.

“We are calling on our sector Minister, Raphael Trotman, to make urgent and strong representation for the sector and to vehemently object to any measure that would lead to contraction of the sector.

“This is the opportunity for the Minister to demonstrate that he truly understands mining and the culture and pressures miners face. The 2017 Budget in its current form spells doom. The mining sector will decline without help” said the GGDMA. (Guyana Times)

1 COMMENT

  1. Some of you shoukd not be complaining about anything as you have put APNU in there. So just do what you have to do and stop moaning. They will also rig the next elections so you will have to endure the hardships. Good luck.

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