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THERE is now some amount of relief for stakeholders in the mining sector as the market price for gold has shown an increase steadily around US$1330 per ounce.
Minister of Natural Resources and the Environment, Robert Persaud, during a recent interview, said, “The reality has shifted, we were anxious as well as the mining community and we shared that anxiety as to the unpredictable nature of gold prices, given the importance of this ministry and the investments made.”
He said discussions are ongoing to come up with measures to cushion the situation and these discussions will continue, but the Ministry of Natural Resources and the Environment will have to establish a “floor price”. There will be need for a standard or cut off price for gold. Once those measures are approved by the government, they will be activated.
There are some current measures which are being built in, such as the royalty rate which states that there will be a 2% drop in the rate if the price hits below US$1000. The minister said, “We are happy the price has bounced back up, not to the levels they were, but certainly to a level that I believe will bring about some relief and comfort. Already we are seeing some positive signs from the miners, given the importance of gold to the Gross Domestic Product (GDP).”
He added that the gold market is a very unpredictable one, as it depends on a number of factors, and the Government of Guyana does not control any of those. When the price drops, the entire global market stands to suffer. “The market is unpredictable; it is difficult for one to determine whether there will be an increase or decrease in the price. It’s like a gamble, taking a chance.”
The recent rebound in gold is only transitory. From estimation, on the current levels, bullion prices may see another 25% to 30% correction. Among the reasons for this is the way the price tends to spike when there are serious economic, financial and geopolitical risks in the global economy. It must be noted that gold performs best when there is a risk of high inflation, as its popularity as a store of value increases.
Minister Persaud said, “What we have to do is to continue to work with the sector, manage the cost, ensure there is greater efficiency, greater recovery, and ensure what is done is environmentally, socially and economically viable.”
When the price plummets, it provides opportunities for operators to introspect on the state of their operations, the business models which they have developed and have been using, because they have been premising them on high gold prices and certainly it causes some level of re-evaluation, the minister stated.
If operators stop basing their business models on high gold prices alone, they will be more prepared for an unexpected drop in the market. There will be better planning and better production, so if the market prices drop, they will not suffer much because of better preparations.
Earlier this month, the Ministry of Natural Resources and the Environment and its regulatory agencies in the mining sector, the Guyana Geology and Mines Commission (GGMC) and the Guyana Gold Board, met with the Guyana Gold and Diamond Miners Association (GGDMA), when several proposals were submitted and discussed for consideration to mitigate the falling gold prices. (GINA)
Minister of Natural Resources and the Environment, Robert Persaud, during a recent interview, said, “The reality has shifted, we were anxious as well as the mining community and we shared that anxiety as to the unpredictable nature of gold prices, given the importance of this ministry and the investments made.”
He said discussions are ongoing to come up with measures to cushion the situation and these discussions will continue, but the Ministry of Natural Resources and the Environment will have to establish a “floor price”. There will be need for a standard or cut off price for gold. Once those measures are approved by the government, they will be activated.
There are some current measures which are being built in, such as the royalty rate which states that there will be a 2% drop in the rate if the price hits below US$1000. The minister said, “We are happy the price has bounced back up, not to the levels they were, but certainly to a level that I believe will bring about some relief and comfort. Already we are seeing some positive signs from the miners, given the importance of gold to the Gross Domestic Product (GDP).”
He added that the gold market is a very unpredictable one, as it depends on a number of factors, and the Government of Guyana does not control any of those. When the price drops, the entire global market stands to suffer. “The market is unpredictable; it is difficult for one to determine whether there will be an increase or decrease in the price. It’s like a gamble, taking a chance.”
The recent rebound in gold is only transitory. From estimation, on the current levels, bullion prices may see another 25% to 30% correction. Among the reasons for this is the way the price tends to spike when there are serious economic, financial and geopolitical risks in the global economy. It must be noted that gold performs best when there is a risk of high inflation, as its popularity as a store of value increases.
Minister Persaud said, “What we have to do is to continue to work with the sector, manage the cost, ensure there is greater efficiency, greater recovery, and ensure what is done is environmentally, socially and economically viable.”
When the price plummets, it provides opportunities for operators to introspect on the state of their operations, the business models which they have developed and have been using, because they have been premising them on high gold prices and certainly it causes some level of re-evaluation, the minister stated.
If operators stop basing their business models on high gold prices alone, they will be more prepared for an unexpected drop in the market. There will be better planning and better production, so if the market prices drop, they will not suffer much because of better preparations.
Earlier this month, the Ministry of Natural Resources and the Environment and its regulatory agencies in the mining sector, the Guyana Geology and Mines Commission (GGMC) and the Guyana Gold Board, met with the Guyana Gold and Diamond Miners Association (GGDMA), when several proposals were submitted and discussed for consideration to mitigate the falling gold prices. (GINA)
