THE falling price of gold on the world market is creating tremendous difficulties for the mining industry across the globe. Consequently, players in the industry are requesting help from their respective governments.Mine workers in Ghana (a country heavily dependent on mining) have called on government to sustain the mining sector in the wake of the falling price of gold on the world market.
According to them, the falling price of gold on the world market was affecting the sustainability of the mining companies and over 3,000 mine workers have been laid off by mining companies in the country due to the decline in the price of gold on the world market. Four hundred workers are also expected to be laid off early this year.
Prince William Ankrah, General Secretary, Ghana Mineworkers Union (GMWU), who was speaking at the Union’s National Executive Committee (NEC) meeting, said government has a part to play in salvaging the mining firms in view of the falling gold price.
He said governments in other countries such as the United States of America were able to bail out companies during the global economic meltdown and urged the government of Ghana to do the same.
Ankrah called on the management of mining companies to put the right measures in place in order to contain the shocks of the cyclic fall of the gold price on the world market.
According to him, studies had shown that prices of gold and other precious minerals usually fall each decade, which often presents critical challenges to players in the industry.
The situation requires that players in the mining sector reposition themselves in the face of possible mines closure and redundancies, Ankrah said.
He suggested that the mining companies invest their earnings to enable them to adequately prepare during soaring prices of gold and other precious minerals.
Ankrah said the situation could worsen if nothing changes, urging the mining companies to learn their lessons and adjust to the situation.
After peaking at US$1,921.15 an ounce on the world market in September 2011, the price of gold fell to as low as US$1,180.50 in June, last year, the lowest price since 2010.
Analysts have predicted that the price of gold will average US$1,000 in 2014 and US$840 in 2015, because a stronger U.S. economy will limit the appeal of gold.
Our mining industry, which in recent years has seen a significant growth due to massive foreign and local investments in gold-mining, is also experiencing serious challenges. Unfortunately, even though last year’s gold declaration which was our highest ever, (458,000 ounces), it will not benefit the mining industry much because of falling prices on the global market.
The Guyana Gold and Diamond Miners Association (GGDMA) at its first meeting for this year expressed the challenges which gold miners are facing as a result of the falling prices of gold and appealed to President Donald Ramotar for the government to implement relief measures to the mining sector.
The President’s response was most positive and heartening as he assured miners that his government will be analysing the situation with a view to implementing appropriate relief measures.
The President promised to ensure the relevant ministries forge closer relations with the association’s executive body to deal more effectively with issues, and to determine what assistance the government could render.
With regard to miners who are experiencing difficulties in terms of having their equipment re-possessed by the banks, the President said government will try to intervene to bring some relief to affected miners.
He pointed out that situations such as these highlight the need for hire purchase legislation in Guyana and assured that his government will be taking steps in this regard.
In terms of the cost for reclamation, the President reiterated the importance of environmental issues, and said there are enormous benefits to accrue from sustainable mining practices and protection of the environment.
“We have already started work to create nurseries…we will help those very small miners to reclaim so that they wouldn’t have that expense. The GGMC will be part of that. For the medium-scale people we will try our best to provide the materials for them to do so, but the large miners will have to do it themselves,” the President said.
He also committed to granting duty-free concessions to miners for the acquisition of new technologies that will minimise, if not eliminate, the use of harmful substances such as mercury in the sector. He also informed that his government can positively consider the reduction of property rentals.
As it relates to duty-free concessions for the four-door pickups, he said while the matter could be favourably considered, this will be done on a conditional basis in terms of gold declaration and taxes that must be paid for workers at mining camps.
However, this issue is not a one-way street and miners should also explore ways and means of cutting costs of production by investing in modern technologies which are more efficient and which increase productivity.
Experts have indicated that every 10 years there would be a significant drop in gold prices and therefore miners should gear and prepare themselves during the good times to meet the challenges of this price cycle.