Gold smuggling…Industry calls for tighter border checks

Gold smuggling…Industry calls for tighter border checks

JUNE 12, 2014 | BY  | – dealer buys the most, declares the least

Stakeholders of the gold industry are calling for tighter border controls amidst claims of smuggling to Suriname.

Stakeholders of the gold industry are calling for tighter border controls amidst claims of smuggling to Suriname.

Stakeholders in the gold mining sector yesterday called on Government to tighten security at the country’s borders, including those with neighbouring Suriname, amidst shocking reports of a large-scale smuggling operation.

At the centre of the allegations is a dealer from the North Georgetown area who is being accused of buying hundreds of millions of dollars in gold from miners and instead of declaring it to authorities, which would attract a mandatory seven per cent tax and royalty charge, reportedly opted to sell it in Suriname.

That neighbouring country has a mere one per cent, making it an attractive market for smugglers. The gold is sold in Suriname to buyers in the US.
It is estimated that Guyana would have lost as much as $2.7B (US$14M) in taxes from the scheme, just for the first five months of this year.
However, stakeholders say they have been fearful of speaking on the issue because of the dealer’s close connections to the Office of the President.
Following the article yesterday, several medium scale miners also confirmed that smuggling is indeed taking place.
It is believed that the well-organised smuggling operation goes back over five years.
The dealer, according to officials of the Guyana Gold Board, only received his licence about two years ago.
Yesterday, following the report of smuggling allegations, several Government inspectors descended on the operations of city dealers.
However, stakeholders are emphatic that the inspectors are on a wild goose chase.
“What are they looking for? If I buy some gold and do not record it, how will they find it? They should instead be examining ways on how to better patrol the borders to stop the smuggling,” one medium scale miner said yesterday.
The issue of gold declaration took the limelight last week after Government expressed alarm over the poor showings.
Declarations dropped by 20 per cent to 165,595 ounces, for the first five months of this year, compared to the same period last year.
For the first half, ending June 30, Guyana had been projecting a target of 242,281 ounces, an uphill task.
Minister of Natural Resources, Robert Persaud, met the Guyana Gold and Diamond Miners Association (GGDMA), the Guyana Gold Board and the Guyana Geology and Mines Commission, among other stakeholders, after it became clear that the targets were way below expectations.
While poor declarations have been blamed on some level on hoarding, miners blankly refused to take the fall.
Instead, it was made clear that Government would have to start seriously looking at the smuggling angle.
Government would be worried because a drop in revenue would seriously dent the country’s projections on revenue for this year.
Gold has been the largest foreign currency earner in recent years, raking in US$600M last year.
The situation took a turn this week when complaints of the smuggling started pouring in, as police and GGMC readied for an extensive enforcement campaign.
According to officials of GGDMA, members complained that the dealer is being protected because of his close links to the Office of the President.
It is estimated that at least 150,000 ounces of gold was smuggled to Suriname by the dealer for the year. Using the seven per cent royalty and tax rate charged by Guyana and an average of US$1,300 per ounce, officials from GGDMA and the Gold Board believed that as much as US$14M in revenues was lost to Guyana.
According to figures supplied by the Guyana Gold Board, five of the 14 dealers made declarations last year.
Pure Diamonds and Excel Minerals, two Brazilian companies, declared 32,000 ounces and 8,770 ounces respectively.
El Dorado Trading records indicated 95,000 ounces, while Mohamed’s Enterprise was the largest buyer with 133,000 ounces. Dinar Gold was the lowest at 267 ounces.
The dealer in question has reportedly been aggressively approaching miners and offering as much as $230,000 per ounce, about $8,000 to $10,000 above the other dealers.
The US dollars from the Suriname sale had reportedly allowed the company to pay its customers with their gold in US dollars.
“Like we said before, this is a small society where everybody knows what is happening in the gold mining industry. We cannot pretend that nothing is happening and allow it to be swept under the carpet.
“There is a reason why our declarations fell by 20 per cent and we are saying that smuggling is the reason.
“We are hoping that President Donald Ramotar is taking note.”
Insiders have estimated that in total, as many as 250,000 ounces may have been smuggled to Suriname this year by the dealer and other parties.
“There is one other point to note. Small miners, especially because of the drop in gold prices, literally cannot afford to hoard. They have to sell. They live month to month.
“Business is not so good with equipment companies even starting to repossess their excavators. Naturally, the miners would sell to the dealer with the best price,” a senior GGDMA official said in confirming that its body is aware of the complaints.
This year, Government is targeting a recording breaking 484,562 ounces.
Last year’s gold declaration was the largest ever at 481,087 ounces. Gold export earning was a massive US$648M as at December 31, last.

Also read:

Govt. worries as gold declarations plunges by 20 percent

JUNE 5, 2014 | BY 

Gold declarations have plunged with a worried Government yesterday urging the mining body to help reverse the situation.
The current data trend for the first five months of this year has shown a signification decrease in gold output, when compared to the same period for last year. For January to May, total gold declaration amounted to 165,595 ounces as compared to 204,970.42 ounces for the same period last year.

The poor showing led to the Ministry of Natural Resources and the Environment writing the Guyana Gold and Diamond Miners Association (GGDMA) on Tuesday.
The letter, signed by Minister Robert Persaud, and addressed GGDMA’s president, Patrick Harding, made it clear that the figure was a 19.21% decrease for the corresponding period of 2014, over that of 2013.
Currently, the level of declaration for 2014 is only 34.17 per cent of the targeted amount for the year which is set at 484,562 ounces.
For the first half of 2014, the Guyana Gold Board was targeting 242,281 ounces. “It must be emphasized that whilst the price of gold is lower than that which was previously expected, the level of gold mining operations have improved and the data sets have indicated that production is continuing,” according to the letter by the Minister.
“The gold mining sector of our economy has been a pillar of improve economic well-being for
Guyana. This has been achieved because of the consistently rising levels of gold declaration over the last decade. The importance of the gold mining sector to our economy cannot be over emphasized since gold has been the largest earner of foreign revenue for the last seven years.”
Yesterday, the Ministry announced that a meeting was held at the GGDMA and licensed gold dealers to consider ways to improve the situation.
Present at the meeting held at the Ministry’s offices at Brickdam were Minister Persaud, Chairman of the Guyana Gold Board; Dr. Gobind Ganga, along with GGDMA executives and private dealers.
A number of measures will be taken including public sensitization and a proactive monitoring and enforcement drive by the Guyana Gold Board regarding undeclared gold transactions.


Stakeholders met yesterday to map measures on how to boost gold declarations.Stakeholders met yesterday(june 5) to map measures on how to boost gold declarations


The measures will also include enhanced inter-agency coordination between law enforcement agencies and the Guyana Revenue Authority.

The Guyana Geology and Mines Commission (GGMC), which regulates the industry, will also start enforcement of reporting obligations by miners.
The police will soon be moving to launch a crackdown on illegal gold trading entities across the country.
“Stakeholders pledged their support for these measures. The Minister emphasized that the Government of Guyana remains uncompromising in its efforts to ensure full compliance with the laws to deal with these issue of undeclared gold and reports of smuggling,” the Ministry said yesterday in a statement.
Last year’s gold declaration was the largest ever at 481,087 ounces. Gold exports was a massive US$648M as at December 31.
With sugar struggling and rice production holding up, surpassing a record 500,000 tonnes last year, Government would want gold to continue raking in its millions.
However prices have plunged from US$1,800 per ounce high to over US$1,200 last year.
Miners have been urged to lower their costs to sustain their operations.
The spinoffs from gold have been major for the economy with cash-rich miners buying up real estate, equipment and vehicles.
Workers have been flooding the gold fields in the hopes of making some quick bucks. (Leonard Gildarie)

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