Home' Trinidad and Tobago Guardian : June 30th 2013 Contents A28
Sunday Guardian www.guardian.co.tt June 30, 2013
Practice is located in South Trinidad
Attractive Remuneration package.
For inquiries call: 221-5784 0621076
You re on Sherriff Street,
Georgetown s lookalike for Ari-
apita Avenue. An impressive four-
storey steel frame structure is taking
shape. Street talk says it will top off
with a glitzy revolving restaurant.
The rumoured entrepreneur? A
well-known gold miner. Other min-
ers own a fair few of the shiny
SUVs which weave through busy
With other Caribbean economies
dragged down by tourism s troubles,
Guyana and Suriname have been
racing through a gold boom.
Guyana s boom has been driven
by local enterprises---small and mid-
scale miners who sift for gold close
to the tumbling rivers of the interi-
or.Omai, a big Canadian-owned
miner, closed its Guyana operation
in 2005. Until then, it turned out
three-quarters of Guyana s gold.
Local miners have made up the
slack, stimulated by rising prices. In
the two years to 2012, gold output
increased by 42 per cent.
An ounce of gold sold for
US$400 back in 2005. In the last
three months of 2012, the price
Not again. An ounce sold for just
US$1,280 last Tuesday morning. By
the end of Thursday, the London
"fix" was close to US$1,200. Look-
ing ahead, UBS Bank is talking
about US$1,050 by June next year.
If you want, blame Ben Bernanke,
chairman of the US Federal Reserve.
Almost two weeks ago, with gold
prices already edgy, he roadmapped
an end to the "quantitative easing"
which has kept interest rates low.
Big investors have dumped gold in
favour of interest-earning assets.
So where does this leave Guyana?
Nowhere good. Last year, gold made
up more than half of Guyana s
exports and 15 per cent of GDP. If
Guyana hits trouble, there could be
a knock-on effect for T&T
exporters and for investors with
Guyanese assets, such as Republic
By law, Guyanese gold must be
sold to the state-owned Gold Board,
which buys from miners at slightly
below the London price. In a rising
market, the board was tempted to
hold gold stocks---around 60,000
ounces, according to media reports.
If that number is close to target,
those stocks lost US$5 million in
value from Tuesday to Thursday
last week. Guyana s GDP is around
US$8 million a day. Should the
board sell now? Or sit tight? It s a
There is no need for a full-degree
panic. Industry insiders say
Guyanese miners can survive with a
gold price around US$1,000---they
bumped along with prices lower
than this until 2009. But output
"The road ahead is full of bumps.
Risks are increasing," says one oper-
ator. "Those who survive will be the
ones who can control their costs.
Suppliers will have to accommodate
"The whole country will have to
adjust," he adds. "The government
will be under pressure. They built
their budget on a higher gold price."
Overseas miners have prospected
Guyana for years, inching towards
Omai-scale investments. Canada s
Guyana Goldfields plans a US$600
million Aurora mine. ETK/Sand-
spring Resources, also Canadian,
recently completed a pre-feasibility
study for a US$400 million
Toroparu projects a 16 per cent
after-tax rate of return with the
gold price at US$1,200, rising to 34
per cent at US$1,750 per ounce.
Last December, the arithmetic
looked attractive; on Friday morn-
ing, it did not.
And Suriname? As always, there s
a slightly different spin to their
story. Maroons from the interi-
or and others hold small-scale
mining concessions but do not
always work them. That falls to
contractors, often Guyanese or
Brazilian, an arrangement which
has brought occasional friction,
even with a rising gold price. A
squeeze on profits would leave
both sides discontented; that
could lead to further conflict.
Unlike Guyana, Suriname has
a large-scale commercial
mine---Gross Rosebel, which is
owned by Omai s successor
company, Iamgold. Profits have
soared since it opened in 2004,
to the enormous benefit of the
Government s tax take.
Now, the company is moving
into hard-rock deposits which
will be costly to mine. It is
asking for low-cost energy and
warns trade unions not to
expect too many pay rises.
With falling prices, that too,
could spell trouble ahead.
The Government last month
signed an agreement with
Iamgold for expansion of Gross
Rosebel. Another agreement is
close to completion with
Alcoa s local subsidiary Suralco
and US company Newmont,
who want to mine gold and
bauxite in the Nassau moun-
The Government plans a
direct equity stake in these
schemes. It is working on a
US$500 million bond issue to
fund these and other invest-
ments. That is big money---
close to nine per cent of GDP.
Meanwhile, the central bank
holds ten per cent of its
reserves in gold. That stash was
worth US$90 million last
month and a good bit less
Crystal ball, anyone? Big
investors and central banks
have sold down their gold and
don t look likely to un-sell. As
the price slides, small investors
rush for the exit.
The other big market is bling
and bangles. In rural India,
jewelry is not just for looks; it s
a family cash reserve. If Gujarat
villagers start to see gold as a
risky buy, that would spell
trouble for Guyana.
GOLD BOOM BUST?
Alluvial gold mining
in the rainforest,
Links Archive June 29th 2013 July 1st 2013 Navigation Previous Page Next Page