UNITED States-based bauxite firm, ALCOA has decided to sell its shares in the local Aroaima Bauxite Company (ABC) to the Guyana Government, a manifestation of its earlier expressed intention to walk away from the ailing bauxite industry here.

Prime Minister Sam Hinds yesterday said that ALCOA's decision to walk away was not "sudden", since the company had earlier signalled it intended to downstream its activities from bauxite mining to alumina and aluminium.

He, however, said the "Government is enthusiastic about continuing business with the Aroaima Bauxite Company, come January 2002," the Government Information Agency (GINA) reported yesterday.

ALCOA had initially proposed merging the Aroaima and Kwakwani operations, designed to ensure viable continuing bauxite activity on the Berbice River.

However, it had also stated its intention to sell its assets and walk way from debts incurred, GINA said.

Under the proposal some job losses would have resulted, but about 700 employees would have been retained, it noted.

GINA said the delays in adapting the ALCOA concept paper and further price reductions in the market place, resulted in decisions to cut cost geared around lower production and have the Government take on a cash-neutral basis, while keeping the door open for other investor participation.

Prime Minister Hinds maintained that the bauxite industry has been ailing for some time now, since both the Linmine and Bermine operations have been experiencing production shortfalls resulting in failure to deliver to customers.

He said that during its initial operations, Aroaima yielded significant profits.

According to GINA, he pointed out that formerly, the ore was within 40 feet of the surface, but later the depth increased to more than 100 feet from the surface.

This factor, coupled with the "softening" of the bauxite prices on other markets contributed to ABC's reported losses from around 1997, the agency said.

To keep workers on the job and the Bermine operations afloat, the Prime Minister said the Government has already worked out cost reductions with barging, trans-shipment and dredging contractors.

Under the arrangement for Aroaima to continue its mining operations, workers have opted for severance, with pay in December of this year and possible retirement in January 2002, rather than work with a wage freeze, GINA reported.

The total workforce of the Aroaima operations is about 460.

Earlier this month, the major players behind ABC's operations indicated their willingness to subscribe to what it took to keep the ailing company in operation, and promised to formalise what they have agreed to, in a legal and binding agreement before the end of the month.

Head of the Presidential Secretariat, Dr. Roger Luncheon told a news conference on October 3 that the most preliminary discussions among the major players of the company had been quite encouraging and during this month, efforts were being made to put in place the necessary legal framework that would bind the major players in their committed and collaborative efforts in keeping that company operational.

Luncheon said then that the major players behind ABC, those both active in the market and in production, had all indicated their willingness to subscribe to what it takes to keep the company in operation.

This, he said, was some departure from those "operational expenses" that were a part of the 2001 operation of the company.

According to him, that schedule of expenditure could not be maintained if the company were to remain viable.

He pointed out that all of the major players had agreed to make adjustment in all of the areas to produce, as neutral a position, to keep the company in operation. Those agreements, he said, were now to be concretised legally and put down in binding and formal legal terms.

"It is our understanding that the month of October is dedicated to that activity," he had informed reporters.

Luncheon said, too, that Cabinet was brought up-to-date on the results of the continued and aggressive pursuit by Prime Minister Hinds and his team in trying to ensure that ABC continues its operations in the Berbice River.

In addition, it was noted that Mr. Hinds and Cabinet had recognised the pivotal role for the industry in the Berbice River with the continued operation of the Aroaima Bauxite Company.

Four Directors of ABC, owned by ALCOA, met in Miami a few weeks ago and reviewed, reaffirmed and refined a number of positions regarding the future of ABC, Luncheon said.

The directors concluded at that meeting that neither ALCOA, nor the Government of Guyana was able to contemplate subsidy to ABC during 2002 or thereafter.

They also found that there was a growing recognition of a slowdown in overall economic activities in the bauxite, alumina and aluminum industries.

ALOCA had wanted the Government to define its position on the future of the operations here quickly and had signalled its intention to close down the operations and move on, if this was not done.