Stabroek News
April 23, 2001

Alcoa World Chemicals has submitted to the government preliminary estimates of the likely cost of production of bauxite with efficient management in Guyana. Prime Minister-designate Sam Hinds expects a meeting, to take the firm's interest to the next stage, will occur when Guyana returns to normality.

Alcoa, based in Pittsburg, USA is the world's largest aluminium manufacturer. Earlier this year, it conducted a due diligence exercise on the Berbice Mining Enterprise (Bermine) operations.

Radex Heraklith (RHL), the world's largest user of refractory bauxite has shown interest in the Linden Mining Enterprise and Hinds said that this group had verbally expressed continued interest in this operation and a formal proposal was expected soon.

Hinds said that the summary document by Alcoa, the new owners of Reynolds International, which had a 50 per cent stake in the Aroaima Bauxite/Mining Company (ABC), confirmed what was public knowledge. That is, the cost of producing bauxite, because of the heavy overburden in Guyana, was higher than in other places. While Hinds would not say what the projected cost of production was, sources indicated that it was likely to be between US$20 per ton to US$30.

He indicated that further interest by Alcoa will depend on how much Guyana would be willing to give up to make Alcoa's investment economical.

Alcoa, a world player in metallurgical bauxite, has expressed interest in three different arrangements here. It is looking at what could be had from a merged Bermine and ABC operation. Hinds said that the government's position was that once no one loses in such a scenario and opportunities were expanded, it would have no objections.

The firm is also looking at the possibilities of developing other bauxite deposits available in Guyana at areas such as Tiger Jump, Moblissa and Imbaimadai among other areas. Hinds said that if the volume produced was large enough, say more than two million tonnes per year, the cost of production could drop to around US$20 per ton. However, the reserve will have to last for about 30 years and the market will have to be available to make this feasible.

The third option open to Alcoa was to also look again at high-alumina material not pursued earlier in areas such as Kopinang, Kamarang, Waramadong, Imbaimadai and through the Pakaraimas with known laterite deposits. Hinds said that the firm was interested in finding out whether the occurrences were sufficient to justify further work.

Alcoa, Hinds said, was pursuing all of the options open to it, doing a literature review and checking the situation on the ground at the same time.

The issue of cost of production also confronts Radex Heraklith, which is interested in acquiring the Linmine operations.

Given the current political climate, and even after this is resolved, it would likely take some time before it is known clearly which direction the interest being shown by these firms is headed.