By Gitanjali Singh
Stabroek News
June 2, 2001

President Bharrat Jagdeo yesterday said that the recommendations of the joint committee on the bauxite industry would not be binding on the government, but rather be subjected to a review by himself and PNC REFORM leader Desmond Hoyte.

"I am sure we have a rapport where we can sit and discuss that [report]," Jagdeo said. He expressed the hope that all of the joint committees' recommendations would arise from consensus and there would be no need to further discuss them at the level of himself and Hoyte.

However, he said, if the committee on bauxite dissented and threw out the Alcoa proposal for the Berbice Mining Enterprise which the government has said it favoured, he hoped it would come up with a "practical and immediately implementable alternative" which will not be a cost on the Treasury, or take money away from the other sectors.

"I am willing to look at any alternative proposal but it must not be to test the market again. We want an alternative which is immediately implementable," Jagdeo asserted.

Briefing the media at the Office of the President yesterday, Jagdeo defended his government's right to adopt a position on Alcoa's proposal to merge the Aroaima Bauxite Company (ABC) and the Berbice Mining Enterprise (Bermine) operations. The government favours the proposal, which is to be subjected to a review by the joint committee.

Jagdeo said that despite the committee being in place, he would not abdicate his responsibilities as President and was willing to listen to others on the issue as well. He pointed out that the government had not solicited a proposal but received this following the merger of Alcoa and Reynolds. Reynolds owned 50 per cent of ABC and the government owns the other 50%.

He said the proposal from Alcoa came in the wake of the US and EU regulatory agencies ruling that the merged Reynolds/Alcoa operation had to shed some of its alumina plants to maintain competition in the industry.

Alcoa, the President said, when it came and visited the ABC operation in which it acquired 50 per cent interest via the merger, told the government that ABC would run out of ore deposits in two to three years.

Jagdeo said that the choice, with no additional ore, was to shut the ABC operations down. He said that Alcoa proposed that as both ABC and Bermine were making losses, the two operations should be merged and be restructured into a stable operation. This would mean that Everton had to be shut down and some 300 workers would be out of jobs.

However, the President said that Alcoa's proposal had to be considered in the context of the realities of the bauxite operations. Linmine, he said, had asked the government for US$8 million in subsidies and US$4 million for community works. Bermine had asked for US$5.6 million in subsidies. This would be equivalent to $3.2 billion or 25 per cent of the government's entire capital budget.

"That is the reality. Are we willing to say forget the roads and the schools?..." Jagdeo asked yesterday.

He said that Linmine and Bermine had been placed on the market three times with no takers in the last four years. He added that the country could forget about the proposal and continue, but raised the issue of the risks.

"Alcoa could still shut down the ABC operation as it is not too interested in bauxite now. Bermine is still loss making. Then there is the problem of the shipping facility which is costly to maintain," Jagdeo said, positing that he did not control those variables.

The President said that many were saying that the ore was like gold in the ground but if this were so then there would have been a mad rush to get into the bauxite operation in Guyana and there was no evidence of this. He said the nation could ill afford the academic type of analysis, which speculated on the future. As President, he said, he had to think about the workers.

He asked were he to go with the committee's recommendation if it said abort the proposal, who would take the blame for the future crisis which would hit the industry.

"If we do not go along with this proposal and we do not have an alternative, we run the risk of the entire bauxite operation in Berbice being shut down," Jagdeo said.

Jagdeo said he intended to take the proposal to the workers and to explain the situation to them. He said the government's current position could change if the joint committee came up with a better proposal.

He said he expected that the joint committee would consider the proposal and discuss it with stakeholders before it came to a conclusion. The President said he believed that the Alcoa proposal made good sense.

The company is proposing that the $57 million in debt of the merged operations be replaced by equity in the form of bauxite reserves from the government and equity injection by Alcoa. Jagdeo sees the merged operation as a good chance of allowing the company to lower its cost of production.