The agreement reached with the Alcoa for the transfer of its shares in Aroaima Bauxite Company to the Guyana government for US$1 will enable it to achieve a cash-neutral status for 2002.

Speaking with reporters at a ceremonial signing of the agreement on Friday at his Wight's Lane office, Prime Minister Hinds said it signalled "agreement with the major customer, Sherwin Alumina Plant (BPU-R) located in Corpus Christi, Texas and the major contractors (Viceroy Shipping Ltd, J P Knight Limited and Boskalis International bv), which will enable a cash-neutral position for ABC for 2002."

Stabroek News understands that the agreement with the Sherwin Alumina Plant (BPU-R) provides for it to purchase bauxite at US$19 a tonne.

In its letter earlier this year to the ABC board, BPU-R had indicated that it would only purchase its bauxite from ABC next year if it matched the US$17.14 per tonne at which it said it could obtain it from other sources. Last year, it purchased bauxite at around US$27 per tonne.

BPU-R's letter followed its reduction earlier in the year of the amount of bauxite it had agreed to purchase from ABC this year.

About the givebacks to match those of the contractors, the Prime Minister said that "ABC is currently engaging the bauxite union, the bargaining agent for ABC employees, on the terms for 2002."

Prime Minister Hinds said that the cash neutral position was premised on ABC being able to produce and sell 1.4 million tonnes of metallurgical and chemical grade bauxite next year, achieve savings through reducing payments to the contractors and cuts in the wages bill for both expatriate and local staff, having a net working capital in excess of US$12 million and a net equity position after the conversion of ABC's US$68 million to Alcoa in excess of US$45 million.

The Prime Minister was reluctant to say whether the reduction in the wage bill for the local workers would take the form of reduced rates of pay or reduced hours of work, explaining that it was for the ABC management to decide.

As for the expatriate workers, the Prime Minister said that a management contract would be signed to replace the one with Alcoa. The contract would provide for some of the managers at present employed by Alcoa to continue with ABC in their personal capacities as part of a five-man management team.

The agreements with Alcoa and the major contractors were signed

by the Prime Minister on behalf of the Government of

Guyana, Winston Brassington on behalf of National Industrial and Commercial Investments Limited (NICIL), Robeson Benn on behalf of ABC, and Neendkumar on behalf of AMC. (AMC is registered in Guyana and is the fully owned operating subsidiary of ABC which is registered in Barbados.)

Stabroek News understands that these agreements were signed earlier in the day before the Wight's lane ceremony at ABC's Lamaha Street head office.

With the ABC now wholly owned by the Guyana government, Brassington and another director to be named will replace the two Alcoa directors on its four-man board.