Quest for bauxite entities heats up -bid deadline extension likely By Gitanjali Singh Stabroek News August 6, 1999 RASC 2000 of which CE Minerals of the US is a major stakeholder and Harbison Walker and Texas Ohio Energy yesterday signalled serious intent on winning control of the bauxite entities up for privatisation. Harbison Walker and CE Minerals are avid competitors on the world market in the area of refractory grade bauxite and the core operation of the Linden Mining Company (LINMINE) is production of this bauxite. "We are very serious about our interest in LINMINE," David Johnson, vice-president of CE Minerals asserted yesterday. RASC 2000, which comprises a host of local and overseas interests, but in which CE Minerals is the major player, has only put in a bid for LINMINE. Other investors in RASC 2000 include Assad Ishoof and Rudy Chandra as well as former chairman of LINMINE, Kim Kissoon. On the other hand, the consortium in which Harbison Walker is a key player is keen on acquiring control of both the LINMINE and Berbice Mining Company (BERMINE) operations. "We have been working on this project for over a year now. We have many hundreds of thousands of US dollars invested in our research and development to make a proper bid for this. We have gone a long long way towards redefining the products, mining plans... we are very much into this project," Buddy Exum of Texas Ohio, one of the stakeholders of that consortium, stated yesterday. The government yesterday hosted a privatisation workshop at Le Meridien Pegasus to provide more details to investors short-listed to bid for the operations of LINMINE and BERMINE and has been asked to extend the bid deadline from this month to the end of October. However, Stabroek News understands that the deadline is likely to be extended to the end of September, which will see the two entities privatised before the end of December if all goes well. Both RASC 2000 and Billiton, another world player in the bauxite sector have asked the government to extend the deadline. Iain MacDougall, a senior Billiton official, said that it was highly ambitious to expect bids for the two entities by the end of this month. Billiton has also been prequalified to bid for control (60%) of both LINMINE and BERMINE, but has not decided whether it will be submitting a bid. "We are here to investigate. Whether we will submit bids remains to be seen. We are conducting a study with a view to be in a position to make our minds up on that issue," said MacDougall. Billiton is in the business of making aluminum, but is looking to see whether it can combine its need for bauxite with making the industry in Guyana survive. "LINMINE and BERMINE operations--refractory grade and chemical grade bauxite--are a business we are currently not in," said MacDougall. However, Billiton is exploring bauxite stocks for its alumina operation in Suriname and is looking at Guyana as one possibility, MacDougall told Stabroek News. This is with a view to filling the void when the mine life in Suriname expires, though there are possibilities in Suriname for other mines. MacDougall said he would be returning in two weeks with a geologist and mining engineer to do further studies on the two operations locally before the company decides on bidding. Another operator similar to Billiton is Reynolds, which is keen on acquiring control of BERMINE. But Larry Grace of Aroaima Mining - in which Reynolds is a key shareholder - refused to speak on that company's interest in BERMINE when approached yesterday. Alcoa World Alumina was not represented at yesterday's workshop but has been short-listed to bid for both BERMINE and LINMINE. Five companies/consortia have been short-listed to bid for control of either LINMINE, BERMINE or both. Those short-listed to bid for both are Alcoa World Alumina, Billiton, and the consortium of Texas Ohio, Harbison Walker, Possehl and Morrison Knudsen. These are all serious players in the world bauxite sector. Short-listed to bid for BERMINE alone is Aroaima Mining and RASC 2000 for LINMINE alone. Exum said his consortia is in a position to submit its bid by this month end, and indicated that if its bid wins, a single company will run both operations. He argued that his consortium can triple LINMINE's sales of refractory grade bauxite. He also boasts that the consortium has much of the expertise required to turn the bauxite industry in Guyana around. He indicated that it is in Texas Ohio's interest to have the bauxite operation flourish or its investment in the Linden power supply will be of no use. "We are looking at this long-term and we are seeing it as a strategic investment to have long-term supply of materials that we know we are going to be internally using in our group," said Exum. Johnson of CE Minerals on the other hand, whose company is a worldwide player in industrial minerals and has a number of interests in development outside the US, said the challenge today was to ensure its operation is profitable given the cheaper Chinese and Brazilian bauxite on the world market. "We have to make sure it is a profitable venture and this is why we are here today to try and learn more about what exactly is going to be available in the privatisation of LINMINE...," said Johnson. He feels the bid deadline should be extended by a month at least. Prime Minister Sam Hinds yesterday opened the workshop and in brief remarks stated that Guyana still has some of the largest quantities of the best bauxite to be found in the world. He noted that the challenge is to find ways and arrangements so that it can be worked profitably, which has been very difficult to do over the past 20 to 30 years. Head of the Privatisation Unit, Winston Brassington, on the other hand, went through the privatisation process and expectations with investors/investor groups present at yesterday's workshop. Investors will be bidding for 60% equity in a new company to be formed and ten percent of the government's remaining 40% will be for employees. The other 30% may be divested by the government at a later stage in a public offering. The new company like the power company, will be assuming a new balance sheet and the monies from the share subscription will go into the operations. As incentives, investors are assured of a waiver of the 6.25% withholding tax, removal of the tax and duties on spares imported, zero consumption tax and duties on inputs and a five-year waiver of the ten percent tax on fuel. They will face the 1.5% royalty on the product, cost of production or revenues, whichever is higher and the 35% corporation tax. A © page from: Guyana: Land of Six Peoples