CAMBIOR investment in LINMINE is best option
--- Brassington
Guyana Chronicle
August 13, 2003
GINA - Head of the Privatization Unit and Executive Director of the National Industrial and Commercial Investments (NICIL), Mr. Winston Brassington, recently outlined Government's plans for the Linden Mining Enterprise (LINMINE) and its position with regards to CAMBIOR's investment in the operations.
During an exclusive interview with the Government Information Agency (GINA), Brassington noted that LINMINE had been operating without a profit for several years, especially in the 1970's, when poor reliability and supply allowed the Chinese to get in the international market.
He added, "By the early 1990's, Guyana's share of the refractory market had dropped from over 80 per cent in the 1970's to less than 25 per cent."
Brassington stated that by this time, Brazil had also acquired a significant position on the international bauxite market, thus today, LINMINE holds barely less than 10 percent, even after `significant sums were invested at that time to make LINMINE viable'.
The Privatization Unit official said that the investors, under the Initial Restructuring Phase (IRP), included many international institutions such as World B, Sysmin and the European Investment Bank.
He noted that these institutions had together credited the Government of Guyana a total of US$23 million. Despite these investments in LINMINE's operations, there was no progress, and employment reduction had become significant.
Employment numbers reduced from 6000, when LINMINE was in its prime during the 1970s to a mere 1,250 in October, 2002.
Brassington said this was due to the gradual transfer of social services and privatization of the power plant. In addition, Government's continued subsidies still could not contain the industry.
As a result, the privatization of LINMINE was attempted in 1999, but LINMINE's position worsened, the Privatization Unit Head stated.
Support by the International Monetary Fund (IMF) through debt-relief required that Government discontinue its subsidies to LINMINE, which was scheduled to take place by the end of 2002, Brassington added.
CAMBIOR's investment in the LINMINE operations was initially earmarked for December 2002, but the company was conducting due diligence to assess the feasibility of the investment.
However, due to financial difficulties, the privatization process was delayed and the deadline was extended to the end of June, this year, Brassington further explained.
With the impending investment, LINMINE commenced its payout from last August, to both voluntary and involuntary redundant workers. On July 31, 2003 the remaining workers were sent off, paving the way for the enactment of the management agreement entered into between Government and CAMBIOR.
Brassington disclosed that the route had to be taken for various reasons, including `the critical need to improve management and marketing and a lack of finance from Government subsidies past the June 30th deadline.
LINMINE's "stripping and mining" contract with OMAI which began last year and which reduced operational costs, coupled with the proposal by OMAI to fully manage LINMINE's production also influenced this turn of events at LINMINE, stated Brassington.
Asked about Government's expectations now that they've agreed to these proposals, Brassington responded that the "management agreement" would assist in the debt financing efforts and at the same time LINMINE would "not require subsidies from Government".
He reiterated that the Government wants to ensure that LINMINE is able to become "internationally competitive" and "sustainable" through CAMBIOR and that eventually, if successful, a high employment effect will develop as well as the "enhancement of the social services", among other positive expectations.
