Aroaima Mining Company’s new general manager, John McLeod, sees the transfer of the company’s mining operations from Aroaima to Kwakwani and reducing the cost of production, as some of the challenges facing the company.

McLeod, 56, an Australian by birth arrived here in August and took over from Morris Stuart as general manager on October 8. Speaking with Stabroek News on Sunday, McLeod says that as the ore body is coming to an end at Aroaima, “the biggest challenge is that we have to move over the Berbice River to Kwakwani. That transition is normally the hardest part of a mining project,” and in the case of Aroaima, “it is juggling equipment and people from one side of the river to another, [and] it involves relocating people as well.”

Aroaima draws its workforce from New Amsterdam, Linden and Kwakwani and McLeod says that it is fortunate that a lot of the workers come from Kwakwani.

About the challenge of reducing the cost of production, McLeod describes the present cost as a killer and says that it has to be halved just to survive.

He explains that at present the world market price is about US$16 - US$20 a tonne and just to be able to replace equipment and meet some of its other costs, Aroaima would have to produce its metal grade bauxite at US$8 a tonne or less.

He explains that one of the problems the company faces is that it has to handle the ore mined at Kwakwani about five times, which adds to the cost of the operations. However, he says that the company is working on plans to reduce the number of times the ore has to be handled, which includes trying to ship directly from Kwakwani to Aroaima. He says that these plans are still at the concept and planning stages but if they can be pulled off the company would be ahead of the game.

Another challenge is the distance that the ore has to be hauled at the Kwakwani mine site, the cost of which could be addressed by bigger and newer trucks. But he says that buying them is not an option at this stage.

Until that happens, McLeod says: “Right now we are trying to bring a very old fleet of equipment into acceptable availability and utilisation as over the years that equipment was run down very badly for a number of reasons, so the first thing we have to put in place is a preventative maintenance programme.”

The fleet includes excavators, three different types of trucks, front-end loaders, graders and water trucks. But he notes that the heavy equipment operators and mechanics are comparable with any in other parts of the world.

About the company maintaining a cash-neutral position, McLeod says that his initial analysis is that it is below that position “so we have to get back to that cash-neutral position although getting back to it will not ensure our survival. We have to get well above the cash-neutral situation.”

Asked about the possibility of a strategic investor helping to improve the situation, McLeod says AMC would have to prove it has markets, a stable and competent workforce and that the company or the strategic investor does not have major social costs.

Commenting on the social cost issue, McLeod says that the trend in the industry over the past ten to 15 years is for mining companies to divest themselves of the mining towns. McLeod, who has been in one mining town or another all his life, save for when he was at university, says, “In hindsight if I look back they are not healthy places. I say that reservedly as they are nice places to grow up [in] but they don’t teach you thrift as everything is supplied by the mining company and a lot of people squander their savings and then when the company closes down they are abandoned.”

He observes that Guyanese would have seen that happen at Ituni, Kwakwani and Linden, but that “Kwakwani has got an opportunity now to build right up again as it was a dying town.”

However, he notes that this time around it is the community that would have to generate the jobs but that first the social facilities would have to be rehabilitated to keep the youths occupied. He says that more than half the population of Kwakwani is below the age of 20.

McLeod says that Aroaima’s primary product is metal grade bauxite. The company produces chemical grade bauxite but he observes that that the market for chemical grade bauxite is very limited and difficult to break into. As such he says that there is no competition with Linmine (now being managed by Omai Bauxite Company) whose main product is chemical grade bauxite from what he has observed from driving through Linden.

McLeod is a mining engineer, who trained in Australia and Canada and has worked in Chile, Peru, Bolivia, Canada, Papua New Guinea, the Solo-mon Islands and Indonesia. He is married to a Canadian, who is currently in Chile, where she works as schoolteacher for a mining company and is expected to join him in Guyana.