Cambior/Linmine deal by September
-predicts PM Hinds
Stabroek News
July 2, 2004
The government and Omai's parent company, Cambior should finalise an arrangement before the end of September for the sale of the Linden Mining Enterprise (Linmine).
Prime Minister Sam Hinds yesterday told Stabroek Business that the required funding was in place for Cambior's acquisition of a 70 per cent stake in Linmine whose mining operations it has been managing on contract for almost a year to maintain Linmine's market share. Omai Mining Company, a Cambior subsidiary, and an off-spring of Omai Gold Mines Limited, has been carrying out the management contract.
"There is much more work to be done but we are moving along at a deliberate but steady pace to complete it before the end of September. Essentially everything is in place and we are working through the documentation and memorandum to memoralise the agreements that were reached."
He said that there were some 60 documents, some of which consist of just a page but others consisting of between 10 and 100 pages.
Hinds said the government would be providing a selection of the existing assets in the arrangement and would be responsible for the existing clean-up of the environment. The new entity is to be responsible for new environmental issues from the time it takes over. Though no announcement has been made, Stabroek Business understands that construction should begin shortly on the production plant and the buzz around Linden is that it could provide additional employment, if only temporary, for a number of workers.
Though unrelated to the Cambior takeover, Hinds feels that the issues related to the future of the Linmine pension plan are largely settled. Some 2300 former Linmine employees, who are either in receipt of a pension or have had their pension deferred until they reach 65, have been polled to determine their views about the issue. Hinds himself is numbered among the deferred pensioners.
But President of the Guyana Bauxite and General Workers Union (GB&GWU) Charles Sampson is concerned about what he sees as inaction by the government.
Sampson, himself a former bauxite industry employee, whose union represents middle management employees at the entity, sees as essential a decision being made with respect to the ownership of Linmine.
He says this in the context of a June 30 deadline by which a decision about the company's future should have been made.
He says the government is playing a "hold me, loose me" game with the industry as one year has passed since widespread layoffs.
Since then workers re-employed by Omai have been hired on a temporary contractual basis without any assurance of tenure of employment.
This situation, which initially was only to have obtained for the first six months has been in place for a year without any possibility of adjustment, Sampson suggested.
He says Omai officials are maintaining that they are only running the company on behalf of the government and are not even part of its board of directors.
Sampson, although acknowledging that workers at the Omai managed entity are taking home more money than before, said it is due in the main to increased work hours. The union is trying not to rock the boat but its patience is quickly running thin as members look to them for a response, Sampson said.
In a related development, the Prime Minister said that RUSAL, the Russian bauxite conglomerate is expected in mid-July to initiate a series of studies that could lead to their investing in the Aroaima Bauxite Company with which it signed a memorandum last year.
Hinds said by the time the studies are completed RUSAL would have invested some US$15 million. However, he cautioned that though the results of the studies up to the point of designing a plant and acquiring an estimate for its construction, problems which had been identified and considered solvable could prove too costly in the end and could lead to an abandonment of the planned investment. He said that was always a risk in such a large investment.
Commenting on the government's motivation for seeing the RUSAL involvement realised, he explained that since the 1980s, the prices for aluminum and alumina have been low. However, he said that during the past year or so there has been a surge in demand and great interest is being shown in the acquisition of new plants.
"We are working to obtain the maximum benefits possible from this surge in interest in new facilities to meet the demand."
Aluminum consumption worldwide in 2003 increased by 7.68% to 27.2M tonnes with China's demand growing by 25.2% from 2002.
At the same time alumina, or refined bauxite, used to make aluminum, went up by 7.2% in 2003 with China's imports going up by 22.6%.
In the near term, spot prices for alumina are expected to stay around $370 per tonne, well above the $153 price of 2001. Growth up to 2010 is projected at 4% per year while bauxite output is estimated by some analysts at 2.5% to 3% per year.