PM has been meeting with potential buyers of bauxite shares - McLean
Kaieteur News
December 30, 2006
Prime Minister Sam Hinds was made aware of the intended sale of the shares held by Cambior, and now IAMGOLD, in what was then Linden Bauxite Company.
The Toronto-based company holds 70 per cent of the shares while the Guyana Government holds the remaining 30 per cent.
Yesterday, Human Resources Manager of Omai Bauxite, Major General (ret'd) Norman McLean said that when the government sought a foreign investor, many came, looked and left.
Cambior, which owned Omai Gold Mines Limited, entered into discussions that lasted two years and was only completed in 2004. This gave rise to the company, Omai Bauxite.
Production rose from 65,000 tonnes in 2002; to 135,000 tonnes in 2004; and to 200,000 tonnes in 2005.
McLean said that the aim was to produce 300,000 tonnes this year but numerous problems surfaced. Coupled with these problems was the fact that the Chinese had influenced a marked drop in the price of Refractory ‘A'Grade Super-Calcined (RASC) bauxite.
This drop forced Omai Bauxite to shut down its Linden operations for two months.
By this time the shareholders in Cambior began to voice their concerns at the loss of revenue in the bauxite industry and the casualties were Louis Gignac and Rejean Gourde.
IAMGOLD demonstrated an interest in the gold operations and set about buying out the shares in Cambior. McLean said that being primarily interested in gold, IAMGOLD set about selling out the bauxite shares.
He added that six companies sent in bids—Rusal, Bosai, Glencore, Century Aluminium, Gerard Metals and Imery CE Metals. They came at different times and met with Prime Minister Sam Hinds and Head of the Divestment Unit, Michael Brassington.
Rusal met with the Prime Minister on September 14; with Bosai on September 29; with Century Aluminium on October 12 and with Gerard Metals on October 17.
In a letter dated December 19 last, Prime Minister Hinds was informed that the “non-approval of Cambior-Bosai transaction could jeopardize near-term operations in Linden .”
Rusal's bid was for US$18 million representing the debt to CLICO and a further $1 for the other shares. Bosai tendered US$46 million which included the US$18 million to CLICO.
Responding to allegations that Cambior/IAMGOLD would make a windfall since the company bought the shares in Linmine for US$10 million. McLean said that the new company stands to lose between US$25 million and US$30 million on the deal.
It had invested that sum in upgrading the bauxite operations—providing four generating sets that ensured that power failures in the mining community were things of the past.
Poor power supply and the absence of water had led to the people in the mining community blockading Linden to the extent that Omai operations were shut down for weeks. Fuel could not get to the gold mining operations and neither could the workers leave or access the mining site.
Omai also spent millions on improving the roads, including the Washer Pond Road and rehabilitating the kilns that produced the RASC.
McLean said that only two countries produce RASC bauxite— China and Guyana . He said that at one time Guyana controlled 90 per cent of the global market and China the remainder.
Guyana 's decline has seen China now controlling the lion's share of the market.
Asked to comment on the likelihood of Bosai buying out the company and shutting down the operations, McLean said that no company would throw that kind of money down the drain.
He acknowledged that China would now have a monopoly of the RASC market but that is to be expected. He added that Guyana could benefit from this monopoly.
The sale of the shares is not a done deal. IAMGOLD, under Section 18 of the Mining Act, must still seek consent from the Guyana Government. Yesterday, Omai Bauxite dispatched a letter to the Prime Minister seeking that consent.
On Thursday, President Bharrat Jagdeo said that the sale of the shares was not a done deal. There needs to be consultation with Guyana by virtue of the country being the other shareholder in Omai Bauxite.
These discussions are necessary because Guyana is both a regulator and a shareholder.