Rusal among bidders for Omai's shares in Linden bauxite operations
Stabroek News
November 3, 2006
Cambior Inc, the Canadian company which, fifteen years ago, made the largest ever investment in Guyana has invited bids for its shares in of the Linden-based Omai Bauxite in a move that could end its near two-year relationship with Guyana's bauxite industry.
In a recent interview with Stabroek Business Omai's Human Resources Manager Major General (retd) Norman Mc Lean said that Cambior had begun a process of entertaining bids from several overseas-based companies for its shares in the company. Rusal, the Russian mining company already mining bauxite in Guyana, and the Chinese company Bosal are among several high-profile international mining companies seeking to take over Omai's bauxite operations in Guyana. Six of the companies - Rusal, Bosan, Glencore, Gerard Metals, Imery CE Metals and Century Aluminium - have already sent representatives to Guyana to inspect the bauxite operations.
Mc Lean, who has been facilitating the inspection process by the overseas bidders told Stabroek Business that Cambior had recruited a broker, BMO Nespitt Burns, to oversee the visits to Guyana by the interested mining entities.
Omai acquired shares in Linmine in December 2004 in an agreement which saw the Government of Guyana retain 30 per cent of the shares. Mc Lean told Stabroek Business that since its acquisition of the bauxite operation Omai had spent US$40m in enhancing its infrastructure and improving its output. Infrastructural enhancement has included the installation of a new crusher, the refurbishing of kilns and the enhancement of quality control standards. Mc Lean noted that at the end of 2004, following the takeover of Linmine by Omai bauxite production had risen from 62,000 tons to 135,000 tons and had reached 213,000 tons at the end of 2005. He pointed out that while bauxite operations at Linden had failed to attract investor interest prior to Omai's takeover in 2004, the company's investment in the mining entity since its takeover had resulted in a heightened level of interest in the acquisition of the shares by several overseas-based companies. Asked about the reasons for Cambior's decision to divest itself of its Linden bauxite operation Mc Lean said that Cambior was a gold-mining company but that its decision to acquire the bauxite asset in the first place had reflected the commitment of Cambior President and Chief Executive Officer Louis Gignac to doing business in Guyana. He said that Cambior's assessment of the Linden bauxite operations had led the company to the conclusion that it was a viable investment that could generate a level of profit that would meet with shareholder approval. He pointed out, however, that the difficulties encountered by the company earlier this year resulting from the undermining of the company's overseas market for RASC bauxite by a cheaper Chinese product had undermined shareholder confidence in the company.
Cambior shareholders, meanwhile, are to meet in Canada on Tuesday November 7th to vote on a $US3bn merger with another Canadian gold mining company, IAMGOLD. The vote which is expected to be a formality will bring into being the world's tenth largest publicly traded gold producer in the world, IAMGOLD Corporation.
In August 1991 the Government of Guyana and Cambior signed an investment deal that resulted in the creation of Omai Gold Mines Ltd. Omai continues to operate a scaled-down gold mining operation in the Essequibo river and according to Mc Lean the Company expects to commence underground mining operations next year. He said that the underground mining operation is expected to yield around 8,000 tons of ore per day compared with the 20,000 tons mined during the earlier operation.