Omai Bauxite to be sold to Chinese company for US$46M
Stabroek News
December 20, 2006
Canada's IAMGOLD Corporation yesterday announced the sale of its stake in Omai Bauxite Mining Inc and Omai Services Inc in Guyana for US$46M to Chinese company Bosai Minerals Group Co. Ltd, the preferred bidder for the assets.
According to a press release from IAMGOLD issued in Toronto, Canada the terms of the agreement with Bosai state that the effective date of the transaction will be December 31, 2006 subsequent to a confirmatory review of the assets by the buying company. IAMGOLD will receive US$28M in cash from Bosai Minerals, subject to working capital and other adjustments. The agreement is also contingent on a number of conditions, including receipt of customary approvals from regulatory authorities. Bosai will also assume US$18M in third-party debt held by IAMGOLD.
The terms of the sale are likely to raise questions locally about the original sale of Omai Bauxite to Cambior which was recently bought by IAMGOLD. Cambior had bought its 70% stake in the Linden bauxite operations for US$10M - US$5M in cash and US$5M in equipment. When Omai Bauxite Company Incorporated was launched in December 2004, Cambior had projected it as a US$40M investment. It is unclear exactly how much was invested since the purchase. The state retains 30% of the business.
The deal with China's Bosai Minerals fits into IAMGOLD's plans to focus on its core assets, the release said. President of IAMGOLD Joseph Conway said, "we are pleased to have reached an agreement for the sale of the bauxite assets. The transaction is consistent with our strategy to focus on our core assets. We look forward to working with Bosai Minerals to finalize this transaction." Conway recently visited Guyana and met President Bharrat Jagdeo.
Bosai Minerals Group General Manager Yuan Zhilun said the company would acquire the deposit because it is "well known to the industrial minerals industry as a first class material."
Omai Bauxite has around 560 employees.
Earlier this month Toronto-based IAMGOLD Corp struck a friendly deal to buy Montreal based gold miner Cambior Inc for more than C$1.2B. Together the companies form a Canadian-based international gold producer with 1.1 million ounces of annual production and a stock-market value of more than C$3B. The new company is the world's 10th largest gold producer.
Established in 1994, Bosai Minerals owns a total of 16 plants and companies in Chongqing, Guizhou, Tianjin, Guangxi, Hong Kong and in Germany. And its products are sold in more than 20 countries and areas in the world, such as Europe, North America, Japan and India, according to its website.
Its output and export volumes of Calcined Bauxite is No. 1 in China and the output and export volume of Brown Fused Alumina is No. 1 in Asia and No. 2 in the world, according to its website. Sources have said its key products have competed with Guyana's on the world market.
In 2005 Bosai had an annual capacity of 200,000 tonnes of Calcined Bauxite; 120,000 tons of Brown Fused Alumina; 300,000 tons of Coke; 100,000 tons of Ferro-Alloys, with a total sales turnover of US$200M and an export turnover of US$50M.
Early last month IAMGOLD Corporation acquired OBMI in its buyout of former owners' Canadian firm, Cambior Inc. Before the buyout by IAMGOLD of Cambior, the latter already had plans in train to sell OBMI. Cambior had 13 years experience in gold mining here before moving into bauxite mining.
Cambior is still exploring for gold at its closed mining site at Omai. After closing the Essequibo mine the company had moved to Suriname. It is not clear what position IAMGOLD will take in relation to the continuing exploration.
Canada-based IAMGOLD, which is mainly a gold producer, operates in Botswana, Mali, Ghana and in Canada.
OBMI currently employs over 200 persons and in July had suspended its operations for two months at an estimated cost of US one million owing to heavy competition from Chinese bauxite on the international market.
If the sale to the Chinese company goes through it would mean that the bauxite industry in Guyana would now be controlled by two Asian companies - RUSAL in Berbice and Bosai in Linden.