Govt must seek info on US$46M bauxite deal
-Corbin -application for Parliament debate denied
By Nicosia Smith
Stabroek News
December 22, 2006
In the wake of concerns that a Canadian company reaped a windfall from the sale of Linden bauxite assets, Opposition Leader Robert Corbin yesterday called on the government to be proactive in seeking information on the US$46M transaction between Chinese company Bosai Minerals Group Inc and IAMGOLD.
Canadian miner IAMGOLD said on Tuesday that it had reached a deal with Bosai to sell its 70% of shares in Omai Bauxite Mining Inc (OBMI) at Linden for US$46M.
In 2004 the former owner of OBMI, Cambior which is now owned by IAMGOLD, bought OBMI for US$10M, raising questions about the government's original sale price. There had also been a pledge by Cambior for investment to a total of US$40M. It is unclear how much was eventually invested in the Linden operations by Cambior.
Yesterday, Corbin sought leave for the National Assembly to be adjourned to debate the IAMGOLD and Bosai deal as a matter of urgent public importance but this request was denied by the Speaker of the House Ralph Ramkarran. The Speaker referred to a handbook on parliamentary procedure which lists as one of the grounds for disallowing adjournment motions cases where the matter is based on press reports as these are unsubstantial. He also added that MPs have had extensive discussions on the rigidity of rules in relation to these matters and it was agreed that it would be permitted to have issues of this type raised on three days notice for matters for which ministers are responsible.
Corbin, also leader of the PNCR, told Stabroek News yesterday after the Parlia-mentary session that the government should treat this issue as a top priority and its refusal to so do "suggest that they are not concerned as they ought to be."
The PNCR Leader argued that since the government has such a large stake in OBMI, namely 30%, it should be more proactive and should not wait for a formal notification of the sale from IAMGOLD.
Prime Minister Samuel Hinds told Stabroek News on Wednesday that the government was waiting for formal notification of the deal from IAMGOLD, before making a statement. The PM, who has responsibility for mining, had said that if Cambior had paid US$5M in cash and US$5M in equipment for the 70% shares and then turned around and sold it for US$46M it would seem to suggest and create the impression that the company made a windfall.
Yesterday, Head of the Presidential Secretariat Dr. Roger Luncheon told Stabroek News that if indeed a deal was reached he believes that the deal is not yet "consummated." He noted that the government as a major shareholder would have to be informed.
Corbin said that one of the major problems in the bauxite industry is that its market was being undermined by cheap low grade Chinese bauxite. Another issue he noted was the high cost of bauxite production here and how the Chinese company will deal with its production cost. One possible way of dealing with this dilemma, according to the Opposition Leader, was to lower the quality of the bauxite and risk damaging Guyana's image as a quality bauxite producer. Russian company Rusal, which has taken over the Berbice bauxite operations, will also be looking at how the Chinese handle the industry.
Corbin explained that although Guyana's cost of producing bauxite was high the product was still able to survive on the international market because of the superior quality. Corbin plans to seek a debate in Parliament on the issue and told Stabroek News that he will utilise another procedure and raise the matter again at another date.
According to the IAMGOLD press release on Tuesday, the transaction will be effective come December 31, subsequent to a confirmatory review of the assets by Bosai.
IAMGOLD will receive US$28M in cash from Bosai, 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 IAMGOLD deal has hints of the controversy that ensnared the PNC over the sale of the former Demerara Woods Limited in 1991 to the UK's Lord Beaverbrook and Associates who then re-sold it for an alleged windfall. The PNC was roundly criticized over this deal.