Omai bauxite sale to Chinese firm not a done deal - Jagdeo
Stabroek News
December 30, 2006
The sale of Omai Bauxite Mining Inc (OBMI) by IAMGOLD to Bosai Mineral Group Co Ltd is not a done deal President Bharrat Jagdeo said on Thursday during a press conference at the Office of the President.
He insisted that several contractual obligations had to be first fulfilled by IAMGOLD, including a proviso that the government as a 30% shareholder must be given the first choice to purchase the company.
"We have had broad information abut what the deal is," the President said, "but the details will still have to come to us, either as shareholder or as a regulator." In this regard, he mentioned that Prime Minister Samuel Hinds had written to IAMGOLD. "They have to come to us, either as a shareholder or as a regulator, for the deal to be consummated," he said.
On December 19, IAMGOLD announced a US$46M deal to sell its bauxite assets OBMI and Omai Services Inc (an electricity provider in Linden) to Chinese company Bosai Minerals in Chongqing, South West China.
The sale, which would involve Bosai taking over a US$18M third-party debt, is set to become effective tomorrow, the announcement said.
Questions have been raised about the sale, since OBMI was originally sold by the government for US$10M. Cambior, the former owner of OBMI, had made an investment last year into Omai Services Inc. However, the deal will still be a windfall for IAMGOLD, which recently acquired Cambior's assets. The government has also not stated whether it would exercise the option to sell its 30% share or buy the 70% share.
Under the terms of the agreement subsequent to a confirmatory review of the assets by Bosai Minerals, IAMGOLD will receive consideration of approximately US$28M from Bosai Minerals, subject to working capital and other adjustments.
Head of the Privatization Unit Winston Brassington who was integrally involved in the original deal to sell the 70% stake to Cambior was unavailable for comment.
In the meantime, businesses in the mining community of Linden will be keenly watching all the developments surrounding this deal to see the likely benefits to them in the form of employment opportunities and the overall economic benefits to the community. In a short statement in the December 19 press release, Bosai Minerals said the Guyana bauxite deposit is well known to the industrial minerals industry as a first-class material, and it would continue the tradition. The high cost of bauxite production in Guyana has seen the price skyrocket on the international market. Cheaper Chinese bauxite has over the years eroded the market. This year, heavy competition from the cheaper Chinese bauxite on the international market led to the closure of OBMI for two months.