Sale of bauxite company for Parliamentary debate Thursday
By Gordon French
Kaieteur News
January 9, 2007
Parliament will on Thursday debate a decision made by Canadian firm, IAMGOLD, to sell its stake in Omai Bauxite Mining Inc. (OBMI) and Omai Services Inc. to China's Bosai Minerals Group for US$46 million.
Speaker of the National Assembly, Ralph Ramkarran said yesterday that the revised and unique changes made to the Standing Order will allow a Motion submitted by Opposition Leader Robert Corbin to be debated.
The Prime Minister, when asked if Government would sell its 30 per cent shares in the bauxite company, said that he would be unable to make a definitive statement since the administration is reviewing the bauxite situation.
Yesterday, Prime Minister Samuel Hinds, who has responsibility for the mining sector, said that Government was still reviewing the sale agreement between the two companies and that a response would be tendered sometime over the next few days.
Corbin, on December 21, through the Motion attempted to have Parliament debate the sale of OMBI, which he said could have grave consequences for Guyana's bauxite, which is the main economic base of Linden.
When the Motion was first submitted to the Speaker it was denied.
Ramkarran asked that Corbin allow three days to elapse before the Motion is considered, in keeping with a revised Standing Order, or have the Motion thrown out entirely.
Corbin accepted the three-day option and later warned that the new deal could have serious implications for Guyana's bauxite industry, which is the main source of income for many persons living in Linden.
He warned that OBMI was now being sold to a Chinese company that has competed with Guyana's bauxite on the world market, stating that the new owners could opt to reduce the grade of the local bauxite or in a ‘worst-case scenario', shut down the industry.
Corbin also told the National Assembly that the sale has opened Guyana to the vagaries of the international market.
OBMI was incorporated in December 2004 in a respective 70-30 per cent ownership agreement between Cambior and the Government of Guyana.
Human Resources Manager of Omai Bauxite, Major General (Ret'd) Norman McLean previously stated that some six companies sent in bids after Cambior/IAMGOLD expressed an interest in selling its bauxite shares to focus on gold mining.
McLean said that representatives from the companies came at different times and met with Prime Minister Sam Hinds and Head of the Privatisation Unit, Michael Brassington.
Government has been contending that the sale agreement between the Toronto-based IAMGOLD and Bosai was not a done deal; however, sources said that the mere fact that Government met with potential buyers is an indication that they knew that a sale agreement was on the horizon.
It is widely speculated that IAMGOLD would make a windfall since the company bought the shares in Linmine for US$10 million.
However, McLean stated that the new company stands to lose between US$25 million and US$30 million on the deal, which was invested in upgrading the bauxite operations.
IAMGOLD announced in December that under the terms of agreement with Bosai Minerals, the effective date of the transaction will be December 31, 2006.
Subsequent to a confirmatory review of the assets by Bosai Minerals, IAMGOLD will receive consideration of approximately US$28M in cash from Bosai, subject to working capital and other adjustments.
The agreement is contingent on a number of conditions, including receipt of customary approvals from regulatory authorities, which in this case is the government.
In July, OBMI suspended its operations for two months, brought on by the prohibitive cost of production of Refractory ‘A' Grade Super Calcined (RASC) bauxite and plummeting prices for the commodity on the world market, largely because China was selling it at a cheaper price.
The steady decline of market prices forced the company to downscale production of this high grade ore from 30,000 tonnes to 15,000 tonnes monthly.
In March of this year, the bauxite company retrenched workers with the aim to cutting back on production cost and becoming competitive on the international market.
Sixty-one (61) workers have been affected by that decision.
Bosai Minerals Group owns 16 plants and companies in Chongqing, Guizhou, Tianjin, Guangxi, Hong Kong and Germany.