Govt may seek change to Linden bauxite deal
By Nicosia Smith
Stabroek News
January 14, 2007
Amid concerns that a huge windfall will be made from the sale of the Linden bauxite operations by IAMGOLD, the government is mulling the separation of a key asset before it blesses a deal between the Canadian miner and the Chinese company Bosai
Privatisation Unit Head Winston Brassington said on Friday that the government, as a 30% stakeholder, was discussing the proposal by IAMGOLD to sell Omai Bauxite Minerals Inc (OBMI) to Bosai Minerals Group Company Ltd.
Brassington said in an interview that the government had also asked for further information on the proposal, since the transactions were "fairly involved". The proposal encompasses both OBMI and Omai Services Inc and Brassington said the discussions were with respect to what was required of government under the shareholders' agreement.
But approval of the proposal may come at a cost to Bosai, as, according to a reliable source, government might seek to strike a deal with Bosai for part of its OBMI assets as a prerequisite for giving its approval. Stabroek News understands that the government is mulling asking Bosai to give up Block 37 at OBMI, to the Bauxite Company of Guyana Inc, a subsidiary of Russian company RUSAL located in the Berbice River. Brassing-ton said he had no comment on the source's statements and a statement would be issued after discussions were concluded. No time frame was given for the conclusion of these discussions.
Officials from OBMI told this newspaper that Block 37 was a mining concession but they could not say specifically what type of bauxite could be found there.
But this newspaper also understands that if the government refuses to approve the sale, IAMGOLD may decide to close down OBMI.
In Parliament on Thursday Opposition Leader Robert Corbin asked the Prime Minister to tell the National Assembly the names of the directors representing the government's 30% in OBMI; names of the shareholders; the date of the last board meeting and how many meetings the board had held during last year. Prime Minister Sam Hinds told Corbin that he would have to answer the questions posed in a proper manner and requested time to provide a response. Previously, Corbin had sought to have a debate on the OBMI situation as a matter of urgent public importance, but this had been denied.
The stakes are high in this US$46M deal between IAMGOLD and Bosai Mineral announced on December 19, 2006, and which has since stirred great interest.
In December 2004, Cambior formed the subsidiary OBMI to manage the 70% stake it acquired from the state-owned Linden Mining Enterprises (Linmine) for US$10M. The arrangement saw Cambior and its subsidiary Omai Gold Mines (the company was closed in 2005) putting up US$5M in cash and another US$5M in mining equipment transfers, while the government contributed a processing plant and service facilities; bauxite mines and other mining leases and prospecting licences. The government was left with a 30% interest in OBMI. IAMGOLD bought Cambior in November 2006 for over $1 billion.
According to an IAMGOLD press release issued in December on the Bosai Minerals deal, the transaction was expected to become effective December 31, 2006 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 for customary approvals from regulatory authorities. Bosai will also assume US$18M in third-party debt held by IAMGOLD.
An official from the Chinese Embassy's Commer-cial Office at Kingston told Stabroek News that Bosai officials would likely be in the country soon.
Bosai Minerals' output and export volumes of Calcined Bauxite are No. 1 in Asia and No. 2 in the world, according to its website. Established in 1994, Bosai owns a total of 16 plants and companies in Chongquing, Guizhou, Tianjin, Guangxi, Hong Kong, China and in Germany. Its exporting countries include Europe, North America, Japan and India .On the other hand, IAMGOLD's operations are in Botswana, Mali, Ghana and Canada.
Approval of its deal with IAMGOLD would make Bosai the largest Calcined bauxite producer, sources say.