We must not isolate ourselves in the world market
Stabroek News
September 28, 2001

Dear Editor,

Reading the SN lead story [ please note: link provided by LOSP web site ] on Wednesday, September 26, 2001, I was pleased to find out that the Guyana government was close to a deal to keep Aroaima afloat, since Guyana as a nation is not ready for the closure of the Aroaima Bauxite Company (ABC). However, I have been calling for deep thought into diversification among the many other persons in and out of Guyana, since our contribution to the world's economy is less than a drop in a bucket and therefore our voice will have basically similar weight.

Now comes the WTC situation and the aircraft industry is announcing cuts in aircraft production. This will mean reductions in demand for a profitable part of the aluminium market. Luckily for us, the quantity used in making aircraft, estimated to be at most 300,000 to 500,000 tonnes, is tiny in relation to total western world aluminium production of more than 17M tonnes. But it is a high specification, high margin part of the market.

The two companies with the greatest involvement in the aviation market are Alcoa of the US, (our business partners) the largest aluminium company, and Pechiney of France. Alcoa is believed to supply about 50 per cent of Boeing's aluminium requirements and 25 per cent of Airbus's.

However, the entire aluminium market is being affected by the economic slowdown. Earlier this year the price had been flexible because energy-related production cuts in the US and Brazil, totalling nearly 2M tonnes a year, had compensated for soft demand. Some analysts were hoping for economic recovery next year which does not seem likely.

But, even before the US attacks, price forecasts were being revised downwards. The Prime Minister has outline the expected price for bauxite but aluminium, the value added product, traded above $1,600 a tonne earlier this year, is now down in the mid-$1,300s. The key question for aluminium companies is when the economic recovery will occur.

We must realize that solving the Bermine/ABC situation will not be easy, but putting it off or procrastinating will be to the detriment of the country. The political directorate has consulted all and sundry, including the political opposition (this is good in a democracy) but the time has now come to make a decision, since I have understood that bargaining with Alcoa is at an advanced stage. In the end we must realize that Alcoa, Alcan, Kaiser and Pechiney between them control the bauxite and

aluminium market and if we are to sell our bauxite we must not burn these people or else we will be isolated in the world market. This is a difficult situation and I sympathize with the PM because there is no easy way out of this situation. With a talented negotiating team, and a tinge of luck, we hopefully will be able to keep Bermine and ABC alive.

Yours faithfully,

Sasenarine Singh