Stabroek News
June 7, 2001

The government has denied being aware of the proposal by Centrotrade Minerals and Metals Inc (CTMM) to provide working capital for the Berbice Mining Enterprise (Bermine) if it should shift to producing abrasive grade bauxite, according to Prime Minister Samuel Hinds.

Prime Minister Hinds' assertion was in reaction to the page 10 report in yesterday's Stabroek News headlined "Government has overlooked feasible Bermine proposal from US entity".

Prime Minister Hinds said that the CTMM proposal was not put to the government, pointing to the commitment by President Bharrat Jagdeo that the government was willing to look at any feasible proposal, which could be implemented immediately.

Trades Union Congress (TUC) General Secretary, Lincoln Lewis disagrees, arguing that all the correspondence from CTMM was seen by the Prime Minister. He also said that CTMM had also offered bridging finance to the Linden Mining Enterprise but the offer was not taken up.

The Prime Minister noted too that the US$500,000 a month bridging finance being offered by CTMM did not address the request by Bermine for US$5.6 million this year.

According to industry sources, the US$5.6 million requested by Bermine is for bridging finance because of its cash flow problems and is to be repaid from the proceeds of its bauxite sales this year.

These sources explained that Bermine's cash flow problems arose from difficulties in meeting its deliveries last year and because of the cancellation of orders by some of its customers. One of these customers, Alcoa, reduced its order by half accepting only 200,000 of 400,000 tonnes of bauxite it had originally requested.

They explained too that the government has already provided US$1.35 million which Bermine has signed an agreement to repay. The additional sums are also to be repaid by Bermine. A proposal by Alcoa for one of its affiliates, the Aroaima Bauxite Company to take over the Bermine operations is currently the object of widespread discussion and debate.

Government sources argue that while Aroaima had a dismal record, its new parent company was more socially conscious even though it insists that every unit of its operations should be profitable.

The CTMM offer was made in a letter to Bermine chairman, Julian Archer, dated May 8, 2001. It said that CTMM had conducted a general market survey that showed "there is need for an additional producer in the AAC (Aluminous A Grade Calcined bauxite) market" and most of its major consumers with whom it has been in contact "have enthusiastically endorsed the re-entry of Guyanese AAC into the market place."

The letter stressed that "the project must be agreed to in principle by the Chairmen of the Boards of BIDCO and BERMINE, and the Prime Minister prior to a firm proposal being submitted by CTMM."

Stabroek News understands that Prime Minister Hinds was scheduled to meet with the TUC general secretary yesterday. (Patrick Denny)

The proposal by Alcoa for the takeover of the Berbice Mining Enterprise (Bermine) by one of its affiliates is not a done deal to the committee set up to assess the prospects for the bauxite industry.

This was stated by co-chairman of the Joint Bauxite Committee (JBC) Dr Clive Thomas when he addressed reporters at a press conference convened by the group on Tuesday. One key issue seems to be the track record of the affiliate, the Aroaima Bauxite Company and members expressed differing views on this subject. Aroaima is a 50:50 joint venture between the Guyana Government and formerly Reynolds Metals Inc. which has since been taken over by Alcoa.

Briefing reporters on the work of the committee since it began its work on the concept paper two weeks ago at the BIDCO Headquarters on Peter Rose and Anira Street on Tuesday, Thomas in response to a question about highlighting the proposal in bauxite communities said "we do not have a task to go out and highlight the Alcoa proposal" but to examine and evaluate it.

He said that when the committee meets with communities they submit copies of the proposal to the relevant stakeholders so the committee could benefit from informed contributions to whatever discussions there are.

Stressing that committee members "do not even know if we accept the concept paper", he added that "there certainly is no unanimity of views on whether that is what will emerge from the committee."

Noting that the impression in the media is that the Alcoa proposal is a done deal, Dr Thomas said that as far as the committee is concerned "this is not a done deal." The Guyana Government has said it is in favour of the Alcoa proposal but is also open to considering other options.

So far, Thomas said, the committee has not yet tried to see "if there is a consensus but we are trying to submit a paper. But the main issue will centre around the decision as to whether what we have in the concept paper is adequate to go forward with or not."

Both the government and Alcoa have accepted in writing to await the committee's proposals which is to be forthcoming this week. This is well within the one-month deadline with which the committee is now working, Dr Thomas said.

Apart from the Alcoa proposal for the restructuring of Bermine and Aroaima, Dr Thomas noted that an American company Centrotrade Minerals and Metals (CTMM) has a proposal which has been crafted with Bermine management workers and other employees.

He said it was important to note that the committee was established by a joint agreement by President Bharrat Jagdeo and Opposition Leader Desmond Hoyte and as such "we are not a committee of either the opposition or of the government".

The committee has visited Aroaima, Kwakwani and Everton. The members have met with a number of experts who have made contributions and pledged to work with the committee and were to meet with some others later on.

During the briefing a debate between Co-chairman Robeson Benn and other members began when Benn said that the joint arrangement with government and Reynolds at Aroaima over the last ten years was a successful mining venture. He saw it "as a model investment for bauxite over the past ten years" and one of the few investments by a foreign company when no one else wanted to invest in Guyana.

The difficulties, he said, however, is that at present, Alcoa is faced with international market conditions where it is out of reserves and something else has to be done to ensure continued operations. "So we are at a stage where we had a successful investment on a particular model in 1989. The condition which now operates suggested that Guyana has to do something to ensure continued operation of that arrangement either by itself or with other" investors, he said.

In response to Benn's comments, his counterpart Dr Thomas said that "in fairness to the committee what he (Benn) said does not represent the committee's view. The committee's view is that we do not have a successful operation (at Aroaima) among some of the members which is itself an issue."

Benn, however, maintained that the issue he was speaking about was not the success of the operation but the success of the initial investment during a period when Guyana was not attracting investment.

Odinga Lumumba adding his voice to the debate said that in retrospect he felt that the Aroaima investment brought employment to hundreds of people and Hoyte should be congratulated for it. He said that profits should not be the major reason for investment but jobs are the critical issue.

Dr Thomas rebutted saying that the committee in general "does not consider the track record of the Aroaima Bauxite Company as reassuring". The company, he said, has made and accumulated losses in the vicinity of US$57 million over the past 10 years and it has in the meantime shipped and sold US$435 million worth of ore. During that period it has never paid taxes to anyone in Guyana. So the company's success or lack of it, he said "constitutes one of the main barriers in our judgement in which we can look (favourably) at this proposal".

Generally, committee members saw the need for a level playing field for investment in the bauxite industry which does not set different standards for different investors. (Miranda La Rose)