The Guyana government is convinced that international bauxite company Alcoa will walk away from its investment in the Aroaima Bauxite Company (ABC) in the Berbice River.

Cabinet Secretary, Dr Roger Luncheon told reporters at yesterday's post-Cabinet briefing at the Office of the President that most if not all of the stakeholders had arrived at the inescapable conclusion that ABC would cease to exist at some short point in time.

"And indeed were the company not absorbed through a joint venture or some new arrangement then the bauxite operations at that site and by that company will also cease. I believe the owners [Alcoa] of the company have made that pellucidly clear to all and sundry," Dr Luncheon said. Government is Alcoa's joint venture partner in ABC.

Dr Luncheon said that the extremely short time frame Alcoa had given the government to respond to its concerns about maintaining its market share, made it necessary for the various stakeholders to recognise the seriousness of the situation and the need to work with the government to preserve as many jobs as possible.

The government reached this conclusion as a result of the report to Cabinet by Prime Minister Sam Hinds on the future of ABC and the state-owned Berbice Mining Enterprise (BERMINE) based on meetings with Alcoa representatives who visited Guyana recently and reports from an ABC shareholder meeting earlier this month. An emergency meeting of the ABC board, on which the government is represented by Robeson Benn and Neil Kumar, is being convened this week in Miami at the request of Alcoa, to recommend to the shareholders what course of action it should take in relation to the future of the company.

Responding to questions as to what steps had been taken by the government in view of the warnings it received from the reports of its directors, Dr Luncheon said that he was certain some studies had been done to determine the viability of other grades of bauxite.

However, he said that Alcoa had established "its financial presence because it was able to carve out a niche and supply in excess of two million tonnes [of metal grade bauxite] to the market.

"That market share is now threatened and our cost of production cannot easily be brought down to the value given by the contracted purchaser [BPU-Reynolds]."

According Alcoa, BPU-Reynolds is only willing to pay US$17.50 per tonne next year for bauxite; ABC's cost of production is around US$24 a tonne.

Dr Luncheon observed that as a consequence Alcoa "in recognition of that difficulty are the ones who are saying that this company as it stands is not viable and we don't intend to continue a loss-making venture."

Expatriate managers supplied by Alcoa's predecessor, Reynolds, which it took over, have managed ABC. In the last five years, the years of its highest receipts, it chalked up losses totalling US$26 million. Over the ten years of its operations it has made US$8 million on the 16 million tonnes of bauxite it has exported and has paid no royalties or taxes.

Meanwhile, Stabroek News understands that yesterday afternoon President Bharrat Jagdeo and PNC REFORM leader Desmond Hoyte received a report from some members of the bauxite committee with recommendations on the proposals about the future of the industry in Berbice. The government nominees, Stabroek News understands, are to submit theirs shortly.