Alcoa will write off $60M debt - President
Stabroek News
October 19, 2001

Alcoa will write off the US$60 million debt owed it by Aroaima Mining Company, which it had jointly owned with the Guyana government.

This disclosure was made by President Bharrat Jagdeo in answer to questions about the criticisms made about the planned restructuring of the company.

"The US$60 million will be written off and the operation would be cost neutral to the government," he told reporters at a press conference he hosted yesterday at the Office of the President to report on his attendance at the emergency meeting of CARICOM Heads last week in the Bahamas.

The President, commenting on the criticism which appeared in a letter in the Stabroek News of the plans to rescue Aroaima, said that while he welcomed criticism, it should be accompanied by alternative proposals for rescuing the company.

Answering questions about the viability of the plans for rescuing Aroaima being pushed by Prime Minister Sam Hinds, President Jagdeo observed that the objective was to save the majority of the jobs at the company. He said that all these jobs would have been lost about a month ago but for the government's actions.

President Jagdeo recalled that he had said that all those persons who were claiming that Alcoa would not have walked away from its investment in Aroaima, had retreated back into the woodwork and the government was left to clean up the mess.

He said that it had to address the concerns of the workers, as a result of the misinformation that had been given to them.

The government's plan calls for the three contractors at Aroaima to agree to cut their costs and for workers to take a wage cut in return for a share of the profits if any at the end of next year. The cuts are in an effort to reduce the production cost to US$20 per tonne from around the US$30 a tonne.

The government has also reached agreement with BPU/Reynolds to supply some 1.1 million tonnes of metal grade bauxite at US$17.14 cents a tonne down from around the US$27 per tonne it is receiving this year.

Critics have questioned the viability of the arrangements when Alcoa had projected that it needed a projected production of 1.6 million tonnes a year to be viable. The proposed arrangement calls for 1.1 million tonnes of metal grade bauxite and 300,000 tonnes of the higher-priced chemical grade bauxite, which it reportedly plans to sell to Reynolds as well, at US$35 per tonne.

Critics said that the government did not check the accuracy of BPU?Reynolds claim that it could indeed access metal grade at US$17.14 a tonne and questioned the ability of Aroaima to sell 300,000 tonnes of chemical grade bauxite for which they said, the total market was only 250,000 tonnes. They questioned how the company would be made viable when it would still be under the same expatriate management, which lost money for five consecutive years.