GOVERNMENT’S PROPAGANDA CANNOT ERASE THE FACTS OUTLINED IN THE JOPP DOSSIER --PRESS STATEMENT Thursday 26 November 2009
• The People’s National Congress Reform extends greetings to our Muslim Community, in particular, and to Guyanese on the occasion of Eid-ul-Adha;
• The PNCR will continue to lend support to the legitimate struggle of workers in Guyana to protect their interests and will provide any support requested by the bauxite workers;
• The PNCR in collaboration with all Opposition Parties will continue to pursue the objective of an international inquiry to investigate the links between the Jagdeo Administration and a criminal enterprise led by ‘Roger’ Khan as well as the numerous human rights abused highlighted in the Dossier;
• Bauxite operations at Linden are closed. Bosai has, so far, been a hopeless failure and we wonder if they would keep the Linden Operations functioning for another year.
PNCR EXTENDS EID-UL-ADHA GREETINGS TO THE ISLAMIC COMMUNITY
The People’s National Congress Reform extends greetings to our Muslim Community, in particular, and to Guyanese on the occasion of Eid-ul-Adha. Eid-ul-Adha is a time for Muslims to learn the value of self-denial by making a sacrifice of the things they love, to God almighty. Prophet Abraham’s great act of submission is thus regarded solely as an example of genuine surrender to the will of God.
The observance of the sacrifice of the great friend of Allah – Prophet Ibrahim (AS), is a day, which must fill the hearts of Muslims with great joy as it reminds them of the qualities associated with great character and encourages us to emulate them. In Guyana, as ethnic tensions still persist and the value of human life appear to have been severely diminished as we daily witness the brutal murders, the gross violations of human rights and the serious decline in moral values in public life, all Guyanese need to emulate these qualities at this challenging period. Additionally, the economic difficulties facing many of our citizens and the poverty that persists, impose an obligation on all Guyanese to remember the poor and needy by sharing our sacrificial offerings with them.
As we extend greetings on this special occasion of Eid-ul-Adha, it is our hope that Guyanese will use the occasion to reflect on its significance to the benefit of our Nation.
IT IS TIME FOR THE MINISTRY OF LABOUR TO FULFILL ITS OBLIGATION TO PROTECT BAUXITE WORKERS’ RIGHTS
The assault on workers rights by both Government and private sector have continued unabated, while the Ministry of Labour appears impotent to undertake its responsibilities. Over the past years, Guyanese have witnessed the Government setting the wrong example, by the unilateral cessation of the check off system for union dues from public servants, the abandonment of collective bargaining in violation of ILO conventions to which Guyana is a signatory, the willful and malicious withholding of subventions approved by the Parliament for the Critchlow Labour College and, more recently, the seizure of land donated to the Guyana Public Service Union. Regrettably, some private sector agencies have followed Government’s atrocious example. The RUSAL Bauxite Company filed an action, recently, against union leaders at Kwakwani, Berbice claiming millions of dollars in damages against them for exercising their democratic rights to withdraw their labour and their constitutional rights to freedom of association. The Minister of Labour and his Ministry remained silent as, no doubt, they lacked the moral authority to speak to this foreign Company because of the Government’s dismal record.
The situation in the Bauxite sector has reached, however, crisis proportions .The workers at Aroaima are now faced with the reality that this foreign Company is arrogantly refusing to honour the collective labour Agreement with the Union, thus forcing the workers to take industrial action again. This situation cannot be allowed to continue. The Government, as usual, has its double standards in the differential treatment to various categories of workers. The speed with which the Ministry of Labour intervened in the recent strike by sugar workers is in sharp contradiction to the total neglect for bauxite workers giving validity to the PNCR often repeated allegation of discrimination by the PPP/C of bauxite workers. The PNCR will continue to lend support to the legitimate struggle of workers, in Guyana, to protect their interests and will provide any support, requested by the bauxite workers. The PNCR, therefore, demands that Mr. Mansoor Nadir intervenes in the Aroaima bauxite issue, to ensure that the Company, which has been given special conditions by the Government of Guyana, does not take further advantage of the workers in that entity.
GOVERNMENT’S PROPAGANDA CANNOT ERASE THE FACTS OUTLINED IN THE JOPP DOSSIER
The decline in the rule of law in Guyana, the wanton trampling of the human rights of our citizens by the State, the unprecedented number of allegations of torture by the security forces and the revelations of state sponsored and supported execution, of more than three hundred Guyanese citizens, are no secret. The PNCR had previously warned that, instead of rectifying the situation, the PPP/C Administration took refuge in propaganda and distortion over the years. The response of the Jagdeo Administration to the recently released DOSSIER by the Joint Opposition Political Parties (JOPP) is therefore not surprising. The Administration’s contention is that the information outlined therein is inaccurate. If indeed the PPP/C is certain of their declared position then there should be no hesitation in heeding the call for an international inquiry. Surely, this would vindicate the regime from all the allegations. The PNCR is not fooled by the usual propaganda that has become a trademark of the Administration’s response.
What has become obvious is that the publication has motivated many Guyanese to provide much more information that had been omitted from the Dossier. The PNCR welcomes these developments and call upon all Guyanese to supply the relevant information to ensure that the Dossier becomes a more comprehensive document. In this regard, the Kaieteur News must be complemented for its supplementary information. In any event the omission of some details from the Dossier or the alleged inaccuracies does not diminish the objective of the JOPP. The Dossier is not intended to replace an inquiry but rather to make the case for such an inquiry to be held. The evidence to support the contentions therein would be left for witnesses to provide to the Inquiry when established. No amount of criticism therefore could diminish the need for such an Inquiry.
The PNCR in collaboration with all Opposition Parties will continue to pursue the objective of an international inquiry to investigate the links between the Jagdeo Administration and a criminal enterprise led by ‘Roger’ Khan as well as the numerous human rights abuses highlighted in the Dossier. We urge all Guyanese to support our efforts to ensure that justice is served and closure can be brought to the lives of the affected family members of the victims.
The Third Term shenanigans of President Jagdeo and his misguided bunch will not divert our attention. They cannot escape that reality, no matter how much diversion is attempted. In this regard, the PNCR had already warned President Jagdeo that no amount of international publicity on the protection of the environment or on the Low Carbon Development Strategy (LCDS) will spare any one in his Government from accounting for the misdeeds of Office; neither will he be spared of accounting for his role in those atrocities.
THE ADMINISTRATION’S CAVALIER APPROACH TO THE GUYANA BAUXITE INDUSTRY: THE CASE OF THE LINDEN OPERATIONS: BOSAI
In our Press Statement, for Thursday 12 November 2009, we dealt extensively with the case of the Berbice Operations with particular reference to its handover to RUSAL. Today we are dealing with the Linden Operations with particular reference to its handover, first to OMAI and their subsequent sale of the assets to BOSAI.
The Bauxite Operations at Linden suffered a serious decline by the end of the 1980’s. Therefore, the then PNC Administration, under President Hoyte, engaged the services of an Alcan sponsored group to undertake, between 1990 and 1991, a comprehensive review of the industry. That review identified the major financial, management and marketing problems facing the industry and made recommendations, which were designed to return the Industry to viability within two years. Because of the recommendations, the then Guymine was split into the Linmine and Bermine Operations, respectively.
In 1992, the European Union and the World Bank provided financing for the rehabilitation of the Industry and the Australian firm, Minproc, was appointed as the managers of the Linmine Operations.
With the accession of the PPP Administration to Office, in October 1992, the Industry came under the purview of the new Government with responsibility for the industry falling to the Prime Minister, Honourable Samuel A. Hinds. This proved, in retrospect, to be an unfortunate choice, since the Prime Minister had consistently prophesied that the Guyana Bauxite Industry was destined for extinction. Here was the opportunity to have his prophesy fulfilled.
Accordingly, the Prime Minister allowed Minproc, with no serious oversight, to spend the money allocated for the rehabilitation and resuscitation of the Linden Operations.
Minproc, therefore, in collaboration with the Adam Smith group (which was opposed to any state ownership), deliberately pursued a path designed to miniaturise the Linden Operation, as part of their plan for its privatization at any cost.
The gold mining company, OMAI, was chosen as the eventual beneficiary to take control of Linmine, under the now established Brassington formula of a management contract to be followed by a full acquisition of a majority shareholding. It does not call for a high level of intelligence to see the fallacy of the Brassington formula. If you put someone to manage an asset with an agreement that it would be sold to them at the end of the management period, with you bearing all the operating and investment costs during the management period, only a saint, or a total idiot, would fail to take the opportunity to invest as much as possible to improve the status of the asset, knowing that he would acquire it at the price that was agreed at the time of entering into the management contract.
In 2003, OMAI Bauxite Mines acquired unfettered management of Linmine and, according to Mr. Robert LaValliere, the spokesperson for their owners, Cambior, at the signing of the Agreement, “It's a natural way of being a good corporate citizen. We will help the government by providing a technical service, trained people and equipment on a contractual basis and they will pay for all the costs; investment of US$30mn-$35mn is required to "revitalize" the operation and Cambior is assisting the Guyanese government to raise these funds from development agencies such as the World Bank”
OMAI got everything they asked for and proceeded to rehabilitate all of the critical pieces of plant and equipment including, the prized Kiln 14 (which was commissioned in 1978, but had fallen into disrepair under Minproc).
In 2005, OMAI acquired a majority shareholding in the company holding the assets of the Linden Operations. However, the sum they paid to the Government appears to be top secret. Perhaps, since the Prime Minister, in his recent response to Mr. Lincoln Lewis, did not refute Mr. Lewis’ assertion that the Linmine operation was sold to OMAI for US$1.00 (a figure often quoted by Mr. Edo of the Adam Smith group), this may yet be true. This contradicts earlier statements that it was sold for US$10 million - US$5 million in cash and US$5 million in equipment. In fact, the Press Statement, issued at the inauguration of the new company, gave the impression that an investment of US$40 million was required.
As far as we are aware, there is still no accounting for the US$5 million cash. However, there is ample and visible evidence that the US$5 million in kind, consisted of a few pieces of fully depreciated mining equipment, a small number of beaten-up trucks and three (3) depreciated power generators from the OMAI gold operation.
According to the OMAI Chairman, there would be a first phase of investment of US$24M, which would be completed by 2005, to be followed by a second phase where US$14.5M would be invested to increase Refractory Grade Bauxite (RASC) production to 230,000 tonnes per year, followed by the refurbishment of a third kiln to increase RASC production to 300,000 tonnes per annum.
Given the expressed intentions of OMAI, with respect to Refractory Grade Bauxite production, it is difficult to understand how the Administration justified giving them control over the Block 37 bauxite deposit, categorized as the single largest deposit in the world of high grade tri-hydrate bauxite. It was known that this Bauxite deposit would be the dream of any major Aluminum company planning to invest in an Alumina Refinery capable of producing 1,000,000 (1million) tonnes of alumina per annum for a period of more than forty (40) years.
Just over one year, after promising to dramatically increase RASC production and to rehabilitate a third kiln to further increase production, OMAI announced a two(2) month closure of the Bauxite plant at Linden (effective 1 July 2006), ”due to reduced demand for RASC as a result of the dumping of Chinese bauxite in international markets.”
Two (2) weeks after that announcement, the company declared that it was selling all or part of its shares, in the Linden Operations. By December 2006, that decision had paved the way for the entry of BOSAI, Linmine’s major competitor in the International Refactory Bauxite Market, for to acquire the facility and put the l.inden Community in the predicament it now finds itself.
There is little evidence of the two phased US$38.5 million investment, promised by the OMAI chairman. However, at the time of the handover to BOSAI, OMAI claimed to have invested a total of US$70 million, in fixed and working capital, into the Linden Operations.
The Guyana public and the world were greeted, in the Sunday 14 February 2007 edition of the Stabroek News, with the headline “Linden Bauxite Deal Blessed” followed by the crisp first paragraph, “Bosai Minerals of Chongqing in China is buying Omai Bauxite Mining Inc. (OBMI) with the sole purpose of continuing its operation and increasing sales, and a joint statement that the building of an alumina refinery was set for the end of 2009”.
It is unthinkable that the representatives of the Guyana Government, in approving the sale of Linmine to BOSAI, did not pay serious attention to the danger this could pose for the future production of Refractory Grade Bauxite at Linden. Bosai was Linmine’s only major competitor in the International Refractory Bauxite Market. Therefore, the acquisition of the Linden Operations by BOSAI was effectively handing over to the Chinese company a global monopoly for this strategic product.
It should be recalled that the Leader of the Opposition, in his statement, at that time, expressed the serious concern that the agreement opened the possibility for BOSAI to close the Linden Operation in order to remove the only competition to Chinese refractory bauxite and fully establish their world monopoly of this critical input for the Western world’s steel, aluminum and other metal processing industries. The developments, with respect to the production and sales of RASC from the Linden Operations, over the past two years, have definitely vindicated his observations.
The Agreement, with the Government, establishing Bosai Guyana Mines Inc, contains many conditions that could prove difficult to enforce. In this regard, the terms and conditions applicable for the establishment of an Alumina Refinery, based on the allocation of the prized Block 37 Deposit - which was simply used by OMAI as a bargaining chip to inflate the value of the Linmine Operations - purports to bind BOSAI to starting the construction of an Alumina Refinery by end-December 2009, failing which, the Block 37 Exclusive Exploration permit would be withdrawn. The relevant clause stipulates 18 December 2008 as the latest date by which the terms and conditions for the purchase of the existing Alumina Plant at Linden should be concluded.
President Jagdeo took the nation and the mineral world by storm with his November 2008 announcement of an agreement with BOSAI for a US$1 billion, 1 million tonne per year Alumina Refinery, to be followed by a 500,000 tonne per year Aluminum Smelter to use the alumina from the Refinery and a Hydro Power Facility to provide power for the Smelter. Nothing in this, so called, new Agreement was really new (except for some production capacity numbers), since every item in it appeared in the original Agreement submitted to Parliament through the Secretary to the Cabinet on 25 May 2007. It appears as though the Government was again out-foxed by BOSAI, since the new Agreement automatically nullifies the original agreement, with no firm deadlines and leaves them in control of Block 37 for an indefinite period.
The original pre-feasibility study, which was to be undertaken during the latter part of 2007, as reported in GINA’s 9 May 2007 edition, never materialised, but was apparently superseded by the study refer to under the new agreement. This study was first scheduled for completion, according to Bosai, within two months of the signing of the agreement, i.e. January 2009. This date was shifted, according to the Prime Minister, to the middle of 2009 and later still by September of 2009. As of today, 26 November 2009, we are still anxiously waiting to hear the findings of that study.
The Cabinet Secretary’s report to Parliament also proudly sets out the following BOSAI 3-year production plan:
Year RASC Bauxite Chemical Grade Bauxite
2007 150,000 - 200,000 metric tonnes 100,000 - 150,000 metric tonnes
2008 200,000 - 250,000 metric tonnes 150,000 - 200,000 metric tonnes
2009 250,000 - 300,000 metric tonnes 200,000 - 250,000 metric tonnes
There were also the longer-term plans for the production of new products -mullite, alumina cement and abrasive grade bauxite - in addition to the incredible estimate of US$1.0 billion for an Alumina Refinery, Aluminum Smelter and Hydro-Power Plant.
The plan is relatively modest in terms of RASC but highly optimistic in terms of Chemical Grade. Unless, of course, the plan was to substantially replace RUSAL in Berbice, which produces genuine Chemical Grade Bauxite as against Tailings which would be sold by BOSAI.
BOSAI exceeded the maximum target by some 18,000 tonnes in 2007 and fell short of the 2008 target by only the same amount. However, even as the impact of the world economic meltdown had started impacting negatively on all the refractory bauxite consuming industries in the Western economies, BOSAI announced a minimum 70,000 tonnes increase in RASC sales for 2009 - almost 40,000 tonnes above the minimum in the Luncheon presentation, with the Company Secretary and other BOSAI officials, at a 26 February 2009 meeting, apparently convincing President Jagdeo that Bosai’s plans for Guyana would not be affected by the global economic crisis since Bosai produced refractory grade bauxite which was less affected by the crisis, than Metallurgical Grade Bauxite. Hence the plans for the Alumina Refinery were unaffected. BOSAI added the sweetener of the company considering ventures in Forestry and Agriculture.
Low and behold, on 3 April 2009, less than two months after their glorious predictions, BOSAI’s Human Resources manager announced to the nation that the company was reducing its 2009 RASC production target from 288,000 to 200,000 tonnes and laying off 110 employees, “due to the slump in steel production resulting from the trickle down effect of the world economy.” On 4 June 2009, the company announced a further 32 job cuts and a few days after its two operating Calcined-Bauxite Kilns went smokeless.
The overall impact of all this is that RASC shipments, to end-October 2009, was only 80,000 tonnes - quite a long shot from the 200,000 tonnes to which BOSAI is sticking and which the Government officials apparently believe is still achievable. Their sales of Chemical Grade Bauxite has fared no better, total sales, to end-October 2009, being only 70, 000 tonnes against the target of. 250,000 - 300,000 tonnes.
It is questionable whether the global economic crisis alone is directly responsible for the unprecedented decline in the sales of RASC. It is evident that there are more than market forces at work influencing the availability of Chinese bauxite and hence the price in the global marketplace. For example, it was discovered that the price of the lowest grade of Chinese refractory bauxite in the market, which five years ago was sold for under US$100 per tonne f.o.b. Chinese port, is currently selling at US$400 – US$450 per tonne.
BOSAI has increased the price of RASC, from less than US$175 per tonne five years ago, to the currently selling prices of US$500 - US$600 per tonne.
The Chinese regulatory authority for exports has now totally banned the export of refractory bauxite for the second half of this year (2009) leading to a desperate shortage in the Western markets.
In the present circumstances, if there were only market forces impacting on the International Refractory Bauxite market, we would expect to see ships lining up in the Demerara River for RASC, the only other international source of refractory bauxite. Instead, we see only two ships loading RASC since June 2009. We are left to wonders if it is the BOSAI price of RASC that is keeping the ships away or if there is a Chinese Government edict to withdraw the product from Western markets.
It is worthy of note that France and Germany are pursuing WTO sanctions against China, while one major US refractory bauxite customer has filed a class action lawsuit against BOSAI and China Mineral Processors for operating a cartel in contravention of US law.
For all practical purposes the bauxite operations at Linden are closed. Bosai has, so far, been a hopeless failure and we wonder if they would keep the Linden Operations functioning for another year.
Currently there is no serious mining activity at Linden. All that is taking place is quarrying of the “tailings” from the Washer Pond for processing and sale as “Special Chemical Grade Bauxite” - the only great new product they developed. The two RASC kilns continue to be smokeless, except for sporadic start-ups when there are visits expected from Government officials, delegations from international agencies or foreign organizations.
The mine site is littered with derelict equipment including most of the Chinese built trucks and other equipment introduced over the past year, surrounded by the few operational pieces of equipment to hide them from public view.
Though the work-force has not yet been reduced to less than 40% of the end-2006 level, which, according to the Acquisition Agreement, is the trigger point for a possible winding up of the operation, many of the employees are on a four hour working day while most of the others are performing well below their effective levels.
The Guyana Government cannot be unaware of the state of affairs in the Linden Operations, as the consequence of BOSAI’s policies towards the International Refractory Bauxite market. This has obvious and potentially disastrous implications for the well-being of the Linden Community. Therefore, the apparent casualness, of the response of the Prime Minister and other representatives of the Administration, suggests a frightening level of indifference. This confirms the perception that the Bauxite Industry and Bauxite Communities are certainly not being given the same treatment as the Sugar Industry and its linked Communities.
People’s National Congress Reform
Congress Place, Sophia,
Thursday 26 November 2009
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