Thursday, December 28, 2006

by Gordon French
Caribbean Net News Guyana Correspondent
Email: gordon@caribbeannetnews.com

GEORGETOWN, Guyana: The Guyana Government is reviewing a decision of Toronto-based mining and exploration company, IAMGOLD Corporation, to sell its stake in Omai Bauxite Mining Inc. (OBMI) and Omai Services Inc. to China's Bosai Minerals Group for US$46 million, and is likely to respond before the end of January.

Prime Minister Samuel Hinds, who has responsibility for the mining sector, said Wednesday that Government is in receipt of a copy of the provisional agreement between IAMGOLD Corp. and Bosai Minerals Group, along with other submissions.

OBMI was incorporated in December 2004 in a respective 70-30 per cent ownership agreement between Cambior and the Government of Guyana. Last month IAMGOLD completed an acquisition agreement of OBMI through a buyout deal with Canadian firm, Cambior Inc.

Prime Minister Hinds said that over the weekend, officials of Cambior met with the government to discuss the deal and make written submissions, which are necessitated by the shareholders’ agreement.

"We are in receipt of the provisional agreement and other submissions, and our technical experts are currently reviewing all of them... I think that Cambior expects us to reply by the end of January and we will meet that expectation," Prime Minister Hinds stated.

Last week, Speaker of the National Assembly, Ralph Ramkarran denied Opposition Leader Robert Corbin of a Motion to have Parliament adjourned to discuss the sale agreement, as a matter of urgent public attention.

Ramkarran asked that Corbin allow three days to elapse before the Motion is considered, in keeping with a revised Standing Order, or have the Motion thrown out entirely. Corbin accepted the three-day option and later warned that the new deal could have serious implications for Guyana’s bauxite industry, which is the main source of income for many persons living in Linden.

He pointed out that OBMI was now being sold to a Chinese company that has competed with Guyana’s bauxite on the world market, stating that the new owners could opt to reduce the grade of the local bauxite or in a ‘worst-case scenario’, shut down the industry.

Corbin also told the National Assembly that the sale has opened Guyana to the vagaries of the international market. At the time of the Parliamentary deliberations, Prime Minister Hinds had stated that Government was not notified of the agreement and as far as the administration was concerned, the new agreement was not a done deal.

He related that Government has 30 days to place an official response after being notified and a subsequent 60 days to make any further responses.

IAMGOLD announced last week that under the terms of agreement with Bosai Minerals, the effective date of the transaction will be December 31, 2006. Subsequent to a confirmatory review of the assets by Bosai Minerals, IAMGOLD will receive consideration of approximately US$28 million in cash from Bosai, subject to working capital and other adjustments. The agreement is contingent on a number of conditions, including receipt of customary approvals from regulatory authorities. In July, OBMI suspended its operations for two months, brought on by the prohibitive cost of production of Refractory ‘A’ Grade Super Calcined (RASC) bauxite and plummeting prices for the commodity on the world market, largely because China was selling it at a cheaper price.

The steady decline of market prices forced the company to downscale production of this high grade ore from 30,000 tonnes to 15,000 tonnes monthly.

In March of this year, the bauxite company retrenched workers with the aim to cutting back on production cost and becoming competitive on the international market. Sixty-one (61) workers have ended up on the breadline since the decision was taken.

Bosai Minerals Group owns 16 plants and companies in Chongqing, Guizhou, Tianjin, Guangxi, Hong Kong and Germany. According to the company’s website, there is a high demand for its product in Europe, North America, Japan and India.

Its website also states that output and export volumes of Calcined Bauxite is No. 1 in China and the output and export volume of Brown Fused Alumina is No. 1 in Asia and No. 2 in the world.

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