Over the past
several weeks certain facts have surfaced which lead me to modify my view on
the bauxite situation.
probably the largest bauxite company in the world, with mines/smelters in 39
countries, their annual revenues world-wide is 22.9 billion US, this country's total annual budget is only 342
million US. These people's revenues are 6700% more than
out total national budget! Part of their holdings is the Bauxite industry in Suriname and they have done very well in Suriname over the years to the benefit of the Surinamese
people and have even built a smelter there. Now remember that we entered this
partnership at Araroima with Reynolds in 1989 not Alcoa.
In 1998 after a
prolonged anti trust lawsuit with Reynolds, Alcoa took over most of the assets
of Reynolds, including the Guyana Arorima mine, this court battle which began
around 1995, affected Guyana in a very fundamental way.
It was during
this period the Reynolds became an untrustworthy partner with the government of
Guyana, since from 1994 to 2000 Reynolds who managed Arorima
did not make a profit in any of those years.
battle ended with Alcoa owning much of Reynolds, who were only left with the
chemical grade smelting plant located in Corpus Christy, Texas. But apparently this chemical Grade facility in Texas is the genesis of all our woes.
In 1998 after
the court battle, it appears that the price for the Araroima bauxite for the
plant in Texas, which was retained by Reynolds, was set
at 26 US dollars per ton. The Guyana production from Arorima was at the time 2
million tons of bauxite per year.
In the year
2001 commencing January 1st, Reynolds probably in an effort to victimise Alcoa,
cut the demand from 2 million tons per year to 1.3 million tons per year for
the Texas smelter. They claimed that they had
commenced mining in Sierra
Leone and the smelter
capacity was approaching saturation. Probably so, but I doubt it.
2002, Reynolds have now announced, they will only be paying seventeen dollars
and twenty cents per ton for the Araroima Bauxite from Guyana.
operation in Guyana has spin-offs, which helps our local
Bauxite industry in many ways. The most important are the following
They are retaining the
Viceroy shipping line to move their 2 million tons of bauxite from Berbice to
the US. The shipping of bauxite from Guyana is in two parts, barge from the mine to the mouth of
the Berbice River then Trans
shipped to the ocean going vessels, even Linmine is now shipping from this
Berbice location even though they are located in the upper Demerera River. Linmine and Bermine who ship only 300,000
tons of bauxite per year benefit from this since, they cannot afford to ship
their 300,000 tons per year on their own, since things like demurrage charges
etc. are, and have been too high.
To maintain this Trans
shipment between the barges and the ocean going ships, Boskalis were retained
to constantly dredge the Berbice River to the tune of
about 5 million US per year.
Now that Alcoa
is no longer there to finance these operations, it can have a significant
effect on all bauxite operations in this country and may even cause more
financial problems for Bermine and Linmine; the effect can be so profound that
it can probably close all Bauxite operations in the country in time. We can ask
everyone to take a drop in pay but we cannot guarantee that this will be
sustainable; We have to wait and see.
year Alcoa approached the government and made some proposals concerning the
Araroima mine. They did not want to run this mine as it was only obtained as
part of the Reynolds take-over; we already know what those proposals were.
that Alcoa, unlike Reynolds; have proved to be a trustworthy partner with the
government of Suriname. Alcoa has in fact now announced and it
was reported in our newspapers that they will build another US 2 Billion
Hydroelectric plant to smelt more Bauxite in Suriname, and put the surplus power into their national Grid.
Because of the
controversy that has surrounded this matter after the elections, the government
failed to give a decision to Alcoa and the company has now sold all its assets
in Araroima to us for 1 dollar US, thereby literally telling us to take our petty
squabbling among ourselves and go to hell. We lost out again. We will continue
to lose out. Imagine a hydroelectric installation in Berbice smelting our
bauxite to alumna and feeding the surplus into a national grid.
There is little
doubt that the Government failed to monitor the court battle and the
deteriorating situation between Alcoa and Reynolds and what the effects would
have been for Araroima, there is little doubt that they did a miserable job of
public relations in not alerting the Guyanese people as to the consequences of
not giving Alcoa a decision earlier, but most importantly the government in an
effort to avert a disaster in the bauxite industry began carrying on hurried
and secret negotiations with Alcoa regarding this Araroima mine.
It was an ill
advised and dangerous thing to do, since when discovered it raised suspicion in
the mind of the opposition, who were in dialogue with the government concerning
the resuscitation of the bauxite industry, not to mention the reaction by the
unions which discovered that over 500 jobs would be lost in the process.
furore prejudiced our situation with Alcoa, I am afraid that we may yet live to
regret this, why couldn't the President and the Prime Minister of this country
knowing that this was the first and presumably the most import of the 17 Hoyte
demands, call in the leader of the opposition and the Unions and tell them of
the urgency of the Alcoa situation? And collaborate on an amicable solution in
our Parliament, that is what it is there for.
Why all the
secrecy? In almost all the business of this nation? It is working against us,
indeed it is and has been ruining us as a nation, it is creating suspicion and
distrust everywhere, it is the point of my comment tonight, why all this
secrecy? And let's be fair ladies and gentlemen, this secrecy did not start in
1992, it just got worse. Why for example is GP&L half of which is owned by
the people of this country, mortgaging all of its immovable assets to the
National Bank of Industry and commerce and the Republic Bank of Trinidad and Tobago? This order of debenture was published in
very fine print in the newspapers on the 8th September 2001.
How can this
government mortgage our company without telling the citizens of this country
who own half of it, why they are doing so? Has ESBI paid us the 23 million they
were supposed to? If not, why not? If we are mortgaging our assets to pay for
equipment/development in GP&L aren't ESBI being dishonest? Aren't they
borrowing money based on assets of our GEC which they do not fully own. Why did
we agree amid much secrecy to pay a guaranteed 23% of the assets of our GEC to
this Irish company, not 23% of the 23 million US, ladies and gentlemen, 23% of
the total assets of GEC!
If you have 23
million dollars US and you put it in a bank in the US and that bank pays you
4-6% interest [which is the current prime rate in the US] you are getting about
1.27 million per year from that investment, if you invest it in a business
which is GUARANTEED to return of 10% you are making 2.3 million profit, of
course NO business will GUARANTEE you a 10% return, but WE did, we guaranteed
23%! Why was 10-12% not enough for ESBI, especially in view of the enormously
expensive management contract we have been paying them, and did we not make
this ridiculous guarantee of 23% return, based on their bringing the 23 million
to fix our GEC, if this company did not have 23 million US dollars to invest in
GEC they should not have bid on the purchase of it, the 23 million should have
been put into GP&L immediately after the take over to fix the problems
which are now surfacing at GPL, that was why we privatised it in the first
Come on people
what is the matter with us? Are we blind? Are we going to wait for the price of
our electricity to go up to 1 million dollars per kilowatt before we act? We
did exactly the same thing with GAC, after it was privatised, the buyers, a
group of local businessmen headed by Mr. Easu Persaud who were in partnership
with the people of this country, since we retained part ownership of the new
company, GA2000, borrowed money from Demerara Bank, are our people aware that
they lost substantially in the closure of GA2000 since they were shareholders
of that company. Is it too far fetched to suggest that in a few years Republic Bank of Trinidad and Tobago will be the owners of our GEC? You tell me!