Tony Vieira's Comments
22 October 2017

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Alcoa/Secrecy
(Aired 25 June 2001)

Over the past several weeks certain facts have surfaced which lead me to modify my view on the bauxite situation.

  Alcoa is 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. 

   The court 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.

   From January 2002, Reynolds have now announced, they will only be paying seventeen dollars and twenty cents per ton for the Araroima Bauxite from Guyana.

  Araroima's operation in Guyana has spin-offs, which helps our local Bauxite industry in many ways. The most important are the following

1.      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.

2.      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.

   Earlier this 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.

   Now remember 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.

  The resulting 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 place.

   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!