Russian bauxite giant RUSAL will be considering the feasibility of a hydropower plant in the Upper Mazaruni area and this was one of three items covered in a Letter of Intent (LOI) signed during President Bharrat Jagdeo’s lightning visit to Moscow last week.
A press release from the Privatisation Unit issued through the Government Information Agency yesterday disclosed that the LOI covered – subject to feasibility studies – the hydropower plant, an alumina plant and an aluminium smelter. The alumina feasibility study has been mentioned for a number of years now but has still not gotten off the ground.
Meanwhile, at a press conference yesterday President Jagdeo also addressed negotiations for the Linden bauxite operations.
“We still want to have a successful conclusion to this arrangement.”
President Jagdeo expressed this position in relation to the US$46M proposed deal between IAMGOLD and Chinese company Bosai Minerals Group Co. Ltd., (Bosai). Bosai is seeking to obtain IAMGOLD’s 70% stake in Omai Bauxite Mining Inc (OBMI) and ownership of a power company Omai Services Inc (OSI) but the government wants certain assurances.
President Jagdeo told the media that on Tuesday the government discussed the IAMGOLD and Bosai proposed deal and IAMGOLD was invited in the discussions on this issue. Stabroek News was reliably informed that IAMGOLD executives arrived in Guyana yesterday for discussions and negotiations.
The president reiterated that the government had signalled its intent to report to IAMGOLD its position by Monday.
The government, as 30% shareholder, has the “Right of First Refusal” on this US$46M deal and so can choose to waive this right or match the offer being made by Bosai. The government was expected to state its position by January 22, but asked for an extension.
Safeguards about Block 37
President Jagdeo said yesterday that the government wants safeguards as to the continuation of operations of OBMI in Linden and that the ore body in Block 37, an asset of OBMI, will be utilized for an alumina plant or refinery. He reiterated that Block 37 should not only be utilized for bauxite production. The president explained that there are sufficient resources apart from Block 37, for bauxite production. It was also stated that Bosai is a competitor in the bauxite industry internationally and the government would not want the Linden operations to be scaled down – to the gain of Bosai’s other companies.
Stabroek News enquired from the president if the plans outlined by Bosai on January 28 in the Sunday Stabroek, to invest one billion US dollars for an alumina refinery and aluminum smelter, pursuant to a feasibility study by 2011, is in keeping with the government’s position on Block 37..
Jagdeo explained that the government has not seen this investment plan from Bosai and has not received a plan with timelines.
Nevertheless, the president noted that once information is supplied that speaks to the desired safeguards of the government, the government “will, maybe waive the right of first refusal.” The president was also confident that the government will be able to provide an answer on this issue by Monday.
“We are interested in a successful outcome,” said the president.
Bill Holrody, the director of international development at Bosai, had noted in an interview on January 27 that Bosai is a trader in RASC (refractory A special calcined) bauxite, not a producer, and as a trader in RASC it does not trade in OBMI markets.
Holrody had told Stabroek News that: “One of the reasons that Bosai wants to invest in Linden is that we have plans to build an alumina refinery and an aluminum smelter, in two phases. These development plans have been summarized to the government and this is why Block 37 is so very important to our long term plans.”
Of course, Holrody said, an operation of this type must have cheap and reliable power “and this will be the biggest obstacle for any company having such plans.” It was noted that a feasibility study for this type of operation usually takes up to three years, but it is expected that the first phase will be operating during 2011. And in the second phase, there will be a doubling of capacity by 2015, Holroyd had said. According to Holroyd, “when Bosai is approved by the government as the new shareholder, Bosai will be the largest supplier of refractory bauxite in the world – both as a producer (Guyana) and trader (China).
During the president’s visit to Russia this past week, he met Russian President Vladimir Putin and owner of RUSAL Oleg Deripaska.
The president reiterated that the discussion in Russia with RUSAL did not include Block 37 and refuted speculation that Block 37 was up for discussion in Russia.
Jagdeo also noted that a press release issued by OBMI Friday made certain erroneous statements. The statements which were said to be erroneous are claims that the government was privy to information on this US$46M deal from the beginning. President Jagdeo said that it was only in December 2006 that the government was informed about the deal.
The OBMI release noted that: “The government and NICIL (National Industrial and Commercial Investments Limited) were kept fully informed of the worldwide search conducted by the investment bank of BMO Capital Markets for an investor ready to continue the operations of OBMI.
The release noted that at all times NICIL and the government had access to the same information, that were made available to the companies to facilitate due diligence in the bidding process.
“This process was at all times transparently conducted, with full disclosure and publicly reported in the media.” NICIL is government-owned and is a signatory to the Shareholders Agreement of OBMI and the government.
Hydropower plant, aluminum smelter
In addition, while in Russia the president and RUSAL entered into a LOI for RUSAL to pursue the development of a hydropower plant, an alumina refinery, and an aluminum smelter.
A release from the Privatisation Unit noted that these projects are all subject to feasibility studies and if the results are positive, there would be construction of all three projects starting by 2011. Bosai also has a similar intent, in relation to OBMI.
These projects it was said will comply with environmental standards. A team from RUSAL is expected in Guyana by March to review and further advance the studies of the hydro plant utilizing the Upper Mazaruni area.
RUSAL is also expected to present by March, the results of its exploration works on deposits in Linden and Ituni, said the release. RUSAL received exploration licences for various bauxite deposits in Region 10.
The president while in Russia also met with the Russian Chamber of Commerce and Industry, the Vice Chancellor of the Russian People’s Friendship University and Guyanese students studying in Russia.
RUSAL is set to become the largest aluminum company in the world from April 1, 2007 following completion of the merger among RUSAL, SUAL and Glencore. RUSAL is currently operating a subsidiary in Guyana, namely Bauxite Company of Guyana Inc. (BCGI).
