-bigger 2009 target could be reduced based on market assessment
Despite the prevailing global economic crisis and lower output last year, the commitment of the Chinese bauxite company Bosai to setting up a US$1bn alumina plant here remains undiminished and the company’s feasibility study is scheduled for completion in September, according to information reaching Stabroek Business.
The company’s Linden operations, however, have declined to comment on the status of the alumina plant, pointing out that the execution of that project does not fall under its purview.
This newspaper has learnt that while the understandings reached between the Government of Guyana and Bosai up to this time are proceeding on schedule, funding for the US$1 billion dollar project will ultimately depend on the state of the alumina market. The price of alumina on the international market has slipped considerably during a period of less than a year. The current price per ton of between US$350 and US$400 is more than US$100 less than what it was last year.
Bosai Personnel and Industrial Relations Superintendent Peter Benny agreed to speak with Stabroek Business on “other issues” relating to Bosai’s local operations but specifically declined to address the alumina plant.
Industry analysts have expressed concern that the global economic crisis and particularly the reduced global demand for alumina is likely to impact on the likelihood that the Chinese company will still go ahead with such a sizeable investment here at this time.
Speaking with Stabroek Business in an exclusive interview earlier this week Benny said that it was no secret that the global recession had reduced the demand for alumina to a point where in some cases the price had slipped below the cost of production,
Meanwhile, according to Benny, while Bosai had not, until now, received any cancellations on orders to which its customers had committed the pace at which those customers were “drawing down” on their orders had slowed appreciably.
‘We are hoping that the market will start to show signs of rebounding by year end and we are gearing for that,” Benny said. .
Meanwhile, despite a shortfall in its projected production last year Bosai has set itself an even higher production target for 2009. This year, the company has set itself a target of 288,000 tons of refractory grade (RASC) bauxite; 150,000 tons of Chemical Grade (SCGB) bauxite and 60,000 tons of Cement Grade bauxite (CGB).
Last year Bosai produced 232,000 tons of RASC compared with its targeted production of 282,000 tons and 128,000 tons of SCGB of a projected 200,000 tons. Production of CGB in 2008 reached 98,000 tons out of a projected 100,000 tons.
Benny said that among the reasons for the 2008 shortfall were the unusually heavy rains during last year and late delivery of ordered equipment which meant that the company did not have its full mining fleet. He said that the rainfall had seriously retarded work in the mines resulting in the company not being able to benefit from an expanded stripping lead. “We were unhappy that we were unable to meet our stripping target given the fact that there was a demand for our bauxite,” Benny said.
Benny told Stabroek Business that despite the production targets set by the company it was likely that those targets may well be reduced by as much as 30 per cent. “It would be unrealistic to imagine that such a development will take place without implications for the company’s employment levels,” Benny said.
Meanwhile, Stabroek Business has been informed that Bosai is working towards its promised September deadline for the installation of its promised shield to alleviate the dust problem in Linden. Benny said that the company was awaiting the completion of the design of the dust shield and had met with both the Environmental Protection Agency (EPA) and the Guyana Geology and Mines Commission (GGMC) to discuss the alleviation of the problem. The company, meanwhile, is establishing a new US$150,000 environmental laboratory which, according to Benny, will, among other things, conduct tests on the quality of ground water and air quality.
“We are committed to respecting the environmental laws and to taking measures to reduce the impact of our operations on the community. Apart from that our role in supporting the community also extends to our work in the rehabilitation of roads and other facilities in the community,” Benny said.