Dear Editor,
This Government has been steadily striving to arrange and, as far as it could, achieve sustainable operations within the bauxite and sugar sectors, traditional mainstays of our economy and society. Even so, we are aware that to achieve the social and economic development which we Guyanese ‘long for’, we should be working towards an economy that would be ten times that which we have today, in value and in diversity. That, essentially, would be a new economy. Bauxite and sugar have been ‘good to us’, but are not likely to provide that increase! We need to ensure that we prepare and dispose ourselves to learn of new economic activities, and look to the future! Hence, whilst I have been noticing, I have, nonetheless, been letting ‘pass by’ a number of articles on bauxite, and bauxite vis-a-vis sugar, such as:
* Lincoln Lewis in Kaieteur News of 2009-09-12, `The same principle that is embraced for sugar must also be embraced for bauxite.’
* S.L. Carmichael in Stabroek News of May 20, 2009, `Can Guyana depend on RUSAL for bauxite development?’
However, I cannot allow passage of the inaccurate and unjust charges repeated once again, by:
* Lincoln Lewis in Stabroek News of 2009-10-11, `The issue is the discriminatory way the Government treats bauxite as compared with sugar.’
Bauxite and Sugar engender great, but often different, emotions in Guyanese, particularly older Guyanese like Lincoln and me. And this is to be expected: sugar and bauxite have, in their respective ways and in their own times, brought money and recognition and pride to Guyanese and Guyana. Although both Lincoln and I have been employees of the bauxite industry since the 1960s, and have remained strongly associated with bauxite unto this day, we do hold very different views. Further, I think that there are facts which Lincoln either cannot see, or chooses to belittle or ignore.
Let us look at what might be the germane paragraph of Lincoln’s contention in Kaieteur News of 2009-09-12.
“The PPP, on coming into office, embraced the privatization of bauxite but refused to put a safety net in place to deal with the resulting social and economic consequences, while at the same time it ignored the recommendation of SAP (Structural Adjustment Programme) to deal with sugar.”
What are the cold facts?
Under the SAP, GUYSUCO, put by the PNC in the late 1980s under Booker-Tate management, was to be returned to profitability, then to be privatized: and there was a return to profitability, but this Government did not privatize Sugar.
L1NMINE, put under MINPROC management, was to be privatized if it was made profitable, or be closed if it could not be made profitable. Lincoln would recall that there was a previous MFI intervention in 1983 to turn GUYMINE to profitability, which intervention did not succeed. This, therefore, was to be a second and last chance for bauxite to be shown to be profitable. In
1994, MINPROC declared that they could see no way to make L1NMINE profitable, but this Government did not close L1NMINE, as was required by the SAP.
Bauxite was privatized in 2004, twelve years after this Government came into office and only when good, sound privatization offers came, even though, by themselves, neither of the two bauxite operations was covering its costs. This Government did not come into office with any preconceived position on bauxite.
LEAP
Whatever Lincoln may think of LEAP, which has come and now is almost gone, it was this Government’s awareness and concern about dealing with the social and economic dislocations arising out of a shrunken operation, that saw the then young Junior Minister of Finance (now our President) leading a team for a week-long social and economic study of the Linden community, the results of which study providing the basis for the application for LEAP. LEAP was born out of this Government’s approach to the Donors to provide L1NMINE workers and the Linden community a third chance – this time, beyond and outside of bauxite! This Government sought an intervention, in LEAP, which was twice what was eventually granted. The Donors ‘cut out’ much of the proposed infrastructural improvements and reduced greatly the budget for loans, arguing that LEAP should focus on people changing: the changed people would then make use, like others, of whatever resources were available in the society, whether concessionary or commercial.
And when, eventually, bauxite operations were to be privatized, re-fashioned and restarted, this Government put more than $2 billion to ensure that workers received what they were due, and even more! For L1NMINE, close to $2 billion was required to clear long-standing payments to PAVE, NIS, a Workers’ Savings Scheme and outstanding leave, and to cover an actuarially-calculated deficit in the Bauxite Pension Plan and to provide an enhanced severance payment to all workers! And about another G$O.5 billion was required to do similarly for BERMINE.
Lincoln must see this Government as having given money to pension schemes in both Bauxite and Sugar, and having acknowledged these interventions, see a Government striving to deal even-handedly with all, and being indifferent to race, industry or region.
Additionally, Lincoln would be aware, too, that this Government has so far not changed the traditional give-away electricity tariffs in bauxite communities, which required about G$2.3 billion last year and is heading this year toward G$2 billion.
Lincoln refers to this Government as saying at the time that it will not close the Demerara Estate, seeking to imply the usually assumed, pro-Indian stance of this Government. Well, hear this! One early morning in 1998, it fell to me to visit Bareroot (very nearly all-African) and Enterprise (very nearly all-Indian), after gunshots were traded during the night, thankfully without any injuries on either side. It turned out that a number of Bareroot residents were cane-cutters who would join the workers’ trucks ‘foreday morning’ at the pick-up point in Enterprise. The Bareroot residents claimed that they were not racial, and showed me an Indian girl from Enterprise who was living with an African boy in Bareroot without any fear! They went on to claim, however, that “is only because we black people here finding Iii wuk cutting cane that your Government now wanting to close the Demerara Estates!” A number of Guyanese, both African and Indian workers, are fearful of the Demerara estates being closed!
Identical
This Administration, indeed, has not treated Sugar and Bauxite in an identical way, but in both cases, it varied from the MFI’s prescription. In any case, is identical treatment really the answer, when the paths and positions of companies are different? Rather, we have sought to treat Bauxite and Sugar, and their employees and communities, equitably, fairly and sensibly. Bauxite, its employees and communities, may have, in many ways, received more attention and support than sugar!
Lincoln would have heard of others who charge that this Government, in supporting sugar, is seeking to keep Indians trapped as cane-cutters, hewers of wood and drudgers of water, while African bauxite-workers are being exposed and introduced to computers, away from bauxite mining and towards the modern world.
We have real problems on which Lincoln, and all of us, should be focusing. As Professor Clive Thomas has observed somewhere, the costs of production of our sugar, bauxite and many other goods and services, have been significantly above free-market prices (recognizing all the valid criticisms of free-market prices). The real, and key, difference between Sugar and Bauxite has not been of this Government’s making, or choosing. The primary difference has been the fact that sugar, until recently, enjoyed preferential prices which enabled it to easily cover the costs of production at US16 to 18 cents/lb, which was above the free-market price of US8 cents to 10 cents/lb; whilst bauxite did not enjoy any preferences, and, on the average, received about US$70 for every US$100 of total costs incurred! This, in my view, is the reason why Booker-Tate, installed as Manager at GUYSUCO by the preceding PNC administration, could have turned things around at GUYSUCO!
Whilst the prescribed consequence of a profitable GUYSUCO was privatization, it must be recognized, nevertheless, that here was a situation of profitability but within a special circumstance! Even so, there were many questions asked. Lincoln would recall the ‘noises’ made as to whether the patrimony of preferential prices should go to the private owners or, rather, somehow kept by the State: but if retained by the State, would anyone want GUYSUCO without that benefit of preferential prices? And what about passing control of vast acreages of land over to private ‘hands’?
MINPROC, however, installed by the same PNC administration to manage L1NMINE, with Guyana’s bauxite products naked on the international markets and without the saving grace of a preferential price, and suffering a number of severe, if not deadly, natural disadvantages, eventually reported, not primarily to our Government but to their employing pay-masters in the Multilateral Financial Institutions, that they could not see any way in which the bauxite operation in Linden could be made profitable on a sustainable basis! There was no collusion between this Government and MINPROC, as Lincoln proclaims; on the contrary, the relationship was more of a frosty distance!
The prescribed consequence of MINPROC’s declaration was for this Government not to return, once more, to subsidizing L1NMINE from the Treasury, but rather, to close L1NMINE, as no one would be expected to purchase a loss-making company, and, indeed, the first formal and informal invitations to bid ended with some interest expressed, but with no actual takers!
Lincoln affirms in Stabroek News of 2009-10-01 that “The closure of any industry results in job loss”, but is not charitable enough to acknowledge that, for that very reason, this Government defied the MFls and, as a result, L1NMINE was not closed. This Government resisted that expectation of the MFls by re-establishing and continuing various subsidies and relief support to the Company which now again was being managed by the Government. Not long after, ALCOA bought Reynolds, including the about five-year old Reynolds-managed ABCI AMC 50:50 partnership at Aroaima, in the Berbice River. ALCOA soon informed this Government that it intended to close that operation. Again, this Government chose not to close ABC/AMC but to take-over ABC/AMC for $1, and folded BERMINE into ABC/AMC. BERMINE, without outside investment since its de-linking from L1NMINE in the late 1980s, was completely ‘run down’, and on its ‘last gasp’!
The new ABC/AMC, to meet the competition at the prevailing market conditions, had to sell its bauxite at US$19/ton, when it needed US$29/ton to cover all the costs to be recognized, of which about half was cash costs, and the other half non-cash, foregone-maintenance and amortization (capitalization) costs. Fortunately, ABC/AMC came to the Government with some cash in the bank, and an equipment fleet still in good condition, but both the cash and the fleet would be ‘run down’ as the days were to go by – it was certainly not a sustainable situation!
BOSAI and RUSAL
It is in this light that one should see the privatization of L1NMINE to OMAI/CAMBIOR/IAMGOLD, then to BOSAI; and the merged ABC/AMC to RUSAL. Privatization for these companies, saved the day! Privatization brought urgently-needed investments to both companies.
Lincoln, from his long association with bauxite and with OMAI, should be ashamed of representing the brief loss-making ownership of OMAI/CAMBIOR as ‘buying for US$l and selling for US$46 million’! Lincoln, more than anyone, should recall the two-month ‘shut down’ of the OBMI operations in Linden, and the losses CAMBIOR suffered from its bauxite venture. It is wicked of Lincoln to speak of “buying for $1 and selling for US$46 million” while taking no account of the investments made. Lincoln would know, too, that OMAI/CAMBIOR intended to close the operations if no acceptable buyer came along, and would be cognizant of the Government’s role in encouraging BOSAI to ‘step into CAMBIOR’s shoes’.
Privatization is, inherently, neither a good thing nor a bad thing, but is a tool to be used like any other in securing our livelihoods. Privatization brings investment, additional expertise and experience, and better access to markets, which is especially important for goods being exported to markets wherein one is a small player. Whilst one regrets the cut-backs in production this year to about 50% of what was planned in the case of BCGI/RUSAL, and 60% of what was planned in the case of BMGGI/BOSAI, without RUSAL and BOSAI as majority partners, these operations would likely have been closed for much of this year, if not permanently.
Though I have no doubt that Lincoln and others believed earnestly in their offer of a Management ‘buy-out’ for US$20 million, I remain certain that, realistically, it was little more than earnest, good intention. And if CAMBIOR lost money paying $1, think of the losses it would have incurred after having paid US$20 million. The Government would have been faced with calls for a double bail-out – bailing out the management consortium from its creditors, and, separately, the company with its workers and community.
Today, the situation with Sugar is changed: with preferential pricing almost gone, Sugar is’ clearly in a position more like where bauxite was when the SAP was introduced. Lincoln, accepting that he wants to be helpful, should be telling the complete story. He should be telling of the warning our President did not hesitate to put before sugar workers at the last Enmore Martyrs Day!
When President spoke, he rebuked Ms. Burton for not presenting a whole, complete story in her address but choosing to jump from the Enmore Martyrs in 1948 to the GPSU strike of 1999 and saying nothing about the 50 years in between. And he went on to say, “you, too, Komal didn’t speak the complete story – you spoke about problems of the Managers and everyone else, but not about the problems caused by the workers, not about their 40% turn-out on many occasions. President warned that with such turn-out, sugar would not survive and might well find itself closed down.
Let me be fair to Lincoln – I have not noticed any reporting of the President’s frank warning in any of the media in Guyana, and perhaps I might have begun to doubt my own ears, but at least one other person heard that view too, for as it happened, I was in Trinidad early the very next morning and there on the 8 o’clock radio news, I heard it said: “President Jagdeo warns sugar workers that sugar could be closed.”
Sugar workers should not put any faith in claims by Mr. Lewis that they, irrespective of everything, can rest secured in a special, favoured relationship with this Government. Nor should bauxite workers be deluded by the view seemingly advanced by Lincoln that the biggest problem for bauxite has been this Government. Rather, sugar workers, bauxite workers, and, indeed, all of us workers, should add to our credo that secure jobs and livelihoods are founded on work-places being secured, with costs being kept less than the best revenues that could be won in open competition. Special favours cannot for long secure uncompetitive work, nor can prejudice prevail against competitive performance for long!
Yours faithfully,
Samuel A. Hinds
Prime Minister