A former senior official in the local bauxite industry has told Stabroek Business that it is unlikely that the Government of Guyana can do a great deal to reverse the recent sale by IAMGGOLD of its 70 per cent stake in the bauxite operations at Linden to the Chinese mining giant Bosai. And the source told Stabroek Business that notwithstanding the fact that the Chinese company had agreed to pay such a high price for the majority share in the Linden bauxite operations it was not “beyond the realm of possibility” that it could make “a strategic decision” to simply close down the operation.
The source said that given what appeared to be the “strategic importance” of the Linden bauxite operations to Bosai as reflected in the price that it had agreed to pay for IAMGOLD’s shares the Government of Guyana may wish to offer ten per cent of its own shares to the Chinese company.
The source who admitted to not ever having seen the agreement between the then Cambior and the Government of Guyana over the sale of the majority share in the Linden bauxite operation said that while the key to the controversy that erupted in the wake of the recent sale lay in the terms of the contract it had already been made public that the government was fully aware of the fact that IAMGOLD was selling its shares long before the deal between IAMGOLD and Bosia had been struck. “The obvious question that arises is why did the Government of Guyana wait until now to raise questions about the transaction,” the source said.
In the wake of the controversy that has arisen over the transaction President Bharrat Jagdeo has said that the sale was not “a done deal” since the agreement had stipulated that the Government of Guyana be offered first refusal in the purchase of IAMGOLD’s shares. However, the source argued that even allowing for a ‘first refusal clause” the multilateral lending agencies – the IMF and the World Bank – would probably have disapproved of any move by the Guyana Government to exercise the option of “buying back” IAMGOLD’s shares.
Just over two years ago the then Cambior acquired a 70 per share in the Linden bauxite operations under an agreement that involved a US$5m cash payment and an injection of a further US$5m in equipment into the ailing company. The new company, Omai Bauxite Company had also agreed to pump a further US$40m investment into the company.
Last month controversy surfaced following the announcement that Bosai had paid US$28m in cash for the 70 per cent Omai bauxite stake in the company’s and had also agreed to assume responsibility for the company’s US$18m debt.
The Government of Guyana holds the remaining 30 per cent stake in the company.
Nanchuan Minerals – Bosai is the name used by the company for all of its worldwide business transactions – was established in 1988 and has emerged as one of China’s leading mining, manufacturing and processing groups. The privately-owned group, the largest processor and exporter of calcined bauxite in China has assets totalling around US$100m.
