In the wake of bauxite companies Bosai and Rusal failing to deliver on several promises made to the Guyanese people, veteran trade unionist Lincoln Lewis is calling for the establishment of a Foreign Investment Commission that will monitor all investors in the country.
Lewis, who is the General Secretary of the Guyana Bauxite and General Workers Union (GB&GWU), during a recent interview with Stabroek News, expressed his disappointment at the failure of the bauxite companies to deliver on their promises, especially to build an aluminium plant here.
In January, during the budget debates, Prime Minister Sam Hinds told the National Assembly that a feasibility study conducted by the Chinese company Bosai Minerals Group late last year did not favour the establishment of an alumina plant in Linden. Hinds reported that Bosai cited, among other problems, the high cost of the bauxite fee, due mainly to the high stripping ratio and the high cost of shipping products to international markets. “Our government is disappointed with this negative result, but it is better not to proceed if you can’t see profits, if you can’t see profitability,” Hinds had said.
Lewis said he was not surprised by these developments and called for the deals with Bosai and Rusal to be revisited by the government. Bosai had signalled its intention to invest US$1 billion in an alumina refinery and aluminium smelter. In November 2008, the government and the head of Bosai signed an agreement to permit the company to conclude a feasibility study to determine the financial and economic attractiveness of establishing a one-million-tonne per year alumina plant in Linden.
Previously, in January 2007, the administration had entered into a Letter of Intent with the Russian bauxite giant Rusal to pursue the development of an alumina plant and smelter. But nothing has come out of this so far.
The Privatization Unit had said that these projects were subject to feasibility studies and that favourable results could see the construction starting by this year.
“I remember well when these companies were coming on board, Sylvester Carmichael [the former marketing director of Linmine] had written extensively on this and his conclusion was that the question of an aluminium plant would never be realized by these guys,” Lewis said. According to him some senior government officials, including the Prime Minister had criticized Carmichael for his statements. Carmichael expressed concerns about the credibility of Rusal and other overseas investors saying they had long-term interests elsewhere and could source their short-term demands cheaply from Guyana.
“We have been taken for a ride,” Lewis insisted. He noted that in the bauxite industry in Jamaica, the Bauxite Institute owns the reserves and any company that wants to develop or mine bauxite has to go to the Bauxite Institute which would release reserves to the company.
He said government had unwisely decided to sell most of its reserves. All of the reserves (particularly in Demerara) were given up for a dollar and the company was sold for sizeable sums after, Lewis noted. “It is not illegal, it is untenable,” he argued. “The reserves belong to the country they don’t belong to any company. So if anybody wants to develop bauxite in that area or build up an aluminum plant, they would have to go to that company and let that company consider the bidder,” he said.
The Prime Minister, during the budget debate, said that a new bauxite company has had positive results from a feasibility study which was conducted in the Bonasika area, and adequate reserves in terms of grade and volume have been identified to justify the establishment of a mine and plant to produce a calcite bauxite product and other non-metallurgical bauxite products.
However, Lewis feels that the establishment of a permanent Foreign Investment Commission which looks at all potential investors and determines whether the investment is needed or not could serve as a long-term solution to companies not fulfilling their promises. He said that this commission should take on board “reputable persons from various interest groups” and should be answerable to Parliament.
“A lot of major companies are running into problems with the Amerindian communities and what we do, is that we sit down and allow them to buy out the leadership in the communities with a couple of dollars, not understanding the cultural, ancestral factors in these situations,” he said.
When contacted, Lance Carberry, the PNCR-1G shadow minister for energy and mining, told Stabroek News that proper due diligence ought to be done on any company that intends to invest in Guyana. He said that as part of the agreements with these foreign investors, the government has to ensure that they have penalties for non-performance. “The penalties should be such that the investor would not want to incur them,” he said. He identified fines and actions against the concessions as possible penalties. He said that the case should never be that investors make promises and when they cannot fulfil them, “the government bends backwards” to find excuses.
He said when it came to encouraging investors, the country needed to first make up its mind about exactly what it wants to do and how it intends to go about doing it. He said that whatever projects are pursued by investors must be in keeping with what the country wants.
Carberry did not endorse or veto Lewis’ suggestion of a Foreign Investment Commission saying that he did not know exactly what the trade unionist had in mind. Carberry said though that ideally all the plans of all the investors should be subject to parliamentary approval. He noted though that this has not been a feature of the PPP/C administration.