Tue | Sep 19, 2017

New Day bauxite partnership pacts on hold over Cockpit boundaries - Jamaican officials still

Published:Friday | June 30, 2017 | 6:00 AMAvia Collinder
Persons view a body of water in Cockpit Country.
A more expnsive view of the forests of the Cockpit Country in Jamaica's interior.
Permanent Secretary for the Ministry of Econimic Growth and Job Creation, Audrey Sewell, says Cabinet is now considering where the boundaries should be drawn.
Diana McCaulay, CEO of Jamaica Environment Trust, says her group has been pushing for a resolution to the boundaries since 2013.
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A senior mining official is urging the quick resolution of the Cockpit boundary markings to determine where bauxite companies can drill for ore, saying it is hobbling the completion of partnership agreements with latest market entrant New Day Aluminium Jamaica Limited.

New Day is an affiliate of Dada LLC, which acquired Noranda's stake in the St Ann Bauxite Limited last October, and continues to operate the mines as Noranda Alumina.

The senior official said that without the partnership agreements, which await resolution of the Cockpit mining issue, Jamaican representatives cannot take their seats on the New Day Jamaica board and participate in the governance of the operation.

The Holness administration is expected to sign off on the boundaries at a Cabinet meeting next month.

The National Environmental & Planning Agency, redirected requests for comment on what precisely Cabinet will be considering to the Office of the Prime Minister (OPM).

"The matter of the Cockpit Country is before Cabinet and as such, I am unable to comment at this point," said Audrey Swell, permanent secretary in the OPM-aligned Ministry of Economic Growth and Job Creation, which has portfolio responsibility for the environment.

It's understood that there have been different proposals, as many as seven over time, as to where the Cockpit Country boundaries should be drawn to protect the estimated 1,099 square kilometres of tropical rainforest, while allowing mining companies certainty about their operations.

The state mining official, who spoke

on condition of anonymity, said the boundaries drawn by environmental lobbies are extensive, and if accepted by the Government, Noranda Alumina would have no bauxite to mine.

"They are even including Appleton in the Cockpit Country," he said, referencing the privately held rum making estate in St Elizabeth.

But pushback is coming from environmentalists who say government-commissioned studies have recommended appropriate boundaries that should be adhered to.

"Noranda has been sold to New Day. That company has some kind of MOU with the Government," Diana McCaulay, CEO of the Jamaica Environment Trust (JET), said on Wednesday. "We believe it guarantees a certain amount of bauxite. So where is that to come from? We suspect, but do not know until something is made public, that the push will come from mining interests to reduce the new boundaries so that bauxite can be supplied to Noranda."

The Cockpit is mostly in the parish of Trelawny, but also borders on St James, St Elizabeth and St Ann.

UWI recommendations

McCaulay said JET would be pushing for the Holness administration to adhere to the boundary recommendations made by the University of the West Indies in a 2013 study commissioned by the State.

"We are fully expecting them not to abide by those," she said.

The Government has not acted on UWI's recommendations, despite pressure from environmentalists.

"Since 2013, people like me have been trying to say 'declare the boundaries, decide on them, release them'. They have not done it to date," McCaulay said.

"Noranda did mine in St Ann within one of the boundaries proposed. But we cannot say it was in or outside of the Cockpit Country since none of the boundaries proposed have been declared," she added.

The state mining official, too wants the issue finalised, but for a different reason.

"Most of the partnership agreements are not signed yet," he said in reference to the New Day transaction.

New Day now owns a minority 49 per cent of the St Ann bauxite operation, which it acquired from bankrupt company Noranda Aluminum Holding Corporation for US$24.4 million, but like Noranda before it, is the managing partner.

The official notes that because the agreements are pending, no board meetings have been held and the Jamaican Government currently knows very little about the business in which it has a 51 per cent interest.

He also wants more lands freed up for mining, saying exports of the ore are on the decline. At one point, the bauxite/alumina sector constituted nearly 70 per cent of exports for Jamaica, but that has now fallen to 46 per cent, he said.

Operations at Noranda Alumina are continuing and appear only to be affected by the closure of Glencore's Sherwin plant in Texas in the United States, which it supplies. Approximately half of its production went to this plant before Glencore placed it in bankruptcy and shuttered the operation in mid-2016.

Noranda is now producing around 2.6 million tonnes of bauxite, down from a maximum 4.6 million tonnes when Sherwin was running. Its capacity is 5.2 million tonnes, according to New Day's Chief administrative officer Anthony Laura.

New Day Jamaica has an initial 25-year renewable lease with the Government of Jamaica (GOJ). Under the agreement, Laura said the company would either pay the Government US$ $1.50 per tonne of bauxite mined or a specified share of the profits from New Day's combined Jamaican and Gramercy operations in Louisiana, whichever is greater.

"To date, New Day has paid the GOJ in excess of US$5.25 million, in furtherance of the letter of intent," Laura told the Financial Gleaner.

Additionally, New Day will invest US$35 million in the operation over the next five years, he said.

Regarding the Cockpit boundaries, he said New Day would refrain from comment "until the issue is resolved in Cabinet".

avia.collinder@gleanerjm.com