Sun | Sep 24, 2017

Gov’t needs Noranda to pay up

Published:Tuesday | December 22, 2015 | 12:05 PMGary Spaulding

SENIOR DIRECTOR of Jamaica Bauxite Institute (JBI), Dennis Morrison, has served notice that the Government is in need of the bauxite levy owed by the Noranda Bauxite Ltd to finance the Budget.

Morrison charged that the St Ann-based company was expecting the Jamaican Government to take the hit it suffered after engaging in poor business practices.

“Noranda owes money and the Government would need to collect that money if it is to meet its responsibilities in terms of financing its Budget,” he stressed.

Morrison told The Gleaner that he was not certain whether talks between the Government and Noranda were ongoing.

“A company that does business on the island always would want to have talks with the Government, especially if there is a problem,” he said.

As it pertains to the threat of pending job cuts, Morrison noted that there has been a cutback of one of Noranda’s overseas alumina plants to which it exports bauxite.

“Naturally, this would affect their output and shipment for bauxite,” he said.

“That is one factor, and that would have to be taken into account.”

Added Morrison: “In so far as them cutting back, one would have to go into the details of what are the implications of that reduction in export and whether it matches what they are now threatening to do.”

OVERARCHING ISSUE

But the overarching issue for Jamaica is the end of a concession agreement between the Government and Noranda that ran from 2009 to the end of 2014.

Morrison charged that at the end of the period, Noranda resisted the planned move to revert to original standards.

“They used all kinds of ploys. They went to arbitration and they lost.”

According to Morrison, an economist by profession, Noranda has been experiencing financial problems for several reasons.

“One of the main reasons, as it affects Jamaica and bauxite, is that the Noranda entered into a bad contract in which it set a selling price that was less than its cost of production,” he said.

Morrison said the price set by Noranda was also lower than what bauxite should have been sold for.

Asked why Noranda would chart such a course, Morrison said: “I don’t know.”

He stressed that one particular contract, of which he was aware, had the cost of bauxite being less than the cost of production.

“We can’t understand why that would have happened to them.”

Added Morrison: “Essentially, what they wanted was for the country of Jamaica to take the hit from them having made a bad contract.”

Responding to reports that the company has been unable to find a market for some 1.15 million tonnes of alumina, Morrison said: “We are not aware of that.”

And reacting to reports of the doubling of the bauxite levy from US$2 to US$5, Morrison said that the Government has not doubled the levy.

“The levy was always going to be standard, and that was always known to Noranda. They got a concession and the period ended, and the financial planning should have taken account of that,” said Morrison.

“It’s not as if the Government went to bed one night and said the following morning that the levy would have been twice what it was before,” he added.

“Both sides knew long ago that they were to go back to the standard.”

gary.spaulding@gleanerjm.com