Wed | Aug 15, 2018

Government, Noranda at loggerheads over bauxite levy

Published:Friday | March 27, 2015 | 12:00 AM

Noranda Bauxide Company and the Jamaican Government are at daggers drawn over the payment of bauxite levy at the full rate.

The dispute, according to Finance Minister Dr Peter Phillips, is regarding the full bauxite levy for the period beginning January 1 2015, as required under the Bauxite Levy Act. He said the matter will go to arbitration.

"Noranda is insisting on a five-year extension of the concession. The Government has honoured the agreement with Noranda, which involved

substantial revenue forgone and, in the circumstances facing the country, we are not able to grant an extension. While I am not in a position to expand further on this matter now, the Government's position is that we must collect taxes due from all taxpayers, be they small, medium or large," Phillips said.


interim regime


The minister noted that an interim regime was agreed with Noranda in 2009, in the context of the global economic crisis and was provided to cope with the crisis, support the efforts of raising the efficiency of the company.

"The clear understanding was that this arrangement would cover the period 2008/2009 to December 31, 2014, and that Noranda would revert to the standard regime on January 1, 2015," Phillips told Parliament as he closed the Budget Debate on Wednesday.

The minister, meanwhile, said UC Rusal, which resumed mining operations this week, has agreed to pay the bauxite levy at the standard rate when it begins shipments later this year.

Phillips had foreshadowed that the Government would not be giving up any of its bauxite revenues this year.

When he opened the Budget Debate earlier this month, Phillips said there would be no extension of the waiver on the bauxite levy.


no benefit


"In the period of the so-called commodity boom, between 2009 and beyond, the one commodity that did not benefit from the boom was bauxite and alumina," Phillips said.

The bauxite levy amounts to approximately US$7 per tonne, which is reflective of a base rate of US$5.50 per tonne, plus increments determined by a specified formula.

Next fiscal year, the Govern-ment is budgeting to collect $4.8 billion in bauxite levy, up from $18 million in the current fiscal year, which ends on March 31.

"The Government of Jamaica and the people of Jamaica expect full payment of the levy by those who mine and utilise this non-renewable resource of the Jamaican people," the minister said.

"The full levy is now due and we expect all the companies to adhere to the law, both the letter and spirit. Sacrifices have been made by the Jamaican people in order to keep the industry going during the difficult periods. Now that this sector in the world economy is moving to a brighter day, the Jamaican people also want their space in the sun," he added.

Noranda mines bauxite from its plant in Jamaica and then processes it at its Gramercy Aluminum plant in the United States.