News

Gov't gives up US$7 million in bauxite levy

BY INGRID BROWN Associate editor — special assignment browni@jamaicaobserver.com

Thursday, October 04, 2012    

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GOVERNMENT is giving US$7 million (approx J$630 million) in revenues to the Russian-based aluminium producer UC Rusal, under a one-year waiver of the bauxite levy, Energy Minister Phillip Paulwell announced yesterday.

The minister, who was speaking at yesterday's Jamaica House press briefing at the Office of the Prime Minister in Kingston, said the concession was a win-win situation for all.

"If we didn't do that I believe the scenario would be quite different today. We wouldn't have the US$7 million, plus we wouldn't have the 600 jobs or the production," Paulwell said.

"We (Jamaica) are now going to be part of the base location for UC Rusal and we will no longer be affected by the swing of supply and demand," Paulwell said.

He told reporters that a similar deal would have kept the Kirkvine plant in Manchester open if it was not rejected by the previous administration. "In 2010 a similar approach was made to the then government and it was not pursued and that plant is still closed today," Paulwell said.

It was not immediately clear what proposal was put to the former Jamaica Labour Party Government by the bauxite giant and what was put on the table by the then administration.

In the meantime, Minister Paulwell said no deal has been struck with UC Rusal for its other two plants -- Alpart and Kirkvine -- because the Government had no sweeteners to offer. "For three years Kirkvine and Alpart have been closed, so there is no levy concession to offer as a sweetener because right now they are not paying anything," Paulwell said.

The minister announced in Parliament Tuesday that the Government had signed a concessionary agreement to waive the bauxite levy on UC Rusal's operation at Ewarton, St Catherine from October 1, 2012 to September 30, 2013. He said, too, that an agreement was reached for the employment level at the plant to remain at the current 600 jobs during the period of the concession.

UC Rusal, Paulwell announced, would be investing US$100 million (J$9 billion) in the facility for the construction of a coal-fired electricity-generating plant. Construction is expected to begin next year and earmarked for completion in 2015.

"We wanted a similar definitive timeline for Kirkvine and Alpart, but we are some distance away as it relates to our position and theirs, and that is why the negotiations continue and by the end of November I will report to the country," he said. Both plants, he said, would also need to have an energy solution as this will help in the creation of more jobs.

"We are seeing with the coal plant at Ewarton, 800 jobs being created, and so if a similar approach is adopted then even before the refinery is established you can have jobs being created by virtue of the energy transformation that has to take place," he said.

The Government, he said, has given its support to the company to pursue energy options in accordance with the country's National Energy Policy as well as local environmental standards.

He announced that Cabinet has also authorised negotiations for the sale of the Government's seven per cent shares in Windalco. He said these negotiations should be completed in November.

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