House approves US$6-m CDF withdrawal to settle bauxite debt
THE House of Representatives yesterday approved the withdrawal of US$6 million from the Capital Development Fund (CDF) to settle Jamaica Bauxite Mining Limited's alumina supply obligations to Glencore AG.
Minister of Finance and Planning, Dr Peter Phillips said the funds will be used to pay the first and second instalments of quarterly payments due to Glencore in the 2014/15 financial year.
"The balance of US$23.6 million is to be provided in equal quarterly payments with interest at eight per cent per annum up to the 2016/17 financial year," Phillips told the House.
He explained that Jamaica Bauxite Mining entered into an alumina supply arrangement in 2002 with Glencore, to facilitate the borrowing of some US$65 million.
He noted that subsequently in 2008, due to the slowdown in the global economy and the closure of UC Rusal's operations, Jamaica Bauxite Mining experienced severe difficulties in meeting its obligations to supply some 255,000 tonnes of alumina to Glencore.
"By December 2012 when the supply contract ended, Jamaica Bauxite Mining's debts to Glencore were US$33 million. On the basis of an agreement arrived at in 2013, the Government agreed to pay Glencore the aggregate sum of US$33.8 million owed by Jamaica Bauxite Mining together with the accrued and unpaid interest at the rate of eight per cent per annum," said the finance minister.
The CDF was established under the Bauxite Production and Levy Act and was promulgated in 1974 when the bauxite production levy was imposed.