Phillip Paulwell, Minster of Science Technology Energy and Mining (MSTEM) said today that the Jamaican government has secured a victory before arbitrators who this week concluded their review of the case between the Government of Jamaica (GOJ) and Noranda Bauxite Limited (NBL), a subsidiary of Noranda Aluminium Holding Corporation which operates in the island.

Arbitrators decided that NBL’s contention to have the bauxite levy charged on its operations reduced — based on previous agreements — could not stand, other reliable sources told the Jamaica Observer.

The London-based arbitration panel which examined the Establishment Agreement between the GOJ and NBL, an agreement dated September 2004, said that the contract terms for 2015 and beyond were not fixed, but open to negotiation.

John Parker, VP of communication & investor relations at Noranda Aluminium Holding Corporation said Friday in response to the decision, “We are still evaluating the specifics of the tribunal’s decision to determine its impact to our bauxite-mining operations.”

Paulwell told the Observer, “I am very happy. We won on all the three points we put forward. We do not want to pressure the companies, but notwithstanding the difficulties of the industry, they need to realise that the Jamaican people need something more”.

The dispute between the bauxite company and the Government surrounded the tonnage on which production levies were based and also the means of making payment when such levies fall due.

A levy on bauxite mined in Jamaica was first introduced in 1974. However, since the global economic recession which started in December 2008, the government made concessions which gave mining companies a break from payment in full. The quarrel between the GOJ and NBL erupted over the government’s decision to revert to the old arrangement this year.

Earlier in the year, the GOJ sought to stop shipments by Noranda until the issue of what rate of levy should apply to it was resolved.

The GOJ said NBL should pay US $7.56 for every dry metric tonne of bauxite Noranda ships but Noranda stated that the applicable rate was US$2.50 a tonne, a concession which the Government implemented in 2010 during the recession. The GOJ said the concession had expired.

The ruling, as summarised by a reliable source for Sunday Finance, said firstly that Noranda’s claim re Most Favoured Treatment under section 2.05 of the Establishment Agreement failed.

The second point by the arbitrators clarified the deduction of production levy payments from income tax payable.

Finally it was noted, our source said, that a letter written by Paulwell in December 2013 did not contradict the Establishment Agreement and that contract arrangements for 2015 and beyond remain to be negotiated.

Paulwell commented, “We can’t always be giving away our bauxite. There are others who are interested [in mining bauxite]. It is time now, especially since the 1970’s when the levy was first introduced, that Jamaica should realise more from this diminishing resource”.

The source indicated that the arbitration panel is to determine costs this week.

Previously, in June, Noranda and the GOJ reached an interim agreement for NBL to pay the interim levy on all bauxite it exports from Jamaica with US$3.75 per dry metric tonne (DMT) in cash and US$1.25 per DMT through the provision of irrevocable letters of credit.

By June 30, 2015, NBL was to have provided those same per DMT amounts on all bauxite it has exported from Jamaica from January 1, 2015 through the date of entering into the interim agreement.

This retroactive payment, was expected to total approximately US$7 million in cash and US $2.5 million in irrevocable letters of credit.

The agreement took effect until the arbitration ruling which was expected this month. Under the terms of the interim agreement, the GOJ agreed to discontinue its May 28, 2015 application for an interim injunction restraining NBL’s export of bauxite from Jamaica.