Bad deal! - Opposition knocks new profit-sharing bauxite agreement between Jamaica and US company
Published:Tuesday | September 18, 2018 | 12:00 AMLivern Barrett/Parliamentary Reporter
A new profit-sharing agreement signed between the Jamaican Government and the United States firm that holds a stake in Noranda Jamaica Bauxite Partners has been described by the parliamentary Opposition as a "bad deal".
Under the agreement signed less than two weeks ago with New Day/Dada Holdings, Jamaica stands to rake in 17.33 per cent in earnings before interest, taxes, depreciation and amortisation, or US$1.50 per tonne of dried bauxite shipped, whichever is greater.
Mining Minister Robert Montague, who announced details of the arrangement in Parliament yesterday, said at the time of the signing, New Day/Dada Holdings paid the government US$7 million or approximately J$959 million.
"This represents a significant part of the US$17 million or approximately J$2.2 billion (in legacy payment and royalties) owed, the rest of which is to be paid over a 36-month period," Montague said.
But Phillip Paulwell, the Opposition spokesman on mining, argued that the agreement, in its current form, meant that the government was leaving more than J$2 billion on the table.
Paulwell indicated, too, that he will be writing to the chairman of Parliament's Public Administration and Appropriations Committee "because I think this matter requires some probing" of the mining ministry.
"If we are abiding by the bauxite levy, over the period from the end of 2016 [when New Day/Dada acquired a 49 per cent stake in Noranda] to now when the rates moved up to US$8 as the average, the amount that we would get is US$38 million," said Paulwell, noting that he was prepared to give the government the "benefit of the doubt" and use a rate of US$7.
"US$25.5 million more or J$3.4 billion, Mr Speaker. You know what we could do with J$3.4 billion dollars in this country?" he questioned.
The former mining minister said there was no reason for the agreement in its current form, as Jamaica's bauxite is a "prized commodity."
"There is no need to sell ourselves short at this time. This is an absolutely bad deal for Jamaica. This represents a dark day for us in the bauxite industry, having regard to the struggles we have gone through," Paulwell said.