New Day for Jamaica's mining prospects - says Montague
Published:Thursday | September 6, 2018 | 12:00 AM
Transport and Mining Minister Robert Montague said that the signing of the Novation Agreement between the Government and New Day Aluminum (Jamaica) Limited is historic and momentous and a unique arrangement that is a win-win for both parties.
The agreement replaces the initial binding Letter of Intent signed between both parties in October 2016.
Speaking at the signing ceremony at the ministry's Maxfield Avenue offices in Kingston, Montague said that the new agreement was vital for the sharing of profits in the Jamaican context.
"It is historic and momentous because it is a very unique arrangement where the country, the Government, and the people will be sharing in the profit of the entities from the mining operations, and if there's no profit, we revert to the bauxite levy," he said.
Additionally, he said that if New Day turns a profit, not only at the Jamaican operations in St Ann but also at the refinery at Gramercy in Louisiana, it will mean a 17.3 per cent profit for Jamaica when taken before taxes and loan payments.
"And if there's no money to be made, they have to pay the levy," he said. "So it's the first time we are doing something like this. It's really a win-win situation for all interested parties."
New Day Aluminum LLC (Dada Holdings) acquired in 2016 the bauxite mining and export assets of Noranda Bauxite Ltd, based at Discovery Bay, St Ann.
MEMORIALISE THE SPECIAL RELATIONSHIP
Montague said that his ministry also tied the payment of the funds that Noranda owed the Government to the signing of the special mining lease.
"New Day had already paid over some money owed by Noranda when I got to the table, where US$17.6 million was owed. We got seven [million] today because I insisted that before the new mining permit, they had to pay a minimum of seven million," he said.
"The remaining US$10.6 million will be paid in equal instalments over 36 months. They will also be investing in the plant, which is one of the reasons why we extended the payment over three years, to give them time to reinvest in the plant to maximise profit."
Thomas Robb, chief strategy officer at New Day Aluminum, said that the signing is to memorialise the special relationship between New Day and the Government of Jamaica.
He said that instead of operating as counterparts, both parties sit on the same side of the table, sharing in the profits that will acrue.
According to Robb, in total and inclusive of the minimum levy, asset usage fees, and royalties for bauxite mined through July 2018, New Day has already paid more than US$26 million on account of its off-site mining relationship with the Government, and has already spent over US$13 million in its investment programme, which is nearly 15 per cent ahead of commitments and which exceeds the run range of the US$31 million coming in previously.
"Taken together, these amounts to approximately US$40 million in contributions that New Day has made since the inception of this relationship," said Robb.