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Rusal (Guyana) unable to satisfy debts

Mar 26, 2009 News

The RUSAL Bauxite Company of Guyana (BCGI) has lost a main party buyer of bauxite for the year 2009, hence the company is forced to reduce its export and consequently production for remainder of 2009.
This, coupled with the reduced prices of aluminium, has caused BCGI to suffer declining revenues and cash flows to the extent that the company cannot satisfy its debts payable at the end.
The company is also having a problem meeting operating costs whilst implementing critical capital project is to sustain product capacity.
In January 2006, the Guyana Government and the Russian Aluminum Company, RUSAL, announced a major agreement on privatising the bauxite industry in Berbice.
A joint statement from the Bauxite Company of Guyana Inc (BCGI), a subsidiary of the RUSAL group, Aroaima Mining Company (AMC), and the Guyana Government said the Russian company was issued at that time that illustrated the various agreements entered into.
It was announced that there was a that sales agreement between BCGI and the RUSAL group formalize and was for the purchase of bauxite that secures sales contracts for more than two million tonnes of bauxite per annum from the Berbice operations for the next 10 years; RUSAL is the third largest aluminium company in the world with revenues of more than US$5B. The American Reynolds Metals company, up to 2001, had owned 50 per cent of Aroaima.
The joint statement said that the recently concluded arrangements directly provide for a total equity investment of about US$20M by the RUSAL group into BCGI and investment by Oldendorf of an estimated US$60M in facilities for shipping and barging the bauxite.
It said, too, that the investments represent a recapitalization and expansion of the investments in Berbice made since 1990 by AMC, and secure markets, management, and money for the expansion of production and sustainability of existing employment levels of bauxite production in the Upper Berbice River.
Oldendorf Carriers is one of the largest private shipping companies in the world, having control of more than 200 large ocean-going ships and shipping more than 80 million tons of cargo per annum. Oldendorf succeeds Viceroy Shipping in the transshipment and ocean shipment of bauxite from the loading basin, and will succeed J.P. Knight as the barge operator at the end of 2006, the statement said.
Oldendorf and BCGI entered into contracts that guarantee shipment of more than two million tons of bauxite per annum over the next 10 years, starting in 2006.

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