BOSAI denies owing royalties

Jul 18, 2014 News

…questions if GGMC, Govt. reneging on agreement

BOSAI Minerals Group Inc has responded to claims that it owes millions in royalties and has denied that this is the case.

GGMC Commissioner, Rickford Vieira

The company has since dispatched a letter to Rickford Vieira, Commissioner of the Guyana Geology and Mines Commission (GGMC), questioning whether the Government of Guyana and the Commission are now reneging on the Agreement to which they are both signatories, as part of the Terms of Business.
Norman Mclean, the Company Secretary for BOSAI, in a missive to the GGMC Commissioner, stated that he was disappointed in the comments attributed to him, that a copy of the contract was not even in GGMC’s possession, despite several efforts to contact the Bauxite Company to provide them with one.
According to McLean, he has sent several copies of the Mineral Agreement between the Government of Guyana, the Guyana Geology and Mines Commission and Omai Bauxite for Vieira’s information.
“Omai Bauxite was taken over by Basal Minerals Group (Guyana) Inc and I have also sent copies of the Name Change for your information.”
He said that for GGMC to claim to not have the relevant documentation is, “totally erroneous as GGMC is a signatory to this Agreement and I have personally supplied several copies to the Commission.”
The major assertion is that BOSAI should pay Royalties, regardless of the fact that they are paying Corporate Taxes.
According to McLean, Articles 9.2 of the Mineral Agreement states: “The Company shall not be liable to pay any royalty on any production for the first five years following the Effective Date. Thereafter, the Company shall pay a royalty at the rate of 1.5% on the FOB (Freight on Board) value of any shipment of bauxite from Linden, provided that in the event the Company pays any amount of corporate tax in any given year of Operations following the Effective Date, the Company shall be exonerated and relieved, effective immediately after having paid any such amount of corporate tax, from paying the aforesaid royalty to Guyana up to an aggregate amount of royalty, payments being equivalent to the amount of corporate tax paid. For greater certainty, any amount of corporate taxes paid by the Company for any given year shall reduce correspondingly the overall amount of royalty to be paid thereafter by the Company. Guyana hereby agrees and irrevocably undertakes to make all necessary arrangements to give full force and effect to the provisions of this clause 9.2”
According to Mc Lean, this Agreement is standard, and is what has been enforced from the days of Guybau, Guymine, Linmine, Bermine etc.
“Are we to now understand that the Government of Guyana and the Guyana Geology and Mines Commission are reneging on the Agreement to which they are both signatories as part of the Terms of Business,” Mc Lean questioned.

BOSAI’s Company Secretary, Norman McLean

Mc Lean stated that “In fact, all parties should be very happy that for the first time in living memory any Bauxite Company has turned a profit and has been able to pay Corporate Tax above and beyond the amount of Royalty it would have had to pay.”
On Monday last, the Ministry of Natural Resources and the Environment, led by Minister Robert Persaud, appeared before the Parliamentary Sectoral Committee on Natural Resources.
Since last year, A Partnership for National Unity (APNU)’s Joseph Harmon had been lambasting the Ministry and GGMC over the royalty issue.
The Opposition MP is of the opinion that BOSAI owes over US$5M from royalties of bauxite produced, but Government is not having much success in collecting.
GGMC’s Chairman had claimed, “We are working hard to bring closure to the issue surrounding royalty payment. I assure you that it is a matter that is engaging the attention of the Board.”
The official disclosed Monday that based on information, BOSAI has been paying taxes to the Guyana Revenue Authority. BOSAI is reportedly contending that because it is paying taxes, it does not have to pay royalties. GGMC has been examining for some time whether BOSAI was right.

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