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Mr. Lincoln Lewis’s Misleading Representations
This is the second installment of a letter from yesterday
Dear Editor,
There was no plundering of the equipment of the bauxite industry. Indeed, even though it would have made good economic sense, it was to avoid such charges of plundering that I did not entertain the offer from a scrap metal business from Singapore to purchase the alumina plant: “Liquify your sunk, frozen, discarded, useless asset” the lady from Signapore urged from across my desk.
An approach from our local firm, Wieting and Richter, as agent for a corresponding German Environmental firm, to remove all installations and hazardous waste, and present a certified environmentally clean site, along with a small net amount of money, was also not entertained.
Mr. Lewis wrote, “By the time the PPP/C had done its target on the [bauxite] industry 4000+ workers were dislocated – – – “.
The PPP/C did not initiate the downsizing of the bauxite industry. Mr. Lewis would know that that sad and traumatic transformation in coming to terms with reality, began with the shock of that first big shrinking of about one third, some 1800 employees in 1983 and the prescribed transfer of all non-core activities to various levels of Government and their agencies.
This transformation was well on its way by the time Minproc took management of the core operation in 1990 and the number of employees would have been further shrunk by the time when we, PPP/C, entered Office in October, 1992.
As has been stated on many occasions when MINPROC declared that they could not see a way to profitability for the bauxite operations in Linden, the prescription we had received called for closure forthwith. We did no such thing.
Instead, we quickly developed a base plan which we soon disclosed at a meeting to which Mr. Lewis was invited and was present: a plan not to close but to resume management of the operations, and to find and put together money to resume subsidy of the bauxite operations.
Whilst I cannot immediately recall all the details of that plan, it would have been firstly a holding operation, based on the realities of recent production rates, costs, prices and losses.
We also quickly applied to the EEC/EU for a SYSMINS loan/grant, which was available for places where the legacy mining business was judged to be no longer sustainable. The processing of this application was protracted, about seven years to first disbursement, partly because based on the relevant consultants’ reports the various reviewing committees were slow to accept that the situation in Linden was as desperate as in other places applying for their support.
Approval, finally, was a well-earned reward to our perseverance.
Mr. Lewis charges us with reducing calcine (RASC) production at Linden. My recall is that whilst there might have been a target of 400,000 tons per year, production and sales were running at about 200,000 tons per year.
Mr. Lewis declares that “Guyana never experienced a problem finding market for its bauxite products“, but he misses the point: what did/does he think of the huge losses since the mid-1970s? Evidently, all and any production was being sold but at prices far below what was required to cover all costs and provide a return on investment or to create a future investment fund.
As indicated in the KATSI (Kaiser Aluminium Technical Services Inc.) report of 1983, funded by the multilateral agencies, we (the bauxite operations) needed to get to where the sales price to costs ratio was improved by a factor of 100:70.
To develop this question further, it was long recognized that as another thousand tons of RASC was produced and sold it went to a market/use where steadily lower costs alternatives were available: but with a single product, price differentiation in the total market was not sustainable.
So, RASC price was being determined by the lowest price/value of the sales on the margin. Experience (unto BOSAI today) seems to suggest that there was/is a core demand for RASC of about 200,000 tons per year for which the value/price return may be sustainable.
Samuel A.A. Hinds
Former Prime Minister and Former President.
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