CONTRACT DEAL SHOCKING… Guyana paying Rusal to abuse bauxite resources

Nov 10, 2019 News

The Russia-owned Bauxite Company of Guyana Inc.’s (BCGI) unchecked exploitation of Guyana’s bauxite resources is being done at the expense of taxpayers, through billions of dollars in waivers of taxes, exemptions and concessions provided by Government.
This, since the country is unable to ascertain the quantity or quality of bauxite being shipped out of country and at what price.
Compounding the situation is the fact that the country’s regulator—the Guyana Geology and Mines Commission (GGMC)—is made to rely on voluntary reports by companies operating locally.
BCGI was granted a range of exemptions from the payment of taxes locally, including payments on Income, Corporation and Property taxes. These have been waived until 2020. Further no Royalty is being paid.
According to the pact inked between the parties in the 2005 Fiscal Incentives Agreement, BCGI shall also be exempt from the payment of withholding tax on interest, dividends and lease payments to its affiliates.
The company has also been exempt from payment of all and any duties and taxes on equipment machinery, motor vehicles and supplies.
Economic Activity
The generous conditions were handed to BCGI with the understanding it would invest more than US$30M to establish the new economic activity in mineral exploration and extraction through investments in the bauxite industry of the Cooperative Republic of Guyana.
A ‘Policy Brief’ that was undertaken by the Ministry of Natural Resources and completed at the end of June, found that a typical monitoring exercise is conducted, “at best, once a year,” at the two bauxite mines in Guyana,
Alarmingly, the Ministry’s field-based monitoring—once a year—does not include measurements of volumes or sample collection and testing of raw or processed material, at any point of these operations.
This means Government is unaware of the exact quantity or quality of bauxite ore being produced and shipped out of Guyana.
In fact, BCGI is only made to, voluntarily, submit monthly production statements on the tonnage of material mined, processed and shipped. Failing this attracts no penalties.
Millions Lost
The Ministry has since determined that there was a potentially high financial benefit to Rusal from undervaluation.
Guyana’s bauxite exports in 2017 were valued at US$102M but reached as high as US$150M in 2012.
It was determined that if these exports were undervalued by as little as 10 percent, the country would have lost US$10.2M in 2017 and US$15M in 2012, “which are not insignificant numbers for our small economy.”
BCGI’s bauxite is barged 240 km downstream from mines near Aroaima, using 20 purpose-built covered barges of 3,000 tonnes each, and six tugs.
The cargo is then transferred from the barges to ocean-going ships, using floating crane, as well as the ships’ own gear.

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CONTRACT DEAL SHOCKING… Guyana paying Rusal to abuse bauxite resources

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