Levy Concession Extended For Bauxite Company

Government has executed a further bauxite levy concession agreement with Russian aluminium company, UC Rusal, for an additional two years.

The agreement will see the company benefiting from a relief of bauxite levy for the West Indies Alumina Company Limited (Windalco) Ewarton plant for the period October 1, 2013 to September 1, 2015.

Making the announcement in the House of Representatives, on Tuesday, June 10, Minister of Science, Technology, Energy and Mining (STEM), Hon. Phillip Paulwell, said the waiver is an extension of the Government’s previous concession agreement with UC Rusal from October  last year.

Mr. Paulwell said several factors have negatively impacted the local bauxite alumina industry, with the global financial situation and reductions in the world market price of alumina in 2008 and 2009 adversely affecting the industry and has caused Windalco to take the position to temporarily cease its operations and close its Ewarton plant.

It also further closed its Kirkvine, Manchester and Alpart in Nain, St. Elizabeth operations.

The Minister said the parties entered into a bauxite levy concession agreement dated October 2, 2013, whereby the Government provided certain concessions to the Windalco’s Ewarton plant.

“UC Rusal has applied for an extension of that waiver, claiming its situation demanded it and that it would be critical to the further opening of the plant beyond October 2013,” he said.

Mr. Paulwell explained that the further bauxite levy concession agreement allows for the relief from the bauxite levy for the Ewarton plant for an additional two years and during the period a number of measures are to be undertaken.

Firstly, the company must commence construction of a coal fired electricity generating plant within this period, which will provide finally, a solution to the company’s high energy cost and improve its competitiveness.

UC Rusal is also required to submit quarterly reports detailing the performance of the Windalco plant against the agreed work plan of efficiency. “Such a plan now exists in this agreement, which relates to improvements in the plants,” Mr. Paulwell said.

Mr. Paulwell said the company has agreed to provide the Jamaica Bauxite Institute with copies of several documents in regard to implementation of the project.

The documents include a feasibility study to be completed by the end of July this year; an environmental impact assessment by the end of December 2014; financing term sheet by the 31^st of March 2015; construction contract by June 30, 2015; and the fixed financing commitment confirmation by June 30, 2015.

UC Rusal also agrees to submit quarterly reports detailing the progress.

The Minister informed that the agreement will be terminated if there is a substantial change in the price of alumina or oil on the world market or if there is failure to perform the contracted inputs, such as the energy plant.

“Once this further bauxite levy concession agreement is terminated the full levy relief package shall immediately cease and the levy that has been waived will become payable immediately,” he said.

UC Rusal is the world’s largest aluminium producer.