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Prime Minister, Bruce Golding, has informed that the Government is currently in negotiations with Swiss metals and minerals trading company, Glencore, regarding the financial obligations that were entered into with that company in 2005, by the previous administration.
“We are in negotiations now and we are trying to see if we can get out of it (the previous agreement), if we can. We can’t just renege on it, we have to talk with the people, we have to say look it is kind of rough on us can we sit down and can we talk about some new arrangements,” Mr Golding said yesterday (Oct. 29) during his monthly call-in programme, ‘Jamaica House Live’.
“It’s is a bad time for that to be done as the international market is so sour, but these are the kind of burdens that we have to carry sometimes. When people get upset because they do not feel that we are doing the things that they expect us to do, I understand and I can’t blame you sometimes when you quarrel. But you must also stop and understand that some of the burdens that we carry, you don’t even know about. I know about them as I have to deal with them everyday,” he added.
Mr. Golding explained that in 2005, the previous Government entered into an agreement with Glencore, which sourced US$200 million that was used to fill a gap in the budget.
“They went to a company called Glencore, which is involved in the bauxite business, had already acquired some stake in the bauxite industry in Jamaica and they said to Glencore look, we are broke. We need some money. Can you arrange to get some money for us,” said Mr. Golding.
He further explained that Glencore arranged for the Government to access funds in the sum of US$200 million, in exchange for a contract which would see the company being supplied with alumina for its operations.
“The Government signed a contract with them to sell them our alumina for a period of time, which I think ends in 2011 at a certain price,” he added.
Mr. Golding further noted that since then, with the increase in the cost of oil, the cost of producing alumina has become greater than the price that was originally signed off on.
“What it has turned out to be is that (for) every tonne of alumina that we produce under that arrangement – of every tonne of alumina we sell we are losing a US$175 and that is an arrangement that will continue right into 2011,” Mr. Golding stated.
He added that the Government is unable to renege on the contract signed and noted that “based on the amount of alumina that we are producing and based on the cost of oil every month, we are losing $1 billion.”