First Look

GOJ must come clean regarding Noranda

| 2016-07-06 00:00:00

As part of its Chapter 11 Bankruptcy Proceedings in the USA, Noranda Aluminum Inc. will sell its St Ann bauxite mining assets.  On 7th July, Noranda is auctioning its “Downstream Business” (four rolling mills), and on 22nd September, 2016 it will be auctioning its “Upstream Business”, which includes its assets in St. Ann as well as the Gramercy alumina refinery in Louisiana and the New Madrid smelter in Missouri.

Noranda Bauxite Limited holds a 49% stake in Noranda Jamaica Bauxite Partnership Limited (the other 51% is owned by Government of Jamaica) and holds Special Mining Lease #165, which encompasses 177 square kilometers (68 square miles) south of Browns Town in St Ann, as well as Special Exclusive Prospecting Licence #578 covering 136 square kilometers (52 square miles) in western St Ann and Trelawny, including part of Cockpit Country.  Noranda originally acquired the Mining Lease and assets from St. Ann Bauxite Limited, which had acquired them from Kaiser Jamaica Bauxite Company. Noranda Bauxite Limited has a concession to mine bauxite in Jamaica through 2030. It currently employs about 300 persons as well as numerous contractors.

Noranda’s bankruptcy and the selling of its St. Ann assets will have consequences for Jamaica beyond St. Ann, as the “twilight” bauxite industry continues its transition to second and third tier operators who are mostly interested in short-term gain  subsidised by concessions from Government of Jamaica.  Rusal has sold Alpart, which operates the alumina plant in Nain, to Jiuquan Iron and Steel Co. Ltd  and will probably continue to divest their operations in Jamaica. The Government of Jamaica must define its policy on the eventual phase-out of bauxite mining in Jamaica, instead of continuing on the merry-go-round of successive owners, each maximising their short-term gains while leaving Jamaica and the communities in mining districts to pick up the costs when the music stops.

It is a long-standing business practice of companies to declare bankruptcy as a means of getting out of prior financial, legal and ethical obligations. Noranda’s sale of its St. Ann bauxite assets has specific consequences and risks relating to all of the “unfinished business” in St Ann, such as unreclaimed / poorly-reclaimed pits and uncompensated land owners, that Noranda will leave behind.  The new owner of the assets will not be responsible for debts incurred by Noranda unless these are specifically listed in what is called a “Cure Notice”. 

This will state the amounts, if any, that the Debtors believe are necessary to assume the mining contracts or leases that are being transferred to the new owner.  Jamaica will be able to object to these amounts at the Sale Hearing on 27th September but otherwise they will be final! No doubt the Minister of Transport and Mining is following this closely.  But how about the unresolved issues of poor reclamation?  How about the illegal operations which took place in the Caledonia crossroad area in early 2015?  How about compensation for people whose rights have apparently been infringed because Noranda has mined closer than the legal limit to their houses, such as Mr Rupert Walker of Caledonia, whose dwelling house is now less than 250 feet from the edge of a one-hundred foot deep, mined-out pit, which itself seems to be outside of the Mining Lease? History has shown that new companies reject prior agreements pertaining to wages, benefits, pension funds, etc. and ignore prior obligations and stated intentions as to social, economic and environmental investments.

It is time that the government of Jamaica protects the citizens of Jamaica and generations-to-come instead of continuing bankrupt, neocolonial policies which subsidise the bauxite industry to the great detriment of Jamaica’s natural environment, agriculture, heritage, community cohesion, sustainability, and sovereignty. We call on Mike Henry, Minister of Transport and Mining, and the Government of Jamaica to clearly state what it intends to do about the money it is owed by Noranda, what amounts it believes should be included in the “Cure Notices”, how it plans to handle the outcomes of Noranda’s sale of its Jamaican assets and what consequences this will have for Government’s 51% share of Noranda Jamaica Bauxite Partners Limited.  We also call upon Government of Jamaica to issue their definition of the Cockpit Country boundary and to  declare the area closed to mining.  Finally, we call upon Government of Jamaica to define its overall plan for the orderly phasing out of bauxite mining in Jamaica.

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