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New mining agreements to protect jobs, increase earnings

Monday, September 10, 2018

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The Government signed new mining agreements with New Day Aluminium (Jamaica) Limited last week Thursday, which it says will secure thousands of jobs, increase earnings for the country and protect Cockpit Country.

At the signing ceremony at his Maxfield Avenue office in St Andrew, Minister of Transport and Mining Robert Montague said that under the agreements, steps have been taken to ensure that Cockpit Country will not be negatively impacted by mining activities.

“The operations will proceed in order to ensure that the natural environment is properly managed for sustainability. We have taken steps to guarantee that Cockpit Country is protected, even as we seek to exploit its natural resources to the benefit of our economy,” he said.

He noted that the Government will be abandoning the bauxite levy in favour of a profit-sharing scheme where both partners will benefit from any financial recovery in the performance of the mining and refining operations.

“We believe that this new arrangement will earn the country more in US dollars compared to the traditional levy system. The Government will earn 17 1/3 per cent… before interest, taxes, depreciation or amortisation, or US$1.50 per tonne of dry bauxite shipped, depending on which is greater. The royalty payments of US$50 per dry metric tonne of ore shipped will also remain in effect,” he said.

Minister of Finance and the Public Service Dr Nigel Clarke, for his part, noted that the mining sector grew by 30 per cent in the last quarter, and with the signing of the new agreements, “we can be confident that growth in the mining sector will be here for a long time to come”.

“From the Ministry of Finance's perspective, we are quite excited and pleased, but more so from the perspective of the Government of Jamaica, about the jobs that will be secured by this, both at the level of the plant itself and downstream in the communities, and the lives that will be enhanced,” he said.

Chief strategy officer, New Day Aluminium Limited, Thomas Robb, noted that the company has undertaken to repay more than US$18 million in debts left behind by its predecessor, over US$6 million of which has been paid to date.

He said that the balance is intended to be paid off by April 2022, nearly three years ahead of the initial agreed schedule.

“I am proud to report that in total and inclusive of the minimum levy... fees and royalties for bauxite-mined through July of 2018, New Day has already paid over US$26 million on account of its bauxite mining relationship with the Government and has already spent over US$13 million in its investment programme. This is nearly 15 per cent ahead of our commitment, and exceeds the run rate of the US$31 million committed previously,” he pointed out.

“Taken together, these amounts [equal] approximately US$40 million of total contributions that New Day has made since inception of this relationship,” he said further.

Robb noted that the industry employs thousands of Jamaicans and serves as an economic engine for “this great island”, adding that bauxite remains a prized mineral resource for Jamaica.

New Day Aluminium (Jamaica) Limited is an affiliate of Dada Holdings LLC, which acquired Noranda's stake in the St Ann Bauxite Limited in 2016 for US$24.4 million.

The Jamaican Government has partial ownership in the company, which has the capacity to produce up to 5.2 million metric tonnes of premium-grade bauxite annually.

—JIS

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