Mining minister confirms zero returns from Bauxite Levy in 2020

Minister of Transport and Mining Robert Montague has confirmed that Jamaica made zero returns from the Bauxite Levy in 2020.

“The only company required to pay the levy currently is Windalco, and we are having some challenges with them,” he told the Standing Finance Committee (SFC) of the House of Representatives, on Thursday last.

“They owe us somewhere in the region of US$25 million in levy, but we are currently addressing the matter,” Montague responded to questions from former minister Phillip Paulwell.

“We have not gotten anything from Windalco from 2019. It is the only entity under this current scheme that is liable to pay, but they have some challenges and we are working with them because they are a valuable stakeholder and a valuable member of the family,” Montague said.

Asked by Paulwell about the situation with Noranda, in which the Government owns some 51 per cent, and from which Paulwell suggested that some revenue should be generated through the partnership, Montague acknowledged that discussions have been held with Noranda.

However, he said that they are of the view that they should complete the discussions with the Government regarding the issue of a Special Mining Lease (SML173), which is likely to be amended.

The grant of the licence to Noranda also met with objections, as to its effect on the Cockpit Country. Fears remain about the impact of bauxite mining on water resources in and around the area, specifically the Rio Bueno catchment area.

“They are of the view that until that is done, they should withhold all payments,” Montague informed the committee.

“We have a different view and two weeks ago we had a meeting with them and they paid us some funds under the profit sharing, as well as funds that were due for the use of the port. We are still at the negotiating table with them, and we are anticipating a mutually amicable resolution to the matter,” he noted.

Asked by Paulwell, how much money was involved? Montague said that he did not wish to make a public statement on the amount at this time.

“I don’t want to at this point because we are still at the table, and as you know we don’t want to create any disruption,” he told Paulwell.

Paulwell recalled that there were some “outstanding monies” accruing from an arbitration done some time ago, and asked whether it was collected.

“We didn’t collect all of it. We collected approximately US$7 million from that. We are working with them to collect the rest and then to make them current,” Montague said.

Noranda Jamaica Bauxite Partnership (NJBP) is 51 per cent owned by the Jamaican Government and 49 per cent by Noranda Bauxite Limited (NBL). NJBP holds the physical mining assets and conducts the mining and related concessions.

In terms of Chinese-owned JISCO/Alpart, which closed down operations on September 27 nearly two years ago, but is expected to resume sometime later this year, with improved marketing and operational conditions, Montague noted that it is a private company, but that the Government has an interest in it because of the number of people it employs and the foreign exchange earnings that it generates. Over 1,500 workers are affected by the closure which was primarily triggered by reducing prices and lack of competitive technology, as a rehab programme was scheduled to start.

“We are working with our partners at Alpart to deal with it, because we anticipate the reopening of the economy, and they too, and we want them to be a part of the way forward,” Montague said.

He added that the owners have refused to give the ministry a timeline, “and we quite understand the timeline for the reopening issue, but we are in discussions with them. We monitor it on a weekly basis”.

He said that the Government will continue working with the Chinese investors, JSICO, as partners at Alpart until the situation there improves.

The Bauxite Levy was legislated in 1973 as the only prospect for increased foreign exchange and tax revenue for the country. However, due to a significant decline in prices over the years since, the benefit from the levy has slipped significantly from well over US$100 million per annum to virtually nil in 2020.