Russian aluminium company Rusal has reached an agreement with the government of Guyana to privatise the country’s leading miner Aroaima Mining Company (AMC). Rusal’s subsidiary Bauxite Company of Guyana (BCGI) will acquire the majority of AMC’s assets and invest US$20mn to develop and expand the company.
The government of Guyana will continue to own a 10% stake in BCGI. This project will raise Rusal’s total bauxite production capacity from its current level of 6.2mn tonnes to 8.7mn tonnes in 2008.

The deal provides for the transfer of all of AMC’s financial and production operations and the majority of its assets and bauxite deposits, with the total reserves of 96mn tonnes, to the Bauxite Company of Guyana on March 30. Some of AMC’s assets, including fixed property in Kwakwani, certain equipment, tugs and barges, will be leased to BCGI for a period of up to two years or until the planned investment programme is implemented in full. .

BCGI was launched in December 2004 as part of Rusal’s memorandum of understanding with the government of Guyana to revitalise the country’s bauxite industry. Rusal holds a 90% stake in BCGI, while the government of Guyana is the owner of the remaining 10%. BCGI has been running AMC under the terms of a management contract since April 2005.

“This deal is a momentous step forward in implementing our strategy of achieving self-sufficiency in raw materials,” says Andrei Raikov, Rusal’s director for alumina business development. “The addition of the Guyanese bauxite to Rusal’s production cycle complements perfectly our plans to expand the Nikolaev alumina refinery in Ukraine from the current 1.3mn to 1.6mn tonnes of alumina per year. The deposits in Guyana will secure a stable supply of the raw material to load the refinery’s additional capacities and will raise its production efficiency by feeding higher quality bauxite.”

Some 350,000 tonnes of bauxite mined in Guyana will be delivered to the Nikolaev refinery during 2006. As AMC’s current supply agreements expire, this volume will increase to 1mn tonnes in 2008 – the same year the Ukrainian refinery is expected to reach its full capacity of 1.6mn tonnes following a modernisation programme.

Kurubuku 22, a 39mn tonne deposit that is part of the AMC complex, will supply the Nikolaev Alumina Refinery with high quality bauxite used for ‘sweetening’ – a technological process that reduces the volume of bauxite needed for the production of alumina.

Rusal’s total investment in expanding and modernising AMC’s current production of 1.4mn to reach 2.5mn tonnes of bauxite annually will total US$20mn. As part of the investment programme, scheduled for 2005-07 and already 60% complete, Rusal will purchase new mining and drying equipment; install a conveyor system servicing the Berbice River, AMC’s main transport artery; and, further develop the mining complex’s infrastructure.

In 2004, Rusal won a separate licence to develop the Linden group of bauxite deposits, which is located on the bank of the Demerara River and holds over 120mn tonnes of bauxite. These deposits could become a potential site for a greenfield alumina refinery, which Rusal is evaluating.