Minister Montague’s Statement on Novation Agreement

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Jamaica News: Mr. Speaker, this honourable house will recall that nearly two years ago, New Day/ DaDa Holdings, LLC (New Day) was identified as the preferred bidder for the purchase of the Gramercy Alumina Refinery in Louisiana and the 49% stake in the Noranda Jamaica Bauxite Partnership in Jamaica. This Government then entered into an agreement with New Day, which sought to protect the interest of the Government and people of Jamaica, while considering the best options for all parties involved.

As a result, over 300 jobs were saved and all monies owed to workers are being paid. The partnership agreement with New Day prevented any disruption of Noranda Bauxite operations.

In October 2016, a Letter of Intent was signed between the GOJ and New Day Holdings. Thereafter, the Novation Agreement and the various implementing documents such as the Establishment Agreement and the Joint Venture Partnership and Mining Agreements, among others, were to be completed and signed by November 30, 2016.

Regrettably, Mr. Speaker, that process was delayed. The deadline for concluding the Novation Agreement was initially extended beyond November 30, 2016 in order to facilitate the equitable treatment of employees on a uniform basis.

The extended delay thereafter was due to several factors including revisions of commitments originally made in the Letter of Intent, discussions on the boundaries of the Cockpit Country; and a frost event in Louisiana which caused the pipes at the Gramercy refinery to burst, therefore delaying certain activities.


Mr. Speaker, I am pleased to announce that on September 6, 2018, the GOJ and New Day signed the Novation Agreement. This Agreement outlines the parameters, commitments and business arrangements between the GOJ and New Day as partners in the bauxite operation in St. Ann.

Steps have been taken to guarantee that this Country is protected, even as we seek to benefit from the natural resources as a driver of our economy. These operations are conducted to ensure that the natural environment is properly managed for sustainability.

It must be noted that the Agreement not only covers Mining operations in Jamaica but extends to the refinery at Gramercy in Louisiana.

Mr. Speaker, I once again put on record that this Government remains committed to ensuring that the People of Jamaica, which we serve, always remain our first and most important priority.


Mr. Speaker, the Government of Jamaica entered into a profit sharing arrangement where both partners benefit from any ‘financial recovery’ in the performance of the mining and refining operations of the entity.

We believe that this new arrangement will earn the country more in US Dollars compared to the traditional levy system. Under the agreement, the GOJ will earn 17.33% earnings before interest, taxes, depreciation and amortisation (EBIDTA), or US$1.50 per tonne of dried bauxite shipped; whichever is greater.

The Royalty payments of US$0.50 (50 cents) per dry metric tonne of ore shipped will also remain in effect.

At signing, New Day paid to the GOJ US$7 million (approximately J$959 Million). This represents a significant part of the US$17 Million (approximately J$2.239 Billion) owed, the rest of which is to be paid over a thirty–six (36) month period. These represent legacy payments as well as royalties.

This Government will continue to insist that when we are owed that those payments are quickly settled. The bauxite belongs to the Jamaican People and not the Government. Therefore, if the company makes no profit, then the levy on bauxite must be paid.


Although, not a part of the Novation agreement, the Government Team requested that the outstanding land titling for persons who have been resettled be dealt with. As at June 2018 there were 1,140 titles outstanding.

We continue to work with the company to have this matter settled.

Mr. Speaker, this Government was tasked with the responsibility to secure the monies owed by Noranda to the People of Jamaica, to protect the jobs of the employees and to ensure the continuation of the bauxite operation. I believe we have accomplished that task.

I must give credit to the hard working technocrats at my Ministry, the Ministry of Finance and the Public Service, the Jamaica Bauxite Institute, the Jamaica Bauxite Mining Limited, and the Attorney General Chambers, who all worked tirelessly to protect the interest of the People of Jamaica, and, Mr. Speaker, to ensure that we got a very good deal for all parties.

Mr. Speaker, this is a new day; we are on a new trail as this Government continues along the path of prosperity and environmental sustainability.

Thank you!


Source: JIS News

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