Rather than sink significant capital into a badly needed expansion to compete with stiff Chinese competition, Cambior (CBJ-T, CBJ-X) is looking for a vertically integrated alumina producer to acquire all or part of its 70% stake in loss-making Omai Bauxite Mining.
Omai Bauxite owns several bauxite deposits in the Linden region of Guyana. A first quarter net loss of US$1.9 million by the subsidiary prompted Cambior to recently suspend part of its operations for July and August. The move was accompanied by the layoff of some 350 workers.
A boost in chemical-grade bauxite output is planned to help offset the impact. The cost of shutting down the production of high-alumina calcined bauxite for 2 months is pegged at $1 million.
Cambior says the government of Guyana, which owns the remaining 30% of the company, is behind the auction as it involves the potential for an expansion of the business. Cambior says several integrated aluminum and alumina producers have already expressed interest in the Omai’s metallurgical bauxite production potential.
Cambior says the divestiture will allow it to focus its efforts on its core gold business.
In afternoon trading in Toronto on June 16, Cambior shares were off 7 at $2.83 following the news late on June 15.
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