Noranda Aluminum Holding Corporation today announced plans to cut 521 jobs across its various operations around the world due to a downturn in business and a set of unforeseen circumstances.
The company says some of the factors which will cause it to shed these jobs by February 4, include the adverse ruling by an arbitration panel in its dispute with the Jamaican government over the bauxite levy payments.
Noranda’s President and Chief Executive Officer, Layle Smith, says the company has been faced with major challenges in recent times including continued low aluminum prices.
Mr. Smith cites the idling of two pot lines at New Madrid, an unfavorable arbitration panel ruling regarding the bauxite production levy in Jamaica and the bankruptcy filing by Noranda’s principal third party bauxite customer as reasons which prompted its cost cutting measures.
In December, the Jamaican Government scored a major victory in its dispute with the St. Ann based Noranda Bauxite Limited.
The dispute was over what tax rate should apply for each metric tonne of bauxite Noranda exports from Jamaica, dating from January 2015.
The government had insisted that Noranda pay the full rate of USD$7.56 per tonne.
But Noranda had argued that it should pay USD$2.52 because of a concessionary regime signed in 2010 which was still in force.
Mr. Smith says Noranda today initiated a workforce reduction involving approximately 190 employees, approximately 90-percent of whom work in the company’s integrated upstream business.
Upstream workers are those involved in the mining of bauxite.
A simple calculation shows that Noranda has already sent home 171 workers.
In addition to that number, Noranda will also send lay-off 350 more employees in its global business by February 4 this year.
It says operations at its smelters will be curtailed on or before March 12, this year, unless it’s able to secure a substantially more sustainable power rate for the smelter and materially improve its overall liquidity.
It says things can only turn around for the company, if its able to negotiate meaningful and substantial fiscal regime relief with the Government of Jamaica.
In that negotiation Noranda says it hopes that it’ll discuss tax and production levy relief, achieve meaningful and substantial cost reductions at the alumina refinery in Gramercy, Louisiana and at the bauxite mining operation in St Ann, Jamaica.
This will include, but is not limited to cost savings resulting from workforce reductions.
Noranda says it has notified the Simpson Miller administration that the the New Madrid Incident is an event of force majeure.
A force majeure refers to an act of God or an unforeseen event.
As a result of the force majeure, Noranda says it will materially reduce mining plans previously provided to the Jamaican government and related entities.
It says it has also advised the Jamaican Government that the filing of a case under Chapter 11 of the Bankruptcy Code by a significant bauxite customer, Sherwin Alumina Company, may result in additional material reductions to its bauxite mining plans.
And Public Relations Consultant at Noranda Bauxite Partners Jamaica, Lance Neita says the company yesterday made the posts of 14 persons redundant.
He says this represents 3-percent of the overall workforce at the company’s Discovery Bay plant in St. Ann.
The company is to have another meeting with trade unions this week to discuss the latest developments which could see even more Jamaican workers losing their jobs.