Minister of Finance and the Public Service Audley Shaw says the Government is renegotiating the forward-sales alumina agreement between the Jamalco Alumina Company and the overseas-based Glencore.

Shaw told reporters yesterday that the country was in more trouble because of what he called the bad alumina contract the previous government inked with Glencore.

The finance minister said that under the agreement, the People's National Party (PNP) government advanced the collection of earnings for alumina, but, based on the terms of the contract, alumina was now being supplied to Glencore far below market rate.

In fact, Shaw said so bad was the contract that the rate at which the product was now being supplied was even below the actual production cost.

According to Shaw, when the former administration entered the forward-sales alumina agreement, it made no allowance for any increase in energy or production costs.

Since then, Shaw said the value of alumina has spiked and Jamaica has not been able to benefit because it is locked into the contract until 2012.

Energy cost

"In the period since that agreement was entered into, you have the energy cost more than doubling and you have the demand coming from India and China that has caused the price to shoot up," he said.

Shaw said this has prompted Prime Minister Bruce Golding and the minister with responsibility for energy to intervene in the matter.

Yesterday, a senior official in the bauxite sector told The Gleaner/Power 106 News Centre that the attempt to renegotiate the forward-sales contract with Glencore was far advanced.

He argued, however, that Shaw's comments at this time were unfortunate because they could affect the process.

The Government was able to collect advance earnings from Jamalco's alumina sales to Glencore because it was part-owner of the local company.