Addax Bioenergy Confirms Redundancy June 14TH

Reactive statement

16 June 2016

AOG, as main shareholder, and Addax Bioenergy confirm that as a result of the expiry on 30 June, 2016, of the third and final extension of the Downscaling Agreement governing the employment of staff on Garden Leave at its sugarcane bioethanol and renewable electricity operation in Makeni, Sierra Leone, it has been obliged to initiate a redundancy exercise as of 14 June, 2016, in accordance with national legislative procedures to terminate employment contracts.

They nevertheless continue to work closely with the H.E. the President of Sierra Leone and his government, and remain hopeful that a solution may still be found in the coming days to ensure the future of the operation.

In that case, a large number of employees made redundant would be offered seasonal employment contracts effective 1 July 2016, and most employees affected by the current redundancy process would be given preference to re-apply for their positions.

Background on employment during the downscaling process

Following their decision in June 2015 to downscale their pioneering sugarcane bioethanol operation in Makeni, Sierra Leone, and to review all options for the future in close collaboration with H.E. the President of Sierra Leone, AOG, as main shareholder, and Addax Bioenergy carried out numerous consultation processes with local stakeholders.

Agreement was reached for conditions of employment applicable to the downscale period and many employees who were not required to report for duty were put on Garden Leave on a pro-rata salary/wage.

During the past few months, Addax Bioenergy has temporarily resumed certain operations including the land preparation for the replanting of sugarcane fields and the maintenance and re-commissioning of the power plant to generate electricity.

These operations have resulted in a large number of employees being called back to work from Garden Leave.

During the last consultation process in March 2016, the parties, including the Ministry of Labour and Social Services and the Union, agreed that the current Downscaling Agreement governing the employment of staff on Garden Leave for the period 1 April – 30 June 2016 would be the final extension of the agreement.

The effect on employees at the end of this term of agreement on 30 June would be dependent on whether a solution had been found for the future of the Makeni operation. 
 
In order to respect the end of the extension agreement on 30 June, Addax Bioenergy is obliged to initiate a redundancy exercise as of 14 June, 2016, for employees presently on Garden Leave, as well as certain other employees that are surplus to operational requirements of the naturally-low level of activities during the rainy season (June to November).

This is in accordance with national legislative procedures to terminate employment contracts.

The process includes consultations with the Minister of Labour and Social Services and the Multi Stakeholders Consultative Forum.

Background on the operation

Created in 2008 and run by AOG subsidiary Addax Bioenergy, the Greenfield operation produced sugarcane ethanol and green electricity from the biomass to power the plant and provided excess energy to the national grid.

The first production took place in May 2014, while the first exports of certified bioethanol to Europe took place during the 2015 season, as production stops during the rainy season from May to November.

The operation has been recognised as a model for responsible investment in Africa.

Two years of social, health and environmental baseline studies were followed by innovations in land leases, a Farmer Development Program (FDP) that trained over 2,300 smallholder farmers and increased food security in the region, on-the-job skills training and employment for up to 3,800 people in the high season.

In 2013, Addax Bioenergy received the first African certification by the Roundtable for Sustainable Biomaterials (RSB).

It also became the first operation in Sierra Leone to be registered as a Clean Development Mechanism (CDM) project of the United Nations Framework Convention on Climate Change (UNFCCC), and the first sugarcane-based power generation facility for ethanol production to be registered as a CDM in Africa.

The company decided to downscale in June 2015. The operation had had to overcome a number of unforeseeable events, which had a significant impact on the timeframe, costs and revenues initially planned.

They include the Ebola outbreak in May 2014, which not only has had a terrible human toll on the country, but has also led to substantial delays as most of Addax Bioenergy’s contractors declared “force majeure” and left the site.

The company nevertheless provided extensive support during the Ebola crisis, building Ebola isolation and treatment units and donating vehicles and equipment, and has continued with its farmer development, training and WASH (Water Sanitation and Health) programmes.

 

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