The Government and Noranda Bauxite Limited are heading to arbitration following the development of a dispute over the payment of the bauxite levy.

Finance Minister, Dr Peter Phillips made the disclosure as he closed the budget debate in the House of Representatives yesterday.

Noranda and the Government of Jamaica had agreed on an interim regime in 2009 which saw the bauxite company being allowed to pay a portion of the levy in light of the global economic crisis.

That regime came to an end in December 2014.

However, Dr Phillips says Noranda is now demanding a five year extension of the bauxite levy concession.

And he says the company has not been paying over the full levy since January.

Dr Phillips says given the finances of the country and improvements in the global economy, the country cannot afford to extend the concession.

Meanwhile, Dr Phillips says UC Rusal has agreed to pay the full levy when it begins making alumina shipments from Alpart later this year.