THE EDITOR, Sir:
Having seen the confusion of the UC Rusal controversy, about staying in or getting out of Jamaica, I cannot fathom a motive for such indecision. They have had a heavily discounted bauxite levy for some time. Will Rusal give us an incentive when production increases beyond expectations, as it was in 2008? Yet the Alpart plant remains closed, and so, too, the Kirkvine plant.
I recall we have been in production in the existing plants since 1960. There should be a pool of workers in public supply, where ex-employees of the bauxite companies may be located. Granted, there might have been some retirees, including engineers, chemical engineers, scientists and maintenance personnel, but this is all to the good, as technical advice will be available.
But with all the expertise, we must have acquired within the Jamaica Bauxite Institute, the Scientific Research Council and other scientific organisations within the last 50 years, we should be able to operate the plants ourselves. There were workers at all levels - technicians, railway, warehousing - and so we must find the personnel.
Would I have to ask, "Why do we not run one of the plants with the employees we have?" We can negotiate operating funds from the capital market, rather than give Rusal such a generous waiver on the bauxite levy.
Aluminum production fell in 2009, pushing the industry into a crisis. Recovery, though, was earlier than expected, with production, as well as consumption levels, rising again in 2010. Demand for aluminum worldwide is skewed more towards consumer applications, aircraft, motor vehicles, minor electronic goods, rather than industrial applications, but more uses are being found for this unique metal.
The demand for aluminum worldwide, not including China, is rising among developing and emerging economies, and is expected to reach 71.2 million tonnes by 2018.
Looking at Rusal's financial future, its fixed asset debt is above US$11 billion in 2011, and net income is US$237 million. Compared to 2010, this is down by a factor of 10. Yet revenue was up 20 per cent, production is up seven per cent, expenses are down two per cent, and net income down 80 per cent. So this company is apparently having cash-flow problems.
My conclusion is that sooner or later, we may be forced to operate the plant ourselves; and if we use another contract partner, one condition should be the training of Jamaican personnel to maintain and manage the plant operations, and be familiar with markets.
UC Rusal is trading now at multi-year lows. The price is great. Why not negotiate for stock options with a lock-up period for not selling the shares? I do believe the Government should get advice on these matters. This is one example of how leaders can intelligently help their country.