By Wilberne Persaud
In A-Level geography class, we learnt that ALCAN set up a local operation in 1943, Jamaica Bauxites Limited, to assess potential for commercial extraction of bauxite in Jamaica. Bayer process technology proved feasible. Kirkvine Works shipped alumina to Norway in January 1953. Kaiser and Reynolds had shipped kiln-dried bauxite earlier - 1952.
The International Bauxite Association (IBA) emerged a quarter-century later. Only then did countries like Jamaica figure out a successful mechanism to get a fair price for bauxite - a non-renewable natural resource that created significant environmental hazards once exploited. That moment occurred on the heels of the oil crisis as the Organisation of Petroleum Exporting Countries (OPEC) quadrupled oil prices in 1973. Bauxite exporters formed a producer association that might, if only for a moment, mimic OPEC's success.
Actually, it was known then, that the IBA could never hope to have as strong an impact as OPEC. A colleague, an engineer turned economist and operations research specialist, used to say: "Bauxite is found wherever one cares to look for it!" It was his joke, but the point was easy to grasp - crude oil, unlike bauxite, is a unique commodity. It was likely to remain so for the foreseeable future. Yet, this is not what we want to take away from the IBA experience.
The point is, at the initial stages, Jamaica knew little about bauxite - the colonial office at Whitehall controlled negotiations. Indeed, Jamaica's governor communicated existence of the ore to aluminium producers among the allies at war, with the idea that it might be used in the war effort. As it turned out, it wasn't. US and Canadian companies came later. Jamaica received comparatively little in returns from the ore.
What shall be the basis?
Fast-forward to the establishment of the IBA and use of a pricing formula - work of a Jamaican economist/ statistician, Alfred Francis - linked to the London Metal Exchange quotation for aluminium. Consider this relative to returns we might hope to achieve from development of a port and logistics hub centred on Goat Islands and Portland Bight area. Should a decision be taken to carry forward this development, what shall guide negotiations?
Shall it be value of the land? Economic rent? If so, what basis for such valuation? Shall it be opportunity cost linked to environmental loss/damage resulting from the project? Shall we add to this the trump-card-value real-estate professionals use: location, location, location? What of some projection of returns expected from the development as a whole? What ownership structure shall govern development once valuation is agreed? Will China Harbour simply purchase the land, dredge, reclaim, build port, logistics and infrastructure facilities to own in perpetuity? Could it be a 99-year lease subject to renegotiation?
Might compensation include construction of Parliament buildings, completing the abandoned development project for National Heroes Circle that Norman Manley perceptively envisaged as our seat of government - structures symbolising power and good governance that Jamaicans could admire, respect and revere? The power of symbolism was never lost at Whitehall. Can we finally grasp that now? Norman Manley did, then. We do possess negotiating guile and strength - including cricket balls old and new - to conceive of and make such a demand, but shall those capacities be drafted to this project?
Should we believe we can craft optimal mechanisms to handle such a major undertaking and simultaneously produce sensible, realistic and workable environmental impact projections, including mitigation initiatives in a matter of weeks? If so, blow me away with a whiff of legalised ganja smoke. Such is utterly wishful thinking; oh, for Alice in Wonderland. But then, we could simply role dice and multiply the result by a factor pulled out of a hat.
So what is likely? China's investment managers and developers gained experience from global expansion in the last decade. They possess turnkey templates hundreds of pages long to put before us.
Make no mistake, this is no gift. Even if it were, we shall surely be forgiven for 'looking the gift horse in the mouth'! Notwithstanding presumed financial, employment, infrastructural and other long-term benefits, there are long-term costs - inevitable, with some unknown. The implications presage such far reaching consequences it would be a travesty to present Jamaica with a fait accompli decided in speedy, closed-door negotiations.
At minimum, there should be meaningful consultation. Some may argue the proposal qualifies for, actually merits the standard our Constitution normally recognises as requiring a two-thirds majority of parliament, even a referendum!
Wilberne Persaud, an economist, currently works on impacts of technology change on business and society including capital solutions for innovative Caribbean SME.email@example.com