Editorial | From Lazarus to Alpart

Evoking Edward Seaga, Dr Wesley Hughes has raised the possibility of a route towards a Lazarus-like resurrection for the Alpart alumina refinery.

His ideas are worthy of serious consideration by the Government. Dr Hughes’ scheme, however, would have a better chance of success, this newspaper believes, if coupled with research and development for extracting rare earth elements (REE) from Jamaica’s red mud – the effluent left when bauxite is refined to alumina. The United States, under Donald Trump, is currently fixated on gaining access to REEs as a strategic resource.

Alpart is a 1.6-million tonne capacity refinery at Nain, St Elizabeth, in Jamaica’s southwest. It is owned by China’s Jiuquan Iron and Steel Company (JISCO), which bought it in 2016 from the Russian aluminium group, UC Rusal.

Like other Jamaican refineries, compared to their global counterparts, Alpart is an expensive producer of alumina. Which causes Jamaican refineries, in the industry’s parlance, to be “swing producers”.

When markets are soft and prices are low, they are among the first to be taken out of production. That is what happened to Alpart under UC Rusal ownership from 2009 when it was shuttered, up to the point of JISCO’s acquisition of the plant in 2016 for US$299 million.

After less than two years of production under JISCO’s ownership, Alpart was again mothballed in 2019. So it has remained.

This time, it wasn’t purely production inefficiencies and market forces that conspired against Alpart. Geopolitics, too, had a part.

BOLD ACTION

In 2019, during his first term, President Trump imposed a 20 per cent tariff (10 per cent for other countries) on aluminium and steel from China, the world’s largest producer of both products.

Mr Trump’s actions helped to nick JISCO’s plan to modernise and expand Alpart to produce alumina from aluminium smelters in China. The United States would be a key export market.

Since his return to office, Mr Trump has added another 25 per cent to the duties on aluminium and steel, effectively killing any near- or medium-term prospect, The Gleaner believed, of Alpart being taken out of mothballs. Mr Trump believes high tariffs would cause a return of manufacturing to the United States.

Dr Hughes’ suggestion would demand bold action by Jamaica, similar to what Prime Minister Seaga did 40 years ago when the Aluminium Company of Jamaica (Alcoa) announced plans to close its refinery at Halse Hall, Clarendon. The Government took control of the plant and ran it for several years under its current name of Jamalco.

“ The challenge would be that the (Jamalco’s) production (under the Government’s management) would have to be marketed in a depressed global market that had little prospects,” Mr Seaga wrote in this newspaper in 2011. “ The choice was risky because the cost of failure would be awesome.

“Yet, the alternative of closing the plant would be certain disaster, while a takeover, though involving great risk of huge losses, offered a glimmer of hope.”

Dr Hughes – who has led critical public sector institutions and was once a senior economic analyst at the Jamaica Bauxite Institute (JBI) – acknowledged that Alpart would require significant investment to modernise the facility. He stressed, however, that it was the only high-temperature refinery in Jamaica, “making it highly suitable for processing the mostly lower quality monohydrate reserves that now remain”.

Wrote Dr Hughes in this newspaper on Sunday: “ However, this is not likely to happen without direct Jamaica Government intervention to force movement to either get JISCo to invest and reopen, or structure some alternative arrangement. If by some miracle the US can pull off a resurgence of smelting, there will be a need for additional alumina, and Jamaica would be ideally located to supply this demand.”

STRATEGIC PLAN

If this suggestion is possible, it would have a better shot if it were tied to probable access to rare earth elements, which are critical for the manufacture of a wide array of high-technology products. China has over a third of the world’s REE reserves and controls 60 per cent of production and 85 per cent of global processing capacity.

Mr Trump’s predecessor, Joe Biden, had encouraged American companies to widen their footprint in rare earth exploration and mining. Mr Trump has been pushing for control of Ukraine’s reserves of REEs, and other critical minerals, as, he says, repayment for America’s provision of arms to Ukraine for its war with Russia.

Rare earth elements exist in bauxite and in the residue from its refining into alumina. The technology for extracting REEs from red mud, which are stored in large ponds near to alumina plants, is longstanding.

However, that technology has not been economically efficient enough to make its commercial application feasible. That is unlikely to be the case forever, especially if the technology is subject to consistent research and innovation, as was attempted in the 2010s in Jamaica by JBI and Japan’s Nippon Light Metals.

This R&D effort should be part of any strategic plan by Jamaica to revive its bauxite/alumina sector, and should be near the top of the priority list of the mining minister, Floyd Green.