Editorial | What the mining mess tells Jamaica

Sometimes two apparently unrelated news stories tell us more about the state of a country than either story does by itself.

Jamaica recently welcomed a US$5-million grant from the European Union, implemented through the World Bank, to strengthen the Government’s capacity to manage the enormous reconstruction programme following Hurricane Melissa. The money will support the National Reconstruction and Resilience Authority (NaRRA), including planning, engineering, procurement, contract management, monitoring, and quality assurance.

The grant is welcome as the country needs every dollar it can obtain for reconstruction. What the development of NaRRA signals is a weakness in the overall capability of the existing state apparatus. Almost simultaneously, the auditor general presented another number in a report that confirmed the weak capability.

Three mining companies owed the Government US$13.7 million in penalties at the end of 2025 for failing to rehabilitate 264 hectares of mined-out land. The two figures tell a much bigger story about Jamaica.

The US$13.7 million represents assessed penalties, not necessarily money that could all be collected tomorrow. Nor should Jamaica reject external assistance merely because domestic revenues remain outstanding.

Why must a country search internationally for US$5 million to strengthen state capacity while allowing substantially larger financial obligations already imposed under its own laws to remain unresolved? That is a question that the Government of Jamaica must ponder seriously.

The auditor general found that one mining lessee alone accounted for 169.68 hectares, 64 per cent of the land awaiting rehabilitation, and US$9.89 million, or 72 per cent of the monetary exposure.

DISTURBING FINDINGS

There were other disturbing findings.

Two operators had US$828,000 in outstanding royalty principal, accompanied by US$2.58 million in interest and penalties. One mining operator continued operating for approximately six years after its licence expired. Six quarry operators operated beyond the expiration of their licences.

The Mines and Geology Department (MGD) completed only 243 quarry inspections in 2022-23 against a target of 400. Enforcement records were incomplete. Security deposits designed to protect taxpayers against future rehabilitation costs were not consistently obtained. These are not isolated administrative mishaps. Together they describe a systemic failure.

Jamaica does not lack mining legislation. There is a Mining Act with clear regulations covering licences, royalties, rehabilitation requirements, security deposits, inspectors, and penalties. What appears deficient is the institutional capability to convert these instruments into desired national outcomes.

A licence is valuable only if operating without one produces consequences. And a rehabilitation requirement protects Jamaica only if the land is actually restored.

What the auditor general’s report is once again showing is the clear distinction between legal form and true state capability.

There is also an economic problem: businesses respond to incentives. The expected cost of breaking a regulation depends on the probability of being caught, the probability of enforcement after detection, and the eventual sanction.

If inspections are inadequate, licences can remain expired for years, and financial penalties remain unresolved, businesses receive a dangerous signal saying that non-compliance may be cheaper than compliance. That will ultimately lead to the regulatory system’s collapse.

Responsible companies incur the costs of obeying the rules while less responsible competitors can postpone or ignore them. Thus the State unintentionally penalises good corporate behaviour.

SECURITY DEPOSITS

One of the most troubling findings concerns rehabilitation security deposits. Mining creates an environmental liability. Financial security is supposed to ensure that the company responsible for disturbing the land also carries the financial responsibility for restoring it.

The auditor general reported that the MGD said the security-deposit requirement had been relaxed to encourage investment but could not provide documented approval for the concession. Who has the authority to make this kind of ad hoc decision? Parliament needs to probe this thoroughly.

This approach to public administration raises many other questions, but an elementary economic issue is about who carries the risk.

Ultimately, somebody must pay to rehabilitate mined-out land. If operators fail, leave Jamaica, or cannot meet their obligations, environmental liabilities migrate towards the State and the taxpayers.

The country then runs a system that privatises the benefits of extraction while socialising part of its environmental costs. That is precisely what the polluter-pays principle was intended to prevent. Mining regulation requires capable institutions.

The question facing Jamaica is, therefore, bigger than NaRRA and bigger than mining.

For decades, there has been a concentration on policies, laws, agencies, plans, and programmes. The country must now become obsessed with execution; and not just the elements dealing with procurement, the aspects that have seemed to agitate politicians recently.

As a general rule, before asking what additional taxes should be imposed, the Government should ask what existing taxes, fees, and royalties remain uncollected.

In a similar vein, before drawing down on the loan facilities made available by the IFIs after Hurricane Melissa, Jamaica should ask what revenues, royalties, fees, and penalties remain outstanding.

This is not an argument against borrowing or international assistance. A developing country recovering from a major hurricane will require both.

It is an argument for something more fundamental: that the country must become as energetic about mobilising the resources already legally due to it as it is about mobilising resources abroad.

The auditor general has given Jamaica something more useful than another catalogue of bureaucratic shortcomings. She has provided a test of whether Jamaica can become a capability state.

The great challenge of the next phase of development is not simply deciding what the Government should do.

It is whether the Jamaican State can consistently do what it says it will. This is a question for all public bodies, not just the MGD.