Sun | Dec 5, 2021

EDITORIAL - Policy review for bauxite

Published:Monday | June 9, 2014 | 12:00 AM

It is time for Phillip Paulwell, the minister with responsibility for mining, to come clean about the state of Jamaica's bauxite/alumina industry and set the basis for a rational discussion about the future of the sector.

He should start by conceding the unlikelihood of the Kirkvine alumina refinery in the parish of Manchester, owned by the Russian firm UC Rusal, seriously reopening for business. If it does, it will be the result of a fair bit of unsustainable political arm-twisting by the Jamaican Government.

We are drawn to the need for this conversation in the face of last week's spectacle in Gordon House of contrived outrage from the Shadow Finance Minister and North East Manchester Member of Parliament Audley Shaw, over Kirkvine's continued closure and alleged scrapping of the plant and the absence of a frank response from Mr Paulwell.

First, as Mr Paulwell well knows - and of which Mr Shaw should be aware - Jamaica, with the mostly older, oil-fired refineries is, in the best of times, in the lower mid-tier region of efficiency in the global production of alumina. Our situation is made worse during periods of recession and reduced demand for aluminium, leading to a collapse in the price of the commodity. This phenomenon makes Jamaica a so-called swing production centre for alumina. In good times, when prices are robust, there is enough insulation to cushion expensive producers like our plants.

In bad times, our plants are among the first to lose production, or close all together, as has been the case of Kirkvine and Alpart, also owned by UC Rusal, since global markets were sent into a tailspin in the aftermath of the global financial meltdown of 2008. Another Rusal plant, at Ewarton in St Catherine, was also closed for a while. It is in production now, only because it is more efficient than the other Rusal facilities in Jamaica and has been awarded substantial tax concessions.

BALD TRUTH

But the bald truth, despite the talks Mr Paulwell will have with UC Rusal's executives and any muscle-flexing the administration may get up to, is that the viability of the Kirkvine facility is in grave doubt. With a production capacity of 610,000 tonnes a year, it is the smallest of the island's alumina refineries. But more critically, built in the early 1950s, it is the oldest and has been subject to the least upgrade. Indeed, most analysts agree that it would be far too expensive to modernise and make it more efficient.

In that regard, it would perhaps make sense to take on board the suggestion of Dr Carlton Davis, a reputed authority on the Jamaican industry, to find an alternative use for Kirkvine - probably as some kind of training facility in mechanics and/or engineering.

For the rest of the sector, Mr Paulwell has on the table other practical solutions, the most important being using coal to fire the remaining refineries. A project for the 1.4-million-tonne Jamalco refinery seems well advanced. Mr Paulwell is discussing with Rusal similar arrangements for Ewarton (670,000 tonnes) and Alpart (1.7 million tonnes).

Most people believe that the smart money says that Jamaica's reserves are good for these facilities and the four million tonnes a year of the raw bauxite mined by Noranda. So, it may be that the idea of the new north shore refinery, based on reserves and geography, is a pipe dream. It's time to talk honestly.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.