Noranda Bauxite optimistic

Sunday, August 22, 2010

Noranda Jamaica Bauxite Company, boosted by increased demand and improved prices for the commodity, have latched unto the new wave and are poised to significantly increase their output.

Sources at Noranda, one of the few companies that had maintained production in the face of the massive fallout in the bauxite sector last year, are expressing cautious optimism, even as they prepare to boost their production driven by an increased appetite within their parent group of companies in the United States.

Noranda currently produces and ships 4.6 million tones of bauxite per year and plans within the next two years to increase that by 10 per cent. Sources at the company note that Noranda's production volumes are not driven only by market prices however, as significant investments are also being made in both employee training and additional equipment sourcing to secure this increased capacity.

They contend that although prices have increased from the market low of 2009, they are still below industry norms so gains will have to come from increasing efficiencies.

The St Ann based company will be loading in excess of 120 ships this year and company spokespersons note that increased productivity and the availability of cheaper energy sources such as LNG will be critical to the viability of their operations locally.

Noranda also has in place a unique programme to encourage employees to recommend ways and means of enhancing production and productivity that is reaping success, resulting in significant savings and improvements in employee productivity. The initial roll out of the programme to all employees saw them responding with close to 500 suggestions for improvements. These suggestions are being actively followed up, company sources note.

Pundits such as Dennis Morrison, an economist and expert on the sector make it clear that for the industry to rebound, a new approach is required centered around more efficient production and sourcing cheaper energy, particularly for alumina production.

Energy and Mining Minister James Robertson has championed the need for a cheaper energy source in the form of Liquid Natural Gas (LNG), seeing it as critical to the survival and growth of Jamaica's productive sector including cost sensitive ones such as bauxite and alumina which currently rely on oil fired kilns which are uneconomic based on the volatile price factor of the fuel.

The recent reopening of UC Rusal's Ewarton works also driven by increased demand within the Russia based group, is also said to be contingent on significantly increased productivity and economies of scale.

Noranda Bauxite, which was formerly owned by Kaiser, is wholly owned by Noranda Intermediate Holding Corporation, Nashville, Tennessee. Noranda is a leading North American integrated producer of value-added aluminium products, while Noranda Bauxite in Jamaica provides all the bauxite ore used for alumina production at Noranda's alumina refinery.