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Jamaica could earn billions from Japanese firm’s research here

Red mud holds big earning potential — Paulwell

BY ALICIA DUNKLEY Senior staff reporter dunkleya@jamaicaobserver.com

Wednesday, January 16, 2013    

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A Japanese aluminium company believes that there’s big money to be made from red mud deposits here and has put up US$3 million for a pilot project that could result in Jamaica earning billions in foreign exchange.

According to Energy Minister Phillip Paulwell, Nippon Light Metal Company Limited researchers have confirmed high concentrations of rare earth elements in Jamaica’s red mud, and are convinced that those elements can be extracted efficiently.

“The concentration of rare earth elements in mineable quantities around the world is unusual, and the concentration of rare earth elements found in Jamaica’s red mud deposits are significantly greater than what is known about other red mud sites around the world,” Paulwell told Parliament yesterday.

He said Nippon Light Metal’s ultimate objective is to extract 1,500 metric tons per annum.

Rare earth oxides, the commodity that will be extracted, are currently being traded at rates up to US$3,500 per kilogramme, according to Paulwell.

“When we compare that to alumina, which is now being traded at US$330 per tonne, it is clear that this resource presents an opportunity Jamaica must pursue, and which must be managed in such a way that Jamaica and Jamaicans benefit significantly,” the minister said.

Even at US$1,000 per kilogramme, 1,500 metric tons of rare earth metals have the potential to earn US$1.5 billion annually.

He also assured that the country was protected against exploitation as the Crown Property (Vesting) Act stipulates that any minerals found in Jamaica are owned by the Crown. Licences granted to bauxite/alumina companies are specific to the extraction of bauxite ore only.

Paulwell explained that in September 2012, Nippon Light Metal entered into a Memorandum of Understanding (MOU) with the Jamaica Bauxite Institute (JBI) for the establishment of the pilot project to determine the commercial scope of the project.

He described the project as “the starting line of an opportunity that has the potential to redefine Jamaica’s economic prospects in a positive way”.

Rare earth elements, or lanthanides, are extremely valuable elements which require advanced technology for their extraction so as to realise their commercial value, Paulwell explained. There are some 17 elements which make up these rare earth elements, including Scandium, Cerium and Dysprosium.

He said while history has shown that traditionally rare earth elements were not in high demand, and that the rare earth elements that were supplied to the international market emanated from China at a very low cost, in recent times demand has grown exponentially, owing predominantly to advances in modern technology and the rare earth elements becoming a key component of those advances.

“Today, several industries are critically dependent on the supply and availability of rare earth elements, chief among them the electronics and ICT industries. Typically, rare earth elements are key components of computers, Liquid Crystal Displays and Cathode Ray Tube monitors, hybrid automobiles, wind power turbines, magnets, television sets, energy-efficient light bulbs, sensors, GPS technologies, CD and DVD drives, digital cameras, most optic lenses, most communication devices, as well as satellites,” the energy minister said.

Paulwell said since Nippon’s approach to the Government in January last year with the research request, the company — which has annual revenues of over US$7 billion and over 10,000 employees — has done basic chemical research analysis, including the extraction of some rare earth elements.

Addressing environmental concerns, Paulwell said rare earth elements resource development may have environmental implications that must be identified and managed. He said the pilot plant study will seek to specifically map the potential impact on land, water and air, and the effect of neutralising the by-products of rare earth elements extraction.

Already, the National Environment and Planning Agency has approved the pilot project and is awaiting final approvals from other regulatory agencies.

Paulwell said the MOU ensures that Nippon Light Metal will assume full responsibility for the management and disposal of any waste from the pilot project. The company will also be responsible for the operating costs.

The energy minister said a number of Jamaican engineers and other workers will be employed on the project, and Jamaica will benefit from the transfer of knowledge.

He also said the results of the pilot project will be beneficially owned, in equal parts, by the JBI and Nippon Light Metal, while any rare earth elements produced at the pilot plant will be jointly owned by the Government and Nippon Light Metal.

He said, too, that during this phase of the pilot, negotiations will begin for the full commercialisation of the project.

Yesterday, Opposition Jamaica Labour Party spokesman on industry, commerce, and energy Gregory Mair wanted to know the Government’s stake in the venture and the revenue projections.

Responding, Paulwell said “a lot is going to depend on the operations of the pilot. The Government of Jamaica, at this stage, will only just now be engaging the company in any such discussions, so we are not yet signed off in terms of the commercial budget… but we do know that, in relation to this pilot, the Japanese company will be footing the bill for the equipment and the construction of the facility and other operational costs. We will provide the red mud — that is our contribution. Whatever is produced will be shared 50/50 at this stage.”

The company has asked for a 20-year licence in the two lakes it is viewing.

Arguing that Jamaica has “enough red mud” to ensure sustainability of supply, Paulwell pointed out that the country has been processing bauxite for over 60 years.

He also argued that the project is a lifeline to the bauxite plants that have shuttered.

“The project is an incentive to bauxite plants that are now closed. You would have been aware, last year, of my own assertiveness in relation to those idle plants. One of the reasons I was so assertive was because I was aware of this project to come,” Paulwell said.

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