Ewarton to reopen, can’t lift bauxite blues
UC Rusal plans to reopen its Windalco Ewarton plant in June — six months ahead of schedule — but earnings from alumina will likely stay down for 2010.
The St Catherine-based plant will increase Jamaica’s alumina capacity for 2010 by 23 per cent, but Jamalco — the Clarendon-based plant that was the only plant to remain open throughout the recession — already saw export from its Rocky Point port drop 4.5 per cent during the first quarter of 2010.
What’s more, the half-year production won’t be enough to offset the output already lost this year due to Alpart and Windalco both remaining closed to date.
Yesterday, news of the plant schedule reopening was announced through a press release in the morning followed by the prime minister during his afternoon budget presentation to Gordon House.
The rationale given for the reopening of the plant was growing demand for the commodity and higher world market prices.
Windalco shuttered both its plants last March amidst weak demand for alumina and low prices.
According to Bank of Jamaica (BOJ), alumina prices plunged 46 per cent in the last quarter of 2008.
Since the closures, alumina exports have been tracking 60 per cent below year-earlier levels, even while Jamalco increased export volumes by 24 per cent in 2009.
Aluminum for delivery in three months on the London Metal Exchange has risen 58 per cent in the past year and reached a high of US$2,429 a tonne last Friday, the highest since October 2008, according to respected global business watchdog, Bloomberg Business Week, quoting a company statement.
Demand in Russia, where Rusal is based, was also projected to grow 26 per cent this year.
Windalco Ewarton is expected to produce 321,000 tonnes of alumina production in the second half of 2010 from its 650,000-tonne capacity.
But Jamaica exported over 650,000 tonnes in the first quarter of 2009, compared to the 307,000 tonnes exported during the first three months of 2010. Moreover, BOJ data shows that alumina prices at the start of the year was already 27 per cent higher than a year prior.
But Jamalco’s export during the first quarter of 2010 was down 4.5 per cent, according to preliminary data provided by the Port Authority of Jamaica.
Eevn with the reopening, output will remain below 2009 levels, therefore, alumina prices will have to continue rising forexport earnings to grow.
