Historic Overview: In the 1960s, the red dirt of bauxite lands in Jamaica’s interior spurred a ‘gold rush’ of mining that attracted global investors and pushed the island to the number one position in mineral supply with a production capacity of nearly 5 million tonnes of bauxite per year, almost a quarter of all the bauxite mined in the world.

Today, Jamaica is long past the days when it was ranked as the leading bauxite producer in the world. While alumina exports are inching up, the general decline of the industry is chronicled by the Jamaica Bauxite Institute (JBI), which reports that currently, Australia is the world’s largest bauxite producer with output of 75 million tonnes in 2018. In second place is China at 70 million tonnes followed by Guinea (50 million tonnes), Brazil (27 million tonnes) and India (24 million tonnes).

The current picture: Jamaica has since fallen to sixth place in the world, with production capacity of 10 million tonnes of bauxite produced in 2018. The island’s share of world bauxite output further fell from 18 per cent in the 1970s to about 2 per cent of total world production of 300 million tonnes in 2018.

Regarding alumina, in 2018, Jamaica was ranked sixth in the world with an output of 2.5 million tonnes. China, Australia and Brazil have ranked as the top three producing countries with outputs of 72 million, 19 million and 7.9 million tonnes, respectively.

The last year in which the island produced 5 million tonnes was 2011. The most recent data provided by the JBI indicate that exports of crude bauxite declined to 3.3 million metric tonnes in 2018.

Alumina exports, on the contrary, have risen. Export levels have risen from 1.5 million metric tonnes in 2010 to 2.5 million metric tonnes in 2018.

Looking for deep pockets: Industry historian Coy Roach indicates that Jamaica has always bet on partnerships with deep-pocketed investors from overseas, but these, in turn have on their own accord run their operations primarily for their own benefit, responding negatively in the 1970s when the Government of Jamaica implemented a bauxite levy to gain more from the industry.

Alumina refineries have changed ownership since then or closed all together. Some, like Kirkvine which is owned by Russia-based UC Rusal, are yet to be reopened. Alpart in St Elizabeth was acquired by Chinese company JISCO, but investment plans remain on the drawing board.

The most painful example of the industry’s challenges is exemplified by Jamalco which is a joint venture between state-owned Clarendon Alumina Production (CAP) and the Noble Group in Jamalco.

The refinery has undergone upgrading over the years with the latest coming in 2007. The current design capacity of the Jamalco refinery is 1.416 million tonnes per annum.

However, recent reports by the auditor general indicated a substantial deterioration in CAP’s cash position necessitated US$27 million in loans from the Government of Jamaica (GOJ) in FY2016/17 to settle outstanding arrears to the joint venture partner.

The additional borrowing was contrary to GOJ’s stance regarding continued support to the entity. Of note, the deterioration in CAP’s liquidity position resulted in a context where more cash was demanded to finance CAP’s operations than was generated. The board of CAP reported difficulty, as well in securing adequate financial reporting from Noble.

In August last year, a fire broke out at Jamalco leaving the entity to lose US$500,000 per day. The company has insurance, but is not producing now and May not produce this year at all.

Ups and downs: Alumina Partners of Jamaica (ALPART) has its bauxite mining and alumina processing plant located at Nain, St Elizabeth, was first established in the early 1960s under the union of three companies (Anaconda, Kaiser Aluminum and Reynolds Metals).

Between then and now it has undergone several partnership and ownership changes, the last of which took place in 2017, resulting in full ownership of the company being transferred to Jiuquan Iron & Steel Company (JISCO).

The JBI notes how the refinery was closed in 2009 in the wake of the global financial crisis. However, in June 2017 the refinery reopened with JISCO, at the helm. Alpart has a capacity of 1.65 million tonnes, which makes it the largest refinery in Jamaica.

It can be further expanded to 2.0 million tonnes. In September 2019, the operation at the refinery was suspended to undertake upgrading exercises. It is still to be reopened.

Windalco in the shadow of sanctions: West Indies Alumina Company (WINDALCO) is fully owned by Rusal, which has two alumina plants – Ewarton Works in St Catherine and Kirkvine Works in Manchester.

In the 1950s Kirkvine Work’s production capacity was expanded from 220,000 tonnes per year in 1954 to 550,000 tonnes by 1968. However, today, Kirkvine Works is in a mothballed state after production ceased during the first half of 2009 under depressed market conditions.

Ewarton Works, which also closed in 2009 was reopened in 2010 and remains operational. Ewarton Work’s production capacity stands at 600,000 tonnes of alumina per annum, the JBI indicates.

Recently the company’s operations have fallen under the shadow of western sanctions which have been levied against its majority Russian owner due to the Ukraine war. In Australia plants with Russian investment have been taken charge of by the Government, but in a recent interview in Washington DC, Prime Minister of Jamaica Andrew Holness told reporters that Rusal’s operations in Jamaica were “safe”.

Noranda and the environmentalists: With operations in the parish of St. Ann, Noranda Jamaica Bauxite Partners II, formerly St. Ann Bauxite Jamaica Limited and prior to that Kaiser Jamaica Bauxite Company, is a partnership between Noranda Bauxite Limited (NBL), a Jamaican limited liability company, and the Government of Jamaica.

Noranda Bauxite Limited has a 49 per cent interest in the partnership and holds and operates the physical mining assets and operations while the GOJ owns the remaining 51 percent.A concession from the Government of Jamaica permits Noranda Bauxite Limited to mine bauxite in Jamaica through 2030.

The JBI notes how in 2011 expansion work resulted in a production capacity boost from 4.5 million tonnes of bauxite per annum to 5.4 million tonnes per annum. The company is currently facing challenges from the environmental lobby which objects to bauxite mining in proximity to protected areas.

Energy cost pressures and taxation: The JBI notes that the mining and processing of bauxite continue to be one of the most important sectors of the Jamaican economy, accounting for about 10 per cent of GDP.

The industry, still, remains one of the two largest gross earners of foreign exchange and, apart from corporate taxes, is the largest single contributor to government revenue.

The capital-intensive industry directly employs only 3,400 workers – down from a high of over 6,900 in 1975 due to rationalisation and modernisation.

In commenting on the changing fortunes of the industry, Coy Roach, the former general manager of Jamaica Bauxite Mines Limited, asserts, “The levy is a factor which drove away investors in the 1970s and remains a negative factor as no other producer of bauxite has the levy.

“Jamaica has not been attractive for investment in the bauxite sector for some time from our traditional countries of investment.” He blames, secondly, production costs which are high because of the high energy cost in Jamaica.

Roach also lays blame on the environmental lobby which has driven the government into a defensive posture. Roach said, “The relentless anti-mining sentiments of the environmentalists and third the continued difficulty of getting bauxite reserves.”

Jamaica Bauxite Mining Limited (JBM) in which Roach was head is a Government-owned company which holds 51 per cent equity on behalf of the Government of Jamaica in the bauxite operations of its current partners, New Day Aluminum (Jamaica) Limited.

Roach told the Jamaica Observer, “I am not sure that we will get the level of investments we had in the 1960s because it is well known that the reserves are dwindling and the difficulty of mining because of the anti-mining lobby.

Nevertheless, he noted plans by existing investors which should see better results for the bauxite-alumina sector. Jamalco, he noted for a long time was the most efficient alumina plant and would still be whenever it restarts.

Notably, he said, owners have invested in new power sources to use natural gas instead of oil. This would have made them even more efficient.