Bauxite industry vital to Jamaica's BOP

Published: Monday July 14, 2008

The bauxite industry continues to contribute significantly to Jamaica's balance of payment figures, having raked in an improved US$1.3 billion in export earnings last year, a 76.9 per cent increase over the previous year.

Earnings from the sector actually went up, even though there was a slight downturn in the production of bauxite-alumina in 2007 relative to 2006. Jamaica last year produced 14.57 million tonnes of bauxite-alumina, compared with 15 million tonnes in the previous year, according to figures supplied by the Planning Institute of Jamaica (PIOJ).

Equipment problems

The PIOJ figures indicate that the downward trend in crude bauxite and alumina production continued for the first quarter of the year, alumina production falling 4.2 per cent to 978,200 tonnes, while crude- bauxite output dropped 2.7 per cent to 1,140,100 tonnes when compared with the first quarter of 2007.

"Lower output for alumina was primarily due to equipment problems at some refineries (while) the decline in crude-bauxite production resulted from the downtime of 10 days, which was required to maintain the conveyor system at the St Ann Bauxite Company," the PIOJ explained in its 'Economic Update and Outlook' for the period January-March, 2008.

The upswing in earnings from the sector in 2007 was driven by favourable alumina price offers on the international market, which increased during 2007 due to strong demand for alumina - the primary material used to make aluminium - and lower output levels. The price per tonne for alumina averaged about US$350 per tonne, having started the year at an average price of $205 per tonne.

At the same time, however, as with any other industry, the rising price of oil and the resulting increase in production costs are presenting a challenge for bauxite companies in Jamaica. In a recent article published in The Sunday Gleaner, former Cabinet secretary, Dr Carlton Davis, who had oversight responsibility for the bauxite-alumina sector, said the price of producing alumina based on an annual output of 4.2 million tonnes has moved from US$150 million in 2003, to about US$550 million at present, and counting.

One per cent decline

Based on the United States Geological Survey (USGS), world production of alumina actually declined one per cent last year when compared with the previous year, although worldwide production of bauxite increased six per cent, propelled mainly by the expansion of bauxite mines in China, Brazil and Guyana.

But while Jamaica's production dipped slightly lower in 2007, the island is the fourth-largest producer of bauxite ore in the world, behind Australia with 64 million tonnes, China 32 million tonnes, and Brazil 24 million tonnes, based on 2007 statistics prepared by the USGS.

The bauxite-alumina sector is one of the main earners of foreign exchange for the country, ranked third behind remittances and tourism. Mining is conducted by three multinational companies: Russian Alumi-nium Company (RusAl), which owns the Alpart refinery in Nain, St Elizabeth, and Windalco refineries in Kirkvine, Manchester and Ewarton, St Catherine; Alcoa, which owns the Jamalco refinery in partnership with the Government at Halse Hall, Clarendon; and the St Ann Bauxite Company, which is owned by a joint venture between Century Aluminum Company and Noranda Aluminum Incorporated, both of the United States.

Jamalco is currently undergoing a $49-billion expansion that will, when completed, increase processing capacity from 1.4 million tonnes to 2.8 million tonnes annually.

Jamaica's output of alumina and crude-bauxite production is expected to increase by 19.6 per cent and 15.2 per cent respectively, while exports will go up 14.3 and 26.2 per cent upon completion of the expansion.

RusAl is also expected to expand capacity at its Alpart refinery.

In the meantime, the prospects for the future of the local industry in terms of supplies appears favourable, based on figures presented by the US-based Geological Survey, which shows that the island has the third-largest reserves of bauxite in the world, along with Brazil.


Source: Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080714/business/business1.html