Is the Bauxite Industry in Jamaica Dead?
Today I pose a question for you, is the bauxite industry in Jamaica dead? Why is it that with a reduction in worldwide demand of 20% has resulted in the closure of one factory and the near closure of the other? Why was Alcan so quick to close its factory?
The answer lies in the fact that bauxite operations in Jamaica are amongst the most expensive to operate in the world. This is true despite the fact that we have the most easily accessible bauxite in the world.
The main cost for the processing of the bauxite is the cost of electricity. The cost of electricity in Jamaica is significantly higher than most other countries. We have argued for a long time about the need to use natural gas to reduce the cost of processing but we seem to lack the will to put it in place. Our electrical company remains inefficient with the generating equipment being old and unreliable and not very cost effective. In addition the loss of electricity due to theft is also at one of the highest rates in the world. It is estimated at 13-15% but the reality is that it is probably even higher. If one third of persons living in Jamaica are squatting then most of those will be obtaining electricity illegally.
The main problem for the electricity company is the second problem for the bauxite companies i.e. the equipment is old and outdated. We have not ephasised the need to retool and upgrade the bauxite companies and this has contributed to their inefficiencies.
The most serious challenge to the future of the bauxite industry is the development of other materials that are cheaper, lighter and stronger than aluminium. As these are produced in greater quantities the demand for aluminium will decrease.
I am not suggesting that the plant will not open but I certainly think that the bauxite companies will consider very carefully whether or not to reopen the factories.
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10 Responses to “Is the Bauxite Industry in Jamaica Dead?”
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What I’m really concerned about is where will all these persons laid off by the Bauxite industry go? It’s really difficult now to start a business in Jamaica.
I agree with you, as with most of our industries, we have not keep their infracture in competitive condition.
The rot started when the industry was unionised. It became terminal when the Bauxite levy was introduced. At that time the Kaiser plant at Discovery Bay was said to be the largest such facility in the world. The companies then were hit with the levy and made the decision that there would be no more significant capital investment in Jamaica but rather a “play out the hand” game whilst new investment was focused on more “friendly” locales ….. Jamaica then nationalized 50+% of the industry ….. Jamaica lost its world leading position and became a bit part player … and now the crowds have left the theatre completely. People can try to rationalize and make excuses all they like …. the fact is that folks do not (continue to) invest in locations where their investment gets mired in molasses and treated with disrespect and indeed contempt.
A difficult question. Bruce does not articulate well but at least he gave a realistic outline in the recent budget. This at least is a reasonable effort. All is not lost. Jamaicans could go solar and be more prudent about electrity for industrial use. Jamaicans could be trained in he manufacture of composites for aircraft and electronics. The issue is not just managing the economy. We need the political will to adopt positive social values which will make us more competitive
Very informative. Jamaica really needs to find more efficient means of producing electricity for alumina production to remain viable.
I’m not ready to say that the bauxite industry in Ja. is dead but it might be on life support. It has always been a given that processing bauxite to make alumina and aluminium was an energy-intensive process. That Jamaica’s electrical network is inefficient has not had a serious upgrade is not surprising. That bauxite in Ja. is very readily accessible is fine but when you’re building autos in Europe and Australasia and there are bauxite deposits in Russia and Australia, any cost advantage(s) Jamaica enjoy(s) is/are no longer there.
As for Jamaica not having an updated and efficient electricity network, neither this present government nor the prior one has ever considered it to be any type of priority when they owned the JPS. Mirant was only concerned about recouping its investment and these new owners, well, let’s see what they’re going to do. You’re right about squatting and electricity theft but these just serve to highlight what’s wrong with governing and governance in Jamaica today. PNP, JLP, they both talk a good game about good government and governance but they both come up very, very short in providing either.
plastics has being replacing aluminium for years………….
The bauxite company like many other companies including financial institutions need to realize that although they provide jobs etc. there is a cap on how much profit they can TAKE. Unfair games they also say plays twice!
for almost every aluminium product, there is a plastic substitute
The bauxite industry in Jamaica needs to die. It is pointless to strip the island of its mineral wealth when the government only takes in 6% of the value of every shipment in revenue. This is not about jobs or benefits – the bauxite industry only benefits the colonial powers who profit from strip-mining Jamaica’s landscape. Those countries take the dirt and refine it to aluminum in their own countries, perfecting technology there, but returning no technological benefit to Jamaica or Jamaicans. Consequently, the collective IQ of Jamaicans go down. At a time when Jamaicans should be designing and manufacturing cameras, computers, hydro-electric and solar power-plants, bio-degradable fuels, and aircrafts, we end up with a country playing to the IMF and bartering for a better shovel to dig dirt while praying for another spitty tourist to clean up after in a hotel designed by some foreign architect, and trying to sell an airline we can no longer manage. Some even hope companies like Alcan will return to hand out more trinkets and Just-Over-Brokes while no Jamaican sits on their boards of directors. This is not the way to live. Look At You.
hello i like it