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main problem for the electricity company is the second problem for the bauxite companies i.e. the equipment is old and outdated.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.

Feedback question:  Is the Golding Administration doing a good job of managing the Jamaican economy?