Editorial | Shaw must grasp bauxite reset

IT IS exceedingly unlikely that a Jamaican government will, at any time in the foreseeable future, contemplate a voluntary closure of the island’s bauxite/alumina industry. So, depending on whose estimates of the island’s minimum reserves holds sway, we should see the mining of bauxite and its refining into alumina continue for between 30 and 50 years and, possibly,100.

That is why this newspaper was disappointed with Mining Minister Audley Shaw’s report on the portfolio to Parliament last week, and why we suggest to Mr Shaw that he should, in the phrase of the popular parlance, ‘wheel and come again’. Still new on the job, having been appointed only in January, he should approach the sector, at least his engagement of critical stakeholders, as though it were a blank canvas.

Mr Shaw comes to an industry that faces mixed fortunes – and perhaps feeling constrained by the fact that he is not in full control. Matters relating to Clarendon Alumina Production (CAP), the trading entity that controls the Government’s 45 per cent in the Jamalco alumina refinery, is the purview of the finance ministry, to which it was assigned last year after a series of management scandals at CAP during the tenure of Mr Shaw’s predecessor, Robert Montague.

Jamalco remains out of production after the fire at the facility. At the same time, the island’s largest alumina refinery, Alpart refinery, owned by China’s Jiuquan Iron and Steel (Group) Company, is heading into its third year in mothballs, having been closed by its owners, ostensibly for modernisation and expansion. And there is a cloud of uncertainty over the Ewarton refinery, of which the Russian Oleg Deripaska is the single largest shareholder, through his 45 per cent stake in Ewarton’s owner, US Rusal. Mr Deripaska is among the Russian businessmen sanctioned by the West over Russia’s invasion of Ukraine.

STILL ECONOMICALLY IMPORTANT

Additionally, the Government is in negotiations with Atlantic Alumina Company, operators of Noranda Bauxite, on how to apply the bauxite production levy after the dissolution of a profit-share arrangement from which Jamaica earned little.

It is notable that in this year’s Budget, the Government projects no earnings from the levy, which, essentially, is a tax on production. The Government expects to pull in under $1 billion in royalties from the industry.

This, however, does not mean that the sector is not economically important. Bauxite and alumina provide good-paying, skilled jobs to hundreds of people. It is also the lifeblood to many communities in the vicinity of their facilities. Further, the post-COVID-19 global economic recovery and the war in Ukraine have driven up the price of alumina, which should mean strong foreign exchange inflows via the refineries that remain in production.

Yet, there is a deficit of trust between industry and the communities within which it operates. That gives purchase to environmental activists and others who advocate for an end to mining in Jamaica. The campaigners argue that bauxite mining causes more damage than the value it delivers to the economy in general, and particularly to communities where it operates. Many complain of not getting a fair treatment from the industry. Indeed, the Jamaica Environment Trust (JET), which is among the industry’s fiercest critics, points to the sector’s lack of transparency, saying that the Government is yet to produce a cost-benefit analysis of the industry’s 70 years in the island.

GOOD DEVELOPMENTS

It is perhaps in partial response to such criticisms that Mr Shaw announced a raft of social initiatives for bauxite communities, including the planned delivery of titles for mined-out properties. Additionally, the comatose Jamaica Bauxite Institute is apparently being resuscitated to deliver analysis and data on the industry.

These are all good developments. They fall short of a fundamental strategy for which we have advocated: a reset of the industry, starting with new conversations between the industry’s stakeholders. As Diana McCaulay, the JET chairman, conceded in a column in this newspaper, most communities do not want the closure of the industry, but the protection of their health and their rural livelihoods.

It would be dishonest to purport that bauxite can be mined and alumina refined in Jamaica without some impact on communities. It is important, therefore, to have frank and transparent discussions about what these intrusions are likely to be, what would be tolerable, and how the worst of the effects of mining can be mitigated. Everyone has to be at the table, including the environmentalists. The industry has to be willing to hold itself accountable and to be held to account.

This newspaper does not believe that this is an easy process. It is nonetheless achievable with the appropriate leadership. The Government must be at the forefront, which in this case means Mr Shaw. He has a unique opening and opportunity – if he grasps it.