EDITORIAL - Charting a new energy path to sustain bauxite industry

Notwithstanding the confidence and euphoria that Mr James Robertson, the portfolio minister, sought to inspire recently, those who oversee Jamaica's alumina industry may have cause for concern, if not deep worry.

For if things continue as they appear to be heading, the dim flicker at the Kirkvine refinery, to which Mr Robertson has been pointing us, could die before it transforms into even a low-intensity light.

The immediate problem is a country called Libya. More fundamental, however, is the need for a renewed approach to policymaking for the bauxite-alumina sector involving all the stakeholders, and in which a new framework for energy in Jamaica is a critical variable.

The Kirkvine plant, with a capacity of 600,000 tonnes a year, is one of the three alumina refineries in Jamaica controlled by the Russian firm, UC Rusal. It has been closed for the better part of a year.

The problem is that in terms of cost efficiency, Jamaica's alumina refineries are in the lower half of the global rankings. And Kirkvine, the smallest and oldest of the facilities, is least efficient.

Kirkvine's recent good fortune was the rebound of the global economy which, with China's continued ravenous consumption of commodities, lifted demand for, and the price of, aluminium, which is now trading at its highest in more than two years. The price of alumina has been dragged along in the process, reaching a price where operating Kirkvine would be viable.

The plan, therefore, is to reopen the plant in July, with the creation of up to 1,000 jobs. Those decisions, we believe, would have preceded recent events in Libya, which gives rise to our concern.

Energy represents the biggest cost for Jamaica's oil-powered alumina refineries. They would have benefited from relatively modest oil prices until they were driven to the wall by the recession.

The uprising against Libya's long-time ruler, Colonel Muammar Gaddafi, however, could affect the equation, impacting not only plans for Kirkvine, but scuttling the short-term consideration for taking the larger Alpart refinery out of mothball.

The point is that Libya, now on the brink of civil war, pumped around 1.7 million barrels of oil a day, much of which has been lost. Oil prices have been on an upswing, which is a danger to global recovery, and also imperils Jamaica's alumina sector.

Our problem is that we do not discern a broad strategic approach to the sector. Indeed, little has been heard about the strategic review of the industry Prime Minister Bruce Golding requested more than year ago from Dr Carlton Davis, a highly acclaimed expert in the field.

That review, we believe, should have been the resource document for a partnership among all the sector's stakeholders à Government, owners, workers, trade unions à in a search for ways to lift the industry's competitiveness.

Indeed, it was such an approach, mediated by the late Michael Manley in the 1990s, that enabled the last round of resuscitation.

This time, though, converting to a new energy source for the sector à whether natural gas as proposed by the Government, or other cheap fuels such as coal à has to be an important part of the discourse.

But first, there must be an engagement.

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