Noranda, Rusal report strong bauxite production
Published:Friday | March 2, 2012 | 12:00 AM
Steven Jackson, Business Reporter
American-owned Noranda Bauxite Limited sold US$150 million worth of bauxite from Jamaica in 2011 while its Russian rival, UC Rusal, more than doubled its local production.
The results indicate a continued strengthening of the bauxite/alumina sector, which earns the third-highest foreign exchange, behind remittances and tourism.
Noranda's sales from bauxite at its St Ann-based plant operation increased 25 per cent over year-earlier levels to US$150 million. Production rose 40 per cent to 2.49 million tonnes.
But the St Ann bauxite plant earned US$18.5 million profit over the period or US$5.3 million less than a year earlier based mainly on an extraordinary expense.
"At St Ann, the conveyor belt which transports dried bauxite to the storage dome failed prior to a planned outage. This failure limited bauxite movement and led to additional costs for demurrage and re-drying bauxite. We estimate that the impact of this event was US$2 million," said parent company Noranda Aluminum in its financials filed this month.
Production at UC Rusal's Ewarton-based Windalco plant rocketed 111 per cent to 1.84 million tonnes. Bauxite from Jamaica contributed 13 per cent of total bauxite mined throughout Rusal's global operations.
Rusal, in its production report published this month, said it remained upbeat about alumina and bauxite but cautious about its final product, aluminum.
"The dynamic growth of the world economy in the first half of 2011 slowed down significantly by the end of the year, impacting the situation in aluminium industry," said UC Rusal CEO Oleg Deripaska, commenting on the full-year production results.
"The continued fears over the Eurozone debt crisis and potential of a hard landing for the Chinese economy pushed aluminium prices lower despite the stable physical demand, bringing a large share of global production capacity below breakeven point".
In such environment, the Russian company—which still has some of its assets mothballed in Jamaica—said it continues to keep cost control as the cornerstone of its operations.
Rusal is the world's largest aluminum producer.
The global downturn, which began in 2008 and intensified in 2009, resulted in the near shutdown of Jamaica's alumina sector.
The Ewarton plant is operational, but the Kirkvine Windalco plant remains mostly unopened since the downturn, and was last reported as likely to ramp back up in March if separate negotiations with the Jamaican Government are successful. Alpart too is still shuttered.
Jamaica accounts for 6.5 per cent of the world's bauxite reserves, according to a recent United States Geological Survey study.
The restart at Kirkvine would allow industry production to return to its pre-crisis levels.
The bauxite-alumina sector earned the third-highest foreign exchange for the island at US$531.5 million in exports for 2010.
Jamaica appears on track to better that outcome, having racked up alumina export earnings of US$293.2 million and an additional US$68.4 million from bauxite over the first six months of 2011. The numbers reflected improved half-year performance of 73 per cent for alumina and 10 per cent for bauxite, according to the latest balance of payment statistics published by the Bank of Jamaica.
Kirkvine previously missed a July 1, 2011 restart date.
UC Rusal in September acquired full control of Alpart, after purchasing the 35 per cent share in Norway's Norsk Hydro for US$46 million. UC Rusal bought its initial 65 per cent of Alpart in 2007 when it partnered with another bauxite company, Glencore.