Bright Prospects for Bauxite/Alumina Sector

Minister of Finance and Planning, Dr. Omar Davies has said the recent growth spurt in the local bauxite/alumina sector is a significant part of the improved competitive position now being experienced by Jamaica.
The Minister who opened the Budget Debate at Gordon House in Kingston on Thursday (April 15) pointed out that in the first quarter of 2004, alumina production increased by 12.1 per cent compared with the corresponding period for 2003 with an increased bauxite output of 8.2 per cent. Furthermore, he said, gross foreign exchange earnings were expected to increase by over 20 per cent to approximately US$950 million for 2004.
In 2003, Alumina output reached 3.84 million tonnes, the highest ever by Jamaica while bauxite production was 13.44 million tonnes, the second highest in the island’s history and the highest in 29 years. At the same time, gross foreign exchange earnings increased by 8.6 per cent, equalling US$775 million.
Dr. Davies noted that the expansions undertaken during the year by JAMALCo and ALPART were investments totalling US$150 million. He pointed out that the JAMALCo expansion increased capacity by 250,000 tonnes during the first half of this year, adding that Alpart’s expansion will lead to increased capacity of 150,000 tonnes.
The Finance Minister told the House that this increase in capacity of 400,000 tonnes per annum would increase foreign exchange earnings by US$80 million per annum.
Furthermore, he said, that in response to the prospects of robust growth in world demand, as well as Jamaica’s improved competitive position, ALCOA had announced plans to further expand the JAMALCo plant by 1.4 million tonnes. This project will involve total capital investments of US$ 690 million of which US$ 300 million will be spent in Jamaica with more than 2,500 construction jobs being created.
When completed, this expansion will generate additional gross foreign exchange earnings of more than US$300 million per annum.
Dr. Davies said that discussions with the executives of ALCOA had given rise to the question of whether the country would be able to provide the goods and services needed to ensure that the construction activity proceeded apace. He pointed out that diverse business opportunities would arise including provision of food services, accommodation, transportation, banking services, equipment hireage, steel fabrication and engineering services.
He noted that given this, an interesting bottleneck, which could arise, was the availability of enough skilled workers to meet the needs of the construction in bauxite/alumina and tourism, simultaneously.
The Finance Minister, however, pointed out that the investment was a direct result of various steps, which had been taken by the Government to foster macro-economic stability and to reform the fiscal arrangements of the industry to enhance competitiveness.
He asserted also that the landmark MOU between the bauxite companies, the trade unions and Government had helped to bring stability to the industrial relations in the sector.