Bauxite and Alumina Industry Impacting Positively on Economy


As the country’s third highest earner of foreign exchange, with approximately US$1 billion in annual gross earnings, the bauxite and alumina industry continues to be a vital contributor to the Jamaican economy.
According to Chairman of the Jamaica Bauxite Institute (JBI), Dr. Carlton Davis, mining of the precious resource is the single largest non-service activity in the country.
He notes that remittances account for US$1.6 billion, while tourism revenues amount to US$1.4 billion per year. “These three represent the bulk of the foreign exchange earnings for the country, so from the point of view of economic activity, especially in rural Jamaica, where the bauxite operations are located, there is employment of persons. Then there are the economic spin-offs, such as the boom one sees in Mandeville, Santa Cruz, and Junction, which are reflective largely of the activities of the bauxite sector,” he points out.
The industry accounted for 15 million tonnes of bauxite last year, which represents the highest level in more than 30 years. “So there is no question as to its importance in our economic landscape, and it has been so for many years. It enables us to pay for the goods and services that we buy from abroad – it is a significant factor,” Dr. Davis tells JIS News.
He adds that when compared with the two top gross foreign exchange earners, and the sugar industry, which accounts for US$100 million, the significance of bauxite is clear. “Any significant fall-out would have a serious effect on our foreign exchange earnings and the consequences for our exchange rate, and inflation. So that is why, despite some criticisms that have been coming up (in the media) in recent times, one has to seek to manage the industry to minimize adverse environmental impact, but at the same time, it is absolutely necessary for economic survival for many years to come,” the Chairman says.
Dr. Davis, who is also Cabinet Secretary, comments on the recent discussions and concerns regarding what some environmental groups and stakeholders have claimed are the Government’s plans to allow mining activities to take place in the Cockpit Country.
“I find it extraordinary that this could have become such an issue, when the operations which were in focus will not be mining for the next 20 to 25 years. JAMALCO is going to be mining in South and North Manchester over the next 20-25 years and our mining plans are based on that. It has never been our policy, based on practice, to mine the Cockpit Country,” he stresses.
He reiterates that it was only a special exclusive prospecting licence that was granted to JAMALCO. “There is no harm in drilling to check what is there. As a matter of fact, a lot of good information can be obtained, but what gives you a right to mine is a mining lease, and nothing of the sort was granted,” he states. Dr. Davis accedes that there is need for a proper management system for the Cockpit Country to ensure that it is indeed protected.
The Chairman asserts that there is no point in creating a resistance to bauxite mining and eventually destroying the industry, without examining the long-term consequences. “Think of where the US$1 billion is going to come from, because at the end of the day, the poor people in Jamaica would be hurt, because if that amount of earning falls out of our economy.the exchange rate would be under pressure. So, it is not enough to just seek to close down the bauxite industry on spurious grounds, but you have to do some hard thinking as to how these earnings would be replaced,” he continues. Of the just over one million hectares of land area in Jamaica, since 1952 only about 7,400 hectares, or less than 0.75 per cent has been disturbed for bauxite mining. “We have restored a little over 4,000 hectares.the important thing is to try to accelerate the process of restoration, so that the lands can be put to use,” Dr. Davis says.
“We are putting a lot of emphasis on making the mined-out lands as productive as possible in vegetables, and in cattle. There are places that you will pass and see cattle, especially in St. Ann, and you would not believe it, but they are mined out lands,” he tells JIS News.
This year will see increased efforts by the industry in the rehabilitation of mined-out lands and productive use of these lands, based on the research efforts the JBI has been undertaking over a number of years. The Chairman says that the National Housing Trust is having difficulty locating lands to construct houses, “so one of the things we have been working on with them, is the availability of mined out lands for housing.”
Bauxite reserves are another concern in relation to the sustainability of the industry. “It all depends on what people are prepared to allow (to be) mined. On the basis of the current production level, we have as much as 50 years, but if people put up pressure and the society allows them to get away with it, then it means you would be reducing those reserves. But suffice to say, we have enough reserves left to support an economic investment for the period which people would expect their reasonable returns,” Dr. Davis says. Mining is currently taking place in the parishes of Manchester, St. Elizabeth, St. Ann, Clarendon, and a part of St. Catherine. Most of the reserves are on the north of the island, largely in Trelawny and St. Ann. “There are areas of North St. Catherine that are unmined and a lot of Trelawny, with the Cockpit Country representing the western border. Revere, which is a company that operated in Jamaica between the late 1960s and early 1970s left a lot of reserves in St. Elizabeth and those would also be taken up. So we have enough reserves to support an economic investment and people usually use figures from 30 to 40 years for their investment,” Dr. Davis informs.
Every country faces the problem of balancing some amount of discomfort with an activity like mining and the economic good which comes from it, the Cabinet Secretary notes.
“It’s all a matter of balance. I believe that poverty has a much greater adverse impact on the environment than economic activities like mining and tourism. A country has to think about how to balance the situation in which you can get economic development, and by that, you are in a better position to preserve your environment, and those are some of the issues that people need to talk about,” he tells JIS News.
According to information provided by the JBI, most of the US$1 billion gross earnings accruing to the industry last year was attributable to alumina refining. This is the first time since 1974 that total bauxite production (crude bauxite produced for export and bauxite refined locally into alumina) has reached the 15-million tonne mark, and this was achieved despite operational challenges and labour disputes, which disrupted production during the year. Bauxite produced for export increased by 12.6 per cent to 4.6 million dry metric tonnes, following an injection of additional capital to upgrade mining equipment and improve internal business processes at St. Ann Jamaica Bauxite Limited. In the meantime, alumina production edged upward by just under one per cent to 4.1 million tonnes.
Meanwhile, the JBI reports that in the first quarter of 2007, production for the bauxite/alumina sector continued its positive trend with year-to-date figures showing that total production of bauxite amounted to 3.7 million tonnes, a 1.4 per cent increase over the amount produced in the similar period last year. Alumina, which account for more than 90 per cent of export earnings from the sector, reached one million tonnes, 0.6 per cent above the level produced for the similar period last year. The outlook for production in 2007 is encouraging. In particular, the early works phase of the JAMALCO expansion is due to deliver a further 150,000 tonnes of alumina. With all other significant variables remaining unchanged, the forecast is for production to climb to just over 4.2 million tonnes of alumina and 5.1 million tonnes of crude bauxite, yielding a total bauxite production level of roughly 16 million tonnes.
The projection is for gross earnings to inch upward to somewhere in the order of US$1.3 billion. Four bauxite and alumina companies are operating in the country, including JAMALCO in Clarendon; ALPART in St. Elizabeth; Windalco in Manchester; and St. Ann Jamaica Bauxite Limited.
The JBI was established in 1976 as an arm of the Jamaica National Investment Company (now the National Investment Bank of Jamaica), to deal mainly with the sovereign aspects of the Government’s participation in the bauxite and alumina industry.
The Institute’s functions include: monitoring and studying the aluminium industry; providing technical advice; undertaking research and development activities; assessing and ensuring rationalisation in the use of Jamaica’s bauxite reserves and (bauxite) land; and monitoring and making recommendations on pollution control and other environmental concerns in the industry.

JIS Social