July 14, 2023
The 2023 projected earnings from the bauxite and alumina sector are set to double to US$677 million. This movement will be the highest since the onset of the pandemic, according to the Jamaican government’s annual market filings with the American securities regulator.
The reopening of the Jamalco plant in Clarendon and rising world market prices are benefiting the sector. Despite this, the refinery in St. Elizabeth is still closed which looms uncertainty regarding aspects of the Jamaican sector.
According to The Jamaica Gleaner, the filing by the Ministry of Finance and the Public Service stated, “Against this background, as well as the situation with Jamalco and uncertainty surrounding the reopening of the Alpart refinery, total bauxite production is projected to amount to roughly 5.4 million tonnes in 2023”, “Then the value of total crude bauxite and alumina exports is estimated at US$677 million.”
In 2019 earnings hit US$814.5 million and fell to US$328 million by 2022, thus making the 2023 projection the largest gross earnings from the sector since 2019.
Companies in the sector mined 4.4 million tonnes of bauxite and produced 634,100 tonnes of alumina last year, output that was well shy of the highs of 2018, marked by the mining of 10 million tonnes of bauxite and production of 2.5 million tonnes of alumina.
On Thursday, July 13, 2023, Managing Director of Jamalco, Austin Mooney said the plant was currently operating “above 80 per cent”, on track towards full capacity by year end.
Notably, Jamalco is currently owned by US-based Century Alumina Company, which it acquired at a price of US$1 from Noble Group of Hong Kong, freeing the latter company of a loss-making asset. Additionally, other major alumina producers include Windalco, which is owned by Russian company UC Rusal, and Alpart, which is owned by Chinese company JISCO. The Alpart refinery, which JISCO bought in 2019, halted operations to undergo modernisation but remains closed.
The Gleaner highlighted that the Jamaican government reported that while the year began on a less-than-optimistic note, with the alumina industry operating at low levels of capacity, a series of events are operating in favour of increased output.
It also noted the following:
“The sector may still be subject to new challenges from developments in the global macro environment. These include rising input commodity prices, logistical challenges and restricted markets,” the filing with the US Securities and Exchange Commission noted.
“Also, due to the Russian invasion of Ukraine, there exists a high level of uncertainty and fear regarding the mid and long-term impacts that the sanctions placed on Russia, Russian companies and oligarchs may have on UC Rusal operations, including Windalco,” it said.
Workers at Windalco took industrial action this year, but, to date, the ongoing wage disputes have not shown any significant effects on production. But the escalating prices of input raw materials, energy and caustic soda are expected to inflate production costs for bauxite and alumina.
“Nonetheless, prospects for higher bauxite, alumina and aluminium prices due to projected increase in global demand, may offset some of the negatives of these production expenses,” it said.
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