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Sep 25

JISCO’s big plans for Alpart

NAIN, St Elizabeth — With Alpart set to resume alumina refining June 20, following an eight-year shutdown, it is anticipated that the plant will gradually return to its production capacity of 1.65 million tonnes annually sometime early next year, boosting local employment and economic activity.But its Chinese owners Jiquan Iron and Steel (JISCO) aren’t stopping there. Conditional on the availability of bauxite reserves, JISCO is planning the construction of a second alumina refinery just to the south of the old, 49-year-old Alpart plant.

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As explained by Sun Jing, assistant managing director of JISCO Alpart Jamaica, during a visit by Opposition Leader Peter Phillips and a People’s National Party (PNP) team on Friday, the new plant would have an annual capacity of two million tonnes of alumina and would be finished by late 2020 if current plans for construction start up next year materialise.

Alumina is a white, granular material refined from raw bauxite. The latter is plentiful in red ore commonly found in sections of central Jamaica including St Elizabeth, Manchester, Clarendon, St Catherine, and St Ann. Alumina is smelted in the world’s industrialised countries to form the light metal aluminium which is used in an array of products ranging from food wrapping to kitchen utensils, cars, and aeroplanes. Sun conceded that meeting next year’s deadline for the planned second Alpart refinery will be tough since additional bauxite reserves for such a plant must be identified from “somewhere” by the Jamaican Government. Also, the necessary approvals from agencies such as the nation’s environmental watchdog, National Environment and Planning Agency, would have to be finalised.

Regarding reserves, Sun explained that currently Alpart’s permits allow for mining of the Manchester Plateau of southern and central Manchester and the Essex Valley, which extends through Malvern in the Santa Cruz Mountains. However, he said, those reserves were “just enough for the existing refinery”. Industry sources say bauxite in the Manchester Plateau and Essex Valley are expected to last another 30 years.

The planned new refinery “will need extra (bauxite) resources, reserves from somewhere, not here (St Elizabeth and south Manchester)”, Sun said. Pressed by journalists as to where else bauxite could come from, the JISCO Alpart executive pointed out that Jamaica had reserves extending as far north as St Ann and easterly to St Catherine, though current lease arrangements do not give Alpart access to those areas. However, Sun said mining bauxite at relatively distant places such as “St Ann” and transporting to the refinery at Nain using “rail” and other options was not a major difficulty. Sources say low-grade reserves in Manchester leased to the Windalco Kirkvine plant, which like Alpart was shut down in 2009, are of primary focus for supply to the proposed new Alpart refinery.

Though of low grade, the ore in the Kirkvine mining area would be economically feasible for exploitation since the Alpart plant would be a “high-temperature” type — superior to the refining processes available at Jamalco in Clarendon and the Windalco plant at Ewarton, St Catherine, sources said on Saturday. One source said there was no consideration being given to the Cockpit Country, around which environmental campaigners and others have drawn a metaphorical fence.

“That’s definitely a no-no”, the source said. While figures are purely preliminary, it is expected that the proposed new alumina plant would cost JISCO in the region of US$1 billion. On Friday, Phillips as well as Phillip Paulwell — the former mining, energy and investment minister credited with a major “early” role in brokering last year’s sale of Alpart to JISCO by the cash-strapped Russian aluminium giant UC Rusal for US$300 million — reiterated talk of value-added industries as a result of the Chinese company’s “massive investment”. They spoke of “light and heavy manufacturing” in an industrial zone extending to the eventual smelting of aluminium — which would be a first for Jamaica. Such an investment would reportedly run to “billions” of US dollars over a period of several years . Paulwell said his experience of JISCO operations in China suggested Jamaica was also on the brink of benefitting from high-tech agriculture, for domestic consumption and exports, using reclaimed mined-out lands.

Pressed by journalists as to whether talk of aluminium smelting wasn’t a pipe dream, Paulwell argued that the ambition, first voiced by the Michael Manley-led PNP Government of the 1970s, would become feasible once the question of an appropriate energy source is settled.

“I believe eventually we will have an energy solution that will make aluminium smelting viable in Jamaica… that is where the ultimate solution is,” he said. Paulwell said that while he was aware that the Chinese had been “looking at LNG” to power operations at Alpart, “using existing heavy fuel oil and diesel makes sense now, because the price of oil is low”. There was much talk up to two years ago of ageing Alpart being retooled with the help of a new power plant using alternatives to heavy fuel oil. However the plunge in oil prices since then has stalled such discussions.

Phillips suggested that integrated industries initiated by the Chinese could fit well into other developments including the widening of the Panama Canal. On Friday, the PNP team and journalists were told that for the immediate future, a “target” of June 20 had been set for the resumption of alumina refining at Alpart, eight years after operations closed down following the global financial crash, accompanied by plummeting metal prices, even as oil prices stayed high at that time.

Patrick James, Alpart’s assistant managing director, told Phillips and his team that after several months of repairs and rehabilitation at the refinery and its support services, mining of bauxite on the Manchester Plateau to supply the resumption of alumina refining will begin this week. Actual transporting of the bauxite down to the plant at Nain is set to begin June 8, he said. Mining of bauxite — for export to eastern Europe — was restarted by UC Rusal in 2015. Such exports of raw ore ended last year. James told the Jamaica Observer that the first shipment of about 35,000 tonnes of alumina destined for China was scheduled for September. He told the PNP team that since the sale of Alpart to JISCO, hundreds of people had been employed. There are more than 1,000 people currently working at Alpart with more than 700 being Jamaicans; 263 are Chinese, he said.

“This activity has ramped up employment in the area (St Elizabeth and Manchester),” James said. The assistant managing director said young people, including graduates of the HEART skills training programme, were now receiving on-the-job training. However, there was a shortage of high-end engineering skills since many former Alpart employees migrated after the refinery closed in 2009.

Following a tour of the Alpart facility, Phillips hailed what he said was the evidence of close cooperation and collaboration between the Chinese owners, the Nain community, and the Jamaican workforce. He said discussions with workers had convinced him that JISCO was moving in the right direction. He hailed the work of the Alpart Community Council, headed by former PNP Member of Parliament for St Elizabeth South Eastern Len Blake, for its role in lobbying the interests of the local community and for working closely with the new Alpart owners.

“We have seen a tremendous amount of work being done by (local) people employed in all sorts of capacities — plant managers, engineers, pipefitters. They have worked together to bring this plant, which has been closed for eight-and-a-half-years, into operation,” Phillips said. “Over time we are certainly anxious to see long-term expansion take place, in a way that can be supported by communities. Perhaps one of the most distinctive features of what is taking place here is the direct involvement of the community organisation, both in terms of monitoring environmental standards and performance, identifying skills needs for the plant and working in collaboration to ensure the needs of the community are taken into account in all that’s been going on,” the opposition leader added.

Phillips said the PNP would be in close touch to ensure high environmental standards are maintained; that employment of locals and other Jamaicans take place at acceptable standards; and that there is minimum dislocation of communities moving forward. Questioned by journalists regarding complaints that in the past communities have not received their due in terms of compensation for extensive dislocation caused by the bauxite/alumina industry, Phillips noted that the good thing was that JISCO and the community council were working closely together. However, he lamented what he said was “depletion” of the Capital Development Fund… “because of actions of the current Government in relation to the (bauxite) levy, those resources flowing into the Capital Development Fund are getting less and less…” “As we (Opposition) said during the Budget debate, the levy regime has been nullified by this Administration…

I told them not to do it. Quite simply we recognised, accepted, supported the need to adjust the levy downwards when the crisis hit in 2008. “Nobody could have quarrelled with it, because we wanted to keep bauxite operating in Jamaica. We recognise that in a situation such as we have here (at Alpart) where JISCO is coming in and making a major investment… which is novel, carrying bauxite/alumina into the Asian market, that there can be good grounds to say ‘you are going to make an adjustment’.

But to make an early adjustment to the bauxite levy, at a time when prices of alumina on the world market are at the highest levels they have been in years… is contrary to what common sense would dictate and good management would require,” Phillips said. Blake, as well as councillor for the Myersville Division Layton Smith and former MP for St Elizabeth South Eastern Richard Parchment, said community leadership was intent on ensuring that locals get what is due to them in the new dispensation; and that environmental standards are maintained at a high level.

Blake conceded that as is always the case in bauxite mining, relocation of residents will be an extreme discomfort. “Relocation is a must. Normally it takes a lot of renegotiation. We are hoping to look at it early and have people relocated to the right places at the right time… This time around we will make sure we negotiate the best possible deal for the people,” he said.

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