Mining communities must benefit from bauxite/alumina revival
Post Date: 20 Jan 2015 Viewed: 347
They are happy that bauxite mining is about to resume and that the Alpart (alumina) plant in Nain which has been closed since 2009 is to be reopened in 2016.
However, parliamentarians Michael Peart and Richard Parchment who represent communities most affected in neighbouring South Manchester and South-Eastern St Elizabeth want to make sure that this time around those areas get maximum benefits from bauxite mining and alumina refining.
They told the Sunday Observer that in their constituencies, benefits from the industry must not only be seen as providing employment. Also, they said it should be a driver for real development and social enhancement which will remain sustainable long after bauxite reserves are exhausted.
They point to the Capital Development Fund set up by the Michael Manley-led People's National Party (PNP) government in 1974 to illustrate their point. As originally envisioned levies charged to bauxite mining companies were to have flowed to the Capital Development Fund (CDF) to finance development projects. Instead, the Fund was largely drained to support the budget as governments struggled to make ends meet in a succession of economic crises over the last 40 years.
"This time around, the Capital Development Fund should be used for its original purpose," said Peart, who is Member of Parliament for South Manchester.
"We have to ensure that the Capital Development Fund is fully utilised in and around the mining areas where bauxite is extracted at great environmental and social costs to the population," said Parchment, who represents South-East St Elizabeth.
The latter points to water supplies in bauxite mining areas as a service which should benefit from the investment of bauxite/alumina earnings.
"In South-East St Elizabeth most people have to rely on rainwater catchment and storage but in the areas close to the Alpart plant, residents can't use rain water because residue (from alumina processing) spoils the water," said Parchment. "So that's one area we definitely will have to look at in terms of improving," he said.
Environmental damage and allegations of serious health issues caused by bauxite mining and processing are a continuing source of tension between companies and residents in bauxite/alumina producing areas.
Opposition MP in North East Manchester and former finance minister Audley Shaw is among those who have called for the Capital Development Fund to be used for development, especially in mined-out areas.
Both Peart and Parchment identified the Tourism Enhancement Fund which supports environmental and community projects in tourist/destination areas as a model which could be followed by the bauxite industry.
"When bauxite mining rips up the land, you not going to get back that land the way it was (for farming, etc), that damage done already, so there must be a fund that seeks to help recovery," Peart said.
He pointed to farming projects supported by irrigation such as the thriving New Forest/Duff House Agro Park as an example of the success that can come from capital development in irrigation.
"The people on that agro park in New Forest and Duff House are quite contented with farming, when bauxite done they will be still there, we need to do more projects like that," he said.
Capital development apart, Peart also visualises the building of a sovereign wealth fund from bauxite/alumina earnings. He identified Norway's oil-based sovereign wealth fund, set up in 1994 and said to be worth in excess of a trillion US dollars, as a model to be followed.
"When Norway discovered oil, they set up a wealth fund. Now everybody in Norway is a millionaire. Why we can't do something like that?" said Peart.
Economist and bauxite/alumina expert Dennis Morrison is among those urging the nurturing of a wealth fund based on Jamaica's bauxite earnings.
As the situation now stands, Peart and Parchment say they are extremely pleased that operations at Alpart and its mining areas are set for phased resumption because of what it will mean for increased employment. The closure of the plant in 2009 left the economy of communities in and around the mining areas and the wider St Elizabeth and Manchester in disarray.
At the national level, the fallout from the bauxite/alumina collapse accelerated the Government's turn to multilateral lender, International Monetary Fund for economic support.
Mining is now set to resume in the Buena Vista area of Myersville in South East St Elizabeth close to the Alpart plant by the end of January. Sources say land surveys and the reopening of access roads are ongoing.
Freshly mined bauxite will be supplemented by 400,000 tonnes stockpiled at Alpart for export. Shipping is set to begin in mid-year following reconfiguring of conveyor belts at the port of exit, Port Kaiser, close to Alligator Pond.
According to official timelines announced by Mining Minister Phillip Paulwell, the reopening of the Alpart Refinery for alumina production is set for the end of 2016. However, sources say the unexpected and dramatic fall of oil prices since last year and projections that the trend will continue for some time yet could influence UC Rusal, Russian openers of Alpart,
to fast-forward reopening plans.
The expectation is that production of alumina at Alpart will be dedicated to an aluminium smelter under construction in Russia.
For Parchment, that is significant news. "That dedicated plant suggests a sense of permanence," he said. "It should mean that whatever happens in terms of the aluminium and metals we have a dedicated market for our alumina," he said.
Parchment is not overjoyed at plans for the export of two million tonnes of bauxite from Port Kaiser pending the reopening of Alpart, since he believes earnings and employment are better generated from value-added alumina production. However, he told the Sunday Observer that he was content that it formed part of the "pathway" towards full resumption at Alpart.
Parchment was encouraged that the Government was able to negotiate without "giving up earnings from royalties and levies" from UC Rusal. He recalled that in order to keep the Ewarton plant in St Catherine open a few years ago, the Government had to make "major concessions" giving up significant earnings.
The Government has said that Alpart will be modernised, partly through the development of independent energy generation. High cost and inefficient use of oil-based energy has been a major bugbear for Alpart which dates back to 1969. Excess production from energy generation at the alumina refinery will go to the national electricity grid.
Paulwell has said that in its new dispensation Alpart will produce 1.65 million of smelter-grade alumina, worth US$500 million. Prior to that, exports of raw bauxite are expected to earn US$60 million. It's expected that in excess of 1,200 jobs will be generated as a result of bauxite mining and preparations for the resumption of alumina refining over the next year and a half.