Rusal grab back a worthy idea

We can only assume that the Simpson Miller administration's notice of intent to rescind UC Rusal's bauxite mining concessions for two of its Jamaican alumina refineries - Alpart and Kirkvine - is a strategic move aimed primarily at enhancing its efforts at enticing Chinese interests to the sector. We expect that the Government would be prepared for the implications of its move; for it is one, whatever its legal merits, to which Rusal is unlikely to accede without a fight.

In that respect, this development could have in it echoes of the 1970s, but without the intensity of the period, when a previous People's National Party government, led by Michael Manley, moved to impose a production tax on the sector and gain a greater stake of the industry. But, however the negotiation with UC Rusal unfolds, this newspaper is sympathetic to the apparent intent of the Government.

One chunk of the contentious mining rights came with Rusal's acquisition of Ewarton (670,000 tonnes) and Kirkvine (610,000 tones) when it merged with Glencore, which acquired the plants from Alcan. The other, related to the 1.7-million tonne Alpart refinery, was part of its acquisition of that refinery from Norsk Hydro.

The high cost of alumina production in Jamaica, driven substantially by the price of energy, has for nearly three decades caused the island to be largely a swing producer in the global alumina sector. When prices are high, we do well. During economic downturns and declining demand, our alumina plants are among the first to face closure, which has been the case with Alpart and Kirkvine since 2009, following the global economic meltdown. Rusal has only kept Ewarton in production because the Government has waived the production levy on that facility and has provided other concessions. Moreover, as Rusal restructures its business, including reducing capacity, Jamaica doesn't seem to figure highly in its future.