Bauxite dilemma

Bauxite dilemma

Gov't/JISCO discuss possible suspension at Alpart plant

Senior staff reporter

Thursday, August 15, 2019

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THE future of hundreds of casual workers at the JISCO/Alpart alumina plant in Nain, St Elizabeth, should be known by month-end as consultations on improving production continue between the Government and the Chinese-owned company.

The Jamaica Observer learnt yesterday that a team headed by new chairman of Jiuquan Iron & Steel (Group), Dexin Chin — which has been in Jamaica for the past week having discussions with stakeholders including Prime Minister Andrew Holness — would have returned home last night to complete the deliberations and make a decision on the future of the plant by later this month.

In a release yesterday, Mining Minister Robert Montague said that his ministry had taken note of the concerns raised in the media about the status of the JISCO operations.

“The ministry believes that the situation deserves urgent attention and has been in dialogue with our partners to discuss the available options,” Montague said.

However, he said that the negotiations were at a delicate stage and, as such, details of the issues could not be divulged at this time.

But the Observer has learnt that the main problems affecting JISCO/Alpart are not limited to the effect of declining aluminium prices on the world market, but also the fact that equipment at the plant, which JISCO acquired from UC Rusal in 2016, are producing way below optimum levels. This has further reduced the company's ability to continue operating at a break-even level.

Concerns were being expressed from last year that, on acquiring the plant, JISCO found that the equipment has been operating as much as 50 per cent below the competence of competing plants.

Despite this, JISCO/Alpart continued to operate and was able to break even in 2018 as aluminium prices stabilised. But since the rapid drop in the metal price in recent months the company has been taking a severe beating in terms of comparable production costs.

JISCO/Alpart has since imported a huge quantity of new parts to upgrade the plant. However, the challenge is that in order to carry out the restructuring the company would need to close down production for between 12 and 18 months.

These issues were discussed by the JISCO team with Holness and his Cabinet, as well as the Opposition and other stakeholders, including other bauxite/alumina plants, which should result in a full report to the company's seniors in China, after which a final decision on the options is likely to be taken.

Montague insisted yesterday that the situation remains “delicate”, and suggested that people “cease and desist” from speculation which could destabilise the situation.

“We seek the patience and understanding of all while we treat with the situation,” the minister said in a release on the matter.

In November 2016, Russian aluminium giant UC Rusal completed the sale of Alumina Partners of Jamaica (Alpart) to JISCO, for which JISCO tendered US$299 million for the vertically integrated plant.

Prior to the sale, UC Rusal had suspended operations at Alpart for nine years, which some inside sources contend may have had a detrimental effect on the plant.

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