As China’s demand for Alumina grows, owners of smelting operations and other investors in the field are searching globally for bauxite reserves to add to their dwindling supplies.

In an article published on March 30 and entitled “Berserk’ Aluminum Boom Signals Ore Bonanza for China’s Quarry”, analysts from Bloomberg said that “demand in China for the aluminum needed in air conditioning units to airliners will rise by almost a third by 2020 while supplies of adequate raw materials to produce the metal are dwindling.”

The Chinese, the analysts noted, are looking primarily at Australia and Guinea. A potential step up in interest is coming from Aluminum Corp. of China, known as Chinalco.

However, the Chinese are also on the hunt in Jamaica –an island which was once the main source of the mineral globally during the bauxite boom of the 1970s.

In February 2016, it was disclosed by Jamaican government sources that owners of UC Rusal had signed an agreement with a Chinese firm for the purchase of Alumina Partners of Jamaica (ALPART) a bauxite mining and alumina processing plant located at Nain, St. Elizabeth, in the south of Jamaica.

The company was later named as Jiuquan Iron & Steel (Group) Co Ltd (JISCO) – a producer of carbon steel, stainless & special steels and steelmaking raw materials products.
In February as well, it was publicised that the Chinese had eyes on Noranda which operates a plant jointly with the government of Jamaica in St. Ann. Noranda Aluminum Holding Corporation (NAHC) announced on February 8 that the company it had filed voluntary petitions for a court-supervised restructuring process under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Missouri.

NACH is parent company of the St. Ann based Noranda Bauxite Limited – the assets of which it shares ownership with the GOJ. While it restructures, it has changed mining targets and cut its workforce.

NAHC has refused to comment on the veracity of any offer from the Chinese.

With Chinese demand growing, Jamaica could arguably seize the moment to restart mining operations which garnered some US$4 billion in levies collected over 40 years.

History of Bauxite Mining in Jamaica

The Jamaica Bauxite Institute notes that mining and processing company Reynolds began ex­porting bauxite from Ocho Rios in June 1952, and Kaiser followed a year later from Port Kaiser on the south coast. Alcan built the first alumina processing plant near its mines at Kirkvine, Manchester, and in early 1952 began shipping alumina from Port Esquivel. This was the beginning of the industry in Jamaica.

By 1968, Alcan had brought the capacity of its two refineries to more than 1 million tonnes a year. In 1969 a new plant was commissioned at Nain, St. Elizabeth, by Alpart, then a consortium of Kaiser, Reynolds and Anaconda, another U.S. company. In 1971, Revere Copper and Brass opened the island’s fourth alumina plant at Mag­gotty, St. Elizabeth. Two years later, Alcoa, which had been shipping un­processed bauxite since 1963, built the country’s fifth refinery, at Halse Hall, Clarendon.

By 1974 Jamaica had become the world’s second largest producer of bauxite and the second largest exporter of alumina. However, no aluminium smelters were built in Jamaica, and it is unlikely that any will be, the JBI states, largely because aluminium smelting or reduction requires massive amounts of electrical energy.

In 1971 Australia overtook Jamaica as the world’s leading producer of bauxite.. At the end of the 1970s, Guinea in West Africa, which had the world’s highest- grade bauxite, also drew ahead of Jamaica, and was then followed by Brazil in the early 1980’s and China and India in the first decade of this century.

The Bauxite Institute notes that Australia remains the world’s largest bauxite producer with output of 63 million tonnes in 2008, the year preceding the global economic downturn which had a deep impact on the bauxite/alumina industry.

In second place was China at 32 million tonnes followed by Brazil (25 million tonnes), India (20 million tonnes) and Guinea (18 million tonnes).

The JBI notes that Jamaica had by then fallen to sixth place in the world, producing 14.6 million tonnes of bauxite.

Jamaica’s share of world bauxite output fell from 18.1% in the 1970s to about 7.1% of total world production of 205 million tonnes in 2008. The island by 2012, had over one-half of the country’s alumina capacity still closed, with output hovering around the 10 million tonne per annum mark.

Australia is first choice

Bloomberg says the Chinese’ choice will be Australia. “Australia is the logical choice,” Darryl Pilgrim, Sydney-based industry director for aluminium and alumina at researcher AME Group was quoted as saying. Currently, China consumes about 54 per cent of Australia’s resource exports, Bloomberg stated.

Locally, the Alpart deal between Jiuquan Iron & Steel and Rusal is expected to close in quarter 2016. Alpart’s current production capacity is approximately 1.7 million tonnes of alumina annually but is capable of expansion to over two million tonnes per annum.

The plant is 100 per cent owned by UC Rusal. Hampered by the global economic recession and soaring energy costs, the Alpart operation was shut down in early 2009. Now rusal seems willing to sell.

The issue of earnings from bauxite from the government side will be a matter for negotiation however. Since the height of the financial recession which hit in 2008, levies of US$5 per dry metric tonne were cut in half. In 2015, the PNP government succeeded in re-instating it with the help of arbitrators in the UK in a tussle with NACH.

The levy will be on the table for settlement between the new government and any investor who may be interested in the bauxite sector.

It is expected that by year end, the status of both Alpart and Noranda should be better clarified.

Since the elections of February 25 which pulled in a new political administration in Jamaica, nothing has been heard of how offers from the Chinese are being received.