Bauxite, alumina earnings set to double
Earnings from the bauxite and alumina sector are projected to double in 2023 to US$677 million, the highest since the onset of the pandemic, according to the Jamaican government’s annual market filings with the American securities regulator.
A series of events are operating in favour of the sector, including the reopening of the Jamalco plant in Clarendon and rising world market prices. However, uncertainty still surrounds aspects of the Jamaican sector, with another refinery in St Elizabeth still shuttered.
“Against this background, as well as the situation with Jamalco and uncertainty surrounding the reopening of the Alpart refinery, total bauxite production is projected to amount to roughly 5.4 million tonnes in 2023,” said the filing by the Ministry of Finance and the Public Service. “Then the value of total crude bauxite and alumina exports is estimated at US$677 million.”
The 2023 projection would be the largest gross earnings from the sector since 2019, which then hit US$814.5 million. By 2022, those earnings had fallen to US$328 million.
Last year, companies in the sector mined 4.4 million tonnes of bauxite and produced 634,100 tonnes of alumina, output that was well shy of the highs of 2018, marked by the mining of 10 million tonnes of bauxite and production of 2.5 million tonnes of alumina.
On Thursday, Jamalco Managing Director Austin Mooney said the plant was currently operating “above 80 per cent”, on track towards full capacity by year end.
Mooney declined to comment on the expected sector earnings for 2023.
Jamalco is now owned by US-based Century Alumina Company, which it acquired at a price of US$1 from Noble Group of Hong Kong, freeing the latter company of a loss-making asset.
Other major alumina producers include Windalco, which is owned by Russian company UC Rusal, and Alpart, which is owned by Chinese company JISCO. The Alpart refinery, which JISCO bought in 2019, halted operations to undergo modernisation but remains closed.
The Jamaican government reported that while the year began on a less-than-optimistic note, with the alumina industry operating at low levels of capacity, a series of events are operating in favour of increased output.
However, it also sounded a note of caution.
“The sector may still be subject to new challenges from developments in the global macro environment. These include rising input commodity prices, logistical challenges and restricted markets,” the filing with the US Securities and Exchange Commission noted.
“Also, due to the Russian invasion of Ukraine, there exists a high level of uncertainty and fear regarding the mid and long-term impacts that the sanctions placed on Russia, Russian companies and oligarchs may have on UC Rusal operations, including Windalco,” it said.
Workers at Windalco took industrial action this yea, but, to date, the ongoing wage disputes have not shown any significant effects on production. But the escalating prices of input raw materials, energy and caustic soda are expected to inflate production costs for bauxite and alumina.
“Nonetheless, prospects for higher bauxite, alumina and aluminium prices due to projected increase in global demand, may offset some of the negatives of these production expenses,” it said.