Jamaica’s Opposition Spokesman on Mining Phillip Paulwell expressed concern late last week that weakening aluminium prices may be the early signs of a global recession, which may imperil the continued operations of Jamaica’s bauxite operations.
In comments to a local call-in radio show, the minister said that the US$500 dip in aluminium prices to US$1,700 per metric ton puts them within range of declaring a recession.
“When it gets to around US$15-14 hundred, you’re really in a recession again, and as we have seen in the past, the Jamaican factories are the first to close when recession occurs because we are regarded as swing locations.”
Paulwell continued by noting a corresponding fall in alumina prices, dropping from US$500 per metric ton to US$290. Three years ago the break-even point was US$300, leading him to believe that some firms are already losing money.
Regarding JISCO’s challenges with the Alpart operations, Paulwell said the government has options available to it to assist the firm that may need to be employed.
“When we were faced with the closure of Windalco, we called in the company, we signed an agreement with them; we said to them, listen, you need to do certain things to make your plant more efficient, and if you do that, we will relieve you of some of the burden of the bauxite levy at the time…and that worked. I think that is the kind of intervention that a government can do at this time.”
Paulwell wasn’t entirely critical of JISCO, however. The four-decade-old plant was in dire need of repairs and modernization when it came into their possession three years ago, and portions of the plant continue to break down even now. Paulwell noted the fact that a “very old, inefficient energy system” exacerbated matters even more.