Balford Henry, News EditorTHE ANNOUNCEMENT last week that Kaiser Aluminum and Chemical Corporation is studying proposals from six interests to purchase of its bauxite/alumina assets, including Kaiser Jamaica Bauxite Company (KJBC) and Alpart in Jamaica, has raised some concerns here.
This is to be expected, as the recent stories about the aluminium industry have not been very encouraging. However, the indications are that the Jamaican bauxite/alumina industry has not been endangered by these recent developments and, in fact, could be positioning itself for a much brighter future and a bigger share of a much reduced production landscape.
The main concern in Jamaica is more likely the relationship between local communities and the new partners which are taking over the local entities. We have already seen Swiss metal traders, Glencore Alumina Limited, take over the former Alcan Jamaica refineries at Kirkvine, Manchester, and Ewarton, St. Catherine, since June 2001, changing the name to WINDALCO (West Indies Alumina Company). Now it seems likely that Kaiser will follow suit and sell its interests to new parties.
There had been concerns that Alcoa's local investment, 49 per cent of JAMALCO, could be jeopardised when it was announced in January that the parent company, in order to accelerate cost reduction initiatives, was planning to cut some 8,000 jobs worldwide.
Alcoa explained that the plan was to restructure its operations globally, including those experiencing negligible growth particularly in Europe and South America, and that this would affect approximately 8,000 employees at over 70 of its operations, worldwide. Although the specific operations to be affected were not named, Jamaica was assured that there was no need for fear.
In addition, the fact that Alcoa had already entered into a US$115 million partnership with the Government of Jamaica for expansion at JAMALCO, Clarendon, was evidence that its interests here were positive and not negative.
Kaiser Aluminum Corporation, in February, filed voluntary petitions under Chapter 11 of the United States' Federal Bankruptcy Code in February to reorganise its financial structure. The company eventually explained that its 65 per cent interest in Alumina Partners of Jamaica (Alpart), and a 49 per cent stake in Kaiser Jamaica Bauxite Company (KJBC), would not be affected by the move. But, Kaiser also announced that it would be exploring interests in its bauxite and alumina entities to help it emerge from bankruptcy. The exploratory offer involved the Jamaican bauxite/alumina operations, along with that at Gramercy in Louisiana, United States, and Queensland, Australia. The recent announcement by its vice-president US and Jamaica Bauxite/Alumina Opera-tions, Eugene Miller, that the company, as previously announced, had explored the potential sale of some of its bauxite, alumina and smelter assets within its Global Commodities Business Unit and that the first part of the process had been completed, has triggered renewed interest in the future of the local industry.
Six companies have expressed interest in acquiring these assets, which include Kaiser's interest in both KJBC and Alpart, and the process has now reached the due diligence stage following the submitting of initial bids by the companies.
Mr. Miller insists that the process is exploratory and that no sale is imminent at this time. National Workers Union (NWU) vice-president, Norman DaCosta, has said that although the development could raise fears about the local industry, the union wished to emphasise if a sale should materialise it could represent a positive step for the future of Alpart, KJBC and Jamaica.
He said that the union would carefully monitor the process, but he is quite confident, based on confidential information about the interested parties that even if the assets are sold, Jamaica and the workers will not suffer, at least, not excessively.
The Jamaica Bauxite Institute (JBI) has also assured us that the local industry will suffer no damage from the sale of the local assets.
According to Parris Lyew-Ayee, general manager of the JBI, "Jamaica will come out the better from the process." Jamaica earned a significant US$712 million (approximately $40 billion) from the sector last year and Kaiser's local operations produce close to half the industry's output.
As Kaiser struggles to get its feet back up, Alcoa has been showing improved figures for 2003. The performance of the world aluminium industry is of special significance to Jamaica, following that decision by the Government in May 2002, jointly to invest with Alcoa US$115 million in the JAMALCO alumina refinery, under an agreement which also ended the 28-year-old bauxite levy. The agreement is for the JAMALCO plant to be expanded by 250,000 tonnes, pushing its capacity from the current one million to 1.25 million tonnes.
As I said before, the issue now is not whether the Jamaican baxuite/alumina industry has a future; the future seems quite secure, at least for the time being. The question is whether the industrial relations and community relations practices of these new companies that will be taking over, will allow the country, in general, and the bauxite regions, in particular, to share the sort of friendly relations that have existed in the past.
Their forerunners left a trail of industrial relations practices, community involvement and support which could be threatened if the future partners are less sociable.
One good sign has come from Alcoa which has formed the Alcoa Foundation out of Pittsburgh, Pennsylvania, in the United States, and recently launched an International Social Venture/Enterprise Initiative aimed at improving the effectiveness and sustainability of non-governmental organisations (NGO), including those in Jamaica.
The Foundation recently staged a first-of-its-kind international forum which brought together a large group of internationally recognised experts, leaders, funders and NGOs in the area of social venture/enterprise initiative to discuss improving the capabilities of NGOs in countries like the United States, the United Kingdom, the Philippines, Slovakia, Chile, Switzer-land, Hungary, Brazil and Jamaica.
How far efforts like that will go to erase the memory the wildcat strike which ended with some 400 workers losing their jobs and having to seek re-employment on contract without union representation remains to be seen. The industrial instability which threatened WINDALCO last September forcing the Minister of Labour to have to seek a court injunction against industrial action, a quite abnormal development in Jamaica, can also be recalled. There are several other issues of concern to communities, including the expansion of mud lakes and their environmental effect and the dust nuisance created by mining operations as well as the tendency to import workers, which has already raised concern among trade unions at the Labour Advisory Committee's level.
In recent times, these problems have led to protests by residents of bauxite/alumina producing communities. Whatever interest we have in seeing that the industry remains buoyant enough to weather the current international climate, there will always be a basic need to continue the good corporate principles of the past. Once that is ensured, then the future of our industry looks quite secure.
