Bauxite battle

STILL not convinced the Government is maximising its earnings from the bauxite sector, Opposition spokesman on mining Phillip Paulwell is stepping up his call for more information from the Andrew Holness Administration.

Last Tuesday Minister of Finance Dr Nigel Clarke responded to a number of questions on the sector from Paulwell in the House of Representatives, particularly related to bauxite and alumina company Jamalco, but the Opposition spokesman wants more details.

Among the questions for which Paulwell is awaiting answers is why the Government not taken the opportunity of the recent sale of the majority stake in Jamalco to move it from an income tax regime to a levy regime, which would allow the country to earn more from the operations of the company.

Clarke promised to provide a comprehensive response to that question at a later date but he noted that Jamalco has not been under a levy regime for years.

In response Paulwell said: “We have been advocating on this side — especially with arrangements which were made with Noranda and others — that you need to ensure that the Jamaican people get something out of this depleting reserve. And we have found that where you have [an] income tax regime we have not seen such profits that ought to be declared, on which basis the Government and people of Jamaica will benefit.

“The safest way to extract some revenue [from the bauxite companies] is to impose the bauxite levy — and that has been our position in relation to the entire industry.”

A smiling Clarke quipped in response: “It is a pity you never did it between 2011 and 2016 when you had the chance,” his reference being to the years when the now Opposition was in Government.

Clarke noted that from about 2002 Jamalco has been exempted from the bauxite levy regime, after it conducted expansions in the past.

Obviously not satisfied with the answers, Paulwell on Sunday used a People’s National Party divisional conference in Harbour View, St Andrew, to signal that he has more questions for the finance minister to answer.

According to Paulwell, he was amazed when Clarke told the House that US$250 million — which was paid out to Jamalco by insurers following a fire in its powerhouse in August 2021 — had been spent.

“So I said ‘What happened?’ and him seh, ‘The plant is 80 per cent back, and they have used the money [US$250 million] to get it to that level.’ Now, if that was so I would not fight over the 20 per cent, but when I drill down…what is there are some broilers which produce steam, but they are borrowed.

“They were borrowed — paid for out of the insurance money — but they have to be returned. That don’t mek no sense,” declared Paulwell as he argued that despite the answers from Clarke, Jamaicans are no clearer as to where the US$250 million has gone.

He continued to express concern about the sale of Noble Holdings’ 55 per cent shares in Jamalco for a reported US$1 to the United States-based Century Aluminium Company, with the approval of the Jamaican Government.

“So I said to minister, ‘If the people who owned it were selling it for US$1 why you never buy it for US$1.50 so that the Government of Jamaica could own 100 per cent?’ No answer, no answer,” Paulwell added in his presentation to the Comrades.

“It is confusing, and that is why I believe there needs to be further explanations. And I am going to Parliament again this week [with] some more questions because the company that bought [Jamalco] is saying them going to spend $20 million and turn a profit by the end of this year. So why the Government of Jamaica couldn’t do that?” questioned Paulwell.

But Paulwell’s claim that the Government had not explained why it had not bought the 55 per cent Nobel shares had been addressed by Clarke in the House.

At that time the finance minister had insisted that it would not have been economically viable for the Government to take over the operations of Jamalco.

“We would have looked at that as a possibility. However…with the vision that we have for this asset, for its long-term viability, it is necessary to make capital investments…that will be required to get there.

“The Government’s view would have been that if we can find someone who is willing to make that investment alongside us [then] it’s less risk for the people of Jamaica, meaning, to make 45 per cent of that investment instead of a hundred, if we had infinite resources then the decision may have been different,” said Clarke.

Jamalco’s powerhouse was extensively damaged by fire in August 2021, which led to the closure of the facility and loss of production from September 2021 to July 2022. Clarke had pointed out that the insurance payout was spent on several major items for the restoration of production at the plant, and underscored that all staff members were paid by the company during the period when the plant was closed.

Clarke said given the fact that it would take resources to improve the plant’s operations, the Government made a decision in getting a partner who can bring international expertise and the capital required to put Jamalco on a long-term sustainable footing.

He said that with the new majority holder, Century Aluminium Company, the plan is not simply now to restore the plant to where it was prior to the fire but to “go a little bit further to put Jamalco in a position that it can be in the upper-half top two quartiles in terms of efficiency for the production of alumina”.