The Bauxite/Alumina Industry

Bauxite is a sedimentary rock rich in aluminum oxides, making it a valuable resource for alumina and aluminum production.

Jamaica's Bauxite industry has been a driver of economic growth and development since its discovery in the 1940s. The discovery of substantial bauxite reserves on the island attracted significant foreign investment, funding a new industry and turning Jamaica into a major player in the global aluminum supply chain. In 1952, the first shipload of bauxite left the island for foreign markets and by 1954, the first export of alumina began. By 1957 Jamaica became the worlds leading bauxite producer with an annual production capacity of nearly 5 million tonnes, almost a quarter of all the bauxite mined in the world in that year.

Birth of the Bauxite Industry

The discovery of the mineral occurred in 1942 when Sir Alfred Da'Costa, a wealthy land and cattle owner, had the soil on his farm located in Lydford, St. Ann, tested. The testing determined that while the land was not great for growing pastures, it was highly aluminous.

The discovery came at a opportune time. The world was embroiled in World War II, pushing up the demand for aluminium. Until then, little attention was paid to finding new sources of bauxite/alumina outside of Europe but the requirement to build planes and other equipment made from aluminum drove the need for new sources.

Reports of the discovery was passed on to the authorities in the UK and from there to Alcan, a company based in Canada. The news also found its way to the Dutch firm, Billiton, but it was Alcan who became the sole explorer of the reserves in the island at the time.

Jamaican bauxite was not used during the war. Exploration and development began in the 1940s by Alcan, Reynolds and Kaiser. The three companies opened operations on the island to survey and acquire land reserves. Reynolds began exporting bauxite from Ocho Rios in June 1952. Kaiser followed in 1953, shipping from Port Kaiser on the south coast of St Elizabeth. The first alumina processing plant was built by Alcan near its mines at Kirkvine, Manchester, and in early 1952, began shipping alumina from Port Esquivel on the south coast of St Catherine. This was the beginning of the Bauxite industry in Jamaica, unmistakably identifiable by the red dirt that covers everything surrounding it.

After the war, when aluminum products became more prevalent in the lives of people around the world, the bauxite-alumina industry soon replaced sugar as the most important sector of the Jamaican economy. By 1965 it accounted for ten per cent of the Gross Domestic Product (the total value of goods and services produced within the economy) and 47 per cent of its exports.

Mining and Exporting

The mining of bauxite in Jamaica is primarily an open-pit extraction process. The topsoil is removed, and the bauxite ore is extracted using heavy machinery, such as excavators and bulldozers. The extracted bauxite is then transported to refineries for processing into alumina.

The refining process involves a process called the Bayer Process, which was developed in the late 19th century by Austrian chemist Karl Bayer. The Bayer Process involves crushing the bauxite ore before mixing it with a hot, concentrated solution of sodium hydroxide. This chemical reaction dissolves the aluminum-bearing minerals, leaving behind impurities. The resulting solution is then filtered, and aluminum hydroxide precipitates out. This precipitate is calcined at high temperatures to produce alumina (aluminum oxide).

The Bayer process consists of four stages:

Digestion: finely ground bauxite is fed into a steam-heated unit called a digester where it is mixed, under pressure, with a hot solution of caustic soda. The aluminium oxide of the bauxite reacts with the caustic soda forming a solution of sodium aluminate called "green liquor" and a precipitate of sodium aluminium silicate.

Clarification: the green liquor is separated from the waste. The waste, which is undissolved iron oxides and silica that were part of the original bauxite, is removed and washed to recover caustic soda before being pumped to residue lakes. The remaining green liquor is pumped through filters to remove any remaining impurities then to heat exchangers where it is cooled from 1000°C to around 650-790°C.

Precipitation: the alumina is precipitated from the green liquor as crystals of alumina hydrate. This process involves mixing the green liquor solution in tall precipitator vessels with small amounts of fine crystalline alumina, which stimulates the precipitation of solid alumina hydrate as the solution cools. At the end of this process the solid alumina hydrate is passed on to the next stage and the remaining liquor, which contains caustic soda and some alumina, goes back to the digesters.

Calcination: the alumina hydrate is washed to remove any remaining liquor and then dried before finally being heated to about 1000°C, leaving the alumina; a dry, pure white, sandy material.

Alumina is then turned into aluminium through a smelting process.

Impact on Jamaica's Economy

Jamaica's bauxite industry has had both positive and negative effects on the country's economy. On the positive side, bauxite mining has contributed significantly to Jamaica's export earnings, foreign exchange reserves and government revenue. This influx of funds has helped finance various development projects, including infrastructure improvements, education, and healthcare initiatives.

The industry has provided employment opportunities for many Jamaicans, particularly in the rural areas where bauxite reserves are concentrated. Areas such as Mandeville in Manchester; Santa Cruz and Junction in St Elizabeth; Brown's Town in St Ann; May Pen in Clarendon and Ewarton in St Catherine. Additionally, the presence of multinational corporations has brought technical expertise and modern technology to the mining sector, enhancing efficiency and safety standards.

The industry's impact on Jamaica's economy however, has not been without challenges. The heavy reliance on bauxite exports make the economy vulnerable to fluctuations in global aluminum prices. During times of depressed prices, Jamaica's economic growth suffers, leading to budgetary constraints and reduced public spending. The environmental impact of bauxite mining, including deforestation, disruption of ecosystems, and pollution of water sources have been a concern. So have social issues, such as displacement of communities near mining sites, has the industry expanded.

In response to these challenges, the Jamaican government implemented policies and regulations to address environmental and social issues associated with bauxite mining. Initiatives were introduced to promote sustainable mining practices, reforestation, and community development projects but environmental concerns continue to grow as mining expands. The Cockpit Country on the western side of the island is the subject of much debate and concern. There is growing concern about the potential impact of mining in this region. The area is the largest natural forest in Jamaica and the largest area of bio-diversity. It is the source of six major rivers that supply about 40% of the island's water needs. A large portion of Cockpit Country was declared legally protected by the Government in 2022, but a significant area, about 30% around the borders, is still unprotected and open to mining.

Industry Transformation and the Formation of the IBA

The oil crisis in the early 1970s, had a detrimental impact on Jamaica's economy, raising the country's oil import bill from $55 million to nearly $180 million per year. The prices for other imports such as food and manufactured goods, rose as a consequence, putting further pressure on the cost of living and the balance of payments. Jamaica's Bauxite export earnings, like other commodity producers, did not grow in pace with the rising cost of imported manufactured goods from the industrialized countries, putting pressure on the island's economy.

Revenue Structure

Revenues from bauxite were derived by taxing the profits made by the mining companies. The problem was, there was no good way to determine the company's profits because there wasn't an established market price for alumina and bauxite. No genuine market existed between independent parties with equal market power. The companies were integrated, they had a "farm to table" model, where controlled the full spectrum of production, from mining, to processing, to refining and to the the final marketable product, aluminum. So the "sales" of the mined ore were mainly an intra-company transaction. The companies therefore had the ability ensure that "profits" were made at whatever level in the production process that was most suitable, giving them leverage when negotiating the taxation base`. They essentially had the handle, and the government the blade, at the negotiating table.

This changed in 1974, when the Jamaica under Michael Manley, announced a repeal of previous agreements and imposed new tax system based on a "production levy" on all bauxite either exported or processed in Jamaica. The levy was set at 7% percent of the selling price of the aluminum ingot, instead of the previous method of using a tax base computed on an artificial profit negotiated between the government and the companies. As a result, the tax rate increased from $2.50 to $14.51 per ton.

During this period, the government revision of the terms of the aluminum companies operating in the country. They stated that it would:

1. find ways of increasing the foreign-exchange derived from the industry beyond higher taxation
2. buy back the large tracts of land owned by the companies
3. secure government participation in the ownership of enterprises.

The government embarked on negotiations with the companies to buy into the ownership of their mining operations. This resulted in the aquisition of 51% of Kaiser, 6% of Reynolds, 6% of Alcoa and 7% of Alcan. They also repurchased most of the ore reserve lands formerly owned by the companies and in return, granted the companies a forty-year mining leases.

Bauxite Exporting Countries Unite

The preceding changes occurred in the same year that the major bauxite producers around the world, agreed to form the International Bauxite Association (IBA). In 1974, bauxite producing nations; Guinea, West Africa, Jamaica, Guyana, Surinam, Guinea, Yugoslavia, Australia, Sierra Leone and Ghana, met in Guinea, West Africa. They shared a common objective of wanting greater control over their natural resource. Jamaica emerged as a leading force in the IBA because they were highly motivated to get higher returns given the economic conditions at the time, and they also had the leverage to get them. The Jamaican government knew that the bauxite companies were highly dependent on the island's bauxite reserves, having made massive capital investments in land and infrastruture over the years they had been there. They could not afford to walk away, but had no option but to negotiate.

The timing of the formation of the IBA was spurred by OPEC's oil embargo in 1973. The members nations of the Organization of Petroleum Exporting Countries (OPEC), proclaimed an oil embargo targeted at nations that had supported Israel during the Yom Kippur War. The price of oil rose 300% during this time. It demonstrated the power that could be wielded by a group of oil exporting nations united in a common cause. The US government's lack of response arising from of its dependence on OPEC's oil exports, gave the bauxite producing nations confidence that a similar cartel of bauxite producers could have a similiar influence. America imported 40% of their oil from OPEC but in the case of bauxite their dependence was even greater at 80% for imported bauxite/alumina.

Government Agencies

Several agencies have been established to manage its interest in the industry by the Government since 1974.

• The Jamaica Bauxite Institute (JBI) began operating in 1976 to advise, monitor, and implement policies on all aspects of the industry, as well as to conduct technical and economic research.
• Jamaica Bauxite Mining (JBM) was set up by the Government to hold the assets acquired from entering into partnerships or joint ventures with the companies.
• The Bauxite and Alumina Trading Company (BATCO) was established to carry out commercial trading activities on behalf of the other Government entities.
• Clarendon Alumina Production (CAP) was formed in 1985 to manufacture and sell alumina at the leased JAMALCO plant, which had shut down operations. With the re-entry of ALCOA in 1988, CAP became a joint-venture partner with an equal share in the plant.

At present, Jamaica has one bauxite company, Noranda Jamaica Bauxite Partners II, and three refining operations, Windalco Ewarton Works, Jamalco and Alpart. The Government has a 51% stake in Noranda Jamaica Bauxite Partners II and a 45% interest in Jamalco.

Conclusion

Today, at the time of this writing in 2023, the world's largest economic bauxite resources occur in Guinea, Australia, Brazil, Vietnam and Jamaica.

At its peak, Jamaica was the world's leading producers of bauxite, accounting for a significant share of the global bauxite production. Australia overtook it in 1971 to be come the world's largest producer. Over the years, Jamaica's Bauxite industry faced challenges such as fluctuating global demand, declining ore grades, and environmental concerns. As a result, Jamaica's position as a top producer has diminished, and other countries like Australia, Guinea, and Brazil have become more prominent in the global bauxite market.

The commodity is still an important industry and continues to be a major foreign exchange earner and source of employment. As the global landscape evolves, it will be essential for Jamaica to continue to diversify its economy and address environmental concerns while leveraging the remaining potential of its bauxite and alumina resources.