Why @UC_RUSAL to reopen ALPART as Xinfa, Noble Group and Aluminium Prices increase by 2017

“The new deal represents an expression of the Government’s commitment to ensure that the full potential of the bauxite/Alumina industry is realised in the shortest possible time”

Minister of Science, Technology Energy and Mining Phillip Paulwell on Monday December 22^nd 2014 announcing UC Rusal re-opening the Bauxite and Alumina Plant in Nain, St Elizabeth by January 2015

Great News for the people of St. Elizabeth in 2015, especially those who used to work with ALPART (Alumina Partners of Jamaica)!

Russian owned UC Rusal is planning to reopen the Bausite and Alumina Plant in Nain, St Elizabeth by January 2015 with the Refinery being re-opened by December 2016 as stated in the article “Mining to resume at Alpart in January ­­ Paulwell”, published Monday, December 22, 2014 3:41 PM, The Jamaica Observer.

Minister of Science, Technology Energy and Mining Phillip Paulwell made the announcement on Monday December 22^nd 2014 at a Press Conference held at the Office of the Prime Minister. The deal that he hammered out with the Russian Mining company will see some US$400 million being spent on upgrading the following:

1.      Development of port facilities 

2.      Ethane co­generation facility 

3.      Plant modernization

4.      Storage and transport infrastructure works

Of that amount, US$100 million will be spent as follows:

1.      Development of port facilities

2.      Storage and transport infrastructure works 

The deal to be executed over a period of two (2) years will see the following:

§  1,200 job created

§  1.65 million tonnes of Alumina Produced

§  2 million Tons of Crude, wet, raw Bauxite to be mined 

§  A new Ethane co­generation Power Plant being built  

The total earnings from this investment is expected to be some US$55 million to US$60 million for that 2 million Tons of Crude, wet, raw Bauxite. The Ethane co­generation Power Plant is US Rusal’s contribution to the 381 MW Project led by Dr. Vincent Lawrence led six-member ESET (Electricity Sector Enterprise Team) as explained in my blog article entitled “Dr. Vincent Lawrence ESET sets 2017 for 381 MW Project - Why JPS Co says LNG even though Ethane and Propane cheaper as Hydrogen Economy possible”.

So why is US Rusal all of a sudden deciding to get back in Bauxite Mining after it was deemed unprofitable as far back as 2010 due to the influx of cheap Chinese mined Bauxite and Alumina due to the lack of a cheaper fuel such as LNG (Liquid Natural Gas) as argued in my blog article entitled “PM Portia Simpson Miller ALCOA Talks hint at LNG - Lady Gaga's Paparazzi in Jamaica’s Bauxite Sector”?

The answer: Competition with the Chinese Military, Trade and Space Exploitation Ambitions.

UC Rusal to reopen ALPART mines - UC Rusal breaks promise, shutters Nain and Ewarton

This is welcome news indeed. UC Rusal had gained ownership over ALPART (Alumina Partners) and their associated Kirkvine Alumina works in Ewarton, St. Catherine and Nain Alumina Works in St Elizabeth back in 2010.

But instead of restarting production, they had shuttered both of these Alumina Plants, scaling back production at the Kirkvine Alumina works in Ewarton, St. Catherine.

They had promised to restart full production at Kirkvine Alumina works in Ewarton, St. Catherine and Nain Alumina Works in St Elizabeth in 2012 as stated in “Bauxite industry deal struck”, published Wednesday, October 03, 2012 BY SHAMILLE SCOTT Business reporter, The Jamaica Observer but that promise was not kept.

Eventually Minister of Science, Technology Energy and Mining Phillip Paulwell and UC Rusal got to talking about them getting a two (2) year concession on paying the Bauxite Levy in exchange for them building a Coal-Fired Refinery to refine Bauxite into Alumina as stated in “Gov’t and UC Rusal to Conclude Discussions on Bauxite Plants”, published May 7, 2014 By Andrea Braham, The Jamaica Information Service and “UC Rusal granted additional two-year Bauxite levy concession”, published May 7, 2014, RJR News.

But despite this, US Rusal still wouldn’t restart Mining, forcing Minister of Science, Technology Energy and Mining Phillip Paulwell to give the company six (6) month ultimatum or face losing their Mining licenses as reported in the article “Gov't gives six-month notice to UC Rusal to resume Mining”, published Friday, July 11, 2014, The Jamaica Observer.

Clearly Energy was the problem, UC Rusal Manager Igor Dorofeev announced that albeit Coal and LNG (Liquid Natural Gas) were options, they had it in mind to use Ethane  as explained  in the article “Rusal Exploring Ethane For Alpart Plant”, Published Sunday July 20, 2014 by Daraine Luton, Senior Staff Reporter, The Jamaica Gleaner.

It was the cost of Energy that was making Production at the Alumina works inefficient, as using Bunker C Oil direct from Petrojam was costly and inefficient when compared to the cheaper alternatives.

But sometimes it takes a little competition to put things into perspective.

UC Rusal to reopen ALPART mines - Competition from Xinfa Group and Noble Group  

So I guess with this new arrangement, UC Rusal has finally made up their minds.

But it can't be because a Minister of  Technology of a Developing World country forced them, as these multinationals are driven by profit making. Most likely it had to do with competition from the Chinese and the British in the form of the Noble Group and the Xinfa Group Company.

The Chinese-based Xinfa Group Company has popped on the scene quite suddenly in the middle of their haggling with the Minister of Science, Technology Energy and Mining Phillip Paulwell back in May 2014.  

Xinfa Group Company  wanted to take over the Reynolds Bauxite Mines in Lydford, St Ann and build a new Bauxite Plant for some US$3 billion as detailed in my blog article entitled “Xinfa Group Company to invest US$3 billion in Reynolds Bauxite Mines in Lydford, St Ann - Sapphire Production a better bet as the World’s flooded with Aluminium”.

Most likely UC Rusal took note of this.

By July 2014, Minister Phillip Paulwell had announced in that the Noble Group were going to purchase a part of ALCOA's stake in the CAP (Clarendon Alumna Partners) joint venture in the JAMALCO Plant in Halse Hall, Clarendon as stated in my blog article entitled “JAMALCO sold to Noble Resources Limited as ALCOA pulls out – UC Rusal stalling on ALPART and Kirkvine refineries as Xinfa Group Company interested”.

By then, UC Rusal was being threatened with a revocation of their Mining license, which I must say was incredibly good timing on the part of Minister Paulwell, as it set the stage for what happened next.

This action probably got them scared, especially the action of the Chinese.  They wouldn't be spending that kinda cash unless the saw something coming in the Bauxite and Alumina market.

The Chinese are bad enough.

But when in October 2014 Noble Group sealed the deal and then even opted to buy ALL of ALCOA's stake in CAP as reported in my blog article entitled “Noble Group buys JAMALCO as Chinese Aluminium demand rises – Why Noble Group BOOT's JAMALCO as GOJ keeps CAP and 381 MW Power Plant on track” that must have tipped them off that an increase in the price of Alumina was coming.

Russians fear Chinese Ambitions – Increase in the Price of aluminum coming by 2017

Fearing that British owned Singapore-listed Noble Group and Chinese owned Xinfa Group Company were planning to hoard Bauxite and Alumina and possibly lower Alumina prices globally, I suspect the Russian Government must have stepped in to secure their stake and future supplies in the Bauxite and Alumina Markets.

Most likely, this increase in Chinese demand for aluminum was due to their ongoing Military, Trade, Construction and Space Exploitation boom, activities that need a lot of aluminium by 2017.

Evidence their fear and desperation could be clearly seen from the fact that they hastily agreed with Minister of Science, Technology Energy and Mining Phillip Paulwell to just mine the wet, raw Bauxite and send it back to Russia.

They even waived their two (2) year concession on paying the Bauxite Levy in exchange for them building a Coal-Fired Refinery to refine Bauxite into Alumina as stated in “Gov’t and UC Rusal to Conclude Discussions on Bauxite Plants”, published May 7, 2014 By Andrea Braham, The Jamaica Information Service and “UC Rusal granted additional two-year Bauxite levy concession”, published May 7, 2014, RJR News.

This isn't a company doing business; this is the Russian Government acting through UC Rusal reacting in fear to China hoarding Alumina by securing their own allotted amount of Alumina as the possibility of a War may be looming on the horizon in Europe.

Stay Tuned!