Editorial | The geopolitics of Alpart

The announcement by the mining  minister, Floyd Green, that China’s Jiuquan Iron and Steel Company (JISCO) plans to spend US$490 million to modernise and increase capacity at their Alpart alumina refinery is good news for Jamaica.
However, it is one that this newspaper welcomes with caution until both  Minister Green and JISCO provide further and better particulars on the proposal, given the geopolitical context in which this investment, worth over J$78 billion, would take place. 
First, the United States under Donald Trump has reasserted the Monroe Doctrine of US hegemony in the Americas. The US has expressly identified China, its expanding economic and strategic rival, as the global power whose influence it wishes to exclude from the Western Hemisphere.
With respect to Jamaica, Kari Lake, Mr Trump’s nominee for ambassador in Kingston, targeted China Merchant Ports Holdings’ 49 per cent stake in Terminal Links - the company with the concession to operate  Jamaica’s  largest and most sophisticated port - as a national security concern for the United States.  Indeed, as this newspaper reported, the Americans are already undertaking a security review  of Kingston Freeport Terminal Limited (KFTL).
This action is likely to be far more than any real fear that activities at the Kingston transshipment port compromise US security interests. It is signal-sending and muscle-flexing.
If a Chinese port company operating in Jamaica is deemed to be incompatible with America’s national interest, and that firm is ultimately forced to divest the holding, then that raises obvious questions about the likelihood of Beijing greenlighting new, major investments by its firms in the island. Further, it is not a far hop from a Chinese minority ownership in a port being seen as a security concern, to similar strategic thinking being applied to the full ownership of an alumina refinery by a Chinese firm.
The demands on Jamaica in this circumstance are more than the ability to appease Washington or do skilled, diplomatic high-wire walks. For, if it forgoes Chinese investments, the Andrew Holness’ administration has to be clear of its new source of big development capital, apart from what is available from multilateral institutions in a period of post-catastrophe reconstruction.
BIG GAME
In the last two decades, Beijing has been almost the only game in town.
Developed in the 1960s as a partnership between three of the old American aluminium majors – Kaiser, Reynolds Metals and Anaconda – Alpart Alumina Partners is an alumina refiner with a rated capacity of 1.65 million tonnes. Its ownership later passed to the commodities trader, Glencore (65 per cent) and the Norwegian metals company, Norsk Hydro (35 per cent), before a two-step acquisition by the Russian firm, UC Rusal. Rusal first gained Glencore’s stake then bought out Norsk Hydro.
A decade ago, near the tail end of a big inflow of capital to Jamaica by Chinese state companies, Jiuquan Iron and Steel Company (JISCO) paid UC Rusal a reported US$299 million for Alpart, which was supposed to be the hub of a proposed US$3-billion industrial development in Jamaica. That was to include a modernisation of the plant to efficiently produce alumina for smelters in China and, ultimately, the export of aluminium to the United States. Smelting in Jamaica was also supposedly on the cards for later on. A logistics operation was also said to be part of the plan.
Shortly after the JISCO acquisition,  Donald Trump won his first presidency and soon thereafter  imposed a 25 per cent tariff on aluminium and steel imports from China. Since his return to office, Mr Trump has hiked those duties to 45 per cent.
Like Jamaica’s  other alumina refineries which were built in the 1960s and ’70s, Alpart was a relatively high-cost producer. During periods of global economic downturn and falling prices, Jamaican refineries are among the first to be taken out of production, and the government regularly makes concessions on taxes.
This production reality and America’s geopolitical posture towards China partly explains the reasons why, in JISCO’s 10 years of ownership of Alpart, the refinery has operated for only two. For the rest of the time, the plant has been in mothballs.
SURPRISING BACKGROUND
That is the surprising background against which Minister Green, after a visit to China, surprisingly told Parliament about JISCO’s planned investment. The company had made no public statement about the proposal.
According to Mr Green, a two-phased project, to start by mid-2027, will lift Alpart’s  capacity to two million tonnes of alumina, but with production, after the initial rehabilitation, reaching one million tonnes.
“Phase One represents an investment of approximately US$490 million and will focus on returning the facility to operation using newer, cleaner and more efficient technologies,”  Mr Green said.
To meet new global and efficiency and sustainability standards, Mr Green said, JISCO had undertaken to, among other things, build “a five-megawatt photovoltaic and energy-storage hybrid system, positioning Alpart as a green, low-carbon demonstration project”. 
Should these things happen, they would represent an exciting development for the Jamaican economy and communities around Nain, St Elizabeth, Alpart’s home, which were hard hit when the refinery was shuttered.
Notably, Mr Green’s statement came a mere fortnight after Ms Lake made clear to a Senate vetting committee her intention to vigorously pursue Mr Trump’s anti-China agenda in Jamaica.
Regarding China Port Holding’s stake in the Kingston facility, Ms Lake said: “... That puts us at risk, so we need to rebalance things.”
On Chinese investments more generally, and Kingston/Beijing relations, she said: “... I think it is concerning for both sides of the aisle when it comes to what China has done and their influence so close to home.”
In the face of these geopolitical realities, more information is necessary on how bankable is Mr Green’s reported deal and whether Jamaica has a strategy for navigating any US obstacles to Chinese investments.