IN AN economy starved for good news, this week's announcement by St Ann Bauxite of its plan to ramp up production over the next three months is particularly welcome.

For a start, it means, for the near term at least, that the 500 employees at St Ann Bauxite are safe, a welcome development in a sector that has shed more than a 1,000 jobs in recent months, with painful consequences for rural communities in the south and south-central parts of Jamaica.

This move, in what to us remains a dodgy environment for the world's aluminium industry, implies a vote of confidence in Jamaica, unless Noranda Aluminium Holding Corporation, St Ann Bauxite's parent, knows something about the future of the industry that we are yet to grasp. It is a gamble on their part, and we hope they win.

In any event, Noranda has given the Government something which, hopefully, will translate into the early beginning of a recovery in the broader economy.

Drop in alumina price

The context of this development is important. Last year, Jamaica produced 10.6 million metric tonnes of bauxite, about 10.2 million tonnes of which was refined into alumina, the primary ingredient of aluminium. Output, generally, was flat.

However, with the global recession gathering steam and the demand for aluminium in retreat, the price of alumina collapsed. The result is evident in Jamaica's fiscal and balance of payments accounts, and in those lost jobs in the parishes of Manchester and St Elizabeth, where three refineries - controlled by AC Rusal and accounting for around two-thirds of the island's alumina production - have closed.

In the last fiscal year, the Government projected to earn $8 billion from the levy companies pay for mining bauxite; instead, it pulled in half that amount. Its projection for this fiscal year is a mere $139 million.

The bleak outlook for the industry has proceeded in accordance with expectation. For the first five months of this year, bauxite export (essentially by St Ann), at 1.13 million tonnes, was down 39 per cent. Alumina declined 44 per cent. Earnings dropped 38 per cent and 69 per cent, respectively.

A start to recovery

Up to July of this year, the Government had earned $46 million from the levy. It is against this backdrop that the privately held Noranda acquired Century Aluminum's share of a consortium that owned 49 per cent of St Ann Bauxite, as well as the 1.2-million tonne Gramercy refinery. Both Noranda and Century were the partners in this consortium.

Now, Noranda says it plans to go full steam ahead with production - in Jamaica and at Gramercy. That means that St Ann Bauxite, producing at under two-thirds of capacity, will run at its 4.8 million tonnes-a-year capability.

This does not, by any stretch, imply a recovery of Jamaica's alumina industry. But it is a start; something that can be held up to other players in the industry as a signal that Jamaica is worth another look.

The Government, perhaps, made concessions to get this deal which, as a shareholder in St Ann Bauxite, it would be more comfortable doing. New, creative, but transparent options must now be put to other entities. Jamaica must, with urgency, also tie up arrangements for cheaper energy sources, so as to give the industry a fighting chance.

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