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Mar 2, 2023 | News
By John Lennon, social justice advocate
On 20 January 2023, the Supreme Court of Jamaica granted an injunction against Noranda Jamaica Partners II and New Day Aluminum (Jamaica) Limited. This will end either the commencement or the continuation of mining of the lands by them under Special Mining Lease 173, and will remain in force until the claim brought by the residents is heard and determined. The hearing is set for November 2023.
Concord Resources Holdings Limited (which has offices in London) acquired the majority ownership in New Day Aluminium in July 2021. Concord was a minority partner in 2018 so was already involved in the exploitation of bauxite in Jamaica. They wanted the case to be struck out, but the court said it found the claimants’ statement of case raised important and complex questions in relation to the nature and scope of the right to life.
However, in mid-February NORANDA counterclaimed that the judge’s decision was wrong and that there will be grave implications for the local industry. Quote: “Justice Nembhard “failed” to grapple with the potential blow to the economy and their business if the planned mining was not allowed to take place, they argued.” Finance minister Dr Nigel Clarke backed them: “Jamaica’s bauxite-alumina sector is of vital economic and developmental significance. The sector supports relatively high-paying jobs and in the past two years has generated between US$300m and US$400m in foreign exchange each year.” Lies, lies and more lies. A hearing is set for March 20 and 21.
In 2021, the Vice-president said that NORANDA has been operating for over 50 years, and currently contributes US$84m per annum to the local economy. That being the case, they should have 5 decades of tax returns totalling billions of USD to support their defence.
The court was asked to consider 17 points, and the most notable were:
- Projected tax collection from Noranda I and Noranda II, inclusive of bauxite production levy and royalties for the financial year 2022-23, is approximately US$35m.
- The figure projected for tax collection for the period 2023-27 is approximately US$139m.
- The Jamaican economy would be negatively affected.
- The Jamaican economy would suffer from the loss of domestically generated income and would also suffer from the loss of export earnings from the bauxite sector.
- The budget would benefit from bauxite levy inflows which approximate to $4,908.3m for the financial year 2022-23.
What is immediately apparent is the absence of details about tax revenues paid. This is an industry that makes profit from destruction, but there is nothing about how much money NORANDA has contributed to the country in compensation. The projections presented are comical for an alleged billion dollar, pillar of the economy industry. This financial year (2022-23) the expected tax inflow from the entire industry is just $4.9b/US$32m. That is 0.5% of the $998.2b 2022-23 budget.
NORANDA claimed that the claimants’ findings were based on speculation or unconvincing evidence, but that is the pot calling the kettle black. Their defence is devoid of evidence regarding levies paid in the past. It is terribly weak and should be the proverbial “final nail in the coffin” for the industry.
The injunction was granted on the breaches of fundamental rights and did not consider economics. However, the numbers present irrefutable evidence that mining cannot be justified. Taxes run countries and NORANDA projected that the people would miss out on US$139m over the next 5 years. Let’s see how much the country would have missed out over the previous 5 years.
Here are the combined earnings of the 4 bauxite companies during that period (NORANDA; WINDALCO – West Indies Aluminum Company; JAMALCO – Jamaica Aluminum Company; and JISCO – Jiuquan Iron & Steel Company Limited):
2017 – US$671.4m;
2018 – US$1.2b;
2019 – US$814.5m;
2020 – US$527.6m;
2021 – US$470.7m;
So in the previous 5 years their total earnings were US$3,684.2m.
An examination of the Central Government Operation Tables for actual revenues received for each of those years furnished the following bauxite levy figures (using the exchange rate at the time):
2017 – $127.5m/US$1m (projected $127.5);
2018 – $136.5m/US$1m (projected $126m);
2019 – $0 (projected $130.9m);
2020 – $0 (projected $145.39m);
2021 – $2,461.7m/US$16.4m (projected $2,155.4m)
The US$16.4m received in 2021 is misleading. WINDALCO owed US$35m in levies between Apr 2018 and Sept 2021, and made 3 payments totalling $2,461.7m. Therefore, none of the levies paid can be attributed to bauxite mined in 2021, so the levy paid that year was $0.
The levies collected prove that mining should immediately cease. In the previous 3 years it appears that NORANDA, JISCO and JAMALCO paid nothing, and between them they paid no more than US$2m in levies over 5 years. In those 5 years, US$3,684.2m was earned and the levy paid was no more US$18.5m i.e. 0.5%.
NORANDA is appealing that they should be allowed to continue this abuse, but their case should be thrown out.
In 2019, this exploitation was celebrated by Bloomberg, and their article was shamelessly reported by the ministry of mining: “Jamaica’s Mining Revival Turns Red Earth to Gold For Hedge Funds“. So some people are making good money from mining. It can be said that without a doubt the Jamaican people have been, and continue to be sold out.
The Defence claimed that this financial year the projected levy from the entire industry will be $4,908.3m (US$32m). When one considers that communities will be displaced, livelihoods lost, the pain and suffering, and the cost on health and the environment, not to mention the threat to the water supply, that paltry figure is an affront. However, the $4.9b cannot be attributed solely to that year, because a significant chunk is from the aforementioned WINDALCO debt.
From the table of projected revenues below, every month around $101m is expected from WINDALCO, and in March an additional $3,694m ($3,795m – 101m; US$24m) should be received. So the projected levy is not $4,908m, but $3,694m. NORANDA said it’s expected levy would be US$24.5m this year, so it appears that only they will be paying the levy. NORANDA needs to explain why it expects to pay US$24m this year and paid nothing the previous years.
Industries owned by the colonizers have one thing in common; exploitation. Mining must benefit both parties but NORANDA has not paid the bauxite levy in years and there is no evidence that they will pay in the future. They made a unilateral decision to stop paying the levy in 2015, and it appears that they haven’t paid a dollar since then. Why can NORANDA pay US$24m this year, but couldn’t in previous years? To save court time, the cost to benefit ratio (BCR: benefits ÷ costs) should be determined, and if the ratio is below 1 mining should cease. I believe mining cannot be economically justified because the costs by far outweigh the benefits.
There are alternatives to mining, tourism and call centres, industries reliant on exploitation. Jamaica receives copious amounts of sunshine and a solar investment pays for itself within 4 years, so we should develop manufacturing sectors such as food processing to cut the massive food import bill. However, the parliamentarians prefer to maintain the status quo, why?
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