Chief Executive Officer (Jamalco)

Jamaica is a major player in the Caribbean, being the second biggest economy in CARICOM as well as the second largest population. But it also has serious competition on all fronts – tourism, financial, and otherwise. What are the main comparative advantages Jamaica has, and what are the areas where it can still get better?

Jamalco has been operating in Jamaica for some 59 years. In 1969, the company started construction work on the plant. In 1963, the mining and export of bauxite commenced. There’s a lot of bauxite in this island and it is very cost effective to access this ore. Jamalco has the lowest cash cost in the world in terms of mining, which is a big advantage for us in Jamaica. In addition, we have a very competent workforce that works in the bauxite and alumina process. This also brings several competitive advantages to Jamalco. Of course, geographically speaking, Jamaica is in a very, very good position. We are very close to the main markets: North America and Canada. Also Europe is not so far away. We export 100% of what we produce as we don’t have any internal consumption for the alumina here. And, of course the exchange rate helps in terms of delivery costs. Low cost is the secret of the success of this business. The exchange rate being advantageous in terms of labor also helps us to keep a cost that is very competitive nowadays with the world.

Jamaica has had an unstable growth for a number of years. Yet some sectors are working quite well such as tourism. What other sectors show promise for foreign direct investment, or may develop to be attractive for investors in the near future?
The bauxite/alumina industry is one such sector. The energy sector is another one. The energy matrix here is mostly, diesel and fuel oil. When the oil price was very high, the market conditions were tough because the production cost was very high. We used to be, for example, one of the highest cost plants in the Alcoa system when we were part of that system. With the price of oil the way it is now, we are in the top three in terms of cost, which has made a big difference. So an investor bringing a different energy solution here that is more cost effective and environmentally friendly, would be attractive for the business.

Jamaica has natural resources, primarily bauxite. The mining sector could become one of the main economic sectors. What is the position of the mining sector in Jamaica?

Since the financial crisis and the meltdown in the bauxite and alumina industry around 2008, some of the refineries in Jamaica were shut down because of the very high costs. Back then, there was a combination of low price for alumina and high energy cost. When the crisis began, our parent company had approximately 10 billion dollars in cash which was expected to keep the plants in operation while we waited for the crisis to end. Everyone had expected it to last for three years but it is 8 years later and the crisis has still not ended. We are still in a crunch where the commodity is concerned. Because of that, a lot of bauxite production in the island has been curtailed. At Jamalco, we have kept the production at the same capacity. But I would say that, since the crisis, the bauxite mining industry in Jamaica has really lost its position and the power it had in the 1970s.

By 1974 Jamaica had become the world's second largest producer of bauxite and the second largest exporter of alumina, but today it’s placed in 6th position, producing 14.6 million tones of bauxite. What are the challenges of the mining sector nowadays?

The main reason that the bauxite industry in Jamaica has shrunk over the years was the high energy cost in the Island, that made alumina production uneconomical. The majority of the bauxite mined was used internally to produce alumina in 4 alumina refineries. With the reduction in prices in 2008/2009, and the high fuel oil prices (USD 90/bbl), the costs of production skyrocketed forcing 3 out of 4 refineries to shutdown. This had a huge impact on the local economy and on the mining of bauxite. Also, new developments worldwide in Africa, Asia, China, Australia and Brazil came to compete with the local industry. It is important to say that Jamaica has around 60 billion tonnes of limestone and around 2 billion tonnes of bauxite. So I think that there are a lot of opportunities existing in the mining industry. We are looking for opportunities in terms of new businesses. Limestone is a potential but we are also looking at selling hydrate, which is an intermediary in the alumina production. The main challenges for the mining sector in Jamaica are really related to how you relate to the communities. The mines here are very small and there are many families and developments on the properties where there is bauxite. Low availability of re-settlement lands is also another big challenge for the miners.

The company started as a bauxite-mining venture by Alcoa in 1959 and exported its first shipment of bauxite in 1963. With more than 50 years of tradition, what are the values that Jamalco stands for?

We have an acronym for our values which is PRICCE, People, Results, Integrity, Community, Customer and of course Environmental Health and Safety. We have inherited some values from the Alcoa family. Because we consider ourselves a son that departed from the Alcoa home, we have retained some of the Alcoa values, but we also customized some values that are inherent to us.

Jamalco focuses on bauxite mining but on alumina production as well. How exactly are you incorporating innovation into your work in order to remain relevant and improve your business model?

During the period in which we were managed by Alcoa, we were linked to what we call the Technological Delivery Group. This is a group in Australia that has scientists and the people who are researching new technologies to apply in the refinery. For local partners, we have the Jamaica Bauxite Institute, with whom we have signed a MOU of cooperation. The idea is really to bring universities and our engineers together so that we can work on research, development and innovation among other things. There are various technologies used in our plant today. We have a state of the art facility for process control, in alliance with Honeywell, called QUASAR. It is part of Alcoa too but we are still a part of that program. Also, we are starting a process to have our engineers do Masters degrees in colleges here.

Jamalco is a joint-venture between Noble Group and Clarendon Alumina Production Limited (CAP). Are you looking for new partners?

Right now, we are looking at investments in terms of energy and the energy matrix. We are working to grow the business in terms of opportunities in markets that we didn’t explore before. And these things are initiatives that we are actively pursuing, but, of course, under the direction of our Executive Committee.  

Your bauxite mines are located in Mount Oliphant plateau and in Harmons Valley, your refinery is in Clarendon. Do you have any plans to further expand within the country or the region?

We don’t have any plans to expand right now. We really want to consolidate our production. I would say we are at approximately 90% of our capacity because we have some internal issues that we are addressing. But the idea is really to fix and eliminate this so that we can start increasing production to achieve our capacity, that is 3880 tonnes per day or 1.416 million tonnes per year. We are producing in the range of 1.3 million tonnes because of the limitations that we have.

Corporate social responsibility is an invaluable way for companies to give back to the communities in which they work. Your company empowers locals through education and sports and even international communities through disaster relief. What initiatives are you currently, or have you been, involved in that you feel most proud of and why?

Our strategic business objectives are driven by an understanding that our communities facilitate our operations.  So we have developed programmes to guarantee their long term well being. Jamalco has a community development model which revolves around six critical pillars. These are: capacity building; social renewal; alternative economic activities; volunteerism; charity; and civic partnerships. For each pillar there are different activities or projects that are done yearly. Among our capacity building initiatives are our Community Education Assistance Program, Mentorship Programs, Road Safety and the Advancing Childhood Education Program where basic school teachers are trained to help our children achieve mastery in numeracy and literacy in the Grade One Learning Profile. Three cohorts of teachers have already graduated. A Tablets in Schools Programme was also launched recently where some 100 computer tablets were distributed to 14 schools.

For social renewal three Centres of Excellence were built.  Our aim is to leave footprints so we try to create facilities where unattached youth can go to learn a skill.  We also try to forge partnerships with the different stakeholders in our communities. We have our Business Leaders’ meeting where the CEO meets with the business community and updates them on what is happening globally in the industry and with our company locally. Under alternative economic activities, opportunities are created to assist unemployed persons within our communities to develop or build micro businesses so they can earn for themselves. Jamalco is also very big on volunteerism. We encourage our team members to volunteer because we know that a country cannot develop alone based on what the Government can do. We have three big projects: a Good Deeds program where each employee is encouraged to volunteer for at least 50 hours on any project to support an institution and, on completion, that institution will receive US$250 which they can use for whatever they wish. There is also the Jamalcoans in Action and Jamalcoans in Motion projects which provide opportunities for our team members to volunteer. We have also had the 1 million trees program while we were in the Alcoa system. Every area of land that we mine is totally rehabilitated. Normally, we use local vegetation and topsoil, and through partnerships with farmers, plant crops on the reclaimed lands.

The mining sector is doing fairly well. Which biggest challenge have you had to face and how are you adapting/evolving to remain competitive?

For our business, the biggest challenge that we have is to be competitive in the world commodity market. This really means having the lowest cost. We are trying to streamline a lot of the operations that we do. Towards the end of last year the alumina price suffered a big loss and went down to around $200 per tonne. The price stayed at that level for two or three months. At that time, our costs were higher than that so our leadership team had to come together to take actions that would really bring this cost down so that the business could be cash positive and ensure our survival. We have only a few refineries that are still operating without saying that they are bankrupt, and several plants are shutting down. My team has a very clear understanding that if we’re not successful the ship is going to sink and we don’t want that to happen.
 
As CEO of Jamalco what is your biggest achievement up to now? What are you most proud of and what is the vision of your company in 5 years time?

I believe that the biggest achievement we have had so far is to make our people believe that they can succeed in this difficult environment; that they are capable of achieving excellence; and that we are second to no one. I am proud of many achievements: we have been producing 100% ‘on spec’ alumina for three years in a row; we have been able to bring Jamalco to the first quartile of cash costs; and we have had excellent safety records for quite some time. I expect that in 5 years Jamalco will be recognized as one of the best alumina producers in the world, the Pride of a Nation, adding value and improving lives.

A final message to HBR readers.

I have been in Jamaica for almost 5 years now and one of the things that I have learned here is to respect the workforce that we have. People here are some of the most resilient persons that I have seen. This makes a big difference. Anyone who wants to invest here can be sure that they will find a lot of talent in this island. I think that this is really what will make the difference in the end.