Jamaican Bauxite Industry Stalling On Coal

The current economic crisis could stall Jamaica's efforts to establish coal as a viable alternative fuel source.

It is to the bauxite industry - one of Jamaica's major energy users and major foreign exchange earners up to recently - that the government was looking to lead the charge for coal.

But the country's Energy Minister Clive Mullings is not worried. In fact he remains hopeful that the industry can be relied upon to invest in the controversial fuel source.

"The fact is that energy is a major input for the production of aluminum so they will always be anxious to get down the energy cost. That is why (coal) was an option they were looking at," Mullings told Jamaica's Sunday Observer. "If there were certain assumptions that the world's economy would turn around in two or three years (I would think they would want to) take advantage of it. So, instead of waiting until you have an upturn in the energy situation, this may be the best time to make the investment. But that is my view, not their view."

Attempts to get a comment from the Jamaica Bauxite Institute (JBI) were unsuccessful on Friday. Michael Mitchell, senior marketing analysts at the JBI was said to be in a meeting but an industry source said it was unlikely that bauxite companies would be looking at coal at this time, given the economic crisis, which has seen them trimming staff and halting operations.

"The view is that it is an attractive option and a practical one but finding the capital now, the investors and the owners would have difficulty," the source told the Sunday Observer.

But concerns over coal and its possible impact on the environment persist, with the recent coal ash spill in Kingston, Tennessee in the United States serving as a reminder of the drawbacks of that fuel source. That episode saw what was described as "what may be the nation's largest spill of coal ash lay thick and largely untouched over hundreds of acres of land and waterways" after a dam broke.

Studies have long shown that coal ash contains significant quantities of heavy metals like arsenic, lead and selenium that can cause cancer and neurological problems.

Mullings is, however, undaunted by that US incident, noting that while government would not be building coal fired plants, it would provide the necessary regulatory framework to guard against any damage to environment or human health.

"It is not our decision (to go coal) in the sense of building a plant; we are not building plants. So it will be an issue now as to whether the investor is coming, what sources of energy will come, and it should not be at the risk of the environment," he said.

Added Mullings: "Everything is a function of safety or what you put in for safety. So you can in any instance find a situation that could have an impact; you can have an explosion at a gas plant. You just have to put your systems in place."

The minister said, in the interim, there was still no disputing the benefits of coal, including its ready availability compared to liquefied natural gas (a cleaner source of fuel), and its relatively low cost.

But the cost of coal spiked last year even as China, from where potential investors were identified, suffered shortages.

An article published in the Financial Times on January 29, 2008 notes that coal prices in Asia had jumped to an all- time high as the region suffered acute shortages "as a result of coal supply disruptions in Australia, South Africa and China".

But Mullings argued that in looking at coal prices, one needed to look at the trend.
"One of the issues with natural gas is its availability. Coal is not short; the world has a 150-year supply." Quizzed as to the potential for securing natural gas from Venezuela or Nigeria, he said there were drawbacks to contend with. "Put it this way, Venezuela is not yet at that point. We have a gas team and they are not at that point to export gas. So it is still in its infancy. They could be ready by 2013/2104," he said. "Nigeria is too far so you can't get compressed natural gas from Nigeria."

Source: Sunday Observer