The Editor, Sir:

I write with reference to the article titled 'A lost birthright - the haemorrhaging of the bauxite sector' by Claude Clarke and published in the Public Affairs section of your February 1 edition.

Clarke spoke from the historically informed position as the immediate past chairman of Jamaica Bauxite Mining Ltd (JBM) and Bauxite and Alumina Trading Company Ltd (BATCO) and also as a past member of the Board of Clarendon Alumina Production Ltd (CAP).

Critical

Clarke is critical of the long pricing position taken by the former administration whose decisions he estimates cost the country US$100 million between 2002 and 2008 and of the present administration, which, because it did not set a price in July 2008 when the London Metal Exchange (LME) price was above US$3,000, stands to lose US$130 million for the years 2009-2010.

I have always been respectful of Clarke's business acumen and commitment to Jamaica and for that reason, engaged him in dialogue when I was appointed in January 2008 to two of the positions formerly held by him.

It is unfortunate, however, that he did not use the acquaintance generated by that engagement to find out the facts regarding the setting of a price in 2008.

The facts are as follows: The price of aluminium rose over US$3,000 in July 2008 and all the forecasts pointed to a higher price. The CRU Monitor, Metal Bulletin and other publications, are the reliable sources of information on the market. The forecast of all of these sources was that the LME price of the metal to which alumina is referenced would reach US$3,600 by the end of 2008, and could reach US$4,000 by 2010.

Not having the prescience of Clarke, the board relied on market information and waited for the advised further increase in the LME price. In this regard, the board of BATCO was not alone.

Even though the price on the LME faltered in August, the information received from the Montreal Aluminium Conference in early September, and generally all other analysts, was that prices would hold and that the market would continue to improve.

Watching the market

BATCO had attempted to engage its counterpart on the very morning the Leihman Brothers' collapse was announced. We were, thereafter, not willing to accept a price below US$2,500 and the board then decided to watch the market further before setting a price.

It is noteworthy that the major contract for 450,000 tonnes was not met in 2008, so that BATCO will continue to supply the 2008 quota up to May 2009, utilising the price of US$227 per tonne of alumina, which is still better than the present world price of average US$180 per tonne of alumina. This price had been set prior to Clarke's chairmanship. The delay in supply was as a result of the last two hurricanes.

The contract relating to the US$65 million loan (260,000 tonnes) utilises 175,000 tonnes from CAP and 85,000 tonnes from JBM's equity in Windalco. Additionally, the US$65 million loan was not for early works as stated by Clarke, but for expansion from 1.0 million tonnes to 1.25 million tonnes.

The hindsight enjoyed by Clarke allows him 20/20 vision, but it is clear that the entire world was caught unawares by the dramatic fall-off in the global economy. Management recalls that during his term as chairman, Clarke also waited for a better price instead of setting prices for 2009, which he could have done. It is a little disingenuous for him to now complain of our desire to wait to get the best price for the country.

The demise of CAP and Windalco was evident before Clarke's tenure as chairman, as JBM owed Windalco an average of US$10 million at that time and CAP already had a US$100 deficit on each tonne produced. A higher price in 2009 will have little or no effect on the position of these companies as Windalco has already announced closure and zero production and CAP will not utilise new prices on most of its alumina until May 2009, when it has supplied the 2008 quota. However, these prices will only be relevant if the Government fails to divest itself of CAP. The future of the industry is fraught with uncertainty and we, as Jamaicans, will need to come together as never before to survive. Baseless accusations and speculation will not serve the nation's purpose.

I am, etc.,

HOWARD S. MITCHELL

Bauxite & Alumina

Trading Company

Chairman