The Editor, Sir:

I write in connection with the furore over the situation in respect of Clarendon Alumina Production Ltd (CAP). I have refrained from involving myself too much in the matter at this stage for a number of reasons. Principal among them is the fact that the Government has been involved for some time now in sensitive negotiations with a number of key parties with a view to getting some resolution of the problems, and that anything said out of turn, however inadvertent, could adversely impact on such negotiations.

Also, I have been very busy doing a number of things including, importantly, assisting the Government in trying to find ways and means to mitigate the worst consequences of the recession in our local industry and to develop a plan of action for its recovery.

No one except the most malevolent can take any comfort from what has transpired in the specific circumstances of CAP and, on the larger canvas, the industry as a whole, but recriminations hardly ever helps in finding solutions. Often, they merely satiate some people's appetite for spite.

Sensitive negotiations

If one is going to formulate a viable way forward, it is important to understand the circumstances which informed certain decisions which were made, and the developments at particular periods, which rendered some of these decisions inadequate.

In an attempt to address these issues as fully as I can, and bearing in mind what I said earlier, about being conscious that sensitive negotiations are taking place, I have completed an article for your publication which I hope will be published in one instalment so that the readers can get the full story without missing some essential points.

For the time being though, I must make a few comments on Claude Clarke's attempts to smear the intelligence and good sense of persons who have given long and unstinting service, often at great personal sacrifice, to the country.

As will be seen in my article when it is published (to paraphrase Longfellow) things are not what they seem or what Clarke would have you believe in his often didactic ignorance. Let me give you just one example.

Expansion

Clarke asserts that the dilution of CAP's equity "from the strategically valuable 50 per cent to the relatively weak 44 (sic) per cent ... removed the Government's raison d'être for participating in the company, that of having an equal voice in decisions affecting its future".

What this assertion tells you, Mr Editor, is that Clarke, though a member of the Board of CAP at the time, did not know or understand what was going on. The fact is that the dilution to 45 per cent (not 44 per cent) came about because CAP, not wishing to pile on any more debt on its already large burden, declined to participate in the first phase of the major expansion called the Early Works Programme. But CAP got an agreement that nothing would be changed in terms of its powers in the Jamalco joint venture. In other words, CAP retained similar powers with the 45 per cent ownership as it had with 50 per cent ownership. This simple fact can be verified by the company's attorney, or chief executive officer.

What is more, because we were taking the long view in terms of the major expansion in which we were not going to participate (again for the reason of not piling up any more debt) CAP secured from Alcoa an understanding that the powers would remain despite its equity share going down to an estimated 22.77 per cent in the expanded plant of approximately 2.8 million tonnes per annum.

Verbal slaughter

The current chairman of BATCO, Howard Mitchell, dealt with Clarke's criticisms of his administration for not fixing prices in the summer of 2008. He pointed out, among other things, that this was as an example of Clarke's '20/20 vision' (which seemed not to have served him uniformly in his life). I can empathise with the dilemma BATCO faced, for as sure as night follows day, if prices had risen to (say) US$4,000 per tonne and BATCO had fixed in the summer of 2008 at US$3,200 they would have been verbally slaughtered by Clarke and his ilk.

The ability to read future trends in a volatile market is a difficult matter. Just recently, the well-known airline, Cathay Pacific, lost hundreds of millions of dollars because it fixed aviation fuel, sometime in 2008, at prices which it thought would have protected it against upward movements in prices, which a lot of people were predicting. Was it not Goldman Sachs which predicted that the price of oil could rise to US$200 per barrel?

Infrastructure costs

I would add one thing to Mitchell's comments. Since Clarke 'knew' that prices were going to fall precipitately, why did he not let Mitchell into the secret? Perhaps he was not on speaking terms with him. Or perhaps, just perhaps, like the rest of us mere mortals, he did not have a clue.

One final thing: Clarke forgot to mention(a) In about October 2007, when it became clear to CAP that the oil market was going to get worse and it was confirmed that the infrastructure costs for the new mine, transportation system and residue disposal areas were going into the 'stratosphere', CAP requested BATCO (who is the designated agency to be in the frontline of alumina sale negotiations) to indicate to Glencore it needed to talk about the contract;

(b) The managing director of BATCO followed through on the request and contacted Glencore;

(c) On learning of what the managing director had done, he 'scolded' him for doing so and sought to 'lecture' me on CAP, seeking to take action that could affect the good name of the country.

I am, etc.,

CARLTON E. DAVIS

Jamaica Bauxite Institute

Kingston