During the March 2023 United Nations Conference on Implementation of the Objectives of the International Decade of Action, “Water for Sustainable Development,” minister Samuda gave a speech about water in Jamaica. As usual, there were requests for foreign help and investment. He said the following: “The high cost of electricity has significantly impacted Jamaica ability to distribute water to all.” He went on to say that Jamaica is reducing it’s energy consumption in the distribution process, and the Mona Reservoir floating solar platform project was highlighted as an example. However, this project appears to be a gold mine for the investors: Derillion Energy Jamaica Limited, the Aten Group and REIL Energy Investments Limited.
When the announcement was made in September 2022 that a US$62.5m floating solar platform would be developed on the Mona Reservoir, the PM said the following: “One of the largest costs to the NWC [National Water Commission], is its energy cost. The savings will be significant, and it will strengthen the NWC.” Also “What you’re seeing today is another strategic and synergetic nation-building decision that generations to come will benefit from.” No, what we’re seeing is yet another strategy to make foreign investors richer at our expense. He was not the only con artist. Minister Samuda stated that the NWC will receive payments of US$25k for leasing out the surface area for the facility. And other benefits included decreased evaporation losses from the reservoir’s surface, along with reduced need to treat algae buildup as well as de-silting capacity gains.
However, it is gross financial mismanagement. The shadow minister of energy, Philip Paulwell said solar pays for itself in 3 years, and he should know because he came off the grid in 2012. Handing over returns on investment of under 4 years is monumental financial negligence bordering on criminality.
Minister of Energy Daryl Vaz joined the party. He contended that the project is directly in tandem with the Jamaica National Energy Policy 2030, which stipulates that government ministries and agencies serve as models and leaders in energy conservation and environmental stewardship. However, our ministries and agencies are serving as models of how foreign investors can get richer at our expense. In March 2022, a Canadian company signed a deal with the Ministry of Education for a schools solar pilot project.
The goal should be to eliminate the NWC’s annual US$52m JPS bill, and deliver cheaper and more dependable water supply, not to brag about having the first floating platform in the region. Less than US$200m would remove all water facilities off the grid, and that money is available. It can be taken from the US$1.7b IMF loan facility, of which US$763m is earmarked for green investment.
We’re told that we don’t have the money for roads and bridges, for pay rises, markets, proper solid waste management etc well here is a reason why. Gross mismanagement of the people’s money and resources. In Jamaica it is evident that foreign investment in renewables should not mean foreign ownership.
THE LETTER
The Editor, Madame:
I believe that minister Samuda needs to disclose full details of the US$62.5m Mona Reservoir floating solar facility, because the numbers point to a return on investment of under 4 years for the investors.
My Analysis
The investors will be selling electricity to JPS and the rates received should be similar to those paid to Wigton Windfarm. I think that is a fair assumption. Wigton generates 62.7MW, and in financial year 2021-22 had sales of just over $2b. According to the NWC, Mona will generate 35MW (56% output of Wigton), so expected sales to JPS should be in the region of $1b.
The solar facility will also generate 10MW to power some water facilities. In a Oct 2022 Jamaica Information Service report, Samuda said “…the NWC should, conservatively, see a reduction in the… overall energy cost KWh of 30% of the current rate…” Also, “The projected savings, conservatively, is approximately $1b a year” which suggests that the annual bill for these facilities is over $3b. Therefore, the investors could be paid over $2b by the NWC i.e. the people.
So the potential annual earnings are over $3b (US$20m), on a US$62.5m investment. If this is true, then explanations are needed from many quarters. To handover a return on investment of under 4 years to the private sector is gross financial negligence, and I have asked for an investigation by MOCA.
State Investment Option
The minister also said that NWC has a network of more than 730 facilities with average monthly costs of $650m, which suggests an annual bill around US$52m. He went on to say that energy is one of the most important pillars of water production and distribution.
One must therefore ask minister Samuda and the NWC why our facilities are still on the grid at an annual cost of US$52m when almost everyday somewhere on the island suffers from water issues because of JPS. State investment would cost under US$200m and eliminate a major problem, whilst generating savings over US$50m per annum, monies that could be invested to upgrade the system and improve pay. This incredibly prudent investment can be immediately financed from the US$1.7b loan facility made available by the IMF, because US$763m is for green energy projects. There is no excuse.
On 14 Mar 2023, I submitted a letter and an opinion piece to the Gleaner (letters@gleanerjm.com; columns@gleanerjm.com), but to date I haven’t received a reply. I wrote in response to an outrageous piece of propaganda by Lance Neita, a “communications consultant and historian with years of working in the bauxite industry.” Mr Neita has written numerous articles for the rag championing the industry, but his latest piece was outrageous, claiming that the injunction would impact a “huge chunk of the economy“. In their written defence NORANDA stated that bauxite mining would contribute just 0.2-0.3% to the economy, and that cannot be considered a huge chunk, however Mr Neita’s scaremongering helps to propagate the myth that mining is a necessary evil. Mr Neita was cc’d but like the Gleaner, he did not respond. I wrote to him last year about his numbers, but I’m still waiting for a reply.
If the injunction was having the impact Mr Neita claims, it would be all over the airwaves but it isn’t. The only story reported by TVJ News (the Gleaner and TVJ are part of the media company RJR Group) is the poisoning of the Rio Cobre by WINDALCO, however the unprofitable status of WINDALCO is ignored. The fact is the mainstream news media supports mining and not only refuses to report fairly, but propagates falsehoods and misleads. A lie is a lie, regardless of how many believe that it is true.
The letter is below and a longer version of the opinion piece was published on the London Mining Network website.
The Letter
The Editor, Madame: On 12 Mar 2023, the Gleaner printed a piece by Lance Neita with a headline that demanded immediate attention: “An injunction not only on mining but on huge chunk of economy“. His claim must be examined.
Finance Minister Clarke supports NORANDA, and Mr Neita wrote “…he [Clarke] has clearly set his expectations on further increases in mining returns“. However, after operating for over 50 years, the NORANDA defence contained no details of taxes paid on earnings. Instead, there are projections for the next 5 years. NORANDA stated that the claimants’ findings were based on “speculation or unconvincing evidence“, but their defence is devoid of evidence regarding levies paid.
The injunction was granted on the breaches of fundamental rights and DID NOT consider levies, so it appears it was presumed by all that Jamaica is well rewarded for her bauxite. So, how much has the industry contributed? Here are the earnings for the previous 5 years (from the Gleaner which claims they’re from the Jamaica Bauxite Institute): 2017 – US$671.4m; 2018 – US$1.2b; 2019 – US$814.5m; 2020 – US$527.6m; 2021 – US$470.7m. Total – US$3,684.2m.
An examination of the Central Government Operation Tables furnished the following annual bauxite levy figures: 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. This payment was from US$35m owed by WINDALCO and therefore cannot be attributed to bauxite mined in 2021, so the levy paid that year was nil.
Something is terribly wrong:
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, but the levy paid was under US$18.5m i.e. 0.5%.
The government agreed to accept just US$1m for 4 of the 5 years. How can that be justified?
The figure that matters is the contribution to the treasury because that is how budgets are financed, and the levy contribution was no more than 0.06%. Needless to say that I do not agree with Mr Neita’s assertion that a chunk of the economy is at stake. In fact, the evidence suggests that the appeal should be thrown out and mining immediately halted.
On 20 January 2023, the Supreme Court 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.
NORANDA wanted the case to be thrown out, but the court accepted the submissions of the claimants that it cannot tenably be argued that their pleadings were “obviously unsustainable” or so “unarguable“. 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 Feb NORANDA counterclaimed that the judge’s decision was wrong and that there will be grave implications for the local industry. “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 commented: “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. In the past, of course, foreign-exchange earnings have been even higher.” Lies, lies and more lies. A hearing is set for Mar 20 and 21.
Since the lease to mine SML173 was granted in 2018, the top brass at NORANDA have been defending the decision. 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, NORANDA should have 5 decades of tax returns totalling billions of USD to illustrate the “potential blow to the economy“, and support their defence. If this is not produced, it will be evident that NORANDA has something to hide.
The Defence
As expected, the defence was centred around the monetary contribution to the economy, and the court was asked to consider 17 points, the most notable being:
The potential earnings from the export of crude bauxite exceeds that of other raw products.
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 alsosuffer from the loss of export earnings from the bauxite sector.
Revenue for the Government of Jamaica would increase to an estimate of approximately US$24.5m.
Income earned by Jamaican employees would be spent on goods and services within the communities, which would further create income non-bauxite workers and businesses.
The budget of the Government of Jamaica would benefit from bauxite levy inflows which approximate to 0.2-0.3% of annual GDP which approximate to $4.908.3m for the financial year 2022-23.
Direct and indirect employment of over 15,000 Jamaicans.
The participation of bauxite companies in agriculture and the establishment of several wells which supply water.
What is glaringly absent are details about tax revenues paid. There is no “In 2021-22 NORANDA made a US$100m levy payment” or the likes. This is an industry that makes profit from destruction, so substantial tax revenues should reflect this, however there is nothing about the amount of money NORANDA has contributed to the country to compensate for it’s activities. NORANDA says the claimants’ findings were based on speculation or unconvincing evidence, but that is the pot calling the kettle black. Their defence is based on far worse and cannot be taken seriously without details of the levies paid in the past.
At what price?
The numbers that were presented are comical for an alleged billion dollar, pillar of the economy industry. For instance, this year the projected tax inflow for the entire industry is only $4.9b/US$32m. That is 0.3% of the US$1b we’ve been continually told bauxite earns, and a 0.5% contribution to the $1002b final budget. Any reasonable person would agree that Jamaica should receive money for her bauxite, and a significant amount. Clarke needs to explain the vital importance of mining. US$32m is nothing but an insult: it stinks of the arrogance of the imperialists, and is about them saving their immoral earnings, and as expected puppet Clarke is on their side. It is a terribly weak defence that actually strengthens the case against the mining, and should be the proverbial “final nail in the coffin” for the industry.
The Prosecution
The injunction was granted on the breaches of fundamental rights but did not consider economics which would expose an industry dependent on exploitation. Lets look at how much Jamaica would lose.
Taxes are used to run the country and NORANDA projected that the people would miss out on US$139m in taxes over the next 5 years. Based on the history of mining, projections cannot be accepted. In July 2021, the Minister of Finance, Dr Nigel Clarke warned that the Government may have to take legal action to get bauxite/alumina companies to resume paying the bauxite levy. Huh? So NORANDA could decide to stop paying the levy, as they did in 2015, hence projections are unacceptable, and as the old adage goes, “a promise is a comfort to a fool“. “He [Clarke] said that over the past 10 years, the country has gone through various periods of serious dislocation, which resulted in long periods of either waivers of the levy or agreements to reduce the levy.” The truth is Jamaica is a banana republic where the colonizers still do as they please. Abuse is their raison d’etre, and the puppets in power facilitate them.
A better forecast would utilise figures from the past. Here is how much the 4 bauxite companies earned during the previous 5 years (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 each of those years furnished the following bauxite levy figures: 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 of debt repayment from WINDALCO (projected $2,155.4m)*
* WINDALCO owed US$35m in levies between Apr 2018 and Sept 2021 (doesn’t appear to have paid the levy in 2017), and made 3 payments from Nov 2021 totalling $2,461.7m (US$16.4m). None of the levies paid can be attributed to bauxite mined in 2021, hence the MoF $2,155.4m projection is misleading. The levy paid for that year was $0.
So in the previous 3 years it appears that NORANDA, JISCO and JAMALCO paid nothing, and no more than US$2m in levies between the in the last 5 years. I don’t think that the prosecution would need to present anymore evidence against NORANDA.
Around US$18.5m in levies were paid on US$3,684m earnings. That is 0.5% of total earnings. How could that be right? This is obviously an unbelievably poor deal for Jamaica. In 2019 this exploitation was celebrated by Bloomberg, and their shameless headline that ridiculed the people was proudly replicated on the ministry of mining website: “Fat cat hedge fund managers getting richer at Jamaica’s expense“.
It is a great read and my favourite paragraph read: In the 1980s, it was a key driver of the growth of Marc Rich & Co., the company that became Glencore Plc. When Rich wanted to cement his position in the country, he went as far as helping to pay for the Jamaican bobsled team whose participation in the 1988 Winter Olympics was depicted in the film “Cool Runnings.” So Jamaica helped build Glencore into a company that had revenues of US$256b in 2022, that is 16 times larger than the Jamaican economy. And our repayment was Rich going as far as helping pay for the bobsled team. Not exactly equitable. You just marvel. Without doubt, the people have been, and continue to be sold out to imperialism by the JLPNP. And the ministry can’t even copy and paste a report.
The Defence claimed that this financial year (2022-23) the projected levy from the entire industry would be $4,908.3m (US$32m). Earnings for the industry were projected at US$507m, and that delivers a pitiful levy contribution of 6.3% (32m÷507m). When one considers that communities in SML173 will be displaced, livelihoods lost, pain and suffering caused, and the cost on health and the environment, in addition to the threat to the water supply, that paltry figure cannot be defended. $4.9b/US$32m is an affront.
However, the $4.9b is not comprised solely from levies expected in financial year 2022-23. It includes the repayments by WINDALCO. From the table below, every month around $101m is projected to be paid, and in March an additional $3,694m ($3,795m – 101m; US$24m) is anticipated. So the projected levy is not US$32m, but US$24m, and that delivers a lower contribution of 4.8% (24m÷507m). One could argue that the defendant is misleading the court.
The Defendant estimated that their levy would increase revenues by US$24.5m, a figure in line with the projected US$24m levy. So it appears that only NORANDA is expected to pay the levy this year. Also, the Defendant claimed that their projected tax and royalty contribution would be approximately US$35m. Hence the royalty is at least US$10.5m (35m-24.5m) and that should be the Capital Development Fund (I have written to confirm the US$10.5m has been received but have not had a response).
What has NORANDA done differently this year, that they can pay US$24.5m, and how much did they pay last year?
The claim that the potential earnings from bauxite exceeds that of other raw products is comical. The price of a tonne of bauxite is around US$50 and that is incomparable to a tonne of any agricultural produce. Blue Mountain Coffee is more than US$50 per pound, and a pound of marijuana can fetch over US$1000. In 2021, agriculture contributed 8.34% towards GDP whereas the Defendant states bauxite contributes 0.2-0.3%.
In regards to employment, the Defendant chose yet again to concentrate on the industry. NORANDA is before the courts, not the industry, so there are not 15,000 jobs at stake. It is a fraction of that unverified figure. In 2018, the Government signed an establishment agreement that averted closure of the operation, which saved 500 jobs and contracts. Clarke claims that the jobs are relatively high paid, but according to Salary Explorer 50% of workers earn less than US$560 per month. Also, from the image below it is reasonable to assume that two thirds of the workforce is exempt from paying income tax (paid on wages above $125k/US$835 per month) so the contribution to the MoF is minimal, and the claim about worker’s spending power is questionable. Can paying Jamaicans to destroy their homeland and the lives of many of their countrymen, with no financial benefit to the country to boot, be considered gainful employment? I think not.
The mining companies positive involvement in agriculture and water is also questionable. The business model is based on destroying arable land and poisoning the environment. Apart from continually poisoning the Rio Cobre, unprofitable WINDALCO is under investigation for breaches of the Cruelty to Animals Act after leaving around 400 cattle starving. WINDALCO could have donated the cows to the local community, but chose to leave them to suffer and slowly die of starvation.
In Hope Village, Manchester the water supplier NWC purchases water from WINDALCO to supply the community, but WINDALCO has altered its regulation of water leaving the people without the commodity. The NWC’s acting regional manager said the following: “WINDALCO supplies us in the evening and we supply to residents as how we get the water from WINDALCO. We are trying to get clarity on the matter with the change in regulation.” Lack of water resulted in the temporary closure of the local infant school. WINDALCO is a law unto itself.
Conclusion
The evidence against NORANDA and the mining industry is overwhelming and does not need a ruling in court. The levy collected over the last 5 years was US$18.4m and cannot be defended. The Office of the Public Defender needs to step in because the costs by far outweigh the meagre benefits. I sent my findings to the Public Defender on 12 Jan, and have made numerous phone calls but that government office appears uninterested.
NORANDA needs to produce tax receipts to defend itself, projected figures are unacceptable. Also, the JLPNP have a lot if explaining to do because it appears that hedge funds are getting richer at our expense. And from the lack of balanced reporting, it is obvious that the local media supports the industry. Mining is subcontracted to local operators and haulage companies so keeping these businesses operating seems to be of paramount importance. Do parliamentarians have links to these companies? If they do, there is obviously a conflict of interest.
This is what Clarke said in July 2021: “Over the past 10 years we have gone through various periods of serious dislocation which resulted in long periods of either waivers of the levy or agreements to reduce the levy“. Explanations are needed in regards to how waivers and reductions were beneficial, and how we gain from foreign exchange earnings.
The fact is, there are superior alternatives to mining. In 2009, the then minister of finance Audley Shaw, proposed food processing as an alternative to the “disabled bauxite/alumina industry” as a major foreign exchange earner. It is extremely viable. A solar and wind powered food processing industry was an option amongst others covered in a previous blog.
The industry cannot be economically justified and should be immediately phased out. The imperialists are not paying for the bauxite, and operate as if the land is theirs. WINDALCO on the other hand, should be immediately shut down and heavily fined. It is an evil company, synonymous with pain and suffering. The owners do not care and have no respect for Jamaica.
Using Renewables to fund education 