Bauxite Dependency: Roots of Crisis

September 25, 2007

Two of Jamaica's most popularly known exports to the U.S. are reggae music and "ganja," the potent marijuana that flourishes in the island's tropical climate. Less well known is the export that has become one of the mainstays of the Jamaican economy and drawn the country into the U.S. orbit - bauxite, the raw material from which aluminum is produced. Bauxite may not be as well known to North America's pop culture as reggae or ganja, but it is more widely consumed. For aluminum has become one of the most common metals in the U.S. It is used by the construction industry for siding and windows in houses. Consumer goods such as electrical appliances, pots and pans, and kitchen foil are made of aluminum, and the food industry uses it for soft drink and beer cans. In heavy industry, aluminum goes into every U.S.-produced automobile; it is used extensively in the space program, and, perhaps most important in measuring aluminum's strategic importance, is the fact that 80 percent of an airplane's weight is accounted for by the metal. Understandably, the government has designated aluminum as one of the 13 strategic metals.(1) Not only does the U.S. depend on imported bauxite for about 85 percent of its needs, it also depends on Jamaican bauxite, which supplies about one-half of U.S. annual imports.(2) Just as aluminum makes Jamaica important to the U.S., so it makes the U.S. important to Jamaica. The postwar expansion of the U.S. aluminum industry has brought dramatic changes to this small island nation of two million people. Until World War II, Jamaica was a typical plantation economy, like other island outposts of the British empire that dotted the Caribbean. Then, nearly overnight, Jamaica was transformed into a new economic outpost of the U.S., as aluminum companies moved in to exploit the island's rich bauxite deposits. The problems and contradictions arising from the legacy of colonialism and the impact of the bauxite industry are the subject of this article. THE ALUMINUM COMPANIES ARRIVE The story of the U.S. aluminum industry began in Pittsburgh in 1888, with the founding of the Pittsburgh Reduction Company, known today as Alcoa (the Aluminum Company of America). For nearly half a century Alcoa had a monopoly on the aluminum industry in the United States. Until World War II, the U.S. and France were the world's major suppliers of bauxite, as well as the world's major producers of aluminum. However, the industry began its global search for raw materials at an early stage. Alcoa began mining bauxite in the Caribbean as early as 1916, when it moved into Guyana (then British Guiana), and later into Surinam. And in Western Europe, French and German companies began in the twenties and thirties to exploit the reserves of southern and Eastern Europe.(3) When the war catapulted aluminum to the foreground as a strategic metal, the U.S. industry underwent phenomenal expansion. At the time of the 1939 congressional appropriation for 9,000 new airplanes, Alcoa was still the only major producer of aluminum in the U.S. With the stimulus of a massive government aid program, the U.S. smelting capacity had increased seven times by 1946.(4) The federal government contracted with Alcoa for the construction of some 40 new aluminum plants, and the Reynolds Metal Co., which had entered into aluminum production in the thirties, became a major producer with the aid of large low-interest federal loans for the purchase and expansion of additional capacity. The federal government's designation of aluminum as one of the 74 metals to be stockpiled after the war gave another boost to the industry by guaranteeing the companies a market. (The stockpiling policy also reflected official recognition that U.S. political and economic hegemony was based on the ability to control and guarantee raw materials supplies.)(5) The war marked the beginning of a period of intense worldwide expansion of the aluminum industry, as the companies searched for cheap sources of high quality bauxite ore. One important factor that spurred the race to control foreign bauxite sources was the entry of two new firms into the industry. With Alcoa controlling most U.S. bauxite deposits, Reynolds and Kaiser Aluminum (known then as Permanente Metals) had to look overseas for their raw materials supplies. The decision of the U.S. government that national reserves of strategic minerals should be kept in reserve for war time was another factor intensifying the scramble for overseas bauxite sources. U.S. raw materials policy for the postwar era was mapped out by the President's Commission on Materials Policy, which presented a five volume study to the federal government in 1952. While emphasizing that "materials strength is a prime ingredient of general economic strength and growth," the Commission openly rejected the notion of self-sufficiency in raw materials resources.(6) Instead, the U.S. should rely on cheap, imported raw materials. "The objective of an overall materials policy for the U.S.," wrote the Commission, "should be to insure an adequate and dependable flow of materials (from abroad) at the lowest cost consistent with national security and the welfare of friendly nations."(7) With the decision to depend on imported bauxite, the U.S. aluminum companies turned their attention to Jamaica. The island soon became a key link in the companies' strategy to internationalize their operations, and the major supplier of bauxite to North America. Jamaica was in several respects a model arena for expansion. Because of the island's proximity to the U.S., Jamaican ores were much cheaper to transport than the bauxite being mined in Guyana and Surinam, which were located more than twice the distance from U.S. Gulf Coast ports. In addition, the exceptionally high quality of Jamaica's ores made them relatively cheap to refine. While bauxite deposits in most tropical areas have a much higher aluminum content that those in the U.S., Jamaica's are among the world's richest. Moreover, the ease of mining bauxite in Jamaica - where ore deposits are located 6 to 12 inches below the surface as compared to as much as 50 feet in Guyana - gave the siting of mines on the island a further economic advantage for the companies. Another drawing card was the cheap and abundant labor available in Jamaica. In 1953 the unskilled bauxite worker earned an average wage of about $13 a week, just slightly more than the sugar cane cutter working full time during the harvest.(8) And because there was relatively little skilled labor within Jamaica, the companies could control the training and set wage scales for skilled workers. Worker militance soon forced the companies to raise wages well above the Jamaican average. Finally, the political climate of Jamaica during the late colonial period was relatively controlled, with the two major political parties strongly wedded to the parliamentary traditions established by the British. Confidence in the political stability of the late colonial regime was undoubtedly matched by the companies' confidence in their ability to come out on top in any dealing with the Jamaican government. The companies' control over every aspect of the worldwide aluminum industry (see box), and Jamaica's lack of experience in the bauxite industry, gave the aluminum giants an overwhelming advantage vis-a-vis the government. As a result, the terms of the first agreement between the companies and the government were highly unfavorable to Jamaica. As compared to Surinam, where the government tax on bauxite was $2.04 per ton in 1950, in Jamaica it was set at a mere 0.40$.(9) MOVING INTO JAMAICA Presented with such favorable conditions the aluminum companies moved rapidly into Jamaica, beginning with the purchase of vast tracts of bauxite lands in the forties. In 1943, Alcoa's former Canadian affiliate, Alcan Aluminium, established Jamaican Bauxites Ltd. as a fully owned subsidiary. Shortly thereafter, other major North American aluminum companies began to explore and make extensive property acquisitions. In 1944 Reynolds Metals entered the island and simultaneously began experimentation in the U.S. to develop a process to handle Jamaican bauxite ores. Permanente Metals (forerunner of Kaiser) began to buy up bauxite reserves abroad after taking over excess government smelting capacity in the U.S. following the war. The company purchased over 40,000 acres of bauxite-rich lands in Jamaica, which were to supply Kaiser's smelting and refining plants for the next two decades. In the early fifties, the companies began to develop their newly acquired reserves. Kaiser built a huge mining complex on the southwest coast of Jamaica. The company also developed its own railway line, road network, and its own port facilities where the ore could be stored, loaded and shipped to Louisiana for processing. Both Reynolds and Alcan also made large investments in mining and port facilities at this time. Alcoa continued to rely on its reserves in the U.S., Guyana and Surinam until 1960, when it too opened operations in Jamaica. It was not long before the companies began to build refineries alongside their mines in Jamaica and other countries. This phase in the overseas expansion of the industry was brought on partly by pressure from governments of bauxite-producing countries like Jamaica which wanted a bigger share of the income generated by the industry. But for the companies, the main consideration was economic. By refining the bauxite to alumina before sending it to the U.S. for final smelting into aluminum ingots, the companies could save on the cost of shipping the bulky ore. (Four tons of bauxite produce two tons of alumina which produce one ton of aluminum.) As early as 1953 Alcan built the first alumina refinery on the island - the Kirkvine works - but the major expansion of refining capacity took place in the early sixties. There are several important points to be made about the investments of the aluminum giants. First, the Jamaican investments became one piece in the companies' global strategy. For Jamaica, this meant that the development of its bauxite resources was decided by the companies' plans and operations elsewhere. The other side of the coin was the companies' growing reliance on Jamaica, as they restructured their refining, reduction and marketing capacity in North America to accommodate Jamaican bauxite. This dependence was later to give the Jamaican government some leverage over the companies. Reynolds expanded its Hurricane Creek refining and smelting facilities in Arkansas to receive Jamaican bauxite and alumina, then later built a refinery at Corpus Christi, Texas, exclusively to process Jamaican ores. Kaiser adapted its alumina refining plant in Baton Rouge, Louisiana to process Jamaican ores, and then went on to build another large refinery at Gramercy, Louisiana exclusively for the refinement of Jamaican bauxite. Alcan embarked upon its massive Kitimat smelter project in British Columbia to be fed with alumina from its Kirkvine plant in Jamaica. Second, the U.S. government was in many respects a silent partner in the Jamaican venture. In addition to the guaranteed markets of the government stockpile and state subsidization of electric power to run the U.S. refineries, the companies received government financing for a large portion of their original investments in Jamaica. Reynolds, for example, received over $8.5 million from the U.S. government to finance its mining and processing facilities, which covered 85 percent of its total investment outlay. And the U.S. government provided $5 million to Alcan, part of it from the Marshall Plan loan funds, to help finance the Kirkvine complex.(10) This partnership between transnational capital and the U.S. government is the origin, as well as the strength, of the North American chains which bind Jamaica until the present. THE IMPACT OF BAUXITE The penetration of the aluminum companies marked the shift from the economic ties of British colonialism in Jamaica to ascending North American domination. And the development of the industry, along with the influx of foreign capital that accompanied it, had a strong impact on the country's economy and class structure. Prior to the arrival of the bauxite companies, Jamaica was still a typical plantation society. Ninety percent of the population were descendants of African slaves, and nearly 55 percent were rural, made up of small and landless peasants and the agricultural proletariat concentrated in the sugar industry. The island was ruled by a traditional oligarchy of some 21 families of English, Jewish, Syrian and Chinese descent, who had become wealthy off the sugar trade and control of the island's commerce. Like other plantation economies, local industry was almost completely undeveloped. Consequently a local industrialist class and industrial proletariat were still in their infancy prior to 1950. Only a fraction of the workforce was employed in large industrial firms, with a significant proportion of the urban population working as domestics or in the commercial. sector.(11) Although the bauxite industry brought far-reaching changes to the island, it brought limited benefits to the Jamaican people. In fact, it created a new set of problems and aggravated the existing social and economic ills of colonialism. In this next section, we will examine the impact of the bauxite industry on the economy, on the state, and on the class structure. THE ECONOMY The arrival of the bauxite companies in Jamaica was met with great expectations by all Jamaicans, but especially the ruling circles. The government believed that the development of bauxite would have the effect of spreading industrialization rapidly to other sectors of the economy. In fact, this was only partially the case, principally because the companies were not interested in reinvesting their profits in other industrial activities within Jamaica. Furthermore, the ripple effects in the economy were limited because the bauxite industry required relatively few inputs which could be purchased locally. Most of the necessary components - heavy earth moving machinery, 40-ton trucks, petroleum, caustic soda used in refining alumina - were not produced within Jamaica, but rather imported from the industrialized countries. One of the more direct effects of the bauxite companies was to stimulate the development of the construction industry, due to the need for large-scale projects to build plants, storage and port facilities. Responding to this opportunity, members of the old oligarchy began to diversify their economic activities into construction and related supplier industries, forming the nucleus of a new industrial bourgeoisie. However, the dependence of these industries on bauxite was double-edged. When the bauxite industry was expanding, the construction industry boomed. But when the expansionary phase ended, the industry inevitably went into a slump. The new industrialists also began to invest in manufacturing, food and beverages. And they soon became closely linked to the foreign manufacturing investors and banks that had arrived in Jamaica close on the heels of the bauxite companies. Through the new industrialists' influence, the Jamaican government sponsored a program of "import substitution." With the intent of stimulating domestic manufacturing to substitute foreign imports, the program opened Jamaica's doors wide to foreign investors by offering generous tax concessions. Many of these foreign companies produced consumer goods for the wealthy classes - such as refrigerators and electric stoves - in a country where 80 percent of the people still used kerosene due to the lack of electrification. Companies such as Goodyear, Colgate-Palmolive and Mead Johnson established subsidiaries on the island. In other cases, the foreign investors did not produce for the domestic market at all, but took advantage of the cheap labor and proximity to U.S. markets to build up export industries. These "screwdriver" industries imported components, which were assembled by Jamaican workers and then re-exported. The growth of the bauxite industry also had a profound impact on Jamaica's trade relations. Prior to the arrival of the aluminum companies, more than half of Jamaica's trade was with Britain - based on the export of sugar, bananas and rum, and the import of manufactured goods and foodstuffs - with only one quarter of her trade with North America. After 1950, this pattern was greatly modified. By 1976, over half of Jamaica's exports went to North America. Nearly 60 percent of all imports came from the U.S. and Canada, including most of Jamaica's food imports, which accounted for 48 percent of the country's food consumption.(12) In contrast to the pre-bauxite period, when nearly half of Jamaica's export earnings came from sugar, today Jamaica relies on bauxite (and the aluminum companies) for 46 percent of its foreign exchange earnings.(13) (See Table 3.) For Jamaica, like other third world countries, this extreme dependence on the economies of North America and its transnationals has had far-reaching political and economic implications. In the hands of imperialism, the threat of economic sanctions always lurks as a powerful weapon against those who might choose policies that would challenge these relations. The U.S. used this weapon effectively in Chile, when the Allende government took over U.S. copper companies in 1971, and as we will see, did not hesitate to flex its economic muscle to keep Jamaica in line. BAUXITE AND STATE REVENUES Because the bauxite industry was 100 percent foreign-owned, and generated relatively few jobs locally, the main contribution of the industry to the Jamaican economy was in the form of royalties and taxes paid to the government by the companies. By 1968, the government derived 14 percent of its tax revenues from the bauxite/alumina industry.(14) This revenue, however, was relatively small by comparison with the value which the industry was generating for the companies themselves. But vertical integration of the bauxite/aluminum industry made it difficult for Jamaica to increase its share of the profits for several reasons. First, it was not easy to establish a market price for bauxite ore upon which to base taxation. Because each company owned all three stages of production - mining, refining and smelting - bauxite was never offered on the market; rather it was "sold" by subsidiary to parent company for a "transfer price" established by the company itself. The companies consistently undervalued the price of Jamaican ore, which kept down their tax payments to the government. In 1950, with the first agreements between the bauxite companies and the government the payment was about 0.40$ per ton. When the Jamaicans discovered how the companies were undervaluing the price, a new agreement was negotiated setting the tax at about $1.85 per ton. This agreement remained in effect until 1971 when the rate was raised to $2.40 per ton - still extremely low considering that smelted aluminum ingot was One of the many rural slums that dot the selling for approximately $500 per ton in the U.S.(15) Moreover, the companies' position of dominance in the aluminum industry throughout the world kept the Jamaican government conciliatory toward them for over two decades. Even if Jamaica objected to their pricing policies, there were few prospects for alternative bauxite buyers. It was not until the government was confronted with severe social and economic crises that it chose to take an aggressive stance vis-a-vis the industry. BAUXITE AND CLASS STRUCTURE As the grip of the bauxite industry on Jamaica's economy tightened, the industry's presence caused important changes in the labor force. Most decisive were the strangulation of small peasant agriculture, and the growth of the industrial proletariat. The Jamaican peasantry had long been plagued by land hunger, lack of capital to implement modern farming, and the general conditions of poverty which besiege the countryside in most areas of the Caribbean and Latin America. With the entry of the bauxite companies into the island, the situation of the peasantry deteriorated. The acute land shortage was further aggravated by the more then 100,000 acres of land purchased by the companies in their race to secure bauxite reserves for the future. Much of this land was purchased from small farmers, who in turn used the cash to leave the countryside and migrate to the cities or move abroad. Between 1945 and 1968 the total acreage under cultivation in Jamaica dropped by 18 percent.(16) The bauxite industry had several other important effects on the peasantry. Because the industry was located in the rural areas and required a skilled though small labor force, it created a new relatively well paid strata of industrial workers in the countryside - not to mention the highly paid technical and administrative staff, who were mainly foreign in the industry's early years. The presence of these groups had a strong inflationary impact on life in the rural areas adjacent to the bauxite enclaves, driving up the cost of food, housing, and other services. This increase in the rural cost of living accelerated the migration of the peasantry to the cities in search of work. The impact of bauxite in the rural areas not only affected small scale peasant agriculture but also affected the sugar industry. By driving up wage rates in the countryside for both skilled and unskilled labor, workers were drawn away from sugar to bauxite, exacerbating the labor shortage in the sugar industry, and accelerating the industry's decline. The bauxite industry created relatively few jobs because of its capital intensive nature. With all of the mining done in open pits, the industry relies more on heavy machinery than on labor power. And most bauxite workers are machine operators rather than pick and shovel miners, responsible for running the trucks, cranes and giant earth moving equipment. The $300 million the companies invested in Jamaica between 1950 and 1970 created only about 6,000 new permanent jobs, and in 1976 employment in the industry stood at less than 7,000 people (only 0.6 percent of the labor force).(17) (See Table 3.) However, the limited industrialization that accompanied the inflow of bauxite investment did spearhead the growth of the industrial proletariat. At the same time, the reserve army of labor was expanding rapidly, with unemployment hovering above 20 percent almost continuously. The growth of such a large reserve army of labor, while guaranteeing low wages, has also undermined the social and political stability which the bauxite companies encountered and relished during the early years of the industry. In recent years, an increasing proportion of the urban population has been pushed into a swelling lumpenproletariat. There is a fine line which distinguishes the unemployed labor army from the lumpenproletariat in Jamaica, and this line is easily crossed. The spread of criminal activities like drug traffic, gambling, robbery and also political thuggery has been a rising barometer of the hostility and frustration bottled up among the urban slum dwellers who find it difficult to secure regular employment. THE TRADE UNIONS Although the bauxite industry employs only a fraction of the labor force, the relatively high wages paid by the aluminum companies have the effect of raising wage rates for workers in other industries. In industrial bargaining, the rates paid to bauxite workers are usually used as benchmarks for industries outside the mining sector. (See Table 4.) However, the solidarity between bauxite workers and other workers is weakened both by the relatively high wages of the bauxite workers, and by the fact that bauxite workers retain a separate strike fund even though they belong to the same unions to which other workers belong: the National Workers Union (NWU) and the Bustamante Industrial Trade Union (BITU). The separation of bauxite workers' strike funds into a special category reflects the general characteristic of the trade union movement in Jamaica: its impact has been to divide rather than unify the working class. The trade union movement took hold in Jamaica during the upsurge of labor militancy in the late thirties. But in the following decade, it split apart into two competing factions each of which became aligned with one of the country's two political parties. The BITU was linked to the Jamaican Labor Party (JLP), and the Trade Union Congress (TUC) was affiliated with the People's National Party (PNP). The NWU emerged in the fifties linked to the PNP. The split in the trade union movement was reflected in the early organizing efforts in the bauxite industry, when both unions competed fiercely to win representation for the workers. Today, the industry is still organized on a company by company basis, with the NWU representing the majority of workers. Another crucial feature of the trade union movement is the separation between the leadership and the rank and file. Jamaica's most important trade union leaders, rather than coming from the rank and file, were drawn from professionals and small businessmen. Alexander Bustamante, Jamaica's most famous union leader, who founded the BITU in 1938, was a small businessman turned union leader late in life. Michael Manley, the current Prime Minister of Jamaica and the head of the NWU, is the son of Jamaica's first Prime Minister, Norman Washington Manley, a progressive lawyer from the coloured professional strata of Jamaican society. Under the influence of this leadership, the unions have narrowly focused on economic demands. Likewise, the militancy of the rank and file is not always reflected by the actions and positions assumed by the leadership. Examples of this have occurred on several occasions within the bauxite industry itself, during the sixties when more militant workers in some plants broke ranks with the Manley leadership of the NWU over issues of company racism and worker-employer relations in the mines and refineries. The leadership moved quickly to expel these radical grassroots tendencies, in a manner reminiscent of the purge which took place during the early fifties when Marxist nationalists were also expelled from the trade union movement and the People's National Party.(18) While the unions were relatively effective in securing economic benefits for the bauxite workers themselves, they were relatively ineffective in protecting the interests of the rapidly expanding working class as a whole. A large proportion of the working class - about 70 percent - remained non-unionized, leaving it completely exposed to the uncertainties and hardships of capitalist economic expansion in Jamaica. In fact, when it came to dealing with the chronic problem of unemployment, the rivalry between the NWU and BITU often fed upon and exacerbated the situation: Jobs were allocated as union (and political party) favors and the union-party alliances further divided the workers against themselves in their scramble for employment. SIGNS OF CRISIS By the early seventies, unrest in the Jamaican working class was reaching crisis proportions. For two decades the response of the Jamaican people to the scourge of unemployment and underemployment was emigration en masse to industrialized countries in search of jobs and a better life. The outflow was first directed toward Britain, where Jamaicans could enter freely as Commonwealth citizens. Between 1950 and 1968 nearly 270,000 people emigrated, representing more than one third of the total population increase during these years.(20)But in 1969, Britain closed its doors to the emigrants of former colonies and the pace of Jamaicans entering the United States and Canada increased. Emigration and contract labor were encouraged by the government as an Cr escape valve, but the ranks of unemployed workers who filled the capital city, Kingston, continued to swell. Another indication of the crisis was the growing rejection of the existing social order by a large number of working class people. This rejection had several manifestations; however, the most apparent during the sixties and early seventies was the Rastafarian movement. The Rastafarian movement, an organic grassroots religious sect, had its origins in Marcus Garvey's "Back to Africa Movement" of the twenties. Because the Rastafarians raised a number of critical social issues in a mystical religious context they gained extreme popularity among the young, unemployed urban masses. Rastafarians rejected Babylon - white European society which had dominated the nearly 90 percent black population of Jamaica for centuries - and called for repatriation of the black man to Africa, spiritually if not bodily. In addition to an eclectic set of religious beliefs, the Rastafarians promoted the idea of dignity among black people, rejecting the slavery of wage labor and the consumer ethic imposed by the neocolonial order. The Rastafarians became an important social movement in Jamaica in part because there were no organizations beyond the churches which provided a focus and unity for a large segment of the working class. In the late sixties and early seventies, the indifference of the ruling class and political parties toward a significant segment of the urban working class also resulted in incidences of spontaneous mass protest, in the form of street demonstrations and riots. While these outbursts were relatively rare, they were only the surface expression of the smoldering frustrations of the masses, confronted with the bleak possibilities which bauxite and capitalist development presented the working class. THE ELECTION OF MICHAEL MANLEY By the time of the 1972 election, Jamaica was ripe for a political change. The ruling Jamaica Labor Party had been ineffective in combating rising unemployment and the accompanying social crisis. Nor had the government been able to address the economic problems resulting from the domination of the bauxite companies and increasing dependence on foreign capital. The winning candidate in the election was Michael Manley, head of the National Workers' Union, who represented the progressive wing of the People's National Party. Manley campaigned on a platform of promises to bolster the economy through strong government initiatives and eliminating the corruption that was rampant in the JLP government. But the main theme of the campaign was the promise of jobs to the unemployed, and justice and equality for the impoverished masses. In the populist tradition, Manley drew support from across the class spectrum, and raised the expectation that he would reconcile the disparate and opposed class interests of Jamaican society. The segment of the working class allied to the NWU naturally supported him, along with the more progressive elements of the petty bourgeoisie, civil servants and urban professionals, who had traditionally been a strong base of support for the PNP. The bourgeoisie had always kept ties with both parties, and in this election the more astute and forward-looking sectors of the bourgeoisie - mainly those with a base in industry - also supported Manley. Recognizing that social unrest was a powderkeg that would threaten their own position if it exploded, they hoped that Manley's populism would pacify the masses. Like the industrial bourgeoisie in other Latin American countries, the Jamaicans were also anxious for the state to play a more active role in the economy to facilitate their own accumulation of profits. The support given to Manley's progressive stand by the local bourgeoisie was rewarded in the post-election period. Most of the major ministerial posts were awarded to members of the bourgeoisie. Halfway through his first term, Manley announced several policies which were soon to win the enmity of both the bauxite companies and the U.S. government. In 1974, the PNP took a series of steps to gain greater control over and derive larger benefits from the island's bauxite industry. On the domestic front, Manley introduced a program he called Democratic Socialism," creating an important new opening for the growth of left forces. As we will see in the following articles, Manley's progressive policies met with the swift retaliation of local and international capital. __________________________________________________ ALUMINIUM GIANTS A closer look at the capitalist world's aluminum industry reveals the enormous power of the forces confronting Jamaica in its attempt to gain greater control over its natural resources. The industry is a tightly knit oligopoly. Six companies control nearly two-thirds of the production: Alcan, Alcoa, Reynolds, Kaiser, Pechiney and Alusuisse. Four of these-Alcoa, Alcan, Reynolds and Kaiser, the "Big Four" of North America- control virtually all of Jamaica's bauxite and alumina production. Aluminum Co. of America (Alcoa), with $2.9 billion sales in 1976, is the world's largest aluminum company and ranked number 72 on Fortune's list of the top 500 U.S. industrial companies. Based in Pittsburgh and controlled by the Mellon and Davis families, its interests include bauxite mining in Jamaica, Surinam, the Dominican Republic, Australia, Guinea and Brazil, as well as the U.S. Alcoa cut its dependence on Caribbean bauxite from 84 percent in 1972 to 38 percent in 1975. Its smelters are located in the U.S., Australia, Brazil, Mexico and elsewhere. Alcan Aluminium, with 1976 sales of $2.7 billion, is the second largest aluminum company and ranks number 84 on Fortune's list of the top non-U.S. industrials. Though based in Montreal, it also is controlled by the Mellon and Davis families. (For years, two brothers, Arthur Vining Davis and Edward K. Davis, were presidents of Alcoa and Alcan respectively. Nathaniel Davis, E.K.'s son, heads Alcan today.) Alcan mines bauxite in Jamaica, Australia, Guinea, Malaysia and France and is developing a major deposit in Brazil. Its Guyana mines were nationalized in 1971. Alcan's main smelter capacity is located in Quebec, Japan and Norway. Reynolds Metals Co., with 1976 sales of $2.1 billion, is the third largest aluminum company, and ranked number 180 among U.S. industrials. Based in Richmond, Va., it is controlled by the Reynolds family (as in Reynolds Tobacco). It mines bauxite in Jamaica, Haiti and Arkansas. Its Guyana mines were nationalized in 1975. Reynolds' smelters include plants in the U.S., Canada and the U.K., where it has a 48 percent interest in England's largest aluminum company. It plans to cut its heavy dependence on Jamaican bauxite through a large joint venture with Alcoa in Australia. Kaiser Aluminum & Chemical Co., with 1976 sales of $1.9 billion, is the fourth largest aluminum company and ranked number 122 among U.S. industrials. Based in Oakland, California, it is controlled by the Kaiser family. Its principal bauxite mines are located in Jamaica and Australia and it smelts aluminum in the U.S. (Pacific north-west and Louisiana), Ghana, the U.K., West Germany and Bahrain. Pechiney Ugine Kuhlmann, a French-controlled metals company, is Europe's largest aluminum producer, as well as its largest copper fabricator and producer of stainless steel. Its 1976 sales of $4.7 billion ranked it number 37 among non-U.S. industrial companies. Its bauxite sources include Australia, Guinea, Greece and France. Pechiney's U.S. aluminum capacity was acquired in 1975 through the purchase of Howmet Corp. Swiss Aluminum (Alusuisse), with 1976 sales of $1.9 billion, ranked number 113 among non-U.S. industrials and is the sixth largest aluminum producer. Based in Zurich and controlled by Swiss capital, it expanded outside of Europe only after World War II. In 1974 it acquired the aluminum operations of U.S.-based Olin Corp. for $126 million. It obtains three-fourths of its bauxite from Australia and also mines in Sierra Leone, Guinea and France. Its smelters are located in Switzerland, the U.S., Germany, Iceland, Italy, Norway and South Africa. ELECTRIC POWER REQUIREMENTS As with all mining operations, aluminum production requires a large capital investment for plant and equipment, an investment easily running into the hundreds of millions of dollars. Of the three stages in the production of aluminumining bauxite, refining it into alumina and smelting the alumina into aluminum-the least expensive is the actual mining stage and the most capital-intensive is the smelting. This is mainly because of the massive electric power requirements of the "pot lines" where oxygen is electrochemically separated from alumina to produce aluminum. In fact, the key raw material for aluminum is not bauxite but electric power, with energy costs accounting for a quarter of the cost of finished aluminum products. The aluminum industry consumers four percent of all electricity produced in the U.S. while accounting for only .5 percent of the GNP. Aluminum companies own entire power plants to feed their smelters. In the late fifties, Alcoa and Alcan's own power capacity exceeded the national totals of such countries as Australia, Brazil and Spain. The magnitude of the power needed by the industry has been met only through massive government subsidization. One third of U.S. aluminum smelting capacity (10 smelters) is located in the Pacific northwest and is dependent on the Bonneville Power Administration (BPA), a federal authority which owns and operates 29 dams on the Columbia River system. The aluminum companies hold long-term contracts for one third of the entire BPA electric power output. In the east another four of the nation's 31 smelters rely on government-subsidized power from the Tennessee Valley Authority (TVA) power system. The enormous capital requirements of the industry have helped determine the international division of labor within it. The third world supplies the bauxite raw material, while the capital-intensive smelting is located in the safer havens of the capitalist industrialized world. While the U.S., Japan and Western Europe produced only 11 percent of the entire world's bauxite in 1976, they smelted 57 percent of the aluminum. The IBA member countries (all third world except for Australia), on the other hand, produced 76 percent of the bauxite and smelted only 6 percent of the aluminum. Now, however, U.S. environmental restrictions and uncertainties about U.S. energy policies are pushing the companies to look overseas for new smelting capacity-a current favorite being the Middle East with its ample supplies of oil and natural gas. Like other oligopolies, the industry is characterized by collusion rather than competition. The industry's price-fixing practices have made it the target of dozens of government anti-trust investigations and suits. And the collusion on prices and markets is only an indicator of cooperation on many other fronts. The two industry leaders, Alcan and Alcoa, which control nearly a third of the capitalist world's market, were in fact once the same company. The aluminum companies cooperate in a myriad of joint ventures. One example is the Alpart venture in Jamaica, owned jointly by Kaiser, Reynolds and Anaconda, a relatively new entry to the industry. Another industry characteristic which restricts Jamaican maneuverability is vertical integration. The major companies control all stages of production-from mining bauxite to refining alumina to smelting aluminumas well as marketing. They even have their own shipping lines. Were Jamaica to seize control of its bauxite mines and alumina refineries it would have great difficulty in marketing its products, for the companies would act in concert to boycott its ore. Guyana, another major bauxite producer, was able to successfully nationalize the large Alcan holdings in 1971 largely because Guyana holds a near world monopoly on calcined bauxite (resistant to very high temperatures and used in refractory applications) and thus the buyers had nowhere else to turn for the product. Fred Goff _________________________________________________ REFERENCES I. ROOTS OF THE CRISIS 1. Lester Brown, "The Global Politics of Resource Scarcity," Testimony to Subcommittee on Foreign Economic Policy, House Committee on Foreign Affairs, 93rd Congress, 1974, p. 247. 2. U.S. Bureau of Mines, Mineral Industry Surveys, Bauxite. 3. See N.H. Engle, et al., "World Bauxite Resources" in Aluminum, Richard D. Irwin, Inc., 1944. 4. Committee on Public Administration Cases, The Disposal of the Aluminum Plants, Washington, D.C., 1948. 5. See Report of the U.S. President's Materials Policy Commission, Resources for Freedom, Vol. I, Government Printing Office, 1952. 6. Ibid., p. 3. 7. Ibid., p. 3. 8. Calculated on the basis of bauxite and sugar workers' wages, Michael Manley, "The Bauxite Story," A Voice at the Workplace, Andre Deutsch, Ltd., 1975, p. 115. 9. Normal Girvan, Foreign Capital and Economic Underdevelopment in Jamaica, Institute of Social and Economic Research (Univ. of the West Indies, Mona, Jamaica), 1972, p. 62. 10. Ibid., p. 22. 11. Owen Jefferson, The Post-War Economic Development of Jamaica, Institute for Social and Economic Research, 1972, p. 50. 12. See National Income and Product 1976, Dept. of Statistics, Government of Jamaica. 13. Owen Jefferson, op. cit., p. 189. 14. Girvan, op. cit., p. 16. 15. See "A Brief History of the Bauxite/Alumina Industry in Jamaica," in JBI Digest, Vol. I, No. 3, September 1976, Jamaca Bauxite Institute, p. 16. 16. See George Beckford, "Plantations, Peasants and Proletariat in the West Indies," in Socialism!, Kingston, Jamaica, Vol. I., No. 3, September 1974. 17. See Table 4.1, The Labour Force, 1976, Department of Statistics, Government of Jamaica, 1977; see also Owen Jefferson, op. cit., p. 26. 18. Trevor Munroe, The Marxist 'Left'in Jamaica, 1940-1950, Institute of Social and Economic Research, 1977.

Tags: Jamaica, bauxite, dependency, aluminum industry, transnationals

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