Major bauxite player in Jamaica is Russia's UC RUSAL

The world economic landscape is changing at an unprecedented rate and the effects of this change are evident right here in Jamaica.

At the start of the 1970s, the local bauxite industry was owned and operated by six transnational corporations - Alcan of Canada, and Alcoa, Reynolds, Kaiser, Revere and Anaconda, of the USA. The only western majors missing were the French-based Pechiney and Alusuisse of Switzerland. The tide of mergers and acquisitions, and uneven business fortunes have removed most of these names from the industry in the past 25 years.

Neither Pechiney nor Alusuisse exist any more, having been absorbed by Alcan. Reynolds was gobbled up by Alcoa which also took over Alumax, another important American aluminium company, when in the 1990s it joined Alcan as the two aluminium giants of the day aggressively pursuing acquisitions.

Anaconda was bought by Atlantic Richfield in the late 1970s, while Revere dropped out of the aluminium industry when it fell into financial difficulties and filed for Chapter 11 Bankruptcy Protection in 1982. It remains as a very small outfit nowadays. Kaiser is just now recovering to somewhat of its former self (less alumina and bauxite), after also emerging from Chapter 11 Bankruptcy Protection recently.

Today, Alcoa remains the only player from the early 1970s, with continuing operations in Jamaica, through its stake in the Jamalco facilities that involve bauxite mining and alumina refining in the mid-island parishes. The major player in Jamaica by far is now U C RUSAL, the Russian behemoth, which has just entered the local industry by absorbing Glencore's stakes in Windalco and Alpart. Glencore had taken an ownership stake in Jamaica's industry by acquiring Alcan's assets here in 2001, which was followed by a close contest at the auction for Kaiser's share of Alpart in 2004.

U C RUSAL is the product of the consolidation process that has taken place in the aluminium industry in post-Soviet Russia, the Ukraine and Kazakhstan, and now projects itself as the world's largest aluminium and alumina producer, operating in 17 countries across five continents. It is a merger of RUSAL and SUAL, the two aluminium entities around which much of the post-Soviet aluminium industry was organised and as indicated earlier, includes Glencore's alumina assets. All indications are that the company will expand and modernise its Jamaican assets as world bauxite resources become scarcer and as it seeks to enhance its position in a world industry that is becoming even more highly competitive.

Its advantages include the possession of low-cost hydro power for aluminium smelting, which is in surplus in the Commonwealth of Independent States (CIS), aluminium smelter capacity which can be expanded at lower capital cost than that for greenfield plants, a huge financial scale, proximity to European and Japanese markets, and access to capital. Its competitive position with regard to energy and its energy resource base are particularly important, given the current and projected high cost of energy globally. U C RUSAL has also inherited a strong research and development and technology apparatus from the Soviet period, that should allow it to function as a vertically integrated outfit deriving benefits from downstream activities.

The company was formed only in March 2007, eclipsing Alcoa as the largest producer of aluminium and alumina, but could lose its top ranking with the news of Alcoa's intention to acquire Alcan. This comes after rumours over many months that BHP Billiton Ltd., the world's biggest miner, and Rio Tinto, another large mining company, were making moves to acquire Alcoa. The word of Alcoa's intention has since been followed by another round of speculation that BHP Billiton could, after all, seek to buy Rio Tinto. This cycle of move and counter move should really not surprise market watchers because, for various reasons, the world has entered a new phase of mergers and acquisitions that mirror profound changes in the structure of the global e