The recent decision by ArcelorMittal to close its operations at Point Lisas represented a major blow to the vision that was so proudly pursued by Dr Eric Williams in the 1970s.
In delivering the 19th Eric Williams Memorial Lecture organised by the Central Bank on June 10, 2005, Prof Kenneth Julien quoted several excerpts from speeches by Dr Eric Williams related to the development of the national energy sector and the policy of heavy industrialisation that the Williams government pursued.
According to Julien, on January 17, 1976, under what he called in his lecture Defining Moment No. 7, Decision to Invest in Iscott, Williams said the following:
“Point Lisas is the symbol of this fundamental reorientation of the international economy. Sugar cane gives way to wire rods. Sugar has separated us as wire rods will weld us back together…There have been attempts to persuade us that the simplest and easiest thing to do would be to sit back, export our oil, export our gas, do nothing else and just receive the revenues derived from such exports and as it were, lead a life of luxury–at least for some limited period. This, the Government has completely rejected, for it amounts to putting the entire nation on the dole. Instead, we have taken what may be the more difficult road and that is, accepting the challenge of entering the world of steel, aluminium, methanol, fertiliser, petrochemicals. We have accepted the challenge of using our hydrocarbon resources in a very definite industrialisation process.”
Up until a few weeks ago, that vision had remained intact even though there was a mid-course correction after the intervention of the IMF in the 1988-90 period. Iscott would soon give way to Ispat and then to ArcelorMittal.
In his lecture, Julien went further to quote from the national budget presented by Dr Williams on December 5, 1980, as follows:
“The decision of the Government to move boldly into the field of industry based on the use of our energy resources has been the subject of discussion, debate, criticisms, and at times outright hostility generated both internally and externally. Those decisions have been translated into one producing unit, Iscott, and by the middle of 1981, another addition to the productive sector of our economy, Fertrin.
“In parallel with these developments and in support of them have been the establishment of a modern industrial estate, 1,500 acres in extent at Point Lisas, a modern port and harbour facility to accommodate vessels of 50,000 tonnes dead weight, and a power plant to meet the demand of proposed industries at Point Lisas and the country as a whole.”
That vision was challenged when the State got out of the iron and steel business. On November 16, 1988, the Government of T&T applied to the IMF for a 14-month stand-by arrangement in the amount of SDR 99 million and a compensatory and contingency financing facility up to a maximum amount of SDR 42.5 million.
On March 14, 1990, the Government went to the IMF again and applied for a 12-month stand-by arrangement worth SDR 85 million and access to a contingency financing arrangement for up to SDR 42.5 million.
According to paragraph 15 of the 1988 letter, the Government told the IMF the following:
“In 1987, Iscott (the state-owned steel company) entered into a management contract with a foreign firm. As a result of some restructuring of the company and new management arrangements, the company’s operating losses were reduced from an average of about TT$210 million a year in 1984-86 to an estimated TT$80 million in 1988.”
According to David Renwick writing in the Caribbean Beat magazine, Issue 14 Summer 1995:
“Iscott was leased to the Ispat steelmaking group from India in 1989, after the government decided it could no longer remain a public sector responsibility. Ispat has now bought the company outright for US$70.5 million. Energy from natural gas is vital to the plant’s successful operation–it uses about 35 million cubic feet per day.”
Today, ArcelorMittal has ground to a halt at Point Lisas and the Williams dream has been severely compromised. There are calls for ArcelorMittal to be nationalised by the Government thereby returning the State to the iron and steel business once more.
The Rowley administration is not intending to do that and so a decision must now be made with regard to the giant iron and steel plant and facilities at Point Lisas. Once the proud legacy of the decision by the Williams administration in the late 1970s as part of a wider industrialisation programme for the development of the country, its twists and turns through its role in putting the country into the hands of the IMF in the late 1980s has now seen its privatisation stage come to a sudden flop.
Last Wednesday’s announcement that Tata Steel is to close its steel business in the United Kingdom is just another saga in the global steel downturn. Did anyone advising the Government see this coming or are they starting from scratch?