ECONOMY-CUBA: Living High on the Nickel Boom

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HOLGUIN, Cuba, Sep 6 2000 (IPS) - Canadian investment in Cuba’s nickel industry has made a major contribution to the take-off experienced by the sector in the past decade. It has also changed life in Moa, a young mining town with more than its share of university graduates, where income levels are among the highest in Cuba.

“We have entire families working in nickel here,” said Carlos González, a Havana resident who has lived in Moa since 1985. “When that happens, hundreds of dollars can flow into a household, besides the salaries earned in Cuban pesos, which are already high.”

After graduating from college in the then-Soviet Union, González was placed by the Cuban government in Moa, a nickel-rich municipality in the province of Holguín, located 923 kms east of Havana and 180 kms from the provincial capital.

At first “I used to dream of returning to Havana,” he recalls. “Then they gave me a house here, I got married, had a family, and now I’m sure that in the capital I couldn’t live the way I live here. Even the red dirt that stains everything has stopped irritating me.”

For some, the “red hell” of a decade ago has gradually become a “green paradise” — not due to any environmental projects undertaken in the mines, but because of the possibility of earning the dollars needed in order to get by on the salary of a public employee.

The differences between Moa and other towns in this Caribbean island nation are readily visible in the styles of dress, the local diet, consumption patterns and the number of local branches of the government’s network of stores that sell only in dollars — a major source of foreign exchange.

The so-called “hard currency incentive,” a policy applied by the government of Fidel Castro in top priority sectors of the economy, came to Moa after Cuba’s General Nickel Company entered into a joint venture with Canada’s Sherrit International.

The association was focused on shoring up Cuba’s flagging nickel industry, which at the start of the 1990s found itself virtually overnight without the market and inputs provided up to then by the former Soviet Union.

The output of Moa Nickel S.A. (formerly the Pedro Sotto Alba plant) in Moa, the Cobalt Refinery Company Inc. in Alberta, Canada, and the Bahamas-based International Cobalt Company Inc. is shared 50-50 by the two sides in the joint venture.

One of the world’s largest nickel-exporting corporations was thus created, comprised of a plant producing nickel sulphide, as well as cobalt, a second plant where both minerals are refined, and a company that markets the products.

Besides accounting for 34.4 percent of the world’s nickel reserves, Cuba has in its favour the fact that the mineral is taken from open-pit mines, which keeps costs down and makes nickel mining in Cuba a very attractive proposition.

The Cuban state made hefty investments in the nickel industry in the 1970s with the hope that it would be exporting 70,000 tonnes of the mineral by 1990. The projections, however, fell flat.

Output plunged from 46,500 tonnes in 1989 to 26,772 tonnes in 1992, one of the worst years of the decade-long crisis that hit the island in 1990 after the collapse of the east European socialist bloc, which previously absorbed 70 percent of Cuba’s exports.

The industry began to rally a year after the joint venture was struck with Sherrit International. By 1995, output had recovered to 43,990 tonnes a year, and today it stands at around 68,000 tonnes, 27,000 of which are produced by Moa Nickel S.A., according to official sources.

Sherrit reported last April that in the first quarter of the year it earned 23.4 million dollars in profits from its business ventures in Cuba in nickel, oil and tourism.

Total revenues in that period stood at 75.3 million dollars, compared to 44.6 million posted in the same period in 1999, the report indicated.

Analysts say the leap in nickel production has had to do with investments aimed at modernising the plants and making them more efficient, from both a technogical and administrative standpoint, and the introduction of new management techniques and a system of hard currency incentives to boost the buying power of salaries.

The salary incentives have made a big difference in Moa, an industrial city that emerged in the wake of the 1959 revolution as part of a government policy aimed at stimulating the development of the nickel industry in the eastern region of Holguín.

Professionals and highly-skilled technicians were sent to the town to put in their “social service” — a two or three-year stint in which university graduates sort of “pay back” their free studies by working wherever, and in whatever conditions, the country needs them.

The Cuban ministry of higher education eventually set up the Superior Metallurgic Mining Institute in Moa, the only school of its kind on the island, from which more than 4,000 specialists have graduated, as well as a branch of the university’s faculty of Medical Sciences.

Eugenio Navarro, a long-time resident of Moa, says the region has two hospitals and 128 “family doctor clinics” (which comprise Cuba’s primary health care system), 303 doctors and dentists, and more than 1,000 nurses and auxiliary health personnel.

Data from the National Office of Statistics indicates that in late 1999, 64,466 people lived in the municipality of Moa, 57,181 of them in the urban area. More than half of the total — 39,858 — were of working age.

“Moa is a city of university students and graduates,” says Carmen López, a Havana resident who spent two years working in that far-off city as a specialist in computer sciences, but who decided, like many others, to return to her hometown.

González, on the other hand, feels that he made the right decision staying in Moa. “Without knowing it, I was ensuring the well-being of my children,” he says.

In Cuba, where the average salary is around 220 pesos a month, and U.S. dollars sell for 21 pesos at government exchange bureaux, González is in a privileged position by “being able to get by on my job, and not having to invent other sources of income or depend on remittances from some relative abroad.

“In my house, there are three of us working in the nickel industry, and we take home between 10 and 24 percent of our salaries in dollars. Some months, each one of us brings home more than 80 dollars,” he said.

The money earned generally goes towards improving the family’s living standards, given the low cost of public services in Cuba, and the fact that education and health care are totally free of charge.

An independent survey carried out in late 1998 in Havana found that the main causes of dissatisfaction listed by the respondents were the increasing “dollarisation” of the Cuban economy and the declining purchasing power of salaries earned in pesos.

The salary incentives applied in Moa are increasingly being applied by the government in other parts of Cuba. But in general terms, people employed by the state are paid in pesos, and in quantities similar to the wages earned prior to the economic crisis.

At the start of the crisis — which the government calls the “special period” — families experienced a widespread deficit of foodstuffs and other basic products. And when availability of supplies returned to normal levels, prices were too high, in general, for government employees to afford.