COMMENTARY — Cuba chases foreign investment

The demise of the Soviet Union has ironically left Cuba — romantically known as “the isle of eternal summer” — out in the cold. As a result, the country’s mining and metals sector is now desperately trying to attract foreign investment, preferably from its Western neighbors.

The country’s ministry of labor has so far listed 37 mining areas for development, and, to its credit, 16 operations are already the subject of joint-venture agreements.

But as the old communist ties fray, Cuba continues to reflect the dismal shadows being cast by the former Soviet alliance: rising inflation, lack of investment and increasing energy costs. In the past, 85% of Cuba’s trade was directed through the former Soviet Union.

Describing the old relationship with Moscow, Antonio de los Reyes, vice-minister for industry and an ex-plant director of Cuba’s state-owned Union del Niquel’s Nicaro smelter, said: “They helped us, but we were far enough away for their involvement to never overstep the mark. We had all the benefits and none of the heartache.”

Unfortunately, Cuba is suffering from plenty of heartache, which is compounded by the crippling effect of the U.S. trade embargo. Adjusting to the new economic order has also opened the gates to the prospect of social disorder among the country’s inhabitants.

Particularly damaging has been the lack of a steady and cheap supply of fuel, which was previously supplied by the Soviet Union in return for raw sugar and minerals. The difficulty of getting access to energy has already hit Cuba’s industrial sectors. Siderurgica Acinox, the privately owned Cuban steel-holding group, has been forced to shut one of its furnaces and reduce capacity in another because of power shortages.

Union del Niquel’s Punta Gorda and Nicaro smelters, where at least 50% of energy is supplied by the national grid, have also been affected. The Cuban industrial sector also knows that the clock is ticking and a solution to its energy crisis needs to be found urgently. Existing joint-venture agreements in the mining sector, signed mainly with Canadian juniors, include a provision by the ministry of industry that the operations will receive a constant source of power. Any breakdown in energy supplies will leave the Cubans paying heavy penalties.

— From an editorial in a recent issue of “Metal Bulletin” of London, England.