Thu | Nov 21, 2019

Noble to consider listing Jamalco - Holding company being created for alumina refinery

Published:Wednesday | October 16, 2019 | 12:10 AMSteven Jackson/Senior Business Reporter

The foreign owners of Jamalco are activating a new holding company that could be used as a vehicle to list the alumina refinery on the Jamaica Stock Exchange, JSE.

The new holding company “can be JSE-listed and engage in opportunistic upstream or downstream mergers and acquisitions”, according to Noble Group in its latest market filings.

The Hong Kong-based company had expected to reach a binding agreement with minority partner the Government of Jamaica (GOJ) in September that would be implemented by year end and would pave the way for the new holding company to become operational by 2020.

It’s unclear whether the September deliverables were met or whether the rest of the timeline to 2020 remains intact.

Finance Minister Nigel Clarke told the Financial Gleaner that discussions are ongoing over Clarendon-based Jamalco, which has been an unincorporated joint venture for over 30 years.

“This means there has not been, and is not, a limited liability company incorporated anywhere that is called ‘Jamalco’ that is representative of the joint venture. Instead, the joint venture partners, including the GOJ, periodically contribute working capital and receive alumina both on a pro rata basis,” he said.

Clarke said that the GOJ considers this unincorporated structure suboptimal and anachronistic –that it represents a fiscal risk to the Government of Jamaica as Jamalco has no balance sheet of its own and therefore relies directly on its shareholders instead of on a consolidated pool of current and fixed assets.

“We are therefore in discussions with Noble to incorporate the joint venture, which will widen the strategic and financing options available to the joint venture partners, including the GOJ,” he said, alluding to Mining Minister Robert Montague’s sectoral presentation that referenced giving Jamaicans a chance to participate in the ownership of the alumina refinery.

“However, it would be premature, at this stage, to speak about timing with any degree of specificity,” he said.

Jamalco is owned 55 per cent by managing partner Noble Group and 45 per cent by Jamaica.

The Financial Gleaner in July reported that the listing was under consideration but that the process of so doing was still under negotiation. The new holding company would facilitate a fresh flow of funds into the venture, Noble said in its filings.

The benefits of incorporation include the restructuring of the Government’s debt obligations to Noble and the joint venture and would see Jamalco conducting direct alumina sales, with Noble providing marketing agency support.

The new holding company would also be able to raise its own long-term debt and working capital rather than relying solely on shareholder funding.

Jamalco Managing Director Winston Hayden was said to be travelling and was not reached for comment.

Noble said in its market filing that the discussions regarding the incorporation of Jamalco have been ongoing with Jamaica for two years.

steven.jackson@gleanerjm.com