Fri | Sep 25, 2020

Noble floats 2021 as date for Jamalco listing

Published:Wednesday | September 16, 2020 | 12:13 AMSteven Jackson/Senior Business Reporter
Jamalco alumina refinery, at Halse Hall, Clarendon.
Jamalco alumina refinery, at Halse Hall, Clarendon.

Noble Group, the operating partner for Jamalco, says the alumina refinery will possibly list next year.

In the meantime, the refinery’s reorganisation and energy initiatives continue.

“Jamalco is targeting 2021 for a possible initial public offer and the company will be working closely with its partners at Clarendon Alumina Production, CAP, to deliver on a successful outcome,” stated the company in a notice to shareholders on Monday.

The announcement follows the payment of the US$135.7 million of debt owed by CAP to Noble; and it confirms previous speculation by analysts that the owners of Jamalco would sit out the market this year. The local stock market has been depressed since the coronavirus was detected in Jamaica in March.

Earlier this year, Hong Kong-based Noble Group formed an agreement with the Jamaican Government to reorganise the assets and operations of the Clarendon-based alumina refinery into a holding company as a precursor to incorporation and then the eventual listing of the refinery.

“The next milestone that Noble has set with its partners at CAP is the incorporation of the Jamalco joint venture into an incorporated entity,” Noble said Monday. “Both partners are fully committed to this complex process, which also requires the support of a number of governmental agencies. Jamalco has made good progress and is focused on completing incorporation by the end of December 2020,” it said.

Noble Group holds 55 per cent of Jamalco via subsidiary General Alumina Jamaica, while CAP holds the other 45 per cent on behalf of the Government of Jamaica.

Jamalco made a net loss of US$2.8 million in March. Its assets were estimated at US$477 million, having shed US$22 million of value over the course of a year.

Noble said that despite challenging market conditions earlier in the year, Jamalco successfully implemented operational efficiencies that continue to enhance its competitive position in the global alumina market.

“This includes substantial reductions in outstanding working capital balances, and the company expects that these will be fully eliminated through the normal course of operations during 2021. Importantly, Jamalco also launched pilot projects aimed at delivering carbon-neutral operations at Jamalco in the near future. These sets of measures put Jamalco in a strong position as it embarks on the next phase of reorganisation,” said Noble.

Jamaica’s bauxite and alumina sector is the country’s third largest earner of foreign exchange, behind tourism and travel, and remittances.

There are three separately owned alumina refineries in operation – Jamalco as the largest, followed by JISCO Alpart in St Elizabeth and Windalco in St Catherine.

All three exported less product than a year earlier, with Jamalco down 11 per cent to 1,1445 kilo tonnes, Alpart down 20 per cent to 610 kilo tonnes, and Windalco down 12 per cent to 457 kilo tonnes, according to the Economic and Social Survey Jamaica 2019 report. The total value of export for alumina and crude bauxite was US$814.5 million, a large decrease from US$1.24 billion in 2018. The performance was due to weaker global demand and the Alpart shutdown for plant expansion.

The CAP loan repayment announced by Noble last week related to the balance on a working capital loan. The debt dates back to 2013, when the company entered into a US$120-million arrangement with Noble to repay amounts CAP owed to then joint-venture partner Alcoa.

The loan paid off CAP’s portion of the working capital debt to Alcoa and also funded further shortfalls that were expected over the medium term as the alumina market was depressed. The repayment of the debt by Government is expected to reduce the national debt by one per cent of GDP.

Noble and GOJ plan to float Jamalco on the Jamaica Stock Exchange.

steven.jackson@gleanerjm.com