Jamalco to list on JSE - Noble Group, GOJ strike deal on refinery
Published:Wednesday | July 22, 2020 | 12:20 AM
The Noble Group has formed a pact with the Jamaican Government to reorganise the assets and operations of alumina refinery Jamalco into a holding company that will raise equity capital on the stock market.
The company, which was unnamed, is expected to list on the Jamaica Stock Exchange, JSE.
“Subsequent to the year end, Noble and the Government of Jamaica agreed to put their respective interests in Jamalco into a newly incorporated Jamaican company which will own and operate the assets and business going forward,” Noble said in its newly released financial results.
Jamalco is owned 55 per cent by Hong Kong-based Noble Group and 45 per cent by Jamaica through Clarendon Alumina Production, CAP.
Under its economic reform programme with the IMF, Jamaica had committed to divesting its holdings in CAP, and was said to have chosen the stock market as the route it would pursue for privatisation. Jamalco is CAP’s chief asset.
The refinery is currently operated as a joint venture between CAP and General Alumina Jamaica, which is owned by Noble Group.
The benefits of incorporating the new holding company include the restructuring of the Government’s debt obligations to 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.
Capital Backing
Noble also announced that it will back Jamalco with up to US$48.7 million in working capital as the need arises.
“The new company will have the ability to raise new capital and will form part of the Jamaican Government’s ongoing privatisation programme, with an initial public offering being planned in due course,” said Noble in its latest market filings.
Jamalco had a challenging year in the face of falling alumina prices even prior to the mining sector’s fallout from the COVID-19 pandemic.
Jamalco’s March quarter 2020 results show a net loss of US$2.8 million compared to US$18.4 million profit a year earlier, as reported in Noble’s financials. The refinery’s assets were estimated at US$477 million, down from US$499 million a year earlier.
Jamalco, when contacted on next steps prior to approaching the market in a capital raise, referred the Financial Gleaner to CAP for comment. None was forthcoming up to press time, neither from CAP nor Finance Minister Nigel Clarke, who last year had confirmed discussions with Noble over the treatment of Jamalco.
Financial Gleaner sources had indicated last year that GOJ was weighing the potential merger of CAP with another state agency, Jamaica Bauxite Mining Limited, and listing that entity on the stock market, but that those plans had been complicated by Noble’s use of its Jamalco holdings to guarantee debt.
The JSE listing of Jamalco is unlikely to happen this year due to the fallout of the local market, according to an investment banker familiar with energy projects who spoke to the Financial Gleaner on Monday. Only a few main market listings are on the table, including an additional share offer by Barita.
“I haven’t heard of Jamalco this year,” the investment banker said. “That would be a massive raise, especially now.”