Jamalco increases revenue, slashes losses

Alumina refinery Jamalco says that it benefited from higher commodity prices during the first half of the year, which served to double its revenue, while losses were reduced to a tenth of previous levels.

Despite signs of a rebound from the fallout in 2020, however, the owners of the refinery, which includes Noble Group as managing partner and the Government of Jamaica as a minority shareholder, are still silent on plans to list the company on the Jamaican stock market.

Jamalco mined half a million tonnes of mineral during the first half of the year, and fetched higher prices for the alumina it processes from bauxite at the Hayes, Clarendon-based plant, Noble said in market filings.

Hong Kong-based Noble’s financial disclosures show that Jamalco earned revenue of US$16 million during the first half of the year, more than double the US$6.8 million recorded a year earlier.

The company was however negatively affected by higher costs, which reduced its operating profit to US$1.65 million from US$3.68 million in 2020. The 2019 comparative figure was not disaggregated as the holding company, called Noble Asset Company Limited, contained other operational assets at the time.

Jamalco is now the only major asset within Noble Asset Company Limited. The holding company’s bottom line suffered a US$17.3-million net loss, but it pales in comparison to the corresponding 2020 net loss of US$174.8 million. The loss was mainly due to heavy finance costs associated with its large debt load.

Alumina future market prices moved from US$2,000 a tonne to US$2,600 a tonne, which was said to be its highest level since 2011, based on industry data from Nasdaq and Tradingeconomics.

Noble owns 55 per cent of Jamalco through its subsidiary General Alumina Jamaica, and the Government of Jamaica owns 45 per cent by way of Clarendon Alumina Production, or CAP. Both owners have confirmed plans to take Jamalco public, but up to press time no update was forthcoming from either Jamalco or the Ministry of Finance, both of which were asked to comment.

In preparation for the market float and listing, CAP repaid all its outstanding debt accumulated since 2013 to Noble, amounting to nearly US$136 million. Both parties fund the capital-intensive operations, under which Noble, as operating partner, mines bauxite and then refines it into alumina at the Jamalco plant.

Noble said in its filings, the lump sum payment reduced interest income for the company.

The operating profit earned at Jamalco, however, puts it in a better position to approach local investors, who tend to place a premium on value companies that earn profit over growth companies that rapidly increase their revenue on a path towards future profit.

steven.jackson@gleanerjm.com