Jamalco to spend US$500m on coal-fired plant

The Jamalco bauxite mining and alumina refinery will spend roughly US$500 million to build its coal-fired plant as a means to offset its high energy costs, stated Government.

The plans were long discussed but it's the first time the authorities have released estimates on the cost.

"The mining and quarrying sector will require a significant amount of capital investment in the near future as it carries out plans to transform its energy base away from oil and into natural gas and coal in an effort to reduce overall costs and strengthen global competitiveness. Jamalco's coal solution project

with an estimated cost of approximately US$500 million is scheduled to be completed by 2018 fourth-quarter," stated the Government in its annual report to the US debt holders released this month and obtained by the Jamaica Observer.

Jamalco is owned 55 per cent by the Noble Group and 45 per cent by the Government of Jamaica-owned Clarendon Alumina Partners, the Government explained in its lengthy filing that covered all sectors of the economy.

The Hong Kong-based Noble Group manages a global portfolio of industrial and energy products in 60 locations around the world. It is ranked number 76 in the 2014 Fortune Global 500.

Noble stated that Jamalco performed better than expected during the first full quarter of ownership.

"In the first three months of 2015, Jamalco beat production and cost targets, all supported by significant declines in energy input prices along with increased efficiencies," stated Noble to shareholders.

On Monday Jamalco's spokesperson Leo Lambert told the Business Observer that a press conference would shortly address issues of the island's power generation including investments at Jamalco.

Two years ago Jamalco entered into a temporary energy-saving solution. It spent some US$26 million to lease roughly 17

megawatts of power-generation equipment from an unnamed party facility.

Jamalco, in early 2005, announced a US$1.2 billion expansion of its refinery to more than double capacity to 2.8 million mtpy and add a gas fuel source, according to a July 20, 2005 Alcoa release. Those plans were halted due to the indecisiveness of the Jamaica Government to determine pricing and supplies for liquified natural gas (LNG). A decade later the country still awaits LNG's entry into the electricity grid.

The new stakeholders in Jamalco are presumably keen on enacting efficiencies.

In December 2014, Alcoa World Alumina LLC completed the sale of its 55 per cent ownership stake in the Jamalco bauxite mining and alumina refining joint venture to Noble Group Ltd. The loss on the sale of Jamalco totalled US$266 million, according to financials.

The plan by US-based Alcoa to divest its Jamaica operations formed part of its global transformation that saw it also slash production in Brazil and Australia, management indicated. Alcoa entered the island some 50 years ago, having built its refinery at Halse Hall, Clarendon in 1973 which shipped unprocessed bauxite. Alcoa's investment in Jamaica followed those of Reynolds and Alcan in 1952, Kaiser in 1953, and Revere in 1971.

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