Jamalco refinery output falters, awaits insurance payout | Business

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Jamalco refinery posted a loss of US$7.6 million, or about $1.2 billion in local currency, in the September quarter, when its alumina plans at Hayes, Clarendon, were bogged down by fire.

Production was halved to 300,000 tons during the July-September period, less than half of the 700,000 tons achieved in the comparable period in 2020. Over the nine months, from January to September, production volumes were 800,000 tons, down 40 percent of 2.2 million tons, or 40 percent less.

“[There was a] Hong Kong-based Noble Group, which operates Jamalco through its subsidiary Asset Company, said the significant drop in shipments since the powerful Jamalco terminal caught fire on August 22, 2021, shutting down production.

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Over a nine-month period, Jamalco benefited from higher commodity prices, improving its bottom line until the fire stalled gains. It still posted a loss of $6 million over nine months, but that was a better result than the $9.5 million loss reported in the same period last year. Third-quarter losses of $7.6 million were categorized by Gleaner Financial From the results of nine months.

Noble owns 51 percent of Jamalco, while the Jamaica government owns the other 49 percent through Clarendon Alumina Partners. The owners have agreed to consolidate Jamalco’s assets into a separate entity for a possible listing on the Jamaica Stock Exchange. Noble said the company’s restructuring process to facilitate the listing would continue despite the fire.

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“Noble and the Jamaican government intend to use the reconstruction period to advance the process of establishing Jamalco,” Noble said.

The Jamalco alumina refinery had $250 million in insurance coverage before the September fire, which Noble said included damages from the fire, business interruption and property damage.

Noble said: “Discussions are underway to agree on a down payment from insurance companies.”

The fire broke out in Jamalco’s power center, which serves as the engine for the plant. For this reason, management had to stop production as well as stop marketing alumina. However, Jamalco’s conservative asset accounting has had a modest impact on its balance sheet. Jamalco’s net assets, or capital, were $280 million, compared to $288 million in 2020.

There was a “modest impact on the balance sheet as the damaged assets were carried at cost less depreciation. Reconstruction is underway, and aims to return to production by the end of the second quarter of 2022 with funding from Jamalco’s comprehensive insurance policy,” Noble said.

In early October, Noble announced a three-tiered recovery plan for Jamalco. It would cost nearly $3 billion, initially, just to bring the plant back to half capacity by next June. Jamalco then expects to ramp up production shortly thereafter, and then decide on a new power.

business@gleanerjm.com

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