Monday, July 14, 2014
JAMALCO sold to Noble Resources Limited as ALCOA pulls out, UC Rusal stalling and Xinfa interested
“To further optimise the Alumina business, Alcoa signed a non-binding letter of intent to pursue a sale of its ownership stake in Alcoa Minerals of Jamaica (AMJ), which operates the Jamalco Bauxite Mining and Alumina refining joint venture. The above actions are consistent with the Company's goal of lowering its position on the world aluminum production cost curve to the 38th percentile and the Alumina cost curve to the 21st percentile, by 2016”
Alcoa Announcing plans in its June financials released to shareholders in the week of Sunday July 6th 2014 to sell JAMALCO
So it is done, folks!
A lot of JAMALCO and Alumina workers read my blog apparently, as I get a huge number of hits coming from Computer Servers located in Domains labled “Alcoa.com”, both from Jamaica and the US of A. This as I’d worked at JAMALCO in the Summer of 2013 as is plainly laid out in my Engineering Resume and Diploma and Degree qualifications for anyone to see!
So here’s the news then! Yes, you read that title right!
ALCOA (Alumina Company of America) has finally decided to follow through on its decision back in June 2014 to Noble Resources UK to sell its stake in JAMALCO (Jamaica Alumina Company) as stated in the article “Sale of Jamalco part of global cuts being made by Alcoa”, published Friday, July 11, 2014, The Jamaica Observer.
ALCOA will retain a minority interest in the operations of the company as a Managing Operator for the next two (2) years. After that, Noble Resources UK may begin the Process of implementing a plan to use Coal in the Refinery Process, being as they also mine Coal that can be used to reduce the high Energy costs associated with using Bunker C Oil as Fuel.
Effectively Noble Resources Limited, the local representative of Noble Resources UK, has acquired ALCOA’s stake in JAMALCO as stated in “Gov't gives six-month notice to UC Rusal to resume Mining”, published Friday, July 11, 2014, The Jamaica Observer.
This news comes even as Minister of Science, Technology, Energy and Mining Phillip Paulwell issued a six (6) month ultimatum to UC Rusal to revoke their Mining License in the ALPART and Kirkvine refineries if Alumina production doesn't resume in six (6) months time.
The ownership of AMJ (ALCOA Mineral of Jamaica), the local holding company representing ALCOA within the JAMALCO partnership breaks down as follows:
1. 55% AMJ
2. 45% Government of Jamaica
Curiously enough, AMJ isn't a solo operation by ALCOA:
1. 60% owned by ALCOA
2. 40% by Alumina Ltd
After some fifty (50) years in Jamaica, ALCOA has very little to show for it. Having built the Alumina Refinery at Halse Hall, Clarendon back in 1973 after Reynolds and Alcan in 1952, Kaiser in 1953 and Revere in 1971, we've now entered a period where they're competing with cheaper Alumina from Chinese.
AML now in Noble Resources Limited – UC Rusal stalling as Xinfa Group Company sale Pending
He made this disclosure with regards to UC Rusal and the drama playing out with the ALPART and Kirkvine refineries during the 2014/15 Sectoral debate in the House of Representatives on Tuesday July 8th 2014, quote: “The Bauxite reserves associated with both plants represent over 200 million tonnes of ore idling in the ground while the plants flounder in uncertainty, and the livelihood of thousands continue to be in peril. This situation cannot be allowed to continue indefinitely”.
It makes sense he be concerned. Aside from people being unemployed, Alumina Mining still contributes millions to Jamaica's Foreign Exchange Earnings since JAMALCO started operations in Jamaica, counting from 1974 to 2013:
1. 400 million tonnes of Bauxite Mined
2. US$3.72 billion in levy and taxes
3. US$222 million in Mining Royalties
4. US$7.6 billion FDI (Foreign Direct Investment) by the Alumina Companies in Infrastructure
They had cheaper Energy.
So as recently as 2013, it seemed that JAMALCO would go the LNG (Liquid Natural Gas Route) as I’d predicted while I was working there as can be seen from my blog article entitled “PM Portia Simpson Miller ALCOA Talks hint at LNG - Lady Gaga's Paparazzi in Jamaica’s Bauxite Sector”.
But with a profit of US$129 million in Second Quarter of 2014 Quarter compared to a US$148 million loss in 2013, it was becoming clear that this wasn't sustainable. Thus, not only are they cutting JAMALCO loose, but they're also scaling back on production in Brazil by 149,000 tonnes of smelting. By the time August 2014 rolls around they'll also close Port Henry in Australia and reduce production there by some 190,000 tonnes of aluminium.
Thanks to the fact that Saudi Arabia operations are more efficient due to the Alumina being mostly located in the Sand, they've continued to expand on operations in that area. Sad to see them go though!
Apparently LNG or any other form of Alternative Energy such as Coal cannot save their operations as is the plan of Chinese-owned Xinfa Group Company, who have plans to acquire the Reynolds Mine in Lydford, St Ann as detailed in my blog article entitled “Xinfa Group Company to invest US$3 billion in Reynolds Bauxite Mines in Lydford, St Ann - Sapphire Production a better bet as the World’s flooded with Aluminium”, may not make Bauxite Mining in Jamaica profitable.
How will this all play out? Will UC Rusal get their act together and make good on their 2012 deal to start Mining operations? Or will Xinfa Group Company acquire their stake in Bauxite Mining and Alumina Production as well? Will we see the production of Sapphire in Jamaica as VAP (Value Added Product) along with the mining of Bauxite and its refining into Alumina?
And what if any News of the push to extract Rare Earth Metals from RDA (Residue Disposal Area) Red Mud as explained in my blog article entitled “No news on progress of the Rare Earth Pilot Plant at JBI - Cuba-Jamaica CFL Project Heralds manufacturing of LED's, Li-Ion Batteries and Sapphire Screens in Jamaica”.
Follow my blog and I’ll give you details later as they become available.