Lydford secures US$3-m mining venture

Mining company aims to increase output eightfold, but Gov’t indecision slows progress

BY CAMILO THAME Business co-ordinator ?

Wednesday, February 09, 2011    

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WHEN Lydford Mining secured a joint-venture agreement with New York-based TBS Shipping to supply high purity limestone to US over the next ten years, the company made another major step towards growing its mineral export business eightfold to two million tonnes a year.

The deal secured late last year, has TBS injecting US$3 million into the operations to repair sheds and conveyor belts as well as upgrade crushing plants in exchange for a 50 per cent ownership in the mine.

Also in play is a contract the joint-venture company has secured to supply 200,000 tonnes of limestone a year until 2012, when the amount demanded is expected to double.

But Lydford, which last year exported approximately 240,000 tonnes of the material is at a cross roads.

Whether it be indecision by policymakers or a lack of will, the owners of the 16-year-old mining operations have had to approach expansion gingerly while they wait on policymakers in the Government to make a final verdict on the use of their only feasible port for exporting the highly valuable mineral — Reynolds Pier.

Reynolds Pier, which is owned by the Jamaica Bauxite Mining Limited, a wholly owned subsidiary of the Government, is being eyed for major redevelopment but whether it will exclude non-tourism players — which currently includes Lydford and sugar exporters — is not yet clear.

According to principals of Lydford Mining, Leo and Edgar Cousins, cruise tourism interests have been pressuring the Government to convert the three-and-a-half acre pier into strictly a cruise port.

This would involve the demolition of a 80,000 tonne warehouse and loaders that were built decades ago, along with a seven-mile long conveyor belt, to accommodate Reynolds shipping two million tonnes of raw material (in particular bauxite) annually. The facilities have been left unused for 20 years.

“If it were refurbished now it could load 3,000 tonnes an hour,” opined Edgar, who oversees the day-to-day operations as managing director. That would make a marked difference to operational efficiencies and cost, given that the current loading rate is now only 800 tonnes an hour.

In fact, TBS’ ship, which docked on Monday to take over 40,000 tonnes of the pure limestone incurs a cost of US$40,000 a day (approximtely US$1 a tonne) each day it sits there.

Now they have got permission from JBM to remove bauxite that is still in the warehouse and clean it to accommodate storage of the limestone. They are in the process of cleaning it now.

But small gains made aside, the Cousins claim that the lack of decision by policymakers have set them back five years, even though they have been trying to get the facility up and running for close to 10 years.

“The only thing not in place is the will to make the decision,” said Edgar.

Leo — Edgar’s father — added that the company had to turn down and order from Chile, but what’s more, the joint partners have already hedged their bets.

“Because of buck-shuffling TBS has bought a competitor in Dom Rep as a hedge,” explained Edgar, who pointed out that Jamaica offered significant competitive advantages over DR, including loading rate, storage capacity and the deepwater port that can handle 50,000-tonne ships.

If it were up to JBM alone, Lydford, which has 35 years left on a 50-year lease of the port facility, would have been far more committed.

JBM managing director Coy Roache told the Business Observer that “JBM has kept it as a multi-purpose facility” and “has held that it should remain one”. Roache, who years before while with the mining commission oversaw significant capital spent on identifying the vast amounts of high purity limestone in the hills of St Ann, said the eight mile limit to transport limestone eliminates use of any other port along that coast.

“But policymakers are the one’s to make the (final) decision,” added Roache.

At present the Port Authority of Jamaica (PAJ) is in discussions with Carnival Cruise Lines over development of a port but details of those negotiations have not yet been made public. PAJ’s president Noel Hylton, did not reply to Business Observer queries up to press time.

President of the National Cruise Council of Jamaica John Byles doesn’t see the use of the port for multiple purposes as a hinderance to cruise tourism, given the level of usage by exporters and the fact that Reynolds Pier is currently only used as a “spillover pier” to the main UDC pier (Edgar places utilisation of the pier at 18 per cent).

His concern is that the current facilities in Ocho Rios won’t draw more visitors unless investment is made in upgrading the pier (or piers), especially since Royal Caribbean will be redirecting most if not all of its ships from Ocho Rios to Falmouth.

Up to 2010, approximately a third of passengers arriving in Ocho Rios came on Royal Caribbean ships.

“(Cruise tourism) in the Caribbean is growing yet Jamaica is flat,” Byles told the Business Observer. “Carnival invested in Grand Turks and both Carnival and Royal Caribbean invested in St Maarten and Honduras. There was growth in those counties.

“For growth you have to get customers to have vested interest in the ports,” he added.

Whatever the decision, both limestone export and cruise tourism represents significant business for Jamaica.

At US$83 estimated to be spent per arriving cruise passenger, the cruise business represents over US$75 million annually, and should Lydford reach its target of two million tonnes a year, it would be looking at over US$40 million annually.

In the meantime, Lydford has already taken on other ventures.

Early last year, Lydford formed a joint venture with Jamaica Producers (which holds 51 per cent) to develop an aggregate plant in Agualta Vale St Mary for which US$2.5 million have been invested to date, while the company is now looking at another venture in St Thomas.

TBS International provides worldwide shipping solutions and has a fleet of 50 vessels.

According to the Cousins, TBS already ships three-million tonnes of limestone a year in the Middle East.





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