Noble lands Jamalco for US$140m

Noble lands Jamalco for US$140m

Forward sale, share buyout gives Hong Kong company access to 85% of refinery output

Friday, October 17, 2014

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HONG Kong-based Noble Resources finalised a deal to buy out Alcoa's stake in the Jamalco alumina refinery for US$140 million.

The US company will continue to manage the operations of the Clarendon plant over the next three years.

But the deal gives Noble a 55 per cent stake in the Jamaican alumina refinery. Put another way, the Hong Kong company will have access to another 780,000 tonnes of annual alumina from the Jamaican plant.

It already secured up to 6.1 million tonnes (5.5 million tonnes) of alumina from Jamalco's output over a 12-year period through last year's US$120-million forward sale contract with Clarendon Alumina Production (CAP), which owns the remaining 45 per cent. That agreement runs until 2025 and gives the Hong Kong company an option to buy out the government-owned CAP.

As a result, Noble could conceivably control over 85 per cent of Jamalco's 1.4 million-tonne annual capacity over the next 11 years.

In any case, existing employees will remain employed by Jamalco.

"The sale will help achieve those goals, while maintaining jobs and protecting the economic contributions of Jamalco to Jamaica," said said Bob Wilt, President, Alcoa Global Primary Products.

What's more, Noble says it wants to implement an energy solution that will enhance the efficiency of the plant.

Jamalco has already proposed to build a gas-fired plant -- a project which is being considered by the Electricity Sector Enterprise Team (ESET).

For Alcoa, the sale falls within the company's "global strategy to reshape its upstream portfolio and lower the cost base of our commodity business", according to Wilt.

The sale, which is subject to regulatory approvals, is expected to be closed by the end of 2014.

Alcoa says it will record a non-cash loss of approximately US$80 million to US$100 million.

Goldman Sachs & Co acted as an advisor to Noble Group on the transaction.

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