Montague says 7-year-old CAP debt issue heading for solution

Montague says 7-year-old CAP debt issue heading for solution

Wednesday, June 03, 2020

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KINGSTON, Jamaica — Minister of Transport and Mining, Robert Montague, says the government is currently in negotiations with the Noble Group for an amicable solution to the long delayed plans to merge Clarendon Alumina Production (CAP) and Jamaica Bauxite Mining Limited (JBML).

Montague hinted that the Minister of Finance and the Public Service, Dr Nigel Clarke, is currently in negotiations with Noble for an amicable solution, which seems likely to be the incorporation of a joint venture which will be listed on the Jamaica Stock Exchange (JSE).

He said, however, that if no solution can be found, the security from a special mining lease for bauxite ore, which was included in the 2013 agreement, would have to be utilised to liquidate the debt and the government's obligations.

Since the proposal for a merger was announced some years ago, Noble underwent a US$3.5 billion debt restructuring in late 2018 and shifted assets to a new company, creating new obstacles to the proposal.

“As soon as the discussions are completed, this House will be informed,” the minister told the House of Representatives yesterday.

Montague, who was opening the annual Sectoral Debate in the House, recalled that the government entered a borrowing arrangement with the Noble Group in 2013 for approximately US$140 million, along with a mining agreement allowing for the special mining lease, which was to be used as security for the loan.

A second measure of security also agreed on was a marketing agreement allowing Noble to market Jamaica's alumina. He said that although this was better than what was there previously, it had to be improved to benefit Jamaica and that was not possible.

“As a result, we have made additional borrowings over the years to fulfill our obligations for working capital. So far, we have racked up an additional US$150 million. We owe, as a people, US$300 million,” he told the House.

“If we were to put the US$142 million that was originally borrowed on a fixed deposit account in the bank, we could have paid all the Jamaican workers at the plant from the interest, until they are retired, and we could still have the deposit. But, we have an agreement that must be respected,” Montague said.

Balford Henry

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