SHINGLES sourced from the nearby Yallahs River are pulled from a stockpile by a tractor and placed into a feed hopper, which then delivers the raw materials into a jaw crusher that can handle stones with widths of up to 30 inches. The materials are crushed to below four inches, put onto a conveyor up to a six feet by 20 feet scalping screen, and sent to different crushers that reduce it to various product sizes, ranging from stones to sand, to be used for construction.

By all appearances, it’s just another day at Jamaica Aggregates Limited’s (JAL’s) multibillion-dollar, world-class crushing plant on 600 acres of land in Yallahs, St Thomas. The facility runs four high-performance crushers — two HP 300 and two HP 200 secondary and tertiary crushers.

Jamaica Pre-Mix Concrete — the largest and most recognisable supplier of premix concrete on the island, founded in 1959 — started this aggregate business next to the Yallahs River in 1990. (Before that, a similar, smaller operation existed in the Hope River.)

With basaltic granite from the rivers, the area boasts the highest quality aggregate in Jamaica and among the best in the world. On the corridor stretching from Bull Bay to Yallahs, there are some 18 different crushing plants, including Jamaica Aggregates, Coast to Coast, Caribbean Aggregates and Murray’s.

“When you use this material on your concretes and on your roads, you get a better wearing surface and your breaks in concrete are higher,” Donovan Matthews, the plant manager of Jamaica Aggregates, tells the Business Observer as his pickup van descends onto the Yallahs riverbed during a tour of the company’s sprawling facility on Monday.

“People prefer this material for structural work when they are doing their high-rise building and decking,” Matthews adds.

In 2008, Pre-Mix entered into a joint venture with French industrial company Lafarge, a global producer and marketer of construction materials, to form Jamaica Aggregates Limited. With annual sales of US$15.2 billion ($1.5 trillion), Lafarge is the world leading producer of cement, the second largest in aggregates production and fourth in concrete.

Lafarge’s strategy was to invest in Jamaica to continue local supply and expand its business through exports into the US. The French giant invested US$12 million into the Jamaica Aggregates operation coupled with an additional US$5 million in Tampa, Florida to receive aggregate from the Yallahs plant.

John Valentine, managing director at Pre-Mix and director of Jamaica Aggregates, notes that there’s huge demand in the United States for very high specification aggregate for superpave, which is used in asphalt concrete.

“The basic raw material from the river has non-scale properties which will meet the basic criteria for the road, but the processing of the material is also critical and has resulted in Lafarge setting up a huge quality control lab here and training for all the employees,” notes Valentine.

The investment in quality led to Jamaica Aggregates last December becoming the first local company to get Florida Department of Transportation (FDOT) approval to export directly into Florida.

Valentine adds, “By virtue of meeting this criteria, it also opens up the market for New Orleans, Houston and the whole southern seaboard of the US.”

Jamaica Aggregates exported approximately 130,000 tonnes of aggregates to the US, where the housing and road building markets are rebounding, and countries across the region in 2012. The company has projected that the FDOT approval will enable it to double annual exports within the next year, with volumes hitting 600,000 tonnes and revenues reaching US$20 million annually by 2014.

The export thrust has been critical, especially within the context of a recession-hit domestic market — with a sluggish construction sector — where Jamaica Aggregates is reporting up to 60 per cent decline in sales. Geon, Ace, China Harbour and Ashtrom are among the company’s top local clients.

Against this background, Lafarge is expected to pump a further US$10 million to build a dock, at the end of the Yallahs river, that would act as an export hub for JAL.

“We are now competing with major international companies such as Volcan Materials, Martin Marietta and Cemex, and because of the economies of scale derived from large vessels, it is ever so more important for us to have control over our shipping,” explains Valentine, revealing that the company has been “in the process of trying to get approval to put the dock down there and it is actively being pursued.”

Government’s much-touted logistics hub project calls for a port at Cow Bay in St Thomas — about two miles away from JAL’s Yallahs plant. The company has approached the Ministry of Industry and Commerce, which is leading the project, to offer its assistance.

“We are proposing that we can either somehow find a way to assist them to get the Cow Bay or if that proves to be too difficult, we would like to get Government assistance to make this (Yallahs) a bulk-handling material hub for the south coast, where you would have two-way traffic,” Valentine informs this newspaper.

In addition to the plant at Yallahs, JAL has two inactive plants at Paul Mountain and Martha Brae. If everything goes according to JAL’s projections in the export market, Valentine says the company will ship mostly stones from the hub in Yallahs, while the sand will still mainly be available for local consumption. The company, he notes, would open the plant at Paul Mountain in St Catherine, where it would replace production of stones at Yallahs for the local market.

“The plan would be that hopefully within two years, one would have four plants operating,” he says.

But all of Jamaica Aggregates’ big expansion plans are under threat. Standing in the way, the company contends, is the new weight limit enforcements at a station in Harbour View, put there by Government in an effort to clamp down on truck drivers who unlawfully overload their vehicles and destroy the roads. The new enforcement has cut loads by around 35 per cent for trailers and half for 10-wheeler trucks.

While JAL is in support of the intention of the new policy, there is a two-fold problem that threatens its viability in an already weak local business and a growing one overseas. The weight limit enforcement will result in a minimum US$2.35 per tonne increase in haulage costs, the company said.

On one hand, the problem for JAL and other crushing plants located in the eastern end of Jamaica, is that the Harbour View Weigh Station is currently the only such facility on the island, creating an uneven playing field with competitors elsewhere in the country.

“What is happening here is inequitable application of Government policy. It is like making prostitution illegal in Harbour View and legal in New Kingston,” argues Valentine.

“We support the Government’s policy, but they can’t implement it on one road without being able to do it anywhere else. What we would like to see is equity,” he declares.

Government has promised to implement portable scales across the island on a phased basis, but JAL is not satisfied.

“In my humble estimation, having used portable scales on the job, they are not sustainable,” says Matthews.

“If you have a portable scale here today and not tomorrow you are not regulating anything while we have a permanent scale at Harbour View on us,” the JAL plant manager argues.

Until scales are implemented across the country, JAL has proposed that all loaded trucks be weighed and a $20-per-tonne toll fee charged on each operator. The company estimates that this will earn Government $36 million a year, and proposes that the contribution be put into a road maintenance fund.

While the industry awaits Government’s response to the proposals, the situation has slowed trucking activity significantly in the east, where our news team saw bout 20 truck drivers lay idle with their vehicles just outside JAL’s administrative offices.

“The truckers are asking for an increase in rate to supply. They will carry less aggregates for more money,” explains Matthews.

Noting that the authorities have threatened the truck drivers with seizures of their vehicles if they are found to be in violation of the weight law, he adds that, “With the new situation, the truckers are now saying that they won’t face the scale.”

Yallahs Trucking Association President Winston Gardener paints a picture of frustration as he expresses similar demands to JAL.

“We have tried to express to the Government the inequity of the situation that exists out here,” he tells the newspaper.

“We had two demonstrations at the weight station in Harbour View but haven’t gotten much result from that. We are here parked because we face seizure and pounding,” says Gardener.

What’s worse for JAL in particular is that it risks fallout in its multi-billion-dollar export market, where it operates on razor-thin margins.

JAL currently trucks aggregates from its Yallahs plant to the Jamaica Gypsum wharf in Harbour View for shipments overseas — the largest so far, a 22,000-tonne vessel. The company plans to construct the port at Yallahs by 2015, which would eliminate its need for trucking to facilitate exports, but argues that the weight limit has meantime derailed its price competitiveness in the international market.

The company says if it absorbs the additional costs, it will result in a loss which would lead to a closure of business in the short term, while transferring the cost to the customer would result in significant fallout in foreign currency earnings.

“The export market is very sensitive to pricing and it is a volume business. So we are in a position where we need to maintain our presence in the overseas market by continuing to export until we have set up ourselves to export from here,” says Valentine.

At the very least, JAL has proposed the facilitation of trucks transporting export tonnage at the proposed $20-per-tonne fee while enforcing restrictions on all other trucks.

Valentine tells the Business Observer that Pre-Mix’s partner in the joint venture, Lafarge, has become increasingly uneasy about the situation in Jamaica.

“They are driving a nail into the heart of a business that has already brought in US$17 million in terms of direct foreign investment and has major links with the world’s largest supplier of construction materials,” he laments.

In the meantime, as the ‘nail’ is being hammered down, life in this ‘aggregate town’ is being slowed to a standstill.

“In terms of our income, right now we don’t know where we stand,” says Gardener, the trucking association spokesman.

“We have to think of going elsewhere because we can’t die of hunger.”

Scores of workers at JAL’s plant are also in jeopardy of being laid off.

“We may have to send off workers for two to three weeks and assess the situation,” says Matthews.