Noranda capital spending slowed in September
NORANDA Jamaica Bauxite Partners expects to “substantially complete” dredging at its Discovery Bay port by year end.
But capital spending on its US$20-million expansion project, which includes improvements in railing infrastructure used in its bauxite mining operation, slowed in the three months to September 30.
Expenditure on the dredging project totalled US$2.9 million for the six months to June 30, but was just US$200,000 in the third quarter. Also total capital expenditure during the three months to September 30 totaled US$1.5 million compared to US$2.6 million in the corresponding period in 2012.
Moreover, the company still hasn’t drawn on a US$20 million line of credit that was secured in 2012 for use in capital improvements at its St Ann bauxite mine.
And while overall capital expenditure during the first nine months of 2013 did increase to US$8.7 million, up from US$6.6 million in the comparative period last year, the company’s parent, Noranda Aluminum, believes “there is a remote possibility that we will not meet the commitment” to complete capital expenditures for haul road development, maintenance, land purchases, among other things, through to 2014.
“If we do not meet our commitment to the Government of Jamaica regarding these expenditures, we would owe to the Government a penalty that could be material to our consolidated financial statements,” said the company in its latest financial statements filed with the US Securities and Exchange Commission.
Noranda’s bauxite segment reduced its operating loss from US$2.3 million during the nine months to September 30, 2012 to US$700,000 in the comparative period in 2013.
But sale of the raw ore used to make alumina (and ultimately aluminium) fell to US$96.5 million during the nine-month period this year, down from year-earlier levels of US$99.1 million, due to less shipment volumes.
The company increased its shipments to its alumina refinery in the US — from 1.9 million tonnes to 2.05 million tonnes — in order to raise bauxite inventory levels, but lower external sales volumes led to an overall reduction in shipments from 3.57 million tonnes to 3.49 million tonnes.
The improvement in profitability “reflected the positive impact of improved operating efficiency in the segment’s shipping operations, which led to a more favourable mix between internal and external shipments and to lower demurrage costs”, according to Noranda.