Clarke defends Govt's stance on Jamalco
Minister of Finance and the Public Service, Dr Nigel Clarke, addresses the House of Representatives on Tuesday May 16. Seated is Deputy Prime Minister and Minister of National Security Dr Horace Chang. Photo: JIS

KINGSTON, Jamaica - Minister of Finance and the Public Service, Dr Nigel Clarke, is insisting that it would not have been economically viable for the Government to take over all operations of bauxite and alumina company, Jamalco, after the previous majority shareholder, Noble Holdings sold its 55 per cent shares in the company for US$ 1 after it ran into financial difficulties.

Clarke, who was responding to questions raised by Opposition Spokesman on Energy and Mining, Phillip Paulwell during the sitting of the House of Representatives on Tuesday, noted that while the Government contemplated full investment in the company instead of its 45 per cent stake, it would have been risky to do so.

“We would have looked at that as a possibility. However...with the vision that we have for this asset, for its long-term viability, it is necessary to make capital investments…that will be required to get there. The Government’s view would have been that if we can find someone who is willing to make that investment alongside us, it’s less risk for the people of Jamaica, meaning to make 45 per cent of that investment instead of a hundred, if we had infinite resources, then the decision may have been different,” he said.

Jamalco’s powerhouse was extensively damaged by fire in August 2021 which led to the closure of the facility and loss of production during September 2021 to July 2022.

Clarke said that given the fact that it would take resources to improve the plant’s operations, “we’re good for our 45 per cent,” noting that the Government took a decision in getting a partner who can bring international expertise, “know how”, and the capital required to put it on a long-term sustainable footing.

He said that with the new majority holder, United States-based Century Aluminum Company, the plan is not simply now to restore to the plant to where it was prior to the fire, but to “go a little bit further to put Jamalco in a position that it can be in the upper half top two quartiles in terms of efficiency for the production of alumina.”

“To get there will require some investments for us to be able to improve operational efficiency…that surpasses where it was at the time of the fire,” he said

He argued that given Jamaica’s financial options, the country is much better off having a partner “in the financial position to be able to make those investments alongside us, rather than being in a position where we the government has to make the entirety of investment required to get to that position”.

Pauwell however, pressed the minister, querying if it would not have been wiser for the Government to match the price or put 50 cents on it to take over the full operations of Jamalco for US$1.50.

“I would buy the argument only that the announcement by the new partner, Century is that it will take them an investment of US$20 million to secure a positive cash flow this year. Would that not be a better consideration for the government to take on that additional cost and to at the end of the day, see a positive cash flow returning and then make the attractiveness of the incorporated status that much better?”, he questioned.

Clarke reiterated that it is a question of risk and return, arguing that the government of Jamaica should not have been in that business in the first place.

“So to double down and go from 45 per cent ownership to 100 - if it did not require additional investment, if it were the case that you could acquire it and get to that enhanced state of efficiency without any additional capital, so there's no sort of additional risk, it would maybe be a no-brainer to do as you are sort of intimating….but given the fact that it would absorb more capital to do so, the Government of Jamaica, the people Jamaica are in a better position to share the the risk and the reward by maintaining our position at 45 per cent and having sit alongside us a multinational enterprise that has experience in jamaica, has operated in jamaica before, has integrated facilities, and with whom we are very aligned as to the strategic direction of Jamalco,” he said.

In the meantime, Clarke said the plant which has been undergoing repairs, is currently operating at 80 percent of its capacity.

-Alecia Smith

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