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Cement Jamaica-Rusal coal alliance - Deal on energy partnership expected by year end

Published:Wednesday | August 27, 2014 | 12:00 AM
Igor Dorofeev, country manager of UC Rusal. - Norman Grindley/Chief Photographer
Fitz Jackson, CEO of Cement Jamaica Limited. - File

Avia Collinder, Business Reporter

Cement Jamaica Limited and mining company Rusal Jamaica are in talks on a possible energy partnership built around coal.

The preliminary agreement around which negotiations are ongoing will see Rusal putting up 100 acres of land at Port Esquivel on which Cement Jamaica now plans to develop its cement plant and a coal-fired power plant and house a storage facility for coal, both parties have confirmed.

Cement Jamaica will in turn operate a storage facility for coal to fire the new power plant that Rusal plans to develop at its Windalco Ewarton Works complex in St Catherine.

Cement Jamaica is a subsidiary of Cemcorp of Canada, with partners in the local venture that include end-users of cement in Canada. Cement Jamaica is currently sourcing financing for the US$570m cement plant, which has been in the works for six years.

UC Rusal Country Manager Igor Dorofeev described the proposed collaboration on coal as a joint venture, stating that he expected an agreement to be in place by year end. He said the partnership would essentially be built around coal storage.

Fitz Jackson, CEO of Cement Jamaica, said the two companies will jointly purchase coal and share equally in the cost of storage.

"We will now be together building the important storage facilities for coal by the port," said Jackson. Rusal can then transport the coal by rail cart, he said.

Neither the Jamaica Bauxite Institute nor Minister of Mining and Energy Phillip Paulwell knew of the budding alliance when Wednesday Business sought comment.

"I am just hearing about it, just as you are," Paulwell said Tuesday. "They have not come to us formally," he said, but added that no governmental approval was required for that sort of partnership.

Paulwell said that he was more focused on ongoing talks with Rusal over Kirkvine and Alpart, which he said were "more urgent issues".

According to Jackson, as part of the deal with Rusal, which is yet to be concluded, Cement Jamaica will supply Windalco's operations at Port Esquivel with power.

"Part of the arrangement is that they will partner with us on the power plant facility and we will provide power for them on the port. Out of that, they will provide lands they have in the vicinity for the cement plant operation," said the Cement Jamaica CEO.

"With the coal importation and storage facility, that is where we are going to invest jointly together. We are looking at 50-50 cost," he said.

Jackson declined comment on the precise mode of acquisition of the 100 acres of land from Rusal, while Dorofeev said there are some elements of the agreement he was not at liberty to disclose immediately.

Access to the land will allow Cement Jamaica to move forward with its own project, which hit a snag linked to a legal fight over land, Jackson said.

Originally, the cement plant was to have been sited on more than 200 acres, including 150 acres of Century Farm lands that the company purchased from lien holder NCB for $75 million, and 92 acres acquired under lease from the National Land Agency. The lands are located beside Port Esquivel.

According to previous reports, the owner of Century Farms, Royden Reitte, is trying to block the closing of the sale of the 150 acres.

"In light of the court matter", Cemcorp sought other options, said Jackson on Tuesday.

"Basically, we are looking at siting the plant on their (Windalco's) land at Port Esquivel," he said.

Cement Jamaica plans to develop a 1.5-million tonne plant, with possible expansion to 1.8 million tonnes later.

Jackson said that with land now available as an alternative site for the cement plant, the company could now move ahead with its geotechnical assessments.

"We have to now finalise the environmental sign-off. There should be no difficulty with that, because it is in the same location, just further south and nearer towards the sea," he said.

He add that financing for the cement plant was also on track. State-owned pension fund manager National Insurance Fund is among the prospective backers.

"One of the delays that we had was the whole land issue. That will be solved once we are able to finalise with Rusal. The litigation was what was threatening to drag out the whole thing and was of concern to the financiers," he said.

Separately, Cement Jamaica holds 500 acres for use as a quarry.