Jamaica Producers sells mining company, braces for Brexit
Jamaica Producers Group (JPG) has sold its stake in Four Rivers Mining Company to Jamaica Aggregates Limited, a deal that calls for the new operators to pay royalty to the food and logistics conglomerate.
But with that now out of the way, Jamaica Producers has a new challenge cropping up overnight - assessing the impact of Brexit.
JPG will retain ownership of the lands currently mined by Four Rivers, but has sold the assets, including mining equipment, to Jamaica Aggregates, said managing director Jeffrey Hall following the company's annual general meeting in Kingston on Friday.
He declined to comment on the sale price.
JPG owned 51 per cent of the mining business alongside minority partners Lydford Mining with 35 per cent, and The Irons Mountain Mining Company, 14 per cent.
Four Rivers has been a lossmaker for JPG, but the company also said the mining operation's disposal was part of the plan to shed non-core assets.
Its core focus is on speciality foods and logistics infrastructure.
"Mining fell outside of that so we have identified people who we think have the expertise to do that business. We think that's a better way to operate," Hall said on Friday.
"JPG still owns the property. We will charge royalties for using our land to conduct mining activities," he said.
JPG entered the mining business in 2010 under a $150-million investment with the objective of monetising the deposits of river aggregates from its lands in St Mary and St Thomas.
However, increasing operational costs and challenges with plant reliability and efficiency saw the subsidiary posting continued losses over the years.
At Friday's meeting, JPG shareholders cheered the disposal, one of whom declared: "I'm glad we are over that."
Jamaica Aggregates, based in Kingston and Yallahs, St Thomas, is a joint venture between Jamaica Pre-Mix and cement producer Lafarge.
Regarding Brexit, the geopolitical turn in the UK from Thursday's vote to exit the European Union could pose both challenges and opportunities for JPG, Hall said.
"It's too early to tell, but it is something that we are watching very closely," he told Sunday Business.
"For us, a depreciation of the sterling can negatively impact on our revenues. But, on the other hand, because we are in the shipping business, a depreciation can mean more trade with the UK," he said.
Some 33 million people from England, Northern Ireland, Scotland and Gibraltar, participated in the referendum, with 52 per cent choosing to leave and 48 per cent voting to remain in the EU.
"There can be implications for the level of certainty and the investment environment in Europe, which could affect consumer confidence. But what we can say is that we are giving it the appropriate attention," he said.
The company further does not expect to change its core strategy for that market, he said.
"We are investing very aggressively in fundamental trends and we think they are the right trends regardless of short-term changes, and we expect to continue to deliver shareholder value," Hall told shareholders.
Just last year, JPG's European business, juice-maker Hoogesteger closed a $200-million round of investments to improve capacity and extend the shelf life of its products.