Tameka Gordon, Business Reporter
Jamaica Producers Group (JPG) is expanding its mining operation to Clarendon to capitalise on upcoming construction projects proposed for the south coast, says JPG chief executive officer (CEO), Jeffery Hall.
The plan follows JPG's buyout of its Dominican Republic snack partner in what Hall has described as a push for growth.
Jamaica Producers is the majority partner in aggregate processing subsidiary, Four Rivers Mining Company Limited, which it co-owns with Lydford Mining Limited.
Four Rivers operates from St Mary. Hall said that while the current operation has efficiently served the north coast, transportation costs to the south has kept it from making a greater impact there.
Now JPG wants in on the action, including the continued buildout of Highway 2000 and other government projects "in the pipeline".
The new Four Rivers plant, slated for Woodleigh near May Pen, will be "of comparable size" to its St Mary predecessor and is expected to double the output of the "high-specification" aggregate being produced in St Mary by the half year of 2014, Hall said.
Four Rivers currently produces 360,000 tonnes of aggregate annually, with the Clarendon plant projected to turn out 140 tonnes per hour and will ramp up production by month end, Hall says.
Raw material for the operation will be sourced from the Rio Minho, which runs in close proximity to the proposed location.
Land for the 2.5-hectare site has been obtained "from a third party" holder, Hall said while declining to give the size of the investment.
Four Rivers, in which JPG has 51 per cent ownership, performed "satisfactorily" for the conglomerate up to half year ending June. Overall, JPG's gains from associated companies and joint ventures quadrupled at half year to J$205 million.
However, JP Tropical Division, under which the mining operation falls, posted a loss in the period.
"JP Tropical will return to profitability, particularly now that our local factories are going full blast," said Hall.
JP Tropical Division, which holds JPG's Jamaican and regional assets, recently took over full operations of the former joint venture snack and food plant based in the Dominican Republic.
"JP Tropical Snacks is now a wholly owned subsidiary and is intended to function primarily as a co-packer of plantain and banana chips for Spanish-language markets... and to act as a back-up source of banana chips for the Jamaican market in the event of storm damage to our Jamaica farms," the company's financials state.
Having acquired the shares of its partner, a family-owned farming company based in the Dominican Republic, Hall said the acquisitions will aid in the repositioning of JP Tropical and its push for renewed profitability.
Hurricane Sandy made a direct hit on the farms of JP, destroying approximately 90 per cent of the crop last October.
JP Tropical "resumed steady production" of bananas on its St Mary farm during the last four weeks of the first quarter. The division however saw "only negligible income" from sales of the fruit, Hall said.
Revenues for JP Tropical's second quarter declined three per cent year-on-year to J$920 million "in the context of very limited banana supply" and rose four per cent in the first quarter of 2013, according to the company's financials.
Additional risk management strategies for JP include plans to improve banana production, potentially through a western Jamaica farm.
"We are currently conducting a feasibility study," the CEO said, noting that the company has been considering the "possibilities for this region" for some time.
"Last year, the focus was on acquisition and investments, now the focus is growth," Hall told Wednesday Business.
JPG intends to restore and stabilise earnings through increased pineapple production, sold to supermarket chains as "fresh produce," as well as through additional cultivation of acreages of cassava for bammy and snack production, "both of which are less susceptible to storm damage".
"We are also looking to improve production from our existing food factories," Hall said.
Overall, JPG earned revenue of J$3.7 billion at half year and net profit of J$158 million. That compares to half-year revenue of J$3.5 billion and profit of J$118 million in the same period last year.