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Jamalco exporting again, writes off US$25m of inventory

Published:Friday | December 2, 2022 | 12:10 AM

The Jamalco alumina plant in Clarendon resumed exports during the September quarter, but also wrote off US$25 million ($3.8 billion) worth of inventory. “Jamalco [went] back to production progressively in the third-quarter since the fire at Jamalco...

The Jamalco alumina plant in Clarendon resumed exports during the September quarter, but also wrote off US$25 million ($3.8 billion) worth of inventory.

“Jamalco [went] back to production progressively in the third-quarter since the fire at Jamalco’s powerhouse happened in August 2021,” said the refinery’s co-owner Noble Group Holdings in its quarterly financial report.

The factory resumed production in July and returned to 50 per cent capacity in August. Then in September, it resumed exports with an initial 63,000 metric tonnes exported to long-term customers, the company stated.

Noble Group didn’t explain why the inventory was written off, but it was the only impairment of its kind during the year. It owns 51 per cent of Jamalco with the remaining 49 per cent held by the Government of Jamaica through an entity called Clarendon Alumina Partners, holds Jamalco via its subsidiary Noble New Asset Company Limited.

In August 2021, the Jamalco refinery, based at Halse Hall in Clarendon, was ravaged by fire. This resulted in the plant shutting down production and negatively affecting the overall sector performance.

The resumption already has positively impacted the mining sector with declines halving. During the September quarter, the mining sector declined by 30 per cent. The decline in the June quarter was estimated at 60 per cent, according to quarterly data from the Planning Institute of Jamaica, which tracks the performance of the real economy.

There are three main refinery plants in operation: Jamalco, which is owned by Noble and Government; Windalco, owned by Russian company UC Rusal; and JISCO Alpart, owned by Chinese company Jiuquan Iron and Steel Company of China.

Noble said last year that Jamalco had property and plant insurance coverage of up to US$250 million “to address single incidents”, such as the August 2021 fire. The company said that the closure of the plant cost them US$500,000 a day.

Up to June, Jamalco had received US$86 million, or nearly $13 billion from insurance payouts to cover the damage from the fire.

“To date Jamalco’s reconstruction has been funded by a comprehensive insurance policy,” said Noble.

No additional disclosures on insurance payouts were made for the September quarter.

steven.jackson@gleanerjm.com