Jamalco set for sale
The company that holds the Jamalco alumina refinery is being transferred to an undisclosed third party, as part of an emerging deal.
The refinery is majority owned by Noble Group Holding Limited, NGHL, which is based in Hong Kong.
“NGHL has announced that it has entered into a call option deed to transfer its entire ownership of General Alumina Holdings Limited (GAH), through which NGHL holds its 55 per cent stake in Jamalco, to a third party,” Noble said in a press release.
The impact on plans by the Jamaican Government, the minority owner with 45 per cent interest, to privatise Jamalco and list it on the Jamaica Stock Exchange wasn’t immediately clear. The Government has made no statement regarding Noble’s disclosure.
Since early 2022, NGHL directors have extensively “tested” the market for potential acquirers for its 55 per cent stake in Jamalco, as well as assessing other transaction alternatives, Noble said.
Noble’s net debt stood at US$495 million as of last September 2022.
“Following this, the board concluded that it was in the best interests of NGHL, GAH, Jamalco and their respective stakeholders to enter into the call option. The call option, if exercised by the third party, will result in NGHL transferring its interest in Jamalco to an owner with significant operational expertise and supply chain capabilities. The foregoing transaction will divest all the NGHL Group’s interests in GAH and Jamalco,” Noble said.
A call option is a contract that gives the buyer the right to acquire an asset at a given price by a set time period.
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 refinery returned to production “progressively in the third quarter”, and now operates close to full capacity. The shutdown resulted in the Noble Group booking virtually no revenue over the six months. Consequently, it reported a loss of US$97 million loss over nine months to September 2022, compared to a net loss of $67 million a year earlier.
“Operating loss from supply chains of US$101 million due to fire event at Jamalco plant in August 2021 which halted alumina production resulted in minimal revenue, whilst fixed costs continued to incur. Nevertheless, this is offset by insurance compensation booked in ‘other income’ line,” Noble said.
Last year, insurance payments amounting to US$86 million, or nearly $13 billion, were collected by Noble for fire damage. More tranches of the insurance money could follow as the plant rebuilds to produce alumina for export.