Jamaica clears debt owed to alumina partner Noble Group
Published:Wednesday | September 9, 2020 | 12:05 AM
Clarendon Alumina Production Limited, CAP, has repaid all its outstanding debt to alumina partner Noble Group, amounting to nearly US$136 million.
The Jamaican Government indicated last month that it planned to repay the funds, but gave no precise timeline.
However, in a notice to shareholders this week, Noble Group Holdings Limited said its wholly-owned subsidiary, Noble Resources International Pte Ltd, has received full repayment of the loan and interest outstanding under the prepayment facility agreement with CAP.
“The aggregate amount received was US$135.7 million,” Noble said.
Jamalco is CAP’s primary asset. Clarendon Alumina Production holds 45 per cent of the refinery on behalf of the Government of Jamaica, while Hong Kong-based Noble Group holds 55 per cent via subsidiary General Alumina Jamaica.
Both parties fund the capital-intensive operations under which they mine bauxite and then refine it into alumina at the plant based in Hayes, Clarendon, with Noble as operating partner.
The debt repayment paves the way for the incorporation and the eventual initial public offering, IPO, of the Jamalco alumina refinery on the Jamaica Stock Exchange. The transaction will satisfy a commitment given by Jamaica that it would divest the loss-making CAP via the stock market.
Noble said it will further update investors next week, September 14, on the restructuring of Jamalco and its listing.
The loan to CAP dates back to 2013, when the company entered into a US$120-million arrangement with Noble to repay amounts CAP owed to then joint-venture partner Alcoa. The loan paid off CAP’s portion of the working capital debt to Alcoa and also funded further shortfalls that were expected over the medium term as the alumina market was depressed. The repayment of the debt by Government is expected to reduce the national debt by one per cent of GDP.
JAMALCO LOSSES
Earlier this year, the Noble Group formed a pact with the Jamaican Government to reorganise the assets and operations of alumina refinery Jamalco into a holding company as a precursor to the eventual listing of the refinery.
Jamalco is currently experiencing losses due to falling alumina prices and weakened demand owing to the COVID-19 pandemic. Its March quarter results show a net loss of US$2.8 million compared to a US$18.4-million profit a year earlier, as reported in Noble’s financials. The refinery’s assets were estimated at US$477 million, down from US$499 million a year earlier.
Noble itself underwent a restructuring in the second half of 2018. The group suffered from a period of loss-making quarters but returned to profitability in the first quarter of 2019.