Jamaica News: Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, says that Clarendon Alumina Production Limited (CAP) has reached a commercial agreement with its partner in the unincorporated Jamalco joint venture, the Noble Group.
CAP, which is wholly owned by the Government, is a 45 per cent shareholder in the joint venture.
Dr. Clarke, during a statement in the House of Representatives on August 11, said that the terms of the commercial agreement will see CAP repaying debt obligations in the amount of approximately US$136.7 million to the Noble Group, by way of a loan from the Government.
The associated security package consists of a debenture comprising a fixed and floating charge over CAP’s interest in the Jamalco joint venture, a security assignment agreement, and mining rights granted by way of Special Mining Lease 170.
The Minister further informed that CAP and the Noble Group will immediately terminate, by way of mutual agreement, the Alumina Sales Agreement and replace it with a three-year alumina marketing agreement.
This, he informed, in respect of CAP’s alumina off-take from the Jamalco operation.
Dr. Clarke explained that under the three-year marketing agreement, CAP will enjoy the same price for alumina that Noble has secured for itself with respect to its alumina off-take from the Jamalco operation, noting that “this has not been the case under the existing alumina sales agreement”.
In return for the marketing of CAP’s alumina at an equivalent price to what it obtains for itself, Noble will be paid a commission of two per cent by the entity on the sales price obtained.
Dr. Clarke said these transactions, which have been approved by Cabinet and CAP’s Board, represent “an important step towards the incorporation and eventual IPO [initial public offering] of the Jamalco joint venture”.
“I cannot stress how important this is. CAP only ceases to be a fiscal risk to the Government of Jamaica once the incorporation and IPO are completed,” he said.
Dr. Clarke said it is anticipated that after the incorporation and listing of Jamalco on the Jamaica Stock Exchange, the entity will build the technical capacity to market its own alumina.
“It is intended that by the time the three-year marketing agreement ends, the technology transfer would have occurred for Jamalco, in which the Government of Jamaica, Noble and, by that time, others are invested, to profitably market its alumina,” the Minister added.
Dr. Clarke said the transactions align the interests of the joint-venture partners, which will now, for the first time, enjoy the same fortunes with respect to the Jamalco operation, the same costs and the same revenue less the two per cent commission.
Source: JIS News