Jamalco sold for US$1
Century Aluminum Company, a United States-based associate of Glencore, will acquire the majority stake in Jamalco for US$1, stripping former owner Noble Group of the lossmaking alumina refinery.
The deal is days away from completion.
“A wholly owned subsidiary of Century will acquire General Alumina Holdings Limited, a Noble subsidiary and owner of Noble’s 55 per cent interest in Jamalco, for US$1. The transaction is expected to close by the end of April 2023,” said Century in filings seen by the Financial Gleaner.
The deal price was not explained but it’s likely implication is that the transaction may have cleared Noble of liabilities for Jamalco going forward.
The Hong Kong-based Noble acquired its stake in Jamalco from Alcoa World Alumina and Chemicals for US$140 million, eight years ago. Alcoa reportedly booked a US$100 million loss on the sale at the time.
The other 45 per cent of Jamalco is held by the Government of Jamaica via Clarendon Alumina Production Limited.
To facilitate the current transaction, Noble transferred the company that held the Jamalco asset to an undisclosed third party, as part of the emerging deal that the Financial Gleaner reported on in March.
Noble had been testing the market since early 2022 for prospective buyers of the Clarendon-based refinery, which generates over 1.4 million tonnes of alumina a year and employs more than 900 people.
Noble issued no additional information on the sale on Tuesday.
After the acquisition in 2014, Noble underwent a series of restructurings which resulted in the splitting up of its group into two main entities. The half, which included Jamalco, generated yearly losses. Added to that, a section of the Jamalco plant was gutted by fire in 2021, which paused production for nearly 12 months.
Noble’s latest financials showed a US$97 million net loss over nine months to September 2022 which worsened from US$67 million in losses in 2021. A large chunk of that loss emanated from Jamalco being offline and not booking revenue while still incurring expenses. Nevertheless, Noble received some compensation for its supply chain losses from insurance payouts.
Century Aluminum is not a new player in the Jamaican market. It was previously the owner of St Ann Bauxite Company but exited the investment well over a decade ago. This acquisition will see it moving up the value chain in Jamaica from mining bauxite to producing alumina. Century will use Jamalco’s alumina to feed its aluminum smelters.
“This acquisition is highly strategic for Century as it secures a predictable, long-term supply of alumina, our most critical raw material and achieves increased transparency and control of our supply chain,” said Jesse Gary, president and CEO of Century in a joint statement with Jamalco about the deal.
“Acquiring this interest in Jamalco allows us to integrate our aluminum smelting operations with this critical upstream supply of bauxite and alumina to create a more balanced and robust operational footprint, resulting in an organisation that is better positioned to deliver strong performance through industry cycles,” he said.
Century operates three smelters in the United States in Hawesville and Robards in the state of Kentucky, and at Goose Creek in South Carolina. It also operates another smelter in Grundartangi, Iceland.
In total, Century has US$1.47 billion of assets. Jamalco will add to that portfolio.
The company is currently operating in the red, but its position improved in 2022, when its losses shrank to US$14.1 million on sales of US$1.6 billion at year ending December, compared with a net loss of US$167.1 million on sales of US$1.3 billion in 2021.
The strength of the Century also lies in its related party, Glencore, which ranks 10th on the Fortune Global 500 list and holds a 42 per cent stake in the US company. Additionally, Century heavily trades alumina products with Glencore, which is based in Switzerland, and holds several mining and oil operations across the world.
Glencore earned US$16.5 billion profit on revenue of US$256 billion for 2022, up from US$4.3 billion from revenue of US$203.7 billion in the prior financial year. Its total assets stand at US$132.5 billion.
The company started as a bauxite mining venture in 1959 and exported its first shipment of bauxite in 1963. The company began alumina production at a new refinery in Halse Hall Clarendon in 1972
Jamalco began operations as a bauxite miner in 1959 then progressed to producing alumina in 1972.
“Jamalco is expected to continue to honour all existing employment contracts and terms and conditions of employment, including the collective labour agreements for both salaried and hourly employees and the existing compensation arrangements for contractors,” a release on the sale noted.