Lydford Mining has entered into a sales arrangement with Vulcan Materials, one of the largest producers of construction aggregates in the United States, an agreement that’s poised to triple the amount of aggregates the Ocho Rios-based company ships overseas by year end.
Vulcan Materials is also the owner of the motor vessel Donald M James, the vessel on which Lydford’s aggregates will sail.
It’s one of three vessels that the American company owns, which has the capacity to freight 75,000 metric tonnes of construction aggregates with each shipment. The cargo vessel is also said to be the largest to grace Jamaica’s shores.
Director of Lydford Mining, Edgar Cousins, is upbeat about the prospect that the arrangement brings to the company and the wider Jamaican economy. Already, Lydford has set a target to triple exported aggregates by year end, partly from new service markets where Vulcan will distribute its products, to include the Cayman Islands and Guyana.
“Vulcan has a huge operation in the United States and they have operations all over the region. They bring to us a reach that would not have been impossible for us to access from where we are in Jamaica,” Cousins told the Financial Gleaner.
Last week, Lydford Mining hosted Minister of Transport and Mining Audley Shaw and Portfolio Minister of Industry, Investment and Commerce Aubyn Hill for a tour of the Donald M James vessel and its operation in celebration of the partnership.
It’s deal with Vulcan comes amid a push by the company to double production output to 1.5 million by 2025. It also has its sight set on tripling of exports from 55,000 tonnes to 165,000 tonnes by year end.
To achieve those targets, Lydford Mining recently began work on the construction of a fully automated block factory to fill demands from the local market.
Investments to the tune of US$2 million were also made into the acquisition of new equipment which include an impact crusher, filter screen and wash plant, aimed at better positioning Lydford to serve both local and international consumers.
In the United States, Lydford competes against aggregate producers from Mexico, The Bahamas, as well as Newfoundland and Labrador in Canada. Landing business within that market is largely based on cost structures, which means that to effectively compete the company needs to scale.
“Size matters and when you can scale it brings your costs down. That’s exactly what we believe Vulcan will bring to the table. For example, a Panamax vessel that can take up 70,000 tonnes will carry twice the material that a smaller ship can do. That translates directly into reduced costs,” said Cousins.
“It takes us five days to load that vessel, they will unload it in less than a day. But with scale like this, the possibility of becoming more competitive with other countries becomes a closer target,” he added.
Vulcan Materials has built up a name as the United States’ largest producer of construction aggregates – primarily crushed stone, sand and gravel. But the aggregates giant is also known for it logistics, product sales and distribution network.
Headquartered in Birmingham, Alabama, Vulcan Materials has over 400 active aggregates facilities, 70 asphalt facilities and 240 concrete facilities, which also consume aggregates. Its coast-to-coast footprint and strategic distribution network align with and serve America’s growth centres.
The arrangement to move and find markets for the materials Lydford Mining produces from its three plants in Jamaica, was signed last month, and on Friday, the company set sail the first freight of 55,000 tonnes of aggregates to the United States on the Donald M. James vessel.
Thereafter, Vulcan Materials will send a vessel to Reynolds Pier in Ocho Rios, St Ann, for loading with aggregates destined for various markets once a week.
Lydford’s portfolio of products includes construction-grade material such as sand and gravel, along with aggregates that are used to produce food and pharmaceutical products, animal feed, fertiliser, paint, plastics, and soap.
Its customer base is spread across Aruba, Bermuda, Guantanamo Bay in Cuba, the US Virgin Islands, and the continental United States.
Although the vessel has capacity to hold 75,000 tonnes of aggregates, Lydford Mining will only load per shipment to the various destinations in accordance with Reynolds Pier’s depth.
“Over time, the Government and the authorities might engage us in a discussions around the depth of Reynolds Pier, but a more pressing matter at this time is the need for storage. Our business is growing and to facilitate that growth we need storage space,” Cousins said.
“It’s a discussion we are having with the Government presently. We are actively trying to find storage space on the port or lands to lease that’s close to the port to have the loading process run smoother and more cost-effectively,” he added.
Currently the materials are being trucked to the port, but Cousins says once production volumes are up, then the conveyor belt that exists at the port becomes viable for the business.
“The conveyor belt has been there since 1960s but has run completely derelict now. It would take some cash to get it running again, but having that operational would cut the cost of transportation by 70 per cent. The numbers would have to make sense for us to take on such a project,” Cousins said.