Jamalco’s value doubles under new ownership, losses unchecked

Century Aluminium has made a US$273-million gain, according to updated information in its newly released year-end financial report.

That’s up from the preliminary estimate of US$103 million in mid-2023, when Century acquired ownership in Jamalco from Noble Group of Hong Kong. But losses continued to mount at the Clarendon-based refinery even as its assets more than doubled in value.

The American company had previously indicated that the initially estimated purchase gain was subject to adjustment, as it became more familiar with the asset.

The gain reported to date is the third revision but is still “preliminary”. Century has up to a year after the acquisition to finalise the value, its management previously said.

Century acquired Jamalco last May for US$1 in what it called a bargain purchase of the asset that had suffered fire damage and was indebted.

Jamalco was valued higher at year end mainly due to the elimination of a US$101-million liability related to asset retirement obligations. Also, the value of fixed assets increased from US$102 million to $246 million.

Jamalco is partially held by the Jamaican government, which had once indicated plans to divest its 45 per cent holdings via the Jamaica Stock Exchange. The status of that plan remains unclear now that a new joint-venture partner, Century, is in the picture. The government’s ownership of Jamalco is held through Clarendon Alumina Partners Limited.

Since the acquisition by Century, Jamalco has made sizeable bauxite and alumina sales, and Century had expected to break even this year on the facility this year. However, unexpected costs led Jamalco to post a big loss.

Century said the refinery, located in the community of Halse Hall, contributed US$150.3 million ($23.5 billion) to its total revenue and a loss of US$41.1 million to total earnings. It Century hopes to claw back some of that money from insurance claims for the equipment failure.

Group-wide, the American company made a net loss of US$43 million on net sales of US$2.2 billion for the 2023 financial year. That’s worse than its performance in 2022, when it recorded a net loss of US$14 million from net sales of US$2.8 billion.

In June, a month after the acquisition, Jamalco experienced a “power disruption” caused by damage to its generation unit. Century said the equipment failure resulted in a loss of production of roughly 84,000 tonnes for the year. That equates to six per cent of the 1.4 million tonne full production capacity at the Jamalco plant.

“The impact of the equipment failure was approximately US$30.4 million. Despite returning the equipment to full capacity as of the end of October, we continue to see some inefficiencies into the first quarter of 2024,” Century said in its financial report.

Century announced in February that it intends to spend up to US$15 million on capital projects at Jamalco this year. The investments are aimed at lifting production from about 80 per cent to full capacity.

steven.jackson@gleanerjm.com