Jamalco targets year end to return to full capacity
JAMALCO is aiming to return its facilities to full production by early next year. The timeline comes nearly two years after a fire in the company’s powerhouse left the alumina refinery paralysed, with estimates at the time showing it was losing up to US$500,000 per day when the facility was not producing.
However, on Wednesday, at a cocktail reception at the company’s Great House in Halse Hall, Clarendon, for its new joint venture partner Us-based Century Aluminum, Austin Mooney, managing director of Jamalco, said the plant is now running “at about 75 to 80 per cent” of its full capacity, with the hope that it will be at full capacity soon.
“We anticipate that sometime around the end of 2023 we should be back up to full production,” Mooney told the audience in attendance. Later, in an interview with the
Jamaica Observer, he placed the timeline as late as January due to uncertainties in the execution of certain projects under what he called Project Restore, which aims to get the alumina refinery up and running at full capacity.
“We’ve been slowly settling down and steadying the plant as we ramp up production month by month,” Mooney said as he outlined that the plant has had to switch from its intention to use gas as its fuel source to diesel and heavy fuel oil (HFO) as prices for the fossil fuel surged in the aftermath of Russia’s invasion of Ukraine.
“We started the plant all revolved around gas ... so we rented a lot of boilers to operate and generate steam using gas, but with the war in the Ukraine gas became expensive. The week before the war, we were paying US$7 per MMBTU for gas, and it went up as high as US$16 per MMBTU,” he told the
Caribbean Business Report.
Mooney said, ahead of the war which caused the hike in gas prices, Jamalco had rented assets that utilise gas as a fuel but have been slowly converting them from burning gas to burning diesel and said that process will be done by the end of May.
“And then we have boiler five, which is one of our biggest and most efficient boilers. We expect that will be back on HFO by December into early January, which should then push us up to 100 per cent production.” It is not clear how much the refinery is saving with the switch from gas to diesel and HFO.
He, however, adds that: “Going forward we will have dual fuel and now we
are talking to New Fortress [Energy] about looking to supply us with gas again.”
The company also said it is looking at renewable energy to help run its plant in the future.
“That’s one of the reasons why we are here, because we want to make our aluminium greener, more sustainable, and more environmentally friendly, and one part of that is to make sure that the refinery which makes the alumina for the smelters operate in an environmentally friendly manner,” Gunnar Guðlaugsson, executive vice-president of global operations for Century Aluminum told Caribbean Business Report on the sidelines of the cocktail reception.
He said that means “renewable green energy to supply the plant like solar and things like that. I think we can make refinery be environmentally friendly, but we have to do the right things to make that happen”, he continued. Century became a partner in Jamalco after it acquired the 55 per cent stake previously owned by the Noble Group for US$1 in April. Clarendon Alumina Partners (CAP), a Government-owned entity, owns the other 45 per cent stake. “Here at Jamalco we are excited about this opportunity because Century is a good fit for Jamalco,” Mooney said. Century Aluminum’s main business is the smelting of aluminium. The company has four smelters — three in the United States and one in Iceland. “They were the customer to take the first shipment of alumina after the restart,” Mooney said, though that came with a lot of challenges, with the date for the shipment of alumina changed more than once due to several challenges the company faced at the time. “Century are very, very aware of the challenges and they have also committed to helping us restore the powerhouse to its full operation capacity and also to invest in our Project Restore, which is to return the plant back up to its full operating capacity of 1.4 million [metric tonnes per year].”
As for Century, Guðlaugsson said the acquisition was to secure the output of Jamalco for its smelters.
“Today we need around 1.4 million tonnes of alumina per year, and so when we have this plant back to capacity, it is basically all of the alumina we need,” Guðlaugsson told the Caribbean Business Report.
He said the company is aware that it has to put new capital in the plant but declined to say how much that might be.
“We are working out those plans right now as we speak, so I am not ready to give a number right now,” Guðlaugsson said in response to queries about how much will be spent overall to get the plant to full capacity. Efforts to ascertain how much has been spent so far proved futile.
“We are working with Century and with CAP. We had a big session this afternoon [Wednesday], where we went through a portfolio of projects, and we are looking to see the justification for each project, where it fits in the schedule, and then when we have all sort of signed off on the projects then we will be in a position to say how much we need to spend,” Mooney added.
One way the company is seeking to raise additional funds is through listing on the Jamaica Stock Exchange or raising money on the international capital markets, but Mooney explained that cannot be done now because Jamalco is not a legal entity.
Finance Minister Dr Nigel Clarke recently reiterated his commitment to incorporating the company, which Mooney said will be the first step before a decision can be made to list.
“It’s progressing very fast. It’s actually a priority for both partners,” he added.
Mooney, however, said he is not involved directly in the process so he does not know how long it will take, but added, “What I know [is] that since the acquisition with Century, both partners have been working on it full steam.”
He explained further: “We are an anomaly. We are a non-incorporated joint venture, so we are not really a legal entity. The legal entity is CAP and Century. In Jamaica we are well known and people understand the value, our proposition, our strengths, so within Jamaica we have a reputation, we can go out and secure credit. But if you want to go and secure credit outside of Jamaica, if you are not a legal entity, it’s never going to happen.”