Vernon Daley, Staff Reporter
THE Jamaican Government and Alcoa Inc. are to invest US$115 million in Jamalco alumina refinery under a recently concluded agreement which will also see the 28-year-old bauxite levy lifted from the company.
Prime Minister P.J. Patterson yesterday announced that as part of the agreement, the Jamalco plant would expand by 250,000 tonnes, pushing its capacity to 1.25 million metric tonnes.
"This is good news for Jamaica and a resounding vote of confidence, especially coming from the acknowledged leader in the world aluminum industry," Mr. Patterson said.
He was speaking at the Jamalco refinery in Halse Hall, Clarendon, where the refinery hosted a fund day to celebrate its 30th anniversary of operations in Jamaica.
Jamalco is a 50/50 partnership between Alcoa Inc. and the Government of Jamaica with Alcoa as the managing partner.
Prime Minister Patterson and CEO of Alcoa, Alain Belda signed the agreement yesterday which has paved the way for immediate start of expansion work, which will be completed by the end of 2003.
According to the company, the removal of the bauxite levy will lower costs at Jamalco by 30 per cent.
In January, Prime Minister Patterson told journalists that the Government was prepared to lift the bauxite levy but not without ensuring that its revenue base was protected.
At that time, he disclosed that Cabinet had approved certain broad principles and criteria that would determine the negotiation brief of the Government in the talks on removing the levy.
These criteria, he said, included expansion of existing capacity and plant modernisation resulting in a substantial increase in revenue and earnings to the Government.
Alcoa was the first company with which the Government entered into negotiations to hammer a new arrangement.
The controversial levy on bauxite production was imposed by the Michael Manley administration in 1974 when bauxite production reached a record high of 15 million tonnes. Production dipped sharply after that. However, it is now on the rebound and is expected to rise to a projected 13.5 million tonnes this year.
"This expansion which is to take place provides further evidence of how this partnership can work for the good of businesses located here," Mr. Patterson told employees who attended the function.
Mr. Belda who also spoke at the function, said that Alcoa is committed to working toward making Jamalco a world-class and globally competitive operation.
The Alcoa CEO said that the reduced costs to be achieved from introduction of new technologies, lower material costs and improved efficiencies "will bring Jamalco in line with Alcoa's other low-cost facilities in its refinery system."
Alcoa Inc., of the U.S., is the world's leading producer of primary aluminum and alumina and is active in all major aspects of the industry. The company began operations in Jamaica more than 40 years ago, with bauxite mining. In 1976 it sold six per cent of its operations to the Government and a further 44 per cent in 1988 under a partnership agreement.
