Prime Minister Bruce Golding said Tuesday that Jamaica might sell its remaining 45 per cent interest in the Jamalco refinery in May Pen, saying the preliminary hunt for a buyer had begun.

The talks, he said, are at an exploratory stage only, suggesting that a deal would be negotiated only if suitors were willing to put serious offers on the table that did not undervalue the asset.

"One option that the government has not ruled out is whether it is in the interest of the country for us to divest ourselves of our equity position in Jamalco," Golding told lawmakers Tuesday in Parliament.

Jamaica and Alcoa are partners in the alumina-producing plant in which it recently gave up five per cent of its holdings to the American company in exchange for 150,000-tonne expansion project that Alcoa financed.

Early Works Programme

That project, which Alcoa called the 'Early Works Programme' was meant to be the precursor to an even bigger expansion programme at the plant that died when attempts to contract cheaper natural gas as fuel for the plant fell through with Trinidad.

The 'early works' done by Alcoa for US$120 million gave the company outright majority control, 55 per cent, of the now 1.4-million tonne capacity refinery in mid-2008.

A downturn in the world aluminium market, including a steep drop in alumina demand, has forced Jamaica to reassess its holdings, Golding said.

But it also comes at a time when Clarendon Alumina Productions, the vehicle used by Jamaica to hold its Jamalco stake, is facing a considerably weakened financial position, requiring government sustenance.

"We have been considering what should be our position in relation to this particular investment," the prime minister said.

Still, he insisted that government would not be engage in a fire sale.

Exploratory discussions

"We continue to engage in discussions with a number of interests. These discussions are merely exploratory. We continue to engage in discussions to see whether or not our interest in continuing the operation of the plant at Jamalco, whether that can be ensured through some new arrangement," Golding added.

The country's bauxite companies have been forced to cut back on production as world economic conditions worsen.

Golding called the situation dire.

"The situation is not getting any better. We are going through the worse slump in the bauxite/alumina industry that has ever been seen," the prime minister said.

The housing and automobile industries - the largest consumers of aluminium have slumped and prices for the metal have nosedived from US$3,160 per tonne on the London Metal Exchange to US$1,300 per tonne.

daraine.luton@gleanerjm.com