Finance and Planning Minister, Dr. the Hon. Peter Phillips, says the supply contracts of the Clarendon Alumina Partners Limited (CAP) will be modified to ensure that its obligations will not incur additional costs to the budget, even as it remains operational.
Dr. Phillips was making the closing presentation in the 2013/14 Budget Debate in the House of Representatives, on Wednesday, May 1, under the theme: ‘A New Direction For Hope And Expanding Opportunity’.
The CAP was founded in 1985 as a producer and refiner of alumina and holds 45 per cent interest in Jamalco, on behalf of the Government of Jamaica, while ALCOA owns the other 55 per cent. The Government had been attempting to sell its stake in the loss-making company to Glencore.
The Finance Minister informed that Glencore had made two proposals to either purchase the facilities outright now, or exercise an option to purchase between January 1, 2015 and December 31, 2020.
Dr. Phillips said the “purchase now” offer was taken off the table as “the price offered by Glencore was significantly below the value of an efficiently producing asset.”
He emphasized that CAP had no choice, but to accept the other offer and to continue producing until Glencore exercises its option to purchase.
“In the interim, Glencore will provide funding to CAP through a line of credit. Repayment of the amounts drawn down under the line of credit will be made by withholding amounts due to the Government for sale of alumina supplied by CAP, consistent with the terms of the two existing alumina supply agreements and a third agreement to be negotiated,” Dr. Phillips said.
He noted that full payment of principal and interest is to be made by December 31, 2020, unless previously prepaid by the Government under the ‘Option to Purchase Arrangements’.
The Minister also revealed that Alcoa had declined options to immediately purchase the facilities from CAP or lease them on a long term basis.
By Andrea Braham, JIS Reporter