Susan Gordon, Staff reporter
DACOSTA
GOVERNMENT- OWNED Clarendon Alumina Production Limited (CAP) is projecting a US$2.76 million loss this year.
These projected losses follow on an estimated US$9.48 million loss in the last financial year ended March 31. The company is in a 50/50 joint venture with Alcoa at the Jamalco plant in Clarendon.
Bauxite is refined into alumina at the plant. This in turn is shipped overseas to produce aluminium.
Former CAP board member Norman DaCosta said he found the the announcement surprising. Mr. DaCosta said the projection comes amid a very upbeat global market for aluminium producers and exporters.
The overall aluminium industry is awash in profits. Alcoa, the world's top aluminium producer and CAP's partner announced record profits last month, while Canadian aluminium producer Alcan Inc. said that its net profit in the first quarter of the year was more than twice the equivalent figure for 2005 and a record for the company.
With continuing demand coming from developed countries and emerging markets such as India and China, the world aluminium deficit is expected to continue up to 2007 said Mr. Da Costa.
The CAP financial results reported in the Estimates of Revenue and Expenditure for public sector bodies tabled in Parliament last month failed to disclose the reason for the losses. It stated that the plant continues to make significant direct contributions to the national budget in respect of levy, taxes and royalties, and to the country's development through employment, infrastructure development and critical foreign currency inflows.
It said that during this year, there are plans for further expansion of the Jamalco refinery from an annual capacity of 1.25 million tons currently to 2.8 million tons, at a cost of US$800 million. The project will include the introduction of superior technologies to lower raw material consumption and improve efficiencies, bringing the plant in line with Alcoa's other low-cost facilities.
This expansion will be fully funded by Alcoa, resulting in Alcoa's ownership interest increasing to about 80 per cent and CAP's reducing to 20 per cent after the expansion. Pre-engineering works are to start this financial year and the plant's ongoing capital programme is projected at US$61.40 million, with the main projects being the construction of a residue disposal lake to maintain and protect the environment and mining infrastructure work to expand Jamalco's refinery years.
The financial report stated that the projected net loss of US$2.76 million, is an improvement of US$6.72 million or 71 per cent on the 2005/06 estimated loss of US$9.48 million. It said production is in accordance with refinery capacity, while alumina sale is based on existing marketing contracts.
The Financial Gleaner was unable to get a response from CAP's management up to press time yesterday.
