Clarendon Alumina Production Limited (CAP), the Government entity with a 50 per cent stake in the nation's second-largest alumina refinery, Jamalco, estimates that US$500 million (J$32.5 billion), or 40 per cent of the planned $1.25 billion expansion of the plant located in Clarendon will flow directly to the Jamaican economy during the three-year project.

In its corporate plan for the financial year running to March 31, 2007, tabled in Parliament last week, CAP said "the likely benefit to the economy of as much as 40 per cent of the $1.25 billion project" is expected.

According to the report, the expenditure over the three-year period - the time it will take to build out the plant - will be more than half the overall cash contribution to the economy since CAP was created in 1985.

This was estimated to be US$902 million during the 20 years to December 31, 2005.

The plant, which currently has the capacity to produce 1.3 million tonnes of alumina yearly, will be increased to a 2.8 million tonne-a-year plant at the end of the three years.

Critical part

A critical part of the project will include the US$250 million 193 megawatt combined cycle power station - 80 of which will be sold to the national grid - to burn natural gas, a less expensive and more environmentally-friendly fuel.

Jamaica has been negotiating with Trinidad and Tobago for the supply of natural gas as the energy source for the power plant.

There has been no recent statements of the state of the negotiations which officials expect to be concluded by 2007.

The alumina plant expansion will be fully financed and owned by Alcoa, reducing CAP's stake from 50 per cent to approximately 23 per cent.

On completion, Alcoa's estimate of tax payments, according to the CAP report, is projected to be US$41 million in the first year after expansion and US$56 million per annum thereafter.

- camilo.thame@gleanerjm.com