AWAC, govt. agree provisionally to US$800mn Jamalco expansion

US aluminum giant Alcoa's (NYSE: AA) affiliate Alcoa World Alumina and Chemicals (AWAC) and the Jamaican government have agreed "in principle" to expand the Jamalco alumina refinery in Clarendon, Jamaica by more than 1.5Mt/y, Alcoa announced. The expansion will more than double the refinery's total capacity to at least 2.8Mt/y. In addition, AWAC ownership in the refinery will move from 50% to 70%. The Jamaican government will own the remaining 30%. AWAC will pay approximately 85% of the total proposed US$800mn cost of the expansion, which will also cover the cost of increasing its ownership of the facility to 70%. The expansion initiative stems from a 2002 agreement with the Jamaican government to remove a nearly 30 year-old levy on bauxite in order to encourage investment. Alcoa spokesperson Kevin G. Lowery told Bnamericas the government's decision to remove the levy was critical to Alcoa's decision to expand the plant. "We talked to the government about the levy being an inhibitor to growth, we worked together to come up with ways to address it and it has encouraged quite a bit of expansion at that facility," Lowery said. He added that the business environment in Jamaica is very positive for the alumina industry. The expanded refinery will be among the world's lowest-cost facilities, Alcoa said. A final decision to move forward on the project is expected in the first half of 2005. Upon approval, the expansion project should be completed by the end of 2007. AWAC is a global alliance between Alcoa and Alumina Limited, with Alcoa holding 60% of the company.