Jamalco maxxes out fire insurance claim
Eyes 100 per cent production by September
Published:Wednesday | February 2, 2022 | 12:08 AM
Finance Minister Dr Nigel Clarke has revealed that a claim has been made for the full policy limit of US$250 million on Jamalco’s insurance following a fire that ravaged the alumina plant last August.
The fire broke out at Jamalco’s powerhouse, which acts as the engine of the plant.
Clarke explained that the policy has many layers and that a consortium of insurers and reinsurers provided coverage.
“Payment is expected to be made over time as Jamalco rebuilds and restores. However, the expectation is that the claim will be settled in full over the course of time. As of January 12, 2022, total insurance proceeds thus far total US$68 million,” Clarke said during Tuesday’s sitting of the House of Representatives.
He said the funds received so far have been used to finance clean-up, asset preservation, and Phase One restoration activities.
The minister said that Jamalco has put in place governance measures to be able to satisfy the insurers that insurance proceeds are used for restoration, rebuilding, and loss of earnings.
“This is necessary for future insurance payments to be released from the insurers to Jamalco,” Clarke said.
The finance minister said restoration works at Jamalco are on track and will take place over three phases.
In Phase One, which should occur by June, Jamalco expects to recommence operations up to 50 per cent of capacity, using steam from a set of boilers that are being installed.
“It is expected that mining operations and associated jobs will begin to be restored in the weeks prior to the resumption of production. By the end of September 22, Jamalco expects to be back at 100 per cent production, which will mark Phase Two,” Clarke said.
He explained that in Phase Two, production costs should be lower than in the previous phase, but still not at the most efficient level owing to the reliance on the temporary steam solution.
In Phase Three, a powerhouse will be built and completion of the overall reconstruction is expected by 2024.
He added that New Fortress Energy (NFE) supplies steam to Jamalco but a force majeure notice was served when production ceased, as a consequence of the fire.
The Jamalco-NFE take-or-pay steam agreement has not changed and has 18 years remaining.
Clarke said it is hoped that the terms will remain attractive to Jamalco once production resumes.
Opposition Spokesman on Mining and Energy Phillip Paulwell questioned whether additional funding would be required outside of the insurance proceeds for the restoration and if it would be contributed by equity partners.
Paulwell asked if the temporary steam solution would be derived from NFE or from the establishment of an additional temporary facility. He also enquired if there was any contention since the force majeure notice was issued to NFE.
The finance minister said the expectation is that full restoration will be financed by insurance proceeds, without resorting to shareholder funds.
With respect to the steam solution, Clarke said boilers have been imported and installation has commenced.