JP diversifies into mining
Published:Wednesday | June 30, 2010 | 12:00 AM
Jamaica Producers Group Limited (JP) is stepping outside its comfort zone - agro-processing and prepared foods - to take on a new venture in mining igneous rock in yet another phase of the company's transformation.
Its partner in this new venture is Lydford Mining Limited, to whose expertise JP will open 3,500 acres of its landholdings for extraction of the rock.
The joint-venture agreement was struck last year, Producers told shareholders at the company's June 25 annual general meeting.
"We are at a fairly advanced stage to bring it to the market, hopefully, before the end of the year or the third quarter," said Jeffrey Hall, JP's group managing director.
"JP has landholdings in St Mary which have very high-quality igneous rock that can be processed into construction aggregate," he said.
Hall told shareholders that the move, being implemented through Four Rivers Mining Company Limited, would drive returns on assets, primarily its landholdings, to produce more value.
The joint-venture enterprise is 51 per cent owned by JP, with Lydford Mining controlling the remaining 49 per cent.
"Lydford Mining is an established player in Jamaica's mining sector, with excellent expertise in the area," Hall said.
The partners have
As the market expands, the parent companies are prepared to make further investments,
"We are going into the gravel business, quarrying river rocks into construction-grade aggregate," said Leo Cousins, the managing director of Lydford Mining.
"The basis of the rock is igneous, coming out of the Blue Mountains, with the aggregate used primarily for road building, concrete and asphalt paving," he said.
Lydford Mining is a 15-year-old privately owned company controlled by Cousins, who has a 51 per cent stake, while his partner, Vincent Hall, owns the other 49 per cent of the shares.
Lydford Mining, located in St Ann, currently mines limestone from reclaimed bauxite lands leased from the Government.
The company exports 90 per cent of its limestone and limestone derivatives to the United States and has annual sales topping US$3 million.
Jamaica Producers is one of Jamaica's more well-known companies. Its reputation was built around banana and shipping.
Two years ago, burdened by losses after four major storms devastated its fields, the company decided to exit exporting bananas, and turned to snacks, desserts and other prepared foods.
It is only just emerging from its loss position - returning profit of J$209 million in 2009 following a combined J$3.3 billion of losses in the two years prior - and has signalled a willingness to try new ventures.
The company, however, knows little of quarrying. That is where its new partner comes in.
"Lydford brings the technical expertise in aggregate extraction and processing," Hall said.
The construction aggregate will be sold primarily in Jamaica for now. Export markets will be assessed and exploited as opportunities arise.
Cousins is projecting at least 300,000 tonnes in annual production when the company is off the ground in earnest.
Jamaica Producers has not, however, totally given up on bananas. It still has several acres under cultivation, mainly for sale on the local market.
Where lands are not suitable for viable cultivation by the company itself, arrangements are entered into for the granting of licences to third-party farmers.
Already under the programme, more than 400 acres of sugar cane, peppers, coconut, papaya, cassava, sweet potato, mango and timber are grown on JP's land.