Government to repay Alcoa

The Parliament granted approval for the Government to guarantee the repayment of 127.7 million US dollars to Alcoa.



The money is owed by the Clarendon Alumina Production Limited, which is part owned by the Government.



The debt was incurred partly because of a decision by the previous administration to enter into a forward sales alumina agreement.



The 10-year agreement guarantees the sale of alumina from Jamalco at a price of 178 US dollars a tonne.



But there is no clause to make an adjustment to the fixed price should the market conditions change.



As a result, Jamaica was at a disadvantage when alumina prices increased to about 491 US dollars a tonne up to last year.



This means that the Clarendon Alumina Production Limited had to borrow money to finance capital development projects at Jamalco.



The Finance Minister said the Government is now forced to guarantee that Clarendon Alumina Production Limited repays 127.7 million dollars.