Alcoa invests $102 million in Jamaican ops

announced recently that its Alcoa World Alumina and Chemicals (AWAC) affiliate and the government of

have approved plans to immediately expand the Jamalco alumina refinery in

by 150,000 metric tons per year (mtpy) as the first phase of the overall 1.5 million mtpy capacity expansion.

This first phase will cost approximately $77 million, with the commitment of another $25 million to finalise detailed engineering on the full project over the next three months. Full production from the first phase is expected by the end of 2006.

"There is concrete evidence of progress in our Jamalco facility and it has earned the right to grow,” said Bernt Reitan, President of Alcoa Primary Products. “Pulling forward a portion of our larger expansion will allow us to leverage globally with other brownfield and greenfield projects to reduce our costs and gain efficiencies.”

A final investment decision on the larger expansion project, which would more than double the refinery's total capacity to at least 2.8 million mtpy, is expected in the third quarter of 2005. As part of that project, AWAC ownership in the refinery will move from 50 percent to at least 70 percent. The government of Jamaica will continue to own the remaining percentage. Upon approval, it is expected that the expansion project will be completed by the end of 2007.

Expansions at Jamalco stem from a 2002 agreement with the Jamaican government to remove a nearly 30-year-old levy on bauxite in order to encourage investment. As a result of that levy removal and investments to expand, the Jamalco refinery is among the world's lowest-cost refineries. AWAC is a global alliance between Alcoa and Alumina Ltd, with Alcoa holding 60 percent.

Separately, Alcoa announced today that it will close its KAMA rigid plastic sheet manufacturing plant in Elyria Ohio in the third quarter of this year. Alcoa says it is closing the plant, which has 66 employees, in order to align system production with demand.

"The decision to close this plant was very difficult," said Mario Garza, KAMA Global Vice President of Operations. "Despite the best efforts of our work force, the cost structure of the Elyria plant is not competitive in today's global market."

The Elyria plant produces plastic sheet for thermoforming into consumer products such as deli trays, clam shells and cookie trays.