A major U.S. metals company and its European partner are investing US$180 million to expand a bauxite refinery they own in Jamaica.

Most of the money for the project is being raised by issuing bonds in Puerto Rico.The expansion to Jamaica's largest refinery will significantly increase the island's refining capacity, which currently is being fully utilized.

Kaiser Aluminum of Oakland, Calif., has a 65 percent share in the refinery, Alumina Partners of Jamaica, or Alpart.

The other owner is Hydro Aluminum Jamaica, a subsidiary of Hydro Aluminum of Norway.

Alpart has been producing about 1.2 million metric tons of alumina a year, and initially will be modernized to produce 1.55 million metric tons a year.

The modernization of the refinery, located in southern Jamaica, is being financed by floating bonds in Puerto Rico through a financing facility established by the island's administration.

The first issue of bonds, amounting to US$60 million, was completed in


"The funding which is in place is intended to get the first phase of the modernization completed," said Billy J. Foster, director of modernization for Kaiser.

A second bond issue of another $60 million will be sought when the first is consumed, maybe in August or September. "This second issue will allow us to complete the upgrading of the plant," Mr. Foster said.

A senior official of Jamaica's Mining Ministry said the rest of the money for the refinery modernization will be provided from the resources of the two owners.

The project is scheduled for completion in one year, and will lift Jamaica's refining capacity to 3.6 million metric tons a year.

Other refiners in Jamaica are Aluminum Co. of America of Pittsburgh, which jointly owns a plant with the Jamaican government, and Alcan of Canada, which owns two plants.

Jamaica is the world's third-largest producer of bauxite, after Australia and Guinea.

But expansion has been affected by available capacity, and this has slowed the industry's growth.

Jamaica's alumina production grew 30 percent in 1990, but slowed last year to 5 percent, with total output of 3.01 million metric tons.

Mr. Foster said there are plans to increase Alpart's output to 2 million metric tons a year.

He said, however, that this would depend on the state of the market.

"If we waited for a stable market, we would never build a plant," he said when asked if the current depressed state of the aluminum market would affect the plans for modernizing Alpart.

It is the second time that money raised in Puerto Rico is being invested in Jamaica's bauxite mining and refining industry.

Last year Alcan's facilities benefited from a US$60 million bond issue. The Puerto Rican administration has established a Caribbean program under which a range of industrial projects in the region can be financed.

The funds for the Caribbean project are from tax-free profits of U.S. companies operating in Puerto Rico that are deposited in the island's banks.