Diageo’s Captain Morgan Rum distillery on St. Croix is on schedule to start making rum by the end of 2010, and everything is going well, said a senior Diageo official, who toured a group of reporters around the construction site on Tuesday.
According to Dan Kirby, Diageo’s vice president of supply for the territory, construction should be complete by October 2010.
"We will be up and running by November of next year, and we expect to be laying down distilled rum into wood in December," Kirby said.
For years, Diageo purchased its Captain Morgan Rum from a third-party distiller in Puerto Rico, and that U.S. territory is now not happy about the move to an in-house distillery on St. Croix, nor about the use of remitted rum excise taxes to entice the liquor giant.
The V.I. government is financing the construction of the plant out of those remitted excise taxes but will ultimately recoup the financing and take in nearly $3 billion in remitted rum excise taxes over the 30-year term of Diageo’s agreement with the government. Generous Economic Development Commission (EDC) tax benefits are to be granted to the company, too, along with direct cash subsidies to buy molasses and pay for advertising. Puerto Rico gave similar tax incentives.
Unhappy about the move to St. Croix, Puerto Rico is now pushing Congress to change the rules and limit the amount of remitted rum tax the territory can give back to the company.
Kirby said he is "100 percent certain" the territory’s collection of rum excise taxes will continue, and the company’s deal with the V.I. government for the financing of the plant’s construction is safe from any actions in Congress.
But even if Congress should change the rules for excise-tax remittances at some point, neither Diageo nor the government will be holding the bag for the cost of constructing the plant, he believes.
"The individual bond holders most likely hold the risk," Kirby said, stressing it was a hypothetical question as he was certain there would be no changes.
Regardless of the larger political situation, the state-of-the-art plant is coming up quickly. Foundations for a number of huge tanks have been poured and two of three gigantic, 4.5-million-gallon waste-processing tanks are already built. Mike Jappy, vice president of operations at the plant, said the giant tanks will be anaerobic digesters, breaking down the fermented mash left after distillation. The process will produce enough methane to provide about half the energy needed to run the distillery, saving energy and helping to process the waste, Jappy said. As a result of that and other measures, the plant will have zero or nearly zero emissions, he said.
The final waste product is a dry, granular substance, which Kirby said may be used to cap the Anguilla landfill, be used as fertilizer by the Department of Agriculture or possibly be burned.
"There are any number of options," Kirby said.
About 100 to 120 workers are employed onsite right now, Kirby said. As the complex work on the technological guts of the distillery really gets going, that number will rise to a peak of about 300 sometime in April, he said. All combined, workers have put about 60,000 hours on the clock so far, of which roughly 75 percent have been local contractors or employees.
So far, there have been no accidents of any kind.
"That’s something we are very, very proud of," he said.
When more complex, technical work begins in earnest early next year, Diageo will try to recruit on-island, but "some of the skill sets are in limited supply," and a larger number of imported specialists will probably be needed, he said.
With the plant coming online later in the year, it will need to hire a permanent workforce. On Jan. 23, Diageo will be holding a career fair.
"We are inviting people all over the island to come and look at working here," Kirby said. The plant will have between 60 to 70 permanent, direct jobs. That is a little higher than earlier estimates of between 40 and 60 jobs, before detailed operational plans were completed. The plant should also create about 100 to 170 indirect jobs, according to Kirby.
After ageing for one year in barrels, the first Captain Morgan Rum made on St. Croix will be ready to sell in January 2012, he said.
