Ten months into construction, with rows of giant tanks and steel frameworks visible from the highway, Diageo’s Captain Morgan Rum distillery on St. Croix is on schedule and beginning to hire its permanent staff, Diageo USVI Vice President Dan Kirby said Thursday. Taking media on a tour of the plant to show off progress, Kirby said construction is about halfway complete.
“By the end of April, about 95 percent of the structure will be complete, at which point the wiring and technical work will begin,” he said. When asked how many contractors and job site employees were hired locally, Kirby said about 82 percent of the contractors are local companies.
“We have spent $30 million, and $25 million of that has gone to local companies—companies that were here before,” he said. They have been trying to hire locally, and when specialized technical work is needed, they post the job locally first before seeking help elsewhere, he said.
“When that does not work, yeah, we do bring in specialists from outside,” he said. While the number varies from day to day, right now the percentage of workers on the project hired from within the territory is “probably in the high 60s,” he said.
The plant, designed to produce 20 million proof gallons of rum a year, is designed to recycle its water, releasing no effluent to the sea, he said.
After fermentation of the molasses, the mash will be distilled in state-of-the-art vacuum distillation columns, which distill the alcohol at lower temperatures, using less energy, releasing nothing into the air and causing less scaling and wear-and-tear on equipment, he said.
The rum produced at the plant will start out at nearly 190 proof—almost pure alcohol. It will then will be mixed with water, bringing it down to 150 proof and aged in 205-liter Kentucky white oak barrels for a year. The first barrel warehouse at their complex further west will be finished on June 23, and the second sometime in mid-August, he said.
“We will fill roughly 800 barrels a day to start,” he said. Complex chemical reactions with the wood and charcoal of the barrels impart certain subtle aromatics to the rum and smooth it out, he explained. “You want a fairly neutral barrel for rum,” he said.
So the 205 -liter barrels they use have already been well-used for making Bourbon, reducing the amount of tannins and other aromatics in the wood. After aging for a year, the barrels will be emptied into isotankers and shipped to Diageo’s bottling facility in Maryland for final blending, he said. The barrels then are filled again.
Walking around the site, Kirby pointed out the plant’s components, explaining what the various tanks and buildings were for. For those driving by on the highway, the large erector-set-like steel-beam assembly is where the vacuum distillation columns will go. The big green tanks closer to the highway are for the rum.
Some of the smaller tanks next to them are for a single day’s production, kept separate until it can be tested for quality. Others are for the oils and esters that are byproducts of distillation. As a clean disposal method, these will be burned to help generate heat for distillation, he said.
The six even-larger green tanks visible further back from the highway are for anaerobic processing of the lees left over from distillation. They will produce and collect methane gas, which will help power the distillation process, making the plant both clean and energy efficient, he said.
The biggest tank, colored black, will hold about a million gallons of fresh water from the V.I. Water and Power Authority, so the plant can keep operating for a few days if there is any interruption in supply, he said.
A massive cylinder, the size of a NASA space rocket, lying on its side on top of rollers is a giant dryer, designed to remove and recycle moisture from the processed lees, he said.
Construction should be fully complete by late October, and the first rum should go into oak barrels in late November or early December. In Jan. 2011, the first batch of aged rum is due to ship off to Maryland, he said.
Diageo held job fairs in January and has hired six of the plant’s 62 eventual permanent production staff and management.
“In April, we will start doing a lot of the hiring, and everyone will be in place by this fall,” he said. Work has not only progressed quickly and smoothly; Kirby said there has not been a single workplace accident in the last six months. “That’s something we are very, very proud of.”
The company has pledged to give $1,000 to a charitable cause in the territory for each incident-free month, he said. “Today we are giving $6,000 for the period from September to February, to the V.I. Special Olympics.”
For many years, Diageo purchased its Captain Morgan Rum from a third-party distiller in Puerto Rico, but with the move to St. Croix, the company will own the factory.
“It will be a transparent and seamless transition,” Kirby said. “The rum will be identical. But now we will have absolute control of what is the key component of our rum.”
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 $100 million in remitted taxes a year—almost $3 billion over the 30-year term of Diageo’s agreement with the government.
Generous Economic Development Commission 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 but less generous tax incentives.
Unhappy about the loss of excise tax revenues, Puerto Rico has been lobbying Congress to change the rules and limit the amount of remitted rum tax the territory can give back to the company, or barring that, to have the money divided between the territories base on population, thus benefitting their much larger territory. Thus far, the rules have remained unchanged and the U.S. Virgin Islands’ deal with Diageo remains intact.
