Qatalum changes coke supply source to redeem savings in freight

In line with the mission to become one of the most efficient smelters in the world, Qatalum's new contractual arrangements for the supply of petroleum coke allow for a net savings in freight rates and time for the foreseeable future.

Qatalum signing the contract with Petroleum Coke Industries Company (PCIC) Kuwait on June 17, 2014.

In the project phase of Qatalum, three, 5 year contracts had been signed with Rain CII US, Oxbow US and PCIC in Kuwait for the supply of petroleum coke. At Qatalum, petroleum coke is used in the manufacture of anodes by Carbon. The contracts were signed in 2009 for a total volume of approximately 250,000 tonnes per annum, and shipments began in 2010. Additionally, the volumes supplied exceeded the consumption needs of the carbon plant therefore causing an unnecessary surplus in the silos at the Port.

Due to long sailing times and high freight costs to Qatalum, the Raw Material Team, in Supply Chain, searched for a closer source of coke. The search resulted in coke sourced from Rain India which was subsequently introduced to the carbon plant. The new coke was successfully tested in 2012.

The shipment from India, which was qualified early in 2013 was later followed by another shipment, when each time, a saving of US$1 million was made on freight. This set a pretext for the Raw Materials department to begin the necessary stages to begin importing from India, instead of the US and the contract with Rain CII US was terminated. As it contractually stands today, instead of originally planned 100 kMT from the US, Qatalum will receive 3 shipments from India and only one from Rain US in 2014. As for 2015 -2016, Qatalum will receive all coke shipments (about 4-5 per year) from India and no more US sourced shipments.

Contractual savings of more than US$ 50 per tonne and a reduced freight time by 20 days are now in place, with contracts from Rain CII India, which is valid for 3 years starting 2014.

Another 3 year contract was recently signed with PCIC Kuwait. Again, the source under this contract will be only from Kuwait with no more shipments from US (as pursuant to current contract). The new contract will be effective from the beginning of 2015. In dropping one shipment from the US Gulf Coast, Qatalum will save USD 1 million, in addition to saving on stock management due to shorter trips from Kuwait.

Both coke supply contracts take into consideration the correct volumes of a minimum of 80,000 to a maximum of 100,000 tonnes annually so as to not develop a surplus in the silos. Additionally, the introduction of options on suppliers will allow Qatalum to be able to trial cargoes from other suppliers for further savings in the future.

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