EXHIBIT 10.6
ALUMINA SUPPLY AGREEMENT
(Glencore Contract No. 161.01.57337-S)
THIS ALUMINA SUPPLY AGREEMENT (this "Agreement") is entered into as of
January 1, 2001, by GLENCORE LTD., a Swiss corporation, and CENTURY ALUMINUM OF
WEST VIRGINIA, INC., a Delaware corporation.
RECITALS
WHEREAS, the parties desire to sell and purchase alumina pursuant to the
terms provided herein.
NOW, THEREFORE, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. In this Agreement, the following words have the
following meanings:
"Alumina" means metallurgical grade alumina produced at Point Comfort,
Texas, USA, any Jamaica refinery (Alpart, Aljam and Jamalco) or at Gramercy,
Louisiana, USA or other mutually agreed origins.
"Xxxx of Lading Date" means the date of completion of loading for the
particular shipment in question.
"Buyer" means Century Aluminum of West Virginia, Inc.
"CIF" means CIF as defined in Incoterms 2000, published by the
International Chamber of Commerce, Paris, France.
"Dollars" or "$" means United States of America dollars.
"MT" means metric tons of 1,000 kilograms each.
"Month" means a calendar month.
"Ravenswood" means the aluminum smelter located at Ravenswood, West
Virginia, USA.
"Seller" means Glencore Ltd.
ARTICLE II
ALUMINA
Section 2.1 Term. This Agreement commences on the date hereof and, unless
terminated earlier pursuant to the terms of this Agreement, ends 30 days after
final delivery of the quantity specified.
Section 2.2 Quantity. Seller agrees to sell and Buyer agrees to purchase a
total of 1,625,000 MT of Alumina beginning January 1, 2002 and continuing until
the quantity specified has been shipped under the following schedule:
January - December, 2002 325,000 MT
January - December, 2003 325,000 MT
January - December, 2004 325,000 MT
January - December, 2005 325,000 MT
January - December, 2006 325,000 MT
The amount of any annual quantity is subject to a tolerance of one barge load of
approximately one thousand five-hundred (1,500) MT for shipping purposes.
Section 2.3 Origin/Quality. Alumina supplied under this Agreement will
comply with the guaranteed specifications for the applicable origin of Alumina
set forth on Exhibits A-E hereto. If Seller's supplier changes the
specifications for Alumina produced by such supplier, Seller may propose that
Buyer accept Alumina conforming to such revised specifications under this
Agreement and Buyer shall not unreasonably withhold such consent. Seller will
deliver a single origin per calendar year and will declare the origin to Buyer
by October 31 of the prior year. SELLER MAKES NO OTHER WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO THE PRODUCT SOLD HEREUNDER AND, SPECIFICALLY, SELLER
MAKES NO WARRANTY THAT THE PRODUCT WILL BE MERCHANTABLE OR FIT FOR ANY
PARTICULAR PURPOSE.
Section 2.4 Price. The price that Buyer shall pay per MT of Alumina CIF
Ravenswood Dock, Ohio River under this Agreement will be [CONFIDENTIAL
INFORMATION HAS BEEN OMITTED FROM THIS EXHIBIT PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE COMMISSION] % of the LME
Price. The LME Price is the cash seller (settlement) price for 99.7 percent
purity aluminum in Dollars quoted by the London Metal Exchange as published in
the Metal Bulletin under the caption "Metal Bulletin (month) Averages" in the
section "London Metal Exchange high, low and average (month) (days)" in the
column "(month) Average" for the quotational period. For each calendar year
there shall be twelve (12) quotational periods of one Month each which shall be
the twelve (12) Months commencing December 1 of the calendar year prior to such
calendar year. For purposes of pricing the Alumina to be supplied under this
Agreement, 27,083 MT (1/12 of 325,000 MT) of Alumina shall be priced in each
quotational period, irrespective of the date of physical shipment.
Section 2.5 Payment. Payment shall be made in Dollars by wire transfer no
later than 30 days after the Xxxx of Lading Date to the account specified by
Seller. Seller shall deliver to
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Buyer the following documents with respect to each shipment: (a) Xxxx of Lading,
(b) invoice, (c) draft survey report, (d) certificate of origin, (e) certificate
of analysis, (f) certificate of insurance and (g) statement of facts.
Section 2.6 Delivery. Alumina will be delivered CIF Ravenswood Dock, Ohio
River in suitable roll-top barges. Deliveries will be reasonably evenly spread
throughout the year. Before October 31 of each calendar year, Seller and Buyer
shall agree to a tentative delivery schedule for the following calendar year.
Not later than 30 days before the beginning of each calendar quarter, Seller and
Buyer shall agree to an exact schedule for such calendar quarter.
ARTICLE III
GENERAL PROVISIONS
Section 3.1 Weighing. Cargo weights will be determined by an independent
draft survey at the load port onto ship (Jamaica) or barge (Point Comfort and
Gramercy) and such weight determinations will be conclusive for the final
settlement for each load. Without prejudice to the foregoing, cargo weights for
shipments from Jamaica will also be weighed for information purposes when such
shipments are transferred from the ship to the barges.
Section 3.2 Sampling. Representative samples to determine the quality for
each shipment of Alumina will be taken during the loading operation, according
to the standard methods being applied at the load port. Two equal portions of
each final sample will be placed in sealed containers and duly marked. One
portion shall be sent to Buyer by air express, along with the report of analysis
(which shall also be telecopied to Buyer), and the other shall be sealed and
held by Seller. The material is deemed to comply with the applicable
specification of the relevant alumina production facility, unless Buyer notifies
Seller, within 30 days of receipt of the material, that the material delivered
does not conform to the applicable specification and the nature of that
non-conformity. Seller will then advise Buyer, within 15 days, whether or not
Seller agrees with Buyer's analysis. In case of disagreement between Seller and
Buyer about the material's conformity, the sample retained by Seller will be
analyzed by a referee laboratory agreeable to Buyer and Seller. The result of
the referee analysis will be definitive and binding for both parties. The cost
of such analysis will be borne by the party whose results differ most from those
given by the mutually agreeable referee laboratory. If chemical impurities
and/or physical specifications exceed the applicable specification of the
relevant alumina production facility, the parties shall meet to reach an
amicable settlement to compensate Buyer. If an amicable settlement cannot be
reached, the dispute shall be referred to arbitration pursuant to Section 3.15.
Section 3.3 Barging and Discharge Requirements. Seller will arrange, at
its expense, for the barges necessary to transport the product to the Ravenswood
Dock. Seller will be responsible for payments to the operators of the barges and
for all port or other charges incurred.
Section 3.4 Title, Ownership and Risk of Loss. Buyer shall have title to
and risk of loss from the time the Alumina crosses the ship's or barge's rail
while loading onto the ship or barge.
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Section 3.5 Taxes, Royalties and Duties. All royalties, taxes and duties
imposed or levied on Alumina delivered hereunder shall be for the account of and
paid by Seller or Buyer, as the case may be, in accordance with CIF deliveries.
Section 3.6 Limitation of Liability. Except as provided herein, Seller's
liability is limited to direct losses suffered by Buyer. Seller is not liable
for incidental or consequential losses or damages. Except as provided in Exhibit
F, in no event will Seller's liability for each shipment hereunder exceed the
value of such shipment.
Section 3.7 Force Majeure.
(a) Except as provided in this Section, neither party will be liable
for failure to comply with any term (other than those relating to payment
obligations) of this Agreement if hindered, delayed, or prevented, directly or
indirectly, by any circumstances outside its reasonable control, including but
not limited to war, conditions of war, acts of enemies, national emergency,
sabotage, revolution, riots or other similar disorders; failure of
transportation; fire, flood, windstorm, explosion, or other acts of God;
strikes, lock-outs or other labor disturbances; breakdown of plants; orders or
acts of any government or governmental agency or authority; interference by
civil or military authority; the inability of Seller to obtain Alumina from its
supplier; or the inability of Buyer to obtain power.
(b) The party invoking this provision must give prompt written
notice to the other party after the occurrence of any such circumstances and
must state the probable extent to which it will be unable to perform or will be
delayed in performing its obligations hereunder. Such party must exercise due
diligence to eliminate or remedy any such circumstances which delay or interrupt
its performance; provided, however, that the settlement of strikes or other
events of labor unrest will be entirely within the discretion of the party
having the difficulty and that such party will not be required to settle such
strikes or labor unrest by acceding to the demands of the opposing party when
such course of action is deemed inadvisable in the discretion of the party
having the difficulty.
(c) In the event of force majeure affecting Seller, Buyer may elect
to either: (i) extend the term of this Agreement to the extent that Seller has
invoked this provision (in which event the price for Alumina in effect for the
extended term shall be the same as the price in effect for Alumina scheduled to
be delivered but not delivered during the event of force majeure); or (ii)
purchase from other suppliers quantities of Alumina which Seller is or expects
to be unable to deliver, and Seller shall not be liable to Buyer for any cost,
expense or loss whatsoever of Buyer arising out of any purchase it may make from
other suppliers. Buyer shall give Seller written notice of such purchases, and
they shall be deducted from the quantity required to be purchased hereunder.
(d) In the event of force majeure affecting Buyer, Seller may elect
to either: (i) extend the term of this Agreement to the extent that Buyer has
invoked this provision (in which event the price for Alumina in effect for the
extended term shall be the same as the price in effect for Alumina scheduled to
be delivered but not delivered during the event of force majeure); or (ii) sell
to other buyers quantities of Alumina which Buyer is or expects to be unable to
accept, and Buyer shall not be liable to Seller for any cost, expense or loss
whatsoever
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of Seller arising out of such sales. Seller shall give Buyer written notice of
such sales, and they shall be deducted from the quantity required to be
purchased hereunder.
(e) Notwithstanding the foregoing provisions, in the case of an
event of force majeure affecting Buyer which continues for a period of six (6)
consecutive months or more, then Seller may elect at any time thereafter to
terminate this Agreement with immediate effect, provided that the event of force
majeure is continuing as of the date of such notice, by sending notice to Buyer
as provided in this Agreement announcing exercise of such right of termination.
Notwithstanding the foregoing provisions, in the case of an event of force
majeure affecting Seller which continues for a period of six (6) consecutive
months or more, then Buyer may elect at any time thereafter to terminate this
Agreement with immediate effect, provided that the event of force majeure is
continuing as of the date of such notice, by sending notice to Seller as
provided in this Agreement announcing exercise of such right of termination.
Alternatively, in the case of an event of force majeure which continues for a
period of six (6) consecutive months or more, the party not affected by the
event of force majeure may continue to exercise its rights as set forth in
subparagraph (c) or (d) above, as applicable, and not exercise the right of
termination provided in this subparagraph (e).
Section 3.8 Termination. This Agreement may be terminated prior to
expiration of its term: (a) by mutual agreement of the parties; (b) by either
party, if the other party or any of its subsidiaries shall generally not pay its
respective debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or against such
party or any of its subsidiaries seeking to adjudicate it a bankruptcy or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
such party or any of its subsidiaries shall take any corporate action to
authorize any of the actions set forth in this subsection (b) under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors; or
(c) by either party, if such party is not in default under this Agreement and
the other party has breached or failed to perform any of its material covenants
and agreements under this Agreement and such breach or failure continues for 30
days after notice thereof by the non-defaulting party (or 10 days after notice
thereof if such default is a default of a payment obligation).
Section 3.9 Failure to Accept Delivery and Failure to Deliver.
(a) If Buyer fails to accept delivery for any reason other than an
event of force majeure, Seller shall be entitled to (i) sell to other buyers the
Alumina which Buyer is or expects to be unable to accept, in which event Buyer
shall be liable to Seller for any cost, expense or loss arising out of such
sales; or (ii) extend the term of this Agreement. If Seller elects to extend the
term of this Agreement, the price for Alumina in effect for the extended term
shall be the same
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as the price in effect for Alumina scheduled to be delivered but which Buyer was
unable to accept. Buyer shall give Seller written notice immediately upon
anticipating an inability to accept delivery. Buyer's liability for failure to
accept delivery shall be limited to the value of the quantity of Alumina which
Buyer is unable to accept.
(b) If Seller fails to deliver for any reason other than an event of
force majeure, Buyer shall be entitled to (i) purchase from other sellers the
Alumina which Seller is or expects to be unable to deliver, in which event
Seller shall be liable to Buyer for any additional cost, expense or loss arising
out of such purchases; or (ii) extend the term of this Agreement. If Buyer
elects to extend the term of this Agreement, the price for Alumina in effect for
the extended term shall be same as the price in effect for Alumina scheduled to
be delivered but which Seller was unable to deliver. Seller shall give Buyer
written notice immediately upon anticipating an inability to deliver. Seller's
liability for failure to deliver shall be limited to the value of the quantity
of Alumina which Seller is unable to deliver.
Section 3.10 Notices. All notices or communications required or permitted
hereunder must be in writing and will be deemed to have been duly given when
received or when transmitted by facsimile and confirmed by written receipt if
sent to the address and facsimile numbers below (or at such other address as a
party may subsequently designate to the other in writing by notice given in
accordance with this Section):
If to Buyer: Century Aluminum of West Virginia, Inc.
Xxxxx 0 Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Purchasing Manager
Fax: 000-000-0000
with a copy to: Century Aluminum Company
0000 Xxxxxx Xxxx
Xxxxx 000, Xxxxxxxx X
Xxxxxxxx, XX 00000
Attention: General Counsel
Fax: 000-000-0000
If to Seller: Glencore Ltd.
Three Stamford Plaza
000 Xxxxxxx Xxxx.
Xxxxxxxx, XX 00000-0000
Attention: Alumina Department
Fax: 000-000-0000
Certain notices, however, must be delivered by overnight or express courier or
in person to be effective. These notices are notices of default, cancellation or
termination under Section 3.7 or 3.8; and arbitration under Section 3.15.
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Section 3.11 Precedence. In the event of any inconsistency between this
Agreement and the terms of any other document specific to the transaction or
delivery in question, the terms of this Agreement will govern.
Section 3.12 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction and which is not material in
implementing the intentions of the parties shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions or affecting the validity or
enforceability of any provision in any other jurisdiction.
Section 3.13 Assignment. Subject to the further provisions of this Section
3.13, this Agreement shall be binding upon the parties and their successors and
assigns. No party may assign this Agreement or any rights and duties hereunder
without the prior written consent of the other party (and such consent will not
be unreasonably withheld), and any purported assignment without such written
consent will be null and void; provided, however, that either party may assign
this Agreement and its rights hereunder to any affiliate, subsidiary or parent
company, without the consent of the other, but in any such event, the assigning
party shall not be relieved of its obligations hereunder.
Section 3.14 Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York, U.S.A.,
excluding those relating to choice or conflicts of law and excluding the United
Nations Convention or Contracts for the International Sale of Goods.
Section 3.15 Arbitration. Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association under its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. There shall
be three arbitrators, and the arbitration shall be conducted in the English
language in New York, New York, U.S.A.
Section 3.16 Waiver. No party will be deemed to have waived any right,
power or privilege under this Agreement unless such waiver is in writing and
duly executed by it. No failure or delay in exercising any right hereunder will
be deemed a waiver thereof by any party. No exercise or partial exercise of any
right, power or privilege will preclude any other or further exercise thereof or
of any other right, power or privilege.
Section 3.17 Entire Agreement. This Agreement including the Exhibits
hereto, is the exclusive and complete agreement between the parties with respect
to the subject matter hereof, sets forth their entire understanding and merges
all prior and contemporaneous writings, representations and understandings
between the parties, including but not limited to that certain letter between
the parties dated January 17, 2001. This Agreement may be amended only by
another written agreement duly signed by the parties.
Section 3.18 Possible Extension. The parties agree to meet during 2005 to
discuss a five-year extension or renewal of this Agreement upon mutually
satisfactory terms and conditions.
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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Agreement.
CENTURY ALUMINUM OF WEST VIRGINIA, INC.
By: /s/ Xxxxxx X. Kitchen
--------------------------
Name: Xxxxxx X. Kitchen
Title: Vice President
GLENCORE LTD.
By: /s/ Xxxxxx Xxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxx
Title:
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EXHIBIT A
POINT COMFORT ALUMINA SPECIFICATIONS
Chemical Specifications Typical Guaranteed
(%) (%)
SiO(2) 0.013 0.020 max
Fe(2)O(3) 0.009 0.015 "
Na(2)O 0.32 0.45 "
CaO 0.024 0.045 "
TiO(2)* 0.001 0.005 "
ZnO 0.001 0.010 "
P(2)O(5)* 0.001 0.005 "
V(2)O(5) 0.001 0.005 "
Ga(2)O(3) 0.009 0.020 "
Physical Specifications
+100 mesh 2 10 max
-325 mesh 8 12 "
-20 micron 1.0 3.0 "
L.O.I. (300-1200(degree)C)* 0.89 1.20 "
m^2/g m^2/g
Surface Area (BET) 70 60 min - 80 max
*Based on routine spot checks (not every shipment).
EXHIBIT B
ALPART ALUMINA SPECIFICATIONS
(Port Xxxxxx / Jamaica)
PRODUCER
TYPICAL GUARANTEES
------- ----------
A1203 % 98.500 98.2000 MIN
SiO(2) % 0.014 0.0170 MAX
Fe(2)O(3) % 0.008 0.0150 MAX
TiO(2) % 0.001 0.0030 MAX
V(2)O(5) % 0.003 0.0045 MAX
Na(2)O % 0.450 0.6000 XXX
XxX % 0.053 0.0600 MAX
P(2)O(5) % 0.001 0.0015 MAX
ZnO % 0.010 0.0120 MAX
MnO(2) % 0.001 0.0020 MAX
LOI (300 - 1000 C) % 0.80 1.20 MAX
+ 100 Mesh % 3.70 10.00 MAX
- 325 Mesh % 8.50 10.00 MAX
- 20 microns 1.40
BET m2/gr 72.00 60 MIN / 85 MAX
Alpha Phase % 11.00
EXHIBIT C
ALJAM ALUMINA SPECIFICATIONS
CHEMICAL SPECIFICATIONS
TYPICAL MAXIMUM
------- -------
Na(2)O 0.42% 0.60%
Fe(2)O(3) 0.007% 0.030
CaO 0.04% 0.070
SiO(2) 0.018% 0.030
TiO(2) 0.001% 0.005
V(2)O(5) 0.001% 0.005
ZnO 0.008% 0.020
P(2)O(5) 0.001% 0.009%
PHYSICAL SPECIFICATIONS
BET (SSA) 80 / 90 m^2/g (range)
LOI (300(degree)- 1100(degree)C) 0.95% 1.2 MAX
-325 TYLER MESH 8.0% 12% MAX
EXHIBIT D
JAMALCO ALUMINA SPECIFICATIONS
(Rocky Point / Jamaica)
PRODUCER
TYPICAL GUARANTEES
------- ----------
SiO(2) % 0.012 0.020 MAX
Fe(2)O(3) % 0.012 0.020 MAX
TiO(2) % 0.002 0.005 MAX
V(2)O(5) % 0.002 0.005 MAX
Na(2)O % 0.380 0.500 XXX
XxX % 0.036 0.050 MAX
P(2)O(5) % 0.0014 0.003 MAX
ZnO % 0.013 0.020 MAX
LOI (300 - 1200 C) % 0.90 1.10 MAX
+ 100 Mesh % 3.00 15.00 MAX
- 325 Mesh % 8.00 12.00 MAX
BET m^2/gr 70.00 65 MIN / 80 MAX
EXHIBIT E
GRAMERCY ALUMINA SPECIFICATIONS
PRODUCT SPECIFICATIONS:
Chemical Properties % Typical % Maximum
Si 0.007 0.012
Fe 0.007 0.011
Na 0.35 0.50
Mn 0.0011 0.002
Zn 0.009 0.015
Ca 0.026 0.035
Physical Properties
LOI (300 - 1000(degree)C) 0.85 1.20
+ 100 Mesh 6.0 10.0
- 325 Mesh 5.0 10.0
EXHIBIT F
NON-CONFORMITY OF ALUMINA
It is the intention of Seller that all Alumina delivered to Buyer
pursuant to this Agreement shall conform to the specifications contained in
Exhibits A-E, but if any such Alumina does not conform, the following provisions
shall apply.
If any Alumina delivered hereunder does not conform to the
guaranteed specifications, Buyer's sole remedy and Seller's sole liability
arising out of the failure of such Alumina to conform to the specifications
shall be either:
(a) Buyer shall have the option of accepting the Alumina at a
reduced price to be negotiated in good faith by the parties, or
(b) If Buyer does not exercise such option or the parties fail to
reach agreement on the reduced price for such Alumina, Buyer shall have the
option, to be exercised within a reasonable time, to cause Seller to replace the
Alumina at no cost to Buyer with a like quantity of Alumina that conforms to the
specifications.
If Buyer elects replacement, Seller shall use its best efforts to do so within
the shortest possible time (including, without limitation, purchasing conforming
alumina from third parties). In such event, Seller shall deliver the replacement
Alumina to Buyer at the Ravenswood Dock, Ohio River. Buyer shall make the
non-conforming Alumina available to Seller at such port (with all additional
expenses reasonably incurred by Buyer in so making the non-conforming Alumina
available to Seller being for the account of Seller).
