Tolling Agreement between Glencore Ltd. and Century Aluminum Company (August 1, 2004)
Glencore Ltd. and Century Aluminum Company have entered into a 10-year agreement for Glencore to supply alumina and for Century to return aluminum produced from that alumina. The contract specifies annual quantities, quality standards, pricing based on the London Metal Exchange, and payment terms. The agreement will begin with the commissioning of a new production line, but not before July 2006. Key terms, such as tolling charges and metal premiums, are linked to market conditions and duty status. Some confidential information has been omitted from the public version of the contract.
Exhibit 10.2
GLENCORE Ltd.
August 1, 2004
Jack Gates
Century Aluminum Company
2511 Garden Road
Monterey, CA 93940
Dear Jack:
We are pleased to present the following revised offer with validity until August 2, 2004:
Quantity: | 174’150 MT +/-5% of alumina to be supplied CIF Grundartangi per annum and 90’000 MT +/-5% of aluminum to be returned FOB stowed Grundartangi per annum. Conversion ratio of 1.935 MT of alumina per MT of aluminum to apply throughout the life of contract. | |
Duration: | 10 years with the start date to match the commissioning of Line 2 at Nordural, but no earlier than July 2006. | |
Alumina: | Acceptable origins to include Aughinish, eurAllumina, San Ciprian, Alunorte, Bauxilum, Suriname, and any Jamaican in Glencore’s option. | |
Tolling Charge: | * % of the LME plus Metal Premium except for the first 90’000 MT of aluminum in which case the tolling charge shall be 71% of the LME plus Metal Premium. | |
Metal Premium: | a) If duty is in place: | |
| Metal Premium = * % of the LME | ||
| b) If the duty is removed or reduced: | ||
| Metal Premium = A or B, whichever is higher. | ||
| * | ||
| * | ||
| * | ||
| * | ||
| * | ||
| * | ||
LME: | The official London Metal Exchange High Grade cash settlement quotation in US dollars averaged over the quotational period (QP). | |
QP: | Month prior month of delivery. |
Three Stamford Plaza • 301 Tresser Boulevard • Stamford, CT ###-###-#### • U.S.A.
Telephone ###-###-#### • Telefax ###-###-#### • Telex ###-###-####
GLENCORE | Page 2 |
Aluminum: | Standard ingots with piece weight between 12-26 kgs each, strapped in bundles. A maximum of 10% is allowed as sow with maximum piece weight of 750 kgs each. | |
Quality: | Primary unalloyed aluminium, 99.7 percent aluminium minimum, FE 0.20 percent maximum, SI 0.10 percent maximum, according to P1020 specifications. | |
Payment Terms: | The tolling charge shall be paid within 5 days after receipt of weekly invoice. |
We look forward to your favorable response to the above offer. Please don’t hesitate to contact me at (203) ###-###-#### should you wish to discuss any aspect of this offer.
Regards,
/s/ Matt Lucke
ACCEPTED as of this 1st day of August 2004
CENTURY ALUMINUM COMPANY
By: | /s/ Gerald J. Kitchen | |
| Gerald J. Kitchen | ||
| Executive Vice President, General Counsel | ||
| and Chief Administrative Officer |
| * | Confidential information has been omitted from this exhibit pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission |
