EXHIBIT 10.7
ALUMINA SUPPLY AGREEMENT
(Glencore Contract No. 161.01.27028-S)
THIS AGREEMENT is made and entered into, as of January 1, 2001, by
and between Glencore AG, a Swiss corporation ("Glencore"), and Berkeley
Aluminum, Inc., a Delaware corporation ("Berkeley").
WITNESSETH:
WHEREAS, the parties desire to sell and purchase alumina pursuant to
the terms provided herein.
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. In this Agreement, the following words shall
have the meanings respectively assigned thereto:
o "AA" means Alcoa of Australia, Ltd.;
o "AA Alumina Plants" means the Kwinana, Pinjarra and Wagerup
alumina plants located in Western Australia, including any
expansions thereof;
o "AA's Loading Berth" means the loading berth of AA at the port
of Kwinana or at the port of Bunbury or such other port for
bulk loading of Alumina from AA Alumina Plants as the parties
may agree from time to time;
o "Alumina" means sandy metallurgical grade alumina;
o "Annual Quantity" means the quantity of Alumina to be
purchased hereunder during a Contract Year, which quantity
shall be 110,000 MT, plus/minus ten (10%) percent at
Berkeley's option;
o "Bill of Lading Date" means the date of completion of loading
for the particular cargo in question;
o "CIF" means CIF as defined in Incoterms 2000, published by the
International Chamber of Commerce, Paris, France;
o "Contract Year" means the twelve-month period from January 1
to December 31 of each year beginning January 1, 2002;
o "Dollars" or "$" means United States of America dollars;
o "Event of Force Majeure" shall have the meaning set forth in
Section 3.8 of this Agreement;
o "MT" means metric tonnes of 1,000 kilograms each; and
o "Mt. Holly" means the aluminum smelter in Mount Holly,
Berkeley County, South Carolina, U.S.A. in which Berkeley
holds an indirect interest.
ARTICLE II
ALUMINA
Section 2.1 Quantity. Glencore agrees to sell and Berkeley agrees to
purchase during each Contract Year that this Agreement is in effect a quantity
of Alumina as determined pursuant to the terms of this Agreement. The quantity
of Alumina to be sold and purchased during each Contract Year, hereinafter
referred to as the Annual Quantity, shall be 110,000 MT, plus or minus ten
percent (10%) at Berkeley's option, to be declared by Berkeley on or before
September 30 of the immediately preceding Contract Year. In each Contract Year,
the Annual Quantity declared by Berkeley will be subject to a tolerance of plus
or minus two percent (2%)
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for shipping purposes. The Annual Quantity shall consist of Alumina produced at
AA Alumina Plants, and (unless otherwise agreed by the parties) shall be from
the same source as AA's own deliveries of Alumina to Mt. Holly. Notwithstanding
the foregoing, if AA delivers alumina to Mt. Holly from a source other than the
AA Alumina Plants, Glencore shall have the option to supply Alumina hereunder
from such alternate source of production.
Section 2.2 Term. This Agreement shall take effect on the date hereof and
shall continue in force until December 31, 2006, unless sooner terminated
pursuant to the terms hereof.
Section 2.3 Quality. Alumina supplied under this Agreement shall comply
with AA's normal specifications for Alumina produced at the relevant alumina
refinery as set forth in Annex A, which is hereby incorporated by reference and
made a part hereof. In the event that AA hereafter supplies alumina to Mt. Holly
from an AA Aluminum Plant with different specifications, the specifications
detailed in Annex A shall be revised accordingly. Except as provided in this
Section 2.3, GLENCORE MAKES NO OTHER WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT
TO THE PRODUCT SOLD HEREUNDER AND, SPECIFICALLY, GLENCORE MAKES NO WARRANTY THAT
THE PRODUCT SHALL BE MERCHANTABLE OR FIT FOR ANY PARTICULAR PURPOSE.
Section 2.4 Price. The price that Berkeley shall pay per MT of Alumina
delivered CIF Charleston 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
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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 Contract 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
Contract Year. For purposes of pricing the Alumina to be supplied under this
Agreement, one-twelfth (1/12) of the declared quantity of Alumina for any
Contract Year shall be priced in each of the twelve applicable quotational
periods, irrespective of physical shipment.
Section 2.5 Payment. Payment of monies for any shipment made pursuant to
this Agreement will be due and shall be effected by telegraphic transfer to the
account specified by Glencore not later than 30 days after Bill of Lading Date
for such shipment. Glencore shall deliver to Berkeley the following documents
with respect to each shipment: (a) Bill 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, Port of Charleston,
South Carolina. Deliveries of the Annual Quantity shall be reasonably evenly
spread throughout each Contract Year. Before October 31 of each calendar year,
Glencore and Berkeley shall agree to a tentative delivery schedule for the
following calendar year. Not later than 30 days before the beginning of each
calendar quarter, Glencore and Berkeley shall agree to an exact schedule for
such calendar quarter.
ARTICLE III
GENERAL PROVISIONS
Section 3.1 Governing Law. This Agreement shall be subject to and
construed under the laws of the State of New York, excluding the rules of
conflicts or choice of law and
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excluding the United Nations Convention on Contracts for the International Sale
of Goods. 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 3.2 Weighing. Cargo weights shall be determined by draft survey at
the port of origin, and these weight determinations shall be conclusive for the
final settlement for each cargo.
Section 3.3 Unloading of Alumina. (a) Berkeley shall provide Glencore
access to the pier facilities at the Port of Charleston which are adequate to
permit Glencore to meet its Alumina delivery obligations hereunder. Berkeley
shall provide Glencore such access on an equitable basis with other suppliers of
Mt. Holly using such pier facilities. Glencore shall deliver Alumina on board
vessels with acceptable storage conditions and unloading charateristics
reasonably adapted to the requirements of the pier facilities as in effect from
time to time. Berkeley shall provide Glencore reasonable advance notice
regarding any subsequent changes to these requirements during the term of this
Agreement. Any such changes which materially impair Glencore's ability to meet
its Alumina delivery obligations hereunder shall be subject to its approval.
(b) Berkeley will discharge Alumina from delivering vessels at the
pier facilities at the rate of 8,500 MT of Alumina per weather working day,
Sundays, local and legal holidays included. Glencore or its representative shall
give notice to Berkeley's representative at the pier facilities stating that the
vessel is in every respect ready to discharge and in free pratique.
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If notice of readiness is given before noon U.S. Eastern Standard time, laytime
shall commence at 1:00 p.m. U.S. Eastern Standard time on such day, and if
notice of readiness is given after noon U.S. Eastern Standard time, laytime
shall commence at 8:00 a.m. U.S. Eastern Standard time on the next morning,
whether the vessel is in berth or not. Notwithstanding the foregoing, laytime
shall not commence later than the time the vessel actually begins to discharge.
Berkeley shall pay demurrage at the rate set forth in the applicable charter
party, subject to a maximum rate of $12,000 per day. Glencore shall pay despatch
at the rate of one-half demurrage.
Section 3.4 Title, Ownership, Risk of Loss. Title, ownership, right of
possession and risk of loss to each shipment of Alumina shall pass to Berkeley
at the time the Alumina is loaded onto the vessel at AA's Loading Berth.
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 Glencore or Berkeley, as the case may be, in accordance with CIF
deliveries.
Section 3.6 Limitations of Liability. Except as otherwise provided herein,
Glencore's liability hereunder shall be limited to direct losses suffered by
Berkeley. Glencore shall not be liable for any incidental or consequential
losses. Except as provided in Annex A, Glencore's liability for each shipment
hereunder shall not exceed the value of such shipment.
Section 3.7 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
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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 3.8 Force Majeure.
(a) Except as provided in this Section 3.8, no party shall be liable
for failure to comply with any terms of this Agreement (other than those
relating to payment obligations) if such party is hindered, delayed, or
prevented, directly or indirectly, by any circumstances outside its reasonable
control, including but not limited to the following: war, conditions of war,
acts of enemies, national emergency, revolution, riots, sabotage 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 or equipment; orders or acts of any government or
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governmental agency or authority; interference by civil or military authority;
the inability of Glencore to obtain Alumina from its supplier; or the inability
of Berkeley to obtain power ("Events of Force Majeure").
(b) The party invoking this provision shall give prompt written
notice to the other parties after the occurrence of an Event of Force Majeure
and shall state the probable extent to which it will be unable to perform or
will be delayed in performing its obligations hereunder. Such party shall
exercise due diligence to eliminate or remedy the Event of Force Majeure, and
shall give the other parties prompt written notice when that has been
accomplished; 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 case of an Event of Force Majeure affecting Glencore,
Berkeley may elect to either: (i) purchase from other suppliers any or all of
the quantities of the product which Glencore is or expects to be unable to
deliver (in which event Glencore shall not be liable to Berkeley for any cost,
expense or loss whatsoever of Berkeley arising out of any purchase Berkeley may
make from other suppliers; Berkeley shall give Glencore written notice of any
such purchase, the amount of which shall be deducted from the Annual Quantity
for the Contract Year in which Berkeley makes such purchase), or (ii) extend the
term of this Agreement to the extent that Glencore 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).
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(d) In the case of an Event of Force Majeure affecting Berkeley,
Glencore may elect to either (i) sell to other buyers the Alumina which Berkeley
is or expects to be unable to accept, and Berkeley shall not be liable to
Glencore for any cost, expense or loss arising out of any such sales; Glencore
shall give Berkeley written notice of any such sale, the amount of which shall
be deducted from the Annual Quantity for the Contract Year in which Glencore
makes such sale; or (ii) extend the term of this Agreement to the extent that
Berkeley has invoked this provision. If Glencore elects to extend the term of
this contract, 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.
(e) Notwithstanding the foregoing provisions, in the case of an
Event of Force Majeure affecting Berkeley which continues for a period of six
(6) consecutive months or more, then Glencore 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
Berkeley 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 Glencore which continues for a period of six (6)
consecutive months or more, then Berkeley 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
Glencore 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).
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Section 3.9 Failure to Accept Delivery and Failure to Deliver.
(a) If Berkeley fails to accept delivery for any reason other than
an Event of Force Majeure, Glencore shall be entitled to (i) sell to other
buyers the Alumina which Berkeley is or expects to be unable to accept, in which
event Berkeley shall be liable to Glencore for any cost, expense or loss arising
out of such sales; or (ii) extend the term of this Agreement. If Glencore elects
to extend the term of this Agreement, 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 which Berkeley was unable to accept. Berkeley shall give
Glencore written notice immediately upon anticipating an inability to accept
delivery. Berkeley's liability for failure to deliver shall be limited to the
value of the quantity of Alumina which Berkeley is unable to accept.
(b) If Glencore fails to deliver for any reason other than an Event
of Force Majeure, Berkeley shall be entitled to (i) purchase from other sellers
the Alumina which Glencore is or expects to be unable to deliver, in which event
Glencore shall be liable to Berkeley for any additional cost, expense or loss
arising out of such purchases; or (ii) extend the term of this Agreement. If
Berkeley elects to extend the term of this Agreement, the price for Alumina in
effect for the extended term shall the same as the price in effect for Alumina
scheduled to be delivered but which Glencore was unable to deliver. Glencore
shall give Berkeley written notice immediately upon anticipating an inability to
deliver. Glencore's liability for failure to deliver shall be limited to the
value of the quantity of Alumina which Glencore is unable to deliver.
Section 3.10 Possible Extension. The parties agree to meet before
September 30, 2005 in order to discuss in good faith a five-year extension or
renewal of this Agreement upon mutually satisfactory terms and conditions.
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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 shall govern.
Section 3.12 Assignment. Subject to the further provisions of this Section
3.12, this Agreement shall be binding upon the parties and their successors and
assigns. No party may assign this Agreement or any rights or duties hereunder
without the written consent of the other party (and such consent will not be
unreasonably withheld), and any purported assignment without such written
consent shall 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 3.13 Notices. All notices or communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when
received or when transmitted by facsimile and confirmed by return notice if sent
to the address and facsimile numbers below:
If to Glencore: Glencore AG
Baarenmattstrasse 3
CH-6341 Baar
Switzerland
Fax: 011-41-41-709-3536
Attn: Alumina Dept.
If to Berkeley: Berkeley Aluminum, Inc.
Route 2 South
Ravenswood, WV 26164
Fax: 304-273-7108
Attn: Purchasing Manager
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with a copy to:
Century Aluminum Company
2511 Garden Road
Suite 200, Building A
Monterey, CA 93940
Fax: 831-642-9080
Attn: General Counsel
Section 3.14 Severability. If any provision of this Agreement is
determined by a court of competent jurisdiction to be null and void or
unenforceable, the remaining provisions of this Agreement shall remain in full
force and effect and the Agreement shall be construed to give effect to the
intent of the parties.
Section 3.15 Waiver. No party shall 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 shall
be deemed a waiver thereof by any party. No exercise or partial exercise of any
right, power or privilege shall preclude any other or further exercise thereof
or of any other right, power or privilege.
Section 3.16 Entire Agreement. This Agreement, including the Annexes
hereto, is the exclusive and complete agreement between the parties relating 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 a writing
duly signed by the parties.
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IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Agreement as of the date first
written above.
Glencore AG Berkeley Aluminum, Inc.
By: /s/ Daniel Schachter By: /s/ Gerald J. Kitchen
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Name: Daniel Schachter Name: Gerald J. Kitchen
Title: Title: Vice President
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ANNEX A
ALCOA OF AUSTRALIA LTD. ALUMINA SPECIFICATIONS
ARTICLE I
SPECIFICATIONS AND ANALYSIS
Section 1.1 - Specifications. Subject to the succeeding provisions of this
Article, each shipment of Alumina delivered to Century pursuant to this
Agreement shall conform to the following specifications ("Specifications"):
(a) Chemical Specifications:
SiO(2) 0.030% Max.
Fe(2)O(3) 0.030% Max.
Na(2)O 0.700% Max.
TiO(2) 0.005% Max.
Zn 0.005% Max.
CaO 0.150% Max.
V(2)O(5) 0.003% Max.
MnO 0.001% Max.
P(2)O(5) 0.003% Max.
(b) Physical Specifications. No more than twelve percent (12%) shall pass
through a 325 mesh Tyler Standard screen and no more than ten percent (10%)
should be retained on a 100 mesh Tyler screen using the dry screen test method.
The loss on ignition, after drying at 300(Degree)C. shall not exceed one percent
(1%) upon heating at 1200(Degree)C. as determined by AA's Standard Methods of
Analysis 121B (11-65). The total water absorption which is defined as the
residual water of crystallization plus total moisture that can be absorbed by
exposure to a forty-four percent (44%) relative humidity atmosphere shall not
exceed four percent (4%) as determined by AA's Standards Methods of Analysis
130A (12-65).
Section 1.2 - Sampling and Analysis.
(a) Glencore shall make the physical analyses set forth in Section 1.1(b)
and a chemical analysis for SiO2, Fe2O3, Na2O, CaO, TiO2, and A 1203 of a
representative sample of each shipment of Alumina sold and delivered to Century
pursuant to this Agreement. The methods of sampling and analysis shall be in
accordance with the standard practices of AA, a copy of which shall be supplied
to Century. A representative sample shall be taken from each shipment of Alumina
to Century at the calcined alumina storage tanks at the AA Alumina Plants and a
portion of such sample shall be analyzed at the alumina plant according to
standard procedures. Unless a representative of Century is present at the
analysis pursuant to Section 1.4, a portion of the sample shall be sent by air
express to Century along with the report of analysis (which shall also be
telecopied to Century). An additional portion of the sample shall be sealed and
retained for expert analysis in case of disagreement. If Century contests the
specifications of any shipment of Alumina, the retained portion of the sample
shall be delivered to Alcoa
Research Laboratories, Pittsburgh, Pennsylvania, and Glencore shall cause such
entity to make an analysis of such portion using AA's standard methods of
analysis. Alcoa Research Laboratories shall be acting as an expert and not as an
arbitrator and its decision as to the specifications of the Alumina contained in
such sample shall be final and binding upon the parties.
(b) Trace element analysis will be shown on the Analysis Certificate for
each shipment.
Section 1.3 - Presumption. The initial analysis at the alumina plant, or if
Century and Glencore disagree on the results of an analysis, then the expert
analysis of the additional portion as provided in Section 1.2(a) will be
conclusively presumed to be the specifications of the entire shipment.
Section 1.4 - Century Representative. If at any time the Alumina delivered to
Century does not conform to the Specifications (as determined by analysis in
accordance with Section 1.2), Century shall immediately thereafter have the
right at its expense to appoint a representative to be present and observe the
sampling and analysis of Alumina to be delivered to Century (carried out
pursuant to Section 1.2) and, subject to the agreement of AA, by AA personnel in
the laboratory of AA. The Century representative shall be entitled to be present
at the sampling and analysis of all Alumina assigned for delivery to Century and
to continue to observe such sampling and analysis until such time as all Alumina
delivered to Century from AA Alumina Plants is within the Specifications for a
period of three (3) consecutive months following the non-conforming shipment
that gave rise to the right of Century to appoint the representative.
ARTICLE II
NON-CONFORMITY
Section 2.1 - Intent of the Parties. It is the intention of Glencore that all
Alumina delivered to Century pursuant to this Agreement shall conform to the
Specifications, but if any such Alumina does not conform, the following
provisions of this Article II shall apply.
Section 2.2 - Remedies. If any Alumina delivered hereunder does not conform to
the Specifications, Century's sole remedy and Glencore's sole liability arising
out of the failure of such Alumina to conform to the Specifications shall be
either:
(a) Century shall have the option of accepting the Alumina at a reduced
price to be negotiated in good faith by the parties; or
(b) If Century does not exercise such option or the parties fail to reach
agreement on the reduced price for such Alumina, Century shall have the option,
to be exercised within a reasonable time, to cause Glencore to replace the
Alumina at no cost to Century with a like quantity of Alumina that conforms to
the Specifications.
If Century elects replacement, Glencore 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, Glencore shall deliver
the replacement Alumina to Century at the port of
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Charleston, South Carolina. Century shall make the non-conforming Alumina
available to Glencore at such port (with all additional expenses reasonably
incurred by Century in so making the non-conforming Alumina available to
Glencore being for the account of Glencore).
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