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Hopeton Ferguson Tracy-Ann Clarke Morgan Horace Cochrane. To define the Supply Chain and its application to the Bauxite Industry Show the structure of the Supply chain and how processes are interdependent Demand and supply of NanoTech bauxite
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Hopeton Ferguson • Tracy-Ann Clarke Morgan • Horace Cochrane
To define the Supply Chain and its application to the Bauxite Industry • Show the structure of the Supply chain and how processes are interdependent • Demand and supply of NanoTech bauxite • Forecasting of bauxite supply and Alumina manufacturing • Factors that inhibit the Supply Chain and • Recommendations for Supply Chain improvement.
The overall production chain of aluminum is represented in Figure 1 on the next slide. • The chain is traditionally constituted by six steps: • - Bauxite mining • - Alumina production • - Aluminum electrolytic smelting • - Manufacturing of intermediary, semi-finished products • - Fabrication of end products • - Aluminum scrap recovery
NanoTech started in Jamaica in 1950 with the formation of Nano Minerals of Jamaica, a wholly owned subsidiary of NanoTech. The company mined bauxite for export, with the first shipment in 1953. • NanoTech mines bauxite and refines it into alumina before exporting the alumina from its port at Clarendon. NanoTech Bauxite
In 1962, the company began processing bauxite into alumina at a new refinery in Clarendon with a production capacity of 500,000 metric tonnes per year (mtpy), and exporting alumina from its port. • The refinery's capacity was upgraded to 1 million mtpy in 1999 and then to 1.25 million mtpy in 2003. • The completion of a further upgrade in March 2007 increased the production capacity of the refinery to 1.425 million metric tonnes per year. NanoTech ’s History
NanoTechproduces smelter grade alumina from bauxite to meet an annual demand of 1.425 million metric tonnes. Major raw materials include: fuel oil, caustic soda and lime • Bauxite is mined by the company’s Mining Department located in the parish of Manchester (approximately 20 Km from the refinery) Bauxite Manufacturing Process • It is then trucked from the mine pits to the conveyor loading point where it is unloaded at a stock pile that is maintained at 300,000 tons • The bauxite is put on a rope conveyor system which is used to transport the bauxite to the railcar loading point (railhead), where an 85,000 ton stock pile is maintained
Railcars are used at this point to transport the bauxite to the refinery • At the refinery, the bauxite is stored at a 120,000 ton stock pile from which the process is fed by way of a conveyor belt • Alumina is extracted from the bauxite at the refinery using the Bayer process • This is then stored in a 5,000 ton bin, and after which it is transported by railcars to the Port for shipment • The alumina is then stored in two bins with capacities of 36,000 tons and 50,000 tons Bauxite Manufacturing Process (cont’d)
From the bins, the alumina is loaded unto the ships via a conveyor belt at a rate of 700 tons/hr • The ships vary in capacity between 19,590 and 44,602 tons and are the responsibility of the customers, mainly from North America • The requisite power for the refinery is generated locally (on site) using bunker C oil • The oil is shipped to a port in Clarendon where it is stored in two tanks of capacity 171,000 and 109,000 barrels, and then transported to the refinery by rail where it is then stored in a 80,000 barrel tank Bauxite Manufacturing Process (cont’d)
The Bayer process uses both caustic soda and lime as other raw materials in the extraction process • The caustic is shipped to port in Rocky Point where it is stored in two 13,090 wet metric tones capacity tanks, and then transported to the refinery by rail where it is then stored in a 2,360,000 gallon tank • The lime is purchased from a supplier located adjacent to the refinery, and is transported by conveyor to the refinery lime storage bins Bauxite Manufacturing Process (cont’d)
The Market Conditions • Some of NanoTech ’s major customers are North American smelters • The corporation has been faced with many challenges in recent years and has lost 25% of its market share due to competition from China • This has lead to a surplus in the non Chinese Market, which in turn has caused a reduction on the selling price of Alumina, while the cost of raw material continue to rise.
The only way to remain viable is to reduce the cost of production by increasing process efficiencies • At the moment Alumina contract price is in the region of US$350/tonne • Sometimes spot market price can be as high as $600 per tonne • NanoTechcontinues to remain the Alumina supplier of choice due to its proximity to the market, proximity to its own shipment port as well as the fact that the bauxite is mined locally. The Market Conditions (cont’d)
Raw Material Finished Product Holmwood Valley Mines Port Alumina Storage De La Vega Stock Pile Railhead Refinery Bauxite Storage North Manchester Mines North Manchester Stock Pile East Manchester Stock Pile East Manchester Mines Customer Oil Supplier Port Oil Storage Refinery Bunker C Oil Storage Caustic Supplier Port Caustic Storage Refinery Caustic Soda Storage Transportation Cost Lime Supplier Refinery Lime Storage Manufacturing Cost Inventory Cost Transportation Cost Transportation Cost Storage Cost Material Cost Transportation Cost Inventory Cost Supply Chain of NanoTech Mineral of Jamaica
HOLMWOOD VALLEY BAUXITE MINE Stock Pile: 60,000 tons Demand 6000 tpd via, 25 tonne trucks to De La Vega Rail Head Distance: 15 km EAST MANCHESTER BAUXITE MINE Stock Pile: 300,000 tons Demand 6000 tpd 25 tonne trucks to DLVRH Distance: 3.2 km DE LA VEGA RAIL HEAD (DLVRH) Stock Pile > 70,000 tonnes Tram 18,000 t/d over 18 Km REFINERY BAUXITE STORAGE Stock Pile: 120,000 tons REFINERY Produce: 3904 tons of Alumina/day Convey 12,500 tons of bauxite/day Convey 3904 tons of Alumina/day ALUMINA BIN 51 Capacity: 5,000 tons ALUMINA BIN 53 & 54 Capacity: 50,000 & 36,000 tons Tram 3904 tons of Alumina/day SHIP Capacity: 19,590 – 44,602 tons Annual Demand: 1.425 mill metric tons/yr Convey 700 tons/hr To Ship NORTH MANCHESTER BAUXITE MINE Stock Pile: 300,000 tons. Demand 6000 t/d via 3.2 Km conveyor belt to DLVRH Bauxite Supply Chain
The bauxite demand from particular mines is dependent on the available Alumina in the bauxite as well as what is already in inventory • Other factors affecting the demand include the range of particular impurities for example: • Silica content • Calcium • Iron • Product specification, vary from customer to customer, and this is usually known at least a year in advance, and this helps to determine the demand forecast from a particular mining location. • Mining, trucking, tramming and belt conveyance is usually done 7 days per week • Service level is expected to be 100%. Raw Material (Bauxite)
North Manchester has its own mines which supplies its bauxite. • Delivery to the stock pile is done by approximately 25 small trucks which a 30 tonne capacity. North Manchester (NM) Bauxite Stock Pile from NM Mines
Table Showing Bauxite Demand vs Supply at North Manchester Stock Pile for 2010 Total Shortfall for North Manchester for the year was 27,500 tonnes
East Manchester has its own mines which supplies its bauxite • Delivery to the stock pile is done by approximately 25 small trucks which a 30 tonne capacity East Manchester (EM) Bauxite Stock Pile from EM Mines
Table Showing Bauxite Demand vs Supply at East Manchester Stock Pile for 2010 Total shortfall for East Manchester stock pile was 92,000 tonnes.
De La Vega receives bauxite from 2 locations, North and East Manchester Mines • The quantities supplied is based on the type of bauxite required by the refinery at that particular time De La Vega Rail Head Bauxite Stock Pile
North Manchester (NM) Bauxite Supply to De La Vega Rail Head Stock Pile • Bauxite is transferred at a rate of 750 t/h via a 3.2 km conveyor belt • Delivery is done 8 hours per day for 5 days per week. Weekend delivery is only done whenever there is a short fall Table Showing Bauxite Demand vs Supply from North Manchester Bauxite Supply to De La Vega Rail Head Stock Pile for 2010
East Manchester Bauxite Supply to De La Vega Rail Head Stock Pile • Bauxite is transported via 25 small trucks, each having a capacity of 30 tonnes • Trucks do an average of 6 trips per day for 5 days per week Table Showing Bauxite Demand vs Supply from East Manchester Bauxite Supply to De La Vega Rail Head Stock Pile for 2010
Table Showing Bauxite Supply vs Demand at De La Vega Rail Head for 2010 Total shortfall for the De La Vega railhead for the year was 118,900 tonnes.
Refinery Bauxite • Refinery bauxite demand is based on the forecasted Alumina demand from the North American Smelters • Bauxite safety stock is 120,000 tonnes and this represents 8 to10 days refinery use • The bauxite is transported to the refinery by rail. This is a 24 hour operation for 7 days per week.
Table showing Refinery Bauxite Demand vs Supply for 2010 Total bauxite short fall for the refinery for the year was 141,412 tonnes
Transportation & Distances Via 3.2 km Conveyor Belt
Table Showing Alumina Demand vs Supply for 2010 • Alumina Supply and Demand • Refinery Storage capacity is 5000 tonnes • Trains are used to transport the Alumina to a larger storage by the shipping port • Port capacity is 86,000 tonnes and this represents a approximately 3 shipments.
Transportation and Distance Costs per tonne
Table Showing Bauxite Use Forecast for 2011 Bauxite forecasting is done by incorporating projected production, available alumina in the bauxite and a tonne/tonne bauxite factor.
Table Showing Alumina Forecast for 2011 Alumina forecast is done based on the customer demand and the schedule of the ships.
The data shows that 2010 bauxite supply suffered a severe short fall from all suppliers, The reasons for the shortfall are outlined below: • Rains, greater than expected caused flooding of pits • Untimely acquisition of mining land. • Community demonstrations due to dusting and demand for more work: • Refinery rail equipment failure. Analysis of Bauxite Shortfalls
The chart indicates that 47% of the time, the reason for the shortfall is due to community problems • These community problems are demonstrations due to: • demands for more work, • dusting by haul trucks and mining operations, • The location most severely affected by this is East Manchester which account for over 85% of the community issues. • Most mining pits were flooded and this took several weeks to dry out, during that time, attempts were being made to open new pits • The effect of the heavy rains also impacted the demand from the refinery Analysis of Bauxite Shortfalls (cont’d)
Whenever bauxite supply to the refinery is reduced by issues in any of the mines or the rail head, a cost of $50 per tonne is incurred to the mining company • There is no charge whenever the refinery is the cause of the shortfall • The shortfall of Alumina carries a penalty called demurrage which is a fee incurred for each day that a ship has to wait in port for the additional Alumina • This fee ranges from US$10,000 per day to $20,000 per day, depending on the shipping line • For 2010 a total of US$45,000 accounted for short falls due to weather Analysis of Bauxite Shortfalls (cont’d)
Improvements can be made to the NanoTech supply chain by implementing the recommendations below: • NanoTech should review and modify the LONGTERM and SHORT TERM mining plan, considering the revised development schedule of the North Manchester Bauxite deposits • Complete Mine Preparation plans to include timely provision of monthly mine development & production schedule, weekly bauxite mining and delivery program, while updating, monitoring and reporting of all bauxite movement • Timely acquisition of land and issuing of mine clearances to support the 2011 mine plan; Prepare and provide for all data required for the preparation of the 2011 Land Acquisition Plan • Preparation of land acquisition plan and execution aiming at increasing amount of “mineable” ore ahead of mine face to 6 months or more at year end Recommendations
Manage the Contractor Bauxite mining processes: Mining, Hauling and Reclaiming to meet or exceed the customer delivery requirement of 360,000 mt per month and quality of Available Al2O3 - 42.2% and Reactive SiO2 - 1.76% • Manage continuously the Ropecon(conveyor) operating system to operate near rated capacity of 1200 tonnes per hour as this system provides the least expensive bauxite and have the least community issues. As well, the impact of weather conditions on the conveyor system is negligible relative to transportation by trucks or by rail. • Assist in the development and execution of at least one (1) Community Service project in North and East Manchester area. • Establish a formal community complaint process in all the community where we have active mine areas Recommendations (cont’d)
Assist in the implementation of the Daily Management System for the Mine Departments. • This involves daily logging of mining parameters, and issues with predetermined standards for problem solving triggers and times • In so doing, problems are identified and solved long before they can become major issues. • As well as, trends will be monitored to identify future opportunities as well as potential problem areas. Recommendations (cont’d)
The End Any Questions ?
