Iron Ore Division “The Iron Division of Caprica SCM is today undergoing a re-structuring due to the international fall of the commodities prices."
The re-structuring of this division involves:
1. Reinforcing process and quality requirements for a more demanding industry, that involves ensuring production above 62% Fe and the inclusion of processes that mitigate the know contaminants, which in Caprica are concentrated around Phosphorus and Titanium.
2. Re-structuring financial loads, which were mainly acquired when the value of iron ore was in the range of 120 usd/ton. This is critical to ensure that the money is not absorbed by Capex and that Opex is privileged. This has meant that the company has to operate with the minimum equipment and plants, and has to become efficient in its production goals.
3. Internalising services, by removing inefficient contractors, especially in the logistics area. In 2014 CI SCM involved a contractor that was detrimental in the logistics operation. The inefficiency of this contractor generated product contamination, Capex and Assets deterioration as well uncoordinated vessel demurrage.
4. Reducing external services costs, such as port terminal storage and vessel loading. CI SCM is currently in conversations with port to reduce storage and loading tariffs below 10 usd/ton.
1. Reinforcing process and quality requirements for a more demanding industry, that involves ensuring production above 62% Fe and the inclusion of processes that mitigate the know contaminants, which in Caprica are concentrated around Phosphorus and Titanium.
2. Re-structuring financial loads, which were mainly acquired when the value of iron ore was in the range of 120 usd/ton. This is critical to ensure that the money is not absorbed by Capex and that Opex is privileged. This has meant that the company has to operate with the minimum equipment and plants, and has to become efficient in its production goals.
3. Internalising services, by removing inefficient contractors, especially in the logistics area. In 2014 CI SCM involved a contractor that was detrimental in the logistics operation. The inefficiency of this contractor generated product contamination, Capex and Assets deterioration as well uncoordinated vessel demurrage.
4. Reducing external services costs, such as port terminal storage and vessel loading. CI SCM is currently in conversations with port to reduce storage and loading tariffs below 10 usd/ton.
Proportional Benefits
The commodities towards the end of 2014 and beginning 2015 declined exponentially. However not all has been negative. The company is able to sustain operation with that above actions mentioned above, however there are two other points that benefit current production:
1. Low fuel prices, has meant that costs of fuel, which represent 30% of the total cost, has been reduced by half since the last shipment. This generates great Opex savings.
2. US Dollar to the Chilean peso depreciation, this means that under a strong dollar, the value of the peso has depreciated 30%. Since the operation is in dollars, the labour and other local costs have reduced 30% since the last shipment.
The commodities towards the end of 2014 and beginning 2015 declined exponentially. However not all has been negative. The company is able to sustain operation with that above actions mentioned above, however there are two other points that benefit current production:
1. Low fuel prices, has meant that costs of fuel, which represent 30% of the total cost, has been reduced by half since the last shipment. This generates great Opex savings.
2. US Dollar to the Chilean peso depreciation, this means that under a strong dollar, the value of the peso has depreciated 30%. Since the operation is in dollars, the labour and other local costs have reduced 30% since the last shipment.
