Four of seven mines are more than 600 kilometres from a ship.

Why logistics is a mining problem, not a shipping problem

Four of the group’s seven mines are more than 600 kilometres from a port and two of them are landlocked entirely. For a bulk commodity, the cost of moving a tonne from the mine gate to a ship can exceed the cost of digging it out of the ground. For a landlocked copper operation, the corridor is the difference between a profitable asset and a stranded one.

This has a practical consequence that took the group too long to accept: rail and port capacity are not a service Quintel buys, they are a constraint Quintel has to manage, invest in and plan around. Gamagara produced below its capability for six years because the mine plan assumed rail availability the corridor could not deliver. The group changed its approach in 2022, and the change was structural rather than contractual.

Route to market by asset

Investing in corridors we do not own

Since 2022 Quintel has committed US$186 million to logistics infrastructure the group does not own and will not own. A private siding and rapid-loading facility at Gamagara cut train turnaround from 14 hours to 5. Two hundred and forty rail wagons were refurbished under a long-term lease-back. Eighty-four kilometres of transmission line and a 220 kV substation were rebuilt in the DRC. Forty-two kilometres of haul road in Guinea were sealed, principally to stop dust reaching villages but also because an unsealed road in a nine-month wet season is not a road.

The structural choice in each case was whether Quintel should own the asset. The group has generally decided not to. A mining company that owns the only rail line, the only power line or the only road into a district acquires a form of leverage over everyone else who needs them, and that leverage eventually gets used, or is assumed to have been used, which is nearly as damaging.

The exception is inside the fence line, where Quintel owns and maintains everything.

Marketing

Marketing, freight and trade finance are run from Quintel Metals DMCC in Dubai, with European sales and distribution handled by Quintel Metals Europe BV in Rotterdam. Between them they place every tonne the group produces. Neither entity trades third-party material.

The group’s commercial preference is for long-tenor contracts over spot sales, and the mix reflects it: 81% of manganese, 74% of bauxite and 62% of copper cathode volumes are committed under contracts of a year or longer. Gold is the exception and is sold at the LBMA afternoon price on the day of allocation, unhedged.

Contract structures are chosen to align the group’s revenue with the economics of the customer rather than with a trading view. Fatala bauxite is priced on a formula indexed to the alumina price, which means the mine earns more when the refinery it feeds is earning more, and less when it is not. That is a deliberate transfer of volatility from customer to producer, and it is why those contracts run for three years or longer.

Standard commercial terms

Indicative terms for direct offtake. All are negotiable; enquiries route to the Dubai office.

Pricing

Exchange-referenced for copper and gold; indexed formula pricing for bauxite; negotiated per dry metric tonne unit for manganese.

Quotational period

Negotiated by contract, typically month of shipment or month following, with declaration rights specified in the contract.

Payment

Irrevocable letter of credit at sight from a first-class bank, or open account terms for counterparties with an established credit history with the group.

Weights and assays

Determined at load port by a mutually appointed independent inspector, with umpire arbitration on the standard exchange-of-assays basis.

Traceability

Every lot carries a certificate of origin identifying the producing operation and the month of production.

Counterparty due diligence

All customers are screened for sanctions, beneficial ownership and adverse media before a first shipment, and re-screened annually.

Freight, emissions and the part we cannot yet fix

Ocean freight and inland haulage sit in the group’s Scope 3 emissions, and they are large. Bauxite alone moves 4.4 million tonnes a year in Capesize and Panamax vessels. Quintel has no realistic technical lever over ship propulsion in the next decade and does not pretend otherwise.

What the group can do, it does: rail is preferred to road wherever it exists, because rail is roughly a fifth of the emissions per tonne-kilometre and materially safer for the communities living along the route; vessel selection includes an efficiency rating criterion; and the sinter plant under study at Owendo would reduce shipped tonnage per unit of contained manganese.

The Climate Transition Plan states the abatement levers the group does not have a solution for, and ocean freight is at the top of that list.