A year of stabilisation in commercial operations
During the year, net sales increased in line with production volumes by approximately a quarter compared to the previous year. In addition to sales, commercial operations focused on stabilising processes after the previous year's development projects.
The world market prices for nickel and zinc were clearly at a lower level than at the beginning of the year. However, the euro-dollar rate developed in Terrafame’s favour, and a decrease was seen in global metal stock levels.
Deliveries of nickel-cobalt and zinc to end-customers through Trafigura’s sales network were launched in 2017 in accordance with the co-operation agreement signed at the time. This co-operation was firmly established in 2018. In accordance with the agreement, Terrafame made all its nickel-cobalt deliveries and 80% of its zinc deliveries through Trafigura. Test deliveries of copper were also launched in late 2017 and continued on a campaign basis.
The delivery volumes of the main products increased during the year in line with the growth of production volumes and Terrafame rose to the level of companies whose export is worth more than EUR 300 million (2017: EUR 220 million).
Marketing planning for new products started
Commercial deliveries of battery chemicals produced by Terrafame are due to start at the beginning of 2021. In the autumn, with the decision to invest in the battery chemicals plant, marketing planning was initiated for the new nickel and cobalt sulphates as well as for ammonium sulphate, a new by-product.
Nickel and cobalt sulphates are used in the manufacture of batteries for electric vehicles, which in practice means precursors of cathode materials. Ammonium sulphate, on the other hand, is suitable for use as fertiliser and as a raw material of the chemical industry.
The technology packages of the battery chemicals plant were put out to tender during the second half of the year. In addition to technical evaluation expertise, the company’s own commercial expertise was utilised in the competitive bidding process for the main technologies.
E-tendering and Lean thinking support operations
Purchasing continued to use the e-tools introduced in 2016, and the database-driven model was, e.g. applied in the competitive bidding procedure for purchases related to the upcoming battery chemicals plant. Above all, electronic tools have enabled the reduction of repetitive work, freeing up time for business development together with partner companies.
During the year, there was a clear increase in the prices of electricity and caustic soda. The rise in electricity prices was influenced by the increase in the prices of emission allowances, coal and oil, as well as by the hydrological balance of Scandinavia. The price development of caustic soda was due to, for instance, the reduction of production capacity in Europe. Correspondingly, Terrafame strove to make more efficient use of energy and chemicals and to improve the process to run more efficiently. Significant opportunities for improving cost efficiency were especially found in the use of lime products.
During the year, sulphur supply was also developed and the industrial site’s fuel distribution stations were replaced with new ones. Warehousing operations were organised in accordance with Lean thinking to support procurement.
A well-functioning supply chain is an important competitive advantage
In addition to skilled personnel and a responsible production process, an efficient and reliable supply chain is one of Terrafame’s strengths on the market. Delivering production supplies to the industrial site and end-products to customers must go according to the planned schedule. Similarly, workplace transport safety must be ensured throughout the year.
The majority of transportation related to Terrafame’s operations in Finland is carried out by rail. That is why, in 2018, discussions were held with the Finnish Transport Agency and the local ELY Centre concerning the need to effectively use the railway line that runs north of Lake Oulujärvi, as well as about developing and electrifying the Iisalmi-Ylivieska railway section. The need to improve roads and road maintenance is connected with the road links from the direction of Kajaani and Sotkamo as well as from the south.
Net sales of Terrafame Ltd 2017-2018.