Kaiser Aluminum introduces energy surcharges

Surcharge tools posted on corporate web site

by Tom Stundza -- Purchasing, 7/2/2008 8:56:00 AM

Kaiser Aluminum this week incorporated energy-cost surcharges onto new orders of fabricated mill products “to help reduce exposure to rising costs for natural gas electricity and diesel fuel.” In a statement, Jack A. Hockema, president, chairman and CEO, says “these surcharges are essential to mitigate the extraordinary rise in costs related to energy that we have been absorbing for several years.”

Hockema says commodity prices for natural gas and diesel fuel paid by Kaiser Aluminum leaped around 60% in May compared to the 2007 average. “These energy prices are spiraling and highly volatile, so we've elected to introduce a surcharge as the most transparent method to recover these costs,” he adds. The energy surcharges are being based on a calculation tied to indices provided by the U.S. Department of Energy and will be updated on a monthly basis.

Buyers can view the formulas for calculating surcharges on the Kaiser Aluminum Web site at www.kaiseraluminum.com. Up-to-date information on the surcharges impact on specific mill products will also be included on the site.

Further surcharges are possible Hockema says since the Foothill Ranch, Calif.-based firm is also looking at ways of addressing “the significant increases in the costs of alloying materials, such as magnesium and copper.”