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Rongsheng Heavy Wins US$1.6 Bln Ship Contract

Aug 5, 2008 Trade


Jiangsu Rongsheng Heavy Industries has won contracts to build 12 iron ore ships for Brazil-based Vale in the world's largest single shipbuilding order, and plans a US$2 billion stock market listing as early as the end of this year.


Vale, the world's top iron ore producer, will pay US$1.6 billion for the 12 vessels (VLOC), each with a capacity of 400,000 deadweight tons that represents the largest VLOC worldwide.


Deliveries for the ships, to be classed by the Norwegian classification society DNV, are scheduled from early 2011 through the end of 2012.


That's really a landmark for China as this would also be the largest ship built by China in terms of tonnage, said Chen Qiang, chairman of Rongsheng, China's top private ship builder, based in Rugao, Jiangsu Province.


Why did Vale chose us rather than the bigger state-owned giants I think it is because of our advantage in price and faster response to client needs, he told Shanghai Daily after a signing event on Sunday night.


Rongsheng, in which a group of investors including Goldman Sachs and D.E. Shaw & Co last year bought a US$250 million minority stake, plans a listing by year-end or early 2009, in either Singapore, Hong Kong, or on the mainland, Chen said.


For the IPO, our main goal is to make Rongsheng a real international company. It's not just for the funding, he said.


Vale, which competes with Australian and Indian miners supplying ore to China's steel industry, said the large ships will help reduce the costs of long-haul maritime transport of ore to Asia.


The ship purchase is in addition to Vale's investment budget of US$59 billion it has planned for 2008 to 2012, said Eduardo Bartolomeo, Vale's executive director of logistics.


Vale said its Brazil-Asia shuttle service will have 18 very large ore carriers, in addition to three existing smaller Capesize vessels. The fleet will have the capacity to carry 30.2 million metric tons of iron ore per year, about 31 percent of its shipments to China last year.


Bartolomeo said that most of the growth for ore in the next five years will come from Asia, led by China, and the market will remain tight given slower-than-expected growth in supply.


Source: American Shipper

 

 

 
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