CHINA'S top private shipbuilder, Jiangsu Rongsheng Heavy Industries has won contracts to build 12 huge iron ore ships for Brazil's Vale in the world's largest single shipbuilding order, and plans a US$2-billion stock market listing as early as year-end.
Vale, the top iron ore producer, will pay US$1.6 billion for the 12 very large ore carriers (VLOC), each with a capacity of 400,000 deadweight tons representing the largest VLOC worldwide, the company said.
Deliveries for the ships, to be classed by 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, based in Rugao, Jiangsu Province.
"Why did Vale choose us rather than those 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 next year, in either Singapore, Hong Kong, or on the Chinese mainland, Chen said.
"For the IPO, fundraising is not the key purpose, but we want to make Rongsheng a real international company."
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 VLOCs, in addition to three already existing smaller Capesize vessels. The fleet will have the capacity to carry 30.2 million tons of iron ore a year, or equivalent to 31 percent of its shipments to China last year.
Bartolomeo yesterday said most of the growth in ore demand during the next five years would come from Asia, led by China, while the market would remain tight given the current slower-than-expected growth in supply.