Singapore’s Eastern Pacific Shipping (EPS) and South Korea’s H-Line Shipping have emerged as the winners of Rio Tinto’s charter tender for up to a dozen dual-fuelled, 210,000-dwt bulk carrier newbuildings.
Under the negotiations, dubbed Project Orion, each company will order three firm vessels —which can run on both conventional fuels and LNG — with options for three additional ships each, according shipping sources.
Rio Tinto is the third mining company, after BHP and Anglo American, to move into LNG-fuelled bulkers.
Other shipping companies said to have been in the running for the deal included JP Morgan Asset Management, Maran Dry Management, U-Ming Marine Transport, China Merchants Energy Shipping and Japan’s big three owners, NYK Line, K Line and Mitsui OSK Lines.
Charter details have not been disclosed but the sources said Rio Tinto is taking the vessels for five to seven years with options to extend. It will use the vessels to transport iron ore from Australia to China.
EPS and H-Line executives declined to comment.
Shipping sources said China’s privately owned New Times Shipbuilding and state-owned Qingdao Beihai Shipbuilding Heavy Industry will build the ships. New Times will construct EPS' vessels and Qingdao Beihai H-Line's.
Both are slated to start delivering from the third quarter of 2023.
EPS and H-Line are expected to pay at least $67m apiece for the newbuildings, which will be fitted with MAN Energy Solutions’ high-pressure ME-GI engines. They will each be fitted with two 3,100-cbm type-C LNG bunker tanks positioned at the side of the ship's accommodation blocks.
Rio Tinto did not comment on the charters directly, but said it is committed to meeting the International Maritime Organization's goal of a 40% reduction in shipping emissions intensity by 2030, and its long-term ambition to reach net zero carbon shipping of its products by 2050.
“We recognise LNG is a cleaner-burning marine fuel option and, while LNG is not a silver bullet for emissions reduction, it can be a transitional fuel on the pathway to industry decarbonisation,” said Rio Tinto.
“We will continue to explore and work with our shipping partners on alternate, low to zero carbon fuels for use in our shipping trades.”
EPS’ deal with Rio Tinto is the second dual-fuelled charter contract from a mining company.
Last year, BHP awarded the Cyril Ducau-led shipping company a five-year charter deal for five LNG-fuelled 209,000-dwt newcastlemax bulker newbuildings.
The vessels, to be built by China’s Shanghai Waigaoqiao Shipbuilding and New Times, are slated for delivery in the first half of 2022.
Seoul-based H-Line is no stranger to LNG-fuelled bulk carriers. The company ordered two dual-fuelled 180,000-dwt capesize bulkers with Hyundai Samho Heavy Industries in 2018 on the back of long-term charters to domestic steel maker Posco. The duo — the HL Green and HL Eco (both built 2020) — was reported to cost $142m in total.
H-Line still has two similar type of vessels under construction at Hyundai Samho. It is scheduled to take delivery of one ship at the end of this year and the other in March 2022.
