Mining giant Rio Tinto has approached two shipyards in China to build up to 12 LNG-fuelled newcastlemaxes worth about $804m.
Industry sources said state-owned Qingdao Beihai Shipbuilding Heavy Industry and privately owned New Times Shipbuilding have been selected as the preferred yards for the newbuildings, which are being discussed under the code name “Project Orion”.
Three berths and options for three more slots have been reserved at each yard.
Rio Tinto, the world’s second-largest mining company, is seeking to charter the 210,000-dwt vessels to transport iron ore from Australia to China.
Shipbuilding sources familiar with the deal said it is looking to have the vessels trading in 2023 and has specified that they be fitted with MAN Energy Solutions’ high-pressure ME-GI engines.
The sources said only selected shipping companies and investors have been asked to bid for this project. Rio Tinto is said to have approached JP Morgan Asset Management, Maran Dry Management, Eastern Pacific Shipping, U-Ming Marine Transport, China Merchants Energy Shipping and Japan’s big three owners, NYK Line, K Line and Mitsui OSK Lines.
The employment period and likely charter rate have not been disclosed.
Shipyard officials declined to comment for this story.
Those following the project said the bulkers will cost at least $67m each.
“Shipbuilding prices have increased due to stronger demand for newbuildings and rising steel plate price,” said a shipbuilding expert. “Prices have gone up by 5% to 10%.”
The last done deal for dual-fuel newcastlemax newbuildings was placed by U-Ming Marine in November. The Taiwanese bulker owner ordered four 190,000-dwt vessels from Shanghai Waigaoqiao Shipbuilding against 10-year charters from Anglo American.
These newbuildings were said to cost at least $65m each, including the additional features. The vessels are due for 2023 delivery.
In January, Australia’s Fortescue Metals Group (FMG) was reported to have floated a tender to charter up to 10 dual-fuel, 209,000-dwt bulker newbuildings.
FMG is said to have invited only a handful of companies to bid for the charter contract, including U-Ming Marine, China Merchants Energy Shipping, Eastern Pacific Shipping, MOL, NYK Line and K Line.
It is said to be seeking to charter five firm newcastlemaxes while lining up options for an additional five ships.
FMG did not specify the length of the charter period but has asked shipowners to quote charter rates for between five and 10 years.
Rio Tinto did not comment directly on the Project Orion. But it 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,” a spokesperson said.
“We will continue to explore and work with our shipping partners on alternate, low to zero-carbon fuels for use in our shipping trades.”
