FMG signs contract to build new iron ore ships

Fortescue has signed a contract to construct four new ‘very large ore carriers’ (VLOC).

The contract, with an unnamed Chinese shipyard for the vessels, is valued at approximately US$ 275 million and will see the four ships delivered from November 2016 through to May 2017.

The majority of payments will be made upon delivery and funded from existing cashflows.

The 260 000 dwt (dead weight tonnage) class vessels, which will account four around six per cent of Fortescue’s shipping requirements by themselves, are larger than traditional capesize vessels and more suited to Port Hedland’s tidal conditions, according to the miner.

Fortescue CEO Nev Power said this new contract represents a strategic decision to secure long term, low cost freight on vessels that more closely complement infrastructure at the Herb Elliot port.

“These vessels are a natural extension of our supply chain and will play a significant role in increasing efficiencies at the Port and lowering costs,” Power said.

“They also reflect and strengthen our close relationship with China, our largest customer.”

The miner played a major part in the development of the VLOC to ensure the design complemented Port Hedland’s tidal conditions and its shallow nature.

This latest development comes on the back of record outputs at Port Hedland. 

Earlier this month the port saw more than one million tonnes of iron ore leave the site during a single site.

The new benchmark of 1 270 721 tonnes was achieved with seven capesize vessels departing at once.

This beat the previous record set in April by almost 160 000 tonnes.

Port Hedland Port Authority also said it was the first time seven capesize vessels have sailed on a single tide.

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