Fednav MEDIA
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Fednav to splash out on polar capesize vessels
Lloyd's List
October 18, 2007
CANADA'S premier dry bulk owner, Fednav, is poised to buy a polar capesize fleet for anything up to $2bn, to serve a new iron ore mining development in Canada's High North.
The Montreal-based bulk shipping and ice-class specialist is scouting for yards to build up to nine 130,000 dwt capesize carriers to ship high-grade iron ore across the North Atlantic to Europe.
Although the investment comes amid increased interest over the potential of shipping lanes of a thawing North West Passage, the capesize vessels, with a draft of 18 m, will be unable to trade east through the 13 m depth of the legendary, and formerly ice-bound, route to Asia.
Market sources say the DNV ice class 1B-equivalent vessels, which can operate in multi-year floes and cut through 1.8 m of ice, will cost as much as twice the price of a standard capesize of this size.
The Canadian shipowner is expected to be looking at a price tag of anything between $150m-$220m for each unit, which will be the first ice-strengthened bulkers of this size.
Fednav was selected by Canadian miner Baffinland Iron in May to provide industrial shipping services for its arctic iron ore mine that is due to go into operation in 2013, with shipments starting a year later.
The dry bulk owner is working on the assumption it will require eight vessels to ship more than 12.5m tonnes each year of the top grade ore from the remote Mary River development on Baffin Island.
Fednav said it had approached a number of yards to build between six to nine of the vessels for delivery by 2014.
Market sources believe that the Canadian group is in advanced talks with two Korean builders, with Aker Yard's ice-class specialist Finnish business also understood to be in the running.
Lloyd's List understands that Fednav has already received a price indication back from one of the Asian yards, but is awaiting a further two to provide their indications.
The design work for the vessels was completed by Aker Arctic, with the Helsinki-based polar shipping experts using Fednav specifications. "We are not at the contract stage, the capital costs needs to be built into the feasibility study before the go-ahead can be given," said Carl Lee, a spokesman for Fednav.
Fednav's fleet is classed with Norway's DNV, but Mr Lee said that no decision had been made over which society the company would use for this newbuild project.
Baffinland Iron Mines' president and chief executive Gordon McCreary, speaking at an industry gathering in Berlin last week, indicated the raw materials will be exported via the port at Steensby, which will be able to handle vessels up to 200,000 dwt.
A study by the Canadian miner is looking into the feasibility of expanding exports to 15m tonnes per year, with a further review next year to investigate the possibility of shipping 25m tonnes per year.
