Another 12 ships! Chinese shipbuilders are the biggest winners in this wave of orders

Following BHP, FMG, and Anglo American, another international mining giant will invest in building LNG-powered bulk carriers. This time, Rio Tinto Group, which has "made a fortune" in the Chinese market, will order 12 LNG-powered Newcastlemax bulk carriers from two Chinese shipyards. Including previous orders worth nearly 2 billion US dollars, Chinese shipbuilding companies have become the biggest winners in this wave of LNG-powered bulk carrier orders.

According to TradeWinds, Rio Tinto will build 12 LNG-powered 210,000 DWT Newcastlemax bulk carriers under the name "Project Orion." Qingdao Beihai Shipbuilding Heavy Industry and New Times Shipbuilding have been selected as preferred shipyards for the project, and are expected to receive orders for 3+3 new vessels respectively.

Sources said that these bulk carriers will be delivered for operation in 2023, equipped with MAN Energy Solutions' high-pressure ME-GI engines. Each vessel costs approximately 67 million US dollars, totaling 804 million US dollars for all 12 ships (approximately 5.202 billion RMB).

Rio Tinto has approached several shipowners for this deal, including JP Morgan Asset Management, Maran Dry Management, Eastern Pacific Shipping, U-Ming Marine Transport, China Merchants Energy Shipping, and Nippon Yusen Kaisha, Kawasaki Kisen Kaisha, and Mitsui O.S.K. Lines. Information on possible charter periods and daily rates has not yet been announced.

Rio Tinto Group stated that the company is committed to achieving IMO's 40% emission reduction target by 2030, as well as its own long-term goal of achieving net-zero carbon shipping by 2050. "We recognize that LNG is a cleaner marine fuel. While LNG is not a perfect emission reduction solution, it can serve as a transitional fuel for the industry on its path to decarbonization."

"We will continue to explore and work together with our shipping partners to develop alternative low-to-zero carbon fuels for our shipping trade."

As early as 2017, Rio Tinto Group, along with partners such as BHP, FMG, Mitsui O.S.K. Lines, U-Ming Marine Transport, Woodside Energy, Shanghai Merchant Ship Design & Research Institute, and DNV GL, jointly carried out the "Green Corridor" joint industry project. They decided to jointly build LNG-powered bulk carriers to transport iron ore and coal on the Australia-China route.

      The LNG-powered bulk carriers launched under the "Green Corridor" project are based on the Shanghai Merchant Ship Design & Research Institute's highly energy-efficient "Green Dolphin" design. Fuel consumption analysis indicates that an LNG fuel tank of approximately 6000 cubic meters is the optimal solution, allowing for a round trip after refueling in Australia. This design utilizes two LNG fuel tanks, located directly above the engine room, with the tank bottoms a few meters below the main deck.

Last year, Australian mining giant BHP and Singaporean ship management company Eastern Pacific Shipping (EPS) signed a charter agreement for five 209,000 DWT LNG-powered Newcastlemax bulk carriers. The new vessels will be jointly built by Waigaoqiao Shipbuilding and New Times Shipbuilding, with Waigaoqiao Shipbuilding building 2 ships and New Times Shipbuilding building 3. Each ship is reportedly costing approximately 66 million US dollars, with a total value of 330 million US dollars for all five ships.

In addition, multinational mining company Anglo American finalized orders for the first batch of four 190,000 DWT LNG-powered Capesize bulk carriers in November last year, ordered by U-Ming Marine Transport from Waigaoqiao Shipbuilding. Each ship is estimated to cost approximately 65 million US dollars, with a total value of 260 million US dollars for all four ships.

Earlier this year, another Australian mining giant, Fortescue Metals Group (FMG), tendered for the charter of 5+5 209,000 DWT dual-fuel bulk carriers. Each vessel is expected to cost between 68 million and 70 million US dollars, meaning the total for 10 ships could be as high as 700 million US dollars.

Adding the 12 vessels Rio Tinto Group intends to order, the total investment in LNG-powered bulk carrier orders from the four aforementioned mining giants is close to 2.1 billion US dollars (approximately 13.585 billion RMB). Except for FMG's order, which is yet to be confirmed regarding the shipyard, dozens of orders from BHP, Anglo American, and Rio Tinto Group are all being built by Chinese shipyards.

Founded in 1873, Rio Tinto Group is one of the world's largest resource extraction and mineral product suppliers, and also the world's second-largest iron ore producer, holding the largest market share in China. It mainly exports iron ore, copper, alumina, nickel, gold, borates, titanium oxide raw materials, etc., to China. China is also currently Rio Tinto Group's fastest-growing market, and the company has reached an annual sales intention of 85 million tons of iron ore with China.

In 2020, Rio Tinto Group's performance was strong, with sales revenue of 44.611 billion US dollars, a year-on-year increase of 3.3%; earnings before interest, taxes, depreciation, and amortization (EBITDA) were 23.902 billion US dollars, a year-on-year increase of 12.8%; net profit attributable to company shareholders was 9.769 billion US dollars, a year-on-year increase of 22.0%; net debt decreased by 3 billion US dollars to 700 million US dollars.

        Benefiting from increased iron ore shipments and a significant rise in average selling prices, Rio Tinto Group's iron ore business sales revenue reached 27.508 billion US dollars in 2020, a significant year-on-year increase of 14.3%; EBITDA was 18.837 billion US dollars, a significant year-on-year increase of 17.0%; net profit reached 11.398 billion US dollars, a significant year-on-year increase of 18.3%.