Bangalore: The flagship company of the Ahmedabad-based Adani Group, Adani Enterprises Ltd, has placed orders for two new capesize bulk carriers with South Korea’s Hanjin Heavy Industries and Construction Co. Ltd worth around $120 million (around Rs566 crore), at least two ship brokers briefed on the order said on condition of anonymity because the purchase has not been made public yet.
Capesize vessels are the largest ships capable of carrying dry bulk commodities and typically can carry as much as 175,000 tonnes of coal, steel or iron ore.
The ships are being acquired through Adani Shipping Pte Ltd, the Singapore-based wholly owned subsidiary of Adani Enterprises, and will fly the Singapore flag. The city-state is seen by fleet owners as an ideal place to own and operate ships, given the conducive fiscal regime prevailing there.
The two ships will be constructed by Hanjin at its Subic Bay yard in the Philippines, said one of the brokers cited above.
A spokesman for Adani confirmed the orders, but did not give details.
Adani Group trades in commodities, makes edible oil, runs Mundra port in Gujarat and distributes natural gas.
The ships will be used by Adani to transport coal from Indonesia and South Africa to its 2,000MW coal-based power plant coming up at Mundra.
On the return leg, the ships will carry iron ore to China from the company’s mines at Belekeri in north Karnataka, ensuring business on both trips and helping the firm gain control over cargo and save on ship hiring charges.
By doubling its fleet to four, India’s biggest coal trader is taking greater control of its freight logistics chain. The growing arbitrage trades in iron ore mean the freight rate component now plays an influential role in sales and marketing patterns.
India’s growing appetite for coal will generate demand for capesize bulk carriers on the route to Asia as it looks to Colombia as a new source of imports.
“Indian thermal coal imports are expected to grow by as much as 25% this year and importers are looking to diversify their sources,” the ship broker mentioned earlier said. “The Adani Group has recently begun purchasing small amounts of Colombian thermal coal on the spot market and is reportedly in talks to import Colombian coal on a long-term contract basis,” he added. This could not be independently verified by Mint.
In 2009, India imported more than 60 million tonnes (mt) of coal, including both thermal and metallurgical, representing a growth of 5% from 2008, London-based ICAP Shipping International Ltd said in a recent report.
A survey by 12 major coal producers said India’s coal imports could climb by one-third this year to 80 mt, ICAP Shipping said.