The Hindu Business Line : Tata NYK Shipping to sign long-term charter for capesize vessels

As part of its long-term strategy, Tata NYK Shipping Pte Ltd, the Singapore-based joint venture (50:50) between Tata Steel and Nippon Yusen Kabushiki Kaisha (NYK Line), a Japanese shipping major, proposes to enter into long-term charter for capesize vessels, according to the Tata Steel annual report.

A beginning has already been made in this regard.

“Progressing towards the goal of achieving logistics control, Tata NYK has entered into a long-term charter for eight supramax/panamax vessels and orders have been placed for building two new supramax vessels,” the report states. The joint venture was floated to handle ocean transportation of bulk cargoes such as coal, iron ore, limestone as well as finished steel, both imports and exports, not only for Tata Steel but also for others including other Tata Group companies.

In 2008-09, the company handled a total of 4.48 million tonnes (mt) of cargo, including 1.98 mt for the Tata Group.

The slump in dry bulk rates, with Baltic Dry Index having dropped to a 20-year low after reaching a peak in May 2008, has hit hard the dry bulk operators who are now pinning a good deal of hope on the movement of raw materials for steel plants for BDI to move up.

GOOD OUTLOOK

Tata Steel, it is pointed out, will be required to import large quantities of coal and iron ore, limestone and export finished steel goods in coming years.

For example, the Tata Steel Group is currently self-sufficient to the extent of 25 per cent in iron ore.

The iron ore security is to go up to 62 per cent by 2015, with the ore becoming available from overseas mines for which joint ventures have been floated in Canada and likely to be floated in Ivory Coast, which means huge quantities of iron ore will be imported in the next few years.

Joint ventures

The same is true about coal. To achieve coal security by way of imports, the company has formed a joint venture with an Australian company for producing coal in Mozambique, acquired strategic interest of five per cent with 20 per cent offtake-rights in the coal mining project in Australia in partnership with several other foreign companies and formed a 50:50 joint venture with Steel Authority of India Ltd (SAIL).

For limestone, Tata Steel has entered into a joint venture with the Al Bahja Group of Oman for a 70 per cent stake. The joint venture will undertake mining of limestone in the Uyun region in Salalah province of Oman.

Scarcity

The overall raw material security, according to the annual report, would reach approximately 50 per cent by 2015, increasing to around 60 per cent by 2018 from the present level of 25 per cent.

For this, the company will be required to make substantial investments in a phased manner to secure raw materials from overseas mines and therefore is evaluating several other mineral projects in Brazil and Australia, the report adds.

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