Logistics, Ports & Terminals, Mining and Heavy Industries

FMG to build eight massive iron ore ships

Ship loading iron ore at Port Hedland. Photo: Fortescue Metals Group

Fortescue Metals Group has ordered eight Very Large Ore Carriers (VLOC) from a Chinese shipbuilder after it secured a $626 million loan.

The Pilbara iron ore miner announced on November 14 it had secured the largest direct Chinese financing deal for an Australian company, after it formalised the US$473 million debt facility, which will cover 85% of the US$556 million (A$736 million) it will cost to build the ships.

The first ship will be delivered to the miner this month, and all eight are expected to be delivered by mid-2018. They are being constructed at China’s Jiangsu Yangzjiang and Guangzhou Shipbuilding International Shipyards.

The loan is from the China Development Bank, and is for an initial term of 12 years.

“This is a groundbreaking financing transition which builds and broadens Fortescue’s highly valued relationships with China through our first direct funding agreements with a major Chinese leasing company,” FMG boss Nev Power said.

“We welcome this important partnership with CDB Leasing which is a significant milestone in our financial strategy, further extending our debt maturity profile while strengthening our capital structure.”

Power said the company would continue to work to build opportunities with China.

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