24 January 2014 – TW
Billionaire siblings invest in bulker newbuildings at Sungdong as they seek to grow mining and transport business.
Geneva trader Reuben Brothers has broken into shipowning in a move that compliments its growing mining and bulk trading interests, which have seen it secure exclusive raw-materials export rights in Morocco and Indonesia.
This week’s investment in six kamsarmax bulkers at South Korea’s Sungdong Shipbuilding & Marine Engineering is being viewed in the market as a bid to take advantage of low newbuilding prices and to meet the company’s growing dry bulk transport needs.
Reuben Brothers, controlled by billionaires David and Simon Reuben, has commissioned four firm eco-fuel bulkers and two options at the Tongyeong-based facility. Two of the 82,000-dwt ships are slated for delivery during the second half of 2015 and two in 2016.
The cost of the newbuildings has not been disclosed but market players indicate Sungdong has been seeking more than $35m apiece for the kamsarmaxes.
The last time a Korean yard secured a kamsarmax order was in May last year when Suisse-Atlantique booked a trio at Hyundai Mipo Dockyard at $33.48m each.
Reuben Brothers is best known for its high-profile property, retail and horse-racing investments.
But it also has a growing demand for dry bulk transport through subsidiary Reuben Brothers Resources (RBR) Trading, which conducts extensive raw-material trading and distribution businesses including iron ore, oil, coal, coke and minerals, as well as investing extensively in mining and windfarms.
Brokers say RBR’s trading volumes require around 10 vessels per week — but that is set to grow. At the end of 2012, the company stepped up its interest in mining when it bought a 50% stake in the Ait Anmar iron ore mine in Morocco.
The company has revived the mine, which was formerly closed down, and is attempting to bring the facility up to full production by this year. It also has an exclusive deal to market Air Anmar’s exports.
The iron ore will be traded through a rail link to Jorf Lasfar Port, a well-known North African dry bulk terminal used mostly by handysize and handymax bulkers but capable of accommodating kamsarmaxes at one berth.
Other RBR projects include the development of a metallurgical coal trade from the Tuhup 2 Coal Project in Indonesia to Asia, and another Moroccan investment, Nkob Industrial Minerals, aimed at the supplying of high-grade talc. Again, RBR holds exclusive trading rights for the projects.
There is also a growing trend of cash-rich commodity traders taking advantage of the current shipbuilding market to invest in newbuildings. Traders that have seized the opportunity include SwissMarine, with an order for six capesizes at Japan Marine United, and Trafigura booking up to six newcastlemaxes at China’s Yangfan Group.