South Korea’s Pan Ocean has agreed with key client Vale to shave off a $1.3bn from a consecutive voyage contract (CVC) it inked with the Brazilian miner in 2009, citing lower than anticipated fuel bills.
The contract of affreightment signed on September 21, 2009 called for the shipping of 238.4m tons of iron ore from Brazil to China over a 19-year period, marking one of the biggest shipping deals ever won by a Korean shipping firm.
The initial deal was worth $5.8bn, however, Pan Ocean has now revealed that it has agreed to slash this to $4.5bn thanks to lower bunker prices than had been forecast nine years ago.
In a release to the Singapore Exchange, Pan Ocean got its decimal points wrong when describing the change in the deal leading many to report that it had originally been worth $58bn, and the writedown was worth $13bn.
Does that imply that a $5.8bn consecutive voyages contract was signed without a bunker adjustment clause? No one can believe that!