Australian miner Fortescue Metals Group has completed a $473m financing agreement with China Development Bank to fund the ongoing construction of eight very large ore carriers.
CDB will fund 85 percent of the cost of building the vessels via a 12-year facility with flexible terms that includes early repayment and extension options.
“This is a groundbreaking financing transaction which builds and broadens Fortescue’s highly valued relationships with China through our first direct funding arrangement with a major Chinese leasing company. 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,” said Nev Power, ceo of Fortescue Metals Group.
The bulkers are being constructed at China’s Yangzijiang Shipbuilding and Guangzhou Shipbuilding International shipyards, with the first delivery scheduled for November 2016 and the balance through to mid 2018.
Fortescue said the VLOC fleet will help improve load rates, efficiencies and reduce operating costs. When fully operational, the carriers will provide 12 percent of Fortescue’s shipping requirements.