Grindrod's biggest ship to date delivers in the wake of record high shipping markets

Wednesday, October 10, 2007

Grindrod, the JSE listed shipping and logistics business, this week celebrated the delivery of the largest vessel built for the group to date. The new 180 000 deadweight ton (dwt) Cape Size vessel, named the IVS Cabernet (reflects her South African “flavour”) is 289 metres long and 45 metres wide which is almost the length of 3 rugby fields and almost the width of one.The ship built by Namura shipyard in Japan has a maximum draught of less than 18 metres and isdesigned to carry coal and iron-ore, making herideally suited to complement the Island View Shipping fleet (Island View Shipping is 100% owned subsidiary of Grindrod Limited).The demand for commodities such as coal and iron-ore has continued to rise contributing to the demand for this type of vessel. The shortage of newbuildings and the high level of confidence in the market’s long term sustainability have impacted on new and second hand ship prices, pushing them to all time highs. Grindrod concluded the long term charter deal with G-ACE PTE Limited in 2004, at rates determined by the market value at that time. Though the specific amount is not disclosed, three years ago, the long term rates were around US$ 20,000 per day. They are currently almost double this amount.“The strategy of ordering ships when markets have indicated a future shortage of a particular class of ship, has served us well,” said Mr. Alan Olivier, CEO Grindrod Limited. “We now have a modern, diversified fleet which will grow to 56 ships by the end of 2011.”Mr. Olivier went on to say that Grindrod will continue to look for opportunities to grow the fleet. He also indicated that although a portion of the fleet is positioned to take advantage of high spot rates in the market, much of Grindrod’s fleet (89% in 2007, 58% for 2008 and 32% for 2009) has been contracted. This means that a good portion of Grindrod’s income and therefore profits are locked-in and will not be affected by fluctuations in the shipping markets. Grindrod reported in August this year, its capital commitments of R2.2 billion on ship expenditure over the next few years.To date, for 2007, the group has spent in the region of R800 million on ships. “We wish the IVS Cabernet well as she sets sail on her maiden voyage, carrying iron-ore from Cape Lambert in Australia to Redcar in the United Kingdom” concluded Mr. Olivier.

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