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Local News>Rio Bueno gets first cargo ship call - Tank-Weld to spend US$40m more on portSusan Gordon - Business Reporter |
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Construction company, Tank-Weld, which this month launched into a new sphere of business as a port operator, had its first ship call at its $2.8 billion Rio Bueno facility in Trelawny by a Chinese vessel bringing steel from the Asian country.
The Haiancheng dropped 16,000 tonnes of steel at the new port on August 15.
Chris Bicknell, managing director of the Tank-Weld Metals, says the port being developed in phases on some 30 acres of property, can, at maximum capacity, handle a ship carrying between 30,000 to 40,000 tonnes of cargo.
Another 3,000 tonne steel shipment was due from Cuba this week, while Tank-Weld expects its first shipment of lumber in September.
That shipment will mark Tank-Weld's entry into the lumber business.
The port as developed is capable of handling containerised activity, but does not have the storage space to stack them, Bicknell said.
Bicknell said the building of the wharf and the warehouse to store steel was just phase one of the project, developed at a cost of US$40 million financed from company resources.
Commercial Capital,
For the next phase to build out a cement plant, liquid petroleum gas (LPG) filling station and a lumber warehouse, the company is seeking commercial capital, he told the Financial Gleaner.
"The building of the wharf was a high risk phase so we used internal funds to build it and not the bank funds which would have put some strain on us," he said.
Of the US$40 million spent on the port to date, US$30 million was spent on the warehouse, wharf and limestone barge, while the land acquired for the development was a US$10 million investment.
The first phase ended up costing the company more than double the initial $1.2 billion estimate.
The second phase, which Tank-Weld has costed at another US$40 million, is to be raised externally, Bicknell said.
Tank-Weld acquired the Rio Bueno facility from the Hendrickson and Hopwood families. Before them, said Bicknell, it was owned by Desmond Blades whose company Musson Jamaica imported animal grains through the port.
Although the port is being developed by the Tank-Weld Group, which consists of about six companies, Port Rio Bueno will operate as a subsidiary of Tank-Weld Metals.
Shareholders in the port include John Greaves, the engineer who built the wharf, the Bicknell family and Arnold Aiken.
Tank Weld Equipment Limited is employed to discharge the vessels, while Transocean Limited is the port agent.
Transocean will coordinate the vessels coming in and ensure customs, health and security arrangements are in place.
Tank-Weld has hired Hugh Morgan as port manager.
To make the port viable would require ship calls of, "I would say about two to two and a half vessels per month or between 25 to 30 per annum," Bicknell told the Financial Gleaner.
He would not, however, comment on projected earnings, but said the company was looking to recoup its investment in eight years of all phases of the development being wrapped up.
Integrated
Tank-Weld currently controls about 70 per cent of the Jamaican steel market. "We are vertically integrated," he said. "We are investing upstream so it would seed into our distribution system," said Bicknell.
Tank-Weld also plans to export aggregates from Rio Bueno to the Cayman Islands.
Its port licence allows the company to import steel, lumber, cement and LPG, and export limestone and aggregates.
For its first shipment of steel last Friday, the company paid $1.7 million upfront in duties and fees to clear the cargo.
"We are applying for a bonded warehouse licence," said Bicknell.
susan.gordon@gleanerjm.com