Bloomberg Report: Boskalis Considers `Hundreds of Millions' for NZ Mine Investment

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By Tracy Withers

     Feb. 15 (Bloomberg) -- Royal Boskalis Westminster NV, the world's biggest dredging company, is considering spending ``hundreds of millions'' on a ship capable of mining a phosphate bed twice the size of Tokyo off the coast of New Zealand.

     ``We're aiming to deliver a vessel that will do the operations,'' Gerard van Raalte, a senior engineer at the Netherlands-based company, said in an interview in Wellington. It may modify an existing ship or build one, he added.

     New Zealand's Chatham Rock Phosphate Ltd. in 2011 selected Boskalis as its partner to help tap a deep-sea bed holding about 25 million metric tons of rock phosphate, worth an estimated NZ$6 billion ($5 billion). Boskalis will likely proceed with its investment in the second half of this year, once it is confident of government approvals, Chris Castle, Chatham Rock's Managing Director, said in a telephone interview.

     Boskalis took a 20 percent stake in Chatham Rock last year as falling demand for dredging amid the global slowdown made off-shore mining more attractive. In return, Boskalis agreed to provide technology and research needed to mine the phosphate --a mineral used in fertilizers -- in an area about 450 kilometers (280 miles) off the South Island's east coast.

     ``The mining license is a given, I don't think anyone regards that as a risk,'' said Castle. For Boskalis ``it's more to do with the environmental consent and their confidence in the process. The button won't be pushed until they are sure.''

                         Final Decision

     The Papendrecht-based company has to choose a ship and develop technology in time for January 2015 -- the target production date -- to mine phosphate that's 400 meters under the ocean surface. That will require an investment of as much as ``several hundreds of millions of dollars'', said van Raalte. The company's final decision is pending consent, he said.

     The rock phosphate covers 4,726 square kilometers, according to Chatham Rock's website. That would provide a local alternative to the 1 million metric tons used in New Zealand each year that's primarily imported from Morocco, it said.

     Chatham Rock shares have surged 40 percent in the past six months and were at 35 New Zealand cents at 2:30 p.m. in Wellington. Boskalis has risen 22 percent in the same period.

     Boskalis's commitment would require the mining license and the environmental consent being granted ``or considerable certainty they are going to be issued,'' said Castle. ``We're confident of the outcome.''

     Chatham Rock applied for the mining permit last September and will seek environmental consent in April, said Castle. The permit to mine can take ``many months'' to process, Britton Broun, a spokesman for the Ministry of Business, Innovation and Employment, said in an e-mailed response to questions. There was ``no specified time period for consideration of'' Chatham Rock's application, he said.

                        Earning Millions

     Boskalis projects its mining rate will be about 70 euros ($93) a metric ton, said van Raalte. That would earn the company about NZ$165 million a year based on an estimated 1.5 million metric tons being mined in that period, Edison Investment Research analyst John Kidd said in a report last September.

     The company has been talking to New Zealand government officials and helping with the mining applications, which should help speed the process, said Castle. It has also modified its existing dredging technology to work at greater depths.

     Boskalis's New Zealand venture comes as the company broadens its business to curb reliance on dredging. It also has 92 percent acceptance for a $985 million offer for Dockwise Ltd. to add ships capable of pulling oil rigs. That followed a 2009 purchase of salvage company Smit Internationale NV, which last year removed fuel from the shipwrecked liner Costa Concordia.

     Mining ``is an interesting new market for the dredging industry,'' said van Raalte. ``Our competitors are also active in this field. Everybody's looking at it at the moment.''

For Related News and Information:

Top New Zealand Stories: {TOPZ <GO>}

Most read New Zealand stories: {MNI NZ BN <GO>}

Reports on Boskalis: {BOKA NA <Equity> CN <GO>}

--Editors: Chris Bourke, Keith Gosman

To contact the reporter on this story:

Tracy Withers in Wellington at +64-4-498-2214 or

twithers@bloomberg.net

To contact the editor responsible for this story:

Chris Bourke at +64-4-498-2215 or

cbourke4@bloomberg.net

Chris Lee - Taking Stock - Chatham Rock Phosphate

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Taking Stock 15 November 2012

Note this excerpt was reposted with permission from Chris Lee. To see the article in its original form please go to www.chrislee.co.nz

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One of the most exciting mining ventures on the horizon is that proposed by the tiny listed company Chatham Rock Phosphate (CRP), previously called Widespread Energy Ltd.

CRP, headed by the patient, ex-Brierley (of the 1980s) analyst Chris Castle, has spent many years looking for affordable projects and may hit pay dirt with its exciting proposal to mine some sea bed for rock phosphate shingle.

CRP has spent millions, and attracted international attention, proving that some seabed between Christchurch and the Chatham Islands contains a source of phosphates that can be mined profitably, yet sensitively, in terms of the environment.

The venture believes it will raise minimal environmental issues, that its Dutch partners have the technology to suck up billions of dollars of the tiny phosphate-filled shingle, and that the phosphate will be better for pasture soils than is available from the Moroccan-exported fertilizer that dominates world sales.

Chris Castle will be wise enough to emphasize the additional benefits to New Zealand that his project will provide.

It will have a significant effect on the Chatham Islands, a part of New Zealand that needs a lift.

The Chatham Islands have an estimated 50,000 hectares of pasture that is in need of fertilizing.

It costs the C.I. farmers $800 a tonne to import phosphate, an unaffordable price, so the land there supports a low level of stock units, suffering from poor pasture growth.

The CRP phosphate could reach the Chathams for a price nearer $100 a tonne, and lift pasture growth sufficiently to allow stock units to increase by nearly 10 times per hectare, creating more stock, support the re-opening of the local meatworks, and several hundred jobs, in an area where jobs are hard to find. The world needs food. The Chatham Islands need jobs.

More importantly CRP would need a base and a port.

The CRP project has sufficient value to make a deep water port viable (if it can be built in time), benefiting the CI fishing industry.

Local farming experts believe the project would allow the Chatham Islands to increase stock units from 65,000 to 700,000, and farming income from $4 million to around $50 million, creating 350 real jobs.

These are very large increases.

The rock phosphate itself would reduce New Zealand’s need to import fertilizer from Morocco, effectively turning a nett importing industry into a nett exporting industry.

The project is still not certain to happen.

It has raised money from American investors, it has found the skilled technology partner in Holland (also a project investor), it has raised money via private placements, yet it will still need to raise another $10 – 12 million before the project is properly funded.

Its ultimate benefit to New Zealand is estimated by an Institute of Economic Research analyst as being potentially $1.3 billion.  

The NZ government alone stands to benefit by tens of millions, in tax and royalties.

If Castle can raise the last of the capital required, if the Crown gives the project the green light, if phosphate prices remain at current levels (about one third of the historic highs) and if our currency remains at its current level, then this project would be rewarding for NZ, for the Chathams, for Castle, and for the shareholders in CRP and its associated company, Widespread Portfolio Ltd. (WID)

Castle listed WID many years ago.

Its shares would increase by 500% in value if CRP achieved the results that are anticipated.

Such a result would be a nice reward for Castle, who has been extraordinarily patient and resilient, as he has pursued this and other projects.

Disclosure: My family owns a modest value of shares in WID and CRP.

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Radio NZ business news interview with Chris Castle on the Edison research due out shortly

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Radio NZ business news interview with Chris Castle on the Edison research due out shortly.  The item is about 8 minutes 30 seconds into the bulletin.

http://www.radionz.co.nz/national/programmes/morningreport/audio/2533688/morning-business-for-26-september-2012.asx