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
+64 21 5581985
chris@crpl.co.nz
PhosphateKing