A MECHANICAL problem which has struck the dedicated NZ coastal cement carrier Aotearoa Chief has led Fletcher Building to warn the NZ Stock Exchange the possible cost of disruption to its Golden Bay Cement business could range from NZ$10 million-30 million.
The 8024 DWT, 120-metre Aotearoa Chief, owned by the Swire Group’s China Navigation Co, was purpose-built in Nanjing, China in 2016 for long-term charter to make around 80 voyages per year delivering cement from Golden Bay’s Portland manufacturing facility around the North Island.
“Due to a mechanical issue, the vessel is currently docked at Northport while inspections and repairs are made by the owner. The timeframe required to make the necessary repairs, and source replacement parts, is not known at this time,” Fletcher told the NZSX this morning [29 July].
“Our key priority is maintaining the supply chain and this is being actively worked through in order to minimise any potential disruption to North Island customers while the vessel is being repaired. Golden Bay has made significant investments over the past several years which puts the company in a position to offer contingencies in the event of disruption to its distribution network.
“Golden Bay is engaging with its customers and has enacted its contingency plans, which include the immediate use of alternative transport options to distribute cement. These options include the use of its existing coastal barge and the greater use of road and rail options.”
Fletcher Building said it is also investigating longer term solutions, which include potentially sourcing the use of alternative cement supplies from domestic and offshore suppliers along with securing the use of a replacement ship if required.
“Fletcher Building’s preliminary assessment is that it expects the impact on FY25 earnings due to the disruption to be in the range of NZ$10 million to $30 million, driven by the anticipated increased costs of supply from the range of mitigating actions expected to be adopted by it.
“However, the actual impact will depend on a number of variables that are not yet known, including the duration of the issue, the mitigation actions available, the third-party costs associated with those mitigating actions and the impact on operations,” the company said.
The breakdown comes at an awkward time for Swire Shipping, which is this week expected to announce it is withdrawing on of the two Pacifica Shipping’s NZ coastal containerships due to unsustainable costs.
