May 11, 2018
Mounting world activity in infrastructure and other construction projects has prompted the second major Canadian bulk shipping enterprise in two years to establish a global cement shipping joint venture to broaden its revenue stream. The niche cement sector has been expanding significantly in both developed and emerging states - with shortsea operators responding to robust demand. Cement shipping, in effect, can be characterized as a regionalized market with generally smaller vessels servicing large global manufacturers that support infrastructure investment.
Montreal’s CSL Group and Cyprus-based SMT Shipping announced on May 8 they have entered into an agreement for CSL to acquire a 50% stake in Eureka Shipping Ltd., SMT’s pneumatic cement vessel business. The new joint venture allows Eureka and CSL to combine expertise, resources and innovative technologies to expand services to customers in the seaborne cement powder and fly ash transportation markets around the world. CSL’s Australian cement shipping business is not included in the agreement.
“The joint venture represents an important step in CSL’s strategy to increase its presence in the global construction material sector,” said Louis Martel, president and CEO of The CSL Group. “We are confident that the synergies between CSL and the Eureka team, along with our common values and complementary skills will further strengthen our ability to provide significant value to our customers and an effective platform for growth.”
The largest owner and operator of self-unloading vessels in the world, the CSL Group trades throughout the Americas, Australia, Europe and Asia. The carrier delivers more than 70 million metric tons of cargo annually for customers in the construction, steel, energy and agri-food sectors.
“SMT Shipping is honored to partner with CSL in Eureka,” said Mark Voorham, CEO of SMT Shipping. “We feel the new joint venture will harness the strengths of both respected companies, which will work together seamlessly to serve our clients with the highest levels of service and professionalism.”
Headquartered in Limassol, SMT Shipping has over the past 30 years built a fleet of about 45 vessels trading in various bulk commodity markets.
“For Eureka Shipping, the partnership with CSL provides a strong, collaborative platform to further invest in innovative logistics solutions to the benefit of our customers in the cement and building materials industries,” added Kai Grotterud, CEO, Eureka Shipping Ltd. The latter operates a fleet of self-unloading cement carriers in the Baltic Sea, Atlantic Ocean, the Mediterranean Sea, the Caribbean and Asia.
The partnership is described as “a strong strategic fit, leveraging the companies’ respective strengths in the shipping and handling of dry bulk cargoes.”
There will be no change in the day-to-day management and operation of vessels in the Eureka fleet. Subject to certain regulatory conditions, the transaction was expected to close by the end of June.
Advent of NovaAlgoma Cement Carriers
The CSL/SMT joint venture was preceded in early 2016 by a similar agreement between Algoma Central Corporation, which operates the largest fleet of liquid and bulk carriers on the Great Lakes-St. Lawrence waterway, and Nova Marine Carriers based in Lugano, Switzerland.
Algoma owns a 50% stake in NovaAlgoma Cement Carriers (NACC). Now the second biggest in the world, the NACC fleet comprises pneumatic cement carriers that use a compressor and pump system to load and unload cement powder via a large diameter hose. Such operations are very clean, with virtually no discharge in the atmosphere.
Nova Marine Carriers controls a fleet of more than 50 ships specializing in bulk traffic in the Mediterranean, Atlantic and Persian Gulf and in Italian cabotage.
When the joint venture was announced, Ken Soerensen, president and CEO of Algoma Central Corporation of St. Catharines, Ontario described NACC as “an excellent example of a global shortsea shipping business that shares many characteristics with our domestic dry-bulk business.” He recalled that Algoma already provided technical and operations management services for three cement-carrying vessels on the Great Lakes on behalf of leading cement producers.