Mercator, Tata in $320m coal shipping deal

Mercator Lines Singapore, a unit of Indian dry-bulk shipping firm Mercator Lines Limited announced on Wednesday it had renegotiated deal with Indian firm Tata Power Company Limited to increase coal shipping from Indonesia to India to 3.2 MTPA from 1.9 MTPA.

The contract was originally signed in October 2006 for four years with two years extension option.

According to Mercator, the additional vessels will be chartered at US$54,000 a day, raising the average vessel earning under the contract to $33,000 a day from $24,000 previously.

The value of the four-year contract, starting June 2008, based on the new quantity and incremental rate, is estimated to be $320 million. The company will require five panamaxes to service the contract, it said.

Tata Power bought 30 percent stake in each of PT Kaltim Prima Coal and PT Arutmin Indonesia last year, units of Indonesian largest coal producer PT Bumi Resources and a part of its trading company to the Indian company.

Under the contract with Tata Power, Bumi will export 10 million tons of coal a year to India beginning 2009 and the amount will increase to 10.8 million tons a year from 2011 onwards. (denny)