Damen takes 70% share of Farocean
May 16, 2008
By Tom Robbins
Cape Town - The world's largest privately owned support ship builder, Damen Shipyards, has bought a 70 percent stake in local builder Farocean Marine, a vote of confidence in the revival of the local industry.
Damen Cape Town, as the ship building company has been renamed, intends to capitalise on making craft such as tugs and oil rig support ships that service the boom in African commodity exports.
Lorenz Winkel, the managing director for Africa, said yesterday the high oil price was the main driver of the global ship building boom.
As the search for oil became an increasingly offshore exercise, there would be "more work for our support boats", Winkel said.
Local port authorities have been slow to respond in making port infrastructure available for private sector servicers of the oil and gas sector, despite a government initiative.
The Farocean Marine sale follows the recent resurgence of the Southern African Shipyards facility that is now building five tugs for Transnet at a value of R400 million.
Winkel said despite the downturn in Western economies there had been no physical sign of the boom in ship building and transport rates tailing off.
But were this to happen, there was still a five-year backlog for the supply of support vessels.
Winkel said that Damen had already built nearly 800 craft for the African market from its 34 yards around the world, but that it needed a facility closer to the sub-Saharan market to reduce costs and provide a quicker service, including for its ship repair service.
Farocean had already started building boats designed by Damen. Damen Cape Town was building a 22m tug for a Nigerian client called Starzs Investment.
Capacity would be increased to four to five ships a year as its global sales network helped to keep order books full. WInkel said.
As in Europe, low-cost manufacturing in the Far East had decimated the local industry. However, with sharply higher global demand starting in 2003, there had been a revival in Europe and there was no reason why South Africa could not follow suit.
The local ship building skills shortage would be boosted by Damen's training networks. The company had already begun training welders and was looking at boilermaking, as well as building relationships with technical education institutions.
There was a lack of space and water access at the port in Cape Town, but the National Ports Authority had been approached on this matter.
Damen's existing empowerment partner, Montsi Investments, would be retained with a 30 percent stake.
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