- Element 25 (E25) is reporting success from its alternative shipping strategy, as the company battles to avoid COVID-19 related congestion delays
- E25 switched from Handymax vessels to Supramax vessels in a bid to avoid elevated shipping prices encountered during its first two manganese shipments
- The manganese producer says the strategy paid off and it’s realised a 45 per cent decrease from the previous peak tariff for its third shipment
- Element 25 is hopeful global shipping tariffs will begin to normalise as COVID-19 restrictions ease in the coming months
- Company shares are down 4.44 per cent at $1.40 per share
Element 25 (E25) is reporting success from its alternative shipping strategy, as the company battles to avoid COVID-19 related congestion delays.
E25 announced in September it would switch from Handymax vessels to Supramax vessels in a bid to avoid elevated shipping prices.
The manganese producer encountered higher costs during its first two shipments from the Butcherbird Manganese Project in WA’s Pilbara region.
Pleasingly, the company said its strategy paid off and it realised a 45 per cent decrease from the previous peak tariff for its third shipment later this month.
E25 added that the reduction in freight rate charges equated to an effective increased realised price of approximately US$0.75 per dry metric tonne unit.
The third cargo ship containing Butcherbird’s ore will leave Port Hedland on November 27, with the ore headed to offtake partner OM Materials.
Commenting on the shipping issues encountered this year, Element 25 said in today’s market update that it hoped prices would normalise as COVID-19 restrictions ease.
“COVID related congestion has had a significant impact on global shipping tariffs in 2021, resulting in increased freight costs which directly impacted on the gross margins for the first and second shipments of manganese concentrate from the project,” the company said.
“The Baltic Dry Index has begun to normalise, and the company expects this trend to continue in coming months, although this recovery will be subject to the ongoing reduction in COVID related restrictions which is anticipated to result in the freeing up of capacity in the global shipping fleet.”
Company shares have dipped 4.44 per cent during morning trade, trading at $1.40 each.