China's large privately-owned shipbuilder Yangzijiang Shipbuilding is set to become a very significant ship breaker.
The Yangzijiang group is investing RMB 240m ($38m) in a shipbreaking venture that will have the capacity to scrap up to 15 VLCCs a year.
Singapore listed Yangzijiang is taking an 80% stake in Jiangsu Huayuan Metal Processing whose subsidiaries include the Jingjiang City Dunfeng Ship Dismantle Co.
Dunfeng is one of the few qualified and environmentally friendly ship scrapping companies in China.
Yangzijiang previously had an indirect 20% stake in the scrapping concerns which now become wholly owned subsidiaries of the shipbuilder.
Yangzijiang said the diversification into shipbreaking and scrap metal trading would provide a steel hedging strategy to complement its shipbuilding business and contribute to a sustainable growth in earnings.
The move into scrapping follows Yangzijiang's recent diversification into the rig and offshore vessel building and repair business.