Dredging giants locked in battle as mega-orders beckon

BY A STAFF REPORTER

AMSTERDAM — Dutch and Belgian dredging combines are well-positioned in the race for contracts for two major Asian projects which are to be awarded this year, despite the internecine warfare which is currently raging in the sector.

Six Dutch and Belgian dredging contractors control nearly 50% of the world's freely accessible dredging market which is estimated to be worth an annual euro 2.5 bn. The US is chief among those countries with a 'closed' dredging market. This market is also valued at euro 2.5 bn a year.

Dutch-based Boskalis is the largest dredging group in the world, with an estimated 20% share of the free market, and has unique access to US dredging contracts through a joint venture with Bean Dredging.

Boskalis is now trying to swallow up construction group HBG, whose dredging arm, Ham Dredging, is in the same consortium bidding for a slice of a Singapore land reclamation project. The Jurong 4 project is worth up to euro 4 bn.

Their partner for this project is Dredging International of Belgium, part of the Deme combine, which is being targeted by HBG to ward off Boskalis' unfriendly takeover bid.

'We honestly don't know where all this will lead,' said MeesPierson's Allard de Buizer. 'But a hostile bid by Boskalis for HBG is definitely not on the cards.'

The scramble has hotted up with investment company HAL's decision to enter the bidding for Deme.

Moreover, the European Commission is likely to object to any combination of Boskalis, Ham or Deme on anti-cartel grounds. Boskalis controls one-fifth of the world market, while Ham is estimated to have a 10% to 12% share and Deme between 11% and 13%.

Despite cutthroat competition in the sector, the companies are often forced to work together on increasingly larger international projects.

'This is a sector where competitors must constantly work together,' said Roel Berends, financial director of Boskalis. 'There is no single dredging company in the world which can handle the larger projects. So meanwhile, it's business as usual,' he added.

The currency crisis in Asia has abated, with the result that new projects are springing up there again. Fears of overcapacity caused by recent fleet renewal have been allayed by the new projects.

The Singapore project has already been named 'the largest dredging works of the century'. This follows the largest dredging project of the 20th century — for Hong Kong's new airport — which is close to completion. The $500 mln Disneyworld Hong Kong project also comes up for tender soon.

MeesPierson's De Buijzer said the market is recovering. 'Work for several new container terminals in Hong Kong will also come up this year. Indonesia has many plans although it cannot finance them now.

'In Holland, Maasvlakte II will be a major project. It will be smaller in scale than the Singapore venture, but still substantial. Finally, a new offshore airport to replace Schiphol remains a possibility, although this is 10 years away,' De Buizer said.