Financial woes at a Croatian shipyard are rippling into Australia’s livestock export trade.
The Uljanik shipyard, which has contracts to construct two livestock vessels intended for the Australian trade, is on the brink of bankruptcy, according to Croatian media reports.
The shipyard received a 96-million-euro loan from the Croatian Government earlier this year but struggled to pay wages in July, which caused a worker strike at the time.
Now, with employees yet to be paid September wages, the shipyard’s administration has conceded it needs Government intervention to solve its wage problem, but the Croatian Government is stating it is not its job to help.
This morning publicly listed Australian livestock exporter Wellard announced to the ASX that Uljanik has terminated its contract to construct the MV Ocean Kelpie.
Wellard commissioned Uljanik to build the MV Kelpie as a bespoke livestock carrier with 12,500 square metres of pen area in March 2015.
There have been continued delays to the project and Wellard announced in its annual report on August 20 that it was commencing negotiations with Uljanik to either exit or delay the build contract.
Wellard said it chose in its 2018 annual report to fully impair the A$13.8 million value it has spent on the MV Kelpie to date.
“Wellard will immediately asses its response to Uljanik in order to protect its rights under the contract,” the company said in this morning’s statement to the ASX.
“Wellard will provide further details as the matter progresses.”
Wellard’s MV Ocean Drover, which the company is currently offering for sale, was also constructed in the Uljanik Shipyard in 2012.
In 2015 the Kuwait livestock transporting and trading company KLTT, which operates two double-tiered export vessels, signed a contract for Uljanik to construct a new 28,000 square metre cattle and sheep export single-tiered vessel with a similar design to Wellard’s Ocean Drover.
New shipping regulations in Australia which come into effect from the start of 2020 – 14 months away – will effectively end the use of twin-tiered vessels in the Australian livestock export trade.
Whether the financial problems being faced by Uljanik will impact the delivery date of the new ship for KLTT is not yet clear.
KLTT is a long-time trading partner of Emanuel Exports and its subsidiary EMS Rural Export, the export licenses of which were cancelled earlier this year after images of dead and heat stressed Australian sheep enroute to the Middle East were publicly released.
KLTT subsequently applied for its own export license in August but is yet to learn from the Department of Agriculture and Water Resources whether that application has been successful.