I don't usually post on HC, except to rail against marketmanipulators - whom I despise.
However the incessant baying by some posters for VMS to book a ship really is,in my view, beyond logic and needs to be addressed. From the ramblings of these incoherent few it seems they expect the MD to be personally ordering a ship, filling it up and dumping a load of IO on the dock of the destination port and him then telephoning his counterpart in Singapore and saying: "Yoo-hoo. Your iron ore is outside your office. Send a cheque!".
Let mepose a few things:
We don't know what the terms of the agreement with ourinternational purchaser are. It is not unusual in mining shipments(including IO) for the terms to be FOB (Free on Board). Maybe that is notthe situation here, but for the sake of this post let's assume that aperfectly standard Incoterms FOB agreement is being used (the International Chamber of Commerce created the international commerceterms, and these have become known as Incoterms). That's notunreasonable, because big miners all over the world use such standard marinetransport FOB agreements to ship ore.
Under standard or usual FOB Terms, the seller only arranges and pays for producttransportation up to the export port. They alsopay for the loading costs onto the vessel.
The ownership of the cargo transfers upon "Delivery", but this is not definedin those Terms, and so must be agreed by the parties separately. It usually means when the goods are placed on board the ship, depending on the nature of the goods.
From that point the buyer assumes the burden (and cost) for the rest of the journey: marine freight transport, unloading of goods, insurance and any costs when the products reach the destination port.
That is, the seller (VMS) fulfils its obligation to deliver when our IO is placed (or dropped) in the ship’s hold at the named port of origin (Burnie). This means that:
(a) Because the freight has to be paid by buyer, the selection of the carrier of goods (i.e. the ship) is the responsibility of the buyer.
(b) So the buyer nominates a shipping carrier to transport the goods from Burnie to the buyer's port (destination). And the buyer (or more usually the buyer's agent or freight forwarder) makes the ship booking.
(c) However VMS uses its freight forwarder (Qube) to get the IO from the mine to Burnie. And to hold it there pending loading (the bloody big shed).
(d) VMS is responsible to clear the IO for export.
(e) VMS arranges for the IO to be loaded into the hold of the buyer's nominated ship at the agreed time, or in the agreed timeframe.
(f) From that point of the IO going into the hold the buyer has to bear all costs and risks of loss of or damage to the IO. Additionally the buyer is responsible for freight, ship running costs and insurance.
Sometimes because of the nature of the cargo and the need for the buyer to inspect prior to loading, "Delivery" can be defined in those circumstances to be accomplished when the seller releases the goods to the buyer's forwarder. Such as at the shed. In that case the buyer's responsibility for risk, insurance and transportation begins at the same moment, and the buyer becomes responsible for transport to the ship and loading.
The Terms do not now refer to when the payment is to be made (before shipment, immediately after shipment, thirty days after shipment, half now half later, at the halfway point of the journey, or whatever) or how it is to be paid (prepayment, against an email of copy documents, on presentation of documents to a bank under a letter of credit, cleared funds into a nominated account, or other arrangement). These matters should be specified in the contract.
In short: if it's a FOB agreement in reasonablystandard form, the buyer needs to order the ship.
To the posters in question: If you were a large overseas buyer, with a big reputation to protect, getting the very first load from a novice miner out of a new, untested mine in a far-off corner of the planet, would you not want to inspect the load before you buy it? Before it gets to Singapore or Shanghai (or you will have to ship it back)? So would you not want to make sure - before it's loaded in Burnie - that there are no rotting trees and decomposing marsupials in the ore? Would you not want to make sure of certainty of a second, third and subsequent load at the same quality? So would it not make sense for your agent or employee to physically inspect the first three or more loads in a big shed in Burnie? Before the first load goes on to the ship? Just to be sure? So given the cost of chartering the ship, would it not make sense to wait until there are multiple loads in a shed, all inspected, before ordering the ship?
But who knows? Maybe VMS has agreed to get the IO to Singapore or Shanghai, sight unseen by the buyer, as demanded by the posters. I think not.
