SINGAPORE - Mainboard-listed New Silkroutes Group has signed a memorandum of understanding with China Shipbuilding Industry Equipment and Materials Co Ltd (CSEMC) to procure crude oil and petroleum products for the state-owned capital goods supplier and to explore collaboration in China and Singapore.
CSEMC supplies raw materials such as steel, non-ferrous metals and coal to the China Shipbuilding Industry Corporation group, which builds and repairs vessels, such as naval ships, tankers and container ships. They also manufacture diesel engines and marine equipment.
Under the MOU, New Silkroutes' wholly owned subsidiary, International Energy Group (IEG), will seek to bring oil and petroleum products into China for CSEMC. On its part, CSEMC will provide support to help IEG realise its plans for managing and owning oil storage facilities, said New Silkroutes. As part of the MOU, CSEMC will set up a company in Singapore to work with IEG.
New Silkroutes said IEG is its biggest revenue driver and it is expected to generate more than US$225 million (S$312.1 million) in revenue for New Silkroutes' financial year ending June 30, 2017, up from US$49.6 million for the previous financial year.
The company said the expected increase will be driven by credit facilities worth US$110 million obtained from several international banks. These lines will increase IEG's trade financing options and allow it to structure more profitable trades.