He has signed a first-stage agreement with Nanjing-based CSC Jinling Shipyard to build the ship as part of a planned fleet of luxury liners, the Gold Coast, Queensland-based businessman said in an e-mailed statement today.
Palmer, whose investments include golf courses, hotels, coal and iron-ore mining projects, a nickel smelter, a soccer team and a horse stud, said the ship will have the same dimensions as the original Titanic. A move into the cruise market, where ships typically cost at least $500 million to build, is an ambitious step, Greg Johnson, an analyst with Shore Capital Group inLondon, said by phone.
“You’re starting from scratch with no experience,” Johnson said. “A $500 million punt is quite sizable.”
The Titanic, commissioned by White Star Line, was the largest liner in the world when built at just under 270 meters (about 880 feet) and 53 meters high. It sank on April 15, 1912, after hitting an iceberg east of Newfoundland, costing the lives of more than 1,500 passengers and crew, according to the statement. The Titanic II will, like its predecessor, have 840 rooms on nine decks, Palmer said.
“It will be every bit as luxurious as the original Titanic, but of course it will have state-of-the-art 21st century technology and the latest navigation and safety systems,” Palmer said, along with gymnasiums and swimming pools.
Palmer, 58, a former media adviser to Queensland’s late state premier Joh Bjelke-Petersen, is known for ambitious projects in varied fields.
In March he was quoted by the Sydney Morning Herald promising to invest in a blind trust to encourage media diversity in Australia, and saying that Australia’s Greens party was funded by the CIA.
He unveiled the Titanic II plan just over an hour before a separate announcement that he would stand against Australian Treasurer Wayne Swan in his seat of Lilley at a federal election due next year.
Challenge to Build
A person on duty at the managing director’s office of CSC Jinling said by phone that while he wasn’t aware of the deal, it may have been signed by the company’s marketing and sales department. Today is a public holiday in China.
The move into the cruise-ship industry, one of the few areas of heavy manufacturing still dominated by European companies, would be a challenge for a Chinese company, said Hur Sung Duck, an analyst at HI Investment & Securities Co. in Seoul.
“That’s a huge jump for a country that builds mostly bulk ships” used for carrying coal, iron ore and grains, Hur said. “I seriously find it difficult to believe it can be built by that time.”
Italy’s Fincantieri Cantieri Navali Italiani SpA, Norway’s STX Europe AS and Germany’s Meyer Werft GmbH, are the largest players in the cruise ship-building market, according to a 2010presentation by Samsung Heavy Industries Co.
Mitsubishi Heavy Industries Ltd. (7011) last November completed two ships for Carnival Corp. (CCL), while STX Europe is owned by Changwon, Korea-based STX Corp.
“The Chinese ship-building industry with our assistance wants to be a major player in this market,” Palmer said in the statement.
The ship would sail under his company, to be name Blue Star Line in reference to the Titanic’s owner. China’s navy would be invited “to escort Titanic II on its maiden voyage to New York,” Palmer said.
Blue Star Line was registered on April 18 as a wholly-owned subsidiary of Palmer’s Mineralogy Pty., according to its only document filed with Australia’s securities regulator. Palmer and Derek Payne, manager of his Cold Mountain horse stud, are the only officers listed in the three-page filing.
The mining magnate has a fortune of A$5.05 billion ($5.3 billion) and is Australia’s fifth-richest person, according to BRW magazine rankings. He is developing coal and iron-ore mines in Australia, including the $8 billion China First coal project in Queensland state. Last year, he dropped plans to sell shares in his company Resourcehouse Ltd. in Hong Kong after commodity prices fell.