CHINA COSCO Holdings Co. plans to order nine new cargo ships in its first major purchase in more than five years, as it takes advantage of a government cash subsidy to scrap old vessels and upgrade its ageing fleet.

    It said in a statement Tuesday that it has agreed to buy four dry-bulk ships of 64,000 deadweight tons each for a total of US$108 million.

    It plans to order the ships from CSSC Huangpu Wenchong Shipbuilding Co., a shipbuilder controlled by China State Shipbuilding Corp.

    The four dry-bulk ships, which carry commodities such as grains, ores and cement, are scheduled for delivery from 2015, it added.

    In a separate statement, the Chinese shipping conglomerate said its board has also approved a plan to buy five container ships with a capacity of 9,400 twenty-foot equivalent units each, but details of the shipbuilding contracts have yet to be finalized.

    The new shipbuilding orders come after the government unveiled details of a new subsidy program earlier last month to encourage the nation’s ship operators to replace older cargo ships and tankers with new ones.

    Chinese shipowners will receive half of a cash subsidy of 1,500 yuan (US$247) per gross ton — a measure of a ship’s internal volume — to replace old ships and get the remainder if a new ship is built.

    China COSCO’s investment in new ships is the shipping operator’s first major vessel purchase since 2008 as the flagship company of State shipping conglomerate China Ocean Shipping (Group) Co. was battered by excess capacity and low freight rates.

    The company sought to reverse losses last year on the back of one-off gains from asset sales and thereby avoid mandatory delisting from the Shanghai Stock Exchange. It racked up losses of 9.56 billion yuan (US$1.56 billion) in 2012 and 10.4 billion yuan in 2011.

    The new orders also come at a difficult time for China COSCO. In July, longtime group chairman Wei Jiafu retired, triggering a senior management shuffle.

    The company hit another setback in November, when one of its executive directors was placed under investigation by authorities for unspecified wrongdoing, though China COSCO has said its operations were unaffected. (SD-Agencies)