Ships are moored at a port on the Parana River in Santa Fe, Argentina, December 21, 2020. REUTERS\/Stringer<\/p>\n
Argentina River Auction Draws Fire From U.S. Dredger Over \u2018Cooked\u2019 Tender<\/p>\n
By\u00a0Patrick Gillespie (Bloomberg) \u2014 A US dredging company is calling out the bid terms of President Javier Milei\u2019s signature concession in Argentina, claiming they\u2019re tilted in favor of a consortium with past ties to China.<\/p>\n
Great Lakes Dredge & Dock Co. has committed to help dredge the Paran\u00e1 River deeper if its partner, Belgium-based Dredging Environmental & Marine Engineering NV, wins the formal bid placed in February. DEME is competing with a group led by Jan de Nul NV, also of Belgium, which has dredged the Paran\u00e1 since the 1990s. A winner could be announced in May or June.<\/p>\n
The river is Argentina\u2019s economic lifeline, carrying most of the grain exports that propel the country\u2019s growth. Deepening the shallow river where ships have run aground is one of the most consequential infrastructure projects in Milei\u2019s bid to turn the crisis-prone nation into an economic power.<\/p>\n
Milei\u2019s auction isn\u2019t open to state-run entities, fueling a public perception that the libertarian leader sought to exclude Chinese companies in a nod to his relationship with US President Donald Trump\u2019s administration and its goal of diluting China\u2019s influence in Latin America.<\/p>\n
After the US bailed out Milei in October with a $20 billion financial lifeline, Treasury Secretary Scott Bessent said Milei was \u201ccommitted to\u00a0getting China out\u201d of Argentina, adding those efforts\u00a0include sea ports.<\/p>\n
With geopolitics in play, an auction in Argentina that on paper looks like a competition between two Belgian dredging giants also has American support on one side and a history of Chinese partnership on the other.<\/p>\n
Argentina\u2019s government says Great Lakes made no formal complaints during months of hearings on the concession\u2019s conditions. China hasn\u2019t commented on the exclusion of state-controlled companies.<\/p>\n
DEME, however,\u00a0publicly complained\u00a0over a year ago about the same terms that it alleges unfairly favor Jan de Nul. In a November statement before the conditions of the latest auction were published, DEME had a more diplomatic tone, calling Argentina a strategic market and praising international efforts for a transparent process.<\/p>\n
Houston-based Great Lakes, the largest US provider of dredging services, sees an uneven playing field with contract requirements that stand to benefit Jan de Nul, Argentina\u2019s longtime partner on the Paran\u00e1.<\/p>\n
\u201cWith the tender, it\u2019s been geared toward the incumbent,\u201d Chris Gunsten, senior vice president of project services at Great Lakes, said in an interview. \u201cIt\u2019s the uphill battle of, \u2018Is it already cooked? Is it already done?\u2019 And the incumbent is just going to be rewarded because of some technicalities that were built into the tender.\u201d<\/p>\n
At the same time, advisers for DEME and Great Lakes say Jan de Nul\u2019s bidding partner, Servimagnus SA of Argentina, has worked with China\u2019s state-run CCCC Shanghai Dredging Co. Officially, no Chinese firm is listed as part of the pending bid.<\/p>\n
Jan de Nul declined to comment through a local PR representative. In a statement, Servimagnus acknowledged its past work with China\u2019s CCCC but said \u201ctoday we don\u2019t have any commercial or contractual relationship with a Chinese company or the government.\u201d The Argentine firm emphasized it has its own technology and equipment for operations.<\/p>\n
DEME confirmed it submitted its bid on Feb. 27 and its consortium includes Great Lakes as well as New York-based financial broker Clear Street Group Inc. While Great Lakes is committed to work on the physical dredging, talks for an equity stake in the project are ongoing, he said.<\/p>\n
To be sure, DEME has also worked in China before as part of its global operations. It formed a consortium with Shanghai Dredging and Servimagnus in 2022 for a previous tender for the Paran\u00e1 concession that was later annulled.<\/p>\n
Among the requirements raising flags for Great Lakes is Argentina\u2019s stipulation of a price floor, a condition Gunsten called unprecedented. The concession also seeks a company that has previously dredged 250 kilometers (156 miles) of river, a rare feat done by Jan de Nul in the Paran\u00e1 during its 25-year concession.<\/p>\n
Any company that opposes a requirement must put up a $10 million \u201cobjection bond,\u201d which Argentina can keep if authorities reject the objection.<\/p>\n
\u201cPrice floor \u2014 I\u2019ve never seen it ever, and I\u2019m 34 years in the dredging industry,\u201d said Gunsten, whose company dredges parts of the Mississippi River. \u201cThe owner usually wants the cheapest price at the right level of quality.\u201d<\/p>\n
DEME and others \u201cdredge millions of cubic meters per year with their equipment,\u201d he added. \u201cTying the requirement to a continuous stretch of a river is farcical.\u201d<\/p>\n
I\u00f1aki Arreseygor, director of the National Agency of Ports and Waterways that\u2019s overseeing the tender, said authorities received more than 200 consultations from interested groups and \u201cnot one of those\u201d came from Great Lakes. \u201cIt never manifested any interest,\u201d Arreseygor said in a written response to a request for comment.<\/p>\n
DEME could have formally added Great Lakes as a partner in its bid and didn\u2019t, he said. \u201cWe have transparency guarantees and a robust procedure that speaks for itself,\u201d Arreseygor said.<\/p>\n
Arreseygor also cited a report by UNCTAD, a United Nations development organization, that supported a price floor to avoid any company price dumping or abusing a dominant position. \u201cWe\u2019re not surprised, unfortunately, by these types of actions that only seek to boycott an unprecedented procedure in the history of this contract,\u201d he added, referring to Great Lakes.<\/p>\n
Once Great Lakes started talks last November, DEME secured letters from the Development Finance Corporation and International Finance Corporation that expressed a willingness to provide financing if the consortium wins the tender. Gunsten and his delegation also met US Ambassador Peter Lamelas in Buenos Aires last week.<\/p>\n
Consultants advising DEME say China\u2019s silence on the tender doesn\u2019t add up since Milei blocked state-run firms, pointing to past work in Argentina by Servimagnus with Shanghai Dredging.<\/p>\n
\u201cYou start seeing it\u2019s almost like a shell game, almost a pyramid situation where they\u2019re hiding the ball from you,\u201d said Steve Bovo, a Florida-based consultant at Corcoran Partners, a lobbying firm advising DEME\u2019s consortium. \u201cThe Chinese are competing all over the world and they have no objections to what\u2019s going on here in Argentina as far as \u2018You\u2019re going to block us from bidding?\u2019\u201d<\/p>\n
\u00a9\u00a02026\u00a0Bloomberg L.P.<\/p>\n