Vale in Talks to Engage Chinese Shipping Companies for VLOCs

Sept. 1 (Bloomberg) -- Vale SA, the world’s biggest exporter of iron ore, said it has been in talks to engage Chinese shipping companies to haul the steelmaking material to China on its very large ore carriers under long-term contracts.

The Brazilian company has held discussions with many Chinese shipowners and expects to sign some deals, Vale’s China President Luiz Meriz, said in an interview in Jinan, Shandong province, today, without giving a timeline.

China’s largest shipping companies are lobbying the government to foil Vale’s plan to build a $2.3 billion fleet of the world’s biggest iron ore carriers that will transport the raw material to the nation, Zhang Shouguo, executive vice chairman of the China Shipowners Association, said in a July interview. The association is seeking cooperative shipping contracts with Vale, Zhang said, without elaborating.

Vale Brasil, the first in the fleet, was diverted to Italy on its maiden voyage, rather than unloading at Dalian in China as scheduled, because of draft restrictions at the port and a request from a European customer, Vale Chief Executive Officer Murilo Ferreira said on July 19.

Chinese regulators haven’t approved any of its ports to increase accommodation capability to more than 300,000 dead-weight tons for dry bulk carriers because of safety and environmental concerns, Zhang said in July.

The vessel wasn’t diverted because of political reasons, Meriz said.

Vale’s iron ore exports to China will remain near last year’s levels at about 130 million metric tons, according to Meriz.

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

To contact the editor responsible for this story: Ryan Woo at rwoo5@bloomberg.net

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