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Vale in Talks About Second Mega-Ship Hub on Lack of China Access

Vale SA (VALE), the world’s biggest iron-ore producer, said it’s in talks about opening a second trans-shipment facility for mega-ships in Asia as it struggles to gain access to Chinese ports.

South Korea is among locations under consideration, Global Marketing Director Claudio Alves told reporters today in Nantong city, Jiangsu province, China, where he was attending a ship-naming event. He didn’t say when a decision would be made.

The Rio de Janeiro-based miner is still having discussions in China in a bid to win permission for its 400,000 deadweight ton ships to use local harbors, Alves said. Vale has so far failed to regularly use Chinese ports as local ship owners complain about new competition worsening a capacity glut and a slump in rates.

Sailing the ships to China remains “the best solution for the steel mills in China and for Vale,” Alves said. “We hope we will be able to implement this very soon.”

Vale eventually intends to build up a fleet of 35 leased and owned mega-ships, each almost as big as the Bank of America Tower in New York. The company will spend at least $8 billion on the plan.

Today’s event marked naming of the first two mega-ships for Oman Shipping Co. The vessels, built by China Rongsheng Heavy Industries Group Holdings Ltd. (1101), will next undergo sea trials. The Omani company will eventually operate four mega-ships for Vale, which it will use to haul iron ore from Brazil to a facility in the Persian Gulf sultanate.

--Jasmine Wang. Editors: Neil Denslow, Vipin Nair

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net.

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