Vale SA, the mining company building a fleet of the biggest-ever iron-ore carriers, said talks with Chinese ship owners to buy or hire the vessels slowed this year after the government blocked their access to the nation’s ports.
The Rio de Janeiro-based company drafted a letter of intent with China Cosco Holdings Ltd., the nation’s largest owner, in June 2009 to build and charter the carriers, Vale wrote in a report sent to Bloomberg June 27. It also signed a “framework agreement” with an unidentified Chinese shipping company in October 2011 to sell as many as four Valemaxes. Talks “slowed down” after the transport ministry said in January that ports needed its permission before allowing the ships to dock.
Vale is spending more than $8 billion on the 35 Valemaxes to lower costs on the 35-day voyage to Asia, the destination of about 45 percent of its Brazilian iron ore. Fifteen of the vessels, more than twice the size of conventional carriers, have entered service. Vale will eventually own 19, with the rest hired from other owners. The ships are already calling in the Netherlands, Italy, Oman and the Philippines and ports are being prepared in South Korea and Japan.
“China’s main ports are world leaders in design and are regularly receiving container and oil tanker ships larger than the Valemax ships,” the company wrote in the report. The change of policy “appears to benefit ship owners who voiced a strong opposition to Valemax berthing in China.”
The China Shipowners Association said in December that the carriers “arouse safety and environment risks” because Vale lacks experience in shipping, according to a transcript of comments by Zhang Shouguo, vice excutive chairman of the group, posted on its website. Vale says the new ships are the safest available to carry iron ore.
Five ports in China can already accommodate the Valemaxes, which can carry about 400,000 metric tons of cargo, and six more are being prepared, according to a map included in the report. Vale opened a floating transshipment station in the Philippines in February that moves cargo from Valemaxes to smaller vessels, bypassing the Chinese ban. A second FTS will be opened in March 2013.
China Cosco’s Joint Company Secretary Guo Huawei didn’t immediately respond to e-mails seeking comment today. Cosco, based in Tianjin, China, operates 376 dry-bulk carriers, according to a quarterly report filed April 26.