Vale Says China Port Restrictions to Giant Valemax Ship Overcome

Vale SA, the miner that developed the world’s largest iron-ore ships, said the setbacks to dock the vessels in China have been removed, opening the door to cut transportation costs to its biggest market.

Valemax, as the 400,000 metric-ton vessels are known, have already arrived in five Chinese ports as they no longer confront restrictions, Vale Investor Relations Director Rogerio Nogueira said on Thursday. The company is now working to adapt China’s ports to the vessel as it boosts the number of Valemax docking in terminals of the Asian nation, he said.

“That issue of the lobby, of the obstruction, that’s overcome. Now it’s port-to-port work, of adaptation,” Nogueira said during a mining seminar in Rio. “We are in that job of increasing the number of ports where we can dock in China.”

Vale started operating Valemax in 2011 to reduce shipping costs and vie with Australian competitors for a bigger share of sales to China, the destination of half the company’s iron-ore shipments. It hasn’t been allowed to dock them in the Asian nation until now.

Chief Executive Officer Murilo Ferreira said July 31 that the company had yet to convince China’s authorities to allow the vessels to anchor at Chinese ports because of safety concerns.

“That was really an important problem, there was an important lobby for Valemax not to dock in Chinese ports,” Nogueira said during the seminar.

The use of Valemax to transport iron ore to China represents “quite a significant” cost advantage compared with using smaller ships, Nogueira said, declining to provide cost estimates.

Price Decline

Iron ore may fall to as low as $55 a ton and trade at an average of $70 a ton this year as the largest producers continue to add supply and high-cost mines in China are more resilient than expected to lower prices, Bank of America Corp. analyst Thiago Lofiego said at the same event.

Ore of 62 percent content rose to $63.27 a dry ton on Thursday, reducing its declined in the past 12 months to 49 percent, according to Metal Bulletin Ltd.

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