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Vale Adapts To Chinese Valemax Port Ban

by Mike Godfrey, Tax-News.com, Washington

26 April 2013


In a conference call announcing performance during the first quarter of 2013, Brazilian mining giant Vale has confirmed that it is continuing to seek economies of scale through the use of Valemax dry bulk carriers to the Asia market, in particular to China, despite a ban on the vessels at Chinese ports.

China banned Valemax vessels - which can carry in excess of 400,000 deadweight tons - in late 2011, officially on safety concerns after Valemax carrier Vale Beijing's hull ruptured on its maiden voyage to China. The move was instead widely reported to have been taken to protect the Chinese shipping industry, which feared that the uptake of huge vessels, amid ship overcapacity in China, would lead to the decline of several domestic operators.

Vale confirmed that for the first time in fourteen months it had managed to have a single Valemax vessel admitted to Lianyungang port in Jiangsu province mid-month, but admitted that it had only been loaded with 220,000 tonnes of iron ore to comply with local regulations. Vale said that although the development marked significant progress, it anticipated that the firm faces a long road to having its 35 Valemax vessels fully readmitted to Chinese ports.

Instead, the company has established a transhipment hub in the Philippines to allow the company to operate the vessels between Brazil and Asia, while smaller vessels are being used to bring loads to Chinese ports. Further transhipment hubs are under consideration or development in South Korea, Japan and Malaysia, the company said, to support the firm's efforts to increase its market share in the region, in competition with Australian miners, Rio Tinto and BHP Billition, which have the upper hand on Vale in terms of geographical location.

TAGS: marine | mining | Australia | China | Philippines | Brazil | Malaysia | Japan

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