Bloomberg News

Vale’s Giant Iron-Ore Ship Reaches China Port for First Time

December 29, 2011

(Updates with details of the vessel in fourth paragraph.)

Dec. 28 (Bloomberg) -- One of the world’s largest commodity ships operated for Vale SA reached a Chinese port for the first time, after the nation’s refusal to allow such vessels delayed by more than six months the Brazilian miner’s plan to control shipments with giant carriers.

The Berge Everest, one of the four vessels BW Group will use to haul iron ore for Vale, has reached the Dalian port fully loaded from Brazil, T.S. Ang, a technical executive at BW Fleet Management in Singapore, the vessel’s owner, said by phone today. He didn’t elaborate as the company is awaiting further details.

Vale is spending at least $8.1 billion on the valemax vessels, including buying 19 very large ore carriers and leasing another 16 in long-term contracts, as it seeks lower freight costs from Brazil to China, its biggest market. The plan has spurred opposition from Chinese shipowners who say it will worsen overcapacity and cause industrywide losses.

BW Group will operate four vessels for Vale, the miner said in 2007. The ship, with a draft of 21.3 meters, is moored outside Dalian, according to data on Bloomberg. The vessel, built by Bohai Shipbuilding Heavy Industry Co., left Brazil in early November, the data showed.

Carolyn Tang, a spokeswoman at Vale China, didn’t answer calls to her office today. A man who said his surname is Wang and is the office secretary of the Dalian port, said he wasn’t aware of the ship.

The Brazilian mining company, the world’s biggest iron ore miner, ships about 45 percent of sales to China, the largest consumer of the steelmaking ingredient.

Vale’s former Chief Executive Officer Roger Agnelli oversaw agreements for the 400,000 deadweight-ton vessels to reduce a reliance on outside shipping lines and risks from changes in freight costs. The Baltic Dry Index, a benchmark for global commodity-shipping rates, fluctuated more than 40 percent on an annual basis every year except one from 2001 to 2010.

The Vale vessels are about twice as big as the capesize ships that are now generally used to ferry commodities from Brazil to China. The miner plans to send about 130 million tons of iron ore on the route both this year and next.

Vale has held talks with Chinese shipping lines about selling or leasing the about 360-meter-long vessels, Teddy Tang, the chief financial officer of its China operations, said in September. No deals had been reached.

The China Shipowners Association, whose members hold about 80 percent of the nation’s shipping capacity, has advised lines not to take the vessels, Executive Vice Chairman Zhang Shouguo has said.

--With assistance from Helen Yuan in Shanghai and Penny Peng and Feiwen Rong in Beijing. Editors: Vipin Nair, Dave McCombs

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Vipin Nair at vnair12@bloomberg.net


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