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UPDATE 1-Vale Mega Ships Pose "Catastrophic" Risk - China Shippers
industry news

* Any oil leak would be "catastrophic" - shippers group

* Govt needs to carefully review whether to allow Valemax entry

* Shipowners lobby has clout, may impact govt decision

SHANGHAI, Dec 13 (Reuters) - China should be in no rush to allow new Valemax ships, the world's largest dry bulk carriers, into its ports, as they have not been thoroughly tested and any oil leak from one could be catastrophic, an influential industry group warned on Tuesday.

Chinese shipowners want the government to keep the new mega vessels (VLOCs) out, fearing Vale, the world's biggest iron ore miner, will use them to monopolise the dry bulk shipping market at their expense.

China is the main market for Vale, a Brazilian mining giant.

The China Shipowners' Association (CSA) said the 400,000-tonne Valemaxes could pose a safety threat. A week ago, the Vale Beijing was found to have a leak as it was preparing for its maiden voyage.

"Such mega ships have been newly built ... and it is not yet certain whether they can withstand various sea conditions," the CSA said in an email to Reuters. "If there is any leaking of fuel oil, the pollution will be catastrophic."

The CSA wields significant industry clout, as its members control some 80 percent of China's shipping capacity, and many are state-owned companies.

"Their objection certainly will affect the decision of the Chinese government," said Huang Wenlong, a shipping analyst at BOC International in Hong Kong.

"There's a concern that Vale will dominate the logistics along with its control on iron ore supply."

The Vale Beijing is one of the first of almost three dozen huge bulk carriers commissioned by Vale, which sees the bigger vessels reducing its costs so it can compete better with Australian rivals BHP Billiton and Rio Tinto , which are closer to the Chinese market.

Huang said he did not expect Vale's VLOCs to be calling at Chinese ports any time soon. "A few Chinese ports may be able to accommodate those ships in terms of designed capacity, but this is not tested yet, and there's a lack of data to prove it is feasible."

Several government bodies, including China's National Development and Reform Commission and the maritime authority, will make the decision on whether to allow the Vale carriers into Chinese ports.


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