Vale Says Ships to Go to Other Countries If Stopped by China

Vale SA (VALE5), the iron-ore producer building a fleet of the world’s largest commodities ships, said its so-called valemax vessels carrying the raw material can stop at other countries if not allowed to enter Chinese ports.

The fleet, which will have the capacity to transport about 60 million metric tons of iron ore per year once fully in operation, can serve alternative ports including those in Malaysia and Oman, Jose Carlos Martins, Vale’s head of Ferrous and Strategy, told reporters today on a conference call.

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 China Shipowners Association, whose members control about 80 percent of the nation’s shipping capacity, advised companies not to use the vessels, according to Executive Vice Chairman Zhang Shouguo.

None of the six vessels already in operation since April have called at Chinese ports. Zhang said the additional capacity is exacerbating a slump in charter rates.

Martins declined to comment on an earlier report by Sao Paulo’s Valor Economico newspaper saying that the company sold four of its 19 iron-ore mega ships to Asian companies. Vale plans to sell the remaining 15 vessels in 2012, the newspaper reported, citing an unidentified Vale official.

“I don’t think the ownership of the ships is fundamental to our strategy. Under some conditions it may have sense to buy but most of the time, it’s better to contract,” Martins said.

Rio de Janeiro-based Vale said Dec. 9 it’s in advanced talks to sell 19 of the vessels, according to a company official, who declined to be named citing internal policy.

Vale gained 2.1 percent to 37.58 reais in Sao Paulo at 5:15 p.m. The stock has declined about 23 percent during 2011.