Metals News
UPDATE 2-Vale Assures China No Retaliation for Huge Ship Ban
industry news
May 17,2012

* Vale not excluding Chinese firms from carrying iron ore

* Vale open to selling huge ships to Chinese firms

By Alison Leung

HONG KONG, May 16 (Reuters) - The world's top iron ore exporter, Brazil's Vale, is not excluding Chinese shipowners from transporting its iron ore and remains open to selling its huge dry bulk carriers to them, industry officials said on Wednesday.

A senior Vale official met the China Shipowners' Association on Friday to smooth relations after Chinese industry officials said the miner stopped hiring vessels from some firms in retaliation for Beijing's ban on its ships.

Chinese shipowners convinced the Chinese government in January to block the world's biggest dry bulk ships from entering Vale's top market due to concern over safety and the vessels' potential impact on loss-making domestic shipping companies.

"The Vale official said there was some misunderstanding. They welcomed Chinese companies, including COSCO, to transport their goods," said Zhang Shouguo, the industry group's secretary general who attended the meeting in Beijing.

Vale wants to manage a fleet of 35 Valemaxes, each of which can carry up to 400,000 tonnes of cargo, to slash shipping costs to China and better compete with Australian rivals BHP Billiton and Rio Tinto .

But Beijing's ban has forced Vale to take a more costly route to deliver iron ore to China, opening up an iron ore trans-shipment hub in the Philippines' Subic Bay port in February. It will also open a hub in Malaysia in 2014 and is considering projects in South Korea and Japan.

Vale officials in Asia were not immediately available to comment.

Vale remained open to selling some of the 19 Valemaxes it planned to own to Chinese shipping companies, which the miner will then hire on a long-term charter. It already has long-term agreements to hire 16 Valemaxes.

"In the past, (Vale) was in touch with Chinese companies but not successful. They are still taking an open attitude," Zhang said.

Vale told the Chinese industry executives it was "willing to consider any possible cooperation with Chinese companies on the Valemaxes it owns", said Zhang Xiaosheng, the association's deputy secretary general.

At the meeting, the industry group gave a letter to Joao Mendes De Faria, Vale's business development director based in Singapore, urging the company to stop building the huge dry bulk carriers and limit the capacity of those already in service to 350,000 tonnes.

Chinese shipping companies, led by state-owned China Ocean Shipping Co (COSCO Group), fear that Vale's vessels will be used by the miner to monopolise the lucrative iron ore trade between Brazil and China.



Chinese shipowners
iron ore
dry bulk
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