STX Pan Ocean: Damage to Vale Beijing “Reparable”

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January 4, 2012

RIO DE JANEIRO (Dow Jones) — South Korean company STX Pan Ocean Co. (028670.SE, GZ9.SG) said Wednesday that the Vale Beijing vessel which developed cracks in its hull when loading Vale SA (VALE, VALE5.BR) iron ore in northeast Brazil in December, has been safely moved to an anchorage and that the damage is reparable.

STX, which is the owner and operator of the ship, has started an “extensive action plan for repairs” on the Vale Beijing and the ship will thereafter be able to sail as the damage is partial, the company said in a statement. However, it is still too early to ascertain the real cause of the problem, and the investigation into the causes of the incident continues, it said.

Mining company Vale’s Ponta da Madeira port terminal where the problem occurred is operating normally and STX believes the problem didn’t stem from the port or the loading operation, it said.

Vale Beijing, reportedly the world’s largest iron ore carrier, and which has been leased to Vale, developed cracks in its hull on Dec. 3 while it was loading iron ore at Ponta da Madeira in Maranhao state, for export. The 400,000-ton vessel was on its maiden voyage, and is still loaded with 260,000 metric tons of iron ore.

No observable damage has occurred to the environment as a result of the ship’s problem and its removal to safe anchorage, STX said, noting that representatives of Brazil’s federal environmental protection agency Ibama, as well as of Brazil’s Navy and Vale, have accompanied the vessel’s relocation.

The situation is “under control,” STX said.

Vale Beijing is one of eight vessels that STX will charter to Vale, and the other seven vessels in the series are also now being assessed, the South Korean company said.

“While we expect that the exact cause of the (Vale Beijing) incident may only be determined when we dry dock the vessel, we believe that this incident is an isolated problem and should not impact the other vessels built elsewhere and under different projects,” STX said. “We are confident in the robustness of vessels built of this size and class.”

–By Diana Kinch, Dow Jones Newswires

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