Vale Sees China Clearing Giant Ore Ships, Eventually

Image Credit: Agencia Vale

RIO DE JANEIRO, Feb 17 (Reuters) – New tighter Chinese restrictions on Brazilian miner Vale’s Chinamax ore carriers are “technical” and are likely to be resolved over time, Vale’s head of iron ore, Jose Carlos Martins, said on Monday.

Vale had originally commissioned as many as 35 of the massive 400,000 dead-weight-tonne ships to be built as part of a multibillion dollar plan to reduce freight costs to its main client, China.

Some of the ships have even been built in Chinese shipyards, but local officials recently tightened the limits on ore carrier sizes allowed into mainland ports to 250,000 dwt from 300,000 dwt previously.

“We’re leaving this to China and we’ll await their decision,” Martins said during a Brazil-China Business Council meeting in Rio de Janeiro.

Vale had originally conceived its Chinamax shipping plans with the projection of saving as much as $10 per tonne on its freight costs to China.

But with the ban on such oversized ships, Vale has resorted to building facilities in the Philippines and Malaysia, where the ships can offload ore for smaller vessels to then bring to Chinese ports. Cost savings on freight would be reduced to $4-$5/t under this plan.

Mainland Chinese-landed iron ore <.IO62-CNI=SI> closed at $124.40/t on Monday.

(c) 2014 Thomson Reuters, All Rights Reserved

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