China Eyes Iron Ore Shipping Partnership with Vale
China is interested in joining forces with Brazilian miner Vale to transfer iron ore from its huge Valemaxes onto smaller vessels, as these large vessels are banned from Chinese ports, writes Drewry.
The shipping partnership would save money, as moving iron ore from Valemax ships, which boast a carrying capacity of over 400k tonnes of iron ore, directly rather than transferring onto barges for discharging at Chinese ports would result in lower freight costs.
As a result of the ban, the Brazilian miner developed a transhipment terminal in the Philippines in February 2012, where the Valemaxes transfer iron ore into smaller ships bound for China. Vale is also setting up a centre for iron ore storage and distribution in Malaysia, which is expected to start operations this year. Valemaxes have also been docking at other ports in Italy, Japan, Oman and South Korea.
“The total freight cost including the cost of transferring iron ore from a Valemax vessel onto smaller vessels is $22 per tonne. The additional cost could be saved if a Brazilian Valemax vessel takes iron ore directly to China, without switching it to barges at nearby ports.
Vale could save about $7 per tonne over the cost and increase its competitiveness in addition to gaining an edge over Australian-based competitors such as BHP Billiton and Rio Tinto. Australian iron ore producers have normally had a $10 per tonne freight advantage over Brazilian iron ore miners, “ according to Drewry.
Drewry, June 18, 2014; Image: Vale