Giant Vale ship gets China port OK

Wed Dec 28, 2011 3:16pm EST
 
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By Ruby Lian and Randy Fabi

SHANGHAI/SINGAPORE (Reuters) - Brazil mining company Vale has docked one of its giant iron ore vessels in China for the first time, ending a year-long impasse with Chinese authorities that threatened to hobble the company's plan to cut shipping costs to its biggest market.

The 388,000-deadweight-tonne Berge Everest began unloading Wednesday at China's Port of Dalian. Vale has ordered 35 megacarriers at an estimated cost of $4.2 billion from Chinese and Korean shipyards. The world's second largest miner has been trying all year to get Chinese authorities to allow the megaships to enter that country's ports.

"This is a huge success. It opens the door and helps Vale break a paradigm in the shipping industry," said Pedro Galdi, a steel and mining analyst with SLW Corretora, a São Paulo brokerage. "The problems getting their ships into China had created a very bad feeling, but China needs the ore and Vale's ore is of very high quality."

Vale's first megaship cargo to China was forced to turn back in June due to the lack of a permit. Earlier this month, the Vale Beijing, the newest member of the "Valemax" fleet -- 50 percent bigger than most ore carriers and one of the largest afloat -- developed cracks in its hull on its maiden voyage.

The Vale Beijing's problem blocked one of Vale's main iron-ore terminals in Brazil for several days and raised questions about the safety of the entire fleet of Valemax vessels.

Vale, which sells about 40 percent of its ore to China, is counting on Valemaxes to slash shipping costs and better compete with Australian rivals BHP Billiton (BHP.AX: Quote) and Rio Tinto (RIO.AX: Quote). While Vale's ore is generally of higher quality, that advantage is cancelled by Australia's proximity to China, the world's top steelmaker and biggest ore importer.

It was not clear what prompted China to finally let one of the Valemax carriers into port. Vale executives in China and Rio de Janeiro declined to comment. A spokeswoman for the ship's owner, Bermuda-based Berge Bulk, and Dalian port officials were not immediately available for comment.

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