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The diversification strategy includes plans to expand into international mining to secure access to minerals including copper, cobalt and nickel, as well as lithium.
Brazil’s Vale’s first of 35 mega-carriers capable of carrying 400,000 tonnes of dry bulk cargo embarked on its maiden voyage to Dalian, China in May 2011, but the 362-metre-long and 65 metre wide Valemax class which can carry more than twice as much as the next size dry bulk vessel only made it halfway there.
Then Chinese officials egged on by the country’s shipping firms fearing competition and steel industry decided to ban the giant vessels – 31 of which have been christened – from the country’s ports over fears of the impact on supply and prices.
Earlier this week Beijing’s ban was effectively lifted after China’s largest shipping group Cosco inked a 25-year freight contract with Vale that involves 14 as Valemax vessels.
Today Vale announced it is doubling down on its very large ore carrier or VLOC strategy inking a deal with China Merchants Group to build 10 more of the gargantuan ships and charter them to Vale over 25 years.
SEE ALSO: Infographic of Valemax VLOC
During the ban Vale’s Valemax fleet called on ports in Japan, South Korea, Italy and elsewhere, but the company was forced to use transit centres in Africa, a distribution facility in the Philippines and a transshipment facility in Malaysia to bring ore to its customers in China.
A Valemax did manage to dock at China’s Lianyungang port in April last year and two ports under construction in China would be able to accommodate the vessels.
The expanded Valemax fleet would now be able to haul nearly 60 million tonnes a year to China, which consumes more than two-thirds of the world’s 1.3 billion tonne seaborne iron ore trade.
Rio de Janeiro-based Vale first decided on the VLOC strategy to help it compete with BHP Billiton, Rio Tinto and Fortescue Metals.
Vale plans to up its production and exports by more than 50% before the end of the decade to 490 million tonnes per year on the back of expansions to existing mines and the completion of its 90 million tonne capacity Serra Sul mine in the Carajas region.
After losing market share to its Australian rivals which enjoy much shorter and cheaper routes to Chinese ports, the lifting of the Valemax ban should see it regain lost ground.
Vale’s stated target is to double volumes to China in the next five years.
