Vale enters JV to expand Chinese port

Vale (NYSE: VALE) has teamed up with China’s Zhoushan Port Company to build and operate Project West III in the port of Shulanghu, according to a securities filing on Friday, in a strategic logistics alliance to serve the world’s largest iron-ore importer.

Vale said it will have 50% of the JV, adding the port project expansion will demand multi-annual investments of about $624 million. Both partners plan to obtain financing for up to 65% of the project, the filing said.

The West III Project consists of expanding the facilities at the Shulanghu Port, developing a storage yard and loading berths with an additional capacity of 20-millions of metric tones per year.

By participating in the project, Vale said it will guarantee a total port capacity of 40-million tonnes a year in Shulanghu, which will help the company optimize costs in its value chain, according to the filing.

Last month, Vale began producing high-grade iron ore fines for pelletizing at its new three-million-tonnes-a-year grinding hub at Shulanghu Ore Transfer Terminal.

The unit, a partnership with Ningbo Zhoushan Port Group, is generating a completely new product, known as GF88. The high-grade ground iron ore fine uses the company’s flagship Carajás Fines as raw material and will partially feed the growing demand for pellets in China’s steel sector.

GF88, Vale said, provides an environmentally-friendly solution for pellet production. It also supports steelmaking clients with the challenge of reducing their carbon footprint, part of the company’s scope 3 emissions plan. 

(With files from Reuters)