Vale's Chinese charm offensive

Ore giant Vale are currently running a 'charm offensive' - a book in English and Chinese on the technical excellence of the Valemax vessels, Letters to the Editor, media commentary...

Dance of the giants, Subic Bay AIS

Despite of (or maybe because of) China's stonewalling, the Subic Bay operation seems to be back in business. Today's screenshot from AIS shows 'Berge Aconcagua'  and 'China Steel Team' being manouevred around 'Ore Fabrica'. Not sure what 'Aconcagua is doing is Subic as she has just broken records for discharging in Oita, Japan. Maybe she has over-carried some cargo to test Fabrica's transfer system?

Today's Op-Ed from Lloyd's List

The lowdown on Valemaxes

Brazilian iron ore giant’s book makes the case for 400,000 dwt ships

Tom Leander

Wednesday 27 June 2012

VALEMAX vessels are banned from China — this everyone knows.

But the facts underlying the ban, a straightforward account of what happened, how it came to pass and its status now have been a matter of detective work and speculation in the press.

All parties involved — the government, stakeholders in China and the government departments with the final say on approving Vale’s big ships — have offered only limited information regarding their strategy and decisions.

Vale has now changed that with a remarkable document describing its valemax strategy, as much as you would ever want to know about the 400,000 dwt ships, why Vale invested in them and how it believes the ships will benefit the Chinese economy.

If this were Washington rather than Beijing, the brochure — really a small book running to 75 pages — would be regarded as a lobbying document.

Its aim is to persuade, but unlike some position pieces it is also a mine of information and deploys a fair and open style, making a best case while weighing up the arguments against its cause without rancour.

The booklet is published in English and Chinese and seems more aimed to readers in the transport, iron ore trading and steelmaking constituencies in China than at an English-language audience.

It also offers clarity for those trying to understand the point of view of the Chinese government, publishing translations of the various circulars by the Ministry of Transport concerning the valemax ships.

One of the interesting approaches of the booklet is to add nuance to English readers’ understanding of the Chinese scene. So often seen as a monolith in the west, China’s authorities have often very strong differences in point of view and must respond to the constituencies they govern.

The wording of the valemax ban — in the view of this newspaper, though not the view of the valemax book — was ambiguous enough to reflect a certain reluctance to impose an absolute ban.

Our interpretation is that this is because China’s Ministry of Transport represents more than the shipowners that took exception to the valemax ships, arguing against their safety and also that they would create a monopoly that would hurt the businesses of China’s shipowners.

In fact, the ministry represents diverse national interests and there are other constituencies in China — steel mill operators, port operators and iron ore traders — that see the ships not as a threat but as a potential boon.

The real business of the Ministry of Transport’s Circular 13 was to remove the “one-case-one” basis, in Vale’s translation, at local ports.

Ports were allowed to let valemax ships on a case-by-case assessment, with the ports later required to submit the reasoning behind the approval to the MoT.

Having had the case-by-case allowance withdrawn, ports must now wait for a blanket approval from the MoT — or a possible return to case-by-case status — before allowing the ships to enter.

The reason that the MoT offered was concern for safety. “Given that the safety of the operation of the super large vessels at ports is not optimistic …” the circular reads in part. But the “given” is never explained.

It is clear where Vale stands, but it is refreshing to see it spelled out so plainly. “Vale was surprised at the MoT Circular 13 because it ended its policy, which allowed ports to decide the safety of berthing larger vessel types,” Vale writes. “Vale was surprised that safety was the main concern of Circular 13 …”

“It surprises us too,” Vale goes on to say, “that the valemax ships designed in China, in consultation with Chinese iron ore ports, built and launched from three Chinese shipyards, Rongsheng, Bohai and STX Dalian, are now restricted”.

The Brazilian iron ore giant makes its case that the ships have safety advantages over conventional bulkers. They require “60% fewer port manoeuvrings for the same amount of ore delivered”.

This cuts back on port congestion and reduces the risk of an accident. The hold design, Vale says, minimises the movement of iron ore, which makes the ships more stable. Fully loaded, valemaxes have a draft of 23 m, which Vale says is similar to other dry bulk ships berthing in China.

Vale also notes that “if required, by some ports, lightering in transhipment stations can reduce the draft of valemaxes”.

The Brazilian company then says: “China’s main ports are world leaders in design and are regularly receiving container and oil tanker ships larger than valemax ships.”

It goes on to say that: “Chinese ports were consulted during the design of the valemax ships, signed co-operation memoranda of understanding as early as 2009 and are among the first in the world well prepared for valemax ships. Soon ports in other countries such as Korea and Japan will catch up, [as] the European ports already did.”

Vale takes a dim view of the consequences of persisting with the ban at a time when China’s economy has slowed to its lowest rate of growth in many years. The ban, it concludes, will hurt China’s ports and could compromise China’s steel industry.

AM