Vale's letter to Lloyd List on ValeMax

In response to a comment on yesterday's post about Vale's charm offensive in China, here's the letter to Lloyd's List.

AM

388,000 DWT 'Berge Aconcagua', Oita Japan

Lloyd's List: Valemax issues clouded by misinformation

Monday 25 June 2012, 10:28

From João Mendes Faria

SIR, I refer to your article “Vale urges China to lift valemax ban” (Lloyd’s List, June 21) and would like to make the following clarifications.

First, Vale has never challenged the Chinese government ban on valemaxes berthing at its ports. We have observed that there has been a great deal of misinformation and speculation in both Chinese and international media. We have recently made efforts to provide factual information to interested parties and different government departments to address the mistaken information and claims widely circulated.

Second, the iron ore carried to Asia via valemax can be transhipped to Chinese or other Asian ports via our transhipment stations. A second floating transhipment station in Asia in early 2013 will double the transhipment capacity from the existing FTS in the Philippines up to 30m tons per year. At the end of 2013 our Malaysian transhipment centre brings the total annual transhipment capacity to 60m tons. Besides those locations the valemax fleet of 35 vessels can regular berth in Rotterdam, Taranto, Sohar in Oman and Oita in Japan. The whole fleet of 35 valemaxes, when ready by the end of 2013, will be able to transport around 55m tons per year.

Third, it is true that we have been in discussions with some Chinese shipowners for each to buy some of the 19 valemaxes which are currently to be owned by Vale. Due to mutual confidentially, we have never named any of the companies we have been in discussions with. It is also true that these discussions have slowed since the issuance of the Ministry of Transport Circular 13 in January. This is completely understandable. Chinese shipowners hope to understand the implications of the barring of the vessels, as we do.

Fourth, Vale and Cosco have had a long-term co-operative relationship for years and Cosco-operated vessels have regularly been carrying cargoes from our Brazilian ports. In the past we proposed to Cosco that they build and operate valemax vessels under long-term charter with Vale. Cosco chose not to, for their own reasons. We fully respect their decision.

Fifth, Vale is not in a hurry for the Chinese government to reopen access to its ports for the valemax ships. We understand that much misinformation must still be clarified.

Although we are not in a rush for Chinese berthing restrictions on valemax to be lifted, we do hope that it can be sooner rather than later. This is simply because the valemax can bring benefits to different Chinese players. Steel mills and iron ore traders will benefit by a more competitive iron ore market. Iron ore ports can double their throughput. This does not even mention the environmental benefits of 35% CO2 reduction per ton of iron ore compared to capesize.

Valemaxes are part of a long-term strategy to enhance market competitiveness in Asia and will be chartered for 25 years.

We are patiently engaging different Chinese stakeholders and agencies and have a high level of confidence that the eventual decisions that will be made will consider all aspects around the issues and the overall benefits to China and Chinese markets.

João Mendes Faria

Global Business Development Director

Vale