It is reported that Brazilian mining giant Vale SA is inviting Chinese ship owners to join an initiative to develop super vessels as it seeks to soothe relations amid an ongoing conflict that has repercussions for industries ranging from ports and shipping to shipbuilding and steel.
The Chinese Shipowners Association has spurned Vale's initiative, citing the potential impact on loss making domestic shipping companies and safety problems. Lobbied by the association, the Ministry of Transport issued a ruling in January that bans dry bulk ships of more than 350,000 deadweight tons from docking at Chinese ports.
The ban was a major setback for Vale which insists its plan is all about fuel efficiency and its competitive edge with Australian miners BHP Billiton and Rio Tinto in supplying China with raw materials. Vale ore has to travel three times the distance as ore from Australia.
1. Shipping not core business
Struggling to seek China permission to allow its VLOCs to call at Chinese ports, Vale insists that the company has no interest in controlling the shipping business.
Mr Gurinder Singh Vale director for shipping and distribution said "Vale's strategy is not about owning vessels. We are a user of shipping capacity. Shipping is not our core business. Mining and iron ore are. Vale is looking to charter its vessels for long-term periods at prices that reflect the cost of investment."
Vale has reportedly stopped hiring ships from China leading shipping company COSCO in retaliation for the Chinese ban but Singh denied the allegation. He said Chinese ship owners have actually been increasing their share of Vale exports to China from 19% in 2009 to 31% last year.
Mr Zhang Shouguo secretary-general of the China Shipowners Association said Vale is trying to create monopolies in iron ore and shipping with its VLOC strategy and is working against the interests of China's ports, steel and shipping industries.
Mr Zhang also urged Vale to downgrade the capacity of its vessels to less than 350,000 deadweight tons.
Vale appears to be sticking with its mega ship plan as it continues to take delivery of the VLOCs which go under the name Valemax from shipbuilders in China and South Korea.
Source - Shanghai Daily
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