Vale sails new 'green' ship in bid to cut rivals China advantage

28th February 2018 By: Bloomberg

Vale sails new 'green' ship in bid to cut rivals China advantage

RIO DE JANEIRO – Brazil’s Vale SA has sailed the first in a fleet of more efficient cargo vessels it’s using in a push to minimize the geographical advantage of its Australian rivals in sending iron ore to China.

The Yuan He Hai is part of a second-generation line of Very Large Ore Carriers, known as VLOCS or Valemaxes, that Vale will employ to deliver the steelmaking ingredient, primarily to its biggest customers in China. The freighter embarked from the Brazilian port of Tubarao, the company said by email Tuesday.

Shipbuilders are constructing a total of 32 such vessels for Vale by the end of 2019. The new “green" ships, which can haul 400 000 t of ore, consume less fuel and emit 15% to 20% less carbon dioxide than the previous generation of vessels, said Vale, the world’s largest producer of iron-ore.

Late last year, CEO Fabio Schvartsman said the Rio de Janeiro-based company’s cost-reduction strategy partly depends on the use of newer ships. While Vale mines some of the highest quality low-cost reserves in the world, it has the disadvantage of having to travel about 13 000 km more than Australian competitors Rio Tinto Group and BHP Billiton to reach China.