Chinese shipping firms and Vale in battle for port access
Caixin Online reported that China's biggest shipping companies are going head to head with the world's largest iron ore supplier in a battle over access to its ports, Steel Guru reports.
The controversy dates to 2007 when Brazilian miner Vale SA started mapping out plans for a fleet of super sized ore carriers and complementary port facilities to serve Asian customers, mainly Chinese steel makers.
Vale's focus sharpened in December 2009 with a project to build distribution centers in China, the world's largest steel producer and other parts of Asia.
Since then, the company has christened 15 of its specially built, 400,000 tonnes Valemax ships. It's also started work on an ore distribution center in Malaysia. And it plans to launch another 20 Valemax ships by 2013.
The battle, meanwhile, is over a pivotal component of the Vale strategy: Shipping companies such as COSCO Group and Sinotrans&CSC Holding are opposing the company's request for government permission to dock and unload Valemax ships at three seaports of Dalian, Majishan and Qingdao.
Companies represented by the China Shipowners' Association have been pressuring the government to ban Valemaxes. But Vale and its allies, including Chinese shipyards hired to build the ships, are lobbying for an open door.
Hints of a possible compromise emerged on May 30th 2012, when association EVP Mr Zhang Shouguo said the COSCO Vale row could soon end.
Mr Zhang said that association chairman Mr Wei Jiafu and Vale CEO Mr Murilo Ferreira have exchanged correspondence. He added that "The consensus between the two sides is for dialogue rather than confrontation, to negotiate a settlement to resolve the current conflict."
Nevertheless, the ports are still closed to Valemax ships, forcing the Brazilian ore supplier to wonder and wait. Companies represented by the China Shipowners' Association have been pressuring the government to ban Valemaxes. But Vale and its allies, including Chinese shipyards hired to build the ships, are lobbying for an open door.
Mr Joan Mendes Faria, global business development director for Vale in Singapore, said that "We hope that in the near future we can directly berth at ports in China. But we are not sure about this. I don't expect a winner and a loser in this situation. The final result will be a compromise."
Chinese shipping companies have serious financial issues fueling their complaints. They've seen profits squeezed in recent years and feel threatened by the looming competition from giant Vale ships on critical Brazil Asia sea routes.
In January 2012, the Ministry of Transport issued a circular banning certain large ships from its ports, which ended Vale's hopes of unloading Valemax ships at China ports.