Vale orders 16 ships from China

Posted by Peers

November 20, 2009

Brazilian miner Vale SA (VALE) has ordered 16 vessels from China, each with a capacity of 400,000 metric tons, the company’s global iron ore director said Tuesday.

Speaking at the Metal Bulletin Steel Survival Strategies, Renato Neves said the first ship would be delivered by the end of 2010 and the rest would come in 2011.

It will “reduce our costs [of shipping iron ore] from Brazil to China,” he said.

Iron ore is a key ingredient used in steelmaking.

Neves wasn’t able to say how much the ship order would cost but said all the ships would be built in China.

He said each ship will be able to carry about 1.6 million tons of material a year based on the premise that each ship can make four trips from Brazil to China a year. He cited the figures to clarify an earlier comment suggesting that each ship would be able to carry 3 million tons a year.

Neves said Vale is producing at full capacity at the moment and is able to produce 300 million tons of iron ore a year.

The new ships will be able to carry a combined 25.6 million tons of iron ore a year based on the above figures, equivalent to about 8.5% of the company’s annual iron ore production capacity, according to Dow Jones Newswires calculations.

-By Alex MacDonald , Dow Jones Newswires;

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