The Vale Brasil and its Valemax sisters, the world's largest dry-bulk vessels at up to 400,000 tonnes, were designed to reduce the cost of shipping iron ore to China, the company's biggest market.Vale SA
Vale SA, the world's largest iron ore producer by volume, took a significant step toward its goal of controlling all its shipping to China after it was confirmed that one of its giant new Valemax ships had been allowed to dock in China for the first time.
A person familiar with the situation confirmed that the Berge Everest, owned and operated by Berge Bulk, part of Hong Kong's BW Group but chartered long-term to Vale, was allowed into the port of Dalian, northeast China, to unload on Wednesday.
The vessels, which at 380,000 to 400,000 deadweight tonnes are the largest dry bulk carriers ever built, had threatened to turn into a major embarrassment for Vale after the Chinese authorities refused permission for the first vessel, the Vale Brasil, to dock in June. The vessel had to turn around and head for Taranto, in Italy, instead. The vessels have since been unloading in Malaysia and the Philippines, with smaller vessels taking the ore on to China.
The huge new vessels have attracted opposition in China on both technical and economic grounds. The China Shipowners' Association has resented Vale's effort to establish a stranglehold over dry bulk shipping on the Brazil-to-China route. However, there have also been technical questions about the suitability of Chinese ports for such large ships and the vessels' own ability to withstand the stresses of handling such large loads.
The problems have been exacerbated by the damage the Vale Beijing, the third of the carriers, sustained earlier this month during loading at Ponta da Madeira in northeastern Brazil for its maiden voyage. There has been speculation that the damage to a ballast tank could have been a result of the strain on the vessel through a controversial quick-loading method adopted for the new ships, which increases stresses on the vessel. DNV, the ship classification society that has approved the vessels' safety, is examining the reasons for the Vale Beijing damage and could withdraw permission for the faster loading process.
It remains unclear whether the permission for the Berge Everest to dock reflects a general change of heart toward the Valemax carriers on the part of the Chinese authorities or will be limited to the four vessels operated by Berge Bulk. While some of the other vessels have been built at South Korean shipyards, the Berge Everest was built in China. Different shipowners are also likely to be taking different approaches to asking for permission for the vessels to dock.
The Chinese shipowners' association has argued vociferously that the new vessels are unsafe and will exacerbate the global over-supply of dry bulk ships, which were particularly heavily ordered during the 2003 to 2008 shipping boom.
"We pay very special attention to this matter, and the association has been firmly opposed [to the Valemax fleet]" the shipowners' association said this week. "However this isn't something that is under the association's control."
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