Tag Archives: Vale

BRAVE NEW WORLD | Dangers as the Vale-China row escalates

From Tradewinds, 2012.05.11

Harsh lessons need to be learned as China’s anger escalated this week over the fleet of 400,000-dwt “Valemax” vessels being built and now operated by the Brazilian miner.

In an intriguing twist to an already extended saga, which could be a parable for our times, Cosco has rounded on Vale for allegedly boycotting its dry-bulk fleet. The blacklisting is in apparent retaliation for what Brazil believes is Cosco’s – and China’s – discrimination against its new fleet of super-bulkers.

It pits one of the world’s biggest commodities producers against a leading shipowner and operator, which just happens to be a state-owned arm of the world’s largest importer and second-biggest economy. Put so bluntly, it is hard to overstate its potential significance.

Cosco president Ma Zehua has threatened to complain to China’s ministry of commerce over what he believes is Vale’s retaliation for government lobbying he says has not happened.

Vale has yet to confirm the boycott but has apparently shunned chartering Cosco ships for around two months, even at times taking higher-priced alternatives.

Vale has already seen some of the 10 Valemax vessels delivered refused entry to Chinese ports on thinly argued “safety” grounds, although some independent experts acknowledge the risks of such large ships in China’s shallow coastal waters.

Vale has set up a transhipment point in the Philippines in an expensive solution that clearly undermines the potential savings of building and operating such giants in the first place.

In response, Cosco’s Ma continues to peddle the fear of “a growing number of [future] safety problems” without any hint of the specific issues, let alone any solutions — which is rather ironic as 20 of the current proposed fleet of 35 Valemaxes are being built at Chinese yards.

Attitudes on both sides appear by turns authoritarian, naive and now increasingly embittered. It is not a pleasant picture with worrying implications for all.

The central message the outside world needs to understand is that commerce and state remain firmly intertwined in modern China, despite apparent modernisation. Until those links are fully broken, it is wise to presume that the two remain cyphers for the other.

Further, no one should underestimate China’s desire to take complete control of its supply chain. If that means breaking the power and influence of any supplier — either of commodities or ships — then that’s what it will do.

It is another chapter in the story of China remodelling the world to its own needs and expectations. China believes the choice is clear: you are either with it or against it.

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VALE BEIJING: STX to repair the ship without cargo offloading

STX Pan Ocean has decided to attempt the repair of the damaged Vale Beijing without unloading the iron ore cargo on board, according to Brazilian newspaper Valor Econômico.

According to “sources close to STX”, the intention is to tow the VLOC to the mouth of the Pará River or to Fortaleza, pending permission from local authorities. In either case, the conditions would be more favorable than at the São Marcos Bay, where the ship has been at anchor since Tuesday (6).

STX reportedly managed to keep the ingress of water into the ballast tanks no.7 port and starboard, but is still in the dark about the causes of the incident.

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SHIPBUILDING | Brazil “biggest of the rest”

Brazil is now by far the biggest shipbuilding region outside the traditional heartlands of Asia and Europe.

It represents 74% of the “rest of the world” orderbook, as compared with just 4% in 2000, says shipbroker Clarksons.

Brazil’s backlog of work by 1 April 2010 was 89 vessels totalling 4.7 million dwt, the highest it has ever reached.

Clarksons says that with continued technology transfer, such as Samsung Heavy Industry’s investment in Atlantico Sul, coupled with sustained niche and domestic ordering, Brazil looks set to remain “best of the rest”.

Driving most of the growth has been domestic orders from Brazil’s exporters of raw materials, says the broker.

The catalyst came with national oil company Petrobras’s listing in 1997 and the creation of its tanker arm Transpetro.

Petrobras, against the background of a Brazilian government expansion programme and Chinese demand for oil, grew its deepwater operations. Various orders were placed for shuttle tankers and platform-supply vessels (PSVs).

This month, China overtook the US as the largest consumer of Brazilian crude, while China’s appetite for iron ore has seen Brazilian mining major Vale start building its own dry-bulk fleet to cut its reliance on chartered vessels.

Clarksons highlights the fact that last October it was reported that under pressure from President Lula, Vale held talks with domestic shipyards to order 400,000-dwt bulkers. A deal has yet to materialise and Clarksons says the largest ships being built in Brazil are a series of 150,000-dwt suezmaxes at Atlantico Sul.

It has a drydock that could build capesize bulkers but it lacks the experience to do so.

Back in 1986, Ishikawajima Do Brazil delivered a 300,000-dwt bulker but lack of investment and incentives by the Brazilian government resulted in the industry declining, says Clarksons.

Now, politics is driving Brazil’s resurgence, although there remains the question of pricing and value for money, as well as lower productivity compared with Asian yards, adds the broker.

Source: http://www.tradewinds.no/weekly/w2010-04-23/article557930.ece

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