Vale to Lease 10 China Merchant Bulkers

Brazil's iron ore miner Vale SA said on Friday it secured a deal with China Merchants Group to lease for 25 years as many as 10 very large ore carriers, which will be built by China Merchants, to ship ore from Brazil to mainland China.

Vale had commissioned at least 35 VLOCs, as they are known in the shipping industry, to be built over the past decade by Asian shipbuilders, some Chinese.

The miner intended to cut its freight costs for shipping ore to China, the world's largest producer of steel and consumer of iron ore, to better compete with rival Australian miners.

But until now, China has banned such large vessels that can carry more than 400,000 tonnes from entering its ports. Analysts expect the new deal between Vale and the Chinese shipbuilding industry to eventually facilitate the opening of mainland ports to receive ore from the VLOCs.

In the meantime Vale has pushed ahead with developing offloading projects in the Philippines and Malaysia, where ore is transferred from the large carriers on to smaller vessels before making the final leg to Chinese ports.

The VLOCs have successfully unloaded ore in Japanese, South Korean and European ports.

Reporting by Reese Ewing