Tuesday, September 16, 2014
Vale signs deal with COSCO
Brazilian mining giant Vale has signed an agreement with China Ocean Shipping Co. to ship its iron-ore via massive Valemax vessels in order to lower costs amid slumping prices of the steel-making ingredient.
Vale will transfer four of its 400,000-metric ton vessels to Cosco and charter them for 25 years, according to a company statement. Cosco will also build 10 ships of similar size to ship Vale's iron ore. No financial terms were released.
The Brazilian company started operating Valemax vessels in 2011 in a bid to compete with Australian competitors located closer to China. The deal indicates Vale may have overcome difficulties convincing China that anchoring the giant ships at Chinese ports is safe.
"The deal makes sense to us as the company frees up some cash (in tough iron ore markets) and partners with Chinese players to help minimize any issue with the docking of very large ore carriers in China," said Banco BTG Pactual SA analysts Leonardo Correa and Caio Ribeiro in a note to clients.
For more of the Bloomberg story: bloomberg.com
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