Vale Sails New `Green’ Ship in Bid to Cut Rivals China Advantage

Brazil’s Vale SA has sailed the first in a fleet of more efficient cargo vessels it’s using in a push to minimize the geographical advantage of its Australian rivals in sending iron ore to China.

The Yuan He Hai is part of a second-generation line of Very Large Ore Carriers, known as VLOCS or Valemaxes, that Vale will employ to deliver the steelmaking ingredient, primarily to its biggest customers in China. The freighter embarked from the Brazilian port of Tubarao, the company said by email Tuesday.

Shipbuilders are constructing a total of 32 such vessels for Vale by the end of 2019. The new “green” ships, which can haul 400,000 tons of ore, consume less fuel and emit 15 to 20 percent less carbon dioxide than the previous generation of vessels, said Vale, the world’s largest producer of iron ore.

Late last year, Chief Executive Officer Fabio Schvartsman said the Rio de Janeiro-based company’s cost-reduction strategy partly depends on the use of newer ships. While Vale mines some of the highest quality low-cost reserves in the world, it has the disadvantage of having to travel about 8,000 miles (13,000 kilometers) more than Australian competitors Rio Tinto Group and BHP Billiton Ltd. to reach China.

source:bloomberg.com