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Vale (VALE) has spent ~$2B on a fleet of mega-ships to carry its iron ore from Brazil to China,...

Vale (VALE) has spent ~$2B on a fleet of mega-ships to carry its iron ore from Brazil to China, but China won't let them in. It's a blow to Vale's global distribution strategy and illustrates the blurred line between China's state-owned enterprises and the country's regulators.
Comments (4)
  • Eventually VALE must take a loss or writedown on this fleet, in the order of $1B. A solution could be to sell the ships to Chinese Costco and Vale have to charter them back.
    13 Nov 2012, 11:47 PM Reply Like
  • The mega-ships will be used to transfer the Iron Ore from Brazil to VALE Port in Maylisia, from there it will be transfered to smaller ships for delivery to smaller ports in China.
    14 Nov 2012, 07:19 AM Reply Like
  • Go tell China that they can buy their Iron Ore from elsewhere in the world , that they will no longer sell them their product and in the future that Vale management will only deal with real nation stateliest those ships to someone else but not to the Chinese.
    14 Nov 2012, 08:27 AM Reply Like
  • Maritime history repeats itself; like when US line built the first mega container ships; and it looked like there was no commercial market viability to recover the economic cost; they went bankrupt and were sold; guess what the ships were here to stay; and even bigger ones got built and are very profitable.
    It was a screaming case of sound economics to proceed with the construction of those first ships - but certain other factors were not in place. The same happened when the first 450,000 dwt super VLCC's the Globtic London and Tokyo got built.
    Vale had the vision (/cash) and the technology was available to build these super VLOC's; they are a large company and they have to be patient, because of Mr Market - but thet will get a return on their investment in spades.
    Besides Vale has been running it's own ore carrying operation for years, with a fleet of ore carriers; the undersigned represented them on the US gulf coast in the 1980's - carrying out fleet maintenance work, and has some pleasant memories of a professional well managed fleet.
    14 Nov 2012, 09:43 AM Reply Like
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