Ban on mega-bulk carriers to hit Vale

BEIJING - Chinese ports will no longer accommodate vessels exceeding approved capacities, according to a statement released by the Ministry of Transport on its website on Tuesday.

Analysts said this might bar the fleets of mega-vessels owned by the Brazilian miner Vale SA from docking at Chinese ports.

Vessels exceeding approved capacities were previously assessed on a case-by-case basis to berth at Chinese ports. But according to the ministry's statement, giant dry bulk vessels and oil tankers have been banned effective immediately.

The statement came one month after Vale unloaded its 388,000-ton vessel Berge Everest at Dalian port, which prompted protests from domestic shipping companies and the China Shipowners Association, according to reports by domestic media.

The ministry said its decision to bar giant ships was taken in light of "maritime safety issues".Vale declined to comment.

"Regulation of vessel capacity is necessary for the safe operation of ports and shipping routes," said Sun Guangqin, director of the Port and Shipping Institute at Dalian Maritime University.

At present, no Chinese ports have the capability to receive dry bulk vessels of 400,000 tons, Sun said. With China having closed its ports to Vale's giant iron ore fleets, the miner might have to use its distribution hub in the Philippines to supply iron ore to China, said Zhang Hui, an analyst with Donghai Securities Co Ltd.

Analysts said the ministry's decision might have some impact on China's shipbuilders, especially, China Rongsheng Heavy Industries Group Holdings Ltd, which has a contract to build 12 of the ships by the end of this year, totaling $1.6 billion."This might hold back Vale from giving more orders for the giant vessels to Rongsheng," Zhang said.

In a bid to stabilize freight costs and iron ore prices, Rio de Janeiro-based Vale invested $2.3 billion in 19 of the 400,000-ton mega-bulk carriers and will control another 16 under long-term contracts, according to the company. Scheduled for delivery by the end of 2013, it will be the world's largest iron ore fleet.

Vale said the mega-vessels would cut freight costs from Brazil to China by 20 to 25 percent and significantly reduce carbon emissions. The miner took delivery of the first ship in the fleet in July and had planned to sail it to China's Dalian port on its maiden voyage. However, the company said that the giant vessel was diverted to Italy because of restrictions at Dalian and a request from a European customer.

Reuters contributed to this story.

China Daily

(China Daily 02/01/2012 page13)