Vale's iron ore to China peaks despite slump

An overview of Ferro Carajas mine, the world's largest iron ore mine, operated by Brazil's Companhia Vale do Rio Doce, in the Carajas National Forest in Parauapebas, Para State in 2012. [Lunae Parracho / Reuters]

China's demand for iron ore reached a peak in its importing history over the past half year and future cooperation with leading global exporters will continue to be strengthened despite lower prices.

Through January to June 2014, China's iron ore imports totaled 457.16 million tons, an increase of 19 percent over the same period last year and a new record high, according to a report released Aug 18 by China's Ministry of Industry and Information Technology.

Among the iron ore exporters, Brazil remains one of China's main sources accounting for 17.6 percent of the total, while Australia remained the top source at 56 percent.

Despite sharply lower import prices, Vale, the world's leading iron ore company, increased its annual supply in the first half of 2014 to the China market by 10 percent.

The cooperation was deepened by contracts signed in July during Xi Jinping's visit to Brazil. Vale signed an agreement with Eximbank of China and a memorandum of understanding (MOU) with the Bank of China (BOC), reinforcing long-term partnerships between Vale the China's leading financial institutions.

The framework cooperation agreement between Vale and Eximbank of China will set the basis for the provision of credit facilities for Vale, covering the acquisition of equipment, goods and services in China for Vale's projects in Brazil and overseas, among other financing opportunities.

With the global financing arrangements signed with BOC, Vale will receive up to $2.5 billion in financing services in the form of syndicated loans, bilateral loans, export credit and trade finance, among other initiatives. The MOU is designed to support Vale's business development and strengthen partnerships between Vale and Chinese enterprises.

The contract and agreements signed amount to $7.5 billion will take effect for a term of three years. Four years ago Vale started its first financial cooperation with Chinese banks with a $1.23 billion loan.

Surveys show that China is one of Brazil's major iron ore export customers. Vale's iron ore production accounts for 80 percent of Brazil's annual production of iron ore and about half of its all sales go to China.

There are still opportunities for the two partners to strengthen trade further. Vale is also seeking to expand collaboration with its Chinese partners to include ports, steel mills, trading companies and suppliers.

The net income of Vale in the first half year of 2014 totaled $3.9 billion, according to Vale's recent performance report.

zhangyuchen@chinadaily.com.cn