In September, Vale and Philippine Subic Bay Metropolitan Authority (SBMA) signed a memorandum of agreement to build an iron ore transshipment hub in Subic Bay. By using a purposely-designed floating terminal to be located in Subic Bay, Vale can carry out an iron ore transshipment operation from its Valemax mother vessel to smaller daughter vessels or feeders with main destinations being mainland China, South Korea, Japan and Taiwan area. Besides, Vale is also exploring the feasibility of constructing an iron ore offshore storage facility.
What impact will Vale’s serial moves have on the iron ore shipping market? Reporters therefore sought opinions from Mr. Shouguo ZHANG,Vice Executive Chairman of China Shipowners’ Association.
It is reported that Vale has been engaged in constructing transshipment hub and distribution centre in Philippines and Malaysia to transport iron ore imported by China. What’s China Shipowners’ Association’s view on that?
Mr. Shouguo ZHANG:
First of all, Vale bases its moves of constructing transshipment hub and distribution centre on its owned fleet but aims at the iron ore which is imported by China. This violates the principle of optimizing resource deployment. At present, the existing fleet in the market is completely able to satisfy the iron ore shipping demand. There is no necessity to waste resource to construct transshipment hub and distribution centre. The additional transshipment step only leads to the waste of resource and decrease of efficiency. Secondly, Vale is an iron ore producing corporation that obviously lacks experience in ship safety management, ship pollution prevention and ship operation and management. It is difficult for them to run ships as good as professional shipping companies and thus tend to arouse safety and environment risks. Thirdly, Vale holds the cargo to itself and now intends to control shipping tonnage. It is a matter of monopoly and unfair competition which not only harms the shipping interest of mainland China but also that of South Korea, Japan and Taiwan area. Fourthly, the current shipping market is in its downturn. Wherever Vale builds the distribution centre, its cost will not be lowered. Their gains can not make up for their losses.
We think Vale’s serial moves might cause itself heavier burdens, bigger losses and also rouse concerns and vigilance from other Asian iron ore importing countries and areas. Brazil Vale’s current task of top priority is to immediately stop its ambitious fleet expansion plan especially to cease the construction of 400,000 dwt VLOC and other types of bulkers. Only by doing so they can minimize their losses.