OREANDA-NEWS. July 21, 2011. Vale SA, the Brazilian miner building a fleet of the world's largest iron-ore carriers, said the first of its new vessels will go to China after being diverted to Italy on its maiden voyage.

The 362-meter (1,187 foot) Vale Brasil, three times the length of a football field, will "undoubtedly" go to China whenever the miner needs to send iron ore to its biggest consumer, Murilo Ferreira, Vale's chief executive officer, said in an interview in Rio de Janeiro yesterday. The ship was diverted from its original destination of Dalian because of draft restrictions at the Chinese port and a request from a European customer that needed the steel-making ingredient.

"For commercial reasons our European customer needed the material a lot and we can't leave a customer without service," Ferreira said, speaking at Vale's headquarters. The ship left Brazil "earlier than expected" and "draft services" at the Chinese port weren't ready, he said.

The world's largest iron ore producer is investing more than USD 2.3 billion to build 19 of the carriers, and will control another 16 under long-term contracts. The vessels are scheduled to join the fleet by the end of 2013 as part of a strategy to stabilize freight costs and iron ore prices, Vale said July 18.

Vale China, the second of the so-called Valemax vessels, will start operating within two months, Ferreira said. The ship, built by China Rongsheng Heavy Industries Group Holdings Ltd., will have a Chinese port as final destination, Vale said in a statement June 21.

Analyze Again

The miner may also revive plans to build an iron ore distribution center in China, Ferreira, 58, said in the interview.

"In the future we will analyze it again and reconsider this issue," he said, adding that he hasn't discussed the idea with the Chinese authorities yet.

Vale is investing USD 1.37 billion to set up a maritime terminal in Malaysia with capacity to dock its Valemax vessels and handle as much as 30 million metric tons of iron ore a year starting in the first half of 2014, according to its Feb. 24 earnings report. Vale started production from a USD 1.36 billion iron-ore pellets plant and distribution center in Oman this year to supply clients in the Middle East, North Africa and India, according to a company news release April 30.

The company wants to increase sales in Asia as it competes for clients in China, Japan and other countries in the region with BHP Billiton Ltd. and Rio Tinto Group, which ship most of their ore from ports in Australia.

Brazil, where Vale produces the bulk of its supplies, is three times further from Asian markets than Australia. A previous plan to establish a center to stockpile ore in China "didn't advance," Eduardo Bartolomeo, Vale's executive director for integrated bulk operations, said in an interview at company headquarters on June 17.