Vale’s new iron ore maxi-ship to break BHP’s iron ore grip on Asia

The second of Vale’s iron ore super ships, or Valemaxes as they are being called, has set sale from Brazil for Asia in an attempt to break the grip that Australia’s BHP Billiton and Rio Tinto have on supplying iron ore into China.

The 350,000 tonne capacity vessel, the Vale Brasil, is expected to dock at Subic Bay in the Philippines in early February. Its arrival marks the start of Vale’s strategy to break the low cost supply chain for iron ore into China that BHP Billiton (ASX:BHP) and Rio Tinto (ASX:RIO) have established from Australia. Vale plans to use the Philippines as a transfer port, where it can move its cargo on to smaller ships for direct transfer to customers in China.

The Vale Brasil and its sister ship, the Berge Everest, are being used by Vale to cut the cost of shipping iron ore from Brazil to the world’s number one market in China. The Australian miners have the advantage over Vale of proximity to China. The two Valemaxes are said to be the first of a fleet of 35 super-ships that will run the route.

Subic Bay Freeport is expected to grow significantly as it becomes the first Asian transfer port. Vale is planning another two transfer ports in the region, one of which will be in Malaysia’s Perek province.