The Chinese government has finally given its official blessing for Vale to deploy its fleet of 34 400,000dwt vessels into domestic ports, having previously prevented their deployment for three years.

Dalian, Ningbo, Qingdao and Tangshan Caofeidian have all been given clearance to receive the Valemax ships, given that they meet the technical standard laid out by official government bodies.

Vale originally designed the ships with China in mind, since they would bring down the cost of moving consignments of iron ore to that country, only for them to be effectively embargoed in 2013 on the grounds of safety.

Earlier, in September 2014,Vale struck an agreement with China Ocean Shipping Company (Cosco) to both sell and hire it some of its existing fleet of Valemax bulk carriers. This was followed in February of this year by China issuing its own guidelines for the design of such large vessels.

It is expected that a saving of $4.00 to $6.00 will now be made in shipping each tonne of iron ore between Brazil and China, which is key to companies being able to make a profit at a time when the price of iron ore has slipped to its lowest level since 2009. Vale, however, has struggled in this market, given longer journey times than those offered by Australian rivals Rio Tinto and BHP Billiton.

According to official statistics, Australia delivered around 241.7mt (million tonnes) of iron ore to China in the first five months of this year, up 14.8% over the previous year, with Australia now accounting for 64% of the total. For its part, Brazil was responsible for sales of 70.89mt, or 18.7% of all Chinese iron ore imports.

Both Rio Tinto and BHP Billiton have announced a rise in production in the second half of this year as a means of competing yet further with Brazil, although the move is seen as possibly driving down prices to historically low levels.

BC