China bans Vale mega-ships

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The Chinese Government has effectively banned Vale’s $8 billion mega-ships from using its ports, citing safety concerns.

Some experts have seen the move as a thinly disguised attempt to ban the vessels following pressure from Chinese ship owners.

Ship owners have previously lobbied against Vale’s vessels, fearing they would give the company a monopoly over the iron ore and shipping industries.

According to The Financial Review a first Vale ship, carrying 410,000 tonnes, was refused entry to Chinese ports in December after it breached the 380,000 tonne restriction.

Early this year Vale’s 388,000 tonne Berge Everest completed delivery of its iron ore cargo, but Chinese officials would not confirm if other vessels would be granted approval.

The new changes mean no Chinese port has regulatory approval to accept ships carrying more than 350,000 tonnes.

Very few ships outside Vale’s new mega-ships carry that capacity.

Vale made the $8 billion mega-ship move to lower transport costs and get a competitive advantage over Rio Tinto and BHP Billiton’s Australian mines, which benefit from their close proximity to China.

According to The Financial Review Vale can still use the vessels in the Philippines or Malaysia.

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