Vale denies VLOC order cancellations

Brazilian iron ore producer Vale denies that it is cancelling its $1.6bn order for 12 VLOCs from the Jiangshu Rongsheng shipyard in China. Despite some reports in the international media suggesting that Vale had cancelled the order, signed with Rongsheng in August of this year for twelve 400,000 dwt iron ore carriers, the Rio de Janeiro based company has robustly denied such a claim.

A Vale spokesperson said : “This information is baseless and has no grounds. We re-affirm our long-term policy is to move a substantial share of our ore to Asia using our own fleet. I repeat again these stories have no grounds and are baseless.”

Because of the fall in iron ore prices and difficult negotiations with Chinese buyers for their ore, there has been strong market speculation that Vale will cut back its investment plans for the next few years, starting with the Jiangshu Rongsheng order.

Vale only last week announced job cuts of 1,300 out of its workforce of 62,000 worldwide and has also declared it will put 5,500 workers in Minas Gerais on mandatory vacation for various periods over the next three months.

On top of this Vale has stopped production at four pellet plants, heightening pressure on the dry bulk sector. Vale stated that it has now “idled” production at a total of six plants with overall capacity of 29.3m tonnes of pellets per year. The mining company added that it suspended operations at these plants “including two pellet plants at the port of Tubarao ” because of the “the unprecedented contraction of the global demand for iron ore and pellets”.