The Brazilian miner is spending more than $2 billion to build a fleet of 19 giant vessels that each can carry 400,000 tons of iron ore, to cut its shipping costs to China.
But with China keeping its ports closed to these Valemaxes, the transshipment facility would allow the company to unload cargo onto a large floating storage vessel in the Subic Bay Freeport, a source at the port told Reuters.
The ore would then be transported to China and other Asian buyers through smaller vessels such as panamaxes or capesizes.
"We are just waiting for the arrival of their floating storage vessel right now and we are in contact with Vale Singapore regarding the project," the source said. "We expect it to start in late January or early February."
"Subic is deep enough to accommodate these vessels. It's a very strategic location, it's near China, South Korea and Japan which are the big users of iron ore in Asia," the source added.
Subic Bay is located in the Philippines' main Luzon island.
Officials at Vale in Singapore and the port declined to comment.
Vale Strategy
The Subic iron ore transshipment centre is one of at least two that Vale plans to set up in Asia. The hubs are part of the firm's strategy to move the steelmaking raw material closer to China, buyer of around two thirds of global seaborne iron ore.
The Brazilian miner in October broke ground for a $1.3 billion iron ore distribution centre in Malaysia's northern Perak state. The centre, however, would only be ready to handle the Valemaxes by 2014.
Vale's Philippines' centre had been due to open in October under an agreement signed earlier this year. "There was a delay because the floating storage vessel that will be stationed in Subic had to be retrofitted," the source said.
The source said the vessel had to be upgraded to include cranes and other equipment to facilitate transfer of cargoes, adding that Vale "could bring in more storage vessels to Subic if the operation is successful."
Vale has yet to secure approval for its Valemaxes access to Chinese ports, mainly due to strong opposition by domestic steelmakers and ship owners who fear the Brazilian firm is seeking to monopolise their businesses.
Beijing's approval may be further pushed back after one of the giant vessels, the Vale Beijing, suffered a ruptured hull while preparing to set sail on its maiden voyage last week, underscoring the need for more stringent safety checks. (Reuters)
