Jiu'an: Four major initiatives to allow Brazilian iron ore to land in China as soon as possible
In the second half of 2014, Brazilian iron ore giant Vale has reached a cooperation with COSCO Group and China Merchants Group and signed a 25-year long-term transportation agreement. Since the birth of the big ship Valemax, the relationship between Vale and Chinese shipowners has never been so harmonious.
In order to reduce the cost of iron ore reaching China, the world's largest iron ore consumer, the Vale's fleet of super-large iron ore carriers (Valemax) was proposed five years ago. As the Vale and Chinese shipowners shake hands, this plan is getting closer and closer to China: Lianyungang, Qingdao Port and other Chinese coastal ports have recently formed alliances with Vale's ports to try to trade in iron ore. Take the lead in the middle.
On December 16, 2014, Joao Mendes, President of Vale China, was interviewed by a 21st Century Business Herald reporter at his Shanghai office. He said that all the new initiatives proposed by Vale in the past three years, whether it is to build a large ship, build a logistics center, or adjust the settlement mode, are for one purpose: to close the distance from the Chinese market.
Four innovation initiatives
"21st Century": Innovation in the mining industry often requires long-term planning and implementation. Can you systematically elaborate on Vale's innovations?
Joao: The nature of the industry itself determines that innovation in the mining industry takes two to three years to plan, and will last at least 5 to 10 years after implementation.
In the past three years we have put forward many innovative initiatives. The first innovation that has been achieved is that we used CIF instead of FOB for settlement a few years ago, helping our customers save shipping and financial costs.
In the past, settlement with FOB, each steel mill is responsible for transporting its products from Brazil to China. But now we have assumed the responsibility and cost of transportation, thus reducing the burden on steel mills. In addition, when the FOB is settled, the steel mill must issue a letter of credit before shipment in Brazil, which means that the customer must pay approximately two months in advance. However, after switching to the CIF price, the customer only needs to pay one week before the delivery of the goods, which greatly saves the financial cost.
The second innovation is carried by a large ship. Large ships can save fuel and reduce emissions. Not only that, the big ship will effectively save the operation time of the port and improve the operational efficiency of the port. The same amount of cargo will be more efficient with one ship than with two ships, and the port's operational efficiency can be doubled.
The third is the opening of the Malaysian Logistics Center in 2014. Now, we can store the ore in Malaysia, and it takes only 7 days to sail from Malaysia to China, which is closer to China than Australia.
and. We can use this logistics center to provide customers with mixed mining services. Vale's mines in Brazil are far apart from each other and cannot be mixed in Brazil. With the Malaysian Logistics Center, we can mix iron ore from different mines to more flexibly meet the different needs of our customers.
The fourth is the Caracas S11D iron ore project being built in Brazil. The iron ore grade produced by the S11D project is higher, reducing emissions during production and increasing production efficiency. The project will use two innovative technologies, “Truckless†and “Dry Screeningâ€, which will reduce greenhouse gas emissions by 50%.
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