SBMA: Measures in place to avert ore spill in Subic Bay

The top official of the Subic Bay Metropolitan Authority (SBMA) said the agency has institut­ed measures to avert the recurrence of iron-ore spill following complaints from local fishermen that the off­shore terminals of a freeport-regis­tered company polluted the waters of Subic Bay last week.

SBMA Chairman Roberto Gar­cia said in a media forum here on Wednesday that he ordered the management of Vale, which operates two floating transfer stations (FTS) in Subic Bay, to stop transshipment during heavy rains to avoid spillage.

The company has also committed to increase the capacity of the rain­water collection tanks in its floating terminals so that excess rainwater will not wash down whatever iron ore is left on the deck of the ships, Garcia added.

The firm, Brazil-based Vale In­ternational SA, is the world’s largest producers of iron ore and controls the largest share of the seaborne trade in iron ore. The company expanded its operations in Subic Bay after one year by deploying another FTS in April.

Garcia said some iron ore on the deck of the floating terminals “were washed away” when it rained hard on July 25.

“We have monitored the spill, which caused discoloration of the waters around the vessels, and by the third day, it has already dissipated,” Garcia said.

The discoloration, however, alarmed residents, particularly fish­ermen, in the Subic Bay area. They initially thought the discoloration was due to rust coming off the hulls of the two floating terminals.

But a resident who recently opened a page called “Stop Vale Ore Operations in Subic Bay Now” in the Facebook social-networking site pointed out that the reddish water around the ships was the result of iron sediments.

The Facebook activist also assert­ed that Olongapo City should earn money from the multimillion-peso income of SBMA from Vale opera­tions because “it is clear that the part of Subic Bay where Vale ships operate is under the jurisdiction of Olongapo, and not of SBMA.”

“The SBMA enjoys huge income while Olongapo gets the damage,” the Facebook page also said.

Garcia, however, gave the assur­ance that Vale operations do not pose a threat to the environment, as well as the health of residents, adding that the firm is “very much safety-conscious.”

He also said it would not be pos­sible for any local government unit (LGU) to collect more fees from Vale operations “because the SBMA is re­leasing revenue shares regularly to all LGUs affected by Subic Bay Freeport operations.”

The Subic agency had just an­nounced on Tuesday it would re­lease a total of P93.7 million to eight LGUs in the Subic Bay area. This includes Olongapo, which will get the lion’s share of P22.7 million as revenue share from Subic Bay Freeport operations for the first semester this year.

On concerns about the environ­ment, Garcia said iron ore is not a toxic substance and that because it is a naturally occurring element, “does not react to the environ­ment.”

The only possible hazard that iron ore may pose, Garcia said, “is when you inhale it in dust form.”

He said, however, that Vale is wetting the iron ore slightly during transshipment to prevent the forma­tion of dust that may be blown by the wind into the sea.

“We have done due diligence here in coordination with Vale even before they started operating,” Garcia said.

Garcia, however, may not be ready for an offshoot of the alarm raised by the reddish waters seen around the Vale ships last week.

Olongapo City Councilor Noel Atienza said he will file two separate resolutions about the issue: The first to urge the Office of the President and the Department of Environment and Natural Resources to conduct an investigation into the Vale iron-ore spill, and the second, to urge the SBMA to stop Vale operation to pre­vent further spillage.(Henry Empeño, BusinessMirror)

PHOTO: VALEMAX OF BRAZIL

http://www.businessmirror.com.ph/index.php/en/news/regions/36405-sbma-measures-in-place-to-avert-ore-spill-in-subic-bay

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Biggest Ore Carrier Calls In Subic

Vale SA, the iron ore producer operating the world's biggest ships, said one of them called at the port of Subic in the Philippines, extending the number receiving the vessels to seven.

The Vale Minas Gerais, with capacity to carry 400,000 metric tons of iron ore, arrived at Villaneuva port yesterday, Vale said in an e-mail today. The company is spending more than $8 billion to build and control a fleet of 35 of the carriers to lower its freight costs and better compete with Australian miners, who are closer to the biggest consuming region.

China buys about 65 percent of the world’s seaborne iron ore. Vale said in June its biggest ships were restricted from calling at the Asian country’s ports. The vessels already called at ports in Brazil, Oman, the Netherlands, Japan and Italy, the miner said today.

They have also discharged at a floating transfer station at Subic Bay in the Philippines.

JFE Steel Corp. took delivery of the cargo, the fourth steelmaker to do so from one of the so-called Valemaxes, according to Vale.

The ships are lowering transport costs for steelmakers in Asia with “advanced” negotiations with other customers and ports to use

them, Vale’s Executive Director for Ferrous and Strategy Jose Carlos Martins said in the statement.

Vale paid $4.20 a ton to hire a vessel to ship ore to China from Subic Bay, according to an Oct. 11 list of charters published by the Baltic Exchange, the London-based assessor of freight costs.

Vale declined to comment on that charter in an emailed response to questions on Oct. 16.

Rates for Capesize vessels carrying the commodity slid 1.7 percent today to $13,430 a day, according to the Baltic Exchange. The ships have less than 50 percent of the capacity of Valemaxes. Panamaxes, the biggest to navigate the Panama Canal’s locks, fell 1 percent to $7,142 a day.

Costs as measured by the Baltic Dry Index, a wider measure of raw materials freight rates, declined 1 percent to 989 points. (Bloomberg)

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Vale, SBMA launch Subic Bay iron ore transshipment operations

Brazil’s Vale Shipping Holdings Pte. Ltd. (VSH), along with the Subic Bay Metropolitan Authority (SBMA), formally launched a partnership for the transshipment of iron ore from this free port.

In a ceremony held at the Lighthouse Marina Resort here on June 1, VSH executives led by Jose Carlos Martins, executive officer for ferrous minerals operations, and officials of the SBMA led by Chairman and Administrator Roberto Garcia, announced the start of Vale’s transshipment business here.

VSH is an affiliate of Vale SA, the world’s largest producer of iron ore, which also controls the largest share of the seaborne market for iron ore.

The company will carry out iron ore transshipment operations from its Valemax mother vessel to be anchored in Subic Bay, and then supply ore to smaller daughter vessels or feeders, which are either Panamax or Capesize types.

The project is expected to boost Subic’s port revenues by up to P70 million in the first year of operations alone.

In his message during the project launch, Martins thanked the SBMA for its warm reception of the project and expressed hope that the partnership between his company and the SBMA would continue to grow and benefit both the Philippines and Brazil.

“The Philippines is growing now at almost the same pace with China, and the Philippines is emerging in the world economy,” Martins noted. “With this opportunity, now is our time — now is the time for countries like Brazil and the Philippines.”

Garcia, meanwhile, said that the Vale project will help thrust the Philippines forward in the maritime industry and stressed its importance to the SBMA.

“In our strategic plan, we were very dead-set in continuing to promote the maritime business, and the Vale project is an important pillar of our strategy to maximize the use of Subic Bay,” he said.

“We have a very good future here,” Garcia added, pointing out that the Philippines is in a current state of rapid development, having achieved a 6.4 per cent GDP growth rate this first quarter compared to 4 per cent last year. “And what is outstanding is the fact that it is the second highest growth rate in the region, second only to China,” he added.

For his part, SBMA director and treasurer Joven Reyes said that the agency is much honored that VSH had chosen Subic Bay as its major transshipment port.

“We hope even more that your business continues to move from success to success and that this partnership, which we are officially launching today, would lead to better and greater developments for Vale, Subic Bay, and of course our country down the road,” Reyes said.

The Vale project began in late 2010 when SBMA and Vale proposed a solution that matched Vale’s transshipment operations model with SBMA’s logistics business model.

Stefani Saño, SBMA senior deputy administrator for business and investment development, said that Vale needed to optimize its large-scale iron ore distribution and delivery system and the SBMA offered the bay as a suitable offshore location.

“This logistics model would allow Vale’s huge vessels to tranship the commodity with maximum efficiency in terms of time and cost, given the scale of operations required,” Saño added.

Saño also said that apart from Vale, the SBMA is also trying to attract more logistics companies to invest in the Freeport. He said that at least two logistics companies engaged in different line of commodities for offshore-based distribution operations have expressed interest in locating at Subic Bay. (FMD/MPD-SBMA)

PHOTO:
SBMA Chairman Roberto V. Garcia welcomes Jose Carlos Martins, executive officer for ferrous minerals operations of the Vale Shipping Holdings Pte. Ltd. ( VSH), during the June 1 ceremonial launch of the Vale iron ore transshipment operations in Subic Bay. Looking on, at left, is SBMA chief operating officer Joven Reyes.

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Brazil’s Vale invests to get around Chinese megaship ban

Brazilian diversified mining major Vale, the world’s number two mining group in terms of market capitalisation, has announced that it is to establish a second floating iron-ore transfer station, in Subic Bay, in the Philippines.

This station will transfer iron-ore from the miner’s giant Valemax bulk carriers to smaller Capesize and Panamax ore carriers, which will then convey the ore to ports in China.

The first of these floating transfer stations, also in Subic Bay, started operations in February and cost the Brazilian group $52-million.

The Valemax ships are the largest bulk carriers in the world. Each of them has a length of 362 m, a beam of 65 m and is able to carry 400 000 t of iron-ore. Each Valemax can carry three times the cargo of a Capesize bulk carrier – Capesize ships currently carry 80% of the world’s seaborne iron-ore.

Vale has ordered 35 Valemax ships, of which eight have been delivered. But Chinese shipowners, alarmed by the competitive threat they pose, have persuaded the Chinese authorities to ban them from that country’s ports.

The floating transfer stations are Vale’s response. They allow the company to deliver its iron-ore some 85% of the distance from Brazil to China on board the more cost-efficient Valemax ships, and then conclude the last 15% on the smaller vessels.

In addition, Vale has an operational land-based distribution centre in Oman and is building a second such centre in Malaysia. Together, these floating transfer stations and the distribution centres will be able to absorb the total capacity of all 35 Valemaxes, which comes to 60-million tons of iron-ore a year.

However, Chinese steelmakers, eager to benefit from the cost reductions the Valemax ships could bring, are reported to be pressurising the Chinese government to lift the ban on the vessels. One of the first Valemax ships successfully docked at Dalian last year, before the ban was imposed.

Moreover, nearly half of the Valemax ships – 16 out of 35 – are being built in China by Rongsheng Heavy Industries, an order worth $2.1-billion. (The rest are being built in South Korea. One of the South Korean ships recently developed cracks in its hull on its maiden voyage, but Rongsheng states its ships are very safe.) Not all the Valemax ships will be owned by Vale, but those that are not owned by the group will be on long-term lease to it.

Should the Chinese government change its policy and allow the Valemax ships into its ports, this will not render the floating transfer stations superfluous. As each transfer station is actually a modified bulk carrier, they will simply be moved to new locations to serve other markets in Asia and South-East Asia.
The development and deployment of the Valemax ships has had a severe impact on the value of Capesize vessels. The website VesselsValue.com last month reported that new Capesize ships that had been worth $69.9-million in April 2010 were now worth $39.9-billion. The website also reported that, as a result of the Chinese ban, the value of Valemax ships had fallen by 36%. But, for Vale, it is the value of the iron-ore and the utility of the ships that are important; the book value of the vessels is a secondary issue.

Meanwhile, closer to home, the Brazilian miner’s Mozambican operation has ordered 33 200 railway sleepers from agriculture and forestry company Montara Continental, which operates in Mozambique and Tanzania and is 75%-owned by the British Obtala Resources group. The railway sleepers will be delivered over the next seven months and will be used in the upgrading of Vale-owned railways in Mozambique and Malawi and in the construction of a new line in Malawi. (Keith Campbell, Creamer Media's Mining Weekly)

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Brazil's Vale offers spot iron ore from Subic Bay, Philippines

SINGAPORE - Brazilian miner Vale has offered spot iron ore for tender Monday, sailing from its Floating Transfer Station at Subic Bay, Philippines, market participants said Monday.

Previously, most of Vale's spot offers have been for cargoes loaded on vessels passing through Singapore within two weeks from the date of sale, but the shipment sailing from Subic Bay will be able to reach the Chinese port of Qingdao in a shorter time span of four-and-a-half days.

Vale is offering a 175,000 mt cargo of 65%-Fe Brazilian sinter feed Carajas fines in a tender closing Monday, 1730 Beijing time (0930 GMT) on a CFR China basis. The cargo will load from the Floating Transfer Station at Subic Bay by Wednesday.

China's Ministry of Transport in January applied stricter administration procedures for large dry bulk vessels. Those with a capacity of more than 350,000 dwt have to go through new demonstration-appraisal-approval procedures before they can call at Chinese ports.

Sources said the Carajas fines spot cargo offered was probably unloaded from Very Large Ore Carrier, or Valemax, vessels at Subic Bay before being loaded into smaller Capesize vessels prior to sailing for China.

"It is the first time I heard Vale offering an iron ore spot shipment that sails straight from Subic Bay," a Hong Kong-based trader said.

Another Singaporean trader said: "Shorter traveling time between the Philippines and China will be popular among steel mills who need very prompt loading cargoes, but it may not be equally popular with traders who have a shorter time to sell their cargoes."

Vale wasn't immediately available to comment. [Melvin Yeo, (Platts) Singapore]

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Vale Starting Subic Ore Transshipment

SINGAPORE (Reuters) – Brazil's Vale will begin its iron ore distribution operations in the Philippines this weekend, the Philippine port operator said, from where the world's top miner of the raw material will transfer China-bound ore brought in by big ships.

Vale is taking a more costly route to deliver iron ore to China, its top market, which has barred the miner's giant dry bulk vessels from entering its ports to shield its domestic shipping industry.

The miner has set up a transshipment hub in the Philippines' Subic Bay port using a floating storage vessel which will start operations on Feb. 12. It is also building a $1.3-billion iron ore distribution hub in Malaysia's northern Perak state, which could be ready to handle the giant ships by 2014.

China last week barred Vale's mega ships called Valemaxes – which at 400,000 deadweight tons each are the world's biggest dry bulk carriers – to protect its shipping sector hit hard by the economic downturn and freight rates that have fallen to their lowest in more than a quarter century.

''When Vale starts full operations on Feb. 12, we expect the SBMA (Subic Bay Metropolitan Authority) to earn some 70 million pesos ($1.64 million) in additional income in the first year alone because of the projected increase in ship calls,'' Roberto Garcia, chairman of SBMA, said in a statement late on Monday.

Vale's Ore Fabrica, the world's largest dry bulk floating storage vessel, arrived in Subic Bay last week. The 280,000-deadweight-tonne vessel will serve as a platform to transfer iron ore from the Valemaxes to smaller vessels for transport to Asian markets led by China.

A Valemax, Vale Brasil, is expected to arrive in Subic on Feb. 12, Reuters shipping data showed. SBMA said it expects Vale Brasil to dock a day later.

Vale was hoping its planned fleet of 35 Valemaxes would slash its shipping costs to China to help it better compete with Australian rivals BHP Billiton and Rio Tinto.

But some analysts have said the cost of the transshipment centers would unlikely outweigh any savings from using the Valemaxes.

Vale has said its plan to build a fleet of 35 giant ore carriers, of which six are already in service, had not changed despite China's ban. (Manolo Serapio Jr., Manila Bulletin)

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Subic Freeport eyes P70-M income from Vale transshipment project

The Subic Bay Metropolitan Authority (SBMA) expects to generate additional revenue of as much as P70 million with the transshipment operation here of Brazil’s Vale Mining, the world's biggest iron ore producer.

SBMA Chairman Roberto Garcia said the agency, which also administers the Port of Subic, has entered into an agreement with Vale Mining, making this free port the hub of Vale’s iron transshipment operations in Asia and turning Subic into a major player in the maritime logistics industry in the Asia Pacific Region.

“The main reason why Vale has located its operations here is Subic’s strategic location in the Asia-Pacific region,” Garcia said. “And it’s all about economies of scale. Vale will haul its ore products to Subic using its big carriers, then transfer the iron ore to smaller vessels, which the smaller ports in China will be able to accommodate,” he said.

“This is a very fortuitous development for SBMA because Subic will be at the very center of what is expected to be the biggest ship-to-ship transfer operations in the world in terms of volume,” Garcia noted.

“When Vale starts full operations on February 12, we expect the SBMA to earn some P70 million in additional income in the first year alone because of the projected increase in ship calls, as well,” Garcia added.

According to SBMA deputy administrator for port operations Redentor Tuazon, Vale will utilize its Valemax carrier vessels, which have a capacity of up to 400,000 deadweight tons (DWT), to deliver iron ore to several ports in China, now the world’s biggest user of iron ore.

The company will carry out its iron ore transshipment operation from its Valemax mother vessels, supplying ore to smaller daughter vessels, or feeders, which are either Panamax or Capesize types. The especially-designed floating terminal that will supply feeder ships will be anchored in Subic Bay.

Tuazon said that preparations are now underway for the initial transshipment operations with M/V Ore Fabrica, the floating terminal station that arrived here last Monday, January 31, and M/V Vale Brazil, which is set to arrive on February 13.

Owing to the magnitude of the transshipment operation, Tuazon said that various marine safety measures have been put into place, including the conduct of hazard and operability (HAZOP) analysis jointly made by representatives of Vale Brazil, SBMA, and agent companies involved in the operations.

All of the vessels to be used in the operation are insured and covered with protection and indemnity insurance, Tuazon added.

The SBMA has been aggressively pushing for the Port of Subic Bay to be a premier marine logistics hub in the region, as it continues to develop the market for the full utilization of Subic’s container terminals.

Recently, it has also offered various incentives to shipping companies for the development of new shipping routes to Singapore and Hongkong.

The arrival of Vale Brazil here would help Subic secure its place on the map in terms of floating terminal operations, Chairman Garcia said. (SBMA Corporate Communications)

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With China shut, Vale iron ore ships head to Philippines (Two of Vale's giant ships to arrive in Subic Bay)

SINGAPORE - Two of the world's biggest iron ore carriers are due to arrive in Subic Bay Freeport for the first time next month, shipping data showed, as Brazilian mining giant Vale looks to use the Philippines as an alternative base to reach Chinese ports.

China, the world's largest iron ore importer and Vale's top market, has yet to fully open its seaports to the giant vessels after domestic ship owners strongly protested the arrival of the first and only vessel of the type into the country in late December.

With accessibility to Chinese ports uncertain, Vale has been forced to rely on its transshipment hub in the Philippines, a costlier alternative that involves employing more vessels and workers.

"I'm not surprised that Vale is sending its ships to the Philippines. They have no choice with China's ports still closed off to them," said a Singapore-based ship broker.

"They have to keep these ships moving or face major losses."

The 400,000-deadweight-tonne Vale China is due to arrive in Subic Bay Freeport, located in the Philippines' main Luzon island, on Feb. 22, shipping data showed.

That is 10 days after similar-sized Vale Brasil is expected to dock.

'A LOT OF MONEY'

Draught measurements indicated the two ships were fully loaded, each likely carrying around 350,000 tonnes of iron ore, traders said.

At current iron ore prices, the value of each cargo is nearly $50 million.

"That's quite a lot of money. Vale may be struggling to sell shipments of 200,000-300,000 tonnes in one go and so it makes more sense for them to break it up," said an iron ore trader in Singapore.

Vale's plan is to set up a floating storage vessel in its planned transshipment hub in Subic Bay from where iron ore would be transferred to smaller vessels such as panamaxes or capesizes and then transported to buyers in Asia.

Keeping readily available iron ore in Subic Bay would also allow Vale to quickly meet China's requirements, the Singapore trader said, since vessels from Brazil take at least a month before they reach China, versus about a week from the Philippines.

Vale officials in Singapore declined to comment.

Vale is also setting up a transshipment centre in Malaysia as an alternative to Chinese ports.

The Brazilian miner in October broke ground for a $1.3 billion iron ore distribution centre in Malaysia's northern Perak state, which could be ready to handle the giant ships by 2014.

Vale is banking on a fleet of 35 Valemaxes to slash shipping costs to China and better compete with Australian rivals BHP Billiton and Rio Tinto .

The 388,000-tonne Berge Everest was the first and only Valemax allowed into China, docking at Dalian Port on Dec. 28 to unload iron ore that has yet to be sold.

The China Shipowners Association has helped keep further ships from arriving at its domestic ports. The group fears the fleet will give Vale a monopoly on both the shipping and iron ore markets at China's expense. (Randy Fabi and Manolo Serapio Jr., Reuters)

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Brazilian iron ore ship heads for Philippines

SINGAPORE­ -- A giant iron ore vessel owned by Brazil’s Vale, a multinational mining company, is on its maiden voyage to the Philippines and is expected to dock at Subic Bay in early February, Reuters data and shipping sources said on Monday.

The 400,000-deadweight-ton (dwt) Vale Brasil would be the second of the company’s so-called Valemaxes, which are very large ore carriers, to sail to Asia.

The first vessel, the 388,000-dwt Berge Everest, unloaded at Dalian Port on Dec. 28, 2011, ending months of delays in getting the world’s biggest dry bulk ships into China, Vale’s top market.

The cargo, estimated at 350,000 tons, has yet to be sold, however, and is sitting in storage, traders said.

Vale is banking on a fleet of 35 Valemaxes to slash shipping costs to China and better compete with Australian rivals BHP Billiton and Rio Tinto.

Reuters Freightviews and independent shipping data showed Vale Brasil is scheduled to arrive in Subic Bay on Feb. 11. Draught measurements indicated the vessel was fully loaded with cargo.

Vale Brasil was supposed to be the first of Vale’s huge ships to arrive in Asia, but was diverted last June to Italy after the Chinese government failed to provide permission for the ship to dock at Dalian Port.

A source at Subic Bay Freeport said they had not yet been advised of the Vale Brasil’s arrival.

“But we are ready anytime to accept the ships,” the source told Reuters, adding the port is deep enough to accommodate Valemaxes.

Vale aims to turn Subic into an iron ore transshipment center, where it can dock its Valemaxes, transfer cargo to smaller vessels and then use these to supply its clients in other parts of Asia.

Sources at Subic Port had said they expected the transshipment operations to start in late January or early February, as soon as Vale’s ship arrives.

The Philippine facility would be the first of at least two transshipment centers Vale is planning to open in Asia.

The Brazilian miner in October broke ground for a $1.3-billion iron ore distribution center in Malaysia’s northern Perak state which would be ready to handle the Valemaxes by 2014.

The China Shipowners Association has opposed Vale’s fleet, worried that the vessels will give the miner monopoly on both the shipping and iron ore markets at China’s expense.

The influential group has also raised concerns about the safety of the huge ships after Vale Beijing, the newest member of the Valemax fleet, developed cracks in its hull on its maiden voyage last month. (Reuters)

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