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COSCO cautious about purchase of carrier fleet

(Xinhua)

15:17, November 08, 2011

BO'AO, Hainan - China Ocean Shipping (Group) Company (COSCO), the country's largest State-owned shipping conglomerate, is unlikely to buy or operate a giant bulk-carrier fleet currently owned by the Brazilian miner Vale SA, said Ma Zehua, president of COSCO Group.

"We are still studying the safety and profitability issues in managing the giant ships," Ma told China Daily in an exclusive interview.

In a bid to stabilize freight costs and iron ore prices, Rio de Janeiro-based Vale invested $2.3 billion in 19 of the 400,000 ton megabulk carriers and will control another 16 under long-term contracts, according to the company. Scheduled for delivery by the end of 2013, it will be the world's largest iron ore fleet.

The miner received the first ship in the fleet - built by China's shipbuilder Rongsheng Heavy Industries Group Co Ltd - in July and had planned to sail it to China's Dalian port on its maiden voyage. However, the company said that the giant vessel was diverted to Italy because of restrictions at Dalian and a request from a European customer.

"China's ports can't handle a vessel of 400,000 tons. They are too big and too dangerous," said COSCO Chairman Wei Jiafu.

"Because of the safety restrictions, we are not considering buying or running Vale's fleet for the time being. We have our own vessels," he said, echoing Ma's comment.

However, an industry insider said the hurdle to the deal was essentially the vessel's price and that there is still room for negotiation.


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