Cosco-Vale deal to end giant ore carrier ban

Beijing's ban on Vale's giant ore carriers has been practically lifted after China Cosco Holdings' landmark deal with the Brazilian miner last Friday over a 25-year freight contract that involves 14 of the massive ships known as Valemax vessels, a person familiar with the matter said.

"The current regulation actually already legitimises these vessels to berth at Chinese ports. If you look at how the ban was initiated in the first place, it will be unlikely for the government to make an official announcement with much fanfare that says the ban is loosened," said an executive at a state-owned port company familiar with the development of iron ore terminals in China.

In early 2012, the Ministry of Transport issued a circular revoking the ability of local maritime authorities to approve dry bulk cargo ships and oil tankers exceeding the designed berth capacity to dock at mainland ports on a case-by-case basis. That effectively banned Valemax vessels, which have a capacity of about 400,000 deadweight tonnes (dwt).

The 2012 circular cited safety concerns as reasons for the rescission of the case-by-case practice, which was authorised in 2006 as an attempt to let mainland ports receive cargo ships larger than the designed berth capacity before terminal facilities were upgraded.

A case-by-case decision can be solely made by local maritime safety administrations based on the traffic, weather, piloting and navigation conditions at a given time, said the executive, who declined to be named.

"Eventually, the ban will be lifted in a quiet manner. You may see a Valemax ship granted approval by a local maritime authority to dock, and that will be it. Officials realised the ban has hurt China's economic interests, pushing up the costs for iron ore imports," the executive said.