The world's largest iron-ore carrier is disabled and could sink at a key Brazilian port from where Vale SA , the world's No. 2 mining company, loads about 10 per cent of the global iron-ore trade, shipping agents and media said on Monday.
The crippled Vale Beijing is the latest blow to Vale's multibillion-dollar plan to have a fleet of 35 of the world's biggest iron-ore carriers to tap demand in the world's fastest growing emerging market, China.
The 361-metre-long vessel is loaded with enough high-grade iron ore to make the steel for nearly three-and-a-half Golden Gate bridges. Were it to settle to the bottom at the Ponta da Madeira Port near Sao Luis, Brazil, the carrier could disrupt about a third of Vale's 300 million tonnes in annual shipments of iron ore.
The Rotterdam-bound very large ore carrier (VLOC) ruptured its hull and was having problems with its ballast tanks, shipping agents told Reuters.
At least two ballast tanks had ruptured and are leaking water into the cargo hold, the Folha de S. Paulo daily newspaper reported, citing the Brazilian navy's harbour master, Nelson Ricardo Calmon Bahia.
The harbour master's office did not return calls on Monday .
At an estimated cost of $150-million (U.S.) to build, the new Vale Beijing was delivered in September to its operator South Korea's STX Pan Ocean. Engineers from the company are expected to arrive at the port on Tuesday.
"If there is a leak between one of the ballast tanks into the cargo holds then it is more serious," said Roddy Mann, senior iron-ore trader at London-based trading house Metalloyd, who added the ship might have to be unloaded for repairs.
Rio de Janeiro-based Vale declined to comment.
The Panamanian registered Vale Beijing had been expected to depart on Sunday morning after docking on Friday, Vale's website said. It is carrying 381,300 tonnes of iron ore, which based on Monday's spot price for ore, would be worth $53-million.
On Monday, ore with a 62 per cent iron-content rose 0.72 per cent to $139.80 a tonne in China's spot market, 27 per cent below its February high for the year.
Were the Vale Beijing to sink at dock, or face further problems, it would threaten to delay loading at the port responsible for nearly 10 per cent of the world's one billion tonnes of annual sea-borne iron-ore shipments, an essential ingredient for steel production in China and Europe.
"Ponta da Madeira is a big port. I don't know how long the ship will be stuck there but it is a big cost for Vale," said a senior steel raw materials trader at a Swiss trading house.
The problem is the second this year among a new class of giant "dry-bulk carriers" being built at Vale's behest to help it better compete with Australian rival's BHP Billiton and Rio Tinto , whose main mines are thousands of kilometres closer than Vale's to China, the main steel maker and iron-ore market.
The first such 400,000 dead weight tonne "Valemax" or "Chinamax" ship delivered earlier this year, the Vale China, had to turn around in the Indian Ocean on its maiden voyage after the Chinese government failed to provide permission for the giant ship to dock. It went to Italy instead.
"It's unfortunate timing for Vale," a ship industry source said of the Vale Beijing problems.
Chinese authorities could use the incident to argue that the Valemax vessels pose safety and environmental risks and thus should be excluded from China's ports, the source said.
The Vale Beijing is the world's largest ore carrier, according to STX Pan Ocean. But it is only slightly bigger than its sister ships Vale Brasil, Vale China, Vale Italia and Vale Rio de Janeiro, which are the first of nearly 35 similar class vessels Vale hopes to put in service in the coming years with third party operators.
The Valemax ships are 10 per cent bigger than the Berge Stahl, the former record holder built in 1986 by Hyundai Heavy Industries in South Korea, according to Vale and Reuters.