Vale (NYSE: VALE) has teamed up with China’s Zhoushan Port Company to build and operate Project West III in the port of Shulanghu, according to a securities filing on Friday, in a strategic logistics alliance to serve the world’s largest iron-ore importer.
Vale said it will have 50% of the JV, adding the port project expansion will demand multi-annual investments of about $624 million. Both partners plan to obtain financing for up to 65% of the project, the filing said.
The West III Project consists of expanding the facilities at the Shulanghu Port, developing a storage yard and loading berths with an additional capacity of 20-millions of metric tones per year.
By participating in the project, Vale said it will guarantee a total port capacity of 40-million tonnes a year in Shulanghu, which will help the company optimize costs in its value chain, according to the filing.
Last month, Vale began producing high-grade iron ore fines for pelletizing at its new three-million-tonnes-a-year grinding hub at Shulanghu Ore Transfer Terminal.
The unit, a partnership with Ningbo Zhoushan Port Group, is generating a completely new product, known as GF88. The high-grade ground iron ore fine uses the company’s flagship Carajás Fines as raw material and will partially feed the growing demand for pellets in China’s steel sector.
