China to bankroll Vale expansion plans

The AFR reports this morning that “China will help to bankroll a major expansion by Brazilian iron ore giant Vale and invest in huge Vale ships that will transport high-quality ore to North Asia – a deal that will reshape the global industry and put more pressure on Fortescue Metals Group.” The article notes that it’s 25% cheaper for Vale to ship ore on the mega-vessels than using Vale’s next best fleet. “The deal with China will pave the way for Vale, the world's third-lowest-cost exporter of iron ore, to narrow – and possibly close – the gap on all-in costs with leader Rio and second-placed BHP. It is also set to put daylight between the margins of Vale and Fortescue – the highest-cost producer of the four iron ore majors – once the expansion is complete.” Full article (AFR Subscribers): (VIEW LINK)