| KASHIMA, Japan, June 20
KASHIMA, Japan, June 20 Nippon Steel & Sumitomo
Metal Corp, Japan's biggest steelmaker, may start talks
on a contract to transport iron ore from Brazilian miner Vale
on Valemax ships, the world's biggest bulk carriers,
to cut costs, a senior official said.
Such a contract would be a boost for Vale, which is trying
to increase use of the ships after China in 2012 prevented the
world's biggest iron ore miner from docking the giant vessels in
its ports to protect its own shipping companies.
The 400,000 deadweight tonne (dwt) vessels could cut Nippon
Steel's shipping costs by at least $400,000 on each cargo.
For Nippon Steel, the world's second-biggest steelmaker,
cutting costs is vital to improving its competitiveness as
global markets face prolonged oversupply due to massive
production by Chinese mills.
The Valemax entered the firm's Kashima steelworks port, near
Tokyo, for the first time this week as a trial run. It was the
third of its plants in Japan to have received Vale's giant
vessels following Oita in southern Japan and Kimitsu, near
"We had no technical problems in receiving the Valemax at
Kashima," Koichiro Harada, Nippon Steel's general manager at raw
materials transportation department, said on Friday after the
company held a media tour at its Kashima plant.
"No decision has been made on a formal contract. We may
enter formal negotiations on a (Valemax) freight contract once
Kashima gets permissions from authorities and we confirm our
plants are ready to receive the ships," Toshiharu Sakae, Nippon
Steel's managing executive officer, told reporters on Thursday.
The Valemax has made a total of seven shipments to Japan
since its first berth in June 2012 at Oita, the only Japanese
port deep enough to receive a fully loaded Valemax.
Nippon Steel buys about 70 million tonnes of iron ore a
year, 80 percent of which come from the three biggest suppliers,
Brazil's Vale and Australia's Rio Tinto and BHP
By country, the steelmaker gets more than 60 percent of its
iron ore from Australia, from where a cargo takes about 11 days
to travel to Japan, much shorter than about 40 days from Brazil.
"We can't say exactly how much we can save by using Valemax,
but in theory the transport cost per 1 tonne of iron ore would
be lowered by dollar amount in the single digits," Sakae said.
(Editing by Aaron Sheldrick and Jane Baird)