Banks back Vale VLOCs

Brazilian mining giant Vale has inked a $1.2bn loan agreement with a pair of Chinese lenders that are on the fringe of financing the company's order for 12 very large ore carriers (VLOCs).

The Sao Paulo and New York-listed dry-bulk player says The Export-Import Bank of China and the Bank of China Limited are coughing up the cash to help fund the 400,000-dwt bulkers ordered at China's Rongsheng Heavy Industries.

Vale says the VLOCs will be added to its Brasil-to-Asia shuttle run.

"The two Chinese financial institutions will provide a credit line of up to $1.229bn, which corresponds to 80% of the amount required to fund the construction of the vessels," the company wrote in a statement Friday.

Vale says the credit pact has a repayable 13-year total term but the borrowings will be dispersed during the next three years in accordance with the construction timeline.

As TradeWinds has reported, when Vale first unveiled its spending spree in 2008, the company said that it expected the yard to deliver the first vessel in 2011 with the last ship hitting the water in 2012.

The total price tag of the project is $1.6bn.

The ships were the first VLOCs penned at the yard and are said to be the largest vessels ever built in China.

Some critics in Brazil, including President Luiz Inacio Lula da Silva, have bashed Vale for its failure to order ships from the nation’s yards.

(To read more about the shipbuilding boom in Brazil, check out TradeWinds' special report, "Brazil in fast lane" )

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