The Brazilian miner Vale and Shandong Shipping Corporation have concluded a charter agreement for new Guaibamax grade vessels, powered by ethanol, with first unit to be delivered in 2029.
According to Vale, the agreement is an unprecedented milestone for global iron ore transportation, as it is the first time in maritime industry that ethanol will be adopted as the primary fuel on a transoceanic vessel.
With the potential to reduce carbon emissions by approximately 90 percent, compared with the usual heavy fuel oil, the initiative reinforces Vale's commitment to reducing its carbon emissions in the value chain and promoting decarbonization in the maritime sector, in line with ongoing discussions at the International Maritime Organization (IMO).
The agreement between Vale and Shandong includes 25-year contracts for the construction of two ships, with an option for more vessels.
The adoption of these second-generation Guaibamax vessels, which are 340 meters long and have a capacity of 325,000 metric tons, is part of Vale’s multi-fuel strategy.
In addition to ethanol, these vessels will be able to use methanol and heavy oil, while the design also allows for conversion to liquefied natural gas (LNG) or ammonia.
Considering the complete fuel cycle from well to propeller (well-to-wake), so-called “second generation ethanol” can represent a reduction of approximately 90% in carbon emissions compared with heavy oil.
In addition to maritime transportation, Vale's adoption of ethanol in logistics includes tests in trucks during operations and in locomotives on the Vitória-Minas Railway (EFVM).
Since 2020, Vale has invested approximately $1.4 billion to reduce its Scope 1, 2, and 3 emissions. The company has committed to reducing Scope 3 emissions by 15 percent by 2035, related to the value chain, which includes most emissions from maritime transportation, depending on the type of contract.