Brazil-based Vale announced Friday that it has started construction on a new iron ore distribution center in Teluk Rubiah, Malaysia that will be geared toward steel industries in the Asia Pacific region. Vale is investing US$1.4 billion in the first phase of the project that will include an iron ore pelletizing plant that will process iron received from Brazil. The location of the new facility will be large enough to handle Vale's new very large iron ore carriers (VLOCs) that can hold about 400,000 tons of iron ore.
While Vale plans to target customers in Malaysia, Australia and Japan, it will pay extra attention to sending iron ore to China. News reports have indicated that Vale has struggled to compete with its major iron ore producing rivals BHP Billiton and Rio Tinto to supply iron ore for the Chinese market because of the amount of time it takes to ship iron ore from Brazil to China. A distribution center in Malaysia with significantly cut down on the travel time, making Vale more competitive in the growing Chinese steelmaking industry.
Vale also recently announced that it is also planning to launch a transshipment hub for iron ore distribution at Subic Bay in the Philippines this month, as well.