As a way to grow market presence in China, the world’s largest iron ore consuming market, Vale is targeting new clients in the Asian country, including inland areas, according to a media report from Estadao.
Vale started to sell the commodity in local currency about two months ago, in a move that is expected to attract smaller Chinese steel mills. According to the media report, the sale of iron ore to the Chinese clients is usually made in USD through long-term contracts. But to reach smaller clients, Vale is blending higher Fe-content iron ore with iron of inferior quality.
Vale currently blends its iron ore in Malaysia, Oman and China. According to the media report, Vale will use about 70 million mt of iron ore for its blending processes this year. It will account for almost 20 percent of the company’s forecasted iron ore production for 2017. As for 2018, the volume will grow to 100 million mt.
Vale’s ferrous division executive, Peter Poppinga, said the company is establishing partnerships with railways and barge operators to bring its product to China’s countryside. Vale said it wants to approach smaller miners that have no access to financing and are interested in buying smaller quantities of iron ore due to logistics issues.
“It’s an important step to gain market share. In the first 60 days, we had almost 20 new clients, which used to buy [iron ore] in the domestic market,” the executive told Estadao.
Vale is also experimenting the new strategy in India, according to the media report.