(CBN - Global) April 12 -- ICBC Financial Leasing Co. has joined a succession of Chinese shipping companies in signing an agreement with Vale SA [NYSE:VALE], the world's leading producer of iron ore, to ship the ore from Brazil to China.
Under the 27-year deal, ICBC Financial Leasing will transport about 16 million tons of the Brazilian miner's iron ore, used in steelmaking, to China every year starting in the first half of 2018. China is Vale's most important market.
Rio de Janeiro-based Vale entered into the same agreement with China Cosco Holdings Co. [SHA:601919] on March 18 and with Hong Kong Ming Wah Shipping Co., a wholly owned subsidiary of China Merchants Energy Shipping Ltd. [SHA:601872], on March 21.
Cosco, China Merchants Energy Shipping and ICBC Financial Leasing will be responsible for transporting 48 million tons of iron ore. When the three agreements take effect, they will handle nearly one quarter of Vale's freight volume each year. Vale shipped more than 300 million tons of iron ore globally in 2015, with more than 200 million tons going to China.
ICBC Financial Leasing, Cosco, and China Merchants Energy Shipping will order 30 400,000-ton super-large ore carriers from four domestic shipyards.
With each ship costing about USD88 million, the value of the order will total USD2.65 billion, making it the world's largest shipbuilding order for a single project to date. These ore carriers will be mainly used for fulfilling the agreement between Vale and the three Chinese ship owners over the next 27 years.