Chinese Port Yantai And Brazilian Miner Vale Enter Into Iron Ore Pact

Yantai Port in northern China and the Brazilian miner Vale have signed a so-called strategic cooperation framework to promote the sale of Vale's iron ore. According to an official statement from Yantai Port, the port and the miner will work together to find "innovative ways" to promote iron ore sales.

Yantai Port boasts an iron ore terminal and "specialised equipment" for handling large ore carriers. The port adds that it expects to become the main production port for Vale's "BRBF" blend of iron ore in markets such as Japan, South Korea and Taiwan. Vale has been blending iron ore at Yantai since 2015, according to an official statement from the port.

The framework deal was signed by Zhang Quancheng, vice president of Yantai Port Group, and one "Mr. Eisenjo," who is the president of Vale China.

The port at Yantai is on the Shandong peninsula in northern China. It is the more southerly of two peninsulas that form Bohai Bay and it is directly to the west of South Korea.

According to the port, it has about 109 berths, of which 70 are deep water. The port has a total quayside length of 22,658 meters.

Graphic: Shandong Province in China is shown with a black outline. Inset: the location of Yantai port on the Shandong Peninsula is marked by the red oval. The yellow and black star shows the location of the country's capital, Beijing. Graphic: Jim Wilson and Google Maps

According to data from the Chinese Ministry of Transport, in the six months to June 2019, the port at Yantai has handled a total of 193.46 million metric tonnes of cargo (a metric tonne equals 2,204.6 U.S. pounds). That half-year figure is up by about 13.8% on the same period in 2018. Meanwhile, about 40.85%, or 79.03 million metric tonnes, of 2019's volume is classified by the Chinese Ministry of Transport as "foreign cargo," although the ministry does not give any further breakdown.

Yantai also handles a relatively small (in Chinese terms) volume of containers. In the year to the end of June, Ministry of Transport data shows that Yantai had handled 1.57 million twenty-foot equivalent units (TEUs) of shipping containers. To put that in perspective, that's more shipping containers than in any single port in the whole of Australia. That nation's biggest container port, Melbourne, handles just over 3 million TEUs a year.

Yantai is part of the recently created Shandong Port Group, which consolidates the major ports in China's Shandong province into one company. The ports consolidated into Shandong Port Group are Qingdao, Bohai Bay, Yantai and Rizhao.

It's the second such deal in recent months for Vale. The Brazilian miner also signed a deal with the Ningbo-Zhoushan port group to help maximize the sale of Vale's iron ore products. Ningbo-Zhoushan is one of the biggest ports in China with 557.96 million metric tonnes of cargo handled in the six months to the end of June 2019, which is a 5.5% rise on the previous year, according to Ministry of Transport data.

About 254.58 million tonnes of that volume, approximately 45.63% of the total, is classified by the ministry as being "foreign" cargo. Ningbo-Zhoushan is one of China's biggest box ports too, with 13.91 million TEUs handled in the first six months of the year.

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