Shanghai: Brazil’s Vale, the biggest iron-ore supplier, paid an initial $240m to China’s Jiangsu Rongsheng Heavy Industry Group for 12 bulk carriers, allaying concern the orders would be canned, Bloomberg writes, quoting two executives.
‘Vale will pay another $240m to Rugao, Jiangsu province-based Rongsheng by the middle of next year as part of a $1.6bn contract, said one of the executives, who declined to be identified because the agreement is private. The purchase signals that Rio de Janeiro-based Vale has enough cash to meet investment plans even as rivals Rio Tinto Group and Anglo American Plc slashed spending to conserve capital in the deepening financial crisis. As many as 50 percent of Chinese shipyards may be shuttered in the next year as cargo demand drops and orders get canceled or delayed, according to the Shanghai Securities News.“There had been speculation in recent months that the order could be canceled because of the decline in iron ore demand and difficulties in getting loans secured,” said Cho In Karp, an analyst at Good Morning Shinhan Securities Co. in Seoul. “It still makes business sense for Vale to keep the order because China will continue to be a major buyer of raw material.”