Brazilian miner Vale and Shandong Shipping Corporation have entered into a charter agreement for new ethanol-fuelled Guaibamax-class vessels, with the first unit due for delivery in 2029.
Vale says the agreement is an unprecedented milestone in global iron ore shipping, as it will be the first time in the maritime industry that ethanol will be used as a primary fuel on a transoceanic vessel.
The initiative, which has the potential to cut carbon dioxide emissions by around 90 percent compared to conventional fuel oil, reinforces Vale's commitment to reducing carbon emissions across the value chain and promoting decarbonization in the maritime sector, in line with ongoing discussions at the International Maritime Organization (IMO).
The agreement between Vale and Shandong includes 25-year contracts to build two ships, with the option to build more ships.
The introduction of the second generation Guaibamax ships, 340 meters long and with a lifting capacity of 325,000 metric tons, is part of Vale's multi-fuel strategy.
In addition to ethanol, these ships will be able to use methanol and heavy oil, and their design also allows conversion to liquefied natural gas (LNG) or ammonia.
Taking into account the full fuel cycle From well to propeller (well to wake), so-called “second-generation ethanol” can deliver around 90% reduction in carbon dioxide emissions compared to heavy oil.
In addition to shipping, Vale's introduction of ethanol into logistics includes in-service trials on trucks and on locomotives on the Vitoria-Minas railway (EFVM).
As of 2020, Vale has invested approximately $1.4 billion to reduce Scope 1, 2 and 3 emissions. The company has committed to reducing Scope 3 emissions by 15 percent by 2035 across its value chain, which includes the majority of emissions from shipping, depending on the type of contract.
