HMM signs long-term contract with Vale

South Korean shipping company HMM has finalized a significant long-term contract of affreightment (COA) with Brazil’s Vale, valued at KRW 430 billion (approximately $309 million). This agreement marks the second collaboration between the two firms, following a previous 10-year contract worth KRW 636 billion signed in May. Under the new terms, HMM will utilize five bulk carriers to transport iron ore over a decade, commencing in April 2024.

Strategic Expansion and Future Plans

As part of its strategic initiative to diversify its operations beyond container shipping, HMM aims to expand its bulk fleet to 110 vessels by 2030, totaling 12.56 million deadweight tons (dwt). This expansion is crucial for HMM as it seeks new growth avenues in the competitive shipping industry. The partnership with Vale, recognized as the world’s largest iron ore producer, is a significant step in this direction.

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The timing of this agreement is noteworthy, especially as discussions arise regarding POSCO, South Korea’s leading steel manufacturer, potentially pursuing a takeover of HMM. Strengthening ties with Vale not only enhances HMM’s operational capabilities but also positions the company favorably amid evolving market dynamics. The new contract is expected to bolster HMM’s revenue streams and solidify its presence in the bulk shipping sector, which is increasingly vital for the company’s long-term sustainability and growth.