The shipping industry's decarbonization transition has achieved a milestone breakthrough. Mining giant Vale, in partnership with Shandong Shipping, is building the world's first ethanol triple-fuel very large ore carriers (VLOCs). Vale announced that it has signed a contract of affreightment with Shandong Shipping Corporation for a new series of ethanol/methanol triple-fuel Guaibamax-class VLOCs. The new vessels will be built by Qingdao Beihai Shipbuilding Co., Ltd. (a subsidiary of China State Shipbuilding Corporation), with the main engine developed by China Shipbuilding Power Group Co., Ltd. Deliveries are scheduled to commence in 2029. This agreement sets an unprecedented milestone for global iron ore shipping: it marks the first time ethanol will be used as a primary fuel for ocean-going vessels. Compared to the conventional marine fuel oil commonly used in the shipping industry, the use of ethanol is expected to reduce greenhouse gas emissions by approximately 90%. This move reinforces Vale's commitment to reducing carbon emissions across its entire value chain and promoting maritime decarbonization, aligning with ongoing discussions at the International Maritime Organization (IMO). The 25-year contract of affreightment involves the construction of two new second-generation Guaibamax-class vessels, with options to build additional ships. The second-generation Guaibamax-class vessels measure 340 meters in length and have a deadweight capacity of 325,000 tons. Adopting this vessel type is part of Vale's multi-fuel strategy. These ships can use ethanol, methanol, or marine fuel oil as fuel, and their design also allows for future retrofitting to use liquefied natural gas (LNG) or ammonia as fuel. In addition to the triple-fuel design, the vessels will be equipped, like Vale's previously ordered second-generation dual-fuel Guaibamax-class VLOCs, with five rotor sails to harness wind energy and reduce fuel consumption. They will also feature several energy-efficiency improvements, including more efficient main engines, hydrodynamic energy-saving devices, shaft generators, variable frequency inverters, and advanced silicone coatings. These measures are expected to reduce greenhouse gas emissions by approximately 15% compared to the current first-generation Guaibamax-class vessels. According to earlier foreign media reports, Shandong Shipping's ethanol/methanol triple-fuel VLOC project could eventually reach up to 10 vessels, with the first two expected to be built. At the end of March, during the 2026 Qingdao International Shipping Week – Green and Intelligent Shipping High-Quality Development Forum hosted by Shandong Shipping, the company had just signed a project cooperation letter of intent with Minsheng Financial Leasing, China Shipbuilding Power, and Beihai Shipbuilding for 325,000-ton ethanol/methanol triple-fuel ore carriers. In February of this year, it was reported that Vale would tender for a new series of triple-fuel ore carriers. At that time, reports indicated that Vale's 30-vessel plan included ten 325,000 DWT VLOCs and twenty 210,000 DWT Newcastlemax bulk carriers, capable of using high-sulfur fuel oil, ethanol, or methanol as fuel. The estimated price for a triple-fuel 325,000 DWT VLOC was approximately $130 million (about RMB 895 million). The latest contract further solidifies the long-term cooperation between Vale and Shandong Shipping. In 2025, Vale signed several 25-year contracts of affreightment with Shandong Shipping for a total of ten new methanol dual-fuel Guaibamax-class VLOCs, scheduled for delivery starting in 2027. These ten methanol dual-fuel VLOCs are also being built by Beihai Shipbuilding. Beihai Shipbuilding is currently the single shipyard with the largest VLOC order book globally. Excluding the latest triple-fuel VLOC orders, data from Clarksons shows there are currently 32 VLOCs on order worldwide, including 18 at Beihai Shipbuilding, six at CMCS Qingdao Shipyard, and eight at Hengli Heavy Industry. Beihai Shipbuilding currently holds an order book of 87 vessels totaling 20.68 million deadweight tons, including 61 bulk carriers, 18 VLOCs, and eight tankers, with delivery schedules extending to 2030.
Commenting on the latest contract, Rodrigo Bermelho, Vale's Director of Shipping, stated: "Vale's pioneering efforts in shipping decarbonization follow a strategy that combines flexibility and efficiency. Using ethanol as fuel for vessels transporting our ore, along with rotor sails to harness wind energy, will position Vale uniquely in the global shipping industry's energy transition over the coming decades, while also promoting the implementation of similar initiatives within the sector."
From a full fuel lifecycle perspective (from well to final product), ethanol (using second-generation ethanol as an example) can reduce carbon emissions by approximately 90% compared to marine fuel oil.
In addition to iron ore maritime transport, Vale is also trialing ethanol in other logistics segments, including trucks within several mining sites and locomotives on the Vitória-Minas Railway (EFVM). These technologies and alternative fuels currently being tested are part of the "Ecoshipping" program. "Ecoshipping" is a research and development initiative launched by Vale to support maritime decarbonization and improve the efficiency of the company's chartered fleet. This fleet currently includes first- and second-generation 400,000-ton Valemax vessels, as well as first-generation 325,000-ton Guaibamax VLOCs, all of which rank among the world's most energy-efficient ships, capable of reducing greenhouse gas emissions by up to 41% compared to a standard 180,000-ton Capesize vessel built in 2011.
It is understood that Vale has set ambitious emission reduction targets, aiming to reduce Scope 1 and Scope 2 emissions by 33% by 2030, and to reduce Scope 3 emissions generated across its value chain by 15% by 2035. Considering that Vale itself does not own vessels, emissions generated from shipping fall under Scope 3 emissions. Since 2020, Vale has invested approximately $1.4 billion in reducing Scope 1, Scope 2, and Scope 3 emissions.
China is a crucial market for Vale. Since entering the Chinese market in 1973, Vale has had over 52 years of cooperation with China. Over the past two decades, China has been Vale's most important market, receiving more than 50% of the iron ore it produces.
