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im23SINGAPORE: China's second largest port will need at least two years to expand its waterways to accommodate Vale's huge iron ore ships, a port executive said on Tuesday, posing further delays for the miner should Beijing lift a ban on the vessels.

China is the world's biggest buyer of iron ore and Vale's top customer. Chinese shipowners convinced Beijing to block in January the so-called Valemaxes due to concerns over safety and the ships' potential impact on loss-making local maritime firms.

The ban has forced Vale, the world's biggest iron ore miner, to take a more costly route to deliver its exports via a trans-shipment hub in the Philippines.

A senior Vale executive told Reuters in March he expected China would allow the Valemaxes, each capable of carrying 400,000-deadweight tonnes of iron ore, to dock within months and in May, the transport ministry gave permission to the eastern Ningbo-Zoushan port to build berths big enough for Vale's ships.

The transport ministry's decision, however, is not final and before the port starts building the berths, it needs the approval of the local government and the government's National Development and Reform Commission, Wu Jinkun, president of Ningbo Port Company Limited, told Reuters.

If the project gains all the necessary permits, the berths would take several years to build, Wu added.

"Of course, we hope that we can be the first port (to accept Valemaxes) but building will take at least two to three years. It's still early," he told Reuters on the sidelines of an industry conference.

"To build a 400,000-tonne berth, we have some problems for instance the water depth of the navigation route."

The first and only Valemax allowed into China, the 380,000-deadweight tonne Berge Everest, docked at Dalian port in December last year, before the official ban.

Vale wants to manage a fleet of 35 Valemaxes to slash shipping costs to China to help it compete with Australian rivals BHP Billiton and Rio Tinto .

"In the long term, China should allow the Valemaxes. But this is dependent on market demand," Wu said.

Copyright Reuters, 2012

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