Brazilian firm Vale says it may build its own iron ore distribution hub in China to lower freight costs and increase its distribution channels in the region.

Earlier, Vale had signed a cooperation agreement with Dalian Port for the distribution of five million to ten million tonnes of iron ore per annum up to the end of 2020.

China’s Qingdao port is being considered as the most suitable site for construction of the hub.

Qingdao Port Group vice-president Tian Guangwen said the company will invest $439.35m developing the terminals in the Dongjiakou Port Area.

The first iron ore terminal to be developed will be a 400,000t terminal for Vale’s iron ore carriers, which will be complete by the end of next year.

Vale plans to develop 16 iron ore carriers of 400,000t before 2012.

The combined carrying capacity of the new ships annually will be 25.6 million tonnes of iron ore.

In Dongjiakou Port Area, Qingdao Port will build five 100,000t, two 200,000t and four 400,000t terminals for loading and unloading iron ore, coal, crude oil and bulk cargo.