Vale SA, the Brazilian mining company, has established a charter agreement to use transoceanic vessels which will operate mainly on ethanol. This decision supports Brazil's efforts to increase biofuel usage in its national energy system and become a leading global player at the forefront of maritime transport.
Vale announced it has finalized a 25-year deal with China's Shandong Shipping Corporation for the construction of two new-generation Guaibamax ore carriers, with an option for additional vessels. The ships which will be delivered to customers from 2029 onwards will use ethanol as their primary fuel according to the company which claims this approach will decrease carbon emissions by 90 percent when compared to standard heavy fuel oil.
The initiative is part of Vale's strategy to decarbonize its maritime transport chain. The company will achieve its goal to decrease Scope 3 emissions, which include shipping, by 15% before the year 2035. "The initiative reinforces the company's commitment to reducing its carbon emissions in the value chain and promoting decarbonization in the maritime sector," Vale said in a statement.
The 325000 ton capacity vessels will use a multi-fuel strategy which enables them to operate with methanol and traditional marine fuel oil while their design allows future conversion to liquefied natural gas LNG and ammonia.
Government Boosts Ethanol Demand
The Brazilian government plans to increase mandatory ethanol gasoline blending requirements which will occur at the same time as the industry shifts toward sustainable fuel solutions. Minister of Mines and Energy Alexandre Silveira confirmed plans to raise the mixture from 30% to 32% within the first half of 2026.
This follows a previous increase from 27% to 30% in August 2025. Market analysts report that each percentage point increase in the blend results in an additional annual demand of approximately 840 million liters of anhydrous ethanol. The latest proposed hike could therefore boost demand by nearly 1.7 billion liters.
Safras and Mercado analyst Maurício Muruci explained that this timing serves a strategic purpose because it coincides with the beginning of sugarcane harvest season which enables mills to modify their production processes. The increased demand for anhydrous ethanol tends to direct more sugarcane to ethanol production which reduces the supply of sugar and drives up prices for both products according to Muruci.
Consumers Weigh Costs at the Pump
The Brazilian streets show drivers who have different opinions about which fuel provides better economic advantages between ethanol and gasoline. While ethanol is significantly cheaper at the pump — often by R$1.50 to R$2.00 per liter — the fuel provides drivers with less efficient driving range.
The ride-sharing drivers who operate their vehicles at high mileage multiple times during the day find that using lower-priced ethanol helps them save more money. The consumers who use gasoline believe that its higher energy content makes it a better fuel choice because of their view that the price difference does not make up for ethanol's lower driving distance.
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