China Merchants Energy Shipping has signed a 25-year iron ore transport contract worth no less than $2.8bn, securing a major share of tonnage on the emerging Simandou trade from Guinea to China.

Shanghai-listed CMES said its dry bulk arm, Hong Kong Ming Wah, signed the long-term transportation agreement with a customer covering six very large ore carriers. The total contract value over the 25-year period will be at least $2.8bn.

The company did not name the counterparty in the latest announcement. But when CMES first outlined the proposed deal in July, it identified China Mineral Resources Group International Supply Chain as the intended signatory — the entity that holds shipping rights for Simandou ore.

What do we know about the deal structure?

The July proposal framed the arrangement as a 25-year contract of affreightment, with freight linked to a relevant Baltic Exchange route index plus a cost-adjustment mechanism. At that stage the deal still awaited board approval and had not been formally signed.

Hong Kong Ming Wah was not waiting on paper to move cargo. By July, the fleet had already shipped around 600,000 tonnes connected with the Guinean iron ore project.

How does the contract fit CMES's fleet plans?

The signing aligns with China Merchants' push into new VLOC tonnage. In July, CMES ordered six 343,000 dwt ore carriers for up to RMB4.93bn ($728m) at a yard controlled by sister company China Merchants Shipbuilding Industry, with deliveries spread across 2029 and 2030.

The ships were earmarked from the outset for long-term commodity contracts, and the newly signed transport agreement provides exactly that kind of revenue visibility.

The order also marked a milestone: CMES's first move into fresh VLOC tonnage in more than a decade, following the 10 Valemaxes it contracted in 2015.

What does this mean for the capesize market?

Simandou is designed to produce as much as 120m tonnes of high-grade iron ore annually once fully ramped up. That volume would make it one of the world's largest iron ore supply additions, and it will be shipped overwhelmingly on dedicated Chinese-controlled VLOC capacity.

For capesize owners, the commercial consequence is a smaller prize than the headline tonnage suggests. Dedicated tonnage on the Guinea–China lane reduces the amount of new cargo likely to spill into the conventional capesize spot market, limiting the upside Simandou volumes might otherwise have delivered to spot rates.

For CMES and its shareholders, the deal converts a strategic newbuilding bet into contracted income: six VLOCs built for up to $728m, backed by a minimum $2.8bn revenue stream over 25 years.

Chinese-controlled VLOC capacity is already becoming a defining feature of the Guinea–China trade, and with CMES's newbuilds arriving in 2029 and 2030 as Simandou ramps toward its 120m-tonne annual target, expect more long-term VLOC fixtures to follow as dedicated tonnage consolidates control of the lane.