UPDATE 1-Vale's designs on China add to Rio, BHP drive for more iron ore
* Vale fight back putting pressure on Rio, BHP
* Battle underway for larger share of China market
* Brazilian miner boosts ties with China, cuts costs (Adds Rio Tinto Q2 iron ore production data, iron ore price)
By James Regan
SYDNEY, July 16 (Reuters) - As Rio Tinto and BHP Billiton ship more iron ore than ever to China, the Australia mining giants face a fightback from Brazil's Vale for market share that threatens to drive already weak prices even lower.
The Australian companies are set to report bumper iron ore production, with Rio Tinto on Thursday unveiling a 9 percent rise in second quarter output. BHP is also expected to post a solid production gain on July 22, as the miners race to keep up exports to boost profits, with lower prices eating into margins.
They now face stiffer competition from Vale, which is also working its mines harder, after the world's biggest producer won approval for its giant Valemax ships to unload in China, cutting down on freight costs.
With a capacity of 400,000 tonnes each, the 34 Valemaxes are the world's biggest bulk carriers and twice the size of vessels used by Rio and BHP, but a ban on entering Chinese ports had severely curbed the cost efficiencies of the larger ships.
"BHP and Rio have been looking to raise volumes in this environment to maximise every tonne," said Morgans Financial analyst James Wilson. Continuación...