Brazil's Vale assures investors of clean CEO selection process

Brazilian mining titan Vale has denied that its ongoing CEO selection process was affected by political interference.

In a statement, chairman Daniel Stieler said the process “strictly follows the rules of governance,” as he has “complete confidence in the board's ability to make the best decision, in accordance with Vale’s bylaws, internal regulations…, the company's corporate policies and applicable legislation.”

The statement was released in response to local press reporting fresh allegations of government meddling. Such allegations first emerged earlier this year, after the firm revealed the schedule for the process to replace CEO Eduardo Bartolomeo. According to the schedule, the next CEO will be named on December 3.

In May, Vale, one of the world’s largest iron ore producers, hired headhunter firm Russell Reynolds Associates to lead the process.

Local media reported that the administration of President Luiz Inácio Lula da Silva was influencing the process in order to find a CEO with a different profile, as Bartolomeo was too focused on short-term financial results, rather than large projects.

The government’s lever is Previ, the pension fund of federal lender Banco do Brasil, which owns 8.76% of the company, while Mitsui holds 6.31%, BlackRock 6.37% and local conglomerate Cosan around 5%. Vale does not have a single controlling shareholder.

Privatized in 1997, Vale has always attracted the attention of political leaders due to its substantial cash generation. Governments are trying to direct the company’s investments toward projects, creating tensions with other shareholders, who push for a more conservative management approach and the distribution of dividends.

"There are always attempts to put pressure on Vale, but I would say that at this moment, in one way or another, interests are aligned. Vale needs to invest in new projects because its production is stagnant, due to the absence of new projects and at some point this will affect the company's dividend distribution," José Carlos Martins, managing partner at Neelix Consulting Mining & Metals, told BNamericas.

Apolo

Earlier this year, Vale completed a public hearing regarding the licensing process of the Apolo iron ore project in Minas Gerais state, with the license expected for next year, after which the project will advance. 

As part of the licensing, the project area was reduced and processes optimized in relation to the original 2009 plans, eliminating the need for tailings dams.

The revised project involves a mine, a waste dump, a waste treatment plant and an 8km rail branch that will connect to the Vitória a Minas line to transport production to Tubarão port in Vitória, Espírito Santo state.

The projections for Apolo’s output is around 14Mt/y of sinter feed at natural humidity, without the use of water in the processing of iron ore. The dry treatment does not generate tailings and reduces the need for water by 95%.

Bamin

Meanwhile, Vale is evaluating the acquisition of iron ore miner Bahia Mineração (Bamin), currently controlled by Kazakhstan's Eurasian Resources Group. A decision will be made only after the next CEO has been selected, a source close to the situation told BNamericas on condition of anonymity.

In 2022, Bamin announced a 20 billion-real (US$3.6bn) investment in the Pedra de Ferro iron ore mine in Bahia state, along with the logistics network to support its operations, including the Fiol railway and Porto Sul port.

Pedra de Ferro has capacity to produce 1Mt/y, planned to increase to 26Mt/y in the coming years. Meanwhile, construction of the Fiol section is 60% complete.