Vale’s new CEO must be aligned with the government, says minister

The Minister of Mines and Energy, Alexandre Silveira, declared on Friday (May 3, 2024) that Vale’s next CEO should be more aligned with the government. He said that the sooner the succession is resolved, the better the company will be able to resolve “issues with Brazil”.

According to the minister, the Executive will require that the mining company’s successor be aligned with states, municipalities and regulatory agencies to solve the environmental and social problems caused by the company. He made the statements in an interview with Bloomberg.

Silveira’s speech indicates that the president’s government Luiz Inácio Lula da Silva (PT) did not give up on having an ally in charge of the largest mining company in the country.

At the beginning of the year, Planalto tried to place the former Minister of Finance, Guido Mantega, as president of Vale, but the plan failed and the company opted to extend the term of current CEO, Eduardo Bartolomeo, until the end of 2024.

On Thursday (May 2), Vale informed the market that the triple list of candidates for the mining company’s presidency will be defined and published by September 30 of this year.

The 3 names for succession will be chosen with the support of an international standard consultancy, which will be hired by June. There has not yet been an intense move by the government to interfere in the appointment of any ally.

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The list of listed companies continues to gain new names. Walter Schalka, an experienced executive who is leaving his post as CEO of Suzano, is one of those mentioned. He has the sympathy of private investors and independent advisors.

By the government, the name of Paulo Cafarelli, former Bank of Brazil. The former president of the Cosan, Luís Henrique Guimarãeswho is currently one of Vale’s advisors.

The government Lula wants a trustworthy name for the mining company. With the speech that Vale needs to meet the wishes of the government and the country, the president, in practice, wants the company to follow the same path as Petrobras in the current PT administration: expand investments in Brazil to induce economic growth and the opening of jobs.

Lula’s vision has always been this. The PT member has always been unhappy with the government’s privatization of the company Fernando Henrique Cardoso (PSDB). The difference is that, in his first 2 terms, the current president had more means of intervening in Vale due to the participation of state-owned companies in the mining company’s shareholding composition, such as BNDES (National Bank for Economic and Social Development) and federal pension funds. .

But the scenario is different now. Vale underwent a 2nd privatization process under the government of Jair Bolsonaro (PL). The then Minister of Economy, Paulo Guedes, reduced government participation in the mining company’s shares from 26.5% to 8.6%. Vale thus became a corporationthat is, a privately controlled company, with capital diluted in the market.

That’s why Lula failed in his first attack on Vale this term, in which he tried to put former Finance Minister Guido Mantega in charge of the mining company. The government operated to establish an ally in the company, but ended up making a tactical retreat in the face of resistance from private shareholders and the negative reaction of the market.