Miner on the Move
John Snow: Laying down the law
Soaring minerals prices helped boost revenues at Companhia Vale do Rio Doce, or CVRD, by 53%, to $8.5 billion in 2004. Rio de Janeiro-based CVRD, the world’s biggest producer of iron ore, earned a record $2.6 billion last year. Amid rising demand from steel makers in China and elsewhere, CVRD is raising prices for ferrous metals by 71.5% for contracts signed this year, with exports expected to double to $10 billion.
CEO Roger Agnelli, a former banker who left Bradesco in 2000 to restructure the mining company, will plow some of its profits into expanding iron-ore production significantly. He says Brazil has the best and largest reserves of the ore in the world, enough to last for hundreds of years. Agnelli also wants to further diversify CVRD, which already produces bauxite, manganese and other minerals, makes aluminum and owns energy and transport facilities.
CVRD wants to enter into joint ventures with foreign steel companies, including China’s Baosteel, to build slab-for-export plants on Brazil’s impoverished north coast. It is trying to persuade the Brazilian government to grant tax relief that will convince the foreign partners to go ahead with the deals that could generate up to $8 billion in foreign direct investment.