Author: Gordon Platt

COMPANY TO WATCH: VALE/BRAZIL

By Gordon Platt

Rio de Janeiro–based mining company Vale, the world’s largest producer of iron ore, is profiting from growing demand for steel as the global economy recovers.The company’s earnings rose 222% last year to a record $17.3 billion.

The company gets a new chief executive this month, when Murilo Ferreira, an industry veteran who spent 10 years at Vale, succeeds Roger Agnelli at the end of his mandate. In March, the Brazilian government filed a court action against Vale, charging that the company has been underpaying mining royalties. Ferreira has amicable relations with the government, which owns 53.5% of Vale. He worked with Brazil’s new president, Dilma Rousseff, when she served as mines and energy minister.

Last December, Vale listed its depositary receipts on the Stock Exchange of Hong Kong, moving closer to Chinese investors and enabling around-the-clock trading of its shares. Vale gets more than half of its sales from Asia, led by China and Japan.

Vale plans to invest $10 billion over five years in Canada to upgrade its mining and processing facilities. It acquired Inco, Canada’s second largest mining company, in 2006 for $18.9 billion. Vale’s nickel-mining and global base metals business is based in Toronto. The Brazilian company’s fertilizer business is evaluating a $3 billion potash development in Saskatchewan. Brazil is the world’s fourth largest consumer of fertilizers.

Vale recently began its first mining operations in Chile, with the inauguration of the Tres Valles copper project. It is also seeking new copper reserves in Congo and Zambia.