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The relationship between Brazilian Mining Veil and the government is boosting groups that rely on public institutions for key licenses, according to the head of one of the world’s top iron ore producers.
In comments that helped resolve the nerves of some investors, CEO Gustavo Piman highlighted the easing tensions with President Luis Inacio Lula da Silva’s management.
Leftwinger repeatedly criticized the $42 billion group last year for issues ranging from investment levels and asset sales to executive pay and environmental accidents.
“There was a recognition that there was a challenge in relation to the veil, not just the government, but also the company’s various stakeholders,” said the Financial Times, located at a mining site in Rio de Janeiro.
“I have devoted a lot of time to this institutional theme. I always say we have more convergence points than divergence, and we were able to show this,” he said.
Pimenta was in charge in October and was Chief Financial Officer.
In addition to the president’s swiping at the veil, the Lula government was also accused of a series of CEO interference – Brasilia claims it had denied.
The incident rattles off investors who feared political interference with the group.
The Veil was privatized in 1997 and officially has limited direct impact on Brazilian businesses, but it holds golden shares that grant veto certain decisions, such as name changes and head office locations.
However, the company relies on public institutions in Latin America’s largest economy, relying on critical environmental permits and infrastructure concessions.
The reset between the company and the government was on display when Lula took a photo with Piman last month. When the five-year, five-year investment of R$700 billion (US$12.2 billion) was announced, Vale’s Carajás Complex, home to the world’s largest open-pit iron ore mine in the state of Para, Amazon, was announced.
The CEO also highlighted Vale’s big bet on copper, planning to double production to 700,000 tonnes a year over the next decade. It aims to obtain greater exposure to major minerals with clean energy transitions on wiring and motors.
“Thesis is a constant electrification of the world and reduces carbon footprint. This pathway is incredibly advantageous for copper because there is no direct alternative,” Piman said. “Our vision is to have a resilient product portfolio in a decarbonized future.”
Pimenta said the group listed in New York and Sao Paulo believes copper is more attractive than lithium. This is also important for green energy switches. Lithium-ion batteries are used in electric vehicles and mobile phones.
“We’ve seen lithium, but we’re not sure about the long-term basis compared to copper, for example. In our view, supply is not very limited,” he added.
Over the past two years, lithium prices have collapsed amid concerns over China’s demand, with weak EV sales over the past two years.
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Meanwhile, expectations for a future copper shortage have sparked competition for assets producing red metal, highlighted last year’s Anglo-American’s £39 billion acquisition.
The largest copper miners produce about 1 million to 2 mn tonnes a year, but Pimenta said the Veil target “gets us back into the game.”
Although the investment figures have not been disclosed, the majority of the project will be in Brazil, and Vale said by 2030 it could increase copper production by almost 40% in the Kalajas region alone.
Shortly after Piman’s promotion, Bale and BHP confirmed a $132 billion settlement with Brazilian authorities in the 2015 Mariana disaster.
The collapse of a mining waste dam at an iron ore venture jointly owned by the two companies killed 19 people and caused extensive environmental damage. Another civil trial in London regarding the accident is taking place.
