Vale CEO seeks major reorganization of executive board
Fears over the direction of Vale, the world’s biggest miner of iron ore by volume, renewed this morning as the company’s CEO Murilo Ferreira announced late on Monday night that he will submit to the Board of Directors a proposal for a new structure of the Executive Board. According to a press release from the company, this restructuring aims to establish an operational model with clearly defined roles and responsibilities for each business unit.
Investors have been particularly cautious of management changes at the miner since Brazil’s government helped push out Roger Agnelli, Vale’s former chief executive, at the end of his mandate in May.
Despite privatizing the company over a decade ago, the government has recently sought to align Vale more closely with national interests by encouraging the miner to develop Brazil’s steel and shipbuilding industries.
Although the replacement of Agnelli by Ferreira came as a relief to many, at least six senior managers left the company after the appointment, putting further pressure on the shares.
In the latest reshuffle, Vale said it would remove from its executive board the current director for finance and investor relations, Guilherme Calvalcanti, the head of fertilizers, Mario Barbosa and the director of exploration, energy and projects, Eduardo Ledsham. However, it declined to comment about whether the men would remain at the company in different roles.
Vale also said it would ditch some executive positions and share out the responsibility for planning, new business development, operations, marketing and sales.
“This model will help us reach our growth goals and consolidate our business, with the aim of further strengthening the company,” Ferreira said.
Despite the drastic management overhaul, the promotion to CFO of Tito Martins, a company veteran and previously the favourite for Agnelli’s job, is likely to calm investors’ nerves, analysts said.
Analysts say that Martins is well-regarded by investors and has clocked nearly three decades at the firm. He took a tough stance as head of Vale's nickel subsidiary inCanadain 2009 over benefits for unionized workers that led to a worker strike lasting for nearly a year and a half.
Last month Vale reported an 18 percent drop in its third-quarter profit from the previous year after a tumble inBrazil's currency cost it $2.8 billion between losses on derivatives and a resulting increase in its foreign debt.
The revamp would do away with some existing executive roles at Vale and share responsibility among all of the executive board for planning, new business development, operations, marketing and sales, according to Vale's statement.
Yesterday, the company said its board had approved a $6bn expansion of its Moatize coal project inMozambique. The investment is expected to boost the plant’s production to 22m tonnes a year as the company looks to Africa for fresh resources, Reuters reports.
(Murilo Ferreira's photo by Eduardo Monteiro/Exame)