Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.
Rumours are swirling this week that Vale SA CEO Roger Agnelli is being forced out of his job. Evidently the Brazilian government seeks greater control over the company saying Agnelli has not aligned the company with “national interests” despite record profits.
Ordinarily, putting a government agenda ahead of good corporate management would herald a sharp downturn in a company’s share value. Anything that hints of government interference – be it nationalization, government resource ownership or excessive taxes and royalties – usually scares off investors very quickly. Vale will be lucky to avoid this sort of disaster.
Vale’s public image in Canada has been deeply tarnished by a pair of strikes – one lasting a year in Sudbury and the other lasting 14 months in Labrador. Despite promising to spend $10 billion over five at its Canadian operations, the company is still viewed with distrust by many people.
Adding greater Brazilian government influence over the company will do nothing to endear Vale to residents of Sudbury or anywhere else in Canada.
The best outcome to the current shake-up would be for someone already on the executive to take over the helm at Vale. There is speculation that that Agnelli’s replacement would be either Tito Botelho Martins, base metals executive director and head of the company’s Canadian operations, or Jose Carlos Martins, executive director of markets, sales and strategy.
The worst outcome would be for the Brazilian government to force one of its bureaucrats into the CEO’s office at Vale. That thought should send a shudder down every reader’s spine.
Our biggest hope is that the situation is quickly resolved, and Vale comes under the leadership of someone who knows and is sympathetic to its Canadian operations.