[Murilo] Ferreira tapped to replace [Vale CEO Roger] Agnelli – by Harold Carmichael (Sudbury Star/Reuters-April 6, 2011)

The Sudbury Star, the City of Greater Sudbury’s daily newspaper. This column was published on April 6, 2011.

The new boss of Vale is no stranger to Greater Sudbury. Murilo Ferreira visited the city several times after the Companhia Vale do Rio Doce SA — now Vale — bought Inco in 2006.

In fact, Ferreira was chief executive officer of Vale Inco when he left Vale in 2008. He is returning to Brazil-based Vale, where he will replace Roger Agnelli as CEO next month. During his 2007 visit to Sudbury, Ferreira announced a $400-million investment in the company’s operations here, including work on Totten Mine.

“As I look to the future, there is again a simple word about our vision: growth,” Ferreira told more than 50 community leaders at a luncheon at Science North. “We are growing at CVRD. We are growing at CVRD Inco. And we are growing right here in Sudbury … This is an exhilarating moment for us on a number of levels.

“When CVRD bought (Inco), there was much apprehension in the community that local control would be lost under the new ownership,” Ferreira also said then.

“The minister of Northern Development and Mines (then Sudbury MP Rick Bartolucci) made it clear he expected us to invest in Sudbury. He wanted us to follow through on our commitment to growth.

“I hope it’s clear to you and all my friends here in Sudbury that we are following through.”

Rick Bertrand, president of United Steelworkers Local 6500, said Tuesday he is not sure what Ferreira’s appointment could mean for Sudbury.

“It’s a difficult question right now,” he said. “We will have to wait and see. I don’t know Murilo and I don’t know much about him.

“But, he will have time to prove himself and we will see what happens when he takes over.”

Local 6500 represents about 2,700 production and maintenance workers at Vale’s Greater Sudbury operations. The union struck Vale for almost a year in a bitter fight over pensions and benefits. The union accepted a five-year contract last July.

Shares of Brazilian mining giant seesawed yesterday as investors hoped the new chief executive could smooth over a rocky relationship with Brazil’s government even as transition worries loomed.

Preferred and common stock in Vale, the world’s largest producer of iron ore, traded in a wide range higher and lower early in the session.

On Monday, Vale named Ferreira to replace Agnelli, whose relationship with the government soured as politicians said the company does not do enough to invest in Brazil.

Vale stock has been volatile recently as rumours have flown about Agnelli’s departure and possible replacements, with some analysts worried the government is preparing to ramp up interference in the mining giant.

The Brazilian government exerts indirect influence over the company via the state development bank and state-linked pension funds, which hold stakes in Vale.

“While we expect the relationship with the government to improve, we believe it may come at a cost of a less focused strategy over time,” BTG Pactual analysts wrote to clients in a report dated Tuesday.

Ferreira takes up his new post on May 22.

He has more than 30 years experience in the mining industry. He began to work for Vale in 1998 as director of Vale do Rio Doce Alumínio -Aluvale, acting in several senior management positions until his leave in 2008, when he was chief executive officer of Vale Inco (currently Vale Canada) and executive director of Nickel and Base Metals Sales of Vale.

Ferreira now faces a delicate balancing act to satisfy the company’s investors and the politicians that pushed out Agnelli, his predecessor.

Fortunately for him, his background alone should win him points with both sides.

The 58-year-old mining veteran’s repeated clashes, when head of Vale’s Canada unit, with Agnelli will likely endear him to the government of President Dilma Rousseff, who led a campaign to oust Agnelli on charges he was doing little to help Brazil’s steelmaking and shipbuilding sectors.

Ferreira’s extensive experience at the world’s biggest iron ore producer should relieve investors who have for weeks worried that Rousseff would seek to install a politician appointee who would put social development goals above profits.

The soft-spoken business administrator established a reputation as a cost-conscious manager by quickly integrating Canadian nickel producer Inco into Vale’s overall operations after Vale bought Inco in 2006.

“He is tough and sharp -he knows what he’s doing,” said one former Vale employee who asked not to be identified.

Vale’s non-voting shares, the company’s most widely traded class of stock, have shed almost 10% since mid-January, when speculation over Agnelli’s departure mounted.

That reflects concern over the risk of “increasingly non-business related decisions being made, leading to higher costs and lower returns,” according to Fraser Phillips, an analyst with RBC Dominion Securities in Toronto.

According to sources close to Ferreira, he saw Agnelli as a leader that offered little room for internal dissent and centralized power within the company, straining ties with national politicians, regional leaders and local communities.

Ferreira reportedly opposed Agnelli’s bid to buy out rival miner Xstrata because the Swiss mining company’s mix of high quality and low quality assets made the purchase risky.

For the rest of this article, please go to the Sudbury Star website: http://www.thesudburystar.com/ArticleDisplay.aspx?e=3061646

Comments are closed.