Sideabr Widget Area
Sidebr widget area is empty
To edit this sidebar:
Go to admin Appearance -> Widgets and place widgets into "sidebar" Widget Area
Brazil’s Vale names new CEO under government pressure
Posted on April 8, 2011
By Brian Ellsworth and Denise Luna
RIO DE JANEIRO (Reuters) – Brazilian mining giant Vale (VALE5.SA) named a new chief executive under withering government pressure, a move that may spark fears of state meddling in Brazil’s private sector but is not expected to dent investor confidence in the firm.
Former Vale executive Murilo Ferreira, who returns to the company as CEO on May 22, will have to placate politicians’ desires for more investment in steel mills while providing the massive returns delivered by outgoing CEO Roger Agnelli during his ten years in office.
Agnelli, who helped turn Vale into the world’s largest iron ore miner, will leave the post after years of criticism by political leaders that he was not doing enough to spur Brazil’s economic development.
“Murilo Ferreira was indicated by the controlling shareholders from a list of three prepared by an international executive search firm,” Vale said in a statement.
Vale’s board will still have to approve the appointment, the company said.
Ferreira, 58, joined Vale in 1998 in its aluminum division and later went on to lead the Canadian nickel operations that the company bought in 2006.
He left the company in 2008, Vale said, adding he has been working in the mining business for 30 years.
The designation of an experienced hand rather than a politician with a heavy social agenda will likely be seen as good news by shareholders.
Investors are keen on Vale’s extensive iron and nickel assets, low operating costs, and strong presence in China.
“A choice that is more entrepreneurial and less political should be well received by the markets,” said Danny Rappaport, who oversees about $120 million for Investport in Sao Paulo.
The move by President Dilma Rousseff to push for Agnelli’s ouster has raised concerns of increased government involvement in Brazil’s private sector.
The campaign to replace Agnelli also sparked protests by opposition politicians and a torrent of Twitter messages excoriating the move as a veiled state takeover.
“Interference by the government could mar the image of the country as a promising place for investment,” said Brazil’s mining association Ibram in a statement posted on its website before the announcement.
GOVERNMENT TIES
Agnelli, 51, a former investment banker with Vale shareholder Banco Bradesco (BBDC4.SA), instilled a culture of meritocracy that turned Vale into Brazil’s No. 1 exporter.