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Raul Gallegos : Ousted Vale CEO
returns unshackled by the state

 

 

The ousted chief executive of Vale ( VALE5.SA )( VALE.N ) is back on the scene. Roger Agnelli was deposed from the Brazilian mining giant last year after resisting President Dilma Rousseff's meddling. Partnered with billionaire banker André Esteves, he is returning to invest in iron ore and metals. It's a chance to show he can outperform Brasilia.

During his decade-long tenure running Vale, Agnelli helped create a Brazilian champion that became the world's second largest miner. His brash style, however, and a decision to spend billions to acquire overseas assets unsettled domestic politicians. And his move to cut 1,300 workers from the Vale payroll in late 2008 didn't sit well with the country's unionized workers either. When Agnelli decided to buy ships from Asian builders instead of local ones, Rousseff showed him the door.

Since his departure, things haven't gone well for most miners, including Vale. They have suffered for Asia's diminishing appetite for commodities and minerals. Vale's shares have lost more than 30 percent of their value since April 2011, when Agnelli left. But the billions he spent to extend Vale beyond its core business, including on nickel mining, haven't helped insulate the company either. Nearly 95 percent of Vale's EBITDA still comes from iron ore.

The timing must look right to Agnelli for another industry turnaround. He and Esteves, through his fast-growing investment bank BTG Pactual ( BBTG11.SA ), have built a $520 million war chest to acquire mining assets. And unencumbered by state shackles, Agnelli is already going head-to-head with his former employer. His AGN Participações bought 20 percent of Rio Verde, a small outfit that also mines potash and phosphate, a fertilizer business that Brazil once pushed Vale to build up.

Agnelli's legacy at Vale is still unclear. But with his privately backed vehicle, he now has the chance to show whether politics was truly encumbering success.

CONTEXT NEWS

- Roger Agnelli, the former chief executive of Brazilian mining giant Vale, and BTG Pactual's André Esteves have teamed up to create B&A Mineração, a $520 million mining venture to acquire iron ore and metal-sector assets. BTG Pactual and Agnelli's AGN Participações will each own half of Sao Paulo-based B&A.

- Agnelli was forced out of Vale last year under pressure from the Brazilian government.

- Reuters: BTG's Esteves, Agnelli team up on new Brazil miner [ ID:nL2E8IC2PI]


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Raul Gallegos is the Latin America financial columnist for Reuters Breakingviews. Raul has more than a decade of experience covering the region's business, finance and economics. His work has appeared in the Wall Street Journal, the LA Times and Institutional Investor. From 2004 through 2009, Raul was the Venezuela-based oil correspondent for Dow Jones Newswires, and a member of the OPEC coverage team in Vienna. He holds a bachelor's degree in economics from the University of California at Berkeley and a master's degree in International Affairs from Columbia University. He was a 2010 Knight-Bagehot Fellow at the Columbia Business School (raul.gallegos@thomsonreuters.com). Petroleumworld does not necessarily share these views.

Editor's Note: This commentary was originally published by Reuters Breaking Views Blog , on July 13, 2012 . Petroleumworld reprint this article in the interest of our readers.

All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.

Use Notice:This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.

All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.

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Petroleumworld News 07/17/2012

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