México

Guyana

Trinidad
& Tobago




Very usefull links



PW
Bookstore





News links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

Brazil government pressure seen forcing Vale executive change


 

By Diana Kinch and Guiherme Baida / Platts

LONDON
Petroleumworld 03 05 2019

Executive changes at Brazil's Vale, announced over Brazil's Carnival weekend as a result of the January 25 fatal Feijao dam burst, may delay strategic decision-making at the mining company, and appear to reinforce Brazilian government authorities' power over its decisions, according to sources close to the company.

"Both Vale, and federal and state government authorities, pressured by the dimension of the tragedy, have taken erroneous decisions that it will now be difficult to revert," said one source close to the company, referring to both the executive changes and the production changes that have been introduced following the disaster, which has claimed at least 186 lives and left up to 122 people missing. Some 70 million mt/year of iron ore has been temporarily removed from the market.

"The executive changes were a way to lessen the arguments with Brazil's attorney general," said a second source close to the miner.

Vale announced late Saturday the temporary resignation of Fabio Schvartsman, its CEO, and three of its key executives, after a recommendation for their dismissal issued by Brazil's Federal Public Prosecution Office, the Public Prosecution Office of the State of Minas Gerais, the Federal Police and the Civil Police of Minas Gerais.

The three departmental executives who have thus tendered their temporary resignations are: Gerd Peter Poppinga (executive director of Ferrous and Coal), Lucio Flavio Gallon Cavalli (head of planning and development of Ferrous and Coal) and Silmar Magalhaes Silva (head of operations of the Southeast Corridor),

Vale said in the statement that the requests for temporary removal from office were immediately accepted by the company's board of directors.

Eduardo de Salles Bartolomeo (currently executive director of Base Metals) is appointed interim CEO. Claudio de Oliveira, current head of Pellet and Manganese, as executive director of Ferrous and Coal; and Mark Travers, current head of Legal, Institutional Relations and Sustainability of Base Metals, will hold the interim position of executive director of Base Metals.

Vale issued a statement Monday attempting to reassure markets of the qualifications of Bartolomeo, who has been with Vale ten years, including in the logistics area. Brazil's Bovespa stock exchange was closed Monday due to the Carnival holiday and Vale's ADRs were relatively stable in New York Monday afternoon.

Bartolomeo's appointment "is in line with Vale's temporary succession plan previously discussed with the company's administrative board," Vale said. "The choice is in line with the aim to bring a senior executive to guarantee stability at Vale's operations and ensure continuity in the processes of compensation, repair and mitigation of the impacts of the No. 1 dam at Corrego do Feijao dam."

However, Bartolomeo's "agenda will be short term and it will be difficult for him to have the opportunity to look at strategic issues," one observer said.

LUKEWARM MARKET REACTION

The news received a lukewarm reaction from the market. "We see this as a mixed development; Mr. Schvartsman is seen as the main driver of Vale's turnaround transformation and is liked by investors, but the Brumadinho tragedy did occur "on his watch" and some action was expected to be taken during the investigations," BMO analyst Edward Sterck said in a note Monday.

"Pressure from Brazilian prosecutors increased after several media outlets reported that documents emerged suggesting that some managers knew about risks of rupture and warned executives, which Vale strongly denies," Sterck said.

Credit Suisse Sao Paulo-based analysts Caio Ribeiro, Renan Criscio and Rafael Cunha said in a note they "believe shares could still be somewhat pressured" by the announcement "as Mr. Schvartsman was seen with very positive lenses by the market. Since his appointment in May 2017, he was regarded as an instrumental figure behind Vale's corporate governance transition to Novo Mercado, divestment and deleveraging strategy (Vale already below 1x ND/EBITDA), cost-cutting focus, capex discipline and "value over volume" speech which generated positive externalities on iron ore markets imposing more rationality and as a consequence less volatility for iron ore prices."

However, the Credit Suisse analysts believe that operational impacts of the changes should be muted and that Vale should continue employing a very similar strategy as in the recent past. "We believe its priorities will for the time being remain directed towards addressing the crisis at hand while attempting to offset any type of volumes loss with spare capacity. We continue to expect a 38 million mt iron ore shipment loss for 2019, but highlight that higher iron ore prices should more than offset this impact."

Vale said that its board of directors is ready to seek a transparent and productive relationship with the Brazilian authorities in order to clarify the facts and properly remediate the damages.


________________________


We invite you to join us as a sponsor.
Circulated Videos, Articles, Opinions and Reports which carry your name and brand are used to target Entrepreneurs through our site, promoting your organization’s services. The opportunity is to insert in our stories pages short attention-grabbing videos, or to publish your own feature stories.

 

________________________

 

Story by Diana Kinch and Guiherme Baida from Platts / SPGlobal.

- newsdesk@spglobal.com

spglobal.com
02 28
2019

Hit your target - Advertise with us

PW 300.000 plus request per week

Copyright© 1999-2019 Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ (PW) stories by anyone provided it mentions Petroleumworld.com as the source.

Other stories you have to get authorization by its authors. Internet web links to http://www.petroleumworld.com are appreciated.

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.

 

Write to editor@petroleumworld.com

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to: editor@petroleumworld.com

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1


 

TOP

Contact: editor@petroleumworld.com,

Editor & Publisher: Elio Ohep/
Contact Email: editor@petroleumworld.com

CopyRight © 1999-2019, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2019, Petroleumworld   / Elio Ohep - All rights reserved

 

 

This site is a public free site and it 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 business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. 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, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.