Vale Elects New CEO, Bids $1.125B for Metorex

Murilo Pinto de Oliveira Ferreira, pictured here, will
succeed Roger Agnelli as CEO of Vale.
Vale reported on April 4 that Murilo Pinto de Oliveira Ferreira had been nominated to succeed Roger Agnelli as Vale's CEO. Murilo Ferreira joined Vale in 1998 when he became director of Vale do Rio Doce Alumínio and subsequently held several other senior management positions before he left the company in 2008, at which time he was CEO of Vale Inco. Agnelli had been CEO of Vale since July 2001. Under his leadership, the company emerged as a global mining powerhouse, most notably through its purchase of Inco Ltd. in January 2007. According to Bloomberg Business Week, Vale's market value had risen more than tenfold to $172 billion during Agnelli's years as CEO, compared to a sevenfold rise for BHP Billiton and a fourfold rise for Rio Tinto during the same period. Vale's 2010 net earnings rose 227% to $17.3 billion, and its operating revenues nearly doubled to $46.5 billion from $23.9 billion in 2009.

Despite this success, Agnelli's departure was preceded by rumors over a period of months that leadership in Brazil's government wanted to see him go because of a perceived lack of sufficient internal investment by Vale in Brazil, especially in its steel and fertilizer industries. About 64% of Vale's 2011 $24-billion capital spending budget will be for projects located in Brazil.

On April 8, shortly after the announcement of Agnelli's impending departure, Vale announced it had agreed to terms for an offer to acquire South Africa-based Metorex Ltd. in a transaction valued at $1.125 billion. Metorex has two operating mines, Chibuluma located in Zambia, in which it holds an 85% interest, and Ruashi in the DRC, in which it holds a 75% interest. Chibuluma has an estimated capacity of 18,600 mt/y of copper contained in concentrates and proven and probable reserves of 3.5 million mt grading 3.8% copper. Ruashi operates a mine and SX-EW plant that have an estimated capacity of 36,000 mt/y of copper cathodes and 4,500 mt/y of cobalt, based on proven and probable reserves of 22.2 million mt, grading 2.4% copper. Metorex also has three projects in the DRC, one in the development phase and two in the exploration phase.

In 2010, Metorex produced 51,569 mt of copper and 3,622 metric mt of cobalt.

The Vale statement said, "The proposed acquisition is consistent with our goal to become one of the largest copper producers in the world. Moreover, the majority of Metorex assets are located near two of our central African copper projects, Konkola North under development in Zambia and Kalumines under feasibility study in the DRC, which will enable Vale to exploit synergies."

The Konkola North and Kalumines projects are part of Vale's joint venture with South Africa-based African Rainbow Minerals.

As featured in Womp 2011 Vol 04 -