São Paulo – Popular protest in some Arab countries should not affect the business of Brazilian mining company Vale. According to the Marketing, Sale and Strategy executive at the company, José Carlos Martins, business in the Middle East represents just 3% of the company’s sales. In a press conference, the executive stated that Vale only sells iron pellets and that the volume is small as against the total volume sold by the company.
"We have a large client in Egypt who is operating normally and a large client in Libya whose business is paralysed," he said, adding, however, that the volume going to both countries is not even 1% of the total. He admitted, however, that regarding commodity prices, recent happenings in the region have an important impact. The executive mentioned the price of oil, but pointed out that he does not believe that, in the economic point of view, the crisis will have great repercussion in Vale business.
The company recently started testing its pelletizing unit in Oman, an Arab country in the Middle East which is not living instability. Vale listed the operation among projects delivered last year and said that the plant should have production of 9 million tonnes a year. This and another five projects collaborated to the company’s good performance in 2010, to its record production of iron ore and also to the greatest net profit of a mining company.
Production of the company’s iron ore was 308 million tonnes last year, with growth of 29.4% over 2009. In pellets, sales reached 49 million tonnes, growth of 105.4%. The company’s revenues reached US$ 45.2 billion, 21% over the previous record, for 2008, and Vale’s profit was US$ 17 billion, 30.6% over the previous record, for 2008: US$ 13.2 billion.
Vale informed, at the press conference, that it aims to double its market value by 2015, by which time 33 new great projects will have been delivered. "On delivering these projects we will be doubling the company’s value," said the Investor Relations executive director, Guilherme Cavalcanti. He added that despite the company living its best moment up to now, the best is yet to come. The company believes that, apart from iron ore, whose prices should remain high, the projects entering operation last year will also have a greater impact on the company’s performance in 2011.
The good performance expected by Vale is based on observations of a globally expansionist monetary policy, on greater consumption in emerging markets and the United States, on greater company investment, on recovery of developed countries and on industrial growth.
Martins said that a Vale, which is already 85% turned to the foreign market, will be even more turned to the foreign market. One of the reasons is that local smelters have their own mines or are developing them. Vale, therefore, is investing in smelters to have participation in the domestic market. Even the ore sold in the country, for example, to Samarco, with which the company has a joint venture, ends up being sold abroad after having been made into pellets.
*Translated by Mark Ament
