Alexandre Rocha
São Paulo -Companhia Vale do Rio Doce (CVRD), the second largest exporter in Brazil, losing only to oil giant Petrobras, had foreign trade revenue of US$ 2.033 billion last year. Part of the company production went to Bahrain, where the mining company has 50% of control of a factory that produces iron pellets, and raw material for steelworks in the region.
The plant, called Gulf Industrial Investment Company (GIIC), was purchased by Vale, in partnership with Gulf Investment Corporation (GIC), from Kuwait in 2000, and produces around 4 million tonnes of iron pellets every year. According to information provided by the mining company, it is "one of the largest independent iron ore pellet processing plants in the world."
But Vale business in the Arab world is not restricted to Bahrain. Around 6% of the 136 million tonnes of iron ore exported by the company in 2003 went to North Africa, and the Middle East.
The company also sells to Egypt, Libya, Algeria, Qatar, and Saudi Arabia. Although Bahrain is the main destination of CVRD export to the region, due to the GIIC, the oldest partner is Saudi Arabia, where the company has been selling iron ore for over 20 years.
Research
In the Arab world, there are still other business possibilities for the company. At the beginning of the year, Vale was invited by the Saudi government to take over mining research in the country. Although the Gulf country is rich in oil, the size of its ore reserves are still not known.
"Vale president Roger Agnelli accepted the invitation, and we are preparing a mission to the country to establish initial contacts, to see what they have there," stated the company commercial director in the iron ore mining area, Nelson Silva. According to him, the deal is still only at the beginning, therefore forecasts are still not possible.
Apart from that, Silva believes in an iron ore export increase to the region, as three steelworks that purchase raw material from Vale, Hadeed from Saudi Arabia, Qasco from Qatar, and ANSDK from Egypt, have recently announced plans for expansion of production. With this, he evaluated that ore consumption in the Arab countries should rise by between 1.5 million and 2.5 million tonnes per year.
Export
In all, CVRD export revenue rose 13.34% between 2002 and 2003. The company, which is the largest iron ore producer and exporter in the world, took the position of second largest Brazilian exporter from Embraer. This change in order, however, was mainly caused by a drop in sales by the aircraft maker.
Exploration and trade of ferrous ore, mainly iron ore, corresponds to 65% of company revenue, and most production is turned to the foreign market. If 136 million tonnes of the product were exported last year, just 25 million were sold on the foreign market.
Revenues and other figures for 2003 will only be published by CVRD tomorrow (24). However, up to the end of the third quarter of last year, gross operating revenues had reached US$ 3.855 billion and net profits, US$ 1.278 billion.
According to Silva, Vale intends to export 151 million tonnes of iron ore this year, 11% over that exported in 2003. On the domestic market, however, the company believes there should not be much change.
The main international company markets are Europe and the bloc made up of Asia and Oceania, which absorb, respectively, 42% and 44% of export. Within these blocs, the main buyers are Germany, France, China, and Japan. The Americas, including the United States and Argentina, purchase 8% of ore exported by CVRD.
It is in Asia, however, that the company has identified the largest foreign trade growth potential, due to China, which purchased 25.7 million tonnes from the company last year, or 18.9% of all export. According to Silva, production of Chinese steelworks has risen between 30 million and 35 million tonnes per year, requiring another 45 million to 52 million tonnes of iron ore per year, being 50% of this total bought on the foreign market.
Other sectors
But CVRD does not only live off ferrous ores. In mining, the company also explores kaolin and potassium, and develops mining and exploration of nickel and copper, metals the company intends to start trading in July. The company also invests in exploration of gold and metals in the platinum chain.
Vale also operates in Aluminium, logistics (railways, port terminals, and coastwise shipping) and energy (they have 10 hydroelectric power plants, three in operation).
Apart from GIIC in Bahrain, the company also owns or has participation in plants in California (USA), Argentina, Norway, and France. Apart from the Saudi invitation, the company also does ore research in Angola (copper, gold, and diamonds), Argentina (copper, gold, and potassium), Chile (copper), China (copper, gold, and charcoal), Cuba (copper and nickel), Gabon (manganese), Mozambique (participating in a tender for coal exploration), Mongolia (copper, gold, and coal), Peru (copper and gold), and Venezuela (coal).
In Brazil the company operates in 14 states, the largest mine is in Carajás, in the northern state of Pará, and most ore production is in the southeastern state of Minas Gerais.
Investment
Last year Vale invested US$ 1.486 billion in projects, exploration and in business turnover. For 2004 forecasted investment is US$ 1.815 billion. Up to 2010, the company intends to invest US$ 7.5 billion in new projects.
The Brazilian government established Vale do Rio Doce in 1942. In 1997 it was privatised and was put in the hands of a consortium led by Companhia Siderúrgica Nacional (CSN), another former state-owned steelworks that had been privatised.
The company is currently controlled by Valepar, whose main shareholders are Bradespar, an investment company connected to the largest Brazilian retail bank, and Previ, the Bank of Brazil pension fund.
The Vale group currently employs 29,408 people, including employees in connected companies.
Bahrain
Last year, Brazil exported a total of US$ 70.8 million to Bahrain, being that iron ore was the main product in the export basket (US$ 39.7 million). Nothing was imported from the country.
