Vale's new CEO, Gustavo Pimenta, will seek to accelerate the company's strategy, focusing on recovering lost iron ore productivity and improving the company's relationship with authorities and the Brazilian public in general.
Such messages were delivered by the executive in his first meeting with market analysts this Wednesday, according to reports from some banks sent to clients.
“We are not asking for anything that changes the investment thesis. The most significant changes appear to be accelerating business strategy towards higher quality products in iron ore… and a stronger focus on efficiency/productivity; and better communication of Vale's benefits to Brazil, authorities and the general public,” Citi analysts said in a statement.
The bank highlighted that Pimenta wants to expand iron ore production from 340 million to 360 million tons per year by 2024 — without giving a timeframe — to 323 million to 330 million tons. The company, according to Citi, recognizes the slowdown in Chinese demand for iron ore, but sees potential growth in India and Southeast Asia.
Earlier in the day, the company announced the departure of Marcello Spinelli as executive vice president of iron ore solutions, the first major change in management under the new executive chairman.
Spinelli will be replaced, on an interim basis, by the company's current director of product and business development, Rogerio Noguera, who will assume the role this Wednesday and remain until December 31.
Nogueira's selection, according to Citi, recognizes “his deep technical knowledge and closeness to clients”. Vale recognizes strong future demand for integrated products and is working to meet market expectations regarding proper blending of ore, the bank said.
In this scenario, even after the collapse of the dams in Minas Gerais, the company still faces operational challenges, with increased safety-related requirements and the need to migrate from iron ore processing to other waste-handling processes as alternatives to dams.
“The projects bringing Vale to reach the target capacity of 350 million tonnes come with very low capex intensity. Because they are existing projects that are being restored and are already being delivered through logistics solutions,” JP Morgan analysts said in a report. .
“The added modules will also increase the quality of Vale's overall product portfolio.”
Santander's statement said Pimenta wants to reduce costs, keep C1 cash prices below $20 per ton, and invest in new technologies to increase company efficiency and increase production without compromising safety.
Contact and base metals
Analysts also noted that Vale plans to improve communication with authorities and the community in general.
“The organizational agenda is very important. “The board feels there is an opportunity to improve communication with interested parties, particularly the government, so that all parties are aware of what Vale is doing,” JP Morgan analysts said.
“It's not about doing something different or beyond what's been done. It's about communicating better and driving a positive agenda with stakeholders. This is low-hanging fruit on the board with significant potential impact for Vale.”
On the base metals side, analysts say Pimenta is seeking to increase its activities in base metals, with a greater emphasis on copper, whose production will reach 500 thousand tons by 2028.
