Brazil is moving to cast off the last shackles of government influence at iron-ore giant Vale SA — but not before replacing the chief executive officer with someone more politically palatable.
Murilo Ferreira’s six-year contract will not be renewed when it expires in May, the Rio de Janeiro-based company said on Friday.
The announcement came days after Vale unveiled a plan to scrap its controlling shareholder pact amid criticism the miner was run like a quasi-state company.
While the company did not say who decided Ferreira’s fate, analysts, including Upside Investor’s Pedro Galdi, said that politics were involved.
Ferreira took the chief executive job in 2011 as part of a management shake up driven by then-Brazilian president Dilma Rousseff.
Incumbent Brazilian President Michel Temer’s government has sought to distance itself from authorities and executives with perceived allegiances to Rousseff, who was impeached last year.
“Clearly this is a political decision and Temer will have the final say in appointing the new CEO,” Galdi said by telephone. “This should be the last time there is political interference in appointing a CEO, as Vale is breaking down control.”
Vale’s shares fell 0.5 percent in Sao Paulo on Friday.
Under Ferreira, 63, the company has been on a roller-coaster ride. Over that period, Vale’s shares lost about 30 percent as commodity prices tumbled amid slowing Chinese demand and expanding supply.
However, in the past year there has been a sharp turnaround as he stepped up cost and debt-cutting efforts and prices recovered, the company’s stock jumped more than 250 percent, outperforming rivals.
Ferreira’s efforts to focus on new deposits in northern Brazil were applauded by investors. That shift has culminated in a US$14 billion mining complex in an area where ore quality is higher and costs will be lower, but back in Vale’s home state of Minas Gerais, the strategy riled politicians from the Brazilian Democratic Movement Party, to which Temer also belongs.
While local political opposition would normally be of little consequence for an independently run company, Vale is controlled by a holding company whose owners include state pension funds and the country’s development bank.
“I never entered the political arena to guarantee my term,” Ferreira said on Friday on a conference call with journalists.
He said he had no knowledge if his successor would be an executive from the current management team such as Clovis Torres, the head of human resources, Peter Poppinga, the head of ferrous metals, or Luciano Pires, the chief financial officer.
Local media has cited Nelson Silva, the head of strategy at Petroleo Brasileiro SA, as a potential candidate.
The board will use an international recruiting firm in its search for a replacement, Vale said in a separate statement.
The next chief executive officer will take over Ferreira’s effort to break up a controlling shareholder group that has made Vale a quasi-state-controlled company.
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