Vale SA: Overview of the world’s largest iron ore company – by Annie Gilroy (Market Realist – December 17, 2014)


Vale SA (VALE) is a Brazilian multinational diversified metals and mining company. It is the world’s largest producer of iron ore and iron ore pellets and the world’s second-largest producer of nickel. It also produces manganese ore, ferroalloys, coal, copper, PGMs (platinum group metals), gold, silver, cobalt, potash, phosphates, and other fertilizer nutrients.

Vale has mineral exploration operations in 11 countries around the globe. It operates infrastructure systems in Brazil and other regions of the world, including railroads, maritime terminals, and ports that are integrated with its mining operations.

Its main operations are divided into four main lines of business:

  • Bulk materials – iron ore and pellets, manganese, ferroalloys, and coal
  • Base metals – nickel, cobalt, copper, PGMs and other precious metals
  • Fertilizer nutrients – potash, phosphate, and nitrogen fertilizers
  • Logistics infrastructure – railroads, maritime terminals, distribution centers, and ports
  • We’ll discuss these in detail in subsequent parts of this series.

Brief history

Vale SA (VALE) was incorporated by the Brazilian government in 1942. Originally, the government was responsible for a majority of the country’s iron ore production and exports. During the 1980s, the company diversified into aluminium, wood pulp, and steel products.

In 1997, Vale was privatized. A 41.73% stake in the company was sold for $3.14 billion. Between 2000 and 2007, the company sold many of its non-core assets, particularly those related to steel and wood pulp, while acquiring more iron ore assets.

The bulk of Vale’s earnings come from iron ore. Its peers in seaborne iron ore trade include Rio Tinto plc (RIO), BHP Billiton Ltd. (BHP), Fortescue Metals Group Ltd. (FSUGY), and Cliffs Natural Resources Inc.’s (CLF) Australian division. Together with Vale, these companies constitute more than 70% of the seaborne iron ore supply.

Investors can also consider investing in exchange-traded funds that invest in the metals and mining sector such as the SPDR S&P Metals & Mining ETF (XME).

Where Vale SA operates and why

Global operations

Vale SA (VALE) operates in 30 countries across the world in different lines of business.

Iron ore

All of its iron ore assets are located in Brazil, which is rich in high-grade iron ore. Development of rails and ports have further facilitated the transportation of ore to far-off markets in Asia and Europe.


Vale has coal operations in Mozambique and in New South Wales and Queensland in Australia. All off these are mineral-rich areas.

The infrastructure in Mozambique is not well developed for supporting mining activities. Infrastructure bottlenecks here are slowing down the development of mining. Currently, the the private sector is leading significant expansion and major rehabilitation of the country’s infrastructure. Vale itself is investing in the development of the Nacala infrastructure project.


Vale has nickel operations in Brazil, Canada, Indonesia, and New Caledonia, as well as fully owned and joint venture refineries in China, South Korea, Japan, the United Kingdom, and Taiwan. The infrastructure and political environment is generally good in these areas.


Vale’s copper assets are located in Canada and Carajas, in the state of Para in Brazil. The infrastructure is quite well developed by Vale itself in the Carajas region as its high-grade iron ore operations are in this area. In the Canadian regions of Ontario and Newfoundland and Labrador, Vale’s operations are also well connected by roads and ports.

The company’s rivals (XME) including BHP Billiton Ltd. (BHP), Rio Tinto plc (RIO) and Fortescue Metals Group Ltd. (FSUGY) mainly operate in Australia. The exception, Cliffs Natural Resources Inc. (CLF), mainly operates in North America.

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