Brazilian mining giant Vale gears up for ‘in-house’ diversification, possible acquisitions ( – September 6, 2017)

Speculation has mounted in recent weeks on possible plans by Brazilian mining company Vale’s new CEO Fabio Schvartsman to diversify and make new acquisitions. New strategic partnerships are in theory ruled out because Vale is big enough “to set its own, even more ambitious goals,” according to the new CEO.

New developments may be known on October 18, the date of Vale’s next general shareholders’ assembly, when a “diagnostic report” on the company’s activities, called for by the new CEO, may be considered by board members.

Indications are that Schvartsman — CEO of a paper and pulp concern before he took over the helm of the Brazilian mining giant in May — is concerned over Vale’s dependence on standard iron ore products, the company’s mainstay.

“We are heavily dependent on iron ore, which is extremely volatile,” Schvartsman said in a recent webcast, stressing that this has forced Vale to continue reducing debt. “Carrying debt with this degree of volatility in our principal product is very dangerous.” The idea is that new diversification will come from within Vale, Schvartsman said, with acquisitions potentially made to support this strategy, where necessary.

There appear to be two areas of immediate focus: nickel, the company’s second biggest product area, which needs to be contributing more, according to the new CEO, particularly from its project in New Caledonia; and value-added iron ore products, which would help the company capitalize on its enormous Carajas iron ore mines, which are among the world’s highest-grade deposits.

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