Vale would be disciplined in making acquisitions - CEO

Thursday, 21 Jul 2011 |Bloomberg.net

Vale, aiming to boost production of the metal almost fivefold to 1 million tonnes by 2015, on July 11th 2011 dropped out of bidding for Johannesburg based Metorex after China's Jinchuan Group Co trumped its USD 1.13 billion offer with a USD 1.36 billion bid. Last year, Rio de Janeiro based Vale produced about 207,000 tonnes of copper.

Mr Murilo Ferreira CEO of Vale SA said that it will have discipline in making acquisitions.

Mr Ferreira said that the company will only make opportunistic acquisitions that bring shareholders returns. Africa is the priority for efforts to expand in copper output.

Mr Ferreira said that "If it's a deal that won't generate returns for our shareholders, I'd rather not do it."

Mr Ferreira said that Vale is interested in any asset in the iron ore, fertilizer, nickel, coal and copper markets as long as it creates growth and return for its shareholders. Energy assets aren't on its radar, even as rival BHP Billiton Limited has made such acquisitions.

Mr Ferreira, who just returned to Rio after two weeks visiting customers and suppliers in Europe, China, Japan and Australia, is seeking to intensify the company's relationship with its shareholders. He said that "I want to strengthen the relationship with analysts and investors. It will be much more intense."

Mr Ferreira said that Vale scrapped its planned IPO of its fertilizers unit because it has low debt levels and doesn't need additional resources to develop the assets. Selling shares now would lead to discounts of as much as 45% in the value of the assets.

Mr Ferreira said that Vale, which is due to report its results for the second quarter on July 28th 2011, expects to finish an internal review of all its projects in the next 60 days. The company will have more clarity on its long term nickel and copper output forecasts after the review.

Mr Ferreira replaced Mr Roger Agnelli as CEO of Vale on May 22nd 2011 after the Brazilian government criticized the company in the past two years for not spending more on domestic steel projects and for buying ships in China when the country was setting up its own yards. Since taking over, Mr Ferreira scrapped a plan to sell shares of Vale's fertilizers business in an initial public offering, cut its long term iron ore output forecast by 10% and announced a share buyback of as much as USD 3 billion.