Vale Top Job Said Subject of Debate in Brazil Political Shakeout

  • Temer himself isn’t among those calling for change: sources
  • Former Vale executives touted as possible CEO replacements

Vale SA Chief Executive Murilo Ferreira is grappling with the biggest commodity collapse in a generation and Brazil’s worst ever environmental disaster. But his biggest threat may be political.

Appointed in 2011 as part of a management shakeup driven by President Dilma Rousseff, Ferreira is now in the cross-hairs of some members of acting President Michel Temer’s Democratic Movement Party, said two people with knowledge of the matter. Former Vale executives Tito Martins and Jose Carlos Martins are being touted as replacements, two other people said.

Ferreira’s fate is far from sealed. Temer himself isn’t currently among those calling for his head, and other politicians and executives associated with Vale’s controlling shareholder group want to avoid giving the impression of interfering with the non-state-run iron-ore giant, the first two people said, asking not to be identified because the matter is private.

Valor Economico reported on Thursday a push by some party members for a new CEO, citing people it didn’t identify. Vale’s board hasn’t discussed the matter, the newspaper reported. Vale’s press department in Rio de Janeiro declined a request for comment from Ferreira. The press office of Brazil’s presidency didn’t reply to a request for comment.

The suspension of Rousseff last month, as she faces impeachment proceedings, has spurred a rapid succession of changes from cabinet posts to management of state entities, including oil producer Petrobras, where Ferreira served a brief stint as chairman. If Rousseff manages to regain office -- and the chances have improved slightly after a series of missteps in Temer’s administration -- the push to replace Ferreira would dissipate.

First Loss

The shift in political sentiment is also being fanned by Vale reporting its first annual loss since its 1997 privatization, as well as criticism over Vale’s initial response to a tailings dam collapse at its joint venture with BHP Billiton Ltd. The spill killed as many as 19 people and contaminated waterways.

Some members of Temer’s administration saw Vale’s response to the disaster as tepid in contrast with a more active approach by Melbourne-based BHP, a government official said. In a Nov. 10 statement, Vale said Ferreira and his BHP counterpart Andrew Mackenzie met with community leaders and local authorities and pledged support for an emergency fund.

Valepar SA, the holding company that controls Vale, is owned by Brazilian pension funds Funcef, Previ, Petros and Funcesp, as well as Bradespar SA, the holding company of Banco Bradesco SA, Mitsui & Co. and a subsidiary of state development bank BNDES.

Vale’s longest-serving executive director, Jose Carlos Martins, headed the company’s ferrous business until 2014 when he left the company. Tito Martins, who is now CEO of Votorantim Metais SA and is no relation to Jose Carlos, was Vale’s chief financial officer in 2011 and 2012 and headed the miner’s Canadian operations before that.

Carla Grasso, who was with Vale until 2011 and is now at the International Monetary Fund, is a third candidate, one of the people said.

Tito Martins declined to comment via the Votorantim press department. Attempts to reach Grasso and Jose Carlos Martins were unsuccessful.

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