194419311967
CHAPTER 5 The Biggest Iron Ore Exporter in the World
5.1 An adventure in the Amazon around. The indigenous peoples (Assurini2 and Xikrin3) were not very friendly and, worst of all, Breno often had to fly over the jungle 137 “You can send us the snakebite serum.” in very unreliable helicopters. The telegram on the desk of American geologist Gene Tolbert,1 It was on one of these flights, on July 11, 1967, on board a red in Rio de Janeiro, was short and incredibly promising. Snakebite helicopter with room for two passengers, that the history of mining serum, in this case, had nothing to do with snakes – it was the code in Brazil (and the world) began to change. Since then, Carajás4 – used among geologists at Companhia Meridional de Mineração, named for the tribe that lived on the banks of the Araguaia River the Brazilian arm of American giant US Steel, to announce the – has been synonymous with iron ore. discovery of a major deposit. The telegram was sent from Belém In the mid-1960s, the Amazon region was being mapped by large by Breno dos Santos, also a geologist, and the cryptic message American companies looking for electrolytic manganese, essential served to protect against the spying that went on between the for the manufacture of batteries. The recommended location was the mining companies scouring northern Brazil in search of riches. Sereno Mountains, known as the “Serra Rica” (“Rich Mountains”). In There were no snakes, but there was manganese, and above all, a geological jargon, there is a saying that “You only look for elephants spectacular amount of iron. Gold, silver, copper, bauxite and zinc, where there are elephants.” Pará – where enormous manganese as well as nickel, chromium, tin and tungsten would also be found deposits had already been found near Marabá – was the “elephant” in due course. of the moment. Breno was 27 years old. He was a recently qualified geologist The strategy adopted by mining companies was to plot routes who had accepted – more through lack of options than idealism – a starting from Belém, and crossing to Santarém and Altamira. job at Companhia Meridional de Mineração, which was looking for Initially, Breno’s team, led by Gene Tolbert, was going to be based in manganese in the Amazon. It was an adventure in every sense. It Altamira, but Union Carbide, US Steel’s main competitor, discovered wasn’t an easy job: the salary wasn’t great, the food was terrible, its plans and got there first. The solution found was to create an there were mosquitoes everywhere, and there were few geologists alternative route via Marabá, where camps were set up around the
2 - According to geologist Breno dos Santos in an interview given to Vale, while flying over an indigenous village as part of a prospecting flight over the Xingu River, he saw the until- then unknown Assurini tribe. “The Indians came out running and we found out later that the village didn’t yet have any contact with civilization. They only became acquainted with Western culture when the Trans-Amazon Highway was built,” he explained. 3 - The Xikrin do Cateté people belong to the Kayapó group (their language is also Kayapó) 1 - Gene Edward Tolbert was born in Kansas, USA in 1925, and died in October 1989 in and they live on the banks of the Cateté River, a tributary of the Itacaiúnas River, between Virginia, USA. He served in the American Air Force during the Second World War. He Água Azul do Norte and Parauapebas, in the Carajás Mountains of Pará. See Enciclopédia moved to Washington in 1949 to work for the United States Geological Survey (USGS). He Povos Indígenas do Brasil. Available at:
Vale Our History Vale Our History Previous page: men crossing the Itacaiunas River in Pará by canoe on August 11, 1967.
138 139
Above: members of the Xikrin indigenous people pose for a photograph on July 22, 1967. Below: geologist Breno dos Team of geologists on a helicopter flight Santos on December 17, 1967. over the Itacaiunas River in Pará in 1967.
Vale Our History Vale Our History Previous page, left to right: camp on Buritirama, an island in the Itacaiunas River in Pará, in 1967. Aerial view of Marabá, Pará, on July 25, 1967.
city, in places with precarious landing strips cleared alongside nut 5.2 Vale becomes the global iron ore leader 140 and rubber plantations. 141 From his camp, Breno and his team members would leave In the late 1960s,6 Companhia Vale do Rio Doce’s commercial on short explorative flights.5 The geologist called his team “the prospects were excellent. In 1968, the company signed its first long- Incredible Army of Brancaleone,” in reference to the movie by Mário and medium-term contracts to supply iron ore to Usinor, a French Monicelli that tells the story of a hapless group of soldiers who state-owned steel company (for 10 years), and Italian steelmakers try to conquer a kingdom of dreams in medieval Europe. Breno’s (for three years). Also in 1968, CVRD signed its third contract with reference made sense. The kingdom idealized by the Brancaleone of seven steel companies in Japan, involving the supply of 2.8 million the Amazon was initially a whitish clearing, covered with stunted metric tons of iron per year, for eight years starting in 1971 – a plants known by the local people as “canelas de ema” (“emu shins”) decisive step in strengthening its presence in the Japanese market. – but the location was an El Dorado of iron. This deal shocked the Australian iron producers, who thought their “The clearing was enormous, and there was low undergrowth position in Japan was assured, given their geographical proximity. around, which normally characterizes a ‘canga,’ meaning a region Benefiting from the global steelmaking boom that began in 1969, rich in ore very close to the surface, impeding the growth of trees. CVRD exported 21.8 million metric tons of ore in 1970 (an increase of When I knocked in my hammer, a red substance came out, and I nearly 100% in relation to 1968), bringing in around US$160 million saw it wasn’t manganese – it was iron. I thought: ‘Wow! Everything of revenue to the country. Japan bought practically one-third of this here is iron!’” recounts Breno. The geologist had already seen total – which included, for the first time, 750,000 metric tons of similar clearings on previous flights, and was starting to think that pellets. As of 1969, Japan had overtaken West Germany to become everything was part of an immense mineral reserve, of a kind that CVRD’s biggest customer. had never before been discovered on the planet. By the end of 1970, the company’s long-term sales commitments “I had been working as a geologist for a short time, I was amounted to 324 million metric tons of run-of-mine ore and pellets, enthusiastic about my discovery, but at the same time I was destined for customers in various countries. In the same year, afraid I could be making a very embarrassing mistake.” But it was Vale renewed its agreements, made in 1962 and 1964 with Samitri no mistake: Breno had discovered 17 billion metric tons of high- and Ferteco, respectively, involving the use of its railroad and grade iron – and as of 1984 (after a lot of research, legal disputes, port facilities to transport iron ore produced by these two foreign technological adventures, heroism, political battles, and enterprise), companies in the Iron Quadrangle region. it would lead to a new stage in Vale’s history. However, the seesaw of global steel production continued with its ups and downs. The boom of 1969-1970 was followed by 5 - The team that discovered Carajás was organized into four units. The first, belonging to a slowdown for two years. Even so, in 1972 the company exported Meridional, was composed of chief geologist Gene E. Tolbert, and geologists E. C. Ferreira, 26.1 million metric tons of iron ore and pellets. The following year, G. C. Machamer, R. Strong and C. D. Reynolds. The second group monitored research in as the steel industry heated up once more, the company’s sales Rio de Janeiro: Francisco Sayão Lobato, mining engineer and consultant; and Jean Robert Maligo, administrative assistant. The third unit was the field team: Breno A. dos Santos, geologist and head of the team; João E. Ritter, geologist; Erasto B. de Almeida, geologist; Noé D. dos Santos, field administrator; C. Marbus, draftsman; Feliciano T. Tenório, supervisor; 6 - This section of text is based on Fernandes, Francisco do Rego (org.), Os maiores Francisco Gadelha and Francisco Braga, foremen; and 10 other employees. Finally, the aerial mineradores do Brasil: perfil empresarial do setor mineral brasileiro, vol. 1, pp. 3-7, 32-33, 60-62 Ship being loaded with support group was composed of Adão Coelho de Barros, autonomous pilot; and José M. de and 93-96: Board of Directors’ Reports, 1968-1978, and Kury, Mário da Gama, A Companhia Vale ore at Tubarão Maritime Aguiar, Carlos A. A. Ratto and Leno A. Compasso, helicopter pilots (working for Helitec). do Rio Doce: 40 anos, op. cit., pp. 70-96. Terminal in Espírito Santo.
Vale Our History Vale Our History CVRD president Raymundo Pereira Mascarenhas (on the right) and Eximbank executives during a signing ceremony for loans to the company, in the United States in 1970.
A summary of CVRD’s performance in the first half of the 1970s If the future seemed guaranteed – thanks to the long-term makes clear how important this period was to the company’s contracts with Japanese steel companies – the present was not yet history. Between 1970 and 1975, the volume of ore it exported rose assured. In 1977, for the first time since 1948 (at the height of the post- by 116%, and the average price per metric ton increased by 77%,9 war crisis), Vale’s performance went into reverse. Its exports fell by resulting in growth in export revenue of around 285%, from US$160 14% in relation to the previous year, from 47.3 to 39.8 million metric million to US$615 million. The start of the 1970s saw advances in tons. On top of lower volumes and export revenues, and despite the the international division of labor, a process in which developed fact that the average iron ore price reached US$15.51 per metric countries invested heavily in emerging countries such as Brazil in ton, rising operating costs and a stronger cruzeiro contributed to in the international market skyrocketed, reaching a total of 37.5 sectors that directly or indirectly made intensive use of natural a significant fall in the company’s profits. The combination of an Raymundo Mascarenhas resources. This included the development of projects with intensive appreciation in Brazil’s currency and a falling average iron ore 142 million metric tons. Continuing with its policy of entering new 143 markets, CVRD began supplying iron ore to China, Scotland and power consumption, especially in sectors with major environmental price would subsequently be experienced at various moments, with Raymundo Mascarenhas (Prado, Bahia, 1928 – Linhares, East Germany, and reestablished sales to Romania and Yugoslavia. impacts, such as mining and pulp. adverse effects for the company’s financial status. Espírito Santo, 1987)1 joined the company in 1957, and 12 In 1973, the company’s long-term commitments to supply iron Faced with the steel industry crisis in the main capitalist years later became its president – the second in-house ore amounted to 402 million metric tons, reserved for customers “Go ahead, Brazil!” economies, CVRD sought new customers in developing countries employee to occupy this position. During his career, he in West Germany, Argentina, Austria, Spain, the USA, France, The In 1976, CVRD’s export volumes stayed at practically the same level that were seeing some growth in their steel production. In 1977, led Docenave and was the general superintendent of Netherlands, England, Italy, Japan, Poland and Turkey. as in 1975. However, thanks to a further rise in the average price of the company signed its first long-term contracts with mills in Iraq, ore, which reached US$15.15 per metric ton, the company received Qatar, South Korea, Indonesia and the Philippines. At the end of sales. His experience in the latter function became the At the end of 1974, despite the first signs of a new downturn in global steelmaking arising from the oil crisis of the previous year,7 export revenues of around US$717 million. CVRD was now the biggest the year, its supply contracts involved future commitments for hallmark of his administration, when the company’s CVRD celebrated a new record for exports: 46.2 million metric contributor to Brazil’s trade balance. To maintain this position, 609 million metric tons – more than half represented by the Asian exports rose from 11.550 million metric tons in 1968, tons of iron ore and pellets – equivalent to 81% of Brazil’s mineral though, government intervention was increasingly necessary. market (316 million metric tons), and the rest accounted for by to 16.056 million metric tons in 1974.2 This increase in exports and 5.5% of the country’s total exports. General Ernesto Geisel became president of Brazil in March 1974, Western Europe (200 million metric tons), Eastern Europe (55.5 sales was also linked to the development of a new export A new factor in this period was an upturn in sales to the United succeeding General Emílio Garrastazu Médici, who was known for million metric tons) and the Americas (38.2 million metric tons). It product for CVRD: pig iron produced in Minas Gerais. States, which rose by 88% between 1973 and 1974. This was because his overall control of spending and political intolerance. Geisel’s was now selling to 63 customers in 26 countries. In 1974, the last year of his first term, he founded the American government had suspended operations at the Reserve government, which lasted until 1979, was marked by the start of In 1978, there was a slight recovery in CVRD’s sales on the Mining Company’s pelletizing complex due to its pollution record. the “political opening” process in the country. In the economic field, international market (to 41.9 million metric tons). New contracts Celulose Nipo-Brasileira (Cenibra) in partnership with In 1974, CVRD signed long-term contracts with customers in the the president invested in infrastructure, signing a controversial were signed with China (to supply 250,000 metric tons on a trial Japanese investors. In the same year, Vale became the USA, Romania, Poland and East Germany, involving around 70 nuclear agreement with Germany and allocating large sums of basis, followed by 4 million metric tons between 1979 and 1980),10 world’s biggest iron ore exporter. million metric tons of ore. money to build the Itaipu hydroelectric power project. During his Poland, Argentina (sale of pellets for five years), Czechoslovakia, After leaving CVRD’s presidency, Mascarenhas – a Despite adverse conditions on the international market, administration – and in particular, together with the Minister of Portugal (a five-year extension of an iron ore sales contract) and qualified engineer who graduated from the Polytechnic aggravated by a deepening crisis in the steel industry, CVRD ended Mines and Energy, Shigeaki Ueki – mining was treated as a matter of France (an extension of CVRD’s contract with Usinor, again, for School of Bahia – was appointed to run Companhia Bozano, 1975 with very positive results. Modest growth in its physical state. This would be perceived in the outcome of the legal deadlock five years). Simonsen Comércio e Indústria, where he remained until volume of exports (up 3.5% from the previous year) was outweighed between CVRD and US Steel concerning the Carajás Iron Project in Also during 1978, Japan, despite 30% of its steelmaking capacity by a 36% rise in their value, due to an increase in the ore price (from 1976, and in the approach to foreign trade in iron ore. being idle, resumed its customary pace of purchases from CVRD. A 1983. The following year, he returned to CVRD as its US$9.74 to US$12.92 per metric ton). The company was now the President Geisel’s visit to Japan in mid-1976 reanimated CVRD’s new feature was the inclusion of a “flexibility clause” in contracts, commercial director. In May 1985, he was appointed Eliezer world’s biggest exporter of iron ore, accounting for 16% of seaborne commercial prospects. The company’s second and third long-term giving Japanese steel companies more freedom to change their Batista’s vice-president and, in April of the following year, trade in the product.8 sales contracts with Japanese steel mills, due to expire in 1978, were volume of imports beyond the existing margin of 10%. he served once again as the company’s president. renewed, involving the supply of 5.7 million metric tons per year of iron ore for 15 years. In addition to these deals, a fifth contract was 7 - The crisis in the steel industry was not a mere reflection of the global economic signed, involving annual sales of 6.5 million metric tons of iron ore recession. Excess capacity, cost pressures and protectionism were other factors that and 6 million metric tons of pellets for 15 years. contributed decisively to the weak performance of steelmaking powers and the geographical displacement of steel production to emerging countries, including Brazil 10 - Given the limited capacity of China’s ports, CVRD made an agreement with Kawasaki 1 - About this subject, see “Mascarenhas, Raimundo,” DHBB, vol. 3, pp. 3,625- itself, as well as Argentina, Mexico, Iran, Iraq, South Korea and the Philippines. See the Steel to permit Brazilian ore transported on Docenave’s large ships to be unloaded at 3,626 and “Conheça todos os presidentes da história da Vale” (Learn about all the Board of Directors’ Report, 1977, n.p. 9 - In 1970, the average price for one metric ton of iron ore was US$7.30, rising to US$8.08 its port facilities on the island of Mindanao, in the Philippines, where the Chinese could presidents in Vale’s history), Exame magazine, April 5, 2011. 8 - In 1975, Brazil, Australia, Sweden and Canada, together, were responsible for 64% of the in 1973, US$9.74 in 1974 and US$12.92 in 1975. See Abranches, Sérgio and Dain, Sulamis, A transfer it onto their small ships. In exchange, Petrobras imported Chinese oil. 2 - See Table 1. seaborne trade in iron ore. empresa estatal no Brasil, 1978, p. 71.
Vale Our History Vale Our History Table 1 shows the movements in CVRD’s sales of iron ore and reflect a change in the criteria used in the company’s reports, Italy 1,299,409 1,197,794 1,150,327 1,558,063 1,860,047 2,149,110 2,723,652 pellets on the global market between 1968 and 1974, broken down which meant that data from different countries were grouped by consuming country, including the quantity purchased annually into major markets (Asia, Western Europe, Eastern Europe and the % 11.3 7.5 5.3 6.2 7.1 5.8 5.9 by each one and its share of total sales. It was necessary to produce Americas). In addition, the figures are more approximate for this Yugoslavia - - - - - 233,236 339,824 a separate table (Table 2) for the years 1975 to 1978 in order to latter period. % - - - - - 0.6 0.7 Japan 2,487,386 4,417,190 7,140,081 9,036,758 9,191,163 13,779,881 16,000,116 % 21.5 27.5 32.7 35.7 35.1 36.8 34.6 TABLE 1 Luxembourg 2,032 153,952 191,758 290,952 39,488 135,394 244,671 CVRD’S EXPORTS OF IRON ORE AND PELLETS BY CONSUMING COUNTRY, IN MILLION METRIC TONS (1968-1974)* % - 1.0 0.9 1.2 0.2 0.4 0.5
COUNTRY 1968 1969 1970 1971 1972 1973 1974 Mexico 79,484 154,749 56,142 - - - - West Germany 3,217,958 4,200,317 4,397,090 5,051,822 4,944,124 6,189,613 6,314,645 % 0.7 1.0 0.3 - - - - 144 % 27.9 26.2 20.2 20.0 18.8 16.5 13.7 Poland 73,182 134,601 318,749 269,958 201,049 442,672 507,493 145 East Germany - - - 57,071 103,571 304,492 284,742 % 0.6 0.8 1.5 1.1 0.8 1.2 1.1 % - - - 0.2 0.3 0.8 0.6 Portugal 45,835 ------Argentina 64,329 136,293 367,676 533,313 486,499 765,774 800,773 % 0.4 ------% 0.5 0.8 1.7 2.1 1.9 2.0 1.7 Romania - - 98,726 - - 101,104 214,062 Austria 1,018,537 1,386,246 1,527,132 1,634,597 1,194,570 1,196,130 1,780,667 % - - 0.4 - - 0.3 0.5 % 8.8 8.6 7.0 6.5 4.6 3.2 3.9 Czechoslovakia 117,945 78,777 145,448 141,481 173,750 323,133 535,542 Belgium 272,315 361,941 459,189 354,825 520,480 429,897 616,091 % 1.0 0.4 0.7 0.5 0.7 0.8 1.2 % 2.4 2.3 2.1 1.4 2.0 1.1 1.3 Turkey - - 26,482 248,525 287,487 262,482 178,203 Canada - 2,032 - 27,723 - 374,456 448,112 % - - 0.1 1.0 1.1 0.7 0.4 % - - - 0.1 - 1.0 1.0 TOTAL 11,550,179 16,056,537 21,800,028 25,295,215 26,178,455 37,513,272 46,213,971 China - - - - - 46,745 53,672 % 100 100 100 100 100 100 100
% - - - - - 0.1 0.1 * Approximate values. Sources: Board of Directors’ Reports, 1968-1974. Spain 82,211 185,049 1,092,247 1,121,550 1,209,244 1,296,746 1,448,202 % 0.7 1.2 5.0 4.4 4.6 3.2 3.1 TABLE 2 Scotland ------31,566 CVRD’S EXPORTS OF IRON ORE AND PELLETS BY CONSUMING GEOGRAPHICAL AREA, IN MILLION METRIC TONS (1975-1978) % ------0.1 United States 481,067 742,672 1,313,775 1,022,850 815,731 3,093,395 5,828,709 AREA 1975 1976 1977 1978 % 4.2 4.6 6.0 4.0 3.1 8.3 12.6 Asia 18.3 18.3 17.3 15.6
France 1,098,305 1,318,957 1,639,088 1,905,371 2,373,849 2,706,693 4,086,884 Western Europe 19.6 20.4 16.2 17.9 % 9.5 8.2 7.5 7.5 9.1 7.2 8.9 Eastern Europe 1.8 3.7 3.7 4.2 Netherlands 668,736 513,441 295,833 572,786 1,015,363 1,774,552 1,352,709 Americas 7.6 4.9 2.6 4.2 % 5.8 3.2 1.4 2.3 3.9 4.7 2.9 England 541,448 1,072,526 1,580,285 1,467,570 1,762,040 1,948,210 2,423,636 TOTAL 47.3 47.3 39.8 41.9 % 4.7 6.7 7.2 5.8 6.7 5.2 5.2 Sources: Board of Directors’ Reports, 1975-1978.
Vale Our History Vale Our History Vale’s excellent commercial performance on foreign markets between 1968 and 1978 can be attributed to the company’s efforts to adapt its maritime transport infrastructure to its ever more ambitious export targets
146 Besides exporting its own production, CVRD, through the improve geostrategic positioning, overcoming the peripheral effect Vitória-Minas Railroad (EFVM) and its port facilities, also of domestic logistics. In these systems, leadership was awarded transported the output of Ferteco and Samitri, as described in to the countries that had structures for planning, regulating and Chapter 4. The expansion provided through contracts signed investing to ensure a strategic network of logistics infrastructure, almost a decade earlier with these two companies generated based on production centers that continuously added value for good results. The figures available for the years 1974 to 1978, consumer markets. encompassing the exports of both companies, amounted to 33.1 Aware of this competitive strategy, in 1970 Docenave received million metric tons. The markets served by Samitri were Western its first new ships, with total transportation capacity of 570,000 Europe (France, Belgium, West Germany and Luxembourg) and deadweight tonnage (DWT). This fleet, composed of ore-oil carriers, North America (the United States and Canada). Ferteco’s ore was was expanded in the following years, reaching a total of 15 ships in largely sold to West Germany. In 1977, CVRD also began exporting 1976, with total transportation capacity of 1.261 million DWT. This pellets produced by its affiliates, shipping around 500,000 metric included Docecanyon, an ore-oil carrier of 269,500 DWT, delivered by tons of the products. The following year, this figure rose to 1.9 Japanese shipyard Nippon Kokkan in 1973. million metric tons. Another important measure was the renewal, in 1968, of CVRD’s average share of Brazil’s total sales of iron ore and a contract with Petrobras by which Docenave committed to pellets between 1968 and 1978 was slightly higher than in the transporting large quantities of oil from the Middle East, using 1961-1967 period, rising from 73.5% to 74.9%. It was not just Vale its ships returning from Japan, ensuring attractive freight costs – by far – that recorded enormous growth in its export volumes. in both directions. Likewise, Docenave entered into an agreement The three largest foreign iron miners operating in Brazil – MBR, with Usiminas to transport the metallurgical coal imported by Samitri and Ferteco – also experienced extraordinary growth in the steel company. The practice of freight sharing (combining the their foreign sales, due to the growing specialization of production transportation of different types of cargo, in accordance with the between developed and emerging countries. MBR accounted for itinerary) would be further intensified in the coming years. The approximately 12% of Brazil’s iron exports during this period, while company was improving its competitiveness while helping to Samitri and Ferteco each represented slightly over 5%. develop Brazil’s industrial system. The sales structure that CVRD established abroad had three CVRD’s fleet of ships and international trade main components: Itabira Eisenerz, a subsidiary succeeded by Rio CVRD’s excellent commercial performance on foreign markets Doce Europa (RDE), founded in January 1974 and headquartered between 1968 and 1978, especially in the early 1970s, may largely be in Brussels, responsible for selling the company’s products in attributed to the company’s efforts to adapt its maritime transport Europe, as well as importing equipment and materials from there; infrastructure to its ever more ambitious export targets. Itabira International Corporation (Itaco); and Rio Doce America In order to consider investing in the building of Docenave, (RDA), a wholly owned subsidiary of Itaco, headquartered in New CVRD’s shipping subsidiary, its own fleet was fundamental. The York, tasked with selling iron ore and pellets in the USA, Canada, lack of efficient, coordinated logistics systems resulted in higher Mexico, and Trinidad and Tobago. CVRD’s negotiations with operating costs, reducing the competitiveness of companies. Japan continued to take place directly between the company and Aerial view of Tubarão Investment was made in global supply chains’ logistics systems to Japanese trading companies. Maritime Terminal in Espírito Santo.
Vale Our History Vale Our History Left: CVRD president Fernando Roquete Reis giving a speech, observed by the President of the Republic, Ernesto Geisel. Opposite page, left to right: a pile of iron ore at Tubarão Maritime Terminal in Vitória, Espírito Santo, in the 1970s. Japanese and Brazilian flags on display in Japan indicate Ernesto Geisel’s visit to the country from September 15 to 21, 1976.
148 TABLE 3 149 CVRD’S DOMESTIC MARKET SALES, IN METRIC TONS (1968-1978)
YEAR SALES CUSTOMER
1968 877,366 -
As it expanded its exports, Vale also significantly increased 1969 1,021,674 Usiminas – 1,011,884; others (Itabira Agro-Industrial and Fertimetal) – 9,790 Fernando Roquete Reis its sales in Brazil. Its share of the domestic iron ore market rose from 18.3% in 1976 to 34.4% in 1978. Among the various deals 1970 1,163,102 Usiminas – 1,146,672; others (Itabira Agro-Industrial, Fertimetal, Ferroval, and Cobrac) – 16,430 As soon as General Ernesto Geisel became President made during this period, it is worth emphasizing contracts signed of the Republic in 1974, Fernando Roquete Reis (Belo in 1973 for the long-term supply of a special type of pellet to Horizonte, Minas Gerais, 1932 – Rio de Janeiro, 1983)1 Usina Siderúrgica da Bahia (Usiba) and Aços Finos Piratini (in Rio 1971 1,317,122 Usiminas – 1,305,088; others – 12,034 was appointed president of Vale. Mining in Brazil was Grande do Sul), companies that were pioneering direct-reduction 11 going through strategic changes, with a focus on steel production in Brazil. CVRD’s steady expansion of sales in 1972 1,876,477 Usiminas – 1,540,364; Cosipa – 76,214; CSN – 251,209; others (Usiba, Aços Finos Piratini, etc.) – 8,690 diversification and foreign trade, and Reis, who had a the country – largely to Usiminas, its biggest customer, but also to Cosipa, CSN, Usiba and other smaller steel mills – justified the solid background in economic policy (having served as establishment, in 1973, of Navegação Rio Doce Ltda., a Docenave 1973 2,117,225 Usiminas – 1,628,899; Cosigua – 112,306; Usiba – 19,467; CSN – 255,427; others – 101,126 director of Brazil’s Central Bank, finance minister of subsidiary dedicated exclusively to coastal shipping12 rather than Minas Gerais State Government, and organizer of the long-distance shipping. 1974 2,244,008 Usiminas – 1,382,149; Cosipa – 263,463; Usiba – 239,757; CSN – 106,670; others – 251,969 postgraduate Economics course at UFMG, among other Table 3 presents information on the company’s sales volumes in positions), seemed the right man to run the company in Brazil between 1968 and 1978, showing the quantity purchased by 1975 2.8 million - its new phase. It was within Brazil’s frontiers, namely in each main customer and its share of total sales, sources permitting. the Carajás Mountains, that Reis would prove that Geisel’s choice had been wise. Reis led the entire legal 1976 3.2 million - dispute involving Vale and United States Steel (partners in Amazônia Mineração S.A.) for control of the 11 - This process involves the production of sponge iron for immediate use in steel 1977 5.9 million - production. To this end, small modules are used (each weighing an average of 400,000 exploitation of the world’s biggest iron ore reserve. metric tons), composed of pellets (60%) and lump ore (30%). When conducted on a small scale, the direct-reduction process has a number of advantages over the use of blast furnaces. 1978 9.5 million* Usiminas, Cosipa, CSN, Usiba, Aços Finos Piratini, and Cimetal 12 - Coastal shipping is also known as “cabotage,” a word named after Sebastián Caboto, 1 - About this subject, see “Reis, Fernando Antônio Roquete,” DHBB, vol. 5, pp. a Venetian sailor who explored the coast of North America in the 16th century in the 4,954-4,955. service of the Spanish Crown. * Including sales of concentrate to the company’s pellet-producing affiliates. Sources:Board of Directors’ Reports, 1968-1978.
Vale Our History Vale Our History 5.3 Expansion of the mine-railroad-port complex This project was completed in 1977.15 Meanwhile, considerable sums were also invested in expanding the Port of Tubarão.16 Work Rising exports and new production targets demanded constant at the port, executed between 1970 and 1974, included dredging the improvements in CVRD’s mine-railroad-port complex, the structure access channel and ship-turning basin; building a new pier with around which the company revolved. A large share of investment a water depth of 24 meters, capable of receiving bulk carriers of was focused on expanding the transportation capacity of the more than 250,000 DWT, where two ship loaders would be installed; 2 150 EFVM,13 which had practically reached saturation point, especially and creating a goods yard around 500,000 m in area and a new 151 after the incorporation in 1969 of a further 168 kilometers of track fines stockyard, built on land reclaimed from the sea using dredged by the Desembargador Drumond branch line, extending it from material, and sheltered by a breakwater. Costa Lacerda to Fábrica in Minas Gerais, and establishing a link By the end of the decade, the Port of Tubarão, now consisting of two with the Central do Brasil Railroad. piers and a dry dock for maneuvers, and protected by a breakwater, The extension of this branch line significantly increased train had an annual loading capacity of 75 million metric tons. The port’s movement on the railroad. Besides serving CVRD, Samitri and loading and unloading operations, totally mechanized, basically Ferteco, the EFVM also transported imported metallurgical coal for consisted of removing ore from train cars using four car dumpers, Usiminas, Acesita, Belgo-Mineira and other steel companies in the and then taking it by conveyor belt to its scheduled destination – Iron Quadrangle region. the holds of ships or one of the two stockyards. With its new branch line, the EFVM started to function as an The stockyards, equipped with three stackers, were capable of export corridor for the output of small steel mills and pig iron storing 5.6 million metric tons of 10 different kinds of products. manufacturers located in the west of Minas Gerais. Before long, When the time came to ship out the ore, the company used bucket steel products were in third place – behind iron ore and coke – in wheels to remove it from the piles and place it onto conveyor belts the list of items transported by the railroad, which also included leading to the piers. While the ore was being transferred onto timber, charcoal and grains, as well as passengers.14 vessels, small samples of the product were constantly taken to Things were also changing at the other end of the railroad tracks, be examined at sampling stations located next to the terminal, at the port. In the late 1970s, the company began implementing providing information on the cargo’s grain size and chemical a centralized, integrated communications and traffic control composition, to ensure that purchasers’ specifications were met. system, in order to optimize traffic capacity along the railroad with To make any necessary corrections, alongside the quay CVRD maximum safety. Locomotive movements would be controlled from installed a screening plant capable of processing 12,000 metric a single dispatch center. The project also involved implementing tons of ore per hour. an automatic train car identification system and acquiring two automatic scales to weigh moving trains. To definitively resolve the EFVM’s overloading problem, in 1971 work began on double-tracking 548 kilometers of the main line.
15 - This year, after installing an automatic control and signaling system on both tracks, 13 - Regarding EFVM’s investments, see Board of Directors Reports, 1968-1978, and Fernandes, and based on an agreement with the Federal Railroad Network (RFFSA) and Usiminas, Francisco do Rego (org.), op. cit., vol. 1, pp. 89-91. CVRD began constructing a transshipment yard near Miguel Burnier Station, in order to 14 - In 1978, the railroad carried (for CVRD and third parties) 48.7 million metric tons of interconnect the EFVM (metric gauge) with the RFFSA’s Central Line (broad gauge). This iron ore for export, 8.9 million metric tons of iron ore for the domestic market, 1.6 million facility, completed in 1978, cut 180 kilometers off journeys between steel producers in the metric tons of coal, 1.3 million metric tons of steel, 926,000 metric tons of pig iron, 497,000 region served by the EFVM and centers of consumption. Given that this route used to be metric tons of limestone, 353,000 metric tons of oil products, 326,000 metric tons of timber, served by trucks, this interconnection also resulted in significant fuel savings. Locomotive on the Vitória- 178,000 metric tons of charcoal, and 76,000 metric tons of manganese, among other freight, 16 - Regarding the expansion of CVRD’s port facilities, see Fernandes, Francisco do Rego Minas Railroad (EFVM). and 2.2 million passengers. See Fernandes, Francisco do Rego (org.), op. cit., vol. 1, p. 91. (org.), op. cit., vol. 1, pp. 91-93, and Board of Directors’ Reports, 1969-1978.
Vale Our History Vale Our History Aerial view of expansion work at Tubarão Maritime Terminal in Espírito Santo, between 1971 and 1972. Opposite page: the iron ore stockyard at Tubarão.
Vale Our History Vale Our History 154 155
The ship Docecanyon at Tubarão Maritime Terminal in Espírito Santo.
Vale Our History Vale Our History Above: a handful of pellets. Below: Piçarrão Mine in Nova Era, Minas Gerais, in September 1978.
the mine.18 During the following decades, the Itabira region would the Iron Quadrangle region of Minas Gerais – either by applying for continue to be CVRD’s main source of high-grade iron ore. However, new concessions from the National Mineral Production Department as waste products accumulated, high-grade ore began to be used (DNPM), or by incorporating third parties’ reserves. In 1970, CVRD up, and the company was left with deposits of lower-grade itabirite, acquired 520,000 metric tons of ore from small miners in Itabira, it was clear that the company would have to dig deeper at Cauê. a volume that rose progressively until reaching 6.9 million metric New facilities at Cauê Mine were opened in 1973, and in the same tons in 1975, equivalent to 13.2% of its own production. year, CVRD began selling its output of concentrates (3.7 million This policy resulted in the implementation of three projects metric tons), most of which was exported. Cauê Mine – something in Minas Gerais: the Guanhães Project, which involved iron 5.4 Cauê: the biggest mine in the West of a symbol of CVRD’s development – then became the biggest mine prospecting in the Itamarandiba region; the Porteirinha Project, to in the 1970s in the West. assess and possibly exploit reserves located in the Rio Pardo region The year 1973 was also marked by the implementation of the in the north of the state; and the Piçarrão Project, to operate a mine Conceição Project, to make full use of the iron ore deposits of the in the municipality of Nova Era acquired by the company in 1967. Back at the other end of the complex – the mines – production mines of Conceição and Dois Córregos. The project involved the Piçarrão Mine had estimated reserves of 20 million metric tons of also demanded new technologies, in particular to make use of construction of new mechanized facilities for processing ore at extractable ore. The Piçarrão Project included building a plant to low-grade ores. In 1969, the company began constructing a plant both mines and a single tertiary crushing and screening unit next make sinter feed and laying a 17-kilometer railroad branch line to to recover itabirite deposits from Cauê Mine, which had until then 157 to Conceição Mine, together with a dry and wet classification plant connect the mine to EFVM’s station in Desembargador Drumond.20 remained unexploited due to their lower levels of iron content. The for hematite fines, and a concentration plant for itabirite fines, both The company expanded its frontiers in 1976 through three new Cauê Plant was designed to produce 9 million metric tons per adjacent to the mine. In all, around US$240 million was invested in acquisitions in Minas Gerais. Firstly, it bought a 99% stake in Caraça year of sinter feed and pellet feed (high-grade concentrates) through Conceição Complex, which was opened at the start of 1979. It was Ferro e Aço S.A., a company that owned Caraça Mine in the Santa the electromagnetic concentration of ore fractions smaller than 1 capable of processing 28 million metric tons per year of itabirite and Bárbara region of the state, with estimated reserves of 42 million mm across. At the same time, in order to make full use of extracted hematite, generating 24.2 million metric tons per year of products metric tons. Secondly, it purchased a 51% interest in Minas d’El Rey ores, the company began work on installing a facility next to the such as blue dust, pellet feed, sinter feed and lump ore. Dom Pedro, which held the rights to mine iron and gold reserves in mine to crush, screen and classify hematite fines, which would also It was known that performance could be greatly improved by Mariana. The other shareholders in this company were Gold Fields be fed with granular fractions of itabirite. making use of ultrafines (until then considered a waste product) of South Africa (30%) and a private Brazilian group called Hugo Cauê Mine has been in operation ever since CVRD was through pelletizing. Consequently, the company decided to build Gouthier (19%). Thirdly, CVRD acquired mining rights to the São established in 1942 – and sampling work was carried out even two industrial pellet plants next to the Port of Tubarão. Luís, Tamanduá and Almas deposits, located near Fazendão, where earlier, in the 1920s, at the instigation of Percival Farquhar. Cauê’s CVRD’s first pelletizing plant, which had a nominal production the EFVM had a railroad yard. mining plan, the top priority during the company’s early years, capacity of 2 million metric tons of pellets per year, was opened Caraça Mine began operating in 1976, producing 1.2 million was explained in detail by CVRD’s first president, Israel Pinheiro, in 1969. The same year, in light of research pointing to growth in metric tons by the end of the year. The mine’s output rose to 1.5 in a speech given at the Engineering Club in August 1943: “The global demand for pellets, due to their superior performance in million metric tons in 1977, and increased further to 2 million facilities designed to extract, crush and transport ore, and then blast furnaces and the spread of new direct-reduction steelmaking metric tons in 1978. Minas d’El Rey started up in 1977, and produced load it onto the Vitória-Minas’ railroad cars, will be modern and processes, Vale began building its second unit, designed to produce 800,000 metric tons in its first year. Given the lack of a railroad link perfect. The initial workings will be at an altitude of 1,200 meters, 3 million metric tons per year, which it opened in 1973. between the mine and CVRD’s network, its output was transported 170 meters below the top of Cauê Peak. The first extraction will by road to the Port of Rio de Janeiro. However, at the end of the take place at this level, producing an estimated 80 million metric Exhaustion of mineral deposits decade, given constantly rising freight costs (accounting for 70% tons from the deposit between 1,200 and 1,370 meters of altitude. All these initiatives to optimize the production of the Itabira of export prices in 1977), CVRD decided to suspend the company’s At the 1,200-meter level, a platform will be made sufficiently large mines faced a serious limitation: if the pace of extraction were activities, which were considered uneconomic, maintaining its to install initial equipment and a truck-turning area. This platform to be maintained, the mines’ high-grade ore deposits would be deposits as strategic reserves. will be the starting point for a road to go around the peak, enabling completely exhausted by the end of the century. It was vital for In August 1974, after 13 years of negotiations between CVRD and excavation to take place by means of tunnels or directly at the CVRD to find new sources of minerals at once. Aços Especiais de Itabira (Acesita), the two companies established pit faces established [...] In the zone where galleries have been Over the course of the decade, this concern led CVRD to intensify a joint venture (51% owned by CVRD), Itavale Ltda., to facilitate made, calculations indicate a quantity of 173 million metric tons its purchases of ore from small producers in the Itabira region19 the exploitation of Acesita’s Periquito and Chacrinha deposits in of exportable ore of compact hematite with metallic iron content and to seek to expand its mining rights both inside and outside the Itabira region of Minas Gerais. The shareholders’ agreement ranging between 68% and 70%.”17 established that CVRD would immediately begin operating Between 1942 and 1949, the company would remove Periquito Mine through a lease, and would also be responsible for approximately one million metric tons of compact hematite from 18 - See Pimenta, Dermeval. Exportação de minério de ferro pelo Vale do Rio Doce. University selling the ore produced. This contract was valid for three years, of São Paulo Polytechnic School. Geology and Metallurgy. Newsletter no. 7. Published by Centro Moraes Rego, October 1949, p. 66. 17 - See “O Brasil e seu minério de ferro.” O Observador Econômico e Financeiro, no. 117, 19 - For figures on CVRD’s ore acquisitions year by year, see the Board of Directors’ Reports, 20 - Regarding CVRD’s new iron ore projects, see Fernandes, Francisco do Rego (org.), op. October 1945, pp. 50 and 64. 1968-1978. cit., vol. 1, pp. 64-73.
Vale Our History Vale Our History and it could be renewed if more time were required for Itavale to (IDB). Brazilian funding agencies that lent to the company during this complete studies of its reserves and produce a definitive plan to period included the National Economic Development Bank (BNDE),22 extract them. Mining activities at the Periquito deposit began in Banco do Brasil, and the Minas Gerais Development Bank. 1976, and in its first year the mine produced 3.6 million metric tons of iron ore, rising to 3.8 million metric tons in 1977 and 5.9 million metric tons in 1978. 158 A second project aimed to develop Capanema Mine, in the TABLE 4 159 municipality of Ouro Preto, Minas Gerais, whose mining rights CVRD’S IRON ORE PRODUCTION belonged to the Kawasaki Steel Corporation. To proceed with the AND ITS SHARE OF BRAZILIAN IRON ORE OUTPUT project, a new company, Mineração Serra Geral (MSG), was set up (MILLION METRIC TONS) in October 1976, through an association between CVRD (51%) and a group of Japanese companies led by Kawasaki Steel.21 In order to process the ore produced at Capanema Mine, in 1977 CVRD'S BRAZILIAN CVRD/BRAZIL YEAR CVRD began another initiative, called the Timbopeba Project. As PRODUCTION PRODUCTION % well as processing ore from Capanema, this project also involved 1968 11.830 25.123 47.1 mining and processing ore from the neighboring deposit of Timbopeba, also in Ouro Preto. Acquired by the company in 1967, 1969* 14.875 27.157 54.8 the Timbopeba reserves contained an estimated 110 million metric 1970* 20.654 36.381 56.8 tons of hematite and 50 million metric tons of itabirite. CVRD’s traditional mines of Cauê, Conceição and Dois Córregos, 1971* 19.749 37.486 52.7 together with the new mining operations developed elsewhere in 1972* 25.043 46.471 53.8 Minas Gerais, produced rapid growth in output in the 1970s. The company’s set of mining operations in the Iron Quadrangle produced 1973* 30.304 55.020 55.1 390 million metric tons of ore over the course of the decade, giving 1974* 42.675 91.488 46.6 rise to various types of products. Output of pellet feed and sinter 1975 52.227 108.162 48.3 feed grew significantly during this period, and by 1977, these items accounted for 13.8% and 36%, respectively, of CVRD’s total 1976 49.883 107.395 46.4 production. However, there was a decline in the company’s share of 1977 42.796 100.817 42.5 Brazilian iron ore output, from 56.8% in 1970 to 48.3% in 1975 and 43.3% in 1978, as shown in Table 4. 1978 45.000 103.896 43.3 CVRD’s investments to expand its mine-railroad-port complex were to a large extent enabled by funding and loans from various * From 1969 to 1974, CVRD’s export volume exceeded its production level. This is international entities, notably Eximbank, the Export Development explained by its increasing use of stocks of fines accumulated by the company. Sources: Corporation (EDC), Chase Manhattan Bank, Chemical Bank, Fernandes, Francisco Rego (org.), op. cit., vol. 1, p. 176; AEB 1978, p. 418. Commerzbank AG, Austrian group Vereinigte Oesterreichische Eisin- und Stahlwerke Ag (VOEST), Mitsubishi Bank Ltd., Nissho-Iwai Co. Ltd., Mitsui & Co. Ltd., and the Inter-American Development Bank 22 - The BNDE was established in 1952 to promote the government’s national economic development policy. In the early 1980s, the bank incorporated the management of a new Employees of the “Mechanized I” tax associated with social issues. As a result, in 1982 the bank’s name was changed to the unit – a system for ore crushing, 21 - Kawasaki Steel had a 24.5% stake in MSG, together with Mitsubishi Mining (5.62%), National Economic and Social Development Bank (Banco Nacional de Desenvolvimento screening, conveyor belt transportation, Nomura Trading Co. (7.16%), Kawasho Corp. (4.22%), Kawatetsu Bussan Co. (2.6%), Nissho- Econômico e Social, or BNDES). See BNDES – História, available at
Vale Our History Vale Our History Left: Vale employee in front of a company poster in the Carajás Mountains of Pará in 1974. Opposite page, left to right: visit by an official delegation from China, attended by Zhao Ziyang and Eliezer Batista; and geologist Gene Tolbert in Carajás, Pará, on September 17, 1967.
160 5.5 Arriving in Carajás for a great variety of mineral deposits. This type of formation is of iron to assess the region’s capacity. From a hotel in Rio de Janeiro’s 161 conductive to the presence of concentrations of iron, manganese, South Zone transformed into the company’s main office in Brazil, It is said that during a visit to the Carajás Mountains in Pará, Zhao aluminum, copper, zinc, nickel, chromium, titanium, phosphates, various applications were submitted to the DNPM for research Ziyang,23 the prime minister of China, seeing a large outcropping of gold, silver, platinum, palladium, rhodium, tin, tungsten, niobium, permits to appraise the mineral deposits found in Pará. The Carajás iron ore sticking out of the ground, told CVRD’s geologists: “Your tantalum, zirconium, rare earth minerals, uranium and diamonds – Mountains began to be definitively mapped. ancestors must have pleased God for him to have given you so a veritable El Dorado of the 20th century. Although US Steel had the legal right of preference to conduct much. I am envious of you!” Ziyang, who was in Brazil from October In Carajás – and this continues to be confirmed as time goes on – research of the deposits it had discovered, its intention to exploit the 30 to November 4, 1985,24 was the second most senior official in the this concentration and variety of mineral deposits extends to levels mineral wealth of Carajás was not viewed favorably by the Brazilian Chinese government and the person responsible for the country’s never before imagined. Hence the Chinese prime minister’s remark government. Based on restrictions established in the Mining Code economic liberalization. about Brazilians having “pleased God.”25 on the number of prospecting licenses that a single company could The Carajás Mountains are a set of ridges and plateaus rising to CVRD arrived in Pará some time after geologist Breno dos hold, the DNPM stalled the process of granting permits for the between 300 and 400 meters above the surrounding land, reaching Santos first knocked his hammer into the earth on top of the region until mid-1969. That was when the government managed altitudes of around 660 meters above sea level. Located between Carajás Mountains, revealing the region’s potential to the world. to persuade the American company to include CVRD as majority the Itacaiunas and Parauapebas rivers, tributaries of the Tocantins, Although it had made its discovery three years previously, US Steel partner in a unified mineral research project covering an area the mountains are almost entirely covered with equatorial forest. subsidiary Companhia Meridional de Mineração had not yet started of 160 million hectares. The agreement was signed in April 1970, In the highest region, there are a number of small lakes that, at to exploit the area’s minerals, for various reasons. The ensuing establishing the Amazônia Mineração S.A. (AMZA) joint venture, first glance, might appear to indicate the presence of limestone, but dispute for control of the iron ore reserves of Carajás between owned by CVRD (51%) and Companhia Meridional de Mineração which in this case are related to iron deposits. The region also has the Brazilian state-owned enterprise and the American company (49%). AMZA was tasked with implementing the Carajás Iron Project. manganese, copper, gold, nickel and much more. that discovered them constitutes an important chapter in CVRD’s Later in 1970, AMZA began the geological surveying of its Most of the world’s metallic mineral deposits are situated in pre- history in the 1970s. reserves, completed in 1972, which would reveal the existence of Cambrian areas, belonging to the longest period in the formation of As seen earlier, the research conducted by Companhia Meridional around 17.9 billion metric tons of ore with an average iron content the Earth’s crust, which lasted from the solidification of the planet’s in the Carajás Mountains, which resulted in the discovery of the of 66.1%. Given these results, the joint venture immediately surface until 570 million years ago. The physical and chemical region’s iron-bearing potential, had the original objective of finding initiated technical and financial feasibility studies for exploiting conditions during this period were very different from those of new manganese reserves. Before Meridional came to the region, the deposits, to be conducted by Valuec Serviços Técnicos Ltda.,26 today, with a much thinner crust, making it easier for metals to rise Union Carbide had discovered manganese deposits in 1966 in the as well as negotiations with the DNPM to obtain the right to mine up from the deepest parts of the Earth. Sereno Mountains, also in Pará. At first, Meridional demonstrated in the region. Pre-Cambrian zones cover around 40% of the Amazon. Their no interest in its iron discovery, given that its objective was The conclusions of these studies were presented in May 1974 volcanic-sedimentary sequences, granite intrusions, acid and manganese. Breno dos Santos recounts that he had to take his boss, and, the same year, the DNPM authorized mining operations. intermediate volcanic flows, alkaline-ultrabasic and basic- Gene Tolbert, to see the location of the discovery in person in order Budgeted at US$930 million, the Carajás Iron Project planned ultrabasic complexes, and sedimentary covers present the potential for him to take it seriously. And then things changed. to extract 12 million metric tons of iron ore per year as of 1979, Tolbert immediately put in a request to US Steel’s American reaching output of 50 million metric tons per year by 1985. The main headquarters to send down technicians with specialist knowledge 23 - Zhao Ziyang was the prime minister of China from 1980 to 1987, and secretary-general of the Chinese Communist Party between 1987 and 1989. 26 - This engineering and planning services company was established as a subsidiary of 24 - See Veja magazine, “Visita pioneira,” edition 896, November 6, 1985, pp. 48-53, and 25 - See Santos, Breno Augusto dos. “Recursos minerais da Amazônia,” Estudos Avançados, Rio Doce Engenharia e Planejamento (RDEP), a company controlled by CVRD, and USS Jornal da Vale. “Vale negocia com China e URSS,” no. 86, November 1985, pp. 3 and 5. vol. 16, no. 45, May-August, São Paulo, 2002. Engineers & Consultants, a US Steel subsidiary.
Vale Our History Vale Our History 162 163
Aerial view of Carajás Mine, Pará, on January 14, 1985.
Vale Our History Vale Our History By that time, it was thought that Carajás’ output, given its excellent quality, would enable the company to meet
destinations for the ore would be the North American, European new demands and also serve markets already supplied and Japanese markets. To transport the ore from the mine to the coast, an 892-kilometer railroad – the Carajás Railroad – would be by the mines of the Doce River System, retaining the built, linking Marabá in Pará to Ponta da Madeira in São Marcos Bay in the municipality of Itaqui, Maranhão, near São Luís. Here, a reserves of Minas Gerais to be allocated preferentially to port capable of receiving ore carriers of up to 280,000 DWT would be constructed. support the Brazilian steel industry The environment, nationalism and controversy Carajás Iron was no ordinary project. All stages of its development involved money, politics, the environment, human lives, nationalism – and a great deal of controversy. One of the most contentious points was AMZA’s decision to build a railroad rather than using waterways. The initial option was to make use of the Tocantins and 164 Itacaiunas rivers. Some sectors of society argued that implementing control of the project. Using these powers, US Steel blocked CVRD’s position to negotiate with US Steel, which did not assure it a 165 a waterborne solution – involving the construction of a port in proposals to expand AMZA’s paid-up capital and delayed the start considerable market share, was not injecting resources into the Espadarte, at the mouth of the Pará River, near Belém – would not of construction work in Carajás, alleging that conditions on the project, and [...] was in a downward managerial and economic only benefit communities along the rivers, but would also avoid global iron ore market were unfavorably affected by the crisis in phase, with a deteriorating financial situation.”29 Joel Mendes Rennó spending on imported locomotives, tracks and metal bridges. the steel industry in the main industrialized countries. The first measure taken by the “new” AMZA, now entirely The solution could be implemented by the Brazilian shipbuilding There then began a long and fierce dispute between the controlled by Companhia Vale do Rio Doce, was to undertake new industry, which was fully able to deliver the undertaking. Some partners for effective management and technical control of the studies to reappraise the most appropriate production scale for the When he was appointed CVRD’s president in 1978, Joel people even suspected that US Steel’s preference for a railroad was joint venture. CVRD’s strategy, backed by the Brazilian government, project and verify the possibilities of rationalizing its costs, which 1 Mendes Rennó (Belo Horizonte, Minas Gerais, 1938) was the result of confidential agreements with CVRD guaranteeing the was to exert pressure to revise key contractual clauses and bring had already grown from the US$930 million originally budgeted in already intimately familiar with the country’s mining American group the right to supply the equipment required to build in other foreign partners by acquiring a part of US Steel’s stake 1973 to around US$3.5 billion. These studies resulted in a new initial policy. Since 1975, he had been an advisor on strategic and operate the railroad. in the venture. An important step in the negotiations, conducted production target of 20 million metric tons per year, as of 1984, rising affairs to the Minister of Mines and Energy, Shigeaki Ueki, In fact, CVRD’s preference for the railroad solution was based personally by CVRD’s president, Fernando Roquette Reis, was the to 35 million in 1987. The project’s costs were reassessed at US$2.4 and was responsible for relations between the ministry not only on technical and financial considerations, but above all approval in 1976 of a “purchase clause.” This clause established that billion. At the same time, CVRD intensified its negotiations to find on strategic factors. The Port of Espadarte would only be able to in the case of an irremediable disagreement about an issue of vital new foreign investors, as well as external and internal funding for and state-owned companies. Rennó’s main goal as receive small ships. At that moment, selecting Espadarte could interest to the majority partner, the latter would have the right to the necessary construction work. president was to implement the Greater Carajás Project, make it unfeasible to sell ore to Japan, which the company acquire the dissenting group’s shares for a price agreed to at the The company’s efforts to find new partners were unsuccessful. which in fact occurred in 1979. then considered its priority market, thereby making the project time and with a relatively flexible payment timeframe. At the same There then followed a period of saturation in the international A qualified engineer who graduated from the Federal completely dependent on the North American market.27 time, CVRD managed to force the dissolution of Valuec, dominated iron ore market, impacted by the crisis in the steel industry. University of Itajubá, Rennó spent a relatively short time The discussions concerning which transportation system should by the American group, and to obtain more control over AMZA’s Even the Brazilian government began to doubt the possibility of – a little over one year – as the president of CVRD. During link the mine to the port (waterway or railroad) also involved, engineering department, which would take on the activities of the guaranteeing, without risks, the start-up of production in Carajás. his administration, he prioritized the construction of the among other actors, the governments of Pará and Maranhão, each dissolved subsidiary. The Minister of Mines and Energy, Shigeaki Ueki, argued that the one seeking to guarantee for its state the benefits arising from The disagreements between the two companies, aggravated development of the Carajás Iron Project should be delayed until Carajás Railroad, which would transport iron ore from the project. The issue continued to be debated until 1976, when by US Steel’s refusal to abide by its ore purchase commitment,28 economic conditions were favorable. Pará to the Port of São Luís. He was responsible for the federal government, through Decree 77,608, granted AMZA a culminated in the official exit of the American company from Despite these obstacles, CVRD insisted on the project’s economic designing and implementing the new mine-railroad-port concession to build and operate the Carajás-Itaqui Railroad. the venture in June 1977, after receiving compensation of US$50 feasibility and the need to implement it immediately, based on complex, fundamental to the development of the region While these controversial discussions were taking place, in the million. CVRD then became AMZA’s sole shareholder. two arguments. Firstly, the company explained, it was impossible and to the company’s success. Rennó left his post in 1979, first half of 1975 the first conflicts between CVRD and US Steel CVRD’s role in ending the dispute was highlighted by Francisco to meet the steel industry’s growing demand for high-grade fines when General João Figueiredo took over as President of began to surface. Although the Brazilian company had a majority do Rego Fernandes: “CVRD negotiated in a tough, inflexible manner. (sinter feed) exclusively from production in the Iron Quadrangle, the Republic. He later served as president of Petrobras, interest in AMZA and appointed four of its directors, including the [...] Possessing basic technological knowledge of iron ore, already whose richest reserves were running out. The use of lower-grade president, the shareholders’ agreement signed in 1970 gave the accounting for around 20% of the seaborne iron ore market, and remaining in this position for almost seven years, minority partner a veto over all strategic decisions taken by Vale. aware of concrete proposals for external funding, for example from between 1992 and 1999. US Steel also appointed the most important directors, including the World Bank [...], CVRD considered itself to be in a comfortable 29 - See Fernandes, Francisco do Rego (org.), op. cit., vol. 1, p. 110. As of November 1976, CVRD had contributed 73.9% of AMZA’s total paid-up capital, although the joint venture’s the director of engineering, which in practice gave it management shareowner composition had not been modified. These share issues, fully subscribed by 1 - About this subject, see “Rennó, Joel Mendes,” DHBB, vol. 5, pp. 4,964-4,965 and CVRD, involved a special type of share, without voting rights (“D-class” shares), a solution “Conheça todos os presidentes da história da Vale” (Learn about all the presidents 28 - Although US Steel had made a commitment to buy up to 50% of Carajás’ output, at found by the company to enable the project to move ahead, given that the Americans in Vale’s history), Exame magazine, April 5, 2011. 27 - See Fernandes, Francisco do Rego (org.), op. cit., vol. 1, pp. 107-108. the time the company was negotiating to consume just 9 million metric tons per year. refused to continue investing while negotiations were ongoing.
Vale Our History Vale Our History Previous page: CVRD president Joel Mendes Rennó (seated on the left) at the signing ceremony for the Albras/Alunorte agreement in July 1978. Opposite: aerial view of Carajás Mine, Pará, amid the green Amazon Rainforest.
31 166 reserves, in turn, would require new and growing investment in main financers of the Greater Carajás Project – imposing certain 167 processing. Therefore, high-grade iron from Carajás would be conditions on the granting of further resources to continue the welcome on the international market. venture. Accordingly, the World Bank indirectly took on the role of Secondly, CVRD made an optimistic diagnosis of the market’s supervising it, representing the interests of the other creditors, and prospects, forecasting an upturn in sales as of 1985. By that time, the Bank’s support would guarantee the success of the initiative’s it was thought that Carajás’ output, given its excellent quality, implementation.32 From this point on, funding for the Brazilian would enable the company to meet new demands and also serve government would depend on government actions to ensure the markets already supplied by the mines of the Doce River System, sustainability of indigenous peoples.33 retaining the reserves of Minas Gerais to be allocated preferentially Occupying the region – with housing, people, commerce and to support the Brazilian steel industry. basic infrastructure – was fundamental to the project’s success. The eastern portion of the Amazon was considered a region that Carajás Mineral Province was hard to integrate, almost impenetrable. By this time, major In order to implement the Carajás Iron Project, Eliezer Batista, reserves of bauxite, manganese, cassiterite, copper, nickel and gold then president of Vale, needed the support of the World Bank had already been discovered in the region, and it would be possible (among other institutions), at the time led by Robert McNamara, to harness them together by using the Carajás Iron Project’s former Secretary of State in John F. Kennedy’s government. infrastructure. Eliezer described McNamara as one of the most intelligent and In February 1978, convinced of the importance of the venture, fascinating people he had ever met. “No one could convince him the Economic Development Council authorized the construction with the sales pitch of a carpet salesman,” he said. “As a banker, he of the Carajás Railroad, which began in July, with the building of wanted a return on investment.” Eliezer personally checked every the first 82-kilometer stretch. The project was only implemented detail of the project, and four years of work was necessary before more intensively, however, as of 1979, during the government of he presented it. Yet in just three meetings with the American, he João Figueiredo. got the green light. However, this was not enough to get the project From that point onward, Carajás would become CVRD’s top- off the ground.30 priority project. Information reported by both the Brazilian and foreign press, obtained by researchers and non-governmental organizations engaged in defending the rights of indigenous peoples, showed the 31 - Besides the World Bank, with US$305 million, participants in funding the Carajás need for the Brazilian government to work together with indigenous Iron Project also included the BNDE, the European Economic Community, Japan and, communities. This contributed to the World Bank – one of the later, American commercial banks and the USSR. See more about the topic in Antonini, Giorgio de. “O Programa Piloto para Proteção das Florestas Tropicais do Brasil (PPG-7) e a globalização da Amazônia.” Revista Ambiente & Sociedade, vol. XIII, no. 2, pp. 299-313, July to December 2010 (available at
Vale Our History Vale Our History 168 5.6 Docegeo: geological research and technology Finally, there was the establishment of Docegeo, which would 169 unify CVRD’s geological research (by introducing planning and, above Three initiatives between the 1950s and 1970s34 marked the all, technology) and employ some of the country’s best geologists. manner in which the Brazilian government – including CVRD – Interested in expanding and diversifying its investments in the demonstrated its interest in geological research in the country. mining sector, in July 1971 CVRD established Rio Doce Geologia e The first initiative, which occurred under Juscelino’s goverment, Mineração S.A. (Docegeo). A wholly owned subsidiary, Docegeo was in 1957, was the creation of the first Geology course in Brazil at the tasked with exploring and harnessing mineral deposits, both in Geology School of Porto Alegre. Until then, the work of geologists Brazil and abroad. The subsidiary’s articles of incorporation also was performed by mining engineers. The teaching of Geology at predicted “searching for, researching and mining solid mineral and universities resulted from the activities of the Campaign to Train fossil fuel substances, and the distribution and sale of its products, Geologists (Campanha de Formação de Geólogos, or Cage). That whether raw, processed or industrialized.” The pioneering age of same year, geology schools would also be established in São Paulo, geological research – with men driven by instinct, rustic maps, Ouro Preto and Recife. The specific work of geologists, as seen in the hammers and courage – was coming to an end. The company adventure of the discovery of Carajás, was key to the rapid growth had realized that its productivity would multiply through prior of the mining sector during this period. research and the use of technical apparatus capable of anticipating Another important initiative was the foundation, in 1969, of the discoveries of mineral deposits and their economic value. Docegeo Mineral Resources Research Company (Companhia de Pesquisa de – as will be seen below – soon set the benchmark for more feasible Recursos Minerais, or CPRM). Established under the administration exploration of the country’s underground resources. It would also of the Minister of Mines and Energy, Antônio Dias Leite (who had complement the diversification plan developed by CVRD at the end also been president of Vale), the CPRM had the main mission of of the decade. intensifying the harnessing of water and mineral resources in the According to its articles of incorporation, the new company would country. The CPRM would operate as a service provision company, not be restricted to CVRD projects, and could also “participate in other performing mining-related work for third parties, carrying out its companies directly or indirectly related to its corporate objectives, as own research and, as a finance company, supplying risk capital to partner or shareholder,” as well as “provide third parties with any mining companies that requested it.35 services related to the aforementioned corporate objective.”36 In practice, the company was the pioneer in mineral prospecting in the country. Its dedication to geological investigation and the development of underground sampling and exploration technologies had a significant effect: three years after establishing 34 - The information related to this item was taken from the following works: Fernandes, this subsidiary, CVRD would become the world’s leading iron Francisco do Rego, (org.), op. cit., vol. 1, pp. 216-227; Machado, Iran. Recursos minerais: política exporter, accounting for 16% of the seaborne trade in the product. e sociedade. São Paulo: Edgard Blücher, 1989, pp. 373-376; and Pereira, Diamantino et al. Geografia, ciência e espaço: o espaço brasileiro.São Paulo: Atual, 1993. 35 - See “CPRM lança as bases para a modificação de assistência financeira à pesquisa mineral.” Mineração Metalurgia, August 1979, p. 6, and “A Companhia de Pesquisa e Recursos Samples of ore from Carajás Minerais (CPRM) está comemorando seu 2o aniversário,” Mineração Metalurgia, February Mine, Pará, in the 1960s. 1972, p. 38. 36 - Cited by Fernandes, Francisco do Rego (org.), op. cit., vol. 1, p. 219.
Vale Our History Vale Our History Previous page: camp used by the Companhia Meridional de Mineração’s manganese prospecting work, in Barra do Buritirama, Marabá, Pará, in 1968. Left: geologists McCandless, Hirata, Rigon and Midleton visiting Docegeo’s camp in Rio Novo, Pará, in 1976.
170 Headquartered in Rio de Janeiro, Docegeo began operating in To facilitate its activities on a national scale, between 1971 Between 1971 and 1978, CVRD transferred around US$82 million Pesquisas Tecnológicas, or Deteg), based at the “km 14” point on the 171 1972 with a workforce of 73 geologists. To determine its subsidiary’s and 1972, Docegeo formed four regional prospecting districts, to Docegeo, most of which was invested in the Amazon district. BR-262 highway 25 kilometers from Belo Horizonte. Deteg’s work operational details, CVRD hired the services of consulting firm determined in line with planned projects: the Amazon, covering Major achievements in this district during this period included enabled the economic exploitation of mineral deposits discovered Terraservice, owned by American geologist Gene Tolbert, one of the North region and Maranhão, headquartered in Belém; the the following: the discovery in 1972 and 1973 of significant bauxite and studied by Docegeo. Deteg’s main achievements in the 1970s the people responsible for discovering Carajás. The consultancy’s Center-West, encompassing the states of Goiás, Mato Grosso and deposits in Paragominas, Almeirim and the Jutaí Mountains in Pará, included technological capacity-building projects to make full first measure was to hire foreign geologists, geochemists and Piauí, headquartered in Goiânia; the Center-East, covering Minas leading CVRD to implement an aluminum production complex use of the company’s iron reserves in the Iron Quadrangle, and geophysicists in order to train the Brazilian team. Gerais, Espírito Santo and Rio de Janeiro, headquartered in Belo in the north of the country; the discovery in 1974 and 1975 of the development of processes to concentrate phosphate rock Docegeo’s initial objectives were defined in its First Three Year Horizonte; and the East, headquartered in Salvador, to operate cassiterite deposits in Antônio Vicente, near São Fidélis do Xingu and anatase ore from the Tapira and Salitre deposits and for the Plan for Geological Prospecting (1972-1975), which established the in the Northeast region. Besides these districts, offices were also in Pará; geological prospecting work conducted in the Araguaia- mechanical, metallurgical and chemical processing of bauxite, priority of working with 14 minerals, namely bauxite, beryllium, opened in Araxá (Minas Gerais) and Cachoeiro do Itapemirim Xingu zone in Pará, where occurrences of copper, lead and zinc nickel, manganese, copper and gold deposits discovered in the cassiterite, lead, copper, chromite, fluorite, phosphate, manganese, (Espírito Santo). In 1976, a new Southeast district was formed, were found; an experimental mining project involving gold deposits Carajás region. nickel, gold, titanium, tungsten and zinc. Vale wanted more than headquartered in São Paulo, extending the company’s activities found in 1976 in the Andorinhas Mountains to the south of the Between 1969 and 1973, CVRD established around 30 small just global leadership in iron ore production. towards the south of the country. The latter district was closed Carajás Mountains; and the sale of gold extracted by prospectors in subsidiaries. At the end of the decade, the CVRD group, including Significant investment was made in the new company. In the down two years later, however. the Pelada Mountains region, sold to Caixa Econômica Federal and AMZA, Docegeo and this set of subsidiaries, had managed to early 1970s, Docegeo had a total of 2,000 employees. By the late Also in 1973, in accordance with the recommendation of the the Brazilian Central Bank.39 As of 1977, the Amazon district took significantly expand its mineral rights, holding 1,151 research 1970s, the subsidiary had 1,200 employees in Belém alone, while a first National Development Plan, the government approved a on the work of assessing manganese and copper deposits recently permits for metallic and non-metallic minerals in 13 Brazilian project was being conducted in the Pelada Mountains of Pará. Besides Basic Scientific and Technological Development Plan. Within the discovered in the Carajás region, previously performed by AMZA. states, covering a total of 3,914 hectares. geologists and scientists, the company employed professionals with scope of the Ministry of Mines and Energy, this plan prioritized Docegeo’s activities in the Center-East district centered on As will be seen in the following chapters, until 2003, Docegeo expertise in aerial and waterway transportation, as well as land three projects related to mining: the implementation of CVRD’s evaluating the Tapira and Salitre phosphate and titanium reserves would be the company’s main research unit. From that point vehicles (jeeps, pickup trucks, and large trucks). Technological Research Center, to support Docegeo’s geological in Minas Gerais, and identifying the limestone deposits of Cachoeiro onwards, new technology projects and institutes would be The geological equipment produced in Brazil – probes and drills, prospecting program; stimulation for CVRD’s CPM research do Itapemirim in Espírito Santo. constructed, continuing and extending the work begun by geologists for example – was now obsolete. Domestic industry had not kept up program; and the establishment of the CPRM Research Center on The Southeast district, during its two years of existence, in the late 1960s. with the innovations in machinery developed in countries such as Fundão Island in Rio de Janeiro, in 1973 and 1974.38 All of these contributed through the discovery of some promising occurrences Canada and Australia. Consequently, Docegeo conducted a program projects sought to contribute to removing one of the biggest of lead and zinc, which were transferred to the Votorantim and to bring together Brazilian companies and the BNDE, which in obstacles to raising the country’s mineral production: a lack of Banespa groups, and an evaluation of copper and molybdenum turn, based on this demand, created a funding program for the expertise in ore processing technology. deposits detected in Caçapava do Sul in the state of Rio Grande 5.7 Going beyond iron technological updating of Brazilian geological machinery.37 In June 1976, due to CVRD’s need to centralize its mineral do Sul. The prospecting strategy adopted was very wide-ranging, covering research activities, until then conducted independently by CPM and Overall, the work conducted by Docegeo during the 1970s allowed At the end of the 1960s,40 Vale was interested in expanding and, research into already known deposits, based on negotiations with Docegeo, it established its Mineral Research Superintendent’s Office CVRD to add more than 35 new mineral deposits to its portfolio, above all, diversifying its activities beyond iron ore production. concession-holders, surveying of new deposits near known ones, (Superintendência de Pesquisas Minerais, or Supem), linked to the containing 11 types of minerals and located in 15 different parts At that time, the company’s leaders believed that Vale’s path and the search for new reserves in virgin areas. The priority, however, company’s administrative structure. Supem was made responsible of Brazil. Finally, it is worth noting the valuable work performed was on projects targeting associations of different minerals. for geological and mineral research in all sectors except iron ore. by CVRD’s Technological Research Department (Departamento de 40 - The basic sources used in this study on CVRD’s diversification policy were the following: Fernandes, Francisco do Rego (org.), op. cit., vol. 1, pp. 32-38; Abranches, Sérgio 37 - Luiz Antonio Godoy, lawyer and former director of Docegeo and the Vale Foundation, 38 - See Presidência da República, Plano Básico de Desenvolvimento Científico e Tecnológico, 39 - The permit to sell gold from the Pelada Mountains was granted exclusively to Docegeo and Dain, Sulamis, op. cit., pp. 69-95; Board of Directors’ Reports, 1969-1978; and Kury, Mário in an exclusive interview with Vale. 1973/1974, pp. 75-76. by the federal government. da Gama, op. cit., pp. 70-120.
Vale Our History Vale Our History 172 to growth could not be based exclusively on the sale of iron ore. Guyana, to provide financial and marketing consultancy services. 173 The implementation of this policy, however, was delayed until the RFID was directly controlled and 90% owned by CVRD. The remaining end of the next decade, given that the company’s resources were shares in RFID were owned by group subsidiaries Rio Doce Europa committed to the expansion of its mine-railroad-port complex, (5%) and Seamar Shipping Corporation (5%). especially the construction of the Port of Tubarão. Docegeo was an CVRD controlled some of its new projects exclusively through important driver in this area. its subsidiaries. Most of the time, however, it opted to establish CVRD’s first diversification project was the establishment in 1967 joint ventures with private Brazilian companies and foreign groups of Florestas Rio Doce S.A., a subsidiary focusing on reforestation with which it already had commercial relationships. CVRD always activities in Minas Gerais. In 1969, the company set up another ensured it was the majority partner in such ventures, but they were subsidiary with the same purpose, this time in Espírito Santo: Rio given the autonomy to take strategic and operational decisions in a Doce Madeiras S.A. (Docemade). Over the next 10 years, driven by fast, dynamic manner. the vigorous expansion of its iron ore sales, CVRD multiplied its A number of factors justified this new corporate policy. On the areas of activity, especially in the mining and metallurgical sectors, one hand, it had become necessary to “dilute the risks of enormous becoming involved simultaneously in various projects to produce investments focused on a single export product.”42 On the other bauxite, alumina, aluminum, manganese, titanium, phosphates/ hand, the massive expansion in the company’s iron ore exports in fertilizers, and timber/pulp. the first half of the 1970s had generated more resources than could Alongside these ventures, which diversified CVRD horizontally, be reinvested in an economically feasible way in its core activities. new vertical investment projects were also developed to process CVRD’s strategy seems to have been determined much more by and industrialize the company’s iron ore output, involving the market considerations than by the need for capital or technology, manufacture of pellets, magnetic ferrites and steel products.41 From although these factors were also important. The entry of external the start, this vertical diversification policy was also an evident capital enabled the simultaneous development of various projects, priority for the new sectors that CVRD entered. which generally involved heavy investment and long maturity To support the company in executing its diversification program, periods. For foreign investors, in turn, the establishment of joint Rio Doce Engenharia e Planejamento (RDEP) was established in ventures with the Brazilian state-owned enterprise was of interest, 1971 to provide technical assistance in the field of engineering. above all, as a means of guaranteeing the regular supply of raw This subsidiary was tasked with conducting feasibility studies and materials and basic inputs for their plants and reducing their costs managing new industrial projects. (This company was closed down of production. in 1979.) In December 1976, CVRD set up another subsidiary, Rio Doce This explains CVRD’s partnerships with business groups from International Finance Ltd. (RDIF), headquartered in Georgetown, Japan, its main iron ore customer, to jointly develop projects directly related to the Japanese economy’s needs (aluminum, pellets and pulp). 41 - In fact, CVRD’s first attempts to develop its activities vertically, represented by the establishment of Companhia Siderúrgica Vatu and Beneficiamento de Itabirito S.A. CVRD employee on top of (Benita), did not progress far. In 1968, Vale decided to liquidate Vatu, in line with guidance a pile of iron ore pellets at from the federal government (cf. Board of Directors’ Report, 1968, p. 43). Benita never started Tubarão Maritime Terminal up operating activities “given that the company itself developed suitable processes for 42 - See CVRD, Divisão de Desenvolvimento (Development Division), Relatório Decenal, 1962- in Vitória, Espírito Santo. concentrating itabirites” (cf. Board of Directors’ Report, 1970, n.p.). 1972, O Minério, May 1973, cited by Abranches, Sérgio and Dain, Sulamis, op. cit., p. 83.
Vale Our History Vale Our History For foreign investors, the establishment of joint ventures with the Brazilian company was of interest, mainly as a means of guaranteeing the regular supply of raw materials and basic inputs for their industry
174 175
Finally, CVRD’s diversification policy aimed to serve government This trend would be reversed at the end of the decade due to interests. In the Brazilian government’s opinion, the experience a number of internal and external factors. On the one hand, the acquired by the company in mining, transportation and foreign decline in CVRD’s profits from iron ore sales, caused by a downturn trade, as well as its elevated status outside the country, needed to in the global steel industry, reduced its investment capacity. On be applied to attract foreign investment and expand exports. the other hand, a worsening of the international economic crisis Accordingly, besides operating as a profit-making enterprise, limited the possibility of raising new funds abroad, aggravating the CVRD also played a strategic role in implementing national company’s financial situation and compromising the development development plans and executing Brazil’s mining policy.43 of its diversification projects. Given this situation, as of 1979, Beginning in 1974, CVRD’s diversification projects acquired a CVRD would be pressured by the government led by General growing weight in its investment program. In the company’s budget João Figueiredo to review its investment program, concentrating for the 1976-1980 five-year period, such projects were allocated resources on mineral extraction ventures (especially the Carajás 32.7% of all its planned investment for 1976. As of 1978, more money Iron Project) and transferring control of some of its projects to the was invested in diversification initiatives than in the expansion of private sector. iron ore production. The most favored sector was aluminum, which received 30% of the diversification program’s investments in 1976 and 1978, slightly more than the Carajás Iron Project.
43 - See Mascarenhas, Raymundo Pereira, “Conferência na ESG,” September 1970, cited by Visit by technicians from Nippon Steel, during the filing Abranches, Sérgio and Dain, Sulamis, op. cit., p. 84. of ore samples from Cauê Mine, in Minas Gerais.
Vale Our History Vale Our History