194419311966 CHAPTER 4 The Defining Years: CVRD as a World-Class Exporting Company 4.1 All paths lead to the sea metric tons. Tubarão was built in partnership with business people 103 from the Japanese steel industry, and definitively marked a change It is one of those remarkable stories that stand out in CVRD’s in Vale’s export strategy. Long distances, large ships, long-term history: on the day before the official opening of Tubarão Maritime contracts, and enormous quantities of ore: it was a superlative Terminal in Espírito Santo, in 1966, one of the car dumpers vision of what lay ahead. With a pier that sticks out nearly four designed to rotate train cars, dumping their ore onto conveyor belts kilometers into the sea, Vale was pointing to its future. leading to ships, had stopped working. The system’s manufacturer The work included constructing a breakwater, a pier alongside had forbidden unauthorized people from touching the machines 16-meter-deep water, riprap along the shore, where facilities to and, to make things worse, a technician would have to come move and store iron ore and coal were located, a railroad yard, from Canada to resolve the problem. It certainly was a problem. and rolling stock maintenance workshops. The mechanized In a little under 24 hours, the President of the Republic, Marshal facilities for moving iron ore and coal were equipped with modern Castelo Branco himself, would be activating the mechanisms for technological apparatus. Ore was unloaded from trains (with up the first official operation at the terminal, whose construction had to 150 cars) using a rotary car dumper, in a completely automated begun under João Goulart’s government in 1962. It was April 1. A operation. The ore was transported along 60-inch-wide conveyor stage, decorated with the Brazilian flag and the company’s logos, belts directly to a ship loader or to the stockyard, which was had already been erected. capable of storing 1 million metric tons of different types of ore. In The solution was to resort to the wisdom of a shy but competent addition, a screening center was installed between the car dumper Spanish electrician who said that he could make the machine work. and the stockyard to separate ore into the different particle size He was indeed successful. Authorized to try to solve the problem, he categories that were sold. Ore was reclaimed from the stockyard managed to repair the mechanism temporarily and the load carried and conveyed to ships using four excavators, in an operation that by the train was reduced. When the crucial moment arrived, the could move 6,000 metric tons per hour.2 train cars were finally rotated, making the ore fall onto a belt and then into Swedish ship Lapplang, the first to dock at Tubarão. The band played the national anthem. President Castelo Branco clapped his hands in satisfaction. Tubarão was open for business.1 Tubarão Maritime Terminal was built at a location around 12 kilometers from the center of Vitória. The existing name of the place, Tubarão (meaning “Shark”), was perfect to demonstrate the aggressiveness of the company’s new plans. Designed by Eliezer Batista four years before it opened, the terminal could receive ships with the capacity to transport up to 150,000 metric tons of ore – at a time when few of the world’s ships could carry more than 60,000 1 - See the statement by José Clovis Ditzel, former president of Rio Doce Internacional, in Histórias da Vale, 2002, p. 87. 2 - See Rangel, Orlando. A Companhia Vale do Rio Doce e o mercado de minério de ferro, 1966, p. 15. Vale Our History Vale Our History Previous photo: a view of Tubarão Maritime Terminal in Espírito Santo. Facing page (in the center): former president of CVRD, Antônio Dias Leite Jr. The first Minister of Mines and Energy was João Agripino, a state deputy from Paraíba, who left his position when Jânio Quadros stood down as President of the Republic in August 1961. During João Goulart’s government, the ministry was run by Gabriel Passos (September 1961 to July 1962), João Mangabeira (July to September 1962), Eliezer Batista (September 1962 to June 1963) and Antonio de Oliveira Brito (June 1963 to April 1964). The changes in the ministry accompanied the political instability of Brasília. Vale reported directly to the MME and its administration reflected the government’s policy for the sector. The shift from the Goulart government to the military regime, as will be seen later on, led to a change in the MME’s orientation, with consequences for CVRD. All the initiatives taken by CVRD throughout the 1960s took place alongside a complex process of administrative reform, activated under the management of Eliezer Batista, who for a time was both Minister of Mines and Energy and the president of the company 104 4.2 CVRD in the 1960s maritime transport arrangements. In 1962, CVRD established a (1961-1964). This process continued under the management of 105 shipping subsidiary, Vale do Rio Doce Navegação S.A. (Docenave). Paulo José de Lima Vieira (1964-1965) and Oscar de Oliveira (1965- If there is one word to describe CVRD’s ambitions for the 1960s, it In turn, the need to transport iron ore in ships with deeper drafts 1967), and moved forward in the administration of Antônio Dias is exportation. Between 1961 and 1967, the amount of iron exported led the company to modernize its port infrastructure, building Leite Jr. (1967-1969). Changes in the company’s structure were by the company rose from 6.1 to nearly 11 million metric tons. The Tubarão Maritime Terminal in Vitória, opened in 1966. Tubarão – as basically dictated by the notable expansion of its activities. CVRD company as a whole – including the iron extracted from its mines, seen in the years that followed its opening – is a special chapter in had grown – and it was necessary for its workforce to be ready for its railroad tracks, and even its investments – pointed towards the Vale’s history. new times.6 Antônio Dias Leite Jr. terminal. There was a leap in exports. At the end of this period, Vale Concerned to raise its iron ore output – to serve both rising was one of the world’s biggest exporters, selling 26 different types foreign demand and the fast-growing Brazilian steel industry – Antônio Dias Leite Jr. (born in Rio de Janeiro in 1920)1 was of mineral.3 Vale acquired new mines in the state of Minas Gerais. At the same time, it had to adapt its production to the changing steel industry’s appointed to run CVRD in March 1967, at the age of 47. A For some time already, the United States had not been Vale’s 4.3 The global iron ore market grows main commercial partner. The amount of ore exported from Brazil new needs, as Siemens-Martin furnaces were replaced with Linz- qualified engineer, at the time of his appointment he was a to America was declining – in absolute terms and (especially) in Donawitz (LD) furnaces, which required better quality ore. and Vale changes its strategy respected professor at the Economics Institute of the Federal relative terms. (See Table 1 in Chapter 3.) Meanwhile, West Germany The growing importance of mineral sector activities in Brazil University of Rio de Janeiro (UFRJ). His study Caminhos do In the 1960s, the emergence of new iron ore producing countries, and Japan were becoming the company’s main markets. Existing – spanning iron to oil, as well as coal and essential steelmaking desenvolvimento (“Paths to development”), published in 1966, inputs – was evident in the establishment of the Ministry of Mines particularly Australia,7 increased supply above levels of demand. contracts were bolstered and new ones established, involving many discussed the economy’s growth prospects and pointed European countries, including in the Soviet bloc. Beneath these and Energy (MME).5 Since the 1940s, technicians at the DNPM and The effect was a reduction in prices, stirring up competition to the potential for foreign trade. It was a kind of letter changes lay a new way of doing business. the National Mines and Metallurgy Council had been calling for between producers and turning the international market upside CVRD’s strategy for winning new markets was focused on the the creation of such a ministry, and President Vargas announced down. Whereas in the 1950s the sellers had dictated the rules of the of intent. Not surprisingly, his leadership of CVRD was use of contracts – now long-term. Another innovation that served plans for one in his message of 1952 to the National Congress. In game, now it was the turn of the buyers. The fall in ore prices was marked by encouragement of exports. Dias Leite sought the company’s expansion was the ending of exclusive agents, to be due course, the MME was established on July 22, 1960 during the severe. From 1951 to 1954, the average price of ore shipped from direct contact with iron-consuming companies, enabling Vitória on an FOB basis was US$12.93 per metric ton, while between replaced by subsidiaries.4 Each subsidiary – in fact an arm of the Kubitschek administration, although it only began functioning on the joint construction of ore pelletizing plants. In 1969, February 1, 1961, one day after Jânio Quadros was sworn in as the 1960 and 1972, the price fell to US$7.99.8 company – negotiated contracts directly with international buyers. he opened Vale’s first pelletizing plant in Tubarão, Espírito country’s president. CVRD had to review its commercial policy, until then based on Another important step was the signing of contracts with S.A.