194419312007 CHAPTER 10 Vale: Constructing a Brand 10.1 An international brand copper, manganese ore, iron ore, nickel, bauxite, phosphate, potash, 335 coal, uranium, diamonds and platinum group metals.4 The sum of For 65 years, the CVRD logo was spread out across the four all the results obtained in the year made the company the world’s corners of the world: on train cars, on ships, on train stations, on second largest miner.5 calendars, on appointment books and pens, on the doors of offices and in trade contracts. However, when joining together those letters, everyone – whether engineers, geologists, the company CEO, office assistants, secretaries, mine workers, locomotive engineers, 10.2 A global company shareholders, or passengers at a station – saw only one thing: Vale. Popularly, CVRD was always Vale. Vale and Brazil entered 2007 with good growth prospects. At On November 29, 2007, at Copacabana Fort in Rio de Janeiro, the start of the year, the United Nations issued its annual report, Vale CEO Roger Agnelli brought together around 500 employees to in which the United Nations Conference on Trade and Development announce one of the biggest changes in the company’s history.1 The (UNCTAD)6 ranked the country the 12th largest foreign investor in reasons for the modification may be summed up in just one word: the world in 2006. That year, a total of US$28 billion was invested by globalization. The word “Vale” is easily read throughout the world Brazilian companies.7 Brazil had left behind companies in important and, as of 2006, when it acquired Canadian company Inco, Vale was powers, such as Australia, China and Russia, which invested US$22 expanding across the globe. billion, US$16 billion and US$18 billion, respectively.8 Vale played a From that point onward, Vale changed its name and logo. The major role in Brazil’s high position in the UN ranking, as the company logo shows a stylized letter “V” that can represent either a mining accounted for more than 50% of that year’s investment. This was pit or a heart. The easy-to-read brand reinforced Vale’s image as a largely due to the acquisition of Canadian company Inco, the world’s global company. No longer were different brands and images used fifth biggest takeover in 2006. It was also the largest transaction ever in different areas.2 Vale – modern and plural – was unified. made by a Latin American company.9 As it changed its brand, Vale was a company that would The UN report diagnosed the new times being experienced end 2007 with net income of US$11.8 billion – up 62.9% from by Brazil. The economy had not been dynamic in the 1980s and the previous year – and new records in all sectors.3 Vale was now 1990s, with growth rates below the world average, but this had now present in more than 30 countries and was developing an extensive mineral prospecting program, with projects in 21 countries around the world. The company was mainly looking for new deposits of 4 - See Vale’s 2007 Sustainability Report. 5 - 2008 Press Book, produced by Vale’s Press Office. 6 - The United Nation’s annual investment report is published by the United Nations 1 - “Simplesmente Vale,” IstoÉ Dinheiro, December 5, 2007. Available at <http://www. Conference on Trade and Development (UNCTAD), the UN’s economic development arm. istoedinheiro.com.br/noticias/7239_SIMPLESMENTE+VALE>. 7 - See Vale’s 2006 and 2007 Form 20-F Reports. 2 - Idem. 8 - See “Brasil é o 12o maior investidor no mundo, aponta ONU,” O Estado de S.Paulo, October 3 - US GAAP 4Q07 Results. Available at <http://www.vale.com.br/pt-br/investido res/resultados- 16, 2007. Available at <http://www.estadao.com.br/noticias/economia,brasil-e-o-12-maior- e-informacoes-financeiras/resultados-trimestrais/Documents/2007/4%C2%B0%20Trimestre/ investidor-no-mundo-aponta-onu,65706,0.htm>. Press%20Releases/vale_usgaap_4t07p.pdf>. 9 - Idem. Vale Our History Vale Our History Photo at start of Chapter 10: Vale’s global headquarters in Rio de Janeiro, 2011. 336 changed. In the 2000s, Brazil’s annual GDP growth rate increased of Vale Inco, which was very strong, with revenue from nickel 337 from 1.7% to around 4% in 2006.10 The rise in GDP that year was activities reaching US$11.78 billion. This amount was four times a foretaste of what was to come in 2007, when growth hit 6.1%.11 higher than the previous year’s figure of US$2.8 billion, due to Vale’s share of the total volume traded by Brazil on the seaborne the fact that Vale Inco’s results were only incorporated in the last market in 2007 reached approximately 32.5%.12 The company quarter of 2006. In 2007, 60.3% of total nickel sales were delivered confirmed its vocation as a growth driver of the Brazilian economy, to customers in Asia, 26.5% in North America, 11.6% in Europe and and this would become even more palpable with the results it 1.6% in other locations.15 would achieve year after year. Over the course of 2007, Vale’s shares were the most traded among In 2007, Vale’s gross operating revenues increased by 62.6% all foreign companies on the New York Stock Exchange, surpassing to US$33.11 billion. Segmented investments, the pursuit of even those of BHP Billiton, the global leader in the mining sector.16 excellence in work methods and the good moment the country was Average daily trading volumes were around US$725.5 million. This experiencing made it possible to predict an even better future for was partly related to the company’s strong performance in iron the company. ore production in Brazil and its sales arrangements with Asian The former “country of the future,” as Brazil had been described steelmakers, which in February 2008 agreed to an average price by Austrian writer Stefan Zweig, was now joining the list of increase of 68%.17 emerging countries that were leading global growth. As declared As a consequence of its expansion program, in April 2008 Vale by the UN report, “external investment by Brazilian companies is announced a partnership with Columbia University to establish a to some extent part of an expansion and consolidation process research and technical training center.18 A program for training that is also occurring at home. Brazilian companies are looking to young geologists and engineers developed professionals to conduct consolidate their industries, such as mining and steel, by buying work in locations such as Kazakhstan.19 foreign competitors in order not to lose markets or become Vale’s presence outside Brazil was not restricted to commercial targets themselves.”13 investments. In May 2008, an earthquake measuring 7.9 on the The investment made by purchasing the Canadian company Richter scale hit southwest China, killing around 90,000 people.20 marked Vale’s entry into the international nickel market, making Hundreds of houses, schools and hospitals collapsed in less than it the world’s second biggest producer of the metal.14 For the first a minute. That same month, Vale donated US$1.4 million to the time, the 2007 figures encompassed the annual performance 15 - See Vale’s 2007 Form 20-F Report. 10 - See Brazil, Finance Ministry. “Economia brasileira em perspectiva.” Special year 2010 16 - “Vale é a ação estrangeira mais negociada na Bolsa de Nova York,” Folha de S.Paulo, edition. Available at <http://www.fazenda.gov.br/portugues/docs/perspectiva-economia- Mercado Aberto, January 30, 2008. brasileira/edicoes/Economia-Brasileira-Em-Perpectiva-Especial-10.pdf>. 17 - “O gol de placa da Vale,” Carta Capital, February 20, 2008. 11 - Idem. 18 - “Vale faz parceria com Columbia para criar centro de pesquisa,” Valor Econômico, April 12 - See Vale’s 2007 Form 20-F Report. 30, 2008. 13 - The document was translated by BBC Brazil in “Brasil bate recorde de investimentos no 19 - “Vale lançará três programas para contratação de recém-formados,” O Globo, May 4, exterior, diz UNCTAD,” October 16, 2007. Available at <http://www.bbc.co.uk/portuguese/ 2008. “O Brasil Batizou: Vale!” reporterbbc/story/2007/10/071016_unctadwir07_pu.shtml>. 20 - “A tragédia das crianças,” Veja, May 21, 2008. Available at <http://veja.abril.com. advertising campaign (2007). 14 - See <http://nickel.vale.com>. br/210508/p_078.shtml>. Vale Our History Vale Our History Right: Cateme Elementary School in Moatize, 2011. 338 International Red Cross to help the victims of the tragedy. In strategic objectives and reward performance, among various other 339 addition to this direct donation, Vale undertook to build three improvements implemented. “Vale Hope Schools” in Sichuan Province, through a contribution of US$400,000. African expansion: Moatize, Mozambique On June 4, 2010, Vale’s Executive Director of Ferrous Metals, Mozambique was the first place outside Brazil to receive a José Carlos Martins and China Country Manager, Michael Zhu, branch of the Vale Foundation, whose purpose is to contribute to leading a group of company employees, attended the opening integrated development in the regions where Vale operates. The ceremony of the Vale Hope School in Yongxing Town, the last Foundation’s investments in the African country have prioritized of the three schools handed over in Sichuan. The 6,500-m² projects in the areas of health, farming, infrastructure, sport elementary school has ten classrooms on three floors and is and education. In addition, an initial 1,108 families were designed for 200 students.21 resettled in Moatize, Tete Province, the coal-rich central region of Mozambique.22 This process was finalized in 2010 with the Strike in Canada resettling of 1,365 families.