Vale: Global Expansion in the Challenging World of Mining

Posted: 31 Aug 2010

See all articles by Tarun Khanna

Tarun Khanna

Harvard University - Strategy Unit

Aldo Musacchio

Brandeis University- International Business School; National Bureau of Economic Research

Ricardo Reisen de Pinho

Harvard University - Business School (HBS)

Date Written: June 30, 2010

Abstract

In 2009 the management of Vale, a Brazilian diversified mining company and the largest iron ore producer in the world, was under pressure from at least two fronts. First, the emergence of China as the most important consumer of iron ore in the last few years had changed the pricing system for iron ore from long-term contracts based on negotiated "benchmark prices" to contracts based on spot prices, usually forcing mining companies to pay for shipping. Second, for Brazil's charismatic president, Lula, a former union leader, Vale's layoffs during the global financial crisis and its perceived move away from Brazil (as Vale increased its exports to China and purchased Chinese vessels to ship iron ore to Asia) were reasons to start an open campaign to pressure Vale and Agnelli to invest in integrated steel mills in Brazil. In October of 2009, the CEO of Vale, Roger Agnelli was going to meet with Lula and had to decide what to do to attenuate these political pressures. What could Agnelli do to deal with political pressures at home? Was the purchase of large vessels to ship iron ore to Asia a good decision at a time when the shipping industry had spare capacity?

Suggested Citation

Khanna, Tarun and Musacchio, Aldo and de Pinho, Ricardo Reisen, Vale: Global Expansion in the Challenging World of Mining (June 30, 2010). HBS Case No. 710-054, Harvard Business School BGIE Unit, Available at SSRN: https://ssrn.com/abstract=1668702

Tarun Khanna

Harvard University - Strategy Unit ( email )

Harvard Business School
Boston, MA 02163
United States
617-495-6038 (Phone)
617-495-0355 (Fax)

Aldo Musacchio (Contact Author)

Brandeis University- International Business School ( email )

415 South Street MC 32
Waltham, MA 02454-9110
United States

National Bureau of Economic Research ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/aldo_musacchio

Ricardo Reisen De Pinho

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
1,661
PlumX Metrics