Lula increases pressure on Mantega, criticizes Vale and sends messages

President Luiz Inácio Lula da Silva (PT) does not seem willing to give up on the appointment of former Finance Minister, Guido Mantega, to command the mining company Vale, nor to disguise the pressure on the company.

In a decisive week for the outcome of the succession soap opera, Lula criticized the company this Thursday (25), the five-year anniversary of the Brumadinho tragedy, in Minas Gerais. The president took the opportunity to send messages about the need for inspection of mining projects.

“Five years and Vale has done nothing to repair the destruction caused. It is necessary to support the victims’ families, environmental recovery and, above all, inspection and prevention in mining projects, so that we do not have new tragedies like Brumadinho and Mariana”, wrote the president on X (formerly Twitter).

The pressure from Planalto is due to the resistance of the mining company’s board of directors and shareholders in accepting the former minister’s appointment. In recent weeks, at Lula’s request, the Minister of Mines and Energy, Alexandre Silveira, began direct negotiations with shareholders and advisors. Silveira even denied the government’s intention, which was later confirmed. Shareholders have resisted the pressure, as the company, privatized since 1997, has governance and compliance consolidated.

Lula will discuss succession with minister and Previ advisors

Lula scheduled a meeting for Tuesday (30) with the Ministry of Mines and Energy, Banco do Brasil and Previ, the pension fund for BB employees, the company’s largest individual shareholder, with 8.7% of the shares and two seats on the board.

Other relevant shareholders of Vale are the Japanese company Mutsui, with 6.3% of the shares, the American fund BlackRock, with 5.8% and Cosan, a giant with sugar and alcohol businesses, which bought 4.9% of the shares in the year past.

One of the alternatives on the table is to try to get the minister’s approval for the council, but for that to happen one of Previ’s advisors has to resign.

The board of directors meets next Wednesday (31) to decide whether to reinstate current president Eduardo Bartolmeo to the position. If he chooses to continue, the executive will remain at the helm of the company for another three years. Otherwise, the board will choose a new name from a list of three nominations from consultancy firms. headhunting. There are 13 directors, eight of them independent, that is, not related to the shareholders.

Previ is the government’s biggest bridge of influence in Vale. In the past, the government had more power, as it participated in the controlling block through BNDES.

But, with the divestment program of the government of Jair Bolsonaro (PL), in 2020 the BNDES sold its stake and Vale became a corporation. In this model, common in the USA, the company does not have a defined controller. Shares are spread among private investors and there are strict corporate governance rules.

In addition to Previ, another limited instrument to influence Vale are the golden sharesa type of indirect participation that the Union holds in state-owned companies that have been privatized.

At 12 golden shares that the government holds do not yield dividends and do not give the right to appoint a CEO or members to the board of directors. But they guarantee the right to veto company decisions, such as the sale or closure of activities in deposits, railways and ports.

Government has instruments of pressure on companies and shareholders

The government’s message to shareholders has been that, if Mantega’s name is not included, the company will not have government support in some of its operations that depend on the involvement of the federal administration.

Despite professional management, pressure on the company’s choices can work. Large private shareholders are companies that depend on federal Executive decisions for numerous demands.

Vale itself also has a pipeline of projects, especially in infrastructure, that involve federal agencies.

Examples include the railway concessions used by Vale. The Executive intends to re-discuss the contracts extended under the Bolsonaro government, under the argument of the supposedly low amount disbursed by the concessionaires.

Among them are the EFVM (Estrada de Ferro Vitória a Minas) and the EFC (Estrada de Ferro de Carajás), operated by the mining company. The EFC was completely doubled to increase the flow of iron ore from Pará towards the ports of Maranhão. According to government calculations, at least R$20 billion extra should be paid by the company for contract renewals.

Press investigations show that Mantega had signaled to shareholders that he could solve the problems with railway concessions. According to a report on the Infomoney website, Mantega expressed his willingness to work as a link between the company and Planalto.

“For example, in granting environmental licenses for current and new projects, renegotiating renewals of railway contracts and also in negotiations to repair environmental and social damage caused by the collapse of the Fundão dam, in Mariana. The values ​​placed on the table are of tens of billions of reais”, says an excerpt from the report.

In addition to Vale’s interests, there are interests of other large shareholders. Mitsui, BlackRock, Bradesco and Cosan have investments that depend on regulation. In general, companies value having a good relationship with the government and it doesn’t seem like a good deal to disagree with a management that still has three years to run.

According to behind-the-scenes investigations, the government and shareholders are trying to gain time to decide whether or not to renew Bartolomeo’s contract unanimously. A new, albeit shorter, mandate has already been considered for the current CEO. The council is divided on the issue.

In the case of Bartolomeo’s shorter mandate, a highly relevant position on the mining company’s executive board would be negotiated for Mantega. For example, a vice-presidency, Infomoney found.

If Bartolomeo’s stay is denied, Mantega could join the triple list of names to be drawn up by the management company. headhunting of executives. This would leave room until April for negotiations to accommodate the government’s request.

The maneuver is not well received by some of Vale’s investors and even advisors. It goes against all company policies and is an arrangement of interests that are not those of the mining company. A division of the directors’ votes, however, is something that is not wanted for the company.