Lula insists on Mantega and Vale’s succession approaches decision

President Luiz Inácio Lula da Silva (PT)’s insistence on placing former Finance Minister Guido Mantega in charge of Vale transformed the mining company’s succession into a soap opera that will have decisive chapters in the coming days. The company was privatized almost three decades ago, but Lula insists on interfering in its direction.

The mandate of the current president, Eduardo Bartolomeo, only ends in May. But, according to the company’s bylaws, the board of directors must announce whether or not the CEO will remain at least four months in advance. On the 31st, the board will analyze whether to reappoint Bartolomeo or open a process to choose another executive.

The government has spared no effort to promote Mantega’s name. The intention, known for more than a year, had moments of greater or lesser commitment, but never left the radar.

In the first attempt, in 2023, the market reaction was immediate and the company’s shares plummeted on B3, the Stock Exchange. Now, with the end of the current term approaching, pressure from Planalto has intensified.

According to journalist Lauro Jardim, from the newspaper “The globe“, the Minister of Mines and Energy, Alexandre Silveira, would be calling the company’s shareholders and warning them that Lula will not give up seeing Mantega in charge of the mining company. In public, however, Silveira said days ago that the government “has sense” to not try to impose the name of the former minister.

“We will not do anything that could disrespect the company’s governance. We don’t do this with Petrobras, where we are controlling. But we are going to participate in the discussion about the largest mining company in the country, and we want it to return to its position as the largest in the world”, stated Silveira during the World Economic Forum, in Davos, Switzerland.

Bartolomeo took over in 2019, after Fabio Schvartsman resigned following the collapse of the Brumadinho (MG) tailings dam. The tragedy led to compensation of R$38 billion, which is still being paid to the families of the 270 dead.

Bartolomeo was re-elected in 2021. According to behind-the-scenes information, the council is divided over his continuity. In the federal government and the PT, the executive is the target of criticism for its discreet and distant stance from the government, committed to professional management.

Government strategy involves Mantega’s appointment to the Council

Due to the resistance imposed by corporate rules and policies, the possibility of Mantega assuming the presidency is low. He would have to be appointed by a consultancy headhunters independent, which is unlikely.

Therefore, one of the hypotheses discussed was an appointment to the board of directors, for a subsequent path towards the presidency. In this case, it would be necessary for one of the current directors to resign, which would also require a good dose of interference on the part of the government – ​​which, it is worth highlighting, is not a shareholder in the company.

If approved, Mantega would have annual remuneration of R$1.34 million, the average amount paid to the company’s 13 directors. According to rumors, however, Mantega is not content with being a “co-pilot” at Vale and insists on the role of president.

In any case, the path will not be easy. The former minister would have to be approved by the area of compliance of the mining company. Your name would need to go through the nomination board, made up of three members, and then be endorsed by the directors themselves and also by the other shareholders at a general meeting.

Mantega, who commanded the Treasury from 2006 to 2015, was one of the actors in the implementation of the new economic matrix, responsible for the unprecedented economic crisis triggered by the government of Dilma Rousseff (PT). He also chaired the Board of Directors of Petrobras between 2010 and 2015, a time of disastrous business decisions and populist price manipulation that brought billions in losses to the state-owned company.

There is also an action against him that has not yet been judged in the Federal Regional Court of the 1st Region (TRF-1), based in Brasília, regarding an alleged case of corruption related to the construction company Odebrecht (now Novonor) and the federal government. The complaint involves the transfer of bribes for issuing provisional measures for debt installments in 2008 and 2009.

“It will be a test for the company’s governance”, says Alexandre Oliveira, board member and member of the strategy committee of the Brazilian Institute of Corporate Governance (IBGC). “Shareholders have their own interests and the existing mechanisms aim exactly to balance them, in addition to shielding the company from political interference”, he says.

Vale has dispersed control and decisions are made by the board of directors

Vale ceased to be state-owned in 1997, in a move that the PT and the left never accepted. There were protests and campaigns against the sale of the mining company. The government maintained its influence through shares belonging to BNDES and state-owned pension funds, such as Previ, from Banco do Brasil.

In 2020, with the policy of divestment of state-owned companies by the government of Jair Bolsonaro (PL), BNDES sold its shares, promoting a new configuration at Vale. With the dispersion of shares, the company adopted the corporationwithout defined controller, common in the USA.

The American fund BlackRock became a partner in this wave. According to the most recent information available on Vale’s website, the fund had 5.83% of the company on October 31, 2023. The company’s largest individual shareholder is Previ, with 8.71% of the capital, and the Japanese Mitsui has 6.31%. None of the other shareholders have more than 5% of the shares.

The first board of directors, responsible for appointing the company’s CEO, was created in April 2021. The terms of office are two years and, in 2023, the current advisors who will define Bartolomeo’s destiny at Vale were chosen. Of the 13 directors, five are appointed by shareholders, and eight are independent, that is, without ties to the controlling shareholders.

The government’s influence is indirect and occurs through the two seats belonging to Previ, Vale’s largest shareholder. One of them is from the current president of the board, Daniel André Stieler, and the other from João Fukunaga. President Bartolomeo himself was also nominated by the BB pension fund.

Other seats on the board of directors are from Bradespar, controlled by Bradesco, Mitsui and Cosan, a Brazilian sugar and ethanol giant. Controlled by businessman Rubens Ometto, Cosan, which operates in fuel distribution and railway logistics, acquired 4.9% of Vale’s shares last year.

At the time, Ometto managed to place Luís Henrique Guimarães, then president of Cosan, on Vale’s board. The movement gave rise to speculation that the group would work for his nomination for the presidency of Vale.

Negotiations with Cosan and Mitsui are government bets to get Mantega on board. In a move considered explicit behind the scenes of the company, the government appointed interlocutors to articulate the former minister’s appointment with shareholders.

There are several interests at stake. Among them, the granting of environmental licenses for current and new projects; railway contract renewals; and also Vale’s negotiations to repair environmental and social damages. These are discussions that involve tens of billions of reais and government bodies, Justice and Public Ministry.

For economist Samuel Pessôa, from the Brazilian Institute of Economics at Fundação Getulio Vargas (Ibre/FGV), the government has instruments to pressure the nomination.

“The Executive Branch in the country is very powerful. If you want, you can use all your blackmail powers to influence decisions. Members of the council have other interests and it is always important to maintain a good relationship with the government”, he says.

Government follows roadmap for influence and rehabilitation of allies

The government’s chess for Vale’s command follows the roadmap of recovering the influence of companies that once belonged to the State, but were privatized.

This is what Lula tried to do in relation to Eletrobras, without success so far, and in the refineries sold by Petrobras.

Lula also decided to resume a practice from his former administrations, recently allocating R$8 billion from BNDES to purchase stakes in companies, as part of the Nova Indústria Brasil program.

For market analysts, when trying to place Mantega in the largest private company in the country, in addition to transforming it into a strategic partner serving federal interests and projects, Lula also follows the strategy of rehabilitating historical names loyal to him and the PT.

It was like that with former president Dilma Rousseff (PT), today the president of the New Development Bank (NDB), the “Brics Bank”. This is how it is with former Minister of the Civil House José Dirceu and former federal deputy José Genoino, who are starting to have more space in the party and are heading towards a resurgence in public life.

In Vale’s case, the soap opera’s outcome could be a watershed for the company’s future. “Nothing indicates that the board will give up its freedom of choice, preserving the company’s interests. We can only hope that the government practices self-restraint and does not try to force a name, regardless of who it is”, summarizes Pessôa.