By Katie Llanos-Small
Roger Agnelli The secret of success
Urbanization and a growing middle class will buoy demand for raw materials, says former Vale CEO Roger Agnelli
As chief executive of Vale, Roger Agnelli oversaw the
extraordinary transformation of a Brazilian company into a
During his 10 years at the helm – he left the
company in 2011 – Agnelli turned Vale into one of the
world’s biggest mining firms. In so doing, he
helped change the face of Brazilian industry.
In 2001, his first year with Companhia Vale do Rio Doce, as
it was then known, the company posted Ebitda of 5.1 billion
reais. A decade later, adjusted Ebitda was $33.8 billion (81
The impact of Chinese demand for raw materials on Latin
America’s commodities exporters was an important
part of this success, he tells LatinFinance.
"The demand for natural resources that China brought, and is
still bringing, to the market has been incredible –
demand for food, energy and mining South America benefitted
very, very much from Chinese demand, as did other countries in
Asia and even Europe at the beginning of the last decade."
But he acknowledges that a slowdown in Chinese demand for
commodities – a major force behind Latin
America’s advance over the past decade –
could complicate the outlook. "I pray for China every day,
because for Latin America, China was a kind of a miracle," he
But he dismisses suggestions that a period of exceptional
demand for raw materials has come to an end. Even if Chinese
growth moderates, he says, it will still be significant. "The
second largest economy in the world is going to grow 7%, which
is a lot," Agnelli says. Moreover, urbanization and an
expanding middle class will mean commodities are in
ever-greater demand, he says.
Brazil offers the ideal environment to incubate Latin
champions like Vale, he says. "The global companies have to be
here," he says. "The local market is very strong, opportunities
are very good. The macro-economic scenario is good. Other
countries in the region are doing very well, and the middle
class is growing."
Nevertheless, there remain a number of shorter term
challenges facing Brazilian industry, he says.
"The labor force, education, infrastructure, regulation and
reducing bureaucracy: those are the obstacles that we have to
overcome," he says. "The long term trend for countries like
Brazil is still positive. In the short term, it depends how
well we do our homework. And our homework from my point of view
is going to be measured by how in favor of the market economy
As well as searching out new areas of exploration, at Vale
Agnelli also looked to acquisitions for growth. Of those,
Vale’s $18.68 billion purchase of Canadian miner
Inco in 2006 was the most notable. Vale’s global
reach helped it attract the finance – and the deal
cemented its status as a truly global corporation.
Now running his own energy investment firm, AGN
Participações, which is developing a biofuel
project, Agnelli is again looking at acquisitions. A tie-up
with Brazil’s BTG Pactual, called B&A
Mineração, has already bought some greenfield
copper and fertilizer projects – areas the company
views as strategic.
This year’s market rout makes shopping easier
– adding "rationality" to the prices, he says.
"It’s much more feasible, but much more
challenging: you have to have the guts to buy."