BREAKINGVIEWS-Ousted Vale CEO returns unshackled by the state

Fri Jul 13, 2012 6:33pm BST

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Raul Gallegos

NEW YORK, July 13 (Reuters Breakingviews) - The ousted chief executive of Vale (VALE5.SA)(VALE.N) is back on the scene. Roger Agnelli was deposed from the Brazilian mining giant last year after resisting President Dilma Rousseff’s meddling. Partnered with billionaire banker André Esteves, he is returning to invest in iron ore and metals. It’s a chance to show he can outperform Brasilia.

During his decade-long tenure running Vale, Agnelli helped create a Brazilian champion that became the world’s second largest miner. His brash style, however, and a decision to spend billions to acquire overseas assets unsettled domestic politicians. And his move to cut 1,300 workers from the Vale payroll in late 2008 didn’t sit well with the country’s unionized workers either. When Agnelli decided to buy ships from Asian builders instead of local ones, Rousseff showed him the door.

Since his departure, things haven’t gone well for most miners, including Vale. They have suffered for Asia’s diminishing appetite for commodities and minerals. Vale’s shares have lost more than 30 percent of their value since April 2011, when Agnelli left. But the billions he spent to extend Vale beyond its core business, including on nickel mining, haven’t helped insulate the company either. Nearly 95 percent of Vale’s EBITDA still comes from iron ore.

The timing must look right to Agnelli for another industry turnaround. He and Esteves, through his fast-growing investment bank BTG Pactual (BBTG11.SA), have built a $520 million war chest to acquire mining assets. And unencumbered by state shackles, Agnelli is already going head-to-head with his former employer. His AGN Participações bought 20 percent of Rio Verde, a small outfit that also mines potash and phosphate, a fertilizer business that Brazil once pushed Vale to build up.

Agnelli’s legacy at Vale is still unclear. But with his privately backed vehicle, he now has the chance to show whether politics was truly encumbering success.

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CONTEXT NEWS

- Roger Agnelli, the former chief executive of Brazilian mining giant Vale, and BTG Pactual’s André Esteves have teamed up to create B&A Mineração, a $520 million mining venture to acquire iron ore and metal-sector assets. BTG Pactual and Agnelli's AGN Participações will each own half of Sao Paulo-based B&A.

- Agnelli was forced out of Vale last year under pressure from the Brazilian government.

- Reuters: BTG's Esteves, Agnelli team up on new Brazil miner [ ID:nL2E8IC2PI]

RELATED COLUMN

Vale of woe [ID:nL5E8E9AOM]

- For previous columns by the author, Reuters customers can click on [GALLEGOS/]

(Editing by Jeffrey Goldfarb and Martin Langfield)

((raul.gallegos@thomsonreuters.com)) Keywords: BREAKINGVIEWS BTG/AGNELLI

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