Vale Iron-Ore Head Martins Leaves as Price Collapses

By Juan Pablo Spinetto  Nov 15, 2014
Bloomberg
Vale SA (VALE5)’s longest-serving executive director, ferrous business head Jose Carlos Martins, is leaving the world’s top iron-ore producer after prices for the steelmaking material fell to five-year lows.

Martins, 64, left the company to pursue new challenges and is being replaced by base-metals head Peter Poppinga, Rio de Janeiro-based Vale said in a statement yesterday. The changes take effect immediately.

“Vale believes Peter’s track record of productivity increases and achievements in cost reductions in the base metals business will serve him well in making the iron-ore business even more competitive,” the company said of Poppinga’s appointment.

Shares of Vale sank to the lowest since 2006 earlier this week after Citigroup Inc. recommended selling the stock on the deteriorating outlook for iron-ore prices. The commodity lost 44 percent this year and trades close to five-year lows as surging supplies from Vale in Brazil and BHP Billiton Ltd. and Rio Tinto Group in Australia created a glut just as China’s economy slowed.

Jennifer Maki, currently chief financial and administrative officer for base metals, will take over as executive director of the unit, replacing Poppinga, Vale also said in the statement.

Earnings Boost

Poppinga, who started at Vale’s iron-ore commercial business in 1999, held positions in Toronto, Switzerland and Australia, among other locations, before being appointed head of the nickel and copper businesses in 2011, with the arrival of Chief Executive Officer Murilo Ferreira.

During his tenure, Vale’s base metals unit boosted its earnings before interest, taxes, depreciation and amortization to almost $3 billion in 2014 from $600 million in 2012 “due largely to increased productivity and the removal of $1.4 billion in costs,” the company said.

Martins joined Vale in 2004 and was appointed executive director of Ferrous Metals in March of the following year. Well versed in Chinese culture and economy, he used to travel four or five times a year to the Asian country, the destination for half of Vale’s iron-ore shipments, he said in an interview with Bloomberg News last year.

Market Variables

On July 31, Martins said that iron ore was poised for a rebound in the second half on lower supply growth and the closure of higher cost mines, with prices of $110 per ton still being “a good reference” for the steel raw material. Prices dropped an additional 21 percent since then, hitting $75.38 per ton on Nov. 6, the lowest since September 2009.

Martins said Oct. 30 that the market variables “did not behave according to what was expected” and that it would take longer for the price to recover the “balance” of around $100 per ton.

“Things are below that level, so, what is left to do now is to be patient and wait a while,” he told reporters on a conference call then. “My crystal ball is a little cloudy now.”

Vale produced a record 236.2 million metric tons of iron ore in the first nine months of the year, 8.1 percent more than in 2014. The company’s managemenet is scheduled to present Vale’s annual plan for 2015 in New York on Dec. 2.