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  • April 2010 (Revised October 2010)
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Vale: Global Expansion in the Challenging World of Mining

By: Tarun Khanna, Aldo Musacchio and Ricardo Reisen de Pinho
  • Format:Print
  • | Pages:26
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Abstract

In 2009 the management of Vale, a Brazilian diversified mining company and the largest iron ore producer in the world, was under pressure from at least two fronts. First, the emergence of China as the most important consumer of iron ore in the last few years had changed the pricing system for iron ore from long-term contracts based on negotiated "benchmark prices" to contracts based on spot prices, usually forcing mining companies to pay for shipping. Second, for Brazil's charismatic president, Lula, a former union leader, Vale's layoffs during the global financial crisis and its perceived move away from Brazil (as Vale increased its exports to China and purchased Chinese vessels to ship iron ore to Asia) were reasons to start an open campaign to pressure Vale and Roger Agnelli to invest in integrated steel mills in Brazil. In October of 2009, the CEO of Vale, Agnelli was going to meet with Lula and had to decide what to do to attenuate these political pressures. What could Agnelli do to deal with political pressures at home? Was the purchase of large vessels to ship iron ore to Asia a good decision at a time when the shipping industry had spare capacity?

Keywords

Financial Crisis; Investment; Global Strategy; Risk Management; Market Entry and Exit; Business and Government Relations; Competitive Strategy; Mining Industry; Brazil

Citation

Khanna, Tarun, Aldo Musacchio, and Ricardo Reisen de Pinho. "Vale: Global Expansion in the Challenging World of Mining." Harvard Business School Case 710-054, April 2010. (Revised October 2010.)
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About The Author

Tarun Khanna

Strategy
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Related Work

    • July 2012 (Revised December 2012)
    • Faculty Research

    Vale: Global Expansion in the Challenging World of Mining (B)

    By: Aldo Musacchio, Tarun Khanna and Ricardo Reisen de Pinho
    • March 2013
    • Faculty Research

    Vale: Global Expansion in the Challenging World of Mining (TN) (A) and (B)

    By: Tarun Khanna and Aldo Musacchio
Related Work
  • Vale: Global Expansion in the Challenging World of Mining (B) By: Aldo Musacchio, Tarun Khanna and Ricardo Reisen de Pinho
  • Vale: Global Expansion in the Challenging World of Mining (TN) (A) and (B) By: Tarun Khanna and Aldo Musacchio
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