What's Vale CEO Roger Agnelli Smoking?

by on
Ferrous Metals, Macroeconomics

I’m looking forward to April Fools Day because given the state of the global economy, we could all use some humor. So I got a kick out of this recent Forbes article in which Roger Agnelli, the CEO of giant iron ore producer Vale claimed “…China’s economy has stopped weakening and the global economy may stop declining in the second quarter.” It’s not that we have an issue with contrarian viewpoints, it’s just more a matter of trying to understand how absolutely nobody has published anything indicating the slowdown will stop in the second quarter of this year.

What’s perhaps even more intriguing about the comments relates to Vale’s own recent actions which include 1300 job cuts in early December, 5500 workers going on paid leave in mid-December and an announcement that further job cuts could be forthcoming. And just the day before this comment about the revised economic forecast, Vale said, “it has acted proactively to cut back production.” According to the article, Vale slashed production during the fourth quarter by 21%. But this month, Vale placed a $170m contract for tugboats and barges. The growth, according to Vale will come from Brazil and China.

There are three reasons Vale could be making such an announcement about a near term economic recovery:

  1. Vale plans to out-maneuver its competitors by being first to pick up the demand and thereby grow market share, this assumes the statement about economic growth indicators turning positive in China and Brazil is true
  2. Vale hopes that such an annoucement will somehow make everyone think that indeed demand is really picking up
  3. Vale is smoking something

I hope the truth lies somewhere between options one and two but I fear three is likely the most obvious explanation.

–Lisa Reisman

Comments (4)

  1. Christopher Brown says:

    Ask the people of Sudbury Ontario-Port Cloborne Ontario and Voisey’s Bay Labrador what the great Roger is on….we’re all on strike against his almighty company because of the “economic catastrophe” and he can’t afford to maintain our contracts “status quo” hmmmmm!

  2. Christopher Brown says:

    Sorry I forgot to mention he gave himself a raise of 121% but the greedy working class doesn’t deserve “staus quo”!!

  3. Jan McCurdy says:

    One wonders how much influence a man really has given Mr Agnellis recent altercation with a Brasilian magestrate over aligations of Columbian cartel ties that have become curiously quiet.

  4. Cesar Paganini says:

    After read your article, I recomend all my friends to smoke the same of Roger Agnelli, CEO of Vale, smokes
    As you can see the company grew, bought Inco and the stocks value.
    I feel extremelly well as ashareholder, it is my best and sincere testimony.
    If you are not a shareholder of Vale in the last 8 years, shame on you! And I can understand your frustration!

    Best regards, Cesar

Leave a Comment

Your email address will not be published. Required fields are marked *