SÃO PAULO, Brazil—Shareholders at Vale SA, the world's largest iron ore producer, late Monday chose a veteran former executive to replace its current chief Roger Agnelli, who is being forced out after a long struggle with the Brazilian government.
After a long meeting among the company's controlling shareholders, including government representatives, Vale in a statement said Murilo Ferreira would take over the company's top job next month, when Mr. Agnelli's contract expires. Mr. Ferreira, 58 years old, led Vale's Canadian unit until 2008, when he left the company for personal reasons.
Considered the government candidate to succeed Mr. Agnelli, who has run the company since 2001, Mr. Ferreira's return to Vale comes after years of increasing efforts by Brazil's government to have greater say in its operations and investment decisions.
Though the company was partially privatized more than a decade ago, the government forms part of a core shareholding group and has increasingly voiced displeasure with Mr. Agnelli's leadership in recent years.
Many analysts now see the succession tussle at the Rio de Janeiro-based company as a gauge for how aggressively President Dilma Rousseff will seek to exert control over Vale and other formerly state-owned companies that were partially privatized in the late 1990s.
Mr. Agnelli ran afoul of the government after rebuffing a range of official requests in recent years to do things such as buy more Brazilian-made ships and invest more in steel production rather than the company's core mining business.
During a decade at the helm of Vale, Mr. Agnelli is credited with focusing the company mainly on iron ore and preparing the company to take off as global iron ore prices soared to a 10-fold rise amid booming Chinese demand. China became Vale's single biggest customer, helping propel Vale shares to a 15-fold rise in a decade.
But the 51-year-old Mr. Agnelli's headstrong personality and unwillingness to budge in dealings with the government spelled his downfall, observers said.
With annual sales topping $46 billion, Vale is a central pillar in Brazil's commodity-driven economic expansion in recent years. Government officials have pushed the company to apply its muscle to other initiatives, even when they would hurt the company's bottom line, insiders say.
For example, Brazil's federal government wants Vale to help finance the construction of a giant Amazon dam, Belo Monte. But the company has balked so far because, as designed, the dam is shaping up as a money loser.
Now, Mr. Angnelli's ouster has sparked fear among some senior executives the company will be forced into such unprofitable ventures, eventually saddling it with inefficiencies.
Senior executives at Vale were surprised in recent weeks by the speed that the government moved to force Mr. Agnelli out, a person familiar with the situation said. That's because Mr. Agnelli had sought to accommodate much of the government's requests—so long as they made sense for Vale.
For example, Brazilian officials have pushed Vale for years to develop a steel business that could help provide jobs and improve the quality of exports. Vale agreed to make steel in the rural Para state, after persuading the government to heavily subsidize its construction.
Brazil wants to create a domestic shipping business and has already required Petrobras to order new ships locally. Under pressure from the government, Vale ordered dozens of ships. But Vale ordered a batch of 400,000 ton super large vessels in China on the grounds that they were outside Brazilian capacity. That was seen as a slap in the face to the government.
Vale was partially privatized in the late 1990s at a time when the government was desperate for cash. But the company's board remains in government hands. Vale's controlling shareholder is a joint venture controlled by government pension funds, the Brazilian bank Banco Bradesco and Japan's Mitsui also have stakes.
The federal government is now reeling Vale back in. Something similar happened at the oil giant Petrobras in recent years. Through an oil-for shares deal, the government increased its controlling stake in the company, which was also partially privatized in the 1990s.‹
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