Brazil’s Vale Faces $8.5 Billion Loss in Market Value

This week, Vale, a leading Brazilian mining company, experienced a sharp market value drop of $8.5 billion.

On Friday, its value stood at $308.5 billion. By 11:45 AM this week, it had fallen to $300 billion.

This decrease is mainly because investors reacted to news about Guido Mantega possibly joining Vale’s Board of Directors.

Guido Mantega, once the Finance Minister under Luiz Inácio Lula da Silva and Dilma Rousseff, is being considered for the board.

At 74 years old, he could earn a monthly salary of $112,000. This is the average pay for the company’s 13 board members.

Mantega’s past in government links him to policies that did not succeed.

He was also investigated in 2018 for fiscal issues but was later cleared of these charges. After Rousseff won her second term in 2014, Mantega lost his ministerial role.

Investors are worried about the government’s role in Rio-based Vale, known for its large dividend payouts.

In 2023, the company paid $28.9 billion in dividends. Vale’s shares make up more than 13% of the Ibovespa portfolio.

At 11:45 AM, Vale’s stock price was $69.73. The day before, it had dropped to $69.45. This brought its market value to $298.8 billion.

This is the first time since October 2023 that Vale’s value is below $300 billion.

Financial experts are concerned about attempts to influence Vale, which is 91.3% owned by private investors.

Lula has always been unhappy with the company’s privatization. It started in 1997 under President Fernando Henrique Cardoso.

During Lula’s first two terms, the government still had some control through major shareholders. But, changes under President Jair Bolsonaro’s leadership made this harder.

Largest shareholders

Before 2020, public foundations like Previ and Litel Participações were among Vale’s largest shareholders.

The National Bank for Economic and Social Development (BNDES) also owned part of Vale through BNDESPar. This was sold in 2021.

Previ sold many of its shares and now owns less than 10% of Vale. It also lost two of its four board seats. Litel’s participation was also dissolved.

As a result, Vale became a corporation. It is now a privately controlled company with no single investor owning more than 10% of its shares.