(Opinion) Brazilian President Luiz Inácio Lula da Silva recently expressed his view that private companies should fully align with his administration’s development vision.
This perspective particularly targeted Vale, a leading mining corporation, as the government sought to install an ally at its helm.
Lula remarked in a Rede TV! interview, “Vale must not think it owns Brazil or can override the country.
We want Brazilian companies to align with the government’s development thoughts.”
The expectation for private entities to adhere to government directives is problematic for Vale, the world’s largest miner and Brazil’s third-largest company.
Lula’s involvement in Vale’s succession lacks legitimacy, given the company’s privatization nearly 27 years ago and its widely distributed share ownership since 2020.
Previ holds an 8.7% stake in Vale, limiting the president’s influence to pressuring the board, responsible for executive decisions.
Lula’s pressure has already disrupted the succession process, dividing the board over the decision to retain or replace CEO Eduardo Bartolomeo, whose term ends in May.
Lula’s assertive approach raises concerns about Brazil’s openness to investment, especially from international companies wary of such governmental intervention.
This is striking as he targets vital sectors like the mineral industry, contributing significantly to Brazil’s trade surplus with nearly $43 billion in exports last year.
Similarly, the oil sector, another economic powerhouse, faces governmental scrutiny.
Petrobras President Jean-Paul Prates’s statements on dividend policies for renewable energy investments sparked debate.
Additionally, plans to re-engage with previously sold assets and resume past projects have raised concerns about mismanagement and corruption.
Lula’s return to interventionist policies disregards the recent narrow electoral victory and societal divide.
Lula’s approach indicates he expects Brazil’s private sector, including companies like Vale, to align with his policies and decisions.