In 2009, the management of Vale, the Brazilian diversified mining company and the largest producer of iron ore in the world, has come under pressure for at least two fronts. First, the emergence of China as the most important consumer of iron ore in the last few years has changed the pricing system for iron ore under long-term contracts based on negotiations "reference price" for contracts based on spot prices, usually makes the mining companies to pay for shipping. Secondly, for the charismatic President Lula, a former union leader, Vale layoffs during the global financial crisis and its perceived shift from Brazil (as Vale increased its exports to China and bought a Chinese court to send iron ore to Asia) were the reasons for starting the open campaign to pressure Vale and Agnelli invest in integrated steel mills in Brazil. In October 2009, CEO Roger Agnelli, Vale was going to meet with Lula and had to decide what to do to reduce these political pressures. What can Agnelli do to deal with political pressure at home? Was buying large vessels to supply iron ore to Asia is a good solution, in a time when shipping was free capacity?
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by Tarun Khanna, Aldo Musacchio, Ricardo de-Reisen Pinho Source: Harvard Business School 26 pages. Publication Date: April 23, 2010. Prod. #: 710054-PDF-ENG
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