State reform and the privatization of a Brazilian champion: the case of Vale

Privatization is a controversial subject in Brazil. It has been so for a while. After the Petrobras scandals, the interest of the public role in the economy remains active. Vale is an historical case. Privatized in 1997, the company has evolved into the 2nd largest mining group. In this perspective, I presented a paper in the Quinto Congreso Latino-Americano de Historia Económica (CLADHE V)  about the subject. This is an outline of this paper and there is a link to the ppt presentation below.

International presence of Vale in 1997

mapa Vale 1997

As continental country with substantial potential for development, in the 2000s Brazil became one of the emerging economies. Coincidently or not, the previous decade was a period characterized by reforms and privatizations. Among the numerous companies privatized in that period, one stands up: the mining company Vale. The relevance of Vale’s case derives from multiple aspects. It shows the intersection of macro and micro history, during a period of intense transformations.

From its foundation in 1942, Vale was a tool of Brazil’s industrialization and economic development. Over time, the company’s influence in the economy was reinforced by the weight that natural resources acquired to Brazil’s trade balance. In 1975, Vale became the world leader in iron ore exports. Although the period and the company have been largely, Vale’s privatization remains a subject that fuels the debate of the public role in promoting economic development in contrast with the liberalization policies inspired by the Washington Consensus.

Research Questions 

What were the macroeconomic factors influencing the privatization of Vale and what rational was used for the valuation of the company, in particular the difficulties in assessing mining assets, the debate of national resources ownership and the questioning of the sale price.

This paper was presented at the section “l’Etat et les privatizations dans l’Amérique Latine et le Sud de l’Europe”at the Quinto Congreso Latino-Americano de Historia Económica (CLADHE V) that took place at the University of São Paulo – USP on July 21th 2016.  The ppt presentation can be download at Research Gate.

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About Hildete Vodopives

Hildete de Moraes Vodopives is founder of Brazil Global and of the Harvard Strategists. She is a member of the Brazilian Investment Analysts Association (APIMEC-Rio) where she served as Corporate Relations Director and later, on the board. Hildete advises companies doing business in Brazil.
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