The end of Vale in Africa – 07/02/2021 – Mathias Alencastro

It had everything to be a triumphant transatlantic adventure. Strengthened by the acquisition of Incro in Canada in 2006, one of the largest South-North operations, Vale intended to link Brazil to China via an ore production chain on the African continent.

At the height of the commodities super cycle, the company could rely on the alliance between President Luiz Inácio Lula da Silva and its CEO, Roger Agnelli, two personalities with different trajectories who believed in Brazil’s global destiny.

The project has come to an end in the past two months, with the Brazilian company leaving the coal business in Mozambique and the process unfolding by Beny Steinmetz, a key partner of Vale in Guinea.

Vale has failed in different ways in the two countries. The start-up of Mozambique’s coal mine in Moatize in 2011 was the fulfillment of an old dream that dates back to pre-privatization days. In an atmosphere of euphoria, Vale had landed in Maputo with the promise of catapulting the African country’s GDP. But the winds quickly changed direction.

Armando Guebuza, a powerful president and staunch Brazilian ally, was embroiled in an IMF debt cover-up scandal and was forced to leave the scene when Felipe Nyusi took over in 2014.

Exasperated by the countless social conflicts sparked by Vale and other Brazilian-sponsored operations, like the disastrous ProSavana, the local political elite turned to Cabo Delgado and its astonishing natural gas fields.

In the midst of a transition in the geopolitics of energy, the coal industry has become an example of poor governance of natural resources. Vale’s departure, shortly after being ordered to pay approximately 1 million reais to Mozambican peasants, is a relief for the authorities.

The situation in Guinea is more caricatured. In 2010, to ensure control of the bauxite reserves, one of the most competitive on the continent, Vale struck an extravagant deal with a famous privateer of African descent, Beny Steinmetz.

Years followed by a Bécketienne wait while President Alpha Condé, master of the instrumentation of geopolitical actors, promised everything to finally deliver nothing.

Vale ended up ruling the world after the money Steinmetz took. In January this year, a Swiss court sentenced the Israeli to five years in prison and a fine of $ 1 million. But wear and tear damaged the company’s reputation. To other players on the continent, Vale has become known as the giant who got tangled up by seasoned mercenaries and politicians.

Vale’s trajectory must be put into perspective with that of Petrobras and Odebrecht, other companies that are packing their bags from Africa. Together, they built the Brazilian project on the continent between 1974 and 2014.

A cycle ended with nostalgia, which will go down in history as the moment when Brazil claimed the place of power, but died on the shores on the other side of the Atlantic.

It is certain that one day Brazil will return to Africa. The question is whether their conglomerates will attempt to embark on the adventure again.

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