Vale’s retreat from Guinea venture

Reuters carried a story quoting an analyst who says Vale is prioritizing Brazilian investments over Guinean projects as it gains an environmental license to develop Serra Sul. The real reason its getting cold feed on the giant Simandou mines may be rather different.

Reuters story: http://in.reuters.com/article/2012/09/26/vale-simandou-priority-idINL4E8KQ20M20120926

Vale's African partner, BSG Resources, has gone ballistic and is threatening to sue investment bank BTG Pactual and its partner B&A Mineração over financing talks apparently carried out with the Guinean government. B&A is the investment vehicle of Roger Agnelli , ex-CEO of Vale.

The details are murky but what is clear is that Guernsey-based BSGR thinks that the BTG-B&A talks with Guinean president Alpha Conde are related to logistics for its blocks in Simandou. BSGR and Vale hold the rights to develop two blocks at the mine and any third party financing could breach contract. In 2010, Vale bought 51% of the assets of BSG resources in BSG Resources (Guinea), creating VBG.

Lamine Fofona, minister of mines in Guinea, has angrily rejected BSG allegations, calling them “insulting, fantastic and contradictory. Talks with BTG and B&A are perfectly legal, open and transparent and are not linked to the exploration of Simandou blocks 1 and 2, he says.

Could all this malarkey explain Vale's cold feet?

 

 

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I've been researching and writing on Brazilian financial markets, industry and economy since 2006 for a wide range of specialist media, consultancies and investors. Before that I spent over 10 years in London and New York writing for and editing magazines and journals dedicated to finance, investment and economics in developing markets, mostly for the Euromoney Institutional Investor group and Thomson Financial. Areas of coverage Below are samples of areas that I cover and some of the common themes that I investigate. Capital markets BM&FBovespa markets *capital raising trends: via equities (IPOs and secondary issuance), debt and loans *the asset management industry: legislation and coverage of the key hedge, pension and investment funds * corporate governance: how the regulator is seeking to strengthen best practice and limitations * debt markets: the nascent corporate markets, attempts to boost liquidity and new insturments. * private equity market: why this market has been so successful, who’s involved. *electronic, high frequency trading and alternative trading platforms: what does the future hold? Banking *credit: the growth of consumer and business credit and competition between banks and models *Public versus private: the role and market share of public and private sector banks and the politicization of the industry * internationalization: which Brazilian banks are expanding overseas and where * investment banking: the growth of the domestic market and who’s winning which mandates *regional banks and development banks: what role they play in the industry and how they compete Mining *licensing: the complex process of obtaining environmental, water, land and operating licenses at a state and federal level. * capacity: the feasibility and sustainability of capacity increases * financing: how miners are raising finance in Brazil and abroad *competition: the interplay Vale, MMX and junior miners *logistics: rail, road and port connections Oil and gas: the fund raising issues related to the massive of pre-salt (link) Multilatinas: Who are they and how and where they are expanding Meatpacking: Are debt burdens sustainable, what are the different business models for areas such as branding and distrbution Agriculture: How are farms consolidating, what are environmental risks, how can foreign investors be involved. IT and software: Can Brazil take on India and build a viable long-term IT industry? For more information on clients and work, please see the media and consultancy sections.
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