Vale: approaching a new base

The Brazilian federal government founded Vale in 1942 and privatized it in 1997, at which time the firm listed on the Bovespa in São Paulo and began the monumental project of carving out a new identity as a public company.

Roberto Castello Branco, Vale’s director of investor relations, has led the company’s IR effort for the past 11 years. During this time, he has seen the firm’s market capitalization rise from $10 bn to $130 bn in early 2012.

In the past few years, Vale has weathered the global economic recession and growth has returned – but growth levels are beginning to fall into the single-digit range.

‘Growth over the next couple of years will be slower than it has been in the past,’ Castello Branco acknowledges. ‘We believe we will still see growth but it will be less than previously.’

As the world’s second-largest mining company adjusts to new performance expectations, the IR department is preparing for a gradual shift in the shareholder base from growth investors to value investors.

Vale, which is followed by more than 30 sell-side analysts worldwide as well as by four rating agencies, has an investor base of nearly half a million.

When a company of this size – it is listed outside Brazil on the NYSE, the Hong Kong Stock Exchange and the Paris exchange – prepares for a shift in its shareholder mix, the effects can potentially be quite significant.

The Rio de Janeiro-based mining powerhouse was listed on the Brazilian stock market in 1943, and started to be traded in the US in 1994, initially over the counter and then, since June 2000, on the NYSE.

Over its lifetime as a publicly traded company, Vale’s approach to IR and its investor base have undergone several transformations. 

Change in approach

When Vale was less well known, the company embarked on regular, lengthy global non-deal roadshows in order to introduce itself to international investors. ‘We would do many non-deal global roadshows each year, and we would cover the entire world,’ says Castello Branco. 

As Vale’s name recognition has grown abroad, the need for such long trips has waned. Today, the company’s American depositary receipt (ADR) – for which JPMorgan is the depositary bank – has the honor of being the most actively traded DR in the world. 

Even though Vale anticipates some shift toward value investors, Castello Branco believes the company will continue to stick closely to the same IR principles it always has: openly and honestly communicating with shareholders.

‘We have always been very candid about our challenges,’ he points out. ‘We will continue to tell investors about our strengths and weaknesses, about risks we’re dealing with and how we’re mitigating those risks.’ 

Because of Vale’s policy of open communications, approaching a new style of shareholder will not entail a change in strategy. ‘Really, nothing will change,’ says Castello Branco. ‘We’ll continue to tell the truth.’

Vale launches iPad app

Although Vale’s 15-person IR team travels regularly on international trips to meet investors, it has also begun to use its website and new technologies to help stay in touch with far-flung investors.

In January 2012, for instance, the company established an iPad app so investors can receive annual reports on their mobile device.

‘We think this helps add value to our IR effort,’ says Castello Branco. Vale was one of the very first South American firms to make IR communications available to iPad users. Later this year, it plans to debut similar apps for iPhones and BlackBerrys.

Castello Branco says he has shied away from Facebook, Twitter and other forms of social media, which he believes work best for consumer-oriented businesses.

Launching an app is different, however, because it lets investors and other interested parties obtain detailed company information in a user-friendly way. Castello Branco also anticipates the firm will offer its sustainability report and press releases to iPad users through separate apps in the coming months; the iPad app is just the first in a library under development.

Vale’s 10K annual report app was designed to make it easier for anyone who wants to keep up with information about the company to do so.

Using the app, iPad users can mark pages or highlight passages of interest. They can also open up a box within a document and jot down their own private notes, updating information or adding comments.

The report is free to download: users touch the ‘app store’ icon on their iPad, type Vale 20F in the search box, click search and then press ‘free’ to download. 

Creating an iPad app is one way Vale hopes to stay in touch with its many investors worldwide. Castello Branco emphasizes that the IR team doesn’t only communicate with institutional equity investors but must also devise ways to keep its 450,000 retail investors well informed.

Increasingly, communicating with debt investors has also become a part of the IR job given that the company has $12 bn in debt on the books.