Roger Agnelli, chief executive of Brazilian mining giant Vale SA, should be a happy man these days.
With the global economy recovering and demand for iron ore on the rise, the outlook for Vale is better than it has been in months. It's no surprise the stock price has been on a tear, more than doubling in the past year. It closed at US$26.93 yesterday on the New York Stock Exchange.
But Mr. Agnelli is also dealing with a political firestorm in Brazil and employee unrest in Canada that are making life difficult for him.
Vale postponed planned investor days this week in New York and London, saying it was purely a scheduling issue. But in a sign of the company's tarnished employee relations, the United Steelworkers accused it yesterday of canceling the events to avoid difficult questions from investors.
The union, which represents about 3,500 striking Vale Inco workers in Canada, referred to Vale as a "company in disarray."
"They're hiding from us and from the public," said Bob Gallagher, head of communications for the United Steelworkers.
The Vale Inco workers have been off the job since July as they fight concessions demanded by the parent company. They are using that time to raise unrest everywhere they can. They protested in New York, Toronto and Rio de Janeiro yesterday, after doing the same in Germany and Sweden last week.
It is not the situation Mr. Agnelli envisioned when he plunked down about $19-billion to buy Inco Ltd. in 2007.
Yet the far bigger problem for him is in his native Brazil.
Vale has received a wave of criticism from Brazilian government leaders, up to and including leftist President Luiz Inacio Lula da Silva. They are angry that the company is raking in big profits this year despite laying off workers and cutting capital spending domestically.
There has been talk in Brazil that the government could dramatically increase the country's 2% mining royalty, a move that appears to be a direct shot at Vale. There were also rumors Mr. Lula wanted to remove Mr. Agnelli from his job, although that talk has died down.
"It seems that Vale is being used as a bit of a political football for the Brazilian government," said one analyst, who asked not to be named.
It was thus not surprising that when Vale announced its US$12.9-billion capital spending budget for 2010 this week, it earmarked about two-thirds of the money for projects in Brazil.
That reportedly pleased Mr. Lula. However, it has not been welcomed so much by Vale's workers in Canada, who would like to see the money spread around.
"We're trying to point that out," Mr. Gallagher said. "When you extract resources from communities, you really do have an obligation to invest in them."
Analysts noted that Vale's 37% cut in capital spending last year was not out of line with the rest of the mining sector. They suggested that the Brazilian government may be trying to rein in the company's global ambitions to make sure it stays focused on its home country. There were rumors Vale could make a major international acquisition (such as Mosaic Cos. or Freeport-McMoran Copper & Gold Inc.), but the company has denied them and focused on organic growth.