Speaker 1: Bloomberg Audio Studios, podcasts, radio news, which.
Speaker 2: It is one of the big narratives of the last year,
Speaker 2: a signature policy of the second term of the Trump administration,
Speaker 2: and that is shoring up supplies of critical minerals and commodities,
Speaker 2: including iron ore pellets, copper, and nickel. It's become, tim though,
Speaker 2: really a focus for countries and governments around the world
Speaker 2: on that.
Speaker 1: We're going to head to the Bloomberg News bureau in
Speaker 1: Rio de Janio and to one of the co hosts
Speaker 1: of Bloomberg Surveillance, Lisa Bramowitz, sitting down with the CEO
Speaker 1: of one of the world's largest mining companies, Gustavo Pimenta,
Speaker 1: the CEO of Valet. Lisa, take it away.
Speaker 3: Thank you so much. Tim Carroll. I am here in
Speaker 3: our beautiful Rio office with Gusavo Pimenta, the CEO of Valet,
Speaker 3: the world's biggest iron ore miner and one of the
Speaker 3: biggest o winers just in general around the world. At
Speaker 3: this critical time, as Tim and Carroll were just talking about,
Speaker 3: there has been this rush to any kind of critical
Speaker 3: minerals cured for security reasons as well as the infrastructure
Speaker 3: build out. How much more demand.
Speaker 4: Have you seen just recently look the amount of demand?
Speaker 4: First of all, good to see you LISTA. The amount
Speaker 4: of demand is super constructive. It's historical for us. I
Speaker 4: think across all the critical minerals, we are seeing and
Speaker 4: a very strong support from clients all over the world
Speaker 4: from countries in terms of looking for security of supply.
Speaker 4: Iron ore continues to be strong. If you look at
Speaker 4: copper nico, so across the board, we are seeing tremendous
Speaker 4: amount of demand for all of the the mining that
Speaker 4: we produce.
Speaker 3: The bulk of your customers typically come from China. Have
Speaker 3: you seen more interest recently from the United States?
Speaker 4: We are China continues to be a strong market for US,
Speaker 4: very relevant for everything we do. But we are seeing
Speaker 4: growth outside China. We are seeing growth in Southeast Asia,
Speaker 4: we are seeing growth in the US Europe. So there
Speaker 4: is a diversification going on these days with other markets
Speaker 4: looking to amplify their access to critical minerals.
Speaker 3: People talk about the commodities recycle, iron ore hasn't participated
Speaker 3: as much in terms of the price gains and there
Speaker 3: has been a sort of plateauing and demand from China.
Speaker 3: Where are the growth opportunities specifically when it comes to
Speaker 3: iron ore.
Speaker 4: So we continue to be very optimistic about iron ore.
Speaker 4: If you step back and look at the overall demand,
Speaker 4: we have population growth, we have industrialization, we have other
Speaker 4: markets growing. Certainly, China probably has plateau and reached their
Speaker 4: overall pick in terms of production. They are doing more
Speaker 4: than a billion tons of crude still production annually. We
Speaker 4: think they will continue to be at that level. But
Speaker 4: we are seeing growth in Southeast Asia. India is growing substantially.
Speaker 4: We're expecting India to double the crud still production in
Speaker 4: the next ten years. Even the US is growing, so
Speaker 4: we are seeing more demand outside China. Chan and will
Speaker 4: continue to be the key market for all of US,
Speaker 4: but we are seeing greater demand in other markets as well.
Speaker 3: You've seen your copper production increase, I believe five to
Speaker 3: ten percent of total revenues over the past five years.
Speaker 3: You've talked about wanting to double it again over the
Speaker 3: next ten or so years. What does that entail in
Speaker 3: terms of investing in existing minds, in terms of acquiring
Speaker 3: new assets, what exactly are you looking at?
Speaker 4: Look are very optimistic also about the copper demand. I
Speaker 4: mean the electrification of everything, which is which is a
Speaker 4: secular trend data centers all of AI. This will require
Speaker 4: an enormous amount of supply from copper. We in Brazil
Speaker 4: are city in a tremendous endowment. Valley has a great endowment,
Speaker 4: especially in the north of Brazil, to produce more copper.
Speaker 4: We've been doing Last year we did about three hundred
Speaker 4: and eighty kilotones. We want to double this to about
Speaker 4: seven hundred kilotones. There is an enormous opportunity for us
Speaker 4: to accelerate the development of the minimal, the critical minerals
Speaker 4: and the deposits that we have in the country.
Speaker 3: Well, does that acquiring other companies? Is that require investing
Speaker 3: large sums and existing minds.
Speaker 4: So for us, it's more about brownfield because the unique
Speaker 4: advantage of Valley is the fact that we operate with
Speaker 4: very efficient capital intensity for the projects because I have
Speaker 4: the rail, I have the port, I have the entire infrastructure.
Speaker 4: So for us, it's more about developing near minds and
Speaker 4: the brown field around our existing operations. So it's less
Speaker 4: about M and A, but more about unlocking the potential
Speaker 4: that we already have.
Speaker 3: What about rare earths? Brazil sits on the biggest reserve
Speaker 3: of rare earths behind China. Are you planning to expand
Speaker 3: into that at all?
Speaker 4: Look, we've been studying if this is something that would
Speaker 4: make sense for Valley. We do have certain opportunities in
Speaker 4: Brazil that we are assessing. For us, there are some
Speaker 4: questions that we have to answer in terms of scale.
Speaker 4: Can we compete with some of the international players like
Speaker 4: the Chinese. So this is something that we are currently assessing.
Speaker 4: I would say our biggest bet is to focus on
Speaker 4: what we are good and have scale at this point,
Speaker 4: I on our Copper and Nico, but we are keeping
Speaker 4: an eye open for other opportunities.
Speaker 3: Are there any countries or players in countries that will
Speaker 3: be interested in assisting you to build that out Given
Speaker 3: the fact that there has been this focus by the
Speaker 3: US and developing national security and sort of get.
Speaker 4: Reserves, certainly a lot of investors, international investors, local investors
Speaker 4: that want to partner with us, and we have a
Speaker 4: few examples here in Brazil and outside where we are
Speaker 4: working together to unlocks. It's a lot about accelerating the
Speaker 4: development of what we have, especially in the critical minerals agenda.
Speaker 4: So we are certainly open to discussions with partners that
Speaker 4: are willing to come and co invest with us.
Speaker 3: What about the price of oil given the fact that
Speaker 3: you have to move all of these very heavy materials
Speaker 3: from one place to your major customer, which is over
Speaker 3: in China, has that hampered demand at all?
Speaker 4: No demand, no impact on demand, I think what we
Speaker 4: had since we are more distant from our end user
Speaker 4: or end client, which in this case continues to be China,
Speaker 4: our most relevant consumer, especially for iron ore, we had
Speaker 4: an impact in the overall cost for our transportation of
Speaker 4: the iron ore. Now, but when we look at the
Speaker 4: overall pricing for commodities and in particular case for iron
Speaker 4: op price has increased more than the impact that we
Speaker 4: had in our cost because the marginal producers have been
Speaker 4: impacted more than Valley. Valley has long term afreightment for
Speaker 4: our vessels. We are hedged on the fuel costs, so
Speaker 4: the impact for us hasn't been negative. In fact, we
Speaker 4: had a margin expansion as a result of the conflict,
Speaker 4: but we continue to monitor that very closely.
Speaker 3: Is there a limit to how much customers will accept
Speaker 3: in terms of price increases.
Speaker 4: Look, certainly, we have to see. I think at this
Speaker 4: point there is no impact in demand destruction we are
Speaker 4: not seeing the markets continue to be solid. Strong clients
Speaker 4: continue to produce who have to continue to see to
Speaker 4: what extent they can absorb the price increase, but at
Speaker 4: this point we are not seeing impact in the overall demand.
Speaker 3: You have a pellet manufacturing place in Oman and it
Speaker 3: has been taken offline as a result of simply not
Speaker 3: being able to ship the pellets out from the area
Speaker 3: due to the conflict there. What is your plan in
Speaker 3: terms of reopening that Look.
Speaker 4: We are ready to reopen, certainly, we are monitoring the
Speaker 4: conflict and we want to make sure our people are
Speaker 4: safe and that's the most important thing for us. It
Speaker 4: is very well located. Oman has a special strategic location
Speaker 4: even within the Middle East. We have a great asset.
Speaker 4: It's a paletizing facility which is very important for the
Speaker 4: carbonization for a lot of the energy transition discussions that
Speaker 4: we have. We are in fact, as we speak, doubling
Speaker 4: the capacity of that facility. At this point, we're waiting
Speaker 4: for the conflict to end or to reduce in terms
Speaker 4: of the potential impact for us to resume our operations.
Speaker 4: We continue to be very optimistic about the Omanian operations
Speaker 4: that we have and we think that could be a
Speaker 4: hub for a lot of the clients that we have
Speaker 4: in the region.
Speaker 3: So this hasn't pushed out your ambitions at all for
Speaker 3: the region or curtailed them in any way. The fact
Speaker 3: that the conflict has.
Speaker 4: Not, particularly with Oman. We continue to be very committed
Speaker 4: and we think it's a great market for us to
Speaker 4: have to serve India, to serve other markets, even Southeast Asia,
Speaker 4: so it's a very strategic asset that we have.
Speaker 3: Are you still confident about your full year forecast for costs?
Speaker 3: Do you expect that to stay where it is?
Speaker 4: So, as we mentioned before, and the overall expectation for
Speaker 4: the year is great. Actually. I mean, we had a
Speaker 4: very strong first quarter production across the board, and all
Speaker 4: commodities are trending very nicely. We had the record production
Speaker 4: in copper, niko and arnor in the Q one, so
Speaker 4: I'm very optimistic about the full year performance. We did
Speaker 4: have an impact in the overall cost base given the
Speaker 4: few costs, but overall margin has expanded, so I'm going
Speaker 4: to continue to expect a great year for us.
Speaker 3: You've been in the business a long time in terms
Speaker 3: of commodities and energy production in general, do you have
Speaker 3: any analog to this period in terms of the super
Speaker 3: cycle that you're seeing and the demand level that you're
Speaker 3: seeing from clients.
Speaker 4: Okay, I think what we've seen for Ironora back in
Speaker 4: you know, twenty ten, twenty fourteen, that period with the
Speaker 4: super cycle is what we're seeing in the critical minerals.
Speaker 4: But I you know, the more I look into, the
Speaker 4: more we discuss with clients, I think the opportunity this
Speaker 4: time around is even greater. So I think we are
Speaker 4: in an unique moment of our historic valley, particularly because look,
Speaker 4: we are located in a country that has an enormous endowment,
Speaker 4: very well positioned from an a geopolitical standpoint. I mean,
Speaker 4: we do businesses with the US, with Europe, with China.
Speaker 4: We have an enormous endowment. We have the infrastructure all
Speaker 4: in place, and the demand is growing across the board
Speaker 4: on all critical minerals. Even our in our continues to
Speaker 4: be very strong. So we are very optimistic. I think
Speaker 4: it's a unique. It's great to be a minor these days,
Speaker 4: so we are very excited with that.
Speaker 3: Crista Wolfamnza, thank you so much for being with us.
Speaker 3: That is the CEO of Vali