(Recasts to add details on Schvartsman, outgoing CEO Ferreira,
share performance throughout)
By Guillermo Parra-Bernal
SAO PAULO, March 27 Vale SA surprised investors
with the appointment of Fabio Schvartsman as chief executive
officer on Monday, choosing a commodities industry veteran to
lead transformation of the world's No. 1 ore producer into a
company with dispersed share ownership.
Schvartsman, who has been the CEO of Klabin SA,
Brazil's largest paper and cardboard producer, for the past six
years, had not figured in media reports as a potential
replacement for CEO Murilo Ferreira. The departure of Ferreira
was announced last month.
In a career spanning four decades, Schvartsman occupied key
positions in companies such as fuel distribution giant Ultrapar
Participações SA, phone carrier Telemar Participações SA and
U.S. oil driller San Antonio International. Vale's board picked
him from a list prepared by executive recruiting firm Spencer
Schvartsman faces the task of engaging Vale's investors in a
plan to phase out a 20-year controlling shareholder pact and
merge the company's two classes of stock into a single one. The
plan was announced last month, the same day that Ferreira
announced he would quit when his term expired in late May after
six years at the helm of the mining giant.
A more dispersed shareholder structure is key to enhancing
transparency and stifling interference from politicians, who for
years have pressed Vale to invest in non-core projects. Some top
shareholders proposed that Ferreira stay in the job for another
year, Reuters reported in January.
The appointment of Schvartsman "minimizes investor concerns
on political interference at Vale, which we view positively,"
Leonardo Correa, a senior analyst at Banco BTG Pactual, said in
a client note.
Preferred shares, Vale's most widely traded class
of stock, rallied 2.5 percent to 27.97 reais, while common
shares gained 1.3 percent to 29.39 reais. Both stocks
are up 3.5 percent since Reuters reported Vale's reorganization
plan in January.
Schvartsman's surprise appointment was welcomed by several
analysts and investors, who expect the executive to replicate
the job he did at Klabin.
"Despite being new to the mining sector, we believe that
Schvartsman can make a smooth transition to Vale," said Marcos
Assumpção, a senior analysts with Itaú BBA in São Paulo.
Under Schvartsman, Klabin undertook rapid growth through
some capital spending plans but got caught in a downbeat cycle
marked by rising debt and Brazil's worst recession on record.
Still, he managed to boost operational margins to about 35
percent, from about 25 percent when he assumed.
Currently, units of Klabin are some of the most
expensive among Latin American paper and pulp producers, trading
at about 7 percent premium to global peers, according to Thomson
In a statement, Klabin thanked Schvartsman for "his
commitment to participating actively in the transition plan,"
noting that the paper producer's board will give continuity to
Reuters had reported some of Ferreira's lieutenants and
executives with Vale experience were being considered for the
(Additional reporting by Anthony Boadle in Brasilia and Roberto
Samora in São Paulo; Editing by Diane Craft and Bill Trott)