After eight years, my geographic area of responsibility changed from Australia to Brazil. In 2004, following the completion of our acquisition of Valepar shares, I went to Brazil for six months for further training in the Brazilian iron ore business and to learn Portuguese. I did a three-month homestay with a family in Belo Horizonte who did not speak any English. I studied one-on-one with three different tutors for seven hours a day, with homework and extra practice on top. I went from understanding nothing to being able to read the newspapers and watch the TV news fairly quickly.
The other three months were spent going through the operations of Vale all over Brazil. This was part of the still-ongoing exchange program between Vale and Mitsui. The experience really helped me build trust on a person-to-person level with the people from Vale. Upon returning to Tokyo, I had a good understanding of what we had invested in and what challenges came with my responsibilities, not to mention a network of friends in Vale. Do I use my Portuguese a lot? Actually, most of our everyday business is conducted in English, but the Vale board meeting materials are all in Portuguese.
Vale was growing rapidly both organically and through acquisitions when Mitsui became a shareholder. It was expanding its existing mines and buying other Brazilian iron ore companies, while developing non-iron ore businesses in Brazil and overseas. Vale and Mitsui made a great fit. We benefited from Vale’s growth while helping Vale achieve its goals. Mitsui is both a shareholder and a business partner. People know that working “for the best interests of the project”—sharing a long-term vision—will enable us to work through any differences and our partners’ interests. That’s why companies all around the world see value in partnering with Mitsui.
As an international company with expertise in many fields, we were well positioned to help Vale expand outside Brazil and beyond iron ore. We provide that expertise in various forms—finance, developing business strategy, bringing in strategic partners, marketing support, the list goes on. The relationship has really blossomed. At present, nine of Mitsui’s 13 business units are working with Vale. In total, the two companies have collaborated on over 40 projects.
Because of its 15% stake, Mitsui has two directors on the Valepar board. My team and I brief them, prepare documentation for them and advise them on any decisions they have to take. At the same time, we suggest projects that will boost Vale’s growth by leveraging Mitsui’s broad array of capabilities. It’s a unique position—to be working for a Japanese general trading company while simultaneously being involved in the management of one of the world’s top mining companies!
Am I worried about the current low price of iron ore? Of course, yes. But just as no one expected the price to shoot up so high in the boom years, no one predicted that it would plunge so low on the way down. The investment banks claims that commodities are “finished,” but I disagree. These low prices won’t continue as the world economy continues to grow. We believe in our business, so we just need to stick to our guns and the cycle will turn and the market will recover soon enough.