Vale S.A.

Companhia Vale do Rio Doce (CVRD) is one of the world's most important producers of iron ore, iron pellets, and other minerals. Owned primarily by the Brazilian government, it has taken a leading role in developing the mineral resources of the Amazonia region. Much of the company's success is based on its ability to draw on foreign expertise and capital while at the same time retaining effective control in Brazilian hands. Companhia Vale do Rio Doce was formed in 1942, receiving the assets of the Itabira Iron Ore Company, including the "iron mountain" of Caué Peak in the Itabira region of Minais Gerais state. The Brazilian government held 80% of the shares in the company, reduced to the present level of 53%. Initially hampered by poor management and inadequate transport facilities, it was only in the early 1950s that the company started on its path to becoming one of the world's most important exporters of iron ore. Brazil is one of the world's major sources of iron ore with reserves estimated at about 50 billion tons, second only to the Soviet Union. Some of the more easily accessible deposits were worked in the early days of Portuguese rule, but were developed more significantly in the wake of the 18th-century gold and rubber booms. Even these were very small-scale operations, and it was only in the late 19th and early 20th centuries that serious efforts to promote iron mining and exports, along with steel manufacturing, began. Not until after World War II did Brazil's iron ore exports begin to acquire worldwide significance, with CVRD in the vanguard. In 1918, Cassel sold out to a group of British financiers and steel manufacturers, who sought the support of Percival Farquhar, an American entrepreneur of varying fortunes, who took the lead in subsequent negotiations. He too was unsuccessful in securing government approval for Itabira's scheme. Brazilian firms and various individuals objected to the grant of such extensive rights to foreigners. In 1923, agreement seemed likely, but was not achieved, at least in part because of Farquhar's insensitive treatment of members of the Brazilian government, but also because of continuing and growing feelings of economic nationalism. Brazilians increasingly wanted to limit the extent of foreign control of their economic resources in order to ensure that they secured a substantial share of the profits generated, and that the exploitation of the resources would be managed to Brazil's own advantage. Some of the objections were recognized in 1940 when the Companhia Brasileira de Mineraç&abrev;o e Siderurgica was created as an all-Brazilian company, acquiring Itabira's assets without the proposed steel mill. That year Itabira shipped out its first cargo of 6,000 tons of ore, and over the next two years exported a further total of 100,000 tons. Hardly a successful company, Itabira's fate was sealed in 1942 when the British government, apparently at the behest of the United States, using special war powers, expropriated the Brazilian holdings of the company's British investors. These assets were handed over to the Brazilian government, which in turn took over most of the original company's Brazilian assets which became the base of CVRD. The Itabira company was dissolved in 1945. Although it did not reach any significant agreement with Farquhar, the Brazilian government was very eager to promote the development of the region's mineral potential, an aim which coincided with Allied interests during World War II. The agreement whereby the Brazilian government acquired Itabira also included provision for U.S. assistance for the extension of the Vitória-Minas railway, which had been completed in 1936, and of ore-loading facilities at Vitória, as well as the development of the mines themselves. Also of strategic importance to the Allies was the formation, in the previous year, of the Companhia Brasileira de Aluminio to develop the bauxite deposits at Pocos de Caldas. To finance CVRD, a grant