March/April 2008

Nickel’s shiny future

A conversation with Vale Inco’s visionary president and CEO Murilo Ferreira

By A. Gordon

It has been a little more than a year now since Murilo Ferreira assumed his post as president and CEO of Vale Inco Ltd., the wholly owned Canadian subsidiary of Brazilian-based Companhia Vale do Rio Doce (Vale). During that time, Ferreira traded the tropical temperatures of Brazil for those of Toronto, where he helped navigate the 106-year-old company through a name and branding change, and oversaw one of the most profitable years the company has ever experienced.

After all of that, even a spirited executive would have every right to be a little tired, no? Well, not Ferreira. Slightly jet-lagged maybe — from visiting Vale Inco’s operations and projects in 20 countries around the globe, and a marketing network that extends to 40 countries — but the enthusiasm and energy emanating from this dynamic leader is undeniable.

Of course, it certainly helps that Vale recently announced that in 2007 it enjoyed gross revenues of US$33.1 billion — the highest in the company’s history and 28.8 per cent more than that recorded in 2006.The same report also indicated that nickel was second only to iron ore in terms of revenue generation.

We asked Ferreira to share his thoughts on the nickel industry and where he perceives it is headed. The future, we discover, looks pretty bright.

CIM: 2007 was quite a year for the nickel market.

Ferreira: Yes, it was a very exciting and challenging year. We reached new records in nickel prices and there were huge increases in Chinese steel production. There was also robust growth in the demand for high nickel alloys, mainly due to the energy and aerospace sectors.

On the supply side, many of the traditional suppliers struggled. Most suffered with the supply interruptions, so in this regard, the large increase in nickel pig iron from China, instead of being a problem, was actually good news for the whole industry, as it brought more balance to the market.

CIM: Is this demand from China expected to continue?

Ferreira: Yes, we are very positive that in the next few years Chinese steel production will continue to drive growth in nickel demand. Chinese demand has grown 29 per cent on average between 2000 and 2007. It’s pretty unbelievable, but we still forecast that demand will grow strongly over the next few years.

CIM: How does Vale Inco hope to meet this demand?

Ferreira: We are, and will continue to be, extremely focused on our customers. In this regard, it’s important for us to have a high-quality product to supply to our customers.We have by far the largest nickel reserves — 27 per cent of the world’s reserves — which will serve as a strong foundation for the future. From that we can expect a good pipeline from which to bring new projects that will continue to drive this growth.

We have a lot of promise in our Totten mine project — the first new Vale Inco mine in Sudbury in more than 35 years.We are going ahead with the Goro project in New Caledonia, where we plan to ramp up in the last quarter of 2008. We also have the Onça Puma project underway in Brazil, which we’re forecasting to start in the first quarter of 2009. There’s also PT Inco in Indonesia. In addition,we have a commitment to build a new refinery in Voisey’s Bay.

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