(Bloomberg) -- Vale SA plans to offer more lower quality iron ore to adapt to the needs of a battered steel industry as it moves beyond being just a supplier of high-grade steelmaking material.
Chief Executive Officer Gustavo Pimenta laid the groundwork for his strategy Tuesday at an investors event in New York, arguing that the Rio de Janeiro-based company needs to adapt to current market conditions by becoming a more flexible supplier.
“Although Vale is perceived as the highest quality iron ore player we have a lot of flexibility to operate,” the new CEO told reporters. “We need to be successful even when margins are not there and clients say ‘I want cheaper products’.”
Pimenta’s strategy deviates from his predecessor, Eduardo Bartolomeo, who sought to establish Vale as the main supplier of high-grade iron ore that customers needed to make steel with fewer emissions. Vale is the world’s second-largest supplier of iron ore, after Rio Tinto Group.
Vale’s top executive said steel mills are navigating a challenging moment and this should make the industry’s journey away from reducing carbon emissions longer than expected. And that means the industry isn’t always paying the premium required to buy Vale’s high-grade ore.
Pimenta, who took the helm in October, told investors he’s focused in regaining competitiveness and driving Vale costs down. Vale aims to keep iron ore output little changed in the next year as market concerns over a supply buildup restrain prices of the steelmaking staple. The company also trimmed its longer-term forecasts for copper and nickel production.
“I think it’s a more realistic plan,” Pimenta said. “We want to make sure that this new cycle starts with the right foot and that we deliver consistently everything we show to the market in my administration.”