Brazil’s Push to Oust Vale’s CEO Reflects Trend

A push by Brazil’s government to oust the chief executive of mining giant Vale SA reflects increasing intervention by the country in former state-owned companies, critics say, and a growing drive by developing countries for greater control over major commodity producers.

Last week, according to people familiar with the discussion, Brazilian Finance Minister Guido Mantega approached Banco Bradesco SA, one of the country’s biggest banks and Vale’s largest private shareholder, and asked for its support in replacing Roger Agnelli, a former Bradesco investment banker who has run the mining company since 2001.

Although Mr. Agnelli had been at loggerheads with the administration of former Brazilian President Luiz Inácio Lula da Silva, the renewed effort to replace him signals a willingness by Dilma Rousseff, Mr. da Silva’s successor, to keep putting government pressure on companies in which the state no longer is the only shareholder.

“These are well-run, profitable companies that don’t need us meddling in their affairs,” said José Mendonça Filho, a Brazilian congressman who summoned Mr. Mantega to testify about the issue. The renewed effort to oust Mr. Agnelli was reported in Brazilian media earlier this week.

The Brazilian Finance Ministry, Vale and Bradesco all declined to comment.

Vale, the world’s biggest producer of iron ore, and Petróleo Brasileiro SA, the state-run energy giant known as Petrobras, were both partially privatized more than a decade ago. Still, the government in recent years has increasingly sought to influence the two companies and push them toward activities that displease many private investors.

Brazil has been particularly assertive in its attempts to steer management, but commodity producers in other countries are increasingly on guard over growing state interference in their operations, too. In addition to seeking greater say in management, governments—amid the continuing commodities boom—are pushing for a bigger share of record profits from metals, minerals, agricultural products and oil.

Mining companies, including BHP Billiton and Rio Tinto, have noted efforts by governments where they operate—from Australia to Canada to the Congo—to get a greater share of the windfall. Tom Albanese, Rio Tinto’s chief executive officer, said this week that all mining companies need to better manage what he referred to as the “curse of resource nationalism.” Increased taxes, fees and government intervention will effectively constrain supply, he warned, and keep prices of iron ore, coal, copper and other metals and minerals high.

In 2009, the West African country of Guinea tossed Rio Tinto from the northern portion of its iron-ore development, complaining it wasn’t working fast enough to bring in tax revenue. In Australia, miners are battling government efforts to implement a resources tax. Last year, Canada thwarted BHP Billiton’s $38.6 billion effort to buy fertilizer company Potash Corp. of Saskatchewan partly because it believed the takeover wouldn’t be good for the country.

In Brazil, the government has been pushing its big commodity producers to branch out from core operations and move into sectors that would create jobs and spur economic activity in remote corners of the country. For instance, Petrobras, despite complaints from private shareholders, succumbed to government prodding that it build refineries in Brazil’s Northeast even though many industry experts call the facilities an unnecessary distraction from the company’s more lucrative exploration and production operations.

At Vale, the tensions began when the company scaled back investment plans and laid off workers at the onset of the global economic downturn. Then-President da Silva at the time criticized the retrenchment as well as Mr. Agnelli’s decision to acquire cargo vessels from shipbuilders outside Brazil. His administration later sought to push the company to complement mining with steel production and other industrial activities.

Because Mr. Agnelli resisted, the government increasingly opposed him—despite record profits at Vale and high esteem for him among other shareholders. The government is a partner with Bradesco and other private investors in the core shareholding group of the company, but it needs the support of those other shareholders to force any change in Vale’s leadership.

A person familiar with the discussion between Bradesco and Mr. Mantega, the finance minister, said the government mostly was asking the bank to clarify whether it would continue backing Mr. Agnelli when his contract comes up for renewal in May.

At the mining company itself, support for Mr. Agnelli, 51 years old, remains strong. The seven other members of its executive committee, according to a person familiar with the company, have said internally that they would also leave if Mr. Agnelli were forced out.

“This wouldn’t just be a change in one executive,” said the person. “It would mean a sweeping change in Vale management.”