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Brazil’s mining giant: Valuable Vale

Few firms have achieved so much with so little fanfare. But can Vale mine anything other than iron ore?

IT IS perhaps the biggest firm you have never heard of. The Boston Consulting Group says it has created more value than any other large firm in the world over the past decade. Yet few people know how to pronounce Vale’s name (it’s “vah-lay”).

This giant Brazilian miner has stayed out of the spotlight even as ravenous demand from China has propelled it from insignificance ten years ago to a market capitalisation of $147 billion. It is now the world’s second-largest miner: smaller than BHP Billiton, but bigger than Rio Tinto and other better-known rivals. …

An acquisition in aluminium: Vale of the trolls

A deal with Norway marks a change of course for a Brazilian mining giant

NOTEWORTHY encounters between Brazil and Norway are rare. Norwegians could point to their country’s unexpected 2-1 victory over Brazil’s footballing princes at the 1998 World Cup. Brazilians may prefer to focus on a recent business deal. On May 2nd Norsk Hydro announced that it was acquiring the aluminium assets of Vale, the world’s second-largest mining company. In a deal valued at $4.9 billion, Norsk will add a mammoth bauxite mine, the world’s biggest alumina refinery and a large smelter to its own substantial aluminium business. In return the Brazilian mining giant will take a 22% stake in Norsk and pocket $1.1 billion in cash.

Producing aluminium competitively requires cheap energy and cheap alumina, the stuff—made from bauxite—that is smelted into the metal. Most aluminium firms with the lowest costs have both. Norsk hopes to join them. It already generates bags of hydro-electric power but has relied on pricey long-term contracts with miners, or the volatile spot market, for raw materials. The availability of huge quantities of bauxite at competitive prices also offers Norsk the opportunity to expand a recently opened smelter in Qatar. …

Let bygones be bygones?

A big African deal signals a partial thaw in Rio Tinto’s relations with China

IN ONE respect Rio Tinto’s relationship with China is clear. That country accounted for a quarter of the mining giant’s revenues in 2009, mainly because of China’s voracious appetite for iron ore. In other respects their relationship is harder to fathom. China was said to be furious last year when Rio first accepted and then spurned its offer to make a $19.5 billion investment in the Anglo-Australian firm. Four Rio employees were subsequently arrested in China for alleged bribery and commercial spying, and this week a date was set for their trial. But on March 19th, just three days before the courts were to begin hearing the cases, Rio announced it had signed a huge joint venture in Africa with none other than Chinalco, the Chinese state-backed metals firm which it had wooed and then jilted last year.

If the deal, to develop a huge iron-ore mine at Simandou in Guinea, suggests a warming in relations between Rio and the Chinese authorities, the signals from the continuing judicial proceedings against Rio’s four employees imply quite the opposite. The arrests of the four men—three are Chinese and one, Stern Hu, is an Australian of Chinese descent—were related to the annual negotiations that set the price China’s steelmakers must pay for iron ore from the world’s three big suppliers: Rio, BHP Billiton and Vale. It was widely assumed outside China that the arrests were motivated by the Chinese authorities’ pique at the way Rio had treated Chinalco. …

Mergers in the fertiliser industry : A growth business

Feeding the world has become a mouth-watering opportunity

FOR thousands of years farmers would try to ensure a decent harvest with exhortations to various deities. The weather may still be in the lap of the gods but the fecundity of the soil can now be improved by more down-to-earth means. The run-up in the price of fertiliser, which reached a peak along with most agricultural commodities in 2008, gave a taste of the money to be made by feeding the world. A recent flurry of takeovers suggests that fertiliser companies see the subsequent drop in prices as a buying opportunity before the next ascent begins.

The biggest deal so far this year was unveiled on February 15th. Yara, a Norwegian fertiliser-maker, agreed to pay $4.1 billion for Terra, an American company. The deal will extend Yara’s lead as the world’s biggest maker of nitrogen-based fertiliser. Vale, a huge Brazilian mining company, has put up $4.8 billion for two recent purchases. These will boost its phosphate- and potash-based fertiliser businesses, which serve Brazil’s vast and growing agricultural sector. …

Brazil’s sugar mergers: Calorific value

Why Brazilian sugar producers are buzzing

SINCE the start of the year the price of sugar futures has almost doubled. This is welcome news for Brazil, the world’s largest producer of the stuff. The price spike is mainly explained by unfavourable weather—too little rain in India and too much in Brazil. India’s sugar production fell by almost half last year, turning the country from the second-biggest producer to the biggest importer. For Brazil’s big sugar companies the timing is perfect: the credit crunch set off a wave of consolidation in an industry that had been resistant to it. The firms that have survived now have more scale and lots of cash.

Louis Dreyfus, a French commodities giant, bought Santelisa Vale, a large processor of sugar cane, in April. Santelisa had expanded fast and taken on too much debt, a common mistake in an industry that had the highest levels of investment of any industry in Brazil before the crunch. Dreyfus, which already trades sugar, soyabeans and other Brazilian agricultural goods, wanted to bolster its position. At the other end of the spectrum is Copersucar, a giant co-operative that unites lots of small growers in Sao Paulo state. …

JBS spreads its wings: Cluck, moo, oink, ka-ching

A Brazilian livestock firm has grown to prize-winning size

UNLESS you work with quadrupeds, it may have escaped your notice that a Brazilian company, JBS, is about to become the world’s largest processor of meat. Its recent acquisition of Pilgrim’s Pride, a big chicken processor in America and Mexico, and a pending merger with Bertin, another Brazilian firm, will soon give it bigger sales than Tyson Foods, the American firm that currently claims the top spot. Other Brazilian names—Vale in mining, Embraer in aviation, Petrobras in oil—may be more famous. But JBS is now the second-largest private-sector company in Brazil by sales, after Vale. And a large majority of its sales come from outside the country.

This is a stunning transformation for a business that began life in Goias state 56 years ago with a slaughterhouse that could butcher just five cattle a day. Its founder, Jose Batista Sobrinho, used to carry sides of beef on his back to market, according to a friend. The expanded firm will slaughter more than 140,000 animals a day and employ 129,000 people. Mr Batista’s three sons still control and run the company, although 49% of it is publicly traded. …

China and the market for iron ore: Testing their metal

Chinese efforts to gain influence over a vital commodity have come to naught

THE offer that BHP Billiton, a mining conglomerate, made in mid-October to buy United Minerals, a prospecting firm with operations near BHP’s iron-ore mines in the Pilbara region of Australia, came with one notable string attached: United must abandon plans to sell an 11% stake to China Railway Materials Group, a state-owned Chinese firm. If United’s shareholders accept the A$204m ($187m) BHP is proffering, as their managers recommend, it will mark another defeat in the Chinese government’s concerted but largely fruitless campaign to gain more influence over the market for iron ore.

The wares of Western mining giants, especially iron ore, are vital to the vast infrastructure projects that are transforming China. The government is nervous about this dependence, especially because just three firms—BHP Billiton, Rio Tinto and Vale—dominate the international trade in iron ore. So China’s government, acting through state-controlled companies, has been trying to overturn this oligopoly by encouraging Chinese customers to negotiate purchases in unison, by hunting for alternate supplies and even by buying a stake in Rio, all to little effect. …

STX Pan Ocean, Vale in talks for long-term contract

STX Pan Ocean Co., South Korea’s biggest bulk carrier, is in talks with Vale SA on a long-term accord to transport iron ore in a deal that may be the biggest contract for the shipper. The stock rose to a three-month high.

STX may haul about 300 million tonnes of iron ore for Vale, the world’s biggest producer of the commodity, over 25 years, Hwang Sung Min, a spokesman for the South Korean company, said by phone today. STX and Vale are still negotiating the details and an agreement may be reached soon, Hwang said.

Web-a-ccino

Impact internet cafe in Eastbourne

By Ana Lucia Gonzalez
BBC News

It’s 15 years since the first internet cafe opened in the UK. Yet, while home and work access have proliferated, the internet cafe shows no sign of disappearing. Why are there still so many of them

When Cyberia, widely considered to be the first internet cafe in the UK, opened its doors in London in 1 September 1994, it offered access to what was then a novelty.

The picture has changed a lot since then, with around 65% of households in the UK having internet access.

Send us your internet cafe stories

Interactive map

But you can still see internet cafes in every High Street in UK towns and cities. From local shops which offer web access, along with services like printing and money wiring, to cavernous underground spaces open 24 hours a day in which gamers gather to compete and share tips.

This survival act has even surprised Eva Pascoe, the founder of Cyberia, who says she thought that the need for public access to the web would be temporary, and that by now "everyone would have a computer built into the watch or earring".

So why is the internet cafe still going strong if people can now surf the web from the comfort of their own desks

Digital divide

While in UK cities the percentage with internet access has increased over the years, some areas still haven’t reaped the benefits of the digital age.

The Megabytes Cafe has been providing services since 1996 for the people at Aberfan, in Merthyr Vale.

It started out as place where young people could go to do their homework or play games, but the grandparents of the children also wanted to learn more about computers.

"As a result, the younger and the older generation were brought together, so in terms of community cohesion it has been an absolutely terrific project to undertake," says Jeff Edwards, founder of the cafe which is part of the Aberfan Merthyr Vale Youth and Community Project.

The web cafe plays an essential role in a community in which only a third of the population owns a personal computer, he says.

"Older people, for example, can get cheaper electricity by going to comparison sites. And the problem with fuel poverty is deep here."

The internet cafe also runs online auction taster sessions in community centres where people can bring their unwanted items to sell.

Albert Lloyd, 70, started visiting when he became a widower. Through the web he has found some of his old friends from when he was stationed as a soldier in Libya 40 years ago.

He also uses Google Earth, he says, "to retrace my steps. It just brings it all back."

Gamers and nostalgia

So what about London and the South East, where households have the highest proportion of internet access in the UK at 74% Do people still feel the need to go elsewhere for their surfing needs

Carlos Guzman at the Videoclip internet cafe in London

Alex Deane is the managing director of Quarks, a small internet cafe chain with premises in Guildford and Reading. His company did some research last year and found that two-thirds of their customers had internet access at home or at work.

"People need a change of scene," Mr Deane says. "Also, some people are not good at maintaining their computers, because this is quite a job these days. Another element is that some companies have restricted the access to websites like Hotmail and Facebook at work. So we have rush hour at lunch time."

Apart from practical needs, it seems like some people still go to the smallest web cafes because they want to feel part of a community, and surf and chat in a familiar atmosphere.

Colombian food at Distriandina, where the Videoclip internet cafe is located

The Videoclip internet cafe is a new addition to Distriandina, a Colombian coffee shop in the Elephant and Castle station arches in South London.

Tucked between Colombian food products, soap opera DVDs and a dance hall which usually holds salsa evenings and political gatherings, the venue is popular with Colombian expats who come to talk to their families back home.

"I can open the internet at home and at work, but I like it here because I can see my friends, they speak my language, I can play ‘sapo’ [a traditional Colombian game] and then buy some Colombian food before going home," says Carlos Guzman, a customer who visits the cafe on the weekend to talk to his family through the camera.

Ye olde concept

Cyberia itself is no longer – Ms Pascoe sold up to a South Korean company, which transformed it into a gamers’ haven. Now all that remains is a vacant shop.

So does the internet cafe still play a role as a social space Ms Pascoe says her idea of Cyberia was based on the coffee shops in eastern Europe.

WHERE PEOPLE GO ONLINE

  • 2003: At home 82%, internet cafes 6%
  • 2006: At home 85%, internet cafes 8%
  • 2008: At home 90%, internet cafes 5%

ONS figures

"I’m Polish and we have coffee shops everywhere, and I don’t see them going away. We all have coffee at home but still go to coffee shops because they fulfil a social function. We just added internet to a concept that is hundreds of years old."

The most successful internet cafes are those which have gone back to the original format of a "public access space, plus IT support centre, plus a social space", she says.

This concept can be seen at Netstream, a 24/7 internet cafe in Soho in central London. A giant silicon chip decorates the main wall along with magazine cuttings from the 1930s. Customers can get technical support for their laptops and can also have their lunch delivered.

"We always play chill-out music and jazz, and try to give people a bit of a relaxing atmosphere, a place where they don’t get disturbed and can work," says manager Alex Karev.

"Sometimes you just can start speaking to people just because they’re sitting so close next to you, you can’t help but speak to each other"

Ali, a gamer

Different groups come at different times, says Mr Karev. "During the day it’s mostly business people who come to work on the computers and need something right here, right now. Once the normal working hours are gone, you get the gamers. Some of them are married or have families, so they come here to relax and play games for a couple of hours, and make friends with other people playing games."

Ali, a gamer, says he makes friends playing community games. "Sometimes you just can start speaking to people just because they’re sitting so close next to you, you can’t help but speak to each other."

And it might be that, 15 years later, the internet cafe is still a space where we can combine the act of solitary surfing with the physical proximity of other humans.


This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

A souring relationship

Behind China’s accusations of spying against Rio Tinto

EACH year the world’s big steelmakers and the big suppliers of iron ore get together to fix a benchmark price for the commodity. For decades the annual negotiations generated barely a murmur of interest from outsiders. In recent years some attention was paid to talks between the big three of the seaborne iron-ore trade—BHP Billiton, Rio Tinto and Vale—and the steelmakers because of rapid price rises for iron ore on the back of rocketing Chinese demand. However this year they have been beset with uncustomary intrigue.

Last month four Rio employees, including an Australian, and two employees of Chinese steel companies were arrested in China. Then on Saturday August 8th China accused Rio, an Anglo-Australian mining giant, of overcharging the country for iron ore by a whopping 700 billion yuan ($102.5 billion) over six years. …

Bangladesh seal rare Test victory

First Test, St Vincent (day five, stumps):
Bangladesh 238 & 345 beat West Indies 307, 181 by 95 runs

Match scorecard


Mahmudullah celebrates dismissing West Indies skipper Floyd Reifer

A superb bowling spell from Mahmudullah saw Bangladesh record only their second ever Test victory with a 95-run win against a weakened West Indies side.

Set 277 to win, the home side crumbled to 181 all out as the debutant off-spinner ripped through the batting order with 5-51 in St Vincent.

David Bernard (52 not out) was the only batsman to provide any resistance.

Earlier, Bangladesh lost their last five wickets for 23 runs to finish on 345 with Darren Sammy claiming 5-70.

The victory is Bangladesh’s first overseas – their previous win came against Zimbabwe over four years ago in Chittagong – in 60 matches since their introduction to Test cricket nine years ago.

The victory was made the more remarkable considering captain and strike bowler Mashrafe Mortaza missed the West Indian innings with a knee injury, with vice-captain Shakib Al Hasan deputising in his absence.

"It was probably a blessing in disguise when we got bowled out (on Monday morning) which gave us more time," said Mortaza, skippering his first Test match since succeeding Mohammad Ashraful last month.

"I thought we let ourselves down in the first innings"

Captain Floyd Reifer

"We were looking to bat until lunch and get a lead of about 300 or more, but we lost our last five wickets quickly."

However, Bangladesh’s achievement came against a second-string West Indies side missing 13 of its best players because of an ongoing contract dispute with the West Indies Cricket Board (WICB).

The board has insisted it will field the same squad – seven of whom made their debuts at Arnos Vale – if no settlement can be reached ahead of the second Test, which starts in Grenada on Friday.

The final day began promisingly for the home side as Sammy claimed three dismissals for his second Test five-wicket haul.

But with 80 overs to chase down 277 on a wearing wicket encouraging turn, the inexperienced West Indies batting line-up succumbed to Bangladesh’s triple spin attack.

Openers Dale Richards and Omar Phillips each fell for 14 before captain Floyd Reifer became the first of Mahmudullah’s five victims for 19.

Reduced to 85-5, Bernard found support in Sammy, but the vice-captain was dismissed by Shakib Al Hasan to leave the home side precariously placed at 119-6.

606: DEBATE
Your thoughts on Bangladesh’s victory

Despite reaching his second half century of the match, Bernard could not find adequate support as Bangladesh wrapped up their historic victory 40 minutes from the scheduled close.

"It is disappointing to lose but I think the guys, brought here the night before a Test, fought well," said 36-year-old stand-in skipper Reifer, who made his first international appearance in more than 10 years.

"I thought we let ourselves down in the first innings, when the batsmen did not capitalise on the starts that they got.

"Many of us got a start, but never really carried on. Young Omar Phillips scored 94, but I thought that a lot of other guys, including myself, got starts, and we never carried on to a big score."</p


This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.