Interview
No recession in sight
Eduardo Bartolomeo / Vale Chief Operations Officer.
In the midst of the overwhelming news on recession, or near recession, in the United States, and consequently in the world, it is comforting to hear someone saying just the opposite, mainly when it is the Vale COO, Eduardo Bartolomeo, that rules over a US$ 13 billion investment budget for the next five years. Bartolomeo does not detect signs of recession neither in the international iron ore market nor in the grain market, products on which Vale decided to focus on since the transference of the intermodal traffic to Log-In. “We are not going to slow down, he says, unless the current scene changes”. These are words that the railroad suppliers always wished to hear: long-term orders, making it possible expansion planning. It also means – in a topic but quite important information – the forthcoming arrival to Brazil of the first ten 6.000 HP AC locomotives, the “Ferrari” of locomotives, including an emission control system and now operating in California. It is the GE Evolution locos, and will go to Carajás RR.
Eduardo Bartolomeo has been Vale COO since January 2007. He was elected by the Administration Council in December 2006. He had been working at AmBev from 1994 to 2003 when he assumed Vale Operations and Logistics Management in 2004. In August 2006 he left to become Petroflex’s chairman, in Rio de Janeiro, returning to Vale in January 2007. Bartolomeo graduated in Metallurgical Engineering at the Universidade Federal Fluminense (UFF) and took an MBA at the Catholic University of Leuven, in Belgium.
RF: Last year Vale changed its procurement policy regarding railroads, announcing long-term orders. How did this change happen?
At first, we need to understand what is happening in the market as a whole. The market had a first expansion cycle in 2001 that, in 2004 and 2005, was at its height, both in general freight and in ores. And now, when we observe the second cycle and see Vale announcing a US$ 59 billion investment – of which US$ 13 billion will be in logistics – aiming at the next five years, we realize that, if we do not bring in strategic alliances, we will not be able to manage the demand. That concerns locomotives, cars, stackers, reclaimers, port equipment, engineering contracts (we are going to duplicate Carajás RR), etc. For the investment plan is very aggressive. This meant the expansion process ripening, which began with the cars purchase from China, you can remember that…
RF: So now there are indeed 12.000 cars to be ordered, plus 3 million sleepers, plus rails too?
There are 270 locomotives, about 12.000 cars, sleepers and, of course, rails. Rail is a critical input that Brazil does not offer.
RF: Are there AC locomotives?
Yes, we have even just closed a strategic alliance with GE, that gives me priority in the production line, offers some cost reductions over the years as we show, as we would show to any other partner, our planned demand. There will be 44 engines in the first order – because I did not buy the 270 locomotives at once. And, of those 44, there are ten Evolution, AC-6.000.
RF: 6.000 HP?
Yes, and GE is already manufacturing them. I am aware that Australia and China are receiving these locos as well. Two ACs replace three 4.400 HP Dash 9 CCs. These engines also allow a gain in the maintenance and use of power. Of the 44 locomotives, 23 shall go to Vitória a Minas RR (23 Dash-9), ten Evolution to Carajás RR and other 11 Dash-9 also to Carajás RR.
RF: When does the Evolution arrive?
In the first quarter of 2009. The purchases sequence depends on demand confirmation.
RF: Doesn’t the US recession alarm you before such massive investment?
When we observe the world-wide request for ore and for grain, there is no reason to believe in recession, on the contrary. We notice a very strong in
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