Brazil's Vale Debuts in Hong Kong, Woos Investors

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hi, I'm Saijal Patel from CNBC and you're watching "Asia Market Daily".

The world's biggest iron ore miner, Vale has made an impressive entrance to the Hong Kong stock market.

Its depository receipts debuted at $HK270, 2.5 percent above its New York close price.

In a first on CNBC interview, Bernie Lo asked Vale's CFO (Guilherme Cavalcanti) if this is the end of its foray into Asia.


Cavalcanti: No not at all. This is the first step we think to conquer the Asian market. We that think there's very huge potential in listing and getting, increasing investor base in this part of the world.

Lo: You didn't raise any money with this. Basically you've become tradable in HK. You have mentioned the possibility of maybe tapping the China market, is that something that you're actively considering right now or is it down the line?

Cavalcanti: It's more down the line, we're not considering that at the moment. We think first of all, we're not needing the money. We have a very good year and our profits are very high, our cash ratio is very high, so we don't need any money now. Although in the future maybe we think that we could tap the market here.

Lo: You do almost two thirds of your business in Asia. This brings you close to your customer base, closer to your customer base, almost 40 percent of your business comes from China. Do you only sell to China, or are we going to see Vale maybe involved in merger and acquisition activities, doing JVs with domestic companies in the PRC?

Cavalcanti: We already have five joint ventures in China. Basically mainly smaller minority shareholders. But for sure in the future we will probably be building more plants like we have here, we could build distribution centres, we can have refining factories in China we think that in the future maybe we'll increase our investments in China as well.

Lo: China is going through a sort of challenging patch right now, trying to control inflation. This is a country which at times has introduced price controls on various parts of the economy, trying to keep inflation at bay. What is the potential for policy changes to affect how well you can do in this market?

Cavalcanti: I think that in terms of steel prices maybe the government could have more control. But in terms of the natural resources, the prices are mainly driven by demand and supply. So the demand is very high. All the infrastructure investments in Asia, the airports the railroads the roads, even the cars, consumer goods that requires minerals are very high, the demand is very high now. And of course for natural resources there is supply constraints to meet when demand is going very fast. So for natural resources we think that supply and demand will mainly derive the price of the natural resources.

Lo: Finally in the steel industry, China is trying to rationalize what has been a very fragmented industry. Is that going to sap demand, is that going to have any kind of negative impact on demand for your products?

Cavalcanti: No actually for Vale this will probably not affect at all because vale has the highest quality iron ore in the world. So our iron ore is actually an energy saver. So when they use the iron ore from Vale, you can produce more steel with the same amount of energy and same amount of coal. So we think that these energy rationalization, Chinese concerns, Vale's iron ore quality can address them. So we don't think demand for our goods will continue to be high, and it's also reflected on the price as well.


Thanks for watching “Asia Market Daily”.

I'm Saijal Patel from CNBC.

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