The Brazilian mining giant, currently the second largest mining company in the world, plans to spend $59 billion over the next five years on 40 capital projects around the globe.
That’s one billion a month, said Almir Rezende, the company’s global procurement head.
Products and supplies in demand range from trucks and excavators to buckets, blades, railcars, locomotives, tires and spare parts.
The worldwide commodity boom and capital spending spree by resource companies has resulted in supply bottlenecks and lead times of 12 to 24 months for some equipment, complained Rezende.
To get around the problem, Vale is open to awarding suppliers 100 per cent of its business for certain products in return for supply guarantees, he said.
Pointing to a strategic alliance with Amsted Maxion, a manufacturer of rail equipment and castings, Rezende told suppliers that Vale business can dramatically boost their market share and global reach. Amsted Maxion’s business with Vale will grow from $135 million in 2007 to $500 million in 2008, he said.
Total cost of ownership
Price isn’t the only factor Vale procurement executives take into consideration in evaluating supplier bids. “We buy based on total cost of ownership and how much money you can save us over time,” he noted.
Marcos Saraiva, Vale global operations director, went one step further, encouraging suppliers to think outside the box.
“We want you to be part of the solution and tell us how we can do things differently,” he said. “We need to reinvent ourselves.”
He offered the example of one supplier that changed the design of truck bodies to increase the payload.
“We paid more,” he said, “but the design increased our productivity.”
Rodolfo Frederico, Vale’s procurement manager for mining equipment, outlined a range of opportunities for heavy equipment, as well as parts such as buckets, wear materials, bits and drill tools.
Also making presentations were Elberti Lopes, procurement manager for railway and material handling equipment, Rodrigo Colombaretti, procurement manager for fuels and consumables and Rogerio Scatolini, procurement manager for project engineering and process equipment.
In the next four years, said Lopes, Vale plans to buy 17,000 railcars. The company’s annual spending on fuel and lubricants totals $2.3 billion a year, including $1 billion on diesel, said Colombaretti.
Following the presentations, suppliers participated in a series of one-on-one meetings with Vale procurement executives to promote their products and services and explore possible business relationships.
The event in Toronto was organized by the Canadian Association of Mining Equipment and Services for Export (CAMESE) with the support of the Ontario Ministry of Economic Development and Trade and the federal government’s Export Development Corporation.