United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934
For the month of
October 2023
Vale S.A.
Praia de Botafogo nº 186, 18º andar, Botafogo
22250-145 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
(Check One) Form 20-F x Form 40-F ¨
Vale’s performance in 3Q23
Rio de Janeiro, October 26th, 2023. “We continue to make significant progress on our strategic and business priorities. In Iron Solutions, we remain on track to meet guidance, with increased production year-to-date, enhanced average quality and a reduced production-to-sales gap in the quarter. In Energy Transition Metals, we are progressing with an asset review to achieve operational excellence. The transition of the Voisey’s Bay mine to underground and the maintenance activities will support sustainable asset performance. In Copper, the successful ramp-up of Salobo III contributes to a higher total output and lower unit costs. We are advancing toward our long-term objectives, by starting loading tests at our 1st briquetting plant and signing two new agreements for the development of Mega Hubs. We have also completed the decharacterization of Dique 2, and B3/B4 dam’s emergency level was reduced to 1, in line with our new framework for dam management established in 2019. We will continue delivering on our strategy to turn Vale into a reference in creating and sharing value to all of our stakeholders.” commented Eduardo Bartolomeo, Chief Executive Officer.
Selected financial indicators | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Net operating revenues | 10,623 | 9,929 | 9,673 |
Total costs and expenses (ex-Brumadinho and de-characterization of dams)1 | (6,921) | (6,730) | (6,412) |
Expenses related to Brumadinho and de-characterization of dams | (305) | (336) | (271) |
Adjusted EBIT from continuing operations | 3,397 | 2,891 | 3,095 |
Adjusted EBIT margin (%) | 32% | 29% | 32% |
Adjusted EBITDA from continuing operations | 4,177 | 3,666 | 3,874 |
Adjusted EBITDA margin (%) | 39% | 37% | 40% |
Proforma adjusted EBITDA from continuing operations2 | 4,482 | 4,002 | 4,145 |
Net income from continuing operations attributable to Vale's shareholders | 2,836 | 4,455 | 892 |
Net debt 3 | 10,009 | 6,980 | 8,908 |
Capital expenditures | 1,464 | 1,230 | 1,208 |
1 Includes adjustment of US$ 47 million in 3Q23 and US$ 52 million in 2Q23, to reflect the performance of the streaming transactions at market price. | |||
2 Excluding expenses related to Brumadinho. | |||
3 Including leases (IFRS 16). |
Highlights
Business Results
· | Proforma adjusted EBITDA from continued operations of US$ 4.5 billion in Q3, up 12% y/y and 8% q/q. EBITDA from the Iron Solutions business was up 18% y/y and 13% q/q, mainly due to higher iron ore realized prices and sales volumes. |
· | Iron ore C1 cash cost ex-3rd party purchases decreased 7% q/q, reaching US$ 21.9/t, on track to meet the US$21.5 – 22.5/t guidance for the year. |
· | Free Cash Flow from Operations of US$ 1.1 billion in Q3, representing an EBITDA to cash-conversion of 25%. |
Disciplined capital allocation
· | Capital expenditures of US$ 1.5 billion in Q3, including growth and sustaining investments, US$ 0.3 billion higher y/y, resulting primarily from the continuous progress of key projects such as Serra Sul 120 Mtpy, Capanema, Voisey’s Bay Mine Expansion, and Salobo III. |
· | Gross debt and leases of US$ 14.0 billion as of September 30th, 2023, flat q/q. |
1 |
· | Expanded Net Debt of US$ 15.5 billion as of September 30th, 2023, US$ 0.8 billion higher q/q, mostly reflecting interest on capital paid to shareholders in the quarter. |
Value creation and distribution
· | Interest on capital of US$ 1.7 billion paid in September, as part of the Shareholder Remuneration Policy. |
· | Allocation of US$ 0.5 billion as part of the 3rd buyback program in the quarter. As of the date of this report, the 3rd buyback program was 72% complete, with US$ 5.5 billion used to repurchase 360 million shares[1]. |
· | Today, the Board of Directors has approved the distribution of US$ 2.0 billion in dividends and interest on capital, scheduled to be paid December 1st. |
· | In addition, the Board of Directors has approved a 4th buyback program to repurchase up to 150 million shares over the next 18 months. The new program will essentially cover the remaining shares from the 3rd buyback program. |
Focusing and strengthening the core
· | Delivering iron solutions: |
- | A letter of intent with Essar was signed, in September, to supply iron ore agglomerates for the Green Steel Arabia project in Saudi Arabia. Vale will supply 4 Mtpy of iron ore agglomerates for the direct reduction route, which will be produced at the Saudi Arabian Mega Hub, in the case of briquettes, and in Oman or Brazil, for pellets. |
- | An agreement with H2 Green Steel was signed in September, to jointly study the feasibility of developing green industrial hubs in Brazil and North America. These hubs will focus on producing low-carbon products, including green hydrogen and hot briquetted iron (HBI), using iron ore briquettes produced by Vale as input material and renewable electricity as the energy source for its hydrogen production. |
- | An MoU with the Port of Açu was announced in September to jointly study the development of a Mega Hub at the port located in São João da Barra in the state of Rio de Janeiro to produce HBI (hot briquetted iron) using the direct reduction route. The Mega Hub will initially receive pellets from Vale and could, in the future, include an iron ore briquette plant at the site to supply the direct reduction route at the industrial complex. |
· | Advancing the project pipeline: |
- | Approval of the development of the Pomalaa[2] mine in October, marking a significant step towards growth in the Energy Transition Metals business. The investment in the mine is US$ 925 million. The mine will provide feed to the HPAL plant project, a three-party collaboration between PTVI, Huayou and Ford Motor Company. The Pomalaa project will have an overall production capacity of up to 120 ktpy of nickel in the form of mixed hydroxide precipitate and is expected to start-up in 2025. |
- | Load tests have started as part of commissioning the first of two iron ore briquette plants in Tubarão. After ramping-up, the combined capacity of the two plants will reach 6 Mtpy. The briquettes will assist in reducing greenhouse gas emissions from the steel industry. |
Promoting sustainable mining
· | In October, the B3/B4 dam had its emergency level reduced to 1. The advancement in the decharacterization process of B3/B4 dam, with the removal of about 85% of the reservoir content, has improved the stability conditions of the dam and facilitated the reduction of the emergency level, as required by current legislation. |
[1] Related to the April 2022 3rd buyback program for a total of 500 million shares.
[2] PTVI owns 100% of the mine and has a call option to acquire up to 30% of the HPAL project upon mechanical completion.
2 |
· | Completion of the decharacterization of Dique 2, located at the Cauê mine, the 13th structure of our Upstream Dam Decharacterization Program to be eliminated. The decharacterization of the remaining 17 upstream structures is on track within the timeframe agreed with authorities, while they continue to be permanently monitored by Vale’s Geotechnical Monitoring Centers. |
· | A long-term agreement between Vale Base Metals and BluestOne, signed in October, will look to reuse waste in Brazil and promote circular mining. The agreement entails the purchase of 50 ktpy of waste from the Onça Puma operations in Pará for the next ten years to produce low-carbon emission fertilizers. |
· | A protocol of intent with Petrobras was signed in September, to jointly assess decarbonization opportunities, including the development of sustainable fuels – such as hydrogen, green methanol, biobunkers, green ammonia and renewable diesel - and CO2 capture and storage technologies. |
· | Vale has set a new target to reduce freshwater use per ton of production by 7% on average until 2030. This target would represent a total reduction of 27% (baseline 2018), alongside the 20% reduction already reached[3], and considers water stress scenarios in areas where we have sites, the implementation of stricter water management processes and the execution of a structured engagement plan. |
[3] Our previous target was to reduce freshwater withdrawal for our production processes by 10% by 2030. As of 2021, we have already achieved a 20% reduction since the baseline year, surpassing our target.
3 |
Adjusted EBITDA
Adjusted EBITDA | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Net operating revenues | 10,623 | 9,929 | 9,673 |
COGS | (6,309) | (6,301) | (5,940) |
SG&A | (150) | (119) | (139) |
Research and development | (188) | (170) | (165) |
Pre-operating and stoppage expenses | (115) | (89) | (103) |
Expenses related to Brumadinho and de-characterization of dams | (305) | (336) | (271) |
Other operational expenses¹ | (159) | (51) | (65) |
Dividends and interests on associates and JVs | - | 28 | 105 |
Adjusted EBIT from continuing operations | 3,397 | 2,891 | 3,095 |
Depreciation, amortization & depletion | 780 | 775 | 779 |
Adjusted EBITDA from continuing operations | 4,177 | 3,666 | 3,874 |
Proforma Adjusted EBITDA from continuing operations² | 4,482 | 4,002 | 4,145 |
¹ Includes adjustment of US$ 47 million in 3Q23 and US$ 52 million in 2Q23, to reflect the performance of the streaming transactions at market price. | |||
² Excluding expenses related to Brumadinho. |
Proforma EBITDA - 3Q23 vs. 3Q22
4 |
Sales & price realization
Volume sold - Minerals and metals | |||
‘000 metric tons | 3Q23 | 3Q22 | 2Q23 |
Iron ore fines | 69,714 | 65,381 | 63,329 |
ROM | 2,232 | 3,668 | 2,236 |
Pellets | 8,613 | 8,521 | 8,809 |
Nickel | 39 | 44 | 40 |
Copper¹ | 74 | 71 | 74 |
Gold as by-product ('000 oz)¹ | 104 | 79 | 88 |
Silver as by-product ('000 oz)¹ | 364 | 346 | 518 |
PGMs ('000 oz) | 41 | 65 | 89 |
Cobalt (metric ton) | 399 | 569 | 660 |
¹ Including sales originated from both nickel and copper operations. |
Average realized prices | |||
US$/ton | 3Q23 | 3Q22 | 2Q23 |
Iron ore - 62% Fe reference price | 114.0 | 103.3 | 111.0 |
Iron ore fines Vale CFR/FOB realized price | 105.1 | 92.6 | 98.5 |
Pellets CFR/FOB (wmt) | 161.2 | 194.3 | 160.4 |
Nickel | 21,237 | 21,672 | 23,070 |
Copper2 | 7,680 | 6,479 | 6,986 |
Gold (US$/oz)12 | 1,872 | 1,748 | 2,082 |
Silver (US$/oz)2 | 22.80 | 17.19 | 23.96 |
Cobalt (US$/t)1 | 35,222 | 49,228 | 34,694 |
¹ Prices presented above were adjusted to reflect the market prices of products delivered related to the streaming transactions. 2 Including sales originated from both nickel and copper operations. |
Costs
COGS by business segment | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Iron Solutions | 4,646 | 4,317 | 4,282 |
Energy Transition Metals | 1,599 | 1,882 | 1,617 |
Others | 64 | 102 | 41 |
Total COGS of continuing operations¹ | 6,309 | 6,301 | 5,940 |
Depreciation | 747 | 752 | 737 |
COGS of continuing operations, ex-depreciation | 5,562 | 5,549 | 5,203 |
¹ COGS currency exposure in 3Q23 was as follows: 47.10% BRL, 46.39% USD, 6.29% CAD and 0.22% Other currencies. |
Expenses
Operating expenses | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
SG&A | 150 | 119 | 139 |
Administrative | 124 | 103 | 118 |
Personnel | 52 | 42 | 52 |
Services | 32 | 28 | 30 |
Depreciation | 12 | 9 | 14 |
Others | 28 | 24 | 22 |
Selling | 26 | 16 | 21 |
R&D | 188 | 170 | 165 |
Pre-operating and stoppage expenses | 115 | 89 | 103 |
Expenses related to Brumadinho and de-characterization of dams | 305 | 336 | 271 |
Other operating expenses | 206 | 51 | 117 |
Total operating expenses | 964 | 765 | 795 |
Depreciation | 34 | 23 | 42 |
Operating expenses, ex-depreciation | 930 | 742 | 753 |
5 |
Brumadinho
Impact of Brumadinho and De-characterization in 3Q23
US$ million | Provisions balance 30jun23 | EBITDA impact | Payments | FX and other adjustments2 | Provisions balance 30sep23 |
De-characterization | 3,661 | - | (146) | (99) | 3,416 |
Agreements & donations¹ | 3,276 | 184 | (292) | 29 | 3,197 |
Total Provisions | 6,937 | 184 | (438) | (70) | 6,613 |
Incurred Expenses | - | 121 | (121) | - | - |
Total | 6,937 | 305 | (559) | (70) | 6,613 |
¹ Includes Integral Reparation Agreement, individual, labor and emergency indemnifications, tailing removal and containment works. 2 Includes foreign exchange, present value and other adjustments. |
Impact of Brumadinho and De-characterization from 2019 to 3Q23
US$ million | EBITDA impact | Payments | PV & FX adjust ² | Provisions balance 30sep23 |
De-characterization | 5,038 | (1,457) | (165) | 3,416 |
Agreements & donations¹ | 8,982 | (5,915) | 130 | 3,197 |
Total Provisions | 14,020 | (7,372) | (35) | 6,613 |
Incurred expenses | 2,873 | (2,873) | - | - |
Others | 180 | (178) | (2) | - |
Total | 17,073 | (10,423) | (37) | 6,613 |
¹ Includes Integral Reparation Agreement, individual, labor and emergency indemnifications, tailing removal and containment works. ² Includes foreign exchange, present value and other adjustments |
Cash outflow of Brumadinho & De-characterization commitments1,2:
US$ billion |
Since 2019 until 3Q23 disbursed |
4Q23 |
2024 |
2025 |
2026 |
2027 | Yearly average 2028-2035³ |
De-characterization | 1.4 | 0.1 | 0.6 | 0.5 | 0.6 | 0.5 | 0.3 |
Integral Reparation Agreement and other reparation provisions | 5.9 | 0.6 | 1.2 | 1.0 | 0.6 | 0.2 | 0.14 |
Incurred expenses | 2.9 | 0.2 | 0.4 | 0.3 | 0.2 | 0.1 | - |
Total | 10.2 | 0.9 | 2.2 | 1.8 | 1.4 | 0.8 | - |
1 Estimate cash outflow for 2023-2035 period, given BRL-USD exchange rates of 5.0076. 2 Amounts stated without discount to present value, net of judicial deposits and inflation adjustments. 3 Estimate annual average cash flow for De-characterization provisions in the 2028-2035 period is US$ 277 million per year. 4 Disbursements related to the Integral Reparation Agreement ending in 2029. |
6 |
Net income
Reconciliation of proforma EBITDA to net income | |||||
US$ million | 3Q23 | 3Q22 | 2Q23 | ||
EBITDA Proforma | 4,482 | 4,002 | 4,145 | ||
Brumadinho and de-characterization of dams | (305) | (336) | (271) | ||
Adjusted EBITDA from continuing operations | 4,177 | 3,666 | 3,874 | ||
Impairment reversal (impairment and disposals) of non-current assets, net 1 | (122) | (40) | (118) | ||
Dividends received | - | (28) | (105) | ||
Equity results and net income (loss) attributable to noncontrolling interests | 73 | 89 | (31) | ||
Financial results | (385) | 2,347 | (157) | ||
Income taxes | (127) | (804) | (1,792) | ||
Depreciation, depletion & amortization | (780) | (775) | (779) | ||
Net income from continuing operations attributable to Vale's shareholders | 2,836 | 4,455 | 892 | ||
1 Includes adjustment of US$ 47 million in 3Q23 and US$ 52 million in 2Q23, to reflect the performance of the streaming transactions at market price. | |||||
Financial results | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Financial expenses, of which: | (362) | (221) | (397) |
Gross interest | (192) | (140) | (185) |
Capitalization of interest | 5 | 9 | 5 |
Others | (137) | (48) | (179) |
Financial expenses (REFIS) | (38) | (42) | (38) |
Financial income | 100 | 141 | 106 |
Shareholder Debentures | 30 | 470 | 321 |
Financial Guarantee | - | - | - |
Derivatives¹ | (51) | 190 | 563 |
Currency and interest rate swaps | (92) | 232 | 558 |
Others (commodities, etc) | 41 | (42) | 5 |
Foreign exchange and monetary variation | (102) | 1,767 | (750) |
Financial result, net | (385) | 2,347 | (157) |
¹ The cash effect of the derivatives was a gain of US$ 70 million in 3Q23. |
Main factors that affected net income for 3Q23 vs. 3Q22
US$ million | ||
3Q22 Net income from continuing operations attributable to Vale's stockholders | 4,455 | |
D EBITDA proforma | 480 | Mainly due to higher iron ore realized prices and higher iron ore and pellets sales volumes. |
D Brumadinho and de-characterization of dams | 31 | |
D Impairment & disposal of non-current assets | (82) | |
D Dividends received | 28 | |
D Equity results and net income (loss) attributable to noncontrolling interests | (16) | |
D Financial results | (2,732) | Mostly driven by (i) cumulative translation adjustment in 2022; and (ii) mark-to-market prices of shareholders debentures. |
D Income taxes | 677 | Mainly due to a decrease in taxable income. |
D Depreciation, depletion & amortization | (5) | |
3Q23 Net income from continuing operations attributable to Vale's shareholders | 2,836 | |
D: difference between 3Q23 and 3Q22 figures |
7 |
CAPEX
Growth and sustaining projects execution | ||||||
US$ million | 3Q23 | % | 3Q22 | % | 2Q23 | % |
Growth projects | 468 | 32.0 | 375 | 30.5 | 376 | 31.2 |
Iron Solutions | 354 | 24.2 | 200 | 16.3 | 255 | 21.1 |
Energy Transition Metals | 96 | 6.6 | 81 | 6.6 | 95 | 7.9 |
Nickel | 67 | 4.6 | 19 | 1.5 | 63 | 5.2 |
Copper | 29 | 2.0 | 62 | 5.0 | 32 | 2.6 |
Energy and others | 18 | 1.2 | 94 | 7.6 | 26 | 2.2 |
Sustaining projects | 996 | 68.0 | 855 | 69.5 | 832 | 68.8 |
Iron Solutions | 609 | 41.6 | 497 | 40.4 | 472 | 39.1 |
Energy Transition Metals | 357 | 24.4 | 341 | 27.7 | 326 | 26.9 |
Nickel | 298 | 20.4 | 288 | 23.4 | 282 | 23.3 |
Copper | 59 | 4.0 | 53 | 4.3 | 44 | 3.6 |
Energy and others | 30 | 2.0 | 17 | 1.4 | 34 | 2.8 |
Total | 1,464 | 100.0 | 1,230 | 100.0 | 1,208 | 100.0 |
Growth projects
Investments in growth projects under construction totaled US$ 468 million in Q3, a 25% increase y/y, driven by higher investments in Iron Solutions projects, especially Serra Sul 120 Mtpy and Capanema projects, partially offset by the conclusion of Sol do Cerrado solar project.
Growth projects progress indicator[4]
Projects | Capex 3Q23 | Financial progress1 | Physical progress | Comments |
Iron Solutions | ||||
Northern System 240 Mtpy Capacity: 10 Mtpy Start-up: 1H23 Capex: US$ 772 MM | 39 | 79% | 92%2 | For the railway, the pile excavation and the temporary bridge construction over the Jacundá River have been completed, with conclusion of works expected in 2024. For the port, the no-load tests on the reclaimer, the silo building, and the conveyor have been completed. |
Serra Sul 120 Mtpy3 Capacity: 20 Mtpy Start-up: 2H25 Capex: US$ 1,502 MM | 144 | 52% | 56% |
For the mine, precast panel fabrication for the semi-mobile crusher's reinforced earth wall has been completed. In addition, the mobilization for the electromechanical assembly of the new conveyor belt has begun. For the plant, the secondary crushing piles have been installed, and concrete structure works are in progress on the crushing and classification area.
|
Capanema’s Maximization Capacity: 18 Mtpy Start-up: 1H25 Capex: US$ 913 MM | 72 | 36% | 57% | The assembly of the primary and secondary circuit connecting gallery, the Capanema’s stacker forearm, and the tertiary screening substation was completed. The environmental approval for the conveyor belt foundations has been granted. |
Briquettes Tubarão Capacity: 6 Mtpy Start-up: 4Q23 (Plant 1) | 1H24 (Plant 2) Capex: US$ 256 MM | 36 | 82% | 95% | The first phase of the load tests, along with the environmental control tests, was successfully completed in August. Commissioning of Plant 1 is expected in Q4. |
Energy Transition Materials | ||||
Onça Puma 2nd Furnace Capacity: 12-15 ktpy Start-up: 2H254 Capex: US$ 555 MM | 26 | 12% | 24% | Construction is progressing, with main activities ongoing, including the detailed engineering, furnace disassembly and procurement. |
1 CAPEX disbursement until end of 3Q23 vs. CAPEX expected. 2 Considering physical progress of mine, plant and logistics. 3 The project consists of increasing the S11D mine-plant capacity by 20 Mtpy. 4 Start-up deadline has been postponed from 1H25 to 2H25.
|
[4] Pre-operating expenses included in the total estimated capex information, in line with Vale’s Board of Directors approvals.
8 |
Sustaining projects
Investments in sustaining our operations totaled US$ 996 million in Q3, a 16% increase y/y, as expected, driven by higher investments in the enhancement of operations and dam management in the Iron Solutions business.
Sustaining projects progress indicator[5]
Projects | Capex 3Q23 | Financial progress1 | Physical progress | Comments |
Iron Solutions | ||||
Compact Crushing S11D Capacity: 50 Mtpy Start-up: 2H26 Capex: US$ 755 MM | 27 | 10% | 18% | The piling works have been completed, and the concrete structures works for the primary crushing have begun. |
N3 – Serra Norte Capacity: 6 Mtpy Start-up: 2H25 Capex: US$ 84 MM | 1 | 16% | 18% | The postponement of the obtainment of the Installation License and Vegetation Suppression Authorization until August 2024 is impacting the beginning of the construction works. |
VGR 1 plant revamp Capacity: 17 Mtpy Start-up: 2H24 Capex: US$ 67MM | 7 | 17% | 51% | The foundation piling for the drainage sump and the construction works of the substation have been completed. The suppliers have been mobilized to start the electromechanical assembly. |
Energy Transition Materials | ||||
Voisey’s Bay Mine Extension Capacity: 45 ktpy (Ni) and 20 ktpy (Cu) Start-up: 1H212 Capex: US$ 2,690 MM | 123 | 89% | 88% | The paste system commissioning has concluded, with performance testing ongoing. Reid Brook's bulk material handling system is near mechanical completion, with the commissioning of sub-systems currently taking place. Assembly of the bulk material handling at Eastern Deeps continues. |
1 CAPEX disbursement until end of 3Q23 vs. CAPEX expected. 2 In 2Q21, Vale achieved the first ore production of Reid Brook deposit, the first of two underground mines to be developed in the project. Eastern Deeps, the second deposit, has started to extract development ore from the deposit and is continuing its scheduled production ramp-up. |
Sustaining capex by type - 3Q23 | ||||
US$ million | Iron Solutions | Energy Transition Materials | Energy and others | Total |
Enhancement of operations | 297 | 158 | 4 | 459 |
Replacement projects | 12 | 139 | - | 151 |
Filtration and dry stacking projects | 45 | - | - | 45 |
Dam management | 30 | 4 | - | 34 |
Other investments in dams and waste dumps | 64 | 22 | - | 86 |
Health and Safety | 48 | 25 | 2 | 75 |
Social investments and environmental protection | 66 | 2 | - | 68 |
Administrative & Others | 47 | 7 | 24 | 78 |
Total | 609 | 357 | 30 | 996 |
[5] Pre-operating expenses included in the total estimated capex column, in line with Vale’s Board of Directors approvals.
9 |
Free cash flow
Free Cash Flow from Operations reached US$ 1.126 billion in 3Q23, US$ 1.038 billion lower y/y, largely explained by the negative effect of working capital (US$ 963 million lower y/y) as a result of the increase in sales volumes and changes in accounts payable.
In the quarter, there was a negative working capital movement of US$ 186 million affecting cash generation, largely explained by higher accrual sales, resulting from higher iron ore provisional prices at the end of the quarter and higher iron ore accrual sales volumes (16.4 Mt in 3Q23 versus 14.7 Mt in 2Q23).
Vale’s cash generation and position was primarily used to distribute US$ 1.678 billion to shareholders in interest on capital and the repurchase US$ 546 million in shares.
Free Cash Flow 3Q23
10 |
Debt
Debt indicators | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Gross debt ¹ | 12,556 | 10,666 | 12,417 |
Lease (IFRS 16) | 1,480 | 1,538 | 1,520 |
Gross debt and leases | 14,036 | 12,204 | 13,937 |
Cash, cash equivalents and short-term investments | 4,027 | 5,224 | 5,029 |
Net debt | 10,009 | 6,980 | 8,908 |
Currency swaps² | (722) | 119 | (895) |
Brumadinho provisions | 3,197 | 3,231 | 3,276 |
Samarco & Renova Foundation provisions³ | 3,010 | 2,954 | 3,401 |
Expanded net debt | 15,494 | 13,284 | 14,690 |
Average debt maturity (years) | 8.2 | 9.2 | 8.4 |
Cost of debt after hedge (% pa) | 5.6 | 5.5 | 5.7 |
Total debt and leases / adjusted LTM EBITDA (x) | 0.9 | 0.6 | 0.9 |
Net debt / adjusted LTM EBITDA (x) | 0.6 | 0.3 | 0.6 |
Adjusted LTM EBITDA / LTM gross interest (x) | 23.0 | 33.7 | 24.1 |
¹ Does not include leases (IFRS 16). ² Includes interest rate swaps. ³ Does not include provision for de-characterization of Germano dam in the amount of US$ 209 million in 3Q23, US$ 217 million in 2Q23 and US$ 191 million in 3Q22. |
Gross debt and leases were US$ 14.0 billion as of September 30th, 2023, in line with the previous quarter.
Expanded net debt, increased to US$ 15.5 billion as of September 30th, 2023, mostly due to the US$ 1.7 billion in interest on capital paid in the quarter. Vale’s expanded net debt target is US$ 10-20 billion.
The average debt maturity reduced slightly to 8.2 years (compared to 8.4 at the end of 2Q23). The average cost of debt after currency and interest rate swaps per annum reduced slightly to 5.6% per annum from 5.7% in July 2023.
11 |
Performance of the business segments
Proforma Adjusted EBITDA from continuing operations, by business area | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Iron Solutions | 4,455 | 3,773 | 3,941 |
Iron ore fines | 3,696 | 2,806 | 3,087 |
Pellets | 712 | 933 | 818 |
Other Ferrous Minerals | 47 | 34 | 36 |
Energy Transition Metals¹ | 379 | 364 | 476 |
Nickel | 100 | 209 | 235 |
Copper | 269 | 155 | 236 |
Other | 10 | - | 5 |
Others² | (352) | (135) | (272) |
Total | 4,482 | 4,002 | 4,145 |
¹ Includes an adjustment of US$ 47 million in 3Q23 and US$ 52 million in 2Q23, to reflect the performance of the streaming transactions at market prices, which will be made until the proceeds received on the streaming transactions are fully recognized in the adjusted EBITDA of the business. Based on the current projections for volumes and commodities prices, it will be fully realized by 2027. ² Including a negative y/y effect of provisions related to communities’ programs, reversal of tax credit provisions, and contingency loss. |
Segment information 3Q23 | |||||||
Expenses | |||||||
US$ million | Net operating revenues | Cost¹ | SG&A and others¹ | R&D¹ | Pre operating & stoppage¹ | Dividends and interest received from associates and JVs | Adjusted EBITDA |
Iron Solutions | 8,862 | (4,164) | (79) | (75) | (89) | - | 4,455 |
Iron ore fines | 7,331 | (3,408) | (79) | (70) | (78) | - | 3,696 |
Pellets | 1,388 | (669) | - | (1) | (6) | - | 712 |
Others ferrous | 143 | (87) | - | (4) | (5) | - | 47 |
Energy Transition Metals | 1,718 | (1,338) | 75 | (75) | (1) | - | 379 |
Nickel² | 1,023 | (925) | 31 | (28) | (1) | - | 100 |
Copper3 | 660 | (341) | (3) | (47) | - | - | 269 |
Others4 | 35 | (72) | 47 | - | - | - | 10 |
Brumadinho and de-characterization of dams | - | - | (305) | - | - | - | (305) |
Others | 42 | (60) | (296) | (38) | - | - | (352) |
Total | 10,623 | (5,562) | (606) | (188) | (90) | - | 4,177 |
¹ Excluding depreciation, depletion and amortization. ² Including copper and by-products from our nickel operations. ³ Including by-products from our copper operations. 4 Includes an adjustment of US$ 47 million increasing the adjusted EBITDA in 3Q23, to reflect the performance of the streaming transactions at market prices, which will be made until the proceeds received on the streaming transactions are fully recognized in the adjusted EBITDA of the business. Based on the current projections for volumes and commodities prices, it will be fully realized by 2027. |
12 |
Iron Solutions
Selected financial indicators - Iron Solutions | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Net Revenues | 8,862 | 7,827 | 7,776 |
Costs¹ | (4,164) | (3,891) | (3,801) |
SG&A and Other expenses¹ | (79) | (47) | 19 |
Pre-operating and stoppage expenses¹ | (89) | (72) | (80) |
R&D expenses | (75) | (49) | (61) |
Dividends and interests on associates and JVs | - | 5 | 88 |
Adjusted EBITDA | 4,455 | 3,773 | 3,941 |
Depreciation and amortization | (508) | (442) | (502) |
Adjusted EBIT | 3,947 | 3,331 | 3,439 |
Adjusted EBIT margin (%) | 44.5 | 42.6 | 44.2 |
¹ Net of depreciation and amortization |
Iron Solutions EBITDA Variation 3Q23 vs. 3Q22 | ||||||
Drivers | ||||||
US$ million | 3Q22 | Volume | Prices | Others | Total variation | 3Q23 |
Iron ore fines | 2,806 | 163 | 876 | (149) | 890 | 3,696 |
Pellets | 933 | 11 | (278) | 46 | (221) | 712 |
Others | 34 | - | 27 | (14) | 13 | 47 |
Iron Solutions | 3,773 | 174 | 625 | (117) | 682 | 4,455 |
The 18% increase in EBITDA y/y is mainly explained by higher iron ore fines realized prices (US$ 876 million), mainly due to a 10% higher average iron ore benchmark price and a 4.4 Mt increase of iron ore fines and pellet sales volume (US$ 174 million). This was partially offset by higher third-party purchase costs, negative effect from the exchange rate, and the consumption of inventories from the previous quarter at higher costs (included in “Others” – US$ 117 million negative in the table above).
Revenues
Iron Solutions' volumes, prices, premiums and revenues | |||
3Q23 | 3Q22 | 2Q23 | |
Volume sold ('000 metric tons) | |||
Iron ore fines | 69,714 | 65,381 | 63,329 |
ROM | 2,232 | 3,668 | 2,236 |
Pellets | 8,613 | 8,521 | 8,809 |
Share of premium products¹ (%) | 81% | 78% | 79% |
Average prices (US$/t) | |||
Iron ore - 62% Fe reference price | 114.0 | 103.3 | 111.0 |
Iron ore - Metal Bulletin 62% low alumina index | 116.1 | 105.1 | 112.9 |
Iron ore - Metal Bulletin 65% index | 125.5 | 115.8 | 124.2 |
Provisional price at the end of the quarter | 117.0 | 95.2 | 110.1 |
Iron ore fines Vale CFR reference (dmt) | 116.3 | 103.3 | 110.6 |
Iron ore fines Vale CFR/FOB realized price | 105.1 | 92.6 | 98.5 |
Pellets CFR/FOB (wmt) | 161.2 | 194.3 | 160.4 |
Iron ore fines and pellets quality premium (US$/t) | |||
Iron ore fines quality premium | 0.8 | 0.6 | 0.6 |
Pellets weighted average contribution | 3.0 | 6.0 | 3.9 |
Total | 3.8 | 6.6 | 4.5 |
contd. |
13 |
(contd.) | ||||||
3Q23 | 3Q22 | 2Q23 | ||||
Net operating revenue by product (US$ million) | ||||||
Iron ore fines | 7,331 | 6,053 | 6,235 | |||
ROM | 33 | 29 | 34 | |||
Pellets | 1,388 | 1,656 | 1,413 | |||
Others | 110 | 89 | 94 | |||
Total | 8,862 | 7,827 | 7,776 | |||
1 Pellets, Carajás (IOCJ), Brazilian Blend Fines (BRBF) and pellet feed. | ||||||
The share of premium products in total sales reached 81% in Q3. The all-in premium was US$ 3.8/t (vs. US$ 6.6/t in 3Q22), mainly due to lower pellet premiums. On a sequential basis, the all-in premium was slightly lower, driven by lower market premiums as steel mills have been favoring lower-grade fines due to the decline in steel margins, and a lower contribution from the pellets business. This was partially offset by a superior product portfolio sales mix, with a larger share of Northern System volumes.
Iron ore fines, excluding Pellets and ROM
Revenues & price realization
Price realization iron ore fines – US$/t, 3Q23
The average realized iron ore fines price was US$ 105.1/t, US$ 12.5/t higher y/y, largely attributed to higher benchmark iron ore prices (US$ 10.7/t higher y/y), and a positive impact from pricing adjustments (US$ 2.1/t higher y/y).
Iron Ore fines pricing system breakdown (%) | |||
3Q23 | 3Q22 | 2Q23 | |
Lagged | 13 | 13 | 16 |
Current | 44 | 61 | 48 |
Provisional | 43 | 26 | 36 |
Total | 100 | 100 | 100 |
14 |
Costs
Iron ore fines cash cost and freight | |||
3Q23 | 3Q22 | 2Q23 | |
Costs (US$ million) | |||
Vale’s iron ore fines C1 cash cost (A) | 1,784 | 1,489 | 1,676 |
Third-party purchase costs¹ (B) | 402 | 343 | 320 |
Vale’s C1 cash cost ex-third-party volumes (C = A – B) | 1,383 | 1,146 | 1,356 |
Sales Volumes (Mt) | |||
Volume sold (ex-ROM) (D) | 69.7 | 65.4 | 63.3 |
Volume sold from third-party purchases (E) | 6.6 | 6.2 | 5.6 |
Volume sold from own operations (F = D – E) | 63.1 | 59.2 | 57.8 |
Iron ore fines cash cost (ex-ROM, ex-royalties), FOB (US$ /t) | |||
Vale’s C1 cash cost ex-third-party purchase cost (C/F) | 21.9 | 19.4 | 23.5 |
Average third-party purchase C1 cash cost (B/E) | 60.5 | 55.3 | 57.4 |
Vale's iron ore cash cost (A/D) | 25.6 | 22.8 | 26.5 |
Freight | |||
Maritime freight costs (G) | 1,129 | 1,230 | 920 |
% of CFR sales (H) | 86% | 84% | 83% |
Volume CFR (Mt) (I = D x H) | 59.8 | 54.9 | 52.3 |
Vale's iron ore unit freight cost (US$/t) (G/I) | 18.9 | 22.4 | 17.6 |
¹ Includes logistics costs related to third-party purchases |
Iron ore fines COGS - 3Q22 x 3Q23 | ||||||
Drivers | ||||||
US$ million | 3Q22 | Volume | Exchange rate | Others | Total variation | 3Q23 |
C1 cash costs | 1,489 | 105 | 68 | 122 | 295 | 1,784 |
Freight | 1,230 | 109 | - | (210) | (101) | 1,129 |
Distribution costs | 145 | 10 | - | 24 | 34 | 179 |
Royalties & others | 231 | 15 | - | 70 | 85 | 316 |
Total costs before depreciation and amortization | 3,095 | 239 | 68 | 6 | 313 | 3,408 |
Depreciation | 289 | 21 | 17 | 30 | 68 | 357 |
Total | 3,384 | 260 | 85 | 36 | 381 | 3,765 |
C1 cash cost variation (excluding 3rd party purchases) – US$/t (3Q23 x 2Q23)
Vale’s C1 cash cost, ex-third-party purchases, decreased US$ 1.6/t q/q, reaching US$ 21.9/t, in line with the guidance for 2023 (US$ 21.5-22.5/t). The main drivers for the cost reduction were (i) lower demurrage costs; (ii) higher volumes diluting fixed costs, especially from the Northern System with lower production costs, and (iii) the continued effort to improve efficiency across the business.
15 |
Vale's maritime freight cost was US$ 1.3/t higher q/q, due to higher bunker fuel costs (US$ 0.9/t higher q/q) and a larger exposure to spot freight rates (US$ 0.6/t higher q/q), driven by Vale’s usual shipping seasonality. On a year-on-year basis, the freight cost reduction was mainly driven by lower bunker fuel costs. CFR sales totaled 59.8 Mt in Q3, reflecting 86% of total iron ore fines sales. From a sensitivity analysis, a US$ 10/bbl change in the brent oil price represents around a US$ 0.9/t change in Vale’s maritime freight cost.
Expenses
Expenses - Iron Ore fines | |||
US$ millions | 3Q23 | 3Q22 | 2Q23 |
SG&A | 21 | 14 | 17 |
R&D | 70 | 46 | 57 |
Pre-operating and stoppage expenses | 78 | 63 | 69 |
Other expenses¹ | 58 | 30 | (43) |
Total expenses | 227 | 153 | 100 |
¹ 2Q23 results were positively impacted by tax credits. |
Iron ore pellets
Pellets – EBITDA | ||||
US$ million | 3Q23 | 3Q22 | 2Q23 | Comments |
Net revenues / Realized prices | 1,388 | 1,656 | 1,413 | Realized price was US$ 161.2/t, US$ 33.1/t lower y/y, mainly due to lower quarterly pellet premiums. |
Dividends from leased pelletizing plants | 0 | 4 | 88 | Absence of seasonal dividends received. |
Cash costs (Iron ore, leasing, freight, overhead, energy and other) | (669) | (714) | (674) | FOB sales were 62% of total sales. |
Pre-operational & stoppage expenses | (6) | (5) | (4) | |
Expenses (Selling, R&D and other) | (1) | (8) | (5) | |
EBITDA | 712 | 933 | 818 | |
EBITDA/t | 83 | 109 | 93 |
Iron ore fines and pellets cash break-even landed in China[6]
Iron ore fines and pellets cash break-even landed in China | |||
US$/t | 3Q23 | 3Q22 | 2Q23 |
Vale's C1 cash cost ex-third-party purchase cost | 21.9 | 19.4 | 23.5 |
Third party purchases cost adjustments | 3.7 | 3.4 | 3.0 |
Vale's iron ore cash cost (ex-ROM, ex-royalties), FOB (US$ /t) | 25.6 | 22.8 | 26.5 |
Iron ore fines freight cost (ex-bunker oil hedge) | 18.9 | 22.4 | 17.6 |
Iron ore fines distribution cost | 2.6 | 2.2 | 2.5 |
Iron ore fines expenses1 & royalties | 7.7 | 5.8 | 6.2 |
Iron ore fines moisture adjustment | 4.7 | 4.7 | 4.7 |
Iron ore fines quality adjustment | (0.8) | (0.6) | (0.6) |
Iron ore fines EBITDA break-even (US$/dmt) | 58.7 | 57.3 | 56.9 |
Iron ore fines pellet adjustment | (3.0) | (6.0) | (3.9) |
Iron ore fines and pellets EBITDA break-even (US$/dmt) | 55.7 | 51.3 | 53.0 |
Iron ore fines sustaining investments | 7.8 | 6.9 | 7.2 |
Iron ore fines and pellets cash break-even landed in China (US$/dmt) | 63.5 | 58.2 | 60.2 |
¹ Net of depreciation and includes dividends received. Including stoppage expenses. |
[6] Measured by unit cost + expenses + sustaining investment adjusted for quality. Does not include the impact from the iron ore fines and pellets pricing system mechanism.
16 |
Energy Transition Metals
Energy Transition Metals EBITDA overview – 3Q23 | ||||||||||||
US$ million | Sudbury | Voisey’s Bay & Long Harbour | PTVI (site) | Onça Puma | Sossego | Salobo | Others | Subtotal Energy Transition Metals | Marketing activities and others¹ | Total Energy Transition Metals | ||
Net Revenues | 685 | 199 | 279 | 78 | 148 | 513 | (219) | 1,683 | 35 | 1,718 | ||
Costs | (684) | (271) | (171) | (58) | (83) | (258) | 259 | (1,266) | (72) | (1,338) | ||
Selling and other expenses | (7) | 11 | (1) | (4) | (1) | (1) | 31 | 28 | 47 | 75 | ||
Pre-operating and stoppage expenses | - | - | - | - | - | - | (1) | (1) | - | (1) | ||
R&D | (16) | (6) | (3) | (1) | (5) | (3) | (41) | (75) | - | (75) | ||
EBITDA | (22) | (67) | 104 | 15 | 59 | 251 | 29 | 369 | 10 | 379 | ||
¹ Includes an adjustment of US$ 47 million increasing the adjusted EBITDA in 3Q23, to reflect the performance of the streaming transactions at market prices, which will be made until the proceeds received on the streaming transactions are fully recognized in the adjusted EBITDA of the business. Based on the current projections for volumes and commodities prices, it will be fully realized by 2027. | ||||||||||||
Nickel operations
Selected financial indicators, ex- marketing activities | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Net Revenues | 1,023 | 1,255 | 1,222 |
Costs¹ | (925) | (1,028) | (886) |
SG&A and other expenses¹ | 31 | 2 | (72) |
Pre-operating and stoppage expenses¹ | (1) | - | - |
R&D expenses | (28) | (31) | (29) |
Adjusted EBITDA | 100 | 198 | 235 |
Depreciation and amortization | (208) | (254) | (229) |
Adjusted EBIT | (108) | (56) | 6 |
Adjusted EBIT margin (%) | (10.5) | (4.4) | 0.5 |
¹ Net of depreciation and amortization. |
EBITDA variation - US$ million (3Q23 x 3Q22), ex-marketing activities | |||||||
Drivers | |||||||
US$ million | 3Q22 | Volume | Prices | By-products | Others | Total variation | 3Q23 |
Nickel excl. marketing | 198 | 36 | (17) | (106) | (11) | (98) | 100 |
EBITDA by operations, ex-marketing activities | ||||
US$ million | 3Q23 | 3Q22 | 2Q23 | 3Q23 vs. 3Q22 Comments |
Sudbury¹ | (22) | 51 | 158 | Higher costs due to the maintenance in Sudbury operations, and lower by-product volumes. |
Voisey’s Bay & Long Harbour | (67) | 17 | (130) | Increased material consumption as a result of (i) extended maintenance in the refinery and (ii) ongoing transition to underground project (VBME). |
PTVI | 104 | 103 | 123 | Lower costs, mainly fuel, partially offset by lower nickel realized prices. |
Onça Puma | 15 | 28 | 17 | Lower nickel realized prices. |
Others² | 70 | (1) | 67 | One-off settlement payment related to royalty. |
Total | 100 | 198 | 235 | |
¹ Includes the Thompson operations and Clydach refinery. ² Includes Japanese operations, intercompany eliminations, purchase of finished nickel. Hedge results have been relocated to each nickel business operation. |
17 |
Revenues & price realization
Revenues & price realization | |||
3Q23 | 3Q22 | 2Q23 | |
Volume sold ('000 metric tons) | |||
Nickel | 39 | 44 | 40 |
Copper | 12 | 18 | 21 |
Gold as by-product ('000 oz) | 9 | 10 | 11 |
Silver as by-product ('000 oz) | 122 | 152 | 276 |
PGMs ('000 oz) | 41 | 65 | 89 |
Cobalt (metric ton) | 399 | 569 | 660 |
Average realized prices (US$/t) | |||
Nickel | 21,237 | 21,672 | 23,070 |
Copper | 7,423 | 5,925 | 6,888 |
Gold (US$/oz) | 1,851 | 1,578 | 1,931 |
Silver (US$/oz) | 22 | 15 | 22 |
Cobalt | 35,222 | 49,228 | 34,694 |
Net revenue by product - ex marketing activities (US$ million) | |||
Nickel | 833 | 960 | 930 |
Copper | 89 | 104 | 145 |
Gold as by-product¹ | 17 | 16 | 21 |
Silver as by-product | 3 | 2 | 6 |
PGMs | 54 | 129 | 85 |
Cobalt¹ | 14 | 28 | 23 |
Others | 13 | 15 | 12 |
Total | 1,023 | 1,255 | 1,222 |
¹ Revenues presented above were adjusted to reflect the market prices of products delivered related to the streaming transactions. | |||
Breakdown of nickel volumes sold, realized price and premium | |||
3Q23 | 3Q22 | 2Q23 | |
Volumes (kt) | |||
Upper Class I nickel | 21.7 | 25.1 | 22.7 |
- of which: EV Battery | 0.2 | 1.6 | 0.6 |
Lower Class I nickel | 4.6 | 5.2 | 4.5 |
Class II nickel | 9.4 | 8.7 | 9.7 |
Intermediates | 3.6 | 5.3 | 3.5 |
Nickel realized price (US$/t) | |||
LME average nickel price | 20,344 | 22,063 | 22,308 |
Average nickel realized price | 21,237 | 21,672 | 23,070 |
Contribution to the nickel realized price by category: | |||
Nickel average aggregate (premium/discount) | 123 | 190 | 170 |
Other timing and pricing adjustments contributions¹ | 770 | (581) | 94 |
Premium/discount by product (US$/t) | |||
Upper Class I nickel | 1,755 | 1,770 | 1,820 |
Lower Class I nickel | 1,368 | 750 | 1,250 |
Class II nickel | (2,542) | (1,920) | (2,340) |
Intermediates | (4,361) | (4,310) | (4,930) |
¹ Comprises (i) the Quotational Period effects (based on sales distribution in the prior three months, as well as the differences between the LME price at the moment of sale and the LME average price), with a negative impact of US$ 59/t , (ii) fixed-price sales, with a positive impact of US$ 164/t, (iii) the effect of the hedging on Vale’s nickel price realization, with a positive impact of US$ 586/t in the quarter and (iv) other effects with a positive impact of US$ 79/t. Note: The nickel realized price for 3Q23 was impacted by a settlement price in the quarter of circa US$ 20,342/t. The average strike price for the complete hedge position was flat at US$ 34,929/t.
|
The nickel realized price in 3Q23 decreased by 2% y/y mainly due to an 8% drop in the LME nickel average price, which was partially offset by positive results of hedging in nickel price realization.
In the quarter, the average realized nickel price was 4% higher than the LME mainly due to hedging results, fixed-priced sales and Class I products premium.
18 |
Product type by operation | |||||
% of source sales | North Atlantic | PTVI & Matsusaka | Onça Puma | Total 3Q23 | Total 3Q22 |
Upper Class I | 81.7 | - | - | 55.2 | 56.7 |
Lower Class I | 17.3 | - | - | 11.7 | 11.6 |
Class II | 0.9 | 53.7 | 100.0 | 24.0 | 19.6 |
Intermediates | 0.0 | 46.3 | - | 9.1 | 12.0 |
Costs
Nickel COGS, excluding marketing activities - 3Q23 x 3Q22 | ||||||
Drivers | ||||||
US$ million | 3Q22 | Volume | Exchange rate | Others | Total variation | 3Q23 |
Nickel operations | 1,028 | (117) | (19) | 33 | (103) | 925 |
Depreciation | 254 | (30) | (5) | (6) | (41) | 213 |
Total | 1,282 | (147) | (24) | 27 | (144) | 1,138 |
Unit cash cost of sales by operation, net of by-product credits | ||||
US$/t | 3Q23 | 3Q22 | 2Q23 | 3Q23 vs. 3Q22 Comments |
Sudbury¹,² | 21,645 | 19,078 | 16,594 | Lower by product credit alongside to lower dilution of fixed costs. |
Voisey’s Bay & Long Harbour² | 30,316 | 16,704 | 34,713 | Lower by product credit alongside to lower dilution of fixed costs and higher material consumption. |
PTVI | 9,915 | 11,637 | 10,297 | Reduced fuel costs. |
Onça Puma | 11,543 | 9,882 | 11,623 | Lower fixed cost dilution. |
¹ Sudbury figures include Thompson and Clydach costs. ² A large portion of Sudbury, including Clydach, and Long Harbour finished nickel production is derived from intercompany transfers, as well as from the purchase of ore or nickel intermediates from third parties. These transactions are valued at fair market value. |
EBITDA break-even
EBITDA break-even | |||
US$/t | 3Q23 | 3Q22 | 2Q23 |
COGS ex. 3rd-party feed | 23,039 | 21,717 | 21,135 |
COGS¹ | 23,581 | 23,214 | 21,969 |
By-product revenues¹ | (4,807) | (6,663) | (7,232) |
COGS after by-product revenues | 18,774 | 16,551 | 14,737 |
Other expenses² | (81) | 705 | 2,516 |
Total Costs | 18,693 | 17,256 | 17,253 |
Nickel average aggregate (premium) discount | (123) | 190 | (170) |
EBITDA breakeven³ | 18,570 | 17,066 | 17,083 |
¹ Excluding marketing activities. ² Includes R&D, sales expenses and pre-operating & stoppage. ³ Considering only the cash effect of streaming transactions, nickel operations EBITDA break-even would increase to US$ 18,786/t. |
Unit COGS, excluding 3rd-party feed purchases, have increased by US$ 1,322 y/y mainly due to lower fixed cost dilution and higher maintenance costs.
All-in costs increased by US$ 1,504 y/y, primarily due to higher unit COGS as well as lower by-products credits mainly driven by lower by-products volumes.
19 |
Copper operations – Salobo and Sossego
Selected financial indicators - Copper operations, ex-marketing activities | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Net Revenues | 660 | 479 | 538 |
Costs¹ | (341) | (275) | (319) |
SG&A and other expenses¹ | (3) | (8) | 49 |
Pre-operating and stoppage expenses¹ | - | (3) | (1) |
R&D expenses | (47) | (38) | (31) |
Adjusted EBITDA | 269 | 155 | 236 |
Depreciation and amortization | (49) | (30) | (34) |
Adjusted EBIT | 220 | 125 | 202 |
Adjusted EBIT margin (%) | 33.3 | 26.1 | 37.5 |
¹ Net of depreciation and amortization |
EBITDA variation - US$ million (3Q23 x 3Q22) | |||||||
Drivers | |||||||
US$ million | 3Q22 | Volume | Prices | By-products | Others | Total variation | 3Q23 |
Copper | 155 | 4 | 69 | 56 | (15) | 114 | 269 |
EBITDA by operation | ||||
US$ million | 3Q23 | 3Q22 | 2Q23 | 3Q23 vs. 3Q22 Comments |
Salobo | 251 | 128 | 218 | Higher copper prices and sales volumes of copper and gold. |
Sossego | 59 | 56 | 17 | Higher copper realized prices. |
Others copper¹ | (41) | (29) | 1 | |
Total | 269 | 155 | 236 | |
¹ Includes R&D expenses of US$ 30 million related to the Hu’u project in 3Q23. |
Revenues & price realization
Revenues & price realization | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Volume sold (‘000 metric tons) | |||
Copper | 62 | 53 | 53 |
Gold as by-product (‘000 oz) | 95 | 69 | 77 |
Silver as by-product (‘000 oz) | 242 | 194 | 242 |
Average prices (US$/t) | |||
Average LME copper price | 8,356 | 7,745 | 8,464 |
Average copper realized price | 7,731 | 6,663 | 7,025 |
Gold (US$/oz)¹ | 1,874 | 1,773 | 2,103 |
Silver (US$/oz) | 23 | 19 | 26 |
Revenue (US$ million) | |||
Copper | 478 | 353 | 371 |
Gold as by-product¹ | 177 | 123 | 161 |
Silver as by-product | 5 | 4 | 6 |
Total | 660 | 479 | 538 |
¹ Revenues presented above were adjusted to reflect the market prices of products delivered related to the streaming transactions. |
20 |
Price realization – copper operations
US$/t | 3Q23 | 3Q22 | 2Q23 |
Average LME copper price | 8,356 | 7,745 | 8,464 |
Current period price adjustments¹ | (189) | (390) | (257) |
Copper gross realized price | 8,167 | 7,355 | 8,207 |
Prior period price adjustments² | 125 | (246) | (638) |
Copper realized price before discounts | 8,292 | 7,110 | 7,569 |
TC/RCs, penalties, premiums and discounts³ | (560) | (452) | (544) |
Average copper realized price | 7,731 | 6,663 | 7,025 |
Note: Vale's copper products are sold on a provisional pricing basis during the quarter, with final prices determined in a future period. ¹ Current-period price adjustments: at the end of the quarter, mark-to-market of open invoices based on the copper price forward curve. Includes a small number of final invoices that were provisionally priced and settled within the quarter. ² Prior-period price adjustment: based on the difference between the price used in final invoices (and in the mark-to-market of invoices from previous quarters still open at the end of the quarter) and the provisional prices used for sales in prior quarters ³ TC/RCs, penalties, premiums, and discounts for intermediate products.
|
Average copper realized price was up 16% y/y mainly due to the 8% increase in LME reference prices and the lower impact of provisional price adjustments.
In the quarter, the average realized prices before discounts were 1% lower than LME mainly reflecting the impact of a lower copper forward price on provisionally priced copper sales[7].
Costs
COGS - 3Q23 x 3Q22 | |||||||||||
Drivers | |||||||||||
US$ million | 3Q22 | Volume | Exchange rate | Others | Total variation | 3Q23 | |||||
Copper operations | 275 | 52 | 13 | 1 | 66 | 341 | |||||
Depreciation | 30 | 18 | 3 | (2) | 19 | 49 | |||||
Total | 305 | 70 | 16 | (1) | 85 | 390 | |||||
Copper operations – unit cash cost of sales, net of by-product credits | |||||||||||
US$/t | 3Q23 | 3Q22 | 2Q23 | 3Q23 vs. 3Q22 Comments | |||||||
Salobo | 2,130 | 2,343 | 2,246 | Higher production volumes leading to higher dilution of fixed costs dilution and higher by-product revenue as Salobo III plant ramps up. | |||||||
Sossego | 3,751 | 3,491 | 4,705 | Lower fixed costs dilution and lower by-product credits resulting from lower feed grades at the mill. | |||||||
EBITDA break-even – copper operations
US$/t | 3Q23 | 3Q22 | 2Q23 |
COGS | 5,512 | 5,170 | 6,046 |
By-product revenues | (2,960) | (2,390) | (3,177) |
COGS after by-product revenues | 2,552 | 2,780 | 2,869 |
Other expenses¹ | 812 | 952 | (325) |
Total costs | 3,364 | 3,732 | 2,544 |
TC/RCs penalties, premiums and discounts | 560 | 452 | 544 |
EBITDA breakeven² | 3,924 | 4,184 | 3,088 |
EBITDA breakeven ex-Hu'u | 3,264 | 3,638 | 3,112 |
¹ Includes sales expenses, R&D, pre-operating and stoppage expenses and other expenses ² Considering only the cash effect of streaming transactions, copper operations EBITDA break-even would increase to US$ 5,012/t. |
The realized price to be compared to the EBITDA break-even should be the copper realized price before discounts (US$ 8,292/t), given that TC/RCs, penalties, and other discounts are already part of the EBITDA break-even build-up.
[7] On September 30th, 2023, Vale had provisionally priced copper sales from Sossego and Salobo totaling 65,709 tons valued at weighted average LME forward price of US$ 8,280/t, subject to final pricing over the following months.
21 |
Webcast Information
Vale will host a webcast on Friday, October 27th, 2023, at 11:00 a.m. Brasilia time (10:00 a.m. New York time; 3:00 p.m. London time). Internet access to the webcast and presentation materials will be available on Vale website at www.vale.com/investors. A webcast replay will be accessible at www.vale.com beginning shortly after the completion of the call. Interested parties may listen to the teleconference by dialing in:
Brazil: +55 (11) 4090-1621 / 3181-8565
U.K: +44 20 3795 9972
U.S (toll-free): +1 844 204 8942
U.S: +1 412 717 9627
The Access Code for this call is VALE.
Further information on Vale can be found at: vale.com
Investor Relations
Vale.RI@vale.com
Thiago Lofiego: thiago.lofiego@vale.com
Luciana Oliveti: luciana.oliveti@vale.com
Mariana Rocha: mariana.rocha@vale.com
Pedro Terra: pedro.terra@vale.com
Except where otherwise indicated, the operational and financial information in this release is based on the consolidated figures in accordance with IFRS. Our quarterly financial statements are reviewed by the company’s independent auditors. The main subsidiaries that are consolidated are the following: Companhia Portuária da Baía de Sepetiba, Vale Manganês S.A., Minerações Brasileiras Reunidas S.A., Salobo Metais S.A, Tecnored Desenvolvimento Tecnológico S.A., PT Vale Indonesia Tbk, Vale Holdings B.V, Vale Canada Limited, Vale International S.A., Vale Malaysia Minerals Sdn. Bhd., Vale Oman Pelletizing Company LLC e Vale Oman Distribution Center LLC.
This press release may include statements about Vale’s current expectations about future events or results (forward-looking statements). Many of those forward-looking statements can be identified by the use of forward-looking words such as „anticipate,” „believe,” „could,” „expect,” „should,” „plan,” „intend,” „estimate” “will” and „potential,” among others. All forward-looking statements involve various risks and uncertainties. Vale cannot guarantee that these statements will prove correct. These risks and uncertainties include, among others, factors related to: (a) the countries where Vale operates, especially Brazil and Canada; (b) the global economy; (c) the capital markets; (d) the mining and metals prices and their dependence on global industrial production, which is cyclical by nature; and (e) global competition in the markets in which Vale operates. Vale cautions you that actual results may differ materially from the plans, objectives, expectations, estimates and intentions expressed in this presentation. Vale undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information or future events or for any other reason. To obtain further information on factors that may lead to results different from those forecast by Vale, please consult the reports that Vale files with the U.S. Securities and Exchange Commission (SEC), the Brazilian Comissão de Valores Mobiliários (CVM) and, in particular, the factors discussed under “Forward-Looking Statements” and “Risk Factors” in Vale’s annual report on Form 20-F.
The information contained in this press release includes financial measures that are not prepared in accordance with IFRS. These non-IFRS measures differ from the most directly comparable measures determined under IFRS, but we have not presented a reconciliation to the most directly comparable IFRS measures, because the non-IFRS measures are forward-looking and a reconciliation cannot be prepared without unreasonable effort.
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Annexes
Simplified financial statements
Income Statement | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Net operating revenue | 10,623 | 9,929 | 9,673 |
Cost of goods sold and services rendered | (6,309) | (6,301) | (5,940) |
Gross profit | 4,314 | 3,628 | 3,733 |
Gross margin (%) | 40.6 | 36.5 | 38.6 |
Selling and administrative expenses | (150) | (119) | (139) |
Research and development expenses | (188) | (170) | (165) |
Pre-operating and operational stoppage | (115) | (89) | (103) |
Other operational expenses, net | (511) | (387) | (388) |
Impairment reversal (impairment and disposals) of non-current assets, net | (75) | (40) | (66) |
Operating income | 3,275 | 2,823 | 2,872 |
Financial income | 100 | 141 | 106 |
Financial expenses | (362) | (221) | (397) |
Other financial items, net | (123) | 2,427 | 134 |
Equity results and other results in associates and joint ventures | 94 | 78 | 5 |
Income before income taxes | 2,984 | 5,248 | 2,720 |
Current tax | (278) | (514) | (404) |
Deferred tax | 151 | (290) | (1,388) |
Net income from continuing operations | 2,857 | 4,444 | 928 |
Net income (loss) attributable to noncontrolling interests | 21 | (11) | 36 |
Net income from continuing operations attributable to Vale's shareholders | 2,836 | 4,455 | 892 |
Discontinued operations | |||
Net income (Loss) from discontinued operations | - | - | - |
Net income from discontinued operations attributable to noncontrolling interests | - | - | - |
Net income (Loss) from discontinued operations attributable to Vale's shareholders | - | - | - |
Net income | 2,857 | 4,444 | 928 |
Net income (Loss) attributable to Vale's to noncontrolling interests | 21 | (11) | 36 |
Net income attributable to Vale's shareholders | 2,836 | 4,455 | 892 |
Earnings per share (attributable to the Company's shareholders - US$): | |||
Basic and diluted earnings per share (attributable to the Company's shareholders - US$) | 0.66 | 0.98 | 0.20 |
Equity income (loss) by business segment | ||||||
US$ million | 3Q23 | % | 3Q22 | % | 2Q23 | % |
Iron Solutions | 87 | 93 | 80 | 92 | 89 | 91 |
Energy Transition Metals | - | - | - | - | - | - |
Others | 7 | 7 | 7 | 8 | 9 | 9 |
Total | 94 | 100 | 87 | 100 | 98 | 100 |
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Balance sheet | |||
US$ million | 9/30/2023 | 6/30/2023 | 9/30/2022 |
Assets | |||
Current assets | 14,673 | 15,547 | 13,922 |
Cash and cash equivalents | 3,967 | 4,983 | 5,182 |
Short term investments | 60 | 46 | 42 |
Accounts receivable | 3,348 | 2,967 | 2,150 |
Other financial assets | 426 | 522 | 152 |
Inventories | 5,114 | 5,193 | 5,268 |
Recoverable taxes | 1,355 | 1,502 | 858 |
Other | 403 | 334 | 270 |
Non-current assets held for sale | - | - | - |
Non-current assets | 14,060 | 14,402 | 13,354 |
Judicial deposits | 1,296 | 1,326 | 1,289 |
Other financial assets | 586 | 698 | 236 |
Recoverable taxes | 1,264 | 1,229 | 1,114 |
Deferred income taxes | 9,682 | 9,904 | 9,825 |
Other | 1,232 | 1,245 | 890 |
Fixed assets | 60,256 | 61,568 | 53,335 |
Total assets | 88,989 | 91,517 | 80,611 |
Liabilities | |||
Current liabilities | 13,644 | 13,556 | 12,994 |
Suppliers and contractors | 5,582 | 5,240 | 4,735 |
Loans, borrowings and leases | 976 | 912 | 447 |
Other financial liabilities | 1,538 | 1,599 | 1,466 |
Taxes payable | 630 | 882 | 303 |
Settlement program ("REFIS") | 407 | 416 | 351 |
Provisions | 943 | 849 | 929 |
Liabilities related to associates and joint ventures | 899 | 1,044 | 2,027 |
Liabilities related to Brumadinho | 1,324 | 1,201 | 1,318 |
De-characterization of dams and asset retirement obligations | 845 | 899 | 700 |
Dividends payable | - | - | - |
Other | 500 | 514 | 718 |
Liabilities associated with non-current assets held for sale | - | - | - |
Non-current liabilities | 35,858 | 37,670 | 32,945 |
Loans, borrowings and leases | 13,060 | 13,025 | 11,757 |
Participative shareholders' debentures | 2,405 | 2,528 | 2,659 |
Other financial liabilities | 2,583 | 2,771 | 1,948 |
Settlement program (REFIS) | 1,744 | 1,886 | 1,861 |
Deferred income taxes | 1,343 | 1,411 | 1,608 |
Provisions | 2,572 | 2,700 | 2,349 |
Liabilities related to associates and joint ventures | 2,320 | 2,575 | 1,117 |
Liabilities related to Brumadinho | 1,873 | 2,075 | 1,913 |
De-characterization of dams and asset retirement obligations | 6,111 | 6,786 | 5,926 |
Streaming transactions | 1,621 | 1,693 | 1,629 |
Others | 226 | 220 | 178 |
Total liabilities | 49,502 | 51,226 | 45,939 |
Shareholders' equity | 39,487 | 40,291 | 34,672 |
Total liabilities and shareholders' equity | 88,989 | 91,517 | 80,611 |
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Cash flow | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Cash flow from operations | 4,128 | 4,591 | 3,259 |
Interest on loans and borrowings paid | (174) | (194) | (200) |
Cash received (paid) on settlement of Derivatives, net | 70 | 100 | 134 |
Payments related to Brumadinho | (292) | (423) | (497) |
Payments related to de-characterization of dams | (146) | (95) | (95) |
Interest on participative shareholders debentures paid | - | - | (127) |
Income taxes (including settlement program) paid | (720) | (582) | (574) |
Net cash generated by operating activities from continuing operations | 2,866 | 3,397 | 1,900 |
Net cash generated by operating activities from discontinued operations | - | - | - |
Net cash generated by operating activities | 2,866 | 3,397 | 1,900 |
Cash flow from investing activities | |||
Capital expenditures | (1,464) | (1,230) | (1,208) |
Dividends received from joint ventures and associates | - | 28 | 105 |
Proceeds (payments) from the sale of investments, net | - | 140 | - |
Other investment activities, net | (235) | 48 | 36 |
Net cash used in investing activities from continuing operations | (1,699) | (1,014) | (1,067) |
Net cash used in investing activities from discontinued operations | - | - | - |
Net cash used in investing activities | (1,699) | (1,014) | (1,067) |
Cash flow from financing activities | |||
Loans and financing: | |||
Loans and borrowings from third parties | 150 | 150 | 1,500 |
Payments of loans and borrowings from third parties | (13) | (448) | (581) |
Payments of leasing | (47) | (48) | (45) |
Payments to shareholders: | |||
Dividends and interest on capital paid to Vale's shareholders | (1,678) | (3,123) | - |
Dividends and interest on capital paid to noncontrolling interest | - | (3) | (5) |
Share buyback program | (546) | (686) | (1,361) |
Stake acquisition on subsidiaries | - | - | (130) |
Net cash used in financing activities from continuing operations | (2,134) | (4,158) | (622) |
Net cash used in financing activities from discontinued operations | - | - | - |
Net cash used in financing activities | (2,134) | (4,158) | (622) |
Net increase (decrease) in cash and cash equivalents | (967) | (1,775) | 211 |
Cash and cash equivalents in the beginning of the period | 4,983 | 7,185 | 4,705 |
Effect of exchange rate changes on cash and cash equivalents | (49) | (228) | 67 |
Cash and cash equivalents at the end of period | 3,967 | 5,182 | 4,983 |
Non-cash transactions: | |||
Additions to property, plant and equipment - capitalized loans and borrowing costs | 5 | 9 | 5 |
Cash flow from operating activities | |||
Income before income taxes | 2,984 | 5,248 | 2,720 |
Adjusted for: | |||
Provisions related to Brumadinho | 184 | 141 | 140 |
Provision for de-characterization of dams | - | 35 | - |
Equity results and other results in associates and joint ventures | (94) | (78) | (5) |
Impairment (impairment reversal) and results on disposal of non-current assets, net | 75 | 40 | 66 |
Depreciation, depletion and amortization | 780 | 775 | 779 |
Financial results, net | 385 | (2,347) | 157 |
Change in assets and liabilities | |||
Accounts receivable | (410) | 3 | (247) |
Inventories | (97) | (287) | (157) |
Suppliers and contractors | 480 | 1,169 | 570 |
Other assets and liabilities, net | (159) | (108) | (764) |
Cash flow from operations | 4,128 | 4,591 | 3,259 |
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Reconciliation of IFRS and “non-GAAP” information
(a) Adjusted EBIT | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Net operating revenues | 10,623 | 9,929 | 9,673 |
COGS | (6,309) | (6,301) | (5,940) |
Sales and administrative expenses | (150) | (119) | (139) |
Research and development expenses | (188) | (170) | (165) |
Pre-operating and stoppage expenses | (115) | (89) | (103) |
Brumadinho and dam de-characterization of dams | (305) | (336) | (271) |
Other operational expenses, net1 | (159) | (51) | (65) |
Dividends received and interests from associates and JVs | - | 28 | 105 |
Adjusted EBIT from continuing operations | 3,397 | 2,891 | 3,095 |
¹ Includes adjustment of US$ 47 million in 3Q23 and US$ 52 million in 2Q23, to reflect the performance of the streaming transactions at market price. | |||
(b) Adjusted EBITDA | |||
EBITDA defines profit or loss before interest, tax, depreciation, depletion and amortization. The definition of Adjusted EBITDA for the Company is the operating income or loss plus dividends received and interest from associates and joint ventures, and excluding the amounts charged as (i) depreciation, depletion and amortization and (ii) impairment reversal (impairment and disposals) of non-current assets. However, our adjusted EBITDA is not the measure defined as EBITDA under IFRS and may possibly not be comparable with indicators with the same name reported by other companies. Adjusted EBITDA should not be considered as a substitute for operational profit or as a better measure of liquidity than operational cash flow, which are calculated in accordance with IFRS. Vale provides its adjusted EBITDA to give additional information about its capacity to pay debt, carry out investments and cover working capital needs. The following tables shows the reconciliation between adjusted EBITDA and operational cash flow and adjusted EBITDA and net income, in accordance with its statement of changes in financial position. The definition of Adjusted EBIT is Adjusted EBITDA plus depreciation, depletion and amortization. | |||
Reconciliation between adjusted EBITDA and operational cash flow | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Adjusted EBITDA from continuing operations | 4,177 | 3,666 | 3,874 |
Working capital: | |||
Accounts receivable | (410) | 3 | (247) |
Inventories | (97) | (287) | (157) |
Suppliers and contractors | 480 | 1,169 | 570 |
Provisions related to Brumadinho | 184 | 141 | 140 |
Provisions related to de-characterization of dams | - | 35 | - |
Others | (206) | (136) | (921) |
Cash flow from continuing operations | 4,128 | 4,591 | 3,259 |
Income taxes paid (including settlement program) | (720) | (582) | (574) |
Interest on loans and borrowings paid | (174) | (194) | (200) |
Payments related to Brumadinho | (292) | (423) | (497) |
Payments related to de-characterization of dams | (146) | (95) | (95) |
Interest on participative shareholders' debentures paid | - | - | (127) |
Cash received (paid) on settlement of Derivatives, net | 70 | 100 | 134 |
Net cash generated by operating activities from continuing operations | 2,866 | 3,397 | 1,900 |
Net cash generated by operating activities from discontinued operations | - | - | - |
Net cash generated by operating activities | 2,866 | 3,397 | 1,900 |
Reconciliation between adjusted EBITDA and net income (loss) | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Adjusted EBITDA from continuing operations | 4,177 | 3,666 | 3,874 |
Depreciation, depletion and amortization | (780) | (775) | (779) |
Dividends received and interest from associates and joint ventures | - | (28) | (105) |
Impairment reversal (impairment) and results on disposals of non-current assets,net¹ | (122) | (40) | (118) |
Operating income | 3,275 | 2,823 | 2,872 |
Financial results | (385) | 2,347 | (157) |
Equity results and other results in associates and joint ventures | 94 | 78 | 5 |
Income taxes | (127) | (804) | (1,792) |
Net income from continuing operations | 2,857 | 4,444 | 928 |
Net income (loss) attributable to noncontrolling interests | 21 | (11) | 36 |
Net income attributable to Vale's shareholders | 2,836 | 4,455 | 892 |
¹ Includes adjustment of US$ 47 million 3Q23 and US$ 52 million 2Q23, to reflect the performance of the streaming transactions at market price. | |||
(c) Net debt | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Gross debt | 12,556 | 10,666 | 12,417 |
Leases | 1,480 | 1,538 | 1,520 |
Cash and cash equivalents¹ | (4,027) | 5,224 | (5,029) |
Net debt | 10,009 | 6,980 | 8,908 |
¹ Including financial investments |
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(d) Gross debt / LTM Adjusted EBITDA | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Gross debt and leases / LTM Adjusted EBITDA (x) | 0.9 | 0.6 | 0.9 |
Gross debt and leases / LTM operational cash flow (x) | 0.8 | 0.9 | 0.8 |
(e) LTM Adjusted EBITDA / LTM interest payments | |||
US$ million | 3Q23 | 3Q22 | 2Q23 |
Adjusted LTM EBITDA / LTM gross interest (x) | 23.0 | 33.7 | 24.1 |
LTM adjusted EBITDA / LTM interest payments (x) | 21.2 | 19.4 | 20.1 |
(f) US dollar exchange rates | |||
R$/US$ | 3Q23 | 3Q22 | 2Q23 |
Average | 4.8803 | 5.2462 | 4.9485 |
End of period | 5.0076 | 5.4066 | 4.8192 |
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Revenues and volumes
Net operating revenue by destination | ||||||
US$ million | 3Q23 | % | 3Q22 | % | 2Q23 | % |
North America | 398 | 3.7 | 562 | 5.7 | 554 | 5.7 |
USA | 323 | 3.0 | 423 | 4.3 | 431 | 4.5 |
Canada | 75 | 0.7 | 139 | 1.4 | 123 | 1.3 |
South America | 1,018 | 9.6 | 1,086 | 10.9 | 1,098 | 11.4 |
Brazil | 915 | 8.6 | 958 | 9.6 | 994 | 10.3 |
Others | 103 | 1.0 | 128 | 1.3 | 104 | 1.1 |
Asia | 7,603 | 71.6 | 6,282 | 63.3 | 6,278 | 64.9 |
China | 5,860 | 55.2 | 4,640 | 46.7 | 4,638 | 47.9 |
Japan | 843 | 7.9 | 857 | 8.6 | 824 | 8.5 |
South Korea | 289 | 2.7 | 387 | 3.9 | 374 | 3.9 |
Others | 611 | 5.8 | 398 | 4.0 | 442 | 4.6 |
Europe | 956 | 9.0 | 1,360 | 13.7 | 1,227 | 12.7 |
Germany | 261 | 2.5 | 377 | 3.8 | 294 | 3.0 |
Italy | 48 | 0.5 | 166 | 1.7 | 182 | 1.9 |
Others | 647 | 6.1 | 817 | 8.2 | 751 | 7.8 |
Middle East | 271 | 2.6 | 334 | 3.4 | 162 | 1.7 |
Rest of the World | 377 | 3.5 | 305 | 3.1 | 354 | 3.7 |
Total | 10,623 | 100.0 | 9,929 | 100.0 | 9,673 | 100.0 |
Volume sold by destination – Iron ore and pellets | |||
‘000 metric tons | 3Q23 | 3Q22 | 2Q23 |
Americas | 9,829 | 11,495 | 10,784 |
Brazil | 9,339 | 10,334 | 9,512 |
Others | 490 | 1,161 | 1,272 |
Asia | 64,801 | 59,353 | 56,618 |
China | 52,139 | 48,707 | 44,908 |
Japan | 6,317 | 5,226 | 6,269 |
Others | 6,345 | 5,420 | 5,441 |
Europe | 2,299 | 3,676 | 4,022 |
Germany | 494 | 789 | 426 |
France | 189 | 669 | 742 |
Others | 1,616 | 2,218 | 2,854 |
Middle East | 1,475 | 1,554 | 953 |
Rest of the World | 2,155 | 1,491 | 1,997 |
Total | 80,559 | 77,569 | 74,374 |
Net operating revenue by business area | ||||||
US$ million | 3Q23 | % | 3Q22 | % | 2Q23 | % |
Iron Solutions | 8,862 | 83% | 7,827 | 79% | 7,776 | 80% |
Iron ore fines | 7,331 | 69% | 6,053 | 61% | 6,235 | 64% |
ROM | 33 | 0% | 29 | 0% | 34 | 0% |
Pellets | 1,388 | 13% | 1,656 | 17% | 1,413 | 15% |
Others | 110 | 1% | 89 | 1% | 94 | 1% |
Energy Transition Metals | 1,718 | 16% | 2,042 | 21% | 1,871 | 19% |
Nickel | 833 | 8% | 960 | 10% | 930 | 10% |
Copper | 567 | 5% | 457 | 5% | 516 | 5% |
PGMs | 54 | 1% | 129 | 1% | 85 | 1% |
Gold as by-product¹ | 147 | 1% | 139 | 1% | 131 | 1% |
Silver as by-product | 8 | 0% | 5 | 0% | 12 | 0% |
Cobalt¹ | 14 | 0% | 28 | 0% | 22 | 0% |
Others² | 95 | 1% | 324 | 3% | 175 | 2% |
Others | 42 | 0% | 60 | 1% | 26 | 0% |
Total of continuing operations | 10,623 | 100% | 9,929 | 100% | 9,673 | 100% |
¹ Exclude the adjustment of US$ 47 million in 3Q23 and US$ 52 million in 2Q23, related to the performance of streaming transactions at market price. ² Includes marketing activities. |
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Projects under evaluation and growth options
Copper | ||
Alemão | Capacity: 60 ktpy | Stage: FEL3 |
Carajás, Brazil | Growth project | Investment decision: 2024 |
Vale’s ownership: 100% | Underground mine | 115 kozpy Au as byproduct |
South Hub extension | Capacity: 60-80 ktpy | Stage: FEL3¹ |
Carajás, Brazil | Replacement project | Investment decision: 2024 |
Vale’s ownership: 100% | Open pit mine | Development of mines to feed Sossego mill |
Victor | Capacity: 20 ktpy | Stage: FEL3 |
Ontario, Canada | Replacement project | Investment decision: 2024-2025 |
Vale’s ownership: N/A | Underground mine | 5 ktpy Ni as co-product; JV partnership under discussion |
Hu’u | Capacity: 300-350 ktpy | Stage: FEL2 |
Dompu, Indonesia | Growth project | 200 kozpy Au as byproduct |
Vale’s ownership: 80% | Underground block cave | |
North Hub | Capacity: 70-100 ktpy | Stage: FEL1 |
Carajás, Brazil | Growth project | |
Vale’s ownership: 100% | Mines and processing plant | |
Nickel | ||
Sorowako Limonite | Capacity: 60 ktpy | Stage: FEL3 |
Sorowako, Indonesia | Growth project | Investment decision: 2024 |
Vale’s ownership: N/A² | Mine + HPAL plant | 8 kpty Co as by-product |
Creighton Ph. 5 | Capacity: 15-20 ktpy | Stage: FEL3 |
Ontario, Canada | Replacement project | Investment decision: 2024 |
Vale’s ownership: 100% | Underground mine | 10-16 ktpy Cu as by-product |
CCM Pit | Capacity: 12-15 ktpy | Stage: FEL3 |
Ontario, Canada | Replacement project | Investment decision: 2024 |
Vale’s ownership: 100% | Open pit mine | 7-9 ktpy Cu as by-product |
CCM Ph. 3 | Capacity: 5-10 ktpy | Stage: FEL3 |
Ontario, Canada | Replacement project | 7-13 ktpy Cu as by-product |
Vale’s ownership: 100% | Underground mine | |
CCM Ph. 4 | Capacity: 7-12 ktpy | Stage: FEL2 |
Ontario, Canada | Replacement project | 7-12 ktpy Cu as by-product |
Vale’s ownership: 100% | Underground mine | |
Iron ore | ||
Green briquette plants | Capacity: Under evaluation | Stage: FEL3 (two plants) |
Brazil and other regions | Growth project | Investment decision: 2023-2029 |
Vale’s ownership: N/A | Cold agglomeration plant | 8 plants under engineering stage, including co-located plants in clients’ facilities |
Serra Leste expansion | Capacity: +4 Mtpy (10 Mtpy total) | Stage: FEL2 |
Northern System (Brazil) | Growth project | |
Vale’s ownership: 100% | Open pit mine | |
S11C | Capacity: Under evaluation | Stage: FEL2 |
Northern System (Brazil) | Growth project | |
Vale’s ownership: 100% | Open pit mine | |
Serra Norte N1/N23 | Capacity: Under evaluation | Stage: FEL2 |
Northern System (Brazil) | Replacement project | |
Vale’s ownership: 100% | Open pit mine | |
Mega Hubs | Capacity: Under evaluation | Stage: Prefeasibility Study |
Middle East | Growth project | |
Vale’s ownership: N/A | Industrial complexes for iron ore concentration and agglomeration and production of direct reduction metallics | Vale signed three agreements with Middle East local authorities and clients to jointly study the development of Mega Hubs |
1 Refers to the most advanced projects (Bacaba and Cristalino). 2 Indirect ownership through Vale’s 44.34% equity in PTVI. PTVI will own 100% of the mine and has the option to acquire up to 30% of the plant as part of the JV agreement. 3 Project scope is under review given permitting constraints. |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Vale S.A. (Registrant) | ||
By: | /s/ Thiago Lofiego | |
Date: October 26, 2023 | Director of Investor Relations |