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
July 2022
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 ¨
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))
(Check One) Yes ¨ No x
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))
(Check One) Yes ¨ No x
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
(Check One) Yes ¨ No x
(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82- .)
Interim Financial Statements
Contents
2
Report of Independent Registered Public Accounting Firm
To the stockholders and Board of Directors of
Vale S.A.
Results of Review of Interim Financial Statements
We have reviewed the accompanying consolidated balance sheet of Vale S.A. and its subsidiaries (“Company”) as of June 30, 2022, and the related consolidated income statement, statement of comprehensive income and cash flows for the three and six-month periods ended June 30, 2022 and 2021, and the consolidated statement of changes in equity for the six-month periods ended June 30, 2022 and 2021, including the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with IAS 34 - Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB).
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2021, and the related consolidated income statement and statement of comprehensive income, changes in equity and cash flows for the year then ended (not presented herein), and in our report dated February 24, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ PricewaterhouseCoopers Auditores Independentes Ltda.
Rio de Janeiro, RJ, Brazil
July 28, 2022
3
In millions of United States dollars, except earnings per share data
Three-month period ended June 30, | Six-month period ended June 30, | |||||||||
Notes | 2022 | 2021 | 2022 | 2021 | ||||||
Continuing operations | ||||||||||
Net operating revenue | 4(d) | 11,157 | 16,514 | 21,969 | 29,067 | |||||
Cost of goods sold and services rendered | 5(a) | (5,950) | (5,465) | (10,572) | (9,763) | |||||
Gross profit | 5,207 | 11,049 | 11,397 | 19,304 | ||||||
Operating expenses | ||||||||||
Selling and administrative | 5(b) | (127) | (132) | (248) | (236) | |||||
Research and development | (151) | (139) | (272) | (237) | ||||||
Pre-operating and operational stoppage | 23 | (111) | (191) | (265) | (336) | |||||
Brumadinho event and de-characterization of dams | 21 and 23 | (280) | (185) | (440) | (300) | |||||
Other operating expenses, net | 5(c) | (165) | (75) | (271) | (90) | |||||
(834) | (722) | (1,496) | (1,199) | |||||||
Impairment reversal (impairment and disposals) of non-current assets, net | 13(b) and 14 | (82) | (41) | 990 | (158) | |||||
Operating income | 4,291 | 10,286 | 10,891 | 17,947 | ||||||
Financial income | 6 | 137 | 76 | 287 | 134 | |||||
Financial expenses | 6 | (372) | (267) | (667) | (611) | |||||
Other financial items, net | 6 | 1,056 | 580 | 959 | 788 | |||||
Equity results and other results in associates and joint ventures | 13 and 22 | (56) | (443) | 155 | (444) | |||||
Income before income taxes | 5,056 | 10,232 | 11,625 | 17,814 | ||||||
Income taxes | 7 | |||||||||
Current tax | (1,181) | (1,201) | (1,434) | (2,716) | ||||||
Deferred tax | 270 | (872) | (1,568) | (1,167) | ||||||
(911) | (2,073) | (3,002) | (3,883) | |||||||
Net income from continuing operations | 4,145 | 8,159 | 8,623 | 13,931 | ||||||
Net income attributable to noncontrolling interests | 52 | 12 | 74 | 24 | ||||||
Net income from continuing operations attributable to Vale's stockholders | 4,093 | 8,147 | 8,549 | 13,907 | ||||||
Discontinued operations | 14(a) | |||||||||
Net income (loss) from discontinued operations | 2,058 | (622) | 2,060 | (917) | ||||||
Loss attributable to noncontrolling interests | - | (61) | - | (142) | ||||||
Net income (loss) from discontinued operations attributable to Vale's stockholders | 2,058 | (561) | 2,060 | (775) | ||||||
Net income | 6,203 | 7,537 | 10,683 | 13,014 | ||||||
Net income (loss) attributable to noncontrolling interests | 52 | (49) | 74 | (118) | ||||||
Net income attributable to Vale's stockholders | 6,151 | 7,586 | 10,609 | 13,132 | ||||||
Basic and diluted earnings per share attributable to Vale's stockholders: | 8 | |||||||||
Common share (US$) | 1.32 | 1.49 | 2.24 | 2.57 |
As described in note 14, the coal segment is presented in these interim financial statements as discontinued operation. Therefore, comparative financial information for the period ended June 30, 2021 has been restated to reflect the sale of the coal operation.
The accompanying notes are an integral part of these interim financial statements.
4
Consolidated Statement of Comprehensive Income
In millions of United States dollars
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income | 6,203 | 7,537 | 10,683 | 13,014 | ||||
Other comprehensive income: | ||||||||
Items that will not be reclassified to income statement | ||||||||
Translation adjustments | (3,616) | 5,233 | 2,328 | 1,885 | ||||
Employee post-retirement obligations (note 26) | 111 | 25 | 143 | 316 | ||||
Fair value adjustment to investment in equity securities (i) | - | (82) | - | 193 | ||||
(3,505) | 5,176 | 2,471 | 2,394 | |||||
Items that may be reclassified to income statement | ||||||||
Translation adjustments | 703 | (2,762) | (1,049) | (756) | ||||
Net investment hedge (note 17) | (145) | 202 | 74 | 42 | ||||
Cash flow hedge (note 17) | 312 | (35) | 8 | (26) | ||||
Reclassification of cumulative translation adjustment to income statement (notes 13b and 14a) | (3,072) | (424) | (3,222) | (1,542) | ||||
(2,202) | (3,019) | (4,189) | (2,282) | |||||
Total comprehensive income | 496 | 9,694 | 8,965 | 13,126 | ||||
Comprehensive income (loss) attributable to noncontrolling interests | 46 | (47) | 68 | (116) | ||||
Comprehensive income attributable to Vale's stockholders | 450 | 9,741 | 8,897 | 13,242 |
(i) Fair value adjustment to shares received as part of the consideration for the sale of Vale’s fertilizer business to The Mosaic Company. In November 2021, the Company sold all shares for US$1,259 in a block trade.
Items above are stated net of tax and the related taxes are disclosed in note 7.
The accompanying notes are an integral part of these interim financial statements.
5
Consolidated Statement of Cash Flows
In millions of United States dollars
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Cash flow from operations (a) | 5,738 | 9,791 | 11,269 | 18,862 | ||||
Interest on loans and borrowings paid (note 20) | (277) | (138) | (456) | (426) | ||||
Cash received (paid) on settlement of derivatives, net (note 17) | (42) | 60 | (118) | (139) | ||||
Payments related to Brumadinho event (note 21) | (319) | (224) | (383) | (289) | ||||
Payments related to de-characterization of dams (note 23) | (83) | (79) | (152) | (163) | ||||
Interest on participative stockholders' debentures paid (note 19) | (235) | (193) | (235) | (193) | ||||
Income taxes (including settlement program) | (1,213) | (1,280) | (3,790) | (2,444) | ||||
Net cash provided by operating activities from continuing operations | 3,569 | 7,937 | 6,135 | 15,208 | ||||
Net cash provided (used) in operating activities from discontinued operations (note 14a) | - | (211) | 41 | (460) | ||||
Net cash provided by operating activities | 3,569 | 7,726 | 6,176 | 14,748 | ||||
Cash flow from investing activities: | ||||||||
Capital expenditures | (1,293) | (1,103) | (2,429) | (2,083) | ||||
Disbursement on VNC sale (note 13b) | - | - | - | (555) | ||||
Proceeds from sale of CSI (note 13b) | - | - | 437 | - | ||||
Dividends received from associates and joint ventures (note 13) | 71 | 43 | 136 | 43 | ||||
Short-term investment | 101 | 543 | 103 | (173) | ||||
Other investments activities, net | 48 | (190) | 48 | (325) | ||||
Net cash used in investing activities from continuing operations | (1,073) | (707) | (1,705) | (3,093) | ||||
Net cash used in investing activities from discontinued operations (note 14a) | (65) | (2,380) | (103) | (2,340) | ||||
Net cash used in investing activities | (1,138) | (3,087) | (1,808) | (5,433) | ||||
Cash flow from financing activities: | ||||||||
Loans and borrowings from third parties (note 20) | 200 | 10 | 625 | 300 | ||||
Payments of loans and borrowings from third parties (note 20) | (1,433) | (179) | (1,828) | (1,412) | ||||
Payments of leasing (note 20) | (57) | (46) | (98) | (97) | ||||
Dividends and interest on capital paid to stockholders (note 27c) | - | (2,208) | (3,480) | (6,092) | ||||
Dividends and interest on capital paid to noncontrolling interest | (4) | (3) | (7) | (6) | ||||
Share buyback program (note 27d) | (2,596) | (2,004) | (4,384) | (2,004) | ||||
Net cash used in financing activities from continuing operations | (3,890) | (4,430) | (9,172) | (9,311) | ||||
Net cash used in financing activities from discontinued operations (note 14a) | - | (3) | (11) | (7) | ||||
Net cash used in financing activities | (3,890) | (4,433) | (9,183) | (9,318) | ||||
Increase (reduction) in cash and cash equivalents | (1,459) | 206 | (4,815) | (3) | ||||
Cash and cash equivalents at the beginning of the period | 9,061 | 12,883 | 11,721 | 13,487 | ||||
Effect of exchange rate changes on cash and cash equivalents | (417) | 560 | 290 | 165 | ||||
Cash and cash equivalents from subsidiaries sold, net (note 14b) | - | - | (11) | - | ||||
Cash and cash equivalents at end of the period | 7,185 | 13,649 | 7,185 | 13,649 | ||||
Cash flow from operating activities: | ||||||||
Income before taxation | 5,056 | 10,232 | 11,625 | 17,814 | ||||
Adjusted for: | - | - | - | - | ||||
Equity results and other results in associates and joint ventures (note 13) | 56 | 443 | (155) | 444 | ||||
Impairment and disposals (impairment reversal) of non-current assets, net (note 14) | 82 | 41 | (990) | 158 | ||||
Provisions for Brumadinho (note 21) | 126 | - | 126 | - | ||||
Provision for de-characterization of dams (note 23) | - | - | 37 | - | ||||
Depreciation, depletion and amortization | 810 | 832 | 1,496 | 1,563 | ||||
Financial results, net (note 6) | (821) | (389) | (579) | (311) | ||||
Changes in assets and liabilities: | - | - | - | - | ||||
Accounts receivable (note 9) | 902 | (1,101) | 1,779 | 301 | ||||
Inventories (note 10) | (305) | (147) | (609) | (338) | ||||
Suppliers and contractors (note 11) (i) | 432 | 334 | (240) | 32 | ||||
Payroll and other compensation | 73 | 79 | (255) | (204) | ||||
Other assets and liabilities, net | (673) | (533) | (966) | (597) | ||||
Cash flow from operations (a) | 5,738 | 9,791 | 11,269 | 18,862 | ||||
Non-cash transactions: | ||||||||
Additions to property, plant and equipment - capitalized loans and borrowing costs | 17 | 14 | 31 | 30 | ||||
(i) Includes variable lease payments.
The accompanying notes are an integral part of these interim financial statements.
6
In millions of United States dollars
Notes | June 30, 2022 | December 31, 2021 | ||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | 20 | 7,185 | 11,721 | |||
Short-term investments | 20 | 48 | 184 | |||
Accounts receivable | 9 | 2,148 | 3,914 | |||
Other financial assets | 12 | 229 | 111 | |||
Inventories | 10 | 5,154 | 4,377 | |||
Recoverable taxes | 7(e) | 744 | 862 | |||
Other | 240 | 215 | ||||
15,748 | 21,384 | |||||
Non-current assets held for sale | 14 | 274 | 976 | |||
16,022 | 22,360 | |||||
Non-current assets | ||||||
Judicial deposits | 25(c) | 1,328 | 1,220 | |||
Other financial assets | 12 | 210 | 143 | |||
Recoverable taxes | 7(e) | 1,147 | 935 | |||
Deferred income taxes | 7(a) | 10,360 | 11,441 | |||
Other | 886 | 650 | ||||
13,931 | 14,389 | |||||
Investments in associates and joint ventures | 13 | 1,791 | 1,751 | |||
Intangible | 15 | 9,448 | 9,011 | |||
Property, plant, and equipment | 16 | 43,166 | 41,931 | |||
68,336 | 67,082 | |||||
Total assets | 84,358 | 89,442 |
Liabilities | ||||||
Current liabilities | ||||||
Suppliers and contractors | 11 | 3,664 | 3,475 | |||
Loans, borrowings, and leases | 20 | 935 | 1,204 | |||
Other financial liabilities | 12 | 1,584 | 1,962 | |||
Taxes payable | 7(e) | 331 | 2,177 | |||
Settlement program ("REFIS") | 7(c) | 356 | 324 | |||
Liabilities related to associates and joint ventures | 22 | 1,783 | 1,785 | |||
Provisions | 24 | 835 | 1,045 | |||
Liabilities related to Brumadinho | 21 | 1,060 | 1,156 | |||
De-characterization of dams and asset retirement obligations | 23 | 692 | 621 | |||
Other | 750 | 1,094 | ||||
11,990 | 14,843 | |||||
Liabilities associated with non-current assets held for sale | 14 | 127 | 355 | |||
12,117 | 15,198 | |||||
Non-current liabilities | ||||||
Loans, borrowings, and leases | 20 | 11,673 | 12,578 | |||
Participative stockholders' debentures | 19 | 3,219 | 3,419 | |||
Other financial liabilities | 12 | 1,820 | 2,571 | |||
Settlement program ("REFIS") | 7(c) | 1,976 | 1,964 | |||
Deferred income taxes | 7(a) | 1,759 | 1,881 | |||
Provisions | 24 | 2,477 | 3,419 | |||
Liabilities related to Brumadinho | 21 | 2,620 | 2,381 | |||
De-characterization of dams and asset retirement obligations | 23 | 6,238 | 7,482 | |||
Liabilities related to associates and joint ventures | 22 | 1,603 | 1,327 | |||
Streaming transactions | 1,637 | 1,779 | ||||
Other | 237 | 137 | ||||
35,259 | 38,938 | |||||
Total liabilities | 47,376 | 54,136 | ||||
Stockholders' equity | 27 | |||||
Equity attributable to Vale's stockholders | 35,500 | 34,472 | ||||
Equity attributable to noncontrolling interests | 1,482 | 834 | ||||
Total stockholders' equity | 36,982 | 35,306 | ||||
Total liabilities and stockholders' equity | 84,358 | 89,442 |
The accompanying notes are an integral part of these interim financial statements.
7
Consolidated Statement of Changes in Equity
In millions of United States dollars
Share capital | Capital reserve | Profit reserves | Treasury stocks | Other reserves | Cumulative translation adjustments | Retained earnings | Equity attributable to Vale’s stockholders | Equity attributable to noncontrolling interests | Total stockholders' equity | |||||||||||
Balance at December 31, 2021 | 61,614 | 1,139 | 15,702 | (5,579) | (1,960) | (36,444) | - | 34,472 | 834 | 35,306 | ||||||||||
Net income | - | - | - | - | - | - | 10,609 | 10,609 | 74 | 10,683 | ||||||||||
Other comprehensive income | - | - | 1,165 | - | 134 | (3,011) | - | (1,712) | (6) | (1,718) | ||||||||||
Dividends and interest on capital of Vale's stockholders (note 27c) | - | - | (3,500) | - | - | - | - | (3,500) | - | (3,500) | ||||||||||
Dividends of noncontrolling interests | - | - | - | - | - | - | - | - | (5) | (5) | ||||||||||
Derecognition of noncontrolling interests | - | - | - | - | - | - | - | - | 585 | 585 | ||||||||||
Share buyback (note 27d) | - | - | - | (4,384) | - | - | - | (4,384) | - | (4,384) | ||||||||||
Share-based payment | - | - | - | - | (4) | - | - | (4) | - | (4) | ||||||||||
Treasury shares used and cancelled (note 27b) | - | - | (2,830) | 2,849 | - | - | - | 19 | - | 19 | ||||||||||
Balance at June 30, 2022 | 61,614 | 1,139 | 10,537 | (7,114) | (1,830) | (39,455) | 10,609 | 35,500 | 1,482 | 36,982 | ||||||||||
Share capital | Capital reserve | Profit reserves | Treasury stocks | Other reserves | Cumulative translation adjustments | Retained earnings | Equity attributable to Vale’s stockholders | Equity attributable to noncontrolling interests | Total stockholders' equity | |||||||||||
Balance at December 31, 2020 | 61,614 | 1,139 | 7,042 | (2,441) | (2,056) | (29,554) | - | 35,744 | (923) | 34,821 | ||||||||||
Net income (loss) | - | - | - | - | - | - | 13,132 | 13,132 | (118) | 13,014 | ||||||||||
Other comprehensive income | - | - | 9 | - | 518 | (417) | - | 110 | 2 | 112 | ||||||||||
Dividends and interest on capital of Vale's stockholders | - | - | (4,319) | - | - | - | (724) | (5,043) | - | (5,043) | ||||||||||
Dividends of noncontrolling interests | - | - | - | - | - | - | - | - | (24) | (24) | ||||||||||
Acquisitions and derecognition of noncontrolling interests | - | - | - | - | (331) | - | - | (331) | 1,761 | 1,430 | ||||||||||
Share buyback (note 27d) | - | - | - | (2,004) | - | - | - | (2,004) | - | (2,004) | ||||||||||
Share-based payment | - | - | - | - | 46 | - | - | 46 | - | 46 | ||||||||||
Treasury shares used (note 27b) | - | - | - | 7 | - | - | - | 7 | - | 7 | ||||||||||
Balance at June 30, 2021 | 61,614 | 1,139 | 2,732 | (4,438) | (1,823) | (29,971) | 12,408 | 41,661 | 698 | 42,359 |
The accompanying notes are an integral part of these interim financial statements.
8
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Vale S.A. and its subsidiaries (“Vale” or the “Company”) are global producers of: (i) iron ore and iron ore pellets, which are key raw materials for steelmaking, (ii) nickel, that is used to produce stainless steel, electric vehicles and metal alloys employed in the production process of several products, and (iii) copper, used in the construction sector to produce pipes and electrical wires. Vale also produces platinum group metals, gold, silver, and cobalt as by-products and operates a railroad and port logistics system in Brazil to outflow its production. Most of the Company’s products are sold to international markets by Vale International S.A. (“VISA”), a trading company located in Switzerland.
In addition, the Company has equity investments and assets with the objective of reducing energy costs, minimizing the risk of shortages and meeting its energy consumption needs through renewable sources.
Vale also produced thermal and metallurgical coal, which has been sold in the current quarter and is presented in these interim financial statements as a “discontinued operation” (note 14a).
Vale S.A. (the “Parent Company”) is a public company headquartered in the city of Rio de Janeiro, Brazil with securities traded on the stock exchanges of São Paulo – B3 S.A. (VALE3), New York - NYSE (VALE) and Madrid – LATIBEX (XVALO).
2. Basis of preparation of interim financial statements
The consolidated interim financial statements of the Company (“interim financial statements”) have been prepared and are being presented in accordance with IAS 34 Interim Financial Reporting of the International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All relevant information for the interim financial statements, and only this information, are presented and consistent to those used by the Company's Management.
The interim financial statements have been prepared to update users on the relevant events and transactions that occurred in the period and must be analyzed together with the financial statements for the year ended December 31, 2021. Accounting policies, accounting estimates and judgments, management of risk and measurement methods are the same as those adopted in the preparation of the latest annual financial statements.
These interim financial statements were authorized for issue by the Executive Committee on July 28, 2022.
a) Functional currency and presentation currency
The interim financial statements of the Company and its associates and joint ventures are measured using the currency of the primary economic environment in which the entity operates (“functional currency”), in the case of the Parent Company is the Brazilian real (“R$”). For presentation purposes, these financial statements are presented in United States dollar (“US$”) as the Company believes that this is how international investors analyze the financial statements.
The main exchange rates used by the Company to translate its foreign operations are as follows:
Average rate | ||||||||||||
Closing rate | Three-month period ended June 30, | Six-month period ended June 30, | ||||||||||
June 30, 2022 | December 31, 2021 | 2022 | 2021 | 2022 | 2021 | |||||||
US Dollar ("US$") | 5.2380 | 5.5805 | 4.9265 | 5.2907 | 5.0783 | 5.3862 | ||||||
Canadian dollar ("CAD") | 4.0699 | 4.3882 | 3.8573 | 4.3096 | 3.9937 | 4.3209 | ||||||
Euro ("EUR") | 5.4842 | 6.3210 | 5.2409 | 6.3789 | 5.5568 | 6.4902 |
9
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
b) Russia-Ukraine conflict
The Company’s business is subject to external risk factors related to our global operations and the global profile of our client portfolio and supply chains. Global markets are experiencing volatility and disruption following the escalation of geopolitical tensions in connection with the military conflict between Russia and Ukraine.
The resulting economic sanctions imposed by the United States, Canada, the European Union, the UK and other countries as a direct consequence of this conflict may continue to significantly impact supply chains, lead to market disruptions including significant volatility in commodities’ prices and bring heightened near-term uncertainty to the global financial system, including through instability of credit and of capital markets.
At this time, the effects of the Russia-Ukraine conflict have not caused significant impacts on the Company’s operations nor on the fair value of its assets and liabilities. However, escalation of the Russia-Ukraine conflict may adversely affect the Company’s business, such as disruption of international trade flows, extreme market pricing volatility, with particular impact on the energy sector, industrial and agricultural supply chains, shipping, and regulatory and contractual uncertainty, and increased geopolitical tensions around the world.
3. Significant events of the current period
Balance Sheet, Cash Flows and Income Statement were particularly affected by the following events and transactions during the three-month period ended June 30, 2022:
Sale of the Coal operation (note 14a). In April 2022, the Company concluded the sale of the Coal operation to Vulcan Resources for a total consideration of US$270. Following the completion of the transaction, the Company recorded an income of US$2,058 from discontinued operations, mainly due to the reclassification of the cumulative translation adjustments of US$3,072, which was partially offset by the derecognition of the carrying value of noncontrolling interest in the amount of US$585 and impairment of US$429.
Share buyback program (note 27d). In May 2022, the Company concluded its share buyback program by the way of acquiring 178,815,500 common shares, corresponding to the total amount of US$3,251. The Company also approved a new share buyback program to repurchase 500,000,000 common shares and their respective ADRs. Under the current program in place, Vale has already repurchased 70,443,798 common shares, corresponding to a total amount of US$1,133.
Bond tender offers (note 20d). In June 2022, the Company repurchased US$1,291 of its Bonds and paid a premium of US$113, which has been recorded and is presented as “Bond premium repurchase” under the financial results.
Sale of Midwestern System assets (note 14c). In July 2022 (subsequent event), the Company concluded the sale of the Midwestern System to J&F Mineração Ltda. (“J&F”) and received US$150, in addition to transferring to J&F the obligations related to the take-or-pay logistics contracts.
Stockholder’s remuneration (note 27c). In July 2022 (subsequent event), the Company approved dividends to its shareholders in the amount of US$3,000, which will be paid in September 2022.
Cancellation of common shares held in treasury (note 27b). In July 2022 (subsequent event), the Company approved the cancellation of 220,150,800 common shares held in treasury.
Sale of Companhia Siderúrgica do Pecém (“CSP”). In July 2022 (subsequent event), the Company and the other shareholders of CSP signed a binding agreement with ArcelorMittal for the sale of CSP for approximately US$2,200, which will be used in full on the prepayment of CSP’s outstanding net debt of approximately US$2,300. The Company does not expect any material impact at closing, which is expected to occur in 2022, subject to customary regulatory approvals.
4. Information by business segment and geographic area
The Company operates the following reportable segments: Ferrous Minerals, Base Metals and Coal (presented as discontinued operations). The segments are aligned with products and reflect the structure used by Management to evaluate the Company’s performance. The responsible bodies for making operational decisions, allocating resources and evaluating performance are the Executive Boards and Board of Directors. Accordingly, the performance of the operating segments is assessed based on a measure of adjusted EBITDA, among other measures.
10
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
The Company allocates to “Other” the revenues and cost of other products, services, research and development, investments in joint ventures and associates of other business and unallocated corporate expenses. Costs related to the Brumadinho event are allocated to "Other" as well.
In 2022, the Company has allocated the financial information of the Midwestern System to “Other” as this operation is no longer analyzed by the chief operating decision maker as part of to the performance of the Ferrous Minerals business segment due to the binding agreement to sell this operation. The comparative information was reclassified to reflect the revision in the allocation criteria.
a) Adjusted EBITDA
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, net.
Three-month period ended June 30, 2022 | ||||||||||||||
Net operating revenue | Cost of goods sold and services rendered | Sales, administrative and other operating expenses | Research and development | Pre operating and operational stoppage | Dividends received and interest from associates and joint ventures | Adjusted EBITDA | ||||||||
Ferrous minerals | ||||||||||||||
Iron ore | 7,113 | (2,971) | (48) | (45) | (74) | - | 3,975 | |||||||
Iron ore pellets | 1,780 | (707) | 2 | - | (6) | 71 | 1,140 | |||||||
Other ferrous products and services | 132 | (93) | - | (1) | (6) | - | 32 | |||||||
9,025 | (3,771) | (46) | (46) | (86) | 71 | 5,147 | ||||||||
Base metals | ||||||||||||||
Nickel and other products | 1,547 | (929) | (12) | (26) | - | - | 580 | |||||||
Copper | 328 | (268) | (3) | (31) | (3) | - | 23 | |||||||
1,875 | (1,197) | (15) | (57) | (3) | - | 603 | ||||||||
Brumadinho event and de-characterization of dams | - | - | (280) | - | - | - | (280) | |||||||
Other (i) | 257 | (205) | (219) | (48) | (1) | - | (216) | |||||||
Total | 11,157 | (5,173) | (560) | (151) | (90) | 71 | 5,254 |
(i) Includes the reclassification of the EBITDA of Midwestern System in the amount of US$49.
Three-month period ended June 30, 2021 | ||||||||||||||
Net operating revenue | Cost of goods sold and services rendered | Sales, administrative and other operating expenses | Research and development | Pre operating and operational stoppage | Dividends received and interest from associates and joint ventures | Adjusted EBITDA | ||||||||
Ferrous minerals | ||||||||||||||
Iron ore | 12,081 | (2,744) | (60) | (43) | (74) | - | 9,160 | |||||||
Iron ore pellets | 1,947 | (520) | 2 | - | (13) | 22 | 1,438 | |||||||
Other ferrous products and services | 150 | (110) | - | (1) | (4) | - | 35 | |||||||
14,178 | (3,374) | (58) | (44) | (91) | 22 | 10,633 | ||||||||
Base metals | ||||||||||||||
Nickel and other products | 1,492 | (959) | (25) | (18) | (60) | - | 430 | |||||||
Copper | 688 | (229) | (1) | (21) | (1) | - | 436 | |||||||
2,180 | (1,188) | (26) | (39) | (61) | - | 866 | ||||||||
Brumadinho event and de-characterization of dams | - | - | (185) | - | - | - | (185) | |||||||
COVID-19 | - | - | (16) | - | - | - | (16) | |||||||
Other (i) | 156 | (120) | (97) | (56) | - | 21 | (96) | |||||||
Total of continuing operations | 16,514 | (4,682) | (382) | (139) | (152) | 43 | 11,202 | |||||||
Discontinued operations - Coal | 161 | (323) | - | (2) | - | - | (164) | |||||||
Total | 16,675 | (5,005) | (382) | (141) | (152) | 43 | 11,038 |
(i) Includes the reclassification of the EBITDA of Midwestern System in the amount of US$47.
11
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Six-month period ended June 30, 2022 | ||||||||||||||
Net operating revenue | Cost of goods sold and services rendered | Sales, administrative and other operating expenses | Research and development | Pre operating and operational stoppage | Dividends received and interest from associates and joint ventures | Adjusted EBITDA | ||||||||
Ferrous minerals | ||||||||||||||
Iron ore | 14,368 | (5,090) | (103) | (79) | (187) | - | 8,909 | |||||||
Iron ore pellets | 3,144 | (1,233) | 7 | (1) | (11) | 71 | 1,977 | |||||||
Other ferrous products and services | 247 | (171) | (2) | (2) | (9) | - | 63 | |||||||
17,759 | (6,494) | (98) | (82) | (207) | 71 | 10,949 | ||||||||
Base metals | ||||||||||||||
Nickel and other products | 3,005 | (1,838) | (20) | (42) | - | - | 1,105 | |||||||
Copper | 802 | (495) | 3 | (56) | (5) | - | 249 | |||||||
3,807 | (2,333) | (17) | (98) | (5) | - | 1,354 | ||||||||
Brumadinho event and de-characterization of dams | - | - | (440) | - | - | - | (440) | |||||||
Other (i) | 403 | (323) | (381) | (92) | (2) | - | (395) | |||||||
Total of continuing operations | 21,969 | (9,150) | (936) | (272) | (214) | 71 | 11,468 | |||||||
Discontinued operations - Coal | 448 | (264) | (12) | (1) | - | - | 171 | |||||||
Total | 22,417 | (9,414) | (948) | (273) | (214) | 71 | 11,639 |
(i) Includes the reclassification of the EBITDA of Midwestern System in the amount of US$77.
Six-month period ended June 30, 2021 | ||||||||||||||
Net operating revenue | Cost of goods sold and services rendered | Sales, administrative and other operating expenses | Research and development | Pre operating and operational stoppage | Dividends received and interest from associates and joint ventures | Adjusted EBITDA | ||||||||
Ferrous minerals | ||||||||||||||
Iron ore | 21,141 | (4,771) | (83) | (76) | (165) | - | 16,046 | |||||||
Iron ore pellets | 3,155 | (903) | 31 | (1) | (26) | 22 | 2,278 | |||||||
Other ferrous products and services | 293 | (199) | 1 | (1) | (8) | - | 86 | |||||||
24,589 | (5,873) | (51) | (78) | (199) | 22 | 18,410 | ||||||||
Base metals | ||||||||||||||
Nickel and other products | 2,926 | (1,730) | (35) | (29) | (60) | - | 1,072 | |||||||
Copper | 1,242 | (395) | (1) | (39) | (2) | - | 805 | |||||||
4,168 | (2,125) | (36) | (68) | (62) | - | 1,877 | ||||||||
Brumadinho event and de-characterization of dams | - | - | (300) | - | - | - | (300) | |||||||
COVID-19 | - | - | (18) | - | - | - | (18) | |||||||
Other (i) | 310 | (294) | (202) | (91) | (2) | 21 | (258) | |||||||
Total of continuing operations | 29,067 | (8,292) | (607) | (237) | (263) | 43 | 19,711 | |||||||
Discontinued operations - Coal | 253 | (652) | 2 | (4) | - | 78 | (323) | |||||||
Total | 29,320 | (8,944) | (605) | (241) | (263) | 121 | 19,388 |
(i) Includes the reclassification of the EBITDA of Midwestern System in the amount of US$82.
12
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Adjusted EBITDA is reconciled to net income as follows:
Continuing operations
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income from continuing operations attributable to Vale's stockholders | 4,093 | 8,147 | 8,549 | 13,907 | ||||
Net income attributable to noncontrolling interests | 52 | 12 | 74 | 24 | ||||
Net income | 4,145 | 8,159 | 8,623 | 13,931 | ||||
Depreciation, depletion and amortization | 810 | 832 | 1,496 | 1,563 | ||||
Income taxes | 911 | 2,073 | 3,002 | 3,883 | ||||
Financial results | (821) | (389) | (579) | (311) | ||||
Equity results and other results in associates and joint ventures | 56 | 443 | (155) | 444 | ||||
Dividends received from associates and joint ventures | 71 | 43 | 71 | 43 | ||||
Impairment and disposals (impairment reversal) of non-current assets, net | 82 | 41 | (990) | 158 | ||||
Adjusted EBITDA from continuing operations | 5,254 | 11,202 | 11,468 | 19,711 |
Discontinued operations (Coal)
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income (loss) from discontinued operations attributable to Vale's stockholders | 2,058 | (561) | 2,060 | (775) | ||||
Loss attributable to noncontrolling interests | - | (61) | - | (142) | ||||
Net income (loss) | 2,058 | (622) | 2,060 | (917) | ||||
Depreciation, depletion and amortization | - | 17 | - | 17 | ||||
Income taxes | - | - | 2 | - | ||||
Financial results | (3,072) | (385) | (3,065) | (386) | ||||
Derecognition of noncontrolling interest | 585 | - | 585 | - | ||||
Equity results in associates and joint ventures | - | 11 | - | 26 | ||||
Dividends received and interest from associates and joint ventures (i) | - | - | - | 78 | ||||
Impairment of non-current assets, net | 429 | 815 | 589 | 859 | ||||
Adjusted EBITDA from discontinued operations | - | (164) | 171 | (323) |
(i) Includes the remuneration of the financial instrument of the Coal segment.
b) Assets by segment
June 30, 2022 | December 31, 2021 | |||||||||||
Product inventory | Investments in associates and joint ventures | Property, plant and equipment and intangible | Product inventory | Investments in associates and joint ventures | Property, plant and equipment and intangible | |||||||
Ferrous minerals | 2,436 | 1,225 | 31,157 | 2,186 | 1,113 | 28,988 | ||||||
Base metals | 1,828 | 18 | 19,500 | 1,384 | 17 | 20,127 | ||||||
Other | - | 548 | 1,957 | 21 | 621 | 1,827 | ||||||
Total | 4,264 | 1,791 | 52,614 | 3,591 | 1,751 | 50,942 |
Three-month period ended June 30, | ||||||||||||
2022 | 2021 | |||||||||||
Capital expenditures | Capital expenditures | |||||||||||
Sustaining capital (i) | Project execution | Depreciation, depletion and amortization | Sustaining capital (i) (ii) | Project execution | Depreciation, depletion and amortization (ii) | |||||||
Ferrous minerals | 477 | 199 | 497 | 531 | 113 | 446 | ||||||
Base metals | 343 | 90 | 299 | 357 | 69 | 367 | ||||||
Other | 24 | 160 | 14 | 5 | 28 | 19 | ||||||
Total | 844 | 449 | 810 | 893 | 210 | 832 |
13
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Six-month period ended June 30, | ||||||||||||
2022 | 2021 | |||||||||||
Capital expenditures | Capital expenditures | |||||||||||
Sustaining capital (i) | Project execution | Depreciation, depletion and amortization | Sustaining capital (i) (ii) | Project execution | Depreciation, depletion and amortization (ii) | |||||||
Ferrous minerals | 976 | 381 | 913 | 1,056 | 195 | 838 | ||||||
Base metals | 613 | 157 | 555 | 648 | 137 | 684 | ||||||
Other | 54 | 248 | 28 | 17 | 30 | 41 | ||||||
Total | 1,643 | 786 | 1,496 | 1,721 | 362 | 1,563 |
(i) According to the Company's remuneration policy, the sustaining capital investments are deducted from the 30% of the adjusted EBITDA. The calculation also considers the current investment of discontinued coal operations, which was US$38 for the six-month period ended June 30, 2022 (2021: US$65).
(ii) The sustaining capital investments related to the Midwestern System were reclassified for the three and six-month periods ended June 30, 2021 in the amounts of US$4 and US$5, respectively. Depreciation, depletion and amortization were reclassified for the same periods in the amounts of US$9 and US$14, respectively.
c) Assets by geographic area
June 30, 2022 | December 31, 2021 | |||||||||||||||
Investments in associates and joint ventures | Intangible | Property, plant and equipment | Total | Investments in associates and joint ventures | Intangible | Property, plant and equipment | Total | |||||||||
Brazil | 1,773 | 7,514 | 26,120 | 35,407 | 1,730 | 7,050 | 23,793 | 32,573 | ||||||||
Canada | - | 1,931 | 11,392 | 13,323 | - | 1,958 | 12,441 | 14,399 | ||||||||
Americas, except Brazil and Canada | - | - | 32 | 32 | - | - | 3 | 3 | ||||||||
Europe | - | - | 778 | 778 | - | - | 739 | 739 | ||||||||
Indonesia | - | 1 | 2,702 | 2,703 | - | 1 | 2,723 | 2,724 | ||||||||
Asia, except Indonesia and China | 18 | - | 817 | 835 | 21 | - | 874 | 895 | ||||||||
China | - | 1 | 22 | 23 | - | 2 | 21 | 23 | ||||||||
Oman | - | 1 | 1,303 | 1,304 | - | - | 1,337 | 1,337 | ||||||||
Total | 1,791 | 9,448 | 43,166 | 54,405 | 1,751 | 9,011 | 41,931 | 52,693 |
d) Net operating revenue by geographic area
The Company's sales revenue decreased in relation to the previous semester mainly due to the decline in the international price of iron ore, which resulted in a 26.7% decrease in the average price per ton realized by the Company during this period.
Three-month period ended June 30, 2022 | ||||||||
Ferrous minerals | Base metals | Other | Total | |||||
Americas, except United States and Brazil | 136 | 111 | 76 | 323 | ||||
United States of America | 47 | 427 | - | 474 | ||||
Germany | 92 | 223 | - | 315 | ||||
Europe, except Germany | 606 | 505 | - | 1,111 | ||||
Middle East, Africa, and Oceania | 656 | 6 | 26 | 688 | ||||
Japan | 812 | 202 | - | 1,014 | ||||
China | 4,902 | 200 | - | 5,102 | ||||
Asia, except Japan and China | 677 | 184 | 47 | 908 | ||||
Brazil | 1,097 | 17 | 108 | 1,222 | ||||
Net operating revenue | 9,025 | 1,875 | 257 | 11,157 |
Three-month period ended June 30, 2021 | ||||||||
Ferrous minerals | Base metals | Other | Total | |||||
Americas, except United States and Brazil | 197 | 130 | 51 | 378 | ||||
United States of America | 161 | 288 | - | 449 | ||||
Germany | 154 | 463 | - | 617 | ||||
Europe, except Germany | 988 | 581 | - | 1,569 | ||||
Middle East, Africa, and Oceania | 672 | 7 | - | 679 | ||||
Japan | 943 | 119 | - | 1,062 | ||||
China | 8,665 | 264 | - | 8,929 | ||||
Asia, except Japan and China | 987 | 315 | - | 1,302 | ||||
Brazil | 1,411 | 13 | 105 | 1,529 | ||||
Net operating revenue | 14,178 | 2,180 | 156 | 16,514 |
14
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Six-month period ended June 30, 2022 | ||||||||
Ferrous minerals | Base metals | Other | Total | |||||
Americas, except United States and Brazil | 266 | 277 | 125 | 668 | ||||
United States of America | 74 | 713 | - | 787 | ||||
Germany | 221 | 602 | - | 823 | ||||
Europe, except Germany | 1,142 | 923 | - | 2,065 | ||||
Middle East, Africa, and Oceania | 1,150 | 9 | 26 | 1,185 | ||||
Japan | 1,482 | 393 | - | 1,875 | ||||
China | 10,001 | 490 | - | 10,491 | ||||
Asia, except Japan and China | 1,310 | 368 | 47 | 1,725 | ||||
Brazil | 2,113 | 32 | 205 | 2,350 | ||||
Net operating revenue | 17,759 | 3,807 | 403 | 21,969 |
Six-month period ended June 30, 2021 | ||||||||
Ferrous minerals | Base metals | Other | Total | |||||
Americas, except United States and Brazil | 377 | 224 | 94 | 695 | ||||
United States of America | 259 | 573 | - | 832 | ||||
Germany | 323 | 929 | - | 1,252 | ||||
Europe, except Germany | 1,579 | 1,287 | - | 2,866 | ||||
Middle East, Africa, and Oceania | 943 | 7 | - | 950 | ||||
Japan | 1,470 | 215 | - | 1,685 | ||||
China | 15,458 | 424 | - | 15,882 | ||||
Asia, except Japan and China | 1,769 | 473 | - | 2,242 | ||||
Brazil | 2,411 | 36 | 216 | 2,663 | ||||
Net operating revenue | 24,589 | 4,168 | 310 | 29,067 |
5. Costs and expenses by nature
a) Cost of goods sold, and services rendered
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Personnel | 457 | 427 | 838 | 810 | ||||
Materials and services | 855 | 725 | 1,534 | 1,357 | ||||
Fuel oil and gas | 353 | 237 | 637 | 425 | ||||
Maintenance | 806 | 749 | 1,433 | 1,373 | ||||
Royalties | 279 | 352 | 488 | 603 | ||||
Energy | 180 | 158 | 332 | 300 | ||||
Acquisition of products | 674 | 691 | 1,135 | 1,034 | ||||
Depreciation, depletion and amortization | 777 | 783 | 1,422 | 1,471 | ||||
Freight | 1,175 | 991 | 2,002 | 1,773 | ||||
Other | 394 | 352 | 751 | 617 | ||||
Total | 5,950 | 5,465 | 10,572 | 9,763 | ||||
Cost of goods sold | 5,800 | 5,323 | 10,289 | 9,487 | ||||
Cost of services rendered | 150 | 142 | 283 | 276 | ||||
Total | 5,950 | 5,465 | 10,572 | 9,763 |
b) Selling and administrative expenses
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Selling | 24 | 24 | 43 | 41 | ||||
Personnel | 44 | 52 | 98 | 99 | ||||
Services | 30 | 22 | 52 | 39 | ||||
Depreciation and amortization | 12 | 10 | 23 | 19 | ||||
Other | 17 | 24 | 32 | 38 | ||||
Total | 127 | 132 | 248 | 236 |
15
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
c) Other operating expenses, net
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Asset retirement obligations | 40 | - | 40 | - | ||||
Provision for litigations | 48 | 28 | 64 | 44 | ||||
Profit sharing program | 19 | 52 | 67 | 75 | ||||
COVID-19 expenses | - | 16 | - | 18 | ||||
Other | 58 | (21) | 100 | (47) | ||||
Total | 165 | 75 | 271 | 90 |
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Financial income | ||||||||
Short-term investments | 121 | 41 | 250 | 68 | ||||
Other | 16 | 35 | 37 | 66 | ||||
137 | 76 | 287 | 134 | |||||
Financial expenses | ||||||||
Loans and borrowings gross interest | (162) | (160) | (323) | (348) | ||||
Capitalized loans and borrowing costs | 17 | 14 | 31 | 30 | ||||
Interest on REFIS | (39) | (10) | (71) | (17) | ||||
Interest on lease liabilities (note 20d) | (16) | (15) | (32) | (33) | ||||
Bond premium repurchase (note 20d) | (113) | - | (113) | (63) | ||||
Other | (59) | (96) | (159) | (180) | ||||
(372) | (267) | (667) | (611) | |||||
Other financial items, net | ||||||||
Net foreign exchange gains (losses) | 464 | (374) | (353) | (61) | ||||
Participative stockholders' debentures (note 19) (i) | 537 | (278) | 288 | (1,261) | ||||
Financial guarantees (i) | 356 | 401 | 479 | 364 | ||||
Derivative financial instruments (note 17) | (270) | 856 | 591 | 417 | ||||
Reclassification of cumulative translation adjustments to the income statement (note 13b) | - | - | - | 1,132 | ||||
Indexation gains, net | (31) | (25) | (46) | 197 | ||||
1,056 | 580 | 959 | 788 | |||||
Total | 821 | 389 | 579 | 311 |
(i) These lines were reclassified from the prior period in order to present “Financial expenses” and “Other financial items, net” in similar line items from period to period.
a) Financial guarantees
As of June 30, 2022, the total guarantees granted by the Company (within the limit of its direct or indirect interest) to certain associates and joint ventures totaled US$1,545 (December 31, 2021: US$1,513). The fair value of these financial guarantees in the amount of US$105 (December 31, 2021: US$542) is recorded as “Other non-current liabilities”.
a) Deferred income tax assets and liabilities
Assets | Liabilities | Deferred taxes, net | ||||
Balance at December 31, 2021 | 11,441 | 1,881 | 9,560 | |||
Tax effect in the income statement | (1,524) | 44 | (1,568) | |||
Translation adjustment | 651 | (1) | 652 | |||
Other comprehensive income | (25) | 47 | (72) | |||
Transfers between assets and liabilities | (183) | (183) | - | |||
Other | - | (29) | 29 | |||
Balance at June 30, 2022 | 10,360 | 1,759 | 8,601 | |||
Assets | Liabilities | Deferred taxes, net | ||||
Balance at December 31, 2020 | 10,335 | 1,770 | 8,565 | |||
Tax effect in the income statement | (1,130) | 37 | (1,167) | |||
Translation adjustment | 196 | 43 | 153 | |||
Other comprehensive income | (63) | 135 | (198) | |||
Balance at June 30, 2021 | 9,338 | 1,985 | 7,353 | |||
16
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
b) Income tax reconciliation – Income statement
Income tax expense is recognized based on the estimate of the weighted average effective tax rate expected for the full year, adjusted for the tax effect of certain items that are recognized in full on the interim tax calculation. Therefore, the effective tax rate in the interim financial statements may differ from management’s estimate of the effective tax rate for the year.
The total amount presented as income taxes in the income statement is reconciled to the statutory rate, as follows:
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Income before income taxes | 5,056 | 10,232 | 11,625 | 17,814 | ||||
Income taxes at statutory rate – 34% | (1,719) | (3,479) | (3,953) | (6,057) | ||||
Adjustments that affect the taxes basis: | ||||||||
Tax incentives | 565 | 1,163 | 1,059 | 1,618 | ||||
Equity results | 22 | 40 | 30 | 35 | ||||
Monetary exchange variation on tax losses carryforward | 211 | (177) | (444) | (39) | ||||
Other | 10 | 380 | 306 | 560 | ||||
Income taxes | (911) | (2,073) | (3,002) | (3,883) |
c) | Income taxes - Settlement program (“REFIS”) |
June 30, 2022 | December 31, 2021 | |||
Current liabilities | 356 | 324 | ||
Non-current liabilities | 1,976 | 1,964 | ||
REFIS liabilities | 2,332 | 2,288 | ||
SELIC rate | 13.25% | 9.25% |
It mainly relates to the settlement program of claims regarding the collection of income tax and social contribution on equity gains of foreign subsidiaries and affiliates from 2003 to 2012. This amount bears SELIC interest rate (Special System for Settlement and Custody) and will be paid in monthly installments until October 2028.
d) Uncertain tax positions
There have been no developments on matters related to the uncertain tax positions since the December 31, 2021 financial statements.
e) Recoverable and payable taxes
June 30, 2022 | December 31, 2021 | |||||||||||
Current assets | Non-current assets | Current liabilities | Current assets | Non-current assets | Current liabilities | |||||||
Value-added tax | 264 | - | 30 | 217 | 11 | 162 | ||||||
Brazilian federal contributions | 389 | 669 | 13 | 520 | 511 | 12 | ||||||
Income taxes | 80 | 478 | 141 | 113 | 413 | 1,861 | ||||||
Financial compensation for the exploration of mineral resources - CFEM | - | - | 76 | - | - | 59 | ||||||
Other | 11 | - | 71 | 12 | - | 83 | ||||||
Total | 744 | 1,147 | 331 | 862 | 935 | 2,177 |
17
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
8. Basic and diluted earnings (loss) per share
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income attributable to Vale's stockholders | ||||||||
Net income from continuing operations | 4,093 | 8,147 | 8,549 | 13,907 | ||||
Net income (loss) from discontinued operations | 2,058 | (561) | 2,060 | (775) | ||||
6,151 | 7,586 | 10,609 | 13,132 | |||||
Thousands of shares | ||||||||
Weighted average number of common shares outstanding | 4,668,739 | 5,097,908 | 4,737,806 | 5,113,959 | ||||
Weighted average number of common shares outstanding and potential ordinary shares | 4,673,377 | 5,102,332 | 4,742,444 | 5,118,383 | ||||
Basic and diluted earnings per share from continuing operations: | ||||||||
Common share (US$) | 0.88 | 1.60 | 1.80 | 2.72 | ||||
Basic and diluted earnings (loss) per share from discontinued operations: | ||||||||
Common share (US$) | 0.44 | (0.11) | 0.43 | (0.15) | ||||
Basic and diluted earnings per share: | ||||||||
Common share (US$) | 1.32 | 1.49 | 2.24 | 2.57 |
June 30, 2022 | December 31, 2021 | |||
Receivables from contracts with customers | ||||
Related parties (note 28) | 133 | 109 | ||
Third parties | ||||
Ferrous minerals | 1,441 | 3,023 | ||
Base metals | 594 | 668 | ||
Other | 21 | 162 | ||
Accounts receivable | 2,189 | 3,962 | ||
Expected credit loss | (41) | (48) | ||
Accounts receivable, net | 2,148 | 3,914 |
No customer individually represented 10% or more of the Company’s accounts receivable or revenues for both periods presented above.
Provisionally priced commodities sales – The commodity price risk arises from volatility of iron ore, nickel and copper prices. The Company is mostly exposed to the fluctuations in the iron ore and copper price (note 17). The selling price of these products can be measured reliably at each period since the price is quoted in an active market.
The sensitivity of the Company’s risk on final settlement of provisionally priced accounts receivables are presented below:
June 30, 2022 | ||||||||
Thousand metric tons | Provisional price (US$/ton) | Change | Effect on revenue | |||||
Iron ore | 12,893 | 112.8 | +/- 10% | +/- 145 | ||||
Copper | 57 | 9,956.3 | +/- 10% | +/- 57 |
June 30, 2022 | December 31, 2021 | |||
Finished products | 3,383 | 2,795 | ||
Work in progress | 906 | 820 | ||
Consumable inventory | 972 | 857 | ||
Allowance to net realizable value | (107) | (95) | ||
Total | 5,154 | 4,377 |
Finished and work in progress products inventories by segments are presented in note 4(b) and the cost of goods sold is presented in note 5(a).
18
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
June 30, 2022 | December 31, 2021 | |||
Third parties - Brazil | 1,625 | 1,766 | ||
Third parties - Abroad | 1,811 | 1,620 | ||
Related parties (note 28) | 228 | 89 | ||
Total | 3,664 | 3,475 |
12. Other financial assets and liabilities
Current | Non-current | |||||||
June 30, 2022 | December 31, 2021 | June 30, 2022 | December 31, 2021 | |||||
Other financial assets | ||||||||
Restricted cash | - | - | 81 | 117 | ||||
Derivative financial instruments (note 17a) | 229 | 111 | 123 | 20 | ||||
Investments in equity securities | - | - | 6 | 6 | ||||
229 | 111 | 210 | 143 | |||||
Other financial liabilities | ||||||||
Derivative financial instruments (note 17a) | 172 | 243 | 378 | 592 | ||||
Other financial liabilities - Related parties (note 28) | 171 | 393 | - | - | ||||
Financial guarantees provided (note 6a) (i) | - | - | 105 | 542 | ||||
Liabilities related to the concession grant | 754 | 760 | 1,337 | 1,437 | ||||
Contract liability | 487 | 566 | - | - | ||||
1,584 | 1,962 | 1,820 | 2,571 |
(i) In July 2022 (subsequent event), the Company signed a binding agreement with ArcelorMittal for the sale of CSP. At the closing, CSP's net debt will be settled and the financial liability related to the guarantee granted will be derecognised by Vale.
a) Liabilities related to the concession grant
On April 14, 2022, the Company prepaid US$168 of its concession grant obligation related to the Estrada de Ferro Carajás ("EFC") as approved by the Board of Directors on October 28, 2021. The outstanding balance will be settled in quarterly installments until 2057.
Liability | Discount rate | |||||||
June 30, 2022 | December 31, 2021 | June 30, 2022 | December 31, 2021 | |||||
Concession grant | 468 | 586 | 11.04% | 11.04% | ||||
Midwestern Integration Railway ("FICO") | 1,261 | 1,206 | 5.73% | 5.29% | ||||
Infrastructure program | 336 | 343 | 5.78% | 5.43% | ||||
West-East Integration Railway ("FIOL") | 26 | 62 | 8.45% | 5.81% | ||||
Total | 2,091 | 2,197 |
19
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
13. Investments in subsidiaries, associates, and joint ventures
Investments in associates and joint ventures | Equity results in the income statement | Dividends received | ||||||||||||||||||||||
Three-month period ended June 30, | Six-month period ended June 30, | Three-month period ended June 30, | Six-month period ended June 30, | |||||||||||||||||||||
Associates and joint ventures | % ownership | % voting capital | June 30, 2022 | December 31, 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||||||||||
Ferrous minerals | ||||||||||||||||||||||||
Baovale Mineração S.A. | 50.00 | 50.00 | 24 | 21 | - | 1 | 1 | 3 | - | - | - | - | ||||||||||||
Companhia Coreano-Brasileira de Pelotização | 50.00 | 50.00 | 74 | 51 | 10 | 10 | 22 | 16 | 10 | 2 | 10 | 2 | ||||||||||||
Companhia Hispano-Brasileira de Pelotização | 50.89 | 50.89 | 40 | 38 | - | - | - | - | 1 | 7 | 1 | 7 | ||||||||||||
Companhia Ítalo-Brasileira de Pelotização | 50.90 | 51.00 | 59 | 48 | 12 | 9 | 13 | 13 | 19 | 6 | 19 | 6 | ||||||||||||
Companhia Nipo-Brasileira de Pelotização | 51.00 | 51.11 | 139 | 129 | 12 | 9 | 22 | 13 | 41 | 7 | 41 | 7 | ||||||||||||
MRS Logística S.A. | 48.16 | 46.75 | 474 | 418 | 20 | 19 | 30 | 36 | - | - | - | - | ||||||||||||
Samarco Mineração S.A. (note 22) | 50.00 | 50.00 | - | - | - | - | - | - | - | - | - | - | ||||||||||||
VLI S.A. | 29.60 | 29.60 | 415 | 408 | (2) | 7 | (20) | (8) | - | - | - | - | ||||||||||||
1,225 | 1,113 | 52 | 55 | 68 | 73 | 71 | 22 | 71 | 22 | |||||||||||||||
Base metals | ||||||||||||||||||||||||
Korea Nickel Corp. | 25.00 | 25.00 | 18 | 17 | 1 | - | 3 | - | - | - | - | |||||||||||||
18 | 17 | 1 | - | 3 | - | - | - | - | - | |||||||||||||||
Other | ||||||||||||||||||||||||
Aliança Geração de Energia S.A. | 55.00 | 55.00 | 383 | 367 | 8 | 7 | 16 | 17 | - | 21 | - | 21 | ||||||||||||
Aliança Norte Energia Participações S.A. | 51.00 | 51.00 | 109 | 105 | (1) | (2) | (3) | (3) | - | - | - | - | ||||||||||||
California Steel Industries, Inc. (note 13b) | 50.00 | 50.00 | - | - | - | 48 | - | 61 | - | - | 65 | - | ||||||||||||
Companhia Siderúrgica do Pecém ("CSP") | 50.00 | 50.00 | - | 99 | - | - | - | (42) | - | - | - | - | ||||||||||||
Mineração Rio do Norte S.A. | 40.00 | 40.00 | - | - | - | 7 | - | (3) | - | - | - | - | ||||||||||||
Other | - | - | 56 | 50 | 1 | 1 | 3 | - | - | - | - | - | ||||||||||||
548 | 621 | 8 | 61 | 16 | 30 | - | 21 | 65 | 21 | |||||||||||||||
Total | 1,791 | 1,751 | 61 | 116 | 87 | 103 | 71 | 43 | 136 | 43 |
20
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
a) Changes in the period
2022 | 2021 | |||
Balance at January 1, | 1,751 | 2,031 | ||
Capital contributions to CSP | - | 42 | ||
Translation adjustment | 111 | 70 | ||
Equity results | 87 | 103 | ||
Dividends declared | (48) | (49) | ||
Equity results reclassified to discontinued operations (note 14a) | - | (26) | ||
Other | (110) | 26 | ||
Balance at June 30, | 1,791 | 2,197 |
b) Acquisitions and divestitures
California Steel Industries (“CSI”): In December 2021, the Company entered into a binding agreement with Nucor Corporation (“Nucor”) for the sale of its 50% interest in CSI for US$437. In February 2022, the Company concluded the sale and recorded a gain of US$297 for the six-month period ended June 30, 2022, as “Equity results and other results in associates and joint ventures”, of which US$147 relates to a gain from the sale and US$150 is due to the reclassification of the cumulative translation adjustments from the stockholders’ equity to the income statement.
Corporate Venture Capital: In June 2022, the Company created a corporate venture capital initiative (“Vale Ventures”) to invest in global startups involved in sustainable mining initiatives, with a capital investment of US$100. The purpose of Vale Ventures is to acquire minority stakes in startups focused on decarbonization in the mining value chain, zero-waste mining, energy transition metals and other technologies.
Vale Nouvelle-Calédonie S.A.S. (“VNC”): In December 2020, the Company signed a binding put option agreement to sell its interest in VNC for an immaterial consideration to Prony Resources consortium. With the final agreement signed in March 2021, the Company recorded a loss in the amount of US$98, presented as “Impairment reversal (impairment and disposals) of non-current assets, net” in the income statement for the period ended June 30, 2021. In the same period, the Company also recorded a gain of US$1,132 due to the cumulative translation adjustments reclassification from the stockholders’ equity to the income statement as “Other financial items, net”.
14. Non-current assets and liabilities held for sales and discontinued operations
June 30, 2022 | December 31, 2021 | |||||||||
Midwestern System assets | Coal (Discontinued operation) | Manganese assets | Other | Total | ||||||
Assets | ||||||||||
Accounts receivable | 30 | - | 11 | - | 11 | |||||
Inventories | 5 | 167 | 12 | - | 179 | |||||
Taxes | 15 | 364 | 17 | - | 381 | |||||
Investments | - | - | - | 377 | 377 | |||||
Property, plant and equipment | 214 | - | - | 6 | 6 | |||||
Other assets | 10 | 21 | 1 | - | 22 | |||||
274 | 552 | 41 | 383 | 976 | ||||||
Liabilities | ||||||||||
Suppliers and contractors | 39 | 110 | 10 | - | 120 | |||||
Other liabilities | 88 | 232 | 3 | - | 235 | |||||
127 | 342 | 13 | - | 355 | ||||||
Net assets held for sale | 147 | 210 | 28 | 383 | 621 |
21
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
a) Coal (Discontinued operation)
In June 2021, in preparation for a sale of the coal operation, in connection with the sustainable strategic mining agenda, the Company carried out a corporate reorganization by acquiring the interests held by Mitsui in the coal assets, which consist of Moatize mine and the Nacala Logistics Corridor (“NLC”). Following the acquisition of Mitsui’s stakes, and therefore, the simplification of the governance, the Company started the process of divesting its participation in the coal business.
In December 2021, the Company entered into a binding agreement with Vulcan Resources (formerly known as Vulcan Minerals - “Vulcan”) for the sale of these assets. Under the sale agreement Vulcan has committed to pay the gross amount of US$270, in addition of a 10-year royalty agreement subject to certain mine production and coal price conditions and so, due to the nature and uncertainties related to the measurement of these royalties, gains will be recognized as incurred.
Therefore, in 2021 the Company adjusted the net assets of the coal business to the fair value less costs of disposal, resulting in impairment losses, and started presenting the coal segment as a discontinued operation starting from the year ended December 31, 2021.
On April 25, 2022, the transaction was completed and the Company recorded a net income from discontinued operations of US$2,060 for the six-month period ended June 30, 2022, which is mainly driven by the reclassification of the cumulative translation adjustments of US$3,072, from the stockholders’ equity to the income statement, as required by IAS 21 - The Effects of Changes in Foreign Exchange Rates, partially offset by the derecognition of noncontrolling interest of US$585 due to the deconsolidation of the coal assets. Additionally, until the closing of the transaction, the Company recorded losses of US$589 due to the impairment of assets acquired in the period and working capital adjustments. These effects are presented below:
(a.i) Net income and cash flows from discontinued operations
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net income from discontinued operations | ||||||||
Net operating revenue | - | 161 | 448 | 253 | ||||
Cost of goods sold and services rendered | - | (340) | (264) | (669) | ||||
Operating expenses | - | (2) | (13) | (2) | ||||
Impairment and disposals of non-current assets, net | (429) | (815) | (589) | (859) | ||||
Operating loss | (429) | (996) | (418) | (1,277) | ||||
Cumulative translation adjustments (i) | 3,072 | 424 | 3,072 | 424 | ||||
Other financial results, net | - | (39) | (7) | (38) | ||||
Derecognition of noncontrolling interest | (585) | - | (585) | - | ||||
Equity results in associates and joint ventures | - | (11) | - | (26) | ||||
Net income (loss) before income taxes | 2,058 | (622) | 2,062 | (917) | ||||
Income taxes | - | - | (2) | - | ||||
Net income (loss) from discontinued operations | 2,058 | (622) | 2,060 | (917) | ||||
Loss attributable to noncontrolling interests | - | (61) | - | (142) | ||||
Net income (loss) attributable to Vale's stockholders | 2,058 | (561) | 2,060 | (775) |
(i) In 2021, the Company assessed that its Australian subsidiaries (part of the coal business), which were no longer operational, were considered "abandoned" under IAS 21 and, therefore, the Company recognized a gain related to the cumulative translation adjustments in the amount of US$424, which was reclassified to the net income for the period ended June 30, 2021.
22
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Cash flow from discontinued operations | ||||||||
Operating activities | ||||||||
Net income (loss) before income taxes | 2,058 | (622) | 2,062 | (917) | ||||
Adjustments: | ||||||||
Equity results in associates and joint ventures | - | 11 | - | 26 | ||||
Impairment and disposals of non-current assets, net | 429 | 815 | 589 | 859 | ||||
Derecognition of noncontrolling interest | 585 | - | 585 | - | ||||
Financial Results, net | (3,072) | (385) | (3,065) | (386) | ||||
Decrease in assets and liabilities | - | (30) | (130) | (42) | ||||
Net cash provided (used) by operating activities | - | (211) | 41 | (460) | ||||
Investing activities | ||||||||
Additions to property, plant, and equipment | - | (36) | (38) | (65) | ||||
Acquisition of NLC, net of cash | - | (2,345) | - | (2,345) | ||||
Disposal of coal, net of cash | (65) | - | (65) | - | ||||
Other | - | 1 | - | 70 | ||||
Net cash used in investing activities | (65) | (2,380) | (103) | (2,340) | ||||
Financing activities | ||||||||
Payments | - | (3) | (11) | (7) | ||||
Net cash used in financing activities | - | (3) | (11) | (7) | ||||
Net cash used by discontinued operations | (65) | (2,594) | (73) | (2,807) |
b) Manganese ferroalloys operations in Minas Gerais
In January 2022, the Company completed the sale of its ferroalloys operations in Barbacena and Ouro Preto and its manganese mining operations at Morro da Mina, in the State of Minas Gerais, to VDL Group (“VDL”) for a total consideration of US$40. As the Company had already adjusted the net assets to the fair value less cost of disposal, the closing did not result in an additional impact on the income statement for the six-month period ended June 30, 2022. As a result, the Company no longer has manganese ferroalloys operations.
c) Midwestern System assets
During the first quarter of 2022, the Company classified the assets and liabilities related to the Midwestern System as held for sale due to the negotiations with interested parties in Vale’s iron ore, manganese and logistics assets in the Midwestern System, through its equity interests in Mineração Corumbaense Reunida S.A., Mineração Mato Grosso S.A., International Iron Company, Inc. and Transbarge Navegación S.A. These negotiations resulted in the execution of a binding agreement with J&F Mineração Ltda. (“J&F”) for the sale of these assets, which was signed on April 6, 2022.
The carrying amount of those assets were fully impaired in past years and the Company had a liability related to take-or-pay logistics contracts in the amount of US$932 that were deemed onerous contracts under the Company’s business model for the Midwestern System, which had negative reserves of US$892 before reclassification to “Non-current assets and liabilities held for sale”.
These offers received during the sale process of the assets represented an objective evidence of impairment reversal and the remeasurement of the existing provision, which led to a gain of US$1,104 recorded as “Impairment reversal (impairment and disposals) of non-current assets, net”, of which US$214 relates to the impairment reversal on the Property, plant and equipment and US$890 is due to the remeasurement of the onerous contract liability.
On July 15, 2022 (subsequent event), the transaction was completed and the Company received US$150. As the Company had already adjusted the net assets to the fair value less cost of disposal, the closing should not result in any additional impact to the income statement for the next quarter.
23
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Goodwill | Concessions | Software | Research and development project and patents | Total | |||||||
Balance at December 31, 2021 | 3,208 | 5,223 | 86 | 494 | 9,011 | ||||||
Additions | - | 132 | 17 | - | 149 | ||||||
Disposals | - | (9) | - | - | (9) | ||||||
Amortization | - | (120) | (22) | - | (142) | ||||||
Translation adjustment | 63 | 341 | 2 | 33 | 439 | ||||||
Balance at June 30, 2022 | 3,271 | 5,567 | 83 | 527 | 9,448 | ||||||
Cost | 3,271 | 6,846 | 550 | 527 | 11,194 | ||||||
Accumulated amortization | - | (1,279) | (467) | - | (1,746) | ||||||
Balance at June 30, 2022 | 3,271 | 5,567 | 83 | 527 | 9,448 | ||||||
Goodwill | Concessions | Software | Research and development project and patents | Total | |||||||
Balance at December 31, 2020 | 3,298 | 5,391 | 76 | 531 | 9,296 | ||||||
Additions | - | 57 | 21 | - | 78 | ||||||
Disposals | - | (5) | - | - | (5) | ||||||
Amortization | - | (115) | (16) | - | (131) | ||||||
Acquisition of NLC (note 14a) | - | 1,428 | - | - | 1,428 | ||||||
Translation adjustment | 104 | 204 | 3 | 20 | 331 | ||||||
Balance at June 30, 2021 | 3,402 | 6,960 | 84 | 551 | 10,997 | ||||||
Cost | 3,402 | 8,097 | 789 | 551 | 12,839 | ||||||
Accumulated amortization | - | (1,137) | (705) | - | (1,842) | ||||||
Balance at June 30, 2021 | 3,402 | 6,960 | 84 | 551 | 10,997 |
16. Property, plant, and equipment
Building and land | Facilities | Equipment | Mineral properties | Railway equipment | Right of use assets | Others | Constructions in progress | Total | |||
Balance at December 31, 2021 | 8,137 | 7,232 | 4,743 | 7,742 | 2,334 | 1,537 | 2,484 | 7,722 | 41,931 | ||
Additions (i) | - | - | - | - | - | 29 | - | 2,343 | 2,372 | ||
Disposals | (14) | (8) | (4) | - | (5) | - | (1) | (45) | (77) | ||
Asset retirement obligation (note 23b) | - | - | - | (1,077) | - | - | - | - | (1,077) | ||
Depreciation, depletion and amortization | (205) | (245) | (351) | (236) | (82) | (94) | (147) | - | (1,360) | ||
Impairment reversal, net | 56 | 34 | 64 | 39 | - | - | 21 | - | 214 | ||
Transfer to asset held for sale - Midwestern System (note 14c) | (56) | (34) | (64) | (39) | - | - | (21) | - | (214) | ||
Translation adjustment | 348 | 370 | 128 | 75 | 151 | 26 | 78 | 201 | 1,377 | ||
Transfers | 240 | 297 | 303 | 347 | 73 | - | 207 | (1,467) | - | ||
Balance at June 30, 2022 | 8,506 | 7,646 | 4,819 | 6,851 | 2,471 | 1,498 | 2,621 | 8,754 | 43,166 | ||
Cost | 15,612 | 12,369 | 11,291 | 16,317 | 4,021 | 2,062 | 5,802 | 8,754 | 76,228 | ||
Accumulated depreciation | (7,106) | (4,723) | (6,472) | (9,466) | (1,550) | (564) | (3,181) | - | (33,062) | ||
Balance at June 30, 2022 | 8,506 | 7,646 | 4,819 | 6,851 | 2,471 | 1,498 | 2,621 | 8,754 | 43,166 | ||
Building and land | Facilities | Equipment | Mineral properties | Railway equipment | Right of use assets | Others | Constructions in progress | Total | |||
Balance at December 31, 2020 | 8,591 | 7,591 | 4,933 | 8,054 | 2,523 | 1,563 | 2,495 | 5,398 | 41,148 | ||
Additions (i) | - | - | - | - | - | 45 | - | 2,151 | 2,196 | ||
Disposals | (2) | (3) | (12) | - | (1) | - | - | (26) | (44) | ||
Asset retirement obligation | - | - | - | (237) | - | - | - | - | (237) | ||
Depreciation, depletion and amortization | (227) | (234) | (334) | (254) | (79) | (81) | (127) | - | (1,336) | ||
Acquisition of NLC (note 14a) | 235 | 456 | 102 | - | 2 | 33 | 2 | 92 | 922 | ||
Impairment, net | - | - | - | - | - | - | - | (88) | (88) | ||
Translation adjustment | 264 | 271 | 138 | 237 | 93 | 11 | 80 | 229 | 1,323 | ||
Transfers | 78 | 201 | 301 | 164 | 53 | - | 113 | (910) | - | ||
Balance at June 30, 2021 | 8,939 | 8,282 | 5,128 | 7,964 | 2,591 | 1,571 | 2,563 | 6,846 | 43,884 | ||
Cost | 15,905 | 12,739 | 11,251 | 17,406 | 4,047 | 2,011 | 5,712 | 6,846 | 75,917 | ||
Accumulated depreciation | (6,966) | (4,457) | (6,123) | (9,442) | (1,456) | (440) | (3,149) | - | (32,033) | ||
Balance at June 30, 2021 | 8,939 | 8,282 | 5,128 | 7,964 | 2,591 | 1,571 | 2,563 | 6,846 | 43,884 |
(i) Includes capitalized interest.
24
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Right-of-use assets (leases)
December 31, 2021 | Additions and contract modifications | Depreciation | Translation adjustment | June 30, 2022 | ||||||
Ports | 680 | 1 | (26) | 7 | 662 | |||||
Vessels | 492 | - | (22) | - | 470 | |||||
Pelletizing plants | 215 | 15 | (23) | 14 | 221 | |||||
Properties | 84 | 13 | (15) | 6 | 88 | |||||
Energy plants | 49 | - | (4) | - | 45 | |||||
Mining equipment | 17 | - | (4) | (1) | 12 | |||||
Total | 1,537 | 29 | (94) | 26 | 1,498 |
Lease liabilities are presented in note 20.
17. Financial and capital risk management
a) Effects of derivatives on the balance sheet
Assets | ||||||||
June 30, 2022 | December 31, 2021 | |||||||
Current | Non-current | Current | Non-current | |||||
Foreign exchange and interest rate risk | ||||||||
CDI & TJLP vs. US$ fixed and floating rate swap | 2 | 3 | - | - | ||||
IPCA swap | 50 | - | 41 | - | ||||
Pre-dollar swap and forward transactions | 66 | 55 | 20 | 9 | ||||
Libor swap | 23 | 30 | 1 | 11 | ||||
141 | 88 | 62 | 20 | |||||
Commodities price risk | ||||||||
Base metals products | 54 | 35 | 28 | - | ||||
Gasoil, Brent and freight | 27 | - | 8 | - | ||||
81 | 35 | 36 | - | |||||
Other | 7 | - | 13 | - | ||||
7 | - | 13 | - | |||||
Total | 229 | 123 | 111 | 20 |
Liabilities | ||||||||
June 30, 2022 | December 31, 2021 | |||||||
Current | Non-current | Current | Non-current | |||||
Foreign exchange and interest rate risk | ||||||||
CDI & TJLP vs. US$ fixed and floating rate swap | 90 | 226 | 151 | 440 | ||||
IPCA swap | 1 | 77 | 6 | 113 | ||||
Pre-dollar swap and forward transactions | 10 | 65 | 57 | 38 | ||||
Libor swap | - | - | - | 1 | ||||
101 | 368 | 214 | 592 | |||||
Commodities price risk | ||||||||
Base metals products | 64 | - | 27 | - | ||||
Gasoil, Brent and freight | 5 | - | 2 | - | ||||
69 | - | 29 | - | |||||
Other | 2 | 10 | - | - | ||||
2 | 10 | - | - | |||||
Total | 172 | 378 | 243 | 592 |
25
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
b) Net exposure
June 30, 2022 | December 31, 2021 | |||
Foreign exchange and interest rate risk | ||||
CDI & TJLP vs. US$ fixed and floating rate swap | (311) | (591) | ||
IPCA swap | (28) | (78) | ||
Pre-dollar swap and forward transactions | 46 | (66) | ||
Libor swap (i) | 53 | 11 | ||
(240) | (724) | |||
Commodities price risk | ||||
Base metals products | 25 | 1 | ||
Gasoil, Brent and freight | 22 | 6 | ||
47 | 7 | |||
Other | (5) | 13 | ||
(5) | 13 | |||
Total | (198) | (704) |
(i) In March 2021, the UK Financial Conduct Authority (“FCA”), the financial regulator in the United Kingdom, announced the discontinuation of the LIBOR rate for all terms in pounds, euros, Swiss francs, yen and for terms of one week and two months in dollars at the end of December 2021 and the other terms at the end of June 2023. The Company has a multidisciplinary group dedicated to studying the rate transition and its potential impacts and is monitoring and advising various areas of Vale on the necessary initiatives.
c) Effects of derivatives on the income statement
Gain (loss) recognized in the income statement | ||||||||
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Foreign exchange and interest rate risk | ||||||||
CDI & TJLP vs. US$ fixed and floating rate swap | (121) | 308 | 269 | 84 | ||||
IPCA swap | (11) | 57 | 66 | 22 | ||||
Eurobonds swap | - | - | - | (28) | ||||
Pre-dollar swap and forward operations | (163) | 426 | 198 | 221 | ||||
Libor swap | 7 | (3) | 42 | 7 | ||||
(288) | 788 | 575 | 306 | |||||
Commodities price risk | ||||||||
Base metals products | 16 | - | 9 | (2) | ||||
Gasoil, Brent and freight | 10 | 64 | 25 | 108 | ||||
26 | 64 | 34 | 106 | |||||
Other | (8) | 4 | (18) | 5 | ||||
(8) | 4 | (18) | 5 | |||||
Total | (270) | 856 | 591 | 417 |
d) Effects of derivatives on the cash flows
Financial settlement inflows (outflows) | ||||||||
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Foreign exchange and interest rate risk | ||||||||
CDI & TJLP vs. US$ fixed and floating rate swap | (17) | (27) | (43) | (67) | ||||
IPCA swap | 8 | 3 | 11 | (65) | ||||
Eurobonds swap | - | - | - | (29) | ||||
Pre-dollar swap and forward operations | 54 | 13 | 84 | (62) | ||||
Libor swap | - | - | (1) | (1) | ||||
45 | (11) | 51 | (224) | |||||
Commodities price risk | ||||||||
Base metals products | (93) | (1) | (178) | (8) | ||||
Gasoil, Brent and freight | 6 | 72 | 9 | 92 | ||||
(87) | 71 | (169) | 84 | |||||
Other | - | - | - | 1 | ||||
Total | (42) | 60 | (118) | (139) |
26
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
e) Hedge accounting
Gain (loss) recognized in the other comprehensive income | ||||||||
Three-month period ended June 30, | Six-month period ended June 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Net investment hedge | (145) | 202 | 74 | 42 | ||||
Cash flow hedge (Thermal coal) | - | (7) | - | (7) | ||||
Cash flow hedge (Nickel and Palladium) | 312 | (28) | 8 | (19) |
Cash flow hedge (Nickel)
Notional (ton) | Fair value | Financial settlement Inflows (Outflows) | Value at Risk | Fair value by year | |||||||||||||||
June 30, 2022 | December 31, 2021 | Bought / Sold | Average strike (US$/ton) | June 30, 2022 | December 31, 2021 | June 30, 2022 | June 30, 2022 | 2022 | 2023 | ||||||||||
Nickel Revenue Hedge Program | |||||||||||||||||||
Forward | 31,875 | 39,575 | S | 23,117 | 9 | (26) | (188) | 39 | (63) | 72 | |||||||||
Total | 9 | (26) | (188) | 39 | (63) | 72 |
In 2022, the Company renewed its hedge nickel program due to the high volatility of nickel prices linked to future cash flows forecast for the period. In this program, hedging operations were executed, through forward contracts, to protect a portion of the projected volume of sales at floating, highly probable realization prices, guaranteeing prices above the average unit cost of nickel production for the protected volumes. The contracts are traded on the London Metal Exchange or over-the-counter market and the hedged item's P&L is offset by the hedged item’s P&L due to Nickel price variation.
Cash flow hedge (Palladium)
Notional (t oz) | Fair value | Financial settlement Inflows (Outflows) | Value at Risk | Fair value by year | ||||||||||||||
June 30, 2022 | December 31, 2021 | Bought / Sold | Average strike (US$/t oz) | June 30, 2022 | December 31, 2021 | June 30, 2022 | June 30, 2022 | 2022 | ||||||||||
Palladium Revenue Hedge Program | ||||||||||||||||||
Call Options | 22,114 | 44,228 | S | 3,368 | - | (1) | - | - | - | |||||||||
Put Options | 22,114 | 44,228 | B | 2,436 | 13 | 26 | 6 | 5 | 13 | |||||||||
Total | 13 | 25 | 6 | 5 | 13 | |||||||||||||
27
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
f) Protection programs for the R$ denominated debt instruments and other liabilities
Notional | Fair value | Financial Settlement Inflows (Outflows) | Value at Risk | Fair value by year | ||||||||||||||||||
June 30, 2022 | December 31, 2021 | Index | Average rate | June 30, 2022 | December 31, 2021 | June 30, 2022 | June 30, 2022 | 2022 | 2023 | 2024+ | ||||||||||||
CDI vs. US$ fixed rate swap | (236) | (461) | (19) | 32 | (49) | (36) | (151) | |||||||||||||||
Receivable | R$ 7,476 | R$ 8,142 | CDI | 100.20% | ||||||||||||||||||
Payable | US$ 1,750 | US$ 1,906 | Fix | 2.50% | ||||||||||||||||||
TJLP vs. US$ fixed rate swap | (76) | (130) | (22) | 5 | (15) | (8) | (53) | |||||||||||||||
Receivable | R$ 966 | R$ 1,192 | TJLP + | 1.07% | ||||||||||||||||||
Payable | US$ 250 | US$ 320 | Fix | 3.32% | ||||||||||||||||||
R$ fixed rate vs. US$ fixed rate swap | 2 | 62 | 4 | 55 | - | 16 | (14) | |||||||||||||||
Receivable | R$ 15,912 | R$ 5,730 | Fix | 4.96% | ||||||||||||||||||
Payable | US$ 3,043 | US$ 1,084 | Fix | -1.50% | ||||||||||||||||||
IPCA vs. US$ fixed rate swap | (78) | (118) | 11 | 7 | - | (4) | (74) | |||||||||||||||
Receivable | R$ 1,402 | R$ 1,508 | IPCA + | 4.54% | ||||||||||||||||||
Payable | US$ 347 | US$ 373 | Fix | 3.88% | ||||||||||||||||||
IPCA vs. CDI swap | 50 | 40 | - | - | 50 | - | - | |||||||||||||||
Receivable | R$ 811 | R$ 769 | IPCA + | 6.63% | ||||||||||||||||||
Payable | R$ 1,350 | R$ 1,350 | CDI | 98.76% | ||||||||||||||||||
Forward | R$ 4,755 | R$ 6,013 | B | 5.46 | 44 | (4) | 88 | 14 | 15 | 29 | - |
g) Protection program for Libor floating interest rate US$ denominated debt
Notional | Fair value | Financial Settlement Inflows (Outflows) | Value at Risk | Fair value by year | ||||||||||||||||||
June 30, 2022 | December 31, 2021 | Index | Average rate | June 30, 2022 | December 31, 2021 | June 30, 2022 | June 30, 2022 | 2022 | 2023 | 2024+ | ||||||||||||
Libor vs. US$ fixed rate swap | 53 | 11 | (1) | 3 | 8 | 30 | 15 | |||||||||||||||
Receivable | US$ 950 | US$ 950 | Libor | 0.13% | ||||||||||||||||||
Payable | US$ 950 | US$ 950 | Fix | 0.48% |
h) Protection for treasury volatility related to tender offer transaction
To reduce the volatility of the premium to be paid to investors for the tender offer transaction issued on June 9, 2022, treasury lock transactions were implemented and already settled.
Notional | Fair value | Financial Settlement Inflows (Outflows) | Value at Risk | Fair value by year | |||||||||||||
June 30, 2022 | December 31, 2021 | Average rate | June 30, 2022 | December 31, 2021 | June 30, 2022 | June 30, 2022 | 2022 | ||||||||||
Forwards | - | - | - | - | - | (8) | - | - |
28
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
i) Protection program for product prices and input costs
Notional | Fair value | Financial settlement Inflows (Outflows) | Value at Risk | Fair value by year | ||||||||||||||
June 30, 2022 | December 31, 2021 | Bought / Sold | Average strike (US$/bbl) | June 30, 2022 | December 31, 2021 | June 30, 2022 | June 30, 2022 | 2022 | ||||||||||
Brent crude oil (bbl) | ||||||||||||||||||
Call options | 8,493,000 | 762,000 | B | 118 | 26 | 7 | 9 | 9 | 26 | |||||||||
Put options | 8,493,000 | 762,000 | S | 82 | (5) | (2) | - | 2 | (5) | |||||||||
Forward Freight Agreement (days) | ||||||||||||||||||
Freight forwards (days) | 690 | 330 | B | 24,764 | 1 | 1 | - | 1 | 1 |
j) Other derivatives, including embedded derivatives in contracts
Notional | Fair value | Financial settlement Inflows (Outflows) | Value at Risk | Fair value | ||||||||||||||
June 30, 2022 | December 31, 2021 | Bought / Sold | Average strike (US$/bbl) | June 30, 2022 | December 31, 2021 | June 30, 2022 | June 30, 2022 | 2022+ | ||||||||||
Option related to a Special Purpose Entity “SPE” (quantity) | ||||||||||||||||||
Call option | 137,751,623 | 137,751,623 | B | 3.21 | 7 | 15 | - | 3 | 7 | |||||||||
Embedded derivative in natural gas purchase agreement (volume/month) | ||||||||||||||||||
Call options | 746,667 | 729,571 | S | 233 | (12) | (1) | - | 8 | (12) | |||||||||
Fixed price sales protection (ton) | ||||||||||||||||||
Nickel forwards | 216 | 342 | B | 16,283 | 1 | 1 | 1 | 1 | 1 | |||||||||
Hedge program for products acquisition for resale (tons) | ||||||||||||||||||
Nickel forwards | 986 | 1,206 | S | 26,192 | 3 | (1) | 3 | 1 | 3 |
29
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
k) Sensitivity analysis of derivative financial instruments
The following tables present the potential value of the instruments given hypothetical stress scenarios for the main market risk factors that impact the derivatives positions. The scenarios were defined as follows:
- Probable: the probable scenario was defined as the fair value of the derivative instruments as of June 30, 2022.
- Scenario I: fair value estimated considering a 25% deterioration in the associated risk variables.
- Scenario II: fair value estimated considering a 50% deterioration in the associated risk variables.
Instrument | Instrument's main risk events | Probable | Scenario I | Scenario II | ||||
CDI vs. US$ fixed rate swap | R$ depreciation | (236) | (662) | (1,089) | ||||
US$ interest rate inside Brazil decrease | (236) | (280) | (329) | |||||
Brazilian interest rate increase | (236) | (279) | (322) | |||||
Protected item: R$ denominated liabilities | R$ depreciation | n.a. | - | - | ||||
TJLP vs. US$ fixed rate swap | R$ depreciation | (76) | (138) | (200) | ||||
US$ interest rate inside Brazil decrease | (76) | (81) | (86) | |||||
Brazilian interest rate increase | (76) | (87) | (96) | |||||
TJLP interest rate decrease | (76) | (83) | (90) | |||||
Protected item: R$ denominated debt | R$ depreciation | n.a. | - | - | ||||
| ||||||||
R$ fixed rate vs. US$ fixed rate swap | R$ depreciation | 2 | (691) | (1,383) | ||||
US$ interest rate inside Brazil decrease | 2 | (62) | (128) | |||||
Brazilian interest rate increase | 2 | (171) | (327) | |||||
Protected item: R$ denominated debt | R$ depreciation | n.a. | - | - | ||||
IPCA swap vs. US$ fixed rate swap | R$ depreciation | (78) | (165) | (252) | ||||
US$ interest rate inside Brazil decrease | (78) | (88) | (98) | |||||
Brazilian interest rate increase | (78) | (97) | (115) | |||||
IPCA index decrease | (78) | (89) | (99) | |||||
Protected item: R$ denominated debt | R$ depreciation | n.a. | - | - | ||||
IPCA swap vs. CDI swap | Brazilian interest rate increase | 50 | 50 | 49 | ||||
IPCA index decrease | 50 | 50 | 50 | |||||
Protected item: R$ denominated debt linked to IPCA | IPCA index decrease | n.a. | (50) | (50) | ||||
US$ floating rate vs. US$ fixed rate swap | US$ Libor decrease | 53 | 34 | 15 | ||||
Protected item: Libor US$ indexed debt | US$ Libor decrease | n.a. | (34) | (15) | ||||
NDF BRL/USD | R$ depreciation | 44 | (142) | (328) | ||||
US$ interest rate inside Brazil decrease | 44 | 35 | 26 | |||||
Brazilian interest rate increase | 44 | 18 | (5) | |||||
Protected item: R$ denominated liabilities | R$ depreciation | n.a. | - | - | ||||
Instrument | Instrument's main risk events | Probable | Scenario I | Scenario II | ||||
Fuel oil protection | ||||||||
Options | Price input decrease | 21 | (53) | (244) | ||||
Protected item: Part of costs linked to fuel oil prices | Price input decrease | n.a. | 53 | 244 | ||||
Forward Freight Agreement | ||||||||
Forwards | Freight price decrease | 1 | (4) | (8) | ||||
Protected item: Part of costs linked to maritime freight prices | Freight price decrease | n.a. | 4 | 8 | ||||
Nickel sales fixed price protection | ||||||||
Forwards | Nickel price decrease | 1 | - | (1) | ||||
Protected item: Part of nickel revenues with fixed prices | Nickel price decrease | n.a. | - | 1 | ||||
Hedge program for products acquisition for resale (tons) | ||||||||
Forwards | Nickel price increase | 3 | (4) | (10) | ||||
Protected item: Part of revenues from products for resale | Nickel price increase | n.a. | 4 | 10 | ||||
Nickel Revenue Hedging Program | ||||||||
Options | Nickel price increase | 9 | (170) | (349) | ||||
Protected item: Part of nickel revenues with fixed sales prices | Nickel price increase | n.a. | 170 | 349 | ||||
Palladium Revenue Hedging Program | ||||||||
Options | Palladium price increase | 13 | 5 | - | ||||
Protected item: Part of palladium future revenues | Palladium price increase | n.a. | (5) | - | ||||
Option - SPCs | SPCs stock value decrease | 7 | - | - |
30
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Instrument | Main risks | Probable | Scenario I | Scenario II | ||||
Embedded derivatives - Gas purchase | Pellet price increase | (12) | (25) | (42) |
l) Financial counterparties’ ratings
The transactions of derivative instruments, cash and cash equivalents as well as short-term investments are held with financial institutions whose exposure limits are periodically reviewed and approved by the delegated authority. The financial institutions credit risk is performed through a methodology that considers, among other information, ratings provided by international rating agencies.
The table below presents the ratings in foreign currency as published by Moody’s regarding the main financial institutions used by the Company to contract derivative instruments, cash and cash equivalents transaction.
June 30, 2022 | December 31, 2021 | |||||||
Cash and cash equivalents and investment | Derivatives | Cash and cash equivalents and investment | Derivatives | |||||
Aa1 | 48 | - | 128 | - | ||||
Aa2 | 385 | 7 | 285 | 15 | ||||
Aa3 | 305 | 41 | 495 | 34 | ||||
A1 | 847 | 46 | 1,145 | 3 | ||||
A2 | 2,214 | 166 | 3,478 | 39 | ||||
A3 | 1,720 | 46 | 1,518 | 20 | ||||
Baa1 | 101 | - | 90 | - | ||||
Baa2 | 15 | - | 10 | - | ||||
Ba2 (i) | 457 | 36 | 2,763 | 5 | ||||
Ba3 (i) | 1,115 | 3 | 1,988 | - | ||||
Other | 26 | 7 | 5 | 15 | ||||
7,233 | 352 | 11,905 | 131 |
(i) A substantial part of the balances is held with financial institutions in Brazil and, in local currency, they are deemed investment grade.
31
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
18. Financial assets and liabilities
The Company classifies its financial instruments in accordance with the purpose for which they were acquired, and determines the classification and initial recognition according to the following categories:
June 30, 2022 | December 31, 2021 | |||||||||||||||
Financial assets | Amortized cost | At fair value through OCI | At fair value through profit or loss | Total | Amortized cost | At fair value through OCI | At fair value through profit or loss | Total | ||||||||
Current | ||||||||||||||||
Cash and cash equivalents (note 20) | 7,185 | - | - | 7,185 | 11,721 | - | - | 11,721 | ||||||||
Short-term investments (note 20) | - | - | 48 | 48 | - | - | 184 | 184 | ||||||||
Derivative financial instruments (note 17a) | - | - | 229 | 229 | - | - | 111 | 111 | ||||||||
Accounts receivable (note 9) | 391 | - | 1,757 | 2,148 | 703 | - | 3,211 | 3,914 | ||||||||
7,576 | - | 2,034 | 9,610 | 12,424 | - | 3,506 | 15,930 | |||||||||
Non-current | ||||||||||||||||
Judicial deposits (note 25c) | 1,328 | - | - | 1,328 | 1,220 | - | - | 1,220 | ||||||||
Restricted cash (note 12) | 81 | - | - | 81 | 117 | - | - | 117 | ||||||||
Derivative financial instruments (note 17a) | - | - | 123 | 123 | - | - | 20 | 20 | ||||||||
Investments in equity securities (note 12) | - | 6 | - | 6 | - | 6 | - | 6 | ||||||||
1,409 | 6 | 123 | 1,538 | 1,337 | 6 | 20 | 1,363 | |||||||||
Total of financial assets | 8,985 | 6 | 2,157 | 11,148 | 13,761 | 6 | 3,526 | 17,293 | ||||||||
Financial liabilities | ||||||||||||||||
Current | ||||||||||||||||
Suppliers and contractors (note 11) | 3,664 | - | - | 3,664 | 3,475 | - | - | 3,475 | ||||||||
Derivative financial instruments (note 17a) | - | - | 172 | 172 | - | - | 243 | 243 | ||||||||
Loans, borrowings and leases (note 20) | 935 | - | - | 935 | 1,204 | - | - | 1,204 | ||||||||
Liabilities related to the concession grant (note 12a) | 754 | - | - | 754 | 760 | - | - | 760 | ||||||||
Other financial liabilities - Related parties (note 28) | 171 | - | - | 171 | 393 | - | - | 393 | ||||||||
Contract liability | 487 | - | - | 487 | 566 | - | - | 566 | ||||||||
6,011 | - | 172 | 6,183 | 6,398 | - | 243 | 6,641 | |||||||||
Non-current | ||||||||||||||||
Derivative financial instruments (note 17a) | - | - | 378 | 378 | - | - | 592 | 592 | ||||||||
Loans, borrowings and leases (note 20) | 11,673 | - | - | 11,673 | 12,578 | - | - | 12,578 | ||||||||
Participative stockholders' debentures (note 19) | - | - | 3,219 | 3,219 | - | - | 3,419 | 3,419 | ||||||||
Liabilities related to the concession grant (note 12a) | 1,337 | - | - | 1,337 | 1,437 | - | - | 1,437 | ||||||||
Financial guarantees (note 6a) | - | - | 105 | 105 | - | - | 542 | 542 | ||||||||
13,010 | - | 3,702 | 16,712 | 14,015 | - | 4,553 | 18,568 | |||||||||
Total of financial liabilities | 19,021 | - | 3,874 | 22,895 | 20,413 | - | 4,796 | 25,209 |
a) Hierarchy of fair value
June 30, 2022 | December 31, 2021 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||
Financial assets | ||||||||||||||||
Short-term investments (note 20) | 48 | - | - | 48 | 184 | - | - | 184 | ||||||||
Derivative financial instruments (note 17a) | - | 345 | 7 | 352 | - | 118 | 13 | 131 | ||||||||
Accounts receivable (note 9) | - | 1,757 | - | 1,757 | - | 3,211 | - | 3,211 | ||||||||
Investments in equity securities (note 12) | 6 | - | - | 6 | 6 | - | - | 6 | ||||||||
54 | 2,102 | 7 | 2,163 | 190 | 3,329 | 13 | 3,532 | |||||||||
Financial liabilities | ||||||||||||||||
Derivative financial instruments (note 17a) | - | 550 | - | 550 | - | 835 | - | 835 | ||||||||
Participative stockholders' debentures (note 19) | - | 3,219 | - | 3,219 | - | 3,419 | - | 3,419 | ||||||||
Financial guarantees (note 6) | - | 105 | - | 105 | - | 542 | - | 542 | ||||||||
- | 3,874 | - | 3,874 | - | 4,796 | - | 4,796 |
There were no transfers between levels 1, 2 and 3 of the fair value hierarchy during the periods presented.
a.i) Changes in Level 3 assets and liabilities during the period
32
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Derivative financial instruments | ||||
Financial assets | Financial liabilities | |||
Balance at December 31, 2021 | 13 | - | ||
Losses recognized in the income statement | (6) | - | ||
Balance at June 30, 2022 | 7 | - |
b) Fair value of loans and borrowings
June 30, 2022 | December 31, 2021 | |||||||
Carrying amount | Fair value | Carrying amount | Fair value | |||||
Quoted in the secondary market: | ||||||||
Bonds | 6,158 | 6,241 | 7,448 | 9,151 | ||||
Debentures | 399 | 411 | 387 | 387 | ||||
Debt contracts in Brazil in: | ||||||||
R$, indexed to TJLP, TR, IPCA, IGP-M and CDI | 317 | 318 | 354 | 449 | ||||
R$, with fixed interest | 6 | 6 | 13 | - | ||||
Basket of currencies and bonds in US$ indexed to LIBOR | - | - | 11 | 11 | ||||
Debt contracts in the international market in: | ||||||||
US$, with variable and fixed interest | 3,912 | 3,629 | 3,615 | 3,231 | ||||
Other currencies, with variable interest | 10 | 10 | 87 | 54 | ||||
Other currencies, with fixed interest | 94 | 95 | 107 | 117 | ||||
Total | 10,896 | 10,710 | 12,022 | 13,400 |
19. Participative stockholders’ debentures
At the time of its privatization in 1997, the Company issued a total of 388,559,056 debentures to then-existing stockholders, including the Brazilian Government. The debentures’ terms were set to ensure that pre-privatization stockholders would participate in potential future benefits that might be obtained from exploration of mineral resources. This obligation related to the debentures will cease when all the relevant mineral resources are exhausted, sold or otherwise disposed of by the Company.
Holders of participative stockholders’ debentures have the right to receive semi-annual payments equal to an agreed percentage of revenues less value-added tax, transport fee and insurance expenses related to the trading of the products, derived from these mineral resources. On April 1, 2022, the Company made available for withdrawal as remuneration the amount of US$235 for the second semester of 2021, as disclosed on the “Shareholders’ debentures report” made available on the Company’s website.
To calculate the fair value of the liability, the Company uses the weighted average price of trades in the secondary market for the last month of the quarter. The average price decreased from R$49.10 per debenture for the year ended December 31, 2021, to R$43.39 per debenture for the period ended June 30, 2022, resulting in a gain of US$288 recorded in the income statement for the six-month period ended June 30, 2022. As of June 30, 2022, the liability was US$3,219 (US$3,419 as of December 31, 2021).
20. Loans, borrowings, leases, cash and cash equivalents and short-term investments
a) Net debt
The Company evaluates the net debt with the objective of ensuring the continuity of its business in the long term.
June 30, 2022 | December 31, 2021 | |||
Debt contracts | 11,031 | 12,180 | ||
Leases | 1,577 | 1,602 | ||
Total of loans, borrowings and leases | 12,608 | 13,782 | ||
(-) Cash and cash equivalents | 7,185 | 11,721 | ||
(-) Short-term investments | 48 | 184 | ||
Net debt | 5,375 | 1,877 |
33
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
b) Cash and cash equivalents
Cash and cash equivalents include cash, immediately redeemable deposits, and short-term investments with an insignificant risk of change in value and readily convertible to cash, being US$3,389 (US$6,714 in 2021) denominated in R$, indexed to the CDI, US$2,993(US$4,769 in 2021) denominated in US$ and US$803 (US$238 in 2021) denominated in other currencies as of June 30, 2022.
c) Short-term investments
As of June 30, 2022, the balance of US$48 (US$184 as of December 31, 2021) substantially comprises investments in exclusive investment fund immediately liquidity, whose portfolio is composed of committed transactions and Financial Treasury Bills (“LFTs”), which are floating-rate securities issued by the Brazilian government.
d) Loans, borrowings, and leases
i) Total debt
Current liabilities | Non-current liabilities | |||||||||
Average interest rate (i) | June 30, 2022 | December 31, 2021 | June 30, 2022 | December 31, 2021 | ||||||
Quoted in the secondary market: | ||||||||||
US$ Bonds | 6.00% | - | - | 6,158 | 7,448 | |||||
R$ Debentures (ii) | 11.41% | 202 | 186 | 197 | 201 | |||||
Debt contracts in Brazil in (iii): | ||||||||||
R$, indexed to TJLP, TR, IPCA, IGP-M and CDI | 10.93% | 64 | 95 | 253 | 259 | |||||
R$, with fixed interest | 2.78% | 6 | 12 | - | 1 | |||||
Basket of currencies and bonds in US$ indexed to LIBOR | - | - | 11 | - | - | |||||
Debt contracts in the international market in: | ||||||||||
US$, with variable and fixed interest | 3.12% | 354 | 479 | 3,558 | 3,136 | |||||
Other currencies, with variable interest | 4.10% | - | 77 | 10 | 10 | |||||
Other currencies, with fixed interest | 3.58% | 12 | 12 | 82 | 95 | |||||
Accrued charges | 135 | 158 | - | - | ||||||
Total | 773 | 1,030 | 10,258 | 11,150 |
(i) In order to determine the average interest rate for debt contracts with floating rates, the Company used the rate applicable as of June 30, 2022.
(ii) The Company has debentures in Brazil that were raised with BNDES for infrastructure investment projects.
(iii) The Company contracted derivatives to mitigate the exposure to changes in cash flows of debt contracted in Brazil, resulting in an average cost of 3.46% per year in US$.
Future flows of debt payments, principal and interest
Principal | Estimated future interest payments (i) | |||
2022 | 568 | 276 | ||
2023 | 105 | 563 | ||
2024 | 611 | 531 | ||
2025 | 152 | 484 | ||
Between 2026 and 2030 | 3,536 | 1,610 | ||
2031 onwards | 5,924 | 2,376 | ||
Total | 10,896 | 5,840 |
(i) Based on interest rate curves and foreign exchange rates applicable as of June 30, 2022 and considering that the payments of principal will be made on their contracted payments dates. The amount includes the estimated interest not yet accrued and the interest already recognized in the financial statements.
Covenants
Some of the Company’s debt agreements with lenders contain financial covenants. The primary financial covenants in those agreements require maintaining certain ratios, such as debt to EBITDA, which is defined in note 4, and interest coverage. The Company did not identify any instances of noncompliance as of June 30, 2022.
34
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Reconciliation of debt to cash flows arising from financing activities
Quoted in the secondary market | Debt contracts in Brazil | Debt contracts on the international market | Total | |||||
December 31, 2021 | 7,974 | 380 | 3,826 | 12,180 | ||||
Additions | - | - | 625 | 625 | ||||
Repayments | (1,317) | (174) | (337) | (1,828) | ||||
Interest paid (i) | (388) | (37) | (31) | (456) | ||||
Cash flow from financing activities | (1,705) | (211) | 257 | (1,659) | ||||
Effect of exchange rate | 71 | 77 | (76) | 72 | ||||
Interest accretion | 318 | 89 | 31 | 438 | ||||
Non-cash changes | 389 | 166 | (45) | 510 | ||||
June 30, 2022 | 6,658 | 335 | 4,038 | 11,031 |
(i) Classified as cash flow due to operational activities.
Funding and repayments
In January 2022, the Company contracted two credit lines of US$425 with The Bank of Nova Scotia, indexed to Libor and maturing in 2027. The Company prepaid US$200 of a line of credit maturing in 2023 with the same bank.
In May 2022, the Company contracted the credit line of US$200 with MUFG Bank indexed to Secured Overnight Financing Rate (“SOFR”) and maturing in 2027.
In January 2021, the Company contracted the credit line of US$300 with The New Development Bank maturing in 2035 and indexed to Libor + 2.49% per year.
Bond tender offers
In June 2022, the Company repurchased US$1,291 of its Bonds and paid a premium of US$113, which has been recorded and is presented as “Bond premium repurchase” under the financial results for the six-month period ended June 30, 2022.
In March 2021, the Company redeemed all of its 3.750% bonds due January 2023, in the total amount of US$884 (EUR750 million) and paid a premium of US$63, which was recorded and is presented as “Bond premium repurchase” under the financial results for the six-month period ended June 30, 2021.
Lease liabilities
December 31, 2021 | Additions and contract modifications | Payments (i) | Interest | Transfer to liabilities held for sale | Translation adjustment | June 30, 2022 | ||||||||
Ports | 713 | 1 | (36) | 14 | (17) | 10 | 685 | |||||||
Vessels | 489 | - | (31) | 9 | - | (1) | 466 | |||||||
Pelletizing plants | 225 | 15 | (2) | 6 | - | 13 | 257 | |||||||
Properties | 103 | 13 | (22) | 1 | - | 7 | 102 | |||||||
Energy plants | 59 | - | (3) | 1 | - | - | 57 | |||||||
Mining equipment | 13 | - | (4) | 1 | - | - | 10 | |||||||
Total | 1,602 | 29 | (98) | 32 | (17) | 29 | 1,577 | |||||||
Current liabilities | 174 | - | - | - | - | - | 162 | |||||||
Non-current liabilities | 1,428 | - | - | - | - | - | 1,415 | |||||||
Total | 1,602 | - | - | - | - | - | 1,577 |
(i) The total amount of the variable lease payments not included in the measurement of the lease liabilities for the six-month period ended June 30, 2022 was US$143 (2021: US$111).
Annual minimum payments and remaining lease term
The following table presents the undiscounted lease obligation by maturity date. The lease liability recognized in the balance sheet is measured at the present value of such obligations.
2022 | 2023 | 2024 | 2025 | 2026 onwards | Total | Remaining contractual term (years) | Discount rate | |||||||||
Ports | 34 | 65 | 64 | 63 | 743 | 969 | 2 to 21 | 3% to 6% | ||||||||
Vessels | 32 | 62 | 60 | 59 | 345 | 558 | 3 to 11 | 3% to 4% | ||||||||
Pelletizing plants | 50 | 50 | 41 | 41 | 117 | 299 | 2 to 11 | 2% to 5% | ||||||||
Properties | 16 | 24 | 21 | 13 | 42 | 116 | 2 to 8 | 2% to 6% | ||||||||
Energy plants | 3 | 6 | 6 | 6 | 55 | 76 | 8 | 4% to 6% | ||||||||
Mining equipment | 1 | 4 | 3 | 3 | 1 | 12 | 2 to 6 | 2% to 6% | ||||||||
Total | 136 | 211 | 195 | 185 | 1,303 | 2,030 |
35
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
e) Guarantees
As of December 31, 2021, loans and borrowings were secured by property, plant and equipment in the amount of US$82, which ended as of June 30, 2022.
On January 25, 2019, a tailings dam (“Dam I”) failed at the Córrego do Feijão mine, in the city of Brumadinho, State of Minas Gerais. The failure released a flow of tailings debris, destroying some of Vale’s facilities, affecting local communities and disturbing the environment. The tailings released have caused an impact of around 315 km in extension, reaching the nearby Paraopeba River. The dam failure in Brumadinho (“event”) resulted in 270 fatalities or presumed fatalities, including 4 victims still missing, and caused extensive property and environmental damage in the region.
As a result, on February 4, 2021, the Company entered into a Judicial Settlement for Integral Reparation (“Global Settlement”), which was under negotiations since 2019, with the State of Minas Gerais, the Public Defender of the State of Minas Gerais and the Federal and the State of Minas Gerais Public Prosecutors Offices, to repair the environmental and social damage resulting from the Dam I rupture.
Changes on the provisions in the period
Consolidated | ||||||||||||
December 31, 2021 | Operating expense | Present value adjustment | Disbursements | Translation adjustment | June 30, 2022 | |||||||
Global Settlement for Brumadinho | ||||||||||||
Payment obligations | 1,427 | - | 76 | (239) | 107 | 1,371 | ||||||
Provision for socio-economic reparation and others | 852 | - | 19 | (30) | 60 | 901 | ||||||
Provision for social and environmental reparation | 705 | - | 68 | (12) | 37 | 798 | ||||||
2,984 | - | 163 | (281) | 204 | 3,070 | |||||||
Commitments | ||||||||||||
Tailings containment and geotechnical safety | 318 | 126 | (1) | (44) | 19 | 418 | ||||||
Individual indemnification | 115 | - | - | (46) | 8 | 77 | ||||||
Other commitments | 120 | - | (1) | (12) | 8 | 115 | ||||||
553 | 126 | (2) | (102) | 35 | 610 | |||||||
3,537 | 126 | 161 | (383) | 239 | 3,680 | |||||||
Current liabilities | 1,156 | - | - | - | - | 1,060 | ||||||
Non-current liabilities | 2,381 | - | - | - | - | 2,620 | ||||||
Liabilities | 3,537 | - | - | - | - | 3,680 | ||||||
Discount rate | 8.08% | 8.75% | ||||||||||
The Company has incurred expenses, which have been recognized straight to the income statement, in relation to communication services, accommodation and humanitarian assistance, equipment, legal services, water, food aid, taxes, among others. In the three and six-month periods ended June 30, 2022, the Company incurred expenses in the amounts of US$154 and US$277, respectively (2021: US$185 and US$300, respectively).
a) Global Settlement for Brumadinho
The Global Agreement includes: (i) payment obligations, of which the funds will be used directly by the State of Minas Gerais and Institutions of Justice for socio-economic and socio-environmental compensation projects; (ii) socioeconomic projects in Brumadinho and other municipalities; and (iii) compensation of the environmental damage caused by the dam rupture.
Measures (i) and (ii) will be carried out directly by the Company for an average period of 5 years. Although the agreement specifies an amount for each project, the project execution is under Vale's responsibility and changes in the original budget and deadlines may have an impact in the provision. In addition, despite the amount set by Global Settlement to carry out the environmental recovery actions, it has no cap due to the Company's legal obligation to fully repair the environmental damage caused by the dam rupture. Therefore, despite the fact Vale is monitoring this provision, the amount recorded could materially change depending on several factors that are not under the Company’s control.
36
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
b) Contingencies and other legal matters
(b.i) Public civil actions brought by the State of Minas Gerais and state public prosecutors for damages resulting from the rupture of Dam I
The Company is party to public civil actions brought by the State of Minas Gerais and justice institutions, claiming compensation for socioeconomic and socio-environmental damages resulting from the dam failure and seeking a broad range of preliminary injunctions ordering Vale to take specific remediation and reparation actions. As a result of the Global Settlement, the requests for the reparation of socio-environmental and socioeconomic damages caused by the dam rupture were substantially resolved. Indemnifications for individual damages was excluded from the Global Settlement, and the parties ratified the agreement with the Public Defendants of the State of Minas Gerais. Thus, the Company is continuing to enter into individual agreements.
(b.ii) Collective Labor Civil Action
In 2021, public civil actions were filed in the Betim Labor Court in the State of Minas Gerais, by a workers' union claiming the payment of compensation for death damages to own and outsourced employees, who died as a result of the rupture of Dam I. An initial sentence was published condemning Vale to pay US$191 thousand (R$1 million) per fatal victim. Vale is defending itself on the lawsuits and understands that the likelihood of loss is possible.
(b.iii) U.S. Securities putative class action suit
Vale is defending itself in a putative class action brought before a Federal Court in New York and filed by holders of securities - American Depositary Receipts ("ADRs") - issued by Vale. The Lead Plaintiff alleges that Vale made false and misleading statements or omitted to make disclosures concerning the risks of the operations of Dam I in the Córrego de Feijão mine and the adequacy of the related programs and procedures. Following the decision of the Court, in May 2020, that denied the Motion to Dismiss presented by the Company, the Discovery phase has started and is expected to be concluded in 2022.
On November 24, 2021, a new Complaint was filed before the same Court by eight Plaintiffs, all investment funds, as an “opt-out” litigation from the putative class action already pending in the Eastern District of New York court, asserting virtually the same claims against the same defendants as those in the putative class case.
Based on the evaluation of the Company's legal counsel and given the very preliminary stage, the expectation of loss of these processes is classified as possible. However, considering the initial stage of this putative class action, it is not possible at this time to reliably estimate the amount of a potential loss. The Plaintiff did not specify the amounts alleged in this demand.
(b.iv) Arbitration proceedings in Brazil filed by minority stockholders and a class association
In Brazil, Vale is a defendant in (i) one arbitration filed by 385 minority stockholders, (ii) two arbitrations filed by a class association allegedly representing all Vale’s minority stockholders, and (iii) three arbitrations filed by foreign investment funds.
In the six proceedings, the Claimants argue Vale was aware of the risks associated with the dam, and failed to disclose it to the stockholders, which would be required under the Brazilian applicable laws and the rules of Comissão de Valores Mobiliários (Securities and Exchange Commission in Brazil). Based on such argument, they claim compensation for losses caused by the decrease of the value of the shares.
Based on the assessment of the Company's legal advisors, the expectation of loss is classified as possible for the six procedures and, considering the initial phase, it is not possible at this time to reliably estimate the amount of a possible loss.
In one of the proceedings filed by foreign funds, the Claimants initially estimated the amount of the alleged losses would be approximately US$344 (R$1,800 million). In another proceeding filed by foreign funds, the Claimants initially estimated the amount of the alleged losses would be approximately US$745 (R$3,900 million). The Company disagrees with the ongoing proceedings and understands that, in this case and at the current stage of the proceedings, the probability of loss in the amount claimed by the foreign funds is remote.
37
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
(b.v) Investigations conducted by CVM and the Securities and Exchange Commission (“SEC”)
On April 28, 2022, SEC filed a suit against Vale alleging violations of U.S. securities laws arising from Vale’s disclosures about its dam safety management, including the dam at Brumadinho. The SEC could seek the imposition of civil monetary penalties, disgorgement and other relief within the SEC’s authority in a lawsuit filed in a federal court. Vale believes that its disclosures did not violate U.S. law and will contest such allegations. Considering that the lawsuit is in its initial phase, it is not yet possible to reliably estimate the amount of a possible loss to the Company.
CVM is also conducting investigations relating to Vale's disclosure of relevant information to shareholders, investors and the market in general, especially regarding the conditions and management of Vale's dams. Currently, it is not possible to reliably estimate the amount of a possible loss to the Company.
(b.vi) Criminal proceedings and investigations
In January 2020, the State Prosecutors of Minas Gerais (“MPMG”) filed criminal charges against 16 individuals (including former executive officers of Vale and former employees) for a number of potential crimes, including homicide, and against Vale S.A. for alleged environmental crimes. In November 2021, the Brazilian Federal Police concluded an investigation on potential criminal liability for the Brumadinho dam rupture. The investigation has been sent to the Federal Public Prosecutors (“MPF”), which has not brought criminal charges against Vale. The MPF and the Brazilian Federal Police conducted a separate investigation into the causes of the dam rupture in Brumadinho, which may result in new criminal proceedings. Vale is defending itself against the criminal claims and is no possible to estimate when a decision will be issued.
c) Insurance
The Company is negotiating with insurers the payment of indemnification under its civil liability and Directors and Officers Liability Insurance. However, these negotiations are still in progress, therefore any payment of insurance proceeds will depend on the coverage definitions under these policies and assessment of the amount of loss. Due to uncertainties, no indemnification related to these insurers was recognized in these financial statements.
22. Liabilities related to associates and joint ventures
a) Rupture of Samarco dam
In November 2015, the Fundão tailings dam owned by Samarco Mineração S.A. (Samarco) failed, releasing tailings downstream, flooding certain communities and causing impacts on communities and the environment along the Doce river. The rupture resulted in 19 fatalities and caused property and environmental damage to the affected areas. Samarco is a joint venture equally owned by Vale S.A. and BHP Billiton Brasil Ltda. (‘‘BHPB’’).
In June 2016, Samarco, Vale and BHPB created the Renova Foundation, a not-for-profit private foundation, to develop and implement (i) social and economic remediation and compensation programs and (ii) environmental remediation and compensation programs in the region affected by the dam rupture. The creation of Renova Foundation was provided for under the agreement for settlement and conduct adjustment (the ‘‘Framework Agreement’’) signed in March 2016 by Vale, BHPB, Samarco, the Brazilian federal government, the two Brazilian states affected by the rupture (Minas Gerais and Espírito Santo) and other governmental authorities.
In June 2018, Samarco, Vale and BHPB entered into a comprehensive agreement with the offices of the federal and state (Minas Gerais and Espírito Santo) prosecutors, public defenders and attorney general, among other parties (“Tac Gov Agreement”), improving the governance mechanism of Renova Foundation and establishing, among other things, a process for potential revisions to the remediation programs provided under the Framework Agreement.
Judicial recovery of Samarco
Under the Framework Agreement, the Tac Gov Agreement and Renova’s bylaws, Renova Foundation must be funded by Samarco, but to the extent that Samarco is unable to fund, Vale and BHPB must ratably bear the funding requirements Under the Framework Agreement.
38
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
In April 2021, Samarco announced the request for Judicial Reorganization (“RJ”) that was filed with the Minas Gerais Court to renegotiate its debt, which is held by bondholders abroad. The purpose of RJ is to restructure Samarco’s debts and establish an independent and sustainable financial position, allowing Samarco to keep working to resume its operations safely and to fulfill its obligations related to the Renova Foundation.
The RJ does not affect Samarco’s obligation to remediate and compensate the impacts of the Fundão tailings dam failure. However, as Samarco began the gradual resumption of operations in December 2020, it is not yet possible to reliably estimate when Samarco will generate cash to comply with its assumed obligation in the Framework Agreement. Thus, the liability recorded by Vale as of June 30, 2022 is recognized based on the assumption that Samarco does not have the capacity to generate cash enough to make all cash contributions to the Renova Foundation.
In addition, the ongoing discussions in the context of the RJ may lead to the loss of deductibility of part of the expenses incurred with the Renova Foundation and of the deferred taxes over the total provision, depending on the method determined for restructuring Samarco's debts. As of June 30, 2022, the exposure is US$1,565 (R$8,198 million), of which US$480 (R$2,516 million) are expenses already incurred and considered as part of the Company’s uncertain tax positions.
The Company is working in the perspective that the mechanisms resulting from the RJ will continue allowing the deductibility of these expenses. However, future decisions resulting from the negotiations regarding Samarco's capital structure, which are not under Vale's control, could materially change the deferred tax recognized by the Company.
b) Changes on the provisions in the period
2022 | 2021 | |||
Balance at January 1, | 3,112 | 2,074 | ||
Additional provision | 89 | 560 | ||
Disbursements | - | (137) | ||
Present value adjustment | (17) | (71) | ||
Translation adjustment | 202 | 65 | ||
Balance at June 30, | 3,386 | 2,491 | ||
June 30, 2022 | December 31, 2021 | |||
Current liabilities | 1,783 | 1,785 | ||
Non-current liabilities | 1,603 | 1,327 | ||
Liabilities | 3,386 | 3,112 |
c) Renova
During the second quarter of 2022, Renova Foundation reviewed the assumptions used on the preparation of the estimates incorporated into the mitigation and compensation programs mainly due recent judicial decisions increasing the scope of some TTAC programs. The periodic review, resulted in an additional provision of US$89 (2021: US$560), which corresponds to its portion of the responsibility to support Renova Foundation.
d) Germano Dam
In addition to the Fundão tailings dam, Samarco owns the Germano dam, which was also built under the upstream method and has been inactive since the Fundão dam rupture. Due to the safety requirements set by the Brazilian National Mining Agency (“Agência Nacional de Mineração – ANM”), Samarco prepared a project for the de-characterization of this dam, resulting in a provision for the de-characterization of the Germano tailings dam. As of June 30, 2022, Vale has a provision for de-characterization of Germano tailings dam in the amount of US$195 (2021: US$202).
e) Samarco’s working capital
In addition to the provision, Vale S.A. made available US$21 during the six-month period ended June 30, 2021, which was fully used to fund Samarco’s working capital. This amount was recognized in Vale´s income statement as an expense in “Equity results and other results in associates and joint ventures”. In 2022, Vale was not required to fund Samarco’s working capital.
39
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
f) Contingencies related to Samarco accident
These proceedings include public civil actions brought by Brazilian authorities and multiple proceedings involving claims for significant amounts of damages and remediation measures. The Framework Agreements represents a model for the settlement of the public civil action brought by the MPF and other related proceedings. There are also putative securities class actions in the United States against Vale and some of its current and former officers and a criminal proceeding in Brazil. The main updates regarding the lawsuits in the period were as follows:
(f.i) Public Civil Action filed by the Federal Government and others and public civil action filed by the Federal Public Prosecutors ("MPF")
The Tac Gov Agreement estates a possible renegotiation of Renova Foundation's reparation programs upon the completion of studies carried by specialists. This issue motivated the request for the resumption of the Public Civil Action, by the MPF.
In October 2020, the MPF requested the resumption of its public civil action of US$30 billion (R$155 billion), due to a difficulty in hiring of technical advisors. Discussion for the renegotiation began in April 2021, and a letter of principles was finalized and signed in June 2021 by the companies Vale, BHPB and Samarco, as well as representatives of the Government and various Justice Institutions.
During the current quarter, the Company has made significant progress in the negotiations with the relevant authorities to sign an agreement which would provide a stable framework for the execution of reparation and compensation programs. Although it is not possible to determine at this time, the Company expects to reach an agreement in the foreseeable future and, based on the current terms under discussion, it would not result in any additional provision.
(f.ii) Criminal proceeding
In September 2019, the federal court of Ponte Nova dismissed all criminal charges against Vale representatives relating to the first group of charges, which concerns the results of the Fundão dam failure, remaining only the legal entity in the passive pole. The second group of charges against Vale S.A. and one of the Company’s employees, which concerns the accusation of alleged crimes committed against the Environmental Public Administration, remained unchanged. The Company cannot estimate when a final decision on the case will be issued.
g) Insurance
Since the Fundão dam rupture, the Company negotiated with insurers the indemnification payments based on its general liability policies. As of June 30, 2021, the Company received US$33, which was recorded as a gain in the income statement as “Equity results and other results in associates and joint ventures”. The Company did not receive any further insurance in 2022 and does not expect to receive any material amounts in the future.
23. Provision for de-characterization of dam structures and asset retirement obligations
The Company is subject to laws and regulations that requires the decommissioning of the assets and mines sites at the end of the operation and, therefore, decommissioning expenditures are incurred predominantly when the Company ceases the operating activities. Depending on the geotechnical characteristics of the structures, the Company is required to de-characterize the structures, as described below.
a) De-characterization of upstream and centerline geotechnical structures
As a result of the Brumadinho dam rupture (note 21), the Company has decided to speed up the plan to “de-characterize” all of its tailings dams built under the upstream method, certain “centerline structures” and dikes, located in Brazil. The Company also operates tailings dams in Canada, including upstream compacted dams, however, there are no safety, technical or regulatory reasons for these dams to be de-characterized. Therefore, these dams will be decommissioned using other methods, thus, the provision to execute decommissioning of dams in Canada is recognized as “Asset retirement obligations and environmental obligations”, presented in item (b) below.
In September 2020, the federal government enacted Law no. 14,066, which modified the National Dam Safety Policy (Law no. 12,334/2020), reinforcing the prohibition of constructing and raising upstream dams in Brazil. The statute also requires companies to de-characterize the structures built using the upstream method by 2022, or by a later date if it is proven that the de-characterization is not technically feasible by 2022. A substantial part of the Company's de-characterization projects will be completed in 15 years, which exceeds the date established in the regulation due to the characteristics and safety levels of the Company's geotechnical structures.
40
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Thus, in February 2022, the Company filed with the relevant bodies a request for an extension to perform the projects and, as a result, signed a Term of Commitment establishing legal and technical certainty for the process of de-characterization of the upstream dams, considering that the deadline defined was technically unfeasible, especially due to the necessary actions to increase safety during the works. With the signing of the agreement, the Company recorded an additional provision of US$37 to make investments in social and environmental projects over a period of 8 years.
Changes on the provisions in the period
2022 | 2021 | |||
Balance at January 1, | 3,523 | 2,289 | ||
Additional provision | 37 | - | ||
Disbursements | (152) | (163) | ||
Present value adjustment | (104) | (43) | ||
Translation adjustment | 240 | 72 | ||
Balance at June 30, | 3,544 | 2,155 | ||
June 30, 2022 | December 31, 2021 | |||
Current liabilities | 474 | 451 | ||
Non-current liabilities | 3,070 | 3,072 | ||
Liabilities | 3,544 | 3,523 |
In addition, due to the de-characterization projects, the Company has suspended some operations due to judicial decisions or technical analysis performed by Vale on its upstream dam structures located in Brazil. The Company has been recording losses in relation to the operational stoppage and idle capacity of the ferrous mineral segment in the amounts of US$161 for the period ended June 30, 2022 (2021: US$193). The Company is working on legal and technical measures to resume all operations at full capacity.
b) Asset retirement obligations and environmental obligations
Liability | Discount rate | |||||||||
June 30, 2022 | December 31, 2021 | June 30, 2022 | December 31, 2021 | Cash Flow duration | ||||||
Liability by geographical area | ||||||||||
Brazil | 1,382 | 1,398 | 6.01% | 5.48% | 2119 | |||||
Canada | 1,602 | 2,727 | 1.31% | 0.00% | 2151 | |||||
Oman | 123 | 123 | 4.21% | 3.03% | 2035 | |||||
Indonesia | 70 | 77 | 4.48% | 4.20% | 2061 | |||||
Other | 209 | 255 | 0.01 - 2.23% | 0.00 - 7.79% | - | |||||
3,386 | 4,580 |
Changes on the provisions in the period
2022 | 2021 | |||||||||||
Asset retirement obligations | Environmental obligations | Total | Asset retirement obligations | Environmental obligations | Total | |||||||
Balance at January 1, | 4,283 | 297 | 4,580 | 4,220 | 302 | 4,522 | ||||||
Present value adjustment (i) | (1,159) | (4) | (1,163) | (213) | 13 | (200) | ||||||
Disbursements | (42) | (28) | (70) | (22) | (17) | (39) | ||||||
Revisions on projected cash flows | 40 | (1) | 39 | - | - | - | ||||||
Translation adjustment | 33 | 18 | 51 | 92 | 11 | 103 | ||||||
Transfer to assets held for sale (note 14) | (49) | (2) | (51) | - | - | - | ||||||
Balance at June 30, | 3,106 | 280 | 3,386 | 4,077 | 309 | 4,386 | ||||||
June 30, 2022 | December 31, 2021 | |||||||||||
Asset retirement obligations | Environmental obligations | Total | Asset retirement obligations | Environmental obligations | Total | |||||||
Current | 106 | 112 | 218 | 72 | 98 | 170 | ||||||
Non-current | 3,000 | 168 | 3,168 | 4,211 | 199 | 4,410 | ||||||
Liability | 3,106 | 280 | 3,386 | 4,283 | 297 | 4,580 |
(i) Mainly refers to the increase in the discount rate of the asset retirement obligation in Canada, which increased from 0.00% to 1.31% in the six-month period ended June 30, 2022. The adjustment in provision was recorded as the property, plant and equipment (note 16).
41
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
c) Financial guarantees
The Company has issued letters of credit and surety bonds of US$604 as of June 30, 2022 (2021: US$605), in connection with the asset retirement obligations for its Base Metals operations.
Current liabilities | Non-current liabilities | |||||||
June 30, 2022 | December 31, 2021 | June 30, 2022 | December 31, 2021 | |||||
Provisions for litigation (note 25) | 109 | 93 | 1,124 | 1,012 | ||||
Employee post-retirement obligations (note 26) | 106 | 99 | 1,353 | 1,533 | ||||
Payroll, related charges and other remunerations | 574 | 816 | - | - | ||||
Onerous contracts | 46 | 37 | - | 874 | ||||
835 | 1,045 | 2,477 | 3,419 |
The Company is defendant in numerous legal actions in the ordinary course of business, including civil, tax, environmental and labor proceedings.
The Company makes use of estimates to recognize the amounts and the probability of outflow of resources, based on reports and technical assessments and on management’s assessment. Provisions are recognized for probable losses of which a reliable estimate can be made.
Arbitral, legal and administrative decisions against the Company, new jurisprudence and changes of existing evidence can result in changes regarding the probability of outflow of resources and on the estimated amounts, according to the assessment of the legal basis.
a) Provision for legal proceedings
The Company has considered all information available to assess the likelihood of an outflow of resources and in the preparation on the estimate of the costs that may be required to settle the obligations.
Tax litigations - Mainly refers to the lawsuit filed in 2011 by Valepar (merged by Vale) seeking the right to exclude the amount of dividends received in the form of interest on stockholders’ equity (“JCP”) from the PIS and COFINS tax base. The amount reserved for this proceeding as of June 30, 2022 is US$440 (2021: US$402). This proceeding is guaranteed by a judicial deposit in the amount of US$509 recorded as of June 30, 2022 (2021: US$463).
Civil litigations - Refers to lawsuits for: (i) indemnities for losses, payments and contractual fines due to contractual imbalance or non-compliance that are alleged by suppliers, and (ii) land claims referring to real estate Vale's operational activities.
Labor litigations - Refers to lawsuits for individual claims by in-house employees and service providers, primarily involving demands for additional compensation for overtime work, moral damages or health and safety conditions.
Environmental litigations - Refers mainly to proceedings for environmental damages and issues related to environmental licensing.
42
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
Tax litigation | Civil litigation | Labor litigation | Environmental litigation | Total of litigation provision | ||||||
Balance at December 31, 2021 | 456 | 284 | 358 | 7 | 1,105 | |||||
Additions and reversals, net | 2 | 24 | 32 | 6 | 64 | |||||
Payments | (1) | (26) | (25) | - | (52) | |||||
Indexation and interest | 14 | 28 | 14 | - | 56 | |||||
Translation adjustment | 29 | 15 | 25 | 1 | 70 | |||||
Held for sale (note 14) | (1) | (7) | (2) | - | (10) | |||||
Balance at June 30, 2022 | 499 | 318 | 402 | 14 | 1,233 | |||||
Current liabilities | 15 | 23 | 64 | 6 | 108 | |||||
Non-current liabilities | 484 | 295 | 338 | 8 | 1,125 | |||||
499 | 318 | 402 | 14 | 1,233 | ||||||
Tax litigation | Civil litigation | Labor litigation | Environmental litigation | Total of litigation provision | ||||||
Balance at December 31, 2020 | 485 | 260 | 335 | 11 | 1,091 | |||||
Additions and reversals, net | (2) | (1) | 46 | 1 | 44 | |||||
Payments | - | (15) | (29) | (4) | (48) | |||||
Indexation and interest | 3 | 10 | 23 | - | 36 | |||||
Acquisition of NLC (note 14a) | - | 1 | 5 | - | 6 | |||||
Translation adjustment | 19 | 11 | 17 | - | 47 | |||||
Balance at June 30, 2021 | 505 | 266 | 397 | 8 | 1,176 | |||||
Current liabilities | 9 | 17 | 76 | - | 102 | |||||
Non-current liabilities | 496 | 249 | 321 | 8 | 1,074 | |||||
505 | 266 | 397 | 8 | 1,176 |
b) Contingent liabilities
June 30, 2022 | December 31, 2021 | |||
Tax litigations | 6,180 | 5,177 | ||
Civil litigations | 1,392 | 1,503 | ||
Labor litigations | 530 | 516 | ||
Environmental litigations | 1,052 | 954 | ||
Total | 9,154 | 8,150 |
In addition, as reported in the annual financial statements for 2021, the Company is a counterparty in several actions and the main updates on contingent liabilities since then, are discussed as follows:
(b.i) Tax proceedings - PIS/COFINS
The Company is a party to several collections related to the alleged improper use of PIS and COFINS credits (federal taxes levied on the companies' gross revenue). Brazilian tax legislation authorizes taxpayers to use PIS and COFINS tax credits, such as those referring to the acquisition of inputs for the production process and other items. The tax authorities mainly claim that (i) some credits were not related to the production process, and (ii) the right to use the tax credits was not adequately proven. In the current period the Company received new proceedings in the amount of US$395 (R$2,070 million), for which the likelihood of loss is deemed possible.
(b.ii) Tax proceedings - Value added tax on services and circulation of goods (“ICMS”)
Vale is engaged in several administrative and court proceedings relating to additional charges of ICMS by the tax authorities of different Brazilian states. In each of these proceedings, the tax authorities claim that (i) use of undue tax credit; (ii) failing to comply with certain accessory obligations; (iii) the Company is required to pay the ICMS on acquisition of electricity (iv) operations related to the collection of tax rate differential (“DIFAL”) and (v) incidence of ICMS on its own transportation. During 2022, the Company received new proceedings in the amount of US$86 (R$453 million), for which the likelihood of loss is deemed possible.
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Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
c) Judicial deposits
June 30, 2022 | December 31, 2021 | |||
Tax litigations | 1,042 | 957 | ||
Civil litigations | 118 | 100 | ||
Labor litigations | 143 | 141 | ||
Environmental litigations | 25 | 22 | ||
Total | 1,328 | 1,220 |
d) Guarantees contracted for legal proceedings
In addition to the above-mentioned tax, civil, labor and environmental judicial deposits, the Company contracted US$2.2 billion in guarantees for its lawsuits, as an alternative to judicial deposits.
26. Employee post-retirement obligations
a) Long-term incentive programs
The Company has long-term reward mechanisms that include the Matching Program and the Performance Shares Units (“PSU”) for eligible executives to retain and stimulate their performance.
On March 30, 2022, a new Matching program started and the fair value estimate was based on the Company's share price and their respective ADRs at the grant date, which was R$95.87 and US$20.03 per share. The Company will grant 1,437,588 shares for the new cycle (2021: 1,046,255 shares). The fair value of the program will be recognized on a straight-line basis over the required three-month period of service, net of estimated losses.
b) Reconciliation of assets and liabilities recognized in the balance sheet
June 30, 2022 | December 31, 2021 | |||||||||||
Overfunded pension plans | Underfunded pension plans | Other benefits | Overfunded pension plans | Underfunded pension plans | Other benefits | |||||||
Balance at beginning of the period | 919 | - | - | 864 | - | - | ||||||
Interest income | 5 | - | - | 58 | - | - | ||||||
Changes on asset ceiling | 240 | - | - | 60 | - | - | ||||||
Translation adjustment | 59 | - | - | (63) | - | - | ||||||
Balance at end of the period | 1,223 | - | - | 919 | - | - | ||||||
Amount recognized in the balance sheet | ||||||||||||
Present value of actuarial liabilities | (5,386) | (621) | (1,175) | (2,833) | (3,983) | (1,428) | ||||||
Fair value of assets | 6,609 | 337 | - | 3,752 | 3,779 | - | ||||||
Effect of the asset ceiling | (1,223) | - | - | (919) | - | - | ||||||
Liabilities | - | (284) | (1,175) | - | (204) | (1,428) | ||||||
Current liabilities | - | (41) | (65) | - | (47) | (52) | ||||||
Non-current liabilities | - | (243) | (1,110) | - | (157) | (1,376) | ||||||
Liabilities | - | (284) | (1,175) | - | (204) | (1,428) |
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Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
a) Share capital
As of June 30, 2022, the share capital was US$61,614 corresponding to 4,999,040,063 shares issued and fully paid without par value.
June 30, 2022 | ||||||
Stockholders | Common shares | Golden shares | Total | |||
Shareholders with more than 5% of total capital | 1,319,727,671 | - | 1,319,727,671 | |||
Previ | 411,270,356 | - | 411,270,356 | |||
Capital World Investors | 319,508,101 | - | 319,508,101 | |||
Blackrock, Inc | 302,602,159 | - | 302,602,159 | |||
Mitsui&co | 286,347,055 | - | 286,347,055 | |||
Free floating | 3,271,534,308 | - | 3,271,534,308 | |||
Golden shares | - | 12 | 12 | |||
Total outstanding (without shares in treasury) | 4,591,261,979 | 12 | 4,591,261,991 | |||
Shares in treasury | 407,778,072 | - | 407,778,072 | |||
Total capital | 4,999,040,051 | 12 | 4,999,040,063 |
b) Cancellation of treasury shares
On February 24, 2022, the Board of Directors approved the cancellation of 133,418,347 common shares issued by the Company and held in treasury, without reducing the value of its share capital. The effect of US$2,830 was recorded in shareholders' equity as “Treasury shares used and cancelled” for the six-month period ended June 30, 2022.
On July 28, 2022 (subsequent event), the Board of Directors approved the cancellation of 220,150,800 common shares issued by the Company and held in treasury, without reducing the value of its share capital.
c) Remuneration approved
On February 24, 2022, the Board of Directors approved the remuneration to shareholders in the amount of US$3,500, which was fully paid on March 16, 2022.
On July 28, 2022 (subsequent event), the Board of Directors approved the stockholder’s remuneration in the total amount of US$3,000, which will be paid in September 2022.
On February 25, 2021, based on the Company’s dividends policy, the Board of Directors approved the stockholder’s remuneration in the amount of US$3,972, which was fully paid on March 15, 2021.
On June 17, 2021, the Board of Directors approved an additional stockholder’s remuneration in the total amount of US$2,200, which was fully paid on June 30, 2021.
d) Share buyback
In 2021, the Board of Directors approved a share buyback program to repurchase 470,000,000 common shares up to 18 months. These programs were concluded and the Company repurchased 178,815,500 common shares and their respective ADRs during the six-month period ended June 30, 2022, corresponding to US$3,251, of which US$1,750 were acquired through wholly owned subsidiaries and US$1,501 by the Parent Company (2021: 93,088,200 shares, corresponding to US$2,004). As of June 30, 2022, the subsidiaries hold 189,153,851 shares, corresponding to US$3,290, and the remaining shares were transferred to the Parent Company.
On May 16, 2022, the Company approved a new share buyback program to repurchase 500,000,000 common shares and their respective ADRs over the next 18 months. During the six-month period ended June 30, 2022, the Company repurchased 70,443,798 common shares and their respective ADRs, corresponding to US$1,133, of which US$606 were acquired through wholly owned subsidiaries and US$527 by the Parent Company.
45
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
The Company’s related parties are subsidiaries, joint ventures, associates, stockholders and its related entities and key management personnel of the Company.
Related party transactions were made by the Company on terms equivalent to those that prevail in arm´s-length transactions, with respect to price and market conditions that are no less favorable to the Company than those arranged with third parties.
Net operating revenue relates to sale of iron ore to the steelmakers and right to use capacity on railroads. Cost and operating expenses mostly relates to the variable lease payments of the pelletizing plants.
Purchases, accounts receivable and other assets, and accounts payable and other liabilities relate largely to amounts charged by joint ventures and associates related to the pelletizing plants operational lease and railway transportation services.
a) Transactions with related parties
Three-month period ended June 30, | ||||||||||||
2022 | 2021 | |||||||||||
Net operating revenue | Cost and operating expenses | Financial result | Net operating revenue | Cost and operating expenses | Financial result | |||||||
Joint Ventures | 140 | (269) | (8) | 180 | (203) | (8) | ||||||
Companhia Siderúrgica do Pecém | 126 | - | 4 | 180 | - | (5) | ||||||
Aliança Geração de Energia S.A. | - | (28) | - | - | (22) | - | ||||||
Pelletizing companies (i) | - | (98) | (11) | - | (68) | (3) | ||||||
MRS Logística S.A. | (5) | (111) | - | - | (81) | - | ||||||
Norte Energia S.A. | - | (32) | - | - | (30) | - | ||||||
Other | 19 | - | (1) | - | (2) | - | ||||||
Associates | 83 | (7) | 2 | 67 | (4) | - | ||||||
VLI | 83 | (7) | - | 68 | (4) | - | ||||||
Other | - | - | 2 | (1) | - | - | ||||||
Major stockholders | 79 | - | (103) | 61 | - | 185 | ||||||
Bradesco | - | - | (103) | - | - | 184 | ||||||
Mitsui | 79 | - | - | 61 | - | - | ||||||
Banco do Brasil | - | - | - | - | - | 1 | ||||||
Total of continuing operations | 302 | (276) | (109) | 308 | (207) | 177 | ||||||
Discontinued operation - Coal (note 14) | - | - | - | - | (45) | 2 | ||||||
Total | 302 | (276) | (109) | 308 | (252) | 179 |
(i) Aggregated entities: Companhia Coreano-Brasileira de Pelotização, Companhia Hispano-Brasileira de Pelotização, Companhia Ítalo-Brasileira de Pelotização and Companhia Nipo-Brasileira de Pelotização.
Six-month period ended June 30, | ||||||||||||
2022 | 2021 | |||||||||||
Net operating revenue | Cost and operating expenses | Financial result | Net operating revenue | Cost and operating expenses | Financial result | |||||||
Joint Ventures | 275 | (465) | (23) | 341 | (329) | (8) | ||||||
Companhia Siderúrgica do Pecém | 255 | - | (2) | 339 | - | (2) | ||||||
Aliança Geração de Energia S.A. | - | (53) | - | 2 | (50) | - | ||||||
Pelletizing companies (i) | - | (168) | (20) | - | (90) | (6) | ||||||
MRS Logística S.A. | 1 | (178) | - | - | (130) | - | ||||||
Norte Energia S.A. | - | (63) | - | - | (54) | - | ||||||
Other | 19 | (3) | (1) | - | (5) | - | ||||||
Associates | 146 | (12) | (1) | 127 | (9) | (1) | ||||||
VLI | 146 | (12) | (1) | 127 | (9) | (1) | ||||||
Other | - | - | - | - | - | - | ||||||
Major stockholders | 157 | - | 182 | 114 | - | 82 | ||||||
Bradesco | - | - | 182 | - | - | 81 | ||||||
Mitsui | 157 | - | - | 114 | - | - | ||||||
Banco do Brasil | - | - | - | - | - | 1 | ||||||
Total of continuing operations | 578 | (477) | 158 | 582 | (338) | 73 | ||||||
Discontinued operation - Coal (note 14) | - | - | - | - | (95) | 15 | ||||||
Total | 578 | (477) | 158 | 582 | (433) | 88 |
(i) Aggregated entities: Companhia Coreano-Brasileira de Pelotização, Companhia Hispano-Brasileira de Pelotização, Companhia Ítalo-Brasileira de Pelotização and Companhia Nipo-Brasileira de Pelotização.
46
Notes to the Interim Financial Statements Expressed in millions of United States dollar, unless otherwise stated | |
b) Outstanding balances with related parties
June 30, 2022 | December 31, 2021 | |||||||||||
Assets | Assets | |||||||||||
Cash and cash equivalents | Accounts receivable | Dividends receivable, financial instruments and other assets | Cash and cash equivalents | Accounts receivable | Dividends receivable, financial instruments and other assets | |||||||
Joint Ventures | - | 81 | 61 | - | 75 | 96 | ||||||
Companhia Siderúrgica do Pecém | - | 77 | 17 | - | 74 | 39 | ||||||
Pelletizing companies (i) | - | - | - | - | - | 37 | ||||||
MRS Logística S.A. | - | - | 20 | - | - | 19 | ||||||
Other | - | 4 | 24 | - | 1 | 1 | ||||||
Associates | - | 35 | - | - | 18 | 3 | ||||||
VLI | - | 32 | - | - | 16 | - | ||||||
Other | - | 3 | - | - | 2 | 3 | ||||||
Major stockholders | 296 | 3 | 37 | 1,825 | 4 | 5 | ||||||
Bradesco | 284 | - | 37 | 1,746 | - | 5 | ||||||
Mitsui | - | 3 | - | - | 4 | - | ||||||
Banco do Brasil | 12 | - | - | 79 | - | - | ||||||
Pension plan | - | 14 | - | - | 12 | - | ||||||
Total | 296 | 133 | 98 | 1,825 | 109 | 104 |
(i) Aggregated entities: Companhia Coreano-Brasileira de Pelotização, Companhia Hispano-Brasileira de Pelotização, Companhia Ítalo-Brasileira de Pelotização and Companhia Nipo-Brasileira de Pelotização.
June 30, 2022 | December 31, 2021 | ||||||
Liabilities | Liabilities | ||||||
Supplier and contractors | Financial instruments and other liabilities | Supplier and contractors | Financial instruments and other liabilities | ||||
Joint Ventures | 205 | 171 | 70 | 393 | |||
Pelletizing companies (i) | 142 | 171 | 13 | 393 | |||
MRS Logística S.A. | 35 | - | 41 | - | |||
Other | 28 | - | 16 | - | |||
Associates | 13 | 129 | 9 | 47 | |||
VLI | 7 | 129 | 6 | 47 | |||
Other | 6 | - | 3 | - | |||
Major stockholders | - | 163 | - | 267 | |||
Bradesco | - | 163 | - | 265 | |||
Mitsui | - | - | - | 2 | |||
Pension plan | 10 | - | 10 | - | |||
Total | 228 | 463 | 89 | 707 |
(i) Aggregated entities: Companhia Coreano-Brasileira de Pelotização, Companhia Hispano-Brasileira de Pelotização, Companhia Ítalo-Brasileira de Pelotização and Companhia Nipo-Brasileira de Pelotização.
47
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) | ||
Date: July 28, 2022 |