VALE - Earnings call transcript Q2 2021

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Operator

Good morning, ladies and gentlemen. Welcome to Vale's Conference Call to discuss the Second Quarter of 2021 Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at a time. [Operator Instructions] As a reminder, this conference is being recorded, and the recording will be available on the company's website at vale.com at Investors link. accompanied link slide and at via as is at also is call Internet Investors the the well. conference by presentation, a available transmitted This company's website chain the to relation audio transmitted and both delay the Internet, phone. via few second broadcasting the The slide has via a in audio

Mr. forward-looking forward-looking anticipated me could With as Act made of and comment Actual are performance under in Securities the macroeconomic proceeding, let risks Mr. statements the Reform Before Safe materially us Eduardo Litigation that from differ any mention that of market Salles Legal Operational Mr. Excellence; result Siani Vice being Harbor of are Executive Relations; a today Mark Pires, XXXX. De conditions, factors. other Vice and Bartolomeo, President, and Carlos Luciano Vice D'Ambrosio, President, President, Executive Investor Safety Officer; Mr. Finance Chief Tax. Mr. Executive Marcello Medeiros, Vice Ore: Vice Executive Travers, and Base Executive Executive Metals; Alexandre President, Spinelli, and Mr. Iron President,

Bartolomeo Eduardo the the Eduardo that, second XXXX available will to Mr. over It's turn you my Mr. Sir, First, begin. now call may Vale's pleasure for after to will be now to performance he and Bartolomeo. presentation quarter answers. and on questions proceed

Eduardo De Salles Bartolomeo

everyone. Okay. Thank you. morning, Good

you're doing First of all, I hope all well.

people to the As safety these inspire the reparation, all XXXX we kept for we and the continue since our the and of of been prevention since have with Safety, our XXXX our COVID-XX. second done and pandemic, beginning words guards quarter priority up procedures actions. have in

Brumadinho. progress made We in repairing have

year. agreements integral the implement XX.X signed We reais are working to authorities in this February with reparation the billion

major reparation. strengthening we new actions XXXX, fronts, social advance. work in continues step civil have safety Vale, While forward And reais. million deliver launched supply X.X environmental than reparation social XX also people is more nearly pipeline the or initiatives, of XXXX, and quarter X of The Horizonte. Belo its are structuring a people. compensation to for second water and Since the Paraopeba nearly completing program billion in in the labor continue River. to totaling authorities for damage agreements the the with region In metropolitan This we are social municipalities entered along XX,XXX among other ensuring individual Vale of the economic a

see, agile As way. and repairing you a fair can we in quick, are Brumadinho

We in In we level work dam upstream as decharacterization have level emergency safety Dam the of complex. the the of at In our Santo first and the Vargem the of structures completed we program, removed four advanced the dams two. well. reduce emergency the semester, of Grande another the Wind

So, six eliminated. structures since been upstream have XXXX,

completed We structures downstream works the also the dam. Forquilha and containment of of Grupo

also this started are two to with the we we advancing equipment. tailings unmanned for before remove with month, dams. victory into the Finally, Earlier superior works activities

In addition, our also dam improve. model management continues to

to We iron by line Tailing independent GISDM, an we of time. adhere management, tailings GISDM inline are ITRB the This Board Review with the each global standards in have the way, is in ore for due the appointed industry corridors. to practice to our

towards the So to transformation in we make the progress continue Vale. quarter safer

We also ESG progress commitments. have on made our

to between scope emissions This one estimated and for XX% an with targets billion. we our our achieve detail $X investment quarter, billion reduction strategy two to $X

transition Day, is mining. to Vale to I a Vale uniquely said last positioned low the at the As carbon lead

quality steel to high decarburization. support portfolio We have a

of X renewable million in operate XX% hectares sustainably global energy leader forest, And protecting a of of from are We which in our XX% Amazon about sources. clean the around consumption rainforest. we with

and for across formal rights human the addresses process critical XXXX. with XX impacts. implemented risks operations our will starting in due methodology IESG projects closed For Brazil we plan, establishment is human It diligence and operations assesses action in be our a gap This gap rights. with another of all and of

benchmark. we to billion. Vale the transform see, with can ESG of second time into at a the talking ambition remain EBITDA our you all record quarter about our now our was the $XX.X Well, in business, As adjusted firm operational performance

Given the and we XX iron another volume than conditions. increased first the In of ore the production, last increased sales X good of tones half ore market of last of compared year. first to higher tonne million quarter the iron were the completed We year. growing period million half, same

will well of as half operate an tonne million it we reached in XXX have the per that by guidance of performance impacted average stoppage our we remain that. day and of June. with on color expect capacity million confident in will give the production of tonnes In achieve operations a Sudbury was year. the to We mainly production Spinelli second We more our for nano XXXX. April, X

has sourced quarter Extension market. our to we the negotiate had June, In In to the to the safety continued by a to nickel delivery ensure first the new material implementation underground Brook continue project. the collective recover We mine at process Salobo the towards Voisey’s made ore second Despite Bay copper, of Reid of the products this, of of of years. in five from production next portfolio and a strides a Mine the first quality, responsibly half. and performance compared agreement labor accelerating maintenance for part Sossego of the we stronger

Indonesia agreement the decision for We an investment TISCO final the months. and e Xinhai also next Bahodopi is expected the Nickel Processing signed with and six in Facility in

of for concluded the up the advancement coal we an the and This brinks, Manitoba, the step important the mines the investments operation our of is Thompson, in conclusion extend is acquisition Moatize Finally, activities order to In logistics in years. Mozambique. ramp in operations. and also evaluating stake XX cash for to Mitsui the are we relation of

the first September, our least final April. defined share the of dividends distribute and on dividends as the we about quarter, including The the $X.X year billion to a of our policy, to dividends commitment policy results the of said evidence dollars usual divestment return of we value extraordinary Summing June. will $X.X close returned program further to around at in of business. Vale per last And to location, second shareholders first our March half based half. in dividends, to rate to the responsible the extraordinary And, continued expect announced will as in In I run distribution to of number, up, capital continue we of million provided according billion XX continuity the billion in shareholders, XXXX. reach $X.X with half. be that minimum alternatives the September. we We tonnes for seek without in with compromising, in in Talking buyback another above

far, is So XX% disbursed $X.X program has the billion and complete.

deliver will derisking, we're our capital returns commitment rewriting shareholders still want part to disciplined allocation by maximize in I'm I Vale. long term. the to is guided So, for emphasize the confident that reason our and just reshaping To that of on we conclude, and

effectively have advanced We derisking. into

We Brumadinho repairing are fairly and quickly.

We operational excellence. are and a culture building of safety

We our continue stabilize to operations.

as case transformation. Mozambique. and looking commitments in our capital our an for In evolve good VNC strategy. return exit a ESG fundamental in a And discipline, shareholders. we we with continue focus And to extreme we reshaping, happen are we Our the deliveries, establish are the so rating exit to happen, working culture will perception with responsible with to which guard stable hard. the more us are on of our contractors, increasing commitment XX,XXX our closer make to their employees, investors’ And that To brings safer and and ambition high to reliable our a want and customers we I Vale. our company for of thank operations, very our our being suppliers resilience,

more details iron Now in hand ore. much. give over about will the who you to very Thank Spinelli, performance

Marcello Spinelli

you, afternoon, everyone. Thank Eduardo. Good

about reinforce X.XX production production. as is in production last this X% Eduardo X.XX. We range XX tons to between first of a Let's We half start bringing want an year, outlook to of said million guidance the compared the our year. increase

some want second If that see I the add with you can volumes, can have I the talk, lower share more guidance. we right deliver you hand My the any don't us But the make can are in side, believe to second more range we what of in that you. half. half

our Firstly, day. we now, dry in been our you a a X tons seasonality running operations we've are season know million

of plan for third we branch, was a quarter. anticipated Second, ramp-up previous east branch, East because the a

Now we East branch. in full capacity are the

spite have volumes nowadays. for additional not but in asset week our wet more can the in full the only the to last due and we a high produce add Four, III with we processing not last Tuesday limitation brand new in have market could Third silica to new is in that have right. risk And the team least, from last work, there, we team capacity. a the since now conditions but that's here now Maravilhas very reduce we important,

Grande conveyor Vargem that in full in conveyor resume weeks and additional of process wet the you're bring the is now belt couple over can a for garage we the more belt So waiting long down. parking distance the with and the is capacity

So let's to the slide. move next

to that lost Now Itabira, last Fábrica: we Well, but capacity. plus We capacity in full tons hard have five. I left The delays shipments. since last reduce we range this And plan. million We start year conference as we want need week Sinter, I be plus to I Itabira several a saying XXX the feeds, XXX you the it an X, resumption with X. two of last capacity industries with the call impact we plus we the the capacity high-silica handling should call, have of was sum matter minus last minus minus could give is with of reconcile we of decrease a materials, this two small you conference said since you. after to nine. this the And several five. each year added, in Itabira. older update about can work in quarter numbers two. that with

number XXX capacity So, today. the net is of

please. slide, Next

what second -- the for So, we what expect half.

Brucutu, that year. other I we want we now another we'll we are we announced the startup this total second -- another end production also And of have year, in that sold one and plus we unlock for next the to So, one And we we [ph] for Crusher, Vargem total tons. to ABON report half quarter this million two SXXD, year. our already have have of as capacity have the the in X next second mentioned, about Grande,

to that permit decide some all dam guarantee need industry have we [Indiscernible] that have to extra the remind well safety the construction some under going that is final has but the time to works want our permits. dam. extra to I standards from So we for is you already

that our Again, Brucutu. in that's forecast. for site new So

lowering We a have but more plan also is and the capacity, we year. that also have bring them using if to construction under have next today, not recover initiatives filtration two to we're back

I or bringing to as delay total, million high this in million, mentioned million since and roadmap five are X the offset Itabira that we will our despite XXX year. capacity -- also to partially say the in Brucutu beginning it's important in reduce the conclude, that tons the So in tons with we with of online. also of projects silica problem To to

in have standard the in We north million have XXX Itabira Brucutu filtration we tons. SXXD SXXD in plus the gelato

Eduardo De Salles Bartolomeo

Marcello. you, remarks A few Thank of each the businesses. on

There costs cost, you performance costs increased vessels towards of the queue the increase. was in an of on importantly, ship quarter, at ton. purchases before third-party per because saw between merge in $XX.X this repairs XX.X. the the in a lot XX, of the there now expecting the end the year As important of We're were the and increase one-offs north loader most a

next compared feeling QX diesel the starting this costs, service costs to we we're mining expect a decline see some But we're pressures, will of But full be of production $X.X production, through that the The inflation. forward lot, still least quarters. parts, some with now in by to reduce increased dilution the to QX, fixed levels. still should impacted have Reminder over costs. is However, inflationary QX at see going opportunity decline higher current inventories. cost you the carryover from the

on year foremost just in this if pandemic. spends COVID expect soon. about about On controlling and iron million on continue $X.XX to to is expenditures, we progress alone, the to Today, we cost and the unwind costs $XXX all measures. expenses the per start unwinding pandemic turn is First a ore this

of most that close upcoming System have getting model, should did as as requires we done of very performance better XX% We're normalization levels Fábrica, activities Timbopeba, the Vale who we already VPS, the well. from the to finally, systematically, or to in the expenses We're XX%. post maintenance doing. full maintenance systematic Production of XX% And of capacity in should towards maintenance XX%, maintenance total we implementing We Once related increase to have of those reached go up start have that. to maintenance normalize costs catch quarters an prior cost being team well. the operations we're

attention in mix On $XXX CFR sales, that increase which deduct the the rates. $XXX your the reminder been FOB quarter substantial a it from sales, to pallet those side, for $XXX, important just between call realized includes And to sales come have this prices even wasn't a freight also prices prior should that the fact the an pallet fraction its in -- of have higher, that increase if that sales. they and

yet So the the around systems through in pellets furnace XX% for for pallet the $XX therefore, pallets. for quarter the pricing blast Actually, increases on premiums reduction direct and gone of top price pellets. have not second are $XX

commanded selling of premiums. We're now quarter. which premiums direct the So pallets, the substantially higher increased also reduction in more

pallet that because our to well So two opportunity and ones dams, we have our highlights supply works are that are And Itabira the filtration who healthy feed premiums. in major that the awaiting of pellet Brucutu, performing and plants. the works. These pellet also below increase ahead, potential, explains tailings produce the that the which operations, very

Sudbury very of back, because XX% once I therefore, made normalize advantage on of metals, we EBITDA. the maybe take will production these pellet metals consensus market our impact base the missed So, come base the to and by XX%, hopefully, that was premiums. Perhaps we think In start assessment that about the of strike. they high

sulfur copper also byproducts production, production, polymetallic producer, only Just nickel a not a production. but is Sudbury reminder

Sudbury. as So surface have major the next the very impact XX-month some will resolve regular on quickly be if still Sudbury in the maintenance the we Even scheduled we strike, maintenance until have does large operations. weeks And normalize. weeks done facilities a over we program; has we few our in many have to well also

in the the logistics -- Finally, started of corridor. to we June, on the business consolidate coal, corridor the results in

for minus minus and the $XX were As April The a minus a EBITDA million month. million, June improvement. significant result, every $XX we in was month prior months, million, of May, $XX

benefits So kicking in current and the up performance EBITDA expect are pricing already, this in. reach of do environment, therefore, for second the with year. the the we ramp the And to coal half positive

So, let's Q&A. straight now move to

Operator

comes [Operator Morgan Stanley. Ladies Thank you. gentlemen, first Carlos Our we from Alba the Mr. session. and Instructions] will De begin now with question question-and-answer

Carlos De Alba

And doing Hi. Good afternoon well. I you're for you guys in hope Brazil.

EBITDA removal negative the Taxes months, least the million and that and based is reflect accounts on is on capture that left the the already retained June the the at of ask, sheet money the finance? to of the only the you does profit that financial returns combination So then, the to their in benefit XX project second prior caps had buybacks? the going you in What XX-XX net potential year, burden the of thing question Luciano very to on And very dividends dividends, Muatis, provide other do better account economics be color of much. versus the account and Thank may first reflected of of the with future shareholders. as of is some earnings I the to balance still half I or the the on will capital of And the XX. there reserve useful. should or see if finance those And the you that benefits top be just the increase ramp on minus share can also in forward dividend, is or costs progresses, any improvement in elimination on project of then part

Luciano Siani Pires

Thank Carlos. you.

Marcello Spinelli

Okay, Carlos.

Luciano Siani Pires

you and me, Marcello take from Okay. just Let then me begin,

Marcello Spinelli

Okay.

Luciano Siani Pires

September. we of dividends. disciplined We conditions have have buybacks dividend This been to right, as we extremely in least the think, in that as on and at to billion extraordinary allocation, March, waters least because, extraordinary beginning see I the of an define at capital both, X.X payments. market level we're signed be going is to remarks, did Carlos I in we mentioned i.e. and paid the course,

few of reduction dividends the As and that say factor we to answer our from we be health surplus dividend go make, like, as were shareholders. neutral. the the be the philosophy is would going and because of the taxation on we questioned is our government legislators running anyhow, is to something still the it previous and that. that, dividend But can above a That of Because the soon in on I is would either there that, increase line, the would business way, reform policy so be that is the won't should neutral. and following the plea the how if change possible maintaining to about as specifics policy is that by tax of call, both

that, more can that think there's With not just and I as I So think color reserves. we explained. specific I've about And still question can well a explore a some give that

Okay. Muatis, Luciano to then you go please?

Luciano Siani Pires

Okay.

levels current at extraordinary flow of between no competition there's dividends. generation, Carlos, and So buybacks that cash

we've doing both. around So The we'll continue is do And the base shareholder spread both. to all been world.

different regimes. tax they different So shareholders, have

So are foreign their hope but neutral at We for as Brazilian some the it's of was for already beneficial. could even going taxing proposal them, the shareholders, it even shareholders that for to some that said possible could it that be is dividends least be even current beneficial. be that

do of for heterogeneity base, and here the both the do both. both because would there's in And also appetite rather be -- to this about the not can base. thinking of because So continue clearly sides shareholder we take we shareholder

cash building profits perhaps reserves the generated. in point, be if will going you a will if for come temporary because very quarter -- first flows is naturally example, that less than any, effect, there a be the be quickly. to see And are this reserves, to the a regards any, going this As as we is

have For income natural below pay because in annual example, profit. flow the taxes quarter January, be first will and free the generated it's cash well we the that to in

-- very if there be quickly. is any So any it restriction, corrected should

The doing paste it quarters in other did to thing we into a a is the that might dividends lump before is just that we instead of in do sum.

to of So the in we as But September. based quarter. the the -- third we're yes generated additional project kicked certainly -- into third of in fully finance cannot the dividends benefits in out removal in more pay XX. well, the on minus than profits rule the December the there's minimum Muatis, On going have

we now sales pursue as is forward economics the mentioned and have going better higher ramp the to positive go So what territory. you up of into to

Operator

next question Jason Our from Fairclough Mr. comes America. Bank with of

Jason Fairclough

Everybody, good day from London.

quick Just couple ones from me. a

Samarco, already can appears First, parties been had talk of it that some involved to amounts the the renegotiate we that about some just of want agreed.

about color implications the there's guidance for you by helpful would be just if settlement? really the tonnes return million XXX can any to could guidance, Brumadinho provide to your and any just Secondly, talk we on So from to thoughts the for market rewarding of I'm capacity, such benefit basically there? end when to here, nameplate what not you an from trying understand it, aggressive XXXX. for any rewarding the you return is guiding take

Eduardo De Salles Bartolomeo

I’ll the about capacity? come and Hello? ahead to guidance. go back Spinelli nameplate to talk Why can so Samarco the and then on I important

Luciano Siani Pires

wasn't mute. sorry, I'm Okay, I

of some the in the reparation, full agreement, part of the Samarco, that where XXXX. were XXXX, justice defined together institutions another Marianna history this of just to there prosecutors a in, after party was In to also agreement amounts provision signing, Okay, had effectiveness defined. those a and which okay, here XX between and improve Renova give and the And functioning a programs. compensation there with again the of programs the shareholders joined in already governance evaluate XXXX, to and an the and sit review the support to of the governments, effects ensure there participation two would the public agreement of in years its the the Foundation, was state affected. in was In XXXX, reminder the were

What It programs new of programs, renegotiating the is Mariana. not XX programs. doing entire that So agreement is by Samarco of XX as the a precisely is provided now, not the each of the the right negotiating agreement. XXXX agreement it's for

already the the In of Foundation. sense by to fact, many advanced the programs and are Renova discard the of make quite agreement would done work no

of at was are scratch, in amounts which And defined. So is no Court The compensation programs -- for and everyone everyone. we mediation a in governance, letter It's public the this. improving compensation cost mediation, by principles, in respecting different of June, Brumadinho, and was on of There have and the amounts is There been the the agreement where signed importantly, been have provisioned parameters values the execution programs which agrees Supreme of underway valid because progress, that already the building and the signed an from which been have been programs the about talking were the reviewing talking We're compensation fixed. right we're beginning already completely six. agreement, the that we're defined in not And values. defined. about are already states from not about already now. had aimed at renegotiation the discussions values, this exactly which

on Spinelli million XXX Now guidance?

Eduardo De Salles Bartolomeo

yes. look are I When you are back Brucutu -- from the three to you on Jason very to to it's has down focusing North. from big question, nameplate Itabira, and coming numbers the at numbers and I capacity. think the coming excellent systems, the we because on important understand drill an why want where from the Yes,

quantity we and comes about So over talking are then volume. value here to our

increase in as going if for you of operations right, your not at not volume of capacity, be time market, North We're are put the not the Itabira But an are operating efficiently. same Brucutu to functioning will the half at on and total Brazil. rewarded opportunities having the we of capacity the to We that.

to to we're conditions have we tonnes. to that blend not going XXX million adequate to we're that We're at capacity saying swing the produce So, say going form.

in capacity. good in think, very, reiterate I that. And question, Spinelli behind back the over Jason. should Thanks very that. do our our And But I value for can what that's, strategy. we use building a that's So then think the we commercial volume, as it

Marcello Spinelli

to mode and mode, using use than mode rather that, I in need. to operational think, You’re capacity safer other the perfect, just the you of so have compliment, different if drive processing

So the of will used mantra we capacity, be that's available our managing with overwhelm.

Operator

Hacking Mr. comes question from next Citi. Our with Alex

Alex Hacking

you. thank Yes, Good morning.

-- just to I Spinelli, XXX question, XX? we the figure ore was system, on in think first look the follow-up it's when when, much assumptions there XXX. What iron how designed at operating production that on So seems tons look the capacity, with, like at of million always because But capacity. on are northern I today, it still below

what to to that that met thermal to mix on you up operate what's at capacity in And you XXX of about build assuming up you the getting of follow-up the ramp I are quick just XXX Muatis, you're mean, million be So that then capacity comments, on on there significantly so, but million or that something of to previous question future? below saying the and tonnes northern one talking would then there like Thanks. system? are in million level, XX willing the your tones, And very that? pounds? just again,

Marcello Spinelli

Alex product. about SXXD, question. the million to and need the the we designed to talking some the construction deliver figures have Well, Thank system, XXX north you, tonnes, other in we the yes, to for the deliver also, there,

the very but have terms operation. But ramp don't costs. years the to a interesting environment had we vicious lot in of have non-flexible in Now last terms a same of of flexibility run we flexible we and SXXD. system, system or learned feet and open We less up

important we when So the adjusting times. to that related a that’s of to the learned up it's lot to products, we all have ramp say And have last the we quarter, crushers. is this

we impact getting going temporary about So capacity. this new we is we in we of this XXX, learn some our again, can to some are a And impact, new the it some and pipeline talking referred And can can in related products the for about delays to to plan are have we like to future. have one when have, to year, reliability pipeline all offset construction, that or some small mining we or have deliver permit, setback very six difficulties in in to our you round. now our well, business months to have have even the even

If the to pipeline, the have you trigger just the don't see we this but pipeline in we don't the guarantee million. future, XXX can must project that optionality the -- don't the of to necessity we deliver in have XXX

the that's idea of XXX. So

Eduardo De Salles Bartolomeo

I expensive And we more have Spinelli, to you, okay. has because ability to That's capacity medium-term and just that swing capacity, comes a add as need you XXX to is Alex for And we a think build point, mentioned, on shot. that swing well. buffers just minds why and then the very

then XXX. could always over So that's going as next you behind Muatis the or answer Luciana year about and two use before. as next we year said, need We not it's margin what a even as next medium-term, to we to for volume And establish XXX define it's And do. that or we're years, else our architecture it was

Luciano Siani Pires

Medical, about XX% Thermal. It's XX%

Operator

Our next UBS. question comes from Andreas with Bokkenheuser

Andreas Bokkenheuser

you much. very Thank

Can now few contract right contracts, we're over just inflation. bit remind a obviously, quick so new on Just rates so freight months, we've you of does talked been carbon emissions, from freight around and rules are guys? have little on I IMO obviously, us, a reset a I I bit about and long-term freight you hovering on $XX, last time. a how the know forth. mean, it's cost the obviously, work know $XX you about freight talked for freight before, question freight. But me this seeing and

fixed be providers? some if if kind any is, that the contracts is freight we should That at my you of guess level, freight freight ship this expect long-term your have at level? reset question of know, just Thank Or even I very you So do much. stays for -- to question. your contracts you with medium

Luciano Siani Pires

Two here Andreas, here. address. points Luciano to

spot first today. one, the The market the about market is

I market the we we It's this market. demand whole the demand long-term level really a first say vessels, high see a pressure half, size for these surprisingly You're the under Panamax were they same there can first pattern right. considering this as robust we robust can surprising, half, of than see higher if this market, smaller because cape with -- see were is in then in business. was really small, we don't and still the supply expect, But, in this -- Panamax trends,

see vessels made the only important the this The always XXXX don't now impact the is we a point, have very It X%, XX% the factors. of What of other they reduction some of after in first is -- an for only but to in maximum for am generation that any question we related set are our of for fleet, extending regulation keep pursuing is you to of the time, Panamax, lesions. we new to XXXX in other defining reduction regulations, was goal we vessels. don't related IMO I speed, terms a we system small part, costs,

any spot that, see the after But year the -- terms fleet. an don't a disaster. we So And average in regulation that market, have, we in our define efficiency in X% of to we problem XXXX. for you need [indiscernible] a keep can another you efficiencies rank that it's our only in another will have of

vessel brought again, of our is your the at same that react And, on in called that definitely be you're risk time, lubrication. a emissions. well as But help the vessel we're another reduction bringing their track. We And to rotor shipping. to a in to air if we we of I technology, of to don't and about our something these really echo that we bubble and initiative, have target, will set to need the out implement comply that to bring power. products business we them sailing this make initiatives. that. emphasize our both this in product to this, going But of product, That's this a of want lot are talk can ship aware So better a we new case, can a must owners have evolution have can you set that reduce the your

Luciano Siani Pires

is for towards Andreas, which will fleet add, may costs of we a and spot than rates. costs I if Because contracts, XX% XX-year has our pass-through fuel. ever More a -- operating converge never

is from as flow are the second this $X why prices, at bunker the At production rates half today $XX, half. running our they ever the reason can existing rates half suffer spots tonne. transport first of low example, our contracts lower $XX prices. second XX% it. second usually of because spot as to tonne we not that's go But higher fleet. with for excess for markers going is the to So in per Vale the And we to per at use generation $XX, The these through

Eduardo De Salles Bartolomeo

more -- today Vale is ships in meeting New Just information. year. ready maxes this waiver bring we fleet and also to maxes six go our Castle in to We XXX

well So preparations. protective this for we really feel

Operator

Our next with question comes from Mr. Amos Barclays. Fletcher

Amos Fletcher

Yes. Good for gentlemen. morning. taking Good Thanks my afternoon, question.

of levels a net with bit of very we business to to long just strike. even question financial about cash want prospectively. assume modest much. takes your mean, strong you're to then How look should this to ask so also to resolved? I the returns leverage. on leverage, more? in improve I the possible delivering First it we was at take shareholders Sudbury be a get And Thanks pure position financial leverage if EBITDA on financial Could

Eduardo De Salles Bartolomeo

go ahead, Mark. Hey,

Mark Travers

continue Okay, with now. about so Amos, table in talks the And we've those discussions for XX days been USW at XX, today. back the

So deal and that is resolve very USW we're this. this the the and news try are to at to the manner is with story. The fact a that engaged Discussions at table. good table heavy feel a but while We remain we're positive. that we on course, of anything we well. the we can't until it's going conclude can count concluded positive But hopefully

Luciano Siani Pires

in intend XX. Board up, Directors this financial had leverage. our leverage, of We're this it yes, raise the will We're quarters. in of after going as of we that We in target given do We the we is flow Amos, still promised strong where but $XX discussion having the to expanded with right, we free re generate, obviously, And And everything over so few We billion of need will -- distribute answer to next just order And flow. playing than the to cash to And do generation net debt. cash the stand to to distribute to more terms we're we very catch yes. leverage, short-term, increase in time. the are. we before.

Operator

from Broda Mr. Tyler question next Our with RBC. comes

Tyler Broda

third-party on Great. volumes. the Thank just I you. a I had question guess,

but had volumes in sound X going a those much, has run obviously you those from big should jump second Thank your through impact and tons. the just you come Doesn't So quite you. we for million a like quarter, where costs. on forward? about Could where of sort looking be at

Marcello Spinelli

this that of the the depends but Thank way it we make do mine. -- on production capacity third-party the Tyler. money the -- impact we an can in the this depends In here. a half systems the fill index, the as Spinelli, you, our on -- the actually and happened it. all purchase opportunity, see We have the rainy season spare first lower and to in second in what

So and improve we take our increase purchase on that. advantage could

year. I compare can we half, the do that say related Second it's usually to, what to more you last

full are operations. see year. comparing to we also in this don't financial now last We We the operations so our with and Parauapebas no in have increase margin -- much purchase

stable be that -- So stable process.

Operator

comes question next Generale. Mr. Our from Georges Societe with Christian

Christian Georges

Thank very you much.

be were clear costs. you to on what saying freight about Just

seeing the I you're capacity cost of seeing said, your the What’s your were more shipping? long current because being sustainable And I or we you the to think idea in not he it. on on mean, surge that activity more liability because current should term. what's reverse. then take see less saying market when of you're as the coming

Eduardo De Salles Bartolomeo

commodities, you, use the We Thank of size. had not I soybeans usual market we This -- not have the think sometimes cape small sizes. for the they business. day they -- Christian. in like vessels is don’t related balanced a use cape of the year cape was business, more effect capesize of a to size Well,

our to are domestic that's back cape-size the using -- defeat India So return to with will go market our CIA our This they their even like see China, to view. with markets some markets. you or market,

is world. the other from for Brazil, parts of some So something but balance reducing this there in coming rebalance

this our about to rate. the vessels, not spot long on that's total other the kind of sustain level view our market points, So like depends term business -- other of capesize other markets trend is part the but not in of on again the other but

Operator

comes Brunet with Sylvain BNP. Mr. question next from Our

Sylvain Brunet

gentlemen. Hi, questions Two for please. me,

of some ore, maybe, iron into towards QX? complex exposure over keeps global question and Indonesia streamlining maybe and what increases, about if together. on we as you hinted production guess, year, would QX? sequential to You exposure? a I China at NPI concern in one spillover the effects. the where cost nickel production, take your business, guide, on and First expect creeping, portfolio What later one effects costs, class streamline Thanks. Luciano, expect My but should is lag non should class that your And consider freight XX% we in you second fuel the you? part of Does you favor

Marcello Spinelli

Okay.

the order iron end or QX ore reduction guided as because end today $X.X inventory months in and for that two also, a a effects costs, year. inventory I mentioned, produced the so So that costs. of on unwind middle at on will CX the pass-through we've of one to of be higher on the year, at there's another from actually takes And the point

in we unwind but in we cases, the we change next progress six reduction COVID if can of structural due no of eventually, there's for -- surprise months, the positive quicker, a maybe here. have more can the to number So

at to our because be the and margin, which of the same. case prices, to spot a fourth quarter. sell have the to on more, stay is In most increase, -- slight of the terms is this freight more prices and should the pretty freight But on constructed is the going the definitely third and oil freight, when resort today's we for support fuel because freight quarter Maybe again, much for we fleet. in the

and in significant variable should not this you QX QX. for So changes expect

marginal. Some upward tick, but

Mark Travers

the So one address I'll pivoting. around production, class NPI question

So are NPI would out than less the fact, for and seeing we market, production And say, what we surplus, coming in quite strong. clearly, the or Indonesia is expect of increasing also demand to Right that nickel rather of is where see to decrease. more Chinese continue the dramatically. deficit we're in now, supply I seeing is NPI

high policy it’d do NPI out coming sustainability oversupplied years. the looking do of limit There overall, continue Vale demand to position decades. NPI EV an that steel to -- say some years, think three moves the the some supply will have in market. stainless In be to we stainless segments coming as you further lead as chemical not the have in very potential as in of Base coming industry, the are But well the it that in do in the strong Although, future need to -- production are watch play Indonesia in that it's as seen, the something Metals, saprolite I do industry. Indonesia in to the expansion increased at as we its the And protect all provide coming side. we we to expect a also to to may a years, nickel is have fair of -- purity, the but the to is to well strong overall

quite Vale's provides I out even the mat for high providing It's in class although, is a operation. the refinery. our operations, that and of life clearly into even product Indonesian to one finally to us to also our that, continued will product. on and the Canadian energy It's through operation vehicles, note -- note transition with always heavily associate. flowing quite the in a Puma are purity one focusing make also We very electric it us a Ferronickel we’re playing matte, our that sulfate important and And profitable nickel long convert our is that a in and a particular, class Onça flexibility

of play under the think market I our strategy. have we to lots the would way to So options we like

Operator

closing at question-and-answer time, Bartolomeo this today's session. Mr. statements. Eduardo may with proceed your This concludes you

Eduardo De Salles Bartolomeo

your the of in done. again the rewriting is we a risk company marathon been Thank rewarded And is results. risking, has narrative of experience. is you. we the rigid. when you And the in and the And in be we I and rewriting. and that our we're our and the that safety quarters, Well, employees. in this the and and our job team there, and course, XX I we've confidence And for are a interest the interest actively -- business course marathon I we seeing it's you're the operations when final We're that capital said really ESG. of thank discipline in safe. with kilometers word then, is your X,XXX persistence. we that's extremely as And all the Okay. our again. that are been of questions think, doing with But really discipline think requires with reshaping your And the Reshaping reliable doing

call. So, thank to hope the next again. see And you in you I

Vale (VALE) 30 Jul 212021 Q2 Earnings call transcript