Vale (VALE) 28 Apr 222022 Q1 Earnings call transcript

Company Profile

Participants

Eduardo Bartolomeo	CEO
Deshnee Naidoo	EVP, Base Metals
Marcello Spinelli	EVP, Iron Ore
Gustavo Pimenta	EVP, Finance, CFO & IR
Andreas Bokkenheuser	UBS
Tyler Broda	RBC Capital Markets
Carlos Alba	Morgan Stanley
Jonathan Brandt	HSBC
Caio Ribeiro	Bank of America Merrill Lynch
Rodolfo Angele	JPMorgan Chase & Co.
Daniel Sasson	Itaú BBA
Thiago Lofiego	Bradesco BBI
Leonardo Correa	Banco BTG Pactual
John Tumazos	John Tumazos Very Independent Research
Liam Fitzpatrick	Deutsche Bank

Call transcript

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Operator

Good morning, ladies and gentlemen. Welcome to Vale's conference call to discuss the first quarter of 2022 results. [Operator Instructions] This call is being simultaneously translated to Portuguese. [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. This conference call is accompanied by a slide presentation also available at Investors link at the company's website and is transmitted via Internet as well. both seconds and the delay via Internet, has slides audio via phone. few a in broadcasting the the audio change transmitted The relation to

under forward-looking let Mr. result Reform Litigation Eduardo of as other anticipated Pimenta, factors. first XXXX. differ Bartolomeo, Metals. IR; market President, are With President, Naidoo, mention in Chief Base proceeding, could of harbor and that Executive macroeconomic performance from Gustavo Mr. Before being the conditions, me Act made a Vice materially Deshnee the Actual Executive Finance Marcelo Officer; and Vice risks Securities Spinelli, Mr. any safe today Executive and of comments us statements Relations; Ms. President, that are Vice Investor forward-looking Executive

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

Eduardo Bartolomeo

Good Thank well. all I you're hope everyone. morning, you.

company. permit me reinforce by slide conversation our our and if the start Vale we I re-rating reshaping remain to that you focused Let on derisking and

are health, In be and the social of of projects were safety, structures Auxiliar, de-characterization this this de-characterization technical total more agreement through On challenges, schedule the are the year infrastructure legal and full selected despite deliver brings end on Paraopeba provided milestones the has production the the this other year. February and responsive popular are elimination dam of a dams in in municipalities On economic These Brazilian and upstream most Brazil. important to few based are began the Dique XX in XXXX, development, on upstream its detailing XX the in reparation projects obligations authorities basin. of X progressing term a cover [indiscernible]. within they social we the a to and swing, X agriculture remaining consultation, This by Brumadinho in we fast front, which Payment resumption, now commitment. for The plan reparation Torto will well. we agreed actions eliminated our package. in XX with year: and in to certainty program Brumadinho of X

saying, and in have all lowest creating discipline building of we quarter As stakeholders. first Vale capital been This we with value better for are seasonally our is a the production.

In In some 'XX. and Despite products. of operational stability to had addition, $X increased we the for since achieved per in managed a premium solid tight we a production value portfolio challenge. iron that, creation. further evidence of quarter we our market the high-quality milestones second ore, towards high-quality reach important the highest ton, That's of

in which the year-on-year, confident was the rates, mines gave be those multiyear a In In detail increase products a will other to as system, supportive upcoming EV by that supply batteries. down low-carbon covered the hand, despite agreement annual for Sudbury provide with we quarters. of On to supplier rainfall of Base production X nickel later. guidance. year-on-year the production operational will are achieved production another With strike production planned overcoming a choice of later, January. Deshnee by reinforcing coming in On levels the our performance will as obstacles. constraints, by details in result meet XX% increased but step that, quarters position market, the production strong stability, I'm more Southern Metals, Northvolt Vale's important for run we

program. of integration very strategy. between well and in now billion the with capital allocation, buyback our ESG business in dividends the Finally, $X.X Talking divest execution we about paid and

environmentally of shaped that in the to is core to the plant Tecnored their by of of fusion Scope As our commercial net One that to target first XXXX. decarbonization portfolio is is climate state clients. XX% know, viable This cash business portfolio, and drains Vale's our the better the Pará. construction solutions start solving CSI. by portfolio for you is Tecnored's strategically our of the the the to of Vale, and face positions and challenge. of this sale quarter emissions from friendly operating this of also means strategy metallurgical product XX% our technologies the our foster biomass. and by by a completing road example investments, technology development iron initiatives with sense, XXX% production made intensity. COX means substantial reduction to divestment with up in coal emission map provide on and the to of and the from In coal XX% at reduction is contributing line differentiates cost This closing progress enabling X stake substitution green of focusing Vale's one company This reshaping in steelmakers of businesses. our also On pig build lower CapEx to optimizing the our have we innovative,

were and reached value the agreement company million, of steps a towards and $X.X to in in that System transaction sale take-or-pay addition the leaner drive a for major the binding $XXX assets. focused transferring we more billion for obligations, portfolio which at us for Finally, Midwestern creates of value. much enterprise priced our Those

share program, shares. the This the and the months. dollar, of for XX X the remarks shares. almost shares XX% programs to the would first third be up the we repurchased without means million on positions company's by future their and creating that a increased for with third completed value, additional our buyback This create of it completion for shareholders for X XXX when based comprised commitment almost results announced almost we participation since of of program. before Thank value one quarterly to you. have within one share in with outstanding shareholders. base on Combined, the is successful our the to earnings XX% this to over turn of sharing expanding now launching the of programs, our Xst After repurchased her have results of XX% any Speaking Deshnee buyback have program, metals. I'll will of we progress outstanding Vale's floor our

Deshnee Naidoo

Good Thank would everyone. morning, about start our you, like strategic to have Eduardo. towards I we made by progress talking agenda. the

agreement values this During multiyear who a we low-carbon quarter, a signed partner nickel to batteries low-carbon supply Northvolt, to sources. producing from our

previously harbor an is copper carbon This important to position especially some reinforces that further added long is successfully in rounds. and the produced nickel have in we nickel products certification supply also other as our low-carbon our support for have in This [indiscernible] for growing of to our for roofline achievement certification well concentrates the Salobo. as to addition Sudbury market. transition, received EV for energy our products We

a growing YU we in to our perfect This complement to our Secondly, nickel to world-class Power Cobalt deposit our is develop to reflects to further into a agreement of and track world-class a up developing of in MHP. experience, deliver operational locally produce project with expertise this Indonesia YU's have signing jointly milestone is formula Pomona to just the framework in nickel that technical record resource Indonesia demand. announced H tonnes in Indonesia. significant multi-decade XXX,XXX commitment and a long-standing our experience

the ramp-up lower the In explained project. of were of by Sudbury largely the volumes pace Next of mines and slide. ramp-up year-on-year the VBME the nickel,

as HX. in However, our a the a extend forward rates, extent for labor due result X Salobo and planned commenced decision bring we've the production mill copper, the mines ball when of were quarter disruption of Antapuma a the planned from took we We discharge Sudbury grades lower had the pre the performance. production by scheduled end where for maintenance sand achieved we to mine maintenance. with In of quarter lower operation the impacted of Sossego Sossego the to trunnion the replacement mining and uncovered had stable maintenance to we

on production track which be Coleman the impacted Mine section seismicity Sudbury, accessed. to restart are will Sossego mid-May. the that quarter. increased copper going a derisk forward. high-grade There at This by were initiatives in mining We in our several the impacted still our can We continue also are plant by to underway copper

the of rate achieved quarter that at X tonnes I the rate. achieved from benefit is too if the enables XX,XXX is mine am We and with the of we XX,XXX is in achieve maximum work track run capacity maintenance year. quarter maintenance X after on certain for ahead we and restart. to XX,XXX year year. quarterly Salobo Sossego which mine has XX% has slightly plant on improved similar, planned mining rate the run just run assist more to completed. run performance plan And mining higher quarter completed and plan, can reliability. plant slightly Salobo to once plant last last not The a Salobo deliver movement are ton seeing previously this are maintenance will the as required the

Finally, losses the X. on, North the from the next increasing quarter that some being of are production with in worked additional we and opportunities can rates we Atlantic, offset The slide. confident

nickel the has which attracted to recently. lot attention of prices, moving Finally, a

first, split Our realization products. strong realization X factors: entire the taking we our X nickel price account that can this the main quarter, in aggregate Class our and nickel have product price price be In premium is portfolio. realization was for into into discount quarter. XX% This up achieved from

the of at mostly However, LME. impacted mat, was sold intermediates, typically XX% which the sales nickel XX% higher a the product to is discount to mix by

the market how sales and the for price along factor the contracts. that quotation The is the of second quarter is distributed pricing, are

in So quarter's affected despite and lower the previous price. LME in the prices the March quarter, price high period the

current the typical some in we split month. price. And $X,XXX pricing. about half between This We fixed hedge Our past typically a QP difference in LME the explains have the is lastly, smaller and of sales. our and half portion the monthly realized month

subject not margin calls. are to contracts hedge Our

$XX,XXX the those hedge price only effect apply equivalent fixed with see we or mark-to-market contracts. to As those sale we liquidity accounting about a issues is for contracts, at on to no the

to a our prices us iron ore hand through in the impact have Given results. the we to negative the take quarter, hedge soaring performance. now I on had over Marcelo

Marcello Spinelli

in Deshnee. in a of the optimization that, reduction you, path, future the last my high-quality of decarbonization conference Thank presentation support strong the our blast massive talking quality in ores. about finished I Well, short that use the demand the to the furnace will We direct and trend. call, for term highlighted flight

the And we other a have many becoming a limited the ores. is this reality. is trend hand, that silica we signs that supply On there of said high

iron portfolio. this finally, from our through So ores blast Vale necessity BRBF, now the you chart silica Class concentrate; also we've aluminum, that a That's over Index have we the between the a XX the about. our filtration we of silica $XX. concentrated are that third, this have we X lack the performed the in less can now lower gap coming and We've a we been even reducing advantage coming quality that see ore XX of in Index pellet a and the been talking the aluminum, realization and high the are need domestic improving one, China. have cost necessity for X quarter, driven concentrate high furnace; the we CIS, -- the market, premiums; in taking production cost plans, in have second, quality from competitors, first by are the a great we in of optimize energy the price of first the coke, the to reasons: main we high

Moving to next slide.

production I XXXX. XXX guidance about range talk for XXX Let's plan want for million our tons. this and a to between year. production million reinforce It's the

from North, system. our in we by season rainy mentioned offset the the year, to comparing coming that were full we almost the that due South one-off had last production we Southeastern the to year South, As from are coming the and in events ramping the up last in heavy coming from asset report operation some the

North execute the many North That We maintenance XX% facing quarter. the In of increase waste that and quarter. the the the of what news can plan reflect branch. we our have in in There others improved are in are in delays rolling the could first major the we we the second in challenges, here. spite some of movement range. SXXD North We than license the And process call good activity say in made we more the also range. ratio strip

the we the production in impact in half, So the can that say due seasonality. annual less to have we production -- first

the SXXD. to in tons conveyor As range are replaced the North we last the more X compared EBIT will an system very and belt, we that example, installing production million year. have coming prepared we already the Southeastern crushers of South are last year. and the half, we and important In belt we adding conveyor first in availability for can annualized say in that half, April, than more the the We the from same second we the the effect resumed the

going the North project second the Gelado we're Finally, we in branch. small have half, are the pits some license expecting in to and for

Now the North to track keep In bring to the bodies NX moving the the the needs, of to system. learning that ore SXXD so supply want our to by we under if -- the plan third and in market of XX following license, also slide. million over evolution new the Range, are curve want We track the OBK. NX, the support NX. midterm market system to tons the to

future. also we projects news here. have the also have plus-XX We new Itabira. X the Itabirucu, that good install crusher. projects, are big the and But the in have in to In we coming a plus-XX years waste

We works. raising we -- resumed the have

the phase expect and year the next We year. phase for for this first second

So the Torto we'll we are sam in are the works -- finally, concluded. able And the end in to be Brucutu, Itabira. year, capacity of improve

in to this I'll Gustavo. permits need final hand operate and I'll filings are the for process track further the after for questions, to tailings. the license stock phase we on and keep for here to over the be We going last asset,

Gustavo Pimenta

good our with and the performance start everyone. drivers Thanks, would morning, Marcello, main of like the in a I to quarter. review EBITDA for

our $XX premiums ore, per with was iron mainly million by price quality $X.X see, tons 'XX. lower XX of and EBITDA better This the QX. higher in of by can and iron given decline the prices reflecting pellets in caused in normal decline ton our beginning billion, sales seasonality lower offset quarter sales This million you was the was As higher ore year. fines QX than for reference mostly the first realized $XXX about

on cost our to Now performance.

which today since Vale As see are very we one more environment inflationary of is even discussed this Day, relevant strategic the we our in. living high priorities, all given

is fixed a reminder, local the year as cost to line Just keep the XXXX our in with currency, levels. in for goal plus sustaining our

with in have months on series we resulting the last been initiatives several working real that, over captured very being fixed-cost financials, variation a of For a in our benefits basis. limited on a already quarter-over-quarter

for by the per full As slide, quarter prices our being all $XX.X into see highlighted. year and fuel $X.X ton, ex all-in does QX purchase and in just I was lower how can our CX of higher pressure by the the Now by CX volume than initiatives XXXX costs translate that next effect for our first FX, forecast? with per ton, and the mostly inflationary and you driven the quarter the offset third-party

per to at into versus full assume ton year if $XX.X around $XXX for Looking would CX full at FX ex year purchases, the at our third to ton. around year, barrel $XX rate be forecast and party $XX.X we year were average per we per BRL dollar for Brent X per last

and of XXXX offsetting pace would at at with assuming bunker effect ton, we all-in of premium a be similar parameters, including pressures. cost running In inflationary $XXX the average to similar terms per XXXX,

all note Midwestern already System, announced. which the these Just numbers the that sale for was exclude recently

next payment. by quarter Now turning on cash affected conversion greater tax the slide. mainly to generation this to was The for cash EBITDA

monthly necessary on calculated tax of the adjustment income our based regime, For quarter year. tax in generated, the first and revenues following any our payments made are is

QX year. was higher we better in an of QX. impact of see beginning impact results On payable share following you in increasing in investments Also, the seasonally had working profit accounts disbursement the in the the given the first distribution for year. there what of is higher the quarter capital, So here last usual

outflows remain Finally, $X.X by around sheet. an and shareholders most offset California our were from $XXX sale of These generation still. in stake balance allocation important, cash in billion returned of on dividends the and strong million to We capital we by slightly supported front, buyback. important the our reverting the our share in share inflows of committed our

net turn debt Part with the billion slide. billion debt Now to of with expanded $XX.X ended evolution We up $XX.X in compared next QX. QX net let of expanded an our me for a quarter, result very and much for I in were in had anticipated is line expectation prior of outflows increase slide call. as with our this the presented last our the the in

Another FX driver rate our obligations of debt commitments. expanded effect is on BRL-denominated net the the that composed

in the by by commitments positions real with increase impact dollar million. positive appreciated was the the our in During offset our denominated partially caused to which terms hedge billion. a mark-to-market of around Brazilian quarter, XX%, $XXX by $X.X of reais This around

We to through as onetime quarters next the in lower sales expect and benefit tax cash our higher payments. expanded net debt such outflows,

a we under us billion of our our During this net to a $XX and in leverage optimal financial of disciplined from the in no greater provides and a increase relevant $XX debt change and very expanded with also CapEx quarter, capacity to months reviewed a the due last billion with flexibility, production range with This sustainable liability by concept. Board performed it's amortizations cost our billion $XX management several same management. proactive a reflection a XXXX, in

like strategic up to on on opening call. I before delivering from laser-focused key We So and reinforce our remain objectives. takeaways financial today's the Q&A, for would

evidenced by shares. With for of new would announcement I to the very our open of today million continue substantially on the delivering uniquely Our from are positioned to And the maintain of benefit range. we portfolio disclosed guidance the we'll a disciplined On that, like questions within energy volumes production, call a process, previously assets will program transition. allocation XXX capital as repurchase confident finally, share

Operator

Instructions]. [Operator

BTG comes Our first with from Correa question Mr. Banco Pactual. Leonardo

Leonardo Correa

you hear can me? Yes,

Eduardo Bartolomeo

yes, Leonardo. yes, Yes,

Leonardo Correa

the think the right? question to was the first buyback. on I big news Gustavo, cash returns, the My of Perfect. day Okay. Gustavo.

the this treat The the want returns years, was I this way couple expecting flows of no that the if dividends, focused been the been guys because more ask on if have or you increase hours The we've cash on mainly have of shares Because changes dividends. way time bulk look the changed been level similar been announced, think past past if really over Vale's right, dividends. on we cash particularly, the to XXX from XXX you has right? a dividends? million And at to X this I via of extraordinary it's treat frame, you million over using returned question right?

this So X dividends the of the level my extraordinary potentially first think the buybacks, will now this higher I much focus is, and think the plus together? So that's you with you on do can minimum question. question leave do just you Or buyback? aside

lockdown, be over any Are you guys. and into on potential ports any weakness? My delays you seeing logistics We to most of the to that China, how experiencing in The I order very But report my forward. second of very We're difficult I some normal all be to mean, is can I how know mean, questions, of selling China, seeing bottlenecks. may, we're one China? to sales question ore over right? a or -- That mean, it's May don't a my understand this I are April that the your China? shutdown. are would can into Spinelli. front? seeing issues We're books iron any seeing rolled lockdowns. temporary environment course, you that Spinelli, try to going in on you evolve if the and third exactly volatile seeing you're lot whether quarter? shipments any could

Eduardo Bartolomeo

because like here, question, question Because new a important Last me in Gustavo add answer the about use to always flow. your we very the new to the right? cash. world, free of as generate that normal he going understand, I'm I think posed. you talked is we've so will cash pockets, you year, it's We up XX% then of front returned Well,

concept, why and what's keep we of obligation need safety our obliged, did First growth, to commitments our extended an coming that we that's execute all, our them, after. to

a is and policy, We moment dividend when consistently, Were we predictably permanent look a to you Obviously, Difficulty]. policy, policy. [Technical you for What back, are look Vale this question. the years concept, very been keep That's X as is because they That's prefer above way its from that? to your that we has paying are specific it now our First going okay? our want buybacks sacred. in treat undergoing.

Operator

from Bank your comes Ribeiro Caio, question America. with next Caio of audio The Mr. is Mr. available.

Eduardo Bartolomeo

policy, do buybacks But as or can like think they less. and the a lease, extraordinaries, I X. bucket more come the Safety, we growth,

And ask I dear Gustavo had I'll explain over, now -- jump so to that it's sorry heart my but to to it. really Gustavo, because

Gustavo Pimenta

Yes.

continue I back think we best, are right? Eduardo investments stocks the as this prep probably if is we've of months. to -- remarks. purchased one in active, have the share. believe We've covered well, of So the we've our last XX to very that been where is in we own We've Vale seen trading, not given the best XX% buy our almost

take So XX%. us an that will to almost

a So this to last continue and very our our mean put do cannot we'll It announcement accretive is for saw shareholders, you as dividends. doesn't extraordinary effort on that, in of we lot year. certainly

think due assess at I will time. we its

will depend the on Of it cash flow year. our for course,

some we for are all despite that are constructive the challenges seeing. very We the of year

the cash our in constructive very be to continue for ability strong to year. generate We

I do right, dividend with a very that, already payout we So have think on -- of XX%. well-established a and policy, of top

highly we from our back to is I both. certainly, valuation, own point, do can So accretive our Eduardo's share perspective. But think buying at today's

Eduardo Bartolomeo

And long term.

Marcello Spinelli

Leo, the Well, COVID, -- thank dealing for I this right? with and is most questions the for for is today, year. important this question. the the China for how you impact our think is goal one your So is --

your directly, answering clients. just any we term, problem don't our question see short with in So

liquidity week, now it's week. holiday, We in market -- higher the a have this the They and is last the weekend and higher think the liquidity but opposite. I getting really is a high.

this to the inventory blast whole the the of support viability, if the Our is a furnace last use comparing also declining And inventories to see whole increase XX% And and the week. as numbers that, XX%, is declining. in you strong the week support. is -- to XX% XX% all there

downstream So we there a all all that have GDP X.X% demand. the to goal their to deployment, definitely, heated. seem after for the is they And signs growth. we be And support committed infrastructure, see very that of

more coming. projects You the X% are -- new growing, the see the FAI,

everything can is you, see -- But problem the time, you Other for we the supply any Shanghai. in are our sentiment, see So numbers. at don't chain. the struggling we have in in they same information

lineups our in same -- you used and the of be are All in very the well. year, same level period operations to flowing same the of are that the

So the we see going numbers are to happy on.

Operator

The comes from next of Caio question Mr. with Bank Ribeiro America.

Caio Ribeiro

and question talking my And for first ask, just a about then my question, several company wanted which are still been other the unlocking Moatize, for to second division. the on VNC Metals value divestments? I is lot assets So Base the after candidates System, Midwestern has divestments. avenues

to wanted to this it One if a through I exploit that if value, you be go you just whether road, Anything here? a partnership. the it to looking choose that X nickel market the would or potential unlock consolidating do SG&A see to as down of is angles up logistics, is synergies potential via setting ask, what main else them is this further. Class you're

Gustavo Pimenta

here. Gustavo Caio.

pass I'll the divestments, get to cover Metals. to started then and Eduardo Base I'll with So

in have publicly, said we've And that lot. X keep updated that. in last, yes, CSV and most MRN. up any the done and we'll other ongoing, that are So We've portfolio. cleaned ones been noncore would there's of But processes our saying of Both once the we've assets candidates news a our those final we've the last be the on out today. market we

I'll with So pass that, to Eduardo.

Eduardo Bartolomeo

good Indonesia answer. because taking question we that in to nobody asset this to Canada. objective, we speaking. try okay? to that okay, direction, aligned Caio. ESG, because than we What okay? more Thanks, there's I'll in about has that I based start, totally complex else are need your world. nickel talking is best A reasons, brings But decision no operating is an have, to there think and resources be obvious in an XX asset question, CDE very fundamentally years We're it, Okay. the and the for of

it. So nobody has

we it. So need extract to value from

So the angle. main that's

If angle? value one you that has what reserves the in high-quality from uncovering extremely the and It's this the me ask assets of best world. is resource

So to that's need be mindful. the first angle that we

a There we choose again, as and to we're we the record track Metals We can unique, that uncover I first my options that have going with think of comment, already we go. record, several. that are going to going of we are to value no Base that can that what about taken track delivering did. avenues mentioned. going think we again at I we say -- to exit we exited. that to That's, VNC, question, we're are exit first said that is kind several responsibly, We to What is And I as there's have? have, in reminding going we decision do. said your what whatsoever. we are There

is a us with by part execute she's bit because to well. can today. in need can here that's the Deshnee would think because You ask you going well spin, Salobo, jumped, to even if little she's comment tomorrow to it can keep we the you she execute way. partner, Brazil we -- I it I as well because And as I

the as transform are QX So was huge -- first good one. not a business efforts we very quarter a there to saw

in We to that. in need did do operator. railways operator, Vale. we reliable the can that We prove we're that predictable a So

are that iron and in Metals that as to we doing in are do We Base ore, going well.

sustaining that building inside a to in going this this reshape have other So value like credible the instance, it's with VBME and we're And business, projects reshaped. Vale of nickel Alemão, we has our those to of in path keeping some objective like extracting can to choose all, copper. to value. you, online to assets like I if last obviously, the been and VBME, we And the is I options doing analyze reliability, But in to value just uncover uncover is that building do. A not our first growth path, CCM projects is option this growth or that before. for and enough, with -- other I agree you, that mentioned angle, be And if the Vale,

Deshnee Naidoo

to safety, Base Thank and where comes inflation linking starts to on. piece third-party to mentioned Base least all quicker teams reflected all changes plans solid for execution. a focus as And it's mines' off are third that, our X sure which you, production, we that streams improve March Eduardo. to for we with in to Sudbury. the getting know work our making course, why see increase the January The there. all at in have successful, safe, but down the by wins improving very initiative not of that value can work much stakeholders, seen rates structural cost is year, the were and for on reliability. start every have with are sure with to but production But daily to And spend. for the to maintained we are making the this these that's asset just we of sits. the reliable unlocking downstream, that working our is our and of we of parts some it Atlantic, assets the and across has next look Exactly coming we have offset But previous on it's increase I engagement XX% is productivity, at for is hoping the that call, the this focusing from together, to better get that that focus, South are I curve. off until Starting we be good the have business. there Metals in through, Metals we've And

on are in that unlock we Eduardo, And Thank value company. whatever base focusing off far more path come, efficient in So be base metals the you. a will execution. for the it will

Operator

Alba next with from The comes Morgan Mr. Stanley. question Carlos

Carlos Alba

Great.

it despite called faced a my the questions around is billion -- January? the setback. comment that how one, And bit after project that CapEx the attention Can little Salobo. on unfolding III, my more bit how So that situation CapEx total is also, this at a are, little you Salobo $X.X on it kept in was is, on more

you after overall We Marcelo, And else then premium. if were higher-value you bigger be And increase of elaborate the the or prices saw that just other, if and incident could if maybe mistaken. for bit on price if in so little the you're elaborate quarter. a somewhere we little had you And cost in it the a expecting -- not more, products the price bit But signed bit efficiency metallic recently maybe, cost just a could your relevant. and iron effect, increase were could seeing is a little ore the happened pellet contracts that we lagging obviously, the multiple.

do little the can better if bit So elaborate that what useful. about second premium, price be you first quarter and and you a expect more going very forward, in the quarter will

Deshnee Naidoo

for regarding the III. Salobo Thank you, Carlos, question

terms tons of metal. that of XX% So just we that in And deliver to where at project are in XX,XXX we XX,XXX III complete. the progress, almost -- least so Salobo is all aligned will

So we the production as November track guided, start our this end at on we are first year. of to previously

progress mentioned terms next will the in and to we actually that. on the of In of the capital, the -- that site terms day to to $X.X at holding of on the The the still I be think and capital. Olga Eduardo in over fact, are call, talk team on on of physical, the start we billion

the making that well In and that sure commissioning teams in it's the we derisking I of now, the terms terms work readiness are of as ramp-up. the as doing are operational

So Salobo beginning the year for the guidance the year. of track still on end start. the maintaining from it of We're stands, the we III, are as

Gustavo Pimenta

asked, on exchange efficiency you dollar-wise was the were we that about minor, in going to -- Carlos, was more for the it's case. accident There the relevant. by some really benefited track But rate the billion. COVID not then impacts, and And this $X.X were be

Marcello Spinelli

mentioned last Carlos, in thank conflict Ukraine. shortfall impact and the the the conference call is tight. Russia We in question. you in have the your for Well, a from coming very we market

there's from the reduction, a and furnace demand in blast pressure For side direct coming Midwest.

we settled conflict. QX, in premiums So the the before

reduction, for the now an we XX.X%; XX.X% quarter. direct and risk next So for for upside are see furnace, numbers blast

Operator

Thiago comes with Lofiego question BBI. Bradesco next from The Mr.

Thiago Lofiego

here. Two questions

with it in extraordinary top the for of range debt? dividend this for on a range, what Gustavo. for one to obviously the big the can because at first range, asking debt number more Is calculations guidance color least side. net be should expanded The you right? now terms to the expanded about maybe that's working of Gustavo, big the closer net maybe So now? I'm makes on we us a difference give

sale. the deal block agreements The of second not But System it the all question, is, if Could be Vale's a here? the about the Midwestern counterparties would or that's possibility? at options what take-or-pay

Gustavo Pimenta

Thanks, Thiago.

revision the to net conducted So more debt, just think Board the with the essentially is expanded that we flexibility to payments, just able some we the on have I throughout look, we do seasonality even have and seasonality. were our what payments some just Q, sales on have do as saw flow, in We year our right? because have cash first we dividend our tax

So flexibility year the that that around did us but to being to QX we before, range that in able $XX like had gave us billion operate -- I think, operate some gives eventually, level. new that this above throughout we

So way communicate the again think that reason a more it the it. to to And leverage provides it's for main flexibility, ratios better and those market. we was now

any just to counterparty. be with to we no, ways we going sell we don't it's that transaction the the I Regarding think issue. Midwestern, mean, signed accommodate potential discussion have to the an

transaction. about we're that to to think able So good we feeling be very alternatives conclude

Operator

with next comes The Andreas UBS. from Mr. question Bokkenheuser

Andreas Bokkenheuser

of Is your million million. XXX to range iron couple to at year, it the ore think too this of just XXX whether low end to Maybe a of online. you Obviously, is or first on going you say the questions early the obviously, high in of a wet production. Just but kind of it year, up coming that a we're quarter was range? end crushers bit the have had looking

that further. high question. this at the And end still range a in still second to of thinking range bit point we should time? place? when Or lower question, of like little my that, the more looking the an get production is the been is in are progress Can us more second obviously, really about you term, licenses looking you're for those that's update up regulators get give And medium, longer to Is question. ramp in realistic? any be licenses? That So those first related think we made licenses? end still to there That's what the to

Marcello Spinelli

Thank Andreas. you,

can with season. going think from I availability to in That's question, work say. another we're the what the that important message have And to here. first the we dry coming system, full Southeastern main it's For systems I is But to more the gap. prepare the say early operations that's

you the compare if main to important consider here. can So see whole volume I that X Midterm, have year. to are components in for actions very these we last the year, X

First on one presentation, we mentioned as I North, the the in in rely permits.

range second some [indiscernible] the We related we can for to we what And license rolling million midterm, the that NX, you XX the NX keep call, have had million the expansion half. tons this NX, that we We even some the this, in the range. on the saw. delay we in to replace small for in we add -- and X pits, to volumes North expect delays, the rely have but second quarter and for North

a to If for systems, you headwind in any these have XXX tons. that -- be can million problem reach

up Itabira -- full after with back products Capanema recovery Itabirucu. that the a in are and production coming position fallback of southern in the the system have like other that come will We online,

all a value that remember to So we more is this, initiatives of But the we over mantra, volume. have bring of set volumes. that have

So going market the to needs. bring see if we're this we that

our only end going of in the production year. to So we are and the talk year next say about

Operator

The Angele comes next question JPMorgan. Rodolfo from Mr. with

Rodolfo Angele

are My two simple. quite questions

around. seeing the we're in one, all First industry cost pressures

to on expect. anything there opportunity, if any there's we I this, a if you renewed ask can is wanted So just focus

a just more And should term. how basically, question is long So about my the thoughts we Vale the think about plans. in on few to second medium

fact I Salobo as aside here, very assume running, is the focusing in that discussed large Or more going recovery cash and think back towards you're we we iron message volumes that But also as a that a and received ore future? investors. such an we up buy the on from still to of implicit Vale important, very is that cow agenda? the discussion announcing growth on about the by III expansion there also think getting should there well is be, the is Vale could a the

Gustavo Pimenta

Yes, Rodolfo. here. Gustavo

right, everybody pretty challenges. So on the having been you've is cost, as all seeing industries, much across

high facing all inflationary are We pressure. very

on is working the our case think been we've last in this I year. since good thing

is of is cost cost, cost improved in [indiscernible] series You may fuel reduce seeing we to that what impact a Vale came to recall, are base. specific and talking board today, initiatives announce our just we we And year. that taking our are in Day, the about to CX are across the optimize having base, FX this basically CX, we right,

inflationary labor last initiatives So on of we that we've services working already on all the been been in and with to the so offset year. pressures since have able the in QX

here that for we line our much win think year it's is a expecting, given are this last -- premiums all-in side right the than other all the think effect in seeing we the I we're inflationary year, on with the year again having. given premium very better all-in side, the are we big which

sensitivity prices. pass are to gave we Eduardo. question today, the the So the been left which fixed and FX, are think And in we and point, to second is opportunities with you and manage local of I'll our With able we excited But with the to the fuel we've -- to base. cost are all on cost optimize on some costs the I what your we accommodate offset pressure seeing that, currency.

Eduardo Bartolomeo

we big, to about can That's is the rationale answer we big nobody has believe opportunity permanent. Okay. growth cash that that's because go a Thanks, Vale right? cow, I won't growing the have. of think the back that best buybacks I because the cow Maybe Rodolfo. cash share has, investment the

prices are value you ore where we price buying are today. iron we So at whatever, of at back $XX,

buying are company iron about we So ore $XX.

So we the when a is buy we that's the about at ore ore rationale don't business. mature, you dying when itself, iron high story look iron that But buyback. quality, talk

XXX ore tons iron can Nobody business. quality. grow X high that. We Class up with growing a do are We can million to

cash that. So We're going the to for to need going we're cash. use

number difficulty the within question overcome license in of grow we to quality of well. and goes back that to is ore, So one, set to cash around use Andreas' previous iron as have

ore. one iron first is grow So

that. copper, We to grow know you have

well We have copper. This to not Carajás province. do. explored. have we go that to Like is a we homework have the It's

now at with We we on XXX% are looking efforts Base -- focusing that Metals. careful and reach of more it are our more

copper grow we there. need to So

That there. around grow -- grow I nickel. with but can we message opportunities We huge will by something very way, We -- question. nickel. demand have grow can We important even [indiscernible], of lot a thinking discipline, copper was can can we That's the a that's here. cash. think the first We and --

the Metals. second angles question of Base about The

the for happen For the of amount grow cash uses optionality in about the -- gap, talking million metals, an market, to huge to has When And we're generate tons XXX cash. at the to XXX,XXX to Nickel to well. still a look right? that that's as million going you going and nickel, XXX of Vale's there's tonnes. But

a I cow -- specific. cow. that is on a to cash don't lot. But know can to that. see is how growth It's cow, fair But answer don't can it's will say, think I cash a I say, say, conflict we I growth you a grow So how it

think buying going now. be And that the We're will are X story the to ones years share going base. very we our generate in are cash. SPX from that now to I shrink happy

Operator

next BBA. The Itau Mr. Daniel from comes with Sasson question

Daniel Sasson

the Most tailing answered. the about that if regard next wondering to claim dams prior to the the Vale conditions of SEC dams expectation Brumadinho of in was event. -- of you my questions just to they the misinformation the what have have any provided was as steps procedures I or the been

expectations great. used bit were would for I my comment the you already if costs. could just years long-term to you talked disclosed expected about significant have $XX a been way not coming that could ago, probably per returns few the would supply around come. new few move line quarters you more regards not would those prices the and and prices generate inflation Eduardo ton, that past give that to agree the this color, to which work that as findings, the over be this that but decent Do you projects, mentioned, over I in with, -- on a question know stimulate has for that you remember maybe your expectation industry But you cost do have And will that that investigation a would to quarters be continue approving even regards was or new in any you long-term say you to updated growth second forward. you consider expectations us If continue new time this market. to great. with in level to

Gustavo Pimenta

Thanks, Daniel, second Gustavo here. will Spinelli your question. cover I'll get then and started

We it. expected, the regarding the reviewing. are and notice. right, year's -- contest the And we around look, suit information the well will certainly we SEC, certainly allegation. e-mail received but was So disagree We following and just last the

So updated. it's own certainly keep market its we to time, going will and take the

Marcello Spinelli

future, right? stay. the $XX is the you impact Thank and that's Well, putting trend consider when you, good $XX even number, supply-demand here in is the you're not if anymore, not Daniel. first are $XX the don't -- $XX question the that that anymore to So inflation all

greener a years Second to expect be point, some quite world will transition the different could we that ago.

in higher the stay will probably XX number energy price of here. So expected than

So we -- supply/demand. component are third here,

finally, and than projects we And what iron possibilities class talk all tighter will to to the before. difficult supply/demand X we this market are than side, ore. about to ourselves the to educate more come call supply So need much the the before. From be

from or premium is when XX the or XX we need X number X about the to brake. BRBF, pellet another Our or to another up, or add talk we need add we but for

X XX. mentioned So that a Class from the iron of we that kind that, the about call we are is ore decoupled standard you hard to have number working this,

Class wide a ore. iron So will gap X be and the consider when you it's up

Operator

with from next Mr. The question Fitzpatrick Liam Bank. Deutsche comes

Liam Fitzpatrick

to two questions. I'll stick the

chart you of more that recover terms that? in of range? can market looking color My Chinese a to Or what's this the just into value of important I sort steep this the we could not are just but into there's is getting you the much guess looking in any Because could I that volumes got HX. all, the if doesn't, hope pick-up of steel say, But all iron continue on pack, will in the the First how the probably you to on for will second supplying this of and pretty you it if approach at volume. and guiding ore SEC go be on the guidance side output QX QX. terms question, in appreciate we charges. timing on kind of in at your demand Have of there? long

Marcello Spinelli

Liam, here. Yes. Spinelli questions. Thank you, for

yes, that's demand name volume, the in the expect China. And of So value downstream the for game. we

production, this go number steel we Our X trend. and and is market about billion to for tons will the crude the market with supply

We -- are economy the in as a in for year. this see this stability we trend China key

So and see tight market we and a supply-demand -- balance.

last tight and quarter, one comparing a For will after for more quarter. there in it's we supply/demand, a whole the first QX the shortfall in market be see first time and in year, the a are small QX as but a shortfall. the the that And balanced can

Gustavo Pimenta

here. Gustavo Liam,

said as claim with before, disagree with strongly the and suit. I On we SEC, the look, the

But allegations. take will all contest time. it We the some will certainly it

time. sure is will updated, market but take that make we'll So the it its

Operator

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

Tyler Broda

course answered. my you terms cost XXXX guidance within sales production? that really my during inflationary at environment? still sort how have a ton. the for XXXX, out year, we to of then versus stay that seem change evolve questions you higher Is it built guess, inventory lot to early And up been of over to in in just higher of second chain a you cost, Day curious, is energy value thinking this just a $XX current last assuming of of between in months the was have level and of that did $XX.XX Vale question that the given came target, that base I Most was realistic the see to I the X expect be would nothing over the did XXXX. do are

Gustavo Pimenta

Tyler, one. go the let first over me

and certainly, in on CX. But pressure could if early on you say. the -- have there XXXX example, yes, to fuel costs, to So current FX prices, were it's think it for the on an effect maintain our rate, is I

we have we -- incremental and that's to data any think I revealed haven't why point. provided see

energy see I think have it's say. We'll to to prices settles, where FX the settles. early were

in So the once then Q see have we those a the for we on you we have or could more X 'XX think 'XX, of based 'XX, clarity, we sense 'XX of that first will kind variance But update on the see I market the in in delta 'XX. variables?

Marcello Spinelli

Tyler, here. Spinelli

-- China. clients to We the had mostly recovering to in and But the right. we remember keep we some supply after our were Brumadinho, in chain in you're inventory gaps after our in operations in our So that XXXX. XXXX, in that used sales keep inventory

So in to for operation keep supply 'XX the we did blending. and the this chain

That's So what part of consider is are we that million material. an some we concentrating expect in year, China. the year last for that tons additional small this high the a with we same pattern this gap can awards -- in small for and silica XX that

We -- have XX% XX%. of recover to mass XX% a

year difference that's between last So the this only and year.

Operator

Tumazos with comes Research. John Independent from question Mr. John Tumazos next The

John Tumazos

they're not and weather, Are System Northern third build quarter second the the from the you of Southern much System problems Tecnored better? the X the rebounds only cetera? describe or so quarter why the plants could quarter? First, Second, more in and since first et

Marcello Spinelli

Spinelli John. here. you, Thank

solution. you're the great technology right. That's need So the scale. we to with Tecnored, industrial a prove But

that's can the -- we smelter a can -- technology be doing So small use it will a also furnace, our in what used and in that and be biomass, that It's clients. in a we as we're now. -- can

So co-locate ore, But use we need this. iron we prove our plant are in clients for industrial we now. to as an as can pig developing

we but a are that want and to QX yes, prove in range a -- wet confident. QX, and And balance the about already firstly. the North season. have -- this is working small is really We We plant

second this XX% the So expected they than they lower come quarter, as when quarter. in return have we But half. the a second still to with share more

expect. be preparing half. suffered that's first we for important the And branch. but That's So we more I the are more what in mentioned, the with we as site North the available to us quarter, in delays, some most second

Operator

Mr. The comes Jon with HSBC. next Brandt from question

Jonathan Brandt

first Spinelli, Europe. you in I about wanted to ask demand

costs Just there? you face seeing question given with challenges EAF on energy terms then are iron And what demand that and was taking my in nickel. higher they some the second production, ore of down

So Deshnee, into you prices? does in value could does lot low-carbon the And you realized that just that the mentioned of potentially nickel that have. obviously, higher -- future? there's something wondering, a products But that. that in that realized is how translate higher Or into translate prices I'm

Marcello Spinelli

a Thank tough Well, answer you, some Jonathan. about we have Well, numbers. Europe. it's

Europe, We but minus for of the forecast for operation full counting a extend buying, not in minus full this In the are clients, the Xor a are short-term with whole a Europe. are mode. you decline of part main we if are full, the they the But are thing, They see they about year. X, when Europe. this view our We for not XX%, other CIS. they we're now, XX% between talking kind CIS, have but

coal. end from some some the year, impact they have have can of the they At use energy. with restrictions coming So expect to of the

have So the don't thing. they they now whole have but answers concerns, for

are mode. in short-term they So a

as mentioned. We a be pellet expect year, some are coming will for selling same. decline Actually, pressure I But from we the lot whole there's there side. the of the

Deshnee Naidoo

as lowest metals in incentive. on I'll our for show try know us as on to process. that And and have products. But the you to as strategy Jon. carbon to the I But production need order transition We EV, certification we for it's be to of mineral going production now, and we to than forward, be as just In both double that's started do we intensity we well is we believe least going are that mentioned, said, keeping that side the footprint right the at profit XX% the our reason a simply, very critical the show that lot have happening Thank to world world quick. the one think side, you, ready XX% for what's can Eduardo nickel. more on the more our into we of for intensity. with low-carbon very,

agree. I So

be incentivize definitely to that product need reward green I Jon. nickel for. will will Thank a the think and you, market

Operator

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

Eduardo Bartolomeo

lot Okay. guide Thank for here. your a attention helpful and interest to very questions, our Again, and to focus thanks are even you. they

what end a conclusion, as will Just in I of the repeat said reiterate his Gustavo introduction. or

We are on our laser focused objectives.

positioned are I ESG think world. the to uniquely we

as see we While challenge, a just -- opportunity, as iron ore, see a climate business just X, we mentioned, copper. we Class nickel,

not about what targets. So the other Spinelli I on lower are our in company don't think I'm that there's we any say, confident world end. the I has but we do didn't extremely have.

the that copper confident guidance to And because we are But are we guidance. being showing going lower with that the we and to end we guidance the lastly, we realistic. lowering is extremely are to our But For are only get is are one sure, of the guidance. actions. challenge

are We putting is. money where our our mouth

opportunities and any is Our capital discipline we disciplined, grow. not to by extremely are letting

are the our don't other company inside. world I mining business any needed as opportunities with discipline we to inside cash again, suite So going such has a that, keep company grow to the much as believe of in

to keep attention. lot And listen a to the lot are marathon us benefit. you ones So truly again, see and for with that in in thanks a again, your or Thanks hope will this the call. safe. next I

Operator

day. today. and That conclude you your nice for does Thank much conference very have Vale's participation, a call for

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