Vale S.A. (VALE) Q4 2022 Earnings Call Transcript

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Vale S.A. (NYSE:VALE) Q4 2022 Earnings Conference Call February 17, 2023 9:00 AM ET

Company Participants

Eduardo Bartolomeo - Chief Executive Officer

Gustavo Pimenta - Executive Vice President of Finance & Investor Relations

Marcello Spinelli - Executive Vice president of Iron Solutions

Deshnee Naidoo - Executive Vice President of Energy Transition Materials

Conference Call Participants

Leonardo Correa - BTG Pactual

Rafael Barcellos - Banco Santander

Caio Ribeiro - Bank of America

Carlos De Alba - Morgan Stanley

Vanessa Quiroga - Credit Suisse

Rodolfo Angele - Banco JPMorgan

Daniel Sasson - Itaú BBA

Amos Fletcher - Barclays


Good morning, ladies and gentlemen. Welcome to Vale's Conference Call to talk Fourth Quarter 2022 Results. At this time, each participants are successful a listen-only mode. Later we will behaviour a question-and-answer convention and instructions will beryllium fixed astatine that time. This telephone is being simultaneously translated to Portuguese. [Operator instructions] As a reminder, this convention is being recorded, and nan signaling will beryllium disposable connected nan company's website astatine astatine nan Investors link.

This convention telephone is accompanied by a descent position besides disposable astatine Investors nexus astatine nan company's website and is transmitted via Internet arsenic well. The broadcasting via Internet, some nan audio and nan descent alteration has a fewer seconds hold successful narration to nan audio transmitted via phone.

Before proceeding, fto maine mention that forward-looking statements are being made nether nan safe harbor of Securities Litigation Reform Act of 1996. Actual capacity could disagree materially from that anticipated successful immoderate forward-looking statements remark arsenic a consequence of macroeconomic conditions, marketplace risks, and different factors.

With america coming are Mr. Eduardo De Salles Bartolomeo, Chief Executive Officer; Mr. Gustavo Pimenta, Executive Vice President of Finance and Investor Relations; Mr. Marcello Spinelli, Executive Vice president of Iron Solutions; Mr. Carlos Medeiros, Executive Vice President of Operations; Ms. Deshnee Naidoo, Executive Vice President of Energy Transition Materials. First, Mr. Eduardo Bartolomeo will proceed pinch nan position connected Vale's 4th fourth 2022 performance. And aft that, he will beryllium disposable for mobility and answers.

It's now my pleasance to move the telephone complete to Mr. Eduardo Bartolomeo. Sir, you whitethorn now begin.

Eduardo Bartolomeo

Thank you very much. Good morning, everyone. I dream you're each doing well. 2022, we substantially derisked and reshaped Vale. We had beardown deliveries successful nan guidance and decommissioning. We advanced, arsenic expected, astatine nan Brumadinho reparation.

We created leverage for operational stableness and flexibility. And we are simplifying our business portfolio, enabling a greater attraction connected our halfway businesses. On apical of that, we drew up a scheme for nan Vale of nan future, a institution that promotes sustainable mining, fosters debased c solutions and remains superior disciplined.

Next slide. Before going to our capacity successful Q4, fto maine conscionable reenforce that we conscionable announced a caller statement creation for Vale's Executive Committee, which will fortify our halfway business, broaden method excellence and amended task execution. I will supply much specifications later on.

I'm besides very happy to denote nan assignment of Jérôme Guillen arsenic our first Independent Director for our Energy Transition Materials business, successful statement pinch nan caller guidance exemplary that we had laid retired during Vale Day.

Jérôme is simply a erstwhile President of Tesla Automotive and has played a cardinal domiciled successful processing nan EV marketplace arsenic we cognize today. He is simply a very innovative and purpose-driven individual that will surely adhd tremendous worth to our power modulation materials strategy. As well, we proceed to make important advancement connected nan number sale, and expect to stock further specifications pinch you still successful nan first half of this year.

Moving connected to our operations. In robust solutions, we delivered beardown results. We find income up 24%, mixed pinch a beardown value realization. Our all-in costs decreased benefited by little freight rates. On nan task side, nan Gelado task is now nether commissioning, and that thief america make america very assured astir our accumulation guidance.

In our power modulation materials business, our nickel accumulation was dependable pinch income up 30% and accumulation up by 6%, chiefly owed to nan fantabulous capacity of our Sudbury mines, which delivered nan highest accumulation rates since 2019.

Also, Onça Puma had nan champion yearly accumulation successful nan past 5 years. In copper, it was a 4th of important attraction activities successful Salobo and Sossego to guarantee plus integrity, which is paving nan measurement for higher accumulation rates successful 2023. We successfully completed nan startup of Salobo III, which will adhd 30 to 40 kilotons per twelvemonth of copper astatine highest product.

On merchandise strategy, I would item Vale's semipermanent statement pinch General Motors to proviso battery-grade nickel sulfate. This reinforces Vale's unsocial strategical position to beryllium nan supplier of prime to nan EV industry. In our quest to go a leader successful sustainable mining, we proceed to present successful galore of our nationalist commitments specified arsenic successful quality rights, Amazon wood protection and nan information of our Dams.

Finally, we walked nan talk connected rate return to our shareholders. We conscionable announced a $1.8 cardinal dividend for costs successful March, while remaining committed to our buyback program, astir 42% completed.

Next slide, please. The redesign of our executive squad is cardinal to guarantee a fit-for-purpose statement pinch greater attraction connected its halfway business and connected delivering our strategical goals. We now person a dedicated building led by Spinelli to accelerate nan improvement of innovative products and solutions successful robust ore and nan betterment of our trading strategy.

Carlos Medeiros now has nan situation of accelerating nan implementation of Vale's guidance model, which will beforehand greater information and reliability connected Vale's operations. Rafael Bittar was promoted to nan Executive Team, implemented pinch excellence our Tailings & Dams guidance model, and now he will lead our method office, which incorporates Safety and Operational Excellence, Mineral Exploration and operational innovation. Alexandre Pereira will beryllium wholly focused connected implementing a state-of-the-art merchandise readying execution from end-to-end to unafraid our semipermanent maturation ambitions.

As you tin see, we designed our organizational building for nan businesslike guidance of our operations and nan improvement of innovative solutions for a carbon-neutral society.

Next slide, please. We are seeing unprecedented opportunities for segmentation and request maturation for high-quality products. Quality is cardinal for nan decarbonization of steelmaking and a game-changing translator for nan high-quality suppliers for illustration Vale. There is nary different institution for illustration Vale, which combines measurement and quality, innovative products and proviso concatenation to present nan decarbonization solutions that nan alloy manufacture needs.

Our robust solution strategy is designed precisely for this purpose. With those differentiators, we are a partner of prime for our clients. We are establishing business pinch alloy mills to find caller solutions to decarbonize nan industry. We person signed pinch clients, representing almost 50% of our Scope 3 emissions.

As you tin spot connected nan chart, we are projecting a higher mean robust contented successful our robust ore portfolio starting successful 2023. This would springiness america overmuch higher value premium connected prices. It's a value and a value game. Just arsenic a reference of really overmuch worth we tin make connected quality, each 1 percent constituent summation successful mean robust contented corresponds to astir $550 cardinal of incremental EBITDA.

The commissioning of nan positive 20 task successful nan S11D and nan Gelado project, which I already mentioned, will thief america execute growth, higher value and amended prices. In nan Southern Eastern and nan Southern Systems, we are expanding attraction process to present high-quality feedstock pinch nan 4 filtration plants successful Itabira, Vargem Grande and Brucutu that we delivered recently. And attraction is cardinal to a high-quality, debased c supply, logic why we signed up for nan improvement of mega hubs successful nan Middle East. And finally, we are besides astir to commencement up our first greenish briquette works successful nan first half of 2023. We look 6 cardinal tonnes accumulation capacity arsenic primitively planned.

Next slide, please. In our power modulation worldly business, we person nan correct assets successful nan correct jurisdictions, making america nan perfect partner for delivering high-quality products to our customers. In 2022, we entered into strategical nickel proviso agreements pinch Northvolt and pinch General Motors, successful summation to an MOU for nickel processing betwixt PTVI, Huayou and Ford Motor Company. We are processing a first-of-its-kind works successful Canada and North America to nutrient nickel sulfate from precocious play low-carbon nickel from our Canadian refineries.

This task is simply a earthy hold to our business, offering diversified income pinch a greater footprint successful nan North American EV market. Nickel accumulation accrued 6% successful 2022 chiefly owed to nan stabilization of Sudbury operations and nan accordant and beardown capacity astatine Onca Puma.

Copper accumulation declined by 15% to 253,000 tonnes successful 2022 owed to extended attraction astatine nan Sossego mill during nan first half of nan twelvemonth and further attraction required astatine Sossego and Salobo. With nan attraction completion and nan startup of Salobo III, our copper accumulation should turn materially successful 2023. In short, we person nan assets, we person nan innovative technology, and we are building nan customer engagement and nan proviso chain. With that, we person nan will and nan conditions to return Vale to nan activity of a sustainable mining connected nan captious minerals world.

Next slide, please. Safety is nan ground of a moving culture, and we are proud to person achieved historical results successful 2022. We reduced much than 80% nan number of precocious imaginable injuries since 2019 successful cardinal captious activities. Vale has now nan lowest TRIFR complaint successful 15 years. We are besides 40% completed successful our extremity to destruct each our upstream dams. The B3/B4 reservoir had its emergency level reduced from precocious to mean aft successful information improvements and important milestone successful nan travel to destruct captious safe conditions successful dams by 2025.

Vale is astir 90% adherent to nan requirements of nan world manufacture modular for tailings management, which gives america assurance that we will beryllium 100% compliant by 2025. And we will proceed to prosecute nan highest information standards and operational excellence, making judge information is incorporated into nan company's culture.

Next slide, please. At Vale, we are making judge that sustainable mining is astatine nan halfway of each our actions. On our travel to trim Scope 1 and 2 emissions, we established a earthy state proviso statement for nan pelletizing works successful São Luis. We are besides testing Biochar successful our metallurgical and pelletizing processes, while progressing pinch nan conversion of nan 2 pelletizing plants to greenish briquette successful Tubarão, arsenic mentioned before.

We person a voluntary committedness to protect and reconstruct further 500,000 hectares of wood by 2030. We protected and recovered 51,000 hectares successful 2022, bringing nan full to 172,000 hectares since 2019 aliases astir 34.4% of nan semipermanent goal.

On nan quality rights, 100% of Vale's operations successful Brazil are covered by quality authorities owed diligences. As you know, we person a extremity of taking 500,000 group retired of utmost poorness by 2030. In 2022, we item our action plan. In 2023, we will commencement a aviator task to use 30,000 group from areas neighboring Vale's cognition and successful different locations.

In Brumadinho, we delivered 58% of nan commitments group by nan reparation agreement. We didn't found deadlines. In Mariana, nan Renova Foundation provided 315 lodging solutions successful 2022. This intends Renova provided a full of 141 lodging solutions truthful acold aliases astir 60% of nan resettlement requirement.

In conclusion, we person materially derisked Vale, and we are delivering connected our commitments to a safer and much sustainable company. With that, I americium judge we are building a amended Vale.

Now I'll walk nan level to Gustavo, who will item our financial results, and I'll get backmost to Q&A astatine nan end. Thank you.

Gustavo Pimenta

Thanks, Eduardo, and bully morning, everyone. Let maine commencement pinch our EBITDA capacity for nan quarter. As you tin see, we delivered a coagulated $5 cardinal EBITDA successful Q4, $1 cardinal higher than Q3 2022. This $1 cardinal summation is chiefly explained by our beardown income capacity successful nan 4th pinch robust ore finance up by 15.8 cardinal tons and nickel by 13.9 kilotons. Price realization for robust ore fines besides contributed to our amended performance, and I'll supply much specifications astir that connected nan adjacent slide.

Bunker and lipid costs was positively affected by $250 cardinal owed to little freight costs chiefly arsenic a consequence of little bunker prices. In others, nan main driver was nan $224 cardinal one-off taxation statement successful Para, which I will screen later successful my presentation.

So, backmost to robust ore value realization. The mean reference value for nan 4th was $99 per ton. Our mean premium was $1.6 per ton, up $1 versus Q3 arsenic a consequence of amended income mix.

The pricing system effect had besides a affirmative effect connected our last realized prices. This is mostly explained by nan higher guardant prices astatine nan extremity of December. Around 31% of income were booked astatine an mean value of $116 per ton. You tin spot this effect connected provisional prices successful existent quarter, which contributed pinch $5.3 per ton.

Before nan adjustments for moisture and FOB sales, value realization was astir $107 per ton, 8.5% supra nan benchmark price. So, successful summary, we delivered a realized value of $95.6 per ton, up $3 per ton versus Q3 contempt a alteration successful benchmark prices of $3.3 per ton.

Now, moving to robust ore all-in costs. As you tin spot astatine nan bottommost of nan table, our EBITDA breakeven costs came down by $2.8 per ton to $48.5 per ton. This is explained by 3 main factors; first, nan 18% alteration successful income from third-party purchases, which contributed to $1.2 per ton successful our C1.

Second, our freight performance, which contributed pinch a costs simplification of $3.6 per ton owed to little bunker prices and amended freight rates; and $1 per ton resulting from higher finance premium owed to a amended mix.

On royalties, Vale associated support pinch nan authorities of Para successful narration to nan summation of TFRN, which is simply a interest to money nan authorities supervision of mineral accumulation activities. This agreement, which covers nan full 2022 fiscal year, was afloat recorded successful Q4.

Excluding this one-off event, nan royalties statement successful Q4 would person been $2.7 per ton little pinch all-in EBITDA breakeven of $45.8 per ton versus nan $48.5 per ton reported. For 2023, we forecast a alteration of $2 per ton successful nan EBITDA breakeven owed to higher mean value of our merchandise portfolio and little substance costs.

Now, turning to power modulation materials. Our EBITDA much than doubled quarter-on-quarter, reaching $775 million. This was chiefly driven by amended value realization for some nickel and copper, arsenic good arsenic a 30% maturation successful nickel income and a alteration successful nickel portion costs by 16% successful nan quarter.

Now, looking astatine all-in costs. In nickel, all-in portion costs dropped by $2,600 per ton chiefly driven by little costs of equipment sold. As you whitethorn recall, successful Q3, we had a carryover of high-cost inventories, which was a one-off effect to our Q3 costs of sales.

For 2023, we task nickel portion costs to beryllium comparatively flat, arsenic we don't expect to alteration our acquisition provender strategy successful nan short term, contempt higher expected productivity successful Sudbury. In nan midterm, we expect a simplification successful nickel costs arsenic we ramp up DBME.

Now moving connected to copper. Copper all-in portion costs was up owed to little volumes from South Atlantic operations, aft attraction astatine Salobo and Sossego plants. We expect portion costs to spell down connected nan backmost of higher volumes associated pinch amended operational capacity astatine Salobo and Sossego and nan ramp-up of Salobo III.

Now, moving to rate generation. As you tin see, free rate travel procreation was mostly impacted by moving superior and CapEx, which are usually higher successful Q4. The moving superior variety is mostly explained by nan $2.1 cardinal summation successful accounts receivable, chiefly owed to higher accrual income measurement for robust ore, together pinch nan affirmative effect of $21 per ton connected higher robust ore provisional prices. These invoices will beryllium collected successful Q1 this year, and we expect nan effect connected moving superior to revert successful nan pursuing quarters.

We besides repurchased astir $1 cardinal successful Vale shares successful Q4, which is aligned pinch our superior allocation strategy. So fto maine talk much astir our superior allocation strategy successful nan adjacent slide.

Since April 2021, we bought backmost 683 cardinal shares aliases 13% of nan first number of outstanding shares. This intends a 15% summation successful attraction of net and dividends connected a per stock basis. Also yesterday, we announced a $1.8 cardinal successful dividends to beryllium paid successful March 2023.

So earlier opening up for questions, I would for illustration to reenforce nan cardinal takeaways from today's call. As Eduardo mentioned, Vale redesigned its Executive Committee to guarantee a fit-for-purpose statement pinch greater attraction connected our operations and connected delivering solutions for nan world power transition.

In that sense, we are taking actions to service a increasing marketplace request for value products, leveraging connected our unsocial mineral endowment and invention capabilities. For example, nan high-grade pellets and briquettes, nan mega hubs initiatives and nan low-carbon nickel products.

We besides stay focused connected delivering caller projects to meet our accumulation guidance and to make judge we prolong nan unsocial competitory advantage of Vale. And finally, we stay highly committed to a disciplined superior allocation process, arsenic evidenced by our highly accretive buyback programme and dividend payout.

Now, I would for illustration to unfastened nan telephone for questions. Thank you.

Question-and-Answer Session


Thank you. Ladies and gentlemen, we will now statesman nan question-and-answer session. We proposal that nan mobility should beryllium asked successful English [Operator Instructions] Please, restrict your questions to 2 astatine a time. And our first mobility comes from Leonardo Correa pinch BTG Pactual.

Leonardo Correa

Good morning, everyone. Thank you. Can you perceive maine well?

Eduardo Bartolomeo

Yes, yes. Yes, we tin now.

Leonardo Correa

Perfect. Thank you. So my first mobility goes to Gustavo. On nan statement of still of rate returns, right, Gustavo, I mean, Vale has been very progressive connected nan buybacks complete nan past quarters. And since you joined Vale, your connection has been very clear connected buybacks and nan penchant for buybacks, right? Think Vale has really stepped up nan crippled connected that front. Since nan caller lows, right, I mean, Vale has rebounded for illustration 40%, 50%, right? The banal has performed rather good complete nan past months. In this context, I mean, nan banal has related arsenic well, right, I mean, versus Australian peers. We spot that re-rating process astir apt complete, right? I mean, nan aggregate is now much aligned, which is fair, right?

So successful this context, Gustavo, I mean, really do you spot nan balance, right, of now sustaining this buyback, right, successful nan discourse of, let's say, a higher priced stock vis-à-vis paying that equilibrium successful bonzer dividend. So I conscionable wanted to spot really you spot existent trade-off, fixed wherever nan stock value is and nan usage of Vale?

And nan 2nd mobility connected costs, I deliberation we had a beautiful reassuring number, right, successful position of delivered costs into China, right? The number has declined from $51 to astir $48 this 4th quarter. I mean, looking forward, right, fixed nan deflationary pressures we're seeing, right, I mean, nan lipid value is still rather depressed. I mean, if you deliberation of freight rates, Brazil to Bay & Long, nan number is $16, truthful still beneath nan freight complaint that you guys are booking. And I understand that you person a bully portion of that which is semipermanent contracts. But conscionable putting everything together, tin we spot nan delivered costs into China falling beneath $45 by year-end, aliases really are you seeing nan improvement of those costs? Thank you very much.

Gustavo Pimenta

Thanks, Leo. So connected nan first one, arsenic you know, we person a very charismatic dividend policy, right, nan 30% EBITDA little sustaining, which is somewhat adjacent to a 50% payout. So we've been performing connected that. And connected nan buyback, arsenic you know, we've been stepping nan talk, delivering and executing connected nan buyback, particularly erstwhile prices are softer. Quite frankly, we proceed to judge that moreover astatine nan existent levels, this is astir apt 1 of nan best, if not nan champion finance that we have, buying backmost shares. And we'll proceed to do astatine those levels.

We proceed to judge that, these investments astatine nan existent levels is highly accretive for our shareholders. On nan cost, I mean, nan guidance that we person provided for 2023 is astir 47. So $2 little than what we posted past year. So we person to see. I deliberation a batch -- it will dangle connected really bunker performs. Certainly, year-to-date, freight rates are better, astir $3 altogether, truthful that could beryllium an upside. But truthful far, we are keeping nan 47 arsenic our guidance for 2023.


And our adjacent mobility comes from Rafael Barcellos pinch Banco Santander.

Rafael Barcellos

Hello, bully morning, and acknowledgment for taking my question. My first mobility is astir briquetting. I mean, really is nan briquetting task evolving? And really arsenic been your commercialized strategy connected this arsenic I deliberation we are approaching nan start-up, and, of course, really your customers person been reacting to that? And my 2nd mobility is astir nan guidelines metals division. Could you please elaborate connected really are you seeing operations evolving now successful nan 1Q, not only connected nan costs broadside but besides connected nan accumulation side, and which type of publication to Vale we could expect from Tesla's erstwhile executive who conscionable joined nan Board? Thank you.

Marcello Spinelli

Thank you, Rafael, for nan questions. This is Spinelli here. Talking astir nan briquette, nan – greenish briquette. So arsenic you mentioned, we expect nan start-up this twelvemonth for nan first business works successful nan first half, 2nd -- successful nan 2nd half. So this is nan twelvemonth for test, truthful business trial successful our clients.

We've been processing nan blast furnace briquette, and we've been testing astir Brazil successful much than each nan benignant of size of blast furnace. So that will beryllium different test. So we're going to research nan seaborne, each nan effect successful nan vessel. So that's nan twelvemonth for test. And besides nonstop simplification will beryllium a anticipation to foster and summation nan velocity to trial successful our clients. So for this year, it's astir test. All nan -- nan commercialized strategy is akin to nan pellets. And for adjacent year, we'll beryllium evolving successful our schedule to grow our accumulation to nan mega hubs and to our clients successful different parts of nan world.

Eduardo Bartolomeo

Rafael, I'll relay nan mobility for Deshnee to spell complete nan performance. But I want to research your 2nd portion of nan mobility astir Jerome. I deliberation arsenic we've been continuously saying, we person unsocial assets and opportunity successful the, what I say, gyration power of nan world. And I deliberation Jerome is portion of this, right? He is 10 years successful Tesla, he's been existent and made what we cognize what is nan EV world today. So he will thief america a batch connected guiding us, connected helping america and nan Board together pinch maine and different peers that we're going to conception to unlock nan tremendous worth that we person wrong this business.

Absolutely is 1 floor plan that fits because he comes from OEM. We are looking for different profiles arsenic good that will thief america pinch underground mining for sure, for -- pinch nan guidelines metals experience. So erstwhile we said, let's carve retired nan business, let's ringing obstruction guidelines metals is precisely to pull talented apical people. And I deliberation this is simply a bully example. And again, I'm truthful gladsome that he took nan situation to travel and extract this unperceived worth of nan guidelines metals business astatine Vale. And I deliberation Deshnee tin elaborate connected your mobility astir nan performance. And I deliberation we are doing bully strides connected that broadside arsenic good and still a batch of challenges arsenic well. Okay, Deshnee, please.

Deshnee Naidoo

Thank you for that, Eduardo, and convey you for nan question, Rafael. So if I look astatine nickel and arsenic we guided astatine Vale Day, nickel will beryllium very akin to nan accumulation level that we achieved past twelvemonth but pinch 2 changes. We will return nan Onca Puma Furnace 1 down successful 4th four, and we will return nan Creighton shaft down for overhaul successful 4th three. But contempt that and because of nan productivity gains that Eduardo mentioned successful position of Sudbury, we are still expecting to support accumulation mostly level successful nan remainder of nan business. And extracurricular of Sudbury and aft completing nan PTVI furnace for rebuild past year, PTVI will springiness america a delta 10,000 tons successful nan year. So that's connected nickel. But I deliberation because of nan seasonal impacts of P&P that we mostly do successful nan first half, we'd person a akin twelvemonth for nickel wherever you spot nan accumulation backmost ended to nan 2nd half, including income arsenic well.

Coming to copper. So copper, there's 3 changes that will hap this year. The first 1 is nan North Atlantic, wherever we'll spot astir a delta 10,000 tons year-on-year, and that's mostly from nan improved support that we did past twelvemonth pursuing immoderate of nan seismicity events we've had that we've since supported. And it was awesome to spot not only did Eduardo mentioned, nickel had a awesome 4th past quarter, but truthful did copper for america retired of Sudbury.

The crippled that we request to triumph astatine this twelvemonth is nan backlog attraction astatine some Salobo and Sossego. And turning to Salobo quickly, we've now moved this into a very system programme wherever we've mapped retired not only each of nan consequence based connected nonaccomplishment profile, but nan action that we request to travel to some drawback up connected immoderate of nan backlog maintenance, but arsenic good arsenic support up to nan attraction schedule that we've had. And again, we person had a bully January, which tells america that we are connected nan correct plan.

Now we each cognize that successful bid to beryllium successful, what gets measured gets done. So we've really put nan Salobo operations into a PMO building truthful that we now arsenic a activity squad tin spot play each of nan activity that is happening. That will springiness america astir a delta 45,000 tons from past year's capacity crossed some Salobo I and II works arsenic good arsenic nan Sossego plant. But nan existent triumph for america this twelvemonth is making judge that we tin proceed connected nan ramp-up scheme of Salobo III plant, which will springiness america astir a delta of 50,000 positive successful nan year.

And again, Rafael, that will beryllium backmost ended, right, conscionable because of nan quality of nan ramp-up curve that we have. But we're very happy to study that arsenic of today, some lines are operating successful Salobo III. So nan measurement to look astatine nan performance, nickel akin to past twelvemonth pinch immoderate of nan exceptions I mentioned. Copper, we are targeting nan guidance, and it will travel from nan delta that we're going to get successful position of nan attraction that we are doing because of nan Salobo III ramp-up that ended into nan 2nd half of nan year.


Our adjacent mobility comes from Caio Ribeiro pinch Bank of America.

Caio Ribeiro

Yes, bully morning. Thank you for your opportunity. So my first mobility is connected nan Base Metals division. If you could stock immoderate updates successful regards to nan process, right, of perchance trading a 10% liking successful nan division, that would beryllium very helpful, right, particularly successful regards to nan timing of concluding nan transaction. First half 2023 is still valid, what floor plan of investors you're successful chat with? And what you scheme to do pinch nan imaginable income proceeds?

And past secondly, if you could besides supply an update successful position of discussions astir nan renegotiation of nan Renova model agreement, whether location is immoderate timing, immoderate meaning of imaginable amounts already agreed, that would beryllium great, too? Thank you.

Gustavo Pimenta

Thanks, Caio. This is Gustavo. So I'll screen both. On Base Metals, it's moving rather well. Quite frankly, we are expecting to person news successful much specifications arsenic we said earlier successful nan first half of 2023 discussing nan opportunity pinch different parties of awesome parties that we deliberation is going to adhd a batch of worth to this story. So enactment tuned.

We should beryllium utilizing a larger information of nan proceeds to money growth. This is simply a business that should beryllium investing successful caller platforms going guardant that I deliberation it's going to beryllium highly accretive, right, bully level of returns and truthful on. So, nan thought is that a batch of nan resources will beryllium utilized for that.

On nan TTAC renegotiation, Renova, we proceed to germinate connected nan discussions. I deliberation nan caller authorities has been vocal successful nan consciousness that they are besides reinforcing a desire to settle, which we each deliberation it's a bully thing. So, our anticipation is that we'll beryllium capable to find a solution and waste nan renegotiation this twelvemonth successful a format that useful for everybody.


Our adjacent mobility comes from Carlos De Alba pinch Morgan Stanley.

Carlos De Alba

Thank you very much. Good greeting everyone. So, a mates of questions. Coming backmost to nan Base Metal business. I don't cognize what other tin you elaborate, but possibly really do you spot nan worth re-rating that a transaction successful guidelines metallic tin return place?

Do you spot that much coming from a aggregate re-rating, aliases do you deliberation that it's much really nan capacity of nan business that unfortunately, moreover though successful nan past fewer months, it has improved, complete nan past respective years it hasn't been stellar. So, really do you -- could you possibly articulate, Gustavo, connected really do you spot this playing out? Do you property this much to aggregate re-rating, transparency, building of nan business, organizational building and activity building aliases much to nan capacity going guardant being amended connected a sustainable basis?

And past nan different mobility if I may, Gustavo, has to do pinch nan CSLL caller determination by nan FDF. Potentially, nan authorities will beryllium capable to get nan money connected taxation disputes earlier nan process aliases nan disputes travel to an extremity connected an exhaust connected nan ineligible avenues.

And it could be, successful theory, retroactive. How overmuch Vale is exposed to that? And besides continuing pinch nan taxation situation, location was a proposal, provisional measurement that would alteration nan transportation pricing practices successful Brazil. How is Vale exposed to that provisional measure? Thank you very much.

Eduardo Bartolomeo

Okay. Carlos, I'll fto Gustavo spell to nan 2nd one. But again, possibly each nan supra that you mentioned because let's beryllium frank. I deliberation nan sanction of nan crippled here, I've been saying that for a agelong time, it's execution. Why we ringing obstruction nan business? Because we judge that doing nan correct incentives, nan correct motivations will let america to amended our performance. It's happening, by nan way. You noticed that.

So -- and we're finishing this ringing fencing. So Deshnee is going to person each her exco together pinch her straight focused. The governance that we are building together is astir attracting group for illustration I conscionable mentioned, Jerome and others that you spot successful nan adjacent months arsenic we germinate successful nan creation of this governance.

But fundamentally, why bring personification other to nan array now? That's a bully question, a adjacent mobility to answer. And I said that we would do anyway, right? So, conscionable carnivore successful mind that if yet we don't person a correct connection because what we want pinch this is an anchor to beforehand nan acceleration of nan execution. We spent already 16 years connected that. We don't person different 16 years for that. So if I'm capable to bring personification that shares nan aforesaid cognition of value, of -- for illustration I mentioned that Jérôme did arsenic a Board member, aliases Ensca [ph] arsenic a partner, a financial partner, a strategical partner that tin thief us, again, accelerate nan execution. That would beryllium nan basal reasons why we carved out, ringing fenced and sold a insignificant participation.

We don't want to put a lipstick connected nan pig. We want to make this business really, really excel. And I'm judge nan re-rating is cardinal here. It's not only because Vale has re-rated, arsenic I deliberation Leo mentioned. I deliberation nan full manufacture is underrated. The full manufacture is ridiculous underrated.

I'm not talking astir nan mining industry. We cannot beryllium successful nan ground of nan power gyration and being taking multiples arsenic we speak. And not evidently, if I move nan greenish metals, copper, nickel, cobalt to a abstracted entity, that makes it easier to group understand nan criticality and nan maturation that is coming.

That's nan adjacent logic why we're doing that, because if you understand nan needs of rate for this business, we are talking immense magnitude of money. We're talking $20 billion. And I deliberation Vale's robust solutions shareholder yet wouldn't for illustration that arsenic well. So why not person this action successful nan adjacent future, if you are executing well?

So sorry for nan agelong answer, Carlos, but it's each of nan above. And I person zero uncertainty that we are successful nan correct path. I person zero uncertainty that we're going to execute overmuch amended than we person been executing. I person zero uncertainty that we're going to person a re-rating and are re-rating overmuch much above.

And I deliberation mining manufacture has to beryllium re-rated. It's unacceptable to beryllium re-rated for illustration -- rated everybody, I'm talking astir Vale. I'm talking astir nan mining industry. So we are truthful captious to nan world, and you cognize precisely what I'm talking astir valuations.

So, agelong answer, sorry, but that's a basal point for us. This is nan astir important strategical matter successful our portfolio today. And then, we will person clip to talk astir robust ore, by nan way. I ne'er saw a telephone pinch truthful galore questions astir guidelines metals. I deliberation that shows nan interest. Thanks, Carlos, for nan mobility again. I will inquire Gustavo to spell complete nan --

Gustavo Pimenta

So, Carlos, conscionable to complement quickly here. On nan tax, nan CSLL, we've booked 100% of nan imaginable effect connected Vale successful Q4, which was $150 million. So that's afloat provisioned, including nan liking and penalties. So you astir apt heard location has been discussions astir giving immoderate alleviation connected penalties, which we are pursuing closely. But astatine this point, it's afloat reserved, $150 cardinal of effect successful Q4.

On nan transportation pricing, we saw it very positively, actually, because I deliberation nan position present is that nan regularisation will travel nan OECD principles, which is what Vale already follows. So I deliberation to a definite extent, it gives transparency and clarity connected nan regularisation that Vale has been already pursuing truthful far, was a affirmative move.


Our adjacent mobility comes from Vanessa Quiroga pinch Credit Suisse.

Vanessa Quiroga

Hi. Thank you for taking my questions. I person a couple. The first 1 is really -- if you tin talk really you spot nan existent request for higher-grade robust ore and agglomerate. I mean, successful nan very short term, we are good alert of nan fundamentals for nan mean and agelong term, but conscionable wondering really – what is your consciousness of that existent marketplace conditions for nan product? And nan 2nd one, conscionable to adhd connected nan mobility astir Base Metals, we've seen and we heard that imaginable partners could beryllium either a subordinate successful nan automotive assemblage aliases a financial partner. So tin you talk a spot further connected what are nan different virtues that you spot successful either floor plan for nan imaginable strategical partner? Thank you.

Marcello Spinelli

Thank you, Vanessa, for your questions. Spinelli here. Well, fto maine talk astir nan short word and midterm. So short-term pellet business, agglomerated business now is pellet. So we're moving to greenish briquette truthful far. But actually, blast furnace pellet successful nan past quarter, we had immoderate accommodation successful nan request because of each nan problems successful nan power successful Europe.

So Europe is an important client, but truthful far, truthful good. They didn't person a immense – that immense effect that we were expecting. So nan request is beardown for this 4th and adjacent quarter. In nonstop simplification is really pinch a bully request successful nan Middle East. Middle East and nan US coming are nan main users for nonstop simplification route. So acold they person immoderate adjustments successful their price, but nan request is location erstwhile you spot nan request and nan accumulation and nan level that we announced successful our guidance. But I person immoderate news successful midterm. I conscionable came from China.

Actually, I was nan first awesome successful beingness successful China truthful acold aft COVID. And 1 point is they are – and it's funny, because I expected that Europeans will travel successful nan first infinitesimal for nan mega hubs, each nan strategy that we person to amended nan accumulation for pellets, and they are really willing successful that. We judge successful nan inclination of increasing nan usage of scrap successful China. But they are struggling to velocity up that proviso of scrap, and they will request nan pellets for that. So they are aiming to subordinate america successful this mega hubs project. And also, our squad was successful Japan, successful Korea. And truthful far, they are already investing successful immoderate places successful nan – wherever we person Duqm that is successful Oman, besides Household Care successful Saudi Arabia. So again, it is happening. And for nan midterm, nan c price, you make a existent important difference. And truthful far, nan clients are coming. So we are excited to support our strategy. We are sticking connected that.

Gustavo Pimenta

Vanessa, Gustavo. Here conscionable connected your 2nd question, look, we are keeping this surely adjacent to america successful position of specifications of imaginable willing parties. What I tin opportunity astatine this constituent is we are looking astatine imaginable partners that judge connected nan power transition, judge connected what Eduardo highlighted earlier successful position of electrification of everything, EV transition, that sees nan semipermanent worth of guidelines metals, right, and is consenting to support our strategy. So that's nan type of floor plan that we are looking at. So we will make judge we stock those specifications later erstwhile we finalize those conversations.


Our adjacent mobility comes from Rodolfo Angele pinch Banco JPMorgan.

Rodolfo Angele

Thank you. I person 2 questions. My first is, I think, a difficult one, but I would for illustration to perceive your thoughts. What I'm proceeding from this telephone is location is simply a large alteration happening astatine Vale, and you're positioning nan institution to beryllium a cardinal subordinate successful a world that's going to beryllium very different. And indeed, nan institution has very unsocial assets, some successful nan guidelines metals and successful nan robust ore abstraction to benignant of present that. But we are still a fewer -- I don't know, location is simply a spread of clip until we get there. And successful nan meantime, we're, of course, looking astatine what's happening. We discussed costs. We discussed a number of things here.

So my mobility to you is erstwhile -- aliases what are nan cardinal benignant of first indicators that will go -- will make clear that -- for investors that we're getting to a constituent wherever profitability is expanding because of nan floor plan of products nan institution has, because of nan changes that are being implemented, and you should deliberation that will hap earlier nan re-rating of nan assemblage aliases not? So that's much of a conception question.

And nan different mobility was -- sorry, it's going to beryllium a spot much boring. I conscionable wanted to cognize if you tin supply america connected nan guidelines metals costs guidance assumption. What are your assumptions embedded location for by product? So that's it for me. Thanks.

Eduardo Bartolomeo

As you said, difficult question, but fantabulous question. I'll effort to beryllium little because it's astir everything that we've been talking about, right? If you look astatine this robust solutions business is there's a basal displacement that we are trying to push connected everybody's mind and ourselves, by nan way. That's why we redesigned nan organization, taking Spinelli wholly focused connected nan trading and nan strategy, bringing mid-year to look nan astir contiguous situation that you mentioned. How tin you comprehend that? It's nan summation of accumulation of pellet feeds and provender of value successful nan Northern System. That will bring precisely that percent constituent that I mentioned to our -- to nan exemplary that you exemplary because, of course, we person to beryllium connected nan lowest quartile.

We are -- we person nan bad assets pinch immoderate costs pressures, but we're doing last cost. That's -- and if we dilute for 340 arsenic you model, obviously, we will help. But fundamentally, it's a percent of robust ore quality. That is nan robust solutions that wherever we conception nan market, wherever we play successful nan precocious yield.

Remember nan descent connected nan position that we showed that this year, we improved for illustration 0.7 percent points, but we want to amended for illustration two-point percentage. Like I cognize if you retrieve Vale Day, we put Carajás being capable to ore to 67. That's wherever you're going to commencement seeing nan existent premium. And we're going to do a webinar astir that, by nan way, conscionable -- it's not a spot to denote these benignant of things, but we're doing a webinar to springiness moreover much specifications astir that for you, because group are not factoring that. We mentioned that successful Vale Day, and we're going to talk a small spot more. So that's 1 portion of nan equation.

Second one, I'll effort not to repetition my full spiel astir Base Metals. But that's -- it's ridiculous undervalued, everybody, not only us. The benignant of request that's coming complete america of nickel and copper aliases cobalt and everything, connected lithium, et cetera, it's not priced. And we request to beryllium capable to present nan projects. So I deliberation if you asked maine wherever nan cardinal points are, delivering nan guidance, delivering nan effectiveness of our existent operations, because we still person awesome assets that are nether -- that could execute better, I would say, perform, but they could execute better. They are getting amended capacity for illustration successful copper, arsenic Deshnee mentioned, connected nickel and nan growth, because that is nan growth.

Like Salobo III, we are very excited pinch Salobo III. Salobo III started up very well. Those benignant of assets are nan ones that are going to bring maturation to nan market, and group are going to extremity appreciating that. And you look astatine -- erstwhile you look astatine nan percent of nan information of Base Metals successful our rate generation, and you tin spell backmost to your model, we do it, because you're underestimating nan size of rate procreation that we're going to beryllium capable to bring if we execute nan projects. So that's why, again, we -- particularly we attraction our statement successful that sense.

So conceptually speaking, it's that. I deliberation it's a spot of a -- not only time. I deliberation I'm not trying to bargain clip here. We are doing. We're executing. We are buying backmost Vale. That's different highly precocious avenue of growth, and you do overmuch much amended calculation than I do. You cognize we accrued 15% nan basis. We are going to bargain much 7%. We're going to renew our buyback program.

So I deliberation it's a semipermanent game. We ever said that this benignant of business is not a sprint. It's a marathon, and group that judge successful nan marathon is going to make a batch of money arsenic we are doing already, right. So let's beryllium honest. I deliberation Vale has been really accretive, and it has a batch overmuch to do. And I deliberation those -- your questions are nan existent was that investors should really thought about. And group that jump successful nan autobus now will beryllium very happy successful nan medium-term. Thanks for nan question.

Gustavo Pimenta

Eduardo, conscionable complement Rodolfo's mobility connected nan 2nd 1 connected nan cost. So Rodolfo, we are taking surely nan use of byproducts based connected marketplace prices. This is nan numbers we are presently using. For 2023, we had guided copper astatine 3,200. It's amended than past twelvemonth arsenic we're bringing Salobo online, resuming capacity astatine Salobo I and II and bringing Salobo III online. And successful nickel, we are astatine 13,000. So likewise to past twelvemonth arsenic volumes are somewhat level arsenic Deshnee has highlighted.


Our adjacent mobility comes from Daniel Sasson pinch Itaú BBA.

Daniel Sasson

Hi, everyone. Thanks for taking my questions. My first mobility is connected nan TRFM successful Pará right. If I'm not wrong, they fundamentally Para was trying to triple nan taxes that they charged, and you really reported higher royalties aliases higher expenses pinch royalties successful your robust ore business this quarter. And you explicitly mentioned that $2.7 per ton costs summation because of an statement pinch nan Para state. If you could conscionable springiness america much specifications connected really -- aliases by really overmuch nan last taxes really increased? That would beryllium great.

And conscionable a speedy follow-up connected nan robust ore rate cost. You mentioned that you stay comfortable pinch your $47 per ton guidance for nan year. But if you could remark a spot connected nan marginal costs that you spot successful nan manufacture correct now aft nan very beardown costs ostentation that we saw but -- during 2022.

But past again, we're now seeing little bunker prices arsenic you mentioned, little freight rates. So, if you could springiness america a consciousness connected wherever you spot nan marginal accumulation costs opinionated correct now that would beryllium great? convey you.

Gustavo Pimenta

Thank you, Daniel. I'll fto Spinelli complete nan marginal costs of nan system. On nan TFIM, nan summation is erstwhile -- it's successful real, actually, it's astir BRL8. So, successful dollars, astir $1.6 per ton from nan north, right? So, this was a agelong conflict we had pinch nan authorities of Para, and we decided to settle.

Part of nan summation will beryllium dedicated for section investments that we're readying to do, societal related and others. So, that's nan effect you're going to spot from now on. As I mentioned successful my prepared remarks, we booked everything successful Q4. That's why you saw that ample variety successful our Q4 performance.

Marcello Spinelli

Daniel, it's Spinelli here. So, you're right, location is simply a activity that for us, it's amended than our competitors. Actually, we are much exposed to nan freight. And what we judge coming is that our semipermanent value is -- for nan past -- nan 70 that utilized to beryllium successful nan past, now is 90 contempt each those ups and downs successful position of cost. That's nan semipermanent value successful average.

So, -- and again, it's important to opportunity we were nan benchmark past twelvemonth successful position of all-in costs because of our high-grade ores. So, nan premiums are playing an important role. And that mid to semipermanent strategy that we see, nan premiums will play a very important domiciled to beryllium -- to make Vale successful nan first quartile of nan costs complaint -- of nan costs curve.


Our adjacent mobility comes from Amos Fletcher pinch Barclays.

Amos Fletcher

Yes, bully greeting everybody. So, I conscionable had 1 mobility connected Base Metals. I conscionable wanted to play devil's advocator present and inquire why does it make consciousness to bring an OEM onto nan shareholder registry and nan Board of nan Base Metals business?

I'm conscionable concerned, I guess, astir imaginable for a conflict of liking arsenic successful nan debased nickel and copper prices, but Vale shareholders want precocious prices. So, yes, I conjecture my mobility is why get an OEM arsenic a shareholder erstwhile you tin motion offtake volumes arsenic you've already been doing pinch Tesla and GM, et cetera? Thanks.

Eduardo Bartolomeo

Okay, Amos. I inquire guys evidently successful nan process. Just to beryllium clear, for illustration Jerome is simply a erstwhile guy, right? So, I deliberation you were asking astir nan partnership. So spell ahead.

Gustavo Pimenta

Yes. So Jérôme is nary longer pinch Tesla, right? So what we are aft is his invention capability, his knowing astir nan market. We deliberation it's going to adhd a batch of worth to nan Board. Regarding your reference to GM, we haven't commented connected immoderate imaginable candidates. So I won’t remark connected that.


That does reason today's question-and-answer session. Mr. Eduardo Bartolomeo, astatine this time, you whitethorn proceed pinch your closing statements.

Eduardo Bartolomeo

Okay. Thank you. Very -- I think, very breathtaking moments, right? I deliberation different call. Good to person a different telephone erstwhile successful a while. And I don't cognize group -- cipher asked astir China. China is doing fine. China is going to improve. But anyhow, I deliberation we are successful a bully start. I think, I'm going to push connected Gustavo's remarks successful nan end.

The organization, aft nan reshaping, arsenic we exit each nan assets that were draining rate wrong Vale, we were capable to repurpose our people. We person a awesome squad present astatine Vale to execute nan strategy. We person taken nan actions, arsenic was asked by Rodolfo.

We request to put value genuinely connected nan marketplace pinch volumes. Our volumes are coming backmost pinch quality. We're not going to put thing other too quality. So -- and we're going to person to make robust solutions beryllium real.

In Base Metals, power transition, now, we request to amended ourselves pinch immoderate modulation materials. It's -- nan opportunities are huge, arsenic we discussed during nan call, and execution of nan projects and nan operations are key.

And finally, we stay superior disciplined. I deliberation if immoderate of our -- nan cheque container database is, we've been very captious to delegate worth to our shareholders and to our stakeholders. This is simply a society, arsenic we discussed before, has to comprehend Vale arsenic desired, not only Vale, I mean, mining, we're not successful this crippled alone.

It's an effort to proviso nan captious minerals that are needed for society. That's a corporate effort. Society has to admit that. And erstwhile that does happen, I would genuinely judge that not only Vale, but nan full assemblage will beryllium re-rated.

So, pinch that, I would for illustration to convey you for your attraction and your questions. And I dream you each support safe. I dream to spot you successful nan adjacent call. Have a bully day.


That does reason Vale's convention telephone for today. Thank you very overmuch for your participation. You whitethorn now disconnect.

Editor: Naga

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