Check out the 1Q24 Financials Results

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Vale released this Wednesday, April 24th, its financial results for the frist quarter of 2024.

Vale reported proforma adjusted EBITDA (including associates and JVs proportionate EBITDA in the amount of US$ 203 million) of US$ 3.5 billion in Q1, 9% lower y/y and 49% lower q/q, mainly as a result of weaker iron ore fines realized prices. Q/q variation was also impacted by seasonally lower sales.

Iron ore sales increased 8.2 Mt (+15%) and while copper sales increased 14.1 kt (+22%) y/y, both supported by continued operational improvements.

Iron ore fines C1 cash cost ex-3rd party purchases was slightly lower y/y, reaching US$ 23.5/t in Q1, despite the negative effect of the BRL appreciation.

Free Cash Flow generation totaled US$ 2.0 billion in Q1, representing an EBITDA to cash-conversion of 57%, positively impacted by strong collection from Q4 sales.

Below you can see the main highlights, as well as the full report:

We got off to a strong start in 2024, fueled by our commitment to operational excellence. In the Iron Ore Solutions business, our iron ore sales have increased by 15% year on year, driven by robust production – the highest Q1 output since 2019. We’re also making progress on our growth projects, which will help improve our product portfolio’s quality and flexibility. Within the Energy Transition Metals business, improved performance at the Salobo complex, coupled with the Salobo 3 plant ramp-up, drove the increase in copper production and sales volumes. Encouraging results were also seen in our Canadian nickel operations, with higher availability of own sourced ore. Aligned with our commitment to society, we’re proud to have achieved 100% renewable energy consumption in Brazil, two years ahead of schedule. As we continue on our journey, we remain committed to building an even greater Vale.

Eduardo Bartolomeo

Chief Executive Officer

Fotógrafo: Ricardo Teles

Highlights

Disciplined capital allocation

Capital expenditures of US$ 1.4 billion in Q1, US$ 0.3 billion higher y/y, as expected. The Serra Sul 120 Mtpy project estimated CAPEX was revised upwards to US$ 2.8 billion, primarily driven by higher input and services costs higher input and services sourcing costs driven by a combined effect of the inflationary economic scenario since the project's approval, and the delay of almost 18 months in the issuance of the project’s installation license. The project’s start-up in 2H26 and Vale’s CAPEX guidance for 2024 of around US$ 6.5 billion remain unchanged.

Gross debt and leases of US$ 14.7 billion as of March 31st, 2024, US$ 0.8 billion higher q/q mainly as a result of new loans raised by Vale S.A. and Vale Base Metals, within our liability management plan.

Expanded net debt of US$ 16.4 billion as of March 31st, 2024, US$ 0.2 billion higher q/q, mainly driven by the increase in net debt. Vale’s expanded net debt target remains at US$ 10-20 billion.

Value creation and distribution

Allocation of US$ 275 million as part of the 4th buyback program in the quarter. As of the date of this report, the 4th buyback program was 17% complete, with 29.9 million shares repurchased.

Recent developments

Agreement to acquire the entire 45%-stake held by Cemig Geração e Transmissão S.A. in Aliança Geração de Energia S.A. (“Aliança Energia”) for R$ 2.7 billion. Upon closing, we will hold 100% of Aliança Energia’s shares. Aliança Energia's power generation asset portfolio consists of seven hydroelectric power plants and three wind farms in Brazil, comprising an installed capacity of 1,438 MW and an average physical guarantee of 755 MW. This transaction aligns with Vale's strategy to have an energy matrix based on renewable sources in Brazil and supports its commitment to decarbonize operations at competitive costs.

Focusing and strengthening the core

Gaining momentum on Iron Ore Solutions: The US Government’s Department of Energy has selected Vale USA to begin award negotiations for Bipartisan Infrastructure Law and Inflation Reduction Act funding. Vale aims for up to US$ 282.9 million to develop an iron ore briquette plant customized for the direct reduction route in the US, with plans for similar facilities in Brazil and globally. The briquettes technology was developed by Vale in Brazil to the support global steel industry and the first plant in the world was inaugurated in 2023 in Vitória, Brazil.

Building a unique Energy Transition Metals vehicle: Last week, the Committee on Foreign Investment in the United States (CFIUS) granted the final regulatory approval for the Energy Transition Metals partnership. The transaction closing is expected in the upcoming weeks.

The definitive agreement on the PTVI divestment was signed in February. As per the agreement, Vale Canada Ltd (“VCL”) will receive approximately US$ 160 million in cash upon closing of the transaction, which is expected to happen before the end of 2024, after the fulfillment of customary closing conditions. Upon completion, VCL will hold 33.9% of PTVI.

Promoting sustainable mining

Vale has achieved 100% renewable electricity consumption in Brazil two years ahead of schedule, which was 2025. With that, the company has zeroed its indirect CO2 emissions in the country. Also, it remains committed to achieving 100% renewable electricity consumption in its global operations by 2030, from the current 88.5%.

The Peneirinha dam, located in the Vargem Grande complex, was removed from the emergency level by the National Mining Agency in March. The structure received a positive Declaration of Stability Condition (DCE) certifying its safety. This is the Company's 12th dam to leave the emergency level in the last two years.

Vale’s ESG Risk Rating, assessed by Sustainalytics, improved from 35.3 last year to 31.2 in April, in further recognition of our efforts to build a safer and more sustainable company.

Reparation

The Brumadinho Integral Reparation Agreement continues to progress with 69% of the agreed-upon commitments completed and in accordance with the settlement deadlines.

In the Mariana reparation, around R$ 36 billion has been spent on remediation and compensation, and approximately 85% of resettlement cases are now completed.