Check out the 3Q24 Financial Results
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Reparation
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Vale released, this Thursday, October 24th, its performance for the third quarter of 2024.
Operational and sales performance improved across all business segments. Iron ore shipments increased by 1.3 Mt (+2%) y/y, driven by an 18% rise in pellet sales due to higher production and strong demand.
The average realized iron ore fines price was US$ 90.6/t, US$ 7.6/t lower q/q despite iron ore reference prices having decreased by US$ 12.0/t. The lower decline vs. the reference price is attributed to an enhanced product portfolio and positive provisional pricing adjustments.
Proforma Adjusted EBITDA decreased by 6% q/q and 21% y/y, totaling USD 3.7 billion. Higher volumes and lower unit costs, particularly in iron ore, partly offset the impact of lower prices.
Iron ore fines’ C1 cash cost, ex-3rd party purchases, was 17% lower q/q and 6% lower y/y, reaching US$ 20.6/t, driven mainly by: (i) fixed costs dilution due to higher production; (ii) a better production mix, with higher volumes from the Northern System where production costs are lower and (iii) continued efficiency. In September, the C1 production cost reached US$ 18.2/t, indicating a positive performance in Q4. Vale is highly confident in achieving the low-end of its 2024 C1 cash cost guidance, ex-3rd -party purchases, of US$ 21.5-23.0/t.
Copper and nickel all-in costs were US$ 2,851/t and US$ 18,073/t, respectively. The copper all-in cost guidance is again being revised down, now to US$ 2,900 - 3,300/t. On nickel, the all-in cost guidance range of US$ 15,000-16,500/t is maintained and on track to be delivered.
Free cash flow was US$ 179 million, US$ 947 million lower y/y, largely reflecting the decrease in EBITDA.
The Samarco-related provision was revised to US$ 4.7 billion, an increase of US$ 1.0 billion, reflecting the most updated assessment regarding the potential settlement agreement with the Brazilian authorities, the claims related to the Samarco dam failure, and the extent to which Samarco may be able to fund any future outflows.
Expanded net debt of US$ 16.5 billion as of September 30th, US$ 1.8 billion higher q/q, primarily due to the additional provisions related to Samarco’s dam failure.
Below you can see the main highlights, as well as the full report:
I am pleased to present Vale's results for the first time as the company’s CEO. Before I comment on the quarter’s performance, I would like to briefly lay out what I envisage as the path forward for the company. First, we will strive to transform Vale into a more agile and efficient company, fostering innovation and a performance culture. Having said that, safety and operational excellence are non-negotiable elements of this journey. Second, our strategic efforts will be concentrated on delivering a superior portfolio, with a greater focus on customer-centricity. On iron ore, we will accelerate our high-quality product offerings, while on base metals, we aim to continue to grow, particularly on copper. Lastly, I am committed to enhancing our institutional relationships, ensuring we leave a positive impact on people and the environment.
In the quarter, our iron ore production reached its highest levels in over five years, underscoring our continued focus on operational excellence. Our pellet production is at its peak since 2019, aligned with our strategy to deliver high-quality products. In our base metals division, copper and nickel production also showed solid progress, marked by operational improvements in Canada, with the asset review implementation already bearing fruit. We also continue to deliver on dam safety, having recently removed the Sul Superior dam from emergency Level 3. Lastly, we expect to sign the Mariana settlement very soon, aiming at a definitive resolution that will, above all, benefit the impacted people and society, through a mutually beneficial agreement for all stakeholders.
Gustavo Pimenta
Fotógrafo: Ricardo Teles
Highlights
Iron Ore Solutions
- Commissioning of the Vargem Grande 1 project’s wet processing operations started in September, one month ahead of schedule. The project represents an important step towards Vale’s iron ore production guidance of 340-360 Mt in 2026, by resuming approximately 15 Mtpy of iron ore capacity and improving the site’s iron content by nearly 2 p.p. Other key projects underway: +15 Mt at Capanema and +20 Mt at S11D are 91% and 67% complete and on track to start in 1H25 and 2H26.
- In September, Vale completed the joint venture transaction with Apollo for US$ 600 million. Under the agreement Vale now holds 50% of the Vale Oman Distribution Center (VODC). VODC operates a maritime terminal with a large deep-water jetty and an integrated iron ore blending and distribution center with a nominal capacity of 40 Mtpy in Sohar, Oman.
Energy Transition Metals
- In October, the second underground mine of the Voisey’s Bay Mine Extension (VBME) project achieved mechanical completion, which will allow the mine to begin ramping up production in the coming months. The ramp-up of the Voisey’s Bay transition is an important milestone for the competitiveness of Canadian operations and will support unit cost reduction of the nickel business segment.
Recent developments
- The Onça Puma plant resumed operations on October 15th after a 10-day halt due to a power outage. Nickel metal production at the furnace restarted on October 22nd.
- Vale and BNDES have advanced with the creation of a private investment fund to foster Critical Minerals development in Brazil. The fund aims to raise up to R$ 1 billion, of which Vale and BNDES will contribute with an amount between R$ 100 million and R$ 250 million each. The amount raised should be invested in about 20 junior and mid-sized companies that operate in mineral research, development, and implementation of new strategic mineral mines in Brazil.
Tailing Dams
- Vale completed the de-characterization of Dique 1A and Dique 1B in September and October, respectively. Since 2019, Vale has de-characterized 16 structures, representing 53% of the Upstream Dam Decharacterization Program.
- The Sul Superior dam, located in Barão de Cocais, had its emergency level lowered from 3 to 2 in August following the execution of geological-geotechnical investigations and safety improvement measures.
Circular Mining
- Vale’s Waste-to-Value program is transforming waste and tailings into valuable resources. It encompasses more than 150 initiatives, including repurposing iron ore tailings into high-grade pellet feed in Carajás and eliminating waste rock stockpiles through reprocessing to create circular iron ore products in Minas Gerais. As part of the program, an additional 7 Mt iron ore production has been identified for 2024.
Decarbonization
- Vale and Green Energy Park, an integrated European hydrogen company, have joined forces to deliver decarbonization solutions for the global steel sector. The companies will work on feasibility studies to develop a green hydrogen production facility to supply a future Mega Hub in Brazil, an industrial complex aimed at manufacturing low-carbon steel products.
- Vale and Petrobras signed, in October, a strategic alliance for the supply of products and services focused on decarbonization. It establishes conditions for potential commercialization of co-processed diesel with renewable content, natural gas, and bunker fuel with 24% renewable content.
Brumadinho
- The Brumadinho Integral Reparation Agreement continues to progress, with more than 70% of the agreed-upon commitments completed and in accordance with the settlement deadlines.
Mariana
- Renova continues to progress with its reparation program, with R$ 38 billion disbursed and more than 446 thousand people compensated by the end of September.
- Advanced negotiations are ongoing for the Mariana settlement agreement, at a total value of approximately R$ 170 billion, considering past and future obligations to support the people, communities, and environment affected by the dam failure.
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