Vale S.A. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Operational Performance: Delivered solid operational results across commodities, on track to meet annual production guidances. Iron ore production growth driven by S11D and project ramp-ups; copper had best third quarter result since 2019; nickel saw own production ramp-up.
• Projects and Milestones: Bacaba copper project preparation ongoing; Serra Sul expansion nearing completion; Serra Leste capacity expansion approved. Dam safety milestone: last Level 3 dam declassified; implemented GISTM tailings management standard.
• Portfolio Strategy: Flexible product mix adjusted to market needs, improving premiums. Iron ore fines premium up ~$2 per ton quarter-on-quarter, annualized EBITDA improvement over $500 million.
• Safety and ESG: Advancement in dam safety, ESG ratings upgraded, ESG-focused investors returning.

Segment Performance

• Iron Ore: Production reached 94 million tons, a 4% year-on-year increase, with sales at 86 million tons, up 5% year-on-year. EBITDA was close to $4 billion, an increase of nearly $250 million. Iron ore fines premium increased by nearly $2 per ton quarter-on-quarter, with an annualized EBITDA improvement of over $500 million.
• Copper: Production grew 6% year-on-year, with all-in costs decreasing 65% to below $1,000 per ton, the fifth consecutive quarter of year-on-year cost reductions.
• Nickel: Production was flat year-on-year, but own production ramped up, leading to a 32% year-on-year decrease in all-in costs to $12,300 per ton. The second furnace of Onça Puma started, adding 15,000 tons of annual production capacity and expected to reduce unit costs by approximately 10%.

Guidance

• Iron Ore: Confident in achieving full-year EBITDA and cost guidance, with iron ore all-in costs expected to be in the range of $20.5 to $22 per ton.
• Base Metals: Nickel all-in cost guidance revised to $13,000-$14,000 per ton, copper all-in cost guidance to $1,000-$1,500 per ton. Free cash flow guidance maintained, with plans to return value to shareholders including potential extraordinary dividends.

Risks

• Market and Regulatory Risks: Impact of market conditions on product premiums; regulatory changes affecting dividends and debt structures.
• Operational Risks: Uncertainties in project execution; market competition affecting product positioning.

Question and Answer

Q: About portfolio strategy and dividends A: Rogério Nogueira discussed the benefits of the portfolio strategy and Marcelo Bacci mentioned potential extraordinary dividends.

Q: Participating debentures and copper growth A: Marcelo Bacci talked about the participating debenture offer, and Shaun Usmar discussed copper growth initiatives and future plans.

Q: Samarco and legal cases A: Gustavo Pimenta spoke about Samarco's progress, and Marcelo Bacci mentioned the status of the U.K. legal case.

Q: Benchmark changes and market cap A: Rogério Nogueira discussed benchmark changes, and Gustavo Pimenta addressed market cap and growth focus