Vale’s Adjusted EBITDA Falls $ 2.7 Billion YoY in Q1 2023, Citing Lower Iron Ore Prices and Sales, as Well as Higher Costs

Vale reported proforma adjusted EBITDA from continued operations of US$ 3.7 billion in Q1, down US$ 2.7 billion y/y, mainly reflecting lower realized prices of iron ore fines and pellets, lower sales of iron ore fines and higher costs, according to its quarterly earnings report.

“Our Q1 results showed stronger iron ore production, supported by S11D improved performance, thanks to our truckless system improved reliability and the new crushers. Despite the weather-related loading restrictions that impacted our sales, we remain confident in our ability to achieve our 2023 goals. Our Energy Transition Metals results were solid, with continued ramp up at Salobo III, resulting in a strong performance in copper. In Sudbury, our mines had their highest production rates since 2017. While the mining industry faces inflationary pressure, we remain focused on cost efficiency and productivity gains. We are also making progress in managing our tailings dams. In April, two geotechnical structures received their declaration of stability, which led to removing their emergency level. Since 2022, we have successfully revoked the emergency level protocols for 10 structures. We remain strongly committed to building a safer and more reliable company while delivering value to our shareholders.”

Focusing and strengthening the core

• Progressing in the electric vehicles value chain:

• PTVI and China’s Zhejiang Huayou Cobalt Co. signed a definitive agreement with global automaker Ford Motor Co. for the development of the Pomalaa project in Indonesia. The three-party collaboration enables to advance more sustainable nickel production in Indonesia and help make electric vehicle batteries more affordable.

• In February, we inaugurated the construction of the Morowali project, an integrated nickel mining and processing plant (RKEF) powered by natural gas, with an expected nickel capacity of 73 ktpy, to start-up in 2025. The project is a JV between PTVI, which will own 100% of the mine and two Chinese partners, who will hold a 51% stake in the RKEF.

Delivering iron solutions:

• Shipment of the first briquettes cargo for international tests in blast furnace in April. The cargo was shipped from the Port of Açu for testing at a client’s blast furnace in Europe. The green briquette is an innovative product, which reduces CO2 emissions in steelmaking by 10%.

• Emergency plan for Torto dam was approved in March, and our expectation is to obtain the operating license by the end of Q2. The dam will enable us to increase the overall quality and volume of pellets, improving mix and average price premium.

• Advancing the project pipeline:

• Both lines at Salobo III plant already in operation, and successfully ramping up. The project will add 30-40 ktpy of copper production to the Salobo complex and it is expected to reach full capac ity in 4Q24.

• Commissioning of Gelado project has continued to progress, using 100% electric dredges. Gelado will produce high-quality pellet feed by reusing the tailings that have been deposited in the Gelado dam.

• Responsible divestment of non-core assets is concluded with:

• The sale of Companhia Siderúrgica do Pecém (CSP) was closed for an enterprise value of US$ 2.2 billion, used to prepay CSP’s outstanding net debt balance of US$ 2.3 billion.

Two geotechnical structures received declaration of stability condition in April, having their emergency level condition removed. Since the beginning of 2022, 10 structures had emergency level protocols revoked.

• Vale’s ESG Risk Rating, assessed by Sustainalytics, was upgraded from 39.1 to 35.3, indicating further recognition of our efforts in building a safer and more sustainable company.

• Agreement with United States Securities and Exchange Commission (“SEC”) to terminate a lawsuit filed by the SEC against the Company was signed in March 2023. Vale will make payments totaling US$ 55.9 million to the SEC.