Vale is expanding its natural gas contracts directly with suppliers on the free market in order to increase its competitiveness, thus contributing to the consolidation of a more dynamic and efficient environment. In recent days, the company signed free market agreements with Eneva and Origem Energia, enabling it to implement its strategy of having around 90% of the natural gas consumed by the company's operations in Brazil by 2025 through this more transparent and open model.

This is an improvement on 2024, when the percentage consumed through free market contracts in Vale's operations was around 20%. Other contracts are still to be signed in the coming weeks, as a result of existing consumption in the state of Minas Gerais.

Origem Energia and Eneva have signed contracts to supply the Tubarão Unit, in Vitória, in the state of Espírito Santo, which accounts for around 60% of Vale's natural gas consumption, until December 2025. Six pellet production plants and one iron ore briquette plant operate at the site. A second briquette plant will be inaugurated at the beginning of next year. These products are part of Vale's “premium” portfolio.

“We want to strengthen the free natural gas market, whose evolution we consider a great achievement for Brazil's industrial sector. Our goal is to obtain a reliable supply of natural gas at competitive prices in a more open, dynamic and transparent market,” explains Strategic Supplies Director Mariana Rosas. “We are also looking for ways to collaborate with the sector in order to develop the market for this input, which is so important for our economy.”

The free market for natural gas has been making gradual progress in Brazil. Unlike the captive market, in which the customer buys from the distributor at a regulated price, in the free market it is possible to negotiate directly with the producer, which increases competition in the sector, as well as allowing each customer to build, together with their supplier, a better contract model that suits them.

“This partnership represents a milestone in the company's trajectory, as well as demonstrating the competitiveness of the molecule from onshore production,” says Origem Energia's Commercial Director, Flavia Barros. “With this contract we now have a more diversified portfolio. It's the first industry we're going to serve directly, via the free market, and it will be our first client in the Southeast region of Brazil. This step demonstrates our commitment to the end customer in the search for a competitive molecule and a contract that is more in line with their demand,” she commented.

“This is our first major contract with an industrial client using our ‘Mesa de Gás’ portfolio and the Sergipe Hub infrastructure, after its connection to TAG's network,” said Marcelo Lopes, Eneva's executive director for Marketing, Commercialization and New Business. “Eneva is consolidating itself as another option for free customers, standing out by offering more flexible solutions. In addition, we ensure special service conditions, greater security of supply and supply alternatives for an increasingly dynamic market.”

In 2022, Vale had already signed a five-year agreement with Eneva to convert its pelletizing plant in São Luís, in the state of Maranhão, from fuel oil to natural gas. This agreement was also born in the free market environment. The adaptation works are being finalized and the plant is expected to start operating on gas by the end of this year. This change will result in a reduction in carbon emissions of around 28%, representing a decarbonization gain as well as a competitive advantage.

Last year, Vale signed small-volume, very short-term contracts with different suppliers on the free market. Subsequently, the first regular supply contracts were signed with different suppliers to meet a fraction of the Vitória plant's demand in 2024.

“The results of these first purchases on the free market were very satisfactory, which led us to look for more representative firm contracts for 2025. We are confident that this is a change with no turning back in the natural gas market,” says Mariana Rosas.

About Eneva

Eneva is the country's largest private operator of natural gas, a key fuel for energy security. The Brazilian company operates in exploration, production and energy supply. It operates 15 natural gas fields in the Parnaíba (MA) and Amazonas (AM) basins, totaling a concession area of over 63,000 km², the largest in Brazil. It has a generation park with 7.2 GW of capacity in operation and under construction, including thermoelectric plants in the states of Maranhão, Ceará, Sergipe, Roraima, Espírito Santo and the Futura Solar Complex in Bahia.

About Origem Energia

Origem is an integrated energy and infrastructure company whose purpose is to contribute to Brazil's development through energy integration. The company currently operates 14 mature oil and natural gas field concessions, 13 of which are located onshore and 1 offshore in the states of Alagoas, Bahia, Espírito Santo and Rio Grande do Norte, as well as 18 exploration blocks located in the Sergipe-Alagoas and Tucano Sul Basins. Origem Energia is controlled by Prisma Capital. Founded in 2017, Prisma Capital is one of Brazil's leading alternative investment managers, made up of partners with more than 15 years' experience working together. Prisma has a flexible mandate to invest in a variety of sectors and asset classes, including private equity, credit, real estate, NPLs, bankruptcy/restructuring, lawsuits and litigation finance. Prisma Capital currently has R$15 billion in assets under management.