“We continue to make significant progress on our strategic and business priorities.
In Iron Solutions, we remain on track to meet guidance, with increased production year-to-date, enhanced average quality and a reduced production-to-sales gap in the quarter. In Energy Transition Metals, we are progressing with an asset review to achieve operational excellence. The transition of the Voisey’s Bay mine to underground and the maintenance activities will support sustainable asset performance. In Copper, the successful ramp-up of Salobo III contributes to a higher total output and lower unit costs. We are advancing toward our long-term objectives, by starting loading tests at our 1st briquetting plant and signing two new agreements for the development of Mega Hubs. We have also completed the decharacterization of Dique 2, and B3/B4 dam’s emergency level was reduced to 1, in line with our new framework for dam management established in 2019. We will continue delivering on our strategy to turn Vale into a reference in creating and sharing value to all of our stakeholders.” commented Eduardo Bartolomeo, Chief Executive Officer.

Highlights

Business Results

• Proforma adjusted EBITDA from continued operations of US$ 4.5 billion in Q3, up 12% y/y and 8% q/q. EBITDA from the Iron Solutions business was up 18% y/y and 13% q/q, mainly due to higher iron ore realized prices and sales volumes.
   
• Iron ore C1 cash cost ex-3rd party purchases decreased 7% q/q, reaching US$ 21.9/t, on track to meet the US$21.5 – 22.5/t guidance for the year.
   
• Free Cash Flow from Operations of US$ 1.1 billion in Q3, representing an EBITDA to cash-conversion of 25%.
   

Disciplined capital allocation

• Capital expenditures of US$ 1.5 billion in Q3, including growth and sustaining investments, US$ 0.3 billion higher y/y, resulting primarily from the continuous progress of key projects such as Serra Sul 120 Mtpy, Capanema, Voisey’s Bay Mine Expansion, and Salobo III.
   
• Gross debt and leases of US$ 14.0 billion as of September 30th, 2023, flat q/q.
   
• Expanded Net Debt of US$ 15.5 billion as of September 30th, 2023, US$ 0.8 billion higher q/q, mostly reflecting interest on capital paid to shareholders in the quarter.

Value creation and distribution

• Interest on capital of US$ 1.7 billion paid in September, as part of the Shareholder Remuneration Policy.
   
• Allocation of US$ 0.5 billion as part of the 3rd buyback program in the quarter. As of the date of this report, the 3rd buyback program was 72% complete, with US$ 5.5 billion used to repurchase 360 million shares¹.
   
• Today, the Board of Directors has approved the distribution of US$ 2.0 billion in dividends and interest on capital, scheduled to be paid December 1st.
   
• In addition, the Board of Directors has approved a 4th buyback program to repurchase up to 150 million shares over the next 18 months. The new program will essentially cover the remaining shares from the 3rd buyback program.

Focusing and strengthening the core

• Delivering iron solutions:

- A letter of intent with Essar was signed, in September, to supply iron ore agglomerates for the Green Steel Arabia project in Saudi Arabia. Vale will supply 4 Mtpy of iron ore agglomerates for the direct reduction route, which will be produced at the Saudi Arabian Mega Hub, in the case of briquettes, and in Oman or Brazil, for pellets. 

- An agreement with H2 Green Steel was signed in September, to jointly study the feasibility of developing green industrial hubs in Brazil and North America. These hubs will focus on producing low-carbon products, including green hydrogen and hot briquetted iron (HBI), using iron ore briquettes produced by Vale as input material and renewable electricity as the energy source for its hydrogen production.

- An MoU with the Port of Açu was announced in September to jointly study the development of a Mega Hub at the port located in São João da Barra in the state of Rio de Janeiro to produce HBI (hot briquetted iron) using the direct reduction route. The Mega Hub will initially receive pellets from Vale and could, in the future, include an iron ore briquette plant at the site to supply the direct reduction route at the industrial complex.

• Advancing the project pipeline:

- Approval of the development of the Pomalaa2 mine in October, marking a significant step towards growth in the Energy Transition Metals business. The investment in the mine is US$ 925 million. The mine will provide feed to the HPAL plant project, a three-party collaboration between PTVI, Huayou and Ford Motor Company. The Pomalaa project will have an overall production capacity of up to 120 ktpy of nickel in the form of mixed hydroxide precipitate and is expected to start-up in 2025.

-Load tests have started as part of commissioning the first of two iron ore briquette plants in Tubarão. After ramping-up, the combined capacity of the two plants will reach 6 Mtpy. The briquettes will assist in reducing greenhouse gas emissions from the steel industry.

Promoting sustainable mining

• In October, the B3/B4 dam had its emergency level reduced to 1. The advancement in the decharacterization process of B3/B4 dam, with the removal of about 85% of the reservoir content, has improved the stability conditions of the dam and facilitated the reduction of the emergency level, as required by current legislation.
   
• Completion of the decharacterization of Dique 2, located at the Cauê mine, the 13th structure of our Upstream Dam Decharacterization Program to be eliminated. The decharacterization of the remaining 17 upstream structures is on track within the timeframe agreed with authorities, while they continue to be permanently monitored by Vale’s Geotechnical Monitoring Centers.
   
• A long-term agreement between Vale Base Metals and BluestOne, signed in October, will look to reuse waste in Brazil and promote circular mining. The agreement entails the purchase of 50 ktpy of waste from the Onça Puma operations in Pará for the next ten years to produce low-carbon emission fertilizers.
   
• A protocol of intent with Petrobras was signed in September, to jointly assess decarbonization opportunities, including the development of sustainable fuels – such as hydrogen, green methanol, biobunkers, green ammonia and renewable diesel - and CO2 capture and storage technologies.
   
• Vale has set a new target to reduce freshwater use per ton of production by 7% on average until 2030. This target would represent a total reduction of 27% (baseline 2018), alongside the 20% reduction already reached3, and considers water stress scenarios in areas where we have sites, the implementation of stricter water management processes and the execution of a structured engagement plan.

¹Related to the April 2022 3rd buyback program for a total of 500 million shares.

²PTVI owns 100% of the mine and has a call option to acquire up to 30% of the HPAL project upon mechanical completion.

³Our previous target was to reduce freshwater withdrawal for our production processes by 10% by 2030. As of 2021, we have already achieved a 20% reduction since the baseline year, surpassing our target.

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