Vale achieved in Iron Ore a solid premium of US$ 9/t in 1Q22, the highest level since 2Q19, reflecting Vale’s high-quality portfolio and a tight supply-demand balance of high quality and low contaminant ores in the global market. On a quarter over quarter basis, production was lower due to (i) the heavy rainfall level in January in Minas Gerais; (ii) delays in obtaining licenses, impacting ROM availability, mainly in Serra Norte; (iii) a performance below expectation in S11D and Sossego; and (iv) major maintenance which should benefit production on a year to go, allowing Vale to maintain our expected annual Iron Ore production guidance range for the year of 320-335 Mt.

1Q22 production and sales performance

Vale’s iron ore fines production totaled 63.9 Mt in 1Q22, 4.1 Mt lower than in 1Q21 as a result of: (i) lower ROM availability and the need to process more waste in Serra Norte, given licensing delays; (ii) higher strip ratio and tie-in effects due to presence of jaspilite waste in the S11D ore body and the installation of two new primary crushers to process the jaspilite; (iii) four days stoppage of Estrada de Ferro Carajás due to the heavy rains in March ; and (iv) the impact of rainfall in Minas Gerais in January , temporarily halting the Southern and Southeastern Systems operations, and also impacting the availability of third-party ore purchase. Those issues were partially offset by the improved production capacity of the Southern and Southeastern Systems, after the commissioning and resumption of several assets during 2021.

Sales volumes of iron ore fines and pellets totaled 60.6 Mt in 1Q22 with a premium of US$ 9.0/t in 1Q22, an increase of US$ 4.3/t compared to 4Q21 due to (i) higher spread of 65% Fe and low alumina ore indexes vs. 62% Fe benchmark index; and (ii) better quality mix of products as some high silica ores are being concentrated in Chinese beneficiation plants before the final sale . These effects were partially offset by the lagged price effect on pellet price realization and the absence of the seasonal dividends from our pellet’s JVs.

Production of finished nickel was 45.8 kt in 1Q22, 5.4% lower than 1Q21, explained by (i) Sudbury mines ramping up during 1Q22 after the labor disruption, (ii) the remaining impact of the incident at Totten mine, (iii) the ramp-up of VBME project, and (iv) unscheduled maintenance on Onça Puma electric furnace. This was partially offset by higher production from PTVI and Thompson sourced ore and higher third-party sourced feed. Third-party sourced feed is planned to grow in the coming quarters in order to maximize our downstream utilization during a transitional period between the depletion of Ovoid mine and full production of the Voisey’s Bay underground project.

Despite that, Sudbury mines achieved pre-strike rates in February with Totten mine resuming operations in the quarter. Also, Onça Puma maintained a similar performance q/q. As a result, we expect our Nickel production for the year to be in line with our guidance of 175-190 kt.

Sales of nickel were 18.8% lower than 1Q21, mainly due to lower production and an inventory strategy to cover sales commitments during the period of planned maintenance on Sudbury surface plant, in 2Q22. This also explains the difference between sales and production in the quarter.

Production of copper was 56.6 kt in 1Q22, 26.0% lower than 1Q21. The decrease was largely caused by lower Sossego production, which operated for 24 days during the quarter, due to scheduled SAG mill maintenance. The maintenance, which was originally scheduled be completed in 1Q22, is now planned to be concluded by mid-May, in order to bring forward the replacement of the SAG mill discharge trunnion, which was planned for a future maintenance. Salobo production was relatively stable, despite corrective maintenance of the mill liners during the quarter. Production of copper as by-product was in line with lower nickel production from our Canadian operations as discussed above in the results for nickel operations.

Given additional unplanned maintenance required at Sossego, at this point we expect copper production to be closer to the low end of our guidance of 330-355 kt of copper in 2022.

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