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Vale updates on 3Q21 performance

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Global Mining Review,

Vale has released its financial statements for 3Q21.

3Q21 highlights

  • Cash generation in the quarter reached US$7.765 billion, US$1.238 billion higher than 2Q21, given the positive impact of working capital variation, which was mainly driven by a significant decrease in accounts receivable explained by the combined effect of:
  • Strong collection from elevated accrual sales volume and price registered in 2Q21.
  • Lower accrual sales volumes and price registered in 3Q21.
  • Consistent with its capital allocation strategy, in September, Vale distributed US$7.391 billion to shareholders based on the results of 1H21. Considering the dividends distributed in March and June, US$13.5 billion has been returned directly to shareholders in 2021.
  • In continuity with the concluding 270 million shares buyback programme, the Board of Directors approved a new share buyback programme of up to 200 million shares, equivalent to 4.1% of the currently outstanding shares of the company.
  • A proforma adjusted EBITDA of US$7.109 billion was recorded in 3Q21, US$4.130 billion lower than 2Q21, mainly due to lower revenues in ferrous minerals, following 31% lower iron ore fines realised prices, and in the base metals business, with lower nickel byproducts revenues and the impacts from the labour disruption in Sudbury.
  • In the resumption of the company’s iron ore production, it started the Maravilhas III dam operation and the long-distance conveyor belt commissioning, in the Vargem Grande Complex. At the end of commissioning, an increase of 6 million tpy is expected in the production capacity of the site. In the Fábrica site, Vale reached full capacity after the resumption of beneficiation plants in 2Q21. In the Mariana Complex, it resumed the regular operation of the EFVM railroad on the Fábrica Nova branch, improving the logistics of the production from the Timbopeba plant.
  • In Brumadinho’s reparation, the company is implementing the integral reparation agreement. Until September, it paid BRL 3.9 billion in relation to it commitments, such as the water safety programme and the first instalments for projects in urban mobility and the reinforcement of public service programs. For 4Q21, Vale expect to pay approximately BRL 9.2 billion, out of which BRL 4.4 billion related to the income transfer programme.

“In 3Q21, our iron ore production was close to 90 million t, with meaningful progress in the operational resumption of the Vargem Grande Complex. We continue to work towards improving operational reliability, especially in the Base Metals business. Our cash generation remains robust, surpassing last quarter by 18%, a pace that allowed the payment of historic dividends in 2021. We now announce a new buyback programme, which demonstrates our confidence in Vale's potential. By maintaining our value-over-volume strategy and optimising costs, we will continue to create and share value with our shareholders,” commented Eduardo Bartolomeo, CEO.

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