Financial Results 2Q21

Negócios

Financial Results 2Q21

Vale announced this Wednesday, July 28th, its financial result for the second trimester of 2021. In 2Q21, Vale reported a record proforma adjusted EBITDA of US$ 11.239 billion, mainly driven by the higher iron ore and pellets realized prices and sales volumes, partially offset by certain costs and expenses that are linked to the iron ore price, such as purchases from third-parties and royalties, elevated freight costs and higher maintenance and services costs.

Safety, People and Reparation continue to guide us and permeate Vale's main achievements. As we proceed with the resumption of our iron ore capacity, we also eliminated six upstream dams and advanced consistently on our ESG agenda. We believe in safe production and operational excellence, which is why we have maintained a high guard on the prevention of COVID-19 in all countries where we operate. With elevated confidence, Vale remains on track in its de-risking, reshaping and re-rating strategy

Eduardo Bartolomeo, Chief Executive Officer

Reparation of Brumadinho

We are advancing with the compensation and remediation commitments established since 2019 and with those provided for in the Integral Reparation Agreement, signed in February 2021. The agreement provides for the Income Transfer Program, to be managed by the authorities, which will replace the Emergency Aid program managed by Vale since March 2019. While the Income Transfer Program is still under structuring, Vale has continued to pay emergency aid to more than 101,000 people in Brumadinho and the region along the Paraopeba river, summing up over R$ 2.2 billion paid since 2019.

Samarco and the reparation of Mariana

Despite Samarco filing for judicial protection under Brazilian bankruptcy law, reparation works and indemnification accelerated in 2Q21. Due to overruns in the resettlement works, especially due to COVID-related delays, and due to new communities and categories (tourism entrepreneurs, informal hotels, inns, bars and restaurants; informal sand and clay traders, among others) being included in the indemnification program, Vale recorded an additional provision of US$ 560 million related to expected disbursements to support Samarco and Renova Foundation. As of June 30, 2021, R$ 14.5 billion have been disbursed by the Renova foundation in the reparation of Mariana, being R$ 4.7 billion supported by Samarco and R$ 9.8 billion supported by Vale and BHP in equal parts.

Advancements in ESG practices

In 2Q21, to advance with our Climate Agenda and support our leading journey towards a lowcarbon mining, we announced investments of US$ 4-6 billion for greenhouse gas emission reduction by 2030 (which includes the previously announced US$ 2 billion to reach renewable energy self-sufficiency). Such capital allocation will ensure our commitment to reducing 33% of our scopes 1 & 2 emissions by 2030 and the achievement of carbon neutrality by 2050.

Results

In 2Q21, Vale reported a record proforma adjusted EBITDA of US$ 11.239 billion, mainly drivenby the higher iron ore and pellets realized prices and sales volumes.

The main drivers of our 2Q21 performance were Ferrous Minerals EBITDA, US$ 10.679 billion, US$ 2.868 billion higher than 1Q21; Base Metals EBITDA, US$ 866 million, US$ 145 million lower than 1Q21; Nickel operations EBITDA, US$ 430 million, US$ 212 million lower than 1Q21; Copper operations EBITDA, EBITDA improved by US$ 67 million to US$ 436 million. Coal EBITDA was negative US$ 164 million, US$ 5 million lower than 1Q21.

Net income was US$ 7.586 billion in 2Q21, US$ 2.040 billion higher than 1Q21, primarily due to higher proforma EBITDA and higher financial results. Total CAPEX for 2Q21 amounted to US$ 1.139 billion, US$ 130 million higher than in 1Q21, explained by acceleration of investments in Voisey’s Bay Mine Extension, Sol do Cerrado solar power plant and Serra Sul 120 Mtpy projects. We generated US$ 6.527 billion in Free Cash Flow from Operations in 2Q21, US$ 680 million higher than in 1Q21.