Financial Results 3Q21

Business

Financial Results 3Q21

Vale announced this Thursday, October 28th, its financial result for the third trimester of 2021. In 3Q21, Vale reported a proforma adjusted EBITDA of US$ 7.109 billion, US$ 4.130 billion lower than 2Q21. Cash generation in the quarter reached US$ 7.765 billion, US$ 1.238 billion higher than 2Q21.

In this third quarter, our iron ore production was close to 90 million tons, 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 program, which demonstrates our confidence in Vale's potential. By maintaining our value-over-volume strategy and optimizing costs, we will continue to create and share value with our shareholders.

Eduardo Bartolomeo, Chief Executive Officer

Reparation of Brumadinho

The compensation and reparation currently reach over 11,400 people through individual and labor indemnification agreements, with a total of R$ 2.7 billion committed, out of which R$ 2.5 already paid.

We are also evolving and working with the authorities on the implementation of the Integral Reparation Agreement. Up to September, we paid R$ 3.9 billion in relation to our commitments, such as the water safety program and the first instalments in the urban mobility and reinforcement of public service programs.

Advancements in the ESG agenda

In September, we relinquished all our mineral rights in Indigenous Lands in Brazil, which includes applications for exploration permits and mining concessions. Between 2020 and 2021, Vale relinquished 104 mining processes interfering with Indigenous Lands in Brazil.

Increasing transparency about Vale's resilience to climate change risks and opportunities and also further detailing our climate-related commitments, Vale released in October 2021 its Climate Change Report, which followed guidelines provided by the Task Force on Climate-Related Financial Disclosures (TCFD).

Imagem Relatório Financeiro

Results

In 3Q21, Vale reported a proforma adjusted EBITDA of US$ 7.109 billion, US$ 4.130 billion lower than 2Q21, mainly due to lower revenues in Ferrous Minerals and Base Metals business, following the lower iron ore realized prices and the lower nickel byproducts revenues, the later impacted by the labor disruption in Sudbury.

The main drivers of the difference of 3Q21 performance in comparison to 2Q21 were: the Ferrous Minerals lower realized sales prices (US$ 3.891 billion); Base Metals lower realized prices, mostly impacted by lower nickel byproducts revenues due to the labor disruptions in Sudbury (US$ 379 million); the higher unit costs and expenses, mainly due to Ferrous Minerals' higher freight costs (US$ 159 million), affected by higher bunker oil and spot freight prices

Net income was US$ 3.886 billion in 3Q21, US$ 3.700 billion lower than 2Q21, primarily due to lower proforma EBITDA and the full impairment of the investment in Coal business.

We ended the quarter with gross debt and leases at US$ 13.585 billion, slightly lower than 2Q21. Net debt totaled US$ 2.207 billion in the same period, US$ 2.945 billion higher than 2Q21, with expanded net debt following at US$ 13.881 billion.