3Q20 - Financial Results

Business

3Q20 - Financial Results

Vale released this Wednesday, October 28th, its Financial Result for the third quarter of 2020.

At the same time that we remain firm in our commitment to Brumadinho full reparation, in this quarter we achieved an important milestone in our production stabilization, with an all-time production record in the Northern System, a major step towards the de-risking of our company

Chief Executive Officer,
Eduardo Bartolomeo

Stabilization of iron ore production

The Northern System achieved a quarterly production record of 56.9 Mt while the Southern and Southeastern Systems improved performance across operating units, notably in the Itabira Complex and Timbopeba site that ran for a full quarter after restarting in June, and with the resumption at Fazendão mine in July.

Reparation

The reparation of Brumadinho is a priority for Vale. In August, search and rescue efforts were resumed after a five-month suspension on the wake of the COVID-19 pandemic. We continue to support the Minas Gerais Fire Department in the search for 11 missing victims. The indemnification process continues, making use of videoconferences during the pandemic. More than 8,200 people are related to indemnification agreements entered into by Vale, an increase of about 600 people since the 2Q20 Performance Report release.

Vale ESG approach

In July, Vale signed a non-binding agreement with Kobe Steel and Mitsui for the creation of a new venture to deliver low CO2 metallics to the global market and new solutions to our clients. As part of our PowerShift program to replace Vale's energy sources with clean ones, we developed, in partnership with Progress Rail, a new 100% electric, battery-powered switchyard locomotive, which is under tests.



The company is installing at the Ilha Guaíba Port Terminal one of the country's largest lithium-ion battery energy storage systems to supply electrical demand as a strategy to replace fossil fuels, becoming operational by 1Q21. In September, during Amazon Day, we disclosed our manifesto reaffirming our commitment to promote sustainable development in the Amazon region.



Check out the Carbon Neutral page and learn about the projects and goals on this subject

Check out the ESG Portal to know what we are doing in search of sustainable results
Imagem Relatório Financeiro

Results

In 3T20, proforma adjusted EBITDA reached US$ 6.224 billion, US$ 2.638 billion higher than in 2Q20 and the highest since 4Q13. While EBITDA improved in all Vale’s business, the better result was mainly driven by the 26% increase of iron ore realized prices and 20% higher iron ore sales volumes in 3Q20. Adjusted EBITDA, after US$ 129 million of expenses related to Brumadinho and COVID-19- related donations to support initiatives to fight the pandemic, totaled US$ 6.095 billion.

Ferrous Minerals business segment achieved in 3Q20 its largest adjusted EBITDA level since 4Q13, US$ 5.856 billion, 67% higher than in 2Q20. The adjusted EBITDA per ton for Ferrous Minerals, excluding Manganese and Ferroalloys, totaled US$ 79.0/t, an increase of US$ 22.4/t when compared to 2Q20.

Vale had a Free Cash Flow from Operations of US$ 3,751 million in 3Q20, mainly driven by the strong EBITDA and small increase in working capital versus production and shipments acceleration. Working capital increase of US$ 288 million was mostly driven by a combined effect of higher inventories across the iron ore supply chain and strong accrual sales in the end of the quarter at a higher price than sales collected during the quarter, both as a consequence of the logistics lead time between production and CFR sales.

To check financial and production reports, click below. On Thursday, July 30th, will be held webcasts for investors at 10am (Portuguese) and 12pm (English) – Brasilia time - to comment the results.