Vale presents its strategic planning for 2018 in New York

12/6/2017

Vale presents its strategic planning for 2018 in New York

Vale presented on December 6th the perspectives for the next year in a meeting with investors and journalists in New York. CEO Fabio Schvartsman opened the meeting, transmitted live over the internet, highlighting that 2018 will be a very important year for the company and that the aim is to pave the way to create value and share wealth, through four strategic pillars.

Performance Improvement

Enhancement will be based on rigorous capital allocation, cost efficiency and a product portfolio which reflects a “flight to quality”.

Clear Strategy

Overall, Vale is focused on building a strong balance sheet while leveraging assets and fostering EBITDA growth.

Governance Enhancement

As of December 22nd 2017, Vale is a true corporation and has two independent board members for the first time in Vale’s history. Re-rating is an important step in this process.

Sustainability Benchmark

Besides focusing on systematic planning and execution, Vale is aimed at working beyond its operations.

We have the firm intention of creating more value in Vale than all of its mining peers in the sector”

Fabio Schvartsman

The executive highlighted that Vale aims to enhance performance by three factors: rigorous capital allocation process based on returns, cost efficiency and price realization. He said that by the end of December Vale will celebrate its start in Novo Mercado, which will be a landmark for the company. Regarding sustainability, Schvartsman emphasized that Vale has changed its approach, adopting a much more systematic plan, which goes beyond its operations. By the end of the presentation, he concluded that, by doing these adjustments, Vale will become a much more predictable and valuable company in the market place.

Check out the highlights for each business area:

Sustainability and
Institutional Relations

Dir. Luiz Eduardo Osorio

Health and safety

Reduction in total injury time from 11.2 in 2007 to 2.1 in 2017

Environment

Reduction of 7% in greenhouse gas direct emissions

Social development

Creation of Renova Foundation in July 2016: 8.2 thousand families with financial assistance; 1.5 thousand families from traditional communities and indigenous people are under Renova Project scope; 800 hectares were replanted

Ferrous Minerals
and Coal

Dir. Peter Poppinga

Ferrous Minerals

All of S11D truckless systems are operating, with their start-ups ahead of schedule

S11D ramp-up will further decrease Vale’s costs to 47%

Investments in innovation and automation will improve operational efficiency and reduce costs by US$ 0.5/t in 2020

The improvement in price realization is expected to add up to US$ 350 million in 2018 EBITDA

Vale’s competitiveness measured in terms of normalized EBITDA/t1 is expected to increase by another US$ 3-5/t in 2020

Local Integrated Operation Centers will be implemented in 2018, following the successful launch of the Global Integrated Operation Center in 2017.

Coal

Coal business will generate solid results by concluding the ramp-up and exploring growth options

US$ 2.7 billion project finance concludes the restructuring and optimization of the business portfolio

Sound ramp-up of Moatize and Nacala Logistic Corridor increased production and sales volumes in 2017

Greater volumes and higher market prices support the improvement of the business EBITDA

The conclusion of the ramp-up will enable Moatize to be more competitively positioned in the industry cost curve

Base metals

Dir. Jenifer Maki

Lower footprint in nickel, calibrating investments and production to reflect market conditions

VNC continued to advance its ramp-up in 2017 with expected production of 40 kt

Electric vehicles increase demand for nickel in the battery market and bring upside to the long-term market

Consolidate a smaller nickel business and leverage the quality of copper assets

Finance

Dir. Luciano Siani Pires

Multiple Re-rating

Migrating to Novo Mercado ahead of schedule on December 22nd, 2017

Benchmark transaction in the Brazilian Market, with a participation of 80% of retail investors

Dissolution of the current control block and consequent diversification of the shareholder base to give more independence to the management team

Consistent track record enhancing investor confidence and enabling a higher multiple

Improved Cash flow

Low capital expenditures even incorporating new growth projects

Cash Flow Drags are expected to decline

Generation of substantial cash flow over the next 3 years which will result in significant shareholder return

Global Business
Support

Dir. Alexandre Pereira

Procurement

Implement a global, integrated and streamlined procurement model

Technology

Integrate technologies and drive the digital business transformation to unlock new levels of productivity

Operations excellence

Shape competitiveness through a strong management model and a culture of performance

Energy

Secure a sustainable energy model and drive energy efficiency, while moving towards self-sufficient production

Capital Projects

Implement strong portfolio management to deliver all capital projects globally, with disciplined capital allocation

Check out Vale Day photos:

Downloads e replays

Watch the replay of the webcasts and download the presentation.

​​​

Vale presents its strategic planning for 2018 in New York