Climate Change

KPIs Report

In 2019, Vale’s activities resulted in 575.3 million tonnes of CO₂ equivalent. From this amount, more than 97% was indirect Scope 3 emissions, resulting from Vale’s product utilization in other industries. The direct emissions from scope 1(fuels and industrial processes), and scope 2 (electricity purchases) added 12.6 million tons of CO₂ equivalent.

Vale’s GHG emissions (in million tCO₂e):

For more information about greenhouse gases emissions (GHG), access our Sustainability Report - 2019

Performance Evolution

Vale's direct GHG emissions (Scope 1) were about 13.3% lower in 2019 compared to 2018, totaling 11.3 million tCO2e. Indirect emissions from electricity purchase (Scope 2) were reduced by 16.6% in 2019, totaling 1.3 million tCO2e, mainly due to the reduction in electricity consumption.

Scope 3 emissions, indirect GHG emissions calculated along the value chain, include upstream emissions (related to goods and services purchased or acquired) and downstream emissions (related to goods and services sold). In 2019, these emissions totaled approximately 563 million tCO2e in the year, a result 4% lower than in 2018. Around 97% of these downstream emissions are due to the processing and use of products sold by Vale in the steel and metallurgical chain. 

Goals and Deadlines

Carbon Goal

In 2019, the company reviewed its climate goals, including new commitments to reduce greenhouse gas (GHG) emissions, bolder goals than previously established in 2018, aiming to become a carbon neutral mining company.

The 33% absolute scope 1 and 2 emissions reduction target by 2030, with 2017 as a baseline, is aligned with  the Paris Agreement's objective of limiting global warming to below 2ºC. This target is linked to the variable remuneration of all Vale's employees.

Besides, we approved the target to become carbon neutral by 2050, and and to propel us towards decarbonization, we approved an internal carbon price of USD 50/tCO2e. This price is also aligned with the 2 ºC scenario, following the recommendations of the Carbon Pricing Leadership Coalition.

Main factors to reach 2030 goals

Plans to reach the 2030 goal

In order to evolve the net zero strategy, the The Low Carbon Forum was created to set and oversee the implementation of the initiatives. The Forum is coordinated by the Sustainability Executive Board and has the  participation of Vale’s CEO and the Executive Directors of Ferrous, Base Metals, Strategy and Finance and Investor Relations. 

As a competitive advantages in climate's agenda, Vale has more than 1 million hectares of protected forest area and a high pecentage of renewable sources in its energy matrix. To achieve our commitments, Vale will invest around US$ 2 billion in renewable energy over the next 10 years to support and bring solutions to the low carbon economy, with a focus on projects with NPV positive.

In order to prioritize the most cost-competitive initiatives to achieve our 2030 target, we have drawn up a marginal abatement cost curve (MAC curve), which analyzes more than 35 projects and it is constantly evolving.

The projects are oriented towards solutions that expand the use of electricity from renewable sources in operations, which promote the energy management and energy efficiency practices and routines in order to create an environment that encourages the adoption of efficient behaviors and solutions and innovative rational use of energy and that stimulates the search for different technological solutions, considering the social, economic and environmental impacts and that align the business portfolio to the transition to a low carbon economy, leveraging new business opportunities.

Vale has invested efforts and resources to reduce greenhouse gases emissions and mitigate the climate change. The total projected spending for the year is US$ 78 million¹, of which US$ 44 million has already been spent up to October, 2020.

Investments in 2020 a series of initiatives related to three main solution routes:

• Energy efficiency and renewable electricity
• Biofuels
• Electrification and breakthrough technologies

The initiatives are related to:

• Open pit mine: energy efficiency including automation and artificial intelligence, electrification studies, alternative fuels, among others;
• Underground mine: use of electrical vehicles and mine equipment, including studies for infrastructure and battery recharging, in addition to assessing the use of alternative fuels; 
• Processing plant: studies to optimize production stages;
• Metallurgy and Pelletizing: energy efficiency, electrification, alternative fuels, new processes;
• Railway: electrification studies, use of artificial intelligence, as well as investments in equipment/systems for continuous improvement of energy efficiency;
• Shipping: implementation of pilot tests to apply new technologies and solutions that contribute to improving the energy efficiency of ships, as well as studies on the use of new fuels;
• Renewable energy generation: prospecting and acquisition studies for new projects on electricity generation based on renewable energy sources;
• Strategy and diagnostics: investments in management tools and studies to reduce greenhouse gas emissions.

As part of the strategy, and in line with the recommendations of the Task Force on Climate Related Finnancial Disclosures (TCFD), Vale conducted a preliminary scenario analysis of its business resilience in the three climate change scenarios, considering the scenarios of the International Energy Agency (IEA).

The construction of climate-related scenarios allows Vale to identify indicators to monitor the external environment and more quickly recognize changes in the scenarios, allowing an agile adaptation to current needs. 

¹Amounts will be updated in February 2021, after year-end results of the company are released.

Scope 3

Vale aims to reduce 15% of its scope net emissions by 2035, to encourage clients and suppliers in the same direction and aligned with its carbon neutral commitment. Through active engagement with clients from the steel and metallurgy industries, Vale will work to reduce emissions in its value chain. The company will guide its operations based on win-win relationships, less intensive products, and new technologies.

Absolute scope 3 net emissions (MtCO2eq)

1BaU stands for business as usual. Scenario based on production of ~400Mtpy.
Nota: Science based target.

Among the initiatives already implemented we can highlight:

Inclusion of contractual clauses related to greenhouse gas management for suppliers. For more information, visit the page about Suppliers here.

Creation of a joint venture focused on low CO2 metallics' production (here).

Premium product portfolio which promotes emission reduction through higher quality ore.

International Maritime Organization (IMO) goals – initiatives that have already added significant value to the environment and Vale shareholders:

Valemax 2G (Compared to capsize ships in 2011):

Risks

Risks and opportunities related to climate change are the responsibility of the Sustainability Department and are identified based on strategic business planning, existing risk management processes and regulatory environment monitoring. These topics are periodically presented to the Risk Management Executive Committee, where they are reviewed for quarterly reporting to the Board of Directors and published in the Annual Report and the Sustainability Report. Identified risks are monitored and reviewed annually if no material change occurs during the year.

Vale uses a risk matrix that considers the severity and probability of each occurrence. In the case of risks related to climate change, Vale has developed specific analysis methodologies divided between impacts resulting from the transition to a low carbon economy and physical impacts, in line with the guidelines of the Task Force on Climate-related Financial Disclosures - TCFD.

Our main risks related to climate change are:

Regulatory / Legal

• Changes in policies to restrict or adapt to the effects of climate change;
• Disputes over non-compliance with policies to mitigate climate impacts.

Technological

Substitution of products/processes for more efficient/current technologies.

Market

Changes in supply and demand due to awareness of cleaner products.

Reputation

Consumer and investor perceptions of the Company's adherence to greener policies.

Physical risks

Direct damage to assets and indirect impacts on the supply chain such as floods, droughts, etc.

Vale methodologies for climate change risks and opportunities

Regulatory risks: Vale has developed an internal carbon pricing model to assess the risks linked to climate change through projections of possible impacts on the operating costs of each business unit. In addition, the company participates in external forums and has tools for monitoring and controlling transition risks.

Physical risks: Based on the Intergovernmental Panel on Climate Change (IPCC) studies, Vale developed, together with the Vale Technological Institute, a projection and mapping model of the possible physical impacts that pose risks to the Company's operation. Climate projection is performed using a climate modeling system that allows future temperature and precipitation scenarios to be obtained. Projections were made for the North Corridor, South Corridor and Corumbá sections.

TCFD

In 2017, Vale adhered to the Task Force on Climate-related Financial Disclosure (TCFD) recommendations led by the Financial Stability Board, containing guidelines for reporting financial risks related to climate change by companies and financial institutions.

Upon signature, the Company also began an in-house project to tailor climate risk qualification and quantification to the TCFD recommendations.

As main actions related to the TCFD, in the last years, we highlighted:

The table below shows Vale's main advances in relation to the recommendations proposed by the TCFD:

Key elements of the disclosures on climate risks and opportunities recommended by the TCFD
TCFD Recomendation	Disclosure Vale	Reference
1. Governance - transparency regarding the governance of risks and opportunities related to climate change
1.1. Description of the supervision of the Board of Directors	Sustainability Committee and Board of Directors responsible for validation sand low-carbon monitoring of guidelines	Chapter “Governance” or “Sustainability Governance”. CDP item C1
1.2. Role of executives in mapping and managing the agenda	Low Carbon Forum, with monthly meetings to assess the deployment and implementation of the Vale Carbon Neutral strategy. This forum is coordinated by the Executive Officers for Sustainability and Institutional Relations, with the support of the Executive Officers for Coal, Strategy and Mineral Exploration, Business Support, Ferrous and Base Metals, and with the participation of Vale’s CEO and CFO. The meetings involve top management and technical groups from the business and corporate areas.	Chapter “Climate Change and Energy”.CDP item C1.2
2. Strategy - current and potential impacts on the company’s business, strategy and financial planning
2.1. Transparency on risks and opportunities identified in the short, medium and long term	Preliminary and qualitative assessment of potential transition and physical risks, as well as low carbon opportunities. The studies will be further developed over 2020	Chapter “Climate Change and Energy”.CDP items C2.4, C2.5
2.2. Impact of identified themes on portfolio and strategy	Adoption of ongoing internal carbon pricing (shadow price) of USD50/t CO2 and in line with what is required to limit temperature increase to 2°C, to be integrated into analyses of capital projects, current projects, budget cycle and strategic planning in 2020	Chapter “Climate Change and Energy”.CDP items C2.4, C2.5
2.3. Business Resilience to Climate Scenarios	Initial exercise prepared in 2018 in relation to EBITDA sensitivity to International Energy Agency scenarios, including 2°C scenario. Preliminary analysis of physical risks of temperature increase and rainfall regime prepared by Instituto Tecnológico Vale. Sensitivity analysis to climate scenarios in progress within the current Strategic Planning cycle, based on the scenarios of the International Energy Agency.	Chapter “Climate Change and Energy” CDP item C3.1
3. Risk management - process of identification, evaluation and management of corporate risks
3.1. Process for mapping and assessment of climatic risks	Environmental and climate change issues are embedded in the corporate risk management process. Physical risks related to impacts that climate change may have on Vale’s assets and their surroundings, as a result of increased temperature, altered rainfall patterns, increased extreme events and rising sea levels, for example, affecting Vale’s operations [5]. Other risks, such as possible impacts of climate legislation on the company’s activities, through the imposition of limits on the emission of greenhouse gases by sector and increases in direct and/or indirect costs due to carbon pricing, are also among the risks identified by the company.	Chapter “Climate Change and Energy” CDP Item 2.2
3.2. Climate risk management process	The main climatic risks are part of the company’s risk management process. In addition, the monitoring of the main risks is also communicated in the framework of the Low Carbon Forum	Chapter “Climate Change and Energy” CDP Item 2.2
3.3. Integration into the corporate risk management process	Climate risks mapped by the different areas within the scope of Corporate Risk Management (CRM), and included in the Operational and Business Risk matrices Regulatory and physical risks included in risk factors (20 F)	20 F Chapter “Risks Management”
4. Metrics and goals
4.1. Metrics Reporting used to monitor climate risks and opportunities	Absolute emissions and intensity Absolute emissions and intensity Energy consumption, intensity and matrix profile Water and land use	Chapter “Climate Change and Energy: Performance and Energy” “Water Resources and Effluent”
4.2. Transparency regarding scopes 1, 2 and 3 emissions	Emissions reporting scopes 1, 2 and 3 in the Sustainability Report, ESG Portal and CDP Questionnaire	Chapter “Climate Change and Energy: Performance”
4.3. Setting goals clearly	In December 2019, Vale assumed more ambitious goals in its climate agenda, with 2017 as the base year. These are the goals: Achieve carbon neutrality in scopes 1 and 2 by 2050 Reduce scopes 1 and 2 emissions by 33% by 2030, a level compatible with a global temperature increase of up to 2 ºC. This target is linked to the variable remuneration of all Vale employees  Produce 100% of the electricity consumed globally from renewable sources by 2025 in Brazil and globally by 2030 Establish ambition to reduce scope 3 emissions • Recover and protect 500,000 hectares by 2030	Chapter “Global Sustainability Goals” and “Climate Change and Energy” CDP item C1.3

The table below shows Vale's main advances in relation to the recommendations proposed by the TCFD:

Key elements of the disclosures on climate risks and opportunities recommended by the TCFD
TCFD Recomendation	Disclosure Vale	Reference
1. Governance - transparency regarding the governance of risks and opportunities related to climate change
1.1. Description of the supervision of the Board of Directors	Sustainability Committee and Board of Directors responsible for validation sand low-carbon monitoring of guidelines	Chapter “Governance” or “Sustainability Governance”. CDP item C1
1.2. Role of executives in mapping and managing the agenda	Low Carbon Forum, with monthly meetings to assess the deployment and implementation of the Vale Carbon Neutral strategy. This forum is coordinated by the Executive Officers for Sustainability and Institutional Relations, with the support of the Executive Officers for Coal, Strategy and Mineral Exploration, Business Support, Ferrous and Base Metals, and with the participation of Vale’s CEO and CFO. The meetings involve top management and technical groups from the business and corporate areas.	Chapter “Climate Change and Energy”.CDP item C1.2
2. Strategy - current and potential impacts on the company’s business, strategy and financial planning
2.1. Transparency on risks and opportunities identified in the short, medium and long term	Preliminary and qualitative assessment of potential transition and physical risks, as well as low carbon opportunities. The studies will be further developed over 2020	Chapter “Climate Change and Energy”.CDP items C2.4, C2.5
2.2. Impact of identified themes on portfolio and strategy	Adoption of ongoing internal carbon pricing (shadow price) of USD50/t CO2 and in line with what is required to limit temperature increase to 2°C, to be integrated into analyses of capital projects, current projects, budget cycle and strategic planning in 2020	Chapter “Climate Change and Energy”.CDP items C2.4, C2.5
2.3. Business Resilience to Climate Scenarios	Initial exercise prepared in 2018 in relation to EBITDA sensitivity to International Energy Agency scenarios, including 2°C scenario. Preliminary analysis of physical risks of temperature increase and rainfall regime prepared by Instituto Tecnológico Vale. Sensitivity analysis to climate scenarios in progress within the current Strategic Planning cycle, based on the scenarios of the International Energy Agency.	Chapter “Climate Change and Energy” CDP item C3.1
3. Risk management - process of identification, evaluation and management of corporate risks
3.1. Process for mapping and assessment of climatic risks	Environmental and climate change issues are embedded in the corporate risk management process. Physical risks related to impacts that climate change may have on Vale’s assets and their surroundings, as a result of increased temperature, altered rainfall patterns, increased extreme events and rising sea levels, for example, affecting Vale’s operations [5]. Other risks, such as possible impacts of climate legislation on the company’s activities, through the imposition of limits on the emission of greenhouse gases by sector and increases in direct and/or indirect costs due to carbon pricing, are also among the risks identified by the company.	Chapter “Climate Change and Energy” CDP Item 2.2
3.2. Climate risk management process	The main climatic risks are part of the company’s risk management process. In addition, the monitoring of the main risks is also communicated in the framework of the Low Carbon Forum	Chapter “Climate Change and Energy” CDP Item 2.2
3.3. Integration into the corporate risk management process	Climate risks mapped by the different areas within the scope of Corporate Risk Management (CRM), and included in the Operational and Business Risk matrices Regulatory and physical risks included in risk factors (20 F)	20 F Chapter “Risks Management”
4. Metrics and goals
4.1. Metrics Reporting used to monitor climate risks and opportunities	Absolute emissions and intensity Absolute emissions and intensity Energy consumption, intensity and matrix profile Water and land use	Chapter “Climate Change and Energy: Performance and Energy” “Water Resources and Effluent”
4.2. Transparency regarding scopes 1, 2 and 3 emissions	Emissions reporting scopes 1, 2 and 3 in the Sustainability Report, ESG Portal and CDP Questionnaire	Chapter “Climate Change and Energy: Performance”
4.3. Setting goals clearly	In December 2019, Vale assumed more ambitious goals in its climate agenda, with 2017 as the base year. These are the goals: Achieve carbon neutrality in scopes 1 and 2 by 2050 Reduce scopes 1 and 2 emissions by 33% by 2030, a level compatible with a global temperature increase of up to 2 ºC. This target is linked to the variable remuneration of all Vale employees  Produce 100% of the electricity consumed globally from renewable sources by 2025 in Brazil and globally by 2030 Establish ambition to reduce scope 3 emissions • Recover and protect 500,000 hectares by 2030	Chapter “Global Sustainability Goals” and “Climate Change and Energy” CDP item C1.3

[1] CEBDS - Brazilian Business Council for Sustainable Development
[2] WBSD- World Business Council for Sustainable Development
[3] IA- International Energy Agency
[4] The greenhouse gases (GHG) considered under this policy are: CO2, CH4, N2O, HFC, PFC, SF6 and NF3. From now on, they will be called "emissions"; "carbon"; or GHG.
[5] The Vale Technological Institute regionalized (downscalling) the global warming models referenced by the Intergovernmental Panel on Climate Change (IPCC) for the Brazilian reality. This allowed Vale to identify rainfall regimes changes and volumes and temperature variation for all operations in Brazil. Models RCP 4.5 and 8.5 were regionalized. Based on changes in rainfall and temperature standards, it was possible to identify the main vulnerable assets and potential changes in the intensity and frequency of operational risks previously identified by the company's risk management process.

Goals and Deadlines

Our next steps to evolve in the theme and in line with our commitments are:

• Conduct an strategy evaluation to achieve the neutrality, involvin forest assets, carbon credits, compensation, among others, with completion forecast for 2021;
• Conduct extensive carbon pricing training for capital project leaders, budgeting and planning teams;
• Update a scenario analysis by the strategic planning team.
  

Analysis of strategy resilience regarding climate change scenarios

Vale, aligned with the TCFD recommendations, analyzed the resilience of its strategy regarding the climate change scenarios. Click here to access the report with the analysis and results.

Management of Risks related to Climate Changes at Vale

Click here to access the report with Vale's analysis and initiatives for the risks management related to climate change.

CDP

CDP is a British NGO that aims to make companies more transparent regarding climate change theme management and on the business' risks and opportunities related to climate change. We respond to the CDP Worldwide questionnaire annually since 2003.

In 2018, CDP adapted the questionnaire to the TCFD recommendations and, as we understand the complexity of the challenge for all adjustments to this new type of reporting, we maintain our publications and are promoting a series of internal actions that lead us to better management and efficiency.

Download Vale’s CDP Questionnaire

Carbon pricing

Vale acknowledges the climate change as one of the biggest challenges of society, and since 2008, periodically updates its Global Climate Change Policy, which defines the corporate guidelines, commitments and targets to ground Vale Net-Zero Strategy.

Carbon pricing consists of attribution of a price to compensate the negative impacts caused in the life cycle of the economic activities that generate greenhouse gas emissions (GHG). It is based on the pollutant-payer principle, which says that the polluting agents should cover the costs for the damage repair of their activities. This payment is made by means of carbon pricing mechanisms, and the most common ones are the carbon markets (emission trading system – ETS) and carbon taxes. (CDP and CEBDS, 2015)¹.

• Carbon Markets: an economic instrument, where a cap is set for the GHG emissions and there is allocation of rights or allowances to emit until achieving the threshold set by the jurisdiction (country, province or region). This allocation can be done by means of free distribution ^[2] of the permits and/or by means of auctions (current scenario of the European Union). Thus, a market for trading of permits is created, called Emissions Trading System (ETS), where the companies that emit quantities lower than their cap can sell such permits to companies that emit above their cap. The carbon price is defined by the market (offer and demand), but many governments set a minimum price to regulate the market. This instrument is also called carbon market or cap and trade.
• Carbon Taxes: it consists of charging a fixed price per emission unit (ex.: reals or dollars per metric ton of carbon dioxide emitted). This fee is paid to the government, serving as a carbon tax. In this instrument, there are no emission limitation, but the fee value is calculated in a way to achieve the socially optimal level of emissions. This optimal level represents the point, in which global heating is contained within the limit set forth in the Paris Agreement (below 2°C), assuring the highest possible level of well-being to the society.

Currently 22% of the global emissions are priced, according to the report of the World Bank “State and Trends of Carbon Pricing 2020”. Until mids 2020, 63 carbon pricing initiatives have already been implemented or planned ², 31 of which consisted of carbon markets and 30 of carbon taxes. Totally, 46 in national and 32 in sub-national level jurisdictions participated in these pricing initiatives. However, almost half of these emissions are priced at prices under US$ 10/tCO2e.

Source: World Bank, Carbon pricing dashboard. Link: https://carbonpricingdashboard.worldbank.org/

Vale is subject to carbon pricing in its operations in countries, such as Canada, at the national and regional level (Ontario, Manitoba and Newfoundland), the United Kingdom and Japan. In Brazil and Indonesia, carbon pricing is still under consideration.

Vale follows up the trends and the studies on climate changes in global forums, which aim to define regulatory and economic strategies to mitigate risks and encourage prioritization of investment in innovative technologies with lower emission worldwide.

Our teams monitor the development of the regulations and support the elaboration of climate policies on carbon pricing as a way to stimulate transition to a low-carbon economy. We understand that the economic instruments, such as carbon pricing, are the most indicated to deal with reduction of the greenhouse gas (GHG) emissions, once they met the environmental goals at lower cost for the society (cost effectiveness).

Therefore, we support external opinions of institutions, such as CEBDS, a branch of WBCSD in Brazil, Carbon Pricing Leadership Coalition, a group of the World Bank, which leads discussions about carbon pricing in companies, among other institutions.

The purpose of the adoption of internal carbon price by Vale is to encourage investments in GHG reduction until anticipating most restrictive regulations in terms of emissions.

¹ CDP and CEBDS, 2015. “Navigating the carbon pricing scenarios: A practical guide on its different mechanisms, applications and tools to adapt the business strategy".
^[2] Using the grandfathering criteria based on historical emission, or benchmarking based on reference index for the sector.
² It is considered an initiative with planned implementation when it is formally adopted by means of legislation and there is an official start date.

Internal carbon price at Vale

One of the internal tools adopted to operationalize the Vale Net-Zero Strategy is carbon pricing, recently implemented at Vale. At the end of 2019, Vale adopted an internal carbon price (shadow price) of 50 dollars per ton of CO2 equivalent (US$50 / tCO2eq). This price is aligned to the temperature targets of the Paris Agreement, according to the recommendations of Carbon Pricing Leadership Coalition (CPLC)³.

Carbon pricing is a tool used in order to make Vale's emission reduction and neutrality targets feasible. To price carbon means to attribute a monetary value to greenhouse gas emissions (GHG). For companies, an internal carbon price enables evaluation of the financial impact of the low-carbon strategy and anticipation of potential regulatory risks related to emission restrictions.

In June 2020, the use of the internal carbon price in economic-financial analysis of new investments started. The association of cost to the greenhouse gas emissions in the feasibility analysis enables explaining the impact of the emissions on the project valuation at the time of decision, making the projects from the Carbon Target portfolio feasible. Thus, the carbon price starts supporting the risk and opportunity assessment, selection and prioritization of projects, contributing to Vale's decarbonization trajectory. It shall be pointed out that Vale also elaborated its marginal discount curve by means of which it prioritizes the most cost-effective emission reduction initiatives, having the internal carbon price of 50 dollars as a reference.

Technical sheet on internal carbon pricing at Vale:

Value		Approach used			Application
US$50 / tCO2-eq		Shadow Price			Economic-financial analysis of investments (Current and Capital) Marginal Abatement Cost Curve (MACC) Project prioritization
US$10 / tCO2-eq		Shadow Price			Economic-financial analysis of forest carbon projects

For the prices US $ 50 / tCO2eq and US $ 10 / tCO2eq, stands out:

Goals

• Achievement of reduction (scopes 1 and 2) and neutrality targets
• Cost-benefit analysis of mitigation options

Scopes

• Scope 1 and Scope 2
• Not applicable to Scope 3

Indicators

• GHG emissions of the operation phase of the projects and the native vegetation removal
• Emission Cost
• NPV (Net Present Value) with and without carbon
• IRR (Internal Return Rate) with and without carbon
• Marginal Abatement Cost

For implementation of the internal carbon pricing methodology at Vale, numberless internal trainings were done for the project leaders, budget and strategic planning teams, as well as review of instructions, procedures and tools in the project and budget areas. Vale also prepared a carbon pricing manual to support the project leaders and developers when applying this tool.

Quantification of GHG emissions of projects and investments is the first step for carbon pricing. As of the accounting of the carbon from the projects, carbon is monetized and the emission cost is included in the project financial indicators and results. The main stages of this methodology are:

³Source: CPLC, Report of the High-Level Commission on Carbon Prices, May 29, 2017.

External Engagement

We follow trends and studies related to climate change in global forums that aim to define regulatory and economic strategies for mitigation and adaptation worldwide. In Brazil, we participate in discussions on the theme, collaborating on policies and strategies aimed at transitioning to a resilient and low-carbon economy.

Examples of relevant agreements and initiatives on climate change in which Vale participates:

Carbon Pricing Leadership Coalition

International Council of Mining and Metals

Task Force on Climate-Related Financial Disclosure

CDP Worldwide

Brazilian Business Council for Sustainable Development (CEBDS - Conselho Empresarial Brasileiro para o Desenvolvimento Sustentável)

WBCSD (World Business Council for Sustainable Development)

Policies and Procedures

Vale's strategy on climate change is based on the “Climate Change Policy,” which has the following strategic guidelines: 

The Policy defines principles and commitments on fighting climate change for the Company and its subsidiaries, regarding:

Business Case

Battery Use - Ilha Guaíba Terminal (TIG)

Vale is installing at Ilha Guaíba Terminal (TIG), in Rio de Janeiro, one of the country's largest battery energy storage systems to supply electrical demand. The system, installed in partnership with MicroPower Comerc (MPC), consists of lithium-ion batteries manufactured by Tesla. The initiative is an important step in Vale's strategy to replace fossil fuels.

The BESS (Battery Energy Storage Systems) system, which is being developed in partnership with Siemens and MicroPower Comerc (MPC), will reduce the electric energy cost of the port by almost 20% by substituting the electrical grid supply during peak demand periods when the tariff is more expensive - known as Peak Shaving. The equipment has a storage capacity of 10 megawatt-hours, which is enough energy to power 45,000 homes for one hour.

 With the cost reduction, BESS will bring gains to Micropower, savings to Vale, and free capacity for the local electrical grid. MPC will also be responsible for the operation of the equipment.

100% eletric locomotive

Vale, in partnership with Progress Rail - a company of the American group Caterpillar -, is developing a new 100% electric, battery-powered switchyard locomotive. In addition to significantly reducing greenhouse gas emissions by replacing diesel fuel with sustainable electric energy, the equipment also reduces noise emission, which mitigates its impacts on the communities surrounding Vale operations.

The pilot-phase for EMD® Joule locomotive is expected to be launched in this second half of 2020, at Tubarão Unit (in Vitória, in the state of Espírito Santo). The equipment is under the construction phase at the Progress Rail's industrial plant in Sete Lagoas (Minas Gerais state). EMD® Joule's batteries will provide a 1.9 MWh storage capacity, expandable to 2.4 MWh, which means being able to operate up to 24 hours with no need to recharge.

This 100% electric switchyard locomotive is part of the PowerShift Program to replace Vale's energy sources with clean ones.

Autonomous Truck

Huge 240-tonne off-highway trucks travel on the roads of a large mining area without a cab operator. Controlled only by computer systems, GPS, radar and artificial intelligence, vehicles move efficiently between the mine front and the unloading area. Autonomous trucks are a reality at Brucutu mine, in the state of Minas Gerais, Brazil. The autonomous operation of iron ore transportation has a higher productivity, generates less wear on parts and extends equipment life by 15%. The initiative has great importance to the Company’s ability to reduce both emissions and fuel and to decrease CO₂ particulate emissions.

PowerShift

Vale has created an internal program called PowerShift to support its sustainability goals, focusing on the transition to a low-carbon economy. The program aims to make the Company's energy matrix clean by focusing on the use of renewable energy and alternative fuels, greater efficiency of operations using new technologies, and forest promotion. PowerShift-linked initiatives are expected to contribute approximately 40% of Vale’s planned reductions to help us reach the United Nations 2030 Agenda target.

Sentinela Project – Artificial Intelligence

Vale's AI Centre, located in Vitória in the state of Espírito Santo, has been developed in partnership with researcher Ali Soofastei from the University of Queensland in Australia. It is a new tool that uses artificial intelligence for better off-highway truck operation. The tool offers the best speed option for the least fuel consumption on the vehicle operator panel.

This technological solution was tested on 50 trucks in Itabira, Minas Gerais, resulting in a reduction of 585 thousand liters of diesel consumption and generating savings of R$1.8 million. In terms of environmental impact reduction, the reduction in diesel consumption prevented the emission of 1,500 tonnes of CO₂. This is the equivalent of planting 3,000 trees in the Atlantic Forest.