Vale S.A.

Good morning, ladies and gentlemen. Welcome to Vale's conference call to discuss second quarter 2020 results. At this time, all participants are in a list and only mode. Later, we'll conduct a question and answer session, and instructions will be given at that time. If you should require assistance during the call, please press the star key followed by zero. As a reminder, this conference is being recorded, and the recording will be available on the company's website at vale.com at the investors link. This conference call is accompanied by a slide presentation, also available at the investors' link at the company's website, and is transmitted via internet as well. The broadcast in the internet, both the audio and the slide change, has a few seconds delay in relation to the audio transmitted via phone. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Sixth Mitigation Reform Act of 1996. Actual performance could differ materially from that anticipated in any forward-looking comments as a result of macroeconomic conditions, market risks, and other factors. With us today are Mr. Eduardo de Sales Bartolomeu, Chief Executive Officer, Mr. Luciano Ciani Pires, CFO, Mr. Marcelo Spinelli, Executive Officer for Ferro's Minerals, Mr. Mark Travers, Executive Officer for Base Metals, Mr. Carlos Medeiros, Safety and Operational Excellence Officer, Mr. Alexandre Pereira, Executive Officer for Business Support, Mr. Paulo Couto, Director of Coal, Mr. Alexandre D'Ambrosio, General Counsel, and Mrs. Marina Quental, Director of People. Mr. Eduardo Bartolomeu will proceed to the presentation of Vale's 2Q20 performance and after that he will be available for questions and answers. It is now my pleasure to turn the call over to Mr. Eduardo Bartolomeu. Sir, you may now begin.

Okay, thank you. Good morning to everyone. First of all, I hope you and your families are doing well and overcoming this unprecedented moment. The first thing I would like to highlight is that Vale Continuous to face the COVID-19 pandemic with humbleness, discipline, and sense of urgency. For almost five months, we have been managing the company in a remote way. The pandemic demands us to make important choices. It puts our planning to the test. We are learning a lot during this process. And not just that planning based on the new situations that we face. As I have said in the last quarter, this war will not be a quick one. So we will keep our defense high. Finally, our priorities continue intact. They are safety, people, and the full reparation of Brumadinho. Next slide, please. Well, our de-risking plan continues, and our response to the pandemic has been incorporated on it. Let me remind you that our risk The risk focus has four fronts, which prioritize, first, the reparation of Rumadinho, second, the safety of our employees, our dams, and to support for our communities, third, the stability of our operations, and last, the discipline in capital allocation. I'll detail a little bit each of these four fronts to you in the next slides. Please, next one. Starting with the reparation, our commitment to Brumadinho remains steady. In this pandemic, we are there helping to ensure resources necessary for the health care of the affected communities. The identifications continue remotely, with more than 7,600 people covered by agreements, which totals about R$ 3.9 billion with the emergency aid. We have already entered into a fair number of agreements with the authorities focused on reparation projects from protection of fauna and flora to water security in the region. So far, we have invested R$11.5 billion in the reparation of Brumadinho and actions with them. That is to say that we have already done a lot and we will continue to do so, aware of our commitment to the reparation. Would you please pass the next slides? Well, I have been saying repeatedly, our top priority is safety. Speaking of our people, in all our operations, we have implemented world-class standards to face the pandemic. In Brazil and Indonesia, we have implemented mass testing in the operational areas and we have already tested our workforce more than once. It's important to say that we have strictly followed the WHO protocol for test, track and treat. We continue with our daily checklists and in screening to our employees that enter our operations. I was in Carajás recently and it was very important to see how we are applying what we learned when dealing with this absolutely new situation for everyone, as was the case with Itabira, for example. On another front, We continue to implement the Hira, our identification and risk treatment program. In 2020, we have already completed its implementation at 11 sites, with another 47 planned by the end of the year. We are also implementing Hira for dam safety, starting now in August. Speaking in dam safety, we continue to make progress on our de-characterization plan. We are advancing with the work for the completion of the Fernandinho Dam and the construction of the containment structures. Finally, the engineer record mentioned in the last call continues to support improvements in the safety standards of our dams. Would you please go for the next one? Safety also involves the care for our communities. We continue to support society aware of the essential role we have in the economy. In the city of Parauapebas, for example, in a partnership with the city hall, we had made mass tests available to the population. Parauapebas was the first municipality in Brazil to do mass testing with the PCR exam. By the second quarter, we had already disbursed R$ 470 million in actions to fight the pandemic in our operations around the world. I would like to stress that it's not just about financial resources. We are working together with the communities and with the authorities, as in Paraupebas, with the expansion of the capacity of the hospital there and the construction of one field hospital, which we constructed and operated. As you can see, our obsession with safety continues with great discipline from our teams and collaboration with communities and authorities. Would you go for the next, please? Well, within our new pact with society, we continue to evolve in our ESG agenda. Recently, we took important steps with the creation of the nomination committee, which aims at the evolution of our governance model and which will work already for the election of the board in 2021. And the announcement of our chief compliance officer responsible for managing our third line of defense is strengthening our governance. Also, we remain firm in the ESG Gaps Closure Plan. We have a target of closing 10 gaps this year, of which we already closed 3, the formation of the Audit Committee, the disclosure of Management Compensation, and the release today of our Tax Transfer Report. On the environmental front, our ambition regarding climate change is even more up-to-date. We announced last quarter that we work to reduce 33% of our emissions in Scope 1 and 2, in line with the Paris Agreement. And very important, we have an ongoing roadmap to achieve these ambitious goals. Already looking at Scope 3, we recently announced a non-binding agreement with Scope Steel and Mitsui to establish a new company targeting on supplying low-carbon metals to the steel industry. This new company will use existing and new technologies such as our Tecnored and Dmitrex process. And why is prioritizing ESG factors so important? Because we believe that the integration of ESG in our routine will be essential for value de-risking. Here is the next slide. As a third point of our de-risking, we continue to stabilize our production. Amid the restrictions that were imposed by the authorities due to the pandemic and our own safety measures, this process has been very challenging. An example of this is that we operated with forced absenteeism to protect our employees, as a result of what I explained about testing, tracking and treating people. Even those who did not test positive but had contact with positive cases were quarantined. Our efficient was impacted so that we could maintain a safe work environment and continue to operate. The good news is that since June we have been able to plan our production and maintenance without any restrictions. Also, we had important achievements in the resumption of our production in Aranora. We had the restart of Timbopeba and the speed up of the production phase in June and July. We have moved on to a very strong second half aiming to meet the guidance for the year. We'll still have some steps to follow in the resumption plan, and Spinair will give you more details about them soon. In base metals, we continue to bear the fruits of the good work carried out in North Atlantic, with robust nickel production since the fourth quarter of 2019. Boises Bay Mine operations resumed safely one month ahead of schedule, after three months in carry maintenance as a preventive measure for COVID-19. In relation to VNC, we continue to negotiate the definitive sale of that asset to New Sentry in a transaction that guarantees the continuity of VNCs by this new operator. For this, we have indicated a commitment of $500 million in the financing package for that business continuity. In cold, we face the challenge quarter, highly impacted by demand, which in turn impacted our production. We continue to be prepared to start the revamping of the asset as soon as possible, as soon as we can guarantee the logistics for entering equipment and materials on the site. Looking a little bit further to conclude, with discipline and highest safety standards, we will resume our production capacity of 400 million tons of iron ore by 2022. Could you please pass the next one? Lastly, Capital discipline is fundamental to the de-risk of value, a point that we have reinforced on several occasions. Looking at our capital allocation, it mainly serves three purposes. First, our commitments, for example, Brumadinho and our own financial debt. As I said, we are making progress on all those fronts. For Brumadinho specifically, we have provisioned $3.4 billion, having already spent $2.6 billion in the reparation. which has been progressing consistently, quickly and with quality. The next is safety and operational continuity. And for these aspects, we have annual investments around 4.5 to 5 billion dollars for the next years. Of course, includes replacement projects and some growth initiatives. And finally, the remuneration of our shareholders. Therefore, we believe that Vale fills in the necessary conditions to resume the payments of dividends. Our commitments are ongoing. Our financial position is robust to meet these commitments. For this reason, Vale's Board of Directors, with the support of our Executive Board, restored the shareholder remuneration policy. Well, to conclude, our commitment is to continue to do everything we can to ensure the safety of our people and our operations. Finally, I would like to thank all of our employees and partners for their efforts in recent months. I now pass the floor to Spinelli, who will give more details on the company's resumption plan, and afterwards, Luciano will give some details about our results in the second quarter. Thank you very much for your attention, and let's get back to you on the Q&A. Please, Spinelli.

Thank you, Eduardo. We know that you have some questions about iron ore production. I want to address the answer in three blocks of information. So firstly, it's important to emphasize that we have a plan to resume capacity to 400 million tons by 2022. We are sticking to the plan and we know what to do, what we have to do. Secondly, We had, obviously, we had an additional challenge after COVID. So we had to change many, many things. I want to remind you that four main issues that we faced after COVID. So first one was related to absentees. So now we are in one third of the peak that happened in April. We're dealing really well in the north, even now in the southeastern and southern system that the problem is growing, but we're so far so good. We had the stoppage of Itabira. We lost one million tons with this, and we learned a lot and improved our controls after this case. Those impacts, those two ones represent 3.5 million tons. So loss flexibility in our production, you know very well, any buffer now we need to deliver. Just to give an example, we moved one maintenance from the wet season to the dry season, so we lost more. We are planning to loss more production in the second half because of that. Thank you very much. The third information, the third block of information, I'll drive you in this slide line by line. It is important to show that we have a different roadmap for each system that we have in Brazil. But it's important, you see, I want to drag your attention about this. We have some options. Thank you very much. What kind of challenge do we have? We are more exposed to the upstream dams. So we have the sequence that we already told you many times that we need to test the impact of the operations in the dam, return the dry operations, the wet operations, and the blasting. So in the first half, we improved our operations in Valle Grande. We are now Thank you very much. to resume the operation of Fabrica. We didn't do this yet. We have the plan. We need some authorizations from the agency and the prosecutors. We already have this plan with them. We are not counting on this production for this year, but we'll be back in next year. The second point here is about Maravillas 3s. And again, I want to draw your attention about this. This is a new asset that will give the possibility to return the dry production for Vargem Grande and we can have the full operation in 2021. Second line is about southeastern system. It's a little bit different problem that we have here. The challenge is The problem with upstream dams is now behind. So we already resumed the operations in Timbopeba. We are running the operations in wet processing. We had some problems with COVID. And what is the main points that we need to address in the second half of next year? I want to remind you that we are moving from a common operation that use dams to an operation that we need to filter the tailings and dry stack the tailings after that. But there is a construction for that implementation that will be ready only in 2022. We use the dams that we have and we lost capacity as we are assessing two main dams in this corridor. One is Itabiruçu in Itabira and the other is Laranjeiras in Brukutu. We are really almost done in Itabiruçu. In a few weeks, we're going to have the full assessment. and probably will be read to return the operation and actually return the construction of the improvement of capacity. So we need to plan this when you're going to have the full report of the depth. And Laranjeiras is a little behind. We still have to improve our assessment. We are drilling some tests and as soon as you have information, We're going to have the plan to resume this operation. But it's important to say we also have another option for operations in Brukutu. There is a new dam called Torto that is under construction. We are not counting on this capacity for this year. Remember that we had some delays with the COVID. But we're waiting to have, and we have a high expectation to have the full operation of a Brook Tool next year. So there's a, after that we'll have the bridge with the capacity of the dam, and in 2022 we'll move to the dry stacking operations. The third one is the Northam system, and this is a total different game. The name of the game here is New Pit and RAMPAP of S11D. We had a problem in the first half with a very heavy rainy season. We had some problems with COVID and the delay of Morrone, that's a new pit in North Ranch. What do you have in the second half? Full operation of North Ranch. The S11D is running amazingly Well, yesterday we had a daily record of 370,000 tons in one day. It's an amazing record. The run rate of S11D is 110 million tons for the last 20 days. And we also have another... Thank you very much. Just to conclude, the last two, actually two months and a half, what we are planning, we are delivering our production. Definitely we have many challenges after COVID, but from the last 20 days, almost 30 days, we are delivering more than one million a day. So we are committed to deliver our guidance in the lower level of the guidance. We have many challenges, but we have great assets to make it happen and the right people. So I want to pass to Luciano.