Vale S.A.

Ladies and gentlemen, welcome to Vale's conference call to discuss 3Q20 results. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at the time. If you should require assistance during the call, please press star zero. Thank you for watching. The broadcasting via internet, both the audio and the slide changes, 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 Securities Litigation Reform Act of 1996. Actual performance could differ materially from that anticipated in any forward-looking comment. 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 Executive Officer, Mr. Luis Eduardo Osorio, Executive Officer for Sustainability and Institutional Relations Mr. Alexandre Pereira, Executive Officer for Global Business Support Mr. Paulo Couto, Director of Coal Mr. Alexandre Pembrosio, General Counsel and Mrs. Marina Quental, Director of People First, Mr. Eduardo Bartolomeu will proceed to the presentation on Vale Street Q20 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, everyone. First of all, I hope everybody is safe and sound. Well, it's been more than seven months since we've started managing Vale in a remote way. And one thing has not changed. The safety of our employees comes first. Vale continues to face the COVID-19 pandemic with discipline and sense of urgency. We maintain our guards very high, and our priorities remain intact. Safety, people, and the reparation of Rumadinho. We have been learning a lot since Rumadinho and transforming our culture and practices for a better Vale. With that in mind, I am pleased to share that our processes and results continue to improve together with our de-risking process. Please, next one. Starting with the reparation, our commitment to Brumadinho remains steady. We already disimbursed $2.6 billion on the reparation. The indemnification process continues With about 8,200 people covered by agreements for moral and material damage. 600 people more since our last call. The works for infrastructure and environmental recovery are progressing as well. We completed the water man at Pará de Minas to ensure the supply of water to a city with a population close to 100,000 people. We have concluded the tailing containment structures at the Paraopeba River. Since May, the river has no longer received sediments. And, most importantly, we continue open for dialogue and to active listening throughout the reparation process. This quarter, we delivered the integral reparation plan for Brumadinho. which was built on the community's perspective and submitted in September to the municipality. We are certain that with this, we have a solid plan in our hands to repair the damage and support the development of Rumadinho. Finally, we are having encouraging conversations with the State of Minas Gerais and other stakeholders To get a framework agreement for collective damage indemnification and compensation for the society and the environment. With that, we continue to pursue our goal of reaching a stable agreement for reparation and compensation. Please, next one. As well, we continue to enhance our safety and dam management. The engineer record is already implemented for 100% of our dams in the iron ore business with an improved continuous monitoring. In risk management, our risk identification program, HIDA, continues now including our dams. 59 operational units were assessed since 19, 42 in 2020, and another 12 sites will be assessed until the end of this year. This program is being applied to our dams as well, with pilots underway in Sudbury and Long Harbor. The heater will be fully implemented by 2022 in Bali. Finally, our new tailing management system is under implementation, and we are doing that by also complying with the ICMM standard launched in August. Our initial assessment indicates Close to 60% of adherence to the ICMM recommendations. We want to be fully compliant by 2020. So, our ambition is clear, to be world-class and have effective standards and processes in place with a safety-driven culture. I can assure you that Vale is on a journey to become a safer and more reliable company. Next slide, please. Brumadinho required us to become better listeners. We are listening to the communities and society and building a strong and consistent relationship with all of our stakeholders. Based on their demands, we have mapped 52 ESG gaps, which have already closed 31 of them. In 2020, we already addressed five gaps, and five more must be closed by the end of this year. Our ambition is to transform Vale into a benchmark in ESG practice. In this agenda, another important subject is the protection of the Amazon. Let me reinforce this. We have been operating in the Amazon for more than 30 years. During this time, we have helped to protect close to 800,000 hectares of rainforest, five times the size of Greater London. In fact, we already protect about 1 million hectares of forest globally. With those actions, I believe that we will contribute for sustainable mining and act accordingly with our new packed society. Next one, please. Well, talking about the operational performance of our business, we continue with our plan to stabilize our production. A path that was detailed in great length during our Investor Tour in September. And I'm glad to share that the iron ore production results for this quarter was very strong. An increase of 21 million tons versus the second quarter, a 31% growth. We had an all-time production record in Carajás. That indicates That we are making progress with our plans for production stability and the initiatives for operational excellence. Spinelli will come shortly to explain the dynamics between production and sales for the quarter. In base metals, as anticipated last quarter, some maintenance postponement was strategic before the pandemic. We have normalized that routine and expect better results for the fourth quarter. In relation to VLC, We are taking steps to place it in carry maintenance in 2021. We also have a new group of potential investors interested in the asset. However, all possible solutions contemplate Bali's exit. In coal, this was also another chapter, highly impacted by weak demand, which continues to wait on our production. But on a positive note, we expect to finally start the plant revamp in the coming week. After that, we should reach a run rate of 50 million tons per year. Next one, please. Besides that, we are focused on recovering our production. But we are also taking important actions to make our production capacity more flexible. The launching of Serra Sul 120 project in Carajás is one of them. Besides creating An important buffer of production capacity ensuring operational flexibility, we allow growth of 20 million tons in the longer term with the dual logistics. Also, we launched project West Tree to expand the Shulanhu port capacity in 20 million tons per year, bringing it to a total capacity of 40 million tons, securing a strategic port capacity for Vale's BRBF in China. In summary, we are taking the necessary actions to ensure the stability we need to operate with efficiency and the growth options required by the market. Please, next one. Well, to finalize, we are the risking valley to build a better valley. Let me walk you through the most important steps on this journey. First, we are repairing Brumadinho. In a fast way and with quality, listening and engaging with the families and community. Second, we are becoming a safer company. With discipline, we continue to make solid progress with our tailoring management system and our operational safety process as well. Third, we are resuming production under safer conditions. I'm sure that we will achieve the 400 million ton brand rate during 2022. We have a clear understanding of what we must do and we are fully capable of delivering it. And finally, we are building the conditions for a long-term, stable business, keeping focus on capital discipline. With that in mind, we resumed our dividend policy and paid a solid dividend last September. Well, to conclude, We intend to continue creating and sharing value for all stakeholders. But most importantly, I assure you that we are doing everything we can to guarantee the safety of our employees in our operations and in our communities. Now I pass to Marcelo Spinelli, who will give some details about the results in Iron Ore. Thank you very much for your attention. We will get back to you at the Q&A.

Thank you, Eduardo. I have some information to share about iron ore production and sales. I think you have a lot of questions about sales. So let's start with the production. So can you pass, please, the slide? Some weeks ago, we had a chance to detail, as Eduardo said, the roadmap to reach it. So, today, I think we have a checklist, transparent checklist. We can have some deviation quarter by quarter, but definitely now we can follow together the evolution of the recovery of production. So, in Q3, first information is what I've said, huge production in the North, 57 million tons record. On track with production also all the projects around the north. And in the south and the southeast, so far so good, on track projects, production, and the initiatives with the dams. For Q4, we are running the production around 1 billion tons a day. It's a good news, so far so good. Our target, you know, we are on the lower level of the guidance, around 310 million tons. It's very important to say that at this time of the year, we don't have any more capacity to offset some deviations if you face some problem. So, we must deliver exactly what we have in our plan. And what kind of risk you have ahead? So, I can say two. First one is related to the license of East Range. It's still waiting for the license. We are in the last mile of that. No more information to the regulators, but we need to receive this to start this operation. We are waiting for that. And we also, we've been hearing about the rumor of La Nina effect. Well, I mean, in fact, in Brazil, just to understand, it comes with more rainfalls in the north. You can anticipate this process in the north. And you have a dry season in the very south of Brazil without so many impacts in our operations. So we have to track this trend day by day. I'll let you know if you have any change in our guidance. So let's focus on the sales now. I think it's the most important information to the end of the year. You can pass the slide, please. Well, I have a rationale here to share with you in three steps. So I'll start with the number one. You know that we've been growing our production, our blending process in China. It's a very successful strategy. Very over volume. We bring the high silica product from the south of Brazil. Today, we have a discount of $30 for that. And it meets with the IOCJ, Caritas Science. You can see the growth in this slide for $94,000 to $145,000. So we have a stable product growing in the market. Our clients are very well satisfied. The same information here. It's about our exposure to China. China in our sales are now reaching almost 70% of our sales. Why? This is due to COVID, you know. China is in a V-shape. The rest of the world is struggling to recover the production and demand. So what does it mean? We have 45 days of transit time, just transit time, the shipping part. And after that, we have the discharge, the blending time, and also the retrieval period. And remember that the last quarter, China suffered with a lot of delays in the discharge time with the congestion in the ports. So the lead time to close the sales is not the same as you have in a FOB or a CFR, traditional CFR. When you are more exposed to China, you're selling more BRB. We had some questions about this in the last call. And it's very important to understand the difference between shipping, you know, the FOB sales, the CFR sales, and the blending sales in China. Because sometimes in FOB you can find price in the time you sell. But when you have the CFR, you can sell during the shipping. But the price will be only when the product arrives in the client. And also, the BRBF will spend more time to blend, to have the product to blend. Another information here to understand the whole picture, we have the inventories. You know that in the last year after Brumadinho, we have to reduce our inventories to keep the supply chain of our clients. So, we reached the minimum level in the end of last year. So, This quarter, the last quarter, we have the first chance to have a gap in our production, to increase our production. And we need to have this time to put this product in China. So we are not talking about speculating inventors that I heard about some ideas about this. It's about operation inventors. We need this to make it happen and we are more focused on China. The two main information here that I want to say to you for Q4. First information, we don't have any intention, we don't have any planning the gap of inventories or gap of production. You know, Q4 in our forecast for Q4 in our production. So we don't see any necessity to have another kind of gap like we have in this quarter. The second information, we don't see many deviations between the Q4 sales and the Q4 production, Q3 production. So as we are moving our inventory to both in Asia, both in China, we have probably numbers close sales and ventures as we are just moving this inventory to the sales after a lot of time that we need. So if you have further questions, I can help in the Q&A session. Now I pass to Luciano Cia.