Vale S.A.

Good morning, ladies and gentlemen. Welcome to Vale's conference call to discuss the third quarter results of 2023. All participants are currently in a listen-only mode. At the end of the presentations, we will provide instructions on how to participate in the question and answer session. This call is being translated simultaneously to Portuguese. 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 in the area for investors. The slide presentation that accompanies this call is being broadcast on the internet and is also available in the investors' area of the company's website. There's a slight two-second delay between the audio and flight changes compared to the audio transmitted via phone. Before proceeding, let me mention that forward-looking statements may be provided in this presentation, including valid expectations about future events or results, encompassing those matters listed in the respective presentation. We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. To obtain information on factors that may lead to results different from those forecast by Vale, please consult the report Vale's Files with the US Securities and Exchange Commission , the Brazilian Comissão de Valores Mobiliários , and, in particular, the factors discussed under forward-looking statements and risk factors in Vale's annual report on Form 20-F. With us today are Mr. Eduardo de Sales Bartolomeu, Chief Executive Officer, Mr. Gustavo Pimenta, Executive Vice President of Finance and Investor Relations, Mr. Marcelo Spinelli, Executive Vice President, Iron Ore Solutions Mrs. Dashny Naidoo, CEO, Vale Base Metals Mr. Carlos Medeiros, Executive Vice President of Operations Mr. Eduardo Bartolomeu will begin his presentation on Vale's third quarter 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.

Thank you. Good morning, everyone. I hope you are all doing well. We continue to make significant progress on our strategic business priorities. We delivered a solid production performance this quarter and throughout 2023. In IRR Solutions, we delivered substantial output with increased average quality while also lowering our production-to-sales gap as expected. In Energy Transition Methods, Salubo 3 is successfully ramping up Contributing to our copper growth year-to-date with total production 10% higher in the quarter in supporting lower unit costs. In nickel, we remain on track to deliver our production guidance while reviewing our assets to unlock value potential. On our path to decarbonization, we are accelerating breakthrough irons for our solutions. We are commissioning our first big credit plant in Tubarão and find Two strategic agreements to assess the development of mega hubs. We are advancing in circular mining initiatives. We created Agera to develop our sustainable sand operations and we signed an agreement with Bluestone to foster waste-to-value transformation solutions in base metals. On dam safety, we continue to deliver on a new framework towards a safer valley. We completed the de-characterization of our 13th upstream dam and reduced the emergency level of B3B4 dam to the lowest. On top of that, we remain with our disciplined capital allocation approach. We just approved a $2 billion shareholder remuneration payment for December. With that, total dividends and interest in capital distributed since 2021 represents a 29% yield for our shareholders. We also launched our fourth share buyback program. Since 2021, Vale has repurchased over 16% of share base, concentrating shareholders' future earnings by about 20%. As you can see, we are delivering on our commitments and reaping good results from our structural changes. Let me go into more detail about our performance. Next slide, please. We had strong results this quarter, and we are starting Q4 at a robust pace, well positioned to deliver on our guidance. In Iron Ore Solutions, we continue to operate S11D at a high rate We also improved our portfolio average quality and boosted pellet production by 11% this quarter. We faced one-off engineering issues at SLM&D and the effects of a power outage across Brazil. And despite those issues, we are on our way to deliver a solid Q4 output. Iron ore finds and pellet sales increased by 6% this quarter, reducing our accumulated production to sales gap. Usually, in the third quarter, we have a high production to sales gap, but this quarter, we shortened that gap by around 50% compared to last year. In Q4, we expect to reduce this gap even further. In energy transition metals, copper production grew 10% in the quarter and 22% on a nine-month basis, as an increase of 41 kilotons compared to last year, thanks to the successful ramp-up of Salobo III, which is now operating at 80% of its capacity. In September, the Salobo Complex reached its highest monthly production level since 2019. Copper sales were exceptional for the period, growing about 5% quarter-on-quarter and 22% on a nine-month basis. Even though we have been delivering a substantial output, we have decided to lower our production guidance by around 15 kilotons, giving some change to the North Atlantic mining method and additional maintenance. In nickel, we are performing as planned, which includes the continued transition of the Voices Bay mine to underground and the rebuild of the Onça Puma Furnace No. 1 later this year. Our outlook for 2022 nickel production remains unchanged. Next slide, please. We are accelerating breakthrough iron ore solutions to deliver the high quality required by a decarbonizing world. The first brick-carrying plant is under commissioning, with the ramp-up expected by the end of this year. We expect to commission the second plant in early 2024, with the ramp-up at the beginning of the second quarter. The combined capacity will be 6 million tons per year. In this year, 2024, will be our first year with industrial-level production and will be a year of operational fine-tuning for the long-term reliability. On the MEGAHUB's development front, we signed two strategic agreements to assess opportunities, with Porto do Azul, for a facility in Brazil for hot brick iron production, using our pellets, and with H2 Green Steel, for concentration units in Brazil and the United States directed towards products for the low carbon steel value chain, including HBI, using our briquettes. Concentration solutions are critical to our decarbonization strategy, and we expect to build our first mega hub in 2024. Next slide, please. Posturing Circular Mining, we launched Agera, a company dedicated to developing our sustainable sand business. Agera trades and distributes sand extracted from the tailings dams of our iron ore operations. This type of operation allows us to reduce the use of dams and Pius in our iron ore operation and we hope to scale up this business. In addition, Vale Base Metals signed a long-term agreement with Bluest One to reuse tailings to produce fertilizers. On Sapumba Mine, we'll supply Bluest One with slag for the next 10 years. This initiative expands circular mining within our energy transition metals business. Furthermore, We signed two other strategic partnerships to assess decarbonization opportunities. With H2 Green Steel, Vale is taking its first step into the green hydrogen market. H2 Green Steel's expertise will be critical for developing green hydrogen in the mega hubs in Brazil and the United States. With Petrobras, we will assess the acceleration of low-carbon solutions taking advantage of the joint technical expertise and synergies of our two companies. Vale plays a leading role in the decarbonization journey by leveraging relevant actions to enable the energy transition. These agreements fit perfectly into this context. Next slide, please. Finally, we are building a safer Vale. We've completed the de-characterization of the 13th upstream dam. We are progressing on our upstream dam de-characterization program with the highest safety standards in place. In addition, after removing around 85% of tailings from B3 before dam, we reduced its emergence level to the lowest possible, with de-characterization to be completed in 2025. Since 2020, we have implemented several safety measures, upgrading over 40% of our structures at emergency levels to a safe status. We continue to systematically reduce dam risks and to implement the best international practice in dam management, while simultaneously developing solutions to minimize dam usage. Now, for our financial results, I'll pass the floor to Gustavo. Thank you.

Thanks, Eduardo, and good morning, everyone. Let me start with our EBITDA performance for the quarter. As you can see, we delivered an EBITDA of $4.5 billion in Q3, almost half a billion dollars higher than the same period last year. The increase is explained by higher realized prices, which increased 13% year on year for iron ore and 16% for copper. On volumes, iron ore fineness and pallet sales increased 4.4 million tons year-on-year, taking advantage of favorable market conditions while reducing the usual production-to-sales gap in Q3. The impact of costs and expenses on EBITDA was $189 million year-on-year. Partially explained by the $56 million effect from the consumption of iron ore inventories from the previous quarter at higher costs, as well as higher maintenance carried out in our nickel businesses. I will go into more detail on costs later in my presentation. Finally, the exchange rate had a negative impact of $124 million in our EBITDA. While byproduct revenues from our operations in Canada were $103 million lower. Iron ore C1 cash cost extra party purchases came down $1.6 per ton quarter on quarter. This was driven by lower demurrage costs as well as higher fixed cost dilution with more production volumes, especially from the northern system where production costs are lower. We also continue to benefit from our rollout of our efficiency program, bringing sustainable cost savings of $0.3 per ton in the quarter. We are on track to deliver our annual guidance of $21.5 to $22.5 per ton, considering an expected further decrease in C1 cash cost in Q4. With regards to walling costs, our EBITDA break-even is slightly increased to $55.7 per ton in the quarter, driven essentially by external factors, which offset the solid C1 performance. Freight costs went up from $17.6 per ton to $18.9 per ton, mainly reflecting The increase in bunker oil prices in Q3. For sensitivity purpose, a $10 per barrel increase in Brent oil prices translates into a $0.9 per ton increase in our freight costs. Additionally, despite the positive effect of lower time chartering rates, our exposure to the spot market freightmen increased in Q3 due to our seasonally higher production and shipments in the second half of the year. Finally, despite an improvement of 87 basis points in the average iron ore quality in the quarter, The lower weighted contribution of pallet businesses and the lower 65% FE market premiums negatively impacted our all-in costs. This is primarily driven by lower margins in the steel industry. We continue to believe in the strong fundamentals supporting demand of high-quality products given secular trends such as the decarbonization of production processes, the electrification of everything, the continuous urbanization of large emerging economies, and the reshoring of supply chains. These are just a few of the examples that support our thesis and validate Vale's unique position in offering high-quality products across all of our portfolio. Now moving to our energy transition metals business. In copper, we continue to see gains from higher production at both Salubo and Sossego, which support the reduction of unit COGS by diluting fixed costs. All in costs, excluding the HUHU project, were about $3,300 per ton, a slight increase driven by lower byproduct revenues due to a decrease in gold prices. At our nickel operations, our COGS extra party feed increased to about $23,300 per ton, with higher maintenance costs in Sudbury. With the end of the maintenance period and increased production in our North Atlantic operations, we expected unit cogs to materially reduce in Q4. In addition, our oiling costs were impacted by lower byproduct credits, mainly due to maintenance at Sudbury, and mining method changes requiring additional ground support at the Coleman mine. Now moving to cash generation. As you can see, Q3 free cash flow from operations was about $1.1 billion, roughly $350 million higher than Q2. We had an increase in working capital this quarter due to greater accounts receivable given higher iron ore sales and prices. Income taxes also increased as a result of better performance. Free cash flow from operations was used to return value to our shareholders. With the payment of $1.7 billion in dividends and $0.5 billion in share buybacks. This is part of our disciplined capital allocation strategy, which leads to my next slide. Yesterday, our board of directors approved a distribution of $2 billion in dividends and interest on capital to be paid on December 1st. These results from better cash flow generation to date and the expected inflow from the base metals partnership. Looking at our dividend distribution since 2021 and including this latest announcement, we have generated robust dividend yields to our shareholders. On top of our dividend commitment, we continue to see share buyback as one of the most accretive ways to create long-term value for our shareholders. To that end, yesterday, our Board of Directors approved a new buyback program to repurchase up to 150 million shares in the next 18 months. Since we started our first program, we have repurchased a total of 830 million shares, representing 16% of our shares count. As a result, a shareholder who invested in Vale during this period has increased their participation of earnings per share by 19%. With that, I would like to now turn the call back to Eduardo for his closing remarks. Thank you.