Vale S.A.

Good morning ladies and gentlemen, welcome to Vale's fourth quarter 2024 earnings call. This conference is being recorded and the replay will be available on our website at vale.com. The presentation is also available for download in English and Portuguese from our website. To listen to the call in Portuguese, please press the globe icon located on the lower right side of your Zoom screen and then choose to enter the Portuguese room. Then, select Mute Original Audio so that you won't hear the English version in the background. We would like to inform you that all participants are currently in listen-only mode for the presentations. Further instructions will be provided before we begin the Q&A session of our call. We would like to advise 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 continue 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 files with the U.S. Securities and Exchange Commission, SEC, the Brazilian Comissão de Valores Mobiliários, CVM, and, in particular, the factors discussed under forward-looking statements and risk factors in Vale's annual report on Form 20EF. With us today are Mr. Gustavo Pimenta, CEO, Mr. Marcelo Batti, Executive Vice President of Finance and Investor Relations, Mr. Rogério Nogueira, Executive Vice President, Commercial and Development, Mr. Carlos Medeiros, Executive Vice President of Operations, and Mr. Sean Earsmore, CEO of Vale Base Metals. Now, I'll turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin.

Hello everyone and welcome to Vale's fourth quarter 2024 conference call. At Vale Day, we laid out our 2030 vision with a clear focus on evolving our portfolio of assets to supply our clients' needs with a highly competitive cost profile. We also presented our initiatives to advance on our cultural transformation while positioning Vale as a trusted partner. I'm happy with the results we were able to achieve thus far and very optimistic about the future of Vale. We finished 2024 on a strong note. On safety, we lowered our injury frequency rate to 1.1 as a result of our continued focus to create an accident-free work environment. We have also achieved 57% of the upstream dams de-characterization program and expect to have no dams at level three by the end of 2025. We signed definitive agreements for the Mariana reparation as well as for the rail concessions renewal. In our iron ore business, we delivered two of our three key projects. Vargem Grande started up in September, ahead of schedule and on budget. And in December, we announced Capanema's startup, also ahead of schedule. Both projects add 30 million tons of low-cost production capacity. In base metals, we produce the first ore from the second deposit of the VBME project, an important milestone towards continued efficiency gains and fixed cost dilution in the nickel business. We have also made progress on strategic partnerships with the closing of our 15% acquisition of MinasRio, as well as the initiation of construction of our concentration plant in Soha, Oman, which is expected to come online in 2027. Last but not least, we delivered on all of our production and cost guidances for the year, reflecting our continued focus on operational excellence. All these achievements demonstrate that we are on the right path to deliver on our 2030 vision. Now looking into our production performance, Iron ore production reached 328 million tons, the highest level since 2018 and above our original guidance. In the fourth quarter of 2024, we proactively shifted our portfolio mix, reducing direct sales of high-silica material while increasing the share of high-quality products from Carajás. This resulted in higher realized iron ore premiums. but more importantly, higher margins and returns on invested capital. In base metals, we continue to make solid progress, having achieved the highest copper production since 2020, driven by Salobo, which produced roughly 200 kilotons of copper in 2024. In nickel, a significant milestone was achieved with the VBME project completion, We have also announced the Thompson review as part of a process to optimize Valley-based metals asset base. We expect to conclude the review process in the second half of this year. We continue to be highly disciplined in our productivity efforts, having delivered all of our cost guidances across the different commodities in 2024. In Iron Ore particularly, our C1 cash cost came in at the low end of the guidance range, at around $22 per ton. In the fourth quarter, our C1 reached $18.8 per ton, the lowest level since 2022. In copper, we had the best year in terms of all-in costs since 2020, on the back of Salobu's record production, as well as higher by-product prices, particularly gold. Nickel costs are also trending downward, with further support expected as a result of the VBME ramp-up. We remain highly committed to continue improving our cost competitiveness across the business and we are very confident on delivering our guidances again in 2025, positioning Vale at the very low end of the industry global cost curve. We are also laser focused on optimizing our capital expenditures. As a result of that, we have reduced our CAPEX guidance for 2025 to $5.9 billion, leveraging optimization initiatives in certain capital investments. In this context, and giving our strong confidence in a robust cash flow generation for 2025, our Board of Directors approved $2 billion in dividends and interest on capital, resulting in an annualized 10% yield. The Board also approved the extension of our buyback program for up to 3% of our outstanding shares. Looking ahead, we will remain highly focused on our disciplined capital allocation approach, balancing capex optimization, accretive growth, and strong shareholder returns. Before passing on to Marcelo, I would like to talk about our announcement last week regarding the new Carajás. As you know, Carajás is one of the best provinces of critical minerals in the world, including for the highest grade iron ore. Under this new program, we are creating a dedicated, multifunctional team with increased investments in exploration in order to accelerate the development of the regional endowment. We are confident this new approach will enhance substantially our ability to develop accretive projects to our shareholders, in line with our long-term strategy. We'll be providing more color about the new Carajás initiative in the following quarters as the program evolves. Now, I'd like to welcome Marcelo Batti for his first conference call with Vale. I'll be back for closing remarks before the Q&A session. Please, Marcelo.

Thanks, Gustavo, and good morning, everyone. It's great to be here for my first quarterly conference call with Vale. Let's take a look at our Q4 financial performance. Our Perform EBITDA was just over $4.1 billion in 4Q24, 9% higher quarter-on-quarter. As you can see in this slide, there were two main factors that contributed to this performance. First, our portfolio optimization strategy allowed for an improvement in our realized all-in premiums of $2.9 per ton sequentially, with a positive impact of $190 million in our EBITDA. And second, our cost efficiency program continues to yield positive results, with our unit costs declining across all of our commodities year on year. In the particular case of our C1, the positive impact on our EBITDA was $180 million quarter on quarter. We think that cost competitiveness is a key element towards protecting our company from market cyclicality, and I'm very pleased with the results that we are achieving. This quarter, our iron ore C1 cash costs, excluding third party purchases, came in at $18.8 per ton, almost 10% lower year on year. This is the lowest C1 cash costs since the first quarter of 2022. The improvement was primarily driven by our efficiency initiatives and a better production mix with higher volumes coming from the northern system. Our all-in cost performance was solid, with a reduction of over 5% year-on-year, reaching $49.5 per ton in the quarter. The improvement was driven by lower C1 costs, as well as by our portfolio optimization strategy, which led to higher realized premiums, as I explained earlier. Our strong performance in Q4 gives us confidence that we are on the right track to continue to improve while delivering all of our guidances in 2025. Looking at our energy transition metals business, we also saw an overall decrease in all-in costs. In copper, all-in costs were the lowest since Q4 2020, reaching about 1.1 thousand per metric ton, driven by higher by-product revenues from Salobo, primarily composed of gold, as well as by improved operational performance. In nickel, all-in costs totaled about $13,900 per metric ton, the lowest since 1Q22, driven by higher byproduct revenues, especially from copper and PGMs. The Valley-based metals asset review led by Sean is progressing remarkably well. We are optimizing operations and achieving cost improvements across all business lines. Our focus is on unlocking VBM's full asset potential. Now moving on to cash generation. I will spend a bit more time on this slide to explain some movements in our free cash flow, particularly in light of our expanded commitments related to Samarco and Brumadinho. First, our recurring free cash flow generation reached roughly $800 million in Q4, $300 million higher than in Q3. This increase was primarily driven by higher EBITDA and a positive impact from working capital, thanks to strong cash collections in Q4 from Q3 iron ore sales. Our recurring free cash flow was used to address one-off items, such as the advanced payment of $656 million for railway concession contracts. Renegotiating the concession contract allowed us to reduce contract risks and optimize our obligations, with a small impact in our provision while securing concession extension until 2057. I would like to highlight that the cash outflows related to the Samarco and Brumadinho commitments are already provisioned in our balance sheet and are part of our expanded net debt concept, which is our reference for capital allocation purposes, including dividends and buybacks. Having said that, those outflows should not be considered in the free cash flow to equity calculations. They should rather be treated as a type of debt amortization. As you can see on the next slide, our expanded net debt remains stable at $16.5 billion in the quarter. Here, we present the main cash and non-cash factors that impacted our expanded net debt sequentially. We are maintaining our $10 to $20 billion expanded net debt range, aiming to be at around the middle. This will be the reference for additional shareholder remuneration. As Gustavo mentioned earlier, Vale will pay $2 billion in shareholder remuneration in March, while our board also approved a new buyback program of up to 120 million shares. This shows our continued focus on returning value to shareholders. With that, I now pass the floor back to Gustavo. Thanks, Marcelo.