Q1 2024 Vale SA Earnings Call

Operator: Good morning, ladies and gentlemen. Welcome to Vale's first quarter 2024 earnings call. This conference is being recorded, and the replay will be available on our website at vale.com. The presentation is available for download in English and Portuguese from our website. To listen to the call in Portuguese, please press the globe icon 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.

Good morning, ladies and gentlemen, welcome to Valley's first quarter 2024 earnings call.

This conference is being recorded and a replay will be available on our website at valley Dotcom. The presentation is available for download in English and Portuguese.

Right.

The call in Portuguese Please press on the lower right side of zoom screen, and then choose to enter the Portuguese brown dense.

Then select huge original audio so that you won't hear the English version in the background.

Operator: We would like to inform you that all participants are currently in a listen-only mode for the presentations. Further instructions will be provided before we begin the question and answer section of BARCALL. We would like to advise you that forward-looking statements may be provided in this presentation, including Vale's expectations about future events or results, encompassing those matters listed in the respective presentation. We caution you that forward-looking statements are not guaranteed to perform and involve risks and uncertainties.

We would like to inform that all participants are currently in a listen only mode for the presentations.

Instructions will be provided before we begin the question and answer section of Barco.

We would like to advise the forward looking statements may be provided in this presentation, including values expectations about future events or results encompassing those matters listed in their respective presentation.

We caution you that forward looking statements are not guarantees of future performance and involve risks and uncertainties do.

Operator: To obtain information on factors that may lead to results different from those forecast by Vale, please consult the report's Vale files with the U.S. Security and Exchange Commission and the Brazilian Comisso de Valores Mobiliários. And in particular, the factors discussed in the forward-looking statements and risk factors in Vale's annual report on Form 20-S. With us today are Mr. Eduardo de Salles Bartolomeo, CEO; Mr. Gustavo Pimenta, Executive Vice President of Finance and Investor Relations; Mr. Marcello Spinelli, Executive Vice President of Iron Ore Solutions; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Mark Cutif Now, I will turn the conference over to Mr. Eduardo Bartolomeo. Sir, you may now begin.

To obtain information on factors that may lead to results different from those forecasts by valley. Please consult our reports bodies files with the U S Securities and Exchange Commission, the Brazilian cornerstones evaluated.

And in particular, the factors discussed under forward looking statements and risks factors and values annual report on form 20-F.

With us today are Mr. Eduardo decided Bartolomeo CEO, Mr. Gustavo remainder executive Vice President of Finance and Investor Relations.

Marcellus Spinelli executive Vice President Iron ore solutions.

Speaker Change: Just the catalogues made Davis executive Vice President of operations and Mr. Mark keeps funny chairman of valid base metals.

Now I will turn the conference over to Mr. Eduardo Bartolomeo, Sir you may now begin.

Eduardo de Salles Bartolomeo: Thank you and good morning everyone. I'm very excited that we got off to a good start in 2020, starting with our safety journey. Technological enhancements and innovation towards safety improvements are showing encouraging results with 77% reduction in accidents in some critical activities. On dam safety, the Penarinha Dam, located in the Vargem Grande complex, was removed from the emergency level by the National Mining Agency and is now certified as safe and stable.

Eduardo de Salles Bartolomeo: Thank you and good morning, everyone.

Eduardo de Salles Bartolomeo: I'm very excited that we got off to a good start in 2024.

Eduardo de Salles Bartolomeo: Starting with our safety journey.

Eduardo de Salles Bartolomeo: Technological enhancements and innovation towards safety improvements showing quality results with 77% reduction in Max to dance and some critical activities.

Eduardo de Salles Bartolomeo: <unk> safety the <unk> dam located in the vacuum go down your complex was removed from the emergency level by the National Mining Agency and is now certified as safe and stable.

Eduardo de Salles Bartolomeo: On our second lab, we're... the stabilization of our iron ore operations, we are taking Vale to an even higher level of... Iron Ore production had the highest output for our first quarter since 2019, and sales were up 15% year over year. On our third level, one of Vale's major competitive advantages is our potential to grow a high-quality portfolio with low capital expenditure. Our three key projects will add 50 million tons of capacity by 2026. Bajangrande, Kapanema, and Esther Avendiplus.

Eduardo de Salles Bartolomeo: On our second lever.

Eduardo de Salles Bartolomeo: The stabilization of our iron ore operations, yeah, taking value at an even higher level of performance.

Eduardo de Salles Bartolomeo: Iron ore production had the highest altitude for a first quarter since 2019 and sales were up 15% year over year.

Eduardo de Salles Bartolomeo: I'll now total over one off values major competitive advantage.

Eduardo de Salles Bartolomeo: As our potential to grow a high quality portfolio with low capital intensity.

Eduardo de Salles Bartolomeo: Our three key projects will add 50 million tons capacity by 2026 margin good LNG Cup on Irma and <unk> plus land.

Eduardo de Salles Bartolomeo: The first project to come online will be Vargem Grande, which is almost 90% completed and on track to start up in the fourth quarter of 2025, on our path to transform the energy transition metal business. Copper production grew 22% in the first quarter. Nickel production decreased by 4% year on year, in line with plan, mainly reflecting maintenance overhaul at the Onsepulma furnace.

Eduardo de Salles Bartolomeo: The first project to come online will be Boston, good LNG, which is almost 90% complete and on track to start up in the fourth quarter of 'twenty 'twenty four.

Eduardo de Salles Bartolomeo: On a path to transform the antigen transitional metal business.

Eduardo de Salles Bartolomeo: Production grew 22% in the first quarter nickel production decreased by 4% year on year in line with plan, mainly reflecting maintenance overhaul at the answer pull my Florida's.

Eduardo de Salles Bartolomeo: Outside Brazil, we saw stronger performance in the Canadian and Indonesian operations. On the Energy Transition Methods Partnership, last week the Committee on Foreign Investment in the United States granted the final regulatory approval, and we expect to close the transaction in the coming weeks. And in our pursuit towards ESG leadership in mining, we reached a remarkable target. 100% renewable energy consumption in Brazil, two years ahead of schedule. Reaching the target means that Vale has zeroed its indirect CO2 emissions in Brazil, which corresponds to scope to emission.

Eduardo de Salles Bartolomeo: Outside Brazil, we saw stronger performance in the Canadian and Indonesian operations.

Eduardo de Salles Bartolomeo: On the energy transition metals partnership.

Eduardo de Salles Bartolomeo: Last week the committee on foreign investment in the United States granted the final regulatory approval and we expect to close the transaction in the upcoming weeks.

Eduardo de Salles Bartolomeo: And in our pursuits towards ESG leadership in mining, we reach at a remarkable targets.

Eduardo de Salles Bartolomeo: 100% renewable and energy consumption in Brazil too.

Eduardo de Salles Bartolomeo: Or is ahead of schedule.

Eduardo de Salles Bartolomeo: The target means that value has zero is indirect COPD abuses in Brazil, which corresponds to a scope two emissions.

Eduardo de Salles Bartolomeo: To support our decarbonization pathway, Vale has announced an agreement to acquire the remaining 45% stake in Alianza Energia, which is a first step towards creating an asset-light energy platform. Lastly, our discipline in capital location remains untouched.

Eduardo de Salles Bartolomeo: To support our Decarbonization pathway Vale has announced an agreement to acquire the remaining 45% stake in <unk>, which is a first step towards creating an asset light energy platform.

Eduardo de Salles Bartolomeo: Lastly.

Eduardo de Salles Bartolomeo: Our discipline in capital location remains touch it.

Eduardo de Salles Bartolomeo: We are walking the talk and returning value to shareholders. In March, we paid $2.3 billion in dividends while completing 17% of the fourth buyback program launched since 2020. Now, let's go over more details of our quarter performance. Next slide, please.

Eduardo de Salles Bartolomeo: We are walking the talk and returning value to shareholders in March we paid $2 $3 billion in dividends, while completing 17% of the fourth buyback program launches since 2020.

Eduardo de Salles Bartolomeo: Now, let's go over more details of our quarter performance.

Eduardo de Salles Bartolomeo: Next slide please.

Eduardo de Salles Bartolomeo: We are gradually becoming a safer company. Technology and innovation have been key pillars to our quest to deliver a sustainable, safe We want to turn Vale into a safety benchmark, starting with zeroing our end-to-end safety incidents, those that usually precede life-changing or fatal events, by the end of 2020. We are on the right track to fulfill this commitment. Our Safety Tones Submission Program targets the critical activities with the highest N2 record, later developing preventive some of them, like collision alerts and driver drowsiness detection. As a result, we have had a 77% reduction in any two events since 2019.

Eduardo de Salles Bartolomeo: Yes, gradually becoming a safer company tech knowledge and innovation have been key pillars to our quest to deliver a sustainable safety performance.

Eduardo de Salles Bartolomeo: We want to turn <unk> into a safe debates mark.

Eduardo de Salles Bartolomeo: Starting with viewing are into injuries.

Eduardo de Salles Bartolomeo: Those that are usually precedes life changing or fatal events.

Eduardo de Salles Bartolomeo: By the end of 2025.

Eduardo de Salles Bartolomeo: On the right track to fulfill these commitments.

Eduardo de Salles Bartolomeo: Our safety transformation program targets the critical activity with the highest into records later developing preventive controls some of them tech knowledge base like collision alerts and driver drowsiness detection.

Eduardo de Salles Bartolomeo: As a result, we had a 77% reduction in any to advance since 2019.

Eduardo de Salles Bartolomeo: Another key element of our safety strategy is our dam safety management. Since 2020, we have increased safety conditions up to adequate levels for 16 dams. All our structures are continuously checked by our 24-7 geotechnical monitoring. In a conservative approach, we removed 100% of the people from risk areas, and backup dams were constructed to reduce potential consequences in those areas.

Eduardo de Salles Bartolomeo: Another key element of our safety strategy is our dam safety management sees.

Eduardo de Salles Bartolomeo: Since 2020, we increased safety conditions up to adequate levels for 16 dams.

Eduardo de Salles Bartolomeo: All our structures are continuously checked by our 24, seven geotechnical monitory sensors in a conservative approach, we removed 100% of the people from risk areas and Beck cap dams were constructed to reduce potential consequences.

Eduardo de Salles Bartolomeo: Those areas.

Eduardo de Salles Bartolomeo: At the same time, Vale continues to progress on the DEM de-characterization program, with 43% of the structures eliminated. We are already seeing a safer body, built with operational discipline and strong management. Okay, next slide, please.

Eduardo de Salles Bartolomeo: At the same time Verde continues to progress on the dam the characterization program with.

Eduardo de Salles Bartolomeo: With 43% of the structures eliminated to date.

Eduardo de Salles Bartolomeo: We are already seeing a safer body built with operational discipline and a strong management model.

Speaker Change: Okay next slide please.

Eduardo de Salles Bartolomeo: We delivered a robust operating performance on Iron-Orient. Production was the highest for a first quarter since 2019, underpinned by increased asset and process reliability, especially as S11D. We have talked about our strong actions toward operational excellence, and we are now consistently bearing the fruits of that. For example, our operational plan for the quarter was successful in dealing with a higher average rainfall. We delivered a 6% increase in total production and 15% higher sales year-on-year.

Eduardo de Salles Bartolomeo: We delivered a robust operating performance on iron ore in Q1 production was the highest for a first quarter since 2019 underpinned by increased asset and process reliability, especially as <unk>.

Eduardo de Salles Bartolomeo: We have talked about our strong actions toward operational excellence and we are now consistently bearing the fruits of that strategy.

Eduardo de Salles Bartolomeo: Our operational plan for the quarter was successful in dealing with a higher average rainfall.

Eduardo de Salles Bartolomeo: We delivered.

Eduardo de Salles Bartolomeo: 6% increase in total production and 15% higher sales year on year.

Eduardo de Salles Bartolomeo: [inaudible] We continue to de-bottleneck our operation. At S11D, increased geological knowledge enables more accurate mining plans, while the truckless system, combined with a mobile mining fleet, provides further operating flexibility. Our long-term ability to deal with Jasperlite relies on the installation of the new crushers, as you know, but these surgical measures have allowed us to operate S11D with more efficiency, with the highest production for the first quarter since 2020. Solid production performance in Q1 gives us further confidence that we will deliver our guidance as planned.

Eduardo de Salles Bartolomeo: Moreover.

Eduardo de Salles Bartolomeo: We continue to Debottleneck, our operations at <unk>, Inc.

Eduardo de Salles Bartolomeo: Increased geological knowledge enables more accurate mining plans, while the truckload system combined with a mobile mining fleet provides further operating flexibility.

Eduardo de Salles Bartolomeo: Our long term ability to deal with Jasper light relies on the installation of the new crushers as you know, but this surgical measures have allowed us to operate S 11 D with more efficiency with the highest production for our first quarter since 2020.

Eduardo de Salles Bartolomeo: The solid production performance in Q1 give us further confidence that we will deliver our guidance S plans.

Eduardo de Salles Bartolomeo: Next slide, please. We are committed to accelerating solutions to support the steel industry's decarbonization. Our bricolet plant is ramping up in our Tubaro compost, aiming to deliver around 1.5 million tons of briquettes in 2024. We continue to progress on agreements for the construction of mega-huts.

Eduardo de Salles Bartolomeo: Next slide please.

Eduardo de Salles Bartolomeo: We are committed to accelerating solutions to support the steel industry decarbonization.

Eduardo de Salles Bartolomeo: Our brick plant is ramping up in our two Budd on complex.

Eduardo de Salles Bartolomeo: Aiming to deliver around $1 5 million tons of briquettes into any 24.

Eduardo de Salles Bartolomeo: We continue to progress on agreements for the construction of Mega hubs. We are also studying the feasibility of developing green industrial hubs in Spain, together with seasonally steel.

Eduardo de Salles Bartolomeo: We are also studying the feasibility of developing green industrial hubs in Spain together with Ridenon. Finally, we are very proud to be selected under the Inflation Reduction Act funding to enter into negotiations to develop a briquette plant in the U.S. The selection by the U.S. Government Department of Energy represents a critical path for the validation of our proprietary technology and its potential to deliver a transformative solution to decarbonize the steel sector. Iron ore briquettes will contribute to achieving Vale's commitment to reduce 15% of its scope 3 net emissions by 2035. Next slide, please.

Eduardo de Salles Bartolomeo: Finally, we are very proud to be selected under the inflation reduction lack funding to answer in negotiations to develop a brick plant in the U S.

Eduardo de Salles Bartolomeo: The selection by the U S government Department of energy represents a critical path for the validation of our appropriate theory tech knowledge and its potential to deliver a transformative solution to decarbonize the steel sector.

Eduardo de Salles Bartolomeo: Iron ore briquettes will contribute to achieving valley's commitment to reduce 15%, albeit scope III net emissions by 2035.

Eduardo de Salles Bartolomeo: Next slide please.

Eduardo de Salles Bartolomeo: In the Energy Transition Metals business, we delivered remarkable output in copper, an outstanding 22% increase quarter-on-quarter driven by the successful ramp-up of soluble III and stronger performance at soluble I and II plants. On nickel, we are on track to deliver the production guidance for 2024. As part of the asset review initiatives, Sudbury Mines had improved performance, and Carabel Mill throughput was up 7% year-on-year. The improved mine performance resulted in reduced consumption of third-party feed and lower costs. We are confident that we are taking the right steps to transform the energy transition method. Next slide.

Eduardo de Salles Bartolomeo: In the energy transition metals business, we delivered remarkable out putting copper and outstanding 22% increase quarter on quarter, driven by the successful ramp up of Sellable III and a stronger performance at Sellable one into plants.

Eduardo de Salles Bartolomeo: On nickel, we are on track to deliver the production guidance for 'twenty 'twenty four.

Eduardo de Salles Bartolomeo: As part of the asset review initiatives Sudbury mines had improved performance and the Clarabelle mill throughput was up 7% year on year.

Eduardo de Salles Bartolomeo: They improved mine performance resulted in reduced consumption of third party feeds and lower costs.

Eduardo de Salles Bartolomeo: We are confident that we have taken the right steps to transform the energy transition metals business.

Eduardo de Salles Bartolomeo: Slides.

Eduardo de Salles Bartolomeo: ONE S G, We continue to march towards becoming a more transparent and open company. We just released our 2023 integrated report, where we announced that we reached the target of 100% renewable energy consumption in Brazil two years ahead of schedule. Reaching the target means that Vale has zero scope for emissions in Brazil.

Eduardo de Salles Bartolomeo: On ESG.

Eduardo de Salles Bartolomeo: We continue to March towards becoming a more transparent and open company.

Eduardo de Salles Bartolomeo: We just released our 2023 integrated report, where we announced that we reached the target of 100% renewable energy consumption in Brazil, two years ahead of schedule.

Eduardo de Salles Bartolomeo: Reaching the target means that valley has zero scope two emissions in Brazil.

Eduardo de Salles Bartolomeo: To support our decarbonization pathway, Vale signed an agreement to acquire the remaining 45% stake in Alianza Energia. This is an important step towards creating an asset-light energy platform. Upon the transaction conclusion, value search for potential partners to better advance in our commitments to decarbonize our operations using renewable sources at competitive prices. Our big focus on becoming an ESG leader in mining is bearing fruit. Our improvement in carbon emissions and safety practice led to renewed perception by Sustainalytics, for instance, with an important upgrade in our ESG risk rating in Asia. With that said, now I'll pass the floor to Gustavo for our financial results, and I'll get back to you in the Q&A. Thank you.

Eduardo de Salles Bartolomeo: To support our decarbonization pathway <unk> signed an agreement to acquire the remaining 45% stake in <unk>.

Eduardo de Salles Bartolomeo: This is an important step towards creating in an asset light energy platform.

Eduardo de Salles Bartolomeo: Upon the transactional collusion value will search for potential partners to better advance in our commitments to decarbonize, our operations using renewable sources at competitive costs.

Eduardo de Salles Bartolomeo: Our big focus on becoming an ESG leader in mining is bearing fruits.

Eduardo de Salles Bartolomeo: Prove it in carbon emissions and safety practice led to renewal perception by sustainable Ebix for instance, with an important upgrade in our ESG risk rating in April.

Eduardo de Salles Bartolomeo: With that said now pass the floor to Gustavo for our financial results and I'll get back to you on the Q&A. Thank you.

Gustavo Duarte Pimenta: Thanks, Eduardo, and good morning, everyone. Let me start with our EBITDA performance for the quarter. As you can see, we delivered a pro forma EBITDA of $3.5 billion in Q1. Before going to the main drivers, I would first explain a couple of reporting changes we implemented this quarter, with the reorganization of our assets between iron ore solutions and energy transition metals. Some items previously classified as orders will now be allocated to their respective business segments. This change includes items such as SG&A and energy generation assets and will allow for a more precise evaluation of each business segment's performance. In addition, for better alignment with market peers.

Gustavo: Thanks, Eduardo and good morning, everyone.

Gustavo: Let me start with our EBITDA performance in the quarter.

Gustavo: As you can see we delivered a pro forma EBITDA was $3 5 billion in Q1.

Gustavo: Before going to the main drivers I would like to first explain a couple of reporting changes we implemented this quarter with.

Gustavo: With the reorganization of our assets between iron ore solutions and energy transition metals.

Gustavo: Some items previously classified as others, we will now be allocated to their respective business segments. This change include items, such as SG&A and energy generation assets and we will allow for more precise evaluation of each business segment's performance.

Gustavo: In addition for a better alignment with market peers.

Gustavo Duarte Pimenta: We are now including the proportional EBITDA of our associates and joint ventures into our EBITDA. We note that before 2024, our EBITDA included the dividends coming from those entities, which were naturally more volatile during the year. Now returning to the main drivers behind our EBITDA performance in the quarter, we are pleased to see a continued strong operational performance across the board, which helped us offset a large portion of the impact from provisional prices, given the decrease in the iron ore benchmark price during the quarter.

Gustavo: We are now, including the proportional EBITDA of our associates and joint ventures into our EBITDA.

Gustavo: We note that before 2024 hour EBITDA included the dividends coming from those entities, which are naturally more volatile during the year.

Gustavo: Now returning to the main drivers behind our EBITDA performance in the quarter were.

Gustavo: We are pleased to see a continued strong operational performance across the board.

Gustavo: Which helped us offset a large portion of the impact from provisional prices.

Gustavo: The decrease in the iron ore benchmark prices during the quarter.

Gustavo Duarte Pimenta: On volumes, Iron Ore sales increased almost 15%, or 8.2 million tons year-on-year, driven by better operational performance in all of our systems, highlighting S11Z, which achieved the highest output for our first quarter since 2020. Sales were also quite strong in Q1 this year, reflecting the initiatives undertaken in 2023 to improve operational performance and flexibility of our Punta de Madera port.

Gustavo: When volumes iron ore sales increased almost 15%.

Gustavo: Our $8 2 million tonnes year on year, driven by better operational performance in all of our systems, highlighting <unk>, which achieved the highest output for a first quarter since 2020.

Gustavo: Sales were also quite strong in Q1, this year, reflecting the initiatives undertaken in 2023.

Gustavo: To improve operational performance and flexibility of our pointed them our data port.

Gustavo Duarte Pimenta: Corporate sales were another highlight in the quarter, increasing by 22% to 14,000 tons year on year, driven by the ramp-up of Salobo 3 and better operational performance in the Salobo 1 and 2 operations. On costs and expenses, I would like to highlight the ongoing efforts that our teams have been making internally to improve productivity and efficiency. Excluding the external effects of higher freight costs in the iron ore business and the one-off effect in base metals, like the Onsepuma furnace rebuild, our costs and expenses were roughly flat year-on-year.

Gustavo: Corporate sales were another highlight in the quarter increasing by 22%.

Gustavo: 14000 tons year on year.

Gustavo: Driven by the ramp up of Salobo, III and better operational performance in the local wanting to operate.

Gustavo: On costs and expenses I would like to highlight the ongoing effort that our team has been making internally to improve productivity and efficiency.

Gustavo: Excluding the external effects of higher freight costs in the iron ore business and the one off effects in base metals like the answer Puma furnace rebuild our costs and expenses were roughly flat year on year.

Gustavo Duarte Pimenta: Again, this is being accomplished through a series of initiatives across the business, and we are quite excited about the cost-efficient opportunities we still see ahead of us. Now moving on to price realization. Our North finally realized the price was $100.7 per ton in Kiowa, 7% lower year-on-year and 15% lower quarter-on-quarter. However, pricing mechanisms had a negative impact of $10 per ton on our realized price in the quarter.

Gustavo: Again, this is being accomplished through a series of initiatives across the business and we are quite excited about the cost efficiency opportunities. We still see ahead of us.

Gustavo: Now moving onto price realization iron ore finally realize it right what $100 seven per tonne in Q1.

Gustavo: 7% lower year on year, and 15% lower quarter on quarter.

Gustavo: Pricing mechanisms had a negative impact of $10 per ton on our realized price in the quarter.

Gustavo Duarte Pimenta: This is largely explained by the negative effect of provisional prices. At the end of Q1, 24% of our iron ore find sales were booked at $102 per ton on average, which compares to an average price of $124 per ton in the quarter. Also, about 30 million tons of sales from Q4'23 were booked at an average price of $139 per ton and were later realized at lower prices in Q1. Additionally, our average earner fines premium came in negative at $1.6 per ton, as we increased the share of high silica products in our sales mix, given the lower discounts observed for these products during the quarter.

Gustavo: Largely explained by the negative effect of provisional prices.

Gustavo: At the end of Q1, 24% of our iron ore fine sales were booked at $102 per ton on average, which compares to an average price of $124 per ton in the quarter.

Gustavo: Also about 30 million tons of sales from Q4 'twenty three.

Gustavo: Our booked at an average price of $139 per ton.

Gustavo: And we're at later realized at lower prices in Q1.

Gustavo: Our average iron ore.

Gustavo: <unk> premium.

Gustavo: Came in negative at one $6 per ton as.

Gustavo: As we increase the share of high silica product in our sales mix given the lower discounts observed for this product during the quarter.

Gustavo Duarte Pimenta: These have allowed us to maintain an adequate balance of high quality products through our supply chain for later value maximization. For Q2, we continue to see similar market conditions and, therefore, are expected to maintain a slightly higher share of high silica products in our mix compared to historical levels. Now, let me turn to our gospel song.

Gustavo: This has allowed us to maintain inadequate balance of high quality products through our supply chain for later value maximization.

Gustavo: For Q2, we continued to see similar market conditions, and therefore <unk>.

Gustavo: <unk> to maintain a slightly higher share of high silica product in our mix compared to historical norms.

Gustavo: Now, let me turn to our cost performance in iron ore our C. One cash cost third party purchases.

Gustavo Duarte Pimenta: In Iron Ore, our C1 cash cost, third-party purchases, was $23.50 per ton, slightly lower versus last year, despite the negative impact of the BRL appreciation. Excluding that effect, C1 would have been $22.8 per ton, almost $1 per ton lower even here. This was driven by lower-than-merge costs due to improved shipping and port loading during the rainy season, and higher fixed-cost dilution as a result of higher production volumes and gains from our cost-efficient program. Additionally, I'd like to take a moment to comment on our strategy behind third-party purchase. We acquire iron ore from smaller producers that operate near our operations.

Gustavo: $23 $5 per ton.

Gustavo: It's slightly lower versus last year, despite the negative impact of the BRL appreciation.

Gustavo: Excluding this effect Q1 would have been $22 $8 per ton.

Gustavo: Almost $8 per ton lower year on year.

Gustavo: This was driven by lower demurrage costs.

Gustavo: Due to improve its shipping import loading during the rainy season.

Gustavo: Higher fixed cost dilution as a result of higher production volumes and gains from our cost efficiency programs.

Gustavo: Additionally, I would like to take a moment to comment on our strategy behind third party purchases.

Gustavo: We acquire iron orphan smaller producers that operate near our operations.

Gustavo Duarte Pimenta: This product is sold directly to our customers, or it is blended within our own production, generating a positive contribution margin. This helps dilute fixed costs, particularly as we have excess logistic capacity, while capital intensity is very low, which implies a very healthy return on invested capital. In 2023, our third-party volume was 24 million tons, and it is expected to increase slightly in 2024. We are also evaluating ways to accelerate the development of some of our smaller deposits through leasing agreements with regional partners, transactions that can offer attractive returns for both sides.

Gustavo: This product is sold directly to our customers or it is blended within our on production.

Gustavo: <unk> generated a positive contribution margin.

Gustavo: This helped to dilute fixed costs, particularly as we have exited logistic capacity, while capital intensity is very low.

Gustavo: It implies a very healthy return on invested capital.

Gustavo: In 2023, our third party volume was 24 million tons.

Gustavo: And it is expected to increase slightly in 2024.

Gustavo: We are also evaluating to accelerate the development of some of our smaller deposits.

Gustavo: <unk> leasing agreements with regional partners transactions that can offer attractive returns for both sites.

Gustavo Duarte Pimenta: Moving on to our energy transition metals business, we are pleased to deliver significant year-on-year reductions in hauling costs for both copper and nickel. Our corporate all-in costs decreased by 26% year-on-year, driven by the continued successful ramp-up of Salobo 3 and the improved operational performance at Salobo 1 and 2. The higher proportion of soluble 3 volumes in the product mix has also contributed to an increase in unit by product revenues with higher gold sales. At Nico Oling, costs were down 14% year on year, supported by higher unit by product revenues. The unit cost increase was expected and largely related to the furnace rebuild at Onsepuma.

Gustavo: Moving on to our energy transition metals business, we were pleased to deliver significant year on year reduction in all in cost in both copper and nickel.

Gustavo: Our corporate all in cost decreased by 26% year on year, driven by continued successful ramp up of <unk> III and the improved operational performance at Salobo went into.

Gustavo: The higher proportion of Sellable three volumes in the product mix has also contributed to an increase in unit byproduct revenues with higher gold sales.

Gustavo: Nico all in costs were down 14% year on year supported by higher unit byproduct revenues.

Gustavo: The unit Cogs increase was expected and largely related to the furnace rebuild at answer Puma.

Gustavo Duarte Pimenta: I would also like to mention that Mark Cutifani and the VBM team continue to make significant progress on the asset review. The Value Unlocked Opportunities are being assessed and designed for implementation over the next 2 to 3 years, with some benefits already being captured in the shorter term. As we pointed out last quarter, we'll present the key findings and action plan of the asset review in a webinar scheduled for June this year.

Gustavo: I would like to also mention that Mark with funny in the VPN team continues to make significant progress on the asset review.

Gustavo: The value unlocked opportunities are being assessed and designed for implementation over the next two to three years.

Gustavo: Some benefits already being captured in the shorter term as we pointed out last quarter, we will present, the key findings and extra plane of the asset review.

Gustavo: Webinar to be scheduled for June this year.

Gustavo Duarte Pimenta: Now moving on to cash generation. Our EBITDA to cash conversion was 57% in Q1, with free cash flow reaching $2 billion, roughly $0.5 billion lower than Q4 2023, despite the $3.4 billion sequential drop in EBITDA driven mostly by seasonally lower shipments, quarter-on-quarter, and lower iron ore price. This was achieved primarily due to the positive impact of a strong cash collection from Q4 sales, as we had anticipated last quarter, and seasonally lower CAPEX disbursements.

Gustavo: Now moving onto cash generation.

Gustavo: Our EBITDA to cash conversion was 57% in Q1 with free cash flow, reaching $2 billion roughly.

Gustavo: $5 billion lower than Q4 2023, despite the three $4 billion sequential drop in EBITDA, driven mostly by seasonally lower shipments quarter on quarter and lower iron ore prices.

Gustavo: This was achieved primarily due to the positive impact of a strong cash collections from Q4 sales as we had anticipated last quarter and seasonally lower Capex disbursements.

Gustavo Duarte Pimenta: Most of the free cash flow generation was used to pay dividends and execute our buyback program for a total shareholder remuneration of $2.6 billion in Q1. So before we move on to the Q&A session, I'd like to reinforce the key messages from today. Safety continues to be our key priority, and we remain highly focused on creating the conditions for an accident-free workplace environment. Our continued strong operational performance across all commodities only reinforces that we are in the right direction to consistently deliver on our fourth and long-term commitment.

Gustavo: Most of the free cash flow generation was used it to pay dividends and execute our buyback program for a total shareholder remuneration of $2 6 billion in Q1.

Speaker Change: So before we move on to the Q&A session I would like to me for US the key messages from today's call.

Gustavo: Safety continues to be our key priority and.

Gustavo: And we remain highly focused on creating the conditions for an accident free workplace environment.

Gustavo: Continued strong operational performance across all commodities only reinforce we are in the right direction to consistently deliver on our fourth and long term commitments.

Gustavo Duarte Pimenta: On ESG, we are making significant progress on several fronts, as demonstrated by our recent achievement of 100% renewable sourcing in Brazil for SCO2, and the continued investments to deliver a sustainable future for our business. On the medium-term strategic objectives we laid out at Valley Day, we are quite pleased to see the development of our key projects, such as Vargin Grande, which we expect to reach startup later this year. These investments will position Vale as the leader in high-quality off.., which is critical for steel making decarbonization.

Gustavo: On ESG, we are making significant progress on several fronts as demonstrated by our recent achievement of a 100% renewable sourcing in Brazil for scope Chu and the continued investments to deliver a sustainable future for our business.

Gustavo: On the medium term strategic objectives, we laid out at validate we are quite pleased to see the development of our key projects such as Virgin ground.

Gustavo: Which we expected to reach startup later this year.

Gustavo: These investments will position <unk> as the leader in high quality offerings, which are critical for our steelmaking decarbonization.

Gustavo Duarte Pimenta: Last, we remain highly committed to a disciplined capital allocation process, as evidenced by our $2.6 billion cash return to shareholders year-to-date through dividends and share buybacks. Now, I would like to open the call to questions. Thank you.

Gustavo: Last we remain highly committed to disciplined capital allocation process as evidenced by our $2 6 billion cash returned to shareholders year to date through dividends and share buybacks.

Speaker Change: Now I would like to open the call for questions. Thank you.

Operator: We are going to start the question and answer section of the call. If you have a question, please click on the raise hand button. If your question has already been answered, you can leave the queue by clicking on the lower hand button. Please ask your question in English and limit your question to two at a time. Our first question comes from Rafael Barcellos with Bradesco BBI.

Speaker Change: We are going to start the question and answer section of the call.

Speaker Change: If you have a question. Please click on the right hand button. If your question has already been answered you can leave the queue by clicking on the lower hand button.

Gustavo: Please ask your question in English and limit your question to two at a time.

Speaker Change: Our first question comes from have filed that silos with bad debts BVI.

Rafael Barcellos: Hello, good morning, and thanks for taking my questions. First, I would say that the main news in the sector was the potential merger between DHP and Anglo-American. So maybe if you could discuss a bit how this movement could change Vale's strategy going forward, it could be interesting for us. Or even how could it change your recently announced partnership with Anglo's Minas Rio Assis? And my second question here is maybe to just understand better your views on iron ore markets and price premiums in the coming quarters. And, of course, how do you see the possibility of further extraordinary dividends now with iron ore prices back to the $120 per ton level? And thanks.

Speaker Change: Hello, Good morning, and thanks for taking my questions. So firstly I would say that the main news in this sector was the potential merger between BHP Anglo American so so maybe if you could discuss a bit on how these movements could change of all is it starts as you go.

Gustavo: Forward it could be interesting for us or even how could it change your recently analysis.

Gustavo: Partnership I think Louis you know as REO assets.

Gustavo: And second and my second question here is maybe to just understand better your views on iron ore markets and price premiums in the coming quarters, and and and and of course, how do you see the possibility of further extraordinary dividends now if iron ore prices back to the $120 per ton level and thanks.

Gustavo: Yeah.

Eduardo de Salles Bartolomeo: Thanks, Rafael. It's Eduardo here, okay?

Gustavo: Hey, Thanks, Rafael Eduardo here, Okay Uh huh.

Eduardo de Salles Bartolomeo: As you've noticed, it's truly unfolding, so we are still digesting what is going on, specifically answering your question. We don't see any impact on Armina's Rio deal. It's being undertaken with the Angle.

Rafael Barcellos: As you've noticed it's truly unfolding. So we are still digesting what is going on.

Eduardo de Salles Bartolomeo: You specifically answering your question, we don't see any any backs on the although I mean those real deal.

Eduardo de Salles Bartolomeo: It's something to be undertaken with the I'm gonna, it's gonna be respected by whoever comes later if it if it comes later so that's the.

Eduardo de Salles Bartolomeo: It's going to be respected by whoever comes later, if it comes later. So that's the first reaction. Second, we've been speaking with you. Since we decided to do the Car Vault, we believe that Vale has a unique position in the industry. We do have a growth platform in iron ore, as Gustavo mentioned during his presentation. We are going to add 50 million tons of high quality at a low cost, so there is no other asset in the world that could be attractive to us in that sense.

Eduardo de Salles Bartolomeo: First reaction.

Eduardo de Salles Bartolomeo: Hum.

Eduardo de Salles Bartolomeo: We've been we've been speaking with you.

Gustavo: Since we decided to do the carve outs right.

Gustavo: We believe that valley has a unique position in the industry right. We do have a growth platform and I are more as it will stop a mentioned during his presentation. We are going to add 50 million tons of high quality with low cost. So there is no other asset in the world that could it be.

Gustavo: Practice to us on that sales and when you look at base metals, we still have the best as well the best Endowment in Canada, and Brazil, and colors as province, and then they'll need ships.

Eduardo de Salles Bartolomeo: When you look at base metals, we still have the best endowment in Canada, in Brazil, in Carajás province, and in Indonesia. Obviously, we're always looking at opportunities, but it doesn't change our strategic focus on executing the asset review and the transformation in base metals. There's a tremendous amount of value to be extracted there, and iron ore, we are the only iron ore group with quality in the sector. So we will follow up closely on the development of this deal, but it doesn't impact our strategy or change anything in our mindset. And I'll pass the second question to Spinelli.

Speaker Change: Obviously, we are always looking at opportunities.

Speaker Change: Eventually, but it doesn't change our strategic.

Speaker Change: Our focus on executing the the acid reveal the transformation and base metals.

Speaker Change: Tremendous amount of.

Speaker Change: There has to be extracted there and iron ore, we are the only R&R growth with quality and the debate in the sector.

Speaker Change: So we will follow up closely.

Speaker Change: The development of this deal, but it doesn't impact our strategy or change anything in our mindset.

Speaker Change: And I'll pass the second question to spin out of it.

Marcello Magistrini Spinelli: Regarding the market, as we see China, as you mentioned, we remain the same; we have the same view about China. That's the main market. We're calling this moment the China Resilience, the problem in the proper markets that all of us track. We see since 21 a very strong market in manufacturing, growing really constantly with the energy transition industry or shipbuilding. So we have an offset for that. And you may consider export as something that is sometimes bothering the market.

Speaker Change: Thank you I'll file.

Speaker Change: Regarding the market. So we see China as you mentioned, we remain the same the same view about China.

Speaker Change: That's the main market.

Speaker Change: We we are calling this the this moment is the China resiliency.

Speaker Change: <unk>.

Speaker Change: In spite the did.

Speaker Change: The problem in the appropriate market stuff all of us track.

Speaker Change: We see <unk> 21, a very strong market in the manufacturing group.

Speaker Change: Growing our really come such constant the leap a.

Speaker Change: With the energy transition industry or ship building shelf, we if we have an offset.

Speaker Change: For that and then you may consider the exports is something that is sometimes bothering to the markets.

Marcello Magistrini Spinelli: But by the end of the day, it's a tradeoff between protection in the market and inflation. All the micron conditions in China are going well. So steel inventory now is slower than last year, and the margins are getting better, so as a whole, we see the market really similar compared to last year, and you asked us about the premiums, well, premiums by product we see a stable moment and that we've been stable for some months, so some quarters actually.

Speaker Change: By the end of the day, it's a tradeoff between protection of the market and and inflation. So.

Speaker Change: All the micro conditions in China.

Speaker Change: I mean, well.

Speaker Change: We're also SKU inventory now is slower than last year.

Speaker Change: And ER and the.

Speaker Change: The margins are getting better so as a whole we see the market really similar compared to last here and you asked us about the premiums premiums by product, we see a stable a moment.

Speaker Change: Uh huh.

Speaker Change: And that's been stable for some months, so some quarters actually sort of see the.

Marcello Magistrini Spinelli: So we see the Carajás and also the BRBF in a stable gap, and uh, we can have a small website race. If we have some spikes in the coal market, that can increase the necessity for efficiency. Next question from Caio Ribeiro with Bank of America. Yes, thank you very much. Good morning. Thanks for the opportunity. So first of all, I just wanted to see

Speaker Change:

Speaker Change: And also there'll be our behalf and our stable gap.

Speaker Change: And we can have a small upside risk.

Speaker Change: If we have some spike in the Coke and.

Speaker Change: Coal market that can increase the necessity for 40 efficiency.

Speaker Change: Okay.

Speaker Change: Next question from Tayo, He beta with Bank of America.

Tayo: Yes. Thank you very much good morning, thanks for the opportunity. So first of all I just wanted to see if you could share some updates with us on the latest involving the houma and so stable operations and any color.

Tayo: You can see our unexpected operational financial effects, there would be helpful.

Tayo: And then my second question is related to the renegotiation of the railroad concessions right can you give us some color there as well on your latest expectations around those negotiations and the timing as well as the glue them. Thank you.

Caio Ribeiro: Next question is from Caio Ribeiro with Bank of America.

Eduardo de Salles Bartolomeo: I think Mark is on the call, right? Mark, would you answer the first one?

Speaker Change: Yeah.

Speaker Change: I think mark is on the call right Mark could you answer the first one.

Mark Cutifani: Thanks Eduardo. Can you hear me okay?

Speaker Change: Yeah.

Mark: Thanks, Eduardo can you hear me okay.

Mark Cutifani: Yep. Good. Well, thanks for the question.

Speaker Change: Yep.

Speaker Change: Okay. Good.

Mark: Well thanks for the question on <unk>.

Mark Cutifani: On both operations... We're working through them with the authorities as we speak in the case of Sago. What has been outlined to us is that there were some complaints about noise and dust and complaints around reduced social programs through COVID. We have already submitted our reports for those issues which were subject to the first complaint. And now that it's clear that we've input the reports, we're now working through the detail that's contained in those reports, both with the authorities and with the local political leadership as well, and we've got about three to four weeks of ore on the ground to process, so we're in good shape in terms of our ore stocks because it's the mines that are actually impacted, so processes are still going forward. On Supuma, a fairly similar story in terms of complaints, a little bit different in terms of some of the mining was more environmental, but also connected to social programs and a similar story.

Mark: Both operations.

Speaker Change: We're working through with the authorities as we speak in the cases.

Speaker Change: So what has been outlined to us is that.

Speaker Change: There were some client complaints on noise and dust and.

Speaker Change: Compliance around reduced social programs through Covid.

Speaker Change: We have already submitted our reports.

Speaker Change: So those issues, which was subject to the first complaint.

Speaker Change: And now that.

Speaker Change: It's clear that we have.

Speaker Change: Input the reports, we're now working through data.

Speaker Change: Thats contained in those reports.

Speaker Change: With the.

Speaker Change: Authorities and with the local political leadership as well.

Speaker Change: And we've got about three to four weeks or on the ground to process. So we're in good shape in terms of variable stopes, because it's the mines. The directionally impacted so processes are still going forward on unsecured fairly similar story.

Speaker Change: In terms of compliance a little bit different in terms of some of the the mining with more environmental related but also connected to social programs and a similar story, we're working through with the authorities. We're also talking to other leaders in the community very sensitive to making sure that our.

Mark Cutifani: We're working through this with the authorities, we're also talking to other leaders in the community, very sensitive to making sure that people aren't impacted, and I think everybody's keen to make sure we get things up and running very quickly. In the Supuma case, we've got about four months of ore because we've now finished the furnace rebuild and we're on heat up at the moment, are still going through those processes. But again, at this stage, we're not anticipating problems over the course of the year.

Speaker Change: People are impacted and I think everybody's screen to make sure we get things up and running very quickly in the unsub Puma case.

Speaker Change: At four months before because we've now finished the furnace rebuild and where on the heat up of demand.

Speaker Change: Still going through those processes, but again at this stage, we're not anticipating.

Speaker Change: Problems out of the course of the year, we should be able to make up the production through the course of the year.

Mark Cutifani: We should be able to make up the production through the course of the year. May might be impacted by the furnace issue, but that's more an operating ramp-up to full capacity issue than anything connected to the current mining shutdown because we've got lots of ore. So that's where we are. I would expect that during the course of next week, we'll have both issues pretty well in view, and we'll let everybody know where we're at.

Speaker Change: You may might be impacted on the fairness issue, but that's more of an operating ramp up to full capacity issue than anything connected to.

Speaker Change: The current mining shutdown, because we've got lots of oil so thats, where we are I would expect during the course of next week.

Speaker Change: We will have both issues pretty well in view and we will let everybody know where we're up to it.

Eduardo de Salles Bartolomeo: Caio, thank you for your question. First of all, we have a very solid contract. We spent more than four years to reach a I'm the CEO of the Renewal with all the approvals and all the levels, federal levels. It's important to say we are complying with our obligations, but nevertheless. We've been talking to the transportation ministry. We see room to optimize some specific parts of the contract and also adjust some obligations.

Speaker Change: Got you. Thank you for your question. So first of all what we have up.

Speaker Change: Very solid contract we've spent more than four years to reshape.

Speaker Change: Oh of the renewal with all the Provost and all the lab was federal levels and.

Speaker Change: It seemed parts I should say, we are complying with all our obligations, but nevertheless.

Speaker Change: We've been talking to the transportation industry.

Speaker Change: B, we see room.

Speaker Change: To optimize some specific parts of the contract.

Speaker Change: So.

Speaker Change: Just some obligations.

Eduardo de Salles Bartolomeo: That can bring value for the company, and we see that we can balance this value with new obligations to pay. So you may expect a balanced negotiation. We are finalizing the negotiations, and we expect the final terms soon.

Speaker Change: That can bring value.

Speaker Change: Value for the company and we see that.

Speaker Change: We can balance this value with new obligations to pay.

Speaker Change: So you may expect a bell loves the negotiation we are finalizing the discussion.

Speaker Change: And we expect the.

Carlos de Alba: Next question is from Carlos de Alba with Morgan Stanley.

Speaker Change: The final terms Sean.

Speaker Change: Next question from Carlos de Alba with Morgan Stanley.

Carlos de Alba: Thank you very much. Good morning, everyone.

Speaker Change: Thank you very much and good morning, everyone. So my question is similar to the last one by focusing a little bit on Myanmar.

Carlos de Alba: So my question is maybe similar to the last one, but I'm going to focus a little bit on Mariana. Clearly, you took a provision in the fourth quarter, and now you have provided us with an updated disbursement path. And there was news overnight about the potential restart or the reportedly restart of the negotiations this week. So I don't know if you can provide an update there. Clearly, a key concern by the market, something that everyone would like to get resolved.

Speaker Change: Clearly you took a provision in the fourth quarter and now you provided us with an updated disbursement path.

Speaker Change: And there were news overnight about the potential.

Speaker Change: We start or the reportedly restart the restart of the negotiations this week.

Speaker Change: I don't know if you can provide us an update there clearly.

Speaker Change: Key concerned by the market something that everyone would like to get resolved I think the company has the authority.

Carlos de Alba: I think the company, the authorities, and certainly the people that were impacted, so I know they will be great there. And my second question is, in light of the increasing capex at CERASUR 120, as well as the Voices Day expansion and then the revision of the capex of the briquettes project, how should we think about the 2025, maybe 2026 capex for the company?

Speaker Change: Got it.

Speaker Change: In Boston, So an update will be greater.

Speaker Change: My question is in light of the.

Speaker Change: Increase in Capex.

Speaker Change: So that's sort of 128 as well as the.

Speaker Change: One day expansion and then.

Speaker Change: Revision on Capex.

Speaker Change: The <unk> project.

Speaker Change: How can we think about how should we think about 2025.

Speaker Change: Capex for the company. Thank you.

Speaker Change: Hey, Carlos this is Gustavo.

Carlos de Alba: Thank you.

Gustavo Duarte Pimenta: Hey, Carlos. This is Gustavo.

Gustavo: So on Mariana, Yes, you have your question is spot on we are highly engage it.

Gustavo Duarte Pimenta: So on Mariana, yes, your question is spot on. We are highly engaged. With the counterparties, the mediation process, as you probably know, has been ongoing, and we have engaged more actively recently in order to find a resolution that works for everybody. We continue to be hopeful that by mid this year, we can reach a negotiated outcome, which we all think is the ideal path in this case, so stay tuned. We'll keep you updated, but we are certainly engaged, looking for ways to find an agreeable solution here for all parties. On CAPEX, we've updated you. The main one is S11Z.

Gustavo: With the Counterparties are the mediation process as you probably know has been ongoing and we engage it more actively recently in order to find a resolution that works for everybody.

Speaker Change: We continue to be hopeful that by by mid this year, we can reach a negotiated outcome with which we all think it's the ideal.

Speaker Change: Bass and this case is so so stay tuned and we'll keep you updated but we're certainly engage it looking for ways to shift.

Speaker Change: Finally, an agreeable solution here for all parties.

Speaker Change: On the Capex, we've updated the main one is.

Gustavo Duarte Pimenta: It's over a period of years as we get to commission in 2026. So, no impact on our guidance for and our expectations as we had before for the following years. This year, we are still within the $6.5 billion, no impact, and we should be able to accommodate those increases in the following years as well.

Speaker Change: S 11 D. It's.

Speaker Change: It's over a period of years as we get to commission in 2026.

Speaker Change: So no impact in our guidance for and our expectations as we have before the final years. This year, we are still within the $6 $5 billion no impact.

Speaker Change: We should be able to accommodate those increases in the following years as well.

John Brent: Next question is from John Brent with HSBC.

Speaker Change: Next question from Jon Brandt with HSBC.

John Brent: Hi, good morning. Thanks for taking my questions. I just wanted to clarify an earlier answer, Eduardo. Just given the Anglo BHP news today, are you sort of unequivocally saying that Vale has no interest in the Anglo assets and that you're more watching to see what the impact is from, you know, from a potential deal, but Vale has no interest in those assets? Is that correct?

Jon Brandt: Hi, good morning, Thanks for taking my questions I, just wanted to clarify an earlier answer Eduardo.

Jon Brandt: Just given the Anglo BHP news today or are you.

Jon Brandt: Sort of unequivocally, saying that you.

John Brent: While I have no interest in the Angola assets and that Youre more watching to see what the impact is from.

Jon Brandt: From a potential deal, but they have no interest in those assets is that is that correct and then.

Eduardo de Salles Bartolomeo: And then I guess, you know, my questions really revolve around, we sort of discussed, you know, some of the rail concessions, some of the permits, the Simarco liabilities, etc. I'm just wondering, you know, I think that's sort of a big part of the reason for Vale's underperformance relative to peers. And I'm just wondering, you know, how would you categorize your relationship with the government? Right?

Speaker Change: I guess my my my questions really.

Jon Brandt: Around we sort of discuss some of the rail concessions.

Jon Brandt: The permits the <unk> liabilities et cetera I'm.

Jon Brandt: I'm, just wondering I think thats sort of a big part of the reason for valleys underperformance relative to peers.

Eduardo de Salles Bartolomeo: I'm just wondering how would you categorize your relationship with with the government right I mean, you've talked a lot about stability.

John Brent: I mean, you've talked a lot about stability and wanting sort of a stable environment, but this seems to be anything but, so I'm just wondering what you can do, or what Vale can do to sort of improve the relationship that you have with the government so that the market doesn't have to deal with these sorts of issues. And then my 2nd question, just really quickly, is that on the breakeven costs for copper, they came in well below guidance for 2024.

Jon Brandt: And wanting sort of a stable environment.

Jon Brandt: This seems to be.

Jon Brandt: So I'm just I'm wondering what you can do or what they can do to sort of improve the relationship that you have with the government. So that the market doesn't have to deal with some of these sorts of issues and then my second question just really quickly is.

Jon Brandt: It looks like on the breakeven costs for for copper they came in well below guidance for 2024, I'm just wondering how much upside risk there is to that guidance number or is this a seasonal issue or.

John Brent: I'm just wondering how much upside risk there is to that guidance number. Is this a seasonal issue or have some of the things marked that you've put into place really starting to bear fruit? Thank you.

Jon Brandt: It has some of the things mark that you've put into place is that really starting to bear fruit. Thank you.

John Brent: Okay.

Eduardo de Salles Bartolomeo: Thanks, John. Well, it's uh... a question that obviously, when you look at Anglo assets, would be interested in. What we try to explain in my answer at the beginning is that we have better options inside house to look at and more cheap options because, otherwise, you would go to a bid, and that doesn't make any sense for us. So that's why I said we are watching with attention. The asset that interferes with our strategy is the Minas Rio that we just closed with Hangul, and this one is protected. The others, as mentioned, we are...

Thanks, John.

Speaker Change: Well that's.

Eduardo de Salles Bartolomeo: <unk> that obviously when you look at Anglo assets, obviously would be it.

Eduardo de Salles Bartolomeo: The rest is what we.

Speaker Change: Try to explain in my answer at the beginning is that we have better options inside house to look at and more cheap options because otherwise you would go to our bids and that's not doesn't make any sense for us.

Eduardo de Salles Bartolomeo: So that's why I said, we are watching with a passion.

Eduardo de Salles Bartolomeo: The asset has interference with our our strategy is the mint is real that we just closed the envelope.

Eduardo de Salles Bartolomeo: This one is protected.

Jon Brandt: The others as mentioned.

Eduardo de Salles Bartolomeo: Wait and see to see what's going to happen, but meanwhile, we are much more interested in accelerating and executing our own endowment. Specifically about the railway concessions, it's a good question because it's not a Vale issue, right? It has been done through Jumo, it has been done through MRAS, and it has been with all the other concessions. So, it's not a Vale-specific problem, obviously, as Spinelli said, we are truly sure that we have a very robust contract, but we'll take the opportunity to adjust some specifics and make a win-win situation with the government that we believe will help with this problem or on this matter that you mentioned, a better and a more stable relationship with the government, which is always good, by the way, we always have.

Speaker Change: We are.

Speaker Change: Wait and see to see what's going to happen, but Meanwhile, we are.

Eduardo de Salles Bartolomeo: Much more interested in accelerating executing.

Speaker Change: Our own involvement.

Speaker Change: Specifically about the railway concessions that's a good question because it's not a value issue right. It has been done through whom always has been to run two mris there hasn't been.

Speaker Change: With all the other concessions so there's not a valley specific problem.

Eduardo de Salles Bartolomeo: Obviously.

Speaker Change: It's been that as said we are truly.

Speaker Change: Sure that we have a very robust.

Eduardo de Salles Bartolomeo: Contract, but will take the opportunity to adjust some specifics and make a win win situation with the government that we believe will help on this problem or when this matter that you that you mentioned better at a more stable relationship with the government that is always good that by the way we always fat.

Eduardo de Salles Bartolomeo: And the second question... to you. That's right, come across to Mark. So Mark.

Speaker Change: And the second question.

Mark Cutifani: So you're right.

Speaker Change: So I'll start quite Quadcopter costal mark sorry, Mark.

Speaker Change: Yeah.

Mark Cutifani: I probably lost Mark. But I can take it, John.

Speaker Change: I guess, it probably lost Marc I can take it John So yeah. It was a good first quarter, especially given the strong ramp up of a soluble <unk> three plus also a strong operational performance and Sellable, one and two so we are not resetting expectations, but what I can say it.

Gustavo Duarte Pimenta: So yeah, it was a good first quarter, especially given the strong ramp-up of Salobo and Salobo 3, plus also a strong operational performance on Salobo 1 and 2. So we are not resetting expectations, but what I can say, it's looking pretty good within the guidance that we had laid out. So hopefully, through the remaining part of the year, we can provide more. More details around.

Speaker Change: Looking it's looking pretty good within the guidance that we had laid out so hopefully three and we are the remaining part of the year, we can provide more more details around it.

Speaker Change: Yeah.

Leonardo Correa: Next question is from Leonardo Correa with BTG Pactual.

Speaker Change: Next question from Leonardo Correa with BTG Pactual.

Leonardo Correa: Good morning, everyone. I have a couple of questions on my side. Yeah, so the first one, I'm not sure if Mark is back. So feel free. Thank you. Hi, you are okay. Perfect.

Leonardo Correa: Yeah.

Leonardo Correa: Good morning, everyone I have a couple of questions on my side.

Leonardo Correa: Yes, so the first one I'm not sure if if mark is back so feel free.

Leonardo Correa: Yes.

Leonardo Correa: You are okay perfect welcome back Mark.

Mark Cutifani: Welcome back, Mark. On just on the on the base metal story, still, right? I mean, they're very mixed results, very pressured, right by, in fairness, pressured nickel prices, but you're having a dual speed situation, right, where basically copper is performing very well, perhaps above expectations, and nickel is performing well below expectations. And the overall results have been pressured. If you take a year, expectations for EB-DAI and base metals were way above what you guys are currently delivering.

Leonardo Correa: On the just on the on the base metal stories still right I mean, they're very mixed results very pressured right by.

Mark Cutifani:

Mark Cutifani: In fairness bye bye pressured nickel prices, but youre, having a dual speed situation right. We're basically copper is performing very well.

Mark Cutifani: Perhaps above expectations and Nicolas is performing well below expectations.

Mark Cutifani: And the overall results have been pressured if you take a year expectations for EBITDA in base metals are way above what what you guys are currently delivering.

Mark Cutifani: And I get the point that there's a lot under review, so I don't want to be unfair, but, and I know that Gustavo, and I think in his opening remarks, he said that by June, we're going to have more details, but I mean, just thinking of you, do you see an opportunity to adjust capacities and to perhaps put some of Vale's nickel assets under care maintenance at this point, just given market conditions are unfavorable and the assets are not generating any EBITDA?

Eduardo de Salles Bartolomeo: And I get the point that there's a lot under review so I don't want to be unfair, but and I know that Gustavo and I think in the opening remarks, you said that by June.

Mark Cutifani: We're going to have more details but.

Mark Cutifani: I mean, just thinking a view I mean, do you see an opportunity to adjust capacities into.

Mark Cutifani: Perhaps put some of valley's Nicole assets under care and maintenance at this point just given market conditions are favorable.

Mark Cutifani: And the assets not generating any EBITDA. So my first question is specifically to nickel how you see the evolution in how viable certain assets of valley are in this scenario.

Mark Cutifani: So my first question is specifically to Nickel, how do you see the evolution and how viable certain assets of Vale are in this scenario? The second question, I think there was a question on this, Gustavo, but I don't think it was addressed yet.

Second question I think there was a question on this is Gustavo, but I think it wasn't addressed yet, but if I may just moving back to the dividend situation and the extraordinary dividend potential for.

Leonardo Correa: But if I may, just moving back to the dividend situation and the extraordinary dividend potential for the latter part of this year. With all these questions on additional provisions and outflows, I mean, how are you viewing this? Right. I mean, we're getting some help from lower prices lately, so we're back to 120. How are you viewing this extraordinary dividend story with your leverage, which is now at the upper upper side of your tolerance? Let's say those are the two questions. Thank you very much. OK, go ahead, Mark.

Leonardo Correa: For the latter part of this year with with all of these questions on additional provisions in outflows.

Leonardo Correa: I mean, how are you viewing this right I mean, we're getting some help from from iron ore prices lately. So we're back to 120 <unk>.

Leonardo Correa: Are you viewing this sexual ordinary dividend.

Leonardo Correa: Story with with your leverage which is now at the upper upper side of.

Leonardo Correa: Of your tolerance, let's say those are the two questions. Thank you very much. Okay go ahead mark.

Leonardo Correa: Okay.

Mark Cutifani: Mark do you mute.

Speaker Change: Try again.

Mark Cutifani: I'll try again. How's that? Okay, I'll copy you.

Leonardo Correa: Okay.

Mark Cutifani: Got you.

Mark Cutifani: Okay, Gustavo made the observation on copper around Solobo's improvement, and that was very encouraging flowing into the first quarter coming off a strong last quarter as well, and that pointed to a few changes that were made over the last six or nine months. And we've had similar, albeit lagging, performance at Sudbury because we did the asset review at Sudbury about three months after Solobo, and Eduardo pointed to the 7% improvement at Claribel. On a run rate basis, it's closer to 15%, and that includes both copper and nickel. So I think we've got good trends in two of the most important operations. Indonesian remains fairly solid.

Mark Cutifani: Okay.

Mark Cutifani: Gustavo made the observation on copper.

Mark Cutifani: Around <unk> improvement and that was very encouraging flowing into the first quarter coming off a strong last quarter as well and thats going to a few changes that were made over the last six to nine months and we've had similar obeyed.

Mark Cutifani: Lagging performance should separate because we did the asset review and sub premium three months out to Salobo.

Mark Cutifani: And what I pointed to the 7% improvement in for Bill.

Mark Cutifani: On a run rate basis, its closer to 15% and that reflects both copper and nickel. So I think we've got good trends at two of the most important operations, Indonesia remains fairly solid.

Mark Cutifani: Onsipuma is coming through the furnace rebuild and is heating up, and what we are flagging is a likely intention to push some of that feed north to try and improve the premiums on products we receive. And so it's not simply about operations. It's also, and that has a long way to go and a lot of improvement to come, but it's also about price realization. And with price volatility and what we think will be a premium related to the products that we produce from Canada, we think there's still a lot of potential on both the cost side and on the pricing side that we're looking at.

Mark Cutifani: <unk> coming through the furnace rebuild any speaking up.

Mark Cutifani: And what we are flagging is a likely intention.

Mark Cutifani: To push some of that.

Mark Cutifani: The north.

Mark Cutifani: To try and improve the premiums on products, where we see and so it's not simply about operations. It's also and Thats a long way to go in a lot of improvement to come but it's also about price realizations and with the price volatility and what we think will be a premium related to the products that we produce from <unk>.

Mark Cutifani: Canada, we think theres still a lot of potential on both the cost side and on the pricing side that we're looking at them with the volatility we're seeing in the nickel market will be done when do we start cutting production, where we're already seeing material reductions in operating costs, and we think theres a real premium sacs.

Mark Cutifani: But with the volatility we're seeing in the nickel market, what we don't want to do is start cutting production where we're already seeing material reductions in operating costs, and we think there's a real premium. So we want to give it another two or three months, and that's what we want to tell you about in June. So we still think there are two stories playing out. The operating improvement plus premiums that we can get by using our flow sheets better, filling Matsusaka, doing more work at Kledig, and making sure we've got all the molecules heading in the right direction. So it'll be a story in two parts, and I think we'll be able to show that in June that we're looking at both operating costs and margin improvements as well as on the pricing side.

Mark Cutifani: We wanted to give it another two or three months and that's what we wanted to reflect and show you in June. So we still think there is a two story is playing out the operating improvement plus <unk>.

Mark Cutifani: Premiums that we can get by using a flow Shakespeare, the Sydney Metro soccer doing more where it could clearly and making sure. We got all the molecules heading in the right in the right direction. So it'll be a story in two parts.

Mark Cutifani: And then I think we'll be able to share that in June that we're looking at both operating cost and margin improvements within the promising shot.

Gustavo Duarte Pimenta: Thanks, Mark. I'll take the second one.

Speaker Change: Thanks, Mark and I will take the second one apologist Cetura filed that haven't responded fourth for the first question on the extraordinary dividend potential.

Gustavo Duarte Pimenta: Apologies also to Rafael that we haven't responded to the first question on the extraordinary dividend potential. Look, as you know, it depends on several elements. Certainly, market conditions have improved lately, which gives us some good expectations of potential cash generation through year-end. But we also compare those vis-a-vis where we are on the leverage ratio, minimum cash, provisions, and outflows. So I think it's early, and we think it's early to point out potential incremental dividends, but we'll certainly assess that through year-end. And if there's any opportunity, we'll certainly consider it with our board, as we always do, right? And we've been doing this consistently over the last several years.

Gustavo Duarte Pimenta:

Gustavo Duarte Pimenta: As you know it depends on several elements certainly market conditions have improved lately, which give us.

Gustavo Duarte Pimenta: Some good expectations of potential cash generation through year end.

Gustavo Duarte Pimenta: But we also compare those vis a vis where we are on the leverage ratio minimum cash provisions and outflows. So I think it's early and we think it's early too.

Gustavo Duarte Pimenta: Point out two potential incremental dividends, but we certainly assess that.

Gustavo Duarte Pimenta: Through year end, and if theres any opportunity we will certainly consider with our board does as we always do right and we've been doing this consistently over the last several years.

Myles Allsop: Next question is from Myles Allsop with EUBS.

Myles Allsop: Next question from Myles Allsop with UBS.

Myles Allsop: Hi there. A couple of questions. First of all, on iron ore, obviously, a very strong first quarter, you know, the guidance for 2024 either looks conservative, or you have some concerns about potential operating challenges later this year. I mean, should we look at the guidance as conservative, or are there other things we should bear in mind for later in the year? And then, maybe, on the nickel side, a question for Mark.

Speaker Change: Hi, there.

Speaker Change: Yes, a couple of questions first of all on I know, obviously, a very strong first quarter guidance for 2024.

Myles Allsop: Either looks conservative or you have some concerns about potential operating challenges.

Myles Allsop: Later this year I mean should we look at the guidance is conservative or I can say.

Myles Allsop: Other things, we should bear in mind for later in the year and then maybe secondly.

Myles Allsop: On the nickel side, a question for Mark I mean, the challenges in the nickel market are driven by Indonesia, and obviously valets contributing to those incremental tons and what what's the latest with the Indonesian projects and.

Myles Allsop: I mean, the challenges in the nickel market are driven by Indonesia, and obviously, Vale is contributing to those incremental tons. What's the latest with the Indonesian projects, and is there any desire to slow those back to try and rebalance the market?

Myles Allsop: Are there any.

Mark Cutifani: Is there any desire to slow those back to try and rebalance market.

Myles Allsop: Thank you. Hi Myles.

Carlos Medeiros: Hi Myles, this is Carlos Medeiros. It's too early days to review our 2024 guidance. We had a quite good Q1. But still, there are... challenges as we see ahead. And we also had a very strong second half of the year last year.

Myles Allsop: Yeah.

Carlos Medeiros: Hi, Myles this is Carlos Medeiros, it's too early days to review or trying to turn it for guidance.

Carlos Medeiros: Have to do a quite good Q1.

Carlos Medeiros: But still there are <unk>.

Carlos Medeiros: <unk> as we see ahead.

Carlos Medeiros: And we had also very strong.

Carlos Medeiros: Second half of the year last year. So this is why we prefer to maintain our guidance and if we decide to revisit it it will be done later in the year.

Carlos Medeiros: So this is why we prefer to maintain our guidance, and if we decide to revisit it, it will be done later in the year. Meanwhile, we're still working on the usual levers to increase production. Think initiatives such as our seasonality plan that has proved to be robust, the reliability initiatives to continue to improve overall equipment availability, our mining plans to review the mine's geometries, whatever is necessary to free up more ore, and also in the hydrogeology initiatives to make sure that our water balance in our mines offers additional opportunities to access the bottom of the pit earlier during the year. So, all in all, we'll keep it for now, and we might get back to you later. Thank you.

Carlos Medeiros: Meanwhile was to work on the usual.

Carlos Medeiros: <unk> true increase production.

Carlos Medeiros: Initiatives such as somehow it's a plan that has proved to be robust.

Carlos Medeiros: The reliability initiatives to continue to improve the overall equipment availability, our mining plans to review them.

Carlos Medeiros: Mine gentlemen, threes.

Carlos Medeiros: However.

Carlos Medeiros: Necessary to free up more ore and also in the hydrogeology.

Carlos Medeiros: Initiatives to make sure that or what's the balance in our minds.

Carlos Medeiros: Uh Huh offers additional puts you wanted to structure the bottom for the pit earlier.

Carlos Medeiros: During the year so all in all we will.

Carlos Medeiros: Keep it for now and.

Speaker Change: I have to get back to you.

Operator: Next call, sir. Oh, sorry. Yeah, balls.

Speaker Change: Later, thank you.

Carlos Medeiros: Sure.

Speaker Change: Next caller.

Speaker Change: Oh, sorry, yeah bombs.

Operator: Sean.

Mark Cutifani: On the question of Indonesia, I think the first thing to recognize is the divestment. Announcements and milestones that were achieved were very positive, and certainly we moved through that fairly quickly with the Indonesian government, so credit to everybody involved. A second point, funds for POMLA have been committed as per the requirements, and we're still working through the early phases of that. In terms of...

Speaker Change: On the.

Speaker Change: Question on Indonesia.

Mark Cutifani: The first thing to recognize is the divestment.

Mark Cutifani: Announcements and milestones that were achieved.

Mark Cutifani: Positive and certainly we made through that fairly quickly with the Indonesian government say credit to everybody involved.

Mark Cutifani: <unk> point.

Mark Cutifani: Funds on Pamela.

Mark Cutifani: Have been committed.

Mark Cutifani: S.

Mark Cutifani: The requirements and we're still working through the early phases of that.

Mark Cutifani: In terms of.

Mark Cutifani: The commitment to new projects, again, we're very mindful of our obligations with our partners, but at the same time, we're also making the point that we need to be prudent and consider the individual investment propositions very carefully. There is a little bit of uncertainty in the marketplace regarding how different products will be priced in the marketplace. Great news for us in Canada is that it's likely we will do better than most because of the nature of the material and its low carbon footprint.

Mark Cutifani: The commitment of our new projects again.

Mark Cutifani: Mindful of our obligations with our partners, but at the same time, we're also making the point.

Mark Cutifani: We need to be prudent.

Mark Cutifani: And <unk>.

Mark Cutifani: Consider the individual investment propositions very carefully there is a little bit of uncertainty in the marketplace regarding.

Mark Cutifani: So different products will be priced in the market great news for us in Canada is that it's likely we will do better than most because of the nitro brew material.

Mark Cutifani: Your line is kind of in footprint, Indonesia will probably be in a very different conversation and we're working with our partners just to make sure we understand that and what that means for each of the investments and again. We're also mindful of the fact that the <unk>.

Mark Cutifani: Indonesia will probably be in a very different conversation, and we're working with our partners just to make sure we understand that and what that means for each of the investments. And again, we're also mindful of the fact that we need to pace those additions with the market as well, but again, it's an open conversation with our partners and still early in that process, I have to say, so we've got a bit more work to do.

Mark Cutifani: Two pace.

Mark Cutifani: <unk> additions with the market as well, but again, it's an open conversation with their partners is still early in that process.

Mark Cutifani: So we've got a bit more work to do.

Operator: Study team, ready for your next question? Next question from Timna Tanners with Wolfie Research.

Mark Cutifani: Ravi Ting.

Mark Cutifani: Your next question.

Operator: Next question from Timna Tanners with Wolfe research.

Timna Beth Tanners: Hey, good morning. Now, let's just dive down a little more into the cost of the proceeds. Given the recent volatility and current oil prices, it would be great to hear what you're thinking to manage the cost side. This quarter saw a kind of big uptick in third-party purchase costs despite the progress on your overall iron ore production costs. So, can you give us an update on this response on how to model the third-party purchase side? That's my first question. And the second is just kind of an outlook on color opinion.

Timna Beth Tanners: Hey, good morning.

Timna Beth Tanners: Right.

Speaker Change: Thanks, Dan.

Speaker Change: I'm, sorry, I'm sorry.

Timna Beth Tanners: Great.

Timna Beth Tanners: That cost side.

Timna Beth Tanners: Okay.

Timna Beth Tanners: Yes.

Timna Beth Tanners: It's a process.

Timna Beth Tanners: Excellent.

Speaker Change: Good morning.

Speaker Change: Thanks, Michael.

Speaker Change: Hi, Bob.

Timna Beth Tanners: Gotcha.

Timna Beth Tanners: That's my first question.

Timna Beth Tanners: Alright.

Timna Beth Tanners: Timna, sorry, it's, it's, uh, it's getting, uh, crunched. Could you speak it, could you ask it again?

Timna Beth Tanners: Excuse me not sorry.

Timna: It's getting there crouched could.

Speaker Change: Could you speak it could you ask it again.

Timna Beth Tanners: Sir, is that any better?

Timna Beth Tanners: Okay.

Operator: A little bit

Speaker Change: You're a little bit.

Timna Beth Tanners: I'm sorry; I'm just asking for any outlook on the cost given the price volatility and any guidelines for third-party purchase costs, anything you can do to contain costs overall on the iron ore side.

Speaker Change: I'm sorry.

Speaker Change: Just asking for any outlet.

Speaker Change: Thanks, Johnny.

Timna Beth Tanners: Okay great.

Timna Beth Tanners: Great.

Timna Beth Tanners: Yes.

Timna Beth Tanners: Thompson.

Timna Beth Tanners: Hi.

Speaker Change: Okay got it we got this one.

Timna Beth Tanners: Okay, we got it. The other one was just on Peloponneum Outlets, thanks. Yeah, I can ask the first one answer the first one, then Tina you ask the second one, Tina Su.

Jeff: Otherwise it's Jeff.

Timna Beth Tanners: Thanks.

Timna Beth Tanners: Yeah.

Tina Su: Yes, I can.

Speaker Change: I'll ask them after the first of all I'll answer the first one that the enemy.

Tina: You ask the second one.

Tina: Hey, Tina.

Gustavo Duarte Pimenta: on the cost outlook. You know, we came in at C1 at 23.5, slightly lower than last year. It's, you have to be mindful that Q1 is usually our toughest quarter in terms of terms, given the lower volumes that are produced. So the effect of dilution is limited, as we saw last year.

Speaker Change: So tinder will stifle here on the cost outlook.

Gustavo Duarte Pimenta: Yes.

Gustavo Duarte Pimenta: We came at a Q1 that China three five is slightly lower than last year.

Gustavo Duarte Pimenta: It's you have to be mindful that Q1, its usually our toughest quarter in terms given the lower.

Gustavo Duarte Pimenta: Volumes that are produced so the effect of dilution is limited as we saw last year, but when we look at the forecast for the year, we're feeling super confident with the numbers that we laid out the journey, one and a half to 23.

Gustavo Duarte Pimenta: But when we look at the forecast for the year, we are feeling super confident with the numbers that we laid out, the 21.5 to 23. A lot of the cost-efficiency initiatives that we started 18 months ago are bearing fruit, and sales are coming strong, production is coming strong, so we are feeling good about it. You know, the challenges which have been managed on the all-in, I think Leonardo made that reference, in terms of the breakeven cost have been mostly associated with the freight rate, which Vale is mostly hedged, which is one of our competitive advantages, not 100% hedged, so you saw an uptick this quarter, but this is one of the headwinds that we've been able to manage.

Gustavo Duarte Pimenta: A lot of the cost efficiency initiatives that we've started 18 months ago are bearing fruit.

Gustavo Duarte Pimenta: And sales are coming in as strong production has come in as strong. So we are we are feeling good about it.

Gustavo Duarte Pimenta: The challenges, which have been managed on the all in I think Leonardo made that reference.

Gustavo Duarte Pimenta: In terms of the breakeven cost.

Gustavo Duarte Pimenta: It's been mostly associated with the freight rates, which valley is mostly hedge it which is one of our competitive.

Gustavo Duarte Pimenta: Advantages not 100% hedge it so you saw an uptick this quarter.

Gustavo Duarte Pimenta: But we did it is one of the headwinds.

Gustavo Duarte Pimenta: The wins that we've been able to manage we are now probably 90% hedge it in terms of our demands for the year.

Gustavo Duarte Pimenta: We are now probably 90% hedged in terms of our demands for the year, also hedged on the Brent cost, and the other element here are the premiums, which came a little tighter and have given you an idea of market conditions, but all in all, we are feeling very good with the numbers that we have laid out in terms of, of course, our forecast for the year for both c1 and all in cost across all businesses, by the way.

Gustavo Duarte Pimenta: Also hedge it under Brent costs.

Gustavo Duarte Pimenta: And the other element here are the premiums which came.

Gustavo Duarte Pimenta: A little tighter and as given.

Gustavo Duarte Pimenta: Market conditions, but all in all we're feeling very good with the numbers that we have laid out in terms of cost forecast for the year for both <unk> and all in cost across all businesses by the way.

Ricardo Monegaglia: Next question from Ricardo Monegaglia with Safra.

Ricardo Monegaglia: Yeah.

Speaker Change: Next question from <unk> <unk> with SASSA.

Ricardo Monegaglia: Hello, good morning, everyone. I have a couple of questions, actually, follow-ups from previous questions. First on the Bates Meadows business. Are there any changes to commodity price head policies given the recent rally in metals prices? And the second question still on base metals: is there any update that you could share with us on regards to the conclusion of the Valley Base Metals transaction? It continues to be expected to occur in the second quarter.

Ricardo Monegaglia: Hello, Good morning, everyone I have a couple of questions actually follow ups from previous questions.

Ricardo Monegaglia: First on the base metals business.

Ricardo Monegaglia: Are there any changes to commodity price hedge policies given the recent rally in metals prices.

Ricardo Monegaglia: And the second question still on base metals is there any updates that you could share with us in regards to the conclusion.

Ricardo Monegaglia: The base metals transaction continues to be expected to occur in the second quarter.

Ricardo Monegaglia: What are the final steps to conclude this acquisition would be interesting to understand. And my second question is on IOR quality; based on the target for the year and 1-24 levels, it implies that quality will come above the level of 62.5% in the coming quarters. Should we expect this trend already in the second quarter, or could high silica sales continue at high or at the same levels as in the first Q? Those are my questions for you guys.

Ricardo Monegaglia: What are the final steps to conclude this acquisition will be interesting tool.

Ricardo Monegaglia: <unk>.

Ricardo Monegaglia: And my second question is on iron ore quality.

Ricardo Monegaglia: Based on the target for the year and <unk> 24 levels it implies that.

Ricardo Monegaglia: Quality will come above.

Ricardo Monegaglia: The level of 62, 5%.

Ricardo Monegaglia: Inquired is should we expect this trend already the second parter are high silica fails will continue high or at the same levels as being the first Q. Those are my questions. Thank you guys.

Gustavo Duarte Pimenta: Sure, thanks Ricardo. So I'll do the first ones and then Spinelli will go over the rest, the premiums. So when it comes to hedging, we usually don't do it. Well, you know, that's the nature of the business. We like to run exposure unless there are some very unique conditions where we may want to consider so that that's that's part of the nature of our business, and we like to run with exposure in those commodities.

Gustavo Duarte Pimenta: Stuff.

Spinelli: Sure. Thanks, Riccardo so I'll do the.

Speaker Change: The first ones and then spinelli cohort two.

Spinelli: The premiums.

Gustavo Duarte Pimenta: So one on the hedging we usually don't do it.

Gustavo Duarte Pimenta: That's the nature of the business.

Gustavo Duarte Pimenta: To round exposure unless there is some very clear Nick conditions, where we may we may want to consider so that's part of the nature of.

Spinelli: Our business and we like to run with.

Gustavo Duarte Pimenta: With exposure in there.

Gustavo Duarte Pimenta: On the VBM, we've got, I think Eduardo mentioned in his prep remarks, we've got all the regulatory approvals, and we are now working with partners to move to the closing, which we expect to happen in the next, call it, couple of weeks. So we'll keep the market updated on that. So I'll turn back to Spinelli. Okay, thank you, Ricardo. So... Regarding the

Gustavo Duarte Pimenta: Those commodities.

Gustavo Duarte Pimenta: The V P M.

Spinelli: Got I think Eduardo mentioned in his remarks, we've got all the regulatory approvals in.

Spinelli: We are now working with partners to move to the closing, which we expect that to happen in the next call. It couple of weeks, so keep the market updated about it.

Gustavo Duarte Pimenta: So I'll turn back to Spinelli.

Spinelli: Thank you Carlos.

Spinelli: Regarding them.

Marcello Magistrini Spinelli: Okay, thank you, Ricardo. Regarding the quality average, it depends firstly on the production mix. And you saw that we had a good performance in the North System, and uh, as we have a pattern of higher production in the second half, that will naturally increase the average rate. And as regards sales, you're right, we took an advantage to sell directly high silicon in the first part of the year, actually at the end of last year.

Spinelli: The quality of average.

Marcello Magistrini Spinelli: Depends on.

Marcello Magistrini Spinelli: Firstly on the production.

Marcello Magistrini Spinelli: Production mix in <unk>.

Marcello Magistrini Spinelli: You saw that we had a good performance in the north system.

Marcello Magistrini Spinelli: And.

Marcello Magistrini Spinelli: We have a pop turn of higher production in the second half.

Marcello Magistrini Spinelli: We will naturally increase the the.

Marcello Magistrini Spinelli: The average.

Marcello Magistrini Spinelli: Great.

Marcello Magistrini Spinelli: Regarding sales you Youre right we had a.

Marcello Magistrini Spinelli: Just to get an advantage to sell directly.

Marcello Magistrini Spinelli: The high silica.

Marcello Magistrini Spinelli: In the first part of the year and actually the end of last year. So the discount was there. So we can take this.

Marcello Magistrini Spinelli: So the discount was narrow, so we can take this, uh, the choice every actually every day we assess this so as we move forward during the year, we have the possibility to blend this product or to concentrate this product or sell directly. But in the second half, we don't have a lot of high silica as we increase the production in our system, and we prioritize the blend. And after that, we can choose the remaining high silica if you want to sell it directly or not. It's difficult to precisely predict in advance. It depends on the market conditions.

Marcello Magistrini Spinelli: The choice every actually every day, we'd be assessed as so as we move forward during the year, we have there.

Marcello Magistrini Spinelli: The possibility to blend this product or to concentrate just broader cross sell directly.

Marcello Magistrini Spinelli: But in.

Marcello Magistrini Spinelli: In the second half.

Marcello Magistrini Spinelli: A lot of high silica as we increase the production to north systems, and we prioritize the blend.

Marcello Magistrini Spinelli: And after that we can choose the remaining high silica if you want to.

Marcello Magistrini Spinelli: Sell directly on all of its difficult to precise and advance it depends on the market conditions.

Gabriel Simoes: Next question is from Gabriel Simes with Goldman Sachs.

Gabriel Simes: Next question from <unk> <unk> with Goldman Sachs.

Gabriel Simoes: Okay. Thanks for taking my questions. I actually have one quick follow-up on one of the questions that were asked before.

Gabriel Simoes: Hi.

Gabriel Simes: Can you hear me.

Gabriel Simoes: Okay.

Gabriel Simes: Thanks for taking my questions.

Gabriel Simes: I actually have one quick follow up on one of the questions that were asked before actually I just wanted to understand on the development of your iron ore projects. So if you could comment a bit on how the development is going the capacity created increasing project. So Greg you've got my name and Thats sort of a knee that'd be great.

Gabriel Simoes: Actually, I just wanted to understand the development of your R&R projects. So if you could comment a bit on how the development is going, the capacity increasing projects, such as Vargin Grande, Capanema, and S11D. That would be great because we just wanted to understand how the projects are doing so far and how confident you are with the timeline you provided earlier. I know you mentioned that Cejasul should remain on the same timeline. I just wanted to have a better sense of the other ones. Thank you.

Gabriel Simoes: We just wanted to understand how the budgets are doing so far and how confident you are.

Gabriel Simoes: The timeline you provided earlier I know you mentioned that the south shore.

Gabriel Simoes: It should remain the same timeline just wanted you to have a better sense on the other ones. Thank you.

Gustavo Duarte Pimenta: So, Gabriel and Gustavo here. We're feeling pretty good about it. We gave you some stats during Eduardo's presentation of where each one of those projects is. We have a series of projects, but the three main ones we've been pointing out are Varginha Grande, Capanem, and Plastrani. And they are moving along the timeline we had established, so we're feeling pretty good about it. And Varginha Grande, for example, the expectation that we'll have this startup by the end of the year.

Gabriel Simoes: Yeah.

Speaker Change: So Greg with stifle here, yes, we are feeling pretty good about it. We gave you some stats doing novartis presentation of where each one of those projects that we have a series of projects, but the three the three main ones we've been pointing out this <unk> plus janney.

Gustavo Duarte Pimenta: And they are moving along the timeline ahead established so we're feeling pretty good about that.

Gustavo Duarte Pimenta: And version and granted for example.

Gustavo Duarte Pimenta: <unk> debt to start have they startup by the end of the year. So that's one of the key projects that we have promised to deliver through China trying to fix to have that increase.

Gustavo Duarte Pimenta: So that's one of the key projects that we've promised to deliver through 2026 to have that increase and take Vale to a potential range of 340 to 360. So, everything is moving along the plan, and we're feeling pretty good about those deliverables.

Gustavo Duarte Pimenta: Take violate U a potential range of $3 40 to 360, so I'm moving.

Gustavo Duarte Pimenta: Along with the plan and we are feeling pretty good about that those those deliverables.

Eduardo de Salles Bartolomeo: This concludes today's question-and-answer session. We would like to hand the floor back to Mr. Eduardo Bartolomeo for his final remarks.

Eduardo de Salles Bartolomeo: Okay.

Eduardo de Salles Bartolomeo: This concludes today's question and answer session, we would like to hand, the floor back to Mr. Eduardo Bartolomeo for the company's final remarks.

Eduardo de Salles Bartolomeo: Okay, thank you. Well, just to conclude, I think we, as we say here in Brazil, start with the right foot. We started the year in very good shape; we always like to say that we win the game in the first quarter. We are not that arrogant, we know we still have nine months to go, the rainy season isn't over yet in the north, but the thesis of safety versus production is being proved, that we can be safer and reliable, and that I think is a very important message.

Eduardo de Salles Bartolomeo: Okay. Thank you.

Eduardo de Salles Bartolomeo: Just to conclude I think we as we sit here in Brazil, we stocked with the right foot.

Eduardo de Salles Bartolomeo: We start the year in a very good shape.

Eduardo de Salles Bartolomeo: We always like to say that we win the game in the first quarter were not that aragats. So we know we still have nine months to go rainy season isn't over yet on the north.

Eduardo de Salles Bartolomeo: The thesis of safety versus production is being proved.

Eduardo de Salles Bartolomeo: Has been proved that we can be safer and reliable and that's I think is a very important message.

Eduardo de Salles Bartolomeo: We are seeing a positive market in iron ore and copper as well; nickel has its challenges. As last answered by Gustavo, our projects are on time and on budget, so we will deliver on that. In June, we're going to have more color on the asset review, and in the end, every about the noises that are around us, we see some overhangs starting to get off of the radar as Mariana is expected to be over by the we will try our best to do it by the first half of the renewal is going to be over, and it's not going to be material. So with that said, If we sit through the noise, we will remain So, again, thanks a lot for your attention, and I hope to see you on the next call. Okay, thank you, and have a safe day.

Eduardo de Salles Bartolomeo: We are seeing a positive market in iron ore in copper as well nickel as this challenge.

Eduardo de Salles Bartolomeo: Lastly asked answered by staff, who are for our projects are on time on budget. So we will deliver on it on June one we are going to have more color on the on the asset review.

Eduardo de Salles Bartolomeo: And then he and.

Eduardo de Salles Bartolomeo: Everything about the noises that are around us we see some overhang starting to.

Eduardo de Salles Bartolomeo: Getting off of the radar as much.

Eduardo de Salles Bartolomeo: This is expected to be over by the <unk>, We will try our best to do it by the first half the renewal was going to be over it's not going to be material. So with that said.

Eduardo de Salles Bartolomeo: If we sit through the noise, we will remain extremely disciplined extremely focused on what we have to do and we still see.

Eduardo de Salles Bartolomeo: Streaming.

Eduardo de Salles Bartolomeo: Huge opportunity to invest in value. So again, thanks, a lot for your attention and I hope to see you in the next call. Okay. Thank you and have a safe day.

Operator: The Values Conference is now concluded. We thank you for your participation.

Speaker Change: This conference has now concluded we thank you for your participation.

Operator: <unk>.