Q2 2024 Vale SA Earnings Call
Operator: Good morning, ladies and gentlemen, welcome to Value's second quarter 2024 earnings call. This conference is being recorded, and the replay will be available on our website at Fadi.com. The presentation is also available for download in English and Portuguese from our website. To listen to the call in Portuguese, please press the globe icon 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.
Speaker Change: Good morning, ladies and gentlemen. Welcome to Vale's second quarter 2024 earnings call.
Speaker Change: This conference is being recorded and the replay will be available on our website at Fadi.com. The presentation is also available for download in English and Portuguese from our website.
Speaker Change: 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.
Operator: We would like to inform you that all participants are currently in a listen-only mode for the presentation. Further instructions will be provided before we begin the question and answer section of our call. We would like to advise that forward-looking statements may be provided in this presentation, including valid expectations about future events or results, encompassing those matters listed in the respective presentation. However, we caution you that forward-looking statements are not guaranteed to result and involve risks and uncertainty. 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. Securities and Exchange Commission and the Brazilian Comisso de Valores Mobiliares.
Speaker Change: We would like to inform 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 our call.
Speaker Change: We would like to advise 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.
Speaker Change: We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties.
Speaker Change: To obtain information and factors that may lead to results different from those forecast by Vale, please consult the report's Vale files with the U.S. Securities and Exchange Commission.
Speaker Change: The Brazilian Comissão de Valores Mobiliares, and in particular, the factors discussed under forward-looking statements and risk factors in Vale's annual report on Form 20-F.
Speaker Change: With us today are Mr. Eduardo de Salles Bartolomeu, CEO , Mr. Gustavo Pimenta, Executive Vice President of Finance and Investor Relations,
Speaker Change: Mr. Marcello Spinelli, Executive Vice President, Iron Ore Solutions, Mr. Carlos Medeiros, Executive Vice President of Operations, and Mr. Mark Cutifani, Chairman of Vale Base Metals.
Operator: And in particular, the factors discussed under Forward-Looking Statements and Risk Factors in Vale's Annual Report on Form 20-F. With us today are Mr. Eduardo de Salles Bartolomeo, CEO; Mr. Gustavo Pimenta, Executive Vice President of Finance and Investor Relations; and Mr. Marcello Spinelli, Executive Vice President, Iron Ore Solutions. Mr. Carlos Medeiros, Executive Vice President of Operations, and Mr. Mark Cutifani, Chairman of Valley Base Metal. Now, I will turn the conference over to Mr. Eduardo Bartolomeo. Sir, you may now begin. Okay, thank you. And good morning, everyone.
Speaker Change: Now I will turn the conference over to Mr. Eduardo Bartolomeo. Sir, you may now begin.
Eduardo de Salles Bartolomeo: Okay, thank you and good morning everyone.
Eduardo de Salles Bartolomeo: Here we are at the halfway mark of 2025. So let's take a look at the progress we've made on our key levers to unlock value at scale. Starting with our safety journey, we are very pleased to inform you that we have eliminated the D3B4 dam. And we were able to achieve this one year ahead of the original schedule. We are working on two additional structures to be eliminated in 2020. By the end of this year, we will have completed more than 50% of our decharacterization program, a significant milestone.
Speaker Change: Here we are at the halfway mark of 2024.
Speaker Change: So let's take a look at the progress we've made on our key levers to unlock value at Vale.
Speaker Change: Starting with our safety journey, we are very pleased to inform that we have eliminated the D3 before them, and we were able to achieve this one year ahead of the original schedule.
Speaker Change: We are working on two additional structures to be eliminated in 2024. By the end of this year, we will have completed more than 50% of our decharacterization program, a significant milestone.
Eduardo de Salles Bartolomeo: On the second level, we continue to see progress on iron ore operational stability, with consistent performance and the third consecutive quarter of year-over-year increase in production. Our C1 cost, which was seasonally higher in the second quarter, is on track to reach our guidance of $21.5 to $23 per ton for the year, especially as our product mix and fixed-cost dilution improves in the second half. On iron ore growth and quality, Vargem Grande is on its way to start up in the next month, and the Kapanema Project is on track for the middle of next year, for a combined capacity addition of 30 million tons. We have approved the Sohar Concentration Plant.
Speaker Change: On our second level, we continue to see progress on iron ore operational stability.
Speaker Change: with consistent performance and the third consecutive quarter of year-over-year increase in production. Our C1 cost that was seasonally higher in the second quarter is on track to reach our guidance of $21.5 to $23 per ton for the year.
Speaker Change: especially as our product mix and fixed-cost dilution improves in the second half.
Speaker Change: On iron ore growth and quality, Vargem Grande is on its way to start up in the next months, and the Capanema project is on track for the middle of next year, for a combined capacity addition of 30 million tons.
Speaker Change: We approved the Sohar Concentration Plant. This will serve as a pilot project of our mega hub strategy which will redefine industry supply chains.
Eduardo de Salles Bartolomeo: This will serve as a pilot project of our MetaHub strategy, which will redefine the industry supply chain, foster additional demand for high-quality pellet feed, and Position Valley will become the world's most competitive direct reduction concentrate supplier. In energy transition metals, our Onsapuma, Susego, and Salobo plants have also resumed operations, with no impact on our guidance for the year. We recently announced the new CEO of Valley Base Metals. Sean Eusman brings his extensive mining experience and his strategic vision to lead the company throughout its value creation path.
Speaker Change: foster additional demand for high-quality pellet feeds and Position Vale has the world's most competitive direct reduction concentrate supplier.
Speaker Change: In energy transition metals, our Onsapuma, Susego and Salobo plants have also resumed operations with no impact on our guidance for the year.
Sean Eusman: We recently announced the new CEO of Valibase Metals, Sean Eusman, brings his extensive mining experience and strategic vision to lead the company throughout its value creation pathway.
Eduardo de Salles Bartolomeo: In our pursuit of ESG leadership in mining, we are reinforcing our commitment to transparent disclosure with the adoption of TNFD and ISSB. On capital allocation, we recycle capital, increasing the maturity of our debt. And yesterday, we announced an interest on capital of $1.6 billion related to our first half of 2024 performance, according to our dividend policy. Now, let's go into the details of this highlight.
Sean Eusman: In our pursuit towards ESG leadership in mining, we are reinforcing our commitment to transparent disclosure with the adoption of TNSD and ISSB.
Speaker Change: On Capitalocation, we recycle capital, increasing the maturity of our debt. And, yesterday,
Sean Eusman: We announced an interest on capital of $1.6 billion related to our first half of 2024 performance, according to our dividend policy. Now, let's go into the details of these highlights. Next slide.
Eduardo de Salles Bartolomeo: Next slide. On dam safety, we concluded the decharacterization of D3 before dam, one of the dams that was put at the highest emergency level in 2019. Dykes 1A and 1B are the other two structures to be eliminated this year, after which we will have completed 53% of our decharacterization program. This is a pioneer process, and we are gaining experience and expertise, which is helping us to advance well. We remain committed to the elimination of all upstream dams in Brazil in a safe and conservative manner.
Sean Eusman: On dam safety, we concluded the de-characterization of D3 Before Dam, one of the dams that was put at the highest emergency level in 2019.
Sean Eusman: DICE 1A and 1B are the other two structures to be delimited this year, after which we will have completed 53% of our decharacterization program.
Sean Eusman: This is a pioneer process and we are gaining experience and expertise, which is helping us to advance well.
Sean Eusman: We remain committed to the elimination of all upstream dams in Brazil in a safe and conservative manner.
Eduardo de Salles Bartolomeo: Next slide, please. On Iron Ore production, we delivered robust operational performance once again, the third consecutive quarter of year over year increase in production. This is a direct result of our efforts to improve the reliability and stability of our assets and processes. S. Sporre, our management.
Speaker Change: Next slide, please.
Speaker Change: On iron ore production, we delivered robust operational performance once again, the third consecutive quarter of year-over-year increase in production.
Speaker Change: This is a direct result of our efforts to improve the reliability and stability of our assets and processes as per our management model.
Eduardo de Salles Bartolomeo: S11D achieved a historical production record for the second quarter, and the asset is a fundamental piece of our strategy for growing high-quality products in our portfolio. The S11D plus 20 million tons expansion project is scheduled to start up in 2026 and will support production growth. And finally, I would like to highlight our sales, which grew 7% year-over-year, reflecting our strong performance.
Speaker Change: S11D achieved a historical production record for a second quarter, and the asset is a fundamental piece of our strategy for growing high-quality products in our portfolio.
Speaker Change: The S11D plus 20 million tons expansion project is scheduled to start up in 2026 and will support production growth.
Speaker Change: Finally, I would like to highlight our sales, which grew 7% year-over-year, reflecting our strong performance.
Eduardo de Salles Bartolomeo: The result of the first semester reinforces our confidence and commitment to meet the top end of our 2024 guidance. This demonstrates that Vale now has a business with much greater predictability, providing a solid foundation for the future. Next slide
Speaker Change: The result of the first semester reinforces our confidence and commitment to meet the top end of our 2024 guidance.
Speaker Change: This demonstrates that Vale now has a business with much greater predictability, providing a solid foundation for the future.
Eduardo de Salles Bartolomeo: Our key iron ore projects are underway to increase capacity. In the next 12 months, we have two main projects coming online. The Vargin Grande project, to start up in the coming months, will add 15 million tons per year of high-quality iron ore capacity with a very low capital expenditure. The CAPANEMA project is progressing well, with the pre-commissioning activities initiated, and will also bring an additional $50 million per year of high-quality ore capacity after the first half of 2021.
Speaker Change: Next slide.
Speaker Change: Our key iron ore projects are underway to increase capacity.
Speaker Change: In the next 12 months, we have two main projects coming online.
Speaker Change: The Vargin Grande project, to start up in the coming months, will add 15 million tons per year of high-quality iron ore capacity with a very low capex investment.
Speaker Change: The CAPANEMA project is progressing well with the pre-commissioning activities initiated and will also bring an additional $50 million per year of high-quality ore capacity after the first half of 2025.
Speaker Change: Next slide.
Eduardo de Salles Bartolomeo: Next slide. Advancing on our long-term strategy, we signed an important agreement to develop the concentration plant in Sohar, a project presented during Vale Day in the. The Sahara Concentration Plant will significantly increase the availability of high-quality pellet feed by 12 million tons per year. This will enable us to produce feed for direct reduction agglomerate.
Speaker Change: Advancing on our long-term strategy, we signed an important agreement to develop the concentration plant in Sohar, a project presented during Valley Day in December .
Speaker Change: The Sahara Concentration Plant will significantly increase the availability of high-quality pellet feed by 12 million tons per year.
Speaker Change: This will enable us to produce feed for direct reduction agglomerates, enhancing our operational capabilities and product offerings.
Eduardo de Salles Bartolomeo: Enhancing our Operational Capabilities and Product Offering. This asset-light business model has a low investment obligation from Vale and an internal rate of return exceeding 30%, making it a highly accretive investment. This partnership will serve as a model for future mega hubs in the region and pave the way for a more sustainable future, allowing the production of metallics through low CO2 emission routes. It marks the first significant step toward new developments to come. Next, please. Next.
Speaker Change: This asset-light business model has a low investment obligation from Vale and an internal rate of return exceeding 30%, making it a highly accretive investment.
Speaker Change: This partnership will serve as a model for future mega hubs in the region and pave the way for a more sustainable future, allowing the production of metallics through low CO2 emission routes.
Speaker Change: It marks the first significant step towards new developments to come.
Speaker Change: Next, please.
Speaker Change: Now moving to the energy transition metals business. Looking at our copper performance, despite the headwinds in the quarter, we had a 5% increase in production in our plants in Brazil.
Eduardo de Salles Bartolomeo: Looking at our copper performance, despite the headwinds in the quarter, we had a 5% increase in production at our plants in Brazil. On Eco, production reflected our planned maintenance strategy, and we are on track to deliver the production guidance for 2025. In Sudbury, improved mine performance resulted in reduced consumption of 30-party feeds and lower costs.
Speaker Change: On Nickel, production reflected our planned maintenance strategy and we are on track to deliver the production guidance for 2024. In Sudbury, improved mine performance resulted in reduced consumption of 30-party feed and lower costs.
Eduardo de Salles Bartolomeo: We are confident that we're putting together a great team, as seen in the appointment of Sean as CEO, and taking the right steps to transform the energy transition method. Next slide. In our ESG strategy, we want to reduce our impacts, generating positive outcomes for nature, and for that, we have three main pillars to support our nature actions: keep the forest that we have standing. At Vale, we protect 11 hectares for every hectare affected by our activity.
Speaker Change: We are confident that we're putting together a great team as seen on the appointment of Sean as CEO and taking the right steps to transform the energy transition metals business.
Speaker Change: Next slide.
Speaker Change: On our ESG strategy, we want to reduce our impacts, generating positive outcomes for nature and people. For that, we have three main pillars to support our nature actions.
Eduardo de Salles Bartolomeo: In 2019, we committed to increasing protected areas by 500,000 hectares, and we are already at 35%. The second pillar is bioeconomy and creating a business environment favorable to the conservation of native forests. And our third pillar is to fight extreme poverty, to help avoid the illegal exploitation of. Our strategy led us to prioritize the adoption of TNFD and ISSB. We believe this will help all stakeholders to better understand and assess companies in their EESG processes.
Speaker Change: First, keep the forest that we have standing. At Vale, we protect 11 hectares for every one hectare affected by our activities.
Speaker Change: In 2019, we committed to increasing protected areas by 500,000 hectares, and we are already at 35% of this target.
Speaker Change: The second pillar is bioeconomy and create a business environment favorable to the conservation of native forests. And our third pillar is to fight extreme poverty, which will help avoid the illegal exploitation of land.
Speaker Change: Our strategy led us to prioritize the adoption of TNSD and ISSB. We believe this will help all stakeholders to better understand and assess companies on their ESG progress.
Eduardo de Salles Bartolomeo: Before we move to our financial results, I would like to comment that we are delivering on our. Our strong operational performance continues quarter after quarter, and we are in very good shape for the second half of 2020. Now I'll pass the floor to Gustavo to comment on the financial performance, and I'll get back to you on the Q&A. Thank you. Thank you, Eduardo. And good morning, everyone.
Speaker Change: Before we move to our financial results, I would like to comment that we are delivering on our commitments.
Speaker Change: Our strong operational performance continues quarter after quarter, and we are in very good shape for the second half of 2024.
Speaker Change: Now, I'll pass the floor to Gustavo to comment on the financial performance and I'll get back to you on the Q&A. Thank you.
Gustavo: Thank you, Eduardo, and good morning, everyone.
Gustavo Duarte Pimenta: Let me start with our EBITDA performance for the quarter. As you can see, our pro forma EBITDA reached $4 billion in Q2, driven by strong operational performance across all commodities. This is a result of our continued focus on operational excellence and asset reliability, and the record iron ore production in Q2 since 2018 is a testament to that. As part of our Asset Integrity Program, we had a concentration of maintenance activities in Q2, particularly in April, which together with the inventory turnover effect and higher freight rates. More than offset higher iron ore sales in the quarter.
Gustavo: Let me start with our EBITDA performance in the quarter.
Gustavo: As you can see, our pro forma EBITDA reached $4 billion in Q2, driven by strong operational performance across all commodities.
Gustavo: This is a result of our continued focus on operational excellence and asset reliability, and the record iron ore production in Q2 since 2018 is a testament of that.
Gustavo: As part of our Asset Integrity Program, we had a concentration of maintenance activities in Q2, particularly in April , which together with the inventory turnover effect and higher freight rates, more than offset higher iron ore sales in the quarter.
Gustavo Duarte Pimenta: The good news is that our C1 significantly declined by the end of Q2, while rising volumes in the north, coupled with reduced maintenance works in the second half, provide us with a solid runway to deliver a strong operational performance in the coming quarters. I will go into the details of our C1 dynamics in the next slide.
Gustavo: The good news is that our C1 significantly declined by the end of Q2.
Gustavo: While rising volumes in the north
Gustavo: coupled with reduced maintenance works in the second half provide us with a solid runway to deliver a strong operational performance in the coming quarters. I will go into the details of our C1 dynamics in the next slides.
Gustavo Duarte Pimenta: On a sequential basis, our pro forma EBITDA increased 15%, driven by 25% higher ship prices, partially offset by higher operating costs and lower realized iron ore. Now I would like to provide more color on our realize it all in premiums for the quarter. Vale has many sites in a broad product portfolio, ranging from high silica products that trade at discounts compared to the benchmark to direct production pallets with a 67% iron ore content.
Gustavo: On a sequential basis, our pro forma EBITDA increased 15%, driven by 25% higher shipments, partially offset by higher operating costs and lower realized iron ore prices.
Gustavo: Now I would like to provide more color on our realized all-in premiums for the quarter.
Gustavo: Vale has many sites in a broad product portfolio, ranging from high silica products that trade at discounts compared to the benchmark, to direct production pallets with a 67% iron ore content.
Gustavo Duarte Pimenta: Typically, high silica products from the southern and southeastern systems are blended with Carajás to create our main product, BRBS. This is a premium product with low alumina and 5% silica content, as the average silica content naturally increases in the southern and southeastern systems.
Gustavo: Typically, high silica products from the southern and southeastern systems are blended with Carajás to create our main product, BRBF. This is a premium product with low alumina and 5% silica content.
Gustavo: As the average silica content naturally increases in the southern and southeastern systems, we have been using a higher proportion of Karajas in the blend.
Gustavo Duarte Pimenta: We have been using a higher proportion of Karajas in the blend, implying increased availability of high silica products which are sold directly in the market. This higher availability is even more pronounced in the first half of the year due to the production seasonality in the northern states. On top of that, based on product availability, we evaluate commercial options cargo by cargo, aiming to maximize value, either by concentrating these products in China, selling them directly, or holding them as inventory. In Q2, with quality discounts below historical levels, direct sales were the most attractive option, with an EBITDA per ton of around $20.
Gustavo: implying increased availability of high silica products to be sold directly in the market. This higher availability is even more pronounced in the first half of the year due to the production seasonality in the northern system.
Gustavo: On top of that, based on product availability, we evaluate commercial options cargo by cargo, aiming to maximize value, either by concentrating these products in China, selling them directly, or holding them as inventory.
Gustavo: In Q2, with quality discounts below historical levels, direct sales were the most attractive option, with an EBITDA per ton of around $20.
Gustavo Duarte Pimenta: As a consequence, I realized all the lean was actually $0.1 per ton aggregate, despite 70% of the portfolio being sold at premiums above the benchmark. In the second half of 2024, we anticipate a reduction in the share of high silica products in our mix due to increased production in the north. Promoting Better Primacy. More importantly, looking into the coming years, the share of high silica products in the sales mix should gradually decline with the start of growth projects like Virgin Grande, Capanema, and particularly the S11D expansion.
Gustavo: As a consequence, our realized all-in was actually $0.1 per tonne negative, despite 70% of the portfolio being sold with premiums above the benchmark.
Gustavo: In the second half of 2024, we anticipate a reduction in the share of high silica products in our mix due to the increased production in the north, supporting better premiums.
Gustavo: More importantly, looking into the coming years, the share of high silica products in the sales mix should gradually decline with the startup of growth projects like Virgin Grande, Capanema, and particularly the S11D expansion.
Gustavo Duarte Pimenta: In addition, the development of concentration plants like the one in Sohar will also contribute to structurally reduce our share of high silica products. Now, let me turn to our cost performer. In Aeronor, our C1 cash costs, excluding third-party purchase, were $24.9 per ton in the quarter, mainly impacted by an inventory turnover effect, as expected for a second quarter. This is how the inventory effect works. Vale has an extensive supply chain, and around 30% of all sales in the quarter are composed of inventories from the previous quarter. Also, we note that production costs in Q1 are usually the highest in the year, given lower fixed cost dilution. As a result, in Q2, the difference in inventory cost impacted C1 by $1.8 per tonne sequentially.
Gustavo: In addition, the development of concentration plants like the one in Sohar will also contribute to structurally reduce our share of high silica products.
Gustavo: Now let me turn to our cost performance.
Gustavo: In Iron Ore, our C1 cash cost, excluding third-party purchases, was $24.9 per ton in the quarter, mainly impacted by an inventory turnover effect, as expected for a second quarter. This is how the inventory effect works.
Gustavo: Vale has an extensive supply chain and around 30% of all sales in the quarter are composed by inventories from the previous quarter.
Gustavo: Also, we note that production costs in Q1 are usually the highest in the year, given lower fixed cost dilution. As a result, in Q2, the difference in inventory costs impacted C1 by $1.8 per ton sequentially.
Gustavo Duarte Pimenta: In this quarter's financial report, we have started to disclose our production costs per ton in order to provide a better view on our C1 cash cost trend. We remain highly confident in achieving our guidance for 2024 of 21 and a half to $23 per ton. Our production cost in June, excluding inventory effects, was already significantly down, reaching $22.
Gustavo: In this quarter's financial report, we have started to disclose our production costs per ton in order to provide a better view on our C1 cash cost trends.
Gustavo: We remain highly confident in achieving our guidance for 2024 of $21.50 to $23 per ton.
Gustavo: Our production cost in June , excluding inventory effects, was already significantly down, reaching $22 per ton.
Gustavo Duarte Pimenta: This is a solid indicator of potential in the second half of the year with benefits from greater cost dilution, increased production in the northern regions, and reduced maintenance activities during the dry season. Now moving to our Energy Transition Matters business, we were pleased to have another quarter of significant E&E reduction in our all-in costs for nickel, which were down 12% to $15,000 per ton.
Gustavo: This is a solid indicator of our potential in the second half of the year with benefits from greater cost dilution, increased production in the northern system, and reduced maintenance activities during the dry season.
Gustavo: Now moving to our Energy Transition Matters business.
Gustavo: We were pleased to have another quarter of significant E&E reduction in our all-in costs in nickel, which were down 12% to $15,000 per ton.
Gustavo Duarte Pimenta: This is mostly due to lower third-party feed purchases, as well as a reduction in expenses, as we wrote down some high-cost inventory. Q2 20. With Q1 and Q2 all-in costs averaging less than $15,000 per ton, we are well-positioned to reach our 2024 all-in guidance of $14,500 to $16,000 per ton this year. And copper oiling costs increased 18% year-on-year to about $3,600 per ton, driven by increased unit costs due to maintenance at Salobo and Susego.
Gustavo: This is mostly due to lower third-party feed purchases, as well as by a reduction in expenses, as we wrote down some high-cost inventories in Q2-23.
Gustavo: With Q1 and Q2 all-in costs averaging less than $15,000 per ton, we are well positioned to reach our 2024 all-in guidance of $14,500 to $16,000 per ton this year.
Gustavo: And copper oiling costs increased 18% year-on-year to about $3,600 per ton, driven by increased unit cogs due to maintenance at Salobo and Susego.
Gustavo Duarte Pimenta: All in, cost averaged about $3,500 per ton in the first half 2020, below our 2024 all in guidance range of 4000 to $4,500. Now moving on to cash generation. Free cash flow generation was $0.2 billion negative in Q2.
Speaker Change: All-in costs average about $3,500 per ton in first half 2024, below our 2024 all-in guidance range of $4,000 to $4,500 per ton.
Speaker Change: Now, moving on to cash generation.
Speaker Change: Free cash flow generation was $0.2 billion negative in Q2, impacted by a higher concentration of payments to suppliers.
Gustavo Duarte Pimenta: Impacted by a higher concentration of payments to suppliers, high execution of concession contract obligations, and lower accounts receivable following the 4.3 million tons of iron ore sales accrued at the end of the quarter. We expect working capital to positively reverse in the second half. However, still, our cash and cash equivalents increased by $3.1 billion in QGIS. This increase was primarily driven by the $2.5 billion proceeds received following the Valley Based Matters Partnership, as well as by the issuance of $1 billion in bonds in June, mostly used for liability management in July. Our capital expenditures were flat quarter on quarter at $1.3 billion, and we're on track to meet our capex guidance of around $6.5 billion for the year.
Speaker Change: High execution of concession contract obligations and lower accounts receivable following the 4.3 million tons of iron ore sales accrued at the end of the quarter. We expect working capital to positively reverse in the second half.
Speaker Change: Still, our cash and cash equivalents increased by $3.1 billion in Q2. This increase was primarily driven by the $2.5 billion proceeds received following the Valley-Based Metals Partnership.
Speaker Change: as well as by the issuance of $1 billion in bonds in June , mostly used for liability management in July .
Speaker Change: Our capital expenditures were flat quarter on quarter at $1.3 billion and we're on track to meet our capex guidance of around $6.5 billion for the year.
Speaker Change: Also yesterday, our Board of Directors approved a distribution of $1.6 billion in interest on capital to be paid in September this year, reinforcing our continued commitment to return value to our shareholders.
Gustavo Duarte Pimenta: Also yesterday, our Board of Directors approved a distribution of $1.6 billion in interest on capital to be paid in September this year, reinforcing our continued commitment to return value to our shareholders. Before moving on to the Q&A session, I would like to reinforce the key messages from today. Safety and dam management continue to be a key priority for Vale, and we are encouraged by the progress in our de-characterization program, having fully de-characterized the B3-B4 dam.
Speaker Change: Before moving on to the Q&A session, I would like to reinforce the key messages from today's call.
Speaker Change: Safety and dam management continue to be a key priority for Vale and we are encouraged by the progress in our de-characterization program, having fully de-characterized the B3-B4 dam.
Gustavo Duarte Pimenta: Our strong operational performance continues to be seen quarter after quarter, and we are on track to deliver our production and cost guidance for the year. In fact, on Iron Ore, we are now very confident of reaching the top end of the 310 to 320 million tons production guidance. On our strategic objective to be the supplier of choice for low carbon steel production, we are very pleased with the advancement of the SOHAR concentration partnership in Oman, which will serve as a pilot for the upcoming Megahub project with a very attractive return.
Speaker Change: Our strong operational performance continues to be seen quarter after quarter, and we are on track to deliver our production and cost guidance for the year. In fact, on Ionor, we are now very confident on reaching the top end of the 310 to 320 million tons production guidance range.
Speaker Change: On our strategic objective to be the supplier of choice for low carbon steel production, we are very pleased with the advancement of SOHAR concentration partnership in Oman, which will serve as a pilot for the upcoming mega-hub projects.
Gustavo Duarte Pimenta: At VBM, our cost performance has been solid so far in the year, and we see room for continued improvement, particularly as the asset review plan is gradually executed. Lastly, we remain highly committed to disciplined capital allocation, controlling Expanded Net Debt Within Our Targets, taking advantage of asset-light growth opportunities and rewarding shareholders with solid remuneration through dividends and by. Now, I would like to open the call for questions. Thank you.
Speaker Change: with very attractive returns.
Speaker Change: At VBM, our cost performance has been solid so far in the year, and we see room for continued improvement, particularly as the asset review plan is gradually executed.
Speaker Change: Lastly, we remain highly committed to disciplined capital allocation, controlling expended net debt within our target.
Speaker Change: Taking advantage of asset light growth opportunities and rewarding shareholders with solid remuneration through dividends and 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.
Speaker Change: 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.
Operator: Please ask your question in English and limit your questions to two at a time. Our first question comes from Daniel Sasson with Ita BBA. You can open your microphone.
Speaker Change: Please ask your question in English and limit your questions to two at a time.
Speaker Change: Our first question comes from Daniel Sasson with Itaú BBA.
Speaker Change: You can open your microphone.
Daniel Sasson: Hi everyone, good morning. Thank you so much for taking my questions. My first question, maybe to Gustavo, if you could please provide us an update on the ongoing negotiations with the government regarding the resettlement for Samarco, where we are right now, the back and forth with the government, and where you think the most important points of this agreement are, that would help us. I mean, I think it could be an important catalyst for stock price performance once this gets sold.
Daniel Sasson: Hi everyone, good morning. Thank you so much for taking my questions. My first question
Daniel Sasson: Maybe to Gustavo, if you could please provide us an update on the ongoing negotiations with the government regarding the resettlement for Samarco.
Speaker Change: Where we are right now, the back and forth with the government, where do you think the most important points of this agreement are? That would help us. I mean, I think it could be an important catalyst for stock price performance once this gets solved.
Daniel Sasson: And my second question is regarding your portfolio mix; you mentioned that you expect 65% of high quality products in your portfolio in the second half versus 59% in the first half, with high silica declining to 10% of sales. Regarding specifically your strategy for the high silica portion, do you, does the decline expected ahead come on the back of reduced inventories of that type of product? Or do you see maybe discounts increasing for that portion?
Speaker Change: And my second question is regarding your portfolio mix. You mentioned that you expect 65% of high quality products in your portfolio in the second half versus 59% the first half.
Speaker Change: with High Silica declining to 10% of sales. Regarding specifically your strategy for the High Silica.
Speaker Change: Do you, did the decline expect ahead comes on the back of reduced inventories?
Speaker Change: of that type of product? Or do you see maybe discounts increasing for that portion? My point is, is that a matter of what you have of high silica products to be sold being lower or less volumes than you had in the beginning of the year? Or that reflects your view that high silica products should demand a higher discount in the second half of this year versus the first half?
Gustavo Duarte Pimenta: My point is, is that a matter of what you have of high silica products to be sold being lower or less volumes than you had at the beginning of the year? Or does that reflect your view that high silica products should demand a higher discount in the second half of this year versus the first half? Thank you so much.
Marcello Magistrini Spinelli: Good morning, Sasson. Gustavo here. So I'll take the first one, and then Spinelli will go over your second question. So, Loco Mariana, we continue to be optimistic about the ability and the possibility, which settled the agreement. All parties are highly engaged, and the view is that in the next couple of months we'll be able to reach a resolution both in terms of the actual agreement, the text associated with the agreement, and also the key financial terms, so this is important for the company, and we see momentum from all parties to be able to sit down and negotiate this, so we are optimistic and our expectations that in the next couple of months we'll be able to reach a Thank you. Thank you, Danielle.
Speaker Change: Thank you so much.
Gustavo: Good morning, Sasson, Gustavo here. So I'll take the first one and then Spinelli will go over your second question. So, Loco Mariana, we continue to be optimistic about the ability and the possibility.
Spinelli: to settle the agreement. All parties are highly engaged.
Speaker Change: The view is that in the next, you continue to have a view that in the next couple of months we'll be able to reach a resolution, both in terms of the actual agreement, the text associated with the agreement, and also the key financial terms.
Spinelli: So this is important for the company and we see a momentum from all parties to be able to sit down and settle this. So we are optimistic and our expectation is that in the next couple of months we'll be able to resolve this.
Spinelli: So I'll pass the second question to Spinelli.
Spinelli: Thank you, thank you Daniel.
Gustavo Duarte Pimenta: Structurally, we have high silica in our portfolio. After Brumadinho, we have this imbalance in our mix. So after, as you saw in the initial remarks, after the ramp-up of S11D, we'll have the main component of the BRBF test, IOCJ, so we can reduce, minimize this kind of process standalone.
Spinelli: Structurally, we have the high silica in our portfolio. After Brumadinho, we have this unbalance in our mix.
Spinelli: So after, as you saw in the initial remarks, after the ramp-up of S11D,
Spinelli: will have the main component of the BRBF test, IOCJ, so we can reduce, minimize this kind of process stand alone.
Marcello Magistrini Spinelli: You asked me what the reason we are doing this is. As we saw in the initial remarks, we just don't sell it, but we have a market for that. So, until May, we sell it directly. The gap was really wide when we compared the high grade and the low grade.
Spinelli: you asked me what is what is what is the the reason we are doing this so
Speaker Change: As we saw in the initial remarks, we just don't sell it, but we have a market for that. So, until May, we sell directly. The gap was really wide when you compare the high grade and the low grade.
Marcello Magistrini Spinelli: Since the end of May, we have started to concentrate the most we can. So we have a capacity to produce 18 to 20 million tons in China. We have remaining high silica to handle. So that's the reason why we expect to have 10% in our portfolio. That's the same level we expect for next year. And with all this, we always say that it depends on market conditions. If we have a better discount for high silica, we can sell directly. That's the influence of them.
Speaker Change: Since the end of May, we start to concentrate the most we can. So we have a capacity to produce 18 to 20 million tons in China.
Speaker Change: We have a remaining high silica to handle. So that's the reason why we expect to have 10% in our portfolio. That's the same level we expect for next year.
Speaker Change: And with always saying that depends on market conditions, we, if we have a better discount for high silica, we can sell directly. That's the influence. So just to set your model, you may consider this 10%.
Marcello Magistrini Spinelli: So just to set your model, you may consider this 10%. And gradually, in 2026, in 2027, we must go to zero. Next question from Rodolfo Angele with JP Morgan. You can open your microphone.
Speaker Change: Incredibly, in 2016-2017, we must go to zero.
Speaker Change: Next question from Rodolfo Angele with JP Morgan.
Speaker Change: You can open your microphone.
Rodolfo R. De Angele: Okay. Hi, good morning. My two questions are the following. First, it's really good to see management positive about the evolution of costs and making sure guidance is reached. But this is a theme that's been more and more recurring when we speak to investors, and I just wanted to hear from you, aside from things such as higher volume, which is seasonally the rule in the second half of the year, particularly in the third quarter. What is the structural problem? What can be done? What's in your hand?
Rodolfo R. De Angele: Okay. Hi, good morning. My two questions are the following. First,
Speaker Change: It's really good to see management positive on the evolution of costs and making sure guidance is reached.
Speaker Change: But this is a theme that's...
Speaker Change: been more and more recurring when we speak to investors and and I just wanted to hear from you you know aside from things such as
Speaker Change: I'm going to start with you. I know you're going to be talking about the higher volumes, which is seasonally, you know, the rule in the second half of the year, particularly in the third quarter. What is the structural? What can be done? What's in your hands?
Gustavo Duarte Pimenta: that we can see the path of costs coming down as expected and, eventually, even lowering into 25 and onwards. So that's question number one. The second is a bit more about where we stand in prices versus the strategy, a successful strategy for the stabilization of the iron ore business. Of course, as per Spinelli's answer right now, the commercial strategy will follow market conditions, right? So what we've been seeing is an effort to lower seasonality, and we saw in the fourth quarter a very strong production report, and of course, we're entering a period of even higher volumes, but how true do you think about volumes in a scenario where prices, as they are today, are slightly below a hundred dollars per ton? Does that change anything, and how do you think about it? What can we expect if prices continue for a So I'll do the first one again, and Spinelli will cover the second one.
Speaker Change: that we can see to make, you know, the path of costs coming down as expected and we hope eventually even lowering into 25 and onwards. So that's question number one.
Speaker Change: The second is a bit more about...
Spinetta: Where we stand in prices versus the successful strategy on the stabilization of the iron ore business? Of course, as per Spinelli's answer right now, the commercial strategy will follow market conditions, right?
Speaker Change: So, what we've been seeing is...
Speaker Change: An effort to lower, to fight back seasonality and we saw since first quarter very strong production reports.
Speaker Change: And of course, we're entering the period of even higher volumes.
Speaker Change: But how should we think about volumes in a scenario where prices as today are slightly below $100 per ton, does that change?
Speaker Change: anything and how how do you think about it what can we expect if prices continue for a while as soft as they are right now thank you very much
Gustavo: So Rodolfo, Gustavo, good morning. Gustavo here. So I'll do the first one again and Spinelli will cover the second one. So certainly I think we've been the last, call it two years, looking structurally at our cost base.
Gustavo Duarte Pimenta: So certainly, I think we've been the last, call it two years, looking structurally at our cost base and implementing a series of initiatives being new technologies in the field, revisiting processes, increasing the share of preventive maintenance as compared to corrective maintenance. All of that, over time, should make our costs more efficient. And so we are seeing this already as we look into the numbers. Certainly, the dilution effect for value given the Spinelli, Jonathan Brandt, Marcello Spinelli, Leonardo Correa, Thiago Lofigo, Alfonso Salazar. So, I'll pass the second question.
Spinelli: and implementing a series of initiatives being new technologies in the field, revisiting process, increasing the share of preventive maintenance as compared to corrective maintenance systems.
Spinelli: All of that over time should make our costs more efficient. And so we are seeing this already as we look into the numbers. Certainly the dilution effect for Vale given the...
Spinelli: The expanded fleet that we have, it's super helpful, right? The ability for us to bring volume with very limited capital helps a lot, but we are not just counting on that. We're also looking structurally.
Spinelli: of in areas where we think we can extract more value from the business and we are seeing results already as we look into the business.
Spinelli: So I'll pass the second question to Spinelli.
Marcello Magistrini Spinelli: Thank you for asking this question. We don't see a support in the cost curve for a major decline at this moment. Definitely, we have the pressure of inflation, freight, and now we see the impact coming from the green world. And that's the pattern we have. We'll have our long-term price of around 90. So this is the first direct answer to your question.
Spinelli: Go full, thank you for a question.
Spinelli: We don't see a support in the cost curve for major decline.
Spinelli: At this moment, definitely we have a pressure of inflation, freight, and now we see starting the impact coming from the green world.
Spinelli: And that's the...
Spinelli: The pattern we have, we have our long-term price of around 90. So this is the first
Marcello Magistrini Spinelli: But... One thing you should pay attention to, so we see a balanced market at this moment. One of the micro indicators that everybody asks us about is the inventory, iron ore inventory on the pork side. I want to draw your attention to some information, extra information about this.
Speaker Change: One of the micro indicators that everybody asks us about is the inventory, iron ore inventory in the pork side. I want to drag your attention for some information, extra information about this.
Marcello Magistrini Spinelli: Firstly, we've been, Vale, not only Vale, but our competitors have also been changing the way we do business, so we are improving the production of VRBF, so we have a non-operational, or a non-for-sale inventory. Our competitors are screening the products, so increasing the blending. We are increasing the concentration now in the second half. So, this 160, when you compare it to last year, it'
Speaker Change: Firstly, we've been, Vale, not only Vale, our competitors also, changing the way we are doing business, so we are improving the production of the RBF, so we have a non-operational
Speaker Change: or a non-for-sale inventory.
Speaker Change: Our competitors are screening the products, so increasing the blending.
Speaker Change: We are increasing the concentration now in the second half.
Speaker Change: This 160, when you compare to last year, it's like 145.
Marcello Magistrini Spinelli: And there's another point that most of the increase came from low-grade ores, as you mentioned. We have the mantra of margin over volume, but if you pay attention at the lower level of IOCJ, and that's the reason the gap is widened between low-grade ore and high-grade ore, the premium carajás is higher now. So again, that's the balance.
Speaker Change: And another point that most of the increase came from low-grade ores, as you mentioned. We have the mantra of margin over volume.
Speaker Change: But if you pay attention in the lower level of IOCJ, and that's the reason the gap is widened, the low-grade ore and high-grade ore.
Speaker Change: The premium in Carajás is higher now. So, again, that's the balance. As a whole, we see the market balance. Pay attention that the port inventory is not approximate directly at this moment with the demand.
Marcello Magistrini Spinelli: As a whole, we see the market balance. Pay attention that the port inventory is not approximated directly at this moment with the demand. And we should track this, you know, instability, or we feel China all the time.
Speaker Change: And we should track this, you know, instability or we feel China all the time.
Marcello Magistrini Spinelli: We like to pray for extra stimulus, but you have a very strong new normal in China that is supported by manufacturing. Export is something we are always worried about, because we don't see yet the countries fighting against some products, but it's something that is structural. We have a new global, new ties in this geopolitics. So, for this year, so far, so good, we see China at this level of production. For next year, we see stability in terms of demand. But obviously, we need some more figures about how we can reduce this, our concerns about the decline of properties in China.
Speaker Change: We'd like to pray for extra stimulus, but we have a very strong new normal in China that is supported by manufacturing. Export is something every time we are worried about because we don't see it yet.
Speaker Change: The country is fighting against some product, but it's something that is structural. We have a new global, new ties.
Speaker Change: In this geopolitics, so...
Speaker Change: For this year, so far so good. We see China with this level of production. For next year, we see a stability in terms of demand. But obviously, we need some more figures about how can we reduce this.
Speaker Change: our concerns about the decline of properties in China, but so far so good for 24 and 25. We are in a good shape in the balance market.
Myles Allsop: But so far, so good for 2024 and 2025; we are in good shape in the balance market. Next question from Myles Allsop with UBS. You can open your microphone.
Speaker Change: Next question from Myles Allsop with UBS.
Gustavo Duarte Pimenta: Great. Thank you very much for the question. So a couple of things. First of all, on M&A, obviously, there are some assets available, nickel assets available in Brazil. Just wondering how you're thinking about M&A, is this the right point to be, should this be the right point in the cycle to be picking up assets in that commodity? And then, secondly, could you talk a bit more about value over volume? So if China is softer than you expect from a demand perspective, at what price point do you expect the majors, including yourself, to start curtailing production? to support prices. Myles, Gustavo here.
Speaker Change: Great.
Myles Allsop: Thank you very much for the question. So, a couple of things. First of all, on M&A, obviously there are some assets available, nickel assets available in Brazil. Just wondering how you're thinking about M&A, is this the right point to be...
Speaker Change: Should be at the right point in the cycle to be picking up assets in that commodity.
Speaker Change: And then secondly, could you talk a bit more about value over volume? So if, if China is softer than you expect from a demand perspective, what price point do you expect the majors, including yourself to start curtailing production to support pricing? Thank you.
Gustavo Duarte Pimenta: So for that particular question on nickel in Brazil, we are not looking at it. And I think, you know, the way we always articulate, and this is the way we think about M&As. As you know, we have a very large endowment at Vale, so our preference has been to develop our own endowment in the commodities that we like. The ones that we operate well and look at opportunities that are win-win type opportunities, such as doing a deal last year, buying 15% of Minas Real with the possibility to go to 30%. So those are the things we like.
Gustavo: Myles, Gustavo here. So for that particular question on nickel in Brazil, we are not looking at those. And I think, you know, the the way we we
Speaker Change: We always articulate, and this is the way we think about M&As. As you know, we have a very large endowment at Bali, so our preference has been to develop our own endowment in the commodities that we like.
Gustavo: The ones that we operate well, and looking at opportunities that are win-win type opportunities.
Gustavo: you've seen us doing a deal last year, buying 15% of Minas Real with the possibility to go to 30%. So those are the things we like, it's highly accretive, and it's right there at what we want to do long term in terms of strategic position.
Marcello Magistrini Spinelli: It's highly accretive, and it's right there in terms of what we want to do long term in terms of, For those particular assets that we just mentioned, we are, we are not, turn to Spinelli for the second question. Thank you, Myles, for a question. So, there are two sides here. The first is the cost curve. If you move lower than $100 to $90, we see 100 million tons outside the market. So, we really see support. We don't see support in the balance to the market below that. You mentioned China.
Gustavo: But for those particular assets that we just mentioned, we are not looking at them.
Gustavo: So I'll turn to Spinelli for the second question.
Spinelli: Thank you, Myles, for a question. So, two sides here. The first...
Spinelli: The Cost Curve
Spinelli: We, if you.
Speaker Change: Move lower than $100 to 90. We see 100 million tons outside the market. So We really see a support. We don't see a support in the balance to the market below that
Speaker Change: On the other hand, in the demand side...
Marcello Magistrini Spinelli: We have a positive eye on China when we see this new normal that we call the Chinese economy's resilience. Again, the new normal is based on manufacturing. It's based on export.
Speaker Change: You mentioned China. We have a positive eye on China when we see this new normal that we call the Chinese economy resiliency.
Speaker Change: Again, the new norm of us is based on manufacturing. It's based on export. We see infrastructure play an important role.
Marcello Magistrini Spinelli: We see infrastructure play an important role, offsetting the decline of properties. Obviously, we see we may pay attention to two main points. That's our concern. And probably your concern, too. That is the level of export, mainly steel goods, the steel directly for us that we see as a temporary part, but today is reaching almost 100 million tons. On the other hand, we have a new geopolitics tie.
Speaker Change: offsetting the decline of properties. Obviously, we see, we may pay attention for two main points. That's our concern, and probably your concern, that is the level of export.
Speaker Change: Mainly the steel goods, the steel directly for us we see as a temporarily part but today is reaching almost 100 million tons.
Speaker Change: On the other hand, we have a new geopolitics tie, so we don't see the same ties of we've been seeing the last year. We have other players, big players, that can support demand from China.
Marcello Magistrini Spinelli: So we don't see the same ties we've been seeing the last year. Now we have other players, big players that can support demand from China. And we need to remind ourselves that ex-China is growing this year 4%, and emerging markets, including Southeast Asia, India, and the Middle East, are growing really fast. So all of this together, we have to pay attention in terms of inflation and how the countries are accepting these new products from China. And it's so far, so good. But we don't see the domestic market declining due to the properties.
Speaker Change: And we need to remind that xChina is growing this year 4%.
Speaker Change: And emerging markets, including Southeast Asia, India, Middle East, is growing really high. So all of this together, we have to pay attention in terms of inflation, how the countries are accepting this.
Speaker Change: New products from China, and it's so far so good, but we don't see the domestic market is declining due to the properties, but all this mix is supporting this high demand, at least for this year, next year, in our analysis.
Carlos de Alba: But all this mix is supporting this high demand, at least for this year and next year, in our analysis. Next question from Carlos de Alba with Morgan Stanley. You can open your microphone.
Speaker Change: Next question from Carlos de Alba with Morgan Stanley . You can open your microphone.
Gustavo Duarte Pimenta: Hello, good morning, everyone. Thank you very much. A couple of questions on my end. One is, if Gustavo gives any updates on the railway concession agreement, similar to Mariana, that is a very important potential catalyst for the stock to move higher. So any of these will be very, very good.
Speaker Change: Hello, good morning everyone. Thank you very much. A couple of questions on my end. One is if Gustavo, any updates on the railway concession agreement, similar to Mariana, that is a very important potential catalyst for the stock to...
Speaker Change: Higher. So any of these will be very, very good. And also, you mentioned that in your prepared remarks that the iron ore cash costs
Carlos Medeiros: And also, you mentioned in your prepared remarks that iron ore cash costs declined significantly or did much better in June or towards the end of the quarter. Can you share with us what the level of cash costs was in June, just to have a sense of the pace in order to model? Carlos, let me do the second one, and then Spinelli will go over the concession renewal discussion. So, it was $22 per ton in June.
Speaker Change: Decline significantly or did much better in June or towards the end of the quarter. Can you share with us what was the level of cash costs in June ? Just to have a sense of the pace in order to model the trend in the second half of the year.
Speaker Change: Carlos, let me do the second one and then Spinelli will go over the concession renewal discussion. So, it was $22 per ton in June . So, April for us, we had some higher.
Carlos Medeiros: So April for us, we had some higher, maintenance costs, which has impact our , , , , , , , , , , , , , , within the guidance range of 21 and a half, with a strong performance in the second half of the, Hi, Carlos. Thank you for... I'm going to take here because I think he lost his mic.
Carlos: maintenance costs which has impact our
Speaker Change: performance in the quarter overall. But looking into June , the performance improved substantially. It was down to 22. That's what makes us feel highly confident in our ability to deliver within the guidance range of 21.5 to 23.
Speaker Change: with a strong performance in the second half of the year.
Speaker Change: Hi Carlos, thank you for...
Speaker Change: I'm going to take here because I think he lost his mic. So Carlos, we continue to evolve. We don't have yet the final
Gustavo Duarte Pimenta: So, Carlos, we continue to evolve. We don't yet have the final resolution to it, uh the conversations are, as we've mentioned in some of our market communication, highly advanced. There are certain regulatory procedures that need to be followed, and so we are waiting for those to be able to settle. We appreciate it's an important topic for our shareholders, and similar to Mariana, we think it's going to get resolved within the next couple of weeks. Next question comes from Leonardo Cor You can open your microphone.
Speaker Change: resolution to it. The conversations are, as we've mentioned, in some of our market communications.
Speaker Change: highly advanced. There are certain regulatory procedures that needs to be followed. And so we are waiting for those to be able to settle. We appreciate it's an important topic for our shareholders. And similar to Mariana, we think it's going to get resolved within the next couple of months. Transcribed by https://otter.ai
Speaker Change: Next question comes from Leonardo Correa with BTG. You can open your microphone.
Leonardo Correa: Hello, everyone. Good morning. Yeah, so I have a couple of questions on my side. The first one is about volumes, right?
Leonardo Correa: Hello, everyone. Good morning.
Leonardo Correa: Yeah, so a couple questions on my side. The first one on volumes, right? So there has
Gustavo Duarte Pimenta: So there has been relevant progress right on iron ore production over the past quarters uh 2024 seems to be in the bag right uh, as Eduardo mentioned in the introduction, it I mean at the upper range of the guidance, which is which is welcome. Looking out to 2025, I understand that you guys can't give precise guidance yet; we're going to have to wait for Vale Day, but given that you have Vargin Grande, which is progressing well, it's supposed to add 15 million tons of additional capacity, and also Capanema, which is also another 15 million tons of capacity.
Speaker Change: relevant progress right on on iron ore production over the past quarters. 2024 seems to be in the bag, right? As Eduardo mentioned in the introduction, it's
Speaker Change: I mean, at the upper range of the guidance, which is, which is welcome, right?
Speaker Change: Looking out to 2025, I understand that you guys can't give precise guidance yet. We're going to have to wait for Valley Day.
Speaker Change: Given that you have Vargin Grande, which is progressing well, it's supposed to add 15 million tons of additional capacity.
Gustavo Duarte Pimenta: Just wanted to hear your thoughts on how production can shape up in 2025 if you have any. Any information I think can help because everything, everything of the story, at least in my view, depends on how production evolves. [inaudible] For Gustavo, still on the cash return topic, right, Gustavo? We still haven't spoken about the theme of cash yet in the conversation, or I think we have spoken less than we have in the past.
Speaker Change: and also Capanema, which is also another 15 million tons of capacity. Just wanted to hear you on how you think production can shape up 2025, if you have any.
Speaker Change: Any information I think can help because everything of the story, at least in my view, depends on how production evolves.
Speaker Change: can evolve from here and obviously that's going to have a big impact on fixed cost dilution. So, trying to understand the direction of volumes is I think essential. The second point
Speaker Change: For Gustavo, still on the cash return topic, right, Gustavo, we still haven't spoken about the theme yet in the conversation, or I think we spoke less than we have in the past.
Gustavo Duarte Pimenta: I mean, it was a good surprise to see the net debt levels. This quarter, given the proceeds from base metals, we're now under $15 billion of expanded net debt, which from hearing you over the past several quarters and years, it seems that close to 20, you were uncomfortable, and Vale was deviating a bit from the average of the industry, right, which was running below Vale on net debt to be that. Now you're getting closer. You're at the low end of the range in terms of targets for you.
Gustavo: I mean, it was a good surprise to see Net Debt's levels.
Speaker Change: Reduce this quarter given the proceeds from base metals, we're now under 15 billion dollars of expanded net debt, which
Speaker Change: From hearing you over the past several quarters and years, it seems that close to 20 you were uncomfortable and Vale was deviating a bit from the average of the industry, right, which was running below Vale on Netdata Vida.
Speaker Change: Now, you're getting closer. You're at the low of the range in terms of targets for you. So my question is, what needs to happen for Vale to move back to paying extraordinary dividends from here? I mean, what do you need to see? You need to see I&R prices rebound or...
Gustavo Duarte Pimenta: So my question is, what needs to happen for Vale to move back to paying extraordinary dividends from here? I mean, what what needs to see? Do you need to see iron ore prices rebound, or would you eventually be looking to increase leverage maybe to the middle of the range? Do you still need San Marco?
Speaker Change: Would you eventually be looking to increase leverage maybe to the middle of the range? Do you still need San Marco? What exactly is weighing on the decision process of Vale not paying the extraordinary?
Leonardo Correa: What exactly is weighing on the decision process of Vale not paying the extraordinary extraordinary? Those are the questions. Thank you very much, guys. Thanks, Leo.
Speaker Change: Those are the questions. Thank you very much, guys.
Gustavo Duarte Pimenta: So I'll cover both. Yeah, look, I think it's fair to say that the trend is upwards, right? So we are bringing those projects online. I mean, we've talked about that at Bali Day, almost 50 million tons. If you sum up the three of them, they are progressing super well within the timeline that we had defined it, so you should expect us to be able to continue to post a positive trend toward that long-term goal of being between 340 and 360 by 2026. Right? So it's fair to assume that
Speaker Change: Thanks, Leo. So, I'll cover both.
Speaker Change: Yeah, look, I think it's fair to say that the trend is upwards, right? So we are bringing...
Speaker Change: those projects online. I mean, we've we've talked about that at Bali Day, almost 50 million tons, if you sum the three of them, they are progressing super well within the timeline that we had defined it. So you should expect us to be able to continue to post a positive trend towards
Speaker Change: That long-term goal of being between 340 to 360.
Speaker Change: by 2026, right? So that's fair to assume that. And certainly the details, as we usually do, we'll provide at Validate. But the trend is certainly positive in that regard. In addition to the positive trend in the stability of our own operations, right, which have been performing well.
Gustavo Duarte Pimenta: And certainly, the details, as we usually do, will provide a quality day. But the trend is certainly positive. In that regard, in addition to the positive trend in the stability of our own operations, which have been lately, so that's, that's a positive. In terms of the extraordinary capital allocation, look, you know the way we think about it, and we are always looking for ways to remunerate our shareholders within the capital allocation framework.
Speaker Change: So that's the positive news.
Zink: with Think.
Zink: In terms of the dividend extraordinary capital allocation, look, you know the way we think about it, and we are always looking for ways.
Zink: to remunerate our shareholders within a very disciplined.
Zink: Capital Location Framework. Certainly there are a few things we want to see first. One is how the second half performs in terms of prices.
Gustavo Duarte Pimenta: Certainly, there are a few things we want to see. First of all, how the second half performs in terms of prices. That's important to see where we're gonna land by your end and also see how, especially Mariana, evolves. And then as we go, we want to have that clarity first before making any further commitments. So those are important topics.
Zink: That's important to see where we're going to land by your end and also see how especially Mariana evolves and as we settle we want to have that clarity first before making any further commitments. So those are important topics.
Caio Ribeiro: That's part of our overall capital framework that we want to see before we commit, and eventually incremental remuneration. Okay, our next question comes from Caio Ribeiro with Bank of America. Caio, you can open your microphone.
Zink: as part of our overall capital location.
Zink: Framework that we want to see before we commit.
Zink: Eventually, incremental remuneration to our shareholders.
Speaker Change: Okay, our next question comes from Caio Ribeiro with Bank of America.
Speaker Change: Caio, you can open your microphone.
Gustavo Duarte Pimenta: Good morning. Thank you for the opportunity. So my first question on going back to prevention guidance for the year, right? Second quarter numbers were quite strong, you know, as you mentioned earlier in the call, your content of attaining that upper end of the guidance, but it even seems feasible that you could surpass that upper end of the guidance. So, my question is, you know, could you revise that guidance up eventually this year?
Caio Ribeiro: Good morning. Thank you for the opportunity. So my first question, and I'm going back to your introduction guidance from the year, right?
Caio Ribeiro: Second quarter numbers were quite strong, you know, as you mentioned earlier in the call, your content of attaining that upper end of the guidance, but
Speaker Change: It even seems feasible that you could surpass that upper end of the guidance. So my question is, you know, could you revise that guidance up eventually this year? You know, what are you looking for in terms of factors, events?
Gustavo Duarte Pimenta: You know, what are you looking for in terms of factors that would give you that confidence to do so? And are these factors more market-related or operational in nature? And is there a particular timing that you would see as more likely to take this decision or not?
Speaker Change: That would give you that confidence to do so. Are these factors events more market-related or operational in nature?
Speaker Change: And these are particular timings that you would see as more likely to take this decision or not.
Gustavo Duarte Pimenta: And then my second question is a follow-up to the ongoing railroad concession renewal negotiations. So, the concession renewal process generally involves an upfront payment, followed by some commitments to deliver investments in the railroad over time. So, I just wanted to see whether you could provide any color once this agreement is struck as to whether that initial payment would be a single installment or several installments, right?
Speaker Change: And then my second question is a follow-up on the ongoing railroad concession renewal negotiations. The concession renewal process generally involves an upfront payment, followed by some commitment to deliver investments in the railroad over time.
Speaker Change: So I just wanted to see, you know, whether you can provide any color, you know, once this agreement is struck, if that initial payment would be a single installment or several installments, right, followed by a Catholic commitment on the railroads over time, you know, or how, you know, we should think about this.
Speaker Change: Thank you.
Unknown Executive: This should be followed by a capital commitment on the railroads over time, you know, or how we should think about this. Thank you. So Caio, thanks for your question, Gustavo here. Yes, I mean, if you look at the year to date, we are performing well and better than last year, in fact, but we wanna see how the next couple of months evolve. And then, you know, if there is an opportunity for us to do better, we'll do it, and we'll certainly update the market as we, you know, feel comfortable updating those numbers.
Speaker Change: So, Caio, thanks for your question. Gustavo here.
Gustavo: Yes, I mean, if you look at year to date, we are performing well and better than last year, in fact. But we want to see how the next couple of months evolve. And then, you know, if there is an opportunity for us to do better, we'll do and we'll...
Tim: We'll certainly update the market as we, as we, you know, feel comfortable to, to update those numbers, but for, for now, Tim is highly focused on delivering what we committed.
Unknown Executive: But for now, Tim is highly focused on delivering what we committed to, and given everything we've seen, performance is super strong. Certainly, the top end of the guidance is highly achievable for us, and there's an opportunity to revisit, which we will do, and it's due. I think in terms of the details of the concession, I think it's early to say those are confidential conversations. We want to keep it within those dialogues.
Tim: And given everything we've seen, performance is super strong, certainly top end of the guidance is highly achievable for us. And if there's an opportunity to revisit, we'll do in its due course.
Speaker Change: I think in terms of the details of the concession I think it's it's early to say those are confidential conversations we want to keep it
Marcello Magistrini Spinelli: But certainly, we're looking at how any settlement fits into our cash flow projections and having the ability to honor those commitments, right? So that's super important in our conversations, but it is something we are still keeping within the negotiation. Next question from Marcio Farigi with Goldman Sachs. You can open your microphone.
Speaker Change: within those dialogues. But certainly, we're looking at how any settlement fits into our cash flow projections and having the ability to
Speaker Change: to honor those commitments, right. So that's super important in our conversations, but it is something we are
Speaker Change: Still keeping within the negotiation team.
Speaker Change: Next question from Marcio Faridi with Goldman Sachs.
Speaker Change: You can open your microphone.
Marcello Magistrini Spinelli: Hi, good morning everyone. Thanks for the time. I have a quick follow-up here. Firstly, I think Spinelli talked a lot about the current situation in China in terms of our premiums and discounts. But I was trying to understand how we should think about it in the long term. There is a clearly, you know, upward trend in terms of demand for high-grade products and agglomerates as well. And obviously, value is definitely going to increase towards that direction as well, right?
Unknown Executive: Hi, good morning everyone. Thanks for the time. I have a quick follow-up here. Firstly, I think Spinelli talked a lot about
Unknown Executive: um the current situation in China in terms of where premiums and discounts are. But I was trying to understand how should we think about it in the long term. There is a clearly um you know upward trend in terms of uh demand for high-grade products and agglomerate as well and obviously value is definitely going um increasing towards that direction as well right. I'm just trying to understand from you I think in longer term uh obviously Simodu coming online you know our numbers you know Fuka parts potentially only 27, 28.
Marcello Magistrini Spinelli: I'm just trying to understand from you, I think in the longer term, obviously, similar to coming online, you know, our numbers, you know, full capacity, potentially only 27, 28, but still significant high-grade volumes. There's obviously a push from the Australians to also develop their own agglomerates with their own finds as well. So how should we think about the balance for premiums in the long term, even in a scenario of growing demand? And maybe on the base metal side, obviously, nickel is better quality from a cost perspective; copper, not so much.
Unknown Executive: but still significant high grade volumes.
Unknown Executive: There is obviously a push from the Australians to also develop their own agglomerators, their own fines as well. So how should they think about the balance for premiums in the long term, even in a scenario of growing demand? And maybe on the base metal side, obviously, nickel, better quality from a cost perspective, copper not so much.
Speaker Change: How should we think about it?
Speaker Change: I think it's been volatile from our sourcing perspective and how much third-party is being used or not, especially in Canada. But now with Susego, also Puma back online, you know, Salobo, how should we think about the momentum for cost of the base metal side, please?
Marcello Magistrini Spinelli: How should we think about it? I think it's been volatile from our sourcing perspective and how much third parties have been used or not, especially in Canada. But now, if Susego is also put back online, you know, Salobo, how should we think about the momentum for cost on the base metal side? Thank you very much.
Marcello Magistrini Spinelli: Thank you, Marcello, for your question. So our long-term strategy remains intact. We strongly believe that we're starting to face segmentation of the market, as you mentioned, with high-grade ores and agglomerated products. If you see today, the pellet feed for high-grade ores or direct production, we may consider that a very strategic material in the world. It's not all about copper, but high-grade ore is very
Speaker Change: Thank you very much.
Speaker Change: Thank you, Marcio, for your question. So our long-term strategy remains intact. We strongly believe that
Speaker Change: We're starting to face segmentation of the market, as you mentioned, with high-grade ores, agglomerated products. If you see today, pellet feed.
Speaker Change: for high-grade ore or direct reduction. We may consider that a very strategic material in the world. It's not all about copper, but high-grade ore is very rare.
Marcello Magistrini Spinelli: And we still see a gap in demand and production in the following years. You mentioned our competitors. They don't have ore that can be concentrated to reach these high-quality ores.
Speaker Change: And we still see a gap in demand and production in the following years. You mentioned our competitors. They don't have ores that can be concentrated to reach these high-quality ores.
Speaker Change: So, direct production is a trend.
Marcello Magistrini Spinelli: So direct production is a trend. Natural gas is a trend. So following this, we see our mega-hub strategy going forward. This announcement today about the mega-hub in Soha is actually the first mega-hub, full mega-hub, already done.
Speaker Change: Natural gas is a trend. So, following this, we see our mega-hubs strategy going forward.
Speaker Change: This announcement today about the Megahub in Soha actually is the first
Marcello Magistrini Spinelli: So we now have to build this capacity to concentrate. But there we have the port, and we have a way to handle the products, and we can produce the agglomerate. So that's the first mega-hub.
Speaker Change: Megahub, full Megahub already done, so we are now, we have to build this capacity to concentrate. But there we have the port, and we have how we can handle the products, and we can produce the agglomerate. So that's the first.
Marcello Magistrini Spinelli: In the U.S., it's moving fast after the grant that we got in the first half. And so far, other regions like Oman or Abu Dhabi and Saudi Arabia are moving really fast. And actually, in a few hours, we're going to receive the Minister of Saudi Arabia to talk about this, the Minister of Industry and Mining. So we're really confident about this trend, and we remain intact in our strategy. Next question from Iuri Pereira with Sintonet.
Speaker Change: In the U.S. it's moving fast after the grant that we got in the first half.
Speaker Change: And so far, other regions like Oman or...
Speaker Change: Abu Dhabi and Saudi is moving really fast and actually in a few hours we're going to receive here the Minister of Saudi to talk about this, Minister of Industry and Mining. So we're really confident about this trend and we remain intact in our strategy.
Speaker Change: Next question from Iuri Pereira with Santander. No, no, no.
Mark Cutifani: We still have to answer the question. Mark Cutifani is going to take the question. Yes, you got me now.
Mark Cutifani: We still have to answer the question. Mark Cutifani is going to take the question.
Mark Cutifani: So thanks for the question. On nickel, the trend should continue to improve with Sudbury mine values continuing to improve. In fact, we're up near a 20% increase as we tracked in June. So the good news in Sudbury is we've got a lot more mine feed. So that's a real positive. I've just come back from Boise Bay.
Mark Cutifani: On nickel, the trend should continue to improve.
Mark Cutifani: With Sudbury, mine values continuing to improve. In fact, we're up near 20% increase as we tracked in the June . So good news in Sudbury is we've got a lot more mine feed. So that's a real positive.
Mark Cutifani: The trends there are very good. We should continue to improve with Ossofuma, getting the second furnace up. So I think the trends are all positive on the nickel front. We've got to keep working hard in Manitoba, getting the place settled, and looking at what we can do to reduce the services that we could probably do from other places. So we're working on all of those fronts. On the copper side, Celebo is the key. It is impacted by grades.
Mark Cutifani: Just came back from Boise Bay, the trends there are very good.
Mark Cutifani: We should continue to improve with Ossip Fermat getting the second furnace up. So I think the trends are all positive.
Mark Cutifani: on the NICOR front. We've got to keep working hard at Manitoba, getting the place settled.
Mark Cutifani: and looking at what we can do to reduce the services that we could probably do from other places. So we're working on all of those fronts. On the copper side, Celebo is the key. It is impacted by grades.
Mark Cutifani: If we can open the pit up a bit more and continue to improve our pit productivity, we can probably do a little bit more on the grade front, but that'll take a little bit of time, and we will depend on our in-pit productivity during the year. And so Sago is about settling post the restart and making sure that we've got the feed mix right during the course of the next 19 months.
Mark Cutifani: If we can open the pit up a bit more and continue to improve our pit productivities.
Mark Cutifani: We can probably do a little bit more on the grade front, but that'll take a little bit of time and will depend on our in-pit productivity during the year. And so SoGo is about settling post the restart and making sure that we've got the feed mix right during the course of the next 18 months. Thanks.
Mark Cutifani: Thanks. Okay, now the next question from Yuri Pereira with Santander. Hi guys. Thanks for taking my question. Could you talk about depletion, not only for Vale but also for the industry? I mean, how many tons do you think are out of the market per year only because of depletion? Thank you very much.
Speaker Change: Okay now next question from Yuri Pereira with Santander.
Unknown Executive: Hi guys, thanks for having my question. Could you talk about depletion, not only for Vale, but also for the industry? I mean, how many tons you think are out of the market per year, only from depletion? Thank you very much.
Unknown Executive: Thank you, Yuri, for your questions. It's a tough question because this is the business. So what I can give you in colors is that globally, we have a decrease in quality. And mainly, our competitors, they are facing, you know, an increase in aluminum. That's a huge impact that will come to the market. In Brazil, I can say from Vale, depletion is something that we had to overcome after Brumadinho.
Speaker Change: Thank you, Yuri, for your questions. It's a tough question because this is the business. So, what I can give you in colors that...
Speaker Change #101: Globally, we have a decrease of quality.
Speaker Change: And mainly in our competitors, they are facing, you know, the increase of alumina. That's a huge impact that will come to the market.
Speaker Change #100: In Brazil, I can say from Vale, the depletion is...
Speaker Change #100: It's something that we we had to overcome after Brumadinho, so we we had to improve our capacity
Marcello Magistrini Spinelli: So we had to improve our capacity, not only to support this decline in the mines, that's a natural thing, but also to grow the capacity to reestablish our level. So globally, if I can give you a number, it's 300 to 400 million tons until 2030. And again, the difficulties to bring back quality put Vale on a very good level to compete in this new world of green energy. Thank you. Next question from Ricardo Monegaglia with Safra. You can open your microphone.
Speaker Change #100: Not only to support this decline of the mines, that's a natural thing, but even...
Speaker Change #100: grow the capacity to re-establish R11.
Speaker Change #100: Globally, if I can give you a number, it's 300 to 400 million tons of CO2.
Speaker Change #100: And again, the difficulties to bring back quality puts value on a very good level to compete in this new world of green energy.
Speaker Change #100: Thank you.
Speaker Change #102: Next question from Ricardo Monegaglia with Safra. You can open your microphone.
Unknown Executive: Hello, everyone. Good morning. I have a couple of quick questions. First, in regards to the lawsuits in the UK and Netherlands, are there any discussions to include such things of some sort in the final agreement from Ariane? Is that a possibility?
Unknown Executive: Hello everyone, good morning. I have a couple of quick questions. First on regards to the lawsuits in the UK and Netherlands.
Unknown Executive: Are there any discussions to include such in some sort in the final agreement from Ariana? Is that a possibility?
Gustavo Duarte Pimenta: The second question is how much Virgin Grande could you produce in 2024? And how do grades in that operation compare with your most recent figures on the quality of FE content? And maybe Mark could just give a quick outlook or his latest impressions on the nickel and copper markets. Thank you. Ricardo Gustavo here, so I'll do the first one, then Carlos will cover the second, and then we can have Mark complementing, so look at the lawsuits they are different, right? So those are different jurisdictions, and, um, the uk and the netherlands as compared to Brazil, we continue to believe that the right uh jurisdiction for this decision to be handled, settled, and resolved is Brazil. This is Brazil.
Speaker Change #103: How much could VAGEN GRANDE produce in 2024 and how does GRADE's net operation compare with your most recent figures on quality of FE content? And maybe if Mark could just give a quick outlook or his latest impressions on nickel and copper markets. Thank you.
Ricardo Monegaglia Neto: Ricardo, Gustavo here. So I'll do the first one, then Carlos will go over the second and then we can have Mark complementing. So, look, on the lawsuit, they are different, right? So those are different jurisdictions than the UK and the Netherlands as compared to Brazil. We continue to believe that the right...
Carlos: for this decision to be handled, settled, and resolved in Brazil.
Carlos Medeiros: And we are working towards that outcome, as I mentioned in my first answer today, to be optimistic that we will be able to resume those conversations and discussions here. Hello Ricardo, this is Carlos Medeiros speaking. On Vargem Grande, we expect to produce one million tons in the remainder part of the year and should be a normal concentrated product, 62% iron. Mark.
Carlos: And we are working towards that outcome, as I mentioned in my first answer today. We continue to be optimistic that we will be able to resolve those conversations and discussions here in Brazil.
Carlos: Hello Ricardo, this is Carlos Medeiros speaking, on Vargem Grande we expect to produce one million tons in the remainder part of the year, and should be a normal concentrated product, 62% iron.
Carlos: Mark
Mark Cutifani: All right, I think the world, as we know, is short copper. Demand still looks pretty strong. There's been a little bit of a slowing of EV demand, but I don't think that's significant in the scheme of things. I think all other markets are pretty strong.
Speaker Change #105: All good. Look, I think the world, as we know, is short-cut. The demand still looks pretty strong. A little bit of a slowing of EV demand, but I don't think that's
Mark Cutifani: So we believe copper will continue to play strongly. And I think the activity we're seeing across the industry in terms of interest in copper assets is really concerning how strong I think the producers are. We're the same.
Speaker Change #105: significant in the scheme of things. I think all other markets are pretty strong. So we believe COPPA will continue to
Speaker Change #105: to play strongly and I think the activity we're seeing across the industry.
Speaker Change #105: in terms of interest in copper assets is really concerning how strong I think the producers are. We're the same. We've got some opportunities to improve. North Atlantic should also do a little bit better on copper next year, but I think I'm pretty positive and I think the risk is to the upside. Thanks for that.
Mark Cutifani: We've got some opportunities to improve. North Atlantic should also do a little bit better on copper next year, but I think it's pretty positive, and I think the risk is to the upside. Next question from Amos Fletcher with Barkley. You can open your microphone.
Speaker Change #105: Next question from Amos Fletcher with Barclays.
Speaker Change #106: You can open your microphone.
Amos Fletcher: Yeah, morning, guys. Thanks for the opportunity. My first question was just on working capital. I was just wanting to ask about how big of a release we can potentially expect in terms of working capital in H2, as Gustavo was mentioning. And then the second question was on nickel production and the guidance. The bottom end of the guidance implies 40% higher production in H2 versus H1. I just wanted to ask what are the main drivers for delivering that big recovery that we should be expecting? All right. Thanks very much. So Amos, Amos, this is Gustavo.
Amos Fletcher: Yeah, morning, guys. Thanks for the opportunity. My first question was just on working capital. I was just wanting to ask about how big of a release we can potentially expect in terms of working capital in H2.
Gustavo: as Gustavo was mentioning.
Speaker Change #108: And then the second question was on nickel production and the guidance. The bottom end of the guidance implies 40% higher production in H2 versus H1. I just wanted to ask what are the main drivers for delivering that big recovery that we should be expecting? All right, thanks very much.
Gustavo Duarte Pimenta: Look, working capital. You know, I think there is a possibility for it to revert, if not all of it, but most of it, as we highlighted in that chart. So I think we are looking for a stronger Q3. I think that's what you should be saying.
Speaker Change #108: So Amos, Amos, this is Gustavo, working capital, um...
Speaker Change #109: You know, I think there is a possibility to revert, if not all of it, but most of it, as we highlighted in that chart. So I think we are looking for a stronger Q3. I think that's what you should be seeing.
Mark Cutifani: On nickel production, the good news, Amos, is that Sudbury has got quite a bit of ore in front of the mill, something we haven't had for a long time. So that's positive in terms of coming out of the maintenance. So probably 10,000 to 15,000 tonne pickup there. Thompson should do better with a bit of production held back through Long Harbour maintenance; there's probably three there. Boise Bay again impacted by Long Harbour maintenance, so there's probably another three or four there, and we've got a little bit more that we can squeeze through on the third parties because of the other maintenance that we've had and smelters.
Amos Fletcher: On nickel production?
Amos Fletcher: The good news, Amos, is that Sudbury...
Amos Fletcher: There's got quite a bit of ore in front of the mill, something we haven't had for a long time, so that's positive in terms of coming out of the maintenance. Probably 10,000 to 15,000 tonne pickup there.
Speaker Change #110: Thompson should do better.
Speaker Change #110: with a bit of production held back through Long Harbour Maintenance, there's probably three there.
Speaker Change #110: Boise Bay again impacted by long harbour maintenance, so there's probably another three or four there.
Speaker Change #110: And we've got a little bit more that we can squeeze through on the third parties because of the other maintenance that we've had in smelters.
Mark Cutifani: So I think overall pretty strong and obviously on subpoena should be a stronger contributor, probably at least 10, based on the bringing up of the furnace rebuild. So quite a few positives there, the only negative might be, well, will be the deconsolidation of PTVI, I think there's about two there, so net, we should go from about what was it 67 to probably a pickup of around 30 in the second half, that's what we're assuming at the moment, that's how it looks. We're pretty comfortable with that at the moment. Thank you.
Speaker Change #110: So I think overall pretty strong and obviously Ansa Puma should be a stronger contributor, probably at least 10.
Speaker Change #110: Based on the
Speaker Change #110: bringing up the determinism rebuild. So quite a few positives there, but the only negative...
Speaker Change #110: might be, well, will be the deconsolidation of PTVI. I think there's about two there. So net, net, we should go from about, what was it, 67 to probably a pickup of around 30 in the second half. That's what we're assuming at the moment. That's how it looks. We're pretty comfortable with that at the moment.
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. Okay, thank you.
Speaker Change #110: Thank you. 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: Well, as I mentioned in my initial remarks, the first half of the year is over, but the best is yet to come. I think we're really confident in delivering on our strategic guidance. I think safety is one of the things we're most proud of, and we are truly all extremely well on that, as I mentioned before.
Eduardo de Salles Bartolomeo: Okay, thank you. Well, as I mentioned in my initial remarks, the first half of the year is over. The best is yet to come. I think we're...
Eduardo de Salles Bartolomeo: really confident on delivering on our strategic guidance. I think safety is one of the things we're most proud of and we are truly all about it.
Eduardo de Salles Bartolomeo: I think iron ore cost is going to come to its place where Gustavo mentioned, and production for sure is in our hands. The things about our direct production, as Gustavo mentioned, are the key takeaways. It's coming to reality, as Spinelli mentioned; we announced the Oman concentration plant. One thing that makes me very happy is the contract of our new CEO at Base Metals. Sean is going to do a great job and help Mark do the transformation that is needed there.
Gustavo: extremely well on that as I mentioned before I think on iron ore cost is going to come to its to its place where Gustavo mentioned and production for sure it's on our hands
Benedict: The things on our direct production, as Gustavo mentioned, as a key takeaway, is coming to reality. As Spinelli mentioned, we announced the Oman...
Speaker Change #112: Concentration Plant. One thing that makes me very happy is the contract of our new CEO at
Speaker Change #115: Based Metals. Sean is going to do a great job, help Mark do the transformation that is needed there. And as you said, Gustavo has mentioned in his final remarks that we are always committed to create value.
Eduardo de Salles Bartolomeo: And as you said, Gustavo mentioned in his final remarks that we are always committed to creating value. So I will end, like always. I have never been so optimistic, and that's why I'm optimistic. We are delivering on what we are, how can I say that, promising to the market, and that makes us happy. And, of course, I'd like to thank our employees, our team for that. Okay. And you, of course, for having the interest and talking to us on the next call. Vale's conference is now concluded; we thank you for your participation and wish you a nice day.
Speaker Change #113: So I will end, like always, I have never been so optimistic, and that's why I'm optimistic. We are delivering on what we are, how can I say that?
Speaker Change #113: Promising to the market and that make us happy and now of course I'd like to thank our employees, our team for that. Okay and you of course for having the interest and talking to us. Until the next call.
Speaker Change #114: Vale's conference is now concluded. We thank you for your participation and wish you a nice day.