Q2 2026 Vale SA Earnings Call

July 31, 2026

Speaker #3: Good morning, ladies and gentlemen. Welcome to Vale's second quarter 2026 earnings call. This conference is being recorded, and the replay will be available on our website at vale.com.

[Company Representative] (Vale): Good morning, ladies and gentlemen. Welcome to Vale's Q2 2026 Earnings Call. This conference is being recorded, and the replay will be available on our website at vale.com. The presentation is also available for download in English and Portuguese from our website. To listen to the call in Portuguese, please press the globe icon on the lower right side of your Zoom screen, and choose to enter the Portuguese room. Select mute original audio so that you won't hear the English version in the background. 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.

Operator: Good morning, ladies and gentlemen. Welcome to Vale's Q2 2026 Earnings Call. This conference is being recorded, and the replay will be available on our website at vale.com. The presentation is also available for download in English and Portuguese from our website. To listen to the call in Portuguese, please press the globe icon on the lower right side of your Zoom screen, and choose to enter the Portuguese room. Select mute original audio so that you won't hear the English version in the background. 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 #3: 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.

Speaker #3: And then choose to enter the Portuguese room. Then select "Mute original audio" so that you won't hear the English version in the background. We would like to inform you that all participants are currently not in listen-only mode for the presentations.

Speaker #3: 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 Vale's expectations about future events or results, encompassing those matters listed in the respective presentation.

[Company Representative] (Vale): 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. We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. To obtain information on factors that may lead to results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission, the Brazilian Comissão de Valores Mobiliários, and in particular, the factors discussed under forward-looking statements and risk factors in Vale's Annual Report on Form 20-F. With us today are Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr. Rogério Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Shaun Usmar, CEO of Vale Base Metals.

Operator: 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. We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. To obtain information on factors that may lead to results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission, the Brazilian Comissão de Valores Mobiliários, and in particular, the factors discussed under forward-looking statements and risk factors in Vale's Annual Report on Form 20-F. With us today are Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr. Rogério Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Shaun Usmar, CEO of Vale Base Metals.

Speaker #3: We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. To obtain information on factors that may lead to results different from those forecast by Vale, please consult the reports Vale files with the U.S.

Speaker #3: Securities and Exchange Commission, the Brazilian Comissão de Valores Mobiliários, and, in particular, the factors discussed under forward-looking statements and risk factors in Vale's annual report on Form 20-F.

Speaker #3: With us today are: Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr. Rogério Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Xoán Osmar, CEO of Vale Base Metals.

Speaker #3: Now I will turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin.

[Company Representative] (Vale): Now I will turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin.

Operator: Now I will turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin.

Speaker #4: Hello, everyone, and thank you for joining Vale's second quarter 2026 conference call. First, I would like to briefly reinforce our strategic direction and ambition to create superior value for our shareholders.

Gustavo Pimenta: Hello, everyone, thank you for joining Vale's Q2 2026 conference call. First, I would like to briefly reinforce our strategic direction and ambition to create superior value for our shareholders. In this context, we have been consistently focused on our key priorities of operational excellence, disciplined capital allocation, and the advancement of highly accretive growth projects, particularly in copper and iron ore. Our objective is to build a business that is resilient through the cycle, competitive under different market environments, and well-positioned to deliver sustainable returns. Despite the uncertainties that continue to shape the global landscape, I'm very confident about Vale's future. What gives me that confidence it's not only the quality of our assets, but also the consistency in which our teams are executing and delivering results.

Speaker #4: In this context, we have consistently focused on our key priorities: operational excellence, disciplined capital allocation, and the advancement of highly accredited growth projects, particularly in copper and iron ore.

Speaker #4: Our objective is to build a business that is resilient through the cycle, competitive under different market environments, and well-positioned to deliver sustainable returns. Despite the uncertainties that continue to shape the global landscape, I am very confident about Vale's future.

Speaker #4: And what gives me that confidence is not only the quality of our assets, but also the consistency with which our teams are executing and delivering results.

Speaker #4: Based on the strong performance in the first half of 2026, yesterday our Board of Directors approved $1.7 billion in dividends and interest on capital to be paid in September. The Board also approved the extension of our share buyback program for up to 2.3% of our outstanding shares.

Gustavo Pimenta: Based on the strong performance in the H1 2026, yesterday our board of directors approved $1.7 billion in dividends and interest on capital to be paid in September. The board also approved the extension of our share buyback program for up to 2.3% of our outstanding shares, reflecting our positive view on Vale's long-term outlook and our continued commitment to delivering superior returns to our shareholders. Let me now turn to the highlights of the Q2 performance. We once again delivered solid year-on-year results across all commodities, reinforcing our confidence in achieving all production guidances for the year. In the particular case of VBM, we have now narrowed the guidance ranges for copper and nickel, implying higher midpoints on the back of continued strong operational performance in both businesses.

Speaker #4: Reflecting our positive view on Vale's long-term outlook and our continued commitment to delivering superior returns to our shareholders. Let me now turn to the highlights of the second quarter performance.

Speaker #4: We once again delivered solid year-on-year results across all commodities, reinforcing our confidence in achieving all production guidances for the year. In the particular case of VBM, we have now narrowed the guidance ranges for copper and nickel, implying higher midpoints, on the back of continued strong operational performance in both businesses.

Speaker #4: Starting with iron ore in Q2, production reached the highest second-quarter level since 2018, supported by the continued ramp-up of the Capanema and Vargem Grande projects, as well as the record output at SLMND.

Gustavo Pimenta: Starting with iron ore in Q2, production reached the highest Q2 level since 2018, supported by the continued ramp-up of the Capanema and Vargem Grande projects, as well as the record output at S11D. Sales volumes also increased by 3% year-on-year. In copper, we delivered our strongest Q2 production in the last nine years with a 6% year-on-year increase, while sales volumes grew 10% in the same period. This growth was driven by record Q2 output at Salobo and a very strong performance at Sossego. In nickel, we also achieved solid results. Production increased by 4% year-on-year, while sales volume grew 7%, supported by additional volumes from Onça Puma and Voisey's Bay. Looking ahead, I would like to highlight two important milestones at Serra Sul that will further enhance the performance of this world-class asset.

Speaker #4: Sales volumes also increased by 3% year-on-year. In copper, we delivered our strongest Q2 production in the last 9 years, with a 6% year-on-year increase, while sales volumes grew 10% in the same period.

Speaker #4: This growth was driven by record second-quarter output at Salobo and a very strong performance at Sossiego. In nickel, we also achieved solid results. Production increased by 4% year-on-year, while sales volume grew 7%, supported by additional volumes from Ancepuma and Voices Bay.

Speaker #4: Looking ahead, I would like to highlight two important milestones at Serra Sul that will further enhance the performance of this world-class asset. First, I am very pleased to announce the startup of the Serra Sul Plus 20 project, with the commissioning of SLMND's second long-distance conveyor belt in July.

Gustavo Pimenta: First, I'm very pleased to announce the startup of the Serra Sul Plus 20 project with the commissioning of S11D's second long-distance conveyor belt in July. This project, which also includes mine and plant expansions, will provide greater operational flexibility to the site. Second, in Q4, we expect to start commissioning the compact crusher project, which is designed to address operational constraints related to jaspilite ore at the Serra Sul mine, helping improve production consistency and strengthen asset reliability. Together, these projects will deliver 20 million tons of incremental capacity at Serra Sul, strengthening Vale's competitiveness and expanding our high-grade product portfolio. Turning now to our copper growth story. Last year, we launched the New Carajás Program with the vision of accelerating the development of strategic projects in one of the world's most attractive mineral provinces.

Speaker #4: This project, which also includes mine and plant expansions, will provide greater operational flexibility to the site. Second, in the fourth quarter, we expect to start commissioning the compact crusher project, which is designed to address operational constraints related to Jasperlite ore at the Serra Sul mine.

Speaker #4: Helping improve production consistency and strengthen asset reliability. Together, this project will deliver 20 million tons of incremental capacity at Serra Sul, strengthening Vale's competitiveness and expanding our high-grade product portfolio.

Speaker #4: Turning now to our copper growth story. Last year, we launched the new Carajás program, with the vision of accelerating the development of strategic projects in one of the world's most attractive mineral provinces.

Speaker #4: Today, I am pleased to announce the earlier startup expected for the Bacaba project. Construction is progressing ahead of schedule, and as a result, Bacaba is now planning to begin commissioning in Q3 2027.

Gustavo Pimenta: Today, I'm pleased to announce the earlier startup expected for the Bacaba project. Construction is progressing ahead of schedule, and as a result, Bacaba is now planning to begin commissioning in Q3 2027, significantly ahead of the original H1 2028 schedule. With 50,000 tons capacity, Bacaba is the first of six accretive growth projects that will support our ambition to double copper production to approximately 700,000 tons per year by 2035. Our second project, the Salobo coarse particle flotation, is expected to be formally announced soon and represents another important step in unlocking the potential of our unique endowment. As we continue to execute our project portfolio with below-average capital intensity and compelling rates of returns, we believe investors will increasingly recognize the significant upside embedded in our copper platform.

Speaker #4: Significantly ahead of the regional first-half 2028 schedule. With 50,000 tons of capacity, Bacaba is the first of six accredited growth projects that will support our ambition to double copper production to approximately 700,000 tons per year by 2035.

Speaker #4: Our second project, the Salobo Coast Portico flotation, is expected to be formally announced soon and represents another important step in unlocking the potential of our unique endowment.

Speaker #4: As we continue to execute our project portfolio with below-average capital intensity and compelling rates of return, we believe investors will increasingly recognize the significant upside embedded in our copper platform.

Speaker #4: Before moving on to our financial performance, I would like to briefly talk about innovation, a key enabler of Vale's long-term strategy. As we have discussed throughout this presentation, our operational results and growth projects are the outcome of consistent execution and a relentless focus on performance.

Gustavo Pimenta: Before moving on to our financial performance, I would like to briefly talk about innovation, a key enabler of Vale's long-term strategy. As we've discussed throughout this presentation, our operational results and growth projects are the outcome of consistent execution and a relentless focus on performance. Having said that, we continue to focus on innovation and on developing new technologies that increase our efficiency, enhance safety, reduce environmental impact, and strengthen our competitiveness. This is our vision for the mining of the future, a strategic agenda built around five key pillars outlined here in this slide that will help shape Vale's journey. To provide greater transparency on this agenda, we recently published Vale's first research, development, and innovation report, showcasing several initiatives that are already transforming the way we operate.

Speaker #4: Having said that, we continue to focus on innovation and on developing new technologies that increase our efficiency and enhance safety, reduce environmental impact, and strengthen our competitiveness.

Speaker #4: This is our vision for the mining of the future, a strategic agenda built around five key pillars. Outlined here in this slide. That will help shape Vale's journey.

Speaker #4: To provide greater transparency on this agenda, we recently published Vale's first Research, Development, and Innovation Report, showcasing several initiatives that are already transforming the way we operate.

Speaker #4: Among them, I would highlight the progress we are making with the model plant in Itabira and our autonomous mining initiatives at Brucutu, Capanema, and Serra Norte.

Gustavo Pimenta: Among them, I would highlight the progress we are making with the model plant in Itabira and our autonomous mining initiatives at Brucutu, Capanema, and Serra Norte, which demonstrate how innovation is being translated into tangible operational gains. I encourage everyone to explore this report and learn more about how innovation supports our strategic agenda and creates opportunities across the businesses. With that, I'll hand over to Marcelo Bacci to discuss our financial performance. I'll return later for my closing remarks before the Q&A session. Marcelo, please.

Speaker #4: Which demonstrate how innovation is being translated into tangible operational gains. I encourage everyone to explore this report and learn more about how innovation supports our strategic agenda and creates opportunities across the businesses.

Speaker #4: With that, I'll hand over to Marcelo Bacci to discuss our financial performance. I will return later for my closing remarks before the Q&A session.

Speaker #4: Marcelo, please.

Speaker #1: Thanks, Gustavo, and good morning, everyone. In the second quarter of 2026, our perform may be done reached 4.1 billion dollars, representing a strong 19% increase year-on-year, despite continued pressure from external cost factors.

Marcelo Bacci: Thanks, Gustavo, and good morning, everyone. In Q2 2026, our pro forma EBITDA reached $4.1 billion, representing a strong 19% increase year on year, despite continued pressure from external cost factors. This performance reflects another quarter of solid execution across our businesses, supported by higher volumes, improved commercial performance, and better price realization. At Vale Base Metals, EBITDA totaled $1.3 billion, increasing nearly 80% year on year. This performance was driven by stronger realized prices and solid operational execution. In iron ore, EBITDA exceeded $3 billion, supported by higher realized prices and increased sales volumes. These positive effects more than compensated for the higher freight costs and the appreciation of the BRL. Overall, this quarter's numbers demonstrate the resilience of our business and our ability to consistently deliver a solid operational performance, even in a more challenging external environment.

Speaker #1: This performance reflects another quarter of solid execution across our businesses, supported by higher volumes, improved commercial performance, and better price realization. At Vale Base Metals, EBITDA totaled 1.3 billion dollars, increasing nearly 80% year-on-year.

Speaker #1: This performance was driven by stronger realized prices and solid operational execution. In our honor, EBITDA exceeded $3 billion, supported by higher realized prices and increased sales volumes.

Speaker #1: This positive effect more than compensated for the higher freight costs and the appreciation of the Brazilian real. Overall, this quarter's numbers demonstrate the resilience of our business and our ability to consistently deliver a solid operational performance, even in a more challenging external environment.

Speaker #1: Now, let me turn to the details of our cost performance. In the quarter, our C1 cash cost, excluding third-party purchases, was $24.10 per ton, an increase of 9% year-on-year.

Marcelo Bacci: Now let me turn to the details of our cost performance. In the quarter, our C1 cash cost, excluding third-party purchases, was $24.1 per ton, an increase of 9% year on year. The all-in cost reached $61.6 per ton, 18% higher year on year. The higher costs were mainly driven by external factors. The appreciation of the BRL impacted both C1 costs and expenses, while diesel and freight costs also increased during the quarter. As I mentioned in our last call, while external variables can introduce volatility into our cost structure, they also reinforce the importance of our relentless focus on productivity and operational excellence. The results of our efficiency program, combined with higher production from low-cost assets such as S11D, demonstrate that we're moving in the right direction.

Speaker #1: The all-in cost reached $61.6 per ton, 18% higher year-on-year. The higher costs were mainly driven by external factors. The appreciation of the BRL impacted both C1 costs and expenses, while diesel and freight costs also increased during the quarter.

Speaker #1: As I mentioned in our last call, while external variables can introduce volatility into our cost structure, they also reinforce the importance of our relentless focus on productivity and operational excellence.

Speaker #1: The results of our efficiency program, combined with higher production from low-cost assets such as S11D, demonstrate that we're moving in the right direction. Together, these initiatives contributed to 50 cents per ton reduction in C1 costs year-on-year, strengthening our structural competitiveness throughout the cycle.

Marcelo Bacci: Together, these initiatives contributed to a $0.50 per ton reduction in C1 costs year on year, strengthening our structural competitiveness throughout the cycle. In addition, our hedging program helped reduce the impact of our external variables in our results. Our Brent oil hedging program resulted in approximately $100 million benefit, equivalent to $1.60 per ton. Considering this effect, our all-in costs were $60 per ton. If oil price volatility persists, this strategy will continue to provide cash flow support in H2 2026. Given the increased volatility in external variables, we have decided to update our 2026 iron ore C1 and all-in cost guidance. The revised guidances reflect an average BRL exchange rate of 5.13 compared to 5.60 in our previous guidance, as well as an average Brent oil price of $86 per barrel versus $68 previously assumed.

Speaker #1: In addition, our hedging program helped reduce the impact of external variables in our results. Our Brent Oil hedging program resulted in approximately $100 million benefit, equivalent to 1.6 dollars per effect, our all-in costs were $60 per ton.

Speaker #1: If oil price volatility persists, this strategy will continue to provide cash flow support and a second half of 2026. Given the increased volatility in external variables, we have decided to update our 2026 R&R C1 and all-in cost guidance.

Speaker #1: The revised guidances reflect an average BRL exchange rate of 5.13, compared to 5.60 in our previous guidance, as well as an average Brent oil price of $86 per barrel, versus $68 previously assumed.

Speaker #1: As a result, we now expect C1 cash costs ex third-party purchases, to range between $22.5 and $23.5 per ton in 2026, compared with our previous guidance of $20 to $21.5 per ton.

Marcelo Bacci: As a result, we now expect C1 cash costs, ex third-party purchases, to range between $22.50 and $23.50 per ton in 2026, compared with our previous guidance of $20 to $21.50 per ton. Roughly 70% of this increase is explained by the combined impact of external effects such as FX and diesel costs. In the same way, we're also updating the all-in cost guidance to $58 to $62 per ton, compared with the previous range of $52 to $56 per ton, with around $5 per ton related to oil, FX, and iron ore premiums. Despite this more challenging external backdrop, we remain fully focused on the variables within our control. Our teams continue to advance a robust pipeline of efficiency and productivity initiatives across the businesses. These efforts are targeting further gains in asset utilization, maintenance optimization, supply chain efficiency, and procurement.

Speaker #1: Roughly 70% of this increase is explained by the combined impact of external effects such as FX and diesel costs. In the same way, we're also updating the all-in cost guidance to $58 to $62 per ton, compared with the previous range of $52 to $56 per ton.

Speaker #1: With around $5 per ton related to oil, FX, and R&R premiums. That said, despite this more challenging external backdrop, we remain fully focused on the variables within our control.

Speaker #1: Our teams continue to advance a robust pipeline of efficiency and productivity initiatives across the businesses. These efforts are targeting further gains in asset utilization, maintenance optimization, supply chain efficiency, and procurement.

Speaker #1: While these initiatives do not fully offset the impact of FX and oil prices in the short term, they are essential to improving our structural cost position over time, combined with the ramp-up of our low-cost assets.

Marcelo Bacci: While these initiatives do not fully offset the impact of FX and oil prices in the short term, they are essential to improving our structural cost position over time. Combined with the ramp-up of our low-cost assets, they will continue to strengthen our competitiveness throughout the cycle and support long-term value creation for our shareholders. Turning now to Vale Base Metals. Both copper and nickel delivered another quarter of strong cost performance, reflecting solid operational execution across our assets and a more supportive market environment. In copper, all-in costs reached -$300 per ton, an improvement of $1.7 thousand per ton year on year, once again in negative territory. In nickel, all-in costs declined 17% year on year, reaching $10.3 thousand per ton. Looking ahead, we expect Vale Base Metals to continue delivering operational improvements beyond the contribution from by-product prices.

Speaker #1: They will continue to strengthen our competitiveness throughout the cycle and support long-term value creation for our shareholders. Turning now to Vale Base Metals, both copper and nickel delivered another quarter of strong cost performance, reflecting solid operational execution across our assets and a more supportive market environment.

Speaker #1: In copper, all-in costs reached a negative $300 per ton, an improvement of 1.7 thousand dollars per ton year-on-year, once again in negative territory. In nickel, all-in costs declined 17% year-on-year, reaching 10.3 thousand dollars per ton.

Speaker #1: Looking ahead, we expect Vale Base Metals to continue delivering operational improvements beyond the contribution from by-product prices. As a result, we're lowering our cost guidance for the year.

Marcelo Bacci: As a result, we're lowering our cost guidance for the year. For copper, we now expect all-in costs to range between zero and $500 per ton compared to our previous guidance of $1,000 to $1,500 per ton. For nickel, we now expect all-in costs to range between 10 and $11,500 per ton compared to our previous guidance of 12 to $13,500 per ton. These revised ranges reflect the operational progress we continue to deliver and reinforce the value creation potential for Vale Base Metals. With that, let me move on to our cash generation. Our free cash flow totaled $1.5 billion in the quarter, supported by our strong EBITDA performance and by the settlement of our currency and oil hedging programs, which contributed a cash impact of $+337 million.

Speaker #1: For copper, we're now expect all-in costs to range between 0 and $500 per ton, compared to our previous guidance of 1 to 1.5 thousand dollars per ton.

Speaker #1: For nickel, we now expect all-in costs to range between $10,000 and $11,500 per ton, compared to our previous guidance of $12,000 to $13,500 per ton.

Speaker #1: This revised range reflects the operational progress we continue to deliver and reinforces the value creation potential for Vale Base Metals. With that, let me move on to our cash generation.

Speaker #1: Our free cash flow totaled $1.5 billion in the quarter, supported by our strong EBITDA performance and by the settlement of our currency and oil hedging programs.

Speaker #1: Which contributed a positive cash impact of $337 million. Capex totaled $1.1 billion, reflecting our continued capital discipline and the benefits of the efficiency initiatives we have implemented across the businesses.

Marcelo Bacci: CapEx totaled $1.1 billion, reflecting our continued capital discipline and the benefits of the efficiency initiatives we have implemented across the businesses. As Gustavo mentioned, consistent with our commitment to shareholder returns, our board of directors approved $1.7 billion in dividends and interest on capital to be paid this September. In addition, we bought back $140 million in shares during the quarter, bringing total repurchases to $214 million year to date. Building on this track record, our board also approved a new share buyback program of up to 100 million shares over the next 18 months, equivalent to 2.3% of our outstanding shares. These decisions reflect our confidence in the strength of our business, our ability to generate cash throughout the cycle, and our continued commitment to creating value for shareholders. With that, let's move to the next slide.

Speaker #1: As Gustavo mentioned, consistent with our commitment to shareholder returns, our Board of Directors approved $1.7 billion in dividends and interest on capital, to be paid in September.

Speaker #1: In addition, we bought back $140 million in shares during the quarter, bringing total repurchases to $214 million year-to-date. Building on this track record, our Board also approved a new share buyback program of up to 100 million shares over the next 18 months, equivalent to 2.3% of our outstanding shares.

Speaker #1: This decision reflects our confidence in the strength of our business, our ability to generate cash throughout the cycle, and our continued commitment to creating value for shareholders.

Speaker #1: With that, let's move to the next slide. Driven by our solid cash flow generation, expanded net debt closed the quarter at $16.7 billion, a reduction of over $1.1 billion from the previous quarter.

Marcelo Bacci: Driven by our solid cash flow generation, expanded net debt closed the quarter at $16.7 billion, a reduction of over $1.1 billion from the previous quarter. We expect expanded net debt to continue converging toward our reference level of $15 billion over the coming quarters. As we approach that level, we create additional flexibility for shareholder remuneration while maintaining the financial discipline and balance sheet strength. Before handing back the call to Gustavo, I would like to reinforce that we remain focused on strengthening our competitiveness across all of our businesses. Despite the external headwinds facing the industry, our priorities remain unchanged. We continue to advance productivity and efficiency initiatives, improve asset performance, optimize our cost structure, and maintain a disciplined approach to capital allocation.

Speaker #1: We expect expanded net debt to continue converging toward our reference level of $15 billion over the coming quarters. As we approach that level, we create additional flexibility for shareholder remuneration, while maintaining financial discipline and balance sheet strength.

Speaker #1: Before handing the call back to Gustavo, I would like to reinforce that we remain focused on strengthening our competitiveness across all of our businesses.

Speaker #1: Despite the external headwinds facing the industry, our priorities remain unchanged. We continue to advance productivity and efficiency initiatives, improve asset performance, optimize our cost structure, and maintain a disciplined approach to capital allocation.

Speaker #1: Together, these actions are strengthening Vale's position through the cycle, supporting consistent cash generation, and reinforcing our ambition to lead value creation in the mining industry.

Marcelo Bacci: Together, these actions are strengthening Vale's position through the cycle, supporting consistent cash generation, and reinforcing our ambition to lead value creation in the mining industry. Gustavo, please.

Speaker #1: Gustavo, please.

Speaker #2: Thanks, Marcelo. Before we move to the Q&A session, let me go over the key takeaways from today's call. First, we continue to deliver strong operational performance across our businesses.

Gustavo Pimenta: Thanks, Marcelo. Before we move to the Q&A session, let me go over the key takeaways from today's call. First, we continue to deliver a strong operational performance across our businesses. Achieving record production and higher sales volumes, reinforcing our confidence in meeting our guidances for the year. Second, we are accelerating our pipeline of high-return growth projects with the start-up of Serra Sul +20 project and the earlier start-up expected for Bacaba. This demonstrates our ability to advance initiatives that will support Vale's growth and generate significant value to our shareholders. Third, we remain focused on enhancing cost competitiveness across the company by improving operational reliability, increasing efficiency, and strengthening resilience through the cycle. At Vale Base Metals, we continue to capture the benefits of the carve-out. Operational performance is improving consistently, delivering gains not only in production but also in costs.

Speaker #2: Achieving record production and higher sales volumes reinforces our confidence in meeting our guidance for the year. Second, we are celebrating our pipeline of high-return growth projects.

Speaker #2: With the startup of the SahaSu Plus 20 project and the earlier startup expected for Bacaba, these demonstrate our ability to advance initiatives that will support Vale's growth and generate significant value for our shareholders.

Speaker #2: Third, we remain focused on enhancing cost competitiveness across the company by improving operational reliability, increasing efficiency, and strengthening resilience through the cycle. At Vale Base Metals, we continue to capture the benefits of the carve-out.

Speaker #2: Operational performance is improving consistently, delivering gains not only in production but also in costs. I'm very confident that we'll continue to make meaningful progress over the coming quarters as we build a leading global energy transition metals business.

Gustavo Pimenta: I'm very confident that we will continue to make meaningful progress over the coming quarters as we build a leading global energy transition metals business. Fourth, we continue to advance our Mining of the Future agenda, leveraging innovation and technology to improve safety, productivity, and sustainability while creating new opportunities across the businesses. Finally, our commitment to shareholder returns remain unchanged. Supported by solid operational results and a strong balance sheet, we continue to allocate capital responsibly through dividends and share buybacks while also investing in Vale's future. Now let's open for the Q&A session. Thank you.

Speaker #2: Fourth, we continue to advance our "Mining of the Future" agenda, leveraging innovation and technology to improve safety, productivity, and sustainability, while creating new opportunities across the business.

Speaker #2: And finally, our commitment to shareholder returns remains unchanged. Supported by solid operational results and a strong balance sheet, we continue to allocate capital responsibly through dividends and share buybacks, while also investing in Vale's future.

Speaker #2: Now, let's open the floor for the Q&A session. Thank you.

Speaker #3: 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.

[Company Representative] (Vale): We are going to start the question and answer section of the call. If you have a question, please click on the raise hand button. If your question has already been answered, you can leave the queue by clicking on the lower hand button. Please ask your question in English and limit your questions to two at a time. Our first question is from Rodolfo Angele from J.P. Morgan. You can open your microphone.

Operator: We are going to start the question and answer section of the call. If you have a question, please click on the raise hand button. If your question has already been answered, you can leave the queue by clicking on the lower hand button. Please ask your question in English and limit your questions to two at a time. Our first question is from Rodolfo Angele from JPMorgan. You can open your microphone.

Speaker #3: If your question has already been answered, you can leave the queue by clicking on the lower hand button. Please ask your question in English and limit your questions to two at a time.

Speaker #4: Our first question is from Rodolfo Angelis from JP Morgan. You can open your microphone.

Speaker #5: Okay, thank you very much. For the presentation, so my two questions are the following. First, on the iron ore business, we noticed that the company was very successful in its freight strategy, being able to perform and pay less than more than $10 lower than the benchmark freight rate to China.

Rodolfo Angele: Okay. Thank you very much for the presentation. My two questions are the following. First, on the iron ore business, we noticed that the company was very successful in its freight strategy, being able to perform and pay more than $10 lower than the benchmark freight rate to China. I wanted to hear from you, what you expect looking forward, because that's a substantial material gain. That's my first question. The second, we're more and more talking about base metals when we discuss Vale, and there is, of course, a lot of questions around the growth profile. It's very interesting to hear that you are being able to anticipate Bacaba, the first of six.

Speaker #5: So, I wanted to hear from you what you expect looking forward, because that's a substantial material gain. So that's my first question. And the second: we're more and more talking about these metals when we discuss Vale, and there are, of course, a lot of questions around the growth profile.

Speaker #5: So it's very interesting to hear that you are being able to anticipate Bacaba, the 1st of 6. So I just wanted to ask you if you could comment a little bit on what was learned, what was the reasons for that, and what does that mean for the other five?

Rodolfo Angele: I just wanted to ask if you could comment a little bit on what was learned, what was the reasons for that, and what does that mean for the other five? Should we expect a similar performance? If you could comment on how mature the key projects on that front are. That will be very helpful. Those are my two questions, and thank you very much.

Speaker #5: Should we expect a similar performance? If you could comment on how mature each of the key projects on that front are, that would be very helpful.

Speaker #5: So, those are my two questions, and thank you very much.

Speaker #1: Rodolfo, we'll start with Rogero, and then Sean can contribute with the VBM question.

Gustavo Pimenta: Rodolfo, to start with Roger, and then Sean can contribute with the VBM question.

Gustavo Pimenta: Rodolfo, to start with Roger, and then Shaun can contribute with the VBM question.

Speaker #6: Thank you, Gustavo. Thank you, Rodolfo. Obviously, what we expect looking forward will depend a lot on the oil prices. But we do have a hedge program also in place.

Rogério Nogueira: Thank you, Gustavo. Thank you, Rodolfo. Obviously, what we expect looking forward will depend a lot on oil prices. We do have a hedge program also in place. Let me give you a little bit of a background on our freight strategy and why we're being successful, okay? In general, we have about 75% of our freight portfolio secured under long-term time charter contracts, which give us a stable cost base. For example, in 2026, we have been reducing our spot exposure effectively through mini COAs, which are short-term Contract of Affreightment, and also using derivatives market for freights, the Forward Freight Agreements. With those two instruments, we've been able to decrease the exposure that we had of 25% to about 10%, actually less than 10%. This is also what we're doing for the years ahead, for 2027, 2028.

Speaker #6: But let me give you a little bit of background on our freight strategy and why we've been successful. In general, we have about 75% of our freight portfolio secured under long-term time charter contracts.

Speaker #6: So, which gives us a stable cost base. But, for example, in 2026, we've been reducing our spot exposure effectively through mini COAs, which are short-term contracts of affreightment, and also using derivatives market for freights.

Speaker #6: The Freight Forward Agreements. So with those two instruments, we've been able to decrease the exposure that we had of 25% to about 10%, actually less than 10%.

Speaker #6: And this is also what we're doing for the years ahead, for 2027 and 2028. We're seeking opportunities to get into the market and reduce that exposure.

Rogério Nogueira: We're seeking opportunities to get into the market and reduce that exposure. Okay, this is on the time charter. Also on the oil, on the Brent, we have a hedge program in place to reduce the volatility and the impact of freight on our costs.

Speaker #6: So this is on the time shorter, and also on the oil, on the Brent, we have a hedge program in place to reduce the volatility and the impact of freight in our costs.

Speaker #5: Yeah, Rodolfo, it's Sean. On your Bacaba projects question, I think if I take you back on our journey, very simply, the restructure of VBM was setting us up for execution.

Shaun Usmar: Yeah, Rodolfo. Hi, it's Shaun. On your Bacaba projects question, if I take you back on our journey, very simply the restructure of VBM was setting us up for execution. If you remember late 2024, we moved to a decentralized organizational model, really simplified and completely changed our approach to capital allocation, project studies, and project execution. What that has meant, and I'll direct you to both some of our Vale Day presentations and indeed the Vale Base Metals day that we did a few months ago, where we've got some materials there to just show the evolution on the approach, the rates of return, and hopefully the market's starting to appreciate. Every quarter I've been with this team, this team has excelled and has delivered on operating guidance or exceeded it. This is, our seventh or eighth consecutive quarter.

Speaker #5: So, if you remember, in late 2024 we moved to a decentralized organizational model. It really simplified and completely changed our approach to capital allocation, project studies, and project execution.

Speaker #5: And so what that has meant, and I'll direct you to both some of our Vale Day presentations and indeed the Vale Base Metals day that we did a few months ago, where we've got some materials there to just show the evolution on the approach, the rates of return, and hopefully the market's starting to appreciate.

Speaker #5: I think every quarter I’ve been with this team, this team has excelled and has delivered on operating guidance or exceeded it. This is, I think, our seventh or eighth consecutive quarter.

Speaker #5: Those are table stakes. And then, on the projects, it's earning the credibility—which hopefully this latest announcement enhances—in order to ensure that we can start seeing this being captured by the market, because it simply is not.

Shaun Usmar: Those are table stakes. On the projects, it's earning the credibility, which hopefully this latest announcement enhances in order to ensure that we can start seeing this being captured by the market, because it simply is not. On Bacaba, we started that project in, I'd say, roughly a mid-teen return before our restructure, with the difference in approach, both in terms of breaking down silos, simplifying, and focusing on our execution model. What we found there was we were able to, as you saw in our Vale Day materials a while ago, substantially reduce the capital, nearly $200 million, nearly 50% reduction. As you're seeing here, we're able to accelerate this now in actual execution. We're nearly 40% progressed already. We're able to move that forward, and the returns that we had previously at about 50% are now closer to 70%.

Speaker #5: So in Bacaba, we started that project in, I'd say, roughly a mid-teens return before I restructured with the different center approach—both in terms of breaking down sellers, simplifying, and focusing on our execution model.

Speaker #5: What we found there was we were able to, as you saw in our Vale Day materials a while ago, substantially reduce the capital—a couple hundred million dollars, nearly a 50% reduction.

Speaker #5: And as you're seeing here, we're able to accelerate this now in actual execution. We're nearly 40% progressed already, so we're able to move that forward.

Speaker #5: And the returns that we had previously at about 50% are now closer to 70%. And so the point is, it's one thing for mining companies to talk about it, but the question is, what can we make happen?

Shaun Usmar: The point is, it's one thing for mining companies to talk about it, but the question is, what can we make happen? When you look at Bacaba as the first cab off the rank, the real focus has been on what are the things that we can intelligently do to identify bottlenecks, accelerate our execution, do so safely, which we've been doing, and indeed, continue to deploy that model in a very direct way to the other five that Gustavo has shown. I'll direct you to a few quick things, just as you look to the future in the materials that I've mentioned for you. This is a fundamental change in our complete regional focus on copper growth in that area. We will update the market again later as we advance in our life of business planning.

Speaker #5: And so, when you look at Bacaba as the first cab off the rank, the real focus has been on what are the things that we can intelligently do to identify bottlenecks, accelerate our execution, and do so safely, which we've been doing, and indeed continue to deploy that model in a very direct way to the other five that Gustavo has shown.

Speaker #5: I'll direct you to a few quick things just as you look to the future in the materials that I've mentioned for you. This is a fundamental change in our complete regional focus on copper growth in that area.

Speaker #5: We will update the market again later as we advance our business planning. It starts with everything from capital allocation on our drilling, to project execution, and operational delivery where, again, we've hit some new records.

Shaun Usmar: It starts with everything from capital allocation on our drilling, our project execution, and our operational delivery, where again, we've hit some new records at Sossego. Obviously, Salobo has continued its good performance. Very quickly, we went from 30,000 meters of drilling to 60,000 last year. We guided to 120,000 meters this year. We're already at 140,000 meters that we're targeting. On Bacaba specifically, around the pits, we're seeing extension potential high grade at depth and at the side. We were targeting 10,000 meters, we're already at 22,000. I give you that context because there's value beyond, not just on this project. We've guided to about a 30% capital reduction, well below industry capital intensity.

Speaker #5: It's a SAGO, and obviously, Celobo has continued its good performance. So, very quickly, we went from 30,000 meters of drilling to 60,000 last year.

Speaker #5: We got it to 120,000 meters this year. We're already at the 140,000 meters that we're targeting. And on Bacaba specifically, around the pits, we're seeing extension potential—high grade at depth and at the side.

Speaker #5: We're targeting 10,000 meters already at 22,000. So I'll give you that context because there's value beyond not just on this project. I think we guided to about a 30% capital reduction.

Speaker #5: Well below industry capital intensity. And at some point, I would like to think that the analyst and investment community would look at our materials and start actually building some of this in, just given our footprint and our established track record in that area.

Shaun Usmar: At some point, I would like to think that the analyst and investment community would look at our materials and start actually building some of this in, just given our footprint and our established track record in that area. This approach does translate across to, I think, the risk and the confidence in our ability to deliver on that pipeline Gustavo mentioned. Thank you.

Speaker #5: This approach does translate across to, I think, the risk and the confidence in our ability to deliver on that pipeline Gustavo mentioned. So, thank you.

Speaker #2: Our next question is from Danielle Sasson from Itaú BBA. You can open your microphone.

[Company Representative] (Vale): Our next question is from Daniel Sasson, from Itaú BBA. You can open your microphone.

Operator: Our next question is from Daniel Sasson, from Itaú BBA. You can open your microphone.

Speaker #7: Hi, everyone. Thank you so much for the opportunity. My first question is actually a follow-up on Rodolfo's question. Sean, if you could— I mean, you're basically bringing Bacaba six months ahead of the original schedule.

Daniel Sasson: Hi, everyone. Thank you so much for the opportunity. My first question is actually a follow-up on Rodolfo's question. Sean, if you could, the 6 months, you're basically bringing forward Bacaba 6 months ahead of the original schedule, that's pretty significant. Is it already possible for you to see that the differences that you made in the planning of this project that led it to be brought forward could actually be replicated to similar projects that you have in your pipeline for your ambition to double your copper production by 2035? Is it too soon to tell, or do you think that we could see Vale reaching its goals ahead of what you've communicated to the market on other occasions? My second question maybe to Bacci.

Daniel Sasson: Hi, everyone. Thank you so much for the opportunity. My first question is actually a follow-up on Rodolfo's question. Shaun, if you could, the 6 months, you're basically bringing forward Bacaba 6 months ahead of the original schedule, that's pretty significant. Is it already possible for you to see that the differences that you made in the planning of this project that led it to be brought forward could actually be replicated to similar projects that you have in your pipeline for your ambition to double your copper production by 2035? Is it too soon to tell, or do you think that we could see Vale reaching its goals ahead of what you've communicated to the market on other occasions? My second question maybe to Bacci.

Speaker #7: So, that's pretty significant. Can you—is it already possible for you to see that the differences you made in the planning of this project that led it to be brought forward could actually be replicated to similar projects that you have in your pipeline, for your ambition to do your copper production by 2035?

Speaker #7: I mean, is it too soon to tell, or do you think that we could see Vale reaching its goals ahead of what you've communicated to the market on other occasions?

Speaker #7: And my second question, maybe to Bacci or Marcelo, if you could walk us through your thought process regarding the upward revisions in your cost guidance and the still high related cash outflows over the next couple of years. How do you think about the trade-offs between shareholders' return and balance sheet resilience?

Daniel Sasson: Marcelo, if you could walk us through your thought process in regards to if the upward revisions in your cost guidance are still high given marginal Samarco-related cash outflows over the next couple of years. How do you think about the trade-off between shareholders' return and balance sheet resilience, right? What are you tracking to decide on executing your buyback program, maybe more aggressively, or paying extraordinary dividends at some point in H2 of this year, versus choosing to be more cautious due to the volatile operating environment? Maybe that could change your focus from shareholders' remuneration to preserving your balance sheet position, the healthy balance sheet position you have. That would be great. Thank you.

Speaker #7: So, what are you tracking to decide on executing your buyback program more aggressively, or possibly paying extraordinary dividends at some point in the second half of this year?

Speaker #7: Versus choosing to be more cautious due to the volatile operating environment—and maybe that could change your focus from shareholders' remuneration to preserving your balance sheet position, the healthy balance sheet position you have.

Speaker #7: That would be great. Thank you.

Speaker #5: Daniel, hi. I think to your question, the short answer is yes. I think the we're not assuming that any two projects are the same because they're not.

Shaun Usmar: Daniel, hi. I think to your question, the short answer is yes. We're not assuming that any two projects are the same, because they're not. We are looking at each of these projects on their distinctive attributes. Again, I'd direct you to some of those materials from our base metals investor day some months ago, where we've also published some technical studies to equip analysts and investors to start really having the tools to appreciate what we're talking about here. We should, in the next number of weeks, publish the coarse particle flotation announcements, which is the next cab off the rank, which will increase throughputs and sustain throughputs at a very high rate of return at Salobo, brownfield of course, and that'll be the next manifestation. That's sort of the 2029 timeframe. Again, we've targeted improvements. You'll see them there when we make our announcement.

Speaker #5: But we are looking at each of these projects based on their distinctive attributes. And again, I'd direct you to some of those materials from our Base Metals Investor Day some months ago, where we've also published some technical studies to equip analysts and investors to really have the tools to appreciate what we're talking about here.

Speaker #5: We should, in the next number of weeks, publish the coarse particle flotation announcement, which is the next cab off the rank. This will increase throughputs and sustain throughputs at a very high rate of return.

Speaker #5: At Celobo, brownfield of course, and that'll be the next manifestation. That's sort of the 2029 timeframe. And again, we've targeted improvements—you'll see them there when we make our announcement.

Speaker #5: The really big one in our the first one towards the end of the decade is Alamar. And we're on track for that. So I don't want to at this stage suggest that that is going to happen earlier.

Shaun Usmar: The really big one, the first one towards the end of the decade is Alemão, and we're on track for that. I don't want to, at this stage, suggest that that is going to happen earlier. What we're doing is we've taken half a billion dollars of capital out. We substantially boosted the return. As part of our life of business planning, I suspect for the foreseeable future, because of what we're finding in our drilling in the region and our life of business planning evolution, even the sequencing of some of these projects with an IDa execution, the real focus is on perhaps in that 2020 to 2035 timeframe and beyond. What can we do to go perhaps beyond the 700? Because the rocks are there, the metal is there. To ensure we can actually execute that.

Speaker #5: But what we're doing is we've taken half a billion dollars of capital out. We've substantially boosted the return. And as part of our life-of-business planning, I suspect for the foreseeable future, because of what we're finding in our drilling in the region and our life-of-business planning evolution, even the sequencing of some of these projects with an IDA execution, the real focus is on perhaps in that 2020 to 2035 timeframe and beyond.

Speaker #5: What can we do to go, perhaps, beyond the 700? Because the rocks are there, the metal is there. And to ensure we can actually execute that.

Speaker #5: So we'll continue to provide I think at the next valid day some more information will continue to make sure that you can watch our quarterly and indeed our other execution on these projects.

Shaun Usmar: We'll continue to provide, I think at the next Vale Day, some more information. We'll continue to make sure that you can watch our quarterly and indeed our other execution on these projects. I'm confident this team is really delivering, I don't know what it takes to convince the market beyond that, beyond quarterly performance, really high rates of return, and then, of course, being able to do so on budget and early. That's the real focus for us with all these projects.

Speaker #5: I'm confident this team is really delivering. And I don't know what it takes to convince the market beyond that, beyond quarterly performance, really high rates of return.

Speaker #5: And then, of course, being able to do so on budget and early. So that's the real focus for us with all these projects.

Speaker #1: Danielle, this is Marcelo speaking. On your second question, we believe that, first, you know most of our cash flow generation comes in the second half of the year.

Marcelo Bacci: Daniel, this is Marcelo speaking. On your second question, we believe that first you know that most of our cash flow generation comes in the H2 of the year, the performance in the H2 is going to be key to determine capital allocation for that period. The new cost guidances, they don't materially change our potential for cash flow generation in the H2. The cash outflows related to reparation and other things are already provided for and considered in the expanded net debt. We are confident that we should be approaching close to $15 billion of expanded net debt at year-end. That number, where we're going to land at year-end, will determine capital allocation for the H2. We decided to reestablish the share buyback program to leave that option open.

Speaker #1: So, the performance in the second half is going to be key to determining capital allocation for that period. The new cost guidance is that they don't materially change our potential for cash flow generation in the second half.

Speaker #1: The cash outflows related to reparation and other things are already provided for and considered in the expanded net debt. So, we are confident that we should be approaching close to $15 billion of expanded net debt at year-end.

Speaker #1: And that number where we're going to land at year-end will determine capital allocation for the second half. We decided to re-establish the share buyback program to lift that option open.

Speaker #1: So, the decision about the total level of shareholder remuneration will depend on cash flow generation. And if that's the case, the decision between share buybacks and dividends will take into consideration, of course, where the share price is and the tax aspects of it.

Marcelo Bacci: The decision about the total level of shareholder remuneration will depend on cash flow generation. If that's the case, the decision between share buybacks and dividends will take into consideration, of course, where the share price is and the tax aspects of it. This will come later in Q3, beginning of Q4.

Speaker #1: But this will come later in the third quarter or the beginning of the fourth quarter.

Speaker #7: Thank you, Marcelo and Sean.

Gustavo Pimenta: Thank you, Marcelo and Shaun.

Speaker #8: Our next question is from Carlos de Alba from Morgan Stanley. You can open your microphone.

[Company Representative] (Vale): Our next question is from Carlos de Alba, from Morgan Stanley. You can open your microphone.

Operator: Our next question is from Carlos de Alba, from Morgan Stanley. You can open your microphone.

Speaker #9: Yeah. Thank you very much. I wanted to just follow up on some of the questions on trade. I understand that the exposure was reduced to 10%.

Carlos de Alba: Yeah, thank you very much. I wanted to just follow up on some of the questions on trade. I understand that the exposure was reduced to 10%, is that also the case for H2? Typically, you have more volumes in the last semester and therefore, typically more exposure to freight. I just wanted to make sure that that 10% already includes this increased exposure in Q2. Then the second question is on the iron ore and pellet operations. Any updates on Fábrica and Viga? When are those expected maybe to come back, as well as the progress of the ramp-up at Oman, given that the conflict in the Middle East sort of reinitiated or escalated again? Any color on São Luís, given that we saw a big reduction in Q2 production. Thank you.

Speaker #9: But is that also the case for the second half of the year? Typically, you have more volumes in the last semester. And therefore, more exposed typically more exposure to freight.

Speaker #9: So I just wanted to make sure that the 10% already includes this increased exposure in the second quarter. And then, the second question is on the iron ore and pellet operations.

Speaker #9: Any updates on Fabrica and Viga? When are those expected to come back, as well as the progress of the ramp-up at Oman, given that the conflict in the Middle East has sort of reinitiated or escalated again?

Speaker #9: And any color on San Luis given that we saw a big reduction in the second quarter production? Thank you.

Speaker #7: Okay. Carlos on freight. You're right. Generally, we have more exposure in the second semester. The 10% number is a flat number, but we average for the year.

Rogério Nogueira: Carlos, on freight. You're right. Generally, we have more exposure in the second semester. The 10% number is a flat number, average for the year, but we do have a low exposure also for the second semester. I also would like to highlight another point, which is important, I didn't mention in my first answer, is that differently from the seaborne, the spot market on seaborne, we have vessels which are scrubber-fitted. Generally, when you're talking about the spot prices, you're talking about low sulfur oil, which currently is carrying a very high spread to the low sulfur oil. Generally, we're paying about $250 per ton lower than the spot prices on bunker. The exposure for the second semester is also low.

Speaker #7: But we do have a low exposure also for the second semester. Okay. I also would like to highlight another point, which is important. I didn't mention in my first answer, is that differently from the seaborn, the spot market on seaborn, we have vessels which are scrubber feated.

Speaker #7: So generally, when you're talking about the seaborne or the spot prices, you're talking about low sulfur oil, which currently is carrying a very high spread to the high sulfur oil.

Speaker #7: So generally, we're paying about $250 per ton lower than the spot prices on bunker. Okay. But the exposure for the second semester is also low.

Speaker #1: Carlos, Gustavo here, on your second question, both fabric and Viga from an operational standpoint ready to be resumed. We've got the authorizations from the municipalities, and we are now working with the state and federal authorities to resume operations.

Gustavo Pimenta: Carlos, Gustavo here. On your second question, both Fábrica and Viga, from an operation standpoint, are ready to be resumed. We've got the authorizations from the municipalities. We're now working with the state and federal authorities to resume operations. We are optimistic we'll be able to do that in the near future. We are not expecting to have any impact in our annual guidance for the year.

Speaker #1: We are optimistic we'll be able to do that in the near future, and we are not expecting to have any impact on our annual guidance for the year.

Speaker #7: So in Oman, Oman is actually in operation. In operations, Carlos, I think one important point is that Oman it actually supplies direct production to the Middle East.

Rogério Nogueira: In Oman. Oman is actually in operations, Carlos. I think one important point is that Oman, it actually supplies

Rogério Nogueira: In Oman. Oman is actually in operations, Carlos. I think one important point is that Oman, it actually supplies direct reduction to the Middle East. Important to notice that Bahrain pelletizing plant, which is one of the main producers of direct reduction in the region, has stopped. The demand for DR pellets is high in the region, and we are arranging different logistics to get to our clients. Oman is operational. We'll have a stoppage in October to do a tie-in for the new concentration plant they were building in Oman. Other than that, the plant is operating quite well.

Carlos Medeiros: direct reduction to the Middle East. Important to notice that Bahrain pelletizing plant, which is one of the main producers of direct reduction in the region, has stopped. The demand for DR pellets is high in the region, and we are arranging different logistics to get to our clients. Oman is operational. We'll have a stoppage in October to do a tie-in for the new concentration plant they were building in Oman. Other than that, the plant is operating quite well.

Speaker #7: It's important to note that the Bahrain pelletizing plant, which is one of the main producers of direct reduction in the region, has stopped, so the demand for DR pellets is high in the region.

Speaker #7: And we are arranging different logistics to get to our clients. So Oman is operational. We'll have a stoppage in October to do a tie-in for the new concentration plant that we are building in Oman, but other than that, the plant is operating quite well.

Speaker #8: So our next question is from Rafael Barcellos from Bradesco BBI.

[Company Representative] (Vale): Our next question is from Rafael Barcellos, from Bradesco BBI.

Operator: Our next question is from Rafael Barcellos, from Bradesco BBI.

Speaker #1: Hello, good morning. Thanks for taking my questions. So, the first question: looking at your new all-in cost guidance for iron ore, and given what you delivered in the first half of the year, it seems that your guidance implies an all-in, which is sort of flattish with the first half.

Rafael Barcellos: Hello, good morning. Thanks for taking my questions. The first question, looking at your new all-in cost guidance for iron ore and given what you delivered in H1, it seems that your guidance implies an all-in which is sort of flattish with H1. While when we look at your C1 guidance, it implies a more significant decline over the course of H2. I just wanted to better understand what drives the difference between your expectations for C1 and all-in trends into H2. As a second question, in your new R&D and innovation report, you mentioned a very interesting initiative at the Conceição 2 operation delivering a 25% increase in productivity, right? On top of that, you also mentioned other cost savings from AI applications, right? Firstly, congratulations for this report. Very informative.

Speaker #1: While when we look at your C1 guidance, it implies a more significant decline over the course of the second half. So I just wanted to better understand what drives the difference between your expectations for C1 and all-in trends into the second half.

Speaker #1: And as a second question, in your new R&D and Innovation report, you mentioned a very interesting initiative at the Conceição 2 operation, delivering a 25% increase in productivity, right?

Speaker #1: So, on top of that, you also mentioned other cost savings from AI applications, right? Firstly, congratulations on this report—it's very informative. Secondly, to what extent do you believe it has the potential to be something more significant for Vale?

Rafael Barcellos: Secondly, to what extent you believe it has potential to be something more significant for Vale? Whether these initiatives make you more confident in lower costs going forward? Thank you.

Speaker #1: And whether these initiatives make you more confident in lower costs going forward. Thank you.

Speaker #7: Rafael, thank you. This is Marcelo. I'm going to take the first question on cost. We have you have to remember that if you look at the all-in, the relative weight of the oil prices is a lot higher than on C1.

Marcelo Bacci: Rafael, thank you. This is Marcelo. I'm going to take the first question on cost. You have to remember that if you look at the all-in, the relative weight of the oil prices is a lot higher than on C1. That's why you see this difference, the C1 reducing in H2, whereas the all-in tends to be flattish. Also on top of that, remember that the oil price effect was basically concentrated in Q2, not on Q1 where prices were a lot lower than they are today. Also we have a lagging effect. Some of the realized cost of H1, especially in Q1, was actually based on the cost formed at the end of last year. Those accounting effects also play a role here.

Speaker #7: That's why you see this difference—the C1 reducing in the second half of the year, whereas the all-in tends to be flattish. And also, on top of that, remember that the oil price effect was basically concentrated in the second quarter.

Speaker #7: Not in the first quarter, where prices were a lot lower than they are today. Also, we have a lagging effect. Some of the realized cost in the first half of the year, especially in the first quarter, was actually based on costs formed at the end of last year.

Speaker #7: So those accounting effects also play a role here. This is basically what explains that the all-in for the second half is going to be even is going to be flattish when compared to the first half, but lower than the second quarter.

Marcelo Bacci: This is basically what explains that the all-in for the H2 is going to be flattish when compared to the H1, but lower than the Q2.

Speaker #3: Rafael, thanks for the question. This is Carlos Medeiros. On the Conceição, this project is really a milestone for us. And after it started operating in March, what we noticed was a 25% increase in production volume.

Carlos Medeiros: Rafael, thanks for the question. This is Carlos Medeiros. At Conceição, this project is really a milestone for us. After it started operating in March, what we noticed was a 25% increase in production volume, besides a fundamental difference in the production split. Prior to the project, this concentration plant used to produce 50% of the time direct reduction feeds and the other 50% for blast furnace. Now, after the project completion, the mix had changed to 75% direct reduction and 25% blast furnace. That is a fundamental change in the mix. We are rolling out, as we speak, this technology to all the concentration plants. Now Brucu 2 is going through the same process and we expect to complete during the H1 of next year.

Speaker #3: Besides a fundamental difference in the production split. So prior to the project, these concentration plant used to produce 50% of the time direct reduction.

Speaker #3: Feeds and the other 50% for blast furnace. Now, after the project completion, the mix has changed to 75% direct reduction and 25% blast furnace.

Speaker #3: So that is a fundamental change in the mix. And we are rolling out, as we speak, this technology to all the concentration plants. So now Brico 2 is going through the same process and we expect to complete during the first half of next year, bearing in mind that Conceição 2 is a concentration plant that produces now between 11 and 12 million tons a year.

Carlos Medeiros: Bear in mind that Conceição 2 is a concentration plant that produce now between 11, 12 million tons a year and Brucu 2 produce 30. Once Brucu 2 is completed, we will roll out to Vargem Grande complex. Vargem Grande 1 and 2 and also the Pico concentration plants. There is a tremendous potential for having more stable processes that will leverage our profitability in our products there in Minas Gerais.

Speaker #3: And Brucutu 2 produces 30. And once Brucutu 2 is completed, we will roll out to the Vargem Grande complex—so Vargem Grande 1 and 2, and also the Pico concentration plants.

Speaker #3: So, that is a tremendous potential for having more stable processes that will leverage our profitability in our products there in Minas Gerais.

Speaker #8: The next question is from Alex Hecking from CD. You can open your microphone.

[Company Representative] (Vale): The next question is from Alex Hacking from Citi. You can open your microphone.

Operator: The next question is from Alex Hacking from Citi. You can open your microphone.

Speaker #2: Yeah, thanks. A couple of questions on copper. How should we be modeling Sosego for the next two or three years with Bacaba accelerated? And then, more broadly on Sosego, if you have success with additional drilling at Bacaba or other satellite deposits, what's the limit on the processing capacity there?

Alex Hacking: Thanks. A couple of questions on copper. How should we be modeling Sossego for the next two or three years with Bacaba accelerated? More broadly on Sossego, if you have success with additional drilling at Bacaba or other satellite deposits, what's the limit on the processing capacity there? Thank you.

Speaker #2: Thank you.

Speaker #5: Thanks. It's Sean. Thanks for those. As you recall, I mean, Sossego, as you know, is nearing its end of life with the Sacrário pit.

Shaun Usmar: Thanks. It's Shaun. Thanks for those. As you recall, Sossego, as you know, is nearing its end of life with the Sequeirinho pit. Vinnie and his team have done a remarkable job even now with diesel price increases. They've actually reduced their specific consumptions, totally offsetting their energy costs, and they continue on that vein. I think last year alone, that took out something like 40% of the unit mining cost. What that's done is it's just made previously uneconomic or economic. They're continuing to be able to, I'd say, extend the back end. You'll recall perhaps in Vale Day, we talked a bit about the drill programs that we're doing and the acceleration there. We're targeting in our portfolio as a whole, more than 20% increase in reserves and resources over 18 months to two years. We put out our statements earlier.

Speaker #5: Vini and his team have done a remarkable job, even now with diesel price increases. They've actually reduced their specific consumptions, totally offsetting their energy costs.

Speaker #5: And they continue on that vein. So I think, last year alone, they took out something like 40% of the mining cost. And what that's done is it's just made previously uneconomic ore economic.

Speaker #5: So, they're continuing to be able to, I'd say, extend the back end. And you'll recall perhaps, in Vale, we talked a bit about the drill programs that we're doing and the acceleration there.

Speaker #5: We're targeting in our portfolio as a whole more than 20% increase in reserves and resources over 18 months to two years. We put out our statements earlier.

Speaker #5: We're well on track, and I expect our constraint, particularly in Paris, is really how many drills we can get turning sooner, because we're finding some really good targets, particularly nearby.

Shaun Usmar: We're well on track, and I expect our constraint, particularly in Pará, really how many drills we can get turning sooner because we're finding some really good targets, particularly nearby. Specific to your question, if you remember, Sossego, the stuff that we're finding, those intercepts that we helped publish a while ago, we're doing, I think, something like 60,000 meters of drilling to see at depth. None of that is currently in our life of mine plan. As that comes forward, I would see that as upside potential. It's not something as you'd appreciate, just given the timing on all of that happens quickly. You'll see, I think, to your question on acceleration elsewhere, as we get to Vale Day, the churn of our latest guidance for 2027 and beyond, we will put into that. Generally, we're seeing acceleration and we're finding more opportunity.

Speaker #5: So, specific to your question, if you remember Sosego, the stuff that we're finding—those intercepts that we've helped publish a while ago—we're doing, I think, something like 60,000 meters of drilling to see at depth.

Speaker #5: None of that is currently in our lifetime mind plan. So as that comes forward, I would see that as upside potential. It's not something, as you'd appreciate, just given the timing and all of that that happens quickly.

Speaker #5: But you'll see, I think, to your question on acceleration elsewhere, as we get to Vale, the churn of our latest guidance for '27 and beyond, we will put into that.

Speaker #5: But generally, we're seeing acceleration and we're finding more opportunity. Just to remind you, and I think others on this, so Bacaba – 30,000 tons or so increase – but what we're, sorry, 50, but what we're finding is with the depletion as we get to the back end of Sosego, we're not allowing for any additional discovery or extension, as we say, from that existing infrastructure.

Shaun Usmar: Just to remind you, and I think others on this, Bacaba 30,000 tons or so increase. What we're, sorry, 50. What we're finding is with the depletion as we get to the back end of Sossego, we're not allowing for any additional discovery or extension, as we say, from that existing infrastructure. The work we're doing on the SAG mill now will take us from 12 to 15, which is really central to the southern hub economic potential unlock. That's the 110 days of downtime from August through November, which we've guided very, very clearly for the back end of this year, which will impact both costs and volumes for copper in the H2 of the year.

Speaker #5: The work we're doing on the SAG mill now will take us from 12 to 15, which is really central to the Southern Hub economic potential unlock.

Speaker #5: That's the 110 days of downtime from August through November, which we've guided very, very clearly for the back end of this year. This will impact both costs and volumes for copper in the second half of the year.

Speaker #5: And importantly, as you think about that, towards the back end of the year, the incremental tons as you transition to the back end of Sosego and Bacaba is coming online is sort of that 25,000 ton, 50 to 25,000 ton incremental.

Shaun Usmar: Importantly, as you think about that towards the back end of the year, the incremental tons as you transition to the back end of Sossego and Bacaba is coming online is sort of that 25,000 tons, 15,000 to 25,000 tons incremental. I would like to think that we can prove up more and to be able to exceed that, but that's really what we've provided to this date. Of course, we're 6 to 9 months ahead, so just stay tuned. We'll update the market in the back end of the year as we revise our life of business plans.

Speaker #5: I would like to think that we can prove up more and be able to exceed that, but that's really what we have provided to date.

Speaker #5: And of course, we're six to nine months ahead. So we'll look to just stay tuned. We'll update the market in the back end of the year as we revise our life of business plans.

Speaker #8: The next question is from Caio Ribeiro from Bank of America.

[Company Representative] (Vale): The next question is from Caio Ribeiro from Bank of America.

Operator: The next question is from Caio Ribeiro from Bank of America.

Speaker #4: Good morning, everyone. Thank you for the opportunity. So, my first question is: I wanted to see if you could share some color on the iron ore market, right?

Caio Ribeiro: Good morning, everyone. Thank you for the opportunity. My first question is, I wanted to see if you could share some color on the iron ore market, right? In particular, after the recent escalation of the conflict and the impact that that's generated on oil prices. We're still seeing freight prices at very high levels, yet iron ore has been correcting, which suggests that it hasn't really benefited from that cost-push inflation, right, in the same way that it did when the conflict first started. Curious to hear from you what you're seeing on the ground that is driving the recent weakness and what your perspective is for the next 6 months, right? Whether you've noted at this point that there's any slowdown in shipments or curtailments from the smaller miners, just given that those FOB prices remain very depressed.

Speaker #4: In particular, after the recent escalation of the conflict and the impact that that's generated on oil prices, we're still seeing freight prices at very high levels. Yet iron ore has been correcting, which suggests that it hasn't really benefited from that cost-push inflation in the same way that it did when the conflict first started.

Speaker #4: So, curious to hear from you what you're seeing on the ground that is driving the recent weakness, and what your perspective is for the next six months, right?

Speaker #4: And whether you've noted at this point that there's any slowdown in shipments or curtailments from the smaller miners, just given that those FOB prices remain very depressed.

Speaker #4: And then secondly, I wanted to touch base on the case decree with a new format being proposed. I just wanted to get some color from you on what implications you see that this could have for your long-term targets, in terms of product mix, cost structure, and perhaps the implications on your ability to compensate for depletion in the Northern System.

Caio Ribeiro: Secondly, I wanted to touch base on the Caves Decree with a new format being proposed. Just wanted to get some color from you, on what implications you see that this could have for your long-term targets, in terms of product mix, cost structure, and perhaps the implications on your ability to compensate for depletion in the Northern System. Thank you.

Speaker #4: Thank you.

Speaker #3: Okay, Caio, I hear you. I'll give you a view for the second half of the year, but let me first give you a general perception of the market as we see it.

Rogério Nogueira: Okay, Caio, Rogério, I'll give you a view for the H2 of the year. Let me give you first a general perception of the market as we see it. Overall, we see that the market fundamentals remain resilient. To me, especially when you look into global pig iron production, which is the most important indicator for iron ore demand. We see that it is broadly stable. This is happening because demand outside China is improving. We believe that the China story is more balanced than the domestic indicators suggest. China specifically, when you look into the official data, you see that the crude steel production has declined by about 3% year-over-year in H1. When you look into public market information, public market sources, the number is slower than that. It's closer to -0.5%.

Speaker #3: So, overall, we see that the market fundamentals remain resilient. I mean, especially when you look into global peak iron production, which is the most important indicator for iron ore demand.

Speaker #3: We see that it is broadly stable. And this is driven because demand this is happening because demand outside China is improving. And we believe that the China story is more balanced than the domestic indicators suggest.

Speaker #3: China specifically, when you look into the official data, you see that crude steel production has declined by about 3% year over year in the first half. But when you look into public market information, public market sources, the number is slower than that.

Speaker #3: It's closer to minus 0.5%. Completing and complementing that at the same time, we see that the export market is actually offsetting the weakness that we've seen in the domestic market.

Shaun Usmar: Completing and complementing that at the same time, we see that the export market is actually offsetting the weakness that we see in the domestic market. Direct steel export has actually reached 55 million tons in H1 2026, we think this is going to be an important stabilizer for steel production. Also outside China, the picture is a bit more constructive. Steel production has increased about 2% year-over-year, this is providing more resilience to the market. Look, for the H2 of the year, especially on your question, when we simulate the cost curves with freight rates and Brent crude and crude actually near $90 per barrel, what we see is that at $95 per ton of prices, you'd have about 120 million tons of iron ore that would actually be reaching the cost limit.

Rogério Nogueira: Completing and complementing that at the same time, we see that the export market is actually offsetting the weakness that we see in the domestic market. Direct steel export has actually reached 55 million tons in H1 2026, we think this is going to be an important stabilizer for steel production. Also outside China, the picture is a bit more constructive. Steel production has increased about 2% year-over-year, this is providing more resilience to the market. Look, for the H2 of the year, especially on your question, when we simulate the cost curves with freight rates and Brent crude and crude actually near $90 per barrel, what we see is that at $95 per ton of prices, you'd have about 120 million tons of iron ore that would actually be reaching the cost limit.

Speaker #3: Direct steel export has actually reached 55 million tons in the first half of 2026, and we think this is going to be an important stabilizer for steel production.

Speaker #3: But also, outside China, the picture is a bit more constructive. Steel production has increased about 2% year-over-year, and this is providing more resilience to the market.

Speaker #3: Look, for the second half of the year, especially on your question, when we simulate the cost curves with freight rates and Brent crude and crude actually near $90 per barrel, what we see is that at $95 per ton of prices, you'd have about 120 million tons of iron ore that would actually be reaching the cost limit.

Speaker #3: So, this is pretty significant, and we think this would create a stabilizing response in the market.

Shaun Usmar: This is pretty significant, we think this would create a stabilizing response in the market.

Rogério Nogueira: This is pretty significant, we think this would create a stabilizing response in the market.

Speaker #2: So, Caio Gustavo here, on the case decree. We are certainly monitoring the modernization of the decree. We think it's going to be an evolution.

Gustavo Pimenta: Gustavo Pimenta here. On the Caves Decree, we are certainly monitoring the modernization of the decree. We think it's going to be an evolution, including for environmental protection. I think it's well-balanced to provide both good environmental protection, at the same time, provide clarity for the development of projects. We don't know yet the details, it's early to say what is the potential impact. Certainly, the Northern Range is the one that has more impact over the years due to Caves restrictions. We are hopeful it will mitigate some of that impact, but it is still early to say, and we are still dependent on the final terms of the decree.

Speaker #2: Including for environmental protection. So, I think it's well balanced to provide both good environmental protection and clarity for the development of projects. We don't know yet the details.

Speaker #2: So it's early to say what the potential impact is. Certainly, the Northern Range is the one that has had more impact over the years due to cave restrictions.

Speaker #2: So we are hopeful it will mitigate some of that impact, but it is still early to say. We are still dependent on the final terms of the decree.

Speaker #8: Next question is from Amos Fletcher from Barclays.

[Company Representative] (Vale): Next question is from Amos Fletcher from Barclays.

Operator: Next question is from Amos Fletcher from Barclays.

Speaker #1: Yeah, good afternoon, gents. A couple of questions from me. First of all, I just wanted to ask your current thoughts on the future structure of VBM, just given the positive outlook for copper.

Amos Fletcher: Yeah, good afternoon, gents. A couple of questions from me. First one, I just wanted to ask your current thoughts on the future structure of VBM, just given the positive outlook for copper and your diversified peers are trying to grow exposure to copper. Does it make sense for Vale to reduce exposure? Then the second question I just wanted to ask was on the unit cost guidance in copper specifically. It implies some sharp increases in H2. Is that all driven by what's happening at Sossego? Or is there anything going on at Salobo we should be aware of as well? Thanks.

Speaker #1: And your diversified peers are trying to grow exposure to copper. Does it make sense for Vale to reduce exposure? And then the second question I just wanted to ask was on the unit cost guidance in copper, specifically.

Speaker #1: It implies some sharp increases in H2. Is that all driven by what's happening at Sosogo, or is there anything going on at Solobo we should be aware of as well?

Speaker #1: Thanks.

Speaker #2: Thanks, Gustavo. Yeah, I'll do the first, and then Sean can complement on the second one. Yeah, look, you saw the prospects that Sean articulated.

Gustavo Pimenta: Yeah, Amos. Gustavo here. I'll do the first then Sean can complement on the second one. Yeah, look, you saw the prospects that Sean articulated, I had the chance to do the same in the prep remarks. There is tremendous opportunity for us to substantially grow the share of copper within the overall Vale's portfolio. We are now targeting to double, Sean indicated potentially to go beyond that. You're gonna hear from us more at Vale Day. For Vale, from the portfolio standpoint, we wanna continue to be vested in copper. We think it's a fundamental part of our story. A lot of the growth is within Carajás, where we already have a very strong operation, you should expect us to continue to be highly vested in that business.

Gustavo Pimenta: Yeah, Amos. Gustavo here. I'll do the first then Shaun can complement on the second one. Yeah, look, you saw the prospects that Shaun articulated, I had the chance to do the same in the prep remarks. There is tremendous opportunity for us to substantially grow the share of copper within the overall Vale's portfolio. We are now targeting to double, Shaun indicated potentially to go beyond that. You're gonna hear from us more at Vale Day. For Vale, from the portfolio standpoint, we wanna continue to be vested in copper. We think it's a fundamental part of our story. A lot of the growth is within Carajás, where we already have a very strong operation, you should expect us to continue to be highly vested in that business.

Speaker #2: And I had the chance to do the same in the prepared remarks. There is tremendous opportunity for us to substantially grow the share of copper within Vale's overall portfolio.

Speaker #2: We are now targeting to double, and Sean indicated potentially to go beyond that. You're going to hear from us more at Vale Day. And for Vale, from the portfolio standpoint, we want to continue to be invested in copper.

Speaker #2: We think it's a fundamental part of our story. A lot of the growth is within Carajás, where we already have a very strong operation.

Speaker #2: So you should expect us to continue to be highly vested in that business.

Speaker #4: Yeah, and I must think—just to complement Gustavo's point, and again, we'll cover it more on Vale Day—and if you look at our last, I just encourage people again to look at the capital intensities.

Shaun Usmar: Yeah. Amos, I think just to complement Gustavo's point again, we'll cover it more Vale Day, if you look at our last stuff. I just encourage people again to look at the capital intensities even under sort of lower price assumptions, the records that we're hitting in multiple assets in the portfolio the execution here. These are really, really robust growth exposures. I think for Vale, the sort of asymmetry, if I can call it that, in terms of opportunity endowment, I think we're manifesting that. With nearly two years of both operational execution in this, I think, the exploration that we're ramping up. I think it's an unusual story in the copper space.

Speaker #4: And even under sort of lower price assumptions, the records that we're hitting in multiple assets in the portfolio and the execution here—these are really, really robust growth exposures.

Speaker #4: So I think for Vale, and the sort of asymmetry—if I can call it that—in terms of opportunity and endowment, I think we're manifesting that.

Speaker #4: With nearly two years of both operational execution in this, I think, and the expiration that we're ramping up, I think it's an unusual story in the copper space.

Speaker #4: On the, to your other question, I think the Vale IR team, in one of the appendices, has put in the schedule of biennial maintenance that's occurring in the nickel business.

Shaun Usmar: To your other question, I think the Vale IR team, it was in one of the appendices, has put in the schedule of biannual maintenance that's occurring in the nickel business. We obviously did a lot last quarter. You'll see some in Q3. In copper, you'll see, as I say, 1 August through November. It's really gonna impact us more in Q3 with Sossego. That's the primary impact. You'll see that flow through in all-in costs. The revised improved cost guidance that we have factors all of that in.

Speaker #4: We obviously did a lot last quarter, and you'll see some in Q3. But in copper, you'll see, as I said, August 1st through November.

Speaker #4: So it's really going to impact us more in Q3 versus Sago. That's the primary impact. And you'll see that flow through in all-in costs.

Speaker #4: The revised, improved cost guidance that we have factors all of that in. But it is a tale of two teams. It was necessary what they've done to sort of produce ahead of, candidly, our budgets to set us up for the second half, where there are going to be, I think, 2,000 people on site replacing the SAG lid, the input trunnion, and then also redoing the electronics at the back end.

Shaun Usmar: It is a tale of two halves, and I think Vinnie and his team, it was necessary what they've done to sort of produce ahead of, candidly, our budgets to set us up for H2, where they're gonna be, I think there's 2,000 people on site replacing the SAG lid, the input trunnion, and then also redoing the electronics at the back end. 55 and 55 days. That's really the primary driver as we go into the back end. Then we have ongoing cost improvement programs that really are beyond what we're working on that will continue to feed into our competitiveness in the future. I think that just sets us up to have a, let's just say, a defensive posture in the face of some of the inflation we're all seeing.

Speaker #4: So, 55 and 55 days—so that's really the primary driver as we go into the back end. And then we have ongoing cost improvement programs that really are beyond what we're working on, that will continue to feed into our competitors in the future.

Speaker #4: I think that just sets us up to have a—this is a defensive posture in the face of some of the inflation we're all seeing.

Speaker #8: The next question is from Marcio Parigi from Goldman Sachs.

[Company Representative] (Vale): The next question is from Marcio Farid from Goldman Sachs.

Operator: The next question is from Marcio Farid from Goldman Sachs.

Speaker #1: Good morning, everyone. Thanks for the opportunity. I just have a couple of follow-ups on my side. Rogerio, I know we've discussed freight a lot, but it's obviously becoming crucially important given how high prices have been.

Marcio Farid: Morning, everyone. Thanks for the opportunity. A couple of follow-ups on my side. Rogério and I always discuss freight a lot, it's obviously getting crucially important given how high prices have been. I know we talked about H2 of the year. I'm more interested about the mid to longer term, if you can comment, please. I know the long-term contracts usually have anywhere between two to 10 years, right? From time to time, they expire, and you need to roll them over. I'm just wondering, obviously, your contracts in terms of freight rates are just below $15 to $20 a ton. Spot rates are nearly 30. Wondering, the new contracts that have been rolling, have you been able to roll them over at similar rates? Or has the spot prices contaminating the negotiations in some way or another?

Speaker #1: I know we talked about the second half of the year. I'm more interested in the mid to longer term, if you can comment, please. I know the long-term contracts usually have anywhere between 2 to 10 years, right?

Speaker #1: But from time to time, they expire and you need to roll them over. So I'm just wondering—obviously, your contracts in terms of freight rates are just below $15 to $20 a ton, while spot rates are nearly $30.

Speaker #1: So, just wondering, the new contracts that have been rolling—have you been able to roll them over at similar rates, or have spot prices contaminated the negotiations in some way or another?

Marcio Farid: I remember the last time we spoke, you were doing some forward contracts on fuel prices to hedge bunker exposure into next year as well. I think you were at 30%. Just wondering if you have sped up that hedging program as well, or if you have managed to just keep those 30% level. Just a follow-up on the Caves Decree. Gustavo, I know you mentioned you are obviously following the situation closely. Seems quite important for Vale. When we look at the production report between concentration in China with pellet feed, some run of mine sales. There is quite a lot going to China, right? Which seems to have a strategic merit at this point, but just wondering, if you are able to get the flexibility on the Caves Decree in Carajás. Obviously if you would have more production capacity.

Speaker #1: And I remember the last time we spoke, you were doing some forward contracts on fuel prices to hedge bunker exposure into next year as well.

Speaker #1: I think you were at 30%. Just wondering if you have sped up that hedging program as well, or if you managed to just keep those 30% level.

Speaker #1: And just a follow-up on the CAVITS decree, Gustavo, I know you mentioned you are obviously following the situation closely. It seems quite important for Vale.

Speaker #1: When we look at the production report, between concentration in China with pellet feed and some run-of-mine sales, there's quite a lot going to China, right? Which seems to have strategic merit at this point.

Speaker #1: But just wondering, if you're able to get the flexibility on the CAVITs decree in Carajás, and obviously, in theory, you'd have more production capacity, but can we see a scenario in which you continue to run those products and concentration in China and you add incremental supply from Carajás?

Marcio Farid: Can we see a scenario in which you continue to run those products and concentration in China and you add incremental supply from Carajás? Are you going to be replacing those higher cost, lower margin volumes once you have better ability to ramp up production in the north? Sorry, long questions. Thank you.

Speaker #1: Or are you going to be replacing those higher-cost, lower-margin volumes once you have better ability to ramp up production in the north? Sorry, long question.

Speaker #1: Thank you.

Rogério Nogueira: Mas, Rogério, on freight, I think you are absolutely right. The way we look at it is actually we managed the whole book for over 20 years. When we talk about long-term contracts, some of the long COAs, Contract of Affreightment, they actually have contracts for 20 years, right? We do manage this on an ongoing basis. Some contracts expire. We are always actually entering into new contracts. This is actually always ongoing. This year alone, we have done, I think, three rounds of book building for freights. The level of freights that we are contracting, and this is about TC, time charter, okay? Because what we do is on the time charter, we contract the long-term contracts, and we have done three book buildings for this year already, and we have contracted long-term. I cannot disclose exactly the numbers, but the numbers have been pretty good, okay?

Speaker #2: Marsh, Rogerio, on freight, I think you’re absolutely right. The way we look at it is, actually, we have managed the whole book for over 20 years.

Speaker #2: So when we talk about long-term contracts, some of them some of the long COAs contract of a freightman, they actually have contracts for 20 years.

Speaker #2: Right? But we do manage this on an ongoing basis. Some contracts expire; we're always actually entering into new contracts. This is actually always ongoing.

Speaker #2: This year alone, we've done, I think, three rounds of book building for freights. The level of freights that we're contracting—and this is about TC, time charter, okay?

Speaker #2: Because what we do is on the time charter, we contract the sort of long-term contracts. And we've done three book buildings for this year already.

Speaker #2: And we've contracted long-term. I cannot disclose the exact numbers, but the numbers have been pretty good, okay? So this is on the freight side.

Rogério Nogueira: This is on the freight side. We also work on mini COAs, which actually tend to be five years long. We operate with some forward instruments for freight, for time charter, which is the Forward Freight Agreements. With those instruments, I think we have a pretty balanced book for the coming, say, five, 10, and then the longer term. This is a sort of ongoing work that we are managing, and we always do like this. On the hedge, Bacci can complement, we have actually improved that. We have increased our hedging program to roughly 70% of our requirements on a combination of zero-cost collars and forward agreements.

Speaker #2: We also work on mini COAs, which actually tend to be five years long. And we operate with some forward instruments for freight, for time charter, which are the freight forward agreements.

Speaker #2: So, with those instruments, I think we have a pre-balanced book for the coming, say, five, ten, and then the longer term. So, this is an ongoing work that we're managing.

Speaker #2: And we always do like this. On the hedge, Bacci can complement, but we've actually improved that. We have increased that and are about to increase our hedging program.

Speaker #2: To roughly 70% of our requirements, on a combination of zero-cost collars and forward agreements.

Speaker #1: Yeah, that's correct. We're close to 70% hedged for 2027, at an average price of about $77 per ton, Brent equivalent.

Marcelo Bacci: Yeah, that's correct. Our close to 70% hedging for 2027 at an average price of about $77 per ton, Brent equivalent.

Speaker #2: Thanks, Marcelo. And just to highlight, I mean, we've talked about that for maybe a year. And when Rogerio took over the position, on our strategy to actually increase the long-term freightman ratios of the company and implement the hedge.

Gustavo Pimenta: Thanks, Marcelo. Just to highlight, we've talked about that maybe a year ago when Rogério took over the position on our strategy to actually increase the long-term affreightment ratios of the company, implement the hedges. It's great to see that strategy paying off. We've put those hedges way before the war, in terms of increasing not only the affreightment, but also enhancing the protection for fuel costs. It's something we've decided to do a few years ago, and we're seeing the benefits today as you guys pointed out. On the caves.

Speaker #2: So, it's great to see that strategy paying off. We put those hedges in place well before the war, in terms of increasing not only the freight management but also enhancing the protection for fuel cost.

Speaker #2: So it's something we've decided to do a few years ago, and we've seen the benefits today, as you guys pointed out. On the CAVITS, answering Carlos—I checked it, Carlos.

Rogério Nogueira: Answering Carlos. I checked it, Carlos. Our exposure for the H2 is below 10%, okay, just to confirm it here.

Speaker #2: Our exposure for the second half is below 10%, okay? Just to confirm it here. And so, on the CAVITS, look, I think the industry in general—and Rogerio can also complement—is facing an overall degrading, not only depletion. You've heard us talking about depletion for a long period of time, but, in general, a very large degrading is going on, to a point that the index has changed from 62 to 61.

Gustavo Pimenta: On the caves, look, I think the industry in general, and Rogério can also complement, it's facing an overall degrading, not only depletion that you've heard us talking about depletion for a long period of time, but in general, a very large degrading going on to a point that the index has changed from 62 to 61. For us, being able to bring those volumes from the Northern Range into production is fundamental. It's very strategic, and we are certain it will create substantial value from a portfolio standpoint. Especially in the Northern Range and also S11D, where we have the ability to bring volumes at a very competitive rate. It also improves, for example, the C1 cash cost, also the all-in. For us, those type of improvements is very strategic and enhances the portfolio.

Speaker #2: So, for us, being able to bring those volumes from the Northern Range into production is fundamental. It's very strategic, and we certainly do create substantial value from a portfolio standpoint.

Speaker #2: And especially in the Northern Range and also S11D, where we have the ability to bring volumes at a very competitive rate. So, it also improves, for example, the C1 cash cost, and also the all-ins.

Speaker #2: So for us, those types of improvements are very strategic and enhance the portfolio. Then we will assess how that plays into the overall portfolio of Vale, including how much we are doing in terms of concentration in China and so on.

Gustavo Pimenta: We'll assess how does that play into the overall portfolio value, including how much we are doing in terms of concentration in China and so on. It does add a lot of flexibility for us from the portfolio standpoint.

Speaker #2: But it does add a lot of flexibility for us from a portfolio standpoint.

Speaker #1: I would say that Gustavo is absolutely right. I think the word is flexibility. Just one compliment: our concentrate in China is becoming a very important product.

Rogério Nogueira: I would say that Gustavo is absolutely right. I think the word is flexibility. Just one complement. Our concentrate in China is becoming a very important product. One, because China is actually replacing some sintering strands to pellets, to pelletizing plants. We are actually promoting, quite successfully, our pellet feed concentrated in China. Demand is increasing significantly. The other flexibility element that it brings us is the possibility of blending and developing different products. Flexibility is the key here, and we'll decide it based on the market and based on our mines.

Speaker #1: One, because China is actually replacing some sintering strengths with pellets, to pelletizing plants. And we are actually promoting quite successfully our pellet feed concentrate in China.

Speaker #1: So, demand is increasing significantly. And the other flexibility element that it brings us is the possibility of blending and developing different products.

Speaker #1: So, flexibility is the key here. We'll decide that based on the market and based on our considerations.

Speaker #3: The next question is from Marina Calero from RBC.

[Company Representative] (Vale): Next question is from Marina Calero from RBC.

Operator: Next question is from Marina Calero from RBC.

Speaker #4: Good morning. Thanks for the call and the opportunity to ask questions. I have a couple of follow-ups on cost. The first one is on your FX strategy.

Marina Calero: Good morning. Thanks for the call and the opportunity to ask questions. I have a couple of follow-ups on cost. The first one is on your FX strategy. We've talked a lot about freight, but FX has been another headwind. Can you remind us your hedging strategy when it comes to the currency and whether you're seeing any opportunities there, particularly for 2027?

Speaker #4: We've seen and talked a lot about freight, but FX has been another headwind. Can you remind us of your hedging strategy when it comes to currency, and whether you're seeing any opportunities there, particularly for 2027?

Speaker #1: Marina, this is Marcelo speaking. When it comes to FX, we have a very strong strategy related to the real-denominated debt, which is basically 100% hedged into dollars.

Marcelo Bacci: Marina, this is Marcelo speaking. When it comes to FX, we have a very strong strategy related to the BRL denominated debt, which is basically 100% hedged into USD. A significant part of our other obligations, especially the reparation obligations, are also hedged into USD. For the running costs, we operate from time to time. I think if you look at the market recently, it hasn't given a lot of opportunity for us to hedge. The volatility has been relatively low and the currency has been around BRL 5, BRL 5.10 for a while now. We have not been operating short-term cost-related FX hedges recently.

Speaker #1: A significant part of our other obligations especially the reparation obligations are also hedged into dollars. For the running costs, we operate from time to time.

Speaker #1: I think, you know, if you look at the market recently, it hasn't given a lot of opportunity for us to hedge at, you know, the volatility has been relatively low.

Speaker #1: And the currency has been around 5, 5, 10 for a while now. So we have not been operating short-term cost-related FX hedges recently.

[Company Representative] (Vale): This concludes today's question and answer session. Vale's conference is now concluded. We thank you for your participation. Goodbye.

Operator: This concludes today's question and answer session. Vale's conference is now concluded. We thank you for your participation. Goodbye.

Speaker #3: This concludes today's question and answer session. Vale's conference is now concluded. We thank you for your participation.

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