Vale S.a. · BMFBOVESPA:VALE3
Vale — Investor Day (September 2020)
46 slides from Vale's investor day presentation, Sep 16, 2020
Slide 1: 20th Analyst & Investor Tour
20th Analyst & Investor Tour September 16th, 2020 Construction works of a filtration plant at the Vargem Grande Complex 1
Slide 2: Disclaimer
“This presentation may include statements that present Vale's expectations about future events or results. All statements, when based upon expectations about the future and not on historical facts, involve various risks and uncertainties. Vale cannot guarantee that such statements will prove correct
Slide 3: 20th Analyst & Investor Tour Presenters
20th Analyst & Investor Tour Presenters: Marcello Spinelli Vagner Loyola 3
Slide 4: Enhancing safety, flexibility and quality
Enhancing safety, flexibility and quality Overcoming challenges and designing a new future Reviewing implementing new are flowsheet solutions to customers De-characterization of 400 level with capacity improvements in reduce dependence 4 What are the targets? 400 Mtpy production buffersupstream stru
Slide 5: Stabilization of production adds quality to Vale's portfolio
Enhancing safety, flexibility and quality Stabilization of production adds quality to Vale’s portfolio Profile of iron ore products Share of premium products² (%) ~90% 85% 84% 81% 53% 2015 2018 2019 2020E Future 5 1 Current seaborne supply (excluding Vale).2 Composed of pellets, Carajás (IOCJ), Braz
Slide 6: Vale reinforces its flexibility by creating capacity buffer
Enhancing safety, flexibility and quality Vale reinforces its flexibility by creating capacity buffer Production (Mt) Capacity (Mtpy) Path to 400Mtpy² 2018 Today1 Future Ponta da Madeira Northern System 194 202 260 230 PA EFC Southeastern System 104 63 106 101 Southern System 84 51 82 67 MG EFVM MS
Slide 7: The Northern System is a high-quality and low-cost growth platform
The Northern System is a high-quality and low-cost growth platform IOCJ, the world’s high-grade benchmark Path to 400 Mtpy Bottleneck today 2018¹ Today Future Plant IOCJ, BRBF input and GF88 Opening of new pits and licensing Ramp-up of operations 7 1 Mine/Plant refers to production and Port refers t
Slide 8: Northern and Eastern Ranges entail opening of new mining fronts and licensing
The Northern System is a high-quality and low-cost growth platform Northern and Eastern Ranges entail the opening of new mining fronts and licensing 2018¹ Today Path to 400 Mtpy Future Resumption of Eastern Range operation (6 Mtpy capacity) after receiving licenses and completing maintenance works 4
Slide 9: S11D, a brand new, innovative asset with lowest C1 cost
The Northern System is a high-quality and low-cost growth platform S11D, a brand new, innovative asset with Vale’s lowest C1 cost 2018¹ Today Path to 400 Mtpy Future 2020 2021 Installation of new crushers to process jaspilite ore bodies 2H22 Start-up of Northern System 240 Mtpy Project 1H24 Start-up
Slide 10: Serra Sul 120 means optionality and growth to Northern System
The Northern System is a high-quality and low-cost growth platform Serra Sul 120 means optionality and growth to the Northern System Serra Sul 120 Project • CAPEX: US$ 1.5 bn • Start-up: 1H24 • Increasing S11D mine-plant capacity in 20 Mtpy • Creates capacity buffer for the short-term, ensuring grea
Slide 11: Northern System with +28 Mtpy capacity in the near term
The Northern System is a high-quality and low-cost growth platform Northern System with +28 Mtpy capacity in the near term Northern System capacity (Mt) 260 Ranges 230 Today Eastern Range resumption Opening of new mining fronts Gelado project New crushers Path to 400 Mtpy Eastern Range 10 Mtpy¹ Nort
Slide 12: Southeastern System is key for pellet feed production
Southeastern System is key for pellet feed production Developing alternatives to enable beneficiation process Path to 400 Mtpy Bottleneck today 2018¹ Today Future 104 63 101 106 Plant² market³ Pellet feed, pellets and BRBF input Assessment of geotechnical structures Filtration and dry stacking solut
Slide 13: Torto dam and filtering as solutions for Brucutu
Southeastern System is key for pellet feed production Torto dam and filtering as solutions for Brucutu 2018¹ Today Path to 400 Mtpy Future Filtration at the plant with tailings’ disposal at Sul dam, which has a limited area for disposal Today Torto dam start-up after conclusion of construction and r
Slide 14: The filtering plant will allow dry stacking for up to 100% of tailings
Southeastern System is key for pellet feed production The filtering plant will allow dry stacking for up to 100% of tailings 14 Use of dams as contingency in wet seasons and licensing areas for tailings piles are key to reach full productivity Feproducts reuse Norte/Laranjeiras Disposal at Torto or
Slide 15: Start-up of the filtering plant in Brucutu expected in 2022
Southeastern System is key for pellet feed production The start-up of the filtering plant in Brucutu is expected in 2022 15 Thickener plant Filtering plant construction works at Brucutu (Aug/2020) Tailings treatment building Physical progress: 26%
Slide 16: Filtering will also play an important role in Itabira Complex
Southeastern System is key for pellet feed production Filtering will also play an important role in the Itabira Complex 2018¹ Today Path to 400 Mtpy Future Capacity limited by tailings disposal restriction (Itabiruçu dam) and temporary filtering in some plants to extend life of current assets Today
Slide 17: Itabira's filtration plants expected to start-up in 2022
Southeastern System is key for pellet feed production Itabira’s filtration plants are expected to start-up in 2022 17 Physical progress (Conceição): 13% Physical progress (Cauê): 15% Filtering plant construction works at Cauê (Aug/2020) Filtering plant construction works at Conceição (Aug/2020)
Slide 18: In Timbopeba, the depleted pit is key to increase wet processing
Southeastern System is key for pellet feed production In Timbopeba, the depleted pit is key to increase wet processing 2018¹ Today Path to 400 Mtpy Future Temporary authorization² by National Mining Agency (ANM) to dispose tailings at Timbopeba pit Today Final authorization by ANM to dispose tailing
Slide 19: Southeastern System with +38 Mtpy capacity in the near term
Southeastern System is key for pellet feed production Southeastern System with +38 Mtpy capacity in the near term Southeastern System capacity (Mt) 106 Today Brucutu (Filtration and Torto dam) Itabira (Filtration and Itabiruçu dam) Timbopeba (Full capacity) Path to 400 Mtpy Timbopeba (Capanema proje
Slide 20: Gradual resumptions in Vargem Grande and Paraopeba Complexes
Besides pellets, Southern System fits precisely Vale’s blending strategy Gradual resumptions in Vargem Grande and Paraopeba Complexes Path to 400 Mtpy Bottleneck today 2018¹ Today Future 14 8-12 12-16 12-16 market³ Complex BRBF input, 62% Fe products and pellets Unlock mining capacity Solve interfer
Slide 21: Maravilhas III dam improves quality and volumes in Vargem Grande
Besides pellets, Southern System fits precisely Vale’s blending strategy Maravilhas Complex III dam improves quality and volumes in Vargem Grande 2018¹ Today Path to 400 Mtpy Future Mines and plants operating with limited capacity with tailings being disposed at Maravilhas I dam and Cianita waste du
Slide 22: Filtering will extend Maravilhas III dam lifespan
Besides pellets, Southern System fits precisely Vale’s blending strategy Filtering, expected in 2021, will extend Maravilhas III dam lifespan Vargem Grande Complex Physical progress 77% 22 Thickener plant Vargem Grande Complex Tailings treatment building
Slide 23: Mechanical dismantling costs ending in 2021
Besides pellets, Southern System fits precisely Vale’s blending strategy Mechanical dismantling costs ending in 2021¹: improved productivity and Vargem Grande Complex ~50% of mining cost increase² 1 Depending on the conclusion of absence of impact in adjacent structures and on the external approval
Slide 24: Internal logistics interference by Vargem Grande dam expected solved by 2022
Besides pellets, Southern System fits precisely Vale’s blending strategy The internal logistics interference by Vargem Grande dam is expected to be solved until 2022¹ Vargem Grande Complex 24 1 Resumption of conveyor belt relies on external approvals by National Mining Agency (ANM) and external audi
Slide 25: Increase autonomous train productivity and decrease emergency level at Forquilhas
Besides pellets, Southern System fits precisely Vale’s blending strategy Increase autonomous train productivity and decrease emergency level at Forquilhas Vargem Grande Complex and Grupo dams elevate Vargem Grande capacity 25 dam dam Fábrica site ~28 km MRS railway Forquilha III Grupo dam Forquilha
Slide 26: Fábrica resumption is key to supply domestic market with pellets
Besides pellets, Southern System fits precisely Vale’s blending strategy Fábrica resumption is key to supply the domestic market with pellets 2018¹ Today Path to 400 Mtpy Future Conclusion of required vibration tests (to certify the absence of impacts on the site’s structures) and evaluation by exte
Slide 27: Southern System with +16 Mtpy capacity in the near term
Besides pellets, Southern System fits precisely Vale’s blending strategy Southern System with +16 Mtpy capacity in the near term Southern System capacity (Mt) 82 51 Today Vargem Grande (Maravilhas III dam and filtration) Vargem Grande (conveyor belts solution and licensing) Fábrica (Resumption) Path
Slide 28: Vale will create capacity buffers to ensure ~400 Mtpy production
Creating buffers to deliver production stability Vale will create capacity buffers to ensure ~400 Mtpy production New assets and solutions coming online • • Eastern range North 240 Mtpy • • Gelado project Serra Sul 120 Northern System Ramp-up and open new mining fronts • • Timbopeba pit • Torto dam
Slide 29: 20th Analyst & Investor Tour Presenter: Luciano Siani Pires
20th Analyst & Investor Tour Presenter: Luciano Siani Pires
Slide 30: De-risking Vale: the evolution of our roadmap
De-risking Vale the evolution of our roadmap 30 Achieving business stability with capital discipline Approaching ESG towards best practices Focusing on operational excellence and dam safety Keeping fast pace at Brumadinho’s reparation
Slide 31: Keeping fast pace at Brumadinho's reparation
Keeping fast pace at Brumadinho’s reparation Over R$ 10 billion spent¹ in indemnifications³ Indemnities Emergency Aid Civil and Labour a robust legal framework Recover the environment affected communities ¹ Excludes de-characterization expenditure. ²Submitted to the municipality of Brumadinho. ³Appr
Slide 32: Provisions for reparation are well-sized and timely disbursed
Keeping fast pace at Brumadinho’s reparation Provisions for reparation are well-sized and timely disbursed Cash outflow¹ US$ billion Provisions Incurred expenses 2019 2020E 2021E ~90% of provisions 2022E disbursed by 2022 2023-25E Total ¹ EBITDA impact in 2019 and 1H20 accumulated at US$ 3.947 billi
Slide 33: Transforming our culture with VPS
Focusing on operational excellence and dam safety By transforming our culture with VPS Standardization of best practices Operational discipline 33 Compliance with routine The discipline in implementing VPS in North Atlantic operations is already bearing fruits People development ▪ Robust nickel prod
Slide 34: Continuously improving dam management
Focusing on operational excellence and dam safety By continuously improving dam management ▪ Approaching international practices 34
Slide 35: Sul Superior back-up dam, delivered in 2020
Focusing on operational excellence and dam safety By increasing safety in nearby areas Sul Superior back-up dam, delivered in 2020 35
Slide 36: B3/B4 back-up dam, to be delivered in 2020
Focusing on operational excellence and dam safety By increasing safety in nearby areas B3/B4 back-up dam, to be delivered in 2020 36
Slide 37: Forquilhas back-up dam, to be delivered in 2021
Focusing on operational excellence and dam safety By increasing safety in nearby areas Forquilhas back-up dam, to be delivered in 2021 37
Slide 38: Evolving with our de-characterization plan
Focusing on operational excellence and dam safety By evolving with our de-characterization plan Cash outflow US$ million 750 - 490 250 - 350 2019 2020 2021 2022 2023+ 2.0 billion in total provisions³ ¹ After further assessments, the Xingu drained pile was reclassified as upstream dam. ²US$ 1,686 mil
Slide 39: We are evolving with our ESG practices
Approaching ESG towards best practices We are evolving with our ESG practices 33% emissions reduction target for scopes 1&2 by 2030 Carbon neutral by 2050 in scopes 1&2 Scope 3 target ambition Sensitivity analysis/stress test related to water Systematic involvement of local stakeholders in the CDP²
Slide 40: Closing cash drains
Achieving business stability with capital discipline Closing cash drains Operational resumption approved by authorities VNC refinery was shut down in 2Q20 New mining plan and plant revamp defined Exiting VNC, starting with placing it on care & maintenance Plant revamp to start in November 2020, foll
Slide 41: Advancing with capacity replacement and growth in Nickel
Achieving business stability with capital discipline Advancing with capacity replacement and growth in Nickel Replacement projects Growth project Growth projects ¹ Nickel EBITDA break-even and average realized price in 2Q20. ² Both projects combined. ³ Pending approval. 4 Combined in a 100% equity p
Slide 42: Advancing with growth projects for Copper
Achieving business stability with capital discipline Advancing with growth projects for Copper Expansion project In partnership with Glencore Searching for a partner Growth project ¹ Copper EBITDA break-even and average realized price in 2Q20. 42 Start-up: 2024E Capacity: +60 ktpy Alemão Start-up: 2
Slide 43: Robust cash generation to sustain reparation and fund projects
Achieving business stability with capital discipline Robust cash generation to sustain reparation, fund accretive projects and remunerate 2020 Expected Cash Flow, based on sell-side analysts’ EBITDA estimates US$ billion shareholders 17.5 0.9 - 1.1 0.7 – 0.9 1.5 – 1.7 4.4 – 4.6 2.0 – 2.1 0.6 – 0.8 6
Slide 44: Cash allocation plan based on long-term expanded net debt target
Achieving business stability with capital discipline Cash allocation plan based on long-term expanded net debt target Expanded net debt target US$ billion Net debt 2Q20 Leases Currency swaps Refis Brumadinho provisions Samarco & Renova Foundation Expanded net debt 2Q20 Target 44 ESG-driven Accretive
Slide 45: A roadmap for value creation
A roadmap for value creation 45 ▪ Repairing Brumadinho ▪ Enhancing dams safety ▪ Improving ESG practices ▪ Resuming production ▪ Operating with excellence (VPS) ▪ Benchmark in safety ▪ Best in class reliable operator ▪ Talent factory ▪ Leader in low-carbon mining ▪ Reference in creating and sharing
Slide 46: Signatures
VALE Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Vale S.A. (Registrant) By: /s/ Ivan Fadel Date: September 16, 2020 Head of Investor Relations