Vale S A : Performance in 3Q22

Vale's performance in Q3 2022

Selected financial indicators

US$ million	3Q22	2Q22	3Q21
Net operating revenues	9,929	11,157	12,330
Total costs and expenses (ex-Brumadinho and de-characterization of dams)	(6,730)	(6,504)	(5,917)
Expenses related to Brumadinho event and de-characterization of dams	(336)	(280)	(161)
Adjusted EBIT from continuing operations	2,891	4,444	6,257
Adjusted EBIT margin (%)	29%	40%	51%
Adjusted EBITDA from continuing operations	3,666	5,254	6,906
Adjusted EBITDA margin (%)	37%	47%	56%
Proforma adjusted EBITDA from continuing operations¹	4,002	5,534	7,077
Net income from continuing operations attributable to Vale's stockholders	4,455	4,093	5,477
Net debt ²	6,980	5,375	2,207
Capital expenditures	1,230	1,293	1,199

• Excluding expenses related to Brumadinho and donations associated with COVID-19. ² Including leases (IFRS 16).

Highlights

Business Results

• Proforma adjusted EBITDA from continued operations of US$ 4.002 billion, US$ 1.532 billion lower than 2Q22, mainly reflecting the decline in iron ore and nickel prices.
• Free Cash Flow from Operations of US$ 2.164 billion, stable q/q, reaching a cash conversion of 54% of the proforma EBITDA, versus 41% in 2Q22. The better cash conversion is mainly explained by the positive impact of working capital in the quarter and the lower income tax paid.

Disciplined capital allocation

• Capital expenditures of US$ 1.230 billion, including growth and sustaining investments, down US$ 63 million from 2Q22, mainly due to lower disbursement in Sol do Cerrado solar project due to equipment deliveries last quarter.
• Gross debt and leases of US$ 12.204 billion as of September 30, 2022, US$ 404 million lower q/q, largely due to bank loans amortization (US$ 300 million).
• Expanded Net Debt of US$ 13.3 billion, following a revision of its concept to be more aligned with market practices and better inform management on capital allocation decisions. The revision was to exclude operating and regulatory commitments yet keeping the target leverage range of US$ 10-20 billion.

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Value creation and distribution

• Dividends and interest on capital of US$ 3.1 billion paid in September, as part of our Shareholder Remuneration Policy.
• Share buyback 25% complete, with around 126 million shares1 repurchased, for a total of US$ 1.9 billion, as of the date of this report.

Focusing and strengthening the core

• Approval of the Bahodopi nickel project, in July. The project is expected to start-up in 2025. The RKEF front of the project is a partnership between PTVI, Tisco & Xinhai with 73 ktpy capacity. PTVI ownership in the processing facility is 49%, and 100% of the mine. The mine will supply ore in accordance with PTVI equity stake in the JV. The project estimated CAPEX is around US$2.2 billion2 for the RKEF plant and around US$ 400 million for the mine.
• Reorganization of base metals operations in Brazil to combine copper and nickel assets into two entities, enabling more efficient processes and management. Both copper and nickel assets will continue to be consolidated and wholly owned by Vale.
• Approval for the construction of Onça Puma's 2nd furnace, with an investment of US$ 555 million for a capacity addition of 12-15 ktpy of nickel. The project is expected to come online in 1H25.
• Opening of the first phase of the C$ 945 million Copper Cliff Complex South Mine Project in Sudbury, Canada. More than 12km of tunnels were developed to reunite the south and north shafts of Copper Cliff Mine. Phase 1 is expected to nearly double ore production at Copper Cliff Mine, adding roughly 10 ktpy of contained nickel and 13 ktpy of copper.

New pact with society

• The upstream dam de-characterization program is 40% concluded. Since 2019, Vale has eliminated 12 structures, 5 in 2022.
• Emergency-levelremoval of 5 dams in Minas Gerais. The structures also received the declaration of stability (DCE), attesting the safety of the structures. Since the beginning of the year, 7 structures had their emergency level revoked.
• Continued progress on the decarbonization agenda:
• Sol do Cerrado solar project is commissioning, and its electrification will ramp up until July 2023. The solar park is comprised of 17 sub-parks with an installed capacity of 766 MWp, one of the largest solar energy projects in Latin America. The project meets 16% of Vale's electricity needs in Brazil in 2025 and is part of the initiatives to reduce 33% of scopes 1 and 2 emissions by 2030.
• Vale and the Germany steelmaker Stahl-Holding-Saar signed a Memorandum of Understanding to pursue solutions focused on carbon-neutral steelmaking process. Since 2021, Vale engaged with around 30 ironmaking clients representing approximately 50% of company's Scope 3 emissions.
• Vale received in Brazil and Indonesia two battery-powered 72t off-road trucks. Emissions from off-road trucks running on diesel represent about 9% of Vale's total scope 1 and 2 emissions. The electric trucks do not emit CO2 as they replace diesel with electricity from renewable sources. They also minimize the noise impact to the surrounding communities.

1Related to the April 2022 3rd buyback program for a total of 500 million shares. As reflected in our 3Q22 Financial Statement, until Sep 30, 2022, the Company had repurchased approximately 119.6 million ordinary shares in the total amount of US$ 1.8 billion.

2 100% basis. Excluding contingency.

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Adjusted EBITDA

Adjusted EBITDA

US$ million	3Q22	2Q22	3Q21
Net operating revenues	9,929	11,157	12,330
COGS	(6,301)	(5,950)	(5,472)
SG&A	(119)	(127)	(114)
Research and development	(170)	(151)	(135)
Pre-operating and stoppage expenses	(89)	(111)	(165)
Expenses related to Brumadinho event & de-characterization of dams	(336)	(280)	(161)
Expenses related to COVID-19 donations	-	-	(10)
Other operational expenses	(51)	(165)	(21)
Dividends and interests on associates and JVs	28	71	5
Adjusted EBIT from continuing operations	2,891	4,444	6,257
Depreciation, amortization & depletion	775	810	649
Adjusted EBITDA from continuing operations	3,666	5,254	6,906
Proforma Adjusted EBITDA from continuing operations¹	4,002	5,534	7,077
Discontinued operations - Coal	-	-	32
Adjusted EBITDA total	3,666	5,254	6,938
Proforma Adjusted EBITDA total¹	4,002	5,534	7,109

¹ Excluding expenses related to Brumadinho and COVID-19 donations.

Proforma EBITDA - 3Q22 vs. 2Q22

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Sales & price realization

Volume sold - Minerals and metals

'000 metric tons	3Q22	2Q22	3Q21
Iron ore fines	65,381	62,769	66,185
ROM	3,668	1,550	540
Pellets	8,521	8,843	8,037
Nickel	44	39	42
Copper	71	52	65
Gold as by-product ('000 oz)	79	62	92
Silver as by-product ('000 oz)	346	391	210
PGMs ('000 oz)	65	46	11
Cobalt (metric ton)	569	450	538

Average realized prices

US$/metric ton	3Q22	2Q22	3Q21
Iron ore fines Vale CFR reference (dmt)	103.3	137.9	162.9
Iron ore fines Vale CFR/FOB realized price	92.6	113.3	127.2
Pellets CFR/FOB (wmt)	194.3	201.3	249.9
Nickel	21,672	26,221	18,211
Copper¹	6,479	6,411	7,933
Gold (US$/oz)	1,748	1,884	1,798
Silver (US$/oz)	17	21	24
Cobalt (US$/t)	49,228	81,915	56,859
¹ Considers operations in Salobo, Sossego and North Atlantic.

Costs

COGS by business segment

US$ million	3Q22	2Q22	3Q21
Ferrous Minerals	4,317	4,248	4,106
Base Metals	1,882	1,424	1,187
Others	102	278	179
Total COGS of continuing operations¹	6,301	5,950	5,472
Depreciation	752	777	603
COGS of continuing operations, ex-depreciation	5,549	5,173	4,869
¹ COGS currency exposure in 3Q22 was as follows: 50.9% USD, 42.0% BRL, 6.8% CAD and 0.3% Other currencies.

Expenses

Operating expenses

US$ million		3Q22	2Q22	3Q21
	SG&A	119	127	114
	Administrative		103		103		90
	Personnel	42	44	29
	Services		28		30		29
	Depreciation	9	12	11
	Others		24		17		21
	Selling	16	24	24
	R&D		170		151		135
	Pre-operating and stoppage expenses	89	111	165
	Expenses related to Brumadinho event and de-characterization of		336		280		161
	dams
	Expenses related to COVID-19 donations	-	-	10
	Other operating expenses		51		165		21
Total operating expenses		765		834		606
	Depreciation	23	33	46
Operating expenses, ex-depreciation		742		801		560

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Brumadinho

Impact of Brumadinho and De-characterization in 3Q22

			Provisions balance		EBITDA				FX and other		Provisions
	US$ million				Payments			balance
		30jun22		impact			adjustments2
								30sep22
	De-characterization	3,544	35	(95)	(30)	3,454
	Agreements & donations¹		3,680		141		(423)		(167)		3,231
	Total Provisions		7,224		176		(518)		(197)		6,685
	Incurred Expenses	-	160	(160)	-	-
	Total		7,224		336		(678)		(197)		6,685

• Includes Integral Reparation Agreement, individual, labor and emergency indemnifications, tailing removal and containment works.
  2 Includes foreign exchange, present value and other adjustments.

Impact of Brumadinho and De-characterization from 2019 until 3Q22

	US$ million		EBITDA		Payments		PV & FX		Provisions balance
		impact			adjust ²		30/sep/22
	De-characterization	5,038	(1,036)	(548)	3,454
	Agreements & donations¹		8,524		(4,714)		(579)		3,231
	Total Provisions		13,562		(5,750)		(1,127)		6,685
	Incurred expenses	2,327	(2,327)	-	-
	Others		122		-		-		-
	Total		16,011		(8,077)		(1,127)		6,685

• Includes Integral Reparation Agreement, individual, labor and emergency indemnifications, tailing removal and containment works. ² Includes foreign exchange, present value and other adjustments

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