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Vale’s Performance in 2019

Mining News - Published on Mon, 24 Feb 2020

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In 2019, proforma EBITDA, excluding the provisions and incurred expenses related to Brumadinho, totaled US$ 17.987 billion, US$ 1.394 billion higher than in 2018, mainly due to higher prices (US$ 5.991 billion) and favorable foreign exchange variations (US$ 571 million), which were partially offset by lower volumes (US$ 2.796 billion), higher costs, expenses and others (US$ 1.404 billion) and the stoppage expenses and others due to Brumadinho (US$ 968 million). Vale posted a loss of US$ 1.683 billion in 2019, compared to a net income of US$ 6.860 billion in 2018. The US$ 8.543 billion decrease was mostly driven by: (i) provisions and expenses related to the Brumadinho dam rupture, including the decharacterization of dams and reparation agreements (US$ 7.402 billion), (ii) recognition of non-cash impairment charges and onerous contracts, mainly in the Base Metals and Coal businesses (US$ 4.202 billion), (iii) provisions related to the Renova Foundation and to the decommissioning of Germano dam (US$ 758 million), which were partially offset by lower foreign exchange losses (US$ 2.555 billion) in the year.

In 2019, adjusted EBITDA of the Ferrous Minerals business segment was US$ 16.997 billion, 16% higher than in 2018, mainly due to higher prices (US$ 6.099 billion), which were offset by lower volumes (US$ 2.463 billion) and higher costs (US$ 885 million), following Dam I rupture impacts. Despite the lower 62% Fe reference price, 13% lower than in 3Q19, Vale’s realized price CFR/FOB decreased only 6% vs. 3Q19, due to the positive effect of the pricing system mechanisms impacted by the strong price volatility in the quarter together with a higher forward price curve. C1 cash cost for iron ore fines decreased to US$ 14.5/t in 4Q19 from US$ 15.3/t in 3Q19, mainly due to lower volumes and prices of third-party purchases and BRL depreciation. Freight costs decreased US$ 0.9/t, totaling US$ 18.2/t in 4Q19, mainly due to lower exposure to spot market and mix of routes/fleet. Vale expects freight costs in 1Q20 to reduce in relation to 4Q19, mainly as a result of spot market volatility caused, among other factors, by uncertainties related to coronavirus.

Base Metals adjusted EBITDA totaled US$ 2.174 billion in 2019, vs. US$ 2.542 billion in 2018. The decrease was mainly due to higher costs (US$ 387 million), mostly related to VNC, Onga Puma and Sossego operations, lower cobalt realized prices (US$ 157 million), lower copper realized prices (U$ 45 million) and higher expenses (US$ 73 million), mostly for research expenses related to Hu’u project, which were partially offset by favourable exchange rate variations (US$ 132 million), higher nickel realized prices (US$ 81 million) and higher gold realized prices (US$ 76 million). Nickel operations are progressing towards higher reliability with production at the refineries going back to regular operating rates after the scheduled and unscheduled maintenance activities at the Copper Cliff Nickel Refinery, in Sudbury, and at the Clydach, Matsusaka and Long Harbour refineries. Likewise, production at Onga Puma mine and plant was resumed after a judicial authorization granted in September. The performance of copper operations was supported by Salobo’s solid performance during the year, reaching close to zero unit cash costs after by-products in 2H19, notwithstanding the impact of unscheduled maintenance in Sossego.

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Posted By : Rabi Wangkhem on Mon, 24 Feb 2020
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