Vale(VALE) - 2024 Q4 - Annual Report

Executive Summary Business Performance Vale reported R$206.0 billion in net operating revenue and R$31.6 billion in net income for 2024, achieving its highest iron ore output since 2018 and exceeding copper production guidance 2024 Key Financial Highlights | Metric | Value | | :--- | :--- | | Net Operating Revenue | R$ 206.0 billion | | Adjusted EBIT | R$ 80.1 billion | | Net Cash from Operations | R$ 50.2 billion | | Net Income (Shareholders) | R$ 31.6 billion | | Expanded Net Debt | US$ 16.5 billion | 2024 Production & Sales Highlights | Product | Production | Sales | | :--- | :--- | :--- | | Iron Ore | 328 Mt (+6.3% YoY) | 307 Mt (+1.9% YoY) | | Pellets | 37 Mt (+1.2% YoY) | 38 Mt (+6.9% YoY) | | Copper | 348 kt (+6.6% YoY) | 327 kt | | Nickel | 160 kt (-3.0% YoY) | 155 kt (-7.6% YoY) | - Capital allocation in 2024 included R$32.7 billion in investments, R$4.76 per share in dividends and interest on capital, and R$2.1 billion in share buybacks[10] ESG Highlights Vale achieved key ESG milestones in 2024, including 100% renewable electricity in Brazil, 57% completion of its Dam Decharacterization Program, and early achievement of gender diversity targets - Achieved 100% renewable electricity consumption in Brazil[13] - Completed 57% of the Upstream Dam Decharacterization Program[13] - Reached 26.5% female representation in the workforce, meeting the target a year ahead of schedule. Self-declared Black professionals hold 37.7% of leadership positions in Brazil, nearing the 40% goal for 2026[13] - Reduced the Total Recordable Injury Frequency Rate (TRIFR) by 68% compared to the 2019 baseline[13] Reparations Vale advanced reparation efforts in 2024, with R$49.45 billion spent on Brumadinho reparations and a R$170 billion definitive settlement signed for the Mariana dam collapse - Brumadinho reparation expenditures reached R$49.45 billion, with 75% of obligations under the Integral Reparation Agreement fulfilled[15] - A Definitive Settlement was signed with public authorities for the full reparation of the Samarco Fundão dam collapse in Mariana[16] - A total of R$45 billion has been disbursed for reparation and compensation related to the Mariana incident, funded by Samarco and its partners, BHP and Vale[15] Strategic Developments Vale pursued strategic initiatives in 2024, including advancing iron ore growth projects, acquiring a stake in Minas-Rio, divesting a portion of VBM, and launching a circular mining program - Commissioned the Vargem Grande and Capanema projects, which will add 30 Mtpy of iron ore production capacity[18] - Acquired a 15% equity stake in Anglo American Minério de Ferro Brasil S.A., owner of the Minas-Rio complex, to access high-quality pellet feed[18] - Completed the sale of a 10% stake in Vale Base Metals (VBM) and completed the Voisey's Bay Mine Expansion Project, which has a capacity of 45 ktpy of nickel[21][22] - Launched the integrated mining circularity program, producing over 10 Mt of iron ore from tailings and waste in 2024, with a potential to exceed 30 Mt by 2030[25] Messages from Leadership Letter from the Chairman of the Board The Chairman highlights the Board's oversight in 2024, focusing on CEO succession, disciplined capital allocation, and progress in dam safety and reparation agreements - The Board of Directors conducted a CEO succession process, resulting in the unanimous approval of Gustavo Pimenta as Vale's new CEO[28] - Key priorities overseen by the board included delivering on 2024 guidance, progressing on Mariana and Brumadinho reparations, and advancing dam safety, including the Upstream Dam Decharacterization Program[31] - The Board approved shareholder remuneration of US$0.84 per share for 2024 and a new share buyback program, demonstrating commitment to disciplined capital allocation[35] - Vale will voluntarily disclose its first report based on ISSB requirements in 2025, enhancing transparency on climate-related financial information[33] Message from our CEO The CEO emphasizes 2024 achievements including meeting production guidance, reducing costs, signing the Mariana reparation agreement, and advancing dam decharacterization, while outlining 2025 strategic pillars - Achieved all production guidances for iron ore (328 Mt), pellets (37 Mt), nickel (160 kt), and copper (348 kt)[45] - Reached a Definitive Agreement for the full reparation of the Mariana dam rupture, valued at R$170 billion[44] - Completed 57% of the Upstream Dam Decharacterization Program and reduced the number of structures at emergency levels by 60% since 2020, aiming for zero level 3 dams by the end of 2025[43] - Achieved the lowest C1 iron ore cost for a quarter since 2021 and the lowest All-in Copper cost for a quarter since 2020 in Q4 2024[46] Company Overview Business Profile and Global Presence Vale is a global leader in iron ore, copper, and nickel production, operating integrated logistics systems and maintaining a significant international presence - Vale is a leading producer of iron ore, copper, and nickel, and also produces platinum group metals, gold, silver, and cobalt[56] - The company operates integrated logistics systems including railroads, maritime terminals, and ports to support its global mining operations[57] 2024 Production and 2025 Guidance | Product | 2024 Production | 2025 Guidance | | :--- | :--- | :--- | | Iron Ore | 328 Mt | 325-335 Mt | | Nickel | 160 kt | 160-175 kt | | Copper | 348 kt | 340-370 kt | Our Strategy: Vale 2030 Vale's 2030 strategy aims for a competitive and resilient portfolio, driven by a 'Superior Portfolio' focus, 'Performance Driven' operations, and becoming a 'Trusted Partner' - Superior Portfolio: Focus on a high-quality, flexible iron ore portfolio and accelerate copper production growth, especially in the Carajás region[66][68] - Performance Driven: Commit to being a benchmark in safety and operational excellence, fostering a results-oriented culture, and driving innovation[69][70] - Trusted Partner: Strengthen relationships with all stakeholders through transparency, open dialogue, and generating positive social and environmental impacts[71][72] Cultural Transformation Vale's cultural transformation focuses on its purpose to 'improve life and transform the future,' guided by core values and key behaviors like safety obsession and open dialogue - The company's purpose is to improve people's lives and transform the future, guided by core values such as 'Life matters most' and 'Act with integrity'[75][76] - Key cultural behaviors include 'Obsession with safety and risk management', 'Open and transparent dialogue', and 'Empowerment with commitment'[76] Shareholding Structure and Capital Market Vale's shareholding structure is diversified with no controlling shareholder, and its shares trade on B3 and NYSE, with a market capitalization of R$232.9 billion at year-end 2024 Shareholding Structure (as of Dec 31, 2024) | Shareholder | Stake | | :--- | :--- | | Others | 72.62% | | Previ | 8.75% | | Mitsui | 6.31% | | BlackRock | 6.37% | | Shares in Treasury | 5.95% | 2024 Trading Information | Trading Information | 2024 | 2023 | | :--- | :--- | :--- | | Closing price (R$/share) | 54.55 | 77.20 | | Market capitalization (R$ billion) | 232.9 | 331.9 | | Variation YoY VALE3 | (29.3)% | (13.1)% | - As of December 31, 2024, there were 1,211,148,744 outstanding ADSs, representing 26.7% of the total share capital[84] Workforce and Culture Workforce Overview Vale's 2024 workforce included 64,616 direct employees and 109,506 contractors, primarily in Iron Ore Solutions in Brazil, with a slight increase in turnover Workforce Composition (2024) | Category | Direct Employees | Contractors | | :--- | :--- | :--- | | Total | 64,616 | 109,506 | | Iron Ore Solutions | 43,607 | 68,898 | | Energy Transition Metals | 13,664 | 7,977 | | Corporate | 7,345 | 32,631 | - The turnover rate was 8.98% in 2024, up from 8.64% in 2023, reflecting the implementation of the Productivity Program and efficiency improvements[92][93] Cultural Transformation Journey Vale's cultural transformation shows progress in safety and operational discipline, with the 2024 Engagement Survey reporting an 83% approval rate and high scores in safety obsession - The 2nd Cultural Diagnosis confirmed significant progress in safety, operational discipline, and a commitment to how results are achieved[97][100] - The 2024 Employee Engagement Survey achieved a record participation of over 40,000 employees, with an 83% overall approval rate (+1 p.p. vs 2023)[98][99] - Key cultural mindset scores in 2024 include 'Obsession with Safety' at 92% and 'Open and Transparent Communication' at 87%[104] Diversity, Equity and Inclusion (DE&I) Vale achieved significant DE&I progress in 2024, meeting its female representation target early and advancing Black leadership representation in Brazil - Achieved the goal of doubling women's representation in the workforce, reaching 26.5% in 2024, a year ahead of schedule[108][110] - Increased the proportion of Black individuals in leadership positions in Brazil to 37.7%, progressing towards the 40% goal for 2026[109] - Representation of people with disabilities reached 5.5% of the workforce in Brazil, exceeding the legal requirement of 5%[109] Safety and Dam Management Occupational Health and Safety Vale significantly improved safety performance since 2019, reducing TRIFR by 68% and high-potential incidents by 60%, with a continued focus on zero fatalities Key Safety Indicators (2019 vs. 2024) | Indicator | 2019 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | N1+N2 Cases (High-potential injuries) | 62 | 25 | (60)% | | TRIFR (Total Recordable Injury Frequency Rate) | 3.46 | 1.09 | (68)% | | Occupational Exposure Limit (in thousands) | 23 | 9.2 | (60)% | - The occurrence of process safety events (P1 events) that could lead to fatalities or significant financial losses was reduced by 45% compared to the previous year[119][121] - Key safety actions for 2025 include implementing Critical Task Requirements (RACs), promoting safe behaviors, and focusing on contractor development[122] Dam Management Vale made substantial progress in dam management, completing 57% of its decharacterization program, reducing emergency-level dams by 60%, and achieving 96% GISTM compliance - Completed 57% of the Upstream Dam Decharacterization Program, eliminating 17 of 30 structures between 2019 and 2024. The goal is to eliminate 90% by 2029[124][127] - The number of dams at any emergency level in Brazil has been reduced by 60% since its peak in 2020 (from 35 to 14)[135][138] - The company's goal is to have zero dams at emergency level 3 by the end of 2025. As of year-end 2024, only one such structure remains[135] - Vale has implemented the Global Industry Standard on Tailings Management (GISTM) for 48 of its 50 Tailings Storage Facilities (TSFs)[142] - The company is reducing its reliance on dams, with approximately 80% of tailings now managed through filtration and dry stacking systems[143] Sustainability (ESG) Nature Vale advances its nature commitment by protecting over 218,000 hectares, reducing new water use by 49%, and adopting the TNFD framework - Since 2020, Vale has protected and/or restored 218,536 hectares, advancing toward its goal of 500,000 hectares by 2030[150] - Vale helps protect around one million hectares of land, with 80% located in the Amazon, including an 800,000-hectare area in partnership with ICMBio[152] - Achieved a 49% reduction in the average annual use of new water for industrial purposes over the last 20 years[155] - Joined the group of companies committed to the early adoption of the Taskforce on Nature-related Financial Disclosure (TNFD) and published its pilot report in June 2024[158] Social Vale's social strategy focuses on poverty reduction, indigenous rights, and community engagement, with R$11.6 billion in social, environmental, and institutional expenditures in 2024 - Progressing on its goal to help lift 500,000 people out of extreme poverty, with 20 proof-of-concept projects involving approximately 51,000 people[159][161] - Finalized and published the Kayapó People's Consultation Protocol in Pará, as part of its commitment to support indigenous communities in securing rights under UNDRIP[163][164] - A 2024 Community Opinion Survey found that 73% of local community respondents and 78% of traditional community respondents view Vale as a trustworthy company[165][166] - Total social, environmental, and institutional expenditures reached R$11.6 billion in 2024, including R$4.96 billion for social/institutional initiatives and R$6.62 billion for environmental initiatives[169] ESG Assessments Vale shows continuous improvement in ESG ratings, with its Sustainalytics score improving to 33.7 in 2024, reflecting its commitment to best practices ESG Rating Progression | Agency | 2019 | Current Rating (2024) | | :--- | :--- | :--- | | MSCI (AAA-CCC) | CCC | B | | Sustainalytics (lower is better) | 54.5 | 33.7 | | ISS Governance (lower is better) | 10 | 1 | | DJSI (higher is better) | 45 | 46 | - The Sustainalytics score improved to 33.7, a 21-point reduction since 2019, moving closer to the goal of a top-3 ranking[170] Decarbonization Vale is committed to decarbonization with targets for Scope 1, 2, and 3 emissions reductions, advancing initiatives like 100% renewable electricity in Brazil and strategic alliances for low-carbon solutions - Key climate targets include a 33% reduction in absolute Scope 1 & 2 emissions by 2030 (vs. 2017), net-zero Scope 1 & 2 emissions by 2050, and a 15% reduction in net Scope 3 emissions by 2035 (vs. 2018)[177] - Achieved 100% electricity from renewable sources in Brazil in 2023, two years ahead of schedule[181] - Signed strategic alliances with Petrobras for biofuels and with Green Energy Park for green hydrogen development to supply future Mega Hubs[184] - Began testing rotor sails on a Valemax vessel to harness wind power and reduce fuel consumption, one of five wind energy projects on ships servicing Vale[184] - Signed agreements with Hydnum Steel, ROGESA, Caterpillar, and Komatsu/Cummins to develop and supply low-carbon solutions for steelmaking and mining equipment[187] Reparations Brumadinho Reparation Vale completed 75% of its Brumadinho reparation obligations by 2024, indemnifying over 17,000 people and advancing environmental rehabilitation - Completed 75% of total obligations under the Integral Reparation Agreement for Brumadinho[188][191] - Over 17,000 people have been indemnified, totaling R$3.8 billion[193] - Environmental efforts include handling 88% of the 12.4 million m³ of tailings and placing 48% of the 658 hectares of disturbed land under rehabilitation[195][196] Mariana Reparation Vale, Samarco, and BHP signed a R$170 billion Definitive Reparation Agreement for the Mariana dam collapse in October 2024, outlining financial commitments for compensation and recovery - A Definitive Reparation Agreement was signed in October 2024 with a total financial commitment of approximately R$170 billion[200][202] Mariana Agreement Financial Breakdown (100% Basis) | Category | Amount (R$ billion) | Description | | :--- | :--- | :--- | | Payments to Public Entities | 100 | Installment payments over 20 years for compensatory programs | | Performance Obligations | 32 | Individual indemnification, resettlement, environmental recovery | | Amounts Already Invested | 38 | Remediation and compensation measures to date | | Total | 170 | | - Vale's provision for these obligations was US$3.7 billion as of December 31, 2024. The company's expected cash contribution is projected to be R$3.1 billion in 2024 and R$11.5 billion in 2025[207][208] Operating, Economic and Financial Performance Overall Performance Vale's 2024 financial performance included R$206.0 billion in net operating revenue, R$80.1 billion in Adjusted EBITDA, and R$32.7 billion in investments, ending with US$16.5 billion in expanded net debt Selected Financial Indicators (R$ million) | Indicator | 2024 | 2023 | | :--- | :--- | :--- | | Net operating revenues | 206,005 | 208,066 | | Adjusted EBIT (LAJIR) | 63,596 | 77,294 | | Adjusted EBITDA (LAJIDA) | 80,121 | 92,594 | | Adjusted EBITDA margin (%) | 38.9% | 44.5% | | Net income attributable to Vale's shareholders | 31,592 | 39,940 | Segment Performance Iron Ore Solutions' Adjusted EBITDA decreased to R$81.6 billion due to lower prices, while Energy Transition Metals' Adjusted EBITDA fell to R$7.9 billion, impacted by nickel prices and deconsolidation Adjusted EBITDA by Segment (R$ million) | Segment | 2024 Adjusted EBITDA (R$ million) | | :--- | :--- | | Iron Ore Solutions | 81,644 | | Energy Transition Metals | 7,929 | | Others & Eliminations | (9,452) | | Total | 80,121 | Iron Ore Solutions Iron Ore Solutions saw increased production of iron ore and pellets, with Adjusted EBITDA of R$81.6 billion impacted by lower prices and reduced C1 cash costs - Iron ore production increased by 2.0% to 327.7 Mt, and pellet production grew by 1.2% to 36.9 Mt[216] - Adjusted EBITDA was R$81.6 billion, down 12.7% YoY, mainly due to an 11.8% decrease in average realized iron ore fines prices to US$95.3/t[217] - C1 cash cost of iron ore fines (ex-third party) was reduced by 2% to US$21.8/t, driven by cost efficiency programs and higher production[219] Energy Transition Metals Energy Transition Metals reported increased copper production and decreased nickel production, with Adjusted EBITDA of R$7.9 billion impacted by lower nickel prices - Copper production rose 6.6% to 348.2 kt, while nickel production fell 3.0% to 159.9 kt, impacted by the PTVI deconsolidation[220] - Adjusted EBITDA decreased by 18.9% to R$7.9 billion, as average nickel prices fell 21.8% to US$17,085/t[220][222] - All-in costs for copper and nickel met revised targets, ending the year at US$2,616/t and US$15,420/t, respectively[221] Net Income Analysis Net income attributable to shareholders decreased to R$31.6 billion in 2024, primarily due to lower iron ore prices and a R$21.2 billion net financial loss - Net income attributable to shareholders was R$31.6 billion, a 20.9% decrease from 2023[228] Net Financial Result (R$ million) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Financial income | 2,281 | 2,159 | | Financial expenses | (7,968) | (7,276) | | Other financial items, net | (15,548) | (4,601) | | Financial result, net | (21,235) | (9,718) | - Recognized a net gain of R$510 million on non-current assets, resulting from gains on divestments in PTVI and VODC, offset by impairment losses on Thompson and Voisey's Bay assets[234][235] Investments (CAPEX) Total investments in 2024 reached R$32.7 billion (US$6.0 billion), comprising R$24.8 billion in sustaining and R$7.9 billion in growth projects, with key iron ore and nickel expansions completed Capital Expenditure by Type (R$ million) | CAPEX Type | 2024 (R$ million) | 2023 (R$ million) | | :--- | :--- | :--- | | Growth projects | 7,889 | 8,214 | | Sustaining projects | 24,766 | 21,232 | | Total | 32,655 | 29,446 | - Successfully delivered the Vargem Grande and Capanema projects, which will increase iron ore capacity by 30 Mtpy[242][243] - Completed the Voisey's Bay mine expansion, with a production capacity of approximately 45 ktpy of nickel[244] Debt Indicators Vale's expanded net debt was US$16.5 billion at year-end 2024, within its target range, with an average debt maturity of 8.7 years and active liability management Key Debt Indicators (US$ million) | Indicator | 2024 (US$ million) | 2023 (US$ million) | | :--- | :--- | :--- | | Gross debt and leases | 15,505 | 13,923 | | Net debt | 10,499 | 9,560 | | Expanded net debt | 16,466 | 16,164 | | Average debt maturity (years) | 8.7 | 7.9 | | Net debt / LTM adjusted EBITDA (x) | 0.7 | 0.5 | - Expanded net debt remained within the target range of US$10-20 billion[246] - Key debt management activities in 2024 included the issuance of US$1 billion in bonds maturing in 2054 and R$6 billion in debentures[250] Shareholder Returns Dividends and Interest on Capital Vale's Board approved total shareholder remuneration of R$4.76 (US$0.84) per share for 2024, totaling R$20.3 billion (US$3.6 billion) in distributions 2024 Shareholder Remuneration | Type | Amount (R$ million) | Per Share (R$) | | :--- | :--- | :--- | | Interest on capital | 11,162 | - | | Dividends | 9,143 | - | | Total | 20,305 | 4.76 | Share Buyback Program Vale repurchased 30.9 million shares for US$409.1 million in 2024, continuing its buyback program which has repurchased over 20% of outstanding shares since 2021 - Repurchased 30.9 million common shares and ADRs in 2024 for a total of US$409.1 million (R$2.05 billion)[259] - Between 2021 and the end of 2024, Vale repurchased a total of 864.2 million shares for US$14.7 billion, representing over 20% of outstanding shares[258] - A new share buyback program for up to 120 million shares over 18 months was announced in February 2025[260] Business Outlook Vale's 2025 guidance includes iron ore production of 325-335 Mt and nickel production of 160-175 kt, with long-term copper growth targets and optimized Capex of US$5.9 billion 2025 Production Guidance | Product | 2025 Guidance | | :--- | :--- | | Iron Ore | 325-335 Mt | | Pellets & Briquettes | 38-42 Mt | | Nickel | 160-175 kt | - Long-term iron ore production is expected to reach 340-360 Mt in 2026[262] - Copper production is targeted to grow to 420-500 kt by 2030 and approximately 700 kt by 2035[266] - Annual Capex guidance for 2025 has been updated and optimized from US$6.5 billion to US$5.9 billion[266] Independent Auditor Policy Vale's independent auditor policy ensures independence and prevents conflicts of interest, with PwC's contract renewed for five years and total fees of R$34.3 million in 2024 - The policy prohibits procuring consulting services that could threaten the independence of the independent auditors[268] - In 2024, the contract with PricewaterhouseCoopers Auditores Independentes LTDA. (PwC) was renewed for a five-year term[270] Fees Paid to Independent Auditor (R$ thousand) | Service | 2024 (R$ thousand) | 2023 (R$ thousand) | | :--- | :--- | :--- | | Accounting Audit | 30,914 | 27,707 | | Audit-Related Services | 3,354 | 2,721 | | Total | 34,268 | 30,428 |