On October 24th, Brazilian mining giant Vale S.A., based in Rio de Janeiro, announced its Q3 2024 earnings report. As of September 30, 2024, Vale’s total net debt reached $16.5 billion, an increase of $1.8 billion from the previous quarter, primarily driven by higher provisions related to the Samarco dam collapse.
The report revealed that Vale experienced improvements across all business segments, with iron ore shipments rising by 1.3 million tons, marking a 2% increase year-over-year. The average realized price for iron ore fines was $90.6 per ton, which represented a decline of $7.6 per ton compared to the previous quarter, while the reference price for iron ore dropped by $12.0 per ton during the same period.
Adjusted EBITDA for the quarter was reported at $3.7 billion, showing a 6% decrease sequentially and a 21% decrease year-over-year. The C1 cash cost for iron ore fines, excluding third-party purchases, fell to $20.6 per ton, down 17% from the previous quarter and 6% from the same period last year. Notably, C1 production costs fell to $18.2 per ton in September, indicating a potential for strong performance in Q4.
In terms of copper and nickel, total costs amounted to $2,851 per ton and $18,073 per ton, respectively. Vale has once again revised its total cost guidance for copper, lowering it to a range of $2,900 to $3,300 per ton, while maintaining the guidance for nickel at $15,000 to $16,500 per ton, which is expected to be achievable.
Additionally, Vale revised its provision related to Samarco to $4.7 billion, an increase of $1 billion. This adjustment reflects the latest assessment of potential agreements with the Brazilian government concerning the Samarco dam collapse, related claims, and Samarco’s capacity to fund any future cash outflows.
Gustavo Pimenta, CEO of Vale, stated that the company’s iron ore production reached its highest level in over five years this quarter, while pellet production hit a peak not seen since 2019. He noted solid progress in the base metals business, particularly in copper and nickel, driven by operational improvements in Canada. Looking ahead, Vale aims to maintain the safety of its dams and recently upgraded the Sul Superior dam from an emergency response level three status.
Pimenta also announced that Vale plans to sign a settlement agreement regarding the Samarco dam incident, which aims to provide a mutually beneficial resolution for all stakeholders involved, ensuring benefits for affected communities.