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Vale's performance in 1Q15 April 30, 2015
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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. These risks and
uncertainties include factors related to the following: (a) the countries where we
operate, especially Brazil and Canada; (b) the global economy; (c) the capital
markets; (d) the mining and metals prices and their dependence on global
industrial production, which is cyclical by nature; and (e) global competition in the
markets in which Vale operates. To obtain further information on factors that may
lead to results different from those forecast by Vale, please consult the reports
Vale files with the U.S. Securities and Exchange Commission (SEC), the Brazilian
Comissão de Valores Mobiliários (CVM), the French Autorité des Marchés
Financiers (AMF) and The Stock Exchange of Hong Kong Limited, and in particular
the factors discussed under “Forward-Looking Statements” and “Risk Factors” in
Vale’s annual report on Form 20-F.”
2
Operational performance
Financial Performance
Capital expenditures
Capital structure
DOCUMENT CONTENT
3
Operational performance
Financial Performance
Capital expenditures
Capital structure
DOCUMENT CONTENT
4
PRODUCTION VOLUMES
Nickel
Kt
Copper³
Kt
Gold
'000 oz
Phosphate Rock
Mt
Iron ore¹
Mt
Coal
Mt
64,9
70,6
83,1
81,3
71,1
79,4
85,7
83,0
74,5
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
65,1
65,2
62,0
67,9
67,5
61,7
72,1
73,6
69,2
89,5
91,3
94,6
94,6
88,4
81,0
104,8
105,4
107,2
57,9
63,2
76,1
88,3
73,7
70,0
84,0
93,6
102,7
1,8
2,4
2,4
2,3
1,8
2,2
2,3
2,3
1,7
2,0
1,9
2,1
2,3
1,9
2,1
2,2
2,2
2,0
Pellets²
Mt
¹ Includes iron ore fines, lump, ROM and iron ore feed for Vale’s pellet plants. Excludes Samarco’s attributable production.
² Excludes Samarco's attributable production.
³ 2013 figures include Tres Valles production (1Q13: 3.7 Kt, 2Q13: 3.6 Kt, 3Q13: 2.9 Kt and 4Q13: 0.8 Kt). Includes Lubambe’s attributable
production.
9,1
9,7
9,7
10,4
9,9
10,0
11,4
11,6
11,4
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PRODUCTION VOLUMES YEAR-ON-YEAR
71,1 74,5
1Q14 1Q15
Iron Ore¹ ²
Mt
9,9
11,4
1Q14 1Q15
Pellets²
Mt
67,5 69,2
1Q14 1Q15
Nickel
Kt
+4.8% +15.2% +2.5%
88,4
1Q14 1Q15
107,2
Copper³
Kt
+21.3%
¹ Includes iron ore fines, lump, ROM and iron ore feed for Vale’s pellet plants.
² Excludes Samarco’s attributable production.
³ Includes Lubambe’s attributable production.
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SALES VOLUMES
55,7
61,9
73,4
73,6
57,8
67,4
66,6
78,2
62,3
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
Iron ore¹
Mt
Nickel
Kt
Copper²
Kt
Gold
'000 oz
Phosphate Rock
Mt
Coal
Mt
63,0
65,0
62,0
69,0
65,0
67,0
71,0
69,0
68,0
72,3
76,9
103,2
99,4
83,8
76,3
97,5
95,2
97,5
47,2
70,2
85,5
94,2
78,9
68,7
106,9
96,5
96,9
1,5
1,9
1,8
2,9
1,4
1,9
2,1
2,1
1,6
0,6
0,7
0,9
0,9
0,8
0,8
0,7
0,9
0,7
9,4
10,2
10,2
11,2
10,0
9,5
11,5
12,7
11,3
Pellets
Mt
¹ 1Q15 figure includes 59.4 Mt of iron ore ex-ROM and 2.9 Mt of ROM. Excludes Samarco’s attributable production.
² 1Q13, 2Q13, 3Q13 and 4Q13 figures include Tres Valles sales volume. Excludes Lubambe’s attributable production.
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SALES VOLUMES YEAR-ON-YEAR
57,8
62,3
1Q14 1Q15
Iron Ore
Mt
10,0
11,3
1Q14 1Q15
Pellets
Mt
65,0 68,0
1Q14 1Q15
Nickel
Kt
+7.8% +13.0% +4.6%
83,8
97,5
1Q14 1Q15
Copper
Kt
+16.3%
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Operational performance
Financial Performance
Capital expenditures
Capital structure
DOCUMENT CONTENT
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ADJUSTED EBITDA¹
US$ billion Adjusted EBITDA margin (%)
5,2 4,9
5,8
6,6
4,1 4,1
3,0
2,2
1,6
148,4
126,0 132,5 134,6
120,4
102,6
90,2
74,3
62,4
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15
49.0 45.9 47.1 50.6 42.7
¹ Adjusted EBITDA excludes gains and/or losses on sales of assets and non-recurring expenses and includes dividends received from
non-consolidated affiliates
41.4 33.1 24.1
Platts IODEX Iron Ore Price
Average (US$/t)
25.7
10
EBITDA BY BUSINESS SEGMENT¹
US$ million
1,027
(128)
678
90
(65)
1.602
Ferrousminerals
Coal
Basemetals
Fertilizernutrients
Others
Total
1Q15 4Q14 1Q14
3.604
(162)
549
35
32
4.058
1.702
(204)
582
75
32
2.187
¹ Excluding non-recurring items.
64
42
6
78
27
3
89
14
1
Share of Total EBITDA (%)
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EVOLUTION OF COSTS AND EXPENSES¹
Costs¹
US$ million
Expenses1,2
US$ million
¹ Net of depreciation and amortization.
² Includes SG&A, R&D, Pre-operating and stoppage and other expenses. Does not include gain/loss on sale of assets
³ Excludes US$ 116 million of the insurance payment. 4 Excludes US$ 230 million of the goldstream transaction.
4,649
5,770
4,257
1Q14 4Q14 1Q15
-8.4%
808
1,320³
6384
1Q14 4Q14 1Q15
-21.0%
12
238 247 165
44 59
30
1Q14 4Q14 1Q15
145
235
119
1Q14 4Q14 1Q15
EVOLUTION OF EXPENSES
SG&A
US$ million
Pre-operating and stoppage expenses
R&D Other expenses¹
282 306
195
¹ Includes contingencies, provisions, profit sharing.
² Excludes US$ 116 million of the insurance payment.
³ Excludes US$ 230 million of the goldstream transaction.
Depreciation
208 231 171
40 61
93
1Q14 4Q14 1Q15
217
607
184
1Q14 4Q14² 1Q15³
248 292
264
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EVOLUTION OF IRON ORE FINES CASH COST, FREIGHT AND
EXPENSES
COGS¹
Freight
17.2
21.7
23.9
1Q14 4Q14 1Q15²
US$/t
-12.8%
¹ Ex-ROM.
² Excludes US$ 2.3/t of the bunker oil hedge treated as hedge account.
Royalties
-28.0%
Expenses
7.9
9.3
4,0
1Q14 4Q14 1Q15
-49.4%
22.7 23.2
19.8
19,9 21,5
18,3
1Q14 4Q14 1Q15
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PRICE REALIZATION – IRON ORE US$/t, 1Q15
AveragePlatts1Q15(dmt)
Humidity Quality Provisionalprices in
priorquarter¹
Laggedprices
Current Provisionalprices incurrentquarter²
Others CFR Ironore prices
Freight Iron oreprices
(ex-ROM)
ROM Valeprice1Q15(wmt)
Pricing system
US$/t
¹ Adjustment as a result of provisional prices booked in 4Q14 at US$ 72.0/t.
² Prices provisionally set at the end of 1Q15 at US$ 51.4/t based on forward curves compared to the US$ 62.4/t from the 1Q15 IODEX.
16.4
62.4 5.0
1.7 2.8 2.2 1.3
4.9
0.9 53.2 7.2
46.0 1.4
44.6
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IRON ORE PRICING SYSTEMS
Impact of Pricing Mechanisms
US$ / t
¹ Provisional prices were settled at US$ 51.4 /t at the end of 1Q15.
Pricing System Breakdown
%
Provisional - prior quarter
Lagged
Current
Provisional - current quarter
-0,5
-2,8
4Q14 1Q15
2,3 2,2
4Q14 1Q15
0,3
-1,3
4Q14 1Q15
-0,8
-4,9
4Q14 1Q15
13% 14%
50% 41%
37% 45%¹
4Q14 1Q15
Lagged
Current
Provisional
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Operational performance
Financial Performance
Capital expenditures
Capital structure
DOCUMENT CONTENT
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EVOLUTION OF CAPITAL EXPENDITURES US$ million
1.834
2.279
1.516
753
1.467
694
2.587
3.746
2.210
1Q14 4Q14 1Q15
Sustaining
Projects-14.6%
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PROJECT PROGRESS INDICATORS 1Q15
Project Capacity
Mtpy
Estimated
start-up
Executed capex
US$ million
2015 Total
Estimated capex
US$ million
2015 Total
Physical
progress
Carajás Serra Sul S11D 90 2H16 255 3,747 1,321 6,878² 60%
CLN S11D 230 (80¹) 1H14 to 2H18 484 3,137 2,375 9,484² 36%
Conceição Itabiritos II 19 (0¹) 1H15 54 917 179 1,137³ 97%
Cauê Itabiritos 24 (4¹) 2H15 81 767 350 1,3174 82%
CSP5 1.5 2H15 - 1,055 185 2,734 82%
Moatize II 11 2H15 117 1,501 629 2,068 86%
Nacala corridor6 18 2H14 225 3,117 648 4,444 85%
¹ Net additional capacity
² Original capex budget for S11D of US$ 8.089 billion and for CLN S11D of US$ 11.582 billion
³ Original capex budget of US$ 1.189 billion 4 Original capex budget of US$ 1.504 billion 5 Relative to Vale’s stake in the project 6 Completion of the greenfield sections of the Nacala corridor occurred in 4Q14 while brownfield section 7 (500Km) is still being upgraded.
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Operational performance
Financial Performance
Capital expenditures
Capital structure
DOCUMENT CONTENT
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23.162 24.685 24.802
1Q14 4Q14 1Q15
DEBT POSITION
Gross Debt
US$ million
Net Debt
Cash position
March 31, 2015
3,685
30.346 28.807 28.487
1Q14 4Q14 1Q15
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FINANCIAL INDICATORS¹
13,8
8,6 6,9
1Q14 4Q14 1Q15
Interest coverage - Ratio
1,1
1,9
2,3
1Q14 4Q14 1Q15
Net Debt / LTM² EBITDA - Ratio
9,7 9,1 8,7
1Q14 4Q14 1Q15
Maturity - years
4,55 4,54 4,46
1Q14 4Q14 1Q15
Cost of Debt - %
¹ Ex-Refis
² LTM – last twelve months. Excluding non-recurring items.
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