Vale (VALE3) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 iron ore production since 2018, with S11D setting a new quarterly record and shipments up 7% year-over-year, driven by strong operational performance.

• Major growth projects Vargem Grande and Capanema are nearing completion, set to add 30 million tons of high-quality iron ore capacity by mid-2025; Sohar Concentration Plant approved as a pilot for mega hub strategy.

• Onça Puma, Sossego, and Salobo plants resumed operations, supporting energy transition metals guidance and cost improvements.

• Net operating revenue rose 8% year-over-year to R$51,735 million in Q2 2024, with net income surging to R$14,586 million, driven by strong iron ore performance and one-time gains from asset sales.

• ESG initiatives advanced with TNFD and ISSB adoption, B3/B4 dam decharacterization completed, and ongoing settlement discussions for Mariana.

Financial highlights

• Pro forma EBITDA reached $4.27 billion in Q2, up 15% sequentially, with adjusted EBITDA at R$20,839 million, and gross margin at 36%.

• C1 cash cost for iron ore was $24.9/ton in Q2, with June cost dropping to $22/ton; 2024 guidance reaffirmed at $21.5–23.0/ton.

• Free cash flow was negative $178 million in Q2, mainly due to working capital and higher capex, but cash and equivalents rose by $3.1 billion, supported by asset sales and bond issuance.

• Capital expenditures reached $1.33 billion in Q2, on track for $6.5 billion annual guidance.

• Board approved $1.6 billion in interest on capital for H1 2024, to be paid in September; share buybacks totaled $114 million in Q2.

Outlook and guidance

• Confident in reaching the top end of 310–320 million tons iron ore production guidance for 2024, with long-term goal of 340–360 million tons by 2026.

• Iron ore C1 cost guidance reaffirmed at $21.5–23.0/ton for 2024; copper and nickel cost and production guidances maintained.

• Strategic focus remains on iron ore and energy transition metals, with ongoing investments in renewable energy and decarbonization.