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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 10/27/23 Vale S.A. 6-K/A 6/30/23 161:21M MZ Technologies/FA |
Document/Exhibit Description Pages Size
1: 6-K/A Amendment to Current, Quarterly or Annual Report HTML 4.03M
by a Foreign Issuer
7: R1 Cover HTML 56K
8: R2 Consolidated Income Statement HTML 106K
9: R3 Consolidated Income Statement (Parenthetical) HTML 55K
10: R4 Consolidated Statement of Comprehensive Income HTML 85K
11: R5 Consolidated Statement of Cash Flows HTML 118K
12: R6 Consolidated Statement of Financial Position HTML 152K
13: R7 Consolidated Statement of Changes in Equity HTML 78K
14: R8 Corporate information HTML 48K
15: R9 Basis of preparation of interim financial HTML 67K
statements
16: R10 Significant events in the three-month period ended HTML 57K
June 30, 2023
17: R11 Information by business segment and geographic HTML 346K
area
18: R12 Costs and expenses by nature HTML 90K
19: R13 Financial results HTML 74K
20: R14 Income taxes HTML 115K
21: R15 Basic and diluted earnings per share HTML 75K
22: R16 Cash flows reconciliation HTML 144K
23: R17 Accounts receivable HTML 66K
24: R18 Inventories HTML 58K
25: R19 Suppliers and contractors HTML 55K
26: R20 Other financial assets and liabilities HTML 96K
27: R21 Investments in subsidiaries, associates, and joint HTML 200K
ventures
28: R22 Acquisitions and divestitures HTML 132K
29: R23 Intangibles HTML 104K
30: R24 Property, plant, and equipment HTML 205K
31: R25 Financial and capital risk management HTML 534K
32: R26 Financial assets and liabilities HTML 227K
33: R27 Participative shareholders? debentures HTML 56K
34: R28 Loans, borrowings, leases, cash and cash HTML 195K
equivalents and short-term investments
35: R29 Brumadinho dam failure HTML 115K
36: R30 Liabilities related to associates and joint HTML 85K
ventures
37: R31 Provision for de-characterization of dam HTML 143K
structures and asset retirement obligations
38: R32 Provisions HTML 58K
39: R33 Litigations HTML 130K
40: R34 Employee benefits HTML 112K
41: R35 Equity HTML 106K
42: R36 Related parties HTML 217K
43: R37 Basis of preparation of interim financial HTML 66K
statements (Policies)
44: R38 Basis of preparation of interim financial HTML 61K
statements (Tables)
45: R39 Significant events in the three-month period ended HTML 50K
June 30, 2023 (Tables)
46: R40 Information by business segment and geographic HTML 345K
area (Tables)
47: R41 Costs and expenses by nature (Tables) HTML 92K
48: R42 Financial results (Tables) HTML 72K
49: R43 Income taxes (Tables) HTML 114K
50: R44 Basic and diluted earnings per share (Tables) HTML 74K
51: R45 Cash flows reconciliation (Tables) HTML 140K
52: R46 Accounts receivable (Tables) HTML 65K
53: R47 Inventories (Tables) HTML 57K
54: R48 Suppliers and contractors (Tables) HTML 52K
55: R49 Other financial assets and liabilities (Tables) HTML 97K
56: R50 Investments in subsidiaries, associates, and joint HTML 200K
ventures (Tables)
57: R51 Acquisitions and divestitures (Tables) HTML 114K
58: R52 Intangibles (Tables) HTML 104K
59: R53 Property, plant, and equipment (Tables) HTML 206K
60: R54 Financial and capital risk management (Tables) HTML 552K
61: R55 Financial assets and liabilities (Tables) HTML 229K
62: R56 Participative shareholders? debentures (Tables) HTML 54K
63: R57 Loans, borrowings, leases, cash and cash HTML 199K
equivalents and short-term investments (Tables)
64: R58 Brumadinho dam failure (Tables) HTML 95K
65: R59 Liabilities related to associates and joint HTML 66K
ventures (Tables)
66: R60 Provision for de-characterization of dam HTML 136K
structures and asset retirement obligations
(Tables)
67: R61 Provisions (Tables) HTML 56K
68: R62 Litigations (Tables) HTML 125K
69: R63 Employee benefits (Tables) HTML 110K
70: R64 Equity (Tables) HTML 104K
71: R65 Related parties (Tables) HTML 215K
72: R66 Basis of preparation of interim financial HTML 55K
statements - Presentation currency (Details)
73: R67 Significant events in the three-month period ended HTML 52K
June 30, 2023 (Details)
74: R68 Significant events in the three-month period ended HTML 59K
June 30, 2023 (Details Narrative)
75: R69 Information by business segment and geographic HTML 96K
area - Adjusted EBITDA (Details)
76: R70 Information by business segment and geographic HTML 133K
area - Net operating revenue by shipment
destination (Details)
77: R71 Information by business segment and geographic HTML 74K
area - Assets (Details)
78: R72 Information by business segment and geographic HTML 76K
area - Assets by geographic area (Details)
79: R73 Information by business segment and geographic HTML 45K
area (Details Narrative)
80: R74 Costs and expenses by nature - Cost of goods sold HTML 70K
and services (Details)
81: R75 Costs and expenses by nature - Other (Details) HTML 55K
82: R76 Costs and expenses by nature - Other (Details 1) HTML 56K
83: R77 Financial result (Details) HTML 76K
84: R78 Income taxes - Income tax reconciliation (Details) HTML 66K
85: R79 Income taxes - Changes in deferred tax (Details) HTML 75K
86: R80 Income taxes - Settlement program (Details) HTML 50K
87: R81 Income taxes - Recoverable and payable taxes HTML 62K
(Details)
88: R82 Basic and diluted earnings (Loss) Per Share HTML 74K
(Details)
89: R83 Financial results (Details Narrative) HTML 47K
90: R84 Cash flows reconciliation - Cash folw from HTML 73K
operating activities (Details)
91: R85 Cash flows reconciliation - cash flow from HTML 50K
investing activities (Details)
92: R86 Cash flows reconciliation - Reconciliation of debt HTML 81K
to cash flow (Details)
93: R87 Cash flows reconciliation - Non cash transaction HTML 46K
(Details)
94: R88 Cash flows reconciliation (Details Narrative) HTML 77K
95: R89 Accounts receivable (Details) HTML 58K
96: R90 Accounts receivable - Sensitivity of the Company's HTML 56K
risk on final settlement (Details)
97: R91 Inventories (Details) HTML 59K
98: R92 Suppliers and contractors (Details) HTML 53K
99: R93 Suppliers and contractors (Details Narrative) HTML 47K
100: R94 Other financial assets and liabilities (Details) HTML 76K
101: R95 Other financial assets and liabilities - HTML 67K
Liabilities related to the concession grant
(Details)
102: R96 Investments in subsidiaries, associates and joint HTML 145K
ventures - Guarantees provided (Details)
103: R97 Investments in subsidiaries, associates and joint HTML 57K
ventures - Changes in the year (Details)
104: R98 Acquisitions and divestitures - Vale Moambique HTML 63K
(Details)
105: R99 Acquisitions and divestitures - Discontinued HTML 108K
operations (Details)
106: R100 Acquisitions and divestitures (Details Narrative) HTML 101K
107: R101 Intangibles - (Details) HTML 84K
108: R102 Property, plant and equipment - Movements HTML 131K
(Details)
109: R103 Property, plant and equipment - Right-of-use HTML 70K
assets (Leases) (Details)
110: R104 Financial and capital risk management - Effects of HTML 80K
derivatives on statement of financial position and
Net exposure (Details)
111: R105 Financial and capital risk management - Effects of HTML 80K
derivatives on the income statement, cash flow and
other comprehensive income (Details)
112: R106 Financial and capital risk management - Protection HTML 119K
programs for the R and EUR denominated debt
instruments and other liabilities (Details)
113: R107 Financial and capital risk management - HTML 120K
Sensitivity analysis of derivative financial
instruments (Details 1)
114: R108 Financial and capital risk management - Protection HTML 60K
program for Libor floating interest rate US
denominated debt (Details 2)
115: R109 Financial and capital risk management - HTML 55K
Sensitivity analysis of derivative financial
instruments (Details 3)
116: R110 Financial and capital risk management - HTML 46K
Sensitivity analysis of derivative financial
instruments (Details 4)
117: R111 Financial and capital risk management - HTML 73K
Sensitivity analysis of derivative financial
instruments (Details 5)
118: R112 Financial and capital risk management - HTML 62K
Sensitivity analysis of derivative financial
instruments (Details 6)
119: R113 Financial and capital risk management - Embedded HTML 68K
derivatives in contracts (Details 7)
120: R114 Financial and capital risk management - Sensitiity HTML 60K
analysis other derivatives (Details 8)
121: R115 Financial and capital risk management - Effects of HTML 50K
derivatives on other comprehensive income (Details
9)
122: R116 Financial and capital risk management - Cash flow HTML 60K
hedge (Details 10)
123: R117 Financial and capital risk management - HTML 55K
Sensitivity analysis of hedge accounting (Details
11)
124: R118 Financial and capital risk management - Financial HTML 78K
counterparties' ratings (Details 12)
125: R119 Financial assets and liabilities (Details) HTML 120K
126: R120 Financial assets and liabilities - Hierarchy of HTML 75K
fair value (Details)
127: R121 Financial assets and liabilities - Loans and HTML 71K
financing (Details)
128: R122 Participative shareholders debentures (Details) HTML 49K
129: R123 Participative shareholders? debentures (Details HTML 45K
Narrative)
130: R124 Loans, borrowings, leases, cash and cash HTML 57K
equivalents and short-term investments - Net debt
and Short-term investments (Details)
131: R125 Loans, borrowings, leases, cash and cash HTML 57K
equivalents and short-term investments - Cash and
cash equivalents (Details)
132: R126 Loans, borrowings, leases, cash and cash HTML 79K
equivalents and short-term investments - Total
debt (Details)
133: R127 Loans, borrowings, leases, cash and cash HTML 65K
equivalents and short-term investments - Debt
payments (Details)
134: R128 Loans, borrowings, leases, cash and cash HTML 91K
equivalents and short-term investments - Lease
liabilities (Details)
135: R129 Loans, borrowings, leases, cash and cash HTML 114K
equivalents and short-term investments - Annual
minimum payments (Details)
136: R130 Brumadinho dam failure (Details) HTML 95K
137: R131 Brumadinho dam failure (Details Narrative) HTML 58K
138: R132 Liabilities related to associates and joint HTML 75K
ventures - Changes on the provisions (Details)
139: R133 Liabilities related to associates and joint HTML 64K
ventures (Details Narrative)
140: R134 Provision for de-characterization of dam HTML 66K
structures and asset retirement obligations -
De-characterization of dam structures located in
Brazil (Details)
141: R135 Provision for de-characterization of dam HTML 71K
structures and asset retirement obligations -
Asset retirement obligations and environmental
obligations (Details)
142: R136 Provision for de-characterization of dam HTML 73K
structures and asset retirement obligations -
Provision changes during (Details)
143: R137 Provision for de-characterization of dam HTML 51K
structures and asset retirement obligations
(Details Narrative)
144: R138 Provisions (Details) HTML 55K
145: R139 Litigations - Changes (Details) HTML 87K
146: R140 Litigations - Contingent liabilities (Details) HTML 55K
147: R141 Litigations - Judicial deposits (Details) HTML 55K
148: R142 Litigations (Details Narrative) HTML 47K
149: R143 Employee benefits - Reconciliation of net HTML 86K
liabilities recognized in the statement of
financial position (Details)
150: R144 Employee benefits - Remeasurement of the fair HTML 59K
value of plans (Details)
151: R145 Employee benefits (Details Narrative) HTML 47K
152: R146 Equity - Shareholders' Agreement (Details) HTML 72K
153: R147 Equity - Cancellation of treasury shares (Details) HTML 49K
154: R148 Equity - Share buyback program (Details) HTML 70K
155: R149 Related parties - Transactions with related HTML 90K
parties (Details)
156: R150 Related parties - Outstanding balances with HTML 95K
related parties (Details)
159: XML IDEA XML File -- Filing Summary XML 324K
157: XML XBRL Instance -- valedfifrs2q23_6ka_htm XML 8.58M
158: EXCEL IDEA Workbook of Financial Report Info XLSX 345K
3: EX-101.CAL XBRL Calculations -- vale-20230630_cal XML 338K
4: EX-101.DEF XBRL Definitions -- vale-20230630_def XML 1.48M
5: EX-101.LAB XBRL Labels -- vale-20230630_lab XML 2.03M
6: EX-101.PRE XBRL Presentations -- vale-20230630_pre XML 1.95M
2: EX-101.SCH XBRL Schema -- vale-20230630 XSD 570K
160: JSON XBRL Instance as JSON Data -- MetaLinks 628± 916K
161: ZIP XBRL Zipped Folder -- 0001292814-23-004317-xbrl Zip 643K
United States
Securities and Exchange Commission
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934
For the month of
September 2023
Praia de Botafogo nº 186, 18º andar,
Botafogo
22250-145 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
(Check One) Form 20-F x Form 40-F ¨
Explanatory Note
i Vale is amending its report on Form 6-K furnished to the Securities and Exchange Commission on July 28, 2023 (File/Film Number: 001-15030 / 231119821) (the “Original 6-K”) solely for the purpose of adding Exhibit 101, which contains Interactive Data File disclosure in accordance with Rule 405 of Regulation S-T. Except as described above, this amendment does not amend any information set forth in the Original 6-K.
Contents
| 2 |
Report of Independent Registered Public Accounting Firm
To the stockholders and Board of Directors of
Vale S.A.
Results of Review of Interim Financial Statements
We have reviewed the accompanying consolidated statement of financial position of Vale S.A. and its subsidiaries (“Company”) as of June 30, 2023, and the related consolidated income statement, consolidated statement of comprehensive income and consolidated statement of cash flows for the three and six-month periods ended June 30, 2023 and 2022, and the consolidated statement of changes in equity for the six-month periods ended June 30, 2023 and 2022, including the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with IAS 34 - Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB).
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statement of financial position of the Company as of December 31, 2022, and the related consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended (not presented herein), and in our report dated February 16, 2023, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated financial position as of December 31, 2022, is fairly stated, in all material respects, in relation to the consolidated financial position from which it has been derived.
Basis for Review Results
These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ PricewaterhouseCoopers Auditores Independentes Ltda.
Rio de Janeiro, RJ, Brazil
July 27, 2023
| 3 |
In millions of United States dollars, except earnings per share
The accompanying notes are an integral part of these interim financial statements.
| 4 |
Consolidated Statement of Comprehensive Income
In millions of United States dollars
Items above are stated net of tax and the related taxes are disclosed in note 7.
The accompanying notes are an integral part of these interim financial statements.
| 5 |
Consolidated Statement of Cash Flows
In millions of United States dollars
| Three-month period ended June 30, | Six-month period ended June 30, | ||||
| Notes | 2023 | 2022 | 2023 | 2022 | |
| Cash flow from operations | 9(a) | i 3,259 | i 5,738 | i 7,539 | i 11,269 |
| Interest on loans and borrowings paid | 9(c) | ( i 200) | ( i 277) | ( i 369) | ( i 456) |
| Cash received (paid) on settlement of derivatives, net | 18(d) | i 134 | ( i 42) | i 172 | ( i 118) |
| Payments related to Brumadinho event | 22 | ( i 497) | ( i 319) | ( i 621) | ( i 383) |
| Payments related to de-characterization of dams | 24 | ( i 95) | ( i 83) | ( i 173) | ( i 152) |
| Interest on participative shareholders' debentures paid | 20 | ( i 127) | ( i 235) | ( i 127) | ( i 235) |
| Income taxes (including settlement program) paid | ( i 574) | ( i 1,213) | ( i 911) | ( i 3,790) | |
| Net cash generated by operating activities from continuing operations | i 1,900 | i 3,569 | i 5,510 | i 6,135 | |
| Net cash generated by operating activities from discontinued operations | 15(f) | - | - | - | i 41 |
| Net cash generated by operating activities | i 1,900 | i 3,569 | i 5,510 | i 6,176 | |
| Cash flow from investing activities: | |||||
| Capital expenditures | 4(c) | ( i 1,208) | ( i 1,293) | ( i 2,338) | ( i 2,429) |
| Additions to investments | 14(a) | ( i 1) | - | ( i 8) | - |
| Proceeds (payments) from the sale of investments, net | 9(b) | - | - | ( i 67) | i 437 |
| Dividends received from associates and joint ventures | 14 | i 105 | i 71 | i 105 | i 136 |
| Short-term investment | i 67 | i 101 | i 12 | i 103 | |
| Other investments activities, net | ( i 30) | i 48 | ( i 97) | i 48 | |
| Net cash used in investing activities from continuing operations | ( i 1,067) | ( i 1,073) | ( i 2,393) | ( i 1,705) | |
| Net cash used in investing activities from discontinued operations | 15(f) | - | ( i 65) | - | ( i 103) |
| Net cash used in investing activities | ( i 1,067) | ( i 1,138) | ( i 2,393) | ( i 1,808) | |
| Cash flow from financing activities: | |||||
| Loans and borrowings from third-parties | 9(c) | i 1,500 | i 200 | i 1,800 | i 625 |
| Payments of loans and borrowings from third-parties | 9(c) | ( i 581) | ( i 1,433) | ( i 620) | ( i 1,828) |
| Payments of leasing | 21 | ( i 45) | ( i 57) | ( i 92) | ( i 98) |
| Dividends and interest on capital paid to Vale’s shareholders | 28(c) | - | - | ( i 1,795) | ( i 3,480) |
| Dividends and interest on capital paid to noncontrolling interest | ( i 5) | ( i 4) | ( i 8) | ( i 7) | |
| Shares buyback program | 28(d) | ( i 1,361) | ( i 2,596) | ( i 2,124) | ( i 4,384) |
| Stake acquisition on subsidiaries | 15(b) | ( i 130) | - | ( i 130) | - |
| Net cash used in financing activities from continuing operations | ( i 622) | ( i 3,890) | ( i 2,969) | ( i 9,172) | |
| Net cash used in financing activities from discontinued operations | 15(f) | - | - | - | ( i 11) |
| Net cash used in financing activities | ( i 622) | ( i 3,890) | ( i 2,969) | ( i 9,183) | |
| Net increase (decrease) in cash and cash equivalents | i 211 | ( i 1,459) | i 148 | ( i 4,815) | |
| Cash and cash equivalents in the beginning of the period | i 4,705 | i 9,061 | i 4,736 | i 11,721 | |
| Effect of exchange rate changes on cash and cash equivalents | i 67 | ( i 417) | i 99 | i 290 | |
| Cash and cash equivalents from subsidiaries sold, net | - | - | - | ( i 11) | |
| Cash and cash equivalents at end of the period | i 4,983 | i 7,185 | i 4,983 | i 7,185 | |
The accompanying notes are an integral part of these interim financial statements.
| 6 |
Consolidated Statement of Financial Position
In millions of United States dollars
| Notes | June 30, 2023 | December 31, 2022 | |
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | 21 | i 4,983 | i 4,736 |
| Short-term investments | 21 | i 46 | i 61 |
| Accounts receivable | 10 | i 2,967 | i 4,319 |
| Other financial assets | 13 | i 522 | i 342 |
| Inventories | 11 | i 5,193 | i 4,482 |
| Recoverable taxes | 7(d) | i 1,502 | i 1,272 |
| Other | i 334 | i 314 | |
| Current assets excluding assets held for sale | i 15,547 | i 15,526 | |
| Non-current assets | |||
| Judicial deposits | 26(c) | i 1,326 | i 1,215 |
| Other financial assets | 13 | i 698 | i 280 |
| Recoverable taxes | 7(d) | i 1,229 | i 1,110 |
| Deferred income taxes | 7(a) | i 9,904 | i 10,770 |
| Other | i 1,245 | i 1,019 | |
| Total non-current assets excluding investments, intangible assets and property, plant and equipment | i 14,402 | i 14,394 | |
| Investments in associates and joint ventures | 14 | i 1,901 | i 1,798 |
| Intangibles | 16 | i 11,001 | i 10,238 |
| Property, plant, and equipment | 17 | i 48,666 | i 44,938 |
| Total non current assets | i 75,970 | i 71,368 | |
| Total assets | i 91,517 | i 86,894 |
The accompanying notes are an integral part of these interim financial statements.
| 7 |
Consolidated Statement of Changes in Equity
In millions of United States dollars
| Notes | Share capital | Capital reserve | Profit reserves | Treasury shares | Other reserves | Cumulative translation adjustments | Retained earnings | Equity attributable to Vale’s shareholders | Equity attributable to noncontrolling interests | Total equity | |
| Balance at December 31, 2022 | i 61,614 | i 1,139 | i 20,744 | ( i 4,980) | ( i 1,675) | ( i 40,975) | - | i 35,867 | i 1,491 | i 37,358 | |
| Net income | - | - | - | - | - | - | i 2,729 | i 2,729 | i 77 | i 2,806 | |
| Other comprehensive income | - | - | i 1,402 | - | i 7 | i 1,354 | - | i 2,763 | i 7 | i 2,770 | |
| Dividends and interest on capital of Vale's shareholders | 28(c) | - | - | ( i 437) | - | - | - | - | ( i 437) | - | ( i 437) |
| Dividends of noncontrolling interest | - | - | - | - | - | - | - | - | ( i 37) | ( i 37) | |
| Acquisitions and disposal of noncontrolling interest | 15(b) | - | - | - | - | i 3 | - | - | i 3 | ( i 59) | ( i 56) |
| Shares buyback program | 28(d) | - | - | - | ( i 2,124) | - | - | - | ( i 2,124) | - | ( i 2,124) |
| Treasury shares canceled | 28(b) | - | - | ( i 4,164) | i 4,164 | - | - | - | - | - | - |
| Share-based payment programs | 27(b) | - | - | - | i 26 | ( i 15) | - | - | i 11 | - | i 11 |
| Balance at June 30, 2023 | i 61,614 | i 1,139 | i 17,545 | ( i 2,914) | ( i 1,680) | ( i 39,621) | i 2,729 | i 38,812 | i 1,479 | i 40,291 | |
| Balance at December 31, 2021 | i 61,614 | i 1,139 | i 15,702 | ( i 5,579) | ( i 1,960) | ( i 36,444) | - | i 34,472 | i 834 | i 35,306 | |
| Net income | - | - | - | - | - | - | i 10,609 | i 10,609 | i 74 | i 10,683 | |
| Other comprehensive income | - | - | i 1,165 | - | i 134 | ( i 3,011) | - | ( i 1,712) | ( i 6) | ( i 1,718) | |
| Dividends and interest on capital of Vale's shareholders | - | - | ( i 3,500) | - | - | - | - | ( i 3,500) | - | ( i 3,500) | |
| Dividends of noncontrolling interest | - | - | - | - | - | - | - | - | ( i 5) | ( i 5) | |
| Acquisitions and disposal of noncontrolling interest | 15(f) | - | - | - | - | - | - | - | - | i 585 | i 585 |
| Shares buyback program | 28(d) | - | - | - | ( i 4,384) | - | - | - | ( i 4,384) | - | ( i 4,384) |
| Treasury shares canceled | 28(b) | - | - | ( i 2,830) | i 2,830 | - | - | - | - | - | - |
| Share-based payment programs | - | - | - | i 19 | ( i 4) | - | - | i 15 | - | i 15 | |
| Balance at June 30, 2022 | i 61,614 | i 1,139 | i 10,537 | ( i 7,114) | ( i 1,830) | ( i 39,455) | i 10,609 | i 35,500 | i 1,482 | i 36,982 |
The accompanying notes are an integral part of these interim financial statements.
| 8 |
i
| 1. | Corporate information |
Vale S.A. (the “Parent Company”) is a public company headquartered in the city of Rio de Janeiro, Brazil with securities traded on the share exchanges of São Paulo – B3 S.A. (VALE3), New York - NYSE (VALE) and Madrid – LATIBEX (XVALO).
Vale S.A. and its subsidiaries (“Vale” or the “Company”) are global producers of: (i) iron ore and iron ore pellets, which are key raw materials for steelmaking, (ii) nickel, that is used to produce stainless steel, electric vehicles and metal alloys employed in the production process of several products, (iii) copper, used in the construction sector to produce pipes and electrical wires, and (iv) platinum, gold, silver, and cobalt as by-products of nickel and copper. To outflow its production, Vale also operates a railroad and port logistics system in Brazil.
Most of the Company’s products are sold to international markets, through the Company's main trading company, Vale International SA (“VISA”), a wholly owned subsidiary located in Switzerland.
In addition, Vale has investments in associates and joint operations which operate energy assets to reduce energy costs, minimize the risk of shortages and meet its energy consumption needs through renewable sources.
The Company also used to produce and sell thermal and metallurgical coal until April 2022, when Vale concluded the sale of this operation (note 15f). The results from the coal operation by the closing of the disposal process are presented in these interim financial statements as “discontinued operations”.
i
| 2. | Basis of preparation of interim financial statements |
The condensed consolidated interim financial statements of the Company (“interim financial statements”) have been prepared and are being presented in accordance with IAS 34 - Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”). All relevant information for the interim financial statements, and only this information, are presented and consistent to those used by the Company's Management.
The interim financial statements have been prepared to update users on the relevant events and transactions that occurred in the period and must be analyzed together with the financial statements for the year ended December 31, 2022. Accounting policies, accounting estimates and judgments, risk management and measurement methods are the same as those adopted in the preparation of the latest annual financial statements.
These interim financial statements were authorized for issue by the Board of Directors on July 27, 2023.
i
In June 2023, the International Sustainability Standards Board (“ISSB”) issued IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures, which provide requirements for disclosures on sustainability-related risks and opportunities and climate-related specific disclosures, respectively. The Company is currently assessing the potential impacts arising from these standards, which are both effective for annual reporting periods beginning on or after 1 January 2024.
Certain other new accounting standards, amendments and interpretations have been published that are not mandatory for December 31, 2023 reporting periods or have not materially impacted these interim financial statements. The Company did not early adopt any of these standards and does not expect them to have a material impact in future reporting periods.
i
b) Functional currency and presentation currency
The interim financial information of the Parent Company and its associates and joint ventures are measured using the currency of the primary economic environment in which each entity operates (“functional currency”), in the case of the Parent Company it is the Brazilian real (“R$”). For presentation purposes, these interim financial statements are presented in United States dollars (“US$”) as the Company believes that this is how international investors analyze the financial statements.
| 9 |
The main exchange rates used by the Company to translate its foreign operations are as follows:
i
| Schedule of exchange rates used to translate its foreign operations | ||||||||||||
| Average rate | ||||||||||||
| Closing rate | Three-month period ended June 30, | Six-month period ended June 30, | ||||||||||
| June 30, 2023 | December 31, 2022 | 2023 | 2022 | 2023 | 2022 | |||||||
| US Dollar ("US$") | i 4.8192 | i 5.2177 | i 4.9485 | i 4.9265 | i 5.0744 | i 5.0783 | ||||||
| Canadian dollar ("CAD") | i 3.6421 | i 3.8550 | i 3.6860 | i 3.8573 | i 3.7654 | i 3.9937 | ||||||
| Euro ("EUR") | i 5.2626 | i 5.5694 | i 5.3867 | i 5.2409 | i 5.4831 | i 5.5568 | ||||||
/ / i
| 3. | Significant events in the three-month period ended June 30, 2023 |
i /
Reversal of deferred income tax related to the Renova Foundation - In May 2023, the Company has entered, together with BHP Billiton Brasil Ltda. (“BHPB”), Samarco Mineração S.A. (“Samarco”) and certain creditors which hold together more than i 50% of Samarco’s notes claims and uncovered bank debt claims, into a binding agreement to setting the parameters of Samarco’s debt restructuring to be implemented through a consensual restructuring plan, subject for approval by the creditors and confirmed by the Judicial Reorganization (“JR”) court.
Under the agreement, Vale and BHPB will no longer be allowed to make direct payments to the Renova Foundation, instead they will have to make capital contributions to Samarco, which will be responsible to fund Renova. Therefore, following the change in the procedure to provide these contributions, Vale will no longer deduct these cash outflows from its income tax computation, resulting in the reversal of the deferred tax asset in the amount of US$1,078, recorded in the income statement and presented as “Income taxes”. Further details are presented in note 23 of these interim financial statements.
Notes offering - In June 2023, Vale issued notes of US$ i 1,500 with a coupon of i 6.125% per year and maturing in 2033.
Bond tender offers - In June 2023, Vale redeemed notes in the total amount of US$ i 500, and paid a premium of US$ i 22, recorded in the income statement and presented as “Bond premium repurchase” in note 6 – Financial results.
Strategic partnership on the Energy Transition Metals business – In July 2023 (subsequent event), the Company signed a binding agreement with Manara Minerals, a joint venture between Ma’aden and Saudi Arabia’s Public Investment Fund, under which Manara Minerals will make an equity investment in Vale Base Metals Limited (“VBM”), the holding entity for Vale’s Energy Transition Metals Business. At the same time, Vale and Engine No. 1 entered into another binding agreement for an equity investment in VBM. As a result of both agreements, the investors will hold a combined i 13% equity interest in VBM for the consideration of approximately US$ i 3.4 billion, which will be contributed to VBM thereby diluting Vale to an i 87% stake.
Therefore, the Company will retain control over VBM and this agreement shall be accounted for as an equity transaction with any result being recognized in shareholder’s equity upon closing of the transaction, which is expected to take place in 2024, subject to precedent condition, including the approval of the relevant antitrust and regulatory authorities.
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4. Information by business segment and geographic area
| Segment | Main activities |
| Iron Solutions | Comprise of the production and extraction of iron ore, iron ore pellets, manganese, other ferrous products, and its logistic related services. |
| Energy Transition Metals | Includes the production and extraction of nickel and its by-products (gold, silver, cobalt, precious metals and others), and copper, as well as its by-products (gold and silver). |
| Coal (discontinued operation) | Comprise of the production and extraction of metallurgical and thermal coal and its logistic related services. |
| Other | Includes the revenues and cost of other products, services, research and development, investments in joint ventures and associates of other business and corporate expenses unallocated to the reportable segments, financial information related to Midwestern system and costs related to the Brumadinho event. |
The segments are aligned with products and reflect the structure used by Management to evaluate the Company’s performance. The responsible bodies for making operational decisions, allocating resources and evaluating performance are the Executive Boards and Board of Directors. Accordingly, the performance of the operating segments is assessed based on a measure of adjusted EBITDA, among other measures.
a) Adjusted EBITDA
The definition of Adjusted EBITDA for the Company is the operating income or loss plus dividends received and interest from associates and joint ventures, and excluding the amounts charged as (i) depreciation, depletion and amortization and (ii) impairment reversal (impairment) and results on disposal of non-current assets.
i
(i) Includes adjustments of US$ i 52 and US$ i 87 in the three and six-month periods ended June 30, 2023, respectively, to reflect the performance of the streaming transactions at market prices.
/
b) Net operating revenue by shipment destination
i
| Net operating revenue by shipment destination | |||||||
| Three-month period ended June 30, 2023 | |||||||
| Iron Solutions | Energy Transition Metals | ||||||
| Iron ore | Iron ore pellets | Other ferrous products and services | Nickel and other products | Copper | Other | Total | |
| Americas, except United States and Brazil | - | i 102 | - | i 123 | i 2 | - | i 227 |
| United States of America | - | i 97 | - | i 334 | - | - | i 431 |
| Germany | i 47 | - | i 1 | i 123 | i 123 | - | i 294 |
| Europe, except Germany | i 321 | i 119 | - | i 181 | i 312 | - | i 933 |
| Middle East, Africa, and Oceania | - | i 507 | - | i 9 | - | - | i 516 |
| Japan | i 623 | i 54 | - | i 147 | - | - | i 824 |
| China | i 4,364 | i 2 | - | i 217 | i 55 | - | i 4,638 |
| Asia, except Japan and China | i 519 | i 67 | i 3 | i 227 | - | - | i 816 |
| Brazil | i 361 | i 465 | i 124 | i 18 | - | i 26 | i 994 |
| Net operating revenue | i 6,235 | i 1,413 | i 128 | i 1,379 | i 492 | i 26 | i 9,673 |
| Three-month period ended June 30, 2022 | |||||||
| Iron Solutions | Energy Transition Metals | ||||||
| Iron ore | Iron ore pellets | Other ferrous products and services | Nickel and other products | Copper | Other | Total | |
| Americas, except United States and Brazil | - | i 131 | i 5 | i 111 | - | i 76 | i 323 |
| United States of America | - | i 47 | - | i 427 | - | - | i 474 |
| Germany | i 92 | - | - | i 140 | i 83 | - | i 315 |
| Europe, except Germany | i 517 | i 89 | - | i 289 | i 216 | - | i 1,111 |
| Middle East, Africa, and Oceania | - | i 656 | - | i 6 | - | i 26 | i 688 |
| Japan | i 718 | i 94 | - | i 199 | i 3 | - | i 1,014 |
| China | i 4,868 | i 33 | i 1 | i 200 | - | - | i 5,102 |
| Asia, except Japan and China | i 523 | i 151 | i 3 | i 158 | i 26 | i 47 | i 908 |
| Brazil | i 395 | i 579 | i 123 | i 17 | - | i 108 | i 1,222 |
| Net operating revenue | i 7,113 | i 1,780 | i 132 | i 1,547 | i 328 | i 257 | i 11,157 |
| Six-month period ended June 30, 2023 | |||||||
| Iron Solutions | Energy Transition Metals | ||||||
| Iron ore | Iron ore pellets | Other ferrous products and services | Nickel and other products | Copper | Other | Total | |
| Americas, except United States and Brazil | i 1 | i 248 | - | i 266 | i 2 | - | i 517 |
| United States of America | - | i 183 | - | i 759 | - | - | i 942 |
| Germany | i 138 | i 33 | i 1 | i 297 | i 253 | - | i 722 |
| Europe, except Germany | i 693 | i 258 | - | i 543 | i 574 | - | i 2,068 |
| Middle East, Africa, and Oceania | - | i 923 | - | i 18 | - | - | i 941 |
| Japan | i 1,102 | i 106 | - | i 305 | - | - | i 1,513 |
| China | i 7,639 | i 2 | - | i 295 | i 109 | - | i 8,045 |
| Asia, except Japan and China | i 922 | i 108 | i 5 | i 367 | i 44 | - | i 1,446 |
| Brazil | i 722 | i 874 | i 229 | i 37 | - | i 51 | i 1,913 |
| Net operating revenue | i 11,217 | i 2,735 | i 235 | i 2,887 | i 982 | i 51 | i 18,107 |
| Six-month period ended June 30, 2022 | |||||||
| Iron Solutions | Energy Transition Metals | ||||||
| Iron ore | Iron ore pellets | Other ferrous products and services | Nickel and other products | Copper | Other | Total | |
| Americas, except United States and Brazil | - | i 261 | i 5 | i 277 | - | i 125 | i 668 |
| United States of America | - | i 74 | - | i 713 | - | - | i 787 |
| Germany | i 221 | - | - | i 311 | i 291 | - | i 823 |
| Europe, except Germany | i 978 | i 164 | - | i 504 | i 419 | - | i 2,065 |
| Middle East, Africa, and Oceania | - | i 1,150 | - | i 9 | - | i 26 | i 1,185 |
| Japan | i 1,334 | i 148 | - | i 388 | i 5 | - | i 1,875 |
| China | i 9,952 | i 41 | i 8 | i 490 | - | - | i 10,491 |
| Asia, except Japan and China | i 1,129 | i 174 | i 7 | i 281 | i 87 | i 47 | i 1,725 |
| Brazil | i 754 | i 1,132 | i 227 | i 32 | - | i 205 | i 2,350 |
| Net operating revenue | i 14,368 | i 3,144 | i 247 | i 3,005 | i 802 | i 403 | i 21,969 |
c) Assets by segment
i| Assets by segment | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Iron Solutions | Energy Transition Metals | Other | Total | Iron Solutions | Energy Transition Metals | Other | Total | |
|
Investments in associates and joint ventures |
i 1,310 | i 12 | i 579 | i 1,901 | i 1,296 | - | i 502 | i 1,798 |
| Intangibles | i 9,054 | i 1,886 | i 61 | i 11,001 | i 8,330 | i 1,847 | i 61 | i 10,238 |
| Property, plant and equipment | i 27,331 | i 18,577 | i 2,758 | i 48,666 | i 24,718 | i 17,808 | i 2,412 | i 44,938 |
| Assets by segment | ||||||||
| Three-month period ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Iron Solutions | Energy Transition Metals | Other | Total | Iron Solutions | Energy Transition Metals | Other | Total | |
| Depreciation, depletion and amortization | i 502 | i 262 | i 15 | i 779 | i 497 | i 299 | i 14 | i 810 |
| Capital expenditures | ||||||||
| Sustaining capital (i) | i 472 | i 326 | i 34 | i 832 | i 477 | i 343 | i 24 | i 844 |
|
Project execution |
i 255 | i 95 | i 26 | i 376 | i 199 | i 90 | i 160 | i 449 |
| Product inventory | i 727 | i 421 | i 60 | i 1,208 | i 676 | i 433 | i 184 | i 1,293 |
| Six-month period ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Iron Solutions | Energy Transition Metals | Other | Total | Iron Solutions | Energy Transition Metals | Other | Total | |
| Depreciation, depletion and amortization | i 905 | i 503 | i 27 | i 1,435 | i 913 | i 555 | i 28 | i 1,496 |
| Capital expenditures | ||||||||
| Sustaining capital (i) | i 984 | i 589 | i 63 | i 1,636 | i 976 | i 613 | i 54 | i 1,643 |
|
Project execution |
i 491 | i 167 | i 44 | i 702 | i 381 | i 157 | i 248 | i 786 |
| Product inventory | i 1,475 | i 756 | i 107 | i 2,338 | i 1,357 | i 770 | i 302 | i 2,429 |
| (i) | According to the Company's shareholder remuneration policy, dividends are calculated based on 30% of the adjusted EBITDA less sustaining capital investments. |
d) Assets by geographic area
i| Assets by geographic area | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| Investments in associates and joint ventures | Intangible | Property, plant and equipment | Total | Investments in associates and joint ventures | Intangible | Property, plant and equipment | Total | |
| Brazil | i 1,889 | i 9,119 | i 31,653 | i 42,661 | i 1,798 | i 8,391 | i 28,210 | i 38,399 |
| Canada | - | i 1,880 | i 11,526 | i 13,406 | - | i 1,845 | i 11,178 | i 13,023 |
| Americas, except Brazil and Canada | - | - | i 4 | i 4 | - | - | i 4 | i 4 |
| Europe | - | - | i 722 | i 722 | - | - | i 747 | i 747 |
| Indonesia | i 12 | i 1 | i 2,759 | i 2,772 | - | i 1 | i 2,731 | i 2,732 |
| Asia, except Indonesia and China | - | - | i 760 | i 760 | - | - | i 786 | i 786 |
| China | - | i 1 | i 16 | i 17 | - | i 1 | i 19 | i 20 |
| Oman | - | - | i 1,226 | i 1,226 | - | - | i 1,263 | i 1,263 |
| Total | i 1,901 | i 11,001 | i 48,666 | i 61,568 | i 1,798 | i 10,238 | i 44,938 | i 56,974 |
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5. Costs and expenses by nature
a) Cost of goods sold, and services rendered
i
| Schedule of cost of goods sold and services rendered | ||||
| Three-month period ended June 30, | Six-month period ended June 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Materials and services | i 1,007 | i 855 | i 1,816 | i 1,534 |
| Freight | i 999 | i 1,175 | i 1,681 | i 2,002 |
| Maintenance | i 954 | i 806 | i 1,766 | i 1,433 |
| Depreciation, depletion and amortization | i 737 | i 777 | i 1,350 | i 1,422 |
| Acquisition of products | i 547 | i 674 | i 1,082 | i 1,135 |
| Personnel | i 466 | i 457 | i 923 | i 838 |
| Fuel oil and gas | i 425 | i 353 | i 810 | i 637 |
| Royalties | i 320 | i 279 | i 552 | i 488 |
| Energy | i 185 | i 180 | i 352 | i 332 |
| Others | i 300 | i 394 | i 557 | i 751 |
| Total | i 5,940 | i 5,950 | i 10,889 | i 10,572 |
| Cost of goods sold | i 5,805 | i 5,800 | i 10,632 | i 10,289 |
| Cost of services rendered | i 135 | i 150 | i 257 | i 283 |
| Total | i 5,940 | i 5,950 | i 10,889 | i 10,572 |
b) Selling and administrative expenses
i
| Schedule of selling and administrative expenses | ||||
| Three-month period ended June 30, | Six-month period ended June 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Personnel | i 52 | i 44 | i 97 | i 98 |
| Services | i 30 | i 30 | i 58 | i 52 |
| Selling | i 21 | i 24 | i 39 | i 43 |
| Depreciation and amortization | i 14 | i 12 | i 25 | i 23 |
| Other | i 22 | i 17 | i 38 | i 32 |
| Total | i 139 | i 127 | i 257 | i 248 |
c) Other operating expenses, net
i /
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| 6. | Financial results |
i
| (i) | It mainly includes foreign exchange gains or losses from accounts receivable (note 10) and loans (note 21) and indexation adjustments from liabilities related to Brumadinho (note 22), associates and joint ventures (note 23), de-characterization of dams and asset retirement obligations (note 24) and legal proceedings (note 26a). |
Financial guarantees
As of June 30, 2023, the total guarantees granted by the Company (within the limit of its direct or indirect interest) for certain associates and joint ventures totaled US$ i 277 (December 31, 2022: US$ i 1,522), which the fair value was null as of June 30, 2023 (December 31, 2022: US$ i 103), as presented in note 13.
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| 7. | Income taxes |
a) Income tax reconciliation
Income tax expense is recognized based on the estimate of the weighted average effective tax rate expected for the full year, adjusted for the tax effect of certain items that are recognized in full on the interim tax calculation. Therefore, the effective tax rate in the interim financial statements may differ from management’s estimate of the effective tax rate for the year.
The reconciliation of the taxes calculated according to the nominal tax rates and the amount of taxes recorded is shown below:
i /
| b) | Deferred income tax assets and liabilities |
i
| Schedule of changes is deferred tax | |||
| Assets | Liabilities | Deferred taxes, net | |
| Balance at December 31, 2022 | i 10,770 | i 1,413 | i 9,357 |
| Effect in income statement | ( i 1,620) | ( i 32) | ( i 1,588) |
| Translation adjustment | i 784 | i 32 | i 752 |
| Other comprehensive income | ( i 30) | ( i 2) | ( i 28) |
| Balance at June 30, 2023 | i 9,904 | i 1,411 | i 8,493 |
| Balance at December 31, 2021 | i 11,441 | i 1,881 | i 9,560 |
| Effect in income statement | ( i 1,524) | i 44 | ( i 1,568) |
| Translation adjustment | i 651 | ( i 1) | i 652 |
| Other comprehensive income | ( i 25) | i 47 | ( i 72) |
| Transfers between assets and liabilities | ( i 183) | ( i 183) | - |
| Other | - | ( i 29) | i 29 |
| Balance at June 30, 2022 | i 10,360 | i 1,759 | i 8,601 |
| c) | Income taxes - Settlement program (“REFIS”) |
i
| Schedule of income taxes settlement | ||
| June 30, 2023 | December 31, 2022 | |
| Current liabilities | i 416 | i 371 |
| Non-current liabilities | i 1,886 | i 1,869 |
| REFIS liabilities | i 2,302 | i 2,240 |
| SELIC rate | i 13.75% | i 13.75% |
The balance is mainly related to the settlement program of claims regarding the collection of income tax and social contribution on equity gains of foreign subsidiaries and affiliates from 2003 to 2012. As of June 30, 2023, this amount bears SELIC interest rate (Special System for Settlement and Custody) and will be paid in monthly installments until October 2028. The impact of the SELIC over the liability is recorded under the Company’s financial results.
d) Uncertain tax positions (“UTP”)
There have not been any relevant developments on matters related to UTP since the financial statements for the year ended December 31, 2022.
e) Recoverable and payable taxes
i
| Schedule of recoverable and payable taxes | ||||||
| June 30, 2023 | December 31, 2022 | |||||
|
Current assets |
Non-current assets |
Current liabilities |
Current assets |
Non-current assets |
Current liabilities | |
| Value-added tax ("ICMS") | i 279 | i 1 | i 24 | i 261 | i 1 | i 46 |
| Brazilian federal contributions ("PIS" and "COFINS") | i 917 | i 855 | i 69 | i 690 | i 740 | i 35 |
| Income taxes | i 296 | i 373 | i 604 | i 309 | i 369 | i 221 |
| Financial compensation for the exploration of mineral resources ("CFEM") | - | - | 66 | - | - | i 54 |
| Other | i 10 | - | i 119 | i 12 | - | i 114 |
| Total | i 1,502 | i 1,229 | i 882 | i 1,272 | i 1,110 | i 470 |
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| 8. | Basic and diluted earnings per share |
The basic and diluted earnings per share are presented below:
i
| Schedule of basic and diluted earnings (loss) per share | ||||
Three-month period ended June 30, |
Six-month period ended | |||
| 2023 | 2022 | 2023 | 2022 | |
| Net income attributable to Vale's shareholders | ||||
| Net income from continuing operations | i 892 | i 4,093 | i 2,729 | i 8,549 |
| Net income from discontinued operations | - | i 2,058 | - | i 2,060 |
| Net income | i 892 | i 6,151 | i 2,729 | i 10,609 |
| Thousands of shares | ||||
| Weighted average number of common shares outstanding | i 4,396,778 | i 4,668,739 | i 4,424,788 | i 4,737,806 |
| Weighted average number of common shares outstanding and potential ordinary shares | i 4,400,609 | i 4,673,377 | i 4,428,619 | i 4,742,444 |
| Basic and diluted earnings per share from continuing operations | ||||
| Common share (US$) | ||||
| Basic and diluted earnings per share from discontinued operations | ||||
| Common share (US$) | ||||
| Basic and diluted earnings per share | ||||
| Common share (US$) | ||||
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| 9. | Cash flows reconciliation |
a) Cash flow from operating activities:
i /
b) Cash flow from investing activities
i /
c) Reconciliation of debt to cash flows arising from financing activities
i
| Reconciliation of debt to cash flows | ||||
Quoted in the secondary market |
Debt contracts in Brazil | Debt contracts on the international market |
Total | |
| December 31, 2022 | i 6,497 | i 280 | i 4,404 | i 11,181 |
| Additions | i 1,500 | - | i 300 | i 1,800 |
| Payments | ( i 517) | ( i 38) | ( i 65) | ( i 620) |
| Interest paid (i) | ( i 237) | ( i 16) | ( i 116) | ( i 369) |
| Cash flow from financing activities | i 746 | ( i 54) | i 119 | i 811 |
| Effect of exchange rate | i 7 | i 34 | i 3 | i 44 |
| Interest accretion | i 234 | i 16 | i 131 | i 381 |
| Non-cash changes | i 241 | i 50 | i 134 | i 425 |
| June 30, 2023 | i 7,484 | i 276 | i 4,657 | i 12,417 |
| Quoted in the secondary market | Debt contracts in Brazil | Debt contracts on the international market | Total | |
| December 31, 2021 | i 7,974 | i 380 | i 3,826 | i 12,180 |
| Additions | - | - | i 625 | i 625 |
| Payments | ( i 1,317) | ( i 174) | ( i 337) | ( i 1,828) |
| Interest paid (i) | ( i 388) | ( i 37) | ( i 31) | ( i 456) |
| Cash flow from financing activities | ( i 1,705) | ( i 211) | i 257 | ( i 1,659) |
| Effect of exchange rate | i 71 | i 77 | ( i 76) | i 72 |
| Interest accretion | i 318 | i 89 | i 31 | i 438 |
| Non-cash changes | i 389 | i 166 | ( i 45) | i 510 |
| June 30, 2022 | i 6,658 | i 335 | i 4,038 | i 11,031 |
| (i) | Classified as operating activities in the statement of cash flows. |
Additions - In March 2023, the Company contracted a loan of US$ i 300 with the Industrial and Commercial Bank of China Limited, Panama Branch (“ICBC”) indexed to Secured Overnight Financing Rate (“SOFR”) with spread adjustments and maturing in 2028.
In June 2023, Vale issued notes of US$ i 1,500 with a coupon of i 6.125% per year, payable semi-annually, and maturing in 2033. The notes were sold at a price of i 99.117% of the principal amount, resulting in a yield to maturity of i 6.245%.
In January 2022, the Company contracted two loans of US$ i 425 with The Bank of Nova Scotia, indexed to Libor and maturing in 2027.
In May 2022, the Company contracted a loan of US$ i 200 with MUFG Bank indexed to SOFR with spread adjustments and maturing in 2027.
Payments - In January 2023, the Company paid principal and interest of debentures, in the amount of US$ i 24.
In June 2023, Vale redeemed notes with maturity date in 2026, 2036 and 2039, in the total amount of US$ i 500, and paid a premium of US$ i 22, recorded as “Bond premium repurchase” in the financial results for the three-month period ended June 30, 2023.
In January 2022, the Company prepaid US$ i 200 of a loan maturing in 2023 with The Bank of Nova Scotia.
In June 2022, the Company repurchased US$ of its bonds and paid a premium of US$ i 113, which has been recorded and is presented as “Bond premium repurchase” in the financial results for the three-month period ended June 30, 2022.
d) Non-cash transactions
i
| Non-cash transactions | ||||
| Three-month period ended June 30, | Six-month period ended June 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Non-cash transactions: | ||||
| Additions to property, plant and equipment - capitalized loans and borrowing costs | i 5 | i 17 | i 10 | i 31 |
| 10. | Accounts receivable |
i
| Schedule of accounts receivable | |||
| Notes | June 30, 2023 | December 31, 2022 | |
| Receivables from contracts with customers | |||
| Related parties | 29 | i 118 | i 211 |
| Third parties | |||
| Iron Solutions | i 2,146 | i 3,132 | |
| Energy Transition Metals | i 731 | i 984 | |
| Other | i 16 | i 35 | |
| Accounts receivable | i 3,011 | i 4,362 | |
| Expected credit loss | ( i 44) | ( i 43) | |
| Accounts receivable, net | i 2,967 | i 4,319 |
No customer individually represented 10% or more of the Company’s accounts receivable or revenues in the periods presented above.
Provisionally priced commodities sales – The Company is mainly exposed to iron ore and copper price risk. The final sales price of these commodities is calculated based on the pricing period stipulated in the sales contracts, which generally is later than the revenue recognition date. Therefore, the Company initially recognizes revenue based on a provisional invoice and the receivables of the provisionally priced products are subsequently measured at fair value through profit or loss (note 19), with these changes in the value of the receivables recorded in the Company's net operating revenue.
The sensitivity of the Company’s risk on final settlement of provisionally priced accounts receivables is presented below:
i
| Schedule of sensitivity of the company’s risk on final settlement | ||||
| June 30, 2023 | ||||
| Thousand metric tons | Provisional price (US$/ton) | Variation |
Effect on Revenue (US$ million) | |
| Iron ore | i 22,564 | i 102 | +/- i 10% | +/- i 230 |
| Copper | i 77 | i 7,811 | +/- i 10% | +/- i 60 |
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| 11. | Inventories |
i
| Schedule of inventories | ||||
| June 30, 2023 | December 31, 2022 | |||
| Finished products | ||||
| Iron Solutions | i 2,638 | i 2,126 | ||
| Energy Transition Metals | i 638 | i 651 | ||
| i 3,276 | i 2,777 | |||
| Work in progress | i 901 | i 800 | ||
| Consumable inventory | i 1,157 | i 1,010 | ||
| Allowance to net realizable value (i) | ( i 141) | ( i 105) | ||
| Total of inventories | i 5,193 | i 4,482 | ||
| (i) | In the six-month period ended June 30, 2023, the effect of allowance to net realizable value was US$47 (2022: US$22). |
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| 12. | Suppliers and contractors |
i
| Schedule of amount due to suppliers and contractors | |||
| Notes | June 30, 2023 | December 31, 2022 | |
| Third parties – Brazil | i 3,318 | i 2,691 | |
| Third parties – Abroad | i 1,753 | i 1,599 | |
| Related parties | 29 | i 169 | i 171 |
| Total | i 5,240 | i 4,461 |
The Company has transactions with certain suppliers, which allows them to anticipate their receivables and the Company to extend its payment term within the short term, that is, during its operational cycle. The outstanding balance related to those transactions was US$ i 1,531 as of June 30, 2023 (December 31, 2022: US$ i 743), of which US$ i 314 (December 31, 2022: US$ i 202) relates to the structure created by the Company with the exclusive purpose of enabling small and medium suppliers to anticipate their receivables with better interest rates, in line with Vale’s social pillar.
| 13. | Other financial assets and liabilities |
i
| Schedule of other financial assets and liabilities | |||||
| Current | Non-Current | ||||
| Notes | June 30, 2023 | December 31, 2022 | June 30, 2023 | December 31, 2022 | |
| Other financial assets | |||||
| Restricted cash | - | - | i 108 | i 77 | |
| Derivative financial instruments | 18 | i 522 | i 342 | i 559 | i 196 |
| Investments in equity securities (i) | - | - | i 31 | i 7 | |
| i 522 | i 342 | i 698 | i 280 | ||
| Other financial liabilities | |||||
| Derivative financial instruments | 18 | i 47 | i 90 | i 98 | i 186 |
| Other financial liabilities - Related parties | 29(b) | i 187 | i 400 | - | - |
| Financial guarantees provided (ii) | 15(a) | - | - | - | i 103 |
| Liabilities related to the concession grant | 13(a) | i 611 | i 416 | i 2,673 | i 2,554 |
| Contract liability and other financial liabilities (iii) | i 754 | i 766 | - | - | |
| i 1,599 | i 1,672 | i 2,771 | i 2,843 | ||
| (ii) | In March 2023, the Company completed the sale of its interest in CSP and derecognized the financial guarantee granted by the Company. |
| (iii) | Includes advances received from customers that meets the definition of contract liability described in IFRS 15 – Revenue from Contracts with Customers and other financial liabilities that meets the definition of a financial liability described in IAS 32 - Financial Instruments: Presentation. |
a) Liabilities related to the concession grant
i
| Schedule of liabilities related to the concession grant | ||||||||||
| December 31, 2022 | Addition | Present value adjustment | Disbursements | June 30, 2023 | ||||||
| Payment obligation | i 954 | i 5 | i 131 | ( i 27) | i 1,063 | |||||
| Infrastructure investment | i 2,016 | i 77 | i 215 | ( i 87) | i 2,221 | |||||
| i 2,970 | i 82 | i 346 | ( i 114) | i 3,284 | ||||||
| Current liabilities | i 416 | i 611 | ||||||||
| Non-current liabilities | i 2,554 | i 2,673 | ||||||||
| Liabilities | i 2,970 | i 3,284 | ||||||||
| Discount rate in nominal terms - Payment obligation | i 11.04% | i 11.04% | ||||||||
| Discount rate in nominal terms - Infrastructure investment | i 6.08% - i 6.23% | i 5.10% - i 5.57% |
| 14. | Investments in subsidiaries, associates, and joint ventures |
i
| Schedule of investments in associates and joint ventures, equity results and dividends received | |||||||||||||
| Investments in associates and joint ventures | Equity results | Dividends received | |||||||||||
| Three-month period ended June 30, | Six-month period ended June 30, | Three-month period ended June 30, | Six-month period ended June 30, | ||||||||||
| Associates and joint ventures | Notes | % ownership | % voting capital | June 30, 2023 | December 31, 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 |
| Iron Solutions | |||||||||||||
| Baovale Mineração S.A. | i 50.00 | i 50.00 | i 28 | i 24 | - | - | i 1 | i 1 | - | - | - | - | |
| Companhia Coreano-Brasileira de Pelotização | i 50.00 | i 50.00 | i 69 | i 80 | i 5 | i 10 | i 9 | i 22 | i 14 | i 10 | i 14 | i 10 | |
| Companhia Hispano-Brasileira de Pelotização | i 50.89 | i 50.00 | i 42 | i 48 | i 1 | - | i 4 | - | i 19 | i 1 | i 19 | i 1 | |
| Companhia Ítalo-Brasileira de Pelotização | i 50.90 | i 50.00 | i 58 | i 62 | i 3 | i 12 | i 7 | i 13 | i 23 | i 19 | i 23 | i 19 | |
| Companhia Nipo-Brasileira de Pelotização | i 51.00 | i 50.00 | i 147 | i 145 | i 8 | i 12 | i 15 | i 22 | i 33 | i 41 | i 33 | i 41 | |
| MRS Logística S.A. | i 48.16 | i 47.09 | i 599 | i 509 | i 41 | i 20 | i 47 | i 30 | - | - | - | - | |
| Samarco Mineração S.A. | 23 | i 50.00 | i 50.00 | - | - | - | - | - | - | - | - | - | - |
| VLI S.A. | i 29.60 | i 29.60 | i 366 | i 428 | i 31 | ( i 2) | ( i 90) | ( i 20) | - | - | - | - | |
| i 1,309 | i 1,296 | i 89 | i 52 | ( i 7) | i 68 | i 89 | i 71 | i 89 | i 71 | ||||
| Energy Transition Metals | |||||||||||||
| Korea Nickel Corp. (i) | - | - | - | - | - | i 1 | - | i 3 | - | - | - | - | |
| PT Kolaka Nickel Indonesia | i 20.00 | i 20.00 | i 12 | - | - | - | - | - | - | - | - | - | |
| i 12 | - | - | i 1 | - | i 3 | - | - | - | - | ||||
| Others | |||||||||||||
| Aliança Geração de Energia S.A. | i 55.00 | i 55.00 | i 408 | i 340 | i 9 | i 8 | i 18 | i 16 | i 16 | - | i 16 | - | |
| Aliança Norte Energia Participações S.A. | i 51.00 | i 51.00 | i 112 | i 106 | ( i 2) | ( i 1) | ( i 3) | ( i 3) | - | - | - | - | |
| California Steel Industries, Inc. | 15(e) | - | - | - | - | - | - | - | - | - | - | - | i 65 |
| Other | i 60 | i 56 | i 2 | i 1 | i 2 | i 3 | - | - | - | - | |||
| i 580 | i 502 | i 9 | i 8 | i 17 | i 16 | i 16 | - | i 16 | i 65 | ||||
| Equity results in associates and joint ventures | i 1,901 | i 1,798 | i 98 | i 61 | i 10 | i 87 | i 105 | i 71 | i 105 | i 136 | |||
| Other results in associates and joint ventures | 15 | - | - | ( i 93) | ( i 117) | ( i 60) | i 68 | - | - | - | - | ||
| Equity results and other results in associates and joint ventures | i 1,901 | i 1,798 | i 5 | ( i 56) | ( i 50) | i 155 | i 105 | i 71 | i 105 | i 136 | |||
| (I) | In September 2022, Vale completed the sale of its 25% stake in Korea Nickel Corp to Posco. for US$16. |
a) Changes in the period
i /
/ i
| 15. | Acquisitions and divestitures |
i
| Schedule of acquisitions and divestitures | |||||
| Three-month period ended June 30, 2023 | Six-month period ended June 30, 2023 | ||||
| Reference | Impairment reversal (impairment) of non-current assets | Equity results and other results in associates and joint ventures | Impairment reversal (impairment) of non-current assets | Equity results and other results in associates and joint ventures | |
| Companhia Siderúrgica do Pecém | 15(a) | - | - | - | i 37 |
| Mineração Rio do Norte | 15(c) | - | ( i 93) | - | ( i 93) |
| - | ( i 93) | - | ( i 56) | ||
| Three-month period ended June 30, 2022 | Six-month period ended June 30, 2022 | ||||
| Reference | Impairment reversal (impairment) of non-current assets | Equity results and other results in associates and joint ventures | Impairment reversal (impairment) of non-current assets | Equity results and other results in associates and joint ventures | |
| Midwestern System | 15(d) | ( i 30) | - | i 1,104 | - |
| California Steel Industries | 15(e) | - | ( i 5) | - | i 292 |
| Companhia Siderúrgica do Pecém | 15(a) | - | ( i 24) | - | ( i 135) |
| ( i 30) | ( i 29) | i 1,104 | i 157 | ||
| Discontinued operations (Coal) | 15(f) | ( i 429) | ( i 589) | ||
| ( i 459) | ( i 29) | i 515 | i 157 | ||
a) Sale of Companhia Siderúrgica do Pecém (“CSP”) – In July 2022, the Company and the other shareholders of CSP signed a binding agreement with ArcelorMittal Brasil S.A. (“ArcelorMittal”) for the sale of CSP. Following the terms of the agreement, the Company has impaired its investment in full, with an impact of US$ i 111 and recorded a provision for accounts receivable with CSP in the amount of US$ i 24, both recorded in the income statement for the six-month period ended June 30, 2022.
In March 2023, the Company completed the sale of its interest in CSP to ArcelorMittal, for US$ i 2,194 (R$ i 11,147 million), which was fully used to prepay most of the outstanding net debt of US$ i 2,296 (R$ i 11,665 million). The remaining balance was settled by the shareholders and so Vale disbursed US$ i 67 upon completion of the transaction. The Company also derecognized its financial liability related to the guarantee granted to CSP, leading to a gain of US$37 recorded as “Equity results and other results in associates and joint ventures” for the six-month period ended June 30, 2023.
b) Vale Oman Pelletizing Company LLC (“VOPC”) – In February 2023, OQ Group exercised its option to sell its 30% noncontrolling interest held in VOPC, a subsidiary consolidated by the Company. In April 2023, the Company completed the transaction and acquired the minority interest for US$130, resulting in a gain of US$3, recorded in equity as of June 30, 2023, as “Acquisitions and disposals of noncontrolling interests”, since it resulted from a transaction between shareholders. Upon closing, Vale owns 100% of VOPC's share capital.
c) Mineração Rio do Norte S.A. (“MRN”) – In April 2023, Vale signed a binding agreement with Ananke Alumina S.A. to sell its 40% stake in MRN, which has been impaired in full since 2021. Under the terms of the agreement, Vale will pay US$93 to the buyer due to certain remaining commitments. Therefore, the Company recognized a provision for that amount with the corresponding impact in the income statement for the three-month period ended June 30, 2023, as “Equity results and other results in associates and joint ventures”. The completion of the transaction is expected for 2024, subject to customary regulatory approvals.
d) Midwestern System – During the first quarter of 2022, the Company classified the assets and liabilities related to the Midwestern System as held for sale due to the negotiations with interested parties in Vale’s iron ore, manganese and logistics assets in the Midwestern System. These negotiations resulted in the execution of a binding agreement with J&F Mineração Ltda. (“J&F”), which was signed in April 2022.
The carrying amount of those assets were fully impaired in past years and the Company had a liability related to take-or-pay logistics contracts in the amount of US$ i 902 that were deemed onerous contracts under the Company’s business model for the Midwestern System, which had negative net assets of US$ i 892 before the reclassification to “Non-current assets and liabilities held for sale” on March 31, 2022.
These offers received during the sale process of the assets represented an objective evidence of impairment reversal and required the remeasurement of the existing provision, which led to a gain of US$ i 1,104 recorded in the six-month period ended June 30, 2022 as “Impairment reversal (impairment) and result on disposal of non-current assets”, of which US$ i 202 relates to the impairment reversal of the Property, plant and equipment and US$ i 902 is due to the remeasurement of the onerous contract liability. The closing was completed in July 2022 and the Company received US$150.
e) California Steel Industries (“CSI”) - In December 2021, the Company entered into a binding agreement with Nucor Corporation (“Nucor”) for the sale of its i 50% interest in CSI for US$ i 437. In February 2022, the Company concluded the sale and recorded a gain of US$ i 292 for the three-month period ended March 31, 2022, as “Equity results and other results in associates and joint ventures”, of which US$ i 142 relates to a gain from the sale and US$ i 150 is due the reclassification of the cumulative translation adjustments from the shareholders’ equity to the income statement.
f) Discontinued operations (Coal) - In June 2021, in preparation for a sale of the coal operation in connection with the sustainable mining strategic agenda, the Company carried out a corporate reorganization by acquiring the interests held by Mitsui in the coal assets, which consist of Moatize mine and the Nacala Logistics Corridor (“NLC”).
In December 2021, the Company entered into a binding agreement with Vulcan Resources for the sale of coal assets. According to the sale agreement, Vulcan has committed to pay the gross amount of US$ i 270 in addition of a i 10-year royalty agreement, subject to certain mine production and coal price conditions and so, any gain will be recognized as incurred due to the nature and uncertainties related to the measurement of these royalties. To date, the Company has not recognized any gain in relation to these royalties.
Therefore, the Company adjusted the net assets of the coal business to the fair value less cost of disposal, which resulted in an impairment loss of US$ i 2,511 and started presenting the coal segment as a discontinued operation from December 2021.
In April 2022, the transaction was completed and the Company recorded a net income from discontinued operations of US$ i 2,060 for the six-month period ended June 30, 2022, which was mainly driven by the reclassification of the cumulative translation adjustments of US$ i 3,072, from the stockholders’ equity to the income statement, as required by IAS 21 - The Effects of Changes in Foreign Exchange Rates, partially offset by the derecognition of noncontrolling interest of US$585 due to the deconsolidation of the coal assets. Additionally, until the closing of the transaction, the Company recorded losses of US$ i 589 due to the impairment of assets acquired during the period and other working capital adjustments. These effects are presented below:
Net income and cash flows from discontinued operations
i| Schedule of net income and cash flows from discontinued operations | ||||
| Three-month period ended June 30, | Six-month period ended June 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Net income from discontinued operations | ||||
| Net operating revenue | - | - | - | i 448 |
| Cost of goods sold and services rendered | - | - | - | ( i 264) |
| Operating expenses | - | - | - | ( i 13) |
| Impairment and results on disposals of non-current assets, net | - | ( i 429) | - | ( i 589) |
| Operating loss | - | ( i 429) | - | ( i 418) |
| Cumulative translation adjustments | i 3,072 | i 3,072 | ||
| Derecognition of noncontrolling interest | ( i 585) | ( i 585) | ||
| Financial results, net | - | - | - | ( i 7) |
| Net income before income taxes | - | i 2,058 | - | i 2,062 |
| Income taxes | - | - | - | ( i 2) |
| Net income from discontinued operations | - | i 2,058 | - | i 2,060 |
| Net income attributable to Vale's shareholders | - | i 2,058 | - | i 2,060 |
| Three-month period ended June 30, | Six-month period ended June 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Cash flow from discontinued operations | ||||
| Operating activities | ||||
| Net income before income taxes | - | i 2,058 | - | i 2,062 |
| Adjustments: | ||||
| Impairment and results on disposals of non-current assets, net | - | i 429 | - | i 589 |
| Derecognition of noncontrolling interest | - | i 585 | - | i 585 |
| Financial results, net | - | ( i 3,072) | - | ( i 3,065) |
| Decrease in assets and liabilities | - | - | - | ( i 130) |
| Net cash generated by operating activities | - | - | - | i 41 |
| Investing activities | ||||
| Additions to property, plant and equipment | - | - | - | ( i 38) |
| Disposal of coal, net of cash | - | ( i 65) | - | ( i 65) |
| Net cash used in investing activities | - | ( i 65) | - | ( i 103) |
| Financing activities | ||||
| Payments | - | - | - | ( i 11) |
| Net cash used by financing activities | - | - | - | ( i 11) |
| Net cash used by discontinued operations | - | ( i 65) | - | ( i 73) |
/ i
| 16. | Intangibles |
i
| Schedule of movements in intangibles | |||||
| Goodwill | Concessions | Software | Research and development project | Total | |
| Balance at December 31, 2022 | i 3,189 | i 6,434 | i 87 | i 528 | i 10,238 |
| Additions | - | i 167 | i 13 | i 3 | i 183 |
| Disposals | - | ( i 7) | - | - | ( i 7) |
| Amortization | - | ( i 123) | ( i 21) | - | ( i 144) |
| Translation adjustment | i 151 | i 530 | i 6 | i 44 | i 731 |
| Balance at June 30, 2023 | i 3,340 | i 7,001 | i 85 | i 575 | i 11,001 |
| Cost | i 3,340 | i 8,601 | i 600 | i 575 | i 13,116 |
| Accumulated amortization | - | ( i 1,600) | ( i 515) | - | ( i 2,115) |
| Balance at June 30, 2023 | i 3,340 | i 7,001 | i 85 | i 575 | i 11,001 |
| Balance at December 31, 2021 | i 3,208 | i 5,223 | i 86 | i 494 | i 9,011 |
| Additions | - | i 132 | i 17 | - | i 149 |
| Disposals | - | ( i 9) | - | - | ( i 9) |
| Amortization | - | ( i 120) | ( i 22) | - | ( i 142) |
| Translation adjustment | i 63 | i 341 | i 2 | i 33 | i 439 |
| Balance at June 30, 2022 | i 3,271 | i 5,567 | i 83 | i 527 | i 9,448 |
| Cost | i 3,271 | i 6,846 | i 550 | i 527 | i 11,194 |
| Accumulated amortization | - | ( i 1,279) | ( i 467) | - | ( i 1,746) |
| Balance at June 30, 2022 | i 3,271 | i 5,567 | i 83 | i 527 | i 9,448 |
| 17. | Property, plant, and equipment |
i
| Schedule of movements in property, plant and equipment | ||||||||||
| Consolidated | ||||||||||
| Notes | Building and land | Facilities | Equipment | Mineral properties | Railway equipment | Right of use assets | Other | Constructions in progress | Total | |
| Balance at December 31, 2022 | i 8,913 | i 8,042 | i 4,984 | i 7,112 | i 2,475 | i 1,455 | i 2,632 | i 9,325 | i 44,938 | |
| Additions (i) | - | - | - | - | - | i 19 | - | i 2,430 | i 2,449 | |
| Disposals | ( i 8) | ( i 8) | ( i 5) | - | ( i 5) | - | ( i 1) | ( i 53) | ( i 80) | |
| Assets retirement obligation | 24(b) | - | - | - | i 99 | - | - | - | - | i 99 |
| Depreciation, depletion and amortization | ( i 224) | ( i 250) | ( i 364) | ( i 241) | ( i 81) | ( i 91) | ( i 163) | - | ( i 1,414) | |
| Translation adjustment | i 607 | i 608 | i 229 | i 302 | i 198 | i 31 | i 153 | i 546 | i 2,674 | |
| Transfers | i 772 | i 586 | i 371 | i 46 | i 47 | - | i 166 | ( i 1,988) | - | |
| Balance at June 30, 2023 | i 10,060 | i 8,978 | i 5,215 | i 7,318 | i 2,634 | i 1,414 | i 2,787 | i 10,260 | i 48,666 | |
| Cost | i 17,700 | i 14,330 | i 12,418 | i 16,285 | i 4,455 | i 2,196 | i 5,903 | i 10,260 | i 83,547 | |
| Accumulated depreciation | ( i 7,640) | ( i 5,352) | ( i 7,203) | ( i 8,967) | ( i 1,821) | ( i 782) | ( i 3,116) | - | ( i 34,881) | |
| Balance at June 30, 2023 | i 10,060 | i 8,978 | i 5,215 | i 7,318 | i 2,634 | i 1,414 | i 2,787 | i 10,260 | i 48,666 | |
| Balance at December 31, 2021 | i 8,137 | i 7,232 | i 4,743 | i 7,742 | i 2,334 | i 1,537 | i 2,484 | i 7,722 | i 41,931 | |
| Additions (i) | - | - | - | - | - | i 29 | - | i 2,343 | i 2,372 | |
| Disposals | ( i 14) | ( i 8) | ( i 4) | - | ( i 5) | - | ( i 1) | ( i 45) | ( i 77) | |
| Assets retirement obligation | 24(b) | - | - | - | ( i 1,077) | - | - | - | - | ( i 1,077) |
| Depreciation, depletion and amortization | ( i 205) | ( i 245) | ( i 351) | ( i 236) | ( i 82) | ( i 94) | ( i 147) | - | ( i 1,360) | |
| Impairment reversal | i 56 | i 34 | i 64 | i 39 | - | - | i 21 | - | i 214 | |
| Transfer to asset held for sale - Midwestern System | ( i 56) | ( i 34) | ( i 64) | ( i 39) | - | - | ( i 21) | - | ( i 214) | |
| Translation adjustment | i 348 | i 370 | i 128 | i 75 | i 151 | i 26 | i 78 | i 201 | i 1,377 | |
| Transfers | i 240 | i 297 | i 303 | i 347 | i 73 | - | i 207 | ( i 1,467) | - | |
| Balance at June 30, 2022 | i 8,506 | i 7,646 | i 4,819 | i 6,851 | i 2,471 | i 1,498 | i 2,621 | i 8,754 | i 43,166 | |
| Cost | i 15,612 | i 12,369 | i 11,291 | i 16,317 | i 4,021 | i 2,062 | i 5,802 | i 8,754 | i 76,228 | |
| Accumulated depreciation | ( i 7,106) | ( i 4,723) | ( i 6,472) | ( i 9,466) | ( i 1,550) | ( i 564) | ( i 3,181) | - | ( i 33,062) | |
| Balance at June 30, 2022 | i 8,506 | i 7,646 | i 4,819 | i 6,851 | i 2,471 | i 1,498 | i 2,621 | i 8,754 | i 43,166 | |
| (i) | Includes capitalized interest. |
Right-of-use assets (leases)
i
| Schedule of right of use assets (lease) | |||||
| December 31, 2022 | Additions and contract modifications | Depreciation | Translation adjustment | June 30, 2023 | |
| Ports | i 657 | - | ( i 27) | i 6 | i 636 |
| Vessels | i 453 | i 5 | ( i 21) | - | i 437 |
| Pelletizing plants | i 204 | i 12 | ( i 25) | i 17 | i 208 |
| Properties | i 87 | - | ( i 13) | i 7 | i 81 |
| Energy plants | i 39 | - | ( i 3) | i 1 | i 37 |
| Mining equipment | i 15 | i 2 | ( i 2) | - | i 15 |
| Total | i 1,455 | i 19 | ( i 91) | i 31 | i 1,414 |
Lease liabilities are presented in note 21.
/ i
| 18. | Financial and capital risk management |
a) Effects of derivatives on the statement of financial position
i
| Schedule of derivatives effects on statement of financial position | ||||
| June 30, 2023 | December 31, 2022 | |||
| Assets | Liabilities | Assets | Liabilities | |
| Foreign exchange and interest rate risk | ||||
| CDI & TJLP vs. US$ fixed and floating rate swap | i 90 | i 30 | i 11 | i 144 |
| IPCA swap | - | i 41 | - | i 63 |
| Dollar swap and forward transactions | i 868 | - | i 407 | i 7 |
| LIBOR swap | i 8 | - | i 7 | - |
| i 966 | i 71 | i 425 | i 214 | |
| Commodities price risk | ||||
| Gasoil, Brent and freight | i 70 | i 71 | i 78 | i 56 |
| Energy Transition Metals | i 45 | - | i 35 | i 1 |
| i 115 | i 71 | i 113 | i 57 | |
| Other | - | i 3 | - | i 5 |
| Total | i 1,081 | i 145 | i 538 | i 276 |
b) Net exposure
| June 30, 2023 | December 31, 2022 | |
| Foreign exchange and interest rate risk | ||
| CDI & TJLP vs. US$ fixed and floating rate swap | i 60 | ( i 133) |
| IPCA swap | ( i 41) | ( i 63) |
| Dollar swap and forward transactions | i 868 | i 400 |
| LIBOR swap (i) | i 8 | i 7 |
| i 895 | i 211 | |
| Commodities price risk | ||
| Gasoil, Brent and freight | ( i 1) | i 22 |
| Energy Transition Metals | i 45 | i 34 |
| i 44 | i 56 | |
| Other | ( i 3) | ( i 5) |
| Total | i 936 | i 262 |
| (i) | In March 2021, the UK Financial Conduct Authority (“FCA”), the financial regulator in the United Kingdom, announced the discontinuation of the LIBOR rate for all terms in pounds, euros, Swiss francs, yen and for terms of one week and two months in dollars at the end of December 2021 and the other terms at the end of June 2023. Vale has finalized the negotiations for the replacement of the reference interest rate of its financial contracts from LIBOR to Secured Overnight Financing Rate ("SOFR"), with spread adjustments to match the transaction costs. The Company does not expect material impacts on the cash flows of these operations. |
c) Effects of derivatives on the income statement
i
| Schedule of effects of derivatives on the income statement | ||||
| Gain (loss) recognized in the income statement | ||||
| Three-month period ended June 30, | Six-month period ended June 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Foreign exchange and interest rate risk | ||||
| CDI & TJLP vs. US$ fixed and floating rate swap | i 144 | ( i 121) | i 188 | i 269 |
| IPCA swap | i 23 | ( i 11) | i 30 | i 66 |
| Dollar swap and forward operations | i 376 | ( i 163) | i 538 | i 198 |
| LIBOR swap | i 2 | i 7 | i 5 | i 42 |
| Forwards | i 13 | - | i 13 | - |
| i 558 | ( i 288) | i 774 | i 575 | |
| Commodities price risk | ||||
| Gasoil, Brent and freight | i 4 | i 10 | ( i 20) | i 25 |
| Energy Transition Metals | - | i 16 | ( i 1) | i 9 |
| i 4 | i 26 | ( i 21) | i 34 | |
| Other | i 1 | ( i 8) | i 2 | ( i 18) |
| Total | i 563 | ( i 270) | i 755 | i 591 |
d) Effects of derivatives on the cash flows
| Financial settlement inflows (outflows) | ||||
| Three-month period ended June 30, | Six-month period ended June 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Foreign exchange and interest rate risk | ||||
| CDI & TJLP vs. US$ fixed and floating rate swap | ( i 4) | ( i 17) | ( i 8) | ( i 43) |
| IPCA swap | i 2 | i 8 | i 3 | i 11 |
| Dollar swap and forward operations | i 98 | i 54 | i 118 | i 84 |
| LIBOR swap | i 4 | - | i 4 | ( i 1) |
| Forwards | i 13 | - | i 13 | - |
| i 113 | i 45 | i 130 | i 51 | |
| Commodities price risk | ||||
| Gasoil, Brent and freight | i 1 | i 6 | i 3 | i 9 |
| Energy Transition Metals | i 20 | ( i 93) | i 39 | ( i 178) |
| i 21 | ( i 87) | i 42 | ( i 169) | |
| Total | i 134 | ( i 42) | i 172 | ( i 118) |
e) Market risk - Foreign exchange and interest rates
Protection programs for the R$ denominated debt instruments and other liabilities
i
| Schedule of protection program | |||||||||||
| Notional | Fair value | Financial Settlement Inflows (Outflows) | Value at Risk | Fair value by year | |||||||
| Flow | June 30, 2023 | December 31, 2022 | Index | Average rate | June 30, 2023 | December 31, 2022 | June 30, 2023 | June 30, 2023 | 2023 | 2024 | 2025+ |
| CDI vs. US$ fixed rate swap | i 88 | ( i 83) | ( i 7) | i 23 | i 8 | i 16 | i 64 | ||||
| Receivable | R$ i 5,696 | R$ i 6,356 | CDI | i 100.13% | |||||||
| Payable | US$ i 1,320 | US$ i 1,475 | Fix | i 1.77% | |||||||
| TJLP vs. US$ fixed rate swap | ( i 28) | ( i 50) | ( i 1) | i 3 | ( i 1) | ( i 3) | ( i 24) | ||||
| Receivable | R$ i 743 | R$ i 814 | TJLP + | i 1.05% | |||||||
| Payable | US$ i 186 | US$ i 204 | Fix | i 3.45% | |||||||
| i 60 | ( i 133) | ( i 8) | i 26 | i 7 | i 13 | i 40 | |||||
| IPCA swap vs. US$ fixed rate swap | ( i 41) | ( i 63) | i 3 | i 5 | - | ( i 6) | ( i 35) | ||||
| Receivable | R$ i 1,186 | R$ i 1,294 | IPCA + | i 4.54% | |||||||
| Payable | US$ i 293 | US$ i 320 | Fix | i 3.88% | |||||||
| ( i 41) | ( i 63) | i 3 | i 5 | - | ( i 6) | ( i 35) | |||||
| R$ fixed rate vs. US$ fixed rate swap | i 791 | i 318 | i 43 | i 64 | i 265 | i 291 | i 235 | ||||
| Receivable | R$ i 19,307 | R$ i 20,854 | Fix | i 7.61% | |||||||
| Payable | US$ i 3,665 | US$ i 3,948 | Fix | i 0.00% | |||||||
| Forward | R$ i 2,186 | R$ i 4,342 | B | i 5.24 | i 77 | i 82 | i 75 | i 6 | i 33 | i 34 | i 10 |
| i 868 | i 400 | i 118 | i 70 | i 298 | i 325 | i 245 | |||||
The sensitivity analysis of these derivative financial instruments is presented as follows:
i /
Protection program for LIBOR floating interest rate US$ denominated debt
i
| Schedule of protection program | ||||||||||
| Notional | Fair value | Financial Settlement Inflows (Outflows) | Value at Risk | Fair value by year | ||||||
| Flow | June 30, 2023 | December 31, 2022 | Index | Average rate | June 30, 2023 | December 31, 2022 | June 30, 2023 | June 30, 2023 | 2023 | 2024 |
| LIBOR vs. US$ fixed rate swap | i 8 | i 7 | i 4 | - | i 4 | i 4 | ||||
| Receivable | US$ i 150 | US$ i 150 | LIBOR | i 0.85% | ||||||
| Payable | US$ i 150 | US$ i 150 | Fix | i 0.85% | ||||||
| i 8 | i 7 | i 4 | - | i 4 | i 4 | |||||
The sensitivity analysis of these derivative financial instruments is presented as follows:
i /
Protection for American treasury volatility related to tender offer transaction
To reduce the volatility of the premium paid to investors on the tender offer transaction issued in June 2023, treasury lock transactions were implemented and have already been settled as of June 30, 2023.
i
| Schedule of protection for american treasury volatility | |||||||||
| Notional | Fair value | Financial Settlement Inflows (Outflows) | Value at Risk | Fair value by year | |||||
| Flow | June 30, 2023 | December 31, 2022 | Index | Average rate | June 30, 2023 | December 31, 2022 | June 30, 2023 | June 30, 2023 | 2023 |
| Forwards | - | - | B | - | - | - | i 13 | - | - |
f) Protection program for product prices and input costs
i
| Schedule of protection program | ||||||||||
| Notional | Fair value | Financial settlement Inflows (Outflows) | Value at Risk | Fair value by year | ||||||
| Flow | June 30, 2023 | December 31, 2022 | Bought / Sold | Average strike (US$) | June 30, 2023 | December 31, 2022 | June 30, 2023 | June 30, 2023 | 2023 | 2024 |
| Brent crude oil (bbl) | ||||||||||
| Call options | i 31,139,250 | i 22,600,500 | B | i 95 | i 68 | i 74 | - | i 15 | i 6 | i 62 |
| Put options | i 31,139,250 | i 22,600,500 | S | i 62 | ( i 71) | ( i 51) | - | i 16 | ( i 23) | ( i 48) |
| Forward Freight Agreement (days) | ||||||||||
| Freight forwards | i 960 | i 2,085 | B | i 13,791 | i 2 | ( i 1) | i 3 | i 1 | i 2 | - |
| ( i 1) | i 22 | i 3 | i 32 | ( i 15) | i 14 | |||||
The sensitivity analysis of these derivative financial instruments is presented as follows:
i /
g) Other derivatives, including embedded derivatives in contracts
i
| Schedule of other derivatives | |||||||||
| Notional | Fair value | Financial settlement Inflows (Outflows) | Value at Risk | Fair value by year | |||||
| Flow | June 30, 2023 | December 31, 2022 | Bought / Sold | Average strike (US$/ton) | June 30, 2023 | December 31, 2022 | June 30, 2023 | June 30, 2023 | 2023+ |
| Fixed price nickel sales protection (ton) | |||||||||
| Nickel forwards | i 2,580 | i 766 | B | i 20,842 | - | i 7 | i 3 | i 3 | - |
|
Hedge program for products acquisition for resale (ton) |
|||||||||
| Nickel forwards | - | i 384 | S | - | - | ( i 1) | i 2 | - | - |
| - | i 6 | i 5 | i 3 | - | |||||
|
Embedded derivative (pellet price) in natural gas purchase (volume/month) |
|||||||||
| Call options | i 746,667 | i 746,667 | S | i 233 | ( i 3) | ( i 5) | - | i 2 | ( i 3) |
| ( i 3) | ( i 5) | - | i 2 | ( i 3) | |||||
The sensitivity analysis of these derivative financial instruments is presented as follows:
i /
h) Hedge accounting
i
| Schedule of effects of derivatives on other comprehensive income | ||||
| Gain (loss) recognized in the other comprehensive income | ||||
| Three-month period ended June 30, | Six-month period ended June 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Net investments hedge | i 96 | ( i 145) | i 145 | i 74 |
| Cash flow hedge | ( i 5) | i 312 | i 14 | i 8 |
Cash flow hedge
i
| Schedule of cash flow hedge | |||||||||
| Notional (ton) | Fair value | Financial settlement Inflows (Outflows) | Value at Risk | Fair value by year | |||||
| Flow | June 30, 2023 | December 31, 2022 | Bought / Sold | Average strike (US$/ton) | June 30, 2023 | December 31, 2022 | June 30, 2023 | June 30, 2023 | 2023 |
| Nickel revenue hedge program | |||||||||
| Forward | ( i 3,150) | i 6,300 | S | i 34,929 | i 45 | i 28 | i 34 | i 4 | i 45 |
| i 45 | i 28 | i 34 | i 4 | i 45 | |||||
The sensitivity analysis of these derivative financial instruments is presented as follows:
i
| Schedule of derivative financial instruments | ||||
| Instrument | Instrument's main risk events | Fair value |
Scenario I (∆ of 25%) |
Scenario II (∆ of 50%) |
| Nickel Revenue Hedging Program | ||||
| Forward | Nickel price increase | i 45 | i 29 | i 13 |
| Protected item: Part of nickel revenues with fixed sales prices | Nickel price increase | n.a. | ( i 29) | ( i 13) |
i) Financial counterparties’ ratings
The transactions of derivative instruments, cash and cash equivalents as well as short-term investments are held with financial institutions whose exposure limits are periodically reviewed and approved by the delegated authority. The financial institutions credit risk is performed through a methodology that considers, among other information, ratings provided by international rating agencies.
The table below presents the ratings in foreign currency as published by Moody’s regarding the main financial institutions used by the Company to contract derivative instruments, cash and cash equivalents transaction.
| 31 |
i
| Schedule of ratings published by Moody's regarding the main financial institutions | ||||
| June 30, 2023 | December 31, 2022 | |||
| Cash and cash equivalents and investment | Derivatives | Cash and cash equivalents and investment | Derivatives | |
| Aa1 | i 36 | - | i 32 | - |
| Aa2 | i 726 | - | i 342 | i 5 |
| Aa3 | i 190 | - | i 239 | - |
| A1 | i 1,602 | i 139 | i 1,746 | i 97 |
| A2 | i 736 | i 296 | i 938 | i 145 |
| A3 | i 713 | i 52 | i 918 | i 62 |
| Baa1 | - | - | - | - |
| Baa2 | i 51 | - | i 7 | - |
| Ba2 (i) | i 798 | i 426 | i 411 | i 174 |
| Ba3 (i) | i 177 | i 168 | i 164 | i 54 |
| i 5,029 | i 1,081 | i 4,797 | i 538 | |
| (i) | A substantial part of the balances is held with financial institutions in Brazil and, in local currency, they are deemed investment grade. |
/ i
| 19. | Financial assets and liabilities |
The Company classifies its financial instruments in accordance with the purpose for which they were acquired, and determines the classification and initial recognition according to the following categories:
i
| Schedule of financial instruments classification based on its recognition | |||||||||
| June 30, 2023 | December 31, 2022 | ||||||||
| Financial assets | Notes | Amortized cost | At fair value through OCI | At fair value through profit or loss | Total | Amortized cost | At fair value through OCI | At fair value through profit or loss | Total |
| Current | |||||||||
| Cash and cash equivalents | 21 | i 4,983 | - | - | i 4,983 | i 4,736 | - | - | i 4,736 |
| Short-term investments | 21 | - | - | i 46 | i 46 | - | - | i 61 | i 61 |
| Derivative financial instruments | 18 | - | - | i 522 | i 522 | - | - | i 342 | i 342 |
| Accounts receivable | 10 | i 424 | i 2,543 | i 2,967 | i 538 | - | i 3,781 | i 4,319 | |
| i 5,407 | - | i 3,111 | i 8,518 | i 5,274 | - | i 4,184 | i 9,458 | ||
| Non-current | |||||||||
| Judicial deposits | 26(c) | i 1,326 | - | - | i 1,326 | i 1,215 | - | - | i 1,215 |
| Restricted cash | i 108 | - | - | i 108 | i 77 | - | - | i 77 | |
| Derivative financial instruments | 18 | - | - | i 559 | i 559 | - | - | i 196 | i 196 |
| Investments in equity securities | 13 | - | i 31 | - | i 31 | - | i 7 | - | i 7 |
| i 1,434 | i 31 | i 559 | i 2,024 | i 1,292 | i 7 | i 196 | i 1,495 | ||
| Total of financial assets | i 6,841 | i 31 | i 3,670 | i 10,542 | i 6,566 | i 7 | i 4,380 | i 10,953 | |
| Financial liabilities | |||||||||
| Current | |||||||||
| Suppliers and contractors | 12 | i 5,240 | - | - | i 5,240 | i 4,461 | - | - | i 4,461 |
| Derivative financial instruments | 18 | - | - | i 47 | i 47 | - | - | i 90 | i 90 |
| Loans, borrowings and leases | 21 | i 912 | - | - | i 912 | i 489 | - | - | i 489 |
| Liabilities related to the concession grant | 13(a) | i 611 | - | - | i 611 | i 416 | - | - | i 416 |
| Other financial liabilities - Related parties | 29 | i 187 | - | - | i 187 | i 400 | - | - | i 400 |
| Contract liability and other financial liabilities | i 754 | - | - | i 754 | i 766 | - | - | i 766 | |
| i 7,704 | - | i 47 | i 7,751 | i 6,532 | - | i 90 | i 6,622 | ||
| Non-current | |||||||||
| Derivative financial instruments | 18 | - | - | i 98 | i 98 | - | - | i 186 | i 186 |
| Loans, borrowings and leases | 21 | i 13,025 | - | - | i 13,025 | i 12,223 | - | - | i 12,223 |
| Participative shareholders' debentures | 20 | - | - | i 2,528 | i 2,528 | - | - | i 2,725 | i 2,725 |
| Liabilities related to the concession grant | 13(a) | i 2,673 | - | - | i 2,673 | i 2,554 | - | - | i 2,554 |
| Financial guarantees | - | - | - | - | - | - | i 103 | i 103 | |
| i 15,698 | - | i 2,626 | i 18,324 | i 14,777 | - | i 3,014 | i 17,791 | ||
| Total of financial liabilities | i 23,402 | - | i 2,673 | i 26,075 | i 21,309 | - | i 3,104 | i 24,413 | |
a) Hierarchy of fair value
i
| Schedule of assets and liabilities measured and recognized at fair value | |||||||||
| June 30, 2023 | December 31, 2022 | ||||||||
| Notes | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |
| Financial assets | |||||||||
| Short-term investments | 21 | i 46 | - | - | i 46 | i 61 | - | - | i 61 |
| Derivative financial instruments | 18 | - | i 1,081 | - | i 1,081 | - | i 538 | - | i 538 |
| Accounts receivable | 10 | - | i 2,543 | - | i 2,543 | - | i 3,781 | - | i 3,781 |
| Investments in equity securities | 13 | - | i 31 | - | i 31 | - | i 7 | - | i 7 |
| i 46 | i 3,655 | - | i 3,701 | i 61 | i 4,326 | - | i 4,387 | ||
| Financial liabilities | |||||||||
| Derivative financial instruments | 18 | - | i 145 | - | i 145 | - | i 276 | - | i 276 |
| Participative shareholders' debentures | 20 | - | i 2,528 | - | i 2,528 | - | i 2,725 | - | i 2,725 |
| Financial guarantees | - | - | - | - | - | i 103 | - | i 103 | |
| - | i 2,673 | - | i 2,673 | - | i 3,104 | - | i 3,104 | ||
There were no transfers between levels 1, 2 and 3 of the fair value hierarchy during the period presented.
b) Fair value of loans and borrowings
i
| Schedule of fair value and carrying amounts of loans and financing | ||||
| June 30, 2023 | December 31, 2022 | |||
| Carrying amount | Fair value | Carrying amount | Fair value | |
| Quoted in the secondary market: | ||||
| Bonds | i 7,157 | i 7,175 | i 6,157 | i 6,253 |
| Debentures | i 227 | i 223 | i 233 | i 225 |
| Debt contracts in Brazil in: | ||||
| R$, indexed to TJLP, TR, IPCA, IGP-M and CDI | i 276 | i 276 | i 278 | i 278 |
| R$, with fixed interest | - | - | i 2 | i 2 |
| Debt contracts in the international market in: | ||||
| US$, with variable and fixed interest | i 4,512 | i 3,587 | i 4,266 | i 4,391 |
| Other currencies, with variable interest | i 9 | i 5 | i 9 | i 9 |
| Other currencies, with fixed interest | i 80 | i 69 | i 89 | i 91 |
| i 12,261 | i 11,335 | i 11,034 | i 11,249 | |
| 20. | Participative shareholders’ debentures |
i
| Schedule of income and balance sheet | ||||||||||||
| Financial results | ||||||||||||
| Average price (R$) | Three-month period ended June 30, | Six-month period ended June 30, | Liabilities | |||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | June 30, 2023 | December 31, 2022 | |||||
| Participative shareholders’ debentures | i 31.35 | i 43.39 | i 321 | i 288 | i 274 | i 288 | i 2,528 | i 2,725 | ||||
On April 3, 2023, the Company made available for withdrawal as remuneration the amount of US$ i 125 for the second semester of 2022 (2022: US$ i 225 for the second semester of 2021), as disclosed on the “Participating debentures report” made available on the Company’s website.
| 33 |
| 21. | Loans, borrowings, leases, cash and cash equivalents and short-term investments |
a) Net debt
The Company monitors the net debt with the objective of ensuring the continuity of its business in the long term.
i
| Schedule of net debt | ||||
| June 30, 2023 | December 31, 2022 | |||
| Debt contracts | i 12,417 | i 11,181 | ||
| Leases | i 1,520 | i 1,531 | ||
| Total of loans, borrowings and leases | i 13,937 | i 12,712 | ||
| (-) Cash and cash equivalents | i 4,983 | i 4,736 | ||
| (-) Short-term investments (i) | i 46 | i 61 | ||
| Net debt | i 8,908 | i 7,915 |
/
b) Cash and cash equivalents
i
| Schedule of cash and cash equivalents | ||
| June 30, 2023 | December 31, 2022 | |
| R$ | i 1,147 | i 1,770 |
| US$ | i 3,598 | i 2,798 |
| Other currencies | i 238 | i 168 |
| i 4,983 | i 4,736 |
| c) | Loans, borrowings, and leases |
i) Total debt
i
| Schedule of total debt | |||||
| Current liabilities | Non-current liabilities | ||||
| Average interest rate (i) | June 30, 2023 | December 31, 2022 | June 30, 2023 | December 31, 2022 | |
| Quoted in the secondary market: | |||||
| US$ Bonds | i 6.02% | - | - | i 7,157 | i 6,157 |
| R$ Debentures (ii) | i 10.07% | i 95 | i 47 | i 132 | i 186 |
| Debt contracts in Brazil in (iii): | |||||
| R$, indexed to TJLP, TR, IPCA, IGP-M and CDI | i 10.62% | i 50 | i 46 | i 226 | i 232 |
| R$, with fixed interest | i 3.04% | - | i 2 | - | - |
| Debt contracts in the international market in: | |||||
| US$, with variable and fixed interest | i 5.37% | i 400 | i 54 | i 4,112 | i 4,212 |
| Other currencies, with variable interest | i 4.10% | - | - | i 9 | i 9 |
| Other currencies, with fixed interest | i 3.87% | i 12 | i 11 | i 68 | i 78 |
| Accrued charges | i 156 | i 147 | - | - | |
| i 713 | i 307 | i 11,704 | i 10,874 | ||
| (i) | In order to determine the average interest rate for debt contracts with floating rates, the Company used the rate applicable as of June 30, 2023. |
| (ii) | The Company has debentures in Brazil obtained for the Company's infrastructure investment projects. |
| (iii) | The Company entered into derivatives to mitigate the exposure to cash flow variations of all floating rate debt contracted in Brazil, resulting in an average cost of 3.42% per year in US$. |
Future flows of debt payments, principal and interest
i
| (i) | Based on interest rate curves and foreign exchange rates applicable as of June 30, 2023 and considering that the payments of principal will be made on their contracted payments dates. The amount includes the estimated interest not yet accrued and the interest already recognized in the interim financial statements. |
| 34 |
Covenants
Some of the Company’s debt agreements with lenders contain financial covenants. The primary financial covenants in those agreements require maintaining certain ratios, such as debt to EBITDA (as defined in note 4a) and interest coverage. The Company did not identify any instances of noncompliance as of June 30, 2023.
ii) Lease liabilities
i
| Schedule of lease liabilities | ||||||
| December 31, 2022 | Additions and contract modifications | Payments (i) | Interest | Translation adjustment | June 30, 2023 | |
| Ports | i 690 | - | ( i 34) | i 12 | i 6 | i 674 |
| Vessels | i 441 | i 5 | ( i 32) | i 8 | ( i 2) | i 420 |
| Pelletizing plants | i 222 | i 12 | ( i 2) | i 5 | i 18 | i 255 |
| Properties | i 105 | - | ( i 19) | i 2 | i 8 | i 96 |
| Energy plants | i 52 | - | ( i 2) | i 2 | - | i 52 |
| Mining equipment | i 21 | i 2 | ( i 3) | i 1 | i 2 | i 23 |
| Total | i 1,531 | i 19 | ( i 92) | i 30 | i 32 | i 1,520 |
| Current liabilities | i 182 | i 199 | ||||
| Non-current liabilities | i 1,349 | i 1,321 | ||||
| Total | i 1,531 | i 1,520 |
| (i) | The total amount of the variable lease payments not included in the measurement of lease liabilities for the six-month period ended June 30, 2023 was US$ i 74 (2022: US$ i 143). |
Annual minimum payments and remaining lease term
The following table presents the undiscounted lease obligation by maturity date. The lease liability recognized in the statement of financial position is measured at the present value of such obligations.
i /
/ i
| 22. | Brumadinho dam failure |
In January 2019, a tailings dam (“Dam I”) experienced a failure at the Córrego do Feijão mine, in the city of Brumadinho, state of Minas Gerais, Brazil. The failure released a flow of tailings debris, destroying some of Vale’s facilities, affecting local communities and disturbing the environment. The tailings released have caused an impact of around 315 km in extension, reaching the nearby Paraopeba River. The dam failure in Brumadinho (“event”) resulted in 270 fatalities or presumed fatalities, including 3 victims still missing, and caused extensive property and environmental damage in the region.
On February 4, 2021, the Company entered into a Judicial Settlement for Integral Reparation (“Global Settlement”), which was under negotiations since 2019, with the State of Minas Gerais, the Public Defender of the State of Minas Gerais and the Federal and the State of Minas Gerais Public Prosecutors Offices, to repair the environmental and social damage resulting from the Dam I rupture. The Global Settlement was ratified by the Minas Gerais State Court on February 4, 2021, and the res judicata was drawn up on April 7, 2021.
As a result of the dam failure, the Company has been recognizing provisions to meet its assumed obligations, including indemnification to those affected by the event, remediation of the impacted areas and compensation to the society, as shown below:
i
| Schedule of changes in provisions to meet its assumed obligations, including de-characterization of the dams | ||||||
| December 31, 2022 |
Operating expense |
Monetary and present value adjustments | Disbursements | Translation adjustment | June 30, 2023 | |
| Global Settlement for Brumadinho | ||||||
| Payment obligations | i 882 | - | i 42 | ( i 243) | i 67 | i 748 |
| Provision for socio-economic reparation and others | i 867 | - | i 62 | ( i 238) | i 63 | i 754 |
| Provision for social and environmental reparation | i 777 | - | i 51 | ( i 25) | i 65 | i 868 |
| i 2,526 | - | i 155 | ( i 506) | i 195 | i 2,370 | |
| Commitments | ||||||
| Tailings containment and geotechnical safety | i 559 | - | i 30 | ( i 67) | i 45 | i 567 |
| Individual indemnification | i 45 | i 82 | i 2 | ( i 32) | i 3 | i 100 |
| Other commitments | i 182 | i 58 | i 1 | ( i 16) | i 14 | i 239 |
| i 786 | i 140 | i 33 | ( i 115) | i 62 | i 906 | |
| Liability | i 3,312 | i 140 | i 188 | ( i 621) | i 257 | i 3,276 |
| Current liability | i 944 | i 1,201 | ||||
| Non-current liability | i 2,368 | i 2,075 | ||||
| Liability | i 3,312 | i 3,276 | ||||
| Discount rate in nominal terms | i 9.08% | i 9.37% |
| (i) | In addition, the Company has incurred expenses, which have been recognized straight to the income statement as “other operating expenses, net” (note 5c), in relation to tailings management, humanitarian assistance, payroll, legal services, water supply, among others. In the six-month period ended June 30, 2023, the Company incurred expenses in the amount of US$ i 242 (2022: US$ i 277). |
a) Global Settlement for Brumadinho
The Global settlement includes: (i) payment obligations, of which the funds will be used directly by the State of Minas Gerais and Institutions of Justice for socio-economic and socio-environmental compensation projects; (ii) socioeconomic projects in Brumadinho and other municipalities; and (iii) compensation of the environmental damage caused by the dam failure. These obligations are projected for an average period of 5 years.
For the measures (i) and (ii), the agreement specifies an amount for each project and changes in the original budget and deadlines may have an impact in the provision. In addition, the execution of the environmental recovery actions has no cap limit despite having been estimated in the Global Settlement due to the Company's legal obligation to fully repair the environmental damage caused by the dam failure. The expenses related to these obligations are deducted from the income tax calculation, in accordance with the Brazilian tax regulation, which is subject to periodic inspection by the competent authorities. Therefore, although Vale is monitoring this provision, the amount recorded could materially change depending on several factors that are not under the Company’s control.
b) Provision for individual indemnification and other commitments
The Company is also working to ensure geotechnical safety of the remaining structures at the Córrego do Feijão mine, in Brumadinho, and the removal and proper disposal of the tailings of Dam I, including dredging part of the released material and de-sanding from the channel of the river Paraopeba.
For the individual indemnification, Vale and the Public Defendants of the State of Minas Gerais formalized an agreement on April 5, 2019, under which those affected by the Brumadinho’s dam failure may join an individual or family group out-of-Court settlement agreements for the indemnification of material, economic and moral damages. This agreement establishes the basis for a wide range of indemnification payments, which were defined according to the best practices and case law of Brazilian Courts, following rules and principles of the United Nations.
c) Contingencies and other legal matters
Public civil actions brought by the State of Minas Gerais and state public prosecutors for damages resulting from the failure of Dam I
The Company is party to public civil actions brought by the State of Minas Gerais and justice institutions, claiming compensation for socioeconomic and socio-environmental damages resulting from the dam failure and seeking a broad range of preliminary injunctions ordering Vale to execute specific remediation and reparation actions. As a result of the Global Settlement, settled in February 2021, the requests for the reparation of socio-environmental and socioeconomic damages caused by the dam failure were substantially resolved. Indemnifications for individual damages was excluded from the Global Settlement, and the Term of Commitment signed with the Public Defendants of the State of Minas Gerais was ratified, whose parameters are utilized as a basis for the settlement of individual agreements. In the same year of 2021, the fulfilment of the Global Settlement was initiated, by Vale and other parties.
Collective Labor Civil Action
In 2021, public civil actions were filed with Labor Court of Betim in the State of Minas Gerais, by a workers' unions claiming the compensation for death damages to own and outsourced employees, who died as a result of the failure of Dam I. Initial decisions sentenced Vale to pay US$ i 208 thousand (R$ i 1 million) per fatality. In June 2023, the Superior Labor Court ruled the lawsuit filed by workers’ union, sustaining the initial decision that condemned Vale. The Company is defending itself in the lawsuits and considers that the likelihood of loss is possible.
U.S. Securities class action suit
Vale is defending itself against a class action brought before a Federal Court in New York and filed by holders of securities - American Depositary Receipts ("ADRs") - issued by Vale. Following the decision of the Court, in May 2020, that denied the Motion to Dismiss presented by the Company, the Discovery phase has started and is expected to be concluded in 2024.
On November 24, 2021, a new complaint was filed before the same Court by eight Plaintiffs, all investment funds, as an “opt-out” litigation from the class action already pending in the Eastern District of New York court, asserting virtually the same allegations in the main class action.
The likelihood of loss of these proceedings is considered possible. However, considering the initial phase of this class action, it is not yet possible to reliably estimate the amount of a potential loss. The amount of damages sought in these claims is unspecified.
Arbitration proceedings filed by minority shareholders and a class association
In Brazil, Vale is named as a defendant in (i) one arbitration filed by 385 minority shareholders, (ii) two arbitrations filed by a class association allegedly representing all Vale’s noncontrolling shareholders, and (iii) three arbitrations filed by foreign investment funds.
In the six proceedings, the claimants argue that Vale was aware of the risks associated with the dam and failed to disclose it to its shareholders. Based on such argument, they claim compensation for losses caused by the decrease in share price.
The expectation of loss is classified as possible for the six procedures and, considering the initial phase, it is not possible at this time to reliably estimate the amount of a possible loss.
In one of the proceedings filed by foreign funds, the Claimants initially estimated the amount of the alleged losses would be approximately US$ (R$ million). In another proceeding filed by foreign funds, the Claimants initially estimated the amount of the alleged losses would be approximately US$ (R$ million). The Company disagrees with the ongoing proceedings and understands that, in this case and at the current stage of the proceedings, the probability of loss in the amount claimed by the foreign funds is remote.
Securities and Exchange Commission (“SEC”) and investigations conducted by the CVM
On April 28, 2022, the SEC filed a lawsuit against Vale in the U.S. District Court for the Eastern District of New York, alleging that certain Vale’s disclosures related to dam safety management prior to the dam failure in Brumadinho violated U.S. securities laws. On March 28, 2023, Vale reached a settlement with the SEC to fully resolve this litigation. Under the agreement, without admitting or denying the settled claims, Vale will make payments totaling US$ i 56, which are provided by Vale. The settlement resolves the litigation without judgment on the claims based upon intentional or reckless fraud. In April 2023, the settlement was approved by the court.
CVM is also conducting investigations relating to Vale's disclosure of relevant information to shareholders, investors and the market in general, especially regarding the conditions and management of Vale's dams. The likelihood of loss of this proceeding is classified as possible and it is not yet possible to reliably estimate the amount of a potential loss to the Company.
Criminal proceedings and investigations
In January 2020, the State Prosecutors of Minas Gerais (“MPMG”) filed criminal charges against 16 individuals (including former executive officers of Vale and former employees) for a number of potential crimes, including homicide, and against Vale S.A. for alleged environmental crimes.
In November 2021, the Brazilian Federal Police concluded the investigation on potential criminal responsibility related with the Brumadinho dam failure and the final report sent to the Federal Public Prosecutors (“MPF”).
In January 2023, after the Federal Supreme Court recognized the competence of the Federal Court, the MPF ratified the complaint presented by MPMG, which was received by the competent authority. The MPF and the Brazilian Federal Police conducted a separate investigation into the causes of the dam failure in Brumadinho, which may result in new criminal proceedings. Vale is defending itself against the criminal claims and is not possible to estimate when a decision will be issued. The likelihood of a financial loss to the Company is classified as possible and it is not yet possible to reliably estimate the amount of a potential loss to Vale.
Decision of the Brazilian Office of the Comptroller General of the Union (“CGU”)
In October 2020, the CGU notified the Company about an administrative proceeding prosecution based on the same allegations mentioned above under the Brazilian Law 12,846/2013 in connection with inspection and monitoring activities related to the Brumadinho dam. In August 2022, the CGU concluded that Vale has failed to present reliable information to the Brazilian National Mining Agency (“ANM”), as once a positive stability condition statement (“DCE”) was issued for the Dam I, where it should be negative in the view of the CGU. Thus, even recognizing the non-existence of corruption acts or practices, the CGU fined Vale US$ i 18 (R$ i 86 million), which is the minimum amount established by law, i.e., the CGU recognizes the non-involvement or tolerance of the Company’s top management. Vale has submitted a request for reconsideration and considers the likelihood of loss for this amount is possible.
d) Insurance
The Company is negotiating with insurers the payment of indemnification under its civil liability and Directors and Officers Liability Insurance. The Company received US$ i 11 from insurers for the six-month period ended June 30, 2023.
/ i
| 23. | Liabilities related to associates and joint ventures |
a) Samarco dam failure
In November 2015, the Fundão tailings dam owned by Samarco Mineração S.A. (“Samarco”) experienced a failure, releasing mine tailings downstream, flooding certain communities and impacting communities and the environment along the Doce River. The dam failure resulted in 19 fatalities and caused property and environmental damage to the affected areas. Samarco is a joint venture equally owned by Vale S.A. and BHP Billiton Brasil Ltda. (‘‘BHPB’’).
In 2016, Vale, Samarco and BHPB, entered into a Framework Agreement with the Federal Government of Brazil, the states of Espírito Santo and Minas Gerais and certain other public authorities to establish the Renova Foundation that is developing and executing environmental and socio-economic programs to remediate and provide compensation for damage caused by the Samarco dam failure.
In June 2018, Samarco, Vale and BHPB entered into a comprehensive agreement with the offices of the federal and state (Minas Gerais and Espírito Santo) prosecutors, public defenders and attorney general, among other parties (“TacGov Agreement”), improving the governance mechanism of Renova Foundation and establishing, among other things, a process for potential revisions to the remediation programs under the Framework Agreement.
Under the Framework Agreement, Samarco has primary responsibility for funding Renova Foundation’s annual calendar year budget for the duration of the Framework Agreement. However, to the extent that Samarco does not meet its funding obligations, Vale and BHPB have secondary funding obligations under the Framework Agreement in proportion to their 50 per cent shareholding in Samarco.
Samarco began to gradually recommence operations in December 2020, however, there remains significant uncertainty regarding Samarco’s long-term cash flow generation.
b) Changes on the provisions in the period
i
| Schedule of changes on the provisions related to samarco dam failure | |||||
| December 31, 2022 | Monetary and present value adjustments | Disbursements | Translation adjustments | June 30, 2023 | |
| Renova Foundation reparation and compensation programs | i 3,124 | i 128 | ( i 108) | i 257 | i 3,401 |
| De-characterization of the Germano dam | i 197 | i 5 | - | i 16 | i 218 |
| Liabilities | i 3,321 | i 133 | ( i 108) | i 273 | i 3,619 |
| Current liabilities | i 1,911 | i 1,044 | |||
| Non-current liabilities | i 1,410 | i 2,575 | |||
| Liabilities | i 3,321 | i 3,619 | |||
| Discount rate in nominal terms | i 6.20% - i 9.51% | i 5.46% - i 9.20% |
| c) | Judicial reorganization of Samarco |
In April 2021, Samarco filed for Judicial Reorganization (“JR”) with the Courts of Minas Gerais.
In May 2023, Vale S.A. entered into a binding agreement jointly with BHPB, Samarco and certain creditors which hold together more than 50% of Samarco's debt, setting the parameters of Samarco’s debt restructuring to be implemented through a consensual restructuring plan (“Agreement”), subject for approval by the creditors and to be confirmed by the JR court. The plan aims to establish an independent and sustainable financial position for Samarco by resuming its high-quality pellets production, allowing Samarco to comply with its socio-environmental obligations.
Under the Agreement, the payments to the financial creditors will be made from 2024 to 2030, in line with Samarco's operational ramp-up and cash flow generation.
The Agreement also provides that additional cash demands that exceed these payments will be made to Fundação Renova through capital contributions to Samarco. The contributions have been carried out directly by Vale and BHPB to the Renova Foundation on behalf of Samarco and, therefore, they were deemed tax deductible as incurred, according to the Brazilian tax regulation.
Therefore, due to the change in the mechanism to fund Renova, Vale will no longer be allowed to deduct future payments from its income tax computation as they are not tax deductible in Brazil. Thus, the deferred income tax asset over the provision in the amount of US$ i 1,078 was reversed in full, with the corresponding impact in the income statement for the three-month period ended June 30, 2023 recorded as “Income taxes”.
In addition, the Agreement does not require the capitalization of the expenses of US$ i 699 (R$ i 3,371 million) that were incurred in the past and so, there are no change in relation to the tax treatment adopted. This matter was disclosed in the annual financial statements for the year ended December 31, 2022 in the uncertain tax positions note.
| d) | Contingencies related to Samarco accident |
These proceedings include public civil actions brought by Brazilian authorities and multiple proceedings involving claims for significant amounts of damages and remediation measures. The Framework Agreements represents a model for the settlement of the public civil action brought by the MPF and other related proceedings. There are also putative securities class actions in the USA against Vale and some of its current and former officers and a criminal proceeding in Brazil. The main updates regarding the lawsuits in the year were as follows:
Public Civil Action filed by the Federal Government and others and public civil action filed by the Federal Public Ministry ("MPF")
Vale is a defendant in several legal proceedings brought by governmental authorities and civil associations claiming socioenvironmental and socioeconomic damages and a number of specific remediation measures as a result of the Samarco’s Fundão dam failure, including a claim brought by the Federal Public Prosecution Office in 2016 seeking US$ i 32 billion (R$ i 155 billion) (the effect for Vale would be 50% of this amount), which has been suspended from the date of ratification of the TacGov Agreement.
However, as pre-requisites established in the TacGov Agreement, for renegotiation of the Framework Agreement were not implemented during the two-year period ended September 30, 2020, the Brazilian Federal and State prosecutors and public defenders filed a request for the immediate resumption of the US$ i 32 billion (R$ i 155 billion) claim.
| 39 |
Therefore, Vale, Samarco, BHPB and Federal and State prosecutors have been engaging in negotiations to seek a definitive settlement of the obligations under the Framework Agreement and the US$ i 32 billion (R$ i 155 billion) Federal Public Prosecution Office claim. The goal in signing a potential agreement is to provide a stable framework for the execution of reparation and compensation programs.
The potential agreement is still uncertain as it is subject to conclusion of the negotiations and approval by the Company, relevant authorities and intervenient parties.
The estimate of the economic impact of a potential agreement will depend mainly on (i) a detailed assessment of the estimates of the amounts to be spent on the reparation and compensation projects being discussed, (ii) an analysis of the detailed scope of such projects to determine their overlap with the initiatives and amounts already provisioned; and (iii) the timing of the execution of projects and disbursements, which will impact the present value of the obligations.
Therefore, until any revisions to the Programs are agreed, Renova Foundation will continue to implement the Programs in accordance with the terms of the Framework Agreement and the TacGov Agreement, for which the expected costs are reflected in the Company’s provision.
Judicial decision requesting cash deposits
In March 2023, as part of a proceeding related to a potential increase on the number of territories recognized as affected by the collapse of Samarco’s Fundão dam and covered by the TTAC, a Federal Court issued a decision ordering Vale and BHP Brasil to make judicial deposits in the total amount of US$ i 2.1 billion (R$ i 10.3 billion), in ten installments, which the effect for Vale would be 50% of this amount. On April 28, 2023, the Federal Court granted the companies' request for a suspensive effect on the decision that determined this deposit. The Company believes its provisions are sufficient to comply with the TTAC obligations.
Criminal proceedings
In September 2019, the federal court dismissed all criminal charges against Vale representatives relating to the first group of charges, which concerns the results of the Fundão dam failure, remaining only the legal entity in the passive pole. The second group of charges against Vale S.A. and one of the Company’s employees, which concerns the accusation of alleged crimes committed against the Environmental Public Administration, remained unchanged. The Company cannot estimate when a final decision on the case will be issued. The likelihood of a financial loss to the Company is classified as possible and it is not yet possible to reliably estimate the amount of a potential loss to Vale.
United Kingdom contribution claim
As a result of the rupture of Samarco’s Fundão dam failure, BHP Group Ltd (“BHP”) was named as defendant in group action claims for damages filed in the courts of England and Wales (The “UK Claim”). The UK Claim includes only BHP and was filed on behalf of certain individuals and municipalities in Brazil only against BHP, for the allegedly damages caused by the Fundão dam failure.
In December 2022, BHP filed a contribution claim against Vale, requesting the Company to be responsible for the indemnification payments in the proportion to its interest held in Samarco. The Company believes that it is not subject to the jurisdiction of the English Court and it does not have any contractual obligation in relation to this matter, therefore, the Company has assessed the risk of loss as remote.
| 40 |
/ i
24. Provision for de-characterization of dam structures and asset retirement obligations
The Company is subject to local laws and regulations, that requires the decommissioning of the assets and mine sites that Vale operates at the end of their useful lives, therefore, expenses for demobilization occur predominantly after the end of operational activities. Depending on the geotechnical characteristics of the structures, the Company is required to de-characterize the structures, as shown in item a) below.
Laws and regulations related to dam safety
In September 2020, the Federal Government enacted Law no. 14.066, which modified the National Dam Safety Policy (Law no. 12,334/2020), reinforcing the prohibition of constructing and raising upstream dams in Brazil. The law also requires companies to de-characterize the structures built using the upstream method by 2022, or by a later date if it is proven that the de-characterization is not technically feasible by 2022. As made available to competent bodies, a substantial part of the Company's de-characterization projects will be completed in a period exceeding the date established in the legislation due to the characteristics and safety levels of the Company's geotechnical structures.
Thus, in February 2022, the Company filed with the relevant bodies a request for an extension to perform the projects and, as a result, signed a Term of Commitment establishing legal and technical certainty for the process of de-characterization of the upstream dams, considering that the deadline defined was technically unfeasible, especially due to the necessary actions to increase safety during the works. With the signing of the agreement, the Company recorded an additional provision of US$ i 37 to make investments in social and environmental projects over a period of 8 years.
In December 2022, the Federal Government published decree no. 11,310, which regulates dispositions of the National Dam Safety Policy, regulates dam supervision activities, establishes the competence to regulate the extension of the self-rescue zone for authorities acting in dam emergency situations, and presents guidelines on technical reports regarding the causes of a breach and other aspects of management of geotechnical structures. This decree also determined that companies must present guarantees for dams in an alert situation, however, the procedures for measuring and executing these guarantees are still being discussed by the responsible public agencies.
In February 2023, ANM issued a resolution that modifies the current dam safety regulation. The main changes are new rules in connection with the active and passive monitoring during the de-characterization of dams, the simplified dam collapse study and simplified emergency action plan for specific cases, and the dam safety plan (“PSB”). The Company believes its provisions are sufficient to comply with the effective legal obligations.
Thus, depending on the development of these laws, the provisions registered by the Company may be materially impacted in future periods.
a) De-characterization of upstream and centerline geotechnical structures
As a result of the Brumadinho dam failure (note 22) and, in compliance with Law 14,066, the Company has decided to speed up the plan to “de-characterize” of all its tailings dams built under the upstream method, certain “centerline structures” and dikes, located in Brazil. The Company also operates tailings dams in Canada, including upstream compacted dams. However, the Company decided that these dams will be decommissioned using other methods, thus, the provision to carry out the decommissioning of dams in Canada is recognized as “Obligations for decommissioning assets and environmental obligations”, as presented in item (b) below.
These structures are in different stages of maturity, some of them still in the conceptual engineering phase, for which the estimate of expenditures includes in its methodology a high degree of uncertainty in the definition of the total cost of the project in accordance with best market practices.
The cash flow for de-characterization projects are estimated for a period up to 13 years and were discounted at present value at a rate, which reduced from 6.16% to 5.72%. Changes in the provisions are as follows:
| 41 |
i
| Schedule of changes in the provisions, de-characterization of dam structures located in Brazil | ||
| 2023 | 2022 | |
| Balance at January 1, | i 3,378 | i 3,523 |
| Additional provision | - | i 37 |
| Disbursements | ( i 173) | ( i 152) |
| Present value valuation | i 179 | ( i 104) |
| Translation adjustment | i 277 | i 240 |
| Balance at June 30, | i 3,661 | i 3,544 |
| June 30, 2023 | December 31, 2022 | |
| Current liabilities | i 502 | i 357 |
| Non-current liabilities | i 3,159 | i 3,021 |
| Liabilities | i 3,661 | i 3,378 |
Operational stoppage and idle capacity
In addition, due to the de-characterization projects, the Company has suspended some operations due to judicial decisions or technical analysis performed by Vale on its upstream dam structures located in Brazil. The Company has been recording losses in relation to the operational stoppage and idle capacity of the ferrous mineral segment in the amounts of US$ i 50 for the period ended June 30, 2023 (2022: US$ i 161). The Company is working on legal and technical measures to resume all operations at full capacity.
b) Asset retirement obligations and environmental obligations
i
| Schedule of changes in the provision of asset retirement obligations and environmental obligations | ||||||
| Liability | Discount rate | Cash flow maturity | ||||
| June 30, 2023 | December 31, 2022 | June 30, 2023 | December 31, 2022 | June 30, 2023 | December 31, 2022 | |
| Liability by geographical area | ||||||
| Brazil | i 2,035 | i 1,788 | i 5.46% | i 6.20% | i 2096 | i 2096 |
| Canada | i 1,649 | i 1,683 | i 1.35% - i 1.61% | i 1.11% | i 2151 | i 2148 |
| Oman | i 114 | i 114 | i 3.25% | i 3.90% | i 2035 | i 2035 |
| Indonesia | i 87 | i 73 | i 3.76% | i 4.33% | i 2062 | i 2061 |
| Other regions | i 139 | i 145 | i 1.70% - i 2.45% | i 1.84% - i 2.00% | - | - |
| i 4,024 | i 3,803 | |||||
Provision changes during the period
i
| Schedule of provision changes | ||||||
| 2023 | 2022 | |||||
| Asset retirement obligations |
Environmental obligations |
Total | Asset retirement obligations |
Environmental obligations |
Total | |
| Balance on January 1, | i 3,466 | i 337 | i 3,803 | i 4,283 | i 297 | i 4,580 |
| Adjustment to present value | i 64 | i 1 | i 65 | i 26 | i 1 | i 27 |
| Disbursements | ( i 61) | ( i 51) | ( i 112) | ( i 42) | ( i 28) | ( i 70) |
| Revisions on projected cash flows | ( i 7) | i 80 | i 73 | ( i 1,145) | ( i 6) | ( i 1,151) |
| Transfer to assets held for sale | - | - | - | ( i 49) | ( i 2) | ( i 51) |
| Translation adjustment | i 168 | i 27 | i 195 | i 33 | i 18 | i 51 |
| Balance on June 30, | i 3,630 | i 394 | i 4,024 | i 3,106 | i 280 | i 3,386 |
|
|
December 31, 2022 | |||||
| Asset retirement obligations |
Environmental obligations |
Total | Asset retirement obligations |
Environmental obligations |
Total | |
| Current | i 243 | i 154 | i 397 | i 210 | i 94 | i 304 |
| Non-current | i 3,387 | i 240 | i 3,627 | i 3,256 | i 243 | i 3,499 |
| Liability | i 3,630 | i 394 | i 4,024 | i 3,466 | i 337 | i 3,803 |
| 42 |
Financial guarantees
The Company has issued letters of credit and surety bonds for US$ i 891 as of June 30, 2023 (December 31, 2022: US$ i 644), in connection with the asset retirement obligations for its Energy Transition Metals operations. In addition, for Indonesia, the Company has bank deposits as collateral in relation to the bank guarantees issued by the bank in relation to the reclamation and mine closure guarantees.
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| 25. | Provisions |
i
| Schedule of provisions | |||||
| Current liabilities | Non-current liabilities | ||||
| Notes | June 30, 2023 | December 31, 2022 | June 30, 2023 | December 31, 2022 | |
| Provisions for litigation | 26 | i 121 | i 106 | i 1,347 | i 1,186 |
| Employee post retirement obligation | 27 | i 68 | i 66 | i 1,353 | i 1,260 |
| Payroll, related charges and other remunerations | i 660 | i 864 | - | - | |
| i 849 | i 1,036 | i 2,700 | i 2,446 | ||
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| 26. | Litigations |
The Company is a defendant in numerous legal actions in the ordinary course of business, including civil, tax, environmental and labor proceedings.
The Company makes use of estimates to recognize the amounts and the probability of outflow of resources, based on reports and technical assessments and on management’s assessment. Provisions are recognized for probable losses of which a reliable estimate can be made.
Arbitral, legal and administrative decisions against the Company, new jurisprudence and changes of existing evidence can result in changes regarding the probability of outflow of resources and on the estimated amounts, according to the assessment of the legal basis.
a) Provision for legal proceedings
The Company has considered all information available to assess the likelihood of an outflow of resources and in the preparation on the estimate of the costs that may be required to settle the obligations.
Tax litigations - Mainly refers to the lawsuit filed in 2011 by Valepar (merged by Vale) seeking the right to exclude the amount of dividends received in the form of interest on capital (“JCP”) from the PIS and COFINS tax base. The amount reserved for this proceeding as at June 30, 2023 is US$ i 555 (2022: US$ i 498). This proceeding is fully guaranteed by a judicial deposit.
Civil litigations - Refers to lawsuits for: (i) indemnities for losses, payments and contractual fines due to contractual imbalance or non-compliance that are alleged by suppliers, and (ii) land claims referring to real estate Vale's operational activities.
Labor litigations - Refers to lawsuits for individual claims by in-house employees and service providers, primarily involving demands for additional compensation for overtime work, moral damages or health and safety conditions.
Environmental litigations - Refers mainly to proceedings for environmental damages and issues related to environmental licensing.
The lawsuits related to Brumadinho event (note 22) and the Samarco dam failure (note 23) are presented in its specific notes to these financial statements and, therefore, are not disclosed below.
i
| Schedule of changes in provision for litigations | |||||
| Tax litigation | Civil litigation | Labor litigation | Environmental litigation | Total of litigation provision | |
| Balance at December 31, 2022 | i 576 | i 291 | i 411 | i 14 | i 1,292 |
| Additions and reversals, net | i 3 | i 27 | i 51 | i 2 | i 83 |
| Payments | ( i 3) | ( i 23) | ( i 39) | ( i 3) | ( i 68) |
| Indexation and interest | i 18 | i 20 | i 11 | i 2 | i 51 |
| Translation adjustment | i 49 | i 23 | i 37 | i 1 | i 110 |
| Balance at June 30, 2023 | i 643 | i 338 | i 471 | i 16 | i 1,468 |
| Current liabilities | i 20 | i 24 | i 75 | i 2 | i 121 |
| Non-current liabilities | i 623 | i 314 | i 396 | i 14 | i 1,347 |
| Balance at June 30, 2023 | i 643 | i 338 | i 471 | i 16 | i 1,468 |
| Balance at December 31, 2021 | i 456 | i 284 | i 358 | i 7 | i 1,105 |
| Additions and reversals, net | i 2 | i 24 | i 32 | i 6 | i 64 |
| Payments | ( i 1) | ( i 26) | ( i 25) | - | ( i 52) |
| Indexation and interest | i 14 | i 28 | i 14 | - | i 56 |
| Translation adjustment | i 29 | i 15 | i 25 | i 1 | i 70 |
| Discontinued operations | ( i 1) | ( i 7) | ( i 2) | - | ( i 10) |
| Balance at June 30, 2022 | i 499 | i 318 | i 402 | i 14 | i 1,233 |
| Current liabilities | i 15 | i 23 | i 64 | i 6 | i 108 |
| Non-current liabilities | i 484 | i 295 | i 338 | i 8 | i 1,125 |
| Balance at June 30, 2022 | i 499 | i 318 | i 402 | i 14 | i 1,233 |
b) Contingent liabilities
i
| Schedule of contingent liabilities | ||
| June 30, 2023 | December 31, 2022 | |
| Tax litigations | i 6,892 | i 6,590 |
| Civil litigations | i 1,289 | i 1,270 |
| Labor litigations | i 492 | i 569 |
| Environmental litigations | i 1,269 | i 1,102 |
| Total | i 9,942 | i 9,531 |
There have not been any relevant developments since the December 31, 2022, financial statements.
c) Judicial deposits
i
| Schedule of judicial deposits | ||
| June 30, 2023 | December 31, 2022 | |
| Tax litigations | i 1,052 | i 945 |
| Civil litigations | i 116 | i 123 |
| Labor litigations | i 142 | i 134 |
| Environmental litigations | i 16 | i 13 |
| Total | i 1,326 | i 1,215 |
d) Guarantees contracted for legal proceedings
In addition to the above-mentioned tax, civil, labor and environmental judicial deposits, the Company contracted US$ i 2.6 billion (R$ i 12.3 billion) (December 31, 2022: US$ i 2.3 billion (R$ i 12 billion)) in guarantees for its lawsuits, as an alternative to judicial deposits.
| 44 |
/ i
| 27. | Employee benefits |
a) Employee post retirement obligation
Reconciliation of assets and liabilities recognized in the statement of financial position
i
| Schedule of reconciliation of assets and liabilities recognized in the statement of financial position | ||||||||||||
| June 30, 2023 | December 31, 2022 | |||||||||||
| Overfunded pension plans (i) | Underfunded pension plans | Other benefits | Overfunded pension plans | Underfunded pension plans | Other benefits | |||||||
| Balance at beginning of the period | i 1,114 | - | - | i 919 | - | - | ||||||
| Interest income | i 53 | - | - | i 84 | - | - | ||||||
| Changes on asset ceiling | i 350 | - | - | i 65 | - | - | ||||||
| Translation adjustment | i 85 | - | - | i 46 | - | - | ||||||
| Balance at end of the period | i 1,602 | - | - | i 1,114 | - | - | ||||||
| Amount recognized in the statement of financial position | ||||||||||||
| Present value of actuarial liabilities | ( i 5,406) | ( i 643) | ( i 1,132) | ( i 5,142) | ( i 608) | ( i 1,057) | ||||||
| Fair value of assets | i 7,103 | i 354 | - | i 6,340 | i 339 | - | ||||||
| Effect of the asset ceiling | ( i 1,602) | - | - | ( i 1,114) | - | - | ||||||
| Assets (liabilities) | i 95 | ( i 289) | ( i 1,132) | i 84 | ( i 269) | ( i 1,057) | ||||||
| Current liabilities | - | ( i 13) | ( i 55) | - | ( i 10) | ( i 56) | ||||||
| Non-current assets (liabilities) | i 95 | ( i 276) | ( i 1,077) | i 84 | ( i 259) | ( i 1,001) | ||||||
| Assets (liabilities) | i 95 | ( i 289) | ( i 1,132) | i 84 | ( i 269) | ( i 1,057) | ||||||
| (i) | The pension plan asset is recorded as “Other non-current assets” in the statement of financial position. |
b) Long-term incentive programs
The Company has long-term reward mechanisms that include the Matching Program and the Performance Shares Units (“PSU”) for eligible executives, whose objective is to encourage the permanence of employees and stimulate performance.
The fair value of the programs is recognized on a straight-line basis over the three-year required service period, net of estimated losses.
On March 30, 2023, a new cycle of the Matching program started, and the fair value estimate was based on the Company's share price and ADR at the grant date, R$ and US$ per share. The number of shares that will be granted for the 2023 cycle was (2022: shares).
On April 28, 2023, a new cycle of the PSU program has started, and the Company will grant shares (2022: shares). The fair value was calculated based on the performance factor using Monte Carlo simulations for the Return to Shareholders Indicator and health and safety and sustainability indicators. The assumptions used for the Monte Carlo simulations are shown in the table below, as well as the result used to calculate the expected value of the total performance factor:
i /
The fair value of both programs will be recognized on a straight-line basis over the required three-year period of service, net of estimated losses.
/ i
| 28. | Equity |
a) Share capital
As at June 30, 2023, the share capital was US$61,614 corresponding to 4,539,007,580 shares issued and fully paid without par value. The Board of Directors may, regardless of changes to by-laws, approve the issue and cancelation of common shares, including the capitalization of profits and reserves to the extent authorized.
i
| Schedule of share capital | |||
| June 30, 2023 | |||
| Shareholders | Common shares | Golden shares | Total |
| Shareholders with more than 5% of total capital | i 959,040,176 | - | i 959,040,176 |
| Previ | i 395,686,156 | - | i 395,686,156 |
| Mitsui&co | i 286,347,055 | - | i 286,347,055 |
| Blackrock, Inc | i 277,006,965 | - | i 277,006,965 |
| Free floating | i 3,384,352,681 | - | i 3,384,352,681 |
| Golden shares | - | i 12 | i 12 |
| Total outstanding (without shares in treasury) | i 4,343,392,857 | i 12 | i 4,343,392,869 |
| Shares in treasury | i 195,614,711 | - | i 195,614,711 |
| Total capital | i 4,539,007,568 | i 12 | i 4,539,007,580 |
b) Cancelation of treasury shares
i
| Schedule of cancellation of treasury shares | ||
| Number of canceled shares | Carrying amount | |
| Cancelation approved on March 2, 2023 (i) | i 239,881,683 | i 4,164 |
| Six-month period ended June 30, 2023 | i 239,881,683 | i 4,164 |
| Cancelation approved on February 24, 2022 (i) | i 133,418,347 | i 2,830 |
| Six-month period ended June 30, 2022 | i 133,418,347 | i 2,830 |
| (i) | During the six-month period ended June 30, 2023 and 2022, the Board of Directors approved cancelations of common shares issued by the Company, acquired and held in treasury, without reducing the amount of its share capital. The effects were transferred in shareholders' equity as "Treasury shares cancelled", between the "Revenue reserve" and "Treasury shares". |
| c) | Remuneration approved |
| · | On February 16, 2023, the Board of Directors approved shareholder’s remuneration of US$1,569, of which US$1,132 is part of the minimum mandatory remuneration, recorded as a liability for the year ended December 31, 2022, and US$437 as an additional remuneration, recorded in equity as “Additional remuneration reserve”. It was fully paid in March 2023. |
| · | On July 27, 2023 (subsequent event), the Board of Directors approved interest on capital to shareholders in the amount of US$1,744, which will be paid in September 2023 as anticipated remuneration for the year ended December 31, 2023. |
| · | On December 1, 2022, the Board of Directors approved interest on capital to shareholders in the amount of US$254, as an anticipation of the income for the year ended December 31, 2022, which is part of the minimum mandatory remuneration, recorded as a liability for the year ended December 31, 2022. It was fully paid in March 2023. |
| · | On February 24, 2022, the Board of Directors approved the remuneration to shareholders in the amount of US$3,500 as an additional remuneration for the year ended December 31, 2021, recorded in equity as “Additional remuneration reserve”. It was fully paid in March 2022. |
| d) | Share buyback program |
i
| Schedule of share buyback program | |||||||
| Total of shares repurchased | Effect on cash flows | ||||||
| Six-month period ended June 30, | |||||||
| 2023 | 2022 | 2023 | 2022 | ||||
| Shares buyback program for 500,000,000 shares (i) | |||||||
| Acquired by Parent | i 73,179,052 | i 32,416,000 | i 1,102 | i 527 | |||
| Acquired by wholly owned subsidiaries | i 67,979,481 | i 38,027,798 | i 1,022 | i 606 | |||
| i 141,158,533 | i 70,443,798 | i 2,124 | i 1,133 | ||||
| Shares buyback program for 470,000,000 shares (ii) | |||||||
| Acquired by Parent | - | i 81,855,600 | - | i 1,501 | |||
| Acquired by wholly owned subsidiaries | - | i 96,959,900 | - | i 1,750 | |||
| - | i 178,815,500 | - | i 3,251 | ||||
| Shares buyback program | i 141,158,533 | i 249,259,298 | i 2,124 | i 4,384 | |||
| (i) | On April 27, 2022, the Board of Directors approved the common shares buyback program, limited to a maximum of 500,000,000 common shares or their respective ADRs. |
| (ii) | On April 1, 2021, the Board of Directors approved the common shares buyback program, limited to a maximum of 270,000,000 common shares or their respective ADRs. Continuing the previous program, the Board of Directors approved a new shares buyback program on October 28, 2021, with a limit of up to 200,000,000 common shares or their respective ADRs. Both programs were concluded in 2022. |
/ i
| 29. | Related parties |
The Company’s related parties are subsidiaries, joint ventures, associates, shareholders and its related entities and key management personnel of the Company.
Related party transactions were made by the Company on terms equivalent to those that prevail in arm´s-length transactions, with respect to price and market conditions that are no less favorable to the Company than those arranged with third parties.
Net operating revenue relates to sale of iron ore to the steelmakers and right to use capacity on railroads. Cost and operating expenses mostly relates to the variable lease payments of the pelletizing plants.
Purchases, accounts receivable and other assets, and accounts payable and other liabilities relate largely to amounts charged by joint ventures and associates related to the pelletizing plants operational lease and railway transportation services.
a) Transactions with related parties
i
| Schedule of transactions with related parties | ||||||
| Three-month period ended June 30, | ||||||
| 2023 | 2022 | |||||
| Net operating revenue | Cost and operating expenses | Financial result | Net operating revenue | Cost and operating expenses | Financial result | |
| Joint Ventures | ||||||
| Companhia Siderúrgica do Pecém | - | - | - | i 126 | - | i 4 |
| Aliança Geração de Energia S.A. | - | ( i 26) | - | - | ( i 28) | - |
| Pelletizing companies (i) | - | ( i 45) | ( i 11) | - | ( i 98) | ( i 11) |
| MRS Logística S.A. | - | ( i 114) | - | ( i 5) | ( i 111) | - |
| Norte Energia S.A. | - | ( i 33) | - | - | ( i 32) | - |
| Other | i 11 | ( i 2) | - | i 19 | - | ( i 1) |
| i 11 | ( i 220) | ( i 11) | i 140 | ( i 269) | ( i 8) | |
| Associates | ||||||
| VLI | i 76 | ( i 5) | - | i 83 | ( i 7) | - |
| Other | - | - | - | - | - | i 2 |
| i 76 | ( i 5) | - | i 83 | ( i 7) | i 2 | |
| Major shareholders | ||||||
| Bradesco | - | - | i 197 | - | - | ( i 103) |
| Mitsui | i 85 | - | - | i 79 | - | - |
| i 85 | - | i 197 | i 79 | - | ( i 103) | |
| Total | i 172 | ( i 225) | i 186 | i 302 | ( i 276) | ( i 109) |
(i) Aggregated entities: Companhia Coreano-Brasileira de Pelotização, Companhia Hispano-Brasileira de Pelotização, Companhia Ítalo-Brasileira de Pelotização and Companhia Nipo-Brasileira de Pelotização.
| Six-month period ended June 30, | ||||||
| 2023 | 2022 | |||||
| Net operating revenue | Cost and operating expenses | Financial result | Net operating revenue | Cost and operating expenses | Financial result | |
| Joint Ventures | ||||||
| Companhia Siderúrgica do Pecém | i 93 | - | - | i 255 | - | ( i 2) |
| Aliança Geração de Energia S.A. | - | ( i 52) | - | - | ( i 53) | - |
| Pelletizing companies (i) | - | ( i 88) | ( i 25) | - | ( i 168) | ( i 20) |
| MRS Logística S.A. | - | ( i 178) | - | i 1 | ( i 178) | - |
| Norte Energia S.A. | - | ( i 60) | - | - | ( i 63) | - |
| Other | i 16 | ( i 5) | - | i 19 | ( i 3) | ( i 1) |
| i 109 | ( i 383) | ( i 25) | i 275 | ( i 465) | ( i 23) | |
| Associates | ||||||
| VLI | i 145 | ( i 11) | ( i 1) | i 146 | ( i 12) | ( i 1) |
| i 145 | ( i 11) | ( i 1) | i 146 | ( i 12) | ( i 1) | |
| Major shareholders | ||||||
| Bradesco | - | - | i 269 | - | - | i 182 |
| Mitsui | i 130 | - | - | i 157 | - | - |
| i 130 | - | i 269 | i 157 | - | i 182 | |
| Total | i 384 | ( i 394) | i 243 | i 578 | ( i 477) | i 158 |
/
b) Outstanding balances with related parties
i
| Schedule of outstanding balances with related parties | ||||||
| Assets | ||||||
| June 30, 2023 | December 31, 2022 | |||||
| Cash and cash equivalents | Accounts receivable | Dividends receivable and other assets | Cash and cash equivalents | Accounts receivable | Dividends receivable and other assets | |
| Joint Ventures | ||||||
| Companhia Siderúrgica do Pecém | - | - | - | - | i 91 | i 17 |
| Pelletizing companies (i) | - | - | i 18 | - | - | i 25 |
| MRS Logística S.A. | - | - | i 26 | - | - | i 25 |
| Other | - | i 5 | i 15 | - | i 4 | i 50 |
| - | i 5 | i 59 | - | i 95 | i 117 | |
| Associates | ||||||
| VLI | - | i 94 | - | - | i 14 | - |
| Other | - | - | i 2 | - | - | i 1 |
| - | i 94 | i 2 | - | i 14 | i 1 | |
| Major shareholders | ||||||
| Bradesco | i 387 | - | i 385 | i 335 | - | i 154 |
| Banco do Brasil | i 35 | - | - | i 30 | - | - |
| Mitsui | - | i 3 | - | - | i 89 | - |
| i 422 | i 3 | i 385 | i 365 | i 89 | i 154 | |
| Pension plan | - | i 16 | - | - | i 13 | - |
| Total | i 422 | i 118 | i 446 | i 365 | i 211 | i 272 |
(i) Aggregated entities: Companhia Coreano-Brasileira de Pelotização, Companhia Hispano-Brasileira de Pelotização, Companhia Ítalo-Brasileira de Pelotização and Companhia Nipo-Brasileira de Pelotização.
| Liabilities | ||||
| June 30, 2023 | December 31, 2022 | |||
| Supplier and contractors | Financial instruments and other liabilities | Supplier and contractors | Financial instruments and other liabilities | |
| Joint Ventures | ||||
| Pelletizing companies (i) | i 81 | i 187 | i 63 | i 400 |
| MRS Logística S.A. | i 34 | - | i 57 | - |
| Other | i 34 | - | i 31 | - |
| i 149 | i 187 | i 151 | i 400 | |
| Associates | ||||
| VLI | i 6 | i 156 | i 5 | i 53 |
| Other | i 1 | - | i 3 | - |
| i 7 | i 156 | i 8 | i 53 | |
| Major shareholders | ||||
| Bradesco | - | i 23 | - | i 75 |
| Mitsui | - | - | i 1 | - |
| - | i 23 | i 1 | i 75 | |
| Pension plan | i 13 | - | i 11 | - |
| Total | i 169 | i 366 | i 171 | i 528 |
/
/
| 49 |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Vale S.A. (Registrant) | ||
| By: | /s/ Thiago Lofiego | |
| Date: October 26, 2023 | Head of Investor Relations | |
| This ‘6-K/A’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 12/31/23 | 6-K | |||
| Filed as of: | 10/27/23 | 6-K | ||
| Filed on: | 10/26/23 | 6-K | ||
| 7/28/23 | 6-K, 6-K/A | |||
| 7/27/23 | 6-K | |||
| For Period end: | 6/30/23 | 6-K | ||
| 4/28/23 | 6-K, EFFECT | |||
| 4/3/23 | 6-K, 6-K/A | |||
| 3/30/23 | ||||
| 3/28/23 | 6-K | |||
| 3/2/23 | 6-K | |||
| 2/16/23 | 6-K | |||
| 12/31/22 | 20-F, 6-K, 6-K/A | |||
| 12/1/22 | 6-K | |||
| 6/30/22 | 6-K, 6-K/A | |||
| 4/28/22 | 6-K | |||
| 4/27/22 | 6-K | |||
| 3/31/22 | 6-K | |||
| 2/24/22 | 6-K | |||
| 12/31/21 | 20-F, 6-K, 6-K/A | |||
| 11/24/21 | ||||
| 10/28/21 | 6-K | |||
| 4/7/21 | ||||
| 4/1/21 | 6-K, 6-K/A | |||
| 2/4/21 | 6-K | |||
| 9/30/20 | 6-K | |||
| 4/5/19 | 6-K, 6-K/A | |||
| List all Filings | ||||