Vale S A : Performance in 1Q23

Vale's performance in 1Q23

Rio de Janeiro, April 26th, 2023. "Our Q1 results showed stronger iron ore production, supported by S11D improved performance, thanks to our truckless system improved reliability and the new crushers. Despite the weather-related loading restrictions that impacted our sales, we remain confident in our ability to achieve our 2023 goals. Our Energy Transition Metals results were solid, with continued ramp up at Salobo III, resulting in a strong performance in copper. In Sudbury, our mines had their highest production rates since 2017. While the mining industry faces inflationary pressure, we remain focused on cost efficiency and productivity gains. We are also making progress in managing our tailings dams. In April, two geotechnical structures received their declaration of stability, which led to removing their emergency level. Since 2022, we have successfully revoked theemergency level protocols for 10 structures. We remain strongly committed to building a safer and more reliable company while delivering value to our shareholders." commented Eduardo Bartolomeo, Chief Executive Officer.

Selected financial indicators

	US$ million		1Q23		1Q22			4Q22
	Net operating revenues	8,434	10,812		11,941
	Total costs and expenses (ex-Brumadinho and de-characterization of dams)1		(5,403)		(5,124)			(7,895)
	Expenses related to Brumadinho event and de -characterization of dams		(111)		(160)			(375)
	Adjusted EBIT from continuing operations		2,920		5,528			3,726
	Adjusted EBIT margin (%)		35%		51%			31%
	Adjusted EBITDA from continuing operations		3,576		6,214			4,626
	Adjusted EBITDA margin (%)		42%		57%			39%
	Proforma adjusted EBITDA from continuing operations 2		3,687		6,374			5,001
	Net income from continuing operations attributable to Vale's shareholders	1,837	4,456		3,724
	Net debt 3		8,226		4,911			7,915
	Capital expenditures	1,130	1,136		1,787

1. Includes adjustment of US$ 35 million in 1Q23, to reflect the performance of the streaming transactions at market price.
2. Excluding expenses related to Brumadinho.
3. Including leases (IFRS 16).

Highlights

Business Results

• Proforma adjusted EBITDA from continued operations of US$ 3.7 billion in Q1, down US$ 2.7 billion y/y, mainly reflecting (i) lower realized prices of iron ore fines and pellets, (ii) lower sales of iron ore fines and (iii) higher costs .
• Free Cash Flow from Operations of US$ 2.3 billion, representing 62% EBITDA to cash-conversion versus 19% in 1Q22, largely explained by (i) the strong cash collection from 4Q22 sales and (ii) seasonally higher income tax paid in 1Q22.

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Disciplined capital allocation

• Capital expenditures of US$ 1.1 billion in Q1, including growth and sustaining investments, in line y/y.
• Gross debt and leases of US$ 13.0 billion as of March 31, 2023, slightly higher q/q, mainly due to US$ 300 million debt issued as part of Vale's liability management.
• Expanded Net Debt of US$ 14.4 billion as of March 31, 2023, in line q/q and within the targeted leverage of US$ 10- 20 billion.
  Value creation and distribution
• US$ 1.8 billion in dividends paid in March 2023.
• Disbursement for the 3rd buyback program in quarter was US$ 763 million. Overall, the 3rd buyback program is 47% complete, with a disbursement of US$ 3.7 billion to repurchase 233.7 million shares 1.

Focusing and strengthening the core

• Progressing in the electric vehicles value chain:
• • PTVI and China's Zhejiang Huayou Cobalt Co. signed a definitive agreement with global automaker Ford Motor
    Co. for the development of the Pomalaa project in Indonesia. The three-party collaboration enables to advance more sustainable nickel production in Indonesia and help make electric vehicle batteries more affordable.
  • In February, we inaugurated the construction of the Morowali project, an integrated nickel mining and processing plant (RKEF) powered by natural gas, with an expected nickel capacity of 73 ktpy, to start -up in 2025. The project is a JV between PTVI, which will own 100% of the mine and two Chinese partners, who will hold a 51% stake in the RKEF.
• Delivering iron solutions:
• • Shipment of the first briquettes cargo for international tests in blast furnace in April. The cargo was shipped from the Port of Açu for testing at a client's blast furnace in Europe. The green briquette is an innovative product, which reduces CO2 emissions in steelmaking by 10%.
  • Emergency plan for Torto dam was approved in March, and our expectation is to obtain the operating license by the end of Q2. The dam will enable us to increase the overall quality and volume of pellets, improving mi x and average price premium.
• Advancing the project pipeline:
• • Both lines at Salobo III plant already in operation, and successfully ramping up. The project will add 30-40 ktpy of

copper production to the Salobo complex and it is expected to reach full capac ity in 4Q24.

• • Commissioning of Gelado project has continued to progress, using 100% electric dredges. Gelado will produce high-quality pellet feed by reusing the tailings that have been deposited in the Gelado dam.
• Responsible divestment of non-core assets is concluded with:
• • The sale of Companhia Siderúrgica do Pecém (CSP) was closed for an enterprise value of US$ 2.2 billion, used to prepay CSP's outstanding net debt balance of US$ 2.3 billion.

1 Related to the April 2022 3rd buyback program for a total of 500 million shares.

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Promoting sustainable mining

• Two geotechnical structures received declaration of stability condition in April, having their emergency level condition removed. Since the beginning of 2022, 10 structures had emergency level protocols revoked.
• Vale's ESG Risk Rating, assessed by Sustainalytics, was upgraded from 39.1 to 35.3, indicating further recognition of our efforts in building a safer and more sustainable company.
• Agreement with United States Securities and Exchange Commission ("SEC") to terminate a lawsuit filed by the SEC against the Company was signed in March 2023. Vale will make payments totaling US$ 55.9 million to the SEC.

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Adjusted EBITDA

Adjusted EBITDA

	US$ million		1Q23			1Q22			4Q22
	Net operating revenues	8,434		10,812	11,941
	COGS		(4,949)			(4,622)			(7,155)
	SG&A		(118)			(121)			(148)
	Research and development		(139)			(121)			(218)
	Pre-operating and stoppage expenses	(124)	(154)	(125)
	Expenses related to Brumadinho event & de -characterization of dams		(111)			(160)			(375)
	Other operational expenses¹	(73)	(106)	(249)
	Dividends and interests on associates and JVs		-			-		55
	Adjusted EBIT from continuing operations		2,920			5,528			3,726
	Depreciation, amortization & depletion		656			686			900
	Adjusted EBITDA from continuing operations		3,576			6,214			4,626
	Proforma Adjusted EBITDA from continuing operations²		3,687			6,374			5,001
	Discontinued operations - Coal		-			171			-
	Adjusted EBITDA total		3,576			6,385			4,626
	Proforma Adjusted EBITDA total²		3,687			6,545			5,001

• Includes adjustment of US$ 35 million in 1Q23, to reflect the performance of the streaming transactions at market price. ² Excluding expenses related to Brumadinho.

Proforma EBITDA - 1Q23 vs. 1Q22

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Sales & price realization

Volume sold - Minerals and metals

	'000 metric tons		1Q23		1Q22		4Q22
	Iron ore fines		45,861			51,311			81,202
	ROM	1,665		1,035		1,963
	Pellets		8,133			7,011			8,789
	Nickel		40			39			58
	Copper¹		63			50			72
	Gold as by-product ('000 oz)¹	72		62		73
	Silver as by-product ('000 oz)¹		406			341			533
	PGMs ('000 oz)		74			49			54
	Cobalt (metric ton)		621			415			927

¹ Including sales originated from both nickel and copper operations.

Average realized prices

US$/ton	1Q23	1Q22	4Q22
Iron ore - 62% Fe reference price	125.5	141.6	99.0
Iron ore fines Vale CFR/FOB realized price	108.6	141.4	95.6
Pellets CFR/FOB (wmt)	162.5	194.6	165.6
Nickel	25,260	22,195	24,454
Copper2	9,298	10,619	8,337
Gold (US$/oz)12	1,845	1,862	1,677
Silver (US$/oz)2	22.07	23.47	21.88
Cobalt (US$/t)1	32,830	78,085	44,980

• Prices presented above were adjusted to reflect the market prices of products delivered related to the streaming transactions.
  2 Including sales originated from both nickel and copper operations.

Costs

COGS by business segment

US$ million	1Q23	1Q22	4Q22
Iron Solutions	3,290	3,108	5,079
Energy Transition Metals	1,620	1,334	1,965
Others	39	180	111
Total COGS of continuing operations¹	4,949	4,622	7,155
Depreciation	613	645	875
COGS of continuing operations, ex-depreciation	4,336	3,977	6,280

¹ COGS currency exposure in 1Q23 was as follows: 50,07% BRL, 42,29% USD, 7,37% CAD and 0,27% Other currencies.

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