Vale S A : Performance in 4Q22 and 2022

Vale's performance in Q4 and 2022

Rio de Janeiro, February 16th, 2023. "In 2022, we made significant progress on our strategic priorities. In safety, we are proud to have eliminated 40% of our upstream structures and removed the B3/B4 dam from the high-risk level. In Iron Solutions, we advanced on our path to becoming the supplier of choice for high-quality products, leveraging Vale's unique mineral endowment and capitalizing on the decarbonization trend of the steel industry. On that, we have announced hubs to develop green solutions in the Middle East and secured MoUs with clients representing around 50% of the our scope 3 emissions, expanding the offer of low-carbon products such as high-grade pellets and briquettes. On operations, we took concrete actions to deliver on our long-term growth guidance by advancing on the critical milestones we had laid out for the year. In the Southeast, the tailings filtration plants are ramping up, and in the North, we improved orebody knowledge at S11D and, in Q4, commissioned the Gelado project. In the Energy Transition Materials business, the operations at Sudbury are now stable, and Onça Puma had its best annual production in the last five years. On Copper, performance has resumed after major maintenance in Salobo and Sossego, and we are off to a great start in 2023. Additionally, our robust pipeline of accretive growth progressed with the successful start-up of Salobo III, the approval of Onça Puma 2nd furnace and the signing of partnerships in Indonesia. We have also re-designed the Executive Committee, ensuring a fit- for-purpose organizaton with a greater focus on our operations and on developing sustainable solutions for the global energy transition. We strongly believe these actions will continue to uniquely position Vale to benefit from the secular trends of the energy revolution impacting the mining industry, creating sustainable long-term value for all stakeholders," commented Eduardo Bartolomeo, Chief Executive Officer.

Selected financial indicators

US$ million	4Q22	3Q22	4Q21	2022	2021
Net operating revenues	11,941	9,929	13,105	43,839	54,502
Total costs and expenses (ex-Brumadinho and de-characterization of dams)	(7,895)	(6,730)	(7,228)	(26,253)	(23,807)
Expenses related to Brumadinho event and de-characterization of dams	(375)	(336)	(2,115)	(1,151)	(2,576)
Adjusted EBIT from continuing operations	3,726	2,891	3,904	16,589	28,309
Adjusted EBIT margin (%)	31%	29%	30%	38%	52%
Adjusted EBITDA from continuing operations	4,626	3,666	4,726	19,760	31,343
Adjusted EBITDA margin (%)	39%	37%	36%	45%	58%
Proforma adjusted EBITDA from continuing operations¹	5,001	4,002	6,857	20,911	33,963
Net income from continuing operations attributable to Vale's shareholders	3,724	4,455	5,352	16,728	24,736
Net debt ²	7,915	6,980	1,877	7,915	1,877
Capital expenditures	1,787	1,230	1,751	5,446	5,033

• Excluding expenses related to Brumadinho and donations associated with COVID-19. ² Including leases (IFRS 16).

Highlights

Business Results

• Proforma adjusted EBITDA from continued operations of US$ 5.0 billion in Q4, US$ 1 billion higher q/q, mainly reflecting the higher iron ore sales volumes and higher realized prices in nickel and copper. Proforma adjusted EBITDA from continued operations of US$ 20.9 billion in 2022, 38% lower than 2021 mainly due to 23.6% lower iron ore fines realized prices.
• Free Cash Flow from Operations of US$ 5.7 billion in 2022, vs. US$ 20.0 billion in 2021 due to lower EBITDA.

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Disciplined capital allocation

• Capital expenditures of US$ 1.8 billion in Q4, including growth and sustaining investments, up US$ 557 million q/q, but flat y/y, following usual seasonality. Capital expenditures of US$ 5.4 billion in 2022, 8% higher than 2021, due to investments in the Sol do Cerrado solar farm, Serra Sul 120, Capanema and Tubarão Briquette iron ore projects.
• Gross debt and leases of US$ 12.7 billion as of December 31, 2022, US$ 508 million higher q/q, largely due to lower free cash flow from operations and further execution of the share buyback program.
• Expanded Net Debt of US$ 14.1 billion, up US$ 856 million q/q, in line with targeted leverage of US$ 10-20 billion.

Value creation and distribution

• US$ 12.6 billion paid in dividends, interest on capital and share repurchases in 2022. Since 2020, Vale has returned US$ 35 billion to shareholders, representing around 46% of its market cap1.
• US$ 1.8 billion in dividends to be paid in March 2023, considering Vale's ordinary dividend policy applied to 2H22 results.
• 3rd share buyback program now 43% complete, with a disbursement of US$ 3.4 billion to repurchase 213 million shares2. With the three buyback programs, earnings and dividends on a per share basis have each increased 15% since April 2021.

2022 in review

Focusing and strengthening the core

• Progressing in the electric vehicles value chain:
• Multi-yearagreement to supply low-carbon nickel to Swedish lithium-cell producer Northvolt AB signed in March.
• Affirmed nickel supply contract with Tesla in May.
• Long-termnickel supply agreement with General Motors signed in November. Pursuant to the agreement, Vale will supply battery grade nickel sulfate, equivalent to 25ktpy of contained nickel starting in 2026.
• Enhancing the iron solutions business:
• Vale signed three agreements in October for the development of Mega Hubs, industrial complexes to supply green solutions to the steel industry.
• MoU with Nippon Steel Corporation, Hunan Iron & Steel Group3, and SHS, among others, to pursue ironmaking solutions focused on the carbon-neutral steelmaking process, signed during 2022.
• In July, Vale announced the start of construction of the Zhongzhai Pre-blending Project, a partnership with Shagang and Ningbo Zhoushan Port. Vale is committed to supplying part of the blended cargos, with high-quality products such as BRBF, and to provide technical assistance on the blending activities.
• Tecnored started the construction of the R$ 1.6 billion-plant in April. Start-up is expected in 2025, with initial capacity of 250 ktpy of green pig iron and potentially reaching 500 ktpy in the future.
• Advancing the project pipeline:
• Approval of the Morowali project (formerly Bahodopi nickel project) in July. The project is expected to start-up in 2025. PTVI will own 100% of the mine while the RKEF project is a partnership between PTVI (49%) and two Chinese partners with 73 ktpy capacity.

1. Market capitalization of Dec 30th, 2022.
2. As of the date of this report. Related to the April 2022 3rd buyback program for a total of 500 million shares. As reflected in our 4Q22 Financial Statement, until Dec 30, 2022, the Company had repurchased approximately 188 million ordinary shares in the total amount of US$ 2.9 billion.
3. Former Hunan Valin Iron & Steel Group Co., Ltd.

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• PTVI and Huayou signed binding agreements on the Pomalaa Nickel Project4 to build an HPAL project associated with PTVI's Pomalaa nickel resources. The project is expected to start-up in 2025 with a production capacity of up to 120 ktpy. Ford Motor Company signed a memorandum of understanding with PTVI and Huayou to join the Pomalaa nickel project to create a three-party relationship.
• PTVI and Huayou signed a Heads of Agreement in September to build a 60-ktpy HPAL project to process limonite ore from the Sorowako mine.
• Approval of the Onca Puma 2nd furnace project with start-up expected in 2025, adding 12-15ktpy of nickel to our portfolio. The project leverages Onca Puma's existing infrastructure, and once complete is expected to decrease unit production costs for the overall Onca Puma complex by 15%.
• Salobo III project successfully commenced at the end of 2022. The project will add 30-40 ktpy of copper production and it is expected to achieve full capacity in 4Q24.
• VBME construction progressing in line with our revised forecast, ending the year with 81% physical completion. The project is expected to achieve full capacity in 1Q24.
• Northern System 240 Mtpy (mine/plant front) and Gelado projects commissioned in Q4, supporting a gradual increase of Northern System iron ore production in 2023.
• Responsible divestment of non-core assets, totaling 9 deals in 5 countries since 2019, eliminating expenditures of up to US$ 2.0 billion per year. In 2022, Vale:
• Concluded the sale of (i) the 50% stake in California Steel Industries; (ii) the Moatize coal mine and the Nacala Logistic Corridor; and (iii) the iron ore, manganese, and logistics assets of the Midwestern System.
• Signed binding agreement for the sale of Companhia Siderúrgica do Pecém - CSP to ArcelorMittal. Closing expected in 1Q23.
• Reorganization of Energy Transition Materials operations in Brazil to combine copper and nickel assets into two entities announced in September.
• New design of Vale's top leadership to accelerate the achievement of strategic objectives, supporting the development and longevity of the company's portfolio and strengthening Vale's second line of defense and risk management model.

Promoting sustainable mining

• To reduce scope 1 and 2 emissions, Vale: (i) entered into an agreement to enable the supply of natural gas to the São Luís Plant, in Maranhão, starting in 2024, consolidating the use of this fuel in all its pellet plants, (ii) started operating the Sol do Cerrado, one of the largest solar farms in Latin America with 766 MWp of capacity, (iii) advanced the electrification of the operational fleet through renewable sources, with battery-poweredoff-road trucks and the second 100% battery-powered locomotive.
• Creation of Vale Ventures to invest approximately US$100 million in startups that are focused on decarbonization initiatives within the mining process, mining without waste, energy transition metals and other technologies.
• Addition of 172,000 hectares of forest since 2019, or around 34.4% of the long-term target.
• "Biomas" project launched by Vale and other major companies in partnership to restore and protect 4 million hectares of native forests in different Brazilian biomes over 20 years.
• Vale signed an agreement with the indigenous communities Xikrin do Cateté and Kayapós in the state of Pará and with the Pataxó and Pataxó Hã-Hã-Hãe communities, affected by the Brumadinho dam collapse.
• Human rights due diligence performed in 76% of Vale's operations (including 100% of operations in Brazil).

4 PTVI will own 100% of the mine and has a call option to acquire up to 30% of the HPAL project upon mechanical completion.

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• Brumadinho Integral Reparation Agreement 58% executed. Since 2019, US$ 7.5 billion have been disbursed5, with another US$ 1.6 billion expected for 2023.
• Restitution of the right to housing in Mariana with a total of 441 housing solutions delivered.
• 12 upstream structures were eliminated by the end of 2022, representing 40% of Vale's Dam De-characterization Program.
• B3/B4 dam had its emergency level reduced from 3 to 2, after successful safety improvements, an important milestone in the journey to eliminate critical safety conditions in dams by 2025.
• 8 structures received stability condition declarations in 2022, with emergency level removed.

5 Includes incurred expenses.

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Adjusted EBITDA

Adjusted EBITDA

US$ million	4Q22	3Q22	4Q21	2022	2021
Net operating revenues	11,941	9,929	13,105	43,839	54,502
COGS	(7,155)	(6,301)	(6,494)	(24,028)	(21,729)
SG&A	(148)	(119)	(131)	(515)	(481)
Research and development	(218)	(170)	(177)	(660)	(549)
Pre-operating and stoppage expenses	(125)	(89)	(147)	(479)	(648)
Expenses related to Brumadinho event & de-characterization of dams	(375)	(336)	(2,115)	(1,151)	(2,576)
Expenses related to COVID-19 donations	-	-	(16)	-	(44)
Other operational expenses	(249)	(51)	(263)	(571)	(356)
Dividends and interests on associates and JVs	55	28	142	154	190
Adjusted EBIT from continuing operations	3,726	2,891	3,904	16,589	28,309
Depreciation, amortization & depletion	900	775	822	3,171	3,034
Adjusted EBITDA from continuing operations	4,626	3,666	4,726	19,760	31,343
Proforma Adjusted EBITDA from continuing operations¹	5,001	4,002	6,857	20,911	33,963
Discontinued operations - Coal	-	-	102	171	(189)
Adjusted EBITDA total	4,626	3,666	4,828	19,931	31,154
Proforma Adjusted EBITDA total¹	5,001	4,002	6,959	21,082	33,774

¹ Excluding expenses related to Brumadinho and COVID-19 donations.

Proforma EBITDA - 4Q22 vs. 3Q22

Sales & price realization

Volume sold - Minerals and metals

'000 metric tons	4Q22	3Q22	4Q21	2022	2021
Iron ore fines	81,202	65,381	81,749	260,663	270,935
ROM	1,963	3,668	607	8,216	2,052
Pellets	8,789	8,521	10,351	33,164	32,306
Nickel	58	44	45	181	182
Copper	72	71	74	244	284
Gold as by-product ('000 oz)	73	79	77	277	340
Silver as by-product ('000 oz)	533	346	352	1,611	1,399
PGMs ('000 oz)	54	65	33	215	173
Cobalt (metric ton)	927	569	483	2,361	2,017

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