Full Transcript: Vale Q2 2026 Earnings Call

Vale (NYSE: VALE ) held its second-quarter earnings conference call on Friday. Below is the complete transcript from the call. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

A. 1 billion year-on-year, driven by higher volumes and improved price realization across its commodities. 7 billion dividend and interest on capital payment, alongside an extension of its share buyback program, reflecting confidence in its long-term outlook. Vale highlighted strategic initiatives, including significant progress in copper and iron ore projects, such as the early start of the Bacaba project and the Serra Sul +20 project, aimed at enhancing operational flexibility and expanding high-grade product portfolios.

Operational highlights included record production levels in iron ore, copper, and nickel, with the company narrowing guidance ranges for these commodities based on strong performance. Management emphasized a focus on innovation and efficiency to reduce costs and improve competitiveness, with notable advancements in autonomous mining and other technology-driven initiatives. Despite external challenges such as increased freight and diesel costs, Vale adjusted its cost guidance and reiterated its commitment to productivity and operational excellence to maintain structural competitiveness.

Vale Base Metals showed strong performance, with copper and nickel costs significantly reduced, and future cost guidance for these metals was lowered due to operational improvements. Full Transcript OPERATOR Good morning, ladies and gentlemen. Welcome to Vale's second quarter 2026 earnings call. com.

The presentation is also available for download in English and Portuguese from our website. To listen to the call in Portuguese, please press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. Then select Mute original audio so that you won't hear the English version in the background. We would like to inform that all participants are currently in listen-only mode for the presentations.

Further instructions will be provided. Before we begin the question and answer section of our call, we would like to advise that forward-looking statements may be provided in this presentation, including Vale's expectations about future events or results encompassing those matters listed in the respective presentation. We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. S.

Securities and Exchange Commission, the Brazilian Comissão de Valores Mobiliários, and in particular the factors discussed under Forward-Looking Statements and Risk Factors in Vale's annual report on Form 20-F. On with us today are Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr.

Rogerio Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Sean Osmar, CEO of Vale Base Metals. Now I will turn the conference over to Mr.

Gustavo Pimenta. Sir, you may now begin. Gustavo Pimenta, CEO Hello everyone and thank you for joining Vale's second quarter 2026 conference call. First, I would like to briefly reinforce our strategic direction and ambition to create superior value for our shareholders.

In this context, we have been consistently focused on our key priorities of operational excellence, disciplined capital allocation and the advancement of highly accretive growth projects, particularly in copper and iron ore. Our objective is to build a business that is resilient through the cycle, competitive under different market environments and well positioned to deliver sustainable returns despite the uncertainties that continue to shape the global landscape.

I'm very confident about Vale's future, and what gives me that confidence is not only the quality of our assets, but also the consistency in which our teams are executing and delivering results based on the strong performance in the first half of 2026. 7 billion in dividends and interest on capital to be paid in. 3% of our outstanding shares, reflecting our positive view on Vale's long-term outlook and our continued commitment to delivering superior returns to our shareholders. Let me now turn to the highlights of the second quarter performance.

We once again delivered solid year-on-year results across all commodities, reinforcing our confidence in achieving all production guidances for the year. In the particular case of VBM, we have now narrowed the guidance ranges for copper and nickel, implying higher midpoints on the back of continued strong operational performance in both businesses. Starting with iron ore, in Q2 production reached the highest second quarter level since 2018, supported by the continued ramp-up of the Capanema and Vargem Grande projects as well as the record output at S11D. Sales volumes also increased by 3% year on year.

In copper, we delivered our strongest Q2 production in the last nine years with a 6% year-on-year increase, while sales volumes grew 10% in the same period. This growth was driven by record second quarter output at Salobo and a very strong performance at Sossego. In nickel, we also achieved solid results. Production increased by 4% year on year while sales volume grew 7%, supported by additional volumes from Nanset, Onça Puma and Voisey's Bay.

Looking ahead, I would like to highlight two important milestones at Serra Sul that will further enhance the performance of this world-class asset. First, I'm very pleased to announce the startup of the Serra Sul +20 project with the commissioning of S11D's second long-distance conveyor belt in July. This project, which also includes mine and plant expansions, will provide greater operational flexibility to the site.

Second, in the fourth quarter we expect to start commissioning the Compact Crusher project, which is designed to address operational constraints related to jaspilite ore at the Serra Sul mine, helping improve production consistency and strengthen asset reliability. Together, these projects will deliver 20 million tons of incremental capacity at Serra Sul, strengthening Vale's competitiveness and expanding our high-grade product portfolio. Turning now to our copper growth story, last year we launched the New Carajás program with the vision of accelerating the development of strategic projects in one of the world's most attractive mineral provinces.

Today I'm pleased to announce the earlier startup expected for the Bacaba project. Construction is progressing ahead of schedule and as a result Bacaba is now planning to begin commissioning in Q3 2027, significantly ahead of the original first half 2028 schedule. With 50,000 tons capacity, Bacaba is the first of six accretive growth projects that will support our ambition to double copper production to approximately 700,000 tons per year by 2035. Our second project, the Salobo coarse particle flotation, is expected to be formally announced soon and represents another important step in unlocking the potential of our unique endowment.

As we continue to execute our project portfolio with below-average capital intensity and compelling rates of returns, we believe investors will increasingly recognize the significant upside embedded in our copper platform. Before moving on to our financial performance, I would like to briefly talk about innovation, a key enabler of Vale's long-term strategy. As we've discussed throughout this presentation, our operational results and growth projects are the outcome of consistent execution and a relentless focus on performance.

Having said that, we continue to focus on innovation and on developing new technologies that increase our efficiency, enhance safety, reduce environmental impact and strengthen our competitiveness. This is our vision for the mining of the future—a strategic agenda built around five key pillars outlined here in this slide that will help shape Vale's journey. To provide greater transparency on this agenda, we recently published Vale's first Research, Development and Innovation report, showcasing several initiatives that are already transforming the way we operate.

Among them, I would highlight the progress we are making with the model plant in Itabira and our autonomous mining initiatives at Brucutu, Capanema and Serra Norte, which demonstrate how innovation is being translated into tangible operational gains. I encourage everyone to explore this report and learn more about how innovation supports our strategic agenda and creates opportunities across the businesses. With that, I'll hand over to Marcelo Bacci to discuss our financial performance. I will return later for my closing remarks before the Q and A session.

Marcelo, please. Marcelo Bacci, CFO Thanks, Gustavo, and good morning, everyone. 1 billion, representing a strong 19% increase year on year despite continued pressure from external cost factors. This performance reflects another quarter of solid execution across our businesses, supported by higher volumes, improved commercial performance, and better price realization.

3 billion, increasing nearly 80% year on year. This performance was driven by stronger realized prices and solid operational execution. In Iron Ore, EBITDA exceeded $3 billion, supported by higher realized prices and increased sales volumes. These positive effects more than compensated for the higher freight costs and the appreciation of the Brazilian real.

Overall, this quarter's numbers demonstrate the resilience of our business and our ability to consistently deliver a solid operational performance, even in a more challenging external environment. Now let me turn to the details of our cost performance in the quarter. 10 per ton, an increase of 9% year on year. 60 per tonne, 18% higher year on year.

The higher costs were mainly driven by external factors. The appreciation of the BRL impacted both C1 costs and expenses, while diesel and freight costs also increased during the quarter. As I mentioned in our last call, while external variables can introduce volatility into our cost structure, they also reinforce the importance of relentless focus on productivity and operational excellence. The results of our efficiency program, combined with higher production from low-cost assets such as S11D, demonstrate that we're moving in the right direction.

50 per tonne reduction in C1 costs year on year, strengthening our structural competitiveness throughout the cycle. In addition, our hedging program helped reduce the impact of external variables in our results. 60 per tonne. Considering this effect, our all-in costs were $60 per tonne.

If oil price volatility persists, this strategy will continue to provide cash flow support in the second half of 2026. Given the increased volatility in external variables, we have decided to update our 2026 C1 and all-in cost guidance. 60 in our previous guidance, as well as an average Brent oil price of $86 per barrel versus $68 previously assumed. 5 per tonne.

Roughly 70% of this increase is explained by the combined impact of external effects such as FX and diesel costs. In the same way, we're also updating the all-in cost guidance to $58 to $62 per tonne compared with the previous range of $52 to DOL, around $5 per ton related to oil, FX, and iron ore premiums. That said, despite this more challenged external backdrop, we remain fully focused on the variables within our control. Our teams continue to advance a robust pipeline of efficiency and productivity initiatives across the businesses.

These efforts are targeting further gains in asset utilization, maintenance optimization, supply chain efficiency, and procurement. While these initiatives do not fully offset the impact of FX and oil prices in the short term, they are essential to improving our structural cost position over time. Combined with the ramp-up of our low-cost assets, they will continue to strengthen our competitiveness throughout the cycle and support long-term value creation for our shareholders.

Turning now to Vale Base Metals, both copper and nickel delivered another quarter of strong cost performance, reflecting solid operational execution across our assets and a more supportive market environment. In copper, all-in costs reached a negative $300 per tonne, an improvement of $1,700 per tonne year on year, once again in negative territory. 3k per tonne. Looking ahead, we expect Vale Base Metals to continue delivering operational improvements beyond the contribution from by-product prices.

As a result, we are lowering our cost guidance for the year. For copper, we now expect all-in costs to range between $0 and $500 per tonne compared to our previous guidance of $1,000 to $1,500 per tonne. For nickel, we now expect all-in costs to range between $10,000 and $11,500 per tonne compared to our previous guidance of $12,000 to $13,500 per tonne. This revised range reflects the operational progress we continue to deliver and reinforces the value creation potential for VBM.

With that, let me move on to our cash generation. 5 billion in the quarter, supported by our strong EBITDA performance and by the settlement of our currency and oil hedging programs, which contributed a positive cash impact of $337 million. 1 billion, reflecting our continued capital discipline and the benefits of the efficiency initiatives we have implemented across the businesses. 7 billion in dividends and interest on capital to be paid in September.

In addition, we bought back $140 million in shares during the quarter, bringing total repurchases to $214 million year to date. 3% of our outstanding shares. These decisions reflect our confidence in the strength of our business, our ability to generate cash throughout the cycle, and our continued commitment to creating value for shareholders. With that, let's move to the next slide.

1 billion from the previous quarter. We expect expanded net debt to continue converging toward our reference level of $15 billion over the coming quarters. As we approach that level, we create additional flexibility for shareholder remuneration while maintaining financial discipline and balance sheet strength. Before handing back the call to Gustavo, I would like to reinforce that we remain focused on strengthening our competitiveness across all of our businesses.

Despite the external headwinds facing the industry, our priorities remain unchanged. We continue to advance productivity and efficiency initiatives, improve asset performance, optimize our cost structure, and maintain a disciplined approach to capital allocation. Together, these actions are strengthening Vale's position through the cycle, supporting consistent cash generation, and reinforcing our ambition to lead value creation in the mining industry. Gustavo, please.

Gustavo Pimenta, CEO Thanks, Marcelo. Before we move to the Q&A session, let me go over the key takeaways from today's call. First, we continue to deliver a strong operational performance across our businesses, achieving record production and higher sales volumes, reinforcing our confidence in meeting our guidances for the year. Second, we are accelerating our pipeline of high-return growth projects with the startup of CEHA Su20 project and the earlier startup expected for Bacaba.

This demonstrates our ability to advance initiatives that will support Vale's growth and generate significant value to our shareholders. Third, we remain focused on enhancing cost competitiveness across the company by improving operational reliability, increasing efficiency, and strengthening resilience through the cycle. At Vale Base Metals, we continue to capture the benefits of the carve-out. Operational performance is improving consistently, delivering gains not only in production but also in costs.

I'm very confident that we will continue to make meaningful progress over the coming quarters as we build a leading global energy transition metals business. Fourth, we continue to advance our mining of the future agenda, leveraging innovation and technology to improve safety, productivity, and sustainability while creating new opportunities across the businesses.