Vale S.A. (VALE3) Earnings Call Transcript

So thanks, everyone, for being here. I'm Ivan Fadel, Head of Investor Relations here at Vale. So we're very, very glad to be here with you today for the 2022 Vale Day Presentation, where we will go over our equity story, but we will show you some strategic initiatives that is shaping Vale of the future. So the way this is going to work, we'll have a slide presentation here for about 1 hour and 20 minutes, 1.5 hour. And after that, we will have a Q&A session. So of course, we will take as many questions as we can from you here and also online. So I want to thank you and the online audience for being with us today. And so let me introduce to you the executives that will participate in this presentation. So we have here today Eduardo Bartolomeo, Vale's CEO. We also have our Executive Vice President for Iron Solution, Marcello Spinelli. We have Deshnee Naidoo, the Executive Vice President for Energy Transition Materials and also Gustavo Pimenta, our CFO, okay? So I'll come back later here to mediate the Q&A. So for now, I hope you enjoy our events, and I'd like to invite Eduardo Bartolomeo to take the stage here. So thank you, everyone.

Okay. Thank you, Ivan. Well, Eduardo here. So good morning, everyone. Great pleasure to be with you here again. I think last time -- and by the way, the others on the virtual as well. Now we have normal rights we have people everywhere. But last time we were here, and I was trying to recap -- give the context was Omicron was I think was after Thanksgiving. I said all everybody has an emotion this -- and this one this Omicron and we thought the room is going to empty. So everybody came, by the way, at that time, I think we didn't expect to be such a hectic year. We saw Ukraine hitting us February. China decided to have its own COVID problem, the recession in the U.S. So it's been a quite a very exciting and active year. But what we want to do today is share with you a little bit of transition where we are going through Vale and I want to bring you 2 anecdotes just to make you reflect a little bit. One is when I was Base Metals Executive Director, we had a projection for this year that we do have 3.8 million vehicles. This year, we're going to produce 11 million EVs in the world. This is the first point. And of course, Ukraine brought the attention to everyone about geopolitical tension about the energy. So the word that we're trying to read to you is that we're not an emergent transition. I don't think it's a legit energy revolution. We are underestimating what we have in front of us. And that brings me to my second anecdote. If you get the same miner market cap and you add it, you get to $570 billion -- sorry, $670 billion. If you get Tesla market cap after the tax brunch, it's $500 million, $600 million -- $507 billion. So all the miners to the other. They don't have what Tesla does. So what I'm trying to do here, and I think this is a mining issue and Vale, of course, we will show its position within the business space as a fundamental problem of position itself and we're ready. So with that in mind, so what we want to do is to recap with you and I promised my team that I will do it in 20 minutes. I hope. You know the framework very well. People that follows Vale. This is, as I mentioned in my fourth Vale Day. I have been trying to cover Brumadinho. Obviously, Brumadinho is the defining moment in Vale, and we did this derisking, reshaping, re-rating, capital allocation. And I want to give you just a very quick overview of what we've achieved. We're going back to some of these elements later. So I won't to go deeper on those. It's just a matter of to understand what we have -- what we were able to deliver in these last 4 years. When you talk about Brumadinho, of course, I think something that we are really -- how can I say that, the conscious of the importance and the impact that we cost. But at the same time, we are fully engaged on repairing it fairly and quickly. I think I'm going to go back to that. Mariana, we accelerated a lot this year. Dams' safety is one of the things I'm really -- I would say, hard to choose the right words for that, but we are under control. We know what we don't know. We know everything about that the [indiscernible] dam so I can come back later. And capacity resumption, we were able to deliver the assets [indiscernible]. It's the most -- I'm talking about specific about Minas Gerais. I'm not talking about the Northern range. I think we did a lot of things. Everything that we promised we delivered, where we're facing much more difficulty than we anticipate. That would be the -- that's why the -- if you look at the little balls, it's why we -- these are the thing. I think here, we check the box. If you asked me what we did great in Vale in the last 4 years, we clean Vale, and that allowed us to come to the next chapter in a moment. We clean 9 business in 5 countries. We left New Caledonia. We left Mozambique. We left steel, we left everything. We end up with iron solutions. If you got the thing that now is [indiscernible] iron ore, and we get energy transition materials. And then I think we will come back cost efficiency. One thing that is very important. We need to be cycle proof. When you start arrived, we started a very strong program about that. Re-rating, and that's the main issue. I think Vale was one of the first companies to leave the station on the ESG agenda because the ESG agenda knocked our door in a very awkward way. But Vale was -- and I will dive you through these things in my presentation. But fundamentally, we did a lot of things that people like remuneration, transference, by the way, okay, when we go to my new framework, I'll explain the other to you. And lastly, I think we check the box of return to shareholders. Gustavo will mention this number later. We paid the last 3 years, $34 billion. All the cash that was generated inside the company was returned to the shareholders. We bought back 30% of Vale. We're going to finish our product, our program about 20%. So undoubtedly, we were extremely disciplined on that sense. And that brought us to this. This is what you're going to know we're very monotonous like very focused and disciplined. That's the framework that would like you to start following us and by the way, charging us is they -- are you walking the talk because I believe that we walked the talk on the previous framework. And it has to do with a very specific thing that's happening in Vale. First of all, you are down the road in 4 years, you're learning. You're understanding various businesses, you have your team. And this is -- if you look at the -- I would say right-hand side, I don't know, the promote sustainable mining is the re-rating. I'm going to go through all these elements here. When you see in the middle is exactly the iron solutions and the energy transition materials. And of course, we have to take this plan. And by the way, going back to my $570 billion and $607 billion, I don't think this framework is Vale's framework. I think this should be a framework for the industry. If we're not responsible, I have a very -- I discussed a lot inside Vale. I have a 12-year-old daughter. She has all the options in the world, of course, because she was well born. But in my view, why should she come to mining when she's 22? That's what miner should be thinking of. What kind of business are we creating to society, to people think that mining is something is not only needed because that's what's happening today. We need it. We are not desired and people have to acquire that. So otherwise, we are not going to get the acknowledgment and the attraction of the investors in society or our business. So this for more sustainable mining is something really important to us. And again, if we are successful, my daughter -- I was yesterday at 1 media company and said, look, this is the kind of work that in the end that we have to have. We usually have to have innovation, autonomous, I don't want to people. You're going to see some technology things with Deshnee like people on the ground. We don't need people on the ground. We can -- we have to create decent jobs, skilled jobs and a very exciting jobs. So that's my -- the first part of this. And the last 2 Spinelli and Deshnee are going to cover and Mr. Gustavo. So let me go through this first block because this is the new space that Vale is going to try to go. If we're successful, we are going to be recognized as a sustainable miner. We're going to foster solutions for the low carbon for this energy revolution that I mentioned before. And of course, you cannot expect differently. We're going to do it very disciplined. And I was thinking about that because, of course, you then -- let's share you something personal. I joined Vale in 2004. If you remember, when we have the 75% increase in price of iron ore, I think people in the room remember that. That was the beginning of the super cycle, right? And what we did with the mining in the super cycle, every investor knows, we've burned down $1 trillion. So I think all those 3 elements, they really reach what is taking Vale out of the business in mining. Mining has to be disciplined. Of course, we are uniquely positioned, not only as Vale, but as a mining industry, we have the new majors. That's another thing that I'd like to say when you remember the new majors, the oil majors in the last century, we are the new majors. So this is where all of our mining, all the mining companies should be looking at. How we are going to be able to supply sustainably because otherwise, it's going to be demand destruction like the EMs, the OEMs are not going to wait for nickel, either we do technical for them, the same for the high-quality iron ore. You know there's a huge dependence and Marcello is going to cover that later. So we need to do all those 3 things. And of course, I'm selling my fish here. I don't know the word. This is that you have been in English. And Vale is uniquely positioned in that environment because we left the ESG train station, much earlier than everybody else. We had endowment, and we were luckily to have the endowment of our assets and Spinelli and Deshnee is going to cover. And we learned the lesson. We're not going to burn cash. All the cash that is going to be generated is going to be disciplined that we used. So we will never forget Brumadinho. I said that is the first day here and people underestimate the impact of the Brumadinho in our operations for the good and for the bad. So the fact that we are trying to do this, we begin doing what exactly said for the first day. I think when I said that we checked the box in Brumadinho, 50% the amount's paid, 35,000 people indemnified BRL 3.2 billion in all those numbers and no extra claims. So Brumadinho is a kind of a contained, but it's not about money, right? This is about empathy, about talking to people, doing what they expect to be done, but they have to be feel compensated. Mariana is a big issue. You know that. We tripled the compensations this year. This is the new Bento. This is -- it is like that. There are more than 400 houses built. They are going to start moving on January because the school years begin. It's a huge construction site, so they cannot move now. But this thing is going to be a rollout of our friction and water is, okay, the river. I know very well that river is much cleaner than before the accident. But fundamentally going to the framework of the sustainable mining. So I'm going to just go very quickly as some of you already saw the presentation. It's a blue dot on -- that begins with people down to nature because that's what we do. We manage people. We are in 180,000 people organization, 60,000 Vale employees. If you don't treat people well, you don't have the skill workforce, you don't get what we expect as a cash return or else. So culture for Vale is a very important element. I came from companies that see culture as a competitive advantage. I believe on that. And we are in this journey since '19. I'm not going to go through all the elements, but the fact that when you measure that, we measure by the way, I'm an engineer, engineers love measurements. So we have mapped more than 24,000 people. And you see adherence to -- sorry, are you listening me too, okay? Anyhow, you see what's high in the generic Vale. Obviously, those are the behaviors that we expect from our employees. Everybody at least believe they're obsessed with safety. What we need to open up is more transparent dialogue and of course, ownership for the home. So this is done. I think there's a high level of adherence to that. Another element that is very important, and it's not brought -- and was brought by the way, in the beginning as a lever to the culture transformation is the DNI agenda. That's a very important agenda to us. It's -- so those are big numbers in a company like Vale. We brought more than 3,800 women to our workforce. We anticipated the goal for '25 was, I think, 2030, if I'm not mistaken. Another very important agenda is to have women in leadership. And this is for Brazil specifically, extremely important. Vale is a 66% black company because of the areas we operate, we have Black, Black as the main negro in [Foreign Language]. I don't know how to say that in English, but we only have 28% people in leadership. And we will not talk about foreman here, talking about leadership in a higher level. So it shows extremely prong, and we're moving it as well. And fundamentally, we have a 0 tolerance against any kind of harassment, and the number shows that. But culture itself needs a framework. And everybody that knows me, VPS is value production system where we were talking here before. Everybody that knows BHP has BOS. Everybody knows Toyota has TPS, and it doesn't matter which asset is, but Vale did not have this framework. Vale has a state-of-the-art logistics since [indiscernible] and is still there because we did VPS there. So what we're trying to do in Vale is to have this framework because that's the framework about how we execute our operations, that doesn't go up alone for operation and go to sales, et cetera. How is the method and how it tripled. And just, of course, too mechanical here, but just to have an understand why Vale is not reliable because that's the biggest issue. Why Vale is not reliable? On average, we have 1.552 the system measures in each dimension like from 0, 1, 2, 3, 4. It's like an iso thing, if you understand what I'm trying to say. On average, Vale used to be in 2020, 1.52. Now we are 1.98. We're only going to be reliable when you get everybody to treat. So this is a big challenge that we have to go. We did a lot. 52% of reactions, a reduction in areas below 2 and a maturity that increased a lot. But until we don't get that done, we are not going to be reliable. So that's another very important piece of the strategy that we are trying to implement. We are implementing since 2019, and we are going to get there just to have a reference, BHP did that in 2004. So again, people, process and of course, what we want to be is a safer company. And we are getting there. We're not there at all. We're still a huge gap. What we measure? We don't measure leading because in safety, you have leading indicators. This is the total recordable injuries, like what you measure like TRIFR, everything that people if they cut their finger or they really lose the finger, it's the same thing. So you see we have the lowest TRIFR in the industry -- in Vale industry. It means more or less, less 800 people getting hurt each year at Vale. But more importantly, we want to reduce fatality. And this is the number you see is 66 high injury incidents in 2018. They came down to 12 and our goal is to 0 by 2025. But it's not only about people and processes, about technology as well. Whenever I started to talk about technology, we have a lot of our intelligence -- artificial intelligence as you know, drowsiness, driving, et cetera. Taking people out of the risk. So this is a very like we call cause, critical activity risks that really are like this very close to people get queued, and they improved like a lot from 82%. And again, if you go back to the point that really concerns everyone is safety, right? As just to remember you, our dams are in higher level of alerts, they are -- nobody is below them. Nobody is above them. So there is 0 chance to any harm in community. We built 4 backed up -- backup dams. And we have 30% of upstream dams but better to talk is let's see a video. [Presentation]

As you saw last week, we took B3/B4 from Level 3. I'm really happy with that. I think a lot of people from investments, say why don't you hurry up with this thing. There's no hurry up here. We're going to do it very cautious. We have a lot of attention. And that's the -- and by the way, we anticipated B3/B4 because we are learning a lot. And people say that innovation -- need is the mother of innovation. And what's happening here is you saw a lot of remote control. We are learning quite a lot from this thing, and we're very happy to have this result. And by the way, we're going to have the last 2 removed until 2025. But we still have dams. So it's a very good tool. We are compliant around 90% already. We do the self audit now. We're going to be compliant as we committed to ICMM by 2023 with all of our high-risk structures. So [indiscernible] dam that I mentioned, very, very cautiously, but extremely under control. But let's move a little bit outside of our chances, right? We have 2 million people under extreme poverty around Vale's operation. It's not acceptable. Mining cannot leave or cannot prosper if there's a share valued society. People like say, "No, you're not government. No, we are not -- I'm not government. I'm just the largest company in Brazil. So if we don't take actions together with the civil society, with government and promote this, we are not going to be resilient. When we said we want to build resilient communities is because we want to build a resilient business. So we started with this approach. This is a multifactor, properties are very complex. We don't have time to go here about that. But fundamentally, as I mentioned in the beginning, with our scope 1, 2 and 3 we walk the talk. So we're going to start this year a pilot program in 4 areas with 5,000 people that is going to attack education, health, income generation infrastructure. And again, it's not Vale, it's Vale together with society for the ones that know the sustainable development goals is the SDG 17. So it's a very important thing. And by the way, you may say, leave no one behind and we cannot leave our neighbors behind. So that's very important. It's key to our business and Vale is taking that very seriously. Second thing, this is one part. The second part is about being in relationship with how do you say, relevant issues to society, the indigenous people in Brazil are extremely relevant to us. This is the first time that our CEO went to Xikrin village. In Carajás, we have a relationship with them by 40 years. Carajas is a 40-year-old operation. And luckily, I was very honored to be invited to go there because we finalized a 15-year settlement with them. It's a very interesting thing. They went to visit us in Carajás. It was a very special moment. But anyhow, this is the part of the society. Let's go to the climate, and this is -- when we came -- when I said we hit the train sooner, we were the first ones to aggressively change our targets to scope 1 and 2. We're the first ones to release the scope 3 emissions target. We're the first one to open up our curve, our marginal abatement curve for Scope 3. We're the first one to sell. We were already spending $6 billion in -- to cover Scope 1 and 2. So we, again, walk the talk and by the way, we have this -- we have some endowment as well because in Indonesia, we are 100% hydropower. Brazil is a very clean matrix. So we are going to be able to be '25 total scope to 0. And we are -- that's my -- I like to create some new [ buses ]. We are a nature-based company. We don't choose where we go. If we choose to go to Paris, but we can't. We have to go to Carajás, we have to go to [indiscernible] . We don't choose ones. So we are nature-based, and we are nature positive. A lot of people are talking being nature positive. Yesterday, I got a question about biodiversity. There's [ Audio Gap ] as we speak. And biodiversity is coming online. And the person has impacted biodiversity. We know more about fauna of Carajas, then U.K. knows about his own how I kind of call the genome. We have around 1,500 genomes in Carajas, and we protect 600 endanger fauna species in Carajas. This is 12x larger than what we really impact this 1.19 million. You always said 1 -- they made my life harder because of the language. It's 1 million hectares, 1.191 million hectares. This is really -- thank you, guys. This is 200x the size of Manhattan or 6x the size of London. So we can -- and we do mine positively with sustainability. And I want to pass about the climate change and it's my last video and I close up and give the word to Spinelli. [Presentation]

This is the road map that I mentioned before, like we want to be very transparent again. And as I mentioned, we need to be radically transparent. There's a lot of questioning around people setting goals and not be able to deliver. Vale is in the path. I won't bother you about this slide, but this slide is very clear like we saw the hub we closed 7 points of percent of the 33% when we do the biomass and so on. And to conclude, we are uniquely positioned to the second part of our frame, which we are able to responsibly mine and irrespective of what I'm talking about, Vale was given an endowment we have the best results of the world in iron ore, in Carajás and in the south of Brazil. And is going to as well explore that. We have a lot of technology. We have logistics power house and an innovation company in iron ore that nobody is. And this -- because a lot of people see Scope 3 as a threat. Vale see Scope 3 as a huge opportunity. The same goes to Base Metals. When we arrived and the acquired Inco in 2006, and of course, we have done the right job since then. But on the other hand, we acquired the best sulfide assets that they are in Sudbury Basin. We have the Carajas of nickel in Indonesia. I was there last week. And we have Brazil. And the intersection point is Carajás. Carajas has the best nickel and the best copper reserves that we can explore and that's going to make us our business uniquely positioned to catch the opportunities that the energy revolution is bringing to us. But we now -- I think I went over some minutes, and Spinelli is going to save some minutes to us. Now please welcome Mr. Spinelli, our Iron Solutions guy.

Thank you so much. Good morning, everyone. So today, in my presentation, I'll drive you in a journey, starting from the market, and we have a segmentation of the market That will be really important to understand what is the impact of the decarbonization that you marketed and what is happening in the iron ore industry. Going across our product portfolio in service to supply needs and finally, depending in our production plan to support the strategy. We are facing a unique information and the steel market as about is a revolution. We are the only iron solutions in the market today that supply these new. Part with the market, this is the same page probably you're going to hear in a presentation from -- in a interpretation like this who have you'll talk about and we believe the same. Steel demand is not over. Cement is not over. We just reached 8 billion people in the world, and we expect to have another 2 billion coming the last -- in the next 30 years. Now not only Chinese Southeast Asia and Africa. So we must have to support all the development and it's not about only a number of people, but also wealth. China just announced a goal to duplicate GDP per capita. That implies in a 4.61% of growth in average until 2035. Utilization is not over. We have China reaching 63% of the urbanization. They have a potentiality to reach 80%, that's a standard of the both country. Global-wide, we have 57%. Many actions are coming in, in many countries like in the U.S., the onshore are blooming also, the steel and positions not only about positioning in base metals. I should talk about that. There will be a lot of information about that. But everything relies on infrastructure to support that. So we need still to support the energy transition. Another information here that steel intensity is also growing. In China some years ago, they used to use 0.8% and the construction for housing. Now they are reaching 6%. That's because we need to reduce cement also. That's one of the main emissions of CO2 in the world. So this is the bigger picture about a standard company, 62 company, but we are not a 62 company in iron ore. Let's talk about something that is closer to us. That's the same number here of steel demand. But now let's split this in some source of metallics. The can -- the way they want to produce this 0. So we have a common sense. We've been talking about that, and we talked about this last year about the pathway of decarbonization of the steel industry. So we start with the optimization of blast furnace, more than 70% of this production is based in blast furnace. They will mine great to direct reduction routes, starting using the energy natural gas in the first moment, related to hydrogen. That's the common sense about the pathway. And you'll see the increase also of scrap, that's a trend. That's the megatrend. But when you need to scrap, to the scrap, you need to clean this scrap. And also, there's another pressure to bring metallics to the table. So we have 2 main source to improve the production of direct reduction routes, decarbonization pathway and clean the scrap, okay? This is more about Vale. Let's translate this to iron ore demand. So my left-hand side here, we have a graph. And probably you see this graph, probably you write about that, that the declining business. Iron ore is a decline. Every time my boss said, "Oh, you're declining business now you need to bring something sexy to the table. And so that's a common graph that you see, a declining business, okay? Not that way because everybody is struggling to bring new volumes in the world. Everybody is struggling due to ESG standards, KVs in part of the Australia. We have other problems in Brazil. Everybody is struggling. But what we have here the quality is decreasing. And the necessity to high quality ore is decreasing. But let's see what is in the middle? Drawn market. We need to optimize the blast furnace to bring agglomerated products to automate the blast furnace. I'm talking about glomeration and we are talking about pellets and in green rickets. So there's a growth here, 2%. Now the main number. The main number. -- we have growth in iron ore business 30% a year of both for direct reduction, pellets or agglomerate products. And the information here is a gap of 70 million tonnes, 70 million tonnes of products to supply the market. Nobody is bringing that. And we are the only company that can bring that, that can solve this problem. I'm talking about announced projects that we've been discussing with our clients. They need to decarbonize. They need to migrate to that route, but they don't have the products. How can you solve that? So with that, there is a big coupling in the market. I've been talking about this in our conference calls. Now I need to drag your attention to that. Again, I'm going to bring [indiscernible] to the table because every time and I learn with her, she's talking about the nickel class 1 and nickel class 2. And that said, we have the same. Iron ore class 1 and iron ore class 2. And my peers, they don't -- probably they don't like to see that they are in the Class 2 because we are in the Class I market. You see agglomerated products and high-grade ores, IOCJ, BRBF, we are a gradual increase of premiums either. And you can see the gap, the widening gap when you compare it to low-grade ores. That's the trend, and that's what is going to happen. And please, if you are modeling our business, don't forget that we are not a standard 62 business. We need to take this in consideration. So one is Iron solutions company. It's a company that is committed to supply the market in 2 mainstream lines, 2 lines of products, products that will bring optimization to the blast furnace. We reduce the use of coke, to reduce the use of energy. So we have -- we are developing and designing products for that. We are good in that. On the other hand, the second line of products that you support, the direct reduction route that we have a lack of demand. That's our solutions company. So let's watch a video now that we can see, and we've been developing this for some time, even after Brumadinho because we've been talking about every time about volumes, volumes and volumes of volumes, all of the 400 million tonnes. And we didn't talk about that so much. That's a silent revolution, a lot of technology here, not a lot of innovation here, and we are really addressing the real value in the market with this technology. Let's watch it. [Presentation]

Okay. So our platform to support that necessity, that demand of agglomerated products, we call agglomerated products, pellets, but pellets, we have a capacity of 55 million tonnes of pelletizing plants, but all the growth will come with the agglomeration that we call briquettes. Half of the OpEx, 1/3 of the CapEx. We're bringing online the 2 plants next year. We are producing large scale now. We're not talking about the design of the future without the lever. We have the lever in that. If you see to my left-hand side, what is -- what do you do here? We are bringing by the end of the decade. Almost 1/3 of our sales will be based on agglomerated products, we're going after value here, we're going after [indiscernible] just for a segment that is growing, that need to be decarbonized. That's what we're doing. Mega hubs. So you show in the video, but just emphasize 2 things here. What is a mega hub? It's a model of 2.5 million tons of HBI plant, HBI or re-reduction through plant. That implies in a 4 million tonne of agglomerated of Green Briquette. We are already designing or committed to design in Saudi Arabia, Abu Dhabi, in Oman, other plants in the same region that we already have a patent plant. There is an old facility. We started to talk about the design in Brazil and the U.S., we have in both countries source of energy competitive energy. But the main message here is we believe that you see an offshoring of energy and production of reduction offshore. Everybody think about energy, green energy being transported by ammonia, being transported by hydrogen. And we think that the green energy can be transported inside metallics. Closure to the industry that goes to the core of that. That's the trend we see serving all the world. Well, now how are we going to solve the biggest problem? [ Audio Gap ] doesn't have a policy for them. We don't have today are struggle to reach 40 million ton because we rely on process. What is the good news here? The one thing that we're really proud. We are really good on that. We are really good on that. We are really doing concentrated ores. Every iron ore in the world can be concentrated. You know that, [indiscernible] cannot concentrate your ores. They cannot reach to 768 with hematite. That's what we do and we know how to do it very well. So what are the solutions for that? We delivered the filtration. So it's not enough. It's not enough. You can just recover our capacity with the filtrations. So we can extract the water. We don't use them. We rely on stockpile for that. But we also bring another technology to drive concentration. We're bringing the technology in 2023, '24. That will be part of the design. It's not enough. So we started to have a kind of hedge, I can say the better word for that to guarantee that we can supply because our plans are changing. They are moving to direct production. They need supply. So we have a fall by position, we can concentrate ores. Now in China. We've been doing this for more than 1 year. And we are designing the hubs to concentrate also if you have any constraint in Brazil. But finally, that's a breakthrough here. Nobody knows that. You'll be the only one. Even our clients, they don't know that. They have a solution to guarantee that. We cracked the coal to concentrate Carajás. That's the biggest pool. We have 200 million tonnes here. If you have a necessity of 70 million tonnes, we can concentrate from 65% aero content to 67% 68%, you already have the process to do that. You're going to do this. We need to be ready by '27, '28 to support that growth that we saw there. Okay. Everything we are talking about circular mining. So you remember last year, we talked about the Vale sand. So everything is connected. So we are doing the best into to sell this sand as a core product to support the concentration process in a sustainable way. Okay. Now we came from market. Now we need to talk about -- we need volumes. Okay. But before that, you're shifting gears here. It's important to say. We're shifting gears here. We are producing high-quality ores to support that market that we're talking about. So remember what you saw here. We have technology. We have innovation for concentration. We are delivering the filtration. We are already delivering the briquette system. We are designing the supply chain for that. We are closer to our clients. When you are doing this, when you're doing this, we are designing with our clients. We're not going to an open market. We are diversifying the geography here, guys. Don't forget it. We're going to man up, you're going to supply Europe that is suffering first before at least before China. We are diversifying also this, reducing risk. But you have to solve a problem of the production. And let's start with the lessons learned, and we have to say one thing. We couldn't -- we underestimate the impact of Brumadinho in our production plan. Definitely, we underestimate. We lost -- you remember that 25% of our capacity just after Brumadinho and we brought back a lot of -- actually, all the operations, not in a full capacity, but we brought back. Safety was an issue. Safety of dam was initial in the beginning, if you remember that. The Saga 2 to bring the vibration tests, we are worried about dismantling another dam with the operations. So we did this. But we've had a huge transformation, huge transformation in the framework of regulation in Brazil for mining and environment. We have a huge relation. As an example, you know about 4 of them that we are already done, it's done, but we didn't get yet the permit because we need 7 guys to prove that. They are struggling to organize their selves just from permit. Okay. This is part of the game, but we are now correcting our production plan to consider that. In that level, we have the legs of the OBK, the ore body. You already -- you know that. We found [indiscernible] very hard rock. And as we have the mine site, the crushers in the downhill, we cannot transport that. We need to crush in the mine side. We don't have the capacity. We install labs, okay. It's not possible to solve the full problem. And we now addressed that with the final pressure to '26. We got to bring 120 million tonnes for us level. This is there. We don't have a problem with license. It's just a matter of construction. And in the North range, depletion -- the pace of depletion is higher than the speed and the pace to bring new or new bodies newly license. We are losing the game here. That's Okay. How can I address this? How can we solve this, 2 things. On one hand -- in one hand strength and relationship with the agency -- environment agency, okay, it is an institutional front, yes. Now we can say that might be in the -- as a priority in Brazil, we can discuss this. We separate a lot because after Brumadinho, it wasn't. So we can do that. But more than that, I'm talking about technical aspects of environmental issues. Two numbers just to figure out, we just committed $40 million with ICM and ICM is a federal agency in Brazil to bring them the technologies that Eduardo just said, about the normal engineer and DNA of bio analysis like flower Carajás, we brought hands, arms towards studies. We cannot skip a process of license. You do the 1 skip. You're going to guarantee that we have the bright license process, but we need to bring them -- we've got a good thing here. We got [indiscernible] the first license. After that just after that, because we could brought a lot of information, and they are really feeling well, that's okay, you can release this, this is First license for that. And don't forget the ITV to develop technology, it's been invested $140 million in many initiatives and technology to do that. It is still problem here forever. We have an ESG trend, we have to work a lot and keep the priority of our government in this area. On the other hand, okay, we have to bring the projects. And I want to drag your attention to. You may ask me why Spinelli, now you believe that you're going to deliver and it's not going to fail again. Okay? I can show you. There's a lot of information. Sorry about that. Now we just got somebody, but I have to drive you through that. Just in the legend, you see main license achievement, the under license process in the Northern system. Gelado has been commissioned. No license problem at all. So it depends on us. And three, it's a good example. We don't have yet the full license, but we got it, we got the first one. That's a huge achievement. And we need to work hard to do that. And in 1 in 2 [indiscernible], we are behind. We need to bring that for you. It's tough. We are behind. But there are other things. In S11D, we have plus 10, plus 20 under construction. No issues for -- with the license. So we are going to bring this volume. We don't have any restriction for that and the pressure is off. In Southeastern system, Torto. I put Torto here with the license achieved, but we don't have the final one, but we'll have -- the main one is the installation license, when you have to start the construction. We already started, this is done. This dam is ready, but you have to find the one that we didn't get yet but you're going to get -- you're going to get in this in month. There is a delay, but you're going to get. And we have another example like Itabiruu, ready to delivery. We remember that we promised this last year. The raising of Itabiruu dam and Torto [indiscernible] improve the quality. Remember that the game is a quality game, and we're improving the production of pellet feed. And that will be really important for that. So now I'll bring the numbers that are really good. You will really like the numbers, the guidances of production. So first number here. For this year, our guidance is in the lower range of our guidance of 310. For next year, our production guidance is a range between 310 and 320. And with all the restrictions that I mentioned, I can say, coincidentally, we have to say that we have a problem we are addressing that. Coincidentally, that's the balance of the market. You see that market is balanced in supply with the kind of products we have, that's the right balance for the market. In the next 2 years, we expect to bring 10 million tons a year in average, minus/plus 5 and reach the 340 million to 360 million. To draw your attention here, we're increasing the quality. That's the game. And you may ask me, what is the 400 million, what is the 400 million. We have the capacity for 400 million tons in logistics. But the sweet part that we see for this business is this number today. We can go after 400 million. If you need, but we don't see this now. [we're planning to get there] and we are doing that. But at the same time, again, it's the most important part of my presentation. We definitely started to supply the market for the new world, the decarbonization world. We are more worried about upgrading our products, bringing concentration, bringing pelletizing, bringing briquettes and increasing our value. So we bring more value with this rather than the 400 million tons with this pattern of portfolio. If you compare the $400 million now, you have this new number with 2026 with more value. We're increasing the agglomerated pallets and green briquettes, and we're going to reach the 1/3 that I mentioned. Increase in high-grade ores, IOCJ, BRBF, you're decreasing the low-grade ores. Take a look at these numbers, that is in this part that we have in the average, that's all in premium. That is increasing. There's a consequence of that premium that I showed you. It's much better. They bring volume. This is not a value over volume. It's a much more value over volume, much more value over volume than the previous plan. So when you design us, when you model us, consider that we are not a [ 62 ] standard company. you are shifting to this idol solutions business. You're not avoiding the problem that we have and that we had. We are addressing. We are more confident that we have a realistic plan to deliver, but without shifting to idol solutions company. To conclude. [indiscernible] we have growth in iron ore. Guys, we have growth, take a look at segmentation, Don't think about as a whole business because we are -- you were educated by those tradings. We are Brazilians. Now you can see we have growth for iron ore. You see it segmented clearly increasing volumes. We have breakthrough initiatives. We are leading that for concentration, for agglomeration. We are doing silently. We've been doing this since primagen. Now we are showing that we have a real plan for that, not an MOU. We have a plan, definitely a plan with more realistic, considering all the challenges we have. We have the sweet spot that we have, and we believe that's more balanced in this plan now. And finally, we are the only iron solutions company. That are really, really committed to the Scope 3 to solve the problems of our clients. Nobody in the industry is still there. They worry about the Scope 1 and Scope 2, but are not really about how can we solve the problem of the decarbonization in the steel industry. So I'll be here for further questions. Now I'll hand over to Deshnee.

All right. Good morning, everyone. It's great to be here and what is my debut Vale Day and fantastic to be talking about our energy transition materials business today. And Spi did an amazing job, but maybe too good a job, I'm going to try and pick up the pace and try and streamline the presentation a little bit. So let me start by summarizing the generational opportunity that we have in front of us in terms of the nickel and copper markets. We all know that this is nickel and copper's time. On the back of low-carbon energy transition. So let me summarize quickly the driving forces behind what's leading to this exciting opportunity in the market today. Firstly, it's all about EV growth. And the numbers that we are projecting for both nickel and copper is in the back of the EV sales growth that we are seeing by 2030. And if we look at the tightness in the market that this demand growth is creating, specifically, in Class 1 nickel today, we are forecasting to see a tightness in the market in the medium term, but actually leading to a deficit in the market as we continue to see demand outstripping supply. But a very important trend that we continue to see, and I call it a positive push by the OEMs for more ESG, more low carbon that is basically translating that basic fundamental that we're seeing in the market into an upside on price differentiation. And the last major trend that we are seeing is actually driven by the support that we're seeing governments in terms of critical mineral policies and more recently, some of the stimulus packages, all of this translates into a bright future for nickel and copper. So we are uniquely placed to deliver into the demand growth given where we operate today. In nickel, predominantly in our North Atlantic hub, we have significant mining and processing all the way to refine product footprint that actually creates an opportunity for us given the substantial global flow sheet that we have that actually links the Indonesian operations as well. In copper, predominantly in South Atlantic out of Carajs, we have significant mining and processing assets all the way to concentrate that actually delivers a significant opportunity there. In every geography that we operate in, we occupy the top 3 positions in terms of reserve and resources today. So for all the OEMs listening, the tons are in the ground. It is a matter of how we exploit it and how fast we can exploit it. And given our geographical location in North America, we are uniquely positioned to take up the demand that we are seeing from Gigafactory growth just down the road from us. But it's not just what we do and the incredible assets that we have, both in the ground and on the ground. It is the how. And that is why today, across our nickel laterite, nickel sulfides as well as our copper businesses. We occupy the quartile 1 position in low-carbon intensity Scope 1 and 2 across the board. In fact, we've just verified 9 of our products that act independently verified that substantiate that. As Eduardo said, for base metals, more than 90% of our electricity comes from renewable sources. 100% of that, as what indicated in Indonesia is all from hydropower. And it's all about building and creating sustainable community relations which is why that historic agreement with the [indiscernible] was so important for us in terms of some of the capital decisions that we will go on to make as well as the IVAs that we have in Canada. But let me tell you about how we are pivoting our business towards this exciting EV sector full value. So at the start of the year, we told you that we want to have at least 35% to 40% exposure to EVs. So at the start of the year, we were at about 5% in terms of offtakes that we had with Northvolt and Tesla. We have been guiding on this exciting nickel sulfate project that we are building in Canada, in Quebec. This project will take 25,000 tons of our low-carbon nickel, pellet and round and will produce battery-grade nickel sulfate. That 25,000 tons will result in 110,000 tons of nickel sulfate. So we recently announced that, that offtake will go to GM in that 1 transaction, we've taken our exposure to EV, full value up to 25%. And just to put the numbers into context, that 110,000 tons of liquid nickel sulfate is enough to power more than 300 nickel-rich EVs annually. That's a game changer. The other business segment that we are working on is actually our circular mining business. And what we are doing there is looking at how can we reintroduce some of the black mass, and we've tested about 25 different black masses over the last almost 4 years now. How can we reintegrate that back into our flow sheet Because we are best placed now with the relationships that we are creating with the OEMs to give them nickel and in return, get some of the spent batteries over a period. But not only are we mapping some of the legacy streams that we've had, we have this year actually put this into serious actions where we started to retreat some of the legacy waste streams that we have. And one of the examples there is almost 7,000 tonnes of copper and nickel that we've retreated and sold from our copper ponds at Thomson. But it's all about building stable operational platforms. We know that we've not achieved the results that we've been guiding over the years. And what we are focused on, almost fixated on right now is improving the safe reliability of the operations. Nothing fairs and better than showing it. So I want to show you very quickly some of the work that we've been busy with in the last year. Let's move to the IROC video. [Presentation]

So IROC which stands for integrating remote operation center is all about integrating what happens below the earth and on surface to make sure that we can optimize our cycle times. This year alone, we managed to increase the productivity in terms of the amount of tons that we've hoisted out of Creighton and Coleman by more than 10% from the start of the year. Additionally, we've increased our scoop [seat] times by 21% year-to-date at Creighton to allow the optimization of that of the tons that we've hoisted. We've enabled this by the LTE networks that we have underground. And when Eduardo spoke about safety transformation, this is safety transformation in action because we are using technology to make sure that we can better manage traffic underground. The many initiatives and programs that we have in North Atlantic is starting to deliver the results. I've just mentioned the IROC as one example, but IROC is part of the overall North Atlantic mines productivity initiative. Something that we started late last year when we started to focus on the bottlenecks per mine to make sure that we can increase the cycle times. So I've mentioned some of the metrics now. The others include increasing our backfill rate, increasing our production drilling as well as looking at improving our development rates. We have seen notable improvements across the 5 mines in Sudbury, but also the rest of North Atlantic. We've also, this year, implemented the CCM 1 project, which is the south refurbishment project. And that project is currently ramping up. We're also ramping up VBME. This year was the year of truing up a lot of the backlog maintenance that we've had on the back of COVID in North Atlantic. I'm very happy to say that the bulk of that work is now behind us. And that extended maintenance at [shack] that we took this year is resulting in reliability is now enabling some of the best daily ore production rates that we've seen across Sudbury. In fact, the rates today between 12,000 to 13,000 tons is the most that we've seen in the last 3 years. All of this ramps up now to over 17,000 tons per day across North Atlantic, which ideally sets us up for what we need to deliver next year. Still work to do, but the results are coming. But if I turn my attention to South Atlantic, and this is where we've not been able to erode some of that backlog maintenance from COVID as we would have wanted. And we know why Carajs is incredibly remote. And through COVID, we've had quite a high turnover of people. So what we are finding instead of going back and fixing the backlog, we are now having to fix a lot more of the asset integrity issues that are affecting our run times and hence, availability. Instead of an ad hoc approach to try and get the assets to perform, we are taking action to take a step back and make sure that we can erode this backlog whilst we operate over the right period of time. An example of that is what we saw at Sossego earlier this year, where we had planned for a 45-day shut to actually replace the [Gelas mill] drive on the mill. And when we went in, we saw we had far more deterioration on the dispatch trunnion. We had to extend the [ SHFE ] in order to replace the discharge trunnion as well. But what I'm encouraged about in South Atlantic Copper is the mine movement that we've been able to not just sustain but improve this year. This is important for Salobo because now we are moving around 127 million tons of both ore and waste rock. This has not only derisk the current Salobo operations, but will derisk the ramp-up of Salobo III. We have started something called the asset recovery program across the current Salobo operations that will see us catch up the majority of that backlog maintenance throughout the course of next year. There's only one way to do things, do a drive, take the time. So in copper, we will be growing copper next year. Two key drivers. That is the Salobo III ramp-up as well as the progressive improvements that we will see in the current Salobo operations as we erode that backlog of maintenance. In nickel, we will continue to consolidate the productivity improvements that we have made this year. We will continue to ramp up VBME. As we indicated earlier this year, VBME is 1 year delay. That delay hits us next year at a time when we are still ramping up VBME but also having to deplete the Ovoid pit which is why we see almost a delta, 10,000 to 11,000 ton difference on VBME. We do have some major overhauls as in the case of Creighton as well as the Ona Puma furnace now coming up to 10 years of life of asset to actually replace next year. So when we take all of that into account, remove the one-offs, nickel is actually stable year-on-year. We are doing the right things in terms of making sure that the asset integrity is what it needs to be. And that is why we are guiding between 160,000 tons to 175,000 tons next year. We have had a busy year, not just in terms of the current assets and the work that we have been doing to make sure we get to a more safer, reliable, solid foundation for the business but we have worked hard to progress the pipeline of projects that we've had. Starting with exploration. So over the last 3 years, we've increased the amount of meters drilled across base metals alone by over 60% and year-on-year, we're starting to see the results that comes from increased exploration. As Eduardo said, we mine some of the most attractive nickel sulphide deposits in the world. the Sudbury Basin, the Thomson Basin and Voisey's Bay. Year-on-year, we've managed to increase our reserves in nickel sulfide to over 35% and our resources by 10%. Similarly in copper with the amount of drilling that we've increased both in Carajs as well as in Indonesia, we have been able to increase our resources year-on-year by 25%. So if you put it all together, the increase in drilling, the acceleration of the study work to start taking decisions to move projects closer to approvals. This year saw projects like Creighton 5, CCM pit moving into feasibility study. It also saw us approving the Bahodopi project, the Pomalaa early works as well as Ona Puma furnace II. We have concluded the project of CCM 1, and we have started Salobo III. Turning to Salobo III. Salobo III has started. As we said last year this time at the end of November, beginning of December. This project has been delivered on time and on budget at $1.1 billion. I have been in the mining industry for almost 25 years now, and I've had the pleasure of either building projects or watching projects both. I am particularly found of concentrator plant because I'm a chemical engineer. This project has some of the best engineering designs I have seen. And if you look at the geography that this project is in, it is quite a feat to be building a project of the size in the middle of the Carajs forest, but the team has done it. And it's not just what we've done on Salobo III that has been exciting. It is the how. We have, for the last 2 years, been piloting a new Vale operations readiness program [indiscernible] salobo, that basically saw us now having recruited more than 90% of the people that we've needed in the jobs already there. In addition to that, we are learning. So we have used all the pain points that we have on the Salobo I and II plant to make sure that we can -- to make sure that we can alleviate that in Salobo III. In addition to that, we have built quite a few optimizations like reducing the amount of conveyors, increasing the amount of stockpile capacity ahead of the mill to make sure that we can introduce buffers. But I am most excited about 2 things. The fact that this complex, the 1 mine and other 3 plants will reduce our overall unit cost for over 15%. But in addition, we will start Salobo III with more than 40% women. That is the highest number of women across any site in Vale. So let's turn very quickly to the projects that we have approved this year, and I'm looking at the time line was not as successful as I was hoping to try and claw back that times, right? So very quickly, Ona Puma, 12,000 to 15,000 tonnes of ferronickel it will bring down the entire complex cost by 15%, $555 million of capital. We have already started the mobilization of Ona Puma after having approved it in September this year. And that is because all of the licenses for Ona Puma are already in place. We have approved both by Bahodopi and Pomalaa early works, and I'll combine some of this very quickly. Bahodopi is a 73,000 ton ferronickel plant. We will be responsible for 100% of the mining that will cost $400 billion, and we have entered into JV with our Chinese partners and that is [cisco], a division of [indiscernible] as well as Xinghai to build the RKEF plant that we will then have a 49% offtake on. Pomalaa is a game changer. Pomalaa is in the Southeast Sulawesi province in Indonesia. That will be the single largest HPAL plant globally today once [built]. We are partnering with Huayou, who now has an established track record in Indonesia to do this. Eduardo was in Indonesia last week, and he had the privilege of going -- the pleasure of going to the Pomalaa groundbreaking ceremony. Both of these projects have something in Indonesia called the PSN which are basically the strategic projects of national importance in Indonesia, which means that all of the licenses and permits that they need will be granted. Too many numbers and all you should take from the nickel replacement project is that we have projects in the pipeline to replace about 44,000, 45,000 tonnes of nickel and copper between 2027 and 2029. And on copper, we've changed our approach in Carajs on the south hub. We are now looking at the synergies that we can bring in terms of getting the approvals of Bacaba and Cristalino in quick succession from next year onwards because these projects are very important for the replacement of Sossego that will last us up until 2026, 2027. This is where the focus is. But there are other opportunities. I'm not going to go through all of the details, and that's what makes the pipeline exciting. In here like Hu'u, for an example, Hu'u today is the single largest copper project being worked on in the world, and we have that within our portfolio. It is more than 1 billion tonnes of reserve resources and it could give us a mine as much as 350,000 tonnes of copper, but Hu'u is more also offer gold and silver deposit as well has an extremely large amount of gold. That project is in early stages. But again, another game changer. And just keeping with the waste to value, we're really looking at how we can take our previously discarded limonite from the Sorowako operations in PT Vale and looking at how we can then convert that into value by working with Huayou on a heads of agreement on a potential 60,000 ton HPAL plant there. Thompson remains a little bit of blue sky, but what an amazing opportunity. That exciting R&R that I mentioned does not include the 5 million tons of contained nickel we have in Thompson. And although South Hub in Brazil is all about replacement North Hub, Blue Sky 70,000 to 100,000 tons is pure growth for us in Carajs. So to save time, we're going to do what my boss didn't ask me to do and put both slides together. When we combine all of the numbers and all of the projects that I've just mentioned, in copper we can get to about 420,000 tons in the midterm and almost 900,000 tons in 2030 longer term because of the projects that we will execute in nickel, and I want to make a distinction very quickly. We take the current production levels, and this is very much a year that we will continue to ramp up our projects. With 245,000 tons in 2026 and above 300,000 tons in the long term. This makes a very important assumption that PTVI will be at 36%. So this is the equity contribution. If you add back the 100% of PTVI that 245 in the middle can be as much as 290,000 tons and the greater than 300,000 tons, almost 400,000 tons. Remember, PTVI although it has an exciting growth it will enable a lot more because I am equity adding PTVI 100%. PTVI's growth means that in the next 5 years, it can grow from the current 80,000 tons to above 330,000 tons alone. So all that's left to say this is the right time for nickel and copper. We have a differentiated business in terms of the resources we have in the ground. Our mineral endowment is unparalleled. We have the assets in the right geographies, incredibly low carbon in order for us to unlock that value. And if you look at the actions that we are taking, we are taking targeted actions to make sure that we can bring back the stability of the current operations to create a far more stable platform in order to grow from. We have an unparalleled project pipeline than we are turbocharging in order to get these projects delivered to a very expectant market right now. Thank you. I'm now going to hand to Gustavo. Thank you.

All Right. Thank you, Deshnee. Good morning, everyone. You've heard a lot. So I'll try to be very quick, and we have -- so we have time for the Q&A. But there is 1 couple of important slides that I want to spend a little time on because I know it's top of mind for everyone. And the first 1 is on base metals, right? We've been debating and discussing with you the different strategic alternatives that we have to unlock base metals. And today, we want to share what is the strategic path that we have discussed with our Board and the one that we are moving forward. So the first thing that is important to highlight, Deshnee has spent a lot of time on how unique these assets are, right? We are seeing a tremendous amount of resources. There's a lot of fundamental support for the business in terms of EV, electrification growth. So the business has a lot of good value proposition. But we are convinced that we have to change the way we manage this business. Over the last several years, we've been managing base metals through a combination of functional model with some local support. So the way to understand this is a lot of the functions today sitting rail supporting base metals. We think this is not the right way to take this business to the next level. So we will change that. And the way we are going to manage base metals going forward is through a Board. So base metals will have all the capabilities sitting in there with the CEO of Base Metals. They'll have the project capability, procurement, sourcing all the key activities that so they don't sit in base metals who will start to sit there, right? So that's an important change in a way to ring fence the business from Vale. And the reason for that is that this business has a very different fundamental dynamic as compared to iron ore. And this is a growth business substantially more complex than iron ore and a processing standpoint. So I think that change is needed. Once we do that, we'll manage this business through a Board -- the Board who have the CEO of Vale, Eduardo, in this case, sitting there as a representative and a few other members of the executive committee. But we will take this change and the benefit of this change to independent board members. So we are already in the process of talking to a very high profile Board members that can join the story, people with deep underground mining experience people with deep EV transition experience -- so people that will help the management team to think through what is next and how to take this business to the next level. Once we ring fence, we are convinced that we will also be able to bring technical talent to the team, to the base metals team. So that's another positive element of this transition. So this is moving forward. We've been talking to people. We are very excited with everything we are hearing and stay tuned to bring more details about the structure in the second half -- in the first half of next year. In parallel with the governance operation, -- we're also bringing a minority shareholder to the base metals platform. And why we're doing this? We are doing this for several reasons, right? One is because it will help to solidify and accelerate this separation. We are clear that this is going to be an enabler in acceleration and will create an acceleration of this separation. We highlight this is going to be done at a multiple that it's substantially bigger than the multiple that Vale trades at. So we start to see one thing that is very important here, occurrence right? Base metals is different from iron ore. We will call for a significant amount of capital to deliver on that story. I mean just Deshnee highlighted some of the goals there. To get to 900 kilotons of copper, double nickel. We will need more than $20 billion of equity, right? So it is fundamental for us to create a vehicle here that can fund itself without competing with the use of proceeds of iron ore. And we all know that this enterprise should trade at a substantially higher multiple as compared to the iron ore. So we are moving in that direction. It is the first step of that vision. We are not going to unlock value here in 1 year. But we are going to unlock value in the long run. If we have a team, a fully dedicated team with the right capabilities, a Board with the right capabilities, its own balance sheet, being able to raise capital in the market, sitting on the level of resources that we are sitting at, we are very confident that we will unlock substantial value on the long run. This initial transaction allows us to keep all the optionalities to do other deals down the road to grow the business, go public, do different things. So this is going to be a path. And we appreciate that over time, and we are very confident that over time, we will unlock value. So that's an important one. We want to make sure we check the box on this with you guys. Now moving back to the flow of the presentation. We were very happy to see this year the evolution that we had on our ESG rating assessment. This is super important. You guys are in the investment community, you know how important this is to attract new investment, right? We were impacted by Brumadinho materially, right? And with all the progress we've done, this was a key priority for Eduardo at some point in time, we recall in 2019, we had 63 ESG gaps. We closed 90% of them. Eduardo highlighted some of the attributes, the first company to come up with Scope 3 reduction targets. The first one to put ESG targets in executive compensation, long-term executive compensation. So we've moved a lot earlier than our competitors from our perspective, and we are starting to see some progress there. So you see, for example, MSCI, very important there, moving us to the same rating that we had pre-Brumadinho, right? It's not yet a good ratings. We should different -- definitely improve from where we are, but we're starting to see some benefits and a result of that work. Sustainalytics, we know the team is doing their own assessment today. We are optimistic and hopeful that we'll see some improvement there. So all of that just validates that we are on the right track. We're also looking into our future. distally highlighted something that is very important. One of the key competitive advantage of Vale, we don't have to go anywhere to grow. I mean we are in Canada. We are in Carajs and we are in Indonesia. Three of the best provinces of mineral deposits in the world, and we are seeing a tremendous amount of resource. So we have 40 years of reserves, right? High grade low carbon intensity as compared to our competitors. So when you look at that future, we have the product to serve it, right? But we have to export and we have to bring them faster at the right cost to the market. So we've been, since last year, accelerating the spend. I think Deshnee showed some highlights there in terms of what we are seeing. We are very excited with what we are seeing. This is going to secure long-term value creation, and we are very excited with that. Now shifting to costs, and I'll talk a little bit about capital allocation as well. So -- last year, we came here and said, "Look, we'll [indiscernible] inflation pick up. We're going to work very hard to cut costs, and we've done it. right? We have reduced costs across the board at Vale by changing the way we do sourcing, revising spec, putting technology, reducing overhead. All of that has been done, which allowed us to offset pretty much all of the inflationary impact ex fuel cost during 2022. So you see our projection for 2022 on C1 here, 19.5 to 20. And you see that all the impacts are due to volume. We are coming with lower volume this year as compared to last year, so unitary costs and the variable costs driven by diesel. Diesel is 60% up year-over-year. so that's a relevant impact for us. For next year, we're assuming diesel will stay as high. So if it drops, it could be a benefit. But we will continue to push very hard on the cost efficiency initiatives, right? This is something that we continue to do. Overall, we expect to deliver versus last year $800 million of sales through some of the examples that I've highlighted. And some of the benefits that we are intending to capture in '23 will be offset by 2 major elements. One is the new way to operate. Spineli highlighted, the filtration plants are coming online, dry stacking, that way of operation is more expensive, right? Still highly accretive, but more expensive. We are seeing -- we're going to see an impact on C1, and we are seeing an impact of what we call geological inflation, especially in the northern range, right? Some of the licensing challenges that we highlighted in the northern of Brazil, is impacting our cost of operations, right? We are having to drive longer, dig deeper for us to maintain productivity. Now it's still highly credit accretive. When the team asked for money there, that's a place we say, go and do it because the margins that we capture in the northern range in the North of Brazil are very attractive. So even though we have an increase here, it's still a very competitive C1 for the industry. But more importantly. And the next one, we see the all in. That's what drives the margin, as you guys know, at the end, right? So here, we have '22, '23, '26, we are highlighting '26 year as a target year for all the business. I'll show you later why. And you see that there is an improvement in all of those metrics towards 2026. We're bringing more volume. We continue to perform on the cost-efficiency initiatives. And you continue to see iron ore getting closer to 40 and you see nickel at [10,000]. So the business will continue. I think the key message here is Vale will remain a Tier 1 cost producer in the industry, which will make us resilient across the cycle that the commodities will usually have. CapEx very stable. This year, around $5.5 billion. Next year, we are targeting BRL 6 billion. A lot of the investment done on reliability of our operations, but also we're investing about $2 billion of accretive growth opportunities, right? BME starting to do on Ona Puma furnace too. So we continue to see good investment opportunities. But it's a very disciplined CapEx program as compared to anyone in the industry, right? So that's one thing that we are -- we feel very proud of. This one is for you guys to help you guys model because this is always a question in terms of what is the impact on our cash flow related to some of the operations. I've said that last year that '22, '23 and '24 are the heavy years for us in terms of disbursements, especially for Brumadinho and Mariana, right? This year, particularly as you see Brumadinho here, was very heavy, the highest in terms of cash outflow. Next year should start to normalize a little more then Mariana picks up, right? So it's something that we will stay with us, especially until 2024 and it starts to come down afterwards. This is a little bit of a propaganda. We have done -- we walk the talk in terms of cash return to shareholders. We've returned $34 billion to shareholders in the last 3 years, 50% of our market cap. That shows how much capacity we have in terms of remunerating our shareholders. And I'd like to close some of my remarks with this slide, right? When we look at the 2026 projections that we laid out in terms of production for all the business, and we run some sensitivities on prices. So we've ran based on $90 per ton as the low end to $110, you guys can pick any range here. And then we do for nickel from 22,000 to 24,000 per ton and then copper 7.5 to 10.5. You see that this company can generate anywhere between $6 billion to $12 billion of free cash. This is CFD, right? Available cash for distribution almost. So it's post CapEx, post [reparation] post everything, right, and available cash for distribution. We can generate anywhere between $6 billion and $12 billion of free cash. This includes, in my prior slide, $1.8 billion of [ reparation ], right? So if you were to do the math, this is almost like 8 and the same with the 12. So [to do] what is the implied free cash flow yield of Vale, you see this company can be a high single-digit to a mid- to high double-digit free cash flow company in the space base case that we work with is low double digits, right? We think this company can generate low double digits on a sustainable basis. And we'll continue to walk the talk in the sense that we will continue to return cash to shareholders. Share buyback, as you know, we continue to believe is one of the most attractive investment opportunities that we have. And by doing so, we are convinced that we will [rate Vale], right? Over time, value get rated as we continue to deliver on those performance. So that's what I had. And for the benefit of the time, we will skip the closing remarks with Eduardo. This is the message we want to convey of being a sustainable mining company. We think this is going to [re-rate] Vale, but also the entire sector, very focused on quality. I think the message today you guys heard loud and clear is that quality play with a very disciplined way in terms of managing the business, balance sheet and capital allocation. So with that, I'll invite Ivan to set up the Q&A, so we can get started.

Already knows the drill very well I'm trying to queue the questions as I see, hence going up and then they all go all together, right? So Yes. And let me just wait a few seconds. We're going to get some chairs here, so we can all sit in front of you and get your questions. We also have our audience on line. We'll try to gather questions, capture them and see if I can combine questions as well. We need to be very disciplined also in our answers here because I think we have about 35, 37 minutes for the Q&A session. So yes, so let's get accommodated and then we'll start -- so I think -- okay. So Jon, I think Thiago was second, Carlos, I'm just gonna level. That's like the Yes. There will be time for everyone. Okay. So let me just get it here. Put that 1 over there. So bear with us guys and will start. And also if you -- for those that are here, of course, in the audience, if you can introduce yourselves name, company, it's going to be better for everyone. Okay. So Jon, yes, go ahead.

Jon Brandt, HSBC. Both of my questions relate to base metals. I'm wondering if you can expand a little bit on the 10% minority investor, the type of investor you're looking for. Depending on the valuation and the multiple that you get, maybe there's an inflow of cash of several billion dollars. But correct me if I'm wrong, you mentioned that to go up to 900,000 tonnes of copper could cost you upwards of $20 billion. So $3 billion, it's a good start, but surely, you can self-finance this given your -- the balance sheet that you have, et cetera. So I'm wondering, other than sort of several billions of dollars that a potential investor would bring in, what other benefits do you see? I mean, is there anything else could it be a miner with expertise? So are you looking purely at a financial company that just is bringing in money? So if you could expand a little bit on that and the rationale behind it. Because you painted an optimistic scenario for nickel and copper and EV. So I'm wondering is it more beneficial for shareholders to keep 100% of that rather than sell 10% even at an attractive multiple, if you could think the market will continue to grow. And my second question, again, on base metals. I'm wondering how you're going to monetize the attractiveness of your assets in terms of -- we know it's low carbon. We know it has very good geographical location. And I understand why companies like GM and other OEMs would want your material. But surely, there's going to be sort of competition from other OEMs over the next decade, given the rise of EVs. So what are you getting out of securing long-term contracts for GM? Are you getting a premium? If you can help me understand how you're actually monetizing your low-carbon strong geographical presence?

Maybe I'll get started. Look, we are looking for a potential partner that will be additive to this story, right? In the sense that it's someone that will help us elevate the ESG profile, someone with industry knowledge, so technical capabilities. So those are the elements. It's not about a financial play. As you said, we don't need that, but it's someone that will accelerate that transition. I think the way to see this is, this is a journey of unlocking value in the long run, right? And we believe by bringing a strategic partner that will help us make that transition. We will accelerate the ring fence, we'll accelerate the value creation. We will continue to maintain the optionalities because remember, I've said up to 10%. We remain with 90-plus percent of this business. So we will remain all the upside of the business going forward. But we have to do it right, right? We have to make sure we execute on the transformation. We have to show we firm up the growth plan. And once we are there, if we do have occurrence, then we may want to tap them instead of using our own cash. It's not mandatory. Vale can continue to follow, right, and continue to fund with its own balance sheet. So it creates options for us down the road to support that growth because, as I said, the growth is very substantial, and we offer a lot of capital. This is a business that should be yielding a 14% to 16% IRR on that development, right? So it's attractive. But it's very important that we raise the most competitive capital, especially if our thesis that, over time, most of our future facing platforms will decouple from the rest and it's going to be substantially more competitive to raise capital in that platform as compared. So that's a thesis. If we get re-rated as well as base metals, we continue to follow. So that creates avenues of growth and avenues for us to raise competitive cap rate.

Just to add on Gustavo's comment, we are biased by VLI rate. You know VLI story. VLI was created in 2010, by myself [indiscernible] it was inside Vale. When we brought the partner is where the real game starts. So in the idea, it's all about execution, right? We don't want to leave money on the table, but money is being left on the table as we speak because we are not running the business well. So there is a huge bet that the execution is going to be improved in that sense, and we're not leaving anything to that chance. So that's what Gustavo mentioned. We're bringing a partner as you asked, we're not bringing a financial institution that pays more or less because this will anchor the execution of the business, because this is key. Because we have today something that worth $14 billion inside Vale, that can work $35 billion or $40 billion, depends on. And that's the value creation, right? So we're not letting money go on the table. But for sure, we're going to bring a partner, and we're going to do that very cautiously, very because what we saw in VLI was exactly that. When you got the right governance, the right incentives, it grew. And then I think [indiscernible] plant.

Sorry, is there an update on the timing of when you want to do all this?

A lot of interest, as you can imagine, people really like the story and really see the Vale long term. We are very advanced. So expectation is that first half next year.

An answer to your question, we are in the condition of choosing. That's, I think, a very important thing. And if we don't find the right partner that meets these requirements, we're going to do it by ourselves anyway. Actually -- I was -- actually interview with somebody else yesterday and made this exactly a question to him. If we don't find the right partner, would you come with us? Because that's the attraction part, right? And you guys said, yes, I'm with you. So again, I'm not tied to that to do the ring-fencing. The ring-fencing is the most important action for us.

All right. Maybe the question on what does it mean for us in terms of some of these offtakes that we have done? So today, we produce around that 175,000 to 180,000 tonnes of nickel. Unlike the rest of the nickel industry, we actually swap it. We produce 75% of Class 1, only 25% of the rest. So we already get a premium above LME for a lot of those products. In terms of the agreements that we've had, there are various agreements and we have built in some premiums for value in that as well. But the relationships that we're building with the OEMs is not just a transactional one on offtake. We are looking at strategic relationships in terms of how we can leverage each other's technology to further progress some of the waste-to-value opportunities, et cetera. In addition, as I said, we really want to start that recycling business, not in terms of just creating our own supply chains to do it, but leveraging OEM's supply chains to do it as well. So yes, our products currently attract a premium market driven, and we are working agreement to look at how the low carbon can give us an additional premium on top of that, and that is what we have locked in already.

Can I just ask also, let's keep one question at a time and then we can just circle back if necessary, okay? Thiago, go ahead, please.

Thiago Lofiego, Bradesco BBI. So my one question goes to Spinelli. So N3 seems to be the key issue there in the Northern system, right? And you mentioned in the presentation, you expect the license for mid-2024. So what are the risks you see there? And if this process is further delayed, should we expect further increases in the C1 because I believe you have to go deeper, there's water issues as well. So what's the dynamics we should expect if this licensee process gets further delayed.

Thiago. Well, we have 2 main sites, S11D and North branch. So North branch, you said entry is not a big bit. It's not a big body. So it's -- that will support us in 3, 4, like [indiscernible] that we had 3 years ago. So that will support a bridge to reach the N1, N2, that will be in the streamline that's ahead of that. So we expect to have -- we are in the middle of the process. So we have the LP. So there's a previous license. We have the installation license, we expect for next year and we have the 1 year to build the pit and the start for that. It's not only that is going on in North brand. We also have -- we are extracting ores from radius around cavities that we can also add mass. So that's another one that's just launched one and we expect another one. So what we will say that's the main challenge we have S11D. S11D is coming with plus 10, plus 10 is almost commissioning. [ Chalado ] actually, in North Range is going really well. And we have S11D plus 20 that is coming with the crusher. So we don't expect to bring back 140 million tonnes to North Range anymore. So -- that we need to keep this in mind. So it's quite difficult to keep the flow of depletion equal to N3, N1 and N2. So that will be an average of 100 million tonnes. That's what we expect. But the offset is inside S11D with a lower cost, actually. What you mentioned is -- yes, you have to go deeper, you have to haul longer but it's -- in average, it's in our calculation that we saw here. There's no higher deviation because of that because S11D it can offset going down actually.

The C1 for us, I mean this is much cheaper -- the C1 first, if you switch from S11D to North Range, actually, it's better. Remember, when we're launching S11D everybody saying, "Oh, it's going to destroy the market. Now it says S11D, the solvation of the market. So it's -- in C1 basis, I think we can overcome that, but it's a huge challenge that we have been very aware of. I think if you struggle to have 100 tonnes on the range, that's where the growth is going to come is from S11D. That's the bet that has to be done is on the execution and on the projects. But in that sense to not overpromise, we are on our hands. This doesn't need -- by the way, the license for us -- for plus 20 took 2 years to get it. And we have just got it last, I think, 2 months ago. So now it's totally in our hands. So -- when we got to do, we know how to do. So that's, I think, is in our hands to execute.

Okay. I think the next one is Leonardo because he has the microphone, right, or is it Carlos or -- well, okay. Go ahead Leonardo, Sorry.

Good morning, everyone. Thanks, Vale, for the presentation. My question is on iron ore. There's -- for many years, we talked about the aspirational volumes target of 400 million tonnes, right? I don't think anyone was incorporating that in their numbers, but that was the target, right? Today, you're downgrading the number to 350 million tonnes, right, or 340 million tonnes, 360 million tonnes. It's been highly debated I think, over the past hours in the market. So I just wanted -- first of all, to hear you on exactly what's driving the move a bit more, a bit more detail on what's driving the move? And second, is this more of an aspirational target? Does it depend on the value over volume? Or are you -- this is a firm target that we should incorporate and we should assume Vale really is reaching for that 350 million tonnes, 360 million tonnes mark. So there's been a big debate on how we should view this longer-term target?

I think let Spinelli detail, but I think it's very important to understand what we're facing here. [indiscernible] we always wanted to go back. And I'm talking here because I'm the only one that was there. So we had this -- we need to go back. And we actually underestimate what's in front of us. And we're like struggling with something that we saw that was the system -- the [indiscernible] system. You saw the numbers. And even there was much more deeper than we anticipated. We were like hitting the knife. And then we started to understand what's going on. But the real issue was coming from the north, on the northern range and of course, the ramp-up of the S11D. So we started to learn. That's a learning process here. Look, why should we get back to front? Everybody was really scared about Vale bringing volumes because if we bring 80 million tonnes, we destroy the market, by the way. So we start to match what we are able to do and what is the sweet spot that we can do. So why we need to rush. Why did we put this rope in our neck to pull it? Then we start to say, "Look, let's -- and we started to position ourselves in this high-end system" the agglomeration on the pelletizing because we are moving -- Spinelli did mention it in his presentation, the 310 next year is not the 310 of this year. In the same basis is $500 million more in EBITDA. So we're not talking about the same 310. It doesn't matter the 310. It matters what the iron content of what's there. So what is their huge challenge. And that's why we position ourselves in a much more lower ramp up. Because in the end, we find a sweet spot between the restrictions that we have, and we have to be humble and honest to face them. And you saw in that graph that Spinelli mentioned on the orange things, then you can look in details. It's very clear where it's in our hands, where it's not in our hands. And again, it makes more money than 400 million -- sorry, I'm a nature-based guy -- so 400 million tonnes. Why should I still put this over my neck. I have the elephant -- to kill the elephants. [indiscernible] both menagerie states and the market is there. We have logistics for -- actually discussing this with the governor of Para. We like -- we have 40 million tonnes of excess capacity in Carajas, how can we work together to fill that gap? Because, of course, for C1, as Thiago mentioned, of course, we want to produce iron ore in Carajas doesn't want it. We have [indiscernible] there. So it's a matter of learning, okay? It's not like we decided to shift. Let's stop overpromising. Let's do what we are able to do, and let's do it. It's totally in our hands. What we actually, if you see what is coming on the -- in RP area, that's probabilistic whatever it is, from, I think, second quarter, right? That's ridiculous. We have those to build since April, but we're going to only operate in April, April -- 1 year to get a license. The day I have -- so I can put a broker to operate, then I have high-quality feed. But I don't have that now. So why should I push the guidance to the market above 35 million tonnes of pellet. Let's do what we can do. That's basically the decision. And this is more a credit to the shareholders as we speak then trying to find just to be really to be the largest share of iron ore company. I don't want to be the largest iron ore company. First of all, I don't want to be iron ore company -- I want to be an iron solution company. and I want to be the best iron ore company. And again, that's what we can do. I cannot do it differently. How do I -- we have -- and I'm not resting in this because as Thiago mentioned, the C1 is extremely important to us. There's a lot of money on the table because 40 million tonnes of iron ore at North is $4 billion or even $5 billion on the vein. So that's more or less what our mindsets are guiding. This is natural. This is reasonable. And what we can do, if we're able to debottleneck the north and the southern system, we can switch capacity that we always talked about switching capacity to high-cost operations, right? Then we can actually do the value over volume strategy. So on a -- maybe on a more concise way it's a learning, we learned and we're taking the right direction, but we're not giving up because we do have the capacity, the capacity infrastructurally speaking, and we have to debottleneck the run of mine.

Yes. But I mean just to close because it's important, you should put that in the model, right? Because I think what Spinelli said is there's a lot less reliant. One, it's more conservative. I mean the speed that Eduardo is referring to, it's a very deep probabilistic scenario that we've run internally. I mean we've modeled in a very different way this year. So our confidence in terms of delivery substantially because the reliance, especially in SLM on licensing is a lot lower, right? Yes, this is a business of licensing at the end. But it's less -- license as compared to the prior guidance. So we should certainly consider that in your numbers.

I think next one now is Sasson. Go ahead.

Daniel Sasson, Itaú BBA. My question comes from the -- on the cost front. I remember that you used to say a few years ago that your deliver in China cost would be something between 25% to 30%, and then you'd be comfortable with ore prices around maybe $70 per tonne, right? It would be a level that you would be profitable and would not stimulate new entrants to the market. But given the cost inflation and our new delivery in China cost expected to be around $42 in the medium to long term. Has your forecast or the level that you feel comfortable with long-term prices changed what would be the level that you see -- that you believe would be decent for you to work that you aim to have to reach a profitability level that you would deem adequate for you guys?

Good question. Look, I think the cost curve of the sector changed it completely, right? And we've been saying this for a while. I think you've seen all the majors come in with big -- higher numbers. And we -- the $70 per tonne. I mean, our recent exercise has shown that in a sustainable basis, $70 per tonne would remove 200 million tonnes out of the market. So that $70 doesn't exist. Forget that number, right? And we've seen this, this year, even with China having the new starts, 30% lower than last year. the price hasn't dropped and it went to $80, then it came back. So there's a lot of support from our perspective long term for something around $90 to $100. That's for us. That's why we've modeled around $100 because we believe that's where the prices should be. So at $100 with my all lean of 42, this is a very profitable business, and we've shown this in the free cash flow generation, right? So certainly has changed it. The all-in of the entire sector has doubled, and it's not coming back.

Okay. Next one is Carlos. Go ahead.

Carlos De Alba with Morgan Stanley. Staying on cost on the nickel side, there is a biggest step down in cost between 2023 and 2026. A more progressive decline in copper. How should we think about when modeling that biggest step down between those 3 years, is it a gradual decline or is it more of really 2026 once you maybe get to a certain level of volumes or a deployment of initiatives. And in iron ore, is coming back, there is no guidance for 20 on cost, but there is on premium realization, which really increases and is a wide margin in 2026. Should we assume that the cost will potentially also increase together without priorization and margins do not expand that much? Or should we bake in a big expansion or a significant expansion in margins because costs don't increase as unmeasurable.