VALE

 

 

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the

Securities Exchange Act of 1934

 

For the month of

 

October 2022

 

Vale S.A.

 

Praia de Botafogo nº 186, 18º andar, Botafogo
22250-145 Rio de Janeiro, RJ, Brazil

(Address of principal executive office)

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

 

(Check One) Form 20-F x Form 40-F ¨

 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))

 

(Check One) Yes ¨ No x 

 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))

 

(Check One) Yes ¨ No x

 

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

 

(Check One) Yes ¨ No x

 

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-     .)

 

 

 

 

 

Interim Financial Statements

Contents

 

	Page
Report of Independent Registered Public Accounting Firm	3
Consolidated Income Statement	4
Consolidated Statement of Comprehensive Income	5
Consolidated Statement of Cash Flows	6
Consolidated Balance Sheet	7
Consolidated Statement of Changes in Equity	8
Notes to the Interim Financial Statements	9
1.    Corporate information	9
2.    Basis of preparation of interim financial statements	9
3.    Significant events of the current period	10
4.   Information by business segment and geographic area	11
5.   Costs and expenses by nature	15
6.   Financial results	16
7.   Taxes	17
8.   Basic and diluted earnings (loss) per share	18
9.      Accounts receivable	18
10.   Inventories	19
11.   Suppliers and contractors	19
12.   Other financial assets and liabilities	19
13.   Investments in subsidiaries, associates and joint ventures	20
14.   Acquisitions and divestitures	21
15.   Intangible	24
16.   Property, plant and equipment	24
17.   Financial and capital risk management	25
18.   Financial assets and liabilities	32
19.   Participative stockholders’ debentures	33
20.   Loans, borrowings, leases, cash and cash equivalents and short-term investments	34
21.   Brumadinho dam failure	36
22.   Liabilities related to associates and joint ventures	39
23.   Provision for de-characterization of dam structures and asset retirement obligations	41
24.   Provisions	43
25.   Litigations	43
26.   Employee post-retirement obligations	45
27.   Stockholders’ equity	46
28.   Related parties	47

 

 

 

Report of Independent Registered Public Accounting Firm

 

To the stockholders and Board of Directors of

Vale S.A.

 

Results of Review of Interim Financial Statements

We have reviewed the accompanying consolidated balance sheet of Vale S.A. and its subsidiaries (the “Company”) as of September 30, 2022, and the related consolidated income statement, statement of comprehensive income and cash flows for the three and nine-month periods ended September 30, 2022 and 2021, and the consolidated statement of changes in equity for the nine-month periods ended September 30, 2022 and 2021, including the related notes (collectively referred to as the “interim financial statements”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with IAS 34 - Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB).

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2021, and the related consolidated income statement and statement of comprehensive income, changes in equity and cash flows for the year then ended (not presented herein), and in our report dated February 24, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

These interim financial statements are the responsibility of the Company’s management. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our review in accordance with the standards of the PCAOB. A review of interim financial statements consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

 

/s/ PricewaterhouseCoopers Auditores Independentes Ltda.

Rio de Janeiro, RJ, Brazil

October 27, 2022

 

Consolidated Income Statement In millions of United States dollars, except earnings per share data

 

				Three-month period ended September 30,				Nine-month period ended September 30,
		Notes		2022		2021		2022		2021
Continuing operations
Net operating revenue		4(d)		9,929		12,330		31,898		41,397
Cost of goods sold and services rendered		5(a)		(6,301)		(5,472)		(16,873)		(15,235)
Gross profit				3,628		6,858		15,025		26,162
Operating expenses
Selling and administrative		5(b)		(119)		(114)		(367)		(350)
Research and development				(170)		(135)		(442)		(372)
Pre-operating and operational stoppage		23		(89)		(165)		(354)		(501)
Brumadinho event and de-characterization of dams		21 and 23		(336)		(161)		(776)		(461)
Other operating expenses, net		5(c)		(51)		(31)		(322)		(121)
				(765)		(606)		(2,261)		(1,805)
Impairment reversal (impairment and disposals) of non-current assets, net		14 and 16		(40)		(63)		950		(221)
Operating income				2,823		6,189		13,714		24,136
Financial income		6		141		90		428		224
Financial expenses		6		(221)		(240)		(888)		(851)
Other financial items, net		6		2,427		(200)		3,386		588
Equity results and other results in associates and joint ventures		13, 14 and 22		78		128		233		(316)
Income before income taxes				5,248		5,967		16,873		23,781
Income taxes		7
Current tax				(514)		(2,464)		(1,948)		(5,180)
Deferred tax				(290)		2,003		(1,858)		836
				(804)		(461)		(3,806)		(4,344)
Net income from continuing operations				4,444		5,506		13,067		19,437
Net income (loss) attributable to noncontrolling interests				(11)		29		63		53
Net income from continuing operations attributable to Vale's stockholders				4,455		5,477		13,004		19,384
Discontinued operations		14
Net income (loss) from discontinued operations				-		(1,548)		2,060		(2,465)
Net income (loss) attributable to noncontrolling interests				-		43		-		(99)
Net income (loss) from discontinued operations attributable to Vale's stockholders				-		(1,591)		2,060		(2,366)
Net income				4,444		3,958		15,127		16,972
Net income (loss) attributable to noncontrolling interests				(11)		72		63		(46)
Net income attributable to Vale's stockholders				4,455		3,886		15,064		17,018
Basic and diluted earnings per share attributable to Vale's stockholders:		8
Common share (US$)				0.98		0.76		3.22		3.36

 

As described in note 14, the coal segment is presented in these interim financial statements as discontinued operation. Therefore, comparative financial information for the nine-month period ended September 30, 2021 has been restated to reflect the sale of the coal operation.

 

 

The accompanying notes are an integral part of these interim financial statements.

 

Consolidated Statement of Comprehensive Income In millions of United States dollars

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Net income		4,444		3,958		15,127		16,972
Other comprehensive income:
Items that will not be reclassified to income statement
Translation adjustments		(1,282)		(3,249)		1,046		(1,364)
Employee post-retirement obligations (note 26)		8		95		151		411
Fair value adjustment to investment in equity securities (i)		-		150		-		343
		(1,274)		(3,004)		1,197		(610)
Items that may be reclassified to income statement
Translation adjustments		(187)		1,380		(1,236)		624
Net investment hedge (note 17)		(47)		(127)		27		(85)
Cash flow hedge (note 17)		40		10		48		(16)
Reclassification of cumulative translation adjustment to income statement (notes 13 and 14)		(1,608)		(10)		(4,830)		(1,552)
		(1,802)		1,253		(5,991)		(1,029)
Total comprehensive income		1,368		2,207		10,333		15,333
Comprehensive income (loss) attributable to noncontrolling interests		(10)		69		58		(47)
Comprehensive income attributable to Vale's stockholders		1,378		2,138		10,275		15,380

 

(i) Fair value adjustment to shares received as part of the consideration for the sale of Vale’s fertilizer business to The Mosaic Company. In November 2021, the Company sold all shares for US$1,259 in a block trade.

 

Items above are stated net of tax and the related taxes are disclosed in note 7.

 

 

The accompanying notes are an integral part of these interim financial statements.

 

Consolidated Statement of Cash Flows In millions of United States dollars

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Cash flows from operations (a)		4,591		10,324		15,860		29,186
Interest on loans and borrowings paid (note 20)		(194)		(173)		(650)		(599)
Cash received (paid) on settlement of derivatives, net (note 17)		100		22		(18)		(117)
Payments related to Brumadinho event (note 21)		(423)		(93)		(806)		(384)
Payments related to de-characterization of dams (note 23)		(95)		(93)		(247)		(254)
Interest on participative stockholders' debentures paid (note 19)		-		-		(235)		(193)
Income taxes (including settlement program) (note 7)		(582)		(991)		(4,372)		(3,434)
Net cash generated from operating activities from continuing operations		3,397		8,996		9,532		24,205
Net cash generated (used) in operating activities from discontinued operations (note 14)		-		55		41		(406)
Net cash generated from operating activities		3,397		9,051		9,573		23,799
Cash flow from investing activities:
Capital expenditures (note 4b)		(1,230)		(1,199)		(3,659)		(3,282)
Proceeds from sale of Midwestern System, net of cash (note 14)		140		-		140		-
Disbursement on VNC sale (note 14)		-		-		-		(555)
Proceeds from sale of CSI (note 14)		-		-		437		-
Dividends received from associates and joint ventures (note 13)		28		5		164		48
Short-term investment		118		424		221		251
Other investing activities, net		(70)		18		(22)		(308)
Net cash used in investing activities from continuing operations		(1,014)		(752)		(2,719)		(3,846)
Net cash used in investing activities from discontinued operations (note 14)		-		(49)		(103)		(2,388)
Net cash used in investing activities		(1,014)		(801)		(2,822)		(6,234)
Cash flow from financing activities:
Loans and borrowings from third parties (note 20)		150		-		775		300
Payments of loans and borrowings from third parties (note 20)		(448)		(111)		(2,276)		(1,523)
Payments of leasing (note 20)		(48)		(55)		(146)		(152)
Dividends and interest on capital paid to stockholders (note 27c)		(3,123)		(7,391)		(6,603)		(13,483)
Dividends and interest on capital paid to noncontrolling interest		(3)		(3)		(10)		(9)
Share buyback program (note 27d)		(686)		(2,841)		(5,070)		(4,845)
Net cash used in financing activities from continuing operations		(4,158)		(10,401)		(13,330)		(19,712)
Net cash used in financing activities from discontinued operations (note 14)		-		(3)		(11)		(10)
Net cash used in financing activities		(4,158)		(10,404)		(13,341)		(19,722)
Increase (reduction) in cash and cash equivalents		(1,775)		(2,154)		(6,590)		(2,157)
Cash and cash equivalents at the beginning of the period		7,185		13,649		11,721		13,487
Effect of exchange rate changes on cash and cash equivalents		(228)		(638)		62		(473)
Cash and cash equivalents from subsidiaries sold, net (note 14)		-		-		(11)		-
Cash and cash equivalents at end of the period		5,182		10,857		5,182		10,857
Cash flow from operating activities:
Income before taxation		5,248		5,967		16,873		23,781
Adjusted for:
Equity results and other results in associates and joint ventures (note 13)		(78)		(128)		(233)		316
Impairment and disposals (impairment reversal) of non-current assets, net (note 14)		40		63		(950)		221
Provisions for Brumadinho (note 21)		141		-		267		-
Provision for de-characterization of dams (note 23)		35		-		72		-
Depreciation, depletion and amortization		775		649		2,271		2,212
Financial results, net (note 6)		(2,347)		350		(2,926)		39
Changes in assets and liabilities:		-		-		-		-
Accounts receivable (note 9)		3		3,870		1,782		4,171
Inventories (note 10)		(287)		(588)		(896)		(926)
Suppliers and contractors (note 11) (i)		1,169		322		929		354
Payroll and other compensation		158		61		(97)		(143)
Other assets and liabilities, net		(266)		(242)		(1,232)		(839)
Cash flows generated from operations (a)		4,591		10,324		15,860		29,186
Non-cash transactions:
Additions to property, plant and equipment - capitalized loans and borrowing costs		9		14		40		44

(i) Includes variable lease payments.

The accompanying notes are an integral part of these interim financial statements.

 

Consolidated Balance Sheet In millions of United States dollars

 

		Notes		September 30, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents		20		5,182		11,721
Short-term investments		20		42		184
Accounts receivable		9		2,150		3,914
Other financial assets		12		152		111
Inventories		10		5,268		4,377
Recoverable taxes		7(e)		858		862
Other				270		215
				13,922		21,384
Non-current assets held for sale				-		976
				13,922		22,360
Non-current assets
Judicial deposits		25(c)		1,289		1,220
Other financial assets		12		236		143
Recoverable taxes		7(e)		1,114		935
Deferred income taxes		7(a)		9,825		11,441
Other				890		650
				13,354		14,389
Investments in associates and joint ventures		13		1,795		1,751
Intangible		15		9,344		9,011
Property, plant and equipment		16		42,196		41,931
				66,689		67,082
Total assets				80,611		89,442

 

Liabilities
Current liabilities
Suppliers and contractors		11		4,735		3,475
Loans, borrowings, and leases		20		447		1,204
Other financial liabilities		12		1,466		1,962
Taxes payable		7(e)		303		2,177
Settlement program ("REFIS")		7(c)		351		324
Liabilities related to associates and joint ventures		22		2,027		1,785
Provisions		24		929		1,045
Liabilities related to Brumadinho		21		1,318		1,156
De-characterization of dams and asset retirement obligations		23		700		621
Other				718		1,094
				12,994		14,843
Liabilities associated with non-current assets held for sale				-		355
				12,994		15,198
Non-current liabilities
Loans, borrowings, and leases		20		11,757		12,578
Participative stockholders' debentures		19		2,659		3,419
Other financial liabilities		12		1,948		2,571
Settlement program ("REFIS")		7(c)		1,861		1,964
Deferred income taxes		7(a)		1,608		1,881
Provisions		24		2,349		3,419
Liabilities related to Brumadinho		21		1,913		2,381
De-characterization of dams and asset retirement obligations		23		5,926		7,482
Liabilities related to associates and joint ventures		22		1,117		1,327
Streaming transactions				1,629		1,779
Other				178		137
				32,945		38,938
Total liabilities				45,939		54,136
Stockholders' equity		27
Equity attributable to Vale's stockholders				33,202		34,472
Equity attributable to noncontrolling interests				1,470		834
Total stockholders' equity				34,672		35,306
Total liabilities and stockholders' equity				80,611		89,442

 

The accompanying notes are an integral part of these interim financial statements.

 

Consolidated Statement of Changes in Equity In millions of United States dollars

 

		Share capital		Capital reserve		Profit reserves		Treasury stocks	Other reserves	Cumulative translation adjustments		Retained earnings		Equity attributable to Vale’s stockholders		Equity attributable to noncontrolling interests		Total stockholders' equity
Balance at December 31, 2021		61,614		1,139		15,702		(5,579)	(1,960)	(36,444)		-		34,472		834		35,306
Net income		-		-		-		-	-	-		15,064		15,064		63		15,127
Other comprehensive income		-		-		1,021		-	191	(6,001)		-		(4,789)		(5)		(4,794)
Dividends and interest on capital of Vale's stockholders (note 27c)		-		-		(3,500)		-	-	-		(3,000)		(6,500)		-		(6,500)
Dividends of noncontrolling interests		-		-		-		-	-	-		-		-		(6)		(6)
Derecognition of noncontrolling interests		-		-		-		-	-	-		-		-		584		584
Share buyback (note 27d)		-		-		-		(5,070)	-	-		-		(5,070)		-		(5,070)
Share-based payment		-		-		-		-	6	-		-		6		-		6
Treasury shares used and cancelled (note 27b)		-		-		(6,616)		6,635	-	-		-		19		-		19
Balance at September 30, 2022		61,614		1,139		6,607		(4,014)	(1,763)	(42,445)		12,064		33,202		1,470		34,672
		Share capital		Capital reserve		Profit reserves		Treasury stocks	Other reserves	Cumulative translation adjustments		Retained earnings		Equity attributable to Vale’s stockholders		Equity attributable to noncontrolling interests		Total stockholders' equity
Balance at December 31, 2020		61,614		1,139		7,042		(2,441)	(2,056)	(29,554)		-		35,744		(923)		34,821
Net income (loss)		-		-		-		-	-	-		17,018		17,018		(46)		16,972
Other comprehensive income		-		-		(211)		-	760	(2,187)		-		(1,638)		(1)		(1,639)
Dividends and interest on capital of Vale's stockholders (note 27c)		-		-		(4,319)		-	-	-		(8,368)		(12,687)		-		(12,687)
Dividends of noncontrolling interests		-		-		-		-	-	-		-		-		(24)		(24)
Acquisitions and derecognition of noncontrolling interests		-		-		-		-	(331)	-		-		(331)		1,761		1,430
Share buyback (note 27d)		-		-		-		(4,845)		-		-		(4,845)		-		(4,845)
Share-based payment		-		-		-		-	54	-		-		54		-		54
Treasury shares used and cancelled (note 27b)		-		-		(2,401)		2,408	-	-		-		7		-		7
Balance at September 30, 2021		61,614		1,139		111		(4,878)	(1,573)	(31,741)		8,650		33,322		767		34,089

 

The accompanying notes are an integral part of these interim financial statements.

 

 

1.               Corporate information

 

Vale S.A. (the “Parent Company”) is a public company headquartered in the city of Rio de Janeiro, Brazil with securities traded on the stock exchanges of São Paulo – B3 S.A. (VALE3), New York - NYSE (VALE) and Madrid – LATIBEX (XVALO).

 

Vale S.A. and its subsidiaries (“Vale” or the “Company”) are global producers of: (i) iron ore and iron ore pellets, which are key raw materials for steelmaking, (ii) nickel, that is used to produce stainless steel, electric vehicles and metal alloys employed in the production process of several products, (iii) copper, used in the construction sector to produce pipes and electrical wires, and (iv) platinum, gold, silver, and cobalt as by-products of nickel and copper. Most of the Company’s products are sold to international markets by Vale International S.A. (“VISA”), a trading company located in Switzerland.

 

Vale also operates a railroad and port logistics system in Brazil to outflow its production and Vale has equity investments and assets with the objective of reducing energy costs, minimizing the risk of shortages and meeting its energy consumption needs through renewable sources.

 

In the second quarter of 2022, the Company concluded the sale of the thermal and metallurgical coal operations, as presented in note 14. Therefore, the results from coal operation until closing are presented in these interim financial statements as “discontinued operations”.

 

2.        Basis of preparation of interim financial statements

 

The consolidated interim financial statements of the Company (“interim financial statements”) have been prepared and are being presented in accordance with IAS 34 Interim Financial Reporting of the International Financial Reporting Standards (“IFRS”) as issued

by the International Accounting Standards Board (“IASB”). All relevant information for the interim financial statements, and only this information, are presented and consistent to those used by the Company's Management.

 

The interim financial statements have been prepared to update users on the relevant events and transactions that occurred in the period and must be analyzed together with the financial statements for the year ended December 31, 2021. Accounting policies, accounting estimates and judgments, management of risk and measurement methods are the same as those adopted in the preparation of the latest annual financial statements.

 

These interim financial statements were authorized for issue by the Company’s Board of Directors in a meeting held on October 27, 2022.

 

a) Functional currency and presentation currency

 

The interim financial statements of the Company and its associates and joint ventures are measured using the currency of the primary economic environment in which the entity operates (“functional currency”), in the case of the Parent Company is the Brazilian real (“R$”). For presentation purposes, these financial statements are presented in United States dollar (“US$”) as the Company believes that this is how international investors analyze the financial statements.

 

The main exchange rates used by the Company to translate its foreign operations are as follows:

 

						Average rate
		Closing rate				Three-month period ended September 30,				Nine-month period ended September 30,
		September 30, 2022		December 31, 2021		2022		2021		2022		2021
US Dollar ("US$")		5.4066		5.5805		5.2462		5.2286		5.1360		5.3317
Canadian dollar ("CAD")		3.9318		4.3882		4.0189		4.1517		4.0024		4.2624
Euro ("EUR")		5.2904		6.3210		5.2838		6.1623		5.4629		6.3769

 

 

b) Russia-Ukraine conflict

 

The Company’s business is subject to external risk factors related to our global operations and the global profile of our client portfolio and supply chains. Global markets are experiencing volatility and disruption following the escalation of geopolitical tensions in connection with the military conflict between Russia and Ukraine.

The resulting economic sanctions imposed by the United States, Canada, the European Union, the UK and other countries as a direct consequence of this conflict may continue to significantly impact supply chains, lead to market disruptions including significant volatility in commodities’ prices and bring heightened near-term uncertainty to the global financial system, including through instability of credit and of capital markets.

At this time, the effects of the Russia-Ukraine conflict have not caused significant impacts on the Company’s operations nor on the fair value of its assets and liabilities. However, escalation of the Russia-Ukraine conflict may adversely affect the Company’s business, such as disruption of international trade flows, extreme market pricing volatility, with particular impact on the energy sector, industrial and agricultural supply chains, shipping, and regulatory and contractual uncertainty, and increased geopolitical tensions around the world.

 

3.       Significant events of the current period

 

Balance Sheet, Cash Flows and Income Statement were particularly affected by the following events and transactions during the three-month period ended September 30, 2022:

 

Capital reduction in a foreign subsidiary (notes 6 and 13). In August 2022, the Company approved the capital reduction of VISA in the amount of US$1,500, which has generated a gain of US$1,543, recorded under “Other financial items, net”, due to the reclassification of the cumulative translation adjustments from stockholders’ equity to the income statement.

 

Sale of Midwestern System assets (note 14). In July 2022, the Company concluded the sale of the Midwestern System to J&F Mineração Ltda. (“J&F”) and received US$153, in addition to transferring to J&F the obligations related to the take-or-pay logistics contracts. These assets were classified as held for sale and a gain of US$1,121 was recorded in the nine-month period ended September 30, 2022, due to the reversal of the impairment of property, plant and equipment and the remeasurement of the onerous contract liability. In addition, the Company recognized a gain of US$37 due to the reclassification of the cumulative translation adjustments from stockholders’ equity to the income statement.

 

Sale of Companhia Siderúrgica do Pecém (“CSP”) (note 14). In July 2022, the Company and the other shareholders of CSP signed a binding agreement with ArcelorMittal for the sale of CSP for approximately US$2,132, which will be received at the closing of the transaction and it will be fully used for the early settlement of CSP's net debt in the amount of approximately US$2,300. The Company does not expect any material impact at closing, which is expected to occur in the first quarter 2023, subject to customary regulatory approvals.

 

Share buyback (note 27d). During the three-month period ended September 30, 2022, the Company repurchased 48,670,681 common shares and their respective ADRs, corresponding to US$686, of which US$358 were acquired through wholly owned subsidiaries and US$328 by the Parent Company.

 

Cancellation of common shares held in treasury (note 27b). In July 2022, the Company approved the cancellation of 220,150,800 common shares held in treasury. The effect of US$3,786 was recorded in shareholders' equity as “Treasury shares used and cancelled”.

 

Stockholder’s remuneration (note 27c). In July 2022, the Company approved the remuneration to its shareholders in the amount of US$3,000, which was fully paid in September 2022.

 

 

 

 

4.       Information by business segment and geographic area

 

The Company operates the following reportable segments: Ferrous Minerals, Base Metals and Coal (presented as discontinued operations). The segments are aligned with products and reflect the structure used by Management to evaluate the Company’s performance. The responsible bodies for making operational decisions, allocating resources and evaluating performance are the Executive Boards and Board of Directors. Accordingly, the performance of the operating segments is assessed based on a measure of adjusted EBITDA, among other measures.

 

The Company allocates to “Other” the revenues and cost of other products, services, research and development, investments in joint ventures and associates of other business and unallocated corporate expenses. Costs related to the Brumadinho event are allocated to "Other" as well.

 

In 2022, the Company has allocated the financial information of the Midwestern System to “Other” as this operation is no longer analyzed by the chief operating decision maker as part of to the performance of the Ferrous Minerals business segment due to the binding agreement to sell this operation. The comparative information was reclassified to reflect the revision in the allocation criteria.

 

a) Adjusted EBITDA

 

The definition of Adjusted EBITDA for the Company is the operating income or loss plus dividends received and interest from associates and joint ventures, and excluding the amounts charged as (i) depreciation, depletion and amortization and (ii) impairment reversal (impairment and disposals) of non-current assets, net.

 

		Three-month period ended September 30, 2022
		Net operating revenue		Cost of goods sold and services rendered		Sales, administrative and other operating expenses		Research and development		Pre operating and operational stoppage		Dividends received and interest from associates and joint ventures		Adjusted EBITDA
Ferrous minerals
Iron ore		6,053		(3,095)		(44)		(46)		(63)		1		2,806
Iron ore pellets		1,656		(714)		(7)		(1)		(5)		4		933
Other ferrous products and services		118		(82)		4		(2)		(4)		-		34
		7,827		(3,891)		(47)		(49)		(72)		5		3,773
Base metals
Nickel and other products		1,563		(1,325)		2		(31)		-		-		209
Copper		479		(275)		(8)		(38)		(3)		-		155
		2,042		(1,600)		(6)		(69)		(3)		-		364
Brumadinho event and de-characterization of dams		-		-		(336)		-		-		-		(336)
Other		60		(58)		(108)		(52)		-		23		(135)
Total		9,929		(5,549)		(497)		(170)		(75)		28		3,666

 

		Three-month period ended September 30, 2021
		Net operating revenue		Cost of goods sold and services rendered		Sales, administrative and other operating expenses		Research and development		Pre operating and operational stoppage		Dividends received and interest from associates and joint ventures		Adjusted EBITDA
Ferrous minerals
Iron ore		8,418		(2,993)		(31)		(53)		(61)		-		5,280
Iron ore pellets		2,009		(612)		(2)		(1)		(10)		-		1,384
Other ferrous products and services		139		(109)		1		(1)		(4)		-		26
		10,566		(3,714)		(32)		(55)		(75)		-		6,690
Base metals
Nickel and other products		896		(782)		57		(20)		(52)		-		99
Copper		678		(242)		(6)		(23)		(1)		-		406
		1,574		(1,024)		51		(43)		(53)		-		505
Brumadinho event and de-characterization of dams		-		-		(161)		-		-		-		(161)
COVID-19		-		-		(10)		-		-		-		(10)
Other (i)		190		(131)		(144)		(37)		(1)		5		(118)
Total of continuing operations		12,330		(4,869)		(296)		(135)		(129)		5		6,906
Discontinued operations - Coal		352		(314)		(5)		(1)		-		-		32
Total		12,682		(5,183)		(301)		(136)		(129)		5		6,938

 

(i) Includes the reclassification of the EBITDA of Midwestern System in the amount of US$40.

		Nine-month period ended September 30, 2022
		Net operating revenue		Cost of goods sold and services rendered		Sales, administrative and other operating expenses		Research and development		Pre operating and operational stoppage		Dividends received and interest from associates and joint ventures		Adjusted EBITDA
Ferrous minerals
Iron ore		20,421		(8,185)		(147)		(125)		(250)		1		11,715
Iron ore pellets		4,800		(1,947)		-		(2)		(16)		75		2,910
Other ferrous products and services		365		(253)		2		(4)		(13)		-		97
		25,586		(10,385)		(145)		(131)		(279)		76		14,722
Base metals
Nickel and other products		4,568		(3,163)		(18)		(73)		-		-		1,314
Copper		1,281		(770)		(5)		(94)		(8)		-		404
		5,849		(3,933)		(23)		(167)		(8)		-		1,718
Brumadinho event and de-characterization of dams		-		-		(776)		-		-		-		(776)
Other (i)		463		(381)		(489)		(144)		(2)		23		(530)
Total of continuing operations		31,898		(14,699)		(1,433)		(442)		(289)		99		15,134
Discontinued operations - Coal		448		(264)		(12)		(1)		-		-		171
Total		32,346		(14,963)		(1,445)		(443)		(289)		99		15,305

 

(i) Includes the reclassification of the EBITDA of Midwestern System in the amount of US$77.

		Nine-month period ended September 30, 2021
		Net operating revenue		Cost of goods sold and services rendered		Sales, administrative and other operating expenses		Research and development		Pre operating and operational stoppage		Dividends received and interest from associates and joint ventures		Adjusted EBITDA
Ferrous minerals
Iron ore		29,559		(7,764)		(114)		(129)		(226)		-		21,326
Iron ore pellets		5,164		(1,515)		29		(2)		(36)		22		3,662
Other ferrous products and services		432		(308)		2		(2)		(12)		-		112
		35,155		(9,587)		(83)		(133)		(274)		22		25,100
Base metals
Nickel and other products		3,822		(2,512)		22		(49)		(112)		-		1,171
Copper		1,920		(637)		(7)		(62)		(3)		-		1,211
		5,742		(3,149)		15		(111)		(115)		-		2,382
Brumadinho event and de-characterization of dams		-		-		(461)		-		-		-		(461)
COVID-19		-		-		(28)		-		-		-		(28)
Other (i)		500		(425)		(346)		(128)		(3)		26		(376)
Total of continuing operations		41,397		(13,161)		(903)		(372)		(392)		48		26,617
Discontinued operations - Coal		605		(966)		(3)		(5)		-		78		(291)
Total		42,002		(14,127)		(906)		(377)		(392)		126		26,326

 

(i) Includes the reclassification of the EBITDA of Midwestern System in the amount of US$120.

 

Adjusted EBITDA is reconciled to net income as follows:

 

Continuing operations

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Net income from continuing operations attributable to Vale's stockholders		4,455		5,477		13,004		19,384
Net income (loss) attributable to noncontrolling interests		(11)		29		63		53
Net income		4,444		5,506		13,067		19,437
Depreciation, depletion and amortization		775		649		2,271		2,212
Income taxes		804		461		3,806		4,344
Financial results		(2,347)		350		(2,926)		39
Equity results and other results in associates and joint ventures		(78)		(128)		(233)		316
Dividends received from associates and joint ventures		28		5		99		48
Impairment and disposals (impairment reversal) of non-current assets, net		40		63		(950)		221
Adjusted EBITDA from continuing operations		3,666		6,906		15,134		26,617

 

Discontinued operations (Coal)

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Net income (loss) from discontinued operations attributable to Vale's stockholders		-		(1,591)		2,060		(2,366)
Net income (loss) attributable to noncontrolling interests		-		43		-		(99)
Net income (loss)		-		(1,548)		2,060		(2,465)
Depreciation, depletion and amortization		-		51		-		68
Income taxes		-		(821)		2		(821)
Financial results		-		23		(3,065)		(363)
Derecognition of noncontrolling interest		-		-		585		-
Equity results in associates and joint ventures		-		-		-		26
Dividends received and interest from associates and joint ventures (i)		-		-		-		78
Impairment of non-current assets, net		-		2,327		589		3,186
Adjusted EBITDA from discontinued operations		-		32		171		(291)

 

(i) Includes the remuneration of the financial instrument of the Coal segment.

 

b)       Assets by segment

 

		September 30, 2022						December 31, 2021
		Product inventory		Investments in associates and joint ventures		Property, plant and equipment and intangible		Product inventory		Investments in associates and joint ventures		Property, plant and equipment and intangible
Ferrous minerals		2,715		1,258		30,892		2,186		1,113		28,988
Base metals		1,612		-		18,694		1,384		17		20,127
Other		-		537		1,954		21		621		1,827
Total		4,327		1,795		51,540		3,591		1,751		50,942

 

		Three-month period ended September 30,
		2022						2021
		Capital expenditures						Capital expenditures
		Sustaining capital (i)		Project execution		Depreciation, depletion and amortization		Sustaining capital (i)		Project execution		Depreciation, depletion and amortization
Ferrous minerals		497		200		442		583		136		408
Base metals		341		81		325		325		113		227
Other (ii)		17		94		8		6		36		14
Total		855		375		775		914		285		649

 

 

 

		Nine-month period ended September 30,
		2022						2021
		Capital expenditures						Capital expenditures
		Sustaining capital (i)		Project execution		Depreciation, depletion and amortization		Sustaining capital (i)		Project execution		Depreciation, depletion and amortization
Ferrous minerals		1,473		581		1,355		1,639		331		1,246
Base metals		954		238		880		973		250		911
Other (ii)		71		342		36		23		66		55
Total		2,498		1,161		2,271		2,635		647		2,212

 

(i) According to the Company's remuneration policy, the sustaining capital investments are deducted from the 30% of the adjusted EBITDA. The calculation also considers the current investment of discontinued coal operations, which was US$38 for the nine-month period ended September 30, 2022 (2021: US$114).

(ii) The sustaining capital investments related to the Midwestern System were reclassified from “ferrous minerals” to “other” for the three and nine-month periods ended September 30, 2021 in the amounts of US$5 and US$10, respectively. Depreciation, depletion and amortization were reclassified for the same periods in the amounts of US$4 and US$18, respectively.

 

c) Assets by geographic area

 

		September 30, 2022								December 31, 2021
		Investments in associates and joint ventures		Intangible		Property, plant and equipment		Total		Investments in associates and joint ventures		Intangible		Property, plant and equipment		Total
Brazil		1,795		7,525		25,907		35,227		1,730		7,050		23,793		32,573
Canada		-		1,817		10,748		12,565		-		1,958		12,441		14,399
Americas, except Brazil and Canada		-		-		4		4		-		-		3		3
Europe		-		-		752		752		-		-		739		739
Indonesia		-		1		2,696		2,697		-		1		2,723		2,724
Asia, except Indonesia and China		-		-		794		794		21		-		874		895
China		-		1		19		20		-		2		21		23
Oman		-		-		1,276		1,276		-		-		1,337		1,337
Total		1,795		9,344		42,196		53,335		1,751		9,011		41,931		52,693

 

d) Net operating revenue by geographic area

 

The sales revenue from Ferrous minerals for the three and nine-month periods ended September 30, 2022, decreased from prior periods mainly due to the decline of 27% in the average realized price of iron ore for both periods, following the decrease in the international price of this product.

 

		Three-month period ended September 30, 2022
		Ferrous minerals		Base metals		Other		Total
Americas, except United States and Brazil		127		140		-		267
United States of America		102		321		-		423
Germany		91		286		-		377
Europe, except Germany		318		665		-		983
Middle East, Africa, and Oceania		629		10		-		639
Japan		689		168		-		857
China		4,337		303		-		4,640
Asia, except Japan and China		653		132		-		785
Brazil		881		17		60		958
Net operating revenue		7,827		2,042		60		9,929

 

		Three-month period ended September 30, 2021
		Ferrous minerals		Base metals		Other (i)		Total
Americas, except United States and Brazil		201		80		27		308
United States of America		71		274		-		345
Germany		176		174		-		350
Europe, except Germany		546		430		-		976
Middle East, Africa, and Oceania		553		5		-		558
Japan		1,293		143		-		1,436
China		5,361		241		-		5,602
Asia, except Japan and China		953		220		-		1,173
Brazil		1,412		7		163		1,582
Net operating revenue		10,566		1,574		190		12,330

 

(i) Includes the reclassification of the revenues of Midwestern System in the amount of US$112.

 

		Nine-month period ended September 30, 2022
		Ferrous minerals		Base metals		Other (i)		Total
Americas, except United States and Brazil		393		417		125		935
United States of America		176		1,034		-		1,210
Germany		312		888		-		1,200
Europe, except Germany		1,460		1,588		-		3,048
Middle East, Africa, and Oceania		1,779		19		26		1,824
Japan		2,171		561		-		2,732
China		14,338		793		-		15,131
Asia, except Japan and China		1,963		500		47		2,510
Brazil		2,994		49		265		3,308
Net operating revenue		25,586		5,849		463		31,898

 

		Nine-month period ended September 30, 2021
		Ferrous minerals		Base metals		Other (i)		Total
Americas, except United States and Brazil		578		304		121		1,003
United States of America		330		847		-		1,177
Germany		499		1,103		-		1,602
Europe, except Germany		2,125		1,717		-		3,842
Middle East, Africa, and Oceania		1,496		12		-		1,508
Japan		2,763		358		-		3,121
China		20,819		665		-		21,484
Asia, except Japan and China		2,722		693		-		3,415
Brazil		3,823		43		379		4,245
Net operating revenue		35,155		5,742		500		41,397

 

(i) Includes the reclassification of the revenues of Midwestern System in the amount of US$231 for the nine-month period ended September 30, 2022 (US$325 for the nine-month period ended September 30, 2021).

 

 

5.       Costs and expenses by nature

 

a)    Cost of goods sold, and services rendered

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Personnel		454		353		1,292		1,163
Materials and services (i)		958		700		2,492		2,057
Fuel oil and gas (i)		497		246		1,134		671
Maintenance		755		698		2,188		2,071
Royalties		245		395		733		998
Energy		188		160		520		460
Acquisition of products		763		634		1,898		1,668
Depreciation, depletion and amortization		752		603		2,174		2,074
Freight		1,315		1,176		3,317		2,949
Other		374		507		1,125		1,124
Total		6,301		5,472		16,873		15,235
Cost of goods sold		6,150		5,312		16,439		14,799
Cost of services rendered		151		160		434		436
Total		6,301		5,472		16,873		15,235

 

(i) The increase in costs is mainly due to higher fuel prices and inflation of other inputs and services during the three and nine-month periods ended September 30, 2022.

 

b)  Selling and administrative expenses

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Selling		16		24		59		65
Personnel		42		29		140		128
Services		28		29		80		68
Depreciation and amortization		9		11		32		30
Other		24		21		56		59
Total		119		114		367		350

 

c) Other operating expenses, net

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Asset retirement obligations		-		-		40		-
Provision for litigations (note 25)		32		23		96		67
Profit sharing program		26		30		93		105
Other		(7)		(22)		93		(51)
Total		51		31		322		121

 

The breakdown of Research and Development expenses by operating segment is presented in note 4 (a).

 

6.        Financial results

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Financial income
Short-term investments		119		70		369		138
Other		22		20		59		86
		141		90		428		224
Financial expenses
Loans and borrowings gross interest		(140)		(156)		(463)		(504)
Capitalized loans and borrowing costs		9		14		40		44
Interest on REFIS		(42)		(17)		(113)		(34)
Interest on lease liabilities (note 20d)		(15)		(14)		(47)		(47)
Bond premium repurchase (note 20d)		-		-		(113)		(63)
Other		(33)		(67)		(192)		(247)
		(221)		(240)		(888)		(851)
Other financial items, net
Net foreign exchange gains (losses)		201		372		(151)		323
Participative stockholders' debentures (note 19) (i)		470		152		758		(1,107)
Financial guarantees (i)		-		(34)		479		330
Derivative financial instruments (note 17)		190		(458)		781		(41)
Reclassification of cumulative translation adjustments to the income statement (notes 13 and 14)		1,608		10		1,608		1,128
Indexation losses, net		(42)		(242)		(89)		(45)
		2,427		(200)		3,386		588
Total		2,347		(350)		2,926		(39)

 

(i) These lines were reclassified from the prior period in order to present “Financial expenses” and “Other financial items, net” in similar line items from period to period.

 

a) Financial guarantees

As of September 30, 2022, the total guarantees granted by the Company (within the limit of its direct or indirect interest) to certain associates and joint ventures totaled US$1,491 (December 31, 2021: US$1,513). The fair value of these financial guarantees in the amount of US$101 (December 31, 2021: US$542) is recorded as “Other non-current liabilities”.

 

 

7.        Taxes

 

a) Deferred income tax assets and liabilities

 

 

		Assets		Liabilities		Deferred taxes, net
Balance at December 31, 2021		11,441		1,881		9,560
Tax effect in the income statement		(1,881)		(23)		(1,858)
Translation adjustment		375		(100)		475
Other comprehensive income		74		62		12
Transfers between assets and liabilities		(184)		(184)		-
Sale of California Steel Industries (note 14)		-		(28)		28
Balance at September 30, 2022		9,825		1,608		8,217
		Assets		Liabilities		Deferred taxes, net
Balance at December 31, 2020		10,335		1,770		8,565
Tax effect in the income statement		812		(24)		836
Transfers between assets and liabilities		7		7		-
Translation adjustment		(452)		(4)		(448)
Other comprehensive income		(121)		179		(300)
Tax loss carryforward from coal operations (note 14)		821		-		821
Balance at September 30, 2021		10,581		1,928		8,653

 

b)    Income tax reconciliation – Income statement

 

Income tax expense is recognized based on the estimate of the weighted average effective tax rate expected for the full year, adjusted for the tax effect of certain items that are recognized in full on the interim tax calculation. Therefore, the effective tax rate in the interim financial statements may differ from management’s estimate of the effective tax rate for the year.

 

The total amount presented as income taxes in the income statement is reconciled to the statutory rate, as follows:

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Income before income taxes		5,248		5,967		16,873		23,781
Income taxes at statutory rate – 34%		(1,784)		(2,029)		(5,736)		(8,086)
Adjustments that affect the taxes basis:
Tax incentives		479		971		1,538		2,589
Equity results		28		68		58		103
Monetary exchange variation on tax losses carryforward		(56)		120		(500)		81
Other (i)		529		409		834		969
Income taxes		(804)		(461)		(3,806)		(4,344)

 

(i) Refers mainly to the reclassifications of accumulated translation adjustments to income for the periods presented (notes 13 and 14).

 

c) Income taxes - Settlement program (“REFIS”)

 

		September 30, 2022		December 31, 2021
Current liabilities		351		324
Non-current liabilities		1,861		1,964
REFIS liabilities		2,212		2,288
SELIC rate		13.75%		9.25%

 

It mainly relates to the settlement program of claims regarding the collection of income tax and social contribution on equity gains of foreign subsidiaries and affiliates from 2003 to 2012. This amount bears SELIC interest rate (Special System for Settlement and Custody) and will be paid in monthly installments until October 2028.

d) Uncertain tax positions

 

There have been no relevant developments on matters related to the uncertain tax positions since the December 31, 2021 financial statements.

 

e) Recoverable and payable taxes

		September 30, 2022						December 31, 2021
		Current assets		Non-current assets		Current liabilities		Current assets		Non-current assets		Current liabilities
Value-added tax		280		-		29		217		11		162
Brazilian federal contributions		452		677		53		520		511		12
Income taxes		115		437		82		113		413		1,861
Financial compensation for the exploration of mineral resources - CFEM		-		-		65		-		-		59
Other		11		-		74		12		-		83
Total		858		1,114		303		862		935		2,177

 

 

8.        Basic and diluted earnings (loss) per share

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Net income attributable to Vale's stockholders:
Net income from continuing operations		4,455		5,477		13,004		19,384
Net income (loss) from discontinued operations		-		(1,591)		2,060		(2,366)
		4,455		3,886		15,064		17,018
In thousands of shares
Weighted average number of common shares outstanding		4,549,205		5,080,890		4,674,248		5,065,750
Weighted average number of common shares outstanding and potential ordinary shares		4,553,843		5,085,314		4,678,886		5,070,174
Basic and diluted earnings per share from continuing operations:
Common share (US$)		0.98		1.08		2.78		3.83
Basic and diluted earnings (loss) per share from discontinued operations:
Common share (US$)		-		(0.31)		0.44		(0.47)
Basic and diluted earnings per share:
Common share (US$)		0.98		0.76		3.22		3.36

 

9.       Accounts receivable

 

		September 30, 2022		December 31, 2021
Receivables from contracts with customers
Related parties (note 28)		135		109
Third parties
Ferrous minerals		1,421		3,023
Base metals		611		668
Other		22		162
Accounts receivable		2,189		3,962
Expected credit loss		(39)		(48)
Accounts receivable, net		2,150		3,914

 

No customer individually represented 10% or more of the Company’s accounts receivable or revenues for the periods presented in these interim financial statements.

 

Provisionally priced commodities sales – The commodity price risk arises from volatility of iron ore, nickel and copper prices. The Company is mostly exposed to the fluctuations in the iron ore and copper price (note 17). The selling price of these products can be measured reliably at each period since the price is quoted in an active market.

 

The sensitivity of the Company’s risk on final settlement of provisionally priced accounts receivables are presented below:

 

		September 30, 2022
		Thousand metric tons		Provisional price (US$/ton)		Change		Effect on revenue
Iron ore		17,271		91.9		+/- 10%		+/- 159
Iron ore pellets		76		136.2		+/- 10%		+/- 1
Copper		81		9,652.0		+/- 10%		+/- 79

 

 

10.       Inventories

 

		September 30, 2022		December 31, 2021
Finished products		3,489		2,795
Work in progress		862		820
Consumable inventory		1,022		857
Allowance to net realizable value		(105)		(95)
Total		5,268		4,377

 

Finished and work in progress products inventories by segments are presented in note 4(b) and the cost of goods sold is presented in note 5(a).

 

 

11.        Suppliers and contractors

 

		September 30, 2022		December 31, 2021
Third parties - Brazil		2,258		1,766
Third parties - Abroad		2,120		1,618
Related parties (note 28)		357		91
Total		4,735		3,475

 

12.        Other financial assets and liabilities

 

		Current				Non-current
		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Other financial assets
Restricted cash		-		-		78		117
Derivative financial instruments (note 17a)		152		111		152		20
Investments in equity securities		-		-		6		6
		152		111		236		143
Other financial liabilities
Derivative financial instruments (note 17a)		103		243		271		592
Other financial liabilities - Related parties (note 28)		136		393		-		-
Financial guarantees provided (note 6a) (i)		-		-		101		542
Liabilities related to the concession grant		693		760		1,576		1,437
Contract liability		534		566		-		-
		1,466		1,962		1,948		2,571

 

(i) In July 2022, the Company signed a binding agreement with ArcelorMittal for the sale of CSP. At the closing, CSP's debt will be settled and the financial liability related to the guarantee granted will be derecognised by Vale.

 

a) Liabilities related to the concession grant

 

On April 14, 2022, the Company prepaid US$168 of its concession grant obligation related to the Estrada de Ferro Carajás ("EFC") as approved by the Board of Directors on October 28, 2021. The outstanding balance will be settled in quarterly installments until 2057.

 

				Liability				Discount rate
		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021
Concession grant		725		586		11.04%		11.04%
Midwestern Integration Railway ("FICO")		1,176		1,206		5.69%		5.29%
Infrastructure program		342		343		5.65%		5.43%
West-East Integration Railway ("FIOL")		26		62		8.72%		5.81%
Total		2,269		2,197

 

13.       Investments in subsidiaries, associates and joint ventures

 

 

						Investments in associates and joint ventures				Equity results in the income statement								Dividends received
										Three-month period ended September 30,				Nine-month period ended September 30,				Three-month period ended September 30,				Nine-month period ended September 30,
Associates and joint ventures		% ownership		% voting capital		September 30, 2022		December 31, 2021		2022		2021		2022		2021		2022		2021		2022		2021
Ferrous minerals
Baovale Mineração S.A.		50.00		50.00		23		21		1		1		2		4		1		-		1		-
Companhia Coreano-Brasileira de Pelotização		50.00		50.00		86		51		15		15		37		30		-		-		10		2
Companhia Hispano-Brasileira de Pelotização		50.89		50.89		44		38		11		1		11		1		4		-		5		7
Companhia Ítalo-Brasileira de Pelotização		50.90		51.00		68		48		11		16		24		29		-		-		19		6
Companhia Nipo-Brasileira de Pelotização		51.00		51.11		146		129		11		15		33		28		-		-		41		7
MRS Logística S.A.		48.16		46.75		480		418		22		33		52		69		-		-		-		-
Samarco Mineração S.A. (note 22)		50.00		50.00		-		-		-		-		-		-		-		-		-		-
VLI S.A.		29.60		29.60		411		408		9		(23)		(11)		(31)		-		-		-		-
						1,258		1,113		80		58		148		130		5		-		76		22
Base metals
Korea Nickel Corporation		25.00		25.00		-		17		-		-		3		-		-		-		-		-
						-		17		-		-		3		-		-		-		-		-
Other
Aliança Geração de Energia S.A.		55.00		55.00		379		367		9		41		25		58		23		5		23		26
Aliança Norte Energia Participações S.A.		51.00		51.00		104		105		(2)		-		(5)		(3)		-		-		-		-
California Steel Industries, Inc. ("CSI") (note 14)		50.00		50.00		-		-		-		104		-		165		-		-		65		-
Companhia Siderúrgica do Pecém ("CSP") (note 14)		50.00		50.00		-		99		-		-		-		(42)		-		-		-		-
Mineração Rio do Norte S.A.		40.00		40.00		-		-		-		(3)		-		(5)		-		-		-		-
Other		-		-		54		50		-		(2)		3		-		-		-		-		-
						537		621		7		140		23		173		23		5		88		26
Total						1,795		1,751		87		198		174		303		28		5		164		48

a) Changes in the period

 

		2022		2021
Balance at January 1,		1,751		2,031
Translation adjustment		51		(82)
Equity results		174		303
Impairment of CSP		(111)		-
Dividends declared		(52)		(132)
Other		(18)		5
Balance at September 30,		1,795		2,125

 

Capital reduction in a foreign subsidiary – In August 2022, the Company approved a capital reduction in the amount of US$1,500 of Vale International S.A. (“VISA”), a wholly-owned foreign subsidiary, leading to a reduction in the absolute value of the investment held by the Parent Company. Therefore, the return of capital received in September 2022 was determined as a partial disposal and, in accordance with the requirements of IAS 21, the exchange differences recorded in the stockholders’ equity were reclassified to the income statement in the same proportion as the reduction in the net investment held in VISA, leading to a gain of US$1,543 presented as “Other financial items, net” (note 6). The remaining balance of cumulative translation adjustments of VISA represents US$4,487 as of September 30, 2022.

 

 

14.       Acquisitions and divestitures

 

		Nine-month period ended September 30, 2022
		Cumulative translation adjustments						Result of the transaction
		Other financial items, net		Equity results and other results in associates and joint ventures		Total recycling from OCI		Impairment reversal (impairment) of non-current assets		Equity results and other results in associates and joint ventures
Midwestern System		37		-		37		1,121		-
California Steel Industries		-		150		150		-		142
Companhia Siderúrgica do Pecém (i)		-		-		-		-		(135)
Other		28		-		28		3		(9)
		65		150		215		1,124		(2)
Discontinued operations (Coal)		3,072		-		3,072		(589)		-
		3,137		150		3,287		535		(2)

(i) Includes impairment of the investment in the amount of US$111 and a provision for accounts receivable with CSP in the amount of US$24.

		Nine-month period ended September 30, 2021
		Cumulative translation adjustments						Result of the transaction
		Other financial items, net		Equity results and other results in associates and joint ventures		Total recycling from OCI		Impairment of non-current assets		Equity results and other results in associates and joint ventures
Midwestern System		-		-		-		-		-
Vale Nouvelle-Calédonie S.A.S.		1,132		-		1,132		(98)		-
Vale Manganês		-		-		-		(28)		-
Other		(4)		-		(4)		-		(70)
		1,128		-		1,128		(126)		(70)
Discontinued operations (Coal)		424		-		424		(3,186)		-
		1,552		-		1,552		(3,312)		(70)

 

Midwestern System - During the first quarter of 2022, the Company classified the assets and liabilities related to the Midwestern System as held for sale due to the negotiations with interested parties in Vale’s iron ore, manganese and logistics assets in the Midwestern System, through its equity interests in Mineração Corumbaense Reunida S.A., Mineração Mato Grosso S.A., International Iron Company, Inc. and Transbarge Navegación S.A. These negotiations resulted in the execution of a binding agreement with J&F Mineração Ltda. (“J&F”) for the sale of these assets, which was signed on April 6, 2022.

 

The carrying amount of those assets were fully impaired in past years and the Company had a liability related to take-or-pay logistics contracts in the amount of US$932 that were deemed onerous contracts under the Company’s business model for the Midwestern System, which had negative reserves of US$892 before reclassification to “Non-current assets and liabilities held for sale”.

 

These offers received during the sale process of the assets represented an objective evidence of impairment reversal and the remeasurement of the existing provision, which led to a gain of US$1,121 recorded as “Impairment reversal (impairment and disposals) of non-current assets, net”, of which US$214 relates to the impairment reversal on the Property, plant and equipment and US$916 is due to the remeasurement of the onerous contract liability, partially offset by losses in working capital adjustments at the closing of the transaction in the amount of US$9.

 

On July 15, 2022, the transaction was completed and the Company received US$153 and recorded a gain of US$37, as the reclassification of the cumulative translation adjustments from the stockholders’ equity to the income statement.

 

California Steel Industries (“CSI”) - In December 2021, the Company entered into a binding agreement with Nucor Corporation (“Nucor”) for the sale of its 50% interest in CSI for US$437. In February 2022, the Company concluded the sale and recorded a gain of US$292 for the nine-month period ended September 30, 2022, as “Equity results and other results in associates and joint ventures”, of which US$142 relates to a gain from the sale and US$150 is due to the reclassification of the cumulative translation adjustments from the stockholders’ equity to the income statement.

 

Sale of Companhia Siderúrgica do Pecém (“CSP”) - In July 2022, the Company and the other shareholders of CSP signed a binding agreement with ArcelorMittal Brasil S.A. (“ArcelorMittal”) for the sale of CSP for approximately US$2,132. The completion of the transaction will be used in full for the prepayment of CSP’s outstanding net debt of approximately US$2,300, as the Company has already recognized an impairment loss of US$135 for the nine-month period ended September 30, 2022. The Company does not expect any material impact at closing, which is expected to occur in the first quarter 2023, subject to customary regulatory approvals.

 

Manganese ferroalloys operations in Minas Gerais - In January 2022, the Company completed the sale of its ferroalloys operations in Barbacena and Ouro Preto and its manganese mining operations at Morro da Mina, in the state of Minas Gerais, to VDL Group (“VDL”) for a total consideration of US$40. As the Company had already adjusted the net assets to the fair value less cost of disposal, the closing did not result in an additional impact on the income statement for the nine-month period ended September 30, 2022 (2021: impairment of US$28). As a result, the Company no longer has manganese ferroalloys operations.

 

Vale Nouvelle-Calédonie S.A.S. (“VNC”) - In December 2020, the Company signed a binding put option agreement to sell its interest in VNC for an immaterial consideration to Prony Resources consortium. With the final agreement signed in March 2021, the Company recorded a loss in the amount of US$98, presented as “Impairment reversal (impairment and disposals) of non-current assets, net” in the income statement for the nine-month period ended September 30, 2021. In the same period, the Company also recorded a gain of US$1,132 due to the cumulative translation adjustments reclassification from the stockholders’ equity to the income statement as “Other financial items, net”.

 

Discontinued operations (Coal) - In June 2021, in preparation for a sale of the coal operation, in connection with the sustainable strategic mining agenda, the Company carried out a corporate reorganization by acquiring the interests held by Mitsui in the coal assets, which consist of Moatize mine and the Nacala Logistics Corridor (“NLC”). Following the acquisition of Mitsui’s stakes, and therefore, the simplification of the governance, the Company started the process of divesting its participation in the coal business.

 

In December 2021, the Company entered into a binding agreement with Vulcan Resources (formerly known as Vulcan Minerals - “Vulcan”) for the sale of these assets. Under the sale agreement Vulcan has committed to pay the gross amount of US$270, in addition of a 10-year royalty agreement subject to certain mine production and coal price conditions and so, due to the nature and uncertainties related to the measurement of these royalties, gains will be recognized as incurred.

 

Therefore, in 2021 the Company adjusted the net assets of the coal business to the fair value less costs of disposal, resulting in impairment losses, and started presenting the coal segment as a discontinued operation starting from the year ended December 31, 2021.

 

On April 25, 2022, the transaction was completed and the Company recorded a net income from discontinued operations of US$2,060 for the nine-month period ended September 30, 2022, which is mainly driven by the reclassification of the cumulative translation adjustments of US$3,072, from the stockholders’ equity to the income statement, as required by IAS 21 - The Effects of Changes in Foreign Exchange Rates, partially offset by the derecognition of noncontrolling interest of US$585 due to the deconsolidation of the coal assets. Additionally, until the closing of the transaction, the Company recorded losses of US$589 due to the impairment of assets acquired in the period and working capital adjustments. These effects are presented below:

 

(a) Net income and cash flows from discontinued operations

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Net income from discontinued operations
Net operating revenue		-		352		448		605
Cost of goods sold and services rendered		-		(364)		(264)		(1,033)
Operating expenses		-		(7)		(13)		(9)
Impairment and disposals of non-current assets, net		-		(2,327)		(589)		(3,186)
Operating loss		-		(2,346)		(418)		(3,623)
Cumulative translation adjustments (i)		-		-		3,072		424
Other financial results, net		-		(23)		(7)		(61)
Derecognition of noncontrolling interest		-		-		(585)		-
Equity results in associates and joint ventures		-		-		-		(26)
Net income (loss) before income taxes		-		(2,369)		2,062		(3,286)
Income taxes		-		821		(2)		821
Net income (loss) from discontinued operations		-		(1,548)		2,060		(2,465)
Net income (loss) attributable to noncontrolling interests		-		43		-		(99)
Net income (loss) attributable to Vale's stockholders		-		(1,591)		2,060		(2,366)

 

(i) In 2021, the Company assessed that its Australian subsidiaries (part of the coal business), which were no longer operational, were considered "abandoned" under IAS 21 and, therefore, the Company recognized a gain related to the cumulative translation adjustments in the amount of US$424, which was reclassified to the net income for the nine-month period ended September 30, 2021.

 

		Three-month period ended September 30,				Nine-month period ended September 30,
		2022		2021		2022		2021
Cash flow from discontinued operations
Operating activities
Net income (loss) before income taxes		-		(2,369)		2,062		(3,286)
Adjustments:
Equity results in associates and joint ventures		-		-		-		26
Impairment and disposals of non-current assets, net		-		2,327		589		3,186
Derecognition of noncontrolling interest		-		-		585		-
Financial results, net		-		23		(3,065)		(363)
Decrease in assets and liabilities		-		74		(130)		31
Net cash generated (used) by operating activities		-		55		41		(406)
Investing activities
Additions to property, plant and equipment		-		(49)		(38)		(114)
Acquisition of NLC, net of cash		-		-		-		(2,345)
Disposal of coal, net of cash				-		(65)		-
Other		-		-		-		71
Net cash used in investing activities		-		(49)		(103)		(2,388)
Financing activities
Payments		-		(3)		(11)		(10)
Net cash used in financing activities		-		(3)		(11)		(10)
Net cash generated (used) by discontinued operations		-		3		(73)		(2,804)

 

15.       Intangible

		Goodwill		Concessions		Software		Research and development project and patents		Total
Balance at December 31, 2021		3,208		5,223		86		494		9,011
Additions		-		443		25		-		468
Disposals		-		(12)		-		-		(12)
Amortization		-		(175)		(32)		-		(207)
Translation adjustment		(93)		159		2		16		84
Balance at September 30, 2022		3,115		5,638		81		510		9,344
Cost		3,115		6,920		536		510		11,081
Accumulated amortization		-		(1,282)		(455)		-		(1,737)
Balance at September 30, 2022		3,115		5,638		81		510		9,344
		Goodwill		Concessions		Software		Research and development project and patents		Total
Balance at December 31, 2020		3,298		5,391		76		531		9,296
Additions		-		121		22		-		143
Disposals		-		(4)		-		-		(4)
Amortization		-