Rio de Janeiro, October 19th,
2020 – Vale S.A. (“Vale”) is evolving with its stabilization plan and
delivered a strong iron ore production in 3Q20. Nickel and Copper
businesses managed to recover productivity for a solid start in 4Q20,
after normalizing routine maintenance in the quarter. Results were
enabled by the workforce commitment to the company’s safety standards
and strict operational discipline, following the continuous
implementation of the Vale Production System (VPS).
Vale’s iron ore fines
production totalled 88.7 Mt, an increase of 21.1 Mt compared to the
previous quarter. The production record of 56.9 Mt in a quarter was
reached in the Northern System, with August as the best month with 19.7
Mt. S11D had a record production in September, with 8.3Mt, and in the
quarter, with 24.4 Mt.
The Southern and Southeastern
Systems overall performance improved across operating units, notably in
the Itabira Complex and Timbopeba site (running for a full quarter given
the resumption in June) and with the resumption of operations at
Fazendão mine in July.
Iron ore production was
maintained at around 1 Mtpd after mid-July, showing consistency and
stability throughout almost the entire quarter. Operations have achieved
increased rates and stability with safety, based on the progressive
implementation of the VPS and measures like the Safe Work Permission
(PTS), which are essential to transform Vale’s culture into one driven
to safety and operational excellence. All operations were also favoured
by regular weather conditions for the period.
Vale’s pellet production
totalled 8.6 Mt in 3Q20, up 21.1%, mainly due to higher availability of
pellet feed, especially from the Itabira Complex, and improved
operational performance at the pelletizing plants.
Sales volumes of iron ore fines
and pellets, with a premium of US$ 4.6/t3, reached 74.2 Mt in 3Q20, an
increase of 20.4%. The logistics lead time between production and CFR
sales started to normalize in September, as Vale was transiting
inventories across its supply chain, with total sales of 28.6 Mt, and
the performance is expected to improve even further in 4Q20, subject to
Vale’s approach based on margin maximization, prioritizing blended
products in the company’s portfolio.
T1: Production summary
000’ metric tons |
3Q20 |
2Q20 |
3Q19 |
9M20 |
9M19 |
%
change |
3Q20/2Q20 |
3Q20/3Q19 |
9M20/9M19 |
Iron
ore1 |
88,676 |
67,598 |
86,704 |
215,877 |
223,628 |
31.2% |
2.3% |
-3.5% |
Pellets |
8,562 |
7,070 |
11,133 |
22,559 |
32,378 |
21.1% |
-23.1% |
-29.5% |
1. Including third party
purchases, run-of-mine and feed for pelletizing plants.
T2: Sales summary
000’ metric tons |
3Q20 |
2Q20 |
3Q19 |
9M20 |
9M19 |
%
change |
3Q20/2Q20 |
3Q20/3Q19 |
9M20/9M19 |
Iron
ore |
65,769 |
54,615 |
74,039 |
172,040 |
191,400 |
20.4% |
-11.2% |
-10.1% |
Pellets |
8,464 |
6,950 |
11,077 |
22,725 |
32,233 |
21.8% |
-23.6% |
-29.5% |
T3:
Iron Ore Production & Sales by Mines
000’
metric tons |
3Q20 |
2Q20 |
3Q19 |
9M20 |
9M19 |
%
change |
3Q20/2Q20 |
3Q20/3Q19 |
9M20/9M19 |
Northern System |
56,850 |
42,463 |
55,401 |
139,213 |
137,992 |
33.9% |
2.6% |
0.9% |
Serra
Norte and Serra Leste |
32,459 |
24,319 |
35,047 |
78,258 |
83,914 |
33.5% |
-7.4% |
-6.7% |
S11D |
24,391 |
18,144 |
20,354 |
60,955 |
54,078 |
34.4% |
19.8% |
12.7% |
Southeastern System |
16,307 |
12,721 |
20,695 |
40,817 |
56,129 |
28.2% |
-21.2% |
-27.3% |
Itabira (Cauê, Conceição and others) |
6,465 |
5,324 |
9,836 |
17,796 |
27,902 |
21.4% |
-34.3% |
-36.2% |
Minas
Centrais (Brucutu and others) |
4,394 |
4,190 |
8,849 |
12,233 |
19,283 |
4.9% |
-50.3% |
-36.6% |
Mariana (Alegria, Timbopeba and others) |
5,448 |
3,207 |
2,010 |
10,788 |
8,944 |
69.9% |
171.0% |
20.6% |
Southern System |
14,930 |
11,768 |
9,806 |
34,054 |
27,753 |
26.9% |
52.3% |
22.7% |
Paraopeba (Mutuca, Fábrica and others) |
7,064 |
5,873 |
7,109 |
16,585 |
19,640 |
20.3% |
-0.6% |
-15.6% |
Vargem
Grande (Vargem Grande, Pico and others) |
7,866 |
5,895 |
2,697 |
17,469 |
8,113 |
33.4% |
191.7% |
115.3% |
Midwestern System |
589 |
645 |
802 |
1,793 |
1,754 |
-8.7% |
-26.6% |
2.2% |
Corumbá |
589 |
645 |
802 |
1,793 |
1,754 |
-8.7% |
-26.6% |
2.2% |
IRON ORE PRODUCTION1 |
88,676 |
67,598 |
86,704 |
215,877 |
223,628 |
31.2% |
2.3% |
-3.5% |
IRON ORE SALES2 |
65,769 |
54,615 |
74,039 |
172,040 |
191,400 |
20.4% |
-11.2% |
-10.1% |
IRON ORE AND PELLETS SALES |
74,233 |
61,565 |
85,116 |
194,765 |
223,633 |
20.6% |
-12.8% |
-12.9% |
1. Including third party purchases, run-of-mine and
feed for pelletizing plants.
2. Including third party purchases and run-of-mine.
Northern System
The Northern System, which is
comprised of Serra Norte, Serra Leste and S11D mines, produced 56.9 Mt
in 3Q20, a record level for a quarter, mainly due to (i) a strong and
record
performance of S11D, (ii) a
15-day maintenance in June and July in Serra Norte, which, despite the
production losses in the beginning of the quarter, permitted the
increase of site’s productivity, and (iii) better weather in the region,
with lower rainfall levels4, guaranteeing more stability in production.
The license and permit necessary
to resume operations of Serra Leste are expected to be granted shortly
and, after that, maintenances will be carried out to safely resume
operations until the end of 2020. Serra Leste operations have been
halted since January 2019 and its resumption will add up to 6 Mtpy of
production capacity.
Southeastern System
The Southeastern System, which
encompasses the Itabira, Minas Centrais and Mariana mining hubs,
achieved a solid production of 16.3 Mt in 3Q20, despite the restrictions
related to tailings disposal, limiting sites’ capacity. The increased
production level in the quarter was mainly due to (i) the absence of
COVID-19-related impacts, which caused a temporary stoppage of 12-day of
Itabira Complex in June and 1 Mt of production loss, (ii) Timbopeba site
operations, which restarted in June with 4 Mtpy capacity running in a
full quarter, (iii) the resumption of Fazendão mine operations in July,
after the granting of license to expand the mining area on the site, and
(iv) usual weather-related seasonality.
Southern System
The Southern System, which
encompasses the Paraopeba and Vargem Grande mining hubs, produced 14.9
Mt in 3Q20. The increase of production compared with 2Q20 was achieved
mainly due to (i) higher production in Vargem Grande complex, after the
partial resumption of wet processing production in 2Q20 with tailings
filtration, using the Maravilhas I dam and Cianita waste dump as a
preliminary solution for tailings disposal, and (ii) seasonally higher
third-party purchases.
Operational stabilization and
resumption plan
As presented in the 2020 Analyst
and Investor Tour presentation, Vale has a set of solutions and new
assets for unlocking and resuming capacities in its sites, which are
under implementation in collaboration with the National Mining Agency
(ANM), the Public Prosecutor’s Office of the Minas Gerais State (MPMG)
and the external audit firms.
|
Actions in progress |
Accomplishments in 3Q20 |
Timeline for resumption |
Northern System |
·
Obtaining license and implementing
maintenance works in
Serra Leste.
·
Licensing and opening new
mining fronts.
·
Progressing on the construction of Gelado, Northern System 240
Mtpy and Serra Sul 120 projects. |
·
Northern System and S11D achieved a record production for a
quarter.
·
Opening of new mining
fronts in Morro 1 in
progress increasing site’s
productivity.
·
Approval of Serra Sul 120
project |
·
4Q20:
Resumption of Serra Leste operation, adding 6
Mtpy in
capacity.
·
2020/23: Applying for new licenses and opening of new mining
fronts such as Morro 1
and N3.
·
2020/21: Installation of new crushers to process jaspilite
ore bodies in
S11D.
·
2021/23: Usina 1 shift to 100% dry processing temporarily
impacting production.
·
1H22:
Start-up of Gelado project, increasing the System’s capacity by
10 Mtpy.
·
2H22:
Start-up of Northern System 240 Mtpy project, increasing the
System’s capacity by 10
Mtpy.
·
2023:
Expansion of Serra Leste
to 10 Mtpy capacity.
·
1H24:
Start-up of Serra Sul 120
project. |
Brucutu |
·
Completion of Torto dam5 and
tailings’ filtration plant construction to increase wet
processing capacity. |
·
Torto
dam construction works achieved 93%
of physical
progress
·
Tailings’ filtration plant construction works achieved 31% of
physical progress. |
·
2Q21:
Start-up of Torto dam, increasing site’s capacity to 28 Mtpy
from current 11 Mtpy.
·
2022:
Start-up of tailings’ filtering plant and dry stacking
activities and use of Torto and Norte/Laranjeiras6
dams as contingency. |
Itabira Complex |
·
Completion of studies (geotechnical investigations) of
Itabiruçu dam.
·
Restart raising construction works of Itabiruçu dam, after
removal of emergency
level.
·
Completion of tailings’ filtration plants construction to
increase wet processing capacity. |
·
Progressed on studies
required by external auditors to remove
the emergency level
of Itabiruçu dam.
·
Tailings’ filtration plant construction works achieved 19% and
17% of physical
progress in Cauê and Conceição, respectively. |
·
1Q21:
Removal of emergency level of Itabiruçu dam and
start of raising
construction.
·
2022:
Start-up of tailings’ filtering plants and dry stacking
activities7,
increasing site’s capacity to 40 Mtpy from current 26
Mtpy. |
Timbopeba |
·
Application for a permanent
authorization to dispose tailings at Timbopeba
pit.
·
Project being concluded to
adapt the plant’s capacity for tailings disposal at
Timbopeba pit. |
·
First
full quarter of operation since the site was halted in Mar/19,
achieving a run-rate of 5.1 Mtpy.
·
Progressed on studies
required by National Mining Agency for the final use of the
Timbopeba pit and on plant’s adaptation to increase
capacity. |
·
1Q21:
Increase production capacity to 12 Mtpy from
current 4 Mtpy fully
disposing tailings at Timpopeba
pit.
·
2023:
Start-up of Capanema project8,
adding 7 Mtpy of net
capacity in the first
years. |
|
Actions in progress |
Accomplishments in 3Q20 |
Timeline for resumption |
Vargem
Grande Complex |
·
Completion of Maravilhas III dam9
and tailings’ filtration plant construction to increase
wet processing
capacity.
·
De-characterization of Vargem Grande
dam.
·
Studies to debottleneck logistics capacity, limited by the
impossibility to operate the long-distance conveyor belt in the
segment close to the Vargem Grande dam
and the use of
autonomous train in Forquilhas and Grupo dams self-rescue zones
(ZAS). |
·
Maravilhas III dam construction works achieved 53% of physical
progress.
·
Tailings’ filtration plant construction works achieved 79% of
physical progress.
·
Forquilha I dam emergency
level decreased to 2 from 3 in October. |
·
2Q21:
Start-up of Maravilhas III dam and tailings’ filtering plant
increasing site’s production capacity to 30 Mtpy from
current 27 Mtpy10
and resumption of VGR pellet plant, depending on market conditions.
·
2022:
Unlock site’s conveyor belt capacity11
after progressing on VGR dam de-characterization and
licensing of new mining areas, which today limit capacity at 30 Mtpy.
·
2020/27: Increase railway capacity, which today limits capacity
at 36 Mtpy, advancing in studies to elevate automated train
productivity and decreasing
emergency levels of Forquilhas and Grupo dams12. |
Fábrica |
·
Conclusion of required vibration tests (to certify the absence
of impacts on the site’s structures), depending on external
assessment/approval.
·
Construction of pipeline for tailings disposal at Forquilha V
dam. |
·
TAS13
railway terminal operations resumed in July, after
vibration tests, enabling inventory movement.
·
Approval received in October to start
vibration tests in
mines and crushing
facilities. |
·
1Q21:
Conclusion of vibration tests.
·
2Q21:
Site’s resumption with 6 Mtpy of production capacity, after
concluding pipeline construction for tailings
disposal at Forquilha
V dam
·
3Q21:
Resumption of Fábrica pellet plant, depending on market
conditions. |
Note:
5. A positive declaration of stability condition
(DCE) and an operating license for Torto dam operations are necessary,
relying on the external auditor and authorities’ assessment.
6. Norte/Laranjeiras dam is under Emergency Level 1
and today does not have a positive stability declaration, which is
required to resume operations. The dam’s stability assessment and
definition of necessary act ions is expected in 4Q20 and the use of the
dam as contingency in 2025.
7. Using Itabiruçu dam as contingency.
8. Project with capacity of up to 18 Mtpy expected to
be approved in 4Q20.
9. A positive declaration of stability condition
(DCE) for Maravilhas III dam operations are necessary, relying on the
external auditor’s assessment.
10. The start-up increases mine-plant capacity to 53
Mtpy.
11. Resumption of conveyor belt relies on external
approvals by National Mining Agency (ANM) and external auditors.
12. Decrease of emergency levels also depends on
external evaluation by ANM and external auditors.
13. TAS stands for Terminal de água Santa.
T4: Pellets Production & Sales by Mines
000’
metric tons |
3Q20 |
2Q20 |
3Q19 |
9M20 |
9M19 |
%
change |
3Q20/2Q20 |
3Q20/3Q19 |
9M20/9M19 |
Northern System |
1,176 |
919 |
1,090 |
2,978 |
2,846 |
28.0% |
7.9% |
4.6% |
São
Luis |
1,176 |
919 |
1,090 |
2,978 |
2,846 |
28.0% |
7.9% |
4.6% |
Southeastern System |
4,906 |
3,537 |
7,628 |
13,575 |
21,468 |
38.7% |
-35.7% |
-36.8% |
Tubarão 1 and 2 |
- |
- |
1,012 |
- |
2,692 |
n.m. |
-100.0% |
-100.0% |
Itabrasco (Tubarão 3) |
821 |
455 |
868 |
2,164 |
2,183 |
80.4% |
-5.4% |
-0.9% |
Hispanobras (Tubarão 4) |
863 |
363 |
942 |
1,855 |
2,590 |
137.7% |
-8.4% |
-28.4% |
Nibrasco (Tubarão 5 and 6) |
1,007 |
842 |
2,042 |
3,074 |
6,009 |
19.6% |
-50.7% |
-48.8% |
Kobrasco (Tubarão 7) |
849 |
541 |
995 |
2,200 |
2,922 |
56.9% |
-14.7% |
-24.7% |
Tubarão 8 |
1,366 |
1,336 |
1,769 |
4,283 |
5,072 |
2.2% |
-22.8% |
-15.6% |
Southern System |
- |
129 |
- |
129 |
1,069 |
-100.0% |
n.m. |
-87.9% |
Fábrica |
- |
- |
- |
- |
515 |
n.m. |
n.m. |
-100.0% |
Vargem
Grande |
- |
129 |
- |
129 |
554 |
-100.0% |
n.m. |
-76.7% |
Oman |
2,480 |
2,485 |
2,415 |
5,877 |
6,841 |
-0.2% |
2.7% |
-14.1% |
Others1 |
- |
- |
- |
- |
154 |
n.m. |
n.m |
-100.0% |
PELLETS PRODUCTION |
8,562 |
7,070 |
11,133 |
22,559 |
32,378 |
21.1% |
-23.1% |
-30.3% |
PELLETS SALES |
8,464 |
6,950 |
11,077 |
22,725 |
32,233 |
21.8% |
-23.6% |
-29.5% |
1. Third party capacity
utilization.
Production overview
Vale’s pellets production in
3Q20 was 21% higher than in 2Q20, mainly due to less maintenance
stoppages and higher pellet feed availability, as a result of
Timbopeba’s site resumption in June and the absence of COVID-19-related
disruptions at the Itabira Complex.
More Info:
VALE’S PRODUCTION AND SALES IN 3Q20 |