Vale’s iron ore fines production totaled 315.6 Mt in 2021, 15.2 Mt higher than 2020, as a result of: (i) Serra Leste resumption in late 2020; (ii) production increase of high silica products in Brucutu; (iii) improved performance in Itabira complex, despite the restrictions related with tailings disposal; (iv) Timbopeba operating with six beneficiation lines since March 2021; (v) resumption of wet processing production in Fábrica, together with the production of high silica products; and (vi) higher third-party purchase. These improvements were partially offset by (i) S11D’s performance, mainly impacted by the higher strip ratio and lower mining productivity during the year, caused by higher incursion of jaspilite materials in the ore body; and (ii) ROM availability in Mutuca, which is under a licensing process.

In order to improve S11D performance towards its nameplate capacity, leading to a production of 80-85 Mt in 2022, Vale is sequentially installing four primary crushers and four mobile crushers to process jaspilite materials, all of them to be operational throughout 1H22. In addition, a new crusher is required to process large compact waste blocks, restricting S11D production capacity on around 5 Mtpy until it is operational by 2025.

Vale ended the year with around 340 Mtpy of iron ore production capacity and expects to achieve 370 Mtpy by the end of 2022, after the ramp-up of the tailings filtration plants at Itabira and Brucutu sites and their respective additions in tailings storage capacity (Itabiruçu and Torto dams) during the second half of the year.

All operations in Minas Gerais affected by the heavy rains of early 2022 have already resumed their regular activities after the re-establishment of adequate safety conditions. The stoppages impact on Vale’s iron ore production was approximately 2 Mt, which does not change our production guidance, as it considers the seasonal impact of the rainy season.

Vale’s pellet production totalled 31.7 Mt in 2021, 2.0 Mt higher than 2020, as a result of the resumption of Vargem Grande pellet plant in January, but still restricted by pellet feed availability in Itabira and Brucutu, which will gradually improve towards the end of 2022 following the start-up of Torto dam and the raising works in Itabiruçu dam.

Sales volumes of iron ore fines and pellets totalled 309.8 Mt in 2021, 23.7 Mt higher than 2020 and in line with 2021’s production.

Despite lower production in the quarter, Vale’s iron ore fines and pellets sales increased 23.2%, mainly from drawdown of transiting inventories formed in 3Q21, leading to a record sales of iron ore fines in a fourth quarter.

Iron ore premium was US$ 4.7/t5 in 4Q21, a decrease of US$ 1.8/t compared to 3Q21 due to (i) US$ 8.2/t lower spread between 65/62% Fe indexes together with less share of IOCJ on total sales; (ii) lower Fe unit contribution due to lower iron ore price; and (iii) lower contractual pellet premiums (-US$ 20/t for direct reduction pellets and -US$ 15/t for blast furnace pellets); which were partially offset by the seasonal dividends received from our pellet’s JVs. In addition, under an environment of improved prices and lower spot freight costs since the second half of the quarter, Vale maintained the share of sales of high-silica products, which, despite the positive margins, negatively impacted average premiums.

Northern System

Northern System production decreased 5.7% vs. 3Q21, mainly as a result of (i) higher rainfall levels6, restricting mining in deeper pits in Serra Norte; and (ii) higher strip ratio in S11D, due to the presence of jaspilite waste in the ore body.

Southeastern System

Southeastern System performance slightly decreased vs. 3Q21, from (i) an unscheduled maintenance in a stacker reclaimer in Brucutu impacting site’s ore movement in November; and (ii)     the depletion of the licensed mining front of Água Limpa.

As expected in Vale’s mining plan, in January 2022, Vale temporarily halted Água Limpa’s iron ore production due to the low profitability of the current mining front while carrying out a license process of new mining areas. Água Limpa produced 2.5 Mt of iron ore in 2021.

Vale started the commissioning in December 2021 of the two tailings filtration plants located in Itabira complex and expects to start-up Brucutu’s plant in the following months. These assets will improve the average quality of Vale's product portfolio with the use of wet processing on the site, while reducing the dependence on dams. Vale is also progressing with the licensing and preparation of areas to receive dry tailings from filtration plants and the works of Itabiruçu dam raising and Torto dam construction.

Southern System

Southern System production decreased 19.4% vs. 3Q21, resulting from (i) the strong reduction of third-party purchase in October due to iron ore prices drop; (ii) lower production of high silica products in Fábrica; (iii) lower ROM availability in Mutuca, as expected in its mining plan.

Pellets Production overview

Pellet production increased 8.8% vs. 3Q21, due to higher pellet feed availability from Southeastern System mines and fewer maintenances required in Tubarão plants and Oman, which achieved a record production for a quarter. On the other hand, production was partially impacted by lower pellet feed availability in the Northern System and Vargem Grande.

Production summary

Sales summary

Production guidance