http://www.vale.com/EN/investors/inform ... _4Q19i.pdf
In 2019, proforma EBITDA, excluding the provisions and incurred expenses related to
Brumadinho, totaled US$ 17.987 billion, US$ 1.394 billion higher than in 2018, mainly due to
higher prices (US$ 5.991 billion) and favorable foreign exchange variations (US$ 571 million),
which were partially offset by lower volumes (US$ 2.796 billion), higher costs, expenses and
others (US$ 1.404 billion) and the stoppage expenses and others due to Brumadinho (US$
968 million).
• Vale generated US$ 8.105 billion in Free Cash Flow from Operations in 2019, enabling:
o the repurchase of US$ 2.270 billion of bonds, with gross debt totaling US$ 13.056
billion in 4Q19, a decrease of US$ 2.410 billion in relation to 4Q18;
o the increase in cash and cash equivalents to US$ 8.176 billion, US$ 2.452 billion
higher than 4Q18, and the decrease in net debt to US$ 4.880 billion, US$ 4.770
billion lower than 4Q18 and the lowest level since 2008;
o the redemption and cancelation of MBR preferred shares, which paid dividends to
non-controlling interest of US$ 162 million and US$ 168 million in 2019 and 2018,
reducing future cash-flow commitments.
• Interest paid on loans totalled US$ 921 million in 2019, the lowest level since 2010 and 45%
lower than the peak level of US$ 1.663 billion in 2016, reflecting the deleveraging and
strengthening process of Vale’s balance sheet in the last three years.
• In December 2019, Vale completed the sindication of a US$ 3.0 billion revolving credit facility,
which will be available for five years. The new line, together with the existing US$ 2.0 billion
facility that expires in 2022, preserves the total available amount in revolving credit facilities
at US$ 5.0 billion, providing a liquidity buffer for Vale and allowing for an efficient cash
management.
• Vale posted a loss of US$ 1.683 billion in 2019, compared to a net income of US$ 6.860
billion in 2018. The US$ 8.543 billion decrease was mostly driven by: (i) provisions and
expenses related to the Brumadinho dam rupture, including the decharacterization of dams
and reparation agreements (US$ 7.402 billion), (ii) recognition of non-cash impairment
charges and onerous contracts, mainly in the Base Metals and Coal businesses (US$ 4.202
billion), (iii) provisions related to the Renova Foundation and to the decommissioning of
Germano dam (US$ 758 million), which were partially offset by lower foreign exchange
losses (US$ 2.555 billion) in the year.
• Impairment charges were mainly due to revisions on the Base Metals and Coal business
plans. In the Base Metals business, the New Caledonian operation has experienced
challenging issues throughout 2019, mainly in relation to production and processing. Thus,
Vale reduced the expected production levels for the remaining life of the operation and
recognized an impairment charge of US$ 2.511 billion. In the Coal business, the revaluation
of the expectations related to the yield of metallurgical and thermal coal, the review of the mining plan, which led to a reduction in the proven and probable reserves, and the lowering
of the long-term price assumptions led to an impairment charge of US$ 1.691 billion.
• In December 2019, the Board of Directors approved the interest on capital (JCP) of R$
7.253 billion, equivalent to R$ 1.414364369 per share. The decision did not modify the
Board of Directors’ previous decision of suspending the Shareholder Remuneration Policy,
with the allocation of the JCP to be decided only after the Policy suspension is withdraw.
• In 4Q19, Vale’s proforma EBITDA totaled US$ 4.677 billion in 4Q19, US$ 151 million lower
than 3Q19. The impact of lower iron ore reference prices was largely offset by: (i) higher iron
ore fines sales volumes, (ii) lower unit cost of the iron ore delivered at Chinese ports that
reached a break-even EBITDA of US$ 37.6/t in 4Q19, US$ 2.5/t lower than 3Q19, mainly due
to the decrease in C1 and freight costs and the higher pellets contribution, and (iii) higher
base metals realized prices.
