6-K 1 a14-6937_26k.htm 6-K

Table of Contents

 

 

 

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

February 2014

 

Vale S.A.

 

Avenida Graça Aranha, No. 26
20030-900 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 o

 

(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 o  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 o  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 o  No x

 

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

 

 

 



Table of Contents

 

Table of Contents:

 

Press Release

3

Signature Page

42

 

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GRAPHIC

 

BM&F BOVESPA: VALE3, VALE5
NYSE: VALE, VALE.P
HKEx: 6210, 6230
EURONEXT PARIS: VALE3, VALE5
LATIBEX: XVALO, XVALP

www.vale.com

rio@vale.com

Investor Relations Department

 

Rogério T. Nogueira

Viktor Moszkowicz

Carla Albano Miller

Andrea Gutman

Marcelo Bonança

Marcelo Lobato

Marcio Loures Penna

Samantha Pons

Tel: (55 21) 3814-4540

 

VALE’S PERFORMANCE IN 2013

 

Rio de Janeiro, February 26, 2014 — Vale S.A. (Vale) delivered a strong performance in 2013, with solid results across its businesses.  2013 was a year in which the benefits of our ongoing cost-cutting efforts, capex discipline and focus on core business became more visible. It was also a year in which we laid-out the foundations to deliver solid volume and free cash flow growth in the years ahead.

 

A year of strong financial and operational performance

 

·   Underlying earnings of US$ 12.3 billion in 2013, 15.4% above 2012.

 

·   Cash generation measured by adjusted EBITDA(1) of US$ 22.7 billion, the third highest-ever in our history, with 4Q13 adjusted EBITDA of US$ 6.6 billion, the highest since 4Q11.

 

·   Record sales volumes of iron ore and pellets (305.6 Mt), copper (353,000 t), gold (297,000 oz) and coal (8.1 Mt), and the highest sales volume of nickel (261,000 t) since 2008.

 

·   Production records in copper (370,000 t), gold (286,000 oz), coal (8.8 Mt) and phosphate rock (8.3 Mt) with highest annual mark in nickel (260,000 t) since 2008.

 

·   Substantial reduction in costs and expenses across all businesses, saving US$ 2.8 billion(2) in 2013 vs. 2012, despite the increases in sales volumes.

 

·   Distribution of a strong dividend of US$ 4.5 billion in 2013, and commitment to a minimum dividend of US$ 4.2 billion in 2014, corresponding to a dividend yield of 6% at the current share price.

 

A year of collecting benefits from cost-cutting, capex discipline and focus on core business

 

·   Reduction of cost of goods sold (COGS) of US$ 972 million (-3.7%) in 2013, despite the increases in sales volumes; decline in sales, general and administrative (SG&A) of US$ 865 million (-38.6%), reflecting a leaner organization; and decrease in research and development expenditures (R&D) of US$ 663 million (-44.9%), reflecting a more focused exploration and project development portfolio.

 

·   Reduction in capex, ex-R&D expenses, of US$ 2 billion in 2013 vs. 2012, reaching US$ 14.2 billion in 2013 and marking another consecutive year of capex reduction.

 

·   Divestment of US$ 6.0 billion(3) of non-core assets, reiterating our continued commitment to the simplification of our asset base and management focus.

 


(1)  Throughout this report, adjusted EBITDA and adjusted EBIT figures exclude non-recurring items. For more information, please see notes (a) and (b) in the Annex 3 of this report.

(2)  Excludes depreciation and amortization and the one-off effect of CFEM provision in 3Q12 (US$ 542 million).

(3)   Includes the sale of VLI still subject to conditions precedent (US$ 2.056 billion).

 

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GRAPHIC

 

A year for removing uncertainties and establishing foundations

 

·    Settlement of the income tax and social contribution on earnings of our non-Brazilian subsidiaries, under the Income Tax Settlement Program (REFIS) reducing uncertainties and allowing management to focus on the key strategic and operational business issues.

 

·    Completion of projects required to grow iron ore production in the years 2014 to 2016: Conceição Itabiritos, Plant 2 (formerly known as Additional 40 Mtpy), and CLN 150, including Pier IV with its first berth in Ponta da Madeira.

 

·    Positive progress on the discussion regarding caves with recent authorization to mine additional N4E mine areas, supporting the 2014 production target of 120 Mt in Carajás in 2014 and increasing the confidence in the growth program for 2015 and 2016.

 

·    Granting of all the implementation licenses for S11D and associated logistics, paving the way for growth in iron ore production beyond 2016.

 

·    Ramp-up of Base Metals projects (Salobo I close to nominal capacity, restart of Onça Puma and continued progress in New Caledonia) and completion of remaining key projects (Long Harbour and Totten), marking the end of an investment cycle and positioning the business to achieve its US$ 4 to US$ 6 billion cash generation target in the coming years.

 

Underpinning our good performance this year is a relentless focus on Health and Safety. Our health and safety indicators improved in 2013 with our total recordable injury frequency rate (TRIFR), falling from 2.8 to 2.6(4). We remain focused towards achieving zero harm in our operations.

 

Looking ahead, we are committed to deliver on our promises. We will maintain our business focus and discipline on cost and capex while diligently working to complete our ongoing projects and deliver volume growth.

 

We are focused on shareholder value creation and committed to using our free cash flow to appropriately reduce our debt levels and distribute increasing dividends to our shareholders.

 


(4)  Per million hours worked.

 

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SELECTED FINANCIAL INDICATORS¹

 

US$ million 

 

2013

 

2012

 

2011

 

2010

 

2009

 

Gross operating revenues

 

48,994

 

48,753

 

62,345

 

46,481

 

23,939

 

Adjusted EBIT

 

17,537

 

14,430

 

28,748

 

21,695

 

6,057

 

Adjusted EBIT margin (%)

 

36.5

 

30.3

 

47.2

 

47.9

 

26.0

 

Adjusted EBITDA

 

22,679

 

19,178

 

33,730

 

26,116

 

9,165

 

Adjusted EBITDA margin (%)

 

47.2

 

40.2

 

55.3

 

57.7

 

39.3

 

Underlying earnings

 

12,261

 

10,622

 

23,248

 

17,289

 

4,925

 

Underlying earnings per share on a fully diluted basis (US$ / share)

 

2.38

 

2.08

 

4.43

 

3.26

 

0.92

 

Total gross debt

 

29,727

 

30,546

 

23,143

 

25,343

 

22,880

 

Total gross debt/ adjusted EBITDA (x)

 

1.3

 

1.6

 

0.7

 

1.0

 

2.5

 

Capital expenditures (excluding R&D and acquisitions)

 

14,233

 

16,196

 

16,252

 

11,569

 

8,002

 

 


(1)The 2011-2013 figures were adjusted under IFRS and consider freight in revenues and COGS. The 2009-2010 figures were calculated in accordance with USGAAP.

 

US$ million 

 

4Q13

 

3Q13

 

4Q12

 

Gross operating revenues

 

13,606

 

12,910

 

12,537

 

Adjusted EBIT

 

5,002

 

4,777

 

2,971

 

Adjusted EBIT margin (%)

 

37.3

 

37.7

 

24.2

 

Adjusted EBITDA

 

6,637

 

5,883

 

4,434

 

Adjusted EBITDA margin (%)

 

49.5

 

46.4

 

36.2

 

Underlying earnings

 

3,212

 

3,639

 

1,871

 

Underlying earnings per share on a fully diluted basis (US$ / share)

 

0.62

 

0.71

 

0.36

 

Capital expenditures (excluding R&D and acquisitions)

 

3,840

 

3,231

 

4,999

 

 

Except where otherwise indicated the operational and financial information in this release is based on the consolidated figures in accordance with IFRS and, with the exception of information on investments and behavior of markets, quarterly financial statements are reviewed by the company’s independent auditors. The main subsidiaries that are consolidated are the following: Compañia Minera Miski Mayo S.A.C., Ferrovia Centro-Atlântica S.A.(FCA), Ferrovia Norte Sul S.A, Mineração Corumbaense Reunida S.A., PT Vale Indonesia Tbk (formerly International Nickel Indonesia Tbk), Sociedad Contractual Minera Tres Valles, Vale Australia Pty Ltd., Vale International Holdings GMBH, Vale Canada Limited (formely Vale Inco Limited), Vale Fertilizantes S.A., Vale International S.A., Vale Manganês S.A., Vale Mina do Azul S.A., Vale Moçambique S.A., Vale Nouvelle-Calédonie SAS, Vale Oman Pelletizing Company LLC and Vale Shipping Holding PTE Ltd..

 

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Table of Contents

 

OPERATING REVENUES

 

Annual performance

 

In 2013, operating revenues totaled US$ 48.994 billion, slightly above 2012. The ferrous minerals business contributed with 72.0% of the operating revenues while the base metals business contributed with 14.9% despite weaker nickel, copper and gold prices in 2013. Fertilizers’ contribution to revenues decreased to 6.1% due to a combination of lower sales volumes and prices during the year.

 

Asia represented 54.2% of total revenues in 2013 and China alone represented 38.6%. The Americas share decreased to 23.7%, due to lower sales volumes in Brazil, which represented 17.2% of sales. Europe recovered some share reaching 17.9%. Revenues from sales to the Middle East were 3.0% in 2013. The rest of the world contributed with 1.2% in 2013.

 

There was an increase of US$ 241 million in operating revenues in 2013 vs. 2012. The positive changes year-on-year were the higher sales volumes of base metals (US$ 1.373 billion), iron ore (US$ 674 million) and metallurgical coal (US$ 427 million) and higher prices of iron ore (US$ 490 million). Those were partly offset by lower prices of base metals (-US$ 1.209 billion), fertilizers (-US$ 393 million) and metallurgical coal (-US$ 310 million) and the decrease in sales volumes of pellets (-US$ 654 million) and fertilizers (-US$ 407 million).

 

Quarterly performance

 

Operating revenues reached US$ 13.606 billion in 4Q13, up by 5.4% versus 3Q13, driven mainly by higher iron ore sales volumes and prices, which contributed with 80% of the increase in revenues, followed by higher pellets sales volumes.

 

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GROSS OPERATING REVENUE BY BUSINESS AREAS

 

US$ million 

 

4Q13

 

3Q13

 

4Q12

 

2013

 

% 2013

 

2012

 

% 2012

 

Ferrous minerals

 

10,177

 

9,482

 

8,998

 

35,267

 

72.0

 

34,866

 

71.5

 

Iron ore

 

8,314

 

7,753

 

7,441

 

28,429

 

58.0

 

27,202

 

55.8

 

Pellets

 

1,677

 

1,525

 

1,396

 

6,158

 

12.6

 

6,757

 

13.9

 

Manganese ore

 

99

 

119

 

72

 

333

 

0.7

 

234

 

0.5

 

Ferroalloys

 

62

 

54

 

50

 

239

 

0.5

 

358

 

0.7

 

Pellet plant operation services

 

 

 

 

 

 

19

 

 

Others

 

25

 

31

 

40

 

110

 

0.2

 

296

 

0.6

 

Coal

 

333

 

211

 

202

 

1,010

 

2.1

 

1,092

 

2.2

 

Metallurgical coal

 

304

 

200

 

181

 

951

 

1.9

 

834

 

1.7

 

Thermal coal

 

29

 

11

 

21

 

59

 

0.1

 

258

 

0.5

 

Base metals

 

1,897

 

1,859

 

1,811

 

7,299

 

14.9

 

7,133

 

14.6

 

Nickel

 

957

 

865

 

1,015

 

3,889

 

7.9

 

4,145

 

8.5

 

Copper

 

647

 

734

 

593

 

2,367

 

4.8

 

2,168

 

4.4

 

PGMs

 

132

 

116

 

75

 

477

 

1.0

 

383

 

0.8

 

Gold

 

118

 

107

 

90

 

398

 

0.8

 

294

 

0.6

 

Silver

 

11

 

10

 

14

 

43

 

0.1

 

63

 

0.1

 

Cobalt

 

17

 

17

 

11

 

71

 

0.1

 

55

 

0.1

 

Others

 

15

 

10

 

13

 

54

 

0.1

 

24

 

 

Fertilizer nutrients

 

591

 

812

 

930

 

2,977

 

6.1

 

3,777

 

7.7

 

Potash

 

50

 

63

 

79

 

222

 

0.5

 

308

 

0.6

 

Phosphates

 

423

 

621

 

622

 

2,120

 

4.3

 

2,583

 

5.3

 

Nitrogen

 

95

 

104

 

208

 

543

 

1.1

 

801

 

1.6

 

Others

 

23

 

24

 

21

 

92

 

0.2

 

85

 

0.2

 

Logistics services - general cargo

 

333

 

404

 

344

 

1,508

 

3.1

 

1,348

 

2.8

 

Railroads

 

260

 

315

 

281

 

1,210

 

2.5

 

1,202

 

2.5

 

Ports

 

73

 

89

 

63

 

298

 

0.6

 

146

 

0.3

 

Others

 

275

 

142

 

252

 

932

 

1.9

 

536

 

1.1

 

Total

 

13,606

 

12,910

 

12,537

 

48,994

 

100.0

 

48,753

 

100.0

 

 

GROSS OPERATING REVENUE BY DESTINATION

 

US$ million 

 

4Q13

 

3Q13

 

4Q12

 

2013

 

% 2013

 

2012

 

% 2012

 

North America

 

610

 

539

 

547

 

2,383

 

4.9

 

2,378

 

4.9

 

South America

 

2,064

 

2,346

 

2,246

 

9,193

 

18.8

 

9,905

 

20.3

 

Brazil

 

1,905

 

2,129

 

2,113

 

8,417

 

17.2

 

9,126

 

18.7

 

Others

 

160

 

217

 

133

 

776

 

1.6

 

779

 

1.6

 

Asia

 

7,868

 

7,298

 

7,349

 

26,558

 

54.2

 

26,617

 

54.6

 

China

 

5,687

 

5,240

 

5,411

 

18,920

 

38.6

 

17,636

 

36.2

 

Japan

 

1,163

 

1,178

 

1,010

 

4,035

 

8.2

 

4,931

 

10.1

 

Others

 

1,018

 

880

 

928

 

3,602

 

7.4

 

4,050

 

8.3

 

Europe

 

2,432

 

2,252

 

1,921

 

8,762

 

17.9

 

8,202

 

16.8

 

Germany

 

920

 

877

 

826

 

3,285

 

6.7

 

2,937

 

6.0

 

Italy

 

271

 

201

 

204

 

1,055

 

2.2

 

1,311

 

2.7

 

Others

 

1,241

 

1,174

 

891

 

4,422

 

9.0

 

(4,230

)

(8.7

)

Middle East

 

458

 

325

 

329

 

1,494

 

3.0

 

1,162

 

2.4

 

Rest of the World

 

173

 

149

 

145

 

604

 

1.2

 

490

 

1.0

 

Total

 

13,606

 

12,910

 

12,537

 

48,994

 

100.0

 

48,753

 

100.0

 

 

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COSTS

 

Costs and expenses, net of depreciation charges and the one-off effect of CFEM provision in 3Q12 (US$ 542 million), showed a material contraction in 2013, with savings of US$ 2.8 billion. Costs dropped US$ 1.063 billion and expenses US$ 1.708 billion when compared to 2012, despite the fact that Vale recorded US$ 394 million(5) in one-off expenses related to the stoppage of Rio Colorado.

 

Cost of Goods Sold (COGS)

 

Annual performance

 

COGS was US$ 25.477 billion in 2013, showing a decrease of US$ 972 million when compared to the US$ 26.449 billion recorded in 2012.

 

COGS reductions of US$ 972 million can be broken by the following factors: (i) US$ 1.638 billion of cost reduction due to nominal exchange rate variations, (ii) US$ 1.692 billion of cost increase due to higher volumes (iii) US$ 1.026 billion due to nominal cost reduction in the currencies in which we operate, despite inflation in those countries.

 

The analysis of individual cost items are net of the effects of volumes and exchange rate changes, with the exception of personnel costs, energy, acquisition of products and depreciation. The cost analysis for each business segment is part of the “Performance of the Business Segments” section.

 

Quarterly performance

 

In 4Q13, COGS was US$ 6.983 billion, increasing US$ 20 million, after adjusting for higher volumes (US$ 389 million) and exchange rate changes (US$ 23 million)(6). The main negative underlying factors were personnel (US$ 76 million) and energy costs (US$ 39 million), which were partially offset by materials (US$ 25 million) and outsourced services (US$ 23 million). The increase in personnel costs refers to the two-year collective agreement settled with our employees in Brazil, and a significant part of it is the one-off impact on accrued vacation and profit sharing provisions.

 

TOTAL COST OF GOODS SOLD - 4Q13 x 3Q13

 

 

 

 

 

Variance drivers

 

 

 

US$ million

 

3Q13

 

Volume

 

Exchange
rate

 

Others

 

Total Variation
4Q13x 3Q13

 

4Q13

 

Outsourced services

 

1,069

 

-14

 

4

 

-23

 

-33

 

1,036

 

Materials

 

1,077

 

37

 

13

 

-25

 

25

 

1,102

 

Energy (Electricity, fuel & gas)

 

652

 

-6

 

3

 

39

 

36

 

688

 

Acquisition of products

 

286

 

172

 

-1

 

-33

 

138

 

424

 

Iron ore and pellets

 

101

 

 

 

27

 

27

 

128

 

Base metals products

 

114

 

75

 

 

-61

 

14

 

128

 

Other products

 

71

 

96

 

-1

 

2

 

97

 

168

 

Personnel

 

868

 

-3

 

2

 

76

 

75

 

943

 

Freight

 

872

 

164

 

 

 

164

 

1,036

 

Depreciation

 

945

 

1

 

2

 

84

 

87

 

1,032

 

Shared services

 

103

 

-18

 

 

 

-18

 

85

 

Others

 

679

 

55

 

2

 

-99

 

42

 

637

 

Total

 

6,551

 

389

 

23

 

20

 

432

 

6,983

 

 

Disclaimer: The effects of volume, exchange rate and other variations are not accounting figures. Calculated in a simplified way for management purposes.

 


(5)  Excluding depreciation.

(6)  COGS exposure in 4Q13 was made up as follows: 53% Brazilian Reais, 30% US dollar, 13% Canadian dollar, 3% Australian dollar and 1% other currencies.

 

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Outsourced services were US$ 1.036 billion, a reduction of US$ 33 million when compared to 3Q13. After adjusting for volumes (-US$ 14 million) and exchange rate variations (US$ 4 million), there was a net decrease of US$ 23 million, mainly as a consequence of lower costs for base metals (US$ 41 million), with the end of scheduled maintenance at Sudbury and Thompson in 3Q13.

 

Cost of materials was US$ 1.102 billion, up US$ 25 million against 3Q13. After adjusting for volumes (US$ 37 million) and currency price changes (US$ 13 million), there was a net decrease of US$ 25 million, as a consequence of lower costs for fertilizers (US$ 14 million) driven by lower sulfur and ammonia prices, and lower costs for nickel materials (US$ 27 million), reflecting the end of the annual scheduled maintenance in Sudbury and Thompson.

 

Costs of energy (electricity, fuel and gas) reached US$ 688 million, an increase of US$ 36 million when compared to 3Q13. Costs with electricity were US$ 181 million, US$ 5 million higher than in 3Q13.  Fuel and gases costs came to US$ 507 million, US$ 31 million higher than in 3Q13. This reflects mainly the increase of 8% in the price of diesel oil in Brazil.

 

The cost of purchasing products, ore and finished products from third parties amounted to US$ 424 million against US$ 286 million in 3Q13. The most relevant third party purchases were:

 

·                  The purchase of iron ore amounting to US$ 128 million, against US$ 101 million in the previous quarter as the volume of iron ore bought from smaller miners reached 3.8 Mt in 4Q13 compared to 2.6 Mt in 3Q13.

 

·                  The purchase of base metals products which increased to US$ 128 million from US$ 114 million in 3Q13 as a result of higher nickel and copper volumes purchased from third parties. We bought 1,700 t of finished and intermediary nickel against 1,600 t in 3Q13. Additionally, we bought 5,400 t of copper against 5,300 t in 3Q13.

 

·                  The costs of acquiring other products increased to US$ 168 million from US$ 71 million, partially reflecting a surplus in our pre-existing long term energy contracts, which was sold in the spot market. The associated revenues are recognized under Other Revenues.

 

Personnel costs amounted to US$ 943 million, an increase of US$ 75 million against the US$ 868 million in 3Q13. The two-year collective agreement settled with our employees in Brazil increased costs by US$ 64 million as a result of the 6.0% wage rise in Brazilian Reais in November 2013 and the one-off impact of the increase on accrued vacation and profit sharing provisions. The semi-annual bonuses for employees working in remote areas in Brazil (Carajás, Sossego and Onça Puma) were paid during 4Q13 and amounted to US$ 12 million.

 

Maritime freight costs reached US$ 1.036 billion in 4Q13, which, as stated previously, are fully accrued as cost of goods sold. Freight costs were up US$ 164 million, when compared to 3Q13, as a result of the increase in CFR shipments, different routes used and higher rates on freights contracted on a spot basis.

 

Depreciation and amortization amounted to US$ 1.032 billion, against US$ 945 million in 3Q13, mainly reflecting higher depreciation costs of iron ore and pellets (US$ 41 million) and nickel (US$ 58 million).

 

Costs with shared services decreased to US$ 85 million in 4Q13, down from US$ 103 million in the previous quarter.

 

Other operational costs reached US$ 637 million, decreasing from the US$ 679 million in 3Q13. The TFRM was US$ 54 million in 4Q13, in line with 3Q13. CFEM, Brazil’s federal mining royalty, was US$ 131 million, US$ 25 million higher than 3Q13, mostly because of the higher average price for iron ore.

 

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COGS

 

US$ million

 

4Q13

 

3Q13

 

4Q12

 

2013

 

% 2013

 

2012

 

% 2012

 

Outsourced services

 

1,036

 

1,069

 

1,153

 

3,951

 

15.5

 

4,769

 

18.0

 

Cargo freight

 

214

 

291

 

294

 

1,059

 

4.2

 

1,191

 

4.5

 

Maintenance of equipment and facilities

 

179

 

197

 

179

 

706

 

2.8

 

792

 

3.0

 

Operational Services

 

212

 

147

 

296

 

591

 

2.3

 

1,131

 

4.3

 

Others

 

431

 

434

 

385

 

1,595

 

6.3

 

1,656

 

6.3

 

Material

 

1,102

 

1,077

 

995

 

4,152

 

16.3

 

4,264

 

16.1

 

Spare parts and maintenance equipment

 

332

 

321

 

301

 

1,222

 

4.8

 

1,417

 

5.4

 

Inputs

 

501

 

488

 

514

 

1,898

 

7.5

 

2,018

 

7.6

 

Tires and conveyor belts

 

56

 

49

 

59

 

297

 

1.2

 

233

 

0.9

 

Others

 

212

 

219

 

121

 

735

 

2.9

 

595

 

2.2

 

Energy

 

688

 

652

 

749

 

2,600

 

10.2

 

2,937

 

11.1

 

Fuel and gases

 

507

 

476

 

530

 

1,934

 

7.6

 

2,071

 

7.8

 

Electric energy

 

181

 

176

 

218

 

666

 

2.6

 

866

 

3.3

 

Acquisition of products

 

424

 

286

 

334

 

1,406

 

5.5

 

1,368

 

5.2

 

Iron ore and pellets

 

128

 

101

 

115

 

405

 

1.6

 

699

 

2.6

 

Base metals products

 

128

 

97

 

70

 

461

 

1.8

 

339

 

1.3

 

Other products

 

168

 

88

 

148

 

541

 

2.1

 

330

 

1.2

 

Personnel

 

943

 

868

 

923

 

3,433

 

13.5

 

3,545

 

13.4

 

Maritime freight

 

1,036

 

872

 

922

 

3,190

 

12.5

 

2,801

 

10.6

 

Shared services

 

85

 

103

 

73

 

363

 

1.4

 

303

 

1.1

 

Others

 

637

 

679

 

741

 

2,504

 

9.8

 

2,673

 

10.1

 

Total Costs before depreciation and amortization

 

5,951

 

5,606

 

5,889

 

21,598

 

84.8

 

22,660

 

85.7

 

Depreciation and amortization

 

1,032

 

945

 

1,083

 

3,879

 

15.2

 

3,789

 

14.3

 

Total COGS (Cost of Goods Sold)

 

6,983

 

6,551

 

6,972

 

25,477

 

100.0

 

26,449

 

100.0

 

 

Expenses

 

Annual performance

 

In 2013, expenses were US$ 5.036 billion, a decrease of US$ 2.321 billion from US$ 7.357 billion in 2012, mainly due to lower Sales, General and Administrative expenses (SG&A), Research and Development expenditures (R&D) and other expenses, which were partially offset by higher pre-operating and stoppage expenses(7). Excluding the effect of depreciation (US$ 429 million), total expenses amounted to US$ 4.607 billion a decrease of US$ 1.708 billion(8) when compared to 2012.

 

The simplification of our organizational structure was the main driver for the reduction of US$ 865 million in SG&A. In 2013, SG&A amounted to US$ 1.375 billion, decreasing 38.6% when compared to US$ 2.240 billion in 2012, with savings much higher than our 20% target for the year. In 2014, our target is to further reduce SG&A expenses by 10%.

 

In 2013, R&D expenditures were US$ 815 million, being US$ 285 million lower than our budget of US$ 1.1 billion for the year and US$ 663 million lower than 2012, a decrease of 45.0%. The reduction of our portfolio of projects and the closure of exploration offices around the world were mostly responsible for this result. In 2014, we will continue focusing on having an efficient exploration portfolio.

 

Pre-operating and stoppage expenses were US$ 1.859 billion in 2013, an increase of US$ 267 million when compared to 2012. Pre-operating expenses were in line with the previous year’s numbers at US$ 1.231 billion in 2013 against US$ 1.240 billion in 2012. On the other hand, stoppage expenses increased by US$ 276 million, amounting to US$ 628 million, mainly reflecting the US$ 381 million in expenses with Rio Colorado in 2013.

 


(7)  As previously mentioned, we revised the concept of pre-operating, stoppage and idle capacity expenses to pre-operating and stoppage.

(8)  Excluding the effect of the CFEM provision (US$ 542 million) in 3Q12.

 

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Other expenses totaled US$ 987 million in 2013, against US$ 2.047 billion in 2012 as a result of lower contingencies and provisions made during 2013. For instance, in 3Q12 we had the one-off effect of CFEM expenses, which amounted to US$ 542 million.

 

Quarterly performance

 

SG&A(9) was US$ 362 million in 4Q13, US$ 47 million above 3Q13. Higher SG&A expenses were driven by an increase in administrative expenses (US$ 65 million), mainly due to the higher third party services expenses (US$ 27 million). Sales expenses were down by US$ 18 million, amounting to US$ 11 million in 4Q13.

 

·                  Despite the two-year collective agreement settled with our employees in Brazil, which resulted in the 6.0% wage rise in Brazilian Reais in November 2013, expenses with personnel increased by only US$ 4 million, amounting to US$ 121 million in 4Q13.

 

R&D expenditure totaled US$ 276 million in 4Q13, higher than the US$ 205 million in 3Q13.

 

Pre-operating and stoppage expenses(9) decreased to US$ 473 million in 4Q13 from US$ 549 million in 3Q13.

 

·                  Pre-operating expenses were US$ 321 million in 4Q13, determined by expenses related to  VNC (US$ 167 million), Long Harbour (US$ 65 million) and S11D (US$ 27 million). VNC expenses were up US$ 38 million when compared to 3Q13, due to the operational problems with the effluent pipeline, which not only cost US$ 27 million to repair but also caused production to stop and prevented further dilution of expenditures over production and sales. The repair work was completed successfully and the plant began a sequential restart on January 1, 2014. In 2013 VNC pre-operating expenses dropped to US$ 606 million from US$ 767 million in 2012. We continue to aim at reaching break-even at VNC during 2014, in which costs and expenses will be matched by revenues.

 

·                  Stoppage expenses reached US$ 152 million in 4Q13, mainly reflecting Rio Colorado expenses (US$ 102 million) and the shutdown of pellet plants, Tubarão I and II and São Luís (US$ 24 million) and Onça Puma (US$ 22 million).

 

Other operating expenses(9) were US$ 30 million higher than 3Q13, amounting to US$ 310 million in 4Q13.

 

EXPENSES

 

US$ million 

 

4Q13

 

3Q13

 

4Q12

 

2013

 

% 2013

 

2012

 

% 2012

 

SG&A

 

362

 

315

 

577

 

1,375

 

27.3

 

2,240

 

30.4

 

Administrative

 

351

 

286

 

527

 

1,269

 

25.2

 

1,960

 

26.6

 

Personnel

 

121

 

117

 

217

 

531

 

10.5

 

806

 

11.0

 

Services

 

116

 

89

 

144

 

343

 

6.8

 

489

 

6.6

 

Depreciation

 

52

 

46

 

69

 

194

 

3.9

 

240

 

3.3

 

Others

 

62

 

34

 

97

 

201

 

4.0

 

425

 

5.8

 

Selling

 

11

 

29

 

50

 

106

 

2.1

 

280

 

3.8

 

R&D

 

276

 

205

 

460

 

815

 

16.2

 

1,478

 

20.1

 

Pre-operating and stoppage expenses

 

473

 

549

 

590

 

1,859

 

36.9

 

1,592

 

21.6

 

Other operating expenses

 

310

 

280

 

688

 

987

 

19.6

 

2,047

 

27.8

 

Total(1)

 

1,421

 

1,349

 

2,315

 

5,036

 

100.0

 

7,357

 

100.0

 

 


(1) Does not include gain/loss on sale of assets

 


(9) Including depreciation.

 

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CASH GENERATION AND OPERATING INCOME

 

Annual performance

 

Cash generation, measured by adjusted EBITDA, reached US$ 22.679 billion in 2013, showing an increase of 18.3% from the US$ 19.178 billion in 2012. The increase in adjusted EBITDA was mainly due to our efforts to cut costs and expenses which resulted in a year-over-year reduction of US$ 2.8 billion in 2013.

 

Operating income, measured by adjusted EBIT, showed a significant improvement versus the previous year, reaching US$ 17.537 billion in 2013, 21.5% higher than the US$ 14.430 billion in 2012. Our adjusted EBIT margin increased to 36.5% in 2013 versus 30.3% in 2012.

 

The share of ferrous minerals in cash generation in 2013 decreased to 95.0% from 97.6% in 2012, while base metals improved to 7.2% from 3.1% in the previous year. The share of logistics was 0.5%, while fertilizers and coal had a negative contribution of -0.2% and -2.0%, respectively.

 

Quarterly performance

 

Adjusted EBITDA was US$ 6.637 billion in 4Q13, 12.8% higher than 3Q13. The positive effects of higher prices of ferrous minerals and coal (US$ 574 million) and higher dividends received from non-consolidated affiliates (US$ 437 million) were the main factors for the increase in adjusted EBITDA versus 3Q13. Those were partly mitigated by lower sales volumes of fertilizers, general cargo logistics and others (US$ 168 million) and lower prices of base metals, fertilizers and general cargo logistics (US$ 136 million).

 

Adjusted EBIT was US$ 5.002 billion in 4Q13, slightly higher than 3Q13. Adjusted EBIT margin was 37.3% in 4Q13, lower than the 37.7% in 3Q13.

 

Main adjustments to adjusted EBIT and adjusted EBITDA in 4Q13 were: (i) impairment on assets, mainly related to the Rio Colorado project, (US$ 2.298 billion); (ii) loss in the sale of Tres Valles (US$ 215 million); and (iii) negative impact of fair value from the sale of VLI (US$ 151 million).

 

ADJUSTED EBITDA

 

US$ million 

 

4Q13

 

3Q13

 

4Q12

 

2013 

 

2012

 

Gross operating revenues

 

13,606

 

12,910

 

12,537

 

48,994

 

48,753

 

Net operating revenues

 

13,406

 

12,677

 

12,258

 

48,050

 

47,694

 

COGS

 

(6,983

)

(6,551

)

(6,972

)

(25,477

)

(26,449

)

SG&A

 

(362

)

(315

)

(577

)

(1,375

)

(2,240

)

Research and development

 

(276

)

(205

)

(460

)

(815

)

(1,478

)

Other operational expenses

 

(783

)

(829

)

(1,278

)

(2,846

)

(3,097

)

Adjusted EBIT

 

5,002

 

4,777

 

2,971

 

17,537

 

14,430

 

Depreciation, amortization  & exhaustion

 

1,136

 

1,044

 

1,200

 

4,308

 

4,288

 

Dividends received

 

499

 

62

 

263

 

834

 

460

 

Adjusted EBITDA

 

6,637

 

5,883

 

4,434

 

22,679

 

19,178

 

Non-recurring effects excluded from analysis

 

(2,664

)

(58

)

(4,152

)

(2,722

)

(5,071

)

 

ADJUSTED EBITDA BY BUSINESS AREA

 

US$ million 

 

4Q13

 

3Q13

 

4Q12

 

2013

 

2012

 

Ferrous minerals

 

6,654

 

5,626

 

4,435

 

21,543

 

18,720

 

Coal

 

-82

 

-72

 

-221

 

-455

 

-389

 

Base metals

 

243

 

303

 

133

 

1,639

 

602

 

Fertilizer nutrients

 

-105

 

-64

 

144

 

-54

 

630

 

Logistics

 

-2

 

77

 

18

 

119

 

83

 

Others

 

-71

 

13

 

-75

 

-113

 

-468

 

Total

 

6,637

 

5,883

 

4,434

 

22,679

 

19,178

 

 

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NET EARNINGS

 

Annual performance

 

Underlying earnings were US$ 12.261 billion in 2013, equal to US$ 2.38 per share on a fully diluted basis, increasing 15.4% from 2012.

 

The non-recurring effects, mostly non-cash items, excluded to calculate the underlying earnings totaled US$ 11.677 billion and are comprised of: (i) net financial expenses (US$ 2.637 billion) related to the REFIS, (ii) impairment on assets, mainly related to the Rio Colorado potash project, (US$ 2.298 billion), (iii) foreign exchange and monetary losses (US$ 2.928 billion), (iv) foreign exchange and interest rate risk derivatives’ losses (US$ 861 million), (v) tax effects of the adjustments described before (-US$ 1.402 billion) and (vi) REFIS income tax effects after deductions (US$ 3.832 billion). The REFIS effects are detailed in the box “Income tax settlement program (REFIS)”.

 

Our net earnings as reported under IFRS were US$ 584 million in 2013, equal to US$ 0.11 per share, against US$ 5.454 billion in the previous year. The positive results in spite of all the non-recurring effects attest to the quality of our assets and operations, which were able to absorb material one-off impacts.

 

Quarterly performance

 

In 4Q13, underlying earnings were US$ 3.212 billion, equal to US$ 0.62 per share, after excluding non-recurring effects, especially related to REFIS and impairments. Net earnings, under IFRS, accumulated a loss of US$ 6.451 billion in 4Q13.

 

Net financial expenses were US$ 4.159 billion in 4Q13, against US$ 503 million in the previous quarter, as detailed on table FINANCIAL RESULTS in Annex 1. The main items in net financial results include: (i) financial expenses of US$ 3.302 billion, mainly due to the financial charges related to the REFIS, (ii) financial revenues of US$ 350 million, against US$ 77 million in 3Q13 as result of the sale of Hydro shares (US$ 214 million), (iii) foreign exchange and monetary losses of US$ 934 million, due to the BRL depreciation of 5.0% against the USD in 4Q13 and (iv) mark-to-market losses on derivatives of US$ 273 million.

 

Equity income from affiliated companies was US$ 116 million in 4Q13, a slight decrease relative to the US$ 128 million in 3Q13. Most of the equity income in the quarter came from the ferrous minerals business, with Samarco accounting for US$ 122 million and MRS US$ 33 million. Results with CSA partially reduced equity income by US$ 46 million.

 

UNDERLYING EARNINGS

 

US$ million

 

4Q13

 

3Q13

 

4Q12

 

2013

 

2012

 

Underlying earnings

 

3,212

 

3,639

 

1,871

 

12,261

 

10,622

 

Items excluded from basic earnings

 

 

 

 

 

 

 

 

 

 

 

Impairment on assets

 

-2,298

 

 

-4,023

 

-2,298

 

-4,023

 

Gain(loss) on sale of assets

 

-366

 

-58

 

-129

 

-424

 

-506

 

Deferred Income Tax of Impairment

 

 

 

1,627

 

 

1,627

 

Reversal of Deferred Income tax

 

 

 

 

 

1,236

 

Impairment on investments

 

 

 

-1,941

 

 

-1,941

 

Shareholders Debentures

 

-16

 

-109

 

45

 

-381

 

-464

 

Foreign exchange and monetary variation gains (losses), net

 

-934

 

-110

 

-139

 

-2,928

 

-1,890

 

Currency and interest rate swaps

 

-226

 

69

 

-2

 

-861

 

-272

 

Gain (loss) on sale of investments

 

41

 

 

 

41

 

 

Fair value on financial instruments available for sale

 

214

 

 

 

214

 

 

Other

 

27

 

 

 

27

 

 

Financial expenses - REFIS

 

-2,637

 

 

 

-2,637

 

 

Tax effects of the adjustments

 

364

 

71

 

77

 

1,402

 

1,065

 

Income taxes - REFIS

 

-3,832

 

 

 

-3,832

 

 

Net Income

 

-6,451

 

3,502

 

-2,615

 

584

 

5,454

 

 

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INCOME TAX SETTLEMENT PROGRAM (REFIS)

 

In November 2013, we decided to participate in the federal tax settlement program (REFIS) for payment of Brazilian corporate income tax and social contribution on the net income of our non-Brazilian subsidiaries and affiliates from 2003 to 2012.

 

Under the conditions of this REFIS, the debts due until December 31, 2012 — estimated at R$ 45.0 billion (US$ 19.605 billion) — could be paid as follows: (i) upfront payment with 100% reduction of penalty, interest and statutory fees or (ii) 20% down payment at the time of joining the program and remaining part in 180 monthly installments adjusted by the Central Bank of Brazil policy interest rate (SELIC), with 80% reduction of penalties, 50% reduction of interest and 100% reduction of statutory fees. In addition, accumulated losses could be used as payment.

 

We elected the upfront payment of taxes for 2003, 2004 and 2006, and payment in installments of principal, penalties and interest for the remainder years of 2005 and 2007 to 2012 resulting in an amount due of R$ 22.325 billion, net of accumulated losses. Therefore, by the end of November, we announced R$ 5.965 billion (US$ 2.555 billion) of upfront tax payments and R$16.360 billion (US$ 7.037 billion) to be paid in 179 monthly installments adjusted by the SELIC.

 

The impact on net income in 2013 due to the recognition of the REFIS program was R$ 14.814 billion (US$ 6.469 billion), with R$ 6.039 billion (US$ 2.637 billion) of financial expenses and R$ 8.775 billion (US$ 3.832 billion) of income taxes.

 

As the table below demonstrates, the actual net income impact is lower than the original impact estimated in November, 2013 at R$ 20.725 billion (US$ 8.914 billion). The reduced impact is a result of the Brazilian Law 12,865/2013, which with the modification brought by the Provisional Measure 627/2013 states, explicitly, in its paragraph 15 of the article 40 that the REFIS reduction of fines, interests and statutory fees “shall not be considered in the tax base” for Brazilian federal tax purposes.

 

REFIS - NET INCOME IMPACT

 

R$ million

 

Contingencies without
REFIS

 

November, 2013 REFIS
estimates

 

Actual REFIS, Law 12,865

 

Principal REFIS

 

(17,084

)

(17,084

)

(17,084

)

Deductions(1)

 

8,309

 

2,398

 

8,309

 

Net tax impact

 

(8,775

)

(14,686

)

(8,775

)

 

 

 

 

 

 

 

 

Financial expenses(2)

 

(27,916

)

(6,039

)

(6,039

)

 

 

 

 

 

 

 

 

Net income impact

 

(36,691

)

(20,725

)

(14,814

)

 


(1) Includes tax effects of interests, interests on penalties and statutory fees and tax losses carry-forward.

(2) Penalties, fines, interest, interest on penalties and statutory fees.

 

Our participation in the REFIS resulted in a substantial reduction in the amounts in dispute, while preserving potential benefits from legal challenges to the tax regime for foreign subsidiaries.

 

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INVESTMENTS

 

From this current report onwards, R&D will not be included in our investments figure. Investments are composed of project execution and sustaining capex, which are based on disbursements.

 

In 2013, Vale’s capital expenditures (project execution and sustaining) amounted to US$ 14.233 billion. This represents a decrease of US$ 1.963 billion when compared to the US$ 16.196 billion spent in 2012. US$ 9.648 billion was dedicated to project execution and US$ 4.585 billion to sustaining. Divestments of non-core business totaled US$ 6.024 billion.

 

INVESTMENTS BY BUSINESS AREA - 2013

 

US$ million

 

Projects

 

%

 

Sustaining
capex

 

%

 

Total

 

%

 

Ferrous minerals

 

4,926

 

51.1

 

2,224

 

48.5

 

7,150

 

50.2

 

Coal

 

1,346

 

14.0

 

165

 

3.6

 

1,511

 

10.6

 

Base metals

 

1,718

 

17.8

 

1,309

 

28.5

 

3,027

 

21.3

 

Fertilizer nutrients

 

780

 

8.1

 

378

 

8.2

 

1,159

 

8.1

 

Logistics services - general cargo

 

353

 

3.7

 

249

 

5.4

 

603

 

4.2

 

Power generation

 

209

 

2.2

 

6

 

0.1

 

214

 

1.5

 

Steel

 

315

 

3.3

 

 

 

315

 

2.2

 

Others

 

 

 

255

 

5.6

 

255

 

1.8

 

Total

 

9,648

 

100.0

 

4,585

 

100.0

 

14,233

 

100.0

 

 

PROJECT EXECUTION

 

Vale has consistently reduced its investments in project execution, from US$ 11.580 billion in 2012 to US$ 9.648 billion in 2013 as projects are delivered. Ferrous minerals represented over 50% of our investments in project execution and, combined, base metals and coal accounted for over 30% of the total.

 

PROJECT EXECUTION BY BUSINESS AREA

 

US$ million

 

4Q13

 

3Q13

 

4Q12

 

2013

 

% 2013

 

2012

 

% 2012

 

Ferrous minerals

 

1,367

 

1,161

 

1,673

 

4,926

 

51.1

 

5,747

 

49.6

 

Coal

 

514

 

392

 

281

 

1,346

 

14.0

 

943

 

8.1

 

Base metals

 

319

 

291

 

655

 

1,718

 

17.8

 

2,491

 

21.5

 

Fertilizer nutrients

 

86

 

141

 

440

 

780

 

8.1

 

1,467

 

12.7

 

Logistics services - general cargo

 

78

 

65

 

152

 

353

 

3.7

 

298

 

2.6

 

Power generation

 

72

 

22

 

121

 

209

 

2.2

 

286

 

2.5

 

Steel

 

11

 

65

 

64

 

315

 

3.3

 

348

 

3.0

 

Total

 

2,447

 

2,136

 

3,386

 

9,648

 

100.0

 

11,580

 

100.0

 

 

Ferrous minerals

 

In 2013 our investment in ferrous minerals was US$ 4.926 billion, mainly comprised of growth initiatives in the iron ore business, namely: (a) Carajás and related infrastructure expansion (US$ 2.718 billion); (b) Itabiritos projects — (US$ 1.087 billion); and (c) global distribution network (US$ 673 million).

 

The expansion in Carajás achieved important milestones during the year. We started ramping up Plant 2 (a dry beneficiation process with 40 Mtpy of capacity), delivered Pier IV with its first berth in Ponta da Madeira (PDM) — currently with 150 Mtpy of capacity — and increased the Carajás railway (EFC) capacity to 128 Mtpy.

 

In 2013, we obtained two essential licenses for S11D and associated logistics. S11D, our flagship iron ore project, received the installation license (LI) for the rail spur that will connect the southern range of Carajás to the EFC and

 

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the LI for the development of the mine and construction of the plant. Pre-stripping of the mine and the off-site electromechanical assembly of modules progressed well.

 

Conceição Itabiritos (CI) started in 4Q13, with investments of US$ 249 million in the year. CI is the first of our Itabiritos projects that will improve quality and extend mine lives allowing full utilization of the South and Southeastern Systems infra-structure capacity. Conceição Itabiritos II and Vargem Grande Itabiritos reached close to 80% of physical completion, and Cauê Itabiritos started the electromechanical assembly of the quaternary screening and grinding buildings.

 

We also finalized the unloading system of our distribution center in Malaysia, Teluk Rubiah, and will have the storage yard ready to start operations in 2H14.

 

Coal

 

Our investments in Mozambique gained steam during 2013. US$ 1.315 billion was invested to duplicate the Moatize coking coal operations and build the Nacala railway and port infrastructure. Moatize II is more than halfway through completion and civil engineering works at the processing facilities are progressing well. The port and railway reached 42% and 40% physical progress in 2013, respectively. The greenfield sections within Mozambique and Malawi which will enable the connection between the Moatize Mine and the Nacala Port achieved 56% physical progress and the first train is expected to circulate by the end of 2014 with rail capacity at 11 Mtpy. Works on revamping the existing railway sections will extend up to 2016, increasing capacity up to 18 Mtpy.

 

Base metals

 

During 2013, we completed two nickel projects: Long Harbour and Totten. The Long Harbour hydrometallurgical refinery, with investments of US$ 1.030 billion in the year, reached construction completion and is currently being commissioned. Totten mine, with investment of US$ 172 million in 2013, is starting up. When fully ramped up, the mine is expected to produce in excess of 8,000 t per year of nickel and in excess of 10,000 t per year of copper.

 

Salobo II reached 90% of physical completion and is currently under commissioning. Salobo II will be completed in 1H14 and we expect a solid ramp-up, as a result of lessons learned from Salobo I.

 

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DESCRIPTION AND STATUS OF MAIN PROJECTS

 

Project

 

Description

 

Capacity
Mtpy

 

Status

Ferrous minerals projects

 

 

 

 

 

 

Carajás Serra Sul S11D

 

·    Development of a mine and processing plant, located in the Southern range of Carajás, Pará, Brazil

 

90

 

·    Electromechanical assembly of modules achieved 47% completion

·    Installation license issued

CLN S11D

 

·    Duplication of 570 km railway, with construction of rail spur of 101 km

·    Acquisition of wagons, locomotives, and onshore and offshore expansions at PDM maritime terminal

 

230 (80¹)

 

·    Authorization issued from ANTT for all civil works required for the construction of the EFC

·    Earthworks for railway duplication and civil works of the rail spur to connect the mine to the EFC in progress

·    Installation license issued

Serra Leste

 

·    Construction of new processing plant in Carajás, Pará, Brazil

 

6

 

·    Eletromechanical assembly of the substation and energizing of the processing plant concluded

·    Pre stripping initiated and commissioning of the iron ore treatment facility in progress

·    Installation license issued

V. Grande Itabiritos

 

·    Construction of a new iron ore processing plant, in the Southern System, Minas Gerais, Brazil

 

10

 

·    Ongoing assembly of steel structures and equipment for the iron ore beneficiation plant

·    Ongoing civil works for the long distance conveyor belt and Andaime railway terminal

·    Operating license expected for 1H14

Conceição Itabiritos II

 

·    Adaptation of the existing plant to process lower grade itabirites from the Conceição mine, located in the Southeastern System, Minas Gerais, Brazil

 

19 (-¹)

 

·    Assembly of steel structures of the flotation cells and civil works for the ball mill with feed type system concluded

·    Ongoing civil engineering, steel structure and equipment electromechanical assembly

·    Installation license issued

Cauê Itabiritos

 

·    Adaptation of the plant to process low-grade itabirites from the Minas do Meio mine hub, located in the Southeastern System, Minas Gerais, Brazil

 

24 (4¹)

 

·    Electromechanical assembly of the quaternary screening and grinding started

·    Ongoing civil works and steel structure and equipment received

·    Preliminary and installation licenses for new primary crusher expected for 1H15

Samarco IV²

 

·    Construction of fourth pellet plant, and expansion of mine, pipeline and maritime terminal

 

4.2

 

·    Commissioning activities in final stages

·    Pre heat of the pelletizing furnace initiated

·    Fully funded by Samarco - not included in Vale’s budget

Tubarão VIII

 

·    Construction of the eighth pellet plant at our existing site at the Tubarão Port, Espírito Santo, Brazil

 

7.5

 

·    Test with pelletizing cargo performed

·    Commissioning activities in final stage

·    Operating license expected for 1H14

Teluk Rubiah

 

·    Construction of a storage yard and maritime terminal for the 400,000 dwt vessels in Teluk Rubiah, Malaysia

 

60

 

·    Unloading system fully commissioned to receive the first vessel

·    On site concreting work at the smaller export pier completed

CSP²

 

·    Development of a steel slab plant in partnership with Dongkuk and Posco, located in Ceará, Brazil.

 

1.5

 

·    Civil and electromechanical works in progress

·    Preliminary and installation licenses issued

 

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Table of Contents

 

Project

 

Description

 

Capacity
Mtpy

 

Status

Coal projects

 

 

 

 

 

 

Moatize II

 

·    New pit and duplication of the Moatize CHPP, as well as all related infrastructure, located in Tete, Mozambique

 

11

 

·    Earthworks concluded

·    Civil works in progress with concrete foundations at the primary crusher, coal handling processing plant (CHPP) and heavy duty vehicles area well advanced

Nacala corridor

 

·    Railway and port infrastructure connecting Moatize site to the Nacala-à-Velha maritime terminal, located in Nacala, Mozambique

 

18

 

·    Rail and sleepers delivery for the section between Moatize and Malawi border in progress

·    Ongoing earthworks, drainage and civil works for the railway section in Malawi and Mozambique

·    Assembly of stacker and conveyor belt at the port initiated

Base metals projects

 

 

 

 

 

 

Salobo II

 

·    Salobo expansion, raising height of tailing dam and increase in mine capacity, located in Marabá, Pará, Brazil

 

100,000 tpy

 

·    Test of the pipes from the filtering facility concluded

·    Ongoing electromechanical assembly of the plant

·    Plant operating license expected for 1H14

 

In the following table we do not include pre-operating expenses in the estimated capex for the year, although these expenses are included in the total estimated capex column, in line with our Board of Directors approval process.

 

PROGRESS INDICATORS

 

 

 

 

 

 

 

Executed capex

 

Estimated capex

 

 

 

 

 

Capacity

 

Estimated

 

US$ million

 

US$ million

 

Physical

 

Project

 

Mtpy

 

start-up

 

2013

 

Total

 

2014

 

Total

 

progress

 

Ferrous minerals projects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carajás Serra Sul S11D

 

90

 

2H16

 

818

 

2,631

 

1,091

 

8,089

 

48

%

CLN S11D

 

230 (80¹)

 

1H14 to 2H18

 

696

 

1,156

 

1,914

 

11,582

 

13

%

Serra Leste

 

6

 

2H14

 

140

 

432

 

34

 

478

 

72

%

V. Grande Itabiritos

 

10

 

2H14

 

376

 

1,292

 

376

 

1,910

 

80

%

Conceição Itabiritos II

 

19 (-¹)

 

2H14

 

228

 

652

 

240

 

1,189

 

79

%

Cauê Itabiritos

 

24 (4¹)

 

2H15

 

233

 

353

 

373

 

1,504

 

47

%

Samarco IV²

 

4.2

 

1H14

 

 

 

 

1,625

 

98

%

Tubarão VIII

 

7.5

 

1H14

 

194

 

1,084

 

154

 

1,321

 

95

%

Teluk Rubiah

 

60

 

2H14

 

490

 

1,003

 

278

 

1,371

 

94

%

CSP²

 

1.5

 

2H15

 

297

 

873

 

197

 

2,570

 

46

%

Coal projects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Moatize II

 

11

 

2H15

 

383

 

839

 

761

 

2,068

 

53

%

Nacala corridor

 

18

 

2H14

 

932

 

1,341

 

1,812

 

4,444

 

41

%

Base metals projects

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salobo II

 

100,000 tpy

 

1H14

 

294

 

1,054

 

332

 

1,707

 

93

%

 

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¹ Net additional capacity

² Relative to Vale’s stake in the project

 

SUSTAINING CAPEX

 

Sustaining capital expenditures have been stable over the past 3 years. In 2013 they reached US$ 4.585 billion, accounting for 5.0% of our asset base and slightly below the 2012 expenditures. Ferrous minerals represented over 48% and, combined, ferrous minerals and base metals accounted over 77% of the total.

 

Sustaining capital expenditures for ferrous minerals included: (i) replacement and acquisition of new equipment (US$ 684 million), (ii) expansion of tailing dams (US$ 284 million), (iii) infrastructure enhancement (US$ 193 million) and (iv) improvement in the current standards of health and safety and environmental protection (US$ 110 million). Maintenance of railways and ports serving our mining operations in Brazil totaled US$ 738 million.

 

Sustaining capex in the base metals operations was mainly dedicated to the rebuilding of the Onça Puma furnace #1 (US$ 166 million), the installation of the AER (atmospheric emission reduction) project (US$ 137 million) in Sudbury, the development of ore bodies and the increase in recovery rates and grades in the nickel mines (US$ 136 million), and the execution of projects for the improvement of production processes in the copper mines (US$ 68 million).

 

Investments in corporate social responsibility reached US$ 1.280 billion in 2013, of which US$ 1.015 billion was for environmental protection and conservation and US$ 265 million for social projects.

 

SUSTAINING CAPEX BY BUSINESS AREA

 

US$ million

 

4Q13

 

3Q13

 

4Q12

 

2013

 

% 2013

 

2012

 

% 2012

 

Ferrous minerals

 

630

 

498

 

715

 

2,224

 

48.5

 

2,135

 

46.2

 

Coal

 

68

 

45

 

102

 

165

 

3.6

 

207

 

4.5

 

Base metals

 

451

 

286

 

470

 

1,309

 

28.5

 

1,202

 

26.0

 

Fertilizer nutrients

 

120

 

121

 

118

 

378

 

8.2

 

370

 

8.0

 

Logistics services - general cargo

 

45

 

77

 

84

 

249

 

5.4

 

293

 

6.4

 

Power generation

 

4

 

 

3

 

6

 

0.1

 

6

 

0.1

 

Steel

 

 

 

(0

)

 

 

 

 

Others

 

75

 

68

 

122

 

255

 

5.6

 

403

 

8.7

 

Total

 

1,393

 

1,095

 

1,614

 

4,585

 

100.0

 

4,616

 

100.0

 

 

PORTFOLIO MANAGEMENT

 

In 2013 we divested non-core assets and further simplified our business portfolio, while unlocking value. The main divestitures in the year included: (i) the sale of interests in Hydro for US$ 1.811 billion, (ii) agreements (still subject to conditions precedent) to sell stakes in aggregate of 62.4% of our wholly-owned subsidiary VLI for R$ 2.7 billion in cash to Vale and R$ 2.0 billion in cash contributions to VLI, and (iii) the sale of gold streams from the Salobo and

 

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Sudbury mines for an initial cash payment of US$ 1.9 billion plus 10 million Silver Wheaton warrants, and ongoing payments equal to the lesser of US$ 400 per ounce of gold and the prevailing market price. We also sold our stakes in Log-in for US$ 99 million, in Fosbrasil for US$ 45 million and in Tres Valles for US$ 25 million.

 

We had US$ 268 million in acquisitions during the year, as a result of previous rights that were exercised. We exercised the purchase option of the remaining 24.5% stake in Belvedere, an early stage project still subject to Board approval in Queensland, Australia for A$ 150 million (US$ 156 million). Belvedere, according to our preliminary estimates, is a large coking coal resource and has the potential to produce up to 7.0 Mtpy. We also acquired an additional 12.47% stake in Capim Branco I and II hydroelectric power plants from Suzano Papel e Celulose S.A. for US$ 112 million as a result of exercising our preemptive rights.

 

By the end of 2013, we entered into transactions with CEMIG Geração e Transmissão S.A. (CEMIG GT), still subject to conditions precedent, to restructure our investments in power generation. As a result, we agreed to sell 49% of our 9% stake in Norte Energia S.A. — the company established to develop and operate the Belo Monte hydroelectric plant — for approximately US$88 million, and create a joint venture to hold certain power generation assets and projects that will supply Vale operations.

 

DEBT INDICATORS

 

During the year, Vale maintained its absolute debt level with strong operational cash flow and divestitures supporting capital expenditures, dividend payments and the upfront payment of the REFIS settlement. Furthermore, net debt at year end would have been less considering full proceeds from the transactions still subject to conditions precedent, mainly VLI.

 

As of December 31, 2013, our net debt was US$ 24.403 billion. Vale´s total debt was US$ 29.727 billion, with US$ 5.324 billion in cash position(10). Such cash position did not include any proceeds from the divestiture of the VLI stakes, which is subject to conditions precedent and, most importantly, the analysis and approval by the antitrust regulator CADE, which is currently underway.

 

Debt leverage, as measured by total debt/LTM adjusted EBITDA(d) ratio excluding non-recurring charges, decreased to 1.3x from 1.5x as of September 30, 2013. Total debt/enterprise value(e) remained stable at 29%.

 

The average debt maturity of 9.9 years as of December 31, 2013 was in line with our goal of maintaining long debt maturity to minimize refinancing risks. The average cost of debt measured in US dollars was stable compared to the previous quarter, at 4.59% per annum as of December 31, 2013.

 

Interest coverage, measured by the LTM adjusted EBITDA /LTM interest expenses(f), increased to 14.8x on December 31, 2013, compared to 13.8x in the previous quarter.

 

Considering hedge positions in interest rates, our total debt on December 31, 2013 was 30% based on floating interest rates and 70% based on fixed interest rates. Considering hedge positions in currencies, 98% of our debt is denominated in US dollars and the remainder in other currencies.

 

DEBT INDICATORS

 

US$ million 

 

4Q13

 

3Q13

 

4Q12

 

Total debt

 

29,727

 

29,776

 

30,546

 

Net debt

 

24,403

 

22,574

 

24,468

 

Total debt / adjusted LTM EBITDA (x)

 

1.3

 

1.5

 

1.6

 

Adjusted LTM EBITDA / LTM interest expenses (x) 

 

14.8

 

13.8

 

14.7

 

Total debt / EV (%)

 

28.7

 

28.8

 

22.5

 

 


(10)  Cash holdings include cash and cash equivalents, as well as short-term investments of US$ 3 million as of December 31, 2013.

 

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PERFORMANCE OF THE BUSINESS SEGMENTS

 

Iron ore and pellets continued to drive adjusted EBITDA in 2013. The base metals business showed significant improvement in the year. Coal, fertilizer and other products had negative contribution to adjusted EBITDA.

 

SEGMENT INFORMATION - 2013, as per footnote of financial statements

 

US$ million

 

Net
operating
revenues

 

Cost(1)

 

Expenses(1)

 

R&D

 

Pre
operating
&
stoppage(1)

 

Dividends

 

Adj.
EBITDA(2)

 

Ferrous minerals

 

34,792

 

(11,849

)

(1,402

)

(326

)

(387

)

715

 

21,543

 

Iron ore

 

28,137

 

(9,153

)

(1,261

)

(314

)

(244

)

65

 

17,230

 

Pellets

 

6,000

 

(2,299

)

(110

)

(12

)

(130

)

650

 

4,099

 

Ferroalloys and manganese

 

523

 

(317

)

(34

)

 

(13

)

 

159

 

Others ferrous

 

132

 

(80

)

3

 

 

 

 

55

 

Coal

 

1,010

 

(1,147

)

(262

)

(49

)

(47

)

40

 

(455

)

Base metals

 

7,286

 

(4,665

)

(1

)

(218

)

(763

)

 

1,639

 

Fertilizer nutrients

 

2,814

 

(2,190

)

(197

)

(53

)

(428

)

 

(54

)

Logistics - general cargo

 

1,283

 

(1,078

)

(72

)

(14

)

 

 

119

 

Others

 

865

 

(669

)

(233

)

(155

)

 

79

 

(113

)

Total

 

48,050

 

(21,598

)

(2,167

)

(815

)

(1,625

)

834

 

22,679

 

 


(1) Excluding depreciation and amortization

(2) Excluding non-recurring effects

 

Ferrous minerals

 

Annual performance

 

Iron ore

 

Adjusted EBITDA of iron ore in 2013 was US$ 17.230 billion, 18.8% higher than the previous year. The increase of US$ 2.727 billion was mainly a result of our efforts to reduce costs and expenses (US$ 1.350 billion), followed by positive effects from exchange rates variations (US$ 640 million) and higher sales prices (US$ 514 million) and volumes (US$ 217 million).

 

Iron ore gross sales revenues were US$ 28.429 billion in 2013, 4.5% higher than in 2012. Sales volumes contributed with US$ 692 million and prices with US$ 535 million to the increase in sales revenues from 2012.

 

Sales volumes reached an all-time record of 264.6 Mt in 2013, supporting the all-time record sales volumes of iron ore and pellets of 305.6 Mt. The use of inventories and higher acquisition of iron ore from third parties were the main factors that contributed to the increase in sales from the 258.1 Mt in the previous year. The average realized price of iron ore was US$ 107.43 per metric ton in 2013, slightly higher than the US$ 105.41 in 2012.

 

Iron ore cost, net of depreciation charges, were US$ 9.153 billion. After adjusting for the effects of higher volumes and currency variations, costs were down by US$ 563 million against 2012, despite inflation in BRL in 2013.

 

Discounting iron ore freight costs of US$ 2.974 billion, total cash cost at the port (mine, plant, railroad and port, after royalties) was US$ 6.179 billion. Cash cost per metric ton declined to US$ 23(11), US$ 5 lower than in 2012, as a result of our ongoing initiatives to reduce costs.

 


(11)  As per segment reporting notes to the financial statements: US$ 9.153 billion in costs net of depreciation and amortization, less US$ 2.974 billion in iron ore freight, over iron ore sales of 264.6 Mt.

 

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Iron ore pellets

 

Adjusted EBITDA of pellets in 2013 was US$ 4.099 billion, slightly higher than 2012. The increase of US$ 29 million was mainly due to higher dividends received from non-consolidated affiliated companies (US$ 371 million), positive impacts from exchange rates variations (US$ 218 million), higher sales prices (US$ 94 million) and lower costs (US$ 48 million). Those positive effects were partly mitigated by lower sales volumes (US$ 576 million) and higher SG&A, R&D and other expenses (US$ 127 million).

 

Pellets gross sales revenues were US$ 6.158 billion in 2013, decreasing by 8.9% versus 2012, mainly due to the decrease in sales volumes, which impacted sales revenues by US$ 654 million compared to the previous year. Sales volumes declined to 40.991 Mt versus 45.382 Mt in 2012, as a result of lower pellet production after the shutdown of the Tubarão I and II and the São Luis plants. Sales prices showed a small increase to US$ 150.22 per metric ton in 2013 versus US$ 148.89 in the previous year.

 

Costs for pellets, net of depreciation charges, were US$ 2.299 billion in 2013. After adjusting for the effects of lower volumes and currency prices, costs were down US$ 48 million against 2012, despite inflation in BRL in 2013.

 

Manganese and ferroalloys

 

Adjusted EBITDA of manganese and ferroalloys in 2013 was US$ 159 million, US$ 31 million lower than 2012, mainly due to the increase in costs and expenses (US$ 85 million) partly offset by higher sales prices (US$ 43 million) and positive impacts from exchange rates variations (US$ 29 million). Higher costs reflect the corrective maintenance at our manganese mine Mina do Azul in 4Q13, which increased cost of materials (US$ 20 million) and outsourced services (US$ 57 million).

 

Manganese gross sales revenues increased to US$ 333 million in 2013, up from US$ 234 million in 2012, due to higher realized volumes and prices. In 2013, manganese ore production was 2.378 Mt, in line with 2012.

 

Ferroalloys sales revenues decreased in 2013 to US$ 239 million from US$ 358 million in 2012, due to the decrease in volumes after the sale of the European operations (Dunkerque and Mo I Rana) concluded in the end of 2012 and lower prices. In 2013, the output of ferroalloys was 179,000 t, 54.9% lower than in 2012, for the reasons given above.

 

Quarterly performance

 

Iron ore

 

Adjusted EBITDA of iron ore in 4Q13 was US$ 5.253 billion, 11.9% higher than the previous quarter. The increase of US$ 557 million was mainly due to higher sales prices (US$ 552 million) and lower SG&A and other expenses (US$ 194 million). Those positive effects were partly offset mainly by higher R&D expenditures (US$ 33 million) and higher costs (US$ 28 million).

 

Iron ore gross sales revenues in 4Q13 increased to US$ 8.314 billion, 7.2% higher than the previous quarter, mainly due to higher prices, which accounted for US$ 544 million of the total increase in sales revenues. Average realized price increased to US$ 112.97 per metric ton in 4Q13 from US$ 105.58 in 3Q13, mainly due to the increase of average Platt’s IODEX 62% in 4Q13 and higher sales on a CFR basis.

 

Our iron ore sales in 4Q13 were priced through three basic systems: (i) 52% based on the current quarter, monthly and daily spot prices; (ii) 31% based on the spot price after delivery, involving provisional pricing and an adjustment invoice following delivery; and (iii) 17% linked to past prices (three-month average with a one-month lag).

 

Sales volumes remained stable — 73.597 Mt in 4Q13 versus 73.435 Mt in 3Q13 — even though there was a slight quarterly decrease in iron ore output to 81.3 Mt(12) in 4Q13. In 4Q13, we acquired 3.8 Mt of iron ore from third parties. Sales on a CFR basis increased to 37.9 Mt in 4Q13, representing 51.5% of total shipments, versus 37.3 Mt in 3Q13, equivalent to 50.8% of total shipments.

 


(12)  Excluding Samarco’s attributable production of 2.780 Mt in 4Q13.

 

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Iron ore costs, net of depreciation charges, were US$ 2.636 billion. After adjusting for the effects of higher volumes and currencies variations, costs were stable in a quarterly comparison. Discounting iron ore freight costs of US$ 974 million, total cash cost at the port (mine, plant, railroad and port, after royalties) was US$ 1.662 billion. Cash cost per ton remained at a low level in 4Q13, at US$ 22.58 per metric ton(13), already including the increase in wages for our Brazilian employees. Excluding iron ore acquired from third parties and costs related to provision for inventories losses of US$ 79 million, cash cost per metric ton was US$ 20.87. Pre-operating expenses for iron ore reduced to US$ 52 million.

 

Iron ore pellets

 

Adjusted EBITDA of pellets in 4Q13 was US$ 1.307 billion, 52.0% higher than 3Q13. The increase of US$ 447 million was mainly due to higher dividends received from non-consolidated affiliated companies (US$ 434 million) and higher sales volumes (US$ 85 million) and prices (US$ 19 million), which were partly offset by higher costs and expenses (US$ 88 million).

 

Pellet gross sales revenues in 4Q13 rose by 10.0% to US$ 1.677 billion, mainly due to the stronger sales volumes, which contributed with US$ 145 million to the increase in sales revenues. Sales volumes increased to 11.167 Mt in 4Q13 from 10.197 Mt in the previous quarter, supported by a 7.0% quarterly increase in pellet production to 10.4 Mt(14). Pellet prices were slightly higher — US$ 150.17 per metric ton in 4Q13 against US$ 149.55 in 3Q13.

 

Pellets costs, net of depreciation charges, were US$ 695 million in 4Q13. After adjusting for the effects of higher volumes and exchange rate variations, costs were up US$ 68 million when compared to 3Q13, mainly due to higher leasing costs of US$ 48 million related to the stoppage of Tubarão I and II. Pre-operating and stoppage expenses for pellets reduced slightly to US$ 29 million.

 

Manganese and ferroalloys

 

Adjusted EBITDA of manganese and ferroalloys in 4Q13 was US$ 61 million, the same as in 3Q13. The reduction of SG&A and other expenses (US$ 14 million) were offset by lower sales volumes and prices (US$ 10 million), higher costs (US$ 3 million) and exchange rate effects (US$ 1 million).

 

Manganese ore gross sales revenues reached US$ 99 million, 16.8% lower than 3Q13, due to the decrease in sales volumes and lower prices. Production of manganese ore reached 638,000 t against 621,000 t in 3Q13. There was an increase in inventory held by clients in 3Q13, which increased volumes sold in that quarter.

 

Ferroalloys sales revenues increased to US$ 62 million, 14.8% higher than in 3Q13, as a result of higher sales volumes, which were slightly offset by lower prices. In 4Q13, the production of ferroalloys was 50,000 t, 4.0% lower than in 3Q13, due to scheduled maintenance stoppage in 4Q13.

 

Market outlook

 

Global activity is expected to improve further in 2014, largely on account of recovery in the developed economies. The Euro area came out of the recession, the US is recovering and has been successful in reducing the unemployment rate while Japan looks set to have a brighter outlook due to its monetary stimulus. This more positive scenario in developed markets is important to encourage and support global investments and boost international trade. However, uncertainties related to emerging markets may partially offset the economic recovery, as some of these markets slowed down in the end of 2013.

 

In China, concerns increased after the Third Plenum Session held last November, when reforms were announced. From then, it became clear that the central government wants to let the market play a decisive role in allocating resources, which makes China’s growth more sustainable in the long term as it will become less dependent on government stimulus, but also more uncertain in the short term as credit conditions may tight.

 

Chinese reforms will also deal with, among other things, the need to control local governments’ debt, maintain the urbanization process and produce a cleaner environment. Reforms will probably be implemented smoothly, without

 


(13)  As per segment reporting notes to the financial statements: US$ 2.636 billion in costs net of depreciation and amortization, less US$ 974 million in iron ore freight, over iron ore sales of 73.6 Mt.

(14)  Excluding Samarco’s attributable production of 2.755 Mt in 4Q13.

 

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major disruptions in any sector and supporting growth around 7.5% this year. We expect China to grow around 7% in the next couple of years, with a gradual deceleration to 6% thereafter.

 

Due to reforms, the Chinese steel industry may become less buoyant, compared to its vigorous growth of 8% year-on-year in 2013. As controls tighten over local governments, there will be a deceleration in infrastructure building. On the other hand, the property sector is expected to continue to grow supported by the ongoing urbanization process, further boosting housing sales and housing starts. The automotive sector also has room to expand. Demand for equipment and machines will also grow as labor costs increase in China and lead firms to replace workers by machines.

 

From an environmental perspective, concerns about pollution are prompting the steel industry to raise capacity utilization, discontinue some non-efficient mills and reduce sintering and pelletizing capacity. These measures have already lifted demand for high quality iron ore, lump and pellets as of 2H13. As a result, premiums on lumps and pellets spiked in the end of 2013 and will probably remain elevated during 2014.

 

Taking a broad-based view on demand, world consumption of iron ore may increase supported by rise in global steel production, that we estimate to be around 4% in 2014, compared to 5% growth last year.

 

On the supply side, this year production is expected to continue to grow, mostly due to Australia and, to a lesser extent, Brazil and India.  This additional supply in the seaborne market may lead to a decline in Chinese domestic ore production alongside a decline in production from non-traditional miners in countries such as Malaysia, Iran and Indonesia, due to their elevated and increasing costs.

 

Overall, in spite of this expansion of supply, we expect the iron ore market to remain balanced, as the steel sector grows smoothly, with China remaining the driving force. Beyond China, demand for iron ore will possibly edge up marginally, along with the recovery in developed markets.

 

FERROUS MINERALS BUSINESS PERFORMANCE

VOLUME SOLD BY DESTINATION — IRON ORE AND PELLETS

 

‘000 metric tons

 

4Q13

 

3Q13

 

4Q12

 

2013

 

% 2013

 

2012

 

% 2012

 

Americas

 

11,058

 

11,250

 

9,618

 

41,715

 

13.6

 

41,342

 

13.6

 

Brazil

 

9,764

 

9,647

 

8,729

 

36,084

 

11.8

 

35,612

 

11.7

 

Others

 

1,294

 

1,602

 

889

 

5,631

 

1.8

 

5,730

 

1.9

 

Asia

 

55,687

 

55,624

 

59,550

 

198,406

 

64.9

 

200,895

 

66.2

 

China

 

40,874

 

42,001

 

46,706

 

145,847

 

47.7

 

148,746

 

49.0

 

Japan

 

8,772

 

8,618

 

7,352

 

31,191

 

10.2

 

30,227

 

10.0

 

Others

 

6,041

 

5,005

 

5,492

 

21,368

 

7.0

 

21,922

 

7.2

 

Europe

 

14,872

 

14,147

 

12,510

 

55,012

 

18.0

 

51,805

 

17.1

 

Germany

 

6,128

 

6,274

 

5,247

 

22,239

 

7.3

 

19,321

 

6.4

 

France

 

2,121

 

2,295

 

1,945

 

8,542

 

2.8

 

5,760

 

1.9

 

Others

 

6,623

 

5,578

 

5,318

 

24,232

 

7.9

 

26,724

 

8.8

 

Middle East

 

2,327

 

1,821

 

2,177

 

7,527

 

2.5

 

6,732

 

2.2

 

Rest of the World

 

820

 

790

 

969

 

2,962

 

1.0

 

2,669

 

0.9

 

Total

 

84,764

 

83,632

 

84,824

 

305,623

 

100.0

 

303,443

 

100.0

 

 

GROSS OPERATING REVENUE BY PRODUCT

 

US$ million

 

4Q13

 

3Q13