6-K 1 tm2032550-1_6k.htm FORM 6-K

 

 

 

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

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

of the

Securities Exchange Act of 1934

 

For the month of

 

October 2020

 

Vale S.A.

 

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

(Address of principal executive office)

 

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

 

(Check One) Form 20-F x Form 40-F ¨

 

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

 

(Check One) Yes ¨ No x

 

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

 

(Check One) Yes ¨ No x

 

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

 

(Check One) Yes ¨ No x   

 

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

 

 

 

 

 

 

 

 

Interim Financial Statements

September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BRGAAP in R$ (English)

 

 

 

 

 

 

Vale S.A. Interim Financial Statements

Contents

 

  Page
Report on review of quarterly information 2
Consolidated and Parent Company Income Statement 4
Consolidated and Parent Company Statement of Comprehensive Income 6
Consolidated and Parent Company Statement of Cash Flows 7
Consolidated and Parent Company Statement of Financial Position 9
Consolidated Statement of Changes in Equity 10
Consolidated and Parent Company Value Added Statement 11
Notes to the Interim Financial Statements 12
1.  Corporate information 12
2.  Basis of preparation of the interim financial statements 12
3.  Significant events in the current period 13
4.  Brumadinho’s dam failure 15
5.  Information by business segment and by geographic area 19
6.  Costs and expenses by nature 24
7.  Financial results 25
8.  Income taxes 26
9.  Basic and diluted earnings (loss) per share 27
10.    Accounts receivable 27
11.    Inventories 27
12.    Other financial assets and liabilities 28
13.    Investments in associates and joint ventures 28
14.    Intangibles 31
15.    Property, plant and equipment 32
16.    Loans, borrowings, cash and cash equivalents and short-term investments 33
17.    Liabilities related to associates and joint ventures 36
18.    Financial instruments classification 37
19.    Fair value estimate 38
20.    Derivative financial instruments 39
21.    Provisions 41
22.    Litigations 41
23.    Employee post-retirement obligations 44
24.    Stockholders’ equity 45
25.    Related parties 46
26.    Parent Company information (individual interim information) 47
27.    Additional information about derivatives financial instruments 50

 

  1 

 

 

 

 

(A free translation of the original in Portuguese)

 

Report on review of quarterly information

 

To the Board of Directors and Stockholders

Vale S.A.

 

Introduction

 

We have reviewed the accompanying consolidated and parent company interim accounting information of Vale S.A. ("Company"), included in the Quarterly Information Form - ITR for the quarter ended September 30, 2020, which comprises the statements of financial position as of September 30, 2020 and the respective income statements and the statements of comprehensive income for the three and nine-month periods then ended, of changes in equity for the nine-month period then ended, the parent company statement of cash flows for the nine-month period then ended and the consolidated statements of cash flows for the three and nine-month periods then ended, and a summary of significant accounting policies and other explanatory information.

 

Management is responsible for the preparation of the consolidated and parent company interim accounting information in accordance with the accounting standard CPC 21 - Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC), and the International Accounting Standard (IAS) 34 - Interim Financial Reporting, issued by the International Accounting Standards Board (IASB), as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of the Quarterly Information - ITR. Our responsibility is to express a conclusion on this interim accounting information based on our review.

 

Scope of review

 

We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion on the interim information

 

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated and parent company interim accounting information included in the quarterly information referred to above has not been prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of the Quarterly Information - ITR, and presented in accordance with the standards issued by the CVM.

 

  2 

 

  

 

 

(A free translation of the original in Portuguese)

 

Vale S.A.

 

Emphasis of matter

 

Brumadinho’s dam failure

 

We draw attention to Note 4 to the consolidated and parent company interim accounting information that describes the actions taken by the Company and the impacts on the interim accounting information as a consequence of the Brumadinho’s dam failure. As disclosed by Management, the Company has incurred costs and recorded provisions based on its best estimates and assumptions. Given the nature and uncertainties inherent in this type of event, the amounts recognized and/or disclosed will be reassessed by the Company and may be adjusted significantly in future periods, as new facts and circumstances become known. Our conclusion is not qualified in relation to this matter.

 

Other matters

 

Value added statements

 

The quarterly information referred to above includes the parent company and consolidated statements of value added for the nine-month period ended September 30, 2020. These statements are the responsibility of the Company's management and are presented as supplementary information under IAS 34. These statements have been subjected to review procedures performed together with the review of the interim accounting information for the purpose of concluding whether they are reconciled with the interim accounting information and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in the accounting standard CPC 09 - "Statement of Value Added". Based on our review, nothing has come to our attention that causes us to believe that these statements of value added have not been properly prepared, in all material respects, in accordance with the criteria established in this accounting standard, and consistent with the parent company and consolidated interim accounting information taken as a whole.

 

Rio de Janeiro, October 28, 2020

 

PricewaterhouseCoopers Patricio Marques Roche
Auditores Independentes  Contador CRC 1RJ081115/O-4
CRC 2SP000160/O-5  

 

  3 

 

 

 

 

Income Statement

In millions of Brazilian reais, except earnings per share data

 

      Consolidated 
      Three-month period ended
September 30,
   Nine-month period ended
September 30,
 
   Notes  2020   2019   2020   2019 
Net operating revenue   5(c)   57,906    40,664    129,591    107,621 
Cost of goods sold and services rendered   6(a)   (25,893)   (22,628)   (67,775)   (60,660)
Gross profit       32,013    18,036    61,816    46,961 
                         
Operating expenses                        
Selling and administrative expenses   6(b)   (684)   (504)   (1,864)   (1,349)
Research and evaluation expenses       (563)   (495)   (1,476)   (1,114)
Pre-operating and operational stoppage       (1,011)   (1,140)   (3,480)   (3,268)
Brumadinho event   4   (613)   (893)   (2,014)   (24,129)
Other operating expenses, net   6(c)   (612)   (492)   (2,161)   (963)
        (3,483)   (3,524)   (10,995)   (30,823)
Impairment and disposals of non-current assets   4, 13 and 15   (1,608)   (130)   (4,004)   (1,333)
Operating income       26,922    14,382    46,817    14,805 
                         
Financial income   7   370    525    1,576    1,368 
Financial expenses   7   (6,571)   (4,308)   (11,993)   (10,199)
Other financial items, net   7   (1,179)   (773)   (10,040)   (1,149)
Equity results and other results in associates and joint ventures   13 and 17   (211)   501    (3,763)   (2,047)
Income before income taxes       19,331    10,327    22,597    2,778 
                         
Income taxes   8                    
Current tax       (4,018)   (3,382)   (7,352)   (5,770)
Deferred tax       (241)   (484)   5,341    2,489 
        (4,259)   (3,866)   (2,011)   (3,281)
                         
Net income (loss)       15,072    6,461    20,586    (503)
Loss attributable to noncontrolling interests       (543)   (81)   (1,302)   (239)
Net income (loss) attributable to Vale's stockholders       15,615    6,542    21,888    (264)
                         
Earnings (loss) per share attributable to Vale's stockholders:                        
Basic and diluted earnings (loss) per share:   9                    
Common share (R$)       3.04    1.26    4.27    (0.05)

 

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

 

  4 

 

 

 

Income Statement

In millions of Brazilian reais, except earnings per share data

 

   Parent company 
   Three-month period ended September 30,   Nine-month period ended September 30, 
   2020   2019   2020   2019 
Net operating revenue   39,698    28,257    83,346    64,805 
Cost of goods sold and services rendered   (11,939)   (10,030)   (30,498)   (28,328)
Gross profit   27,759    18,227    52,848    36,477 
                     
Operating revenues (expenses)                    
Selling and administrative expenses   (344)   (235)   (944)   (640)
Research and evaluation expenses   (241)   (217)   (621)   (552)
Pre-operating and operational stoppage   (957)   (1,126)   (3,118)   (3,171)
Equity results from subsidiaries   3,461    (2,147)   3,456    4,849 
Brumadinho event   (613)   (893)   (2,014)   (24,129)
Other operating expenses, net   (747)   (995)   (2,590)   (650)
    559    (5,613)   (5,831)   (24,293)
Impairment and disposals of non-current assets   (76)   (2)   (214)   (1,064)
Operating income   28,242    12,612    46,803    11,120 
                     
Financial income   74    130    626    298 
Financial expenses   (6,409)   (3,315)   (11,822)   (9,060)
Other financial items, net   (1,373)   (340)   (8,187)   (488)
Equity results and other results in associates and joint ventures   (211)   501    (3,763)   (2,047)
Income (loss) before income taxes   20,323    9,588    23,657    (177)
                     
Income taxes                    
Current tax   (3,298)   (2,890)   (5,713)   (4,438)
Deferred tax   (1,410)   (156)   3,944    4,351 
    (4,708)   (3,046)   (1,769)   (87)
Net income (loss) attributable to Vale's stockholders   15,615    6,542    21,888    (264)
                     
Earnings (loss) per share attributable to Vale's stockholders:                    
Basic and diluted earnings (loss) per share:                    
Common share (R$)   3.04    1.26    4.27    (0.05)

 

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

 

  5 

 

 

 

 

Statement of Comprehensive Income

In millions of Brazilian reais

 

   Consolidated 
   Three-month period ended September 30,   Nine-month period ended September 30, 
   2020   2019   2020   2019 
Net income (loss)   15,072    6,461    20,586    (503)
Other comprehensive income (loss):                    
Items that will not be subsequently reclassified to income statement                    
Retirement benefit obligations   422    (291)   (624)   (840)
Fair value adjustment to investment in equity securities   815    (449)   312    (811)
Total items that will not be subsequently reclassified to income statement, net of tax   1,237    (740)   (312)   (1,651)
                     
Items that may be subsequently reclassified to income statement                    
Translation adjustments   3,753    6,623    25,967    6,900 
Net investments hedge (note 20b)   (458)   (630)   (3,484)   (546)
Cash flow hedge (note 20b)   (299)   (4)   (291)   (4)
Total of items that may be subsequently reclassified to income statement, net of tax   2,996    5,989    22,192    6,350 
Total comprehensive income   19,305    11,710    42,466    4,196 
Comprehensive income (loss) attributable to noncontrolling interests   (726)   (49)   (2,976)   (216)
Comprehensive income attributable to Vale's stockholders   20,031    11,759    45,442    4,412 
                     

 

   Parent company 
   Three-month period ended September 30,   Nine-month period ended September 30, 
   2020   2019   2020   2019 
Net income (loss)   15,615    6,542    21,888    (264)
Other comprehensive income (loss):                    
Items that will not be subsequently reclassified to income statement                    
Retirement benefit obligations   210    (9)   191    (43)
Fair value adjustment to investment in equity securities   680    (368)   344    (656)
Equity results   347    (363)   (847)   (952)
Total items that will not be subsequently reclassified to income statement, net of tax   1,237    (740)   (312)   (1,651)
                     
Items that may be subsequently reclassified to income statement                    
Translation adjustments   3,936    6,591    27,641    6,877 
Net investments hedge (note 20b)   (458)   (630)   (3,484)   (546)
Equity results   (299)   (4)   (291)   (4)
Total of items that may be subsequently reclassified to income statement, net of tax   3,179    5,957    23,866    6,327 
Total comprehensive income   20,031    11,759    45,442    4,412 

 

Items above are stated net of tax and the related taxes are disclosed in note 8.

 

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

 

  6 

 

 

 

 

Statement of Cash Flows

In millions of Brazilian reais

 

   Consolidated 
   Three-month period ended September 30,   Nine-month period ended September 30, 
   2020   2019   2020   2019 
Cash flow from operations (a)   29,919    20,496    50,107    46,237 
Interest on loans and borrowings paid (note 16)   (1,117)   (1,912)   (3,126)   (3,781)
Derivatives received (paid), net   (672)   (362)   62    (817)
Interest on participative stockholders' debentures paid   (3)   -    (472)   (351)
Income taxes (including settlement program)   (2,509)   (1,961)   (6,189)   (5,202)
Net cash provided by operating activities   25,618    16,261    40,382    36,086 
                     
Cash flow from investing activities:                    
Investment fund applications   (172)   -    (672)   - 
Capital expenditures   (4,693)   (3,544)   (14,893)   (8,715)
Additions to investments   (1)   (281)   (366)   (283)
Acquisition of subsidiary, net of cash (note 13)   -    (1,570)   -    (3,454)
Proceeds from disposal of assets and investments   449    82    466    475 
Dividends received from associates and joint ventures   10    1    419    762 
Judicial deposits and restricted cash related to Brumadinho event (note 4)   50    6,683    (50)   (5,888)
Short-term investment   -    (3,770)   3,318    (3,820)
Other investments activities, net   (1,056)   232    (1,978)   (371)
Net cash used in investing activities   (5,413)   (2,167)   (13,756)   (21,294)
                     
Cash flow from financing activities:                    
Loans and borrowings from third-parties (note 16)   9,585    3,784    34,004    11,886 
Payments of loans and borrowings from third-parties (note 16)   (29,368)   (7,013)   (31,674)   (14,213)
Payments of leasing   (244)   (206)   (726)   (507)
Dividends and interest on capital paid to stockholders   (18,492)   -    (18,492)   - 
Dividends and interest on capital paid to noncontrolling interest   (15)   (395)   (56)   (683)
Net cash used in financing activities   (38,534)   (3,830)   (16,944)   (3,517)
                     
Increase (decrease) in cash and cash equivalents   (18,329)   10,264    9,682    11,275 
Cash and cash equivalents in the beginning of the period   66,333    23,176    29,627    22,413 
Effect of exchange rate changes on cash and cash equivalents   1,885    2,204    10,580    1,956 
Cash and cash equivalents at end of the period   49,889    35,644    49,889    35,644 
                     
Non-cash transactions:                    
Additions to property, plant and equipment - capitalized loans and borrowing costs   67    133    274    429 
                     
Cash flow from operating activities:                    
Income before income taxes   19,331    10,327    22,597    2,778 
Adjusted for:                    
Provisions related to Brumadinho event (note 4)   -    -    108    22,126 
Equity results and other results in associates and joint ventures   211    (501)   3,763    2,047 
Impairment and disposal of non-current assets   1,608    130    4,004    1,333 
Depreciation, depletion and amortization   4,162    3,690    12,174    10,505 
Financial results, net   7,380    4,556    20,457    9,980 
Changes in assets and liabilities:                    
Accounts receivable   (1,513)   1,973    (4,031)   1,213 
Inventories   (1,626)   (214)   (3,157)   (1,019)
Suppliers and contractors (i)   1,064    1,635    (1,260)   3,198 
Provision - Payroll, related charges and other remunerations   792    737    538    (374)
Payments related to Brumadinho event (note 4) (ii)   (1,176)   (1,544)   (2,975)   (2,786)
Other assets and liabilities, net   (314)   (293)   (2,111)   (2,764)
Cash flow from operations (a)   29,919    20,496    50,107    46,237 

 

(i) Includes variable lease payments.

(ii) Additionally, the Company incurred in expenses in the amount of R$613 and R$1,906 for the three and nine-month periods ended September 30, 2020, respectively, and R$893 and R$1,906 for the three and nine-month periods ended September 30, 2019, respectively, which did not qualify for provision and, as such were recognized in the income statement.

 

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

 

  7 

 

 

 

 

Statement of Cash Flows

In millions of Brazilian reais

 

   Parent company 
   Nine-month period ended September 30, 
   2020   2019 
Cash flow from operations (a)   34,147    31,350 
Interest on loans and borrowings paid   (4,426)   (3,801)
Derivatives received (paid), net   (735)   (946)
Interest on participative stockholders' debentures paid   (472)   (351)
Income taxes (including settlement program)   (5,379)   (3,852)
Net cash provided by operating activities   23,135    22,400 
           
Cash flow from investing activities:          
Capital expenditures   (7,534)   (4,548)
Additions to investments   (1,563)   (5,708)
Investment fund applications   (672)   - 
Proceeds from disposal of assets and investments   174    61 
Dividends received   422    1,650 
Judicial deposits and restricted cash related to Brumadinho event   (50)   (5,888)
Short-term investment   3,234    (3,435)
Other investments activities, net (i)   7,857    (3,413)
Net cash provided by (used in) investing activities   1,868    (21,281)
           
Cash flow from financing activities:          
Loans and borrowings from third-parties   25    2,894 
Payments of loans and borrowings from third-parties   (3,210)   (4,143)
Payments of leasing   (136)   (114)
Dividends and interest on capital paid to stockholders   (18,492)   - 
Net cash used in financing activities   (21,813)   (1,363)
           
Increase (decrease) in cash and cash equivalents   3,190    (244)
Cash and cash equivalents in the beginning of the period   9,597    4,835 
Effects of disposals of subsidiaries and merger, net of cash and cash equivalents   188    - 
Cash and cash equivalents at end of the period   12,975    4,591 
           
Non-cash transactions:          
Additions to property, plant and equipment - capitalized loans and borrowing costs   274    428 
           
Cash flow from operating activities:          
Income (loss) before income taxes   23,657    (177)
Adjusted for:          
Provisions related to Brumadinho event   108    22,126 
Equity results from subsidiaries   (3,456)   (4,849)
Equity results and other results in associates and joint ventures   3,763    2,047 
Impairment and disposal of non-current assets   214    1,064 
Depreciation, amortization and depletion   5,984    5,729 
Financial results, net   19,383    9,250 
Changes in assets and liabilities:          
Accounts receivable   (14,555)   (2,605)
Inventories   (853)   (532)
Suppliers and contractors   (116)   3,510 
Provision - Payroll, related charges and other remunerations   539    120 
Payments related to Brumadinho event (note 4)   (2,975)   (2,786)
Other assets and liabilities, net   2,454    (1,547)
Cash flow from operations (a)   34,147    31,350 

 

(i) Includes loans and advances from/to related parties.

 

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

 

  8 

 

 

 

  

Statement of Financial Position

In millions of Brazilian reais

  

      Consolidated   Parent company 
   Notes  September 30,
2020
   December 31,
2019
   September 30,
2020
   December 31,
2019
 
Assets                   
Current assets                        
Cash and cash equivalents   16   49,889    29,627    12,975    9,597 
Short-term investments   16   707    3,329    707    3,309 
Accounts receivable   10   17,002    10,195    36,412    16,599 
Other financial assets   12   2,562    3,062    32    1,140 
Inventories   11   24,418    17,228    6,217    5,310 
Prepaid income taxes       660    1,492    301    648 
Recoverable taxes       2,011    2,227    657    929 
Others       1,707    1,538    2,133    1,569 
        98,956    68,698    59,434    39,101 
                         
Non-current assets                        
Judicial deposits   22(c)   11,504    12,629    11,181    12,242 
Other financial assets   12   13,938    11,074    3,970    3,972 
Prepaid income taxes       3,047    2,407    -    - 
Recoverable taxes       2,998    2,446    1,887    1,471 
Deferred income taxes   8(a)   54,210    37,151    41,513    28,770 
Others       3,416    1,998    976    937 
        89,113    67,705    59,527    47,392 
                         
Investments   13   11,482    11,278    187,665    144,594 
Intangibles   14   37,307    34,257    16,215    16,271 
Property, plant and equipment   15   214,280    187,733    109,116    105,875 
        352,182    300,973    372,523    314,132 
Total assets       451,138    369,671    431,957    353,233 

 

Liabilities                   
Current liabilities                        
Suppliers and contractors       17,478    16,556    10,606    10,765 
Loans, borrowings and leases   16   5,775    5,805    3,735    4,323 
Other financial liabilities   12   10,062    5,658    10,956    6,678 
Taxes payable       4,554    2,065    3,585    1,062 
Settlement program ("REFIS")   8(c)   1,764    1,737    1,728    1,702 
Liabilities related to associates and joint ventures   17   3,880    2,079    3,880    2,079 
Provisions   21   5,732    4,956    3,567    3,210 
Liabilities related to Brumadinho   4   5,282    6,319    5,282    6,319 
De-characterization of dams   4   1,804    1,247    1,804    1,247 
Interest on capital       -    6,333    -    6,333 
Others       3,928    3,051    4,555    3,181 
        60,259    55,806    49,698    46,899 
Non-current liabilities                        
Loans, borrowings and leases   16   79,207    54,038    23,021    20,546 
Other financial liabilities   12   29,831    17,622    120,643    76,365 
Settlement program ("REFIS")   8(c)   12,899    14,012    12,643    13,733 
Deferred income taxes   8(a)   9,220    7,585    -    - 
Provisions   21   43,891    34,233    11,448    11,368 
Liabilities related to Brumadinho   4   3,463    5,703    3,463    5,703 
De-characterization of dams   4   7,071    8,787    7,071    8,787 
Liabilities related to associates and joint ventures   17   4,495    4,774    4,495    4,774 
Streaming transactions       11,379    8,313    -    - 
Others       2,061    1,649    4,835    3,578 
        203,517    156,716    187,619    144,854 
Total liabilities       263,776    212,522    237,317    191,753 
                         
Stockholders' equity   24                    
Equity attributable to Vale's stockholders       194,640    161,480    194,640    161,480 
Equity attributable to noncontrolling interests       (7,278)   (4,331)   -    - 
Total stockholders' equity       187,362    157,149    194,640    161,480 
Total liabilities and stockholders' equity       451,138    369,671    431,957    353,233 

 

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

 

  9 

 

 

 

 

Statement of Changes in Equity

In millions of Brazilian reais

 

 

   Share capital   Capital reserve   Profit
reserves
   Treasury
stocks
   Other
reserves
   Cumulative
translation
adjustments
   Retained
earnings
   Equity
attributable
to Vale’s
stockholders
   Equity
attributable to
noncontrolling
interests
   Total
stockholders'
equity
 
Balance at December 31, 2019   77,300    3,634    28,577    (6,520)   (5,673)   64,162    -    161,480    (4,331)   157,149 
Net income (loss)   -    -    -    -    -    -    21,888    21,888    (1,302)   20,586 
Other comprehensive income   -    -    -    -    (1,470)   25,024    -    23,554    (1,674)   21,880 
Dividends and interest on capital of Vale's stockholders   -    -    (12,350)   -    -    -    -    (12,350)   -    (12,350)
Dividends of noncontrolling interest   -    -    -    -    -    -    -    -    (42)   (42)
Capitalization of noncontrolling interest advances   -    -    -    -    -    -    -    -    71    71 
Assignment and transfer of shares (note 24)   -    -    -    68    -    -    -    68    -    68 
Balance at September 30, 2020   77,300    3,634    16,227    (6,452)   (7,143)   89,186    21,888    194,640    (7,278)   187,362 
                                                   
    Share capital    Capital reserve    Profit
reserves
    Treasury
stocks
    Other
reserves
    Cumulative
translation
adjustments
    Retained
earnings
    Equity attributable
to Vale’s
stockholders
    Equity attributable to
noncontrolling
interests
    Total
stockholders'
equity
 
Balance at December 31, 2018   77,300    3,634    42,502    (6,604)   (5,912)   59,483    -    170,403    3,280    173,683 
Loss   -    -    -    -    -    -    (264)   (264)   (239)   (503)
Other comprehensive income   -    -    -    -    (1,474)   6,150    -    4,676    23    4,699 
Dividends of noncontrolling interest   -    -    -    -    -    -    -    -    (331)   (331)
Capitalization of noncontrolling interest advances   -    -    -    -    -    -    -    -    76    76 
Assignment and transfer of shares (note 24)   -    -    -    84    -    -    -    84    -    84 
Balance at September 30, 2019   77,300    3,634    42,502    (6,520)   (7,386)   65,633    (264)   174,899    2,809    177,708 
                                                   

 

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

 

  10 

 

 

 

 

Value Added Statement

In millions of Brazilian Reais

  

   Consolidated   Parent company 
   Nine-month period ended September 30, 
   2020   2019   2020   2019 
Generation of value added                
Gross revenue                    
Revenue from products and services   130,618    108,680    84,263    65,722 
Revenue from the construction of own assets   4,194    4,772    1,617    2,595 
Other revenues   797    507    479    329 
Less:                    
Cost of products, goods and services sold   (19,050)   (16,453)   (9,806)   (7,908)
Material, energy, third-party services and other   (27,572)   (26,152)   (8,203)   (8,391)
Impairment of non-current assets and others results   (4,004)   (1,333)   (214)   (1,064)
Brumadinho event   (2,014)   (24,129)   (2,014)   (24,129)
Other costs and expenses   (11,253)   (7,461)   (6,965)   (4,716)
Gross value added   71,716    38,431    59,157    22,438 
Depreciation, amortization and depletion   (12,174)   (10,505)   (5,984)   (5,729)
Net value added   59,542    27,926    53,173    16,709 
                     
Received from third parties                    
Equity results from entities   (3,763)   (2,047)   (307)   2,802 
Financial income   9,159    3,041    7,622    2,349 
Total value added to be distributed   64,938    28,920    60,488    21,860 
                     
Personnel and charges   6,303    6,049    2,998    2,593 
Taxes and contributions   8,257    8,571    7,478    4,690 
Interest (net derivatives and monetary and exchange rate variation)   29,318    12,855    26,795    11,469 
Other remunerations of third party funds   474    1,948    1,329    3,372 
Dividends and interest on capital   12,350    -    12,350    - 
Reinvested net income (absorbed loss)   9,538    (264)   9,538    (264)
Loss attributable to noncontrolling interest   (1,302)   (239)   -    - 
Distributed value added   64,938    28,920    60,488    21,860 

 

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

 

  11 

 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

1.        Corporate information

 

Vale S.A. and its subsidiaries (“Vale” or the “Company”) are iron ore and iron ore pellets producers, key raw materials for steelmaking, and producers of nickel, which is used to produce stainless steel and metal alloys employed in the production process of several products. The Company also produces copper, metallurgical and thermal coal, manganese ore and, platinum group metals, gold, silver and cobalt. The information by segment is presented in note 5.

 

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

 

 

2.        Basis of preparation of the interim financial statements

 

a)    Statement of compliance

 

The condensed consolidated and individual interim financial statements of the Company (“interim financial statements”) have been prepared and are being presented in accordance with IAS 34 Interim Financial Reporting (Technical Pronouncement - CPC 21 (R1) Interim Statements) of the International Financial Reporting Standards (“IFRS”), as issued by International Accounting Standards Board (“IASB”) and also in accordance with accounting practices adopted in Brazil by the Brazilian Accounting Pronouncements Committee ("CPC"), that have been approved by the Brazilian Securities and Exchange Commission ("CVM"). All relevant information from its own interim financial statements, and only this information, are being presented and correspond to those used by management in the management of the Company.

 

b)    Basis of presentation

 

The interim financial statements have been prepared to update users about relevant events and transactions that occurred in the period and should be read in conjunction with the financial statements for the year ended December 31, 2019. The accounting policies, accounting estimates and judgements, risk management and measurement methods are the same as those applied when preparing the last annual financial statements. The selected notes of the Parent Company are presented in a summarized form in note 26.

 

These interim financial statements were authorized for issue by the Executive Board on October 28, 2020.

 

The interim financial statements of the Company are measured using the currency of the primary economic environment in which the entity operates (“functional currency”), which in the case of the Parent Company is the Brazilian real (“R$”).

 

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

 

           Average rate 
   Closing rate   Three-month period ended   Nine-month period ended 
   September 30,
2020
   December 31,
2019
   September 30,
2020
   September 30,
2019
   September 30,
2020
   September 30,
2019
 
US Dollar ("US$")   5.6407    4.0307    5.3772    3.9684    5.0793    3.8887 
Canadian dollar ("CAD")   4.2344    3.1034    4.0366    3.0051    3.7505    2.9258 
Euro ("EUR" or "€")   6.6132    4.5305    6.2876    4.4123    5.7207    4.3679 

 

  12 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

3.        Significant events in the current period

 

a) Main events

 

The financial position, cash flows and performance of the Company were particularly affected by the following events and transactions during the three-month period ended September 30, 2020:

 

·As announced in September 2020, the exclusivity period to negotiate the sale of Vale Nouvelle-Calédonie S.A.S. (“VNC”) to New Century Resources Limited ended and the parties did not reach an agreement for the sale of VNC. Further details on the transaction and plans for such investment are presented in note 5(b).

 

·In September 2020, the Company entered into an agreement to sell its investment held in Biopalma, resulting in a loss of R$507 (note 5b).

 

·In September 2020, the Company decided to close its operations at the Simões Filho plant in Bahia, resulting in an impairment loss of R$404 (note 5b).

 

·In August 2020, the conditions precedent of the agreement to sell the Company's stake in Henan Longyu were concluded and until October 2020, the Company received R$608 out of the total agreed consideration in the amount of R$832 (note 13b).

 

·On September 30, 2020, the Company paid stockholders’ remuneration in the amount of R$12,350, see note 24.

 

·On October 7, 2020 (subsequent event), the Company concluded the agreement for the divestiture of PT Vale Indonesia Tbk (“PTVI”) and received R$1,560 (note 13b).

 

·On October 9, 2020 (subsequent event), the Company approved the incorporation of a joint venture to build and operate an expansion project for the Shulanghu Port facilities, located in China. Vale's capital contribution to the project is estimated to range from R$620 to R$903 (note 13b).

 

b) Coronavirus pandemic

 

Background - The coronavirus pandemic developed rapidly in 2020, with reports of several fatalities from COVID-19, including the locations of the Company's main operations. A significant portion of the Company's revenue comes from sales to customers in Asia and Europe, regions that have had their economic activities affected as a result of the pandemic. Vale also has an extensive logistics and supply chain, including several ports, distribution centers and suppliers that have operations in the affected regions.

 

The Company has taken several measures to monitor and prevent the effects of COVID-19, including health and safety measures for its employees (such as social distancing and remote working) and actions to secure the supply of materials essential to the Company's production process.

 

Vale has pledged more than R$538 to support humanitarian aid programs in the communities where the Company operates, with special focus on Brazil communities that have been more adversely affected by the pandemic. These resources are being used to purchase medical supplies and equipment, among other actions taken against COVID-19. This amount was recognized as "Other operating expenses" in the income statement for the three and nine-month periods ended September 30, 2020.

 

The Company is closely monitoring the impact of the COVID-19 on its business. To date, COVID-19 has not had a significant operational or financial impact on the Company, other than those already disclosed on these interim financial statements. However, if the pandemic continues for an extended period of time or increases in intensity in the regions where Vale operates, the Company's financial conditions or results of operations in 2020 may be adversely impacted.

 

Impairment and onerous contracts - The Company assessed whether there were any triggering events suggesting an impairment test for its non-financial assets and concluded there have been no changes in the circumstances that would indicate an impairment loss in the Company's cash generating units ("CGUs").

 

During this year, some of the Company's operations were temporarily suspended due to COVID-19. These operations have already been resumed and, therefore, the main long-term assumptions applied on the preparation of the cash flow models, such as commodity prices and production levels, remain unchanged for the impairment trigger assessment.

 

  13 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

Voisey's Bay, Nickel - On March 16, 2020, the Company reduced its Voisey's Bay mining operation and placed it in care and maintenance, as a precaution to avoid exposure when travelling to the remote site and to help to protect the health and well-being of Nunatsiavut and Innu indigenous communities in Labrador in face of the COVID-19 pandemic. On July 3, 2020, the Company resumed this operation, which reached its full operational capacity in August 2020.

 

Mozambique, Coal - In 2019, the Company fully impaired the assets related to this CGU because the expected yield of metallurgical coal and thermal coal will not be achieved, mostly due to technical issues on the project and operation of the assets related to this CGU. As a result, the Company has decided to implement a new mining plan and a new plant strategy to achieve the ramp-up of this asset, which includes shortening the life of mine and completing a plant overhaul. However, in addition to the slowdown in the operational activities, the COVID-19 pandemic has caused travel and equipment transportation restrictions and so, the Company has revisited the plans for the Mozambique coal processing plant stoppage. The halting of the processing plants’ operations that was previously expected to start in the second quarter of 2020, will now take place in November 2020. Other than this, the plan for this CGU has not changed and, therefore, no further impact was recognized in the period ended September 30, 2020.

 

Liquidity - As a precautionary measure to increase its cash position and preserve financial flexibility considering the uncertainties resulting from the COVID-19 pandemic, in March 2020, Vale drew down its revolving credit lines in the amount of R$26,997 (US$5 billion) and discontinued the nickel hedge program, through the sale of option contracts for the total amount of R$1,123. In September 2020, the Company repaid in full the amount that was drawn from revolving credit lines (note 16).

 

Deferred tax liabilities - On March 31, 2020, the government of Indonesia issued a regulation ("PERPPU-1") to manage the economic impact of the global COVID-19 pandemic, which affects Indonesia's tax policies. The 25% income tax rate was reduced to 22% in fiscal years 2020 and 2021 and will later be reduced to 20% as of fiscal year 2022. Therefore, the Company has measured the deferred income tax of PT Vale Indonesia Tbk ("PTVI"), considering the effective promulgation of the new income tax rate. As a result, the Company recognized an income tax gain of R$393 in the nine-months period ended September 30, 2020.

 

Fair value of other assets and liabilities - At this time, the effects of the pandemic have not caused significant impacts on the fair value of the Company's assets and liabilities. However, unusual significant changes have occurred in the value of financial assets in many markets since the pandemic began. The effects of the pandemic remain uncertain, making it impossible to predict the final impact it could have on the economy and, in turn, on the Company's business, liquidity and financial position, meaning that the fair value of assets and liabilities may change in subsequent periods.

 

  14 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

4.        Brumadinho dam failure

 

On January 25, 2019, a tailings dam (“Dam I”) failed at the Córrego do Feijão mine, in the city of Brumadinho, state of Minas Gerais. The failure released a flow of tailings debris, destroying some of Vale’s facilities, affecting local communities and disturbing the environment. The tailings released have caused an impact of around 315 km in extension, reaching the nearby Paraopeba River. The dam failure in Brumadinho (“event”) resulted in 270 fatalities or presumed fatalities.

 

Vale has been taking the necessary actions to support the victims and to mitigate and recover the social and environmental damages resulting from the event, including indemnification and donations to those affected by the dam rupture. The Company has created the Special Recovery and Development Board, which is in-charge of those measures related to the Brumadinho dam rupture.

 

The Company has also informed the market and Brazilian authorities of its decision to speed up the plan to “de-characterize” its tailings dams built under the upstream method (same method as Brumadinho’s dam), certain “centerline structures” and dikes, located in Brazil. Therefore, the Company has a total provision to comply with these assumed obligations in the amount of R$17,620 as at September 30, 2020 (R$22,056 as at December 31, 2019).

 

a) De-characterization of the dams

 

The changes in the provision to carry out the de-characterization of the upstream structures, centerline structures and dikes for the nine-month periods ended September 30, 2020 and 2019 are as follows:

 

   Consolidated 
   2020   2019 
Balance at January 1,   10,034    - 
Provision recognized   -    7,515 
Disbursements   (980)   (62)
Present value valuation   (179)   280 
Balance at September 30,   8,875    7,733 

 

    September 30,
2020
    December 31,
2019
 
Current liabilities   1,804    1,247 
Non-current liabilities   7,071    8,787 
Liabilities   8,875    10,034 

 

In addition to the de-characterization projects of the upstream dams, which are already reserved as at September 30, 2020, the Company is assessing whether there are other structures that would meet the criteria to be de-characterized as well. In addition, at the current stage of studies and analysis, it is not yet possible to estimate if an additional provision for the de-characterization of other structures will be recorded in future reporting periods.

 

b) Framework Agreements and donations

 

The Company has been working together with the authorities and society to remediate the environmental and social impacts of the event. Therefore, the Company has started negotiations and entered into agreements with the relevant authorities and affected people. Vale has also developed studies and projects to ensure geotechnical safety of the remaining structures at the Córrego do Feijão mine, in Brumadinho, and the removal and proper disposal of the tailings, especially alongside the Paraopeba river.

 

On April 1, 2020, the judge of the 2nd Public Finance Court of Belo Horizonte released R$500 from the judicial deposits of the Company. On May 15, 2020, the judge released an additional amount of R$1,000. Both amounts were released to the State of Minas Gerais to be used by the State Government on actions against COVID-19 pandemic and were considered as compensation for part of the obligation assumed by the Company due to the Brumadinho dam rupture.

 

  15 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

The changes in the provision for the nine-month periods ended September 30, 2020 and 2019 are as follows:

 

   Consolidated 
   2020   2019 
Balance at January 1,   12,022    - 
Provision for social and economic compensation   108    14,239 
Disbursements (i)   (3,495)   (2,194)
Present value valuation   110    163 
Balance at September 30,   8,745    12,208 

 

   September 30,
2020
   December 31,
2019
 
Current liabilities   5,282    6,319 
Non-current liabilities   3,463    5,703 
Liabilities   8,745    12,022 

 

(i) Includes cash outflows of R$1,995 and the realization of judicial deposits of R$1,500.

 

The Company is under negotiations with the Government of the State of Minas Gerais (“GEMG”) and other relevant authorities for an additional agreement for collective damages indemnification and further compensation for the society and environment. The goal of Vale with a potential agreement would be to provide a stable legal framework for the execution of reparation and compensation, with the suspension of the existing civil lawsuits.

 

The potential agreement is still very uncertain as it is subject to conclusion of the ongoing negotiations and approval by the Company, the Government of the State of Minas Gerais, Public Prosecutors and other Authorities and Intervenient parties.

 

The estimate of the economic impact of a potential agreement will depend on (i) final agreement on the list of reparation and compensation projects, (ii) a detailed assessment of the estimates of the amounts to be spent on the reparation and compensation projects being discussed, (iii) an analysis of the detailed scope of such projects to determine their overlap with the initiatives and amounts already provisioned; and (iv) the timing of the execution of projects and disbursements, which will impact the present value of the obligations.

 

Based on the current terms under discussion, and preliminary estimates subject to the uncertainties listed above, such possible agreement might result in an additional provision of approximately R$8 billion. All accounting impacts, if any, will be recorded in the period an agreement is reached. Therefore, the provisions recorded in these interim financial statements do not include the potential outcome of the current negotiation as it is not yet possible to reliably estimate an amount or whether the current negotiations will be successful.

 

c) Incurred expenses

 

The Company has incurred expenses, which do not qualify for provision and have been recognized in the income statement, in the amount of R$613 and R$1,906 for the three and nine-month periods ended September 30, 2020, respectively and R$893 and R$1,906 for the three and nine-month periods ended September 30, 2019, respectively. These expenses include communication services, accommodation and humanitarian assistance, equipment, legal services, water, food aid, taxes, among others.

 

d) Operation stoppages

 

The Company has suspended some operations due to judicial decisions or technical analysis performed by Vale on its upstream dam structures. The Company has been recording losses in relation to the operational stoppage and idle capacity of the ferrous mineral segment in the amounts of R$600 and R$1,879 for the three and nine-month periods ended September 30, 2020, respectively, and R$704 and R$2,248 for the three and nine-month periods ended September 30, 2019, respectively. The Company is working on legal and technical measures to resume all operations at full capacity.

 

e) Assets write-off

 

Following the event and the decision to speed up the de-characterization of the upstream dams, the Company recognized a loss of R$251 and R$836 as “Impairment and disposal of non-current assets” for the three and nine-month periods ended September 30, 2019 in relation to the assets written-off of the Córrego do Feijão mine and those related to the other upstream dams in Brazil. In 2020, the Company did not write-off any asset related to the Brumadinho event.

 

  16 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

f) Contingencies and other legal matters

 

Vale is subject to significant contingencies due to the Brumadinho dam failure. Vale has already been named on several judicial and administrative proceedings brought by authorities and affected people and is currently under investigation. Vale is evaluating these contingencies and would recognize additional provisions based on the updates on the stage of these claims.

 

Following these contingencies, approximately R$506 of the Company’s bank accounts are restricted and R$4,942 were converted into judicial deposits as at September 30,2020.

 

For the Brumadinho event, the Company has financial guarantees in the amount of R$5,819 in September 30, 2020. The expenses related to these financial guarantees in the amounts of R$10 and R$30 were recorded as financial expense in the Company's income statement for the three and nine-month periods ended September 30, 2020, respectively.

 

On August 26, 2020, the Public Prosecutor's Office of Minas Gerais (“MPMG”) and other plaintiffs of the Public Civil Actions presented a request for ruling condemning Vale to indemnify alleged economic losses of the State of Minas Gerais and collective moral damages, both claims already considered in said Public Civil Actions filed against Vale in January 2019 as a result of the Brumadinho dam rupture. In that submission, the plaintiffs also requested the immediate freezing of R$26.7 billion from the Company as a guarantee for the reimbursement of the alleged economic losses, which was dismissed by the judge of the 2nd Lower Court of Public Treasury of Belo Horizonte on October 6, 2020 (subsequent event). Said indemnification requests are still pending judgment and the Company is unable to estimate when a final decision will be issued.

 

On May 27, 2020, the MPMG requested the imposition of fines or forfeit of assets, rights and amounts of the Company, allegedly based on Article 5, item V of Brazilian Law 12.846/2013. According to the MPMG, Vale would have, through its employee’s actions, hindered the inspection activities of public agencies in the complex. The Company was not required to present any guarantees based on a judicial decision.

 

On October 20, 2020 (subsequent event), the Company was informed that the Brazilian Office of the Comptroller General (“CGU”) initiated an administrative proceeding based on the same allegations made by the MPMG.

 

Both proceedings are ongoing and the Company cannot estimate when a final decision will be issued. 

 

(f.i) Administrative sanctions

 

In 2019, the Company was notified of the imposition of administrative fines by the Brazilian Institute of the Environment and Renewable Natural Resources (“IBAMA”), in the amount of R$250.

 

On July 6, 2020, the Company signed an agreement with IBAMA, of which R$150 will be used in environmental projects in 7 parks in the state of Minas Gerais, covering an area of approximately 794 thousand hectares, and R$100 will be used in basic sanitation programs in the state of Minas Gerais. The total amount was deposited in court to be used in these environmental projects, subject to ratification of justice.

 

As at September 30, 2020, the administrative sanctions are recorded as “Liabilities related to Brumadinho“.

 

(f.ii) U.S. Securities class action suits

 

As detailed in note 3 to the financial statements for the year ended December 31, 2019 and updated in the interim financial statements for 2020, Vale is defending itself against a potential class action lawsuit before a New York Federal Court filed by holders of securities - American Depositary Receipts ("ADRs") - issued by Vale.

 

Following the decision of the Court, in May 2020, rejecting part of the preliminary defense presented by the Company, the Discovery phase has started and is expected to be concluded by June 2021.

 

Based on the evaluation of the Company's legal counsel and given the very preliminary stage, the expectation of loss of this process is classified as possible. However, considering the initial phase of the potential class action, it is not possible at this time to reliably estimate the amount of a potential loss.

 

(f.iii) Arbitration proceedings in Brazil filed by shareholders and a class association

 

In Brazil, Vale is a defendant in (i) one arbitration filed by 166 minority shareholders, and (ii) one arbitration filed by a class association allegedly representing all Vale’s minority shareholders.

 

In both proceedings, the Claimants argue Vale would be aware of the risks associated with the dam, and failed to disclose it to the shareholders, which would be required under the Brazilian applicable laws and the rules of Comissão de Valores Mobiliários (Securities and Exchange Commission of Brazil). Based on such argument, they claim compensation for losses caused by the decrease of the value of the shares.

 

(f.iv) Cooperation with the CVM and the SEC

 

The Company is cooperating with the SEC and the CVM by providing documents and other information concerning the failure of Dam I as requested by both agencies.

 

  17 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

Based on the evaluation of the Company's legal counsel and given the very preliminary stage, the expectation of loss of these proceedings is classified as possible. However, considering the initial phase of the arbitrations, it is not possible at this time to reliably estimate the amount of a potential loss.

 

g) Insurance

 

The Company is negotiating with insurers the payment of indemnification under its operational risk and civil liability. However, these negotiations are still at a preliminary stage, therefore any payment of insurance proceeds will depend on the coverage definitions under these policies and assessment of the amount of loss. Due to uncertainties, no indemnification to the Company was recognized in these interim financial statements.

 

Critical accounting estimates and judgments

 

The measurement of the provision requires the use of significant judgments, estimates and assumptions. The provision reflects the estimated costs to comply with Vale’s obligation in relation to the Brumadinho event.

 

The main critical assumptions and estimates applied in measuring the provision for de-characterization of the dams considers, among others: (i) volume of the waste to be removed based on data available and interpretation of the enacted laws and regulations; (ii) location availability for the tailings disposal; (iii) acceptance by the authorities of the proposed engineering methods and solution; and (iv) updates in the discount rate.

 

The provision for Framework Agreements and donations may be affected by factors including, but not limited to: (i) changes in the current estimated market price of the direct and indirect cost related to products and services, (ii) changes in timing for cash outflows, (iii) changes in the technology considered in measuring the provision, (iv) number of individuals entitled to the indemnification payments, (v) resolution of existing and potential legal claims, (vi) demographic assumptions, (vii) actuarial assumptions, and (viii) updates in the discount rate.

 

Therefore, future expenditures may differ from the amounts currently provided because the realized assumptions and various other factors are not always under the Company’s control. These changes to key assumptions could result in a material impact to the amount of the provision in future reporting periods. At each reporting period, the Company will reassess the key assumptions used in the preparation of the projected cash flows and will adjust the provision, if required.

 

  18 

 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

5.        Information by business segment and by geographic area

 

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

 

As disclosed on note 4 to these Interim Financial Statements, the Company has created the Special Recovery and Development Board that reports to the CEO and is responsible to assess the costs related to the Brumadinho event. These costs are not directly related to the Company's operating activities and, therefore, were not allocated to any operating segment.

 

The Company allocates to “Others” the revenues and cost of other products, services, research and development, investments in joint ventures and associates of other business and unallocated corporate expenses.

 

a)    Adjusted LAJIDA (EBITDA)

 

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

 

   Consolidated 
   Three-month period ended September 30, 2020 
   Net operating
revenue
   Cost of goods
sold and
services
rendered
   Sales, administrative
and other
operating
expenses
   Research and
evaluation
   Pre operating
and
operational
stoppage
   Dividends
received and
interest from
associates and
joint ventures
   Adjusted
LAJIDA
(EBITDA)
 
Ferrous minerals                                   
Iron ore   39,614    (11,110)   (270)   (164)   (649)   2    27,423 
Iron ore pellets   6,416    (2,313)   7    (8)   (89)   -    4,013 
Ferroalloys and manganese   274    (233)   (21)   (1)   (49)   -    (30)
Other ferrous products and services   436    (324)   2    (1)   -    8    121 
    46,740    (13,980)   (282)   (174)   (787)   10    31,527 
                                    
Base metals                                   
Nickel and other products   7,072    (4,804)   (121)   (55)   (1)   -    2,091 
Copper   3,156    (1,017)   (13)   (81)   (1)   -    2,044 
    10,228    (5,821)   (134)   (136)   (2)   -    4,135 
                                    
Coal   551    (1,726)   (28)   (47)   -    110    (1,140)
                                    
Brumadinho event   -    -    (613)   -    -    -    (613)
COVID-19   -    -    (76)   -    -    -    (76)
Others   387    (463)   (726)   (207)   (12)   -    (1,021)
Total   57,906    (21,990)   (1,859)   (564)   (801)   120    32,812 

 

  19 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

  

   Consolidated 
   Three-month period ended September 30, 2019 
   Net operating
revenue
   Cost of goods
sold and
services
rendered
   Sales,
administrative
and other
operating
expenses
   Research and
evaluation
   Pre operating
and
operational
stoppage
   Dividends
received and
interest from
associates and
joint ventures
   Adjusted
LAJIDA
(EBITDA)
 
Ferrous minerals                                   
Iron ore   26,118    (10,077)   (326)   (114)   (650)   -    14,951 
Iron ore pellets   6,362    (2,893)   (32)   (20)   (105)   -    3,312 
Ferroalloys and manganese   190    (153)   (6)   (2)   -    -    29 
Other ferrous products and services   466    (345)   -    (3)   -    -    118 
    33,136    (13,468)   (364)   (139)   (755)   -    18,410 
                                    
Base metals                                   
Nickel and other products   4,136    (2,681)   (47)   (43)   (64)   -    1,301 
Copper   1,966    (971)   (8)   (49)   -    -    938 
    6,102    (3,652)   (55)   (92)   (64)   -    2,239 
                                    
Coal   954    (1,732)   19    (39)   -    114    (684)
                                    
Brumadinho event   -    -    (893)   -    -    -    (893)
                                    
Others   472    (441)   (548)   (225)   (14)   1    (755)
Total   40,664    (19,293)   (1,841)   (495)   (833)   115    18,317 

 

   Consolidated 
   Nine-month period ended September 30, 2020 
   Net operating
revenue
   Cost of goods
sold and
services
rendered
   Sales,
administrative
and other
operating
expenses
   Research and
evaluation
   Pre operating
and
operational
stoppage
   Dividends
received and
interest from
associates and
joint ventures
   Adjusted
LAJIDA
(EBITDA)
 
Ferrous minerals                                   
Iron ore   85,058    (28,001)   (677)   (402)   (2,054)   2    53,926 
Iron ore pellets   15,098    (6,191)   65    (17)   (291)   283    8,947 
Ferroalloys and manganese   851    (682)   (21)   (6)   (105)   -    37 
Other ferrous products and services   1,222    (939)   10    (6)   -    8    295 
    102,229    (35,813)   (623)   (431)   (2,450)   293    63,205 
                                    
Base metals                                   
Nickel and other products   16,833    (11,276)   (294)   (177)   (156)   -    4,930 
Copper   7,674    (2,940)   (23)   (237)   (1)   -    4,473 
    24,507    (14,216)   (317)   (414)   (157)   -    9,403 
                                    
Coal   1,734    (5,369)   (6)   (119)   -    434    (3,326)
                                    
Brumadinho event   -    -    (2,014)   -    -    -    (2,014)
COVID-19   -    -    (545)   -    -    -    (545)
Others   1,121    (1,241)   (2,331)   (512)   (38)   126    (2,875)
Total   129,591    (56,639)   (5,836)   (1,476)   (2,645)   853    63,848 

 

  20 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

   Consolidated 
   Nine-month period ended September 30, 2019 
   Net operating
revenue
   Cost of goods
sold and
services
rendered
   Sales,
administrative
and other
operating
expenses
   Research and
evaluation
   Pre operating
and
operational
stoppage
   Dividends
received and
interest from
associates and
joint ventures
   Adjusted
LAJIDA
(EBITDA)
 
Ferrous minerals                                   
Iron ore   65,942    (24,490)   (947)   (280)   (2,174)   -    38,051 
Iron ore pellets   17,775    (7,992)   (60)   (59)   (193)   567    10,038 
Ferroalloys and manganese   784    (589)   (15)   (4)   -    -    176 
Other ferrous products and services   1,249    (955)   4    (6)   -    -    292 
    85,750    (34,026)   (1,018)   (349)   (2,367)   567    48,557 
                                    
Base metals                                   
Nickel and other products   12,044    (8,388)   (180)   (99)   (110)   -    3,267 
Copper   5,546    (2,745)   (20)   (96)   -    -    2,685 
    17,590    (11,133)   (200)   (195)   (110)   -    5,952 
                                    
Coal   3,221    (4,850)   22    (85)   -    331    (1,361)
                                    
Brumadinho event   -    -    (24,129)   -    -    -    (24,129)
                                    
Others   1,060    (1,075)   (954)   (485)   (24)   195    (1,283)
Total   107,621    (51,084)   (26,279)   (1,114)   (2,501)   1,093    27,736 

 

Adjusted LAJIDA (EBITDA) is reconciled to net income (loss) as follows:

 

   Consolidated 
   Three-month period ended September 30,   Nine-month period ended September 30, 
   2020   2019   2020   2019 
Net income (loss) attributable to Vale's stockholders   15,615    6,542    21,888    (264)
Loss attributable to noncontrolling interests   (543)   (81)   (1,302)   (239)
Net income (loss)   15,072    6,461    20,586    (503)
Depreciation, depletion and amortization   4,162    3,690    12,174    10,505 
Income taxes   4,259    3,866    2,011    3,281 
Financial results   7,380    4,556    20,457    9,980 
LAJIDA (EBITDA)   30,873    18,573    55,228    23,263 
                     
Items to reconciled adjusted LAJIDA (EBITDA)                    
Equity results and other results in associates and joint ventures   211    (501)   3,763    2,047 
Dividends received and interest from associates and joint ventures (i)   120    115    853    1,093 
Impairment and disposal of non-current assets   1,608    130    4,004    1,333 
Adjusted LAJIDA (EBITDA)   32,812    18,317    63,848    27,736 

 

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

 

  21 

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

  

b)       Assets by segment

 

   Consolidated 
   September 30, 2020   December 31, 2019 
   Product
inventory
   Investments in
associates and
joint ventures
   Property, plant
and equipment
and intangibles (i)
   Product
inventory
   Investments in
associates and
joint ventures
   Property, plant
and equipment
and intangibles (i)
 
Ferrous minerals   12,520    6,865    140,062    7,880    6,970    135,143 
Base metals   7,450    91    104,480    5,457    56    80,181 
Coal   309    -    -    243    -    - 
Others   -    4,526    7,045    7    4,252    6,666 
Total   20,279    11,482    251,587    13,587    11,278    221,990 

 

   Consolidated 
   Three-month period ended September 30, 
   2020   2019 
   Capital expenditures (ii)       Capital expenditures (ii)     
   Sustaining capital   Project execution   Depreciation,
depletion and
amortization
   Sustaining capital   Project execution   Depreciation,
depletion and
amortization
 
Ferrous minerals   2,160    198    2,160    1,595    361    2,173 
Base metals   1,802    378    1,932    1,071    175    1,179 
Coal   146    -    -    314    -    267 
Others   6    3    70    19