Vale SA ADR

Vale SA delivered an all-around beat in its last results with a strong performance in iron ore solutions and a strong price realization. The all-in costs of the company decreased and benefitted from lower freight rates. Now the Galedo project is under commissioning. Also, in Vale’s energy transition material business, the nickel production was steady, with production and sales up, driven by the excellent performance of its Sudbury mines which successfully delivered very high production rates. In the last five years, Puma and Onca have had their best annual production. In copper, this was a quarter of vital maintenance activities in Sossego and Salobo to ensure asset integrity. Vale completed the start-up of Salobo III successfully. The long-term strategy of Vale with General Motors for supplying battery-grade nickel sulphate strengthens the unique strategic position of the company to become the supplier of choice to the EV industry. Vale is developing a first-of-its-kind plant in North America and Canada to produce nickel sulphate from low-carbon nickel from Canadian refineries. To reduce Scope 1 and 2 emissions, the company established a natural gas supply agreement in Sao Luis for the palletizing plant. We give Vale a ‘Hold’ rating with a revised target price.