Vale’s profit grows 33.6% in the third quarter, to R$ 21.8 billion

Vale recorded net income of R$21.80 billion in the third quarter of 2021, which corresponds to a growth of 33.6% compared to the same period last year.

Compared to the immediately previous quarter, however, there was a 48.7% drop in the result.

The mining company’s sales revenue totaled US$ 12.682 billion (R$ 71.16 billion) in the period, an increase of 17.8% year-on-year, and a drop of 23.9% at the margin.

The results are directly related to the variation in the price of iron ore in the respective periods. The price of the commodity ended September at US$ 163 (R$ 914.72) a ton, according to the balance released on Thursday night (28) by the company, compared to US$ 118 (662.19) a year ago, and US $200 (R$1,122) in June.

According to Vale, over the third quarter, cuts in steel production in China impacted demand for iron ore and prices retreated from the high levels achieved over the three immediately previous months.

As a result of lower demand and steady supply, iron ore stocks in China’s ports have increased pressure on commodity prices. The increase in freight costs in the period was also mentioned.

Vale produced almost 90 million tons of iron ore in the period, and highlighted the operational resumption of the Vargem Grande Complex.

“Our cash generation remains robust, surpassing the last quarter by 18%, a pace that allowed the payment of historic dividends in 2021”, he informed.

Vale paid approximately US$7.4 billion (R$41.52 billion) in dividends in September, based on results for the first half of 2021.

The company also announced a new share repurchase program and ADRs, in light of the imminent completion of the current program, which has had about 268 million of the 270 million shares repurchased to date.

The new program will be limited to 200 million common shares and their respective ADRs, representing up to 4.1% of the total number of shares outstanding, and will be executed over a period of up to 18 months.

“The continuity of the buyback program demonstrates the company’s management confidence in Vale’s potential to consistently create and distribute value,” said the miner in a statement to the market.

“Governed by discipline in capital allocation, we consider the repurchase of our shares to be one of the best investments available to the company.”

Vale also informed that it received notification from the SEC, the body that oversees the capital market in the United States, about the possibility of opening an investigation into the tragedy in Brumadinho (MG), which left 272 dead in January 2019.

According to the miner, the investigation was recommended by the SEC team, which alleges violations of the US securities law on disclosures regarding the safety management of dams, in general, and the Brumadinho dam, specifically.

In a statement to the market, Vale says that the notification “is not a formal accusation or allegation of misconduct”. “It gives Vale the opportunity to provide its point of view and to address issues raised by the SEC team,” the company says.

Regarding repairs to the damage caused by the disaster, Vale reported that compensation currently covers approximately 11,400 people through individual and labor compensation agreements, with a total of BRL 2.7 billion committed, of which BRL 2.5 billion has already been paid.

Until September, the company also paid an amount of R$3.9 billion under the comprehensive repair agreement, referring to the commitments made, such as the water safety program, the first installments in the urban mobility program and the reinforcement of the programs for public service.

For the fourth quarter of 2021, Vale expects to pay approximately R$9.2 billion, of which R$4.4 billion is related to the income transfer program.