Vale NYSE: VALE reported first-quarter 2026 results marked by higher iron ore volumes, stronger price realization and a sharp step-up in earnings from its Base Metals business, while executives emphasized ongoing cost discipline, shareholder returns and continued progress on safety and decarbonization initiatives.
Operational performance and safety updates
Chief Executive Officer Gustavo Pimenta opened the call by reiterating Vale’s strategy of “operational excellence, combined with disciplined capital allocation” and growth opportunities “particularly in copper and iron ore.” He said recent geopolitical volatility underscored the need for resilience and competitiveness.
On safety, Pimenta said Vale “safely removed two additional structures from any emergence level” in the first three months of the year, reaching an “80% reduction since 2020.” He framed the effort as a cultural and leadership priority across the organization.
In iron ore, Pimenta said production rose 3% year-over-year, supported by “record output at S11D and Brucutu” and the ramp-up of the Capanema and Vargem Grande projects. He added that the Serra Sul +20 project reached 86% physical completion and remains on track to start up in the second half of the year.
Iron ore sales volumes increased 4% year-over-year, which Pimenta said was supported by higher production and “healthy global demand.” He also highlighted improved price realization, saying “all link premiums” increased by $2.6 per ton quarter-on-quarter, which he translated into about $800 million in annualized revenue.
At Vale Base Metals (VBM), Pimenta said production rose in both major metals. Copper production reached 102,000 tons, “the highest level since 2017,” and was 13% higher year-on-year, supported by record output at Salobo and Sossego, plus Canadian polymetallic operations including Voisey’s Bay. Nickel production increased 12% year-on-year to 49,000 tons, helped by the Voisey’s Bay mining expansion project and commissioning of a second furnace at Onça Puma.
Financial results, costs, and cash generation
Marcelo Bacci, Executive Vice President of Finance and Investor Relations, said first-quarter 2026 pro forma EBITDA totaled $3.9 billion, up 21% year-over-year. He attributed the increase to stronger operational execution across “our three commodities,” higher volumes, and improved price realization.
Bacci said Vale Base Metals’ EBITDA “more than doubled,” reaching $1.2 billion. He noted the quarter included an approximately $140 million negative impact from provisional price adjustments at quarter-end and said that “based on today’s forward curves, this impact would have been positive,” implying a potential reversal in the second quarter.
In iron ore, Bacci reported EBITDA of BRL 2.9 billion, which he described as “flat but solid” year-over-year. He said higher sales volumes and improved all-in premiums more than offset Brazilian real appreciation during the quarter.
On costs, Bacci said iron ore C1 cash cost (excluding third-party purchases) was $23.6 per ton, up 12% year-over-year, driven primarily by the stronger Brazilian real and inventory consumption “carried from the previous quarters at higher costs.” He said all-in cash cost increased 8%, with “stronger all-in premiums and a solid performance in freight” partially mitigating cost pressures.
He added that assuming market consensus estimates of an average BRL 5.25 exchange rate and $90 per barrel oil price, Vale is “working to achieve the top end of our original guidances on a 61% Fe basis.” In response to analyst questions about whether the company could still meet guidance after a higher first-quarter C1 print, Bacci said second quarter should look similar to the first, but he expects a better second half, allowing the company to deliver the top end of guidance if markets align with futures curves.
VBM cost performance also improved, according to Bacci. Copper all-in costs fell into negative territory, declining BRL 1,800 per ton year-over-year to BRL -600 per ton, driven by by-product revenues, higher prices, and increased gold volumes. Nickel all-in costs declined 48% year-over-year to BRL 8,200 per ton, supported by by-product revenues, cost optimization at Voisey’s Bay, and fixed cost dilution from higher production volumes.
Vale’s recurring free cash flow was $813 million, up 61% year-over-year, which Bacci said reflected solid EBITDA and the settlement of currency swap and oil hedging programs. He said working capital was a drag due to higher inventories and accounts receivable, with collections expected “over the coming quarters.”
Capital returns, debt position, and hedging
Bacci said Vale distributed BRL 2.7 billion in dividends and interest on capital during the quarter and repurchased “nearly 5 million shares” under its buyback program. Extended net debt rose seasonally to BRL 17.8 billion, within the company’s stated BRL 10 billion to BRL 20 billion target range.
He said that under the “current price environment for iron ore, copper and nickel,” management is “increasingly confident” in the possibility of paying extraordinary dividends and further executing buybacks during the year. Responding to questions on pacing, Bacci said the company looks not only at the level of net debt but the trend; he indicated that if net debt trends below $15 billion, the company would consider further shareholder distributions through a combination of extraordinary dividends and buybacks.
On the mix of payouts, Bacci said that while Vale previously preferred dividends due to tax changes, “this year the situation is different” and the company expects a more “balanced approach between buybacks and extraordinary dividends,” depending in part on the share price.
On hedging, Bacci said the cost sensitivities presented do not include hedging, since hedge levels vary over time, and hedge impacts typically flow through financial results rather than EBITDA or C1/all-in cost metrics. He said Vale has a “significant” hedge position for 2026 and is evaluating 2027, noting the oil market is “very much inverted.”
Separately, Bacci described Vale’s oil hedge program as using zero-cost collars and providing Brent crude protection above $80 per barrel for around 70% of its bunker oil demand in 2026.
Iron ore market commentary: demand, premiums, and portfolio strategy
Rogério Nogueira, Executive Vice President of Commercial and Business Development, addressed multiple analyst questions on iron ore markets, including disruptions tied to the Middle East. Discussing the conflict’s impact, he said global steel production remained stable and that, outside Iran, regional clients continued producing using scrap and pellet inventory. He said the conflict’s overall impact on global iron ore supply was “neutral,” with additional pellet feed redirected to China and Asia offset by “no exports from Iran in terms of iron ore.”
Nogueira also said Vale believes the industry cost curve has shifted upward by $5 to $10 per ton, with some marginal producers impacted by more than $10 per ton. He said this cost pressure supports current pricing and later added that, based on a preliminary assessment, a $10 price reduction (holding other variables constant) could put “more than 50 million tons” of supply at negative margins.
On China, Nogueira said crude steel production appeared stable, citing blast furnace utilization around 90%. He also said Vale expects annualized Chinese steel exports around 100 million tons in 2026, with infrastructure and manufacturing offsetting a weak property sector. He noted iron ore port inventories in China rose to 166 million tons quarter-over-quarter, while Vale’s “inventories of value ores” declined by about 10 million tons.
On premiums and product demand, Nogueira said the company expects pellet premiums to be “stable or even with a slight increase” next quarter. He also detailed a product mix strategy that has supported fines premiums, saying fines premiums were $4.1 per ton in the first half versus $1.9 per ton in the fourth quarter of 2025 (fines only, excluding pellets). He said there has been strong acceptance of Vale’s mid-grade Carajás product and that Vale is planning to increase it to 50 million to 55 million tons, “beyond our expectations.” He also said China concentrate has been well received and should reach about 40 million tons of annual sales this year.
Asked about China’s domestic concentrate output and scrap usage, Nogueira said Vale expects domestic concentrate production in China to decline from around 260 million tons per year to about 160 million tons longer term due to low-grade, smaller, often underground operations. On scrap, he said usage should increase gradually from about 300 million tons per year, but not in a way that creates major disruption to seaborne iron ore imports.
Base metals strategy, growth projects, and IPO optionality
Shaun Usmar, CEO of Vale Base Metals, said the first quarter’s operational performance positioned the portfolio well for the year, while acknowledging a planned 110-day shutdown at Sossego. He said Sossego posted its best performance since 2008, with an “81% year-on-year increase,” and said Salobo increased output despite lower grade and longer haul distances, aided by improved recoveries. At Voisey’s Bay, he said copper was up 64% year-on-year and hit record production.
On the Alemão project and exploration, Usmar said Vale has “roughly doubling” exploration in Pará and is targeting “over 20% increase” in mineral inventory versus 2024 over time, with a focus on increasing NPV across projects. He said the team is progressing studies and permitting and expects to provide updates “probably by Vale Day” and further exploration updates “similar time next year.”
On the possibility of a Vale Base Metals IPO, Pimenta said the carve-out created optionality but emphasized that an IPO “is a means to an end” rather than a goal itself. He said the initial objective was to stabilize operations, which he said the VBM team has achieved, and the next step is to grow the business—particularly copper—with a goal “to double the size” of the copper business. Usmar added that VBM does not currently need funding for growth and, if performance and prices hold, the business could be “around zero net debt” and self-fund, making any transaction more of a strategic decision for Vale’s owners.
Pimenta also briefly addressed railway concession talks, saying Vale resumed conversations with government entities early in the year and is “hopeful” it can conclude discussions “this year still.”
In closing remarks, Pimenta summarized the quarter’s themes as continued safety progress, disciplined execution across business lines, cost efficiency efforts amid external pressures, commitment to sustainability goals, and capital allocation aimed at “strong cash flow and attractive returns to our shareholders.”
About Vale NYSE: VALE
Vale SA is a Brazilian multinational mining company and one of the world's largest producers of iron ore and iron ore pellets. In addition to iron ore, the company produces and sells a range of bulk commodities and metals, including nickel, copper, coal, manganese, ferroalloys and cobalt, and it participates in the fertilizer inputs market. Vale also operates extensive logistics assets — including rail, port and maritime logistics — that support its mining and export activities and provide services to third parties in some regions.
Headquartered in Brazil, Vale maintains a global operational footprint with mining, processing and shipping activities across the Americas, Africa, Asia and Oceania.
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