VALE S.A. American Depositary Shares Each Representing one common share
VALE · NYSE
Dec 2026
Next quarter
Expected to report Feb 16, 2027 — estimated from last year’s reporting date.
Consensus is $0.51 EPS for Dec 2026 across 2 estimates, ranging $0.48 to $0.54.
VALE Sep 2026
- 12.12%
- +1.88%
- $0.33
- $0.29
- —
- —
Highlights
- EPS miss: Reported EPS was $0.29 versus consensus of $0.33, a 12.12% shortfall.
- Lower EBITDA: Pro forma EBITDA was $3.5 billion, down 20% year over year, as lower iron ore prices, higher bunker costs and a stronger Brazilian real pressured results.
- Iron ore volumes: Production fell 6% year over year, largely because of Serra Norte, while sales reached 86.3 million tonnes, slightly above the year-ago level, helped by inventory drawdown.
- Cash generation: Free cash flow was $2.2 billion despite lower EBITDA; expanded net debt fell about $200 million to $16.4 billion even after $1.7 billion of dividends and interest on capital.
- Freight protection: Realized freight cost rose $4.70 per tonne since Q1, versus increases of $12 per tonne on Brazil–China spot rates and $4.90 on Australia–China; Vale estimates more than $3 billion of 2026 benefit versus spot.
- Base metals strength: Vale Base Metals EBITDA rose more than 60% year over year to $1.1 billion, or 31% of group EBITDA, supported by stronger realized prices and operations.
- Iron ore costs: C1 cost was $23.10 per tonne, up 12% year over year but down 4% sequentially; all-in cost was $60.40 per tonne, up 21% year over year and down 2% sequentially.
- Copper expansion: Vale approved Salobo’s coarse particle flotation project, adding 6 million tonnes per year of processing capacity and targeting about 30,000 tonnes of additional annual copper once ramped up.
Analysis
Vale’s third quarter combined an earnings miss with resilient cash generation. EPS of $0.29 was 12.12% below the $0.33 consensus. Pro forma EBITDA of $3.5 billion fell 20% year over year, mainly under pressure from lower realized iron ore prices, higher bunker costs and Brazilian real appreciation. Iron ore production declined 6%, although sales were slightly higher at 86.3 million tonnes as Vale drew on inventories. Serra Norte was the principal operational drag; management attributed the quarter to mine conditions and temporary operating issues, and said October daily production there was 15% above September.
The offset was Vale’s ability to protect cash and margins. Free cash flow reached $2.2 billion, and expanded net debt declined about $200 million to $16.4 billion after $1.7 billion of shareholder distributions. Freight contracting and hedging limited exposure to a sharp spot-rate increase, while Base Metals EBITDA climbed more than 60% to $1.1 billion. Sequentially, iron ore C1 and all-in costs eased 4% and 2%, respectively, though both remained higher year over year. Vale maintained its 2026 production and cost outlook, while pointing to Salobo and other copper projects as longer-term growth drivers.
Iron ore execution
- Production and sales: Iron ore production was down 6% year over year, mainly reflecting Serra Norte, while sales of 86.3 million tonnes were slightly above last year, supported by S11D and the sale of inventories built in prior quarters.
- Serra Norte pressures: Management cited lower ore quality that affected processing, fleet reliability issues during the start-up of 28 autonomous trucks, rain while mining at the bottom of the pit, and clay-related clogging. It said the operating issues had been resolved and October daily production was 15% above September.
- Outlook and flexibility: Vale expects to deliver iron ore guidance at its low end. Management used about 64 million tonnes as Serra Norte’s annual reference level, alongside 8 million tonnes at Serra Leste and 90 million tonnes at Serra Sul. It said Serra Norte should move sideways next year, with Serra Leste expansion and the N3 ore body among the planned contributors to future Northern system volumes.
- Supply discipline: Management estimated that about 160 million tonnes, or 10% of seaborne supply, is losing money. Vale said roughly 5 million tonnes of its own and third-party volumes could be at risk of adjustment next year, and that third-party volumes remain contribution-margin positive and can be stopped if margins turn negative.
Freight protection
- Relative cost performance: Since Q1, Brazil–China spot freight rose $12 per tonne and Australia–China rose $4.90, while Vale’s realized freight cost increased $4.70. Management said this helped preserve relative margins and estimated more than $3 billion of benefit in 2026 versus spot-market exposure.
- Contract coverage: About 75% of shipping needs over the coming years are covered by long-term fixed-rate contracts. Vale said Q4 freight needs were fully covered and more than 80% of 2027 requirements had already been secured.
- Fuel and currency hedges: Vale had hedged 67% of expected 2027 bunker consumption at an average $78 per barrel on a Brent-equivalent basis. Currency and oil hedges had generated more than $700 million in cash benefits so far in 2026, including $456 million from currency hedge settlements.
Base metals growth
- Quarterly performance: Vale Base Metals EBITDA reached $1.1 billion, up more than 60% year over year and 31% of group EBITDA. Copper production fell 6% and sales 4% year over year amid planned Sossego maintenance, while Salobo recorded its highest third-quarter production. Nickel production rose 6% and sales 16%; the Sudbury refinery had its highest quarterly output since Q4 2013.
- Cost and guidance: Copper all-in cost was negative $200 per tonne, a $1,200-per-tonne improvement year over year, and management expects full-year cost near the lower end of guidance. Nickel all-in cost was $14,600 per tonne, up 18% year over year due mainly to planned Canadian maintenance; Vale expects a Q4 decline and reiterated its $10,000–$11,500 full-year guidance.
- Salobo project: The approved coarse particle flotation project adds 6 million tonnes per year of processing capacity, taking Salobo to 42 million tonnes. At full ramp-up, it is expected to contribute about 30,000 tonnes of copper annually and 15,000 ounces of gold, with start-up targeted for the first half of 2028.
- Longer-term pipeline: Vale said the project, Bacaba and productivity initiatives support a goal of up to 500,000 tonnes of copper production by 2030, with a broader ambition to reach 700,000 tonnes by 2035. In Pará, annual drilling is expected to exceed 120,000 metres this year, up from 65,000 last year.
Costs and hedging
- Iron ore unit costs: C1 cash cost, excluding third-party purchases, was $23.10 per tonne, up 12% year over year and down 4% from Q2. All-in cost was $60.40 per tonne, up 21% year over year but down 2% sequentially; including the oil-hedge cash benefit, all-in cost was $59 per tonne.
- Drivers and outlook: The stronger real and energy-related pressures lifted costs year over year, with diesel and bunker prices adding to operating and freight costs. Management expects Q4 C1 and all-in costs to remain broadly stable versus Q3 and within 2026 guidance, with full-year costs near the high end of their ranges.
- Efficiency program: Vale launched a company-wide productivity initiative spanning operations, procurement, maintenance and logistics, intended to deliver lasting cost improvements. It expects to provide more detail at Vale Day in December.
Cash and capital
- Cash and debt: Free cash flow was $2.2 billion, supported by working-capital release and hedge proceeds. Expanded net debt ended Q3 at $16.4 billion, down about $200 million and within Vale’s $10–$20 billion target range, despite $1.7 billion of dividends and interest on capital paid in September.
- Investment: Capital expenditures were $1.25 billion for the quarter. Vale expects full-year 2026 CapEx toward the lower end of its $5.4–$5.7 billion guidance range.
- Shareholder returns: Management said an extraordinary dividend this year was unlikely given uncertainty around next year, despite expectations for strong cash generation. It said future additional capital could be allocated in a more balanced way between dividends and buybacks.
