Vale S.A. (BVMF:VALE3)

Vale Day 2019

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Dec 4, 2019

Thanks, everyone, for being here this morning with us. 2019 was has been a tough year for Vale, one of the most challenging years for us. The Brumadin strategy cost the lives of our colleagues, our friends and community members. So I would like to begin this valid day asking a moment of silence for in the memory and in respect for the victims. We will never forget Brumadinho. And for that, we are committed to build a safer and more reliable company. Since I took Vale's leadership in March, we've been vocal and saying 3 words: people, safety and reparation. Those three words have inspired us to create the road map that we believe is fundamental to derisk Bali. First of all, is the reparation of Brumadinho. For that, we have already 400 people engaged in that sense. This department reports directly to me. The second is to assure that our dams are safe, that our assets are integral and that we are moving towards to be a safer company. 3rd, we need to bring back volumes on a sustainable way. We're going to discuss this later. And finally, we have to have discipline on the capital that we are going to be generating. So for that, I would like to tell you that this morning, what is our strategy here is to run you through these elements because we believe that's what the investor community are asking from us. So I would like to ask your attention for 2 words that are that should come frequently during the presentation. Is listening and execution. Vale is well known for its execution capacity and we can be shown we'll show you during the presentation that we are doing that. Not very much for listening, so we need to improve our listening, and that's what we are doing. With that said, I would like to ask Marcelo Klein, the person that we designated to do the reparation of Brumadinho to drive us through what he's been doing so far. Thank you. Thank you, Eduardo. Good morning, everyone. Our mission at Vale is the full reparation of Brumadinho, the reparation of the damage caused to the people and territories. We have structured our reparation efforts inspired by the United Nations Guiding Principles on Business and Human Rights, in which principle number 31st says that business enterprise should guarantee that we have at operational level mechanisms that guarantee that grievance will be addressed and resolved based on engagement and dialogue. So I'm bringing you here sorry, I'm bringing you here as well a version a simplified version of what is a typical week as we can schedule. And my week starts on Monday with attending a meeting with Eduardo, our CEO and all the executive directors where I report how reparation is evolving, what are the critical issues for the week, what are the mid- and long term risks and also take the chance to talk to each of the executives to help to ask for the helps in terms of legal, IT, social responsibility and so on. So we have all functions, corporate functions at Vale. They are available to help reparation and that dynamic works very well. We also like to say that besides this strong dialogue, we also have a strong presence on the ground for our 400 people, around 200 stays every day in Brumadinho talking to people, to the communities and paying attention and capturing demands where they really happen. So along the week, I also talk to public prosecutors and other authorities. I have meetings with the fire officers. Just remind you from the 2 70 victims, We are still looking for 13. So it's a big rescue operation that has been lasting for more than 10 months. And also have meetings with the representatives from the family victims. So they bring it weekly their demands and we are building up a nice agenda together. And it's important to say that having them, allowing us to be there with them, sitting down, listen to their demands, to their fears is a big opportunity and a great chance for us to really construct effective reparation. We have structured our reparation in 4 main pillars. The first one is restoring the livelihood and the dignity of those affected. The second encompasses economic and non economic compensation. The third one deals about restoring the productive capacity of affected areas. And the 4th one, restoring the environment. So we're going to give you some details on each of those pillars, what are the main actions we are developing to guarantee that together we compose an effective reparation. Talking about restoring the livelihood and dignity of affected people, it's important to say that the most important thing is to welcome the factory people, providing them with information, care, attention and diverse kinds of services resources so that they can go through probably the worst moment of their lives with dignity. So when we're talking about restoring the livelihood, we have physical items that need to be provided. We have emotional issues as well. The physical items are easier to provide. You're talking about water, access to foods, to toilet, to personal items, to housing and to transportation, for example. But at the level of the individual, restoring livelihood demands a lot of attention on mental health and psychosocial support because it's hard to measure if our measures on the things we're doing, our action on those fields are being effective and takes time for us really to guarantee the effectiveness of those actions. So we are paying a lot of attention to those two disciplines, mental health and psychosocial support. We are getting guidance from the United Nations expert teams as well. And we recognize there are still improvement opportunities yet to be captured on those fields. And since we have a framework of sorrow, of fear, of uncertainty, it's really important to take to pay attention to details. Just to give you an example, in one of those meetings with the families, they have asked us to change the color of the buses that provides the service of community of picking up and dropping off employees from work to house and back to work. Because the complaints that seeing the buzz is going through the city every day reminding them of the people they lost and lost in Finland, hurt their hearts. So this is a kind of and we are doing that. We are changing the colors. We are also changing the routes to avoid the buzz going through the streets where several families of the victims live. So this is just an example of how these details become so important. They are not details at all and they become very important for the families. And we can only capture this kind of level of interaction if you're very close to them. And that's an example of how real effective listening is working. Our second pillar talks about the economic and non economic compensation. Now I'll discuss what's important both are important. We need to have the compensation payments. They are important trigger for the rest of the livelihood of people. And we also need to take care of non economic compensation. Talk about the economic compensation, I'd like to stress that we have made framework agreements, very important framework agreements in a very short period of time. On February 20, thus less than 1 May after the tragedy, 1 month after the tragedy, we have the chance to establish an agreement for the payment of a monthly economic support for all the citizens of Brumadin and the residents along the Para al Puebla riverbank from Westside and Westside. And that is the help that's already beneficiated 108,000 people and had paid more than BRL 1,000,000,000 so far. Last week we have renewed this agreement for 10 months more under new eligibility criteria was something that guaranteeing the city to run its basic services and avoiding the citizens to go through hard situation while we are carrying on all the preparation efforts. Another very important settlement agreement was established with the public defensiveness of Middle Israel States where we have made an agreement for the model and material indemnifications for individual and groups. So it's a friendly agreement. We have made more than 2,300 people already covered by that. And this is a more definitive solution where people can really recover the means for living they have lost. And the 3rd important agreement is the labor one, reminding you that from the 27 victims, 250 of them were labels or workers. So we are talking mainly about a label tragedy. So we have established with the label prosecutor in Brazil a very wide agreement where we pay fair and competitive verifications for all the workers and have already beneficiated more than 1500 people. And for the 250 families of the victims, 250, 244 have already made agreements. Besides the economic compensation frameworks, we have also non economic issues. We have signed 22 other agreements that covers for example quality water monitoring, animal rescue and care, some improvements you need to make to increase the amount of water you can capture since you don't have the water of the river available. So we are revamping pumps and water treatment systems. We are drilling new wells so that we can provide water to critical areas like hospitals and schools. So a lot of actions that are important, they are not directly economical but are important for restoring the overall conditions in the area. Our 3rd pillar talks about how we're going to restore and develop the socioeconomic capacity of Brumadinho and the other cities nearby. So here we have actions that covers the individuals, the communities and the entities and governments. For individuals, for example, we have a program that calls full support for the affected people where it provides economic financial planning and education so that they can make best use of the money they got. We also give advisor technical advisory support for them in choosing their house and also how they're going to rest with their familiar agricultural small business activities. So it's a volunteer program where we have technicians explaining them and planning with them through weekly meetings how can they reorganize their lives. For the community, we have sponsored several programs with the purpose of reinforcing and re strengthening the bonds between the people. So we have community activities. We have like productive gardens where they plant stuff for eating together. They have handcraft workshop and so on. So the main purpose of those activities is that the people rediscover their power as a community. And for entities, we are providing, for example, financial support to several secretaries of the municipalities of Romadio and other cities around so that they can provide better service to the community, for example, things related to health, to education, to tourism and so on. So we are also trying to encourage activities that go beyond mining activities so that they can rumadinkai think about the new futures less dependent on the mining activities. Okay. The 4th pillar is about environmental recovery. Since the breach of the dam in January, we were very concerned about how to avoid the environmental damage to go to keep going since the sediments could be conveyed to the main river. So we have installed several engineering structures to prevent the material from being carried during the wet seasons, during the heavy rains that last from October, November to February. So far these structures are working very well. So we're really managing to keep the big problem limited to a specific area before the main river is achieved. We also have actions related to river vegetation, related to the protection of river springs and so on. But instead of telling you, I'm going to show you a video that gives you much more information about our main efforts on environmental recovery. To reduce the impacts caused to the environment by the breach of dam 1 in Brumadinho, Valley has been working to contain tailings, recover the environment, and ensure the water catchment and supply in the region. To clean and restore the Farrokevon Stream and the impacted section of the Paro Pebe River, 2 water treatment stations were built and are now operating. The first station has already treated and returned over 1,000,000,000 liters of clean water to the Parapeva River. We are working on the removal of accumulated tailings, starting with the dredging of the silted area of the river and withdrawing branches and materials. Valley has also developed different emergency works for environmental recovery and the containment and removal of tailings to minimize the impact. The construction of structures which will guarantee the water supply to the Metropolitan region is underway. We also have initiatives planned to develop sanitation in 22 municipalities in that region. To finish my talk to you saying that the reparation of Brumadin become a purpose for life for us and reinforcing 2 main messages. First, that we are really basing our action on social dialogue and participation and small presence on the ground and that we are providing fast and fair compensation so that people can restore as much as possible the normality of their lives. So we work hard so the affected people can feel respected and dignified amid so much sorrow. Thank you. Now I hand over back to Eduardo. Thanks, Clang. Well, I think it's pretty clear that we are doing the reparation on an effective way, but more importantly on a with quality, with doing exactly what people are expecting to be done. So we need to go beyond that. We need to build, of course, a better value. I think we have all the elements together now to push us in that direction. First time I mentioned these 2 pillars, I'm going to go back to them about the other three ones later, but these 2 new ones, the safety and operational excellence, practice society was in Barcelona, was a concept, was something that came to us as kind of obvious because we needed to ensure, as I mentioned at the beginning, safety in our operations, but we want to go beyond. We want to be and we are ambitious on that sense to build a safer company, one of the safest in the mining industry, and we're going to show how. 2nd, we need to be a true development enabler in the communities where we operate and beyond. And of course, those 2, they cross across our business. We won't change our strategy. The value of volume is still kept. We're going to talk about how we're going to bring back flexibility to do that. Base metal is still key for us. We need to transform. We are undergoing that. And as I mentioned before, we need to have discipline. We have discipline, and we will show you actions in that direction as well. But to begin, I think nothing will be done in this company if we don't really prove to ourselves, to community, to investors that we are safer and safe. For that, when I arrived, we started with the nucleus. When I took effectivity in April, we approved with our Board a new C level position. Structure is important. It's not enough. Culture is much more important than that. But of course, we needed to reinforce a second line of defense. And for that, we invited Carlos Medeiros, well rounded executive from manufacturing that believes in the same things I believe. I believe that operational excellence is the what is going to drive safety, is the stabilization of our routines, is the discipline in executing what we have to be executed. We have around $60,000,000,000 of assets in Vale. They should be well run. And for that, we have an ambition and dream, as I mentioned, to be one of the safest mines in the world. So Medeiros, please guide us through what we are doing in that direction. Good morning. Following Vale's decision to strengthen its governance on safety and risk management, this office was created. I lead Vale's 2nd line of defense and I report directly to Eduardo Bartolomeo, Vale's CEO. And it's important to make 2 clarifications. 1st, my compensation is not tied to any operational targets. And the second one, my team and I have the authority to stop any given operation whenever necessary. So in order to avoid the occurrence of any major unwanted event, This office has been organized in 4 different areas. First one, tailings. We have to ensure that our dams are safe and they comply with the international standards. As to integrity, we have to maintain our assets and ensure that they can be operated with safety. Operational excellence, use VPS, that's Valley Management System, to be the vehicle for all the changes that will happen going forward. And the health and safety and operational risks, enhance the safety culture and establish a methodology for mapping all the risks. We also believe that every accident is preventable, and therefore, every action that we'll be taking will be aiming to build a safer and more reliable company. There are some milestones that will be accomplished in the next couple of years that I would like to share with you. First one, global risk assessment. Adopt and we have already adopted a very thorough methodology for hazard identification and risk analysis to map all the risks across Vale. Review our tailing management system, so it's about building a new tailing management system in line with the best international practices. DPS revised and relaunched. That's our management system that has been revised. And so far, more than 60,000 people have been trained. So they are now ready to use VPS as a supporting tool for the ongoing transformation. And strengthen our global maintenance structure is about implementing 1 single global maintenance strategy to guarantee us to integrity. Governance, as you know, plays a fundamental role in accident prevention. So this slide shows our previous and our current governance model for risk. So our board approved a new risk policy a few months ago. And following this decision, 4 executive risk committees have been created. So with the current governance model, we believe that we can monitor and manage our risks in a much more effective way besides allowing information to flow freely and openly through all organizational levels. As far as geotechnical structures are concerned, we have chosen to adopt a different model. And this model, by design, has several redundancies in order to maximize safety. So starting on your left hand side, the first two box, they belong to the first line of defense, which is our operations. So the box at your far left, the geotech and corporations team, they are the ones who run our assets. They are the ones who own our risk. They are overseen by the 2nd box, which is the geotechnical support team. Then following that, there is the 2nd line of defense, which is the organization I lead. And then an independent board committee, This is, as it says, it's a committee that reports directly to the board and its members are well known geotechnical experts back there in Brazil. Then we have the 3rd line of defense, our internal auditors. And then we have 2 external layers. The first one are the companies that issue our declaration of stability. They work with value on a continuous basis. And then there are the companies that work that report the public prosecutors. They also work with Vale on a continuous basis. So all in all, we have 7 instances overseeing the main decisions on operations and on the general condition of our geotechnical structure. This goes way beyond the traditional three lines of defense model in the industry. So on top of that, Vale is also using the service of an international well known company to assess and help us rebuilding our tailing management system or TMS. So this slide shows the timetable for decharacterizing 9 upstream dams similar to the one at Brumadinho. The yellow stars indicate the completion date for the containment walls for the most critical structures. Decharacterizing an upstream dam is a quite complex process that encompasses several steps. So as we speak, companies have been mobilized or have been hired and people mobilized so we can meet the proposed timetable here. As a matter of fact, the 8 B dam on the top of the slide has been already fully decharacterized, and the area it's used to occupy has already been returned to society. You watch now a video that will help you understand how the decharacterization process works. In January 2019, Valley announced the upstream dams decharacterization plan. The 8 b dam is the first of 9 structures in this plan to cease function as a dam. Situated at Mina de Aguas Claras in the municipality of Novolima, the 8 b was a waste containment upstream dam. In other words, the heightened structure was supported on the waste. Before the construction started, the water from the reservoir had been removed by a pumping system. Later, the removal of the upstream structure and the construction of a canal with blocks of stone took place. Such canal allows the natural runoff of surface water. The construction lasted for 6 months. The planting of native species has already started. 1100 tree seedlings will be used to revegetate the area and reintegrated into the natural environment. We'll continue working in order to eliminate risks from the upstream dams. So before I conclude, I'd like to leave 3 key message with you. First one is in order to derisk its business, Vale is building a strong and independent second line of defense. The second one is just to ensure to I would like to assure to you that risk and safety is at the very center of every decision we're making at Vale. And the third one is that a very strong and robust tailing management system is being put together now. I will hand over now to Marcelo Spinelli, who is going to explain how Vale will treat its remaining dams going forward. Marcelo, please. Thanks, Charles. Good morning. Well, in addition to the risk management that Carlos just said and also the characterization of the dams, we are investing in alternative for tailing dams. But I really want to say that I'm the operator of iron ore. I'm the first line of defense. And I'm really committed to avoid the use of dams. That's my first goal. So what we've been doing. Well, in 2014, our capacity of dry processing method that we don't use the dams was 40%, reaches 60% this year. And in 2023, we will be with 70% of capacity of dry processing method. That's the best for us. The Northland system will reach 100% in 2 years. And you know very well that in Northland system, we have the Carajas fines, the high quality ore. And as you have, the blending process, the blending strategy in China that we use the better ore to blend with the Southern system, we can reduce the wet processing method in the South. But we still have a remaining 30%. What we're doing beyond so this is a new information brand new information. We are anticipating $1,800,000,000 of investment to install filters to separate the tailing from the water. We can reuse the water and we can have the dry stacking after all. It's been under construction for the main sites in the southern system. But we still have a 16% 15% to 14% of the wet processing method. And this is another important information. Know very well that we bought a new technology that is called New Steel this year. And New Steel is based on the dry magnetic method. We can use we can separate the tailings in the ore without the water. So we'll be the 1st company in the world that is going to use industrial scale this methodology in 2022 is under construction. And if we succeed and we are really concerned and we really believe that we're going to succeed, we can be out of this kind of method that can use dams and water. So just to summarize this part, as an operator, I'm really committed that in the future of the iron ore mining business, we're not going to use them anymore. So Eduardo, please go back to the stage. Yes, I think you could see clearly that we are effectively working. That's not a speech, it's actions. I think governance is being structured, it's being reinforced. We're eliminating the backlogs on the upstream dams and are working hard to eliminate and creating safer ways to operate, not only in dams, but in all assets that we do operate. So it's a let's say maybe a dream now, but it's an ambition that we will pursue day after day as long as we are together here as a team. But that's okay, but that's not enough. Society demands much more. I think Brumadinho accelerated several initiatives that were around the company, even society, a broad valley. The mining industry has changed its way that is perceiving how it should interact with society. Society wants to share the value that we create. That's a fundamental thing. Last year, we announced here those commitments. They range from climate change, from water use, energy to specific economic development. But we understood, again, listening to stakeholders, shareholders, communities, our board extremely active on that, That we need to push much further. We need to push much, much further on how we interact locally, on how we truly deliver value locally, how we truly help society move forwards. So we revised our goals. We aligned our climate change goals to the Paris Agreement. It does represent, and Luciano will drive us through with more details, a huge ambition that were before. We want to be carbon neutral by 2,050. And the energy, we have again more ambitious go to go global. We are only focused in Brazil. And in forest as well, and Luciano again is going to mention that, it's going to be like 50% above. But why is that? I think one of the things that's behind is we need to go further, we can go further. And it's not grounded in something that we think is possible, but we have a portfolio that allow us to really induce our value chain to change. Our value chain on steel industry is around 10% of the world's emission. So we're not as a mining company, our emissions are relatively low. But when we look beyond, it's pretty high. And we have the right products to do that, even outside the iron ore with the nickel. With energy, we have a very clean matrix in the 3 more important countries that we operate on Indonesia, in Canada, in Brazil. And in forest, we are a player in Amazon. So that leaves us with a very strong basis to really have the ambition to lead this transition. And again, I would like to ask Luciano to detail that, and I think sorry, I forgot to give one very important point. I think, as I mentioned before, we had these five points that are being revised. And one very important point is our gaps around ESG. We are listening. We've made a big revision. We talked to several institutions like consulting companies, shareholders, NGOs, and we map our gaps. 50% of those we eliminated just by giving disclosure, but we created a road map about that. For that one, I will come back later. But specifically now, I want Luciano to prove to us and to you that we will lead this carbon transition. Please Luciano? There has been a lot of excitement within Vale about this. I'd say today, maybe half the time of our Board discussions go around this legacy that we intend to create. It is true that many in the industry have announced similar objectives. So there's a call for action amongst all corporates, especially towards climate change. So you might be thinking, why is this different from what others are doing? We believe on those three ones that we have new targets that we can lead the way because of the endowments that we have in terms of assets and footprint. Starting by climate change. So where we are today, we are aligned with the Paris Agreement. That implies increasing to 30% the target for reduction of emissions until 2,030. We have a road map that addresses today about 70 percent of that. The other 30 percent we don't know how to get there, but we're working on it. We have established carbon pricing $50 per tonne. So, so far others have done that. And we are also targeting carbon neutrality in scope 1 and 2 by 2,050. And again, others have done that as well. Where can we lead? We believe we can lead. And that's why the excitement builds within our organization. First, we do have the iron ore the high grade iron ore, the pallets and the products that our customers need in order to reach their goals in terms of client reduction of emissions. And we have the Class 1 nickel that will electrify the world. So based on that, we are now working on Scope 3 targets that we will introduce shortly for shipping and for steelmaking. And we are building a whole plan for 10 years from now Vale to be the go to supplier of products to help customers deal with climate change. Metallics is something that we made an investor tour just focusing on that and we'll return to that under Spinelli's presentation that we believe is a business opportunity to get there. So that's why we intend to be leaders on this front. Another front that we intend to be leaders is in our energy self generation. Today, we have 60% of self generation renewable sources. We intend to go to 100% in Brazil by 2025 and globally by 2,030. Our footprint helps on that. We have a lot of hydropower in Brazil, in Canada and also in Indonesia. And so to our knowledge being 100% supplied with renewable energy is something also that puts us on the leadership. The other topic that we believe we will lead as well is in forest protection. We have today already about 100,000,000 hectares of forest mostly in the Amazon being protected by Vale. 100,000,000 hectares is about 100 times the size of cities like Manchester or Liverpool. It's about 7 times the size of Greater London area. It's about a third the size of Belgium. And we intend to increase that amount protected and reforested by 50%. And when we do that, this is going to be an area greater than Northern Ireland. And if I may just show you a concrete example of that. As you know, our largest iron ore mines are in the Amazon. And because of that protection the video the animation you will see shows how unfortunately all the surrounding area besides the borders of the protected areas of Vale has been deforested over the past 30 years, leaving just the area protected by Vale and its operations as untouched. As you see from, 73 towards 2018, that's how it advanced and leaving just the areas where Vale has the red portions is the mining areas of Vale. So that's unfortunately how it evolved, but we're being very effective on protecting those areas. When it comes to sustainable development, we talked about the E now about the S. We want to go beyond the collection of taxes, the corporate social responsibility, traditional one. To be a truly development enabler means thinking very hard and investing a lot of money in our legacy. And the very first example is in the city of Itabira where Vale was born in the 1940s. The mines will adjust in about 15 years and we just signed agreements by listening to society's demands and concerns and ambitions to provide for a legacy that goes beyond our operations. Let me show you a short video. Valley's goal is to positively impact society by contributing to the development of the regions where we operate. In Itabita, Valley is helping to transform the city into an educational and technological innovation hub. One of the initiatives is the empowerment of the city's teaching staff from primary to higher education, the modernization of engineering programs, and the incubation of technology based businesses. In October 2019, Valley signed an agreement to invest R100 1,000,000 reais on the expansion of the campus of the Federal University of Itajuba in the city of Itabita. The partnership involving the municipal government, the university and Vale aims to support Itabita so the city can become an educational and open innovation hub in a state of Minas Gerais and further contributes to reduce the city's economic dependency on the mining activity. The city is very excited about this project. Well, we talked about where we believe we can lead, but now let's talk about bridging our gaps and our shortcomings about what we heard from you especially in governance where we can improve. Well, as we said in the beginning, first of all, I think we need to listen, but we need to talk as well. I think a lot of that stuff that Luciano mentioned, very few of our stakeholders knew how much we involved in the first station of Amazon, the clean energy that we have. But anyhow, our commitments are done and we're going to go forward. But as I said in the beginning, we mapped around several gaps, 50 we closed. Just one example of something that we already are undergoing as well in direction to close the road map. First of all is in gender balance. I think as a mining company, we're unbalanced. We only have 13% of our workforce in Mayo. We want to double that by 2,030. We need to certify, what's another demand, our operations. We only have 22% of our operations certifying in the eyes of 14,000 a month. We're going to drive through that. It's a longer period, but of course, we'll try to achieve and we will achieve. One very important one in governance is the audit committee was something that was asked and we are going to establish that on 2020. A very interesting one is the Riemann Rights policy. We used to have 1. We engaged in conversation. We made a public consultation. We revised it. But as well as important, it was a demand as well, is to tie our compensation. Our short term compensation normally, I think every company has its safety and environmental goals we used to have as well. So we tied now, we approved with the Board our long term compensation. So it's more or less put your money where your mouth is, is very famous. So Vale, C level, myself, our employees are all committed with those goals. They are ambitious, but we will try to achieve them. But as I mentioned, we need to talk as well. And we created this portal, an ESG portal that all the information that I'm giving you to you here is now I think went online on Monday, right? So I invite you to take a quick view on how it looks. Oh, sorry. The ESG portal is the new Valley Transparency channel. Here, you will find important company information such as repair actions, reuse of water resources, and electricity management, as well as info on sustainability, payment policy, safety measures, and performance. Everything is organized into areas of interest. A way to promote easy and democratic access to important company information in a transparent manner. Visitvalet.com/esg and get to know our new portal. Okay. Now we're going to shift gears. We went through the reparation. I think the safety part, as we said, and the spectrum society. As I said, those are cross. They are cross across the business. So now we want to talk a little bit about iron ore. Marcel is going to come here and talk about how we're going to regain our flexibility and, of course, what's next for iron ore. Mark will come and discuss a little bit about how we are evolving with the transformation based metals, some changes that we're doing in the strategy as well. And lastly, Luciano is going to come and wrap up everything with how opportunities we have, what actions we are doing with some non core assets. And in the end, I will come back and close and do a wrap up. Please, Marcelo? So, well, let's talk about iron ore and the name of the game is Derisking iron ore business. And derisked iron ore business means back to efficiency to that 2018 and restore the capacity. So that's the name of the game. But nevertheless, I want to reinforce that that's a mantra today, okay? We are really committed to safety of people and asset integrity. And safe first is something that is really going on and we see some examples. Well, talking about resumption of operations, You know very well that we lost 93% after Brumadin tragedy 93,000,000 tons after Brumadin tragedy. And we still have a remaining capacity to restore. So we are planning to go back in 15,000,000 tons next year and 25,000,000 tons in 2021. So I want to explain how we're going to do this. It's a gradual process. I can simplify in 2 phases. The first phase is related to mechanical dismantling. Capacity means quantity, volumes and quality. So this first phase, we can regain the quantity, but not the quality. We don't use the wet processing, so we don't have the best quality ores. The second phase is related to evolving of the dams, so we can increase the a better assessment of the dams and we can use the wet processing and volumes and quality goes back. And the blasting process in the end of the process, in the end of the game, we can have more efficiency. So this is a gradual process. Another information here that is really important that we are every day assessing and investigating all the dams and all the risk management, as Carlos just said. We have three examples that just happened. That's a new normal. I want to reemphasize that gradually you're going to have some ups and downs and some stops of the operations to reaffirm that we are ready to go to the operation. So 2 months ago, we had a problem with Ferro's operation. It was a permit problem already solved. Last Friday, we went back. We had a problem in the dam in a very important operation And almost 1 month ago, we decided to go further, go deeper in the analysis of Itabiro Shudam, that is Itabiro operation. And now we are we have a good news. We are anticipating part of the operation in 1 month that will be in January. So in the last Monday, during the Vale Day in New York, my team called me and said, well, we have to improve the investigation in La Angera's dam that is a Brucutu operation. My team and Carlos' team decided to stop the operation. We need another 1 month to go deeper in a crack. We had a lot of information with satellites, very top of the technology, using by us for the dams, and we decided to stop the operation, reduce 60% of that operation in Bouygues Tutu to guarantee that the dam is okay. So we expect in 1 month more than that return to operation and say for real. So safety is the name of the game. And the new normal is if you need to assess some operations, some of them, we're going to do it, but safe will be the first thing to do. Well, I'm going to talk about the future here, volumes and after that efficiency. So what will be the capacity for next years? For next year, we see we expect the number is 350,000,000 but the range is from 340,000,000 to 355,000,000 What we have here, again, it's very important to emphasize the value over volume is our strategy. This is about capacity. If you can deliver the quality and the volume that the market needs, we're going to do it. If you don't have the necessity, we can adjust the capacity to the right production. And in 2 years, we can recover the formal capacity from 2018. This is the news about the volumes. Another very important information here, as we said that gradually we are returning. The first half of next year will have 2 impacts on the volumes. First one, we are recovering the BRBF stocks in China that we used this year. So the supply for the beginning of the year, part of that will be used for this recovery. Secondly, just I said, quality is a ramp up that in the second half will be better than the first half. So we need to guide our volumes and adjust our volumes by the valuable volume, considering quality and also the stocks that we need to regain. Another information for pellets. Production for next year expected is 45,000,000 tons. Well, I'll divide the efficiency in 3 parts. First one, the C1 cost from the mine to the Brazilian port. Good news here, midterm, we are back to the level of $2,031 per ton to $13.5 per ton. What are the main levers to get there? First one is really directly related to the volumes. So we can dilute the cost, fix the cost and reduce the variable cost with 1.2 to 1.0.2. The second lever is about efficiency. We are working hard to make this company more and more efficient. We have digital transformation undergoing, autonomous tracking, automation. So we expect to have a better operation and reliable operation. And this is another very important information. As we are using the futures, the filtering process to avoid the dams, we are increasing part of our cost. We just said about the investment that we are anticipating, but the OpEx related to this kind of operation increase in part of that. But we can offset this with our initiatives of efficiency. 2nd layer of the cost after the Brazilian port going to China or going to the other parts of the world is the freight. Very good news here. We are undergoing our strategy of big vessels. You know very well with the Valemaxes. Just to remind you, we can save 40% of emissions with the Valemax if you compare to Capesize and the results are there. So Valemax are coming. We are on track. We also have the Guayba MAXs and we are reducing the freight, mid term freight, long term freight to $16 per ton. Next year, we have the IMO regulation, you know very well, we have to use the low sulfur bunker. We have a gap between the low sulfur and the high sulfur. It's about $200 today. We're not counting on the supply demand that the market can adjust. So the low sulfur can go down. But to avoid this, we are installing scrubbers. The scrubbers, there are some mechanisms that we can use the high sulfur bunker and offset this increase of cost of low sulfur butler. Our we are the road map is going really well. We expect to reach 76% of our fleet this year and also in 2 years 100% of the fleet. So that's the way we see the freight. The 3rd part of our competitiveness is the premium. And this is a part that all of you ask me a lot about this year. What about the premiums? We don't have the we're not confident about the premiums. Let's see this is just a little complex slide. I want to pass through that. The left side you have this table is about the components, the function that we have the premium. Premium is a function of steel margins and the price of energy that's used in the steel process. Steel margins, the higher the margins is, you are our clients are stimulated to use a better ore to produce more. So that's the trend we have. And if you have a higher cost of the energy, you can save this energy using less coking coal and you can pay more for that. So this is the pattern that what happened last year. The write up, the premiums in this index these numbers are the difference between the spread between 65 index 62 index, the premium of iron ore, the Panajas ore, we are going in that up right side. Left downside was what happened this the middle of the year of this year. So you remember what happened this year. We have an unbalanced on supply demand. Brumadin caused that and also the problems in Australia, the Veronica and all the weather conditions. With the high index that happened after that, we invited new competitors for this game. So we have and still have part of that the concentrates from China, product produced inside China and other parts of the world are sending concentrates from like Canada sending to China. The price of this steel went down and this is regarding the problem of trade war. The China was really boosting the production. They did it. They relaxed the problems related to the environment. So the winter cuts were really more relaxed. So the price went down and the margins reduced. So that's what happened during the year. But what we see now, the stable steel is a good reference what our business is. We are around 12 in the spread of the 2 indexes. That is really close to the margin of the steel today and the price of coking coal. So we really believe that in the long term, the price we believe there is something between $60,000,000 to $80,000,000 and the margin go back and the premiums will be higher as we have more margins in this field. So to summarize this, what we see in our business is still a strong business. If you consider the EBITDA breakeven, that is some of the costs. You see long term go back what happened to 2018 that we were the first one in the world. We're going to have the 28 to 30. And if you consider that the lower price that you see in long term, dollars 60 per ton, we still have a 50% margin of EBITDA in this business. So it's very strong and cash generator of business. So what is we the future? Luciano just mentioned about the necessity. Our clients are claiming. We are in Europe. You know very well about all the efforts, all the pressures about the missions here. We are ready now to face this problem. We have the best portfolio in the world. We have the best iron ore in the world. We have an interesting if you simulate the impact of our products in our clients, we can save today 30,000,000 tons of CO2. It's about 9% of the Scope 3, what we call the Scope 3, the CO2 that is immediate in our clients is the impact of, call it, of our products. More than 85% of our products are premium products. You know very well the list of our products, the BRBF, the IOCJ. And I want to reinforce one product here, this GF-eighty eight. It was an initiative that we started understanding what China the problem with China is there's a delay from Europe. They're more worried now about the dust. And they are investing more in palletizing to avoid the sintering process. As you need to make the pellets, they need pellet feed. They don't have pellet feed for that. So what we are doing, we are grounding Carajas finds to feed this market. It's about 30,000,000 tons in this market, and you can use what we call the free carrage ash to apply in a new possibility. What we expect this year is about 7,000,000 tons of this product. But we are looking beyond that. Luciano said that we have some initiatives about metallics. Why metallics? We are you know that there's a trend in some part of the world to move from blast furnace to electric arc furnace. And we want to help them not only to use more scraps that can use metallics to clean the scraps or to use directly in the part of the process. And we're studying part of that solutions with them. HPI, why HPI? It can be a possibility. Brazil is exploring the pre salt and there's a lot of gas can be a location for natural gas and also we can have plans of HBI with our clients to feed this kind of necessity. Another possibility, what we call the green pig iron. Pig iron inside Vale more than 15 years, we have Techno Red. There's a technology for pig iron. That is going really well. We have a trial industrial trial ongoing on. And we can use as a source of energy the biomass. We already tested 50% of biomass in this kind of technology and we can reduce 0.5%, 50% of the emissions in our clients. If you use 100 percent of biomass, we can close the gap of the challenge of 2,050. So the main message here to summarize our strategy. First one, go back to the volumes, but be careful with the safety first. This is a mantra. Volumes and quality and value over volume is a key strategy for us. You know very well that. Secondly, cost. We go back. We're working hard. And as we go with the volumes, we can go and work with the initiative to reduce costs. We go back and we are in a good shape to be the best in the world again in some years. And we are ready for the future, for a greener world. Today, we have the best portfolio and are working hard with our clients to give them in short to long term the best portfolio for the new challenges. Now, Marc, we will continue with the base metals strategy. Thank you. Good afternoon, everyone. Marcelo spoke to you about the potential we have in our iron ore portfolio for a greener future. I want to speak to you today about the turnaround of the base metals business that's underway, but also the opportunity we have as nickel plays a key role in an electric vehicle in a renewable energy driven world. With the adoption of electric vehicles, nickel is poised for dramatic change. Nickel is a key component in the electric vehicle battery that drives increased performance and lowers its costs. With nickel, we will enable the mass adoption of the electric vehicle globally. Of course, this will increase the demand for nickel dramatically. I want to talk to you about how we see the market dynamics playing out for the nickel industry. Currently, as the demand increases to supply the electric vehicles batteries, in small numbers right now and as it grows, we have excess Class 1 nickel available through inventories, Class 1 being our high purity nickel and particularly in the form of briquettes, which is currently feeding the electric vehicle battery industry. However, this will not last. It will not be sufficient to meet the demand in the coming years. And what we're going to need to see is the increased use of laterite ores, primarily through the adoption of high pressure acid leach technology, HPAL plants. This is a technology that the nickel industry has tried with some success, but clearly some shortfalls in our industry, and we will need to dramatically improve to meet the demand in the future. Overall, we see a tightening supply demand dynamic in the nickel industry, and we see the emergence of 3 very distinct markets, each with its own supply demand dynamic: our Class 1 high purity products, the stainless steel products and then products that feed the batteries through nickel sulfate. With the emergence of these supply demand dynamics, I'm going to talk to you now about the new commercial strategy that we've developed for Vale based Metals. We have a very strong high purity nickel Class 1 product base, which comes in many different forms, can feed many different applications. As we see the supply demand dynamic becoming tighter, we see the great opportunity to preserve and restore our market share in the Upper Class 1 nickel. We see the opportunity to play the LME price as we see it responding in the next few years to the demand for electric vehicles and to get greater value out of the premiums we get from these high quality nickel products. We also have opportunities in the Class 2 ferronickel market, the market to feed the stainless steel as well as the battery industry. But we will selectively participate in those opportunities as we see the opportunities in front of us and ensure that we have robust returns available to us. I will talk to you about the opportunity we have to increase our faironucal production in Onsipumumabut we also have opportunities in the battery market, be it a greenfield project in Indonesia that I'll speak to in a few minutes in Pomala, partnering with Sumitomo. We also have the ability to move our Class 1 products to the battery markets as it makes sense, particularly with our powder nickel powders. So what are we going to do to take advantage of this opportunity? Our challenge is to turn around the Base Metals business, and it's a challenge that we are undertaking right now. And it will take us through the next couple of years, and I'll explain why. 1st and foremost, we need to be a safe and reliable producer. Our assets have failed us in the past couple of years and in this year in particular as well. We need to invest in our asset integrity and focus in on the pillars that Carlos explained to us earlier, adopting the preventive maintenance strategy that he discussed. And we see that reaping benefits for us in the next couple of years. We also have a program of very significant investments in replacement mines in Canada. We've announced and are undertaking the development of the Voises Bay underground mine, which will replace the open pit mine, which will deplete in the next couple of years. We're also extending the Copper Cliff mine in Sudbury. So through this period, we will have very significant demands on our capital, but it is very important that we develop a strategy where we will be cash flow positive throughout this tough period with this period of investment. And we've secured this through our nickel hedging strategy that we've announced recently. A nickel hedging strategy that carries about 30% of our production through 2020 and has already generated value for us. Finally, as we move through this period of reinvestment, we have the optionality for growth, particularly in our Indonesian portfolio. To secure the investments in Indonesia, we need to ensure the pathway to the extension of our contract of work, which expires in 2025. Recently, we announced the signing of a heads of agreement to meet the divestment requirement, which is a key pillar for the extension of the contract of work. It was announced that we would have Inollam, a state owned entity in Indonesia. We'll be purchasing 20% of PT Vale, 15% coming from Vale and 5% coming from Sumitomo Metals. We believe this will be a very critical pillar in ensuring the successful extension of the contract to work, which will allow for the investments in Indonesia. We have the brownfield expansion opportunity in Sarawakko. Our long history of operating in Sarawakko, long profitable history. We have the opportunity to expand by 10 kilotons through ferro nickel production in the short term. We are also under discussions through partnerships through the development of 2 projects, Baadopi, which would be a 70 kiloton Ferron nickel project, primarily with Chinese partners using Chinese engineering and EPCM methodology. It's important to say with both of these projects, we retain 100% interest in the mines. In Pomola, we will be partnering with Sumitomo, a company that has mastered the HPAL technology. And we have a 40 kiloton project available to us, supplying HPAL to the electric vehicle market. Where does this get this? Where are we now and where does it bring us to? So I'm going to review our production profile through next year and the coming years. These numbers do not include production from Vale New Caledonia, and Luciano will speak to you about that in a few minutes. Currently, we're at a production rate of about 210,000 tonnes per annum as we focus in on becoming that safe, reliable producer. In the short term, we have the ability to grow to about 240,000 tonnes, primarily as we see production increasing in our North Atlantic Canadian operations. And we also have the opportunity to expand with a second furnace in Onsopuma, a fantastic project with robust promising robust returns. And finally, we have the opportunity to grow to 360,000 tonnes with the addition of the Indonesian projects that we announced. Similar to nickel, we have great opportunities in the copper industry copper business as well. Similar to nickel, copper has the ability to respond and grow with the electric vehicle as well as the renewable energy industries. We'll start to see the application in these industries to add on to the traditional industrial applications that we currently see. And this is just as the mines in the copper industries are depleting and the mine ore grades are depleting as well. I'll just finally conclude with an overview of our copper portfolio and the growth opportunities that we have. We're currently producing or we'll produce at a rate of 400,000 tonnes next year. With a very short term ability to increase to 430,000 tonnes in 2021 as we see increased production coming from Canada as well as from Sasego in Brazil. In 2022 and 2023, we're going to see significant increases as our Salobo III growth project comes online. And finally, not included in the production are 3 projects that I will mention here. The Victor project, one that we discussed last year in this event, is a copper project, copper nickel project, primarily copper, sitting alongside the Glencore Nickel Rim project. We are currently studying with Glencore the joint development and operation of that mine, which would see 30 kilotons attributable to Vale. We hope to be announcing a project sanction in the second half of next year. Alamo is another project we have in the Carajas region of Brazil, the potential of 60,000 tonnes, and again, project sanction scheduled for second half of next year. And finally, in the longer term, we have a project in Indonesia, a very significant copper gold project with the potential of 250,000 tonnes per annum, very promising project that we will be looking at. So in summary, we're turning around the base metals business, becoming a safe, reliable producer and taking full opportunity of the potential we see in the nickel and copper markets going forward. So at this point, I'll return this to Luciano to conclude. So where do all of this lead us? What's the investment opportunity for Vale at this point in time? The key word if there's one word that you should leave today in the back of your minds is the word derisking. We're very mindful that the equity story of Vale relies on derisking. Derisking to improve the cash flows of the core business, derisking to improve the cash flow outside of the core business, we'll talk about, and derisking to improve the way those cash flows translate into valuations. Starting with the business. If we put altogether what was told to you today, every one of our core businesses will increase production from 10% to 30% over the next 3 years. Bear in mind this time line, 3 years. 2022 is the year in which we want to deliver to you a completely different valley. Together with the increase in production that we talked the resumption of volumes in iron ore, the increase in production in nickel and in copper, we will have also competitiveness improvements across all the businesses. And this will not come at a high cost. We always present the capital expenditure numbers and here they are. Two messages here. We continue to foresee a US4.5 billion dollars level of capital expenditures from 2022 onwards, which is exactly where we were before. However, over the next few years, there will be an uptick to 5,000,000,000 reason being for the front loading of those investments in filtration and in dry stacking that Spinelli just mentioned. Our commitment to avoid and eliminate the consequences of tailings dams, we're front loading those investments 2 years then back to 4.5 percent even with the growth opportunities that were just mentioned for example in base metals. So de risking in the core business means cash flows will improve. But now I'll talk about derisking outside of the core business and we understand there are lots of inefficiencies and problems that we need to address within the Vale umbrella, Starting by non performing assets, MoaTees, VNC and other JVs. And I'll focus on the 2 of them, on MOATs and VNC. In MOATs, see what's written on the left hand side. A short term shock will lead to strong gains in cash flows. That's our goal. What is this shock about? The reason why we're underperforming in moieties this year is because we started to mine sections of the mine where the ore body is very, very poor. Because of the lack of drilling we did not anticipate that. And the plant is not capable of drilling that ore. So we're going to do 2 fold. 1st, on the left hand side, there's a complete new mining plan. We will abandon the poor parts of the ore body. We will shorten the mine life. We will go after the good stuff and we will improve for example the yield of coking coal in the mix. The second thing we will do is on the right hand side, we will stop the plant in Mozambique in oil production for 3 months in order to do a complete overhaul of the plant to adapt it to the new the ore body that we have and to do some changes in the flow sheet. And after doing this, the goal is on the second half of twenty twenty to have it up and running at 50,000,000 tonnes production rate and therefore EBITDA positive. When it comes to Vale New Caledonia, we made the decision to exit BNC. We've communicated this to the French authorities both in France and in the South province. We're going to exit responsibly. There's a few reasons why we believe we will succeed and why we're doing this. The first one is we realized that we're not we don't have the competence to raise the production levels with this technology to where we want it to be. We realize that others may have this competence as HPOW is a technology now that it is much talked about in many parts of the world because it's going to be a key technology to supply the nickel battery market. So others are doing their homework and maybe better than us. And finally, Nucaradona produces not only final products, but also intermediates that are very sought after today. NHC is very important for the battery market and there may be an opportunity to work with those intermediates and to completely also change the flow sheet and others are looking into this as well. A final decision on the final configuration of V and C will be announced in the first half of twenty twenty. Not only warranties and V and C, but there are other cash flow drains within the Vale system. So irregardless of what happens outside of Vale, just by shutting the taps, we can improve cash flow significantly. And here's a list of them. We just mentioned Moaties and VNC. They're consuming over $1,000,000,000 in 2019. Our commitment to you is to banish those outflows by 2022. We have the stoppage expenses, all of the expenses that are going out because of the Halton mines, dollars 900,000,000 this year. Commitment to 2022, they will be 0. Samarco, remember Samarco is still a cash flow drain. Samanco and Renova the foundation. It will not it will still be there by 2022 expenses with Renova, but it will diminish considerably. However, next year is an important one because of the restart and some more indemnifications at the Renovo Foundation. We're repurchasing the MBR preferred shares within the iron ore business and the outflows of £200,000,000 per year we'll seize next year. And there are other outflows that we're vigorously tackling. So if you add the 2019 column that's almost $3,000,000,000 outside of Brumadinho expenses that went out for no good economic purpose, and we intend to eliminate most of those by 2022, derisking in the outside of the core business. Talking about Brumadinho expenditures, yes, they were having 2019, they will be having 20 20, they will be having 2021, they will start to decrease by 2022. The reason why 2020 2021 are very strong is because of the decharacterization expenses which are mostly concentrated on those 2 years. They're not going to vanish in 2022, but they will be hopefully substantially smaller. So de risking outside of the core business will lead to important improvements in cash flows. So therefore, by 2022, you see the tables, EBITDA on the left hand side, free cash flow on the right hand side. We intend to deliver to you a very healthy company. There are some hypotheses here of prices of iron ore and nickel and you can see by yourselves the cash flows intended and how they convert very healthily into free cash flow because of the low level of capital expenditures. But now the key question is how those numbers translate into valuation. And we are very mindful that you have many doubts about Vale. You doubt about the liabilities of the reparation efforts. You doubt about the safety issues. You doubt about the resumption of volumes. You doubt about how we're going to deal with warranties in V and C. And that's why we've spent 70% of this presentation talking about all of those issues to convey you the message that management is fully committed towards derisking the company. And if we successfully derisk the company, we believe and on the right hand side, you have on top of it the EBITDA numbers similar to the ones you saw on the table on the left side, 3 different scenarios, a more pessimistic scenario 15.5 percent a base case scenario 19.5 percent and a more optimistic scenario 23.5 percent. How do those cash flows will translate into valuation? If we derisk the company, if we eliminate all those uncertainties, we believe we may deserve from you an assessment on EV multiple, which may come back to the 5.5 to 6 range that we traded about 10 years ago from 4 times today, maybe even less than 4 times. That's a key component of the story. And if we do that and still aiming at $10,000,000,000 of net debt, you can see how the market cap can improve substantially. And when you add the free cash flow that will be generated over the next 3 years, by 2022, there can be a potential shareholder return if you take just the middle scenario of over 25% a year. All that we're talking about, we're going to do it because it is the right thing to do, but also there will be hopefully rewards from it. And that's what we intend to deliver to you by 2022. I think with that, we sorry, we conclude. As you saw, we are undergoing the derisking. The doubts are getting smaller or lower. But fundamentally, I want to remind you and we say that inside Bali, we don't see this as a sprint. It's a marathon. You take time, you take efforts, but two words you can expect from us: discipline and persistence. Preparation, as Clive showed, is happening. It's happening with quality. Safety is something that is embedded in us. We will be the safest company in the world. We need to stabilize our production. We are doing we are getting back our volumes strictly, but with safety. And more importantly, we are primed to this valuation because as I said in the beginning, we'll be disciplined. But I think more importantly, we want to build a better value, a better value that is safer, more human and more sustainable. Okay? Thank you. And let's go to the Q and A. Thank you again. Well, thank you very much, gentlemen. It's Doug Upton from the Capital Group. I have a question. It's a continuation of the derisking question, I think. And Luciano, thanks for what you ran through. From a shareholders' point of view, in the short term, derisking is also about the final closure of the Brumadinho issues. Yes. So could you just talk through like the key issues still facing the company from Brumadinho, the key counterparties, maybe mostly from a legal point of view, I think, and what the time frames might look like? Okay. Thanks, Doug. I think let's put it this way. I think there is an obvious investigation that has to conclude internally and externally that will assess responsibilities and time frame for that. Internally, we believe that our technical assessments are going to be delivered this month. We are finally attacking that. That's the internal assessment of the brake. From the prosecutors, we believe will happen either before the recess of the judiciary or later in the beginning of the year. So there's a recess in Brazil now for that. And that's a very important point because it creates a possibility to the other agreements that need to be done. We have 3 civil actions against us that froze BRL 11,000,000,000 around $2,000,000,000 doesn't matter. And one is around environment. Those are we have reparation and compensation. The studies about reparation are very well advanced, but the problem is the compensation and that's we are discussing with them. And again, I think we could expect something around the Q1. The second one is the social and environmental sorry, the social and economic damage that we advanced a lot on the how can I say that, agreements that Klein mentioned here, but we need to get that collective? That gets more complex. But anyhow, again, we are dealing and I will get to the third one to clear that up. There's a fundamental compensation for the government. So the government took the lead and tried to arrange these agreements around what stakeholders we're talking here, the public prosecutors of the state of Minas Gerais, the government itself and the judiciary system and ourselves, of course. So the complexity of managing those three those four elements is being led by the government. So we believe that we should expect at least for the first half, not this year. It doesn't have we don't have any time. We were hopefully that thinking that we could have the agreement, but it's too many people around and too many complexities. But we believe that in the first half of next year is reasonable. If you remember, some market took much more than that. I think there is a key difference here is the speed that we are dealing with. And that's as we said in, I think, in other events, is low it's how can I say that? It's taking the burden of the ACPs. ACPs is a civil action that requires that. So we don't we're not waiting for that. So on water, we are taking actions. So those things are I think will allow us to conclude this on the first half. But it's very again, very ambitious. Importantly, from an accounting perspective, when we did, for example, the provision on the 2nd quarter for the social environmental side, we did reparation because we basically know what needs to be done. Some of the agreements that were mentioned already deal with that. But we also already provision for compensation. Why is that? Because we've engaged with the authorities and we pretty much know where they're coming from. For example, Davide talked about sanitation efforts. There's a desire to, for example, increase water supply security for the metropolitan area of Belo Horizonte. So there are long term plans and things that we're discussing with the water utility company. So this will fall under the compensation umbrella, the agreements that Eduardo mentioned, but hasn't been settled yet, but has been provisioned for according to our estimates. Same thing with the socioeconomic. The provisions were big. If you just think about indemnifications for individuals, you will never get to the values which were provisioned. The difference to the provisions are our own estimates of the grounds and the order of magnitude of where those compensation agreements should come from. So once they are settled, then we will have an adjustment upwards or downwards. And the legal and the public authorities are telling you that it's better to take a bit longer on all the arrangements related to make all the compensation package rather than going too fast and having problems in the future. Sarafina Gaboucheri from Macquarie Bank. Just a question for Marcelo and I and O. Do you anticipate more difficulties or disruptions in the Q1 during the rainy season from operating the dry processing facilities? Could you sort of comment on the risk around that? Okay. Well, I think this year we faced a unique problem in the Northland system. In March, we had a lot of problems, the merge, and we have many problems. But since then, we've been working hard to have a better position in the rainy season. The rainy season just already started before, we are expecting, but we think we are more prepared for that. It's ready more, but we are much more prepared. So a lot of initiatives to make it happen. So I see in terms of direction that will be much better shape than this year. Thank you. Sergey Donskoi, Solvjej. Two questions. One actually is a follow-up to Doug's question. So do I say it correctly that the provisions that you have made so far, they are made against well, to the best of your knowledge and there is nothing of substantial sort that we should kind of bear in mind that can that is left outside of those provisions on a balance sheet? Speaking of these lawsuits and your interactions with the prosecutors and the government. That's the first question. And second question, you provided outlook for iron ore growth production over the next 4 years. What should we think about the evolution in quality, for instance, grades, how they are going to evolve from where we are now to next year and to 2022 or any other parameters there that are of relevance? Thank you. Okay. Thank you for the question. I think just clarifying, I think Klein just mentioned, we are interacting with the prosecutors. We know not only the prosecutors, but there is a person organizing the demands. So again, we are pretty sure that we are comfortable in that range. But we have to bear in mind that we've frozen in BRL 11,000,000,000 and we provisioned BRL 16,000,000,000. So as Luciano mentioned, it's pretty larger than we thought before. On the environmental part, you cannot even compare to Fungdon because the range is much smaller, the impact is much smaller. So there is no relevance. So we have as well the reference for some article for that. The collective damage is the one that has the biggest uncertainty. But I think Luciano can comment as well. But we're pretty sure that what from what we know so far and even from the action that we have against us, we are well in a conservative side. Just to give you an idea, the one of the civil actions that put forward in the very beginning was the civil action of the labor public prosecutors because this was basically a labor accident. 250 of the 2 70 victims were workers, employees of value or contractors. So the Labour Public Prosecutors they took forward. They put this civil action. This was settled. And as Marcelo mentioned 244 of the 250 have already families have already settled with Vale, so fair indemnification. And they have established already in the civil action the amount of the compensation the collective compensation at BRL400 million. So that was already paid about BRL100 million. So when you go to the 108,000 people of the city of Brumadinho and the surroundings, you obviously have way more people. However, these are not the families of the victims. These are people who had some of them were much less affected. But that gives you an order of magnitude of the types of compensation that could come. For example, the sanitation over 22 municipalities is expected to cost around BRL 1,200,000,000. It's about $300,000,000 Likely that agreement will be a patchwork of many of those okay, so we should do sanitation for 22 municipalities, you should do something for the water utility company, you should do something here, you should do something there. And when you add all of this up to our best knowledge, we believe we have enough funds already to cover those estimates. And one point I think to remind about the uncertainty that in this case we don't have is the limit of the impacted people. So if you've seen 180,000 people, we even believe that impacted people are much lesser because they're in the range of the river. But anyhow, we don't have this uncertainty now. Yes, that's interesting. Last week, the emergency payments were renewed, but they were renewed with a different criteria. Of the 108,000 people, 9,000 will continue to receive the full emergency payments. The other 99,000 which are deemed to be less affected so to speak, they're now going to receive just half the handouts. So there is some sort of convergence towards a number of affected people around 10,000 maybe 15,000. So that's what we are talking about in terms of the bigger impacts. Agreed, certainly with prosecutors, everybody involved, understanding and agreeing that is a fair adjustment in the compensation. And I think you could come back to that. Regarding the quality, we can divide this in 2 phases. The short term, as I mentioned, we have very good news. S11D is going really well. We expect the full year next year from 90,000,000 tons. So it's the base of the with Carajas is the base of the quality. And as I mentioned during the first half, we have the return of the wet processing method. So we can sometimes be short of high product products in the beginning. So we are going to adapt the value of the volume to not over supply high silica products. So that's the main thing. After that, we are the cruiser. As I mentioned, we have the best portfolio. We have the blending and the Carajas will grow and we'll have other products to improve if you need to improve Carajas. So high quality is the key strategy for value. Tyler Brodrup from RBC. Thanks very much for coming to London for this presentation. Two questions from my side. 1, the 340,000,000 to 355,000,000 tonne forecast you have for this year, Is that including the potential for more Leninger S type situations, I. E, if you're going to be focusing more on safety? Is that built into the base case? Is there is that just curious in terms of the guidance? Secondly, does the decommissioning sort of the decharacterization schedule, does that have an impact still on the production profile? And if you could just explain how, if at all? And then finally, I guess, on the in terms of metallics and the interesting shift there with you're suggesting with the cheaper gas in Brazil that potentially grow out of EAF capacity in Brazil. Is there any thought from Vale to be to move further downstream as that process develops? Let me begin with the last part. There's no chance that we go downstream. There is the idea here is to solve a problem from the client. If he wants to solve the problem, he comes together with us. That we have the opportunity to solve a big problem, we're talking to the Europeans mainly now. And of course, that's the what we want to do, we want to captivate our iron ore in their with the clients. That's the main driver behind that. We want to solve a problem and we want to captivate him. It's more or less like the Brascals of the palletizing plants of the 50 years ago. They want they come together with us. Otherwise, we don't go. We have very, very experience on that. That builds up on our capital discipline that I mentioned before, our learning from the past. So we are extremely optimistic around that, but extremely conservative on this downstream optionality. We don't see as an optionality. We see as an opportunity if the client comes together either on take or pay, either on investing. There's of course, we didn't design that yet, but philosophically it's that. And I think Mr. Nel can go over the other. In terms of capacity, I can say capacity because, yes, we can have some disruption. Again, we have 7 layers of defense. If someone puts a red flag, say, well, there's a problem here, we're going to look after that. But we are counting on that in that range. So is it that what can happen? We really believe that this is a good number to pursue. In terms of the characterization, we don't count on that dams for our production. In the 9 dams, I think there are 2 or 3 that we need to understand the impact of a production in that dam. So actually, we don't use them. We don't need to finalize the characterization process, but we have to check the interaction between the operation there. So that's the first phase that I mentioned. The mechanical dismantling is the first phase because we cannot blast because of the impact of that. So the interaction is regarding impact not directly involved in the process of the characterization. Jason Fairclough, Bank of America Merrill Lynch. Just listening to, Brumadinho notwithstanding, it appears that the real quality core of the business is still the iron ore business. And the further we get away from Brazil, the more problems you guys are having operationally and from a quality point of view, you've got disposal in New Caledonia, recapitalizing in Mozambique, recapitalizing in Canada. How do we think about these businesses longer term? Do they really have a place in Vale? Is there a focus? We see some of the other large mining companies disposing of some of the tail of assets. Could you reasonably call some of these assets a tail? Not necessarily. I think as we mentioned before, base metals are core for us. I think, of course, as Luciano mentioned, New Caledonia, as we talked here last year, is something that is we're struggling. And we believe it's time with the risk profile, much more on the risk profile and a return profile. If you do it very well, it shouldn't be on the core of the base metals business. If we were a standalone company, we will do the same thing. And we're taking this approach to a standalone company with the base metals to sustain its investments. I think that's very key to understand. I think we made a lot of inroads. Last year, we promised here that we would tackle the underground mines. We delivered the budget on the underground mines. But of course, the bottlenecks move. So now we had some problems in refineries. That way, I think it's much more easier to solve it. We are learning how to operate in Canada. I think it's very important that that has to do with our management model that we mentioned that last year as well, the famous VPS. So I think we have no doubts about either. Our Canadian assets, everybody is looking for our Canadian assets, but we are more than everybody. We feel the optionality in the industry, Indonesia. You might ask why it be in Indonesia because we have the best resources in the world. What happened in the price this year was exactly the reaction to Indonesia. So we are there. We are 50 years there. We know how to operate there. So it's key to us. There's no doubt about that. So selectively, we have to do specifically about coal, I think the obvious answer is we need to fix the business. If we talk about exiting, leaving or sharing or partnering, now we're destroying value for value. First of all, we need to fix. And I think in that case, it's much more reliable to fix it than in an HPAL capacity. We have a beneficiation plant in Brazil. I think we were unfortunate not to transfer the mining knowledge and the plant knowledge to there. But we did very well in the railway. We operate the railway and the ports in Mozambique very, very well. So and they are a distinct business, by the way. So I think more objectively being your answer, no, they're not tails. They are core for us. Base metal is core for us. We believe it will deliver 30%. I think numbers there were, they are in our strategic plan. Of course, we need the price to come. We saw the movement this year. I think we're very fortunate to lock in. We're making money on the lock in that we did. We know there were price takers there. But if the market reorganizes itself, fundamentally, is the nickel market going to be organized in the future because of what Mark mentioned, the separation of the we are very, very optimistic about the upper class market because that's where we know how to play, that's where we know how to price. So I think that's the answer to your question. One thing I forgot to mention with respect to Indonesian investments is that, that will be self funded at the Indonesian subsidiary level. There will be no cash requirements coming at the shareholder level. Good afternoon. Sylvain Brunet with Exane BNP Paribas. My first question was on iron ore. We've seen the impact at Larenjaras. Could you give us more examples of concrete examples of what the intervention team has done 10 months after the accident? 2nd question is on the inventory you mentioned you need to rebuild in Malaysia. Could you help us with the range there? What sort of tonnage we should assume? Would you be happy with the 20,000,000, 30,000,000 ton estimate? And how do you think about that inventory with your new operating style? Should it be a bit bigger than before? And lastly, on copper, could you give us some color behind the lower number in lower production number in 2020 versus last year, the origin of that? Thanks. Okay. Well, Leningeris, it's quite the example that we want to deliver to you that we are doing this time. So we're using the best technology available for to assess the dams. We have satellites that we are checking every day movements and any signs of kind of problem. What happened that we saw that something moved in the during a period of time. I'm talking about 8 centimeters, something like that. And when we went to the field, we found a crack, a small crack, it's 8 meters of grass. And as you found, we need to investigate. So what we work with all the teams there, my team and Carlos' team, and we couldn't answer the question, the full question of what happened. So as we don't know what happened, we need to investigate. So we decided to stop, investigate and see. But we don't see a problem of safety in this case. But the pattern is that if you don't have the answer in the right time, you need to investigate. So stop, we're going through this investigation during 1 month. Our expectation is there's nothing so big problem there, but we need to go through that. And we have we get to return to you what happened after 1 month. So that's exactly what happened. That's exactly what happened than before. And it can happen with the others. So but we are confident that is the right path to do this time with all the team involved. You asked about Malaysia, right? Malaysia port is very important. It's part of 1 of the 17 port that we operated in Asia and actually serving China and all the countries there. We expect we there is very important to part of our pricing model is based there. We can define the price based on that port. We are planning to expand this port. We didn't approve yet, but we have a plan to expand in another 13% of capacity. But actually, we are really well served in China with the 17 port now. We are using 4 ports for Valemaxes and also Malaysia port. So we see that's a very good strategy to keep the blend and all the distribution after that. And we want to actually improve the distribution in China with other kind of services in Malaysia. That's the strategy we have there. And here's about the guidance for copper. Yes. So in copper, we gave guidance of 400,000 tonnes. It is on the conservative side. There is the potential to be a few more 1,000 tonnes in there if we execute very well next year. I think there's a few different factors. One is there's some refinement, I think, of our guidance, primarily think, There is some substantial work that's delaying, I think, the ramp up a little bit in the Long Harbor, so some cutting there. There was there's also the impact of some reduction of third party feed in Sudbury as one of our providers there has shut down a mine, so it reduces the tonnage in Sudbury due to that impact as well. Hi. Roberto Lampo from Alquity Investment Management. Thank you very much for your presentation. It's really encouraging to see how you're incorporating ESG factors, which are very dear to us and to our stakeholders. Why only 20% of your long term compensation tied to that factor? That's one question. The other one is regarding the other tailing dams in the portfolio at Valeck. How many of them would you classify of high risk potential either some kind of rupture or toxic materials seeping into drinking water and so forth? And lastly, the audit committee that you're going to be establishing, how will that differ in terms of responsibilities compared to the fiscal council, which is in place in Brazil? First of all, thank you for recognizing that. I think we are the first big three miners that will have long term compensation in with SG related factors. That was a decision discussed with the Board. We think it's a journey, it's a beginning. So we can reassess that when time is due. Specifically about the dams, we have 18 dams that are that don't have the certificate of stability. They are well known. They are taken care. They are not upstream dams. That's very important to mention. Of course, the upstream dams that we mentioned here, they don't have certificate of stability. But as Carlos mentioned, we are building backup dams on them. If you ask me what concern us is the upstream dams, there are still when I mentioned about safety set governance, removal of backlogs and reducing the use of tailings. So we have already one that is completed. It's in the Gungusoku region. It's a huge structure. It's a backup dam that we will hold if in the event that will something happen, we will hold and this impact that you mentioned will not happen. We will get them all the ones that really are concerning us on the factor of safety are on ALLO-three. They will get ready by February because Porquita is getting more time because of geological issues there. But the B3, B4, if you remember, if you see the presentation there, you'll see it will be ready by December because that's a very effective demonstration that we are not underestimating any risk. Maybe you see why we're building these structures, because it can happen. So but we, of course, are working in reducing the arrival of water. We're draining it. As Peniel mentioned, we're increasing the factor of safety, but we're not counting on that. We're counting when we are doing effective actions to mitigate that. So that's the specifically the how we are dealing with the tailing dams. And I think the Audit Committee, Luciano can explore that. It's a long term demand to be independent, but I think Luciano has more details. Just adding on the tailings dams, sometimes there's a little bit of confusion. The material which is stored on tailings dams is not toxic at all. It's basically iron ore with a little bit of with a lot of silica. So it's like 20% iron ore. And silica which is sand basically. And water. Yes and water. What sometimes we get reports is following the dam breach, sometimes the riverbed already contained some of these heavier metals. And then the bottom of the riverbed was shaken because of the flow of the tailings. And then some of these which perhaps come from artisanal mining have raised up to the surface. And one very evident proof of this is some of our tailings dams are used actually to source water for Vale. So for example, Salobo, the water for the operation of Salobo comes from the tailings dam. So it can take catches water from the rain and then we pump it for our consumption of our employees and our activities. So it's not toxic at all. In terms of the Audit Committee and Fiscal Council, Fiscal Council is something that the Brazilian corporate law prescribes to have. It's a body in which minorities can be represented in order to basically it's another level of audit on the company's accounts, but it does not support and provides advisory to the Board of Directors. So the Board of Directors and something that usually there is in Brazil, it's the Finance Committee. Some Board of Directors have established the Finance Committee as subcommittee in order to provide that kind of advisory, which in the U. S, for example, is mostly done by the audit committee. But the audit committee requires independent experts basically. And this in the boards of directors like in Vale for example, the Finance Committee does not have those certified experts, advisors in which we will need to go outside of the Board of Directors in order to bring those guys to the Audit Committee. The Audit Committee Chair needs to be an independent, needs to be independent, but it will work together with the Board of Directors in order to provide accurate advisory on those more complex audit and financial matters. Whereas the fiscal council interaction with the Board of Directors is much more is not that frequent. And they have kind of different constituencies. They answer to different constituencies. So therefore, the fiscal custom has not been providing the type of support that boards of directors they need. Although the SEC, for example, they understand that a fiscal counsel with certain characteristics make up for the lack of an audit committee and that's why Vale continues to be traded in New York Stock Exchange in compliance with U. S. Securities laws. But we recognize that by having a true independent audit committee as a support to the Board is the best practice and we will implement that. Doug Upton again. I have three questions, I think all technical. The first one is on the filtering and dry stacking in the iron ore wet process. So it looks like you plan to do half of the wet processing is a filter and dry stack. Some of the rest will be the dry magnetic separation. So my question is why not filter and dry stack all of the iron ore, all of the wet processing? Second question, could you just update us on the idea of doing extra 50,000,000 tonnes of capacity in Carajas? The third one was after the sell down in Indonesia, do you still consolidate the Indonesian one or will that go out into equity? And just sort of a 4th one as well. When you do the internal report on Brimadinho, would you be publishing that one? Thank you very much. Okay. Good. Thank you again. Yes, for the 4th as soon as we have. I think that's thanks for your question because this is something very key on it. We are extremely diligent on delivering every information towards the solving of the problem. That's absolutely. So the day that sits in my table will be in the market. That's the fundamental thing that we are driving our actions. And we are as obviously, we want to know exactly to answer the former question if because we are more or less like throwing the net in everything. We don't care about what is inferred, perceived. We are doing the right thing. If we get more technical insights, we are going to be used again for the upstreams to prevent, but although we are prevented by the backups. So now I'm going to circulate the questions. I think the consolidation, Mark can give more color. I think we won't consolidate because it's going to be 34,000,000,000 but that's going to be in 2025,000,000 but Yes. The agreement that will close likely early in the New Year, based on how we're structuring the governance and the shareholders agreement and through some relationships with Sumitomo, we believe we'll be able to consolidate on closing of that transaction. There is a further divestment requirement as we go to a new regime when we switch in 2025 to a license regime and there's an additional sale of 11%. That's a different story. And for the dry processing and the Wet processing, It's a LEGO solution. You need a space for dry stacking. So in some part of our mines, we don't have space for dry stacking. So that's the we have the dams that are working, we can use it. So there's a limitation for that. What kind of things we are working with, we are trying to put some different products to make the piles more stronger, can do it and leave the be out of that like a co product. So we're developing all those solutions to expand the use of the dry stacking. And again, the dry magnetic is much, much simpler because you can do this in small packages like 1,000,000 to 2,000,000. It's more flexible to do that. So we're working hard to combine all the technologies to find a solution, but that's a restriction area of that. And there's a shared value proposition that we are looking at that I think will be disruptive. Because tailings is a problem wet and dry. We cannot underestimate even sometimes worse on piles. So, we try to extract the sand out of it. So, that's something to watch for. That will allow us. So, if you somebody people asked me already about that. We don't have tails in our master plan. There's no more tails being designed in value. We are constructing 3 tails, if I'm not mistaken. It's Maravillas, Torto and Grupo, but there's none more. So, we will find a solution. Innovation need is the mother of innovation. So, we will need to stack, dispose. We can sell, but that's too much. We're not going downstream on that. But we can even make money on that. But anyhow, our position now is let's reduce something that is obviously not the best appropriate way to do it. So that's why so first, for our knowledge so far, I think it's reasonable. And new steel is something that we see some opportunities as well because it has to dry, so it consumes energy. So if we can reduce the consumption of energy, it can so there's a lot of things going on there. I think this push, as I mentioned in the beginning, will move a lot of pieces inside Vale to make us much better, much safer. $50,000,000 The $50,000,000 And now it's mine. Okay. Dollars 50,000,000 it's a flexibility. For the SLAV1D? Yes. We are in engineering, that's all. But anyhow, go into the details. Yes. We are 90. We are ready for another 10. We're studying probably improving soon another 20%. And we are still studying having engineering for 150. Depends on the market, depends on the necessity, but quality will be a key is a key trend for that. So and just to reinforce what I'd say, my car today is iron ore. I don't know if soon can be iron ore and sand. I don't know. It depends on the technology and our competence. But for the $50,000,000 it's much more on the engineering and creating the flexibility and signing of course that we have the best resources in the world. So that's where the money should flow to invest. That's where if needed, by the way, if needed. So again, I've been very insistent on those things because it's the de risking issue. We are not going to create any downstream or excess capacity. I think we are trying to look to the past, see what we did right because we did a lot of things right, but of course, learn from what we didn't do right. So but we need to sign with the system that we have the best logistics. We just invested. We doubled the track in rail and Carajal. We expand Ponta da Madeira. It's there. And if you look at Victoria Minas, what happened in the past, that's what allowed us to be where we are, to be what we are. And we are preparing the company for the next 10 to 20 years. Hi, good afternoon, gentlemen. Paulo Vittorga Raffaello from CRU. You mentioned that metallics and the gentleman asked a question about metallics early on. And I think Mr. Siani referred to the Investor Tour presentation focus almost exclusively in the Metallics opportunity you're evaluating. You mentioned you would be evaluating that opportunity to increase your portfolio of premium products to your clients. My question would be the timing of that initiative, the upside in margin that Vale envisages in that opportunity and also if there's appetite even outside Europe, for instance in China for those sorts of products that will help your clients reduce emissions and be more profitable. Yes. We have different markets. So the Europe is suffering more pressure now for emissions. China, we see this in more long term. In 5 years, they will be more concerned about emissions. So now they have problem with the dust with other kind of problems. So metallics can be a solution for Europe or even U. S. But the way we see metallics is to lock in the way we sell iron ore or pellets. It's not something that we want to be an investor, a hard investor in this business that is close to our clients' business. So we want to be a solution for them. Be suggest our logistics, location, source of energy because the business is this. And the kind of energy, biomass can be a possibility for even for pig iron or if you think about HPI, HPI is natural gas, so Brazil can become a source of that. So we are trying to arrange the solution and be part of that, but not be the main investor for that. So if the client needs, we'll be there to have the solution and lock in capacity to sell iron ore or pellets. That's the way we're going to evolve this kind of business. Timeline for that is 5 years, Europe, U. S. And more time take more time for China. And the kind of product for China is different in this 5 years, next 5 years, more for kind of pellets, to pelletize on low ground, Carajas, other kind of products that we're still developing and you can in few months show you other solutions for China. There's a key theme here, which is in 5 years the seaborne market will start to contract. And in 10 years, it will be very contested. So one key component of Vale's strategy for Iron Ore is to lock in its clients to be the differentiated company, to make sure that when it comes to be contested, it's the others who are going to lose market share. So we're beefing up our technical marketing resources, our products to be ready for what's going to happen in 10 years' time. Okay. So we have time for one last question. I think there's a question here. Thanks. Yes. Tom Borgin Davis from Optiva. Two quick questions from me more on the regulatory side. How concerned are you about the potential for a special participation tax? And secondly, I appreciate it's not a priority at the moment, but given Brazil corporate law, which we were just discussing, the provisions we've seen and also more recently impairments, how likely is it that Vale may be required to pay out a minimum dividend perhaps this month or in March? Okay. Thank you. Your first question, sorry? Participation. Yes. I was thinking about the dividends. Sorry. We have a very, very objective view on that, legal view. You cannot double tax anything. There's a chosen royalty that is FM. So you cannot do a special participation. So that's in the constitution. That's our view. But again, we always say the same thing. It's the view of a miner in a mining country. So that's where we use, of course, our entities to defend our position in Congress through IBRA and through CENID. So we are very confident that that cannot happen. That's our view. And we are of course not just saying that. So that's one thing. There's another one that is about levying it, the import tax or the export tax, the VAT. That's mining. That's, like we say, taxing export tax is going to bring, how can I say that, fragility to the Brazilian industry? So and then again, the way that they're trying to do is just for the miners. That again doesn't make any sense because you need so those kind of things is natural. I think this is a thing that happens. And we have to remember that we just undergone this within, I think, 2017, right, Luciano? So I think it doesn't in our sense, has the time hasn't come. And by the way, Brazil was talking about, reform the whole system to make it our country more competitive. So in that discussion as well, it doesn't make sense of that. So in our sense, we are confident that either the legality is not sound or on the opposite way. And I think from the competitive way side for the country, for the company, it doesn't make sense. And about dividends, we are obliged to pay the 25%. We don't know the impacts exactly of the impairment yet, but Luciano can explore. Because we don't want to make projections in this way, but I think Luciano can explain the technicality about the 25%. If you do the math with impairments and the results accumulated, I think you can have a pretty good idea of at least if it's we're going to be on the plus or negative territory. So I think with not too much work, you can have the answer to your question. I'm really being pushed out. I hope we answer your questions. And of course, I think the main line that we're trying to convey to you is that we are doing our utmost with discipline, with persistence to derisk the business. It's not a sprint. It's a longer run than it's going to be taken, but we do it with our team. I think we try to show you that we are committed to that, okay? By the way, thank you. Otherwise, I would miss my flight. Okay. Thanks a lot.