Vale S.A. (BVMF:VALE3)

Vale Day 2018

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Dec 6, 2018

Well, good morning, everybody. Thank you so much for being here this morning. Well, this is another Vale Day and we will start remembering a bold remark that we made last year in this same Vale Day. Remember that Vale was, in our opinion, prepared to generate more value than any other company in the sector. This was said 1 year ago. And fortunately, you can see through the figures that it's still true. And actually, I can tell you that we think that we are poised to do it all over again in 2019. So let's wait in 2019 and see if that's going to be true as well. I decided to start this presentation instead of the presentation itself going straight to the concern that I suppose a number of you have regarding the situation in China, the situation in the steel prices and the situation in the iron ore. Let's have it discussed before starting the presentation itself. Like 3 weeks ago, I was in New York and I made a presentation there when I said that we were expecting prices to soften by the end of the year. Why? Because this happens every end of the year, because they winter in China, because lower demand, because lower demand especially. What happened this year besides the lower demand, besides the normal situation, you have 2 other factors that weighted on prices. 1st, this so called trade war between China and U. S. With a very negative sentiment regarding everything iron ore included. And second, the winter cuts in China were lower than expected. And people that made inventory expecting this for happening, they found the market fully supplied. And so they are facing now more availability of steel than demand. Consequently, prices went down. Consequently, it brought iron ore prices down as well. But what is really important at least in our opinion is that we made the remark as well that prices would stay between $60 $80 per tonne. And this is precisely what has happened during these last 12 months at least. And this is comfortably the situation even now. So the prices went down, yes, they came down recently. But they came down from a very comfortable level of prices. And the prices are still in a proper way. And it is Vale's opinion. It is my opinion as well that in the beginning of the year when the building of inventories start all over again prices will start to move up once more. There is a lot of noise regarding this trade war causing all kinds of movements in the market. But if you take it aside for a moment, in the physical market, in the real market, very little is happening right now. Well, having said that, with this introduction, we can start our presentation itself. We are going to cover in the presentation all these points, but I want to emphasize the 3 main important messages that we want to leave with you. First, Arunnoa, Arunnoa, we are going to continue to do what we are doing in a very successful way. We are very proud in the evolution that we are showing in the iron ore. So we see no reason for changing that much on the contrary. We are going to emphasize even more the flight to quality, the availability of high quality products coming from Vale. 2nd, and this is the most important point of this presentation, base metals. It is my goal, it is the goal of all of our management team to turn around this business this year. Why? Because we think that there is a EV revolution coming and we have this year to fix things, but we have only this year. So it is not just myself or Eduardo Bartolomeo. It is Peter's job. It is Luciano's job. It is Alejandro's job. Actually, it's everybody's job to make it happen. So you I hope to be here by this time next year showing you the evolution that we had on this. But you are going to see during the presentation a number of measures that are taking place in the company. We changed management as you know starting with Eduardo Bartolomeo, but Eduardo Bartolomeo changed everybody also as well. And consequently, we have a completely new team taking care of this operation. And I'm very confident that we are going to deliver what is expected. Finally, the last fact that I want to leave with you is capital allocation discipline. This is here for stay. While it's not going to change that, you are going to see during the presentation that we are going to have a very large free cash flow during the following years. And our purpose is basically to give it back to the shareholders either through dividends or share buybacks depending on the moment. In this presentation, we are going to start with sustainability. And in sustainability, I want to emphasize one special thing. Rosario will make the full presentation on sustainability. But we are committed to recover 100,000 hectares of degraded land that is land that is not Vale's, it's outside Vale's premises and with the purpose of not only recovering it, but creating a source for sustainable income in the region where we operate. I think this is among all the initiatives that you are going to see the most important one. With that, I pass the floor to Ozzorio that will continue to make the presentation on sustainability. Thank you. Thank you, Fabio, for giving me the floor. Good morning, everyone. I'd like to start my presentation recalling our bold promise made in this very room last year, which was a promise to become reference in sustainability. And today, I'd like to share our journey, how we are doing up to now. And let me start saying that sustainability is totally embedded in our culture, in the way we do business across organization, throughout our daily operations and in the way we operate by being the most sustainable operation we have in the world, I may say, We have in terms of efficiency, the truckless dry processing S-eleven D project also in everything we do towards a Mining 4.0. That's going to be given in detail by my colleague, Peter Poppinga in his presentation. Also in the way we produce by having a high quality products helping the environment with less CO2 emissions, such as the high grade iron ore and the nickel and cobalt for batteries. And last but not least, the way we engage with society. We are present in territories with critical and still social and environmental issues to be resolved outside our premises as Fabio mentioned. And we like to leave a very positive legacy in this territory. So we will continue to invest in social environmental programs that we strategically selected this year in order to do so. But our efforts are paying off. We are being recognized by international bodies with some awards I'd like to share with you. The first of them, we are ranked top 3 out of 40 companies by the World Corporate Human Rights Benchmark in 2018. Also, for 7 years in a row, we are listed by the UN Global Compact Lead as the only mining company in this rank. And just recently, ladies and gentlemen, last week, we were also listed by the Brazilian Stock Exchange Sustainability Index 2019 in Brazil. So in other words, we are on the right track to deliver our promise made here. In terms of Mariana, let's say that through Hanover Foundation, it's already invested EUR 1,300,000,000 in environmental and social programs, specifically in environmental recovery, resettlement and compensation. And today, we'd like to show you a video how Nova Miento is going to look like in 2020. Please show the video. And last but not least, ladies and gentlemen, I'd like to share our vision, our goals that we set to 2,030. We want to have 100% of self generation of clean energy in Brazil. Also as mentioned by Fabio, the recovery of 100,000 hectares of degraded lands outside our premises. In terms of water, the reduction of new water collection by 10%. In terms of climate change, we have a new goal set, which is the reduction of 16% of CO2 emissions by 2,030. And also, we will continue to invest in health care, education and income generation in our social programs. So it's we are shifting gears here and that's the message I would like to leave with you that we are on the right track to become reference to sustainability. And now we will give the floor back to Mr. Fabio Schwartzman. Fabio? [SPEAKER FABIO SALVADO:] Take care, Jose. Well, let's remember what is the situation in the in our iron ore division and why we are doing what we are doing. It is basically an issue of supply and demand. Supply sorry demand because of the flight of quality the supply side reform in China it's here for staying. They have to cope with pollution. They have to improve productivity in their steel mills. Consequently, the necessity of the so called Green Oro Valley is really very strong. And this is the reason why the performance of our operation is as good as it is today. Why green ore? Because we are less polluted than the others. We have less emissions of everything, less particulates, less CO2, less NOx, less SOx, meaning that it makes sense to use high quality ore in order to achieve the results that they badly need. So we are confident that this is not going to change. At the same time looking at this looking from the supply side, we are and now everybody understands the fact. We are seeing at the same watching at the same time the depletion of the binds of our competitors being they are Chinese or Australians. So at the same time that we have S11D ramping up and having more availability of this high quality ore, the rest of the market, the rest of the suppliers, they are facing the opposite situation. Of the suppliers, they are facing the opposite situation. And this is the reality of Vale. And now I will pass through Peter that will describe a little bit what we've been doing recently with that. Thank you, Fabio. Good morning, ladies and gentlemen. It's a pleasure to be here with you again. So as Fabio said, as a consequence of the supply side reform and the sustained steel demand, we have a need for productivity. And if you have to produce the same amount of steel, say, with less capacity, of course, your capacity utilization goes up. And that's what you can see on this chart here. We have world capacity utilization going up from 70% to 76%. This is worldwide. If you take China only, the 70 6% would be 85% nowadays. And same rationale applies to steel prices. Steel prices have gone up worldwide constantly as well. Of course, there are some seasonality effects. And we all well know, like Fabio said, the steel prices came off their recent peaks recently. We think it's not a structural demand issue. It is a short term weakness and has to do basically with the fact that China has produced much more steel ahead of the winter cuts than and the winter cuts came out, turned out to be less strict than it was anticipated. Anyway, we don't think the steel prices will go back to their historical levels. Now speaking about productivity, what is it about? It's essentially getting it's about FE units. And you can get more FE units into the system by either having more rich material in the center plant, like our Cara Jas finds, or you feed the blast furnace with more pellets, which has also a good effect on the emissions. So what we see is an increasing trend in pellet demand worldwide. We see an over 30% increase in the next years. As a twist, however, we also see a huge depletion going on in the domestic concentrate in the whole world. So it is easy to build a pellet plant, isn't it? It's very difficult to get the right feed for that. And that's what's happening right now. We have today, in this year, we have a supply shortage of over 50, 25,000,000 tonnes pellet feed worldwide, and I wouldn't be surprised if this supply gap goes to 50,000,000 within some years. Where are these big markets for these pellets is, of course, Middle East and Africa based on the direct reduction, but also U. S. Projects will probably grow. In China, that's the big news. China was never a pellet, a big pellet producer, and there was never a big pellet demand. But now it's coming. And in Europe, because of the CO2 issue, it's also probably going to increase the pellet consumptions a lot. We spoke now about the FE units, but as you well know, blast furnaces and steelmaking is not only about the FE, there is also the contaminants. You have to balance those elements very well. And what we see now mainly in the Asian region is a big imbalance in contaminants like alumina, like phosphorus coming, the Australian mines being depleted. And what's replacing that has a much higher contaminants than the ore coming out, as you can see on the right side of the chart. Now what happens if this materializes, which is already the case, the penalties for all those elements shooting up. And this is the next slide. You can see the I took the alumina example, but you can have this you have the same behavior for the FOSS. The alumina has an exponential behavior in terms of penalties. This is on the left side. This is taking the 62 family plus the 58 family together. But if you look to the right side and look a little more detail, this is an x-ray of the 62 family only. So you see that it's more and more the alumina is affecting more and more the relative value of the ores. And you see our yellow BRBF here is getting a premium because of the alumina. You see that some other brands like the Mining RSC or the Jimbe Bar from Australia are getting huge penalties. At the end of the day, this is the average of that is giving you the 62 index, okay? Now miners, of course, reacting to that different ways. Miners are taking out some high alumina FOSS stuff, selling it separately. Others are avoiding bidding on the participating on the fixed pricing system so that you preserve your brands. Actually, Vale today is we are having more or less 60% of all the volume in the price formation of the 62 index because of this effect. Eventually, miners will have to increase their CapEx. They will have there will be an increase in OpEx because of wet processing, but not so valid. So we are not in this reactive mode. We are ahead of the game, and we are actually leading the quality game. Now how did we get there? And essentially, there were 2 things we did. We invested in our competitive advantages, which are what? There are 2. It's courageous, and it is the ability to make high quality pellet feed in the Southeastern system. Those 2, again, it's easy to build a pellet plant, but to make the feed, that's the trick. So those 2 are our competitive advantages, and we invested heavily in that in the last years. And the second thing we did was we consolidated and implemented our differentiation strategy. You remember in the past, these ores didn't get a premium. And through our commercial initiatives and, of course, supported by the flight to quality trend, we were able to differentiate ourselves very well. And the result is in front of you. These are the main families of our products. So on the left side, it's more related to the productivity, the FE units, the Caragas fines, the pellets. And on the right side, it's more related to what I just said about the impurities, the low alumina, the low force, the Brazilian blend and the Sinterfit low alumina, which we recently sold at $12 premium. I would like to pass then back the floor to Fabio for him to show us a little more how these investments were done and what's next in the pipeline. Well, we are not here by chance. We spent in the last few years almost $20,000,000,000 in iron ore to build this. This differentiated position that we have came out of that. We invested more than $14,000,000,000 in S11D alone with a nominal capacity of 90,000,000 tonnes of high grade ore. We invested at Dada close to $5,000,000,000 in pellet feed and in sinter feed, total of 65,000,000,000 tons of extra feed for both. We invested more than $1,000,000,000 in palletizers themselves, meaning that we have capacity now to produce and use all the pellet feed that we generate. But the good news is this is the best. We don't have to invest that anymore. But we do have some new things to share with you. None of them are huge investments, but all of them are in our opinion very good news. Oh sorry before that one further comment on our system. It's important to emphasize how we translated the complexity of our operation, 22 minutees, 11 13 pellets plants, 3 reroads, 4 ports, 17 blending sites. This is we will never have the same confidence of the Australians that they are much closer to China and their operations is obviously more simple than ours. So what we have done through this integrated control system, we center we put everything in the same structure and we are able to optimize the operation, take advantage of the evolution of the market in any given moment. And this is better emphasized by the 16 blending ports that we have in China. These were partnerships that were built during these last two years. Now we have 120,000,000 tons of blending capacity in China and we have a big inventory sitting in China. So Vale is not selling straight to according to orders anymore. We sell according to inventory. That means that we take advantage of the movements of the market. If market is weak, as it seems to be the case in the end of this year, we are going basically to hold to the inventories and we are going to leave this we are going to bring this product to the market when the market start to operate better in the beginning of next year. We already did it last year and we are going to do it again this year. Consequently, we went from 53% of high quality products to 81 during this period of time. It's a clear evolution in the right direction given the market situation. And one moment about this new information that I want to share with you. 1st, the increase of capacity in the Northern system. We are increasing capacity in S11D from 90,000,000 to 100,000,000 tons in the system in the to 240,000,000 in the North. We just announced today the acquisition of Ferros. This is one bolt on acquisition that I have referred during the last calls with investors. This is exactly we are looking for when we are talking about bolt on acquisitions. We are talking small acquisitions, very synergetic with ours. Why synergetic? It's because we can take advantage of their infrastructure and they can take advantage of our infrastructure. Therefore, we have a very competitive cost of operating. And we on top of that, we are talking about 4,000,000 tons of further high quality pellet feed coming from this in a moment where this is something that is lacking everywhere in the world. We have the gelato recovery that was already explained. We are increasing the production of pellet feed in our southeastern system by 20,000,000 tons in the next few years. We have a Malaysia expansion of blending of 10,000,000 tons. We have the expansion in pellets production in Oman. With all of that, you see that we'll be able to continue to grow the share of high quality in our portfolio. We are going to very good 95% of all of our sales of high quality products in the next few years. So now it's time to give the floor back to Peter. He is going to explain each one of these investments to you in more detail. Thanks, Fabio. So let's start with the SL 11D expansion. Dollars 707,000,000 CapEx approved, dollars 10,000,000 tonnes. What is the rationale here? Rationale is cost reduction, of course. SL-eighty has a lower C1 cost, around $8 than the rest. And the rationale is also price realization. What are we going to do? It's essentially investing the majorities in the mine and the plant. So we have a 5th crusher in the mine. We will have tertiary crusher and secondary screening enhancement in the plant. And what's most important, we have a 3rd silo for loading the trains and another stockyard coming down the mine so that the plant and the loading station will not become a bottleneck for the mine production in the trackers. One thing I wanted to emphasize here, this is not probably going to into the seaborne market. This is what we are seeing today. Well, first of all, we need feed for our pellet plant in Sao Luis. And we are detecting in the domestic market from Brazil, we are detecting a need for Carajas. And so probably most of it will go to the domestic market in some years to come. 2nd initiative is the gelado project. This is typically only reduction. This is a recovery of the tailing dam and also an upgrade of the pellet feed there. It's also a nice sustainability project. Why is it cost reduction? Because it's much easier to dredge and to pump than to mine and to grind. This is much more cost effective. So the investment here is $270,000,000 and it's about dredging, filtering, cycloning and magnetic separation, which is the concentration. So very simple. Next one, this is a big one. This is the big opportunity we have in the Southeastern system where we have so big reserves but also big opportunities for to produce a low alumina, high grade pellet feed. And our plan is to increase the production by 20,000,000 tonnes for pellet feed, high grade pellet feed. And there is mainly 3 ways to do it, process optimization. For instance, we have the Brucutu mine, we have the Itabira mine where we have coarse tailings to the jigging process. Just grind that and flotate it, and it gives you pellet feed. We have FE content reduction in tailings. We have developed a known technology of high frequency screening together with optimized flotation gives you less FE in the tailings. And the biggest part is recovery and concentration of tailings. This is easy to understand. Our the trick here is that we have our bottlenecks in the grinding, not in the flotation. So you have a big tailing dam sitting in Itabira. You have big tailing dams from the past sitting in Brucutu, for instance. You're going to recover all that. This can bypass the grinding system because it's already fine. And we have space in flotation, so we just flotate it. That is what's behind this big initiative. And we also have developed new technology. This is value patent. We have developed new technology to actually flotate the ultra fines, 50% recovery. This is a very important process and will start in the Varjengrenji mine in 1 or 2 years. Last but not least, I just wanted to make the remark that we are also studying and developing and acquiring expertise in dry processing or dry ore processing, which will be the next frontier here. So then we go to the acquisition of Ferrous, Fabry just mentioned about. Ferrous today produce 3,000,000 tonnes of sinter feed plus pellet feed, but not very high grade. And the resources are 600,000,000 1,500,000,000 tonnes, and the reserves are 600,000,000 around 600,000,000 tonnes. And they have this Vega project, where this production will be upgraded to 4,000,000 tonnes per year, but now with a high grade content. The Vega project is almost done, almost executed. And the rationale here is both. It's cost reduction and it's also price realization. Why cost reduction? We have our Fabrica mine sitting right next to this Ferros mine, so we have lots of operational synergies here. We also have we'll get the optionality instead of shipping and railing the ore through the MRS system, we are going to use our Victoria Minas railway. And Ferros has a big failing dam, a new one, and we have lots of plans with this failing dam. And why price realization? Because this is easy with a very few dollars, it's easy to I think it's something around $20,000,000 you can upgrade the whole ferrous production into direct reduction pellet feed, which is our plan. And the acquisition price was €550,000,000 as you know. Next one is a small one in Oman, an opportunity to go to 2,000,000 tonnes more pellets by installing another grinding mill, but also by feeding more Karajas finds. See what's happening. So we are Carajas fines are starting to be used in the domestic market in Brazil. We use Carrias finds already in the pellet plant in Sao Luis and in the pellet front of Tubarang and now also in Oman. So not all the colorless finds you hear about is going to the seaborne market. And this is important because it boosts the productivity of the grinding mills, and we can produce more pellets as well. So it's typical price realization rationale here. And last but not least, the Vale Malaysia expansion, 10,000,000 tonnes. Malaysia, our distribution center, blending center there has a capacity of 30,000,000. We're going to 40,000,000. And it's again a pure cost rational because it's much easier and cost effective to reach the small ports in the region, like in China, Southeast Asia, by blending it in Malaysia then by doing cabotage in the countries. It's much cost effective, and you have a better use of your Vallemax fleet. And then the other rationale is to get to new markets easier in Southeast Asia and India. India is always this big question mark. Is India coming? Is it what are they going to do? For sure, they will import much more coking coal. And we are seeing some iron ore more and more coming into India. Okay. So that's summarizing it. What Fabio said, that's how we are going to reach the 95% of our improved product mix. And I wanted just to remind you and that our we are committed to our value over volume approach according to the assumptions of margin optimizations we have today. And that means that our production guidance for 2019 is 400,000,000. And it also means that all these incremental tonnage we are talking about, which you just saw in several projects, are not going to increase going forward from our 2019 production guidance, probably going to be very flat. Now let's just a minute talk about pure competitiveness, pure costs, leave the quality story behind a little bit. And what are we doing going forward in terms of our C1 costs? Let's start with that. We are having initiatives that the C1 costs can be $1 to $2 lower. It's mainly about the S11D ramp up. This gives already a higher lower C1 cost. But it's also about productivity, technological initiatives and cost managements. And here, I would like to show you a small so this is $1 to $2 lower C1 costs. And I we have a small video showing the initiatives we are developing together with our colleague, Ali Shandy Pereira, about the technology. Can we have the film, please? Thank you. And the other big pillar on the competitiveness is the freight, right? And so you know that all our 1st generation Vale Maxes are already operating. We are having now the 2nd generation Vale Max coming on stream, 18 of 32 already operating and the 47 Guayba Max under construction. And I just wanted to remind you that the 2nd generation Valimax and the Guayba Max, they are $3 to $4 more competitive than the 1st generation of Valimaxes. But we have also the IMO regulation coming, the SO2. By 2020, we must be compliant, and we are well ahead of the game. What are we doing? We are the 1st generation ValueMax are being retrofitted with scrubbers. The 2nd generation plus the GuayibaMAXs, they already come with scrubbers installed. That means that you can continue to use the HSFO, the high sulfur oil, with these vessels. And then on the red bar here, these are smaller vessels where we have decided then to go for low sulfur oil, marine diesel adjustments. And we are assuming a spread of $200 to $2.50 $2.40 It depends on the how the market will react. We don't know how the refineries will react, but this seems to be a safe number. Means that if you add all this together, you see that still with our IMO compliance, we are going to have less more or less $500 less freight some years down the road than we have today. And last but not least, show you the price realization in last year's. This is FE. This is all sorts of premiums, and pellets is included here. And we are forecasting to next year to have a $2 to $2.5 higher price realization than we had this year. And recapping here, the 65 index was launched in 2015, and the 62 low alumina index was launched in 2018. And some days ago, you saw that the SGX launched the derivative instruments for the 65 so that our customers, if they want, they would be able now to hedge there is a forward curve being consolidated. Summarizing all the competitiveness initiatives. We have $1 to $2 C1 competitiveness. This is SLF and D in productivity. And $2.5 to $3 higher price realization plus the $500 I mentioned on the freight, which gives us $3.5 to $5 increased competitiveness down the road. And the last chart here shows our journey. It's a normalized chart where we normalize by price, reference price, foreign exchange and bunker. Those are the 3 elements affecting our competitiveness. And you see steady as we go, getting more and more EBITDA per tonne on a normalized basis. So we are in the right direction. And $44 to $47 in some years, this is considering the $3.5 to $5 on competitiveness we mentioned before, but also those small high return projects I just mentioned about. And that was it from the iron ore. We speak a little about coal now. I just want to put it in context that, as you know, we have the coal is are going to produce this year the same amount of last year roughly, 12,000,000 tonnes, because we wanted to stabilize the business first, the ramp up. We what do I mean by stabilizing the ramp up? It's essentially about the mine. The mine, we have we had to develop new mine phases. For instance, we are entering the 6 the number 6 section. We also wanted to bring back the strip ratio to normal sustainable level that was not well planned in the past. Now we have it almost back. And also, we want to deliberately mine some regions where we would not mine normally because we wanted to empty the pit to prepare this pit for the future in order to avoid to build new tailing dams. So all this together was not an optimal mining in this year and will become now better in 2019. Those are the main pillars we are building on. We have the capacity. Yes, we need some more infrastructure. We need to build some conveyor belts from the mines to the plants. Mine equipments, we are getting 2 more shovels and 18 trucks to help and the development of new mining sessions I already mentioned. We also have on the mine productivity, it's mainly about knowledge transfer. We have roughly 50 people, 50 high skilled operators coming to Mozambique, as we speak, from Vale's operation to help mainly in the mine maintenance department. And in terms of yield, we had to build and we are building a buffer stockpile between the mines and plants in order to increase availability, interconnection of the two plants and some more process control. And the big drilling program is being carried out as well so that we can have more knowledge on the deposit. And here, you see the ramp up profile. So next year, production guidance will be 14,000,000 tonnes, and we are going to reach our capacity, 20,000,000 by 2021. And last slide shows you the forecasted cost reduction. We are around 120,000,000 today. We are going to 80,000,000 in the future. Of course, this includes the net Makalal tariff because of the project finance. And then you can we can make all sorts of calculation. Today, the margin would be around 20. In the future, the margin with this evolution and depending on the price you put for coal, the margin can be 40, 60 or so on. That concludes my presentation. Thank you very much, and I would like to give them the floor then back to Fabio, who is going to introduce base metals. We got Pete. Well, as you could see, we have all the reasons to be confident that we are in the right path regarding iron ore. And I'm quite confident that with the steady and experience at hand of Peter, coal will be a source of good deals in the short period of time. So what was lacking was base metals. And base metals is our main challenge and is going to be treated like this. Today, you are going to get a lot of information what is which is the problem and how are we going to change that, how are we going to address that. The first is obviously we need to have this operation fixed and stable if we are to take advantage of the future EV revolution. Why do we think that the EV revolution is for real at this point? Because if you take only the announcements of the automakers around the globe, the volume is so big that will be produced in the next few years that you have to have a lot more nickel than that is available in the market today. Vale is by far the largest company in this field. And besides being the largest company, we have the largest reserves untapped of nickel in the world of higher quality in Indonesia. So if anyone in the world will be participating in this EV revolution, Supply material, it should be valid. So turning around, As I said, with these automakers announcements, we are expecting production to get to 14,000,000 close to 14,000,000 And therefore, you are going And therefore, you are going to need only for that 500,000 tons of further nickel. Today the total market is 2,000,000. Where this new nickel will come from, if not from companies like Vale that hold the reserves. Consequently, we decided not to close VNC. Actually, we think that if we really believe that this EV revolution is going to be real, why are we going to take out 50,000 tonnes of total capacity in Nova Caledonia when it's going to be badly needed in the market and surely rewarded by the market with correct prices. We are doing this not only because of prices because now we changed management there as well. And we are doing a completely different approach towards bringing it to normal operation. So again, this is the challenge of the company. And among the challenges that we have in all of our base metals, this is the most difficult one, but the one that we are prepared to face as we should given the proximity of the EV revolution. It's important as well to share with you this agreement that we just made with Glencore regarding Victor. Why this is an important achievement for Vale? Victor is a very good ore body that Vale has as you're going to see in the presentation of Eduardo Bartolomeo in the sequence. It has more than nearly production expected of 40,000 tons of copper per year alone. And it was impossible to operate without cooperation between Vale and Glencore. Nevertheless, this cooperation was never possible and never achieved during the less more than 10 years. And we are proud that we finally got it done. And this will be a win win situation that will produce a fantastic return on investment for Vale. That's again once more like it was in the case of Voise's Bay. The approach that we are having now, we don't we do anything that makes sense in order to produce more value. And this was clearly one movement in this direction. So now Eduardo please tell them what is that you're going to do. Thank you. Well, good morning. A pleasure to be here with you today and a special day as well. It's my first Vale Day. So it's a good chance to share with you my learnings, my views, my actions. By the way, our actions, as Fabio mentioned before, I think, is a broader problem. It's not a base metals problem. It's a Vale problem. So we are on the way we're going to tackle the problem, we're going to understand very easily that it's being done in that way. Okay? But before, one of my first learnings, I've been with Vale since 2004, a logistics person or to the iron ore world, arrived in January. I found out something that might be obvious to a lot of you, but not for us, by the way, that we have, by far, the best footprint in nickel. I think there are polymetallic mines in Sudbury. They can even be cash cost negative, by the way. On Sapuma, extremely well run operations in Carajas. PTVI, as Fabio mentions, owns and has the biggest reserves and the largest and the best reserves in the world and where the new game is going to be played. MV and C, hard operation, but sitting in the best one of the best source mines in the nickel quality in the world as well. So that's a very important point just to remember. But the house, as Fabio mentioned, has to be fixed to take chance of this opportunity. So the way we look at this, and that I might pause a little bit here in this slide because it has philosophically what are we trying to do and we go through everything, through the turnaround and not that, that has so much turnaround to be done. And I think it's important to define what turnaround means because a lot of people say turnaround. Turnaround? What? Turnaround? Well, what to expect 1 year from now or 3 or 5 years from now? We understand that turnaround fundamentally is to have a stable, predictable. We say to the market we're going to produce 244, become next year we say we did 245, 44. We said that our cost is the 1st quartile or a second is going to be moved to the first. So we need to have the most cost efficient production and, of course, extract the most value from our products because we have a and then by the way, nickel in itself has a very diverse product mix on the best value of it. So I think fundamentally, what we want to try is to make a stable efficiency and value operation. It's clear cut, and that's what we're actually going to do. And I say, I'm an engineer, so I need an equation. So our strategy is not very complex. I think it has to be simple. It's around people and processes. We understand fundamentally, if I have the right people doing the right processes, we're going to have right results. If we can get the equation and improve, like if I have good people, good process, you're going to get good results. So I think fundamentally, it's very important because when I arrived at the base metals, the first thing we look at, how we can get the best people together. And when I mean best people, it's not like taking people out or taking people in. It's who does what. So I think I'm glad to say a year after that we're very fortunate to have assembled a very good team. We brought people from the industry. We brought people from iron ore. We brought people from Brazil. So I think it's a good moment. I think we are in this sense, we are ready to go. And for the other side of the equation, and it's going to be those 3 pillars here, we're not going to invent anything. I think Vale has world class operations in the railway. I know very well, by the way, has world class operations in iron ore. So why not bring process or accelerate the implementation of a process that Vale has since, I would say, decades? And the first one is, I think, very, very dear to Peter, by the way, is the IDPs, the supply chain integration, integrated business plan. It's what it's all about, is to move our processes from a push model that it used to be to a pull model. I think we did a pull model, by the way, very wisely when Fabio arrived, when we decided to cut production, we slashed 80,000 tons of production. So the market doesn't need why should we be producing at $99,000 something that costs $11,000 At least if you put sustain, it can go up to $15,000 So I think that mindset is around the IBP. But as I said before, it's a more granular thing. So we need to streamline we need to look this from market to mine and do exactly what we have to do in operations. Moreover, this process is going to bring something that is really important. If you notice our footprint in a global footprint is to streamline operations extremely, how can I say, extract the most of each one? So it gives transference, check and balances. So it's a very fundamental part of our system. 2nd one, it's as well. We have this framework in Vale since 2008. It's a framework that designs and implements processes of operation, maintenance that creates stability. But good process, as I said in the beginning, without good people, it doesn't work. So there's another arm in this framework that deals with the leadership, how we manage KPIs, etcetera, how we engage people. I think everybody has if you had the opportunity to be through a turnaround. Turnaround in the end, there is only one word that is important, is how to engage everybody. From Fabio, by the way, I think Fabio mentioned, how can we engage our executive team and how we engage everybody? We're talking about 25,000 people at Basementos that has to be aligned with what we aim to do. So this framework is simple, extremely hard to execute because it depends on a lot of discipline, but it's behind what we call operational excellence here. When we achieve that, I can be sure that we're going to say 244 and it's 244. And the last one, I think and again, Alexandre here is our tech guy. I think it's a way to accelerate both the supply chain integration and the execution of process inside our mines, for instance. I think there's a lot of technology on the shelf that we can bring to our system to accelerate these three things and make them together work much more efficiently. So with that said, today, 50% of our cost and 100% of our future is in Canada. So Canada is an operation that has been through a turnaround since 2006 or 'five. We streamlined or we closed Manitoba Refinery. We created a single furnace. It's the first line there. But how can I say? And it's time to collect the cost reduction. I'm going to show some numbers later. But fundamentally, we have a new operation. We have a very modern plant in Long Harbor, extremely well run mine on the north on the Arctic. We have a mine mill operation in Manitoba, and we have a problem in Sudbury. So fundamentally, we're going to do this year. We conclude the flow sheet. We did that now. We're going to cost reduction. But we have to and that's, I think, the point that has to be really understood when we are looking at the nickel business fundamentally in Sudbury. We need to go in the underground. I think we're this year, let's talk about commitments. We said we're going to save $75,000,000 I mean 2018. We saved it. We delivered. But as Collemond and people that follow us know that Collemond had problems until April and hiccups until now, it's burned more than $100,000,000 So all my savings are being burned literally on the underground. So our focus there is to do exactly that equation there. We are bringing the good people, just an example. We are bringing people from the process world inside Soderbit to the underground. So our focus on Canada is to really get this leap change in the underground mines. They are where, of course, the feed comes from. And just to conclude, Canada, we need to conclude the longer harbor hemp up that has key on when the evolution comes or the revolution comes, and we'll be ready to do that. But as we say, put your money where your mouth is. So this is in our budget. So we are capturing $140,000,000 in our budget through revisions of contracts. There's a huge opportunity. It's not only going to the contract and say, Pay me or I'll pay less. There's a lot of revision around that. The metrics, cost management, maintenance, a lot of benefits from decentralization, from the closing of Manitoba. So this all around triggers around $140,000,000 But again, if we're not able to operate well, the underground mines, we can burn it. So that's the focus about the turnaround. The second piece of the fixing is PTVI. PTVI is although well run, although in a cost base that is okay, we believe we stay in Fabry is focused on that as well. We call our jewel, our jewel, but a jewel that needs to be polished. It's a 50 year old jewel. It's long time, so it's an old aged plant. It's an aged fleet. So fundamentally, we're going to age. We're going to modernize our fleet because we need better feed to the system. We're going to debottleneck our furnaces there with some small improvements. And there's a huge opportunity in converting the our kilns and dryers to coal from oil. Just to give you a number, this is around $1,000 tonnes in the medium term that we can extract from a $7,000 tonne operation. So it's relevant for the nickel business to be able to operate in the range of $6,000 cash cost. And lastly, our most preferred problem, it's we have a task force there since June. We are really focused on turning around. We're using again. We think it's powerful to have the right people and the right processes. It's exactly what we're doing at Sudbury. But moreover, we are bringing new equipments and revising the mine plants to guarantee that we don't hear in a such complex plant what we heard this year, we don't have feed. There's nothing it doesn't make any sense. So this is an isolated action. We were very humble because Goro is a very complex plant. It's been 10 years. We hired an engineering company to assess if there are any fatal flaws in the project. There weren't, by the way. We were stocking 40,000 tonnes. We have run at 40,000 tonnes rates in the Q4 last year, Q1 this year. There are very minor investments needed to debottleneck on the partial neutralization plant. I won't bother you for the technicalities. But we know that we the plant is able to do 50. We know by that. But again, it's a matter of having the right process with the right people. And we are pretty confident that we can bring VMC in 50 tons in 3 years. That is going to be more or less when the line we will cross in our front for the demand. And that's where I come now for my second part of the presentation. And then I would have to say that in the beginning, but it's there's an interesting thing here. There is an alignment of circumstances, right? I'm extremely motivated because this is an opportunity of a lifetime and an industry that is shaking, shifting in a company that needs to that to happen. And when we look at these numbers, and a lot of people there's a lot of talk we're going to be able to discuss on the Q and A, It's the numbers are like this is short term. We're talking like 23,000, 100,000 tons a year. We did that 73 to NPI production. But if you look in the next cycle, we are talking about a Sudbury, a Voyage's Bay and a PTVI every year has to be brought to the market. So there's a huge challenge here. And for that, we say we have the best, I would say, cannon. I don't know how the word is for that. It's not look what happened here. Okay, I'll have to give it by heart. Let's see if I'm very prepared. Anyhow, fundamentally, we're bringing from 244 to 313. 313 is our number that we did. There's no investments whatsoever of growth to bring from 244 to 213. And just like VNIC is at 10,000 tonnes, Onsampuma is 2nd furnace, PTVI is the improvements in the furnace, and North Atlantic is the improvement in the mines. So this is marginal. So this we can bring when it's needed. We will bring so you see in our releases, there is no number for 2021. We don't care. We're going to bring it when it's needed. And when market comes, we can tap Indonesia. We can tap Indonesia through Poma and Bahadopi, bring back to 400,000 tons, keeping our production as leaders in the industry. So for nickel, I think we're very well prepared. We need to have our house fixed. We need to have the foundations done and, of course, bring the production as it has to be brought at the time it has to be brought. And we're pretty confident that we will bring that. But to conclude, it's not telling about nickel. We have copper. Copper is another story. It's our good kid. We are bringing 400 from 417,000 to 500,000 tons. There's a long term potential for 800,000 tons. I'll explain a little bit later how we get there. And the idea here in copper is very simple, is let's accelerate the projects. Let's try to bring them as cost effective as we can and as fast as we can. Using again, that's the if you're getting the message here, everything that Vale has the best is its knowledge. So we have a huge knowledge that we of years of exploration in Carajas. So that's where we're going to drink in the water to try to improve. And we had a very great idea. Our friends, even wasn't even from my group, so I found my group, why not use the mini mine concept that we use at Iron Ore to explore various satellite deposits that are not feasible for us. Even it's too small for a too big of a guy, so it's better to bring small guys. We're talking to the small guys to try to help us develop them. And when you look at the numbers, we're talking 50000, 50,000 tons of copper. It's a lot of copper. And we have a huge infrastructure built in our plants, in our railways to do that. So this is a concept. It doesn't have a target date now, but it's short term, really short term. We are already talking to some partners to do that. And as I go, we have like 1 year, more or less like a year project to be delivered. First one is Salobo III, was announced. It's a replenished growth project. We call it smart project. We are using the gold stream for silver with with some pressures. It has a net CapEx of $450,000,000 And starting up at $22,000,000 we already started construction. We got the environmental licenses we are this project is undergoing. Cristalino is a replacement project. It's 80,000 tonnes, very low CapEx. It's to replace Soussego's mine and keep the plant operating. It's for 'twenty three. Next one is Aleman. We are revising this fell too. This is a growth project, has a huge benefit of the gold and starting up in 2024 eventually. We're looking for that. It wasn't like that. So just to have an understanding, those projects were left out. So we tried to bring them to the stream. Victor is our we're really proud. I think Fabio mentioned in the beginning, it's a I'm a newcomer, but everybody that's in the basin, and you know what Glencore and Vale in the basin means. So it's a huge opportunity to develop together. And I think this change in mindset that we are approaching for voices, Bay or and wife not really together. So Glencore is a very, very wise business focused people. So we were able to get in a very decent agreement. And we are talking, by far, one of the best bodies in the base is 8% copper 7.7% of grade of copper. So and there has 2 bodies of nickel that never would be reached by us if we were to use this infrastructure. So it's a 30,000 tonnes copper project. It is a copper project, but brings 11,000 tonnes of nickel as well. And we're starting up at 24,000,000 and ramping up at 25,000,000 Uhuru is this is the long term one. This is potential. It's we just finalized FEL1 for the ones that understand the methodology. It's just very conceptual to understanding the dynamics. We have now proved the dynamics. So it's very long term. It takes years to go to fl2 because of exploration, etcetera. But it's a huge deposit. It's around 250,000 to 300,000 tons, a lot of gold and has a potential to bring it on stream to 26. I think with that, I conclude my presentation. I hope it's clear. Fundamentally, what I'm trying transmit to you is that we are being we know the challenge of base metals. We are humble. We are not here to come and say it's a piece of cake. We know it's years that we've been trying to fix the business. The approach that we are trying to bring new is let's do it simple, let's do it with the right people, and let's do it with Vale knows. We are at Vale, so let's use what Vale knows. And that has been done with a lot of success for the last years. I think we built built, as I said, a tremendous operation in Brazil for iron ore. We should be able to do that at base metals. I'm very confident to do that. But as I didn't wrap up my numbers, I would like to invite Luciano to make the put your money where your mouth is with the rewards of our strategy. Thank you. Eduardo, congratulations for your very first Vale Day. And it's very exciting for me because he's bringing us luck. I've been here for a few times, and I don't recall a Vale Day in which we had brought to life so many concrete initiatives Vale. You see, we have 240,000,000 tonnes of Carajas. We have Oman expansion. We have Malaysia expansion. We have the acquisition of Ferros. He has just shown you a road map for increased production of copper. We have an agreement with Victor. Lots of small initiatives and small in the sense that they cost very little, very marginal CapEx for the company. They don't change at all the profile of cash flow generation. This you know already that Vale is a cash machine, and we started to deliver this year. And now what I'm going to show you, when you add up all those initiatives together and they add up big, there's a tremendous upside potential. And this is one of the key messages for today. Not only Vale is a cash machine, but perhaps we have the best upside potential in the industry. I'll show you the numbers. I'm going to start with iron ore. And before I start, the assumptions you're going to see here are that there are no additional tonnes of iron ore offered in the seaborne market. That may not be true to our advantage. So Peter, for example, noticed that there is additional demand for Carajador in the domestic market. So eventually, they may be incremental, but the numbers you're going to see assume only increased price realization, lower costs or both. In my left, we start with Carajas 240,000,000 tonnes. So we have obviously higher price realizations and we have obviously lower costs. Gerladu, the additional EBITDA comes from lower costs and also from the higher quality pellets that will be produced at Sao Luis for an additional premium of $5 per tonne. The 20,000,000 tonnes additional pellet feed from the Southeastern system also add price realization. Oman adds price realization through the sale of additional pallets. Malaysia has lower costs of distribution. And the Ferros acquisition, these tonnes are already being sold in the seaborne market. So these will be, from a Vale perspective, additional tonnes. And this is the EBITDA that we expect once the Viggo project is up and running, and we also upgrade the pellet feed towards direct reduction pellets. So you see they incrementally add up. And when it comes to the competitiveness, we have another $2,000,000,000 just based on things which are already here such as S11D remaining ramp up, such as the freight cost reductions that we will see, the Matrix cost management program, the digital initiatives and the like. In iron ore alone, we have close to $3,000,000,000 of incremental EBITDA in the next 5 years. Now we move to base metals. And again on my left, we start with what we call the nickel turnaround. The first column is just the potential when we bring back the 80,000 tonnes back to 313,000 tonnes of production at the existing margins, dollars 500,000,000 of EBITDA. And the cost reductions that Eduardo touched over and over have a potential of lowering the cost base of the entire nickel production by over $2,500 And again, if you just add the turnaround potential with the existing assets, you get to over $1,300,000,000 of additional EBITDA for nickel. The 3rd column is the EV revolution opportunity that we call. We cannot grant that, but this is the opportunity in which we believe. 2019 is the year in which electric vehicles are going mass market. The likes of Ford, Volkswagen are introducing their offerings to the middle classes. We believe a $7,000 price uplift is required to incentivize the supply which is needed for that revolution to happen, and we believe you should believe. Finally, the road map for copper growth production. Until 2023, there are additional 80,000 tonnes of copper coming in. At current margins, another $300,000,000 And that does not include the projects that start up after 'twenty 3, such as Alamo in 20 24, Victor in 20 25 and eventually Yahoo. Another up to $4,000,000,000 of opportunity in base metals. Finally, a number of different, again, small and accretive opportunities, starting with coal. The keyword for coal is operating leverage, The cost reductions with the volume increase and cost dilutions are huge. And you will see as it ramps up an acceleration of results from coal mainly because of the cost reductions on the 2nd column, but obviously also with additional volume at current margins. If you continue going to the right, remember a year ago, I was complaining about the pre operating expenses of so many operations which had been stopped or were ramping up in value. We spent this year $180,000,000 in pre operating expenses. In 2019, pre operating expenses at Vale will be 0. Then again, continuing moving to the right, you have 2 columns that talk about opportunities of reduction of financial expenses. And you might say, well, you already reached $10,000,000,000 of net indebtedness. So how are you going to reduce your expenses going forward? 1st, we'll still carry too much cash on our balance sheet and too much gross debt. There's a carrying cost. Once we get to optimal levels, we save 2.6 percent over $2,000,000,000 of gross debt. We believe the next column, liability management. We have way too high legacy indebtedness in our balance sheet, high in terms of interest rates. As we refinance those liabilities towards 2023, overall cost of liabilities will decrease. Some of you may remember on the last before last column, the MBR shares preferred shares in an iron ore company within the core of our operations that we had to sold in 2015 to finance ourselves. We paid $170,000,000 in dividends in 2018. We will buy back those preferred shares, and this will not be a cash outflow anymore. And finally, talking about cash outflows, do not forget Samarco. We've been supporting the company, paying the wages of its employees to this date and this is not going to be the case in 2023. Samaqua will be producing, will pay its own bills and eventually even returning some money back to shareholders. The $360,000,000 spent in 2018 will no longer be there. When you add all of this together, again, almost $2,000,000,000 of EBITDA and cash flow opportunities going forward in the next 5 years. Putting this all together, from analyst average consensus EBITDA in 2018 towards 2023, there's an almost 50% uplift in value cash flow generation. That's the opportunity that we will hungrily go after. Not only we are a cash machine, but we have huge upside. And you might be wondering, how about investments? How are they going to eat up on the cash flows? They're not going to be different than what we presented to you last year. Our budget for 2019 is $4,400,000,000 of investments, and it will stay at this level for the years going forward. There's a lot of capital allocation optimization ongoing, and we will easily absorb those small incremental initiatives in our CapEx profile. As a result of all of that, I showed you last year and updated to you the cash flow generation estimates from management for the next 3 years. You pick your iron ore price, you pick your nickel price and you see how many 1,000,000,000 of dollars you'll have available for distributions, for dividends, for buybacks, for financial flexibility over the next 3 years. So bad years, perhaps $8,000,000,000 good years, perhaps $12,000,000,000 on average, close to $10,000,000,000 every year. And I invite Fabio now to come back on stage to tell you a little bit how we intend to use these cash flows and for his closing remarks. Well, guys, and as I said, I'm very proud of this presentation because this is the Vale I work for. This is the company that I dream it was possible to build, a company that as a mining company left no rocks unturned. Everything that exists in the company are being care of taken care of at the same time. And consequently, now the last thing that we have is well, this will be the level of our cash generation every year, I would say, in a very conservative basis. And this will be clearly returned to our investors as we don't plan to do anything at all with it other than giving it back to shareholders. Just as a final reminder, the 3 key messages of our presentation. I don't know we are going to continue what has proven successful. We are increasing our stake in high quality ore, taking advantage of the flight to quality that is happening in the world right now. Our biggest challenge is to transform base metals. I don't think that Vale can be considered a successful company if we are not able to operate base metal at the same level that we operate iron ore. And this is our my personal goal. It is our team goal. And finally, capital discipline is here for staying. We are not going to change it because different for our competitors. We don't need it. As you saw during the presentation, we have plenty of things to do at home that will enable the company to continue to grow, to continue to improve EBITDA generation during and cash generation during the next few years. So we are in a position that we can take care of the situation without putting more money to work. And that will be our goal. And so this was our presentation. Now we are going to be answering your questions. Thank you. Thank you very much. So I've got two questions, if I could. So it's Paul Gate from Bernstein. The first of which is on the nickel business. So you're presenting sort of clearly a very bullish sort of scenario here. But over the course of the last year, we've seen a number of announcements, thinking about here sort of Tsingtian, but also things from like direct nickel, things like cleantech, a number of guys that are coming forward with potentially quite different cost structures in terms of the processing routes that they're sort of making claims for at least. Just wondering if you have any thoughts about some of the viability of some of those routes and what that might mean for the deficits essentially that would support the acceleration in the price that you're looking at there? And then the second question I have is if you could just remind me of the tonnage that you're shipping out from Brazil, how much of that is covered by your own shipping? And do you have any sort of external requirement beyond your own sort of Vale Max fleet? Thanks very much indeed. [SPEAKER CARLOS GOMES DA SILVA:] Okay. Let's start with the Nikko question. Our position on this is that there was an announcement that was exactly in at the same time at LME here in London. And this announcement made by Ting Shuan made it sound possible that it will they will be investing only $700,000,000 to build H PoP facility and that more than that that it will be up and running by the end of next year. I claim that it is totally impossible. It is not taking aside the ingenuity of the Chinese. They will get there eventually. They are going to show important cost reductions in this investment, important CapEx reduction and they will do it in a very fast way. But I'm pretty sure that's not happened in 2019. I'm pretty sure it's not happened either in 2020. So this announcement that came in a moment where the market price was increasing not because of the EV revolution, but because of the reduction in inventories in nickel worldwide. What happened once this announcement was made is that the price of nickel started to come down. That was a very convenient situation for companies that were short on nickel. They have to buy nickel in the market. So my position, Vale's position is this is something temporary that will revert itself for a very simple reason. There wouldn't there won't be any nickel revolution without the sorry, electric car revolution in batteries if there is no availability of nickel. So actually even we go even further. We hope that this new technology they are talking becomes a success so that we can use it as well. So we are waiting to see if it that's something that we will have if it happens. The reserves belongs to Vale. Baja Dopi, Pomaa are basically Vale's reserve. Who else has nickel reserves in the world? So this for us is a good situation. It will reverse ourselves. And that's the reason why we are very strong on our forecast for EV and taking decisions according to that. Now if you want, Peter, about the freights? Yes. So if you take 400,000,000 tons, let's say, our base case number, 400,000,000, you take out domestic market, which is 30 or something, and the balance is 3.60, 3.70, you would 70% of that is CNF and the rest is FOB. And so onethree of the CNF is not covered by the Balimax or Weibamax. Onethree is either short term or spot or 1 year COAs and stuff. Christian Georges at SocGen. Just going back to that nickel question that Paul put across to you sorry, yes. Just coming back to the question on nickel. I think there's been also some developments with regards to the content of the batteries. I think BASF was reported recently being able to reduce quite substantially the amount of nickel and cobalt and increase in stained manganese. So the question is, is there a downside risk on the amount you're showing us on the slides with regards to your expectation of future demand? And equally, by the way, you're a relevant manganese producer. Would you be considering increasing your manganese production accordingly? And the second question on iron ore, you mentioned India in your presentation. I think 2018 iron ore supply from India has come down dramatically, both on the open market and domestically. So do we have a really upside risk on iron ore demand from India over the next 24 months? Thank you. Yes. Your question about the BASF examples of trying to reduce the nickel content on the batteries. By the way, we have seen we partnered with BASF in several studies as well. But fundamentally, what we see is a shift for more nickel. All the effort from the for the industry as we speak is to move from 9, like even Tesla, say 9.5, saying that they're going to extract cobalt out. That's not possible, by the way. But it's increases in our direction. What could change the amount of nickel relevantly inside the batteries, the solid state batteries, this is the next state, but it's good as well because it improves the performance of the batteries, make it cheaper. Because I think what Fabio is trying to say about the Chinese in Indonesia, we are there as well. We want a stable market. We want a supplied stable market in a good way. So if we have solid state, this I'm talking 10 years from now, we're going to have a better cost performance. We don't see a threat in the short term trying to take nickel out because and trying to put manganese. We've seen increase in nickel because it gives energy density and together with some combustible stability. And again, our play game is to make the revolution possible. We cannot see the what we saw at the stainless steel in 2007. We need to be very careful as an industry to supply this market in a cost effective base. So fundamentally, it's this. Just to complement, the You can see that we put in just $7,000 of price increase. That means basically a normal behavior of the market. It's obvious if prices instead of going up $7,000 if prices go to $50,000 something will happen. And of course, people will take out nickel from batteries. We'll find other ways of dealing with the situation. So it is our responsibility. As we've been we are playing in I don't know to operate according to this fact we don't want prices to go too high. It's not helpful. It's not sustainable. It's going to change in a negative way the demand for it. So Vale being the largest producer in this segment has this responsibility and we are going to work with this view. As we did recently when we reduced sales to the market, we made something that I it was funny when I was at my first meeting in Canada and I told the guys, well, look, we should reduce production. Have you ever heard of a mining company reducing production? Well, we did it. We did it. And why? Because it doesn't make sense to sell a nickel at a very low price when the market will eventually react on the sequence. So we are going to behave in a way that will support a normal market that will guarantee if possible the presence of nickel in batteries in the long run to the extent of that we can manage it. Regarding your question about manganese, manganese Vale is a very, very tiny producer. And the problem with manganese is the availability of high quality manganese in the world that is not there. So the place where the manganese is Gabon. That's not exactly the easiest place in the world. And so I think that hardly we can think that manganese will be a solution as cobalt is a difficult solution as well given where this source of cobalt is. So we have the same problem of cobalt and manganese. So if you look at everything, it point out that nickel is the most natural solution for batteries. Hello, Jim Lennon, Macquarie. Peter, you gave a brilliant exposition of the flight to high value in iron ore. Could you elaborate a little bit more on coal at Moatiz? What is the mix between the lower value thermal coals and higher value coking coals? And is there anything you can do in your mining plan to maximize value going forward? Hi, Jim. Thank you for the question. Yes, so the coal the mix of thermal and metallurgical coal in Moa cheese is around 60 metallurgical and 40 thermal. What we are doing is actually trying to increase the yield in the process plant because this the yield is defining you define this inside the plant, and I showed you the initiatives. The other one is to sell some thermal coal domestically. We are advanced in some discussions with some local stakeholders to build some thermal plants for local electricity. So you would get more space in the railway to increase your mix, exporting more metallurgical. I wouldn't say that this would change dramatically, but maybe we could go to 2 thirds metallurgical and 1 third thermal down the road. Sylvain Brunet with Exane BNP Paribas. My first question perhaps on the suite of projects you've shown us. Could you give us a bit more color on how price sensitive these projects are or some association with the returns you expect? You've given us the blended figure. Any indication of the contingency plans you've built into those numbers? My second question is on nickel. As you've taken over the business, you what is your analysis of what went wrong previously? So I understand people. But beyond that, what are the other conclusions from your audit? Thank you. So I just if I correct well, if I understand well your first question, it was about in the iron ore business, there are several initiatives, how price sensitive they are. That is well, one of some of them are cost initiatives. So there's not a price component here, right? The gelato project or the Malaysia is a pure cost initiatives. All the others has to do with price realization. So that means it's on top of the benchmark, of the 62 benchmark, okay? So we are increasing our price realization. Maybe the best the most powerful project here, which is not yet fully captured in our numbers, is the ability for us to produce more pellet feed in the Southeastern system. As I told you, we have a huge supply gap in the world for pellet feed. Supply for pellet feed because there is this demand for pellets, right? And this is not only to be for delivered by our Southeastern system, but also by Carajas. So there are new segments in the world where people think what where is the corridors going to go? How will this affect prices? It's not as you see, we are on a runway that we are 200,000,000 tonnes today. We are going to go to 240,000,000. So the 40,000,000 additional, 10,000,000 domestic market and maybe another 10,000,000 to increase our Brazilian blend. And the other 20,000,000 will be exactly destined for these markets where you need pellet feed because you can transform easily carrageous fines in pellet feed as well. So it is very powerful, these initiatives, because of this huge demand for feed for pelletizing, which can be pellet feed from the Southeastern system or it can be Karneros finds ground like we are doing it already in our own plants. If we can do it in our own plants, why not in the whole world? And this is different segments. This is not in the equation of the seaborne people have in mind. So it's very it's not very price sensitive. It comes on top of the $62,000,000 reference. It's price realization. Well, I'll try to be short, okay? It's an interesting question because it's the same question I did when I arrived. As I said, I'm with TIM Valley since 2004. And fundamentally, we saw 3 things: lack of business vision, low vertical integration and low horizontal integration. I think when we talk to people, we didn't stop. We didn't stop production. So there is a lack of business vision. So why we're doing that fundamentally? So like examples for Long Harbor or even Goro, etcetera. But more important, I think that's a fundamental problem that we have is the low vertical integration. We were integrated with Brazil. We were running a stand alone business. And loosely, being because of the lack of business vision, integrated horizontally. People in New Caledonia was let alone in New Caledonia. So when I said, send a task force, and I said, we are there in New Caledonia. We are present there. We need to add value to New Caledonia. Not only changing the it doesn't matter, just go send another hero there at New Caledonia and forget about them. So it's our office helping New Caledonia through the process that we have in Brazil. So this is what I call the vertical part that is bringing value inside. The horizontal is bringing us around Indonesia, and it's a very hard business, by the way, in Canada and Brazil for us. Us, fundamentally bringing focus on results on everybody because, as I've said in my presentation, we are being beaten by the underground mines because there's no lack there's a huge lack of focus and results there. And we have a very well process. We run very well the process in Sudbury. We are really good on the process side in Sudbury. So this lack of result, lack of use of the knowledge in Brazil and lack of trying to disseminate this knowledge is what, in my expectations, are going to be the actions that we'll solve. They're hard. That's why I'm saying the way I finalize my speech. I'm not coming here and saying, oh, it's hard. We do it very, very focused and very disciplined. As Fabio mentioned in the beginning, I'm counting everybody. Again, I would be the hero that goes there. I don't want to be a hero. I want to just make these medals great. As well, as soon as I joined Vale, one of the first executive meetings that I ran there, I saw that we discussed a lot about iron ore, a lot about Brazil and almost nothing about base metal. That base metal was not present not even present in the discussions. So when we I was asking my colleagues what was going on. They had very limited idea because there was a clear separation between what was done in Brazil, what was done today. It's everything is the same. We are really doing together everything that is needed in every single place. Brazil, I don't know, base metals, coal, there is no difference. Everything is part of Vale. This is not a minor thing. It is a total different mindset that will enable us to become responsible for what's going to happen there because till then nobody was who's responsible? Nobody. Someone that was running the business along there. Thank you. Tyler Brodeau at RBC. I just have two questions, I guess probably for Peter just on the pellet market. Do you think that having more pellet supply will change the dynamics around the pellet premiums going forward? I. E. Is there an element of the lack of pellet supply driving this higher price? And then secondly, in terms of the structure of the pellet market, the annual contract negotiation, how do you see that evolving? There's some talk about whether or not it may become more like other markets where there's a more of a spot component, I guess. Just one of your thoughts. So the first question, it is no secret that today, on top of the demand, which is very, very high, there is a supply shortage because of mainly because of Samarco, right? Once Samarco comes back, and we hope it will come back very soon, in beginning of '20 or something like that. Of course, there will be an effect, but Samarco will come back in a responsible way, and probably a ramp up will be along 3 years, right? So it will not be have a big impact at once. The structural price negotiations, how they are happening today. I you know that you must and what people are not doing it is differentiate between 2nd 1st tier and 2nd tier pellets. It's very different. When you see people publishing, which is, of course, very useful to know, publishing index or indices in the Asian markets, for instance, in China, that's sometimes mixing 1st year and 2nd tier, mostly 2nd tier pellets. That's very volatile. That's coming from countries which are different. So they have different policies. It's not constant. In our case, we are proud. We are 1st year. We even give sometimes the market the option. Do you want to go for spot? Do you want to go for short term settlements? And it's the market deciding, no, we want to stay with either, let's say, half year contracts, 1 year contracts. And so we say yes because we think this is a good for the stability of the market. So that's what we are we don't see any big change there. Okay. Thank you. It's Olivia from Merrill Lynch. So just a point of clarification on the nickel business. So my question is for your base case assumption, have you already considered an offsetting effect potentially from lower demand from stainless going forward? And second question, what is your view on Chinese steel price going into next year and the year after, given that your business relationship with China? So would be very interested to hear your insights. And lastly, how are we doing on San Marco? Peter, to start, commenting on the steel demand and prices for next year. Was it optical? She made a connection between she's saying that the demand will go down or same as did we take this in consideration? No, no, no. Yes. I think for the first question was about nickel. We don't believe that, by the way. Actually, in our projections, we saw a very modest increase in stainless. But for short term, there's not this case, although Finshan is slowing the market with stainless. But we see some softening now. But our projection is not is growth still on the stainless steel demand. Of course, not as huge as the electric vehicle. I don't your second question was about steel as a whole or stainless? So I think it's for Peter. Can you repeat the question? So my second question was on crude steel in China, I. E, HRC price, yes? So the crude steel production in China, we Yes. Well, that is what we what Fabio said in the beginning. We think the current weakness in the market is a short term one because China produced too much steel ahead of the winter cuts, which turned out to be not so strict as forecasted. It's seasonal. And I think very soon, traders are stock and traders are small. In the Q1 next year, you will see a restocking there naturally happening. Steel in general, steel production in China, we think, will go up next year. We are this year, we got probably 900 and something. It's going to be €920,000,000 €925,000,000 The €1,000,000,000 mark, I think, will be very hard and not be reachable. What's most important for our business is not the steel, it's the pig iron, right? The pig iron is today around 7 $40,000,000 $750,000,000 and the peak there could be $770,000,000 It's still to come, but it will come shortly because right after that, as you know, there will be a little more scrap used in China. So this will go down. Regarding San Marco, the worst is clearly behind us. We are getting closer to restart. I think that we have almost everything in place to restart it by the beginning of next year. The climate in Brazil towards licensee is starting to improve, what we probably will hope will help the restart. Nevertheless, it's important to emphasize that what BHP and ourselves we are doing regarding Samarco is more a social thing that's something that will translate into any kind of return for the companies. So as Peter mentioned, the ramp up will be very slow. So the company will not generate enough cash in the 1st years. And this is because of the necessity of having a sustainable and safe operation. And that will be the goal. People will come back to work. That's the most important part. So the region will benefit from it. But money wise, there is nothing coming out of Samarco except what Luciano mentioned. Eventually, in some years ahead, we end up putting more money to work there every single year. Good afternoon. It's Grant Spohrer from Macquarie. I've got some number related questions. So the first one really is on the pellet market. In your 12% to 12.5% premium that you're sort of guiding to for next year, how much of that is akin to the pellet component? And then secondly, in your copper plan, when do you forecast that Sasego, the current pit, comes to an end? And then just on the MVR, what sort of cost reduction in terms of dollar per tonne are you looking at when you buy back those bonds? First question the pellets. You mean the 2.5 price realization for next year? Yes, there is a good amount of pellet in there. So we are not only increasing production because, first of all, there is a production increase for next year because of the ramp up of the Sao Luis pellet plant. So there will be additional 5,000,000 to 6,000,000 tons there. And of course, there is an important price increase being negotiated as we speak and not yet concluded, but it's going to be an important one. Yes. Cristalino is the project that we mentioned that we will replenish the depletion of the Socebo mine. If I'm not mistaken, 23 is in the presentation. It's just a pure replacement of the capacity. That's why it's so low CapEx. It's so just exploration, And we're using the plant for Sosebu. And remember that Minima, as I mentioned, is another idea to fill our Sosebu plant as well. So the whole idea is to feed the plants. So keep it operating, and Cristalino is the best for that. The repurchase of MBR shares will not have an impact on costs. It's below the line. It's accounted for as dividends to non controlling shareholders. So we will actually increase consolidated net income available to Vale shareholders. That's going to be the effect. Afternoon, Liam Fitzpatrick from Deutsche Bank. Two questions on iron ore. If we do see a sharper than expected slowdown next year and iron ore drops below 60%, should we infer from your presentation that you will react relatively quickly from a supply point of view? And then secondly, on high grade premiums, if I remember rightly, last year, you talked about a $13 to $14 a tonne long term sustainable premium. Does that figure still hold? Or has it increased? Thank you. [SPEAKER JEAN PIERRE ANDRE DE CHALENDAR:] Well, it's important to emphasize that we don't believe that prices will go below 60%. But having said that, if it goes beyond 60%, we are going to react accordingly. Your second question was, sorry? Premium. Premium. Yes. The premium Yes. So the just to complement on Fabio's remark, we think like last year, like the year before, we will hover around a $70 price reference. On the premiums, if you take the premiums what depends the premiums depend on steel margins, as you know, on coke prices and also what people sometimes forget is how much low quality ore is there to be blended, to be corrected, right? And this has decreased because of the Indian exports. And it can increase again now, so that affects the premiums as well. I would say, if you take the average of the year 2018, which will be around 20 to 21 on Callajas. If you go back to 2017, which was around 2016, I would say next year would be between 16% 20%, something like that. That is the of course, this includes the 3% to 4% FE in the so don't mix it up. There is the premium including the FE. There is the premium over the FE correction, right? So if you take it like that, between $60,000,000 and $20,000,000 I would guess would be the right premium for the average premium it has. Makes no sense to say 1 month or 2. It's the whole year. That's my guess, yes. [SPEAKER JEAN FRANCOIS VAN BOXMEER:] Just to complement and reinforce Peter's point, what we are witnessing is a market that is more quality driven. So if there is an availability of low quality products, the premium will be bigger. If there is no availability of a low quality or low grade because people decide to put it elsewhere. The consequence will be lower premium, but a higher average price of all ports. So for us, it really doesn't matter if we collect a bigger premium or a bigger price. In the end of the day, the net result is what we are looking for. Jenny Warrington from Hermes. First, I want to commend you for setting up sustainability targets in terms of clean energy, recovery of degraded land, water and carbon. And I wanted to ask if you could give a bit of background on how the carbon target was set. Is it ambitious enough in the sense of is it aligned with the Paris climate agreement? And also, what are the challenges that you anticipate in order to achieve this target? And the second question is about social license to operate. I wanted to have a sense of across your global operations, what are your main concerns in terms of securing social license to operate considering community relations and also labor relation issues? So what are the, say, the hotspots that you need more attention from you in terms of social license to operate? Esponio, Premier, you have Esponio. Okay. Well, in terms of the Paris agreement, it's totally aligned. I would say that we spent the year going through international methodology to set our actually to verify our footprint, carbon footprint, and we just concluded that. And we, of course, we analyze throughout our operations new goals. As you know, we just before time, we just met our 2020 goal to reduce 5%. Now we are going to 16%. So we are stretching the goal. And this is because all these technologies, all these 4.0 minuteing that we are moving towards. So I would say that it's totally aligned, national methodology, strategy and that's our ambitious goal set for 2013. [SPEAKER JAIME SAENZ DE TEJADA:] To emphasize as well, these goals were set according to our investment plans in all of our operations. And therefore, it's planned for. It is poised to happen. And we take that our reading of the it is a conservative one. We can it can and we will try to have even more than the figure that is there. Regarding social license, one thing that became clear for me I guess and for us that Vale is a mining company and a mining company that generates a lot of mining from operations in several places in the world. And it is our duty, our responsibility to give something back for the communities that are affected by Vale's presence. And we are poised to do so. It is part of when I emphasized in the presentation the recovered of the regulated areas and to the production of income out of it for the population is because we are going to build thermoelectricity plants there and that we will use the biomass that will be produced in this land in a sustainable way. So we are going to guarantee the demand. And consequently, the offer will be sustained and people will be rewarded by that. So Vale is totally committed in every region Vale operates to see what is the necessity in each they are different in each region. These are the one that I was describing is particularly in the parastate that needs badly an improvement in income of the population. And that's the way we are looking there. And every single place that we are, we have a specific look what is necessary there, what is that we can do in order to be in a well positioned relationship with the community for the socially licensed to operate. Hello. Ben McEwen from Saracen and Partners. I'd like to follow on from the last question regarding the emissions of Vale. So absolutely commend Vale on its emissions reduction target. But when you look at your clients' emissions, there are obviously a lot more emissions intensive in the production technologies as is the current Chinese crude steel production. How do you think about the long term dynamics of crude steel production in China from an emissions intensity perspective? And what does that mean for Vale's production? Thank you. Well, first of all, the answer that Oz already gave to the other guy about reduction of emissions is basically scope 1 and scope 2. So only in our internal operations, okay? So if you go to the maritime transportation to our clients, it's another thing. Just for direct, for example, in Brazil, about 60% of our emissions is basically in our pelletizing plants, the rest at the mines. And most of these is based this reduction is based in the at the mines in railways. And the pelletizing plants, we are looking for new technologies to reduce, but we don't have it yet, but we will get But we cannot reduce anything because we make a lot of money and also because through our pelletizing plant production of pellets, we produce reduction of emissions in our clients. So we are also the Valemax, in average, this fleet of Valemax, we reduce compared to the fleet used before about 40% of CO2 emissions, but it's not considering in that 16%. And you our the transportation of our ore produce much more CO2 than our operations in Brazil and elsewhere. The third part is about how we can help our customers to reduce emissions. And this problem here in Europe is absolutely important because now they have from 2020 to 2030, they have new targets to be reached. And to be very frank with you, we are talking to them and we understand that they don't know how to comply with the new targets. And we have a view that production of metallics like HBI and the pig iron based on natural gas and biomass is the future in this industry. So if we can and I can tell you that we are working very hard on this task. If we can produce in a competitive way metallics in Brazil and supply Europe and also China and our other clients in a competitive way, and we are quite sure that we can do that. Probably, the market will this demand doesn't exist today. So for example, just as an example, if you feed the best furnace with pig iron or HBI, the reduction of emissions, you can go up to 40% of the feed of the blast furnace wafer. The reduction of emissions is about 30% to 35% in the steel mill, you see. So now we are in touch with some lot of customers interested on this kind of development. And we I'm quite sure that next year in the Vale Day, we will bring something in real terms. And we what I can tell you now is that we can we are working very hard and we are quite confident that we will bring the solution for this kind of thing. So if we can do that, our customers will very easily comply with the new targets of our CO2 emissions in Europe and even in China. Thank you, Again just to complement, this is the new step for Vale. This will be the next natural step for our development that will generate more value from our existing production. It's Amos Fletcher from Barclays. A couple of questions just on numbers. I wanted to ask for Siani. With respect to IFRS 16, what effect is that likely to have on your net debt going into 2019? And does that limit potentially your surplus capital for distribution next year? And then secondly, just a couple of CapEx questions. What's the potential CapEx liability you're looking at for Cristalino of Alamo? Does Moatice sounds like it may need some additional capital? And also to quantify in terms of the nickel ramp up from $245,000,000 next year to $313,000,000 How much capital will that require as well? Thank you. Okay. In terms of IFRS, we're still working on the details. There will be some impact. It will not impact the ability to distribute excess capital. And in due time, when we close the books for 2018, we will make public the precise numbers. But there obviously will be some impact, but it's not going to be meaningful enough to impair the ability to distribute capital. Yes. On the copper project that you asked, I won't disclose the numbers, but the range is around Cristalina, as I mentioned to you, is a very low intense CapEx. It's 500 ish. And Alamo is a BIDEN. Is more or less like Salobo, but there is still one fell through. So that's exactly the process that we're going through to exactly nail down the cost. But very important to your other question, there is no growth CapEx for the 313. It's there already. We have the whole plan. There is sustaining CapEx, of course, because we need to have the feet to operate the plants, but that's sustaining. There's no growth for just Anzapuma 2nd furnace, but it's still sustaining, very small. So we are able to get back to 313 with no growth CapEx. It's Doug Upton with Capital Research. Thank you very much for the presentation today. I had a question on iron ore. So if you're planning to add 10,000,000, 20,000, 25,000,000 tonnes of new capacity or high grade capacity. But to keep the total at the old 400,000,000 tonne number, it means you have to close some capacity somewhere else, so Southern Southeastern system. So the experience of the industry is that it's always very difficult to close a mine even when it's losing money. So you want to close a mine that may be making small amounts of money. So can you just touch on the challenges of doing that and the cost of doing that? Thank you. Thank you for the question. And it's not always about closing. And first of all, it's not exactly like that. So we are going to increase the capacity of high grade products. But some of this additional tonnage will not go into the seaborne market. So that must be clear. So seaborne, the traditional seaborne market, like some of it will go to the domestic market, some of it will go even to palletizing abroad, which is using domestic concentrates. But yes, in the Southeastern in the Southern system, probably we are going to reduce, but not close. We have mines where we can easily switch off some plants, but we from 3 or 4 production plants, maybe close down too, reduce like that, but not closing mines. We are not going to close mines. We are going to reduce production in some of these regions, mainly in the southern system, but not closing mines. Thanks. It's Tal Ongitzer at First State Investments. Thank you for the excellent presentation. I just wonder if we could dig a little deeper into capital allocation priorities. I'm particularly interested in considering a somewhat more negative scenario for global growth. In fact, perhaps a global recession, which hurts steel prices and perhaps quality premiums and base metal prices all at the same time. In such a scenario, can you tell us how much you could cut CapEx below the €4,400,000,000 number that you've outlined? And if it came to it, what would take priority, investment projects or the dividend? [SPEAKER JEAN FRANCOIS PRUNEAU:] Well, tough question, but let me put it this way. We prepare the company for the bad times. What is really important is that we have today a very low debt indebtedness that will allow us to cope in the best possible way with any scenario. That means it will be only an issue of allocating between this and that. And it will depend on where are the effects concentrated. We are committed to only invest in things that we will have a decent return on investment. So if this return is not there, the investment is not going to be there also. So we have some room always to cope with that. This business plan that was presented take into consideration normal course of business. And if it's not normal, not normal will be our behavior. And the cash generation of this company, no matter what scenario, will be huge. You understand that the our, iron ore delivery in China, the cost is around $28 per tonne. So if the price goes to say $50 we will cause a number of unforeseen situation. We are still generating a big amount of cash out of our operations in even this scenario. On the other hand, the issue of nickel is much more connected to what's going to happen with this car electric car revolution. The problem the question has not to be driven to ourselves, but to the automakers that are planning to invest 100 of 1,000,000,000 of dollars in this they announced more than $100,000,000,000 of investment right now. So what is that they are going to keep the investments, they will need batteries. If they will need batteries, they will need nickel. If they will need nickel, price of nickel has to be enough to reorder. Otherwise, there won't be nickel for them. So I think that so 2 different situations. 1 is we are in a very, very good shape regarding cost. The other, I think that we are in very good shape because of the market situation market expectation for nickel. So let me add. In 2015 our EBITDA bottomed at $7,200,000,000 and that with the fertilizer division. So if you adjust for that, it would be $6,700,000,000 If you take all of the relevant variables of 2015 and rerun the cash flow projections of Vale with those, and that includes also oil prices, which tend to come down and the real exchange rates, which tend to adjust as well, you get to almost twice this number today. So if you get an EBITDA between $12,000,000,000 $13,000,000,000 spending $4,500,000,000 and the wreckage that probably will happen in the industry, this will be much more a scenario of opportunities rather than a scenario to retreat and cut investments by $500,000,000 or whatever. It's a completely different game. You should not think of a scenario like this one for Vale as what happened in 2015. We're way more prepared now. Thanks. Doug often again. I was just thinking about the nickel business. And Fabio, earlier, you said the Jewel is in Indonesia. So this one, you own 60% of and you have to reduce that ownership in the future. Can you firstly just remind what's the sell down requirement and how does that look? And then secondly, why it doesn't make it more interesting to look at growing the nickel somewhere where you weren't 100%, perhaps in New Caledonia, perhaps in Canada somewhere? Two thoughts from me. Well, I would love to give you a different alternative. But let's start to tell you that the only place on Earth where you have nickel in volumes that will enable the production to grow is in Indonesia. So it's not an issue of choice. Either you do it in Indonesia or there won't be nickel for these Indus at all. 2nd, we different from other companies, we think that we have a very good relationship with Indonesia. We are there for 50 years. We never lost money there. We have a good and respectful relationship with them. And we are prepared to go even further in order to build something that is sustainable, because it is so obvious that the only place that you can find nickel in the world is there other than the nickel that exists today that there we will have a solution. And I can anticipate that we are in advanced conversations with them in a very positive grounds. Unfortunately, we don't have a choice of doing in a place where we hold 100% of the company. Fabio, just to add, I think you're right. We that's the optimistic scenario, New Caledonia and Canada like Manitoba. But we have optionality. Again, remember when I said this slide, we have all the optionalities. Our focus has to be Indonesia, as Fabio just explained. But if you look at New Caledonia, it's hard to say, but it's a huge opportunity there. If the market comes because the number for 30 is 1,400,000, that's where I as an industry participant, I'm really concerned about the supply side, not to have another imbalance. And we have this cannon in New Canada and even in Canada as well. But it's too early to talk that. Our focus has to be Indonesia because it's the next round. We are there. It's the option now that has to it's the one that has to come after right after. But you're right. I think their optionality is there as well. Ladies and gentlemen, thank you very much for joining us today. I hope that you enjoyed the presentation. I don't want to bore you, but I want to repeat once more that we have 3 goals. I don't know. We are continuing to improve our flight towards quality our own flight towards quality. The challenge of this organization is to be able to speak of base metals as we speak of iron ore and that's we are looking to make it happen in the short term. And finally, capital discipline you can count the capital discipline we will continue with large dividend distributions and shareholders' buyback to the investors. Thank you.

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