6-K 1 tm212148d2_6k.htm FORM 6-K

 

 

 

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the

Securities Exchange Act of 1934

 

For the month of

 

February 2020

 

Vale S.A.

 

Praia de Botafogo nº 186, 18º andar, Botafogo
22250-145 Rio de Janeiro, RJ, Brazil

(Address of principal executive office)

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

 

(Check One) Form 20-F x Form 40-F ¨

 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))

 

(Check One) Yes ¨ No x

 

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))

 

(Check One) Yes ¨ No x

 

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

 

(Check One) Yes ¨ No x   

 

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-       .)

 

 

 

 

 

 

 

Financial Statements

December 31, 2020

 

 

 

BRGAAP in R$ (English)

 

 

 

 

 

 

 

Vale S.A. Financial Statements

Contents

 

  Page
Independent auditor’s report on the parent company and consolidated financial statements 2
Consolidated and Parent Company Income Statement 9
Consolidated and Parent Company Statement of Comprehensive Income 10
Consolidated and Parent Company Statement of Cash Flows 11
Consolidated and Parent Company Statement of Financial Position 12
Consolidated Statement of Changes in Equity 13
Consolidated and Parent Company Value Added Statement 14
Notes to the Financial Statements 15
1.     Corporate information 15
2.     Basis of preparation of the financial statements 15
3.     Significant events in the current year 16
4.     Information by business segment and by geographic area 18
5.     Costs and expenses by nature 23
6.     Financial results 24
7.     Streaming transactions 24
8.     Income taxes 25
9.     Basic and diluted earnings (loss) per share 29
10.   Accounts receivable 29
11.   Inventories 30
12.   Recoverable taxes 30
13.   Other financial assets and liabilities 31
14.   Investments in subsidiaries, associates and joint ventures 32
15.   Acquisitions and divestitures 36
16.   Intangibles 40
17.   Property, plant and equipment 42
18.   Impairment and onerous contracts 45
19.   Financial and capital risk management 48
20.   Financial assets and liabilities 60
21.   Participative stockholders’ debentures 63
22.   Loans, borrowings, leases, cash and cash equivalents and short-term investments 64
23.   Brumadinho’s dam failure 68
24.   Liabilities related to associates and joint ventures 72
25.   Provisions 75
26.   Litigations 77
27.   Employee benefits 81
28.   Stockholders’ equity 89
29.   Related parties 92
30.   Commitments 93

 

1

 

 

(A free translation of the original in Portuguese)

 

Independent auditor's report

on the parent company and

consolidated financial statements

 

To the Board of Directors and Shareholders

Vale S.A.

 

Opinion

 

We have audited the accompanying parent company financial statements of Vale S.A. (the "Company"), which comprise the statement of financial position as at December 31, 2020 and the income statement, statements of comprehensive income, changes in equity and cash flows for the year then ended, as well as the accompanying consolidated financial statements of Vale S.A. and its subsidiaries ("Consolidated"), which comprise the consolidated statement of financial position as at December 31, 2020 and the consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Vale S.A. and of Vale S.A. and its subsidiaries as at December 31, 2020, and the financial performance and the cash flows, as well as the consolidated financial performance and the consolidated cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

 

Basis for opinion

 

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Parent Company and Consolidated Financial Statements section of our report. We are independent of the Company and its subsidiaries in accordance with the ethical requirements established in the Code of Professional Ethics and in the Professional Standards issued by the Brazilian Federal Accounting Council, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

 

Key Audit Matters

 

Key Audit Matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current year. These matters were addressed in the context of our audit of the parent company and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

 

PricewaterhouseCoopers, Rua do Russel 804, 6º e 7º, Edifício Manchete, Rio de Janeiro, RJ, Brasil, 22210-907,

T: +55 (21) 3232 6112, www.pwc.com.br

 

2

 

 

Vale S.A.

 

Our audit was planned and performed considering the operations and transactions of the Company and its subsidiaries in 2020. In this context, the Key Audit Matters, as well as our audit approach, remained substantially consistent with those of the previous year.

 

Why it is a Key Audit Matter   How the matter was addressed in the audit
     
Brumadinho's dam failure (Note 23)    
     

On January 25, 2019, Dam I failed at the Corrégo do Feijão mine, which belongs to the Paraopeba Complex in the Southern System, located in Brumadinho, Minas Gerais, Brazil ("Brumadinho Dam").

 

The Company incurred in expenses and recorded provisions, related to (i) the Judicial Settlement for Integral Reparation (Global Settlement); (ii) individual indemnities and other commitments to indemnify affected people and recover the impacted areas ; and (iii) de-characterization of all its tailings dams built using the same method as the Brumadinho Dam (upstream method).

 

The measurement and subsequent reviews of these provisions involved critical judgments by management in determining the assumptions and bases used, which also had the support of specialists hired for this purpose. Variations in the main assumptions used, such as (i) volume of the waste to be removed; (ii) location availability for the tailings disposal; (iii) acceptance by the authorities of the proposed engineering methods and solution; and (iv) amounts related to indemnity payments to people affected by the dam failure, among others, may result in a significant change in the amounts recorded as at December 31, 2020.

 

Additionally, given the nature and uncertainties regarding the measurement of the accounting impacts inherent to this type of event, the amounts recognized and disclosed should be reviewed and may be significantly adjusted in future periods, as new facts and circumstances become known.

 

Accordingly, due to these aspects, this matter was considered an area of focus in our audit.

 

Our audit procedures included, among others, the understanding and assessment of the significant internal controls established by the Company's management related to the recording and monitoring of the expenses incurred and provisions made and corresponding disclosures in the financial statements resulting from this event.

 

We discussed with management about the main terms and agreements signed and read other technical documents used by the Company's management to justify the expenses and provisions made.

 

We obtained, on a sample basis, the supporting documentation of the expenses incurred and evaluated the reasonableness of the calculation models and the significant assumptions used, with the support of our engineering specialists.

 

As a result of the procedures described above, we consider that the measurement model and the assumptions adopted by the Company's management to calculate and record these provisions are reasonable, and that the respective disclosures in the financial statements are consistent with the information obtained during our audit.

 

 

 

 

3

 

 

Vale S.A.

 

Why it is a Key Audit Matter   How the matter was addressed in the audit
     
     

 

Impairment of assets (Note 18)

   
     

The Company is required to perform, at least once a year, the impairment test of the goodwill based on expected future returns allocated in the ferrous mineral and nickel segments, and also assess the impairment indicators for the other non-financial assets, including investments in subsidiaries. As part of this assessment, the Company determines an estimate of future cash flows for each Cash-generating unit ("CGU"), considering different factors and internal and external assumptions.

 

According to the reasons described in the corresponding note to the financial statements, during 2020, the Company carried out impairment tests for goodwill recorded in the ferrous mineral segment and in the base metals segment and did not identify the need for provisions.

 

To assess the recoverable value of these non-financial assets, the Company determines cash flows based on budgets approved by management and projected internal and external information, which are susceptible to the following significant assumptions: (i) discount rate; and (ii) long-term future metal prices. These assumptions may significantly change in relation to those projected by the Company due to adverse economic conditions with a consequent impact on the financial statements.

 

In addition, the Company carried out an impairment test for assets with triggering events and recognized losses due to the reduction of the recoverable value of the asset related to the New Caledonia operation (nickel). The measurement of this impairment loss was based on the fair value resulting from the sale negotiation of this operation, in accordance with the binding offer signed.

 

Accordingly, due to these aspects, this matter was considered an area of focus in our audit.

 

Our audit procedures included, among others, the evaluation of the design and test of the effectiveness of the significant internal controls related to the process of determining the recoverable value of non-financial assets.

 

We compared the information used in the impairment tests with the Budget Plan approved by the Company's Board of Directors and tested the mathematical accuracy of the calculations, as well as discussed the main assumptions used in the cash flow projections. In addition, we read relevant documents related to the sale negotiations.

 

We also evaluated, with the support of our valuation experts, the reasonableness of the calculation models and the significant assumptions used, including the discount rate, as well as conducting a sensitivity analysis on these assumptions used by the Company.

 

Finally, we read the disclosures made in the notes to the financial statements.

 

As a result of the procedures described above, we consider that the measurement model and the assumptions adopted by the Company's management to assess the impairment of the non-financial assets are reasonable, and that the respective disclosures in the financial statements are consistent with the information obtained during our work.

 

 

 

4

 

 

Vale S.A.

 

Why it is a Key Audit Matter   How the matter was addressed in the audit
     
     

 

Provision for tax contingencies (Note 26)

   
     

The Company and its subsidiaries have relevant tax matters under discussion at several procedural levels, for which, based on the opinion of their internal and external legal advisors, a provision for tax contingencies in the amount of R$ 2,520 million was recorded.

 

The definition of the amount of the provision and the amount of the contingent liabilities depends on critical judgments by management regarding the settlement term and amount.

 

In addition, considering the significance of the amounts involved, any changes in estimates or assumptions, which influence the determination of the loss estimate, could have significant impacts on the Company's financial statements.

 

 

Accordingly, this matter was considered an area of focus in our audit.

 

 

Our audit procedures included, among others, the evaluation of the design and operating effectiveness of the significant internal controls related to the process of determining tax contingencies, as well as the assessment of significant information technology systems that support this process.

 

For tax positions related to income taxes, we met with management to discuss and evaluate their conclusions on the impacts of initial adoption of Interpretation ICPC 22/IFRIC 23, as well as to understand the internal controls related to the identification and monitoring of uncertainty tax treatments and measurement and recognition of the obligation, when applicable.

 

We requested and obtained confirmation from all the legal advisors, internal and external, who are responsible for the Company's tax claims, confirming amounts and estimates used by the Company's management.

 

Also, when applicable, for the most significant tax proceedings, we obtained the opinions of other tax advisors, aiming to assess the reasonableness of the estimates determined by the lawyers responsible for the respective claims, and analyze the arguments and case law adopted by the Company's legal advisors.

 

We consider that the criteria and assumptions adopted by management for determining provisions, as well as disclosures, are consistent with the assessment of legal advisors.

 

 

5

 

 

Vale S.A.

 

Other matters

 

Statements of Value Added

 

The parent company and consolidated Statements of Value Added for the year ended December 31, 2020, prepared under the responsibility of the Company's management and presented as supplementary information for IFRS purposes, were submitted to audit procedures performed in conjunction with the audit of the Company's financial statements. For the purposes of forming our opinion, we evaluated whether these statements are reconciled with the financial statements and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in Technical Pronouncement CPC 09 - "Statement of Value Added". In our opinion, these Statements of Value Added have been properly prepared in all material respects, in accordance with the criteria established in the Technical Pronouncement, and are consistent with the parent company and consolidated financial statements taken as a whole.

 

Audit of information corresponding to the year ended December 31, 2018

 

The audit of the financial statements for the year ended December 31, 2018 was conducted by other independent auditors, who issued an unqualified audit report dated March 27, 2019, with an emphasis of matter paragraph related to a subsequent event resulting from the Brumadinho's dam failure occurred on January 25, 2019.

 

Other information accompanying the parent company and consolidated financial statements and the auditor's report

 

The Company's management is responsible for the other information that comprises the Management Report.

 

Our opinion on the parent company and consolidated financial statements does not cover the Management Report, and we do not express any form of audit conclusion thereon.

 

In connection with the audit of the parent company and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement in the Management Report, we are required to report that fact. We have nothing to report in this regard.

 

Responsibilities of management and those charged with governance for the parent company and consolidated financial statements

 

Management is responsible for the preparation and fair presentation of the parent company and consolidated financial statements in accordance with accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

 

 

6

 

 

Vale S.A.

 

In preparing the parent company and consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible for overseeing the financial reporting process of the Company and its subsidiaries.

 

Auditor's responsibilities for the audit of the parent company and consolidated financial statements

 

Our objectives are to obtain reasonable assurance about whether the parent company and consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

 

As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

  Identify and assess the risks of material misstatement of the parent company and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of the Company and its subsidiaries.

 

  Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

  Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the parent company and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

 

  Evaluate the overall presentation, structure and content of the parent company and consolidated financial statements, including the disclosures, and whether these financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

 

7

 

 

Vale S.A.

 

  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the parent company and consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

 

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the Key Audit Matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

Rio de Janeiro, February 25, 2021

 

PricewaterhouseCoopers Patricio Marques Roche
Auditores Independentes Contador CRC 1RJ081115/O-4
CRC 2SP000160/O-5  

 

 

8

 

 

 

Income Statement

In millions of Brazilian reais, except earnings per share data

 

 

       Consolidated   Parent company 
       Year ended December 31, 
   Notes   2020   2019   2018   2020   2019 
Net operating revenue   4(d)    208,529    148,640    134,483    127,395    86,428 
Cost of goods sold and services rendered   5(a)    (98,567)   (83,836)   (81,201)   (44,868)   (37,509)
Gross profit        109,962    64,804    53,282    82,527    48,919 
                               
Operating expenses                              
Selling and administrative expenses   5(b)    (2,857)   (1,924)   (1,917)   (1,564)   (934)
Research and evaluation expenses        (2,293)   (1,765)   (1,376)   (1,005)   (877)
Pre-operating and operational stoppage   23    (4,517)   (4,559)   (984)   (4,081)   (4,389)
Equity results and others results from subsidiaries   14    -    -    -    10,988    (6,670)
Brumadinho event   23    (27,016)   (28,818)   -    (27,016)   (28,818)
Other operating expenses, net   5(c)    (3,956)   (2,052)   (1,613)   (2,384)   (1,770)
         (40,639)   (39,118)   (5,890)   (25,062)   (43,458)
Impairment and disposals of non-current assets   18    (11,819)   (20,762)   (3,523)   (346)   (1,204)
Operating income        57,504    4,924    43,869    57,119    4,257 
                               
Financial income   6    1,922    2,092    1,549    708    485 
Financial expenses   6    (17,141)   (14,738)   (8,274)   (16,748)   (13,553)
Other financial items, net   6    (8,921)   (800)   (11,333)   (8,191)   (422)
Equity results and other results in associates and joint ventures   14 and 24    (5,436)   (2,684)   (693)   (5,436)   (2,684)
Income (loss) before income taxes        27,928    (11,206)   25,118    27,452    (11,917)
                               
Income taxes   8                          
Current tax        (17,828)   (5,985)   (2,806)   (14,739)   (4,705)
Deferred tax        14,803    8,494    3,772    14,000    9,950 
         (3,025)   2,509    966    (739)   5,245 
                               
Net income (loss) from continuing operations        24,903    (8,697)   26,084    26,713    (6,672)
Net income (loss) attributable to noncontrolling interests        (1,810)   (2,025)   117    -    - 
Net income (loss) from continuing operations attributable to Vale’s stockholders        26,713    (6,672)   25,967    26,713    (6,672)
                               
Discontinued operations                              
Loss from discontinued operations        -    -    (310)   -    - 
Loss from discontinued operations attributable to Vale’s stockholders        -    -    (310)   -    - 
                               
Net income (loss)        24,903    (8,697)   25,774    26,713    (6,672)
Net income (loss) attributable to noncontrolling interests        (1,810)   (2,025)   117    -    - 
Net income (loss) attributable to Vale’s stockholders        26,713    (6,672)   25,657    26,713    (6,672)
                               
Earnings (loss) per share attributable to Vale’s stockholders:                              
Basic and diluted earnings (loss) per share:   9                          
Common share (R$)        5.21    (1.30)   4.95    5.21    (1.30)

 

The accompanying notes are an integral part of these financial statements.

 

9

 

 

 

Statement of Comprehensive Income

In millions of Brazilian reais

 

 

   Consolidated   Parent company 
   Year ended December 31, 
   2020   2019   2018   2020   2019 
Net income (loss)   24,903    (8,697)   25,774    26,713    (6,672)
Other comprehensive income (loss):                         
Items that will not be subsequently reclassified to income statement                         
Retirement benefit obligations (note 27)   (436)   (486)   142    (528)   (414)
Fair value adjustment to investment in equity securities (note 19)   641    (735)   275    583    (596)
Equity results (note 14)   -    -    -    150    (211)
Transfer to reserve   -    -    (51)   -    - 
Total items that will not be subsequently reclassified to income statement, net of tax   205    (1,221)   366    205    (1,221)
                          
Items that may be subsequently reclassified to income statement                         
Translation adjustments   18,607    4,812    14,541    20,555    4,626 
Net investments hedge (note 19)   (2,732)   (324)   (1,958)   (2,732)   (324)
Cash flow hedge (note 19)   (631)   427    -    -    - 
Equity results (note 14)   -    -    -    (631)   427 
Transfer of realized results to net income   702    -    (257)   -    - 
Total of items that may be subsequently reclassified to income statement, net of tax   15,946    4,915    12,326    17,192    4,729 
Total comprehensive income (loss)   41,054    (5,003)   38,466    44,110    (3,164)
                          
Comprehensive income (loss) attributable to noncontrolling interests   (3,056)   (1,839)   269           
Comprehensive income (loss) attributable to Vale’s stockholders   44,110    (3,164)   38,197           
From continuing operations   44,110    (3,164)   38,181           
From discontinued operations   -    -    16           
    44,110    (3,164)   38,197           

 

Items above are stated net of tax and the related taxes are disclosed in note 8.

 

The accompanying notes are an integral part of these financial statements.

 

10

 

 

 

Statement of Cash Flows

In millions of Brazilian reais

 

 

   Consolidated   Parent company 
   Year ended December 31, 
   2020   2019   2018   2020   2019 
Cash flow from operations (a)   89,537    61,224    56,811    49,561    46,516 
Interest on loans and borrowings paid (note 22)   (3,911)   (4,760)   (4,023)   (5,400)   (4,845)
Derivatives received (paid), net (note 19)   (280)   (1,287)   (250)   (876)   (1,485)
Interest on participative stockholders’ debentures paid (note 21)   (1,000)   (776)   (529)   (1,000)   (776)
Income taxes (including settlement program)   (9,138)   (7,119)   (4,089)   (7,663)   (5,557)
Net cash provided by operating activities   75,208    47,282    47,920    34,622    33,853 
                          
Cash flow from investing activities:                         
Capital expenditures   (22,726)   (14,774)   (13,899)   (11,374)   (7,572)
Additions to investments (note 14)   (657)   (287)   (79)   (2,243)   (2,852)
Acquisition of subsidiary, net of cash (note 15)   -    (3,513)   -    -    (3,513)
Proceeds from disposal of assets and investments   2,229    546    4,959    1,416    90 
Dividends received from associates and joint ventures (note 14)   904    1,423    922    2,973    3,901 
Judicial deposits and restricted cash related to Brumadinho event (note 23)   (50)   (6,169)   -    (50)   (6,169)
Short-term investment   3,318    (3,408)   (180)   3,234    (3,502)
Investment fund applications   (4,565)   -    -    (2,203)   - 
Other investments activities, net (i)   (2,687)   (358)   7,353    915    (5,505)
Net cash used in investing activities   (24,234)   (26,540)   (924)   (7,332)   (25,122)
                          
Cash flow from financing activities:                         
Loans and borrowings from third-parties (note 22)   34,023    11,886    4,584    44    2,894 
Payments of loans and borrowings from third-parties (note 22)   (33,207)   (21,874)   (28,149)   (3,534)   (6,509)
Payments of leasing (note 22)   (1,129)   (891)   -    (339)   (354)
Dividends and interest on capital paid to stockholders (note 28)   (18,637)   -    (12,415)   (18,637)   - 
Dividends and interest on capital paid to noncontrolling interest   (72)   (695)   (635)   -    - 
Share buyback program   -    -    (3,858)   -    - 
Transactions with noncontrolling stockholders (note 15)   981    (3,310)   (56)   -    - 
Net cash used in financing activities   (18,041)   (14,884)   (40,529)   (22,466)   (3,969)
                          
Net cash used in discontinued operations   -    -    (157)   -    - 
                          
Increase in cash and cash equivalents   32,933    5,858    6,310    4,824    4,762 
Cash and cash equivalents in the beginning of the year   29,627    22,413    14,318    9,597    4,835 
Effect of exchange rate changes on cash and cash equivalents   7,605    1,356    2,170    -    - 
Effects of disposals of subsidiaries, net of cash and cash equivalents   (79)   -    (385)   188    - 
Cash and cash equivalents at end of the year   70,086    29,627    22,413    14,609    9,597 
                          
Non-cash transactions:                         
Additions to property, plant and equipment - capitalized loans and borrowing costs   345    551    704    345    549 
                          
Cash flow from operating activities:                         
Income (loss) before income taxes   27,928    (11,206)   25,118    27,452    (11,917)
Adjusted for:                         
Provisions related to Brumadinho event (note 23)   24,430    25,447    -    24,430    25,447 
Equity results and others results from subsidiaries (note 14)   -    -    -    (10,988)   6,670 
Equity results and other results in associates and joint ventures (note 14)   5,436    2,684    693    5,436    2,684 
Impairment and disposal of non-current assets (note 18)   11,819    20,762    3,523    346    1,204 
Depreciation, depletion and amortization   16,679    14,751    12,240    8,069    7,752 
Financial results, net (note 6)   24,140    13,446    18,058    24,231    13,490 
Changes in assets and liabilities:                         
Accounts receivable   (14,136)   (41)   (1,012)   (27,976)   3,743 
Inventories   (724)   669    (2,994)   (779)   (536)
Suppliers and contractors (ii)   (932)   2,836    (1,414)   906    3,397 
Provision - Payroll, related charges and other remunerations   1,447    (318)   349    1,110    131 
Proceeds from streaming transactions (note 7)   -    -    2,603    -    - 
Payments related to Brumadinho event (note 23) (iii)   (4,169)   (3,982)   -    (4,169)   (3,982)
Other assets and liabilities, net   (2,381)   (3,824)   (353)   1,493    (1,567)
Cash flow from operations (a)   89,537    61,224    56,811    49,561    46,516 

 

(i) Includes loans and advances from/to related parties. For the year ended December 31, 2018, includes proceeds received from Nacala project finance (note 29) in the amount of R$8,434.

(ii) Includes variable lease payments.

(iii) In addition, the Company has incurred in expenses in the amount of R$2,586 and R$2,903 for the year ended December 31, 2020 and 2019, respectively. Therefore, in 2020, the Company has disbursed a total amount of R$6,755 in relation to the Brumadinho event (2019: R$6,885).

 

The accompanying notes are an integral part of these financial statements.

 

11

 

 

Statement of Financial Position

In millions of Brazilian reais

 

 

       Consolidated   Parent company 
   Notes   December 31, 2020   December 31, 2019   December 31, 2020   December 31, 2019 
Assets                    
Current assets                         
Cash and cash equivalents   22    70,086    29,627    14,609    9,597 
Short-term investments   22    4,006    3,329    1,811    3,309 
Accounts receivable   10    25,944    10,195    46,559    16,599 
Other financial assets   13    1,707    2,449    37    1,140 
Inventories   11    21,103    17,228    6,142    5,310 
Recoverable taxes   12    2,646    3,719    1,036    1,577 
Others        1,313    2,151    2,199    1,569 
         126,805    68,698    72,393    39,101 
                          
Non-current assets                         
Judicial deposits   26(c)    6,591    12,629    6,265    12,242 
Other financial assets   13    9,271    10,724    3,838    3,954 
Recoverable taxes   12    5,670    4,853    2,244    1,471 
Deferred income taxes   8(a)    53,711    37,151    42,760    28,770 
Others        3,380    2,348    725    955 
         78,623    67,705    55,832    47,392 
                          
Investments   14    10,557    11,278    181,319    144,594 
Intangibles   16    48,309    34,257    28,243    16,271 
Property, plant and equipment   17    213,836    187,733    111,338    105,875 
         351,325    300,973    376,732    314,132 
Total assets        478,130    369,671    449,125    353,233 
                          
Liabilities                    
Current liabilities                         
Suppliers and contractors        17,496    16,556    11,601    10,765 
Loans, borrowings and leases   22    5,901    5,805    3,804    4,323 
Other financial liabilities   13    9,906    5,658    4,747    6,678 
Taxes payable        4,950    2,065    3,509    1,062 
Settlement program (“REFIS”)   8(d)    1,769    1,737    1,733    1,702 
Liabilities related to associates and joint ventures   24    4,554    2,079    4,554    2,079 
Provisions   25    9,498    4,956    4,606    3,210 
Liabilities related to Brumadinho   23    9,925    6,319    9,925    6,319 
De-characterization of dams   23    1,981    1,247    1,981    1,247 
Interest on capital        6,429    6,333    6,415    6,333 
Dividends payable   28    6,342    6,287    6,342    6,287 
Others        3,516    3,097    4,173    3,227 
         75,838    55,806    56,975    46,899 
Non-current liabilities                         
Loans, borrowings and leases   22    72,187    54,038    21,646    20,546 
Participative stockholders’ debentures   21    17,737    10,416    17,737    10,416 
Other financial liabilities   13    23,967    7,206    107,718    65,949 
Settlement program (“REFIS”)   8(d)    12,493    14,012    12,245    13,733 
Deferred income taxes   8(a)    9,198    7,585    -    - 
Provisions   25    43,829    34,233    13,016    11,368 
Liabilities related to Brumadinho   23    13,849    5,703    13,849    5,703 
De-characterization of dams   23    9,916    8,787    9,916    8,787 
Liabilities related to associates and joint ventures   24    6,228    4,774    6,228    4,774 
Streaming transactions   7    10,419    8,313    -    - 
Others        1,483    1,649    4,010    3,578 
         221,306    156,716    206,365    144,854 
Total liabilities        297,144    212,522    263,340    191,753 
                          
Stockholders’ equity   28                     
Equity attributable to Vale’s stockholders        185,785    161,480    185,785    161,480 
Equity attributable to noncontrolling interests        (4,799)   (4,331)   -    - 
Total stockholders’ equity        180,986    157,149    185,785    161,480 
Total liabilities and stockholders’ equity        478,130    369,671    449,125    353,233 

 

The accompanying notes are an integral part of these financial statements.

 

12

 

 

Statement of Changes in Equity

In millions of Brazilian reais

 

 

   Share capital   Capital reserve   Profit reserves   Treasury stocks   Other reserves   Cumulative translation adjustments   Retained earnings   Equity attributable to Vale’s stockholders   Equity attributable to noncontrolling interests   Total stockholders’ equity 
Balance at December 31, 2017   77,300    3,634    24,539    (2,746)   (6,525)   47,556    -    143,758    4,348    148,106 
Net income   -    -    -    -    -    -    25,657    25,657    117    25,774 
Other comprehensive income   -    -    -    -    613    11,927    -    12,540    152    12,692 
Dividends and interest on capital of Vale’s stockholders   -    -    -    -    -    -    (7,694)   (7,694)   -    (7,694)
Dividends of noncontrolling interest   -    -    -    -    -    -    -    -    (629)   (629)
Acquisitions and disposal of noncontrolling interest   -    -    -    -    -    -    -    -    (757)   (757)
Capitalization of noncontrolling interest advances   -    -    -    -    -    -    -    -    49    49 
Appropriation to undistributed retained earnings   -    -    17,963    -    -    -    (17,963)   -    -    - 
Share buyback program   -    -    -    (3,858)   -    -    -    (3,858)   -    (3,858)
Balance at December 31, 2018   77,300    3,634    42,502    (6,604)   (5,912)   59,483    -    170,403    3,280    173,683 
Loss   -    -    -    -    -    -    (6,672)   (6,672)   (2,025)   (8,697)
Other comprehensive income   -    -    -    -    (1,171)   4,679    -    3,508    186    3,694 
Interest on capital of Vale’s stockholders   -    -    (7,253)   -    -    -    -    (7,253)   -    (7,253)
Dividends of noncontrolling interest   -    -    -    -    -    -    -    -    (337)   (337)
Acquisitions and disposal of noncontrolling interest   -    -    -    -    1,410    -    -    1,410    (5,549)   (4,139)
Capitalization of noncontrolling interest advances   -    -    -    -    -    -    -    -    114    114 
Allocation of loss   -    -    (6,672)   -    -    -    6,672    -    -    - 

Treasury shares utilized in the year (note 28)

   -    -    -    84    -    -    -    84    -    84 
Balance at December 31, 2019   77,300    3,634    28,577    (6,520)   (5,673)   64,162    -    161,480    (4,331)   157,149 
Net income (loss)   -    -    -    -    -    -    26,713    26,713    (1,810)   24,903 
Other comprehensive income   -    -    -    -    (453)   17,850    -    17,397    (1,246)   16,151 
Dividends and interest on capital of Vale’s stockholders   -    -    (12,350)   -    -    -    (6,342)   (18,692)   -    (18,692)
Dividends of noncontrolling interest   -    -    -    -    -    -    -    -    (42)   (42)
Acquisitions and disposal of noncontrolling interest   -    -    -    -    (1,181)   -    -    (1,181)   2,559    1,378 
Capitalization of noncontrolling interest advances   -    -    -    -    -    -    -    -    71    71 
Appropriation to undistributed retained earnings   -    -    20,371    -    -    -    (20,371)   -    -    - 

Treasury shares utilized in the year (note 28)

   -    -    -    68    -    -    -    68    -    68 
Balance at December 31, 2020   77,300    3,634    36,598    (6,452)   (7,307)   82,012    -    185,785    (4,799)   180,986 

 

The accompanying notes are an integral part of these financial statements.

 

13

 

 

 

Value Added Statement

In millions of Brazilian Reais

 

 

   Consolidated   Parent company 
   Year ended December 31, 
   2020   2019   2020   2019 
Generation of value added                
Gross revenue                    
Revenue from products and services   210,108    149,982    128,818    87,588 
Revenue from the construction of own assets   6,064    6,584    2,396    3,448 
Other revenues   2,101    725    1,369    436 
Less:                    
Cost of products, goods and services sold   (28,250)   (22,780)   (14,699)   (10,757)
Material, energy, third-party services and other   (40,000)   (36,475)   (11,406)   (11,201)
Impairment of non-current assets and others results   (11,819)   (20,762)   (346)   (1,204)
Brumadinho event   (27,016)   (28,818)   (27,016)   (28,818)
Other costs and expenses   (18,398)   (11,460)   (9,169)   (7,574)
Gross value added   92,790    36,996    69,947    31,918 
Depreciation, amortization and depletion   (16,679)   (14,751)   (8,069)   (7,752)
Net value added   76,111    22,245    61,878    24,166 
                     
Received from third parties                    
Equity results from entities   (5,436)   (2,684)   5,552    (9,354)
Financial income   6,201    3,505    4,482    2,084 
Total value added to be distributed   76,876    23,066    71,912    16,896 
                     
Personnel and charges   9,336    8,183    4,581    3,430 
Taxes and contributions   12,042    4,540    8,984    914 
Interest (net derivatives and monetary and exchange rate variation)   29,979    16,702    28,448    15,350 
Other remunerations of third party funds   616    2,338    3,186    3,874 
Reinvested net income (absorbed loss)   26,713    (6,672)   26,713    (6,672)
Loss attributable to noncontrolling interest   (1,810)   (2,025)   -    - 
Distributed value added   76,876    23,066    71,912    16,896 

 

The accompanying notes are an integral part of these financial statements.

 

14

 

Notes to the Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

 

1.Corporate information

 

Vale S.A. and its subsidiaries (“Vale” or the “Company”) are iron ore and iron ore pellets producers, which are key raw materials for steelmaking, and nickel producers, which is used to produce stainless steel and metal alloys employed in the production process of several products. The Company also produces copper, metallurgical and thermal coal, manganese ore and, platinum group metals, gold, silver and cobalt. The information by segment is presented in note 4.

 

Vale S.A. (the “Parent Company”) is a public company headquartered in the city of Rio de Janeiro, Brazil with securities traded on the stock exchanges of São Paulo – B3 S.A. (VALE3), New York - NYSE (VALE) and Madrid – LATIBEX (XVALO).

 

2.Basis of preparation of the financial statements

 

a)Statement of compliance

 

The consolidated and individual financial statements of the Company (“financial statements”) have been prepared and are being presented in accordance with International Financial Reporting Standards (“IFRS”), as issued by International Accounting Standards Board (“IASB”), as implemented in Brazil by the Brazilian Accountant Pronouncements Committee (“CPC”), approved by the Brazilian Securities Exchange Commission (“CVM”) and by the Brazilian Federal Accounting Council (“CFC”). All relevant information from its own financial statements, and only this information, are being presented and correspond to those used by the Company’s Management.

 

The presentation of the parent company and consolidated statements of value added is required by the Brazilian corporate legislation and the accounting practices adopted in Brazil for listed companies, while it is not required by IFRS. Therefore, under the IFRS, the presentation of such statements is considered supplementary information, and not part of the set of financial statements. The Statement of Value Added was prepared in accordance with the criteria defined in Technical Pronouncement CPC 09 - “Statement of Value Added”.

 

b)Basis of presentation

 

The financial statements have been prepared on a historical cost basis as adjusted to reflect: (i) the fair value of financial instruments measured at fair value through income statement or at fair value through the statement of comprehensive income; and

(ii) impairment of assets.

 

These financial statements were authorized for issue by the Board of Directors on February 25, 2021.

 

c)Functional currency and presentation currency

 

The financial statements of the Company and its associates and joint ventures are measured using the currency of the primary economic environment in which the entity operates (“functional currency”), which in the case of the Parent Company is the Brazilian real (“R$”).

 

The exchange rates used by the Company to translate its foreign operations are as follows:

 

   Closing rate   Average rate for the year ended 
   2020   2019   2018   2020   2019   2018 
US Dollar (“US$”)   5.1967    4.0307    3.8748    5.1578    3.9461    3.6558 
Canadian dollar (“CAD”)   4.0771    3.1034    2.8451    3.8480    2.9746    2.8190 
Euro (“EUR” or “€”)   6.3779    4.5305    4.4390    5.8989    4.4159    4.3094 

 

d) Significant accounting policies

 

Significant accounting policies used in the preparation of these financial statements are disclosed in the respective notes and have been consistently applied to all years presented, except for the adoption of the IFRS 16/CPC 06 (R2) - Leases from January 1, 2019 using the retrospective approach with the cumulative effect recognized as at the date of initial application. Accordingly, the comparative information has not been restated and 2018 financial information continues to be presented under IAS 17/CPC 06 (R1) and related interpretations. As disclosed in note 8(e), the Company also adopted IFRIC 23 – Uncertainty over Income Tax Treatments from January 1, 2019.

 

15

 

Notes to the Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

 

In addition, certain new accounting standards and interpretations have been published that are not mandatory for December 31, 2020 reporting periods and have not been early adopted by the Company. These standards are not expected to have a material impact on the entity in future reporting periods.

 

e) Critical accounting estimates and judgments

 

The preparation of financial statements requires the use of critical accounting estimates and the application of judgment by management in applying the Company’s accounting policies. These estimates are based on the experience, best knowledge, information available at the statement of financial position date and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Changes in facts and circumstances may lead to the revision of these estimates. Actual future results may differ from estimates.

 

The significant estimates and judgments applied by the Company in the preparation of these financial statements are as follows:

 

Note   Significant estimates and judgments
7   Deferred revenue
8   Deferred income taxes
14   Consolidation
17   Mineral reserves and mine useful life
18   Impairment of non-current assets
19   Fair values estimate
23   Brumadinho dam failure
24   Liabilities related to associates and joint ventures
25   Asset retirement obligation
26   Litigation
27   Employee post-retirement obligations

 

3.       Significant events in the current year

 

a) Main events

 

The financial position, cash flows and performance of the Company were particularly affected by the following events and transactions during the year ended December 31, 2020:

 

In February 2021 (subsequent event), the Company entered into a Judicial Settlement for Integral Reparation (“Global Settlement”) with the State of Minas Gerais, the Public Defender of the State of Minas Gerais and the Federal and the State of Minas Gerais Public Prosecutors Offices, to repair the environmental and social damage resulting from the Dam I rupture. Thus, the Company recognized a loss of R$19,924 in the income statement for the year ended December 31, 2020 (note 23).

 

In 2020, as a consequence of the periodic review of the estimates for the de-characterization of the dam structures, the Company recognized R$1,900 in addition to the provision already recorded. In addition, the Company also identified other structures that met the de-characterization criteria, resulting in an addition of R$1,275 to the provision (note 23).

 

In December 2020, the Company signed the early extension terms for its railways concessions related to Estrada de Ferro Carajás (“EFC”) and Estrada de Ferro Vitória a Minas (“EFVM”), for an additional thirty years period, from 2027 to 2057. As a result of the agreement, the Company recognized an intangible asset, which represents its right to use of both EFVM and EFC, and their related concession grants liabilities, in the aggregate amount of R$12,016 (note 16).

 

In 2020, the Company started looking for a potential buyer for Vale Nouvelle-Calédonie S.A.S. (“VNC”) and started studying the other options available to exit the operation. Following the negotiations that took place during the year, VNC’s assets and liabilities were classified as “held for sale” and measured at fair value, resulting in the recognition of an impairment loss in the amount of R$2,155. In December 2020, the Company signed a binding put option agreement for the sale of its ownership interest in VNC for an immaterial consideration. The proposed transaction is expected to be concluded in the first quarter of 2021. Under this agreement, the Company has reserved the amount of the commitment to fund VNC in approximately R$2,573 (US$500 million) to continue VNC operations, including the commitment to invest in the conversion of the tailings deposition from wet to dry-stacking. Therefore, the Company recognized a loss related to VNC in the amount of R$4,728 recognized in the income statement as “Impairment and disposals of non-current assets” for the year ended December 31, 2020 (note 18).

 

16

 

Notes to the Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

 

In 2020, the Company tested the recoverability of its loan receivable from Nacala BV. The testing was triggered by the revisions undertaken on the coal volumes that are projected to be transported on the railway, resulting in a loss of R$4,106, recognized in the income statement as “Impairment and disposals of non-current assets” for the year ended December 31, 2020 (note 18).

 

During 2020, Fundação Renova reviewed the assumptions used on the preparation of the estimates incorporated into the mitigation and compensation programs. The periodic review resulted in an addition of R$5,530 to the provision. In addition, Vale made available R$845 for Samarco’s working capital needs (2019: R$402). This amount was recognized in the income statement as “Equity results and other results in associates and joint ventures” for the year ended December 31, 2020 (note 24).

 

In July 2020, the Board of Directors approved the resumption of the stockholders´ remuneration policy and paid the amount of R$18,637 (note 28).

 

In December 2020, the Company was notified by BNDESPar of the full exercise of the option to purchase 8% of VLI shares held by Vale. With the exercise of this option, Vale received R$1,223 and holds 29.6% of VLI’s total shares. This transaction resulted in a gain of R$885, recognized in the income statement as “Equity results and other results in associates and joint ventures” for the year ended December 31, 2020 (note 15).

 

In November 2020, the Company concluded the sale of Biopalma da Amazônia S.A. Reflorestamento Indústria e Comércio (“Biopalma”) to Brasil Bio Fuels S.A. As a result of this transaction, a loss of R$681 was recognized in the income statement as “Impairment and disposals of non-current assets” for the year ended December 31, 2020 (note 18).

 

In August 2020, the conditions precedent of the agreement to sell the Company’s stake in Henan Longyu were concluded and the Company received R$843 as part of the consideration for the transaction. This transaction resulted in a gain of R$598 due to the recycling of the cumulative translation adjustments at closing, which was recognized as “Equity results and other results in associates and joint ventures” in the income statement for the year ended December 31, 2020 (note 15).

 

In October 2020, the Company concluded the agreement for the divestiture of PT Vale Indonesia Tbk (“PTVI”) and received R$1.560. The transaction with non-controlling interest resulted in a loss of R$1.012, which was recognized in the Stockholders’ Equity for the year ended December 31, 2020 (note 15).

 

In September 2020, the Company decided to shut down its operations at the Simões Filho plant in Bahia, resulting in an impairment loss of R$412, recognized in the income statement as “Impairment and disposals of non-current assets” for the year ended December 31, 2020 (note 18).

 

In July 2020, Vale Overseas Limited issued guaranteed notes due July 2030, in the amount of R$8,214 (US$1,500 million) (note 22).

 

In October 2020, the Company approved the incorporation of a joint venture to build and operate an expansion project for the Shulanghu Port facilities, located in China. Vale’s capital contribution to the project is estimated to range from R$600 to R$900.The construction of the project, which is expected to take up to three years, will start after both parties obtain the anti-trust and other regulatory approvals in China (note 15).

 

On January 20, 2021 (subsequent event), the Company signed a Heads of Agreement (“HoA”) with Mitsui & Co., Ltd. (“Mitsui”), allowing both parties to structure Mitsui’s exit from the Moatize coal mine (“Vale Moçambique”) and the Nacala Logistics Corridor (“NLC”). The HoA determines that Vale will acquire Mitsui’s stake in the mine and logistics assets for an immaterial consideration and will undertake the obligation of the Nacala Corridor’s Project Finance in full, which has approximately R$12,992 (US$2,500 million) outstanding balance at December 31,2020. In case of closing the transaction, Vale will also control NLC and, therefore, consolidate its assets and liabilities. The parties expect to conclude the transaction in 2021, which is subject to the execution of the definitive agreement and usual precedent conditions. In addition, the Company informed the market its divestiture decision in the coal segment, which may lead to the presentation of this segment as a discontinued operation in future financial statements depending on the Company’s assessment (note 15).

 

17

 

Notes to the Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

 

b) Coronavirus impact

 

A significant portion of the Company’s revenue derived from sales to customers in Asia and Europe, regions that have had their economic activities affected as a result of the pandemic. The Company also has an extensive logistics and supply chain, including several ports, distribution centers and suppliers that have operations in those affected regions.

 

The Company has taken several measures to monitor and prevent the effects of COVID-19, including health and safety measures for its employees (such as social distancing and remote working) and actions to secure the supply of materials essential to the Company’s production process.

 

The Company has pledged R$592 to support humanitarian aid programs in the communities where the Company operates, with special focus on Brazil communities that have been more adversely affected by the pandemic. This amount was used to purchase medical supplies and equipment and were recognized as “Other operating expenses” in the income statement for the year ended December 31, 2020.

 

At this time, the effects of the pandemic have not caused significant impacts on its operations nor on the fair value of the Company’s assets and liabilities. However, unusual significant changes have occurred in the value of financial assets in many markets since the pandemic outbreak. However, if the pandemic continues for an extended period of time or increases in intensity in the regions where the Company operates, the Company’s financial conditions or results of operations may be adversely impacted.

 

Liquidity - As a precautionary measure to increase its cash position and preserve financial flexibility considering the uncertainties resulting from the COVID-19 pandemic, the Company temporary discontinued the nickel hedge program, through the sale of option contracts for the total amount of R$1,123.

 

Deferred income tax - On March 31, 2020, the government of Indonesia issued a regulation (“PERPPU-1”) to manage the economic impact of the global COVID-19 pandemic, which affects Indonesia’s tax policies. The 25% income tax rate was reduced to 22% in fiscal years 2020 and 2021 and will later be reduced to 20% as of fiscal year 2022. Therefore, the Company has measured the deferred income tax of PT Vale Indonesia Tbk (“PTVI”), considering the effective promulgation of the new income tax rate recognizing an income tax gain of R$393 in the year ended December 31, 2020.

 

4.        Information by business segment and by geographic area

 

The Company operated the following reportable segments during this year: Ferrous Minerals, Base Metals and Coal. The segments are aligned with products and reflect the structure used by Management to evaluate Company’s performance. The responsible bodies for making operational decisions, allocating resources and evaluating performance are the Executive Boards and the Board of Directors. The performance of the operating segments is assessed based on a measure of adjusted LAJIDA (EBITDA).

 

The Company has created the Special Recovery and Development Board, which is in-charge of those measures related to the Brumadinho dam rupture (note 23) that reports to the CEO. The costs related to the Brumadinho event are not directly linked to the Company’s operating activities and, therefore, are under “Other”, as well as, revenues and costs of other products, services, research and development, investments in joint ventures and associates of other businesses and unallocated corporate expenses.

 

The information presented to the Executive Board on the performance of each segment is derived from the accounting records, adjusted for reallocations between segments.

 

The main activities of the operating segments are as follows:

 

Ferrous minerals – Comprise of the production and extraction of iron ore, iron ore pellets, manganese, other ferrous products and its logistic services.

 

Base metals - Include the production and extraction of nickel and its by-products (copper, gold, silver, cobalt, precious metals and others) and copper, as well as its by-products (gold and silver).

 

Coal – Comprise of the production and extraction of metallurgical and thermal coal and its logistic services.

 

Fertilizers (Discontinued operations) - Included the production of potash, phosphate, nitrogen and other fertilizer products, which was discontinued in 2018 (note 15).

 

18

 

Notes to the Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

 

a)     Adjusted LAJIDA (EBITDA)

 

The definition of Adjusted LAJIDA (EBITDA) for the Company is the operating income or loss plus dividends received and interest from associates and joint ventures, and excluding the amounts charged as (i) depreciation, depletion and amortization and (ii) impairment and disposal of non-current assets.

 

   Consolidated 
   Year ended December 31, 2020 
   Net operating revenue   Cost of goods sold and services rendered   Sales, administrative and other operating expenses   Research and evaluation   Pre operating and operational stoppage   Dividends received and interest from associates and joint ventures   Adjusted LAJIDA (EBITDA) 
Ferrous minerals                                   
Iron ore   142,478    (42,391)   (958)   (663)   (2,708)   117    95,875 
Iron ore pellets   22,043    (8,562)   52    (25)   (390)   608    13,726 
Ferroalloys and manganese   1,177    (915)   -    (11)   (159)   -    92 
Other ferrous products and services   1,667    (1,301)   14    (8)   -    8    380 
    167,365    (53,169)   (892)   (707)   (3,257)   733    110,073 
                                    
Base metals                                   
Nickel and other products   25,877    (16,713)   (134)   (248)   (156)   -    8,626 
Copper   11,356    (4,087)   (35)   (351)   (4)   -    6,879 
    37,233    (20,800)   (169)   (599)   (160)   -    15,505 
                                    
Coal   2,431    (7,536)   (83)   (142)   -    434    (4,896)
                                    
Brumadinho event   -    -    (27,016)   -    -    -    (27,016)
COVID-19   -    -    (592)   -    -    -    (592)
Others   1,500    (1,675)   (4,826)   (844)   (60)   171    (5,734)
Total   208,529    (83,180)   (33,578)   (2,292)   (3,477)   1,338    87,340 

 

   Consolidated 
   Year ended December 31, 2019 
   Net operating revenue   Cost of goods sold and services rendered   Sales, administrative and other operating expenses   Research and evaluation   Pre operating and operational stoppage   Dividends received and interest from associates and joint ventures   Adjusted LAJIDA (EBITDA) 
Ferrous minerals                                   
Iron ore   92,504    (34,843)   (1,281)   (491)   (2,963)   120    53,046 
Iron ore pellets   23,446    (10,515)   (81)   (65)   (282)   1,036    13,539 
Ferroalloys and manganese   1,112    (869)   (32)   (9)   (4)   -    198 
Other ferrous products and services   1,705    (1,278)   1    (4)   -    37    461 
    118,767    (47,505)   (1,393)   (569)   (3,249)   1,193    67,244 
                                    
Base metals                                   
Nickel and other products   16,845    (11,305)   (297)   (174)   (111)   -    4,958 
Copper   7,506    (3,569)   (22)   (173)   (81)   -    3,661 
    24,351    (14,874)   (319)   (347)   (192)   -    8,619 
                                    
Coal   4,005    (6,462)   3    (121)   -    447    (2,128)
                                    
Brumadinho event   -    -    (28,818)   -    -    -    (28,818)
                                    
Others   1,517    (1,541)   (2,045)   (728)   (43)   230    (2,610)
Total   148,640    (70,382)   (32,572)   (1,765)   (3,484)   1,870    42,307 

 

19

 

Notes to the Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

  

   Consolidated 
   Year ended December 31, 2018 
   Net operating revenue   Cost of goods sold and services rendered   Sales, administrative and other operating expenses   Research and evaluation   Pre operating and operational stoppage   Dividends received and interest from associates and joint ventures   Adjusted LAJIDA (EBITDA) 
Ferrous minerals                                   
Iron ore   75,056    (33,356)   (281)   (403)   (418)   108    40,706 
Iron ore pellets   24,389    (12,427)   (39)   (98)   (71)   582    12,336 
Ferroalloys and manganese   1,660    (1,065)   (11)   (4)   -    -    580 
Other ferrous products and services   1,737    (1,147)   (16)   (3)   (3)   28    596 
    102,842    (47,995)   (347)   (508)   (492)   718    54,218 
                                    
Base metals                                   
Nickel and other products   16,855    (11,213)   (173)   (141)   (120)   -    5,208 
Copper   7,672    (3,502)   (14)   (68)   -    -    4,088 
    24,527    (14,715)   (187)   (209)   (120)   -    9,296 
                                    
Coal   6,025    (5,811)   (33)   (75)   -    511    617 
                                    
Others   1,089    (961)   (2,738)   (584)   (76)   204    (3,066)
Total   134,483    (69,482)   (3,305)   (1,376)   (688)   1,433    61,065 
                                    
Discontinued operations (Fertilizers)   397    (393)   (15)   -    -    -    (11)
Total   134,880    (69,875)   (3,320)   (1,376)   (688)   1,433    61,054 

 

Adjusted LAJIDA (EBITDA) is reconciled to net income (loss) as follows:

 

From continuing operations

 

   Consolidated 
   Year ended December 31, 
   2020   2019   2018 
Net income (loss) attributable to Vale’s stockholders   26,713    (6,672)   25,967 
Net income (loss) attributable to noncontrolling interests   (1,810)   (2,025)   117 
Net income (loss)   24,903    (8,697)   26,084 
Depreciation, depletion and amortization   16,679    14,751    12,240 
Income taxes   3,025    (2,509)   (966)
Financial results   24,140    13,446    18,058 
LAJIDA (EBITDA)   68,747    16,991    55,416 
                
Items to reconciled adjusted LAJIDA (EBITDA)               
Equity results and other results in associates and joint ventures   5,436    2,684    693 
Dividends received and interest from associates and joint ventures (i)   1,338    1,870    1,433 
Impairment and disposal of non-current assets   11,819    20,762    3,523 
Adjusted LAJIDA (EBITDA)   87,340    42,307    61,065 

 

(i) Includes the remuneration of the financial instrument of the Coal segment.

 

From discontinued operations

 

   Consolidated 
   Year ended December 31, 2018 
Loss   (310)
Income taxes   (134)
Financial results   18 
LAJIDA (EBITDA)   (426)
      
Items to reconciled adjusted LAJIDA (EBITDA)     
Impairment of non-current assets   415 
Adjusted LAJIDA (EBITDA)   (11)

 

20

 

Notes to the Financial Statements

Expressed in millions of Brazilian reais, unless otherwise stated

 

 

 

b)    Assets by segment

 

   Consolidated 
   December 31, 2020   December 31, 2019 
    Product inventory    Investments in associates and joint ventures    Property, plant and equipment and intangibles (i)    Product inventory    Investments in associates and joint ventures    Property, plant and equipment and intangibles (i) 
Ferrous minerals   10,483    5,995    152,970    7,880    6,970    135,143 
Base metals   6,398    91    101,593    5,457    56    80,181 
Coal   129    -    -    243    -    - 
Others