6-K 1 tm2111946d1_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

 

April 2021

 

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- .)

 

 

 

 

 

 

 

Interim Financial Statements

March 31, 2021

 

 

BRGAAP in R$ (English)

 

 

 

 

 

Vale S.A. Interim Financial Statements

Contents

 

  Page
Report on review of quartely information 2
Consolidated and Parent Company Income Statement 4
Consolidated and Parent Company Statement of Comprehensive Income 5
Consolidated and Parent Company Statement of Cash Flows 6
Consolidated and Parent Company Statement of Financial Position 7
Consolidated Statement of Changes in Equity 8
Consolidated and Parent Company Value Added Statement 9
Notes to the Interim Financial Statements 10
1. Corporate information 10
2. Basis of preparation of the interim financial statements 10
3. Significant events in the current period 11
4. Information by business segment and by geographic area 12
5. Costs and expenses by nature 15
6. Financial results 16
7. Income taxes 16
8. Basic and diluted earnings per share 17
9. Accounts receivable 17
10. Inventories 18
11. Other financial assets and liabilities 18
12. Investments in subsidiaries, associates and joint ventures 19
13. Intangibles 21
14. Property, plant and equipment 22
15. Financial and capital risk management 23
16. Financial assets and liabilities 29
17. Participative stockholders’ debentures 31
18. Loans, borrowings, leases, cash and cash equivalents and short-term investments 32
19. Brumadinho’s dam failure 34
20. Liabilities related to associates and joint ventures 38
21. Provisions 40
22. Litigations 41
23. Employee post-retirement obligations 42
24. Stockholders’ equity 43
25. Related parties 44
26. Parent Company information (individual interim information) 45

 

1 

 

 

 

Report on review of quarterly information

 

To the Board of Directors and Stockholders

 

Vale S.A.

 

Introduction

 

We have reviewed the accompanying consolidated and parent company interim accounting information of Vale S.A. ("Company"), included in the Quarterly Information Form (ITR) for the quarter ended March 31, 2021, comprising the statement of financial position at that date and the income statement and the statements of comprehensive income, changes in equity and cash flows for the three-month period then ended, and a summary of significant accounting policies and other explanatory information.

 

Management is responsible for the preparation of the consolidated and parent company interim accounting information in accordance with the accounting standard CPC 21, Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC) and International Accounting Standard (IAS) 34, Interim Financial Reporting issued by the International Accounting Standards Board (IASB), as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of the Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim accounting information based on our review.

 

Scope of review

 

We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion on the interim information

 

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated and parent company interim accounting information included in the quarterly information referred to above has not been prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of the Quarterly Information, and presented in accordance with the standards issued by the CVM.

 

PricewaterhouseCoopers Auditores Independentes, Rua do Russel 804, Edifício Manchete, 6º e 7º andares, Rio de Janeiro, RJ, Brasil

22210-907, T: (21) 3232-6112, F: (21) 3232-6113, www.pwc.com/br

 

2 

 

 

 

Other matters

 

Value added statements

 

The quarterly information referred to above includes the parent company and consolidated statements of value added for the three-month period ended March 31, 2021. These statements are the responsibility of the Company's management and are presented as supplementary information under IAS 34. These statements have been subjected to review procedures performed together with the review of the interim accounting information for the purpose of concluding whether they are reconciled with the interim accounting information and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in the accounting standard CPC 09 - "Statement of Value Added". Based on our review, nothing has come to our attention that causes us to believe that these statements of value added have not been properly prepared, in all material respects, in accordance with the criteria established in this accounting standard, and consistent with the parent company and consolidated interim accounting information taken as a whole.

 

Rio de Janeiro, April 26, 2021

 

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

CRC 2SP000160/O-5

 

3 

 

 

 

Income Statement

In millions of Brazilian reais, except earnings per share data

 

 

 

 

      Consolidated   Parent company 
      Three-month period ended March 31, 
   Notes  2021   2020   2021   2020 
Net operating revenue   4(c)   69,301    31,251    46,075    18,793 
Cost of goods sold and services rendered   5(a)   (25,397)   (19,215)   (12,439)   (8,617)
Gross profit       43,904    12,036    33,636    10,176 
                         
Operating expenses                        
Selling and administrative expenses   5(b)   (577)   (516)   (323)   (260)
Research and evaluation expenses       (552)   (429)   (252)   (178)
Pre-operating and operational stoppage   19   (792)   (1,192)   (748)   (1,160)
Equity results and others results from subsidiaries   12   -    -    13,901    (1,687)
Brumadinho event   19   (637)   (708)   (637)   (708)
Other operating expenses, net   5(c)   (41)   (267)   (487)   (586)
        (2,599)   (3,112)   11,454    (4,579)
Impairment and disposals of non-current assets   12 and 14   (897)   (136)   (8)   42 
Operating income       40,408    8,788    45,082    5,639 
                         
Financial income   6   402    492    93    173 
Financial expenses   6   (7,538)   (2,290)   (7,442)   (2,327)
Other financial items, net   6   6,960    (8,688)   652    (5,832)
Equity results and other results in associates and joint ventures   12 and 20   (93)   (767)   (93)   (767)
Income (loss) before income taxes       40,139    (2,465)   38,292    (3,114)
                         
Income taxes   7                    
Current tax       (8,270)   (1,593)   (7,489)   (1,065)
Deferred tax       (1,680)   4,695    (239)   5,163 
        (9,950)   3,102    (7,728)   4,098 
                         
Net income       30,189    637    30,564    984 
Loss attributable to non-controlling interests       (375)   (347)   -    - 
Net income attributable to Vale's stockholders       30,564    984    30,564    984 
                         
Earnings per share attributable to Vale's stockholders:                        
Basic and diluted earnings per share:   8                    
Common share (R$)       5.96    0.19    5.96    0.19 

 

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

 

4 

 

 

 

Statement of Comprehensive Income

In millions of Brazilian reais

 

 

   Consolidated   Parent company 
   Three-month period ended March 31, 
   2021   2020   2021   2020 
Net income   30,189    637    30,564    984 
Other comprehensive income (loss):                    
Items that will not be subsequently reclassified to income statement                    
Retirement benefit obligations (note 23)   1,642    47    (7)   (9)
Fair value adjustment to investment in equity securities   1,553    (1,209)   1,279    (1,002)
Equity results (note 12 and 26)   -    -    1,923    (151)
Total items that will not be subsequently reclassified to income statement, net of tax   3,195    (1,162)   3,195    (1,162)
                     
Items that may be subsequently reclassified to income statement                    
Translation adjustments   10,023    18,305    10,501    19,601 
Net investments hedge (note 15)   (851)   (2,394)   (851)   (2,394)
Net cash flow hedge (note 15)   88    277    -    - 
Equity results (note 12 and 26)   -    -    88    277 
Reclassification of cumulative translation adjustment to net income (note 12)   (6,308)   -    (6,308)   - 
Total of items that may be subsequently reclassified to income statement, net of tax   2,952    16,188    3,430    17,484 
Total comprehensive income   36,336    15,663    37,189    17,306 
Comprehensive income (loss) attributable to non-controlling interests   (853)   (1,643)          
Comprehensive income attributable to Vale's stockholders   37,189    17,306           

 

Items above are stated net of tax and the related taxes are disclosed in note 7.

 

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

 

5 

 

 

 

Statement of Cash Flows

In millions of Brazilian reais

 

 

   Consolidated   Parent company 
   Three-month period ended March 31, 
   2021   2020   2021   2020 
Cash flow from operations (a)   47,422    9,006    55,867    6,405 
Interest on loans and borrowings paid (note 18)   (1,585)   (1,077)   (1,989)   (1,589)
Cash received (paid) on settlement of Derivatives, net (note 15)   (1,094)   1,332    (831)   (178)
Income taxes (including settlement program)   (6,433)   (1,527)   (5,118)   (1,352)
Net cash provided by operating activities   38,310    7,734    47,929    3,286 
                     
Cash flow from investing activities:                    
Capital expenditures (notes 13 and 14)   (5,541)   (4,999)   (3,183)   (2,678)
Additions to investments (note 12)   (237)   (364)   (403)   (628)
Cash paid on the disposal of VNC (note 12)   (3,134)   -    -    - 
Short-term investment   (4,069)   884    (2,682)   870 
Other investments activities, net (i)   (141)   (244)   (10,657)   1,532 
Net cash used in investing activities   (13,122)   (4,723)   (16,925)   (904)
                     
Cash flow from financing activities:                    
Loans and borrowings from third-parties (note 18)   1,633    24,419    1,633    - 
Payments of loans and borrowings from third-parties (note 18)   (6,913)   (1,678)   (6,401)   (1,226)
Lease payments (note 18)   (304)   (218)   (102)   (26)
Dividends and interest on capital paid to stockholders (note 24)   (21,866)   -    (21,866)   - 
Dividends and interest on capital paid to non-controlling interest   (15)   (12)   -    - 
Net cash provided by (used in) financing activities   (27,465)   22,511    (26,736)   (1,252)
                     
Increase (decrease) in cash and cash equivalents   (2,277)   25,522    4,268    1,130 
Cash and cash equivalents in the beginning of the period   70,086    29,627    14,609    9,597 
Effect of exchange rate changes on cash and cash equivalents   5,590    6,135    -    - 
Cash and cash equivalents at end of the period   73,399    61,284    18,877    10,727 
                     
Non-cash transactions:                    
Additions to property, plant and equipment - capitalized loans and borrowing costs   87    138    87    138 
                     
Cash flow from operating activities:                    
Income (loss) before income taxes   40,139    (2,465)   38,292    (3,114)
Adjusted for:                    
Equity results and others results from subsidiaries (note 12)   -    -    (13,901)   1,687 
Equity results and other results in associates and joint ventures (note 12)   93    767    93    767 
Impairment and disposal of non-current assets   897    136    8    (42)
Depreciation, depletion and amortization   4,012    3,676    2,047    1,932 
Financial results, net (note 6)   176    10,486    6,697    7,986 
Changes in assets and liabilities:                    
Accounts receivable   7,718    2,553    25,884    430 
Inventories   (924)   (865)   (111)   (591)
Suppliers and contractors (ii)   (1,452)   (2,846)   (1,749)   (2,820)
Provision - Payroll, related charges and other remunerations   (1,634)   (885)   (882)   (496)
Payments related to Brumadinho event (note 19) (iii)   (813)   (970)   (813)   (970)
Other assets and liabilities, net   (790)   (581)   302    1,636 
Cash flow from operations (a)   47,422    9,006    55,867    6,405 

 

(i) Includes loans and advances with related parties in the Parent Company.

 

(ii) Includes variable lease payments.

 

(iii) In addition, the Company has incurred in expenses, which were recognized straight in the income statement, of R$637 and R$708 for the three-month period ended March 31, 2021 and 2020, respectively. Therefore, the Company has disbursed a total amount of R$1,450 as at March 31, 2021 in relation to the Brumadinho event (2020: R$1,678).

 

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

 

6 

 

 

 

Statement of Financial Position

In millions of Brazilian reais

 

 

      Consolidated   Parent company 
   Notes  March 31, 2021   December 31,
2020
   March 31, 2021   December 31,
2020
 
Assets                   
Current assets                        
Cash and cash equivalents   18   73,399    70,086    18,877    14,609 
Short-term investments   18   8,141    4,006    4,294    1,811 
Accounts receivable   9   20,026    25,944    23,907    46,559 
Other financial assets   11   1,648    1,707    33    37 
Inventories   10   24,352    21,103    6,954    6,142 
Recoverable taxes       2,652    2,646    1,026    1,036 
Others       1,807    1,313    2,484    2,199 
        132,025    126,805    57,575    72,393 
                         
Non-current assets                        
Judicial deposits   22(c)  6,529    6,591    6,210    6,265 
Other financial assets   11   12,025    9,271    5,768    3,838 
Recoverable taxes       6,304    5,670    2,473    2,244 
Deferred income taxes   7(a)  52,459    53,711    41,855    42,760 
Others       3,679    3,380    927    725 
        80,996    78,623    57,233    55,832 
                         
Investments   12   10,658    10,557    205,961    181,319 
Intangibles   13   49,343    48,309    28,133    28,243 
Property, plant and equipment   14   222,547    213,836    111,983    111,338 
        363,544    351,325    403,310    376,732 
Total assets       495,569    478,130    460,885    449,125 
Liabilities                   
Current liabilities                        
Suppliers and contractors       17,733    17,496    9,965    11,601 
Loans, borrowings and leases   18   5,633    5,901    3,164    3,804 
Other financial liabilities   11   11,861    9,906    5,193    4,747 
Taxes payable       4,731    4,950    3,856    3,509 
Settlement program ("REFIS")   7(c)  1,774    1,769    1,738    1,733 
Liabilities related to associates and joint ventures   20   4,818    4,554    4,818    4,554 
Provisions   21   5,143    9,498    3,420    4,606 
Liabilities related to Brumadinho   19   10,521    9,925    10,521    9,925 
De-characterization of dams   19   2,093    1,981    2,093    1,981 
Dividends payable       119    6,342    103    6,342 
Others       2,953    3,516    4,935    4,173 
        67,379    75,838    49,806    56,975 
Non-current liabilities                        
Loans, borrowings and leases   18   73,035    72,187    18,596    21,646 
Participative stockholders' debentures   17   23,043    17,737    23,043    17,737 
Other financial liabilities   11   25,166    23,967    106,521    107,718 
Settlement program ("REFIS")   7(c)  12,082    12,493    11,843    12,245 
Deferred income taxes   7(a)  11,078    9,198    -    - 
Provisions   21   42,414    43,829    12,760    13,016 
Liabilities related to Brumadinho   19   12,344    13,849    12,344    13,849 
De-characterization of dams   19   9,085    9,916    9,085    9,916 
Liabilities related to associates and joint ventures   20   5,048    6,228    5,048    6,228 
Streaming transactions       11,316    10,419    -    - 
Others       1,677    1,483    4,352    4,010 
        226,288    221,306    203,592    206,365 
Total liabilities       293,667    297,144    253,398    263,340 
                         
Stockholders' equity   24                    
Equity attributable to Vale's stockholders       207,487    185,785    207,487    185,785 
Equity attributable to non-controlling interests       (5,585)   (4,799)   -    - 
Total stockholders' equity       201,902    180,986    207,487    185,785 
Total liabilities and stockholders' equity       495,569    478,130    460,885    449,125 

 

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

 

7 

 

 

 

 

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
non-controlling
interests
   Total
stockholders'
equity
 
Balance at December 31, 2020   77,300    3,634    36,598    (6,452)   (7,307)   82,012    -    185,785    (4,799)   180,986 
Net income (loss)   -    -    -    -    -    -    30,564    30,564    (375)   30,189 
Other comprehensive income   -    -    -    -    3,012    3,613         6,625    (478)   6,147 
Dividends and interest on capital of Vale's stockholders   -    -    (15,524)   -    -    -    -    (15,524)   -    (15,524)
Dividends of non-controlling interest   -    -    -    -    -    -    -    -    (9)   (9)
Acquisitions and disposal of non-controlling interest   -    -    -    -    -    -    -    -    76    76 
Treasury shares utilized in the period (note 24)   -    -    -    37    -    -    -    37    -    37 
Balance at March 31, 2021   77,300    3,634    21,074    (6,415)   (4,295)   85,625    30,564    207,487    (5,585)   201,902 

 

   Share capital   Capital reserve   Profit
reserves
   Treasury
stocks
   Other
reserves
   Cumulative
translation
adjustments
   Retained
earnings
   Equity
attributable to
Vale’s
stockholders
   Equity
attributable to
non-controlling
interests
   Total
stockholders'
equity
 
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)   -    -    -    -    -    -    984    984    (347)   637 
Other comprehensive income   -    -    -    -    (1,162)   17,484    -    16,322    (1,296)   15,026 
Dividends of non-controlling interest   -    -    -    -    -    -    -    -    (9)   (9)
Capitalization of non-controlling interest advances   -    -    -    -    -    -    -    -    25    25 
Treasury shares utilized in the period (note 24)   -    -    -    68    -    -    -    68    -    68 
Balance at March 31, 2020   77,300    3,634    28,577    (6,452)   (6,835)   81,646    984    178,854    (5,958)   172,896 

 

 

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

 

8 

 

 

 

 

Value Added Statement

In millions of Brazilian Reais

 

   Consolidated   Parent company 
   Three-month period ended March 31, 
   2021   2020   2021   2020 
Generation of value added                    
Gross revenue                    
Revenue from products and services   70,104    31,648    46,835    19,146 
Revenue from the construction of own assets   1,824    1,196    661    589 
Other revenues   622    343    485    130 
Less:                    
Cost of products, goods and services sold   (7,772)   (5,174)   (4,214)   (2,503)
Material, energy, third-party services and other   (9,355)   (7,925)   (3,124)   (2,967)
Impairment of non-current assets and others results   (897)   (136)   (8)   42 
Brumadinho event   (637)   (708)   (637)   (708)
Other costs and expenses   (3,992)   (2,910)   (2,204)   (1,609)
Gross value added   49,897    16,334    37,794    12,120 
Depreciation, amortization and depletion   (4,012)   (3,676)   (2,047)   (1,932)
Net value added   45,885    12,658    35,747    10,188 
                     
Received from third parties                    
Equity results from entities   (93)   (767)   13,808    (2,454)
Financial income   4,441    4,769    3,938    5,083 
Total value added to be distributed   50,233    16,660    53,493    12,817 
                     
Personnel and charges   2,212    1,972    1,102    988 
Taxes and contributions   13,032    (1,309)   10,629    (2,539)
Interest (net derivatives and monetary and exchange rate variation)   4,544    15,165    10,608    13,014 
Other remunerations of third party funds   256    195    590    370 
Reinvested net income   30,564    984    30,564    984 
Loss attributable to noncontrolling interest   (375)   (347)   -    - 
Distributed value added   50,233    16,660    53,493    12,817 

 

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

 

9 

 

 

 

 

Selected Notes to the Interim 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 interim financial statements

 

a)      Statement of compliance

 

The consolidated and individual interim financial statements of the Company (“interim financial statements”) have been prepared and are being presented in accordance with IAS 34 Interim Financial Reporting (CPC 21) of the International Financial Reporting Standards (“IFRS”), as issued by the 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 interim 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 interim financial statements have been prepared to update users about relevant events and transactions that occurred in the period and should be read in conjunction with the financial statements for the year ended December 31, 2020. The accounting policies, accounting estimates and judgements, risk management and measurement methods are the same as those applied when preparing the last annual financial statements. The selected notes of the Parent Company are presented in a summarized form in note 26.

 

These interim financial statements were authorized for issue by the Executive Board on April 26, 2021.

 

The interim financial statements of the Company 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:

 

       Average rate 
   Closing rate   Three-month period ended March 31, 
   March 31, 2021   December 31, 2020   2021   2020 
United States dollar   5.6973    5.1967    5.4833    4.4656 
Canadian dollar ("CAD")   4.5325    4.0771    4.3323    3.3148 
Euro ("EUR")   6.6915    6.3779    6.6033    4.9224 

 

10 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

3.            Significant events in the current period

 

The financial position, cash flows and performance of the Company were particularly affected by the following events and transactions during the three-month period ended March 31, 2021:

 

·February 2021, 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. In April 2021 (subsequent event), the res judicata of the Global Settlement was drawn up (note 12).

 

·In March 2021, the Company completed the sale of its equity interest in Vale Nouvelle-Calédonie SAS (“VNC”) to the Prony Resources New Caledonia consortium. Upon closing of the transaction, the Company recognized further losses in the amount of R$549 as “Impairment and disposals of non-current assets”. Thus, the Company has paid a total cash of R$3,441, of which R$307 were used support the continuity of VNC’s operation until March 31, 2021 and R$3,134 (US$555 million) was paid to the buyers on March 31, 2021. Additionally, the Company reclassified the gain of R$6,391 related to the cumulative translation adjustments from the stockholders’ equity to the income statement under “Other financial items, net” (note 12).

 

·In March 2021, the Company paid stockholders’ remuneration in the amount of R$21,866 (note 24).

 

·In March 2021, the Company redeemed all of its 3.750% bonds due January 2023, in the total amount of R$4,946 (EUR750 million) and for it paid a premium of R$354, which was recorded as “Financial expenses” under “Expenses with cash tender offer redemption” for three-month period ended March 31,2021 (notes 6 and 18).

 

·In April 2021 (subsequent event), the Company approved a share buyback program for its common shares, limited to a maximum of 270,000,000 common shares and their respective ADRs. The program will be carried out over a period of up to 12 months (note 24).

 

·In April 2021 (subsequent event), the Company signed an Investment Agreement with Mitsui & Co., Ltd (“Mitsui”), for the acquisition by Vale of the totality of Mitsui´s interest of Vale Moçambique and in the Nacala Logistics Corridor (“NLC”). The completion of Mitsui´s exit is expected throughout 2021 (note 12).

 

11 

 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

4.            Information by business segment and by geographic area

 

The Company operates the following reportable segments: 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 ("chief operating decision maker" under IFRS 8 - Operating Segments) are the Executive Boards and the Board of Directors. Accordingly, the performance of the operating segments is assessed based on a measure of adjusted LAJIDA (EBITDA).

 

The Company allocates to “Others” the revenues and cost of other products, services, research and development, investments in joint ventures and associates of other business and unallocated corporate expenses. Additionally, the costs related to the Brumadinho event are not directly linked to the Company's operating activities and, therefore, are allocated to "Other" as well.

 

In the current period, the Company has allocated the financial information of Vale New Caledonia operation to “Others” as this operation is no longer analyzed by the chief operating decision maker as part of to the performance of the Base Metals business segment due to the sale of this operation. The comparative periods were restated to reflect this change in the allocation criteria.

 

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 
   Three-month period ended March 31, 2021 
   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   50,153    (11,456)   (117)   (184)   (503)   -    37,893 
Iron ore pellets   6,637    (2,105)   160    (4)   (72)   -    4,616 
Ferroalloys and manganese   250    (122)   (5)   (1)   (23)   -    99 
Other ferrous products and services   536    (362)   10    (1)   -    -    183 
    57,576    (14,045)   48    (190)   (598)   -    42,791 
                                    
Base metals                                   
Nickel and other products   7,880    (4,238)   (54)   (60)   (2)   -    3,526 
Copper   3,010    (904)   1    (102)   (3)   -    2,002 
    10,890    (5,142)   (53)   (162)   (5)   -    5,528 
                                    
Coal   509    (1,810)   8    (11)   -    424    (880)
                                    
Others (i)   326    (621)   (564)   (188)   (5)   -    (1,052)
    69,301    (21,618)   (561)   (551)   (608)   424    46,387 
                                    
Brumadinho event   -    -    (637)   -    -    -    (637)
COVID-19   -    -    (9)   -    -    -    (9)
Total   69,301    (21,618)   (1,207)   (551)   (608)   424    45,741 

 

(i) Includes the EBITDA of VNC in the amount of R$358.

 

12 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

   Consolidated 
   Three-month period ended March 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   19,375    (7,548)   (87)   (108)   (749)   -    10,883 
Iron ore pellets   3,824    (1,848)   48    (4)   (112)   -    1,908 
Ferroalloys and manganese   211    (223)   -    -    (5)   -    (17)
Other ferrous products and services   383    (317)   5    (3)   -    -    68 
    23,793    (9,936)   (34)   (115)   (866)   -    12,842 
                                    
Base metals                                   
Nickel and other products   4,263    (2,386)   (86)   (57)   -    -    1,734 
Copper   1,709    (924)   4    (77)   -    -    712 
    5,972    (3,310)   (82)   (134)   -    -    2,446 
                                    
Coal   673    (1,684)   6    (40)   -    324    (721)
                                    
Others (i)   813    (1,000)   (591)   (140)   (17)   -    (935)
    31,251    (15,930)   (701)   (429)   (883)   324    13,632 
                                    
Brumadinho event   -    -    (708)   -    -    -    (708)
Total   31,251    (15,930)   (1,409)   (429)   (883)   324    12,924 

 

(i) Includes the reclassification of the EBITDA of VNC in the amount of R$209 for the three-month period ended March 31, 2020.

 

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

 

   Consolidated 
   Three-month period ended March 31, 
   2021   2020 
Net income attributable to Vale's stockholders   30,564    984 
Loss attributable to non-controlling interests   (375)   (347)
Net income   30,189    637 
Depreciation, depletion and amortization   4,012    3,676 
Income taxes   9,950    (3,102)
Financial results   176    10,486 
LAJIDA (EBITDA)   44,327    11,697 
           
Items to reconciled adjusted LAJIDA (EBITDA)          
Equity results and other results in associates and joint ventures   93    767 
Dividends received and interest from associates and joint ventures (i)   424    324 
Impairment and disposal of non-current assets   897    136 
Adjusted LAJIDA (EBITDA)   45,741    12,924 

 

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

 

b)            Assets by segment

 

   Consolidated 
   March 31, 2021   December 31, 2020 
   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   12,519    6,036    155,045    10,483    5,995    152,970 
Base metals   7,263    96    109,462    6,398    91    101,593 
Coal   270    -    -    129    -    - 
Others   18    4,526    7,383    -    4,471    7,582 
Total   20,070    10,658    271,890    17,010    10,557    262,145 

 

13 

 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

   Consolidated 
   Three-month period ended March 31, 
   2021   2020 
   Capital expenditures (ii)       Capital expenditures (ii)     
   Sustaining capital   Project execution   Depreciation, depletion and amortization   Sustaining capital   Project execution   Depreciation, depletion and amortization 
Ferrous minerals   2,898    446    2,180    2,381    406    1,892 
Base metals   1,594    374    1,738    1,349    235    1,552 
Coal   159    -    -    345    -    83 
Others (iii)   58    12    94    272    11    149 
Total   4,709    832    4,012    4,347    652    3,676 

 

(i) Goodwill is allocated to ferrous minerals and base metals segments in the amount of R$7,133 and R$11,114 in March 31, 2021 and R$7,133 and R$10,008 in December 31, 2020, respectively. The variation of "Property, plant and equipment and intangibles" of base metals occurred due to the foreign exchange variation in the period.

(ii) Cash outflows.

(iii) Includes the reclassification of VNC under the captions “Sustaining capital” and “depreciation, depletion and amortization”, in the amount of R$266 and R$81, respectively, for the three-month period ended on March 31, 2020.

 

c)            Net operating revenue by geographic area

 

   Consolidated 
   Three-month period ended March 31, 2021 
   Ferrous minerals   Base metals   Coal   Others   Total 
Americas, except United States and Brazil   1,200    520    -    21    1,741 
United States of America   544    1,567    -    -    2,111 
Germany   937    2,546    -    -    3,483 
Europe, except Germany   3,234    3,864    100    -    7,198 
Middle East, Africa and Oceania   1,499    2    99    -    1,600 
Japan   2,893    527    -    -    3,420 
China   37,208    875    76    -    38,159 
Asia, except Japan and China   4,279    865    234    -    5,378 
Brazil   5,782    124    -    305    6,211 
Net operating revenue   57,576    10,890    509    326    69,301 

 

   Consolidated 
   Three-month period ended March 31, 2020 
   Ferrous minerals   Base metals   Coal   Others (i)   Total 
Americas, except United States and Brazil   458    488    -    390    1,336 
United States of America   201    1,092    -    -    1,293 
Germany   826    865    -    -    1,691 
Europe, except Germany   1,276    1,689    219    -    3,184 
Middle East, Africa and Oceania   1,075    36    126    -    1,237 
Japan   1,692    424    55    -    2,171 
China   13,789    505    75    -    14,369 
Asia, except Japan and China   1,850    707    198    -    2,755 
Brazil   2,626    166    -    423    3,215 
Net operating revenue   23,793    5,972    673    813    31,251 

 

(i) Includes the reclassification of VNC in the amount of R$390 for the three-month period ended March 31, 2020.

 

Provisionally priced commodities sales – The commodity price risk arises from volatility of iron ore, nickel, copper and coal prices. The Company is mostly exposed to the fluctuations in the iron ore and copper price (note 15). The selling price of these products can be measured reliably at each period, since the price is quoted in an active market.

 

The sensitivity of the Company’s risk on final settlement of provisionally priced accounts receivables is presented below:

 

   March 31, 2021 
   Thousand metric tons   Provisional price (US$/tonne)   Change   Effect on Revenue 
Iron ore   12,114    160.5    +/-10%    1,066 
Iron ore pellets   108    200.0    +/-10%    12 
Copper   78    10,864.6    +/-10%    462 

 

14 

 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

5.            Costs and expenses by nature

 

a)            Cost of goods sold and services rendered

 

   Consolidated 
   Three-month period ended March 31, 
   2021   2020 
Personnel   2,142    1,855 
Materials and services   3,854    3,631 
Fuel oil and gas   1,144    1,257 
Maintenance   3,561    3,003 
Royalties   1,379    726 
Energy   819    843 
Ores acquired from third parties (i)   1,878    266 
Depreciation, depletion and amortization   3,779    3,285 
Freight   4,293    3,117 
Others   2,548    1,232 
Total   25,397    19,215 
           
Cost of goods sold   24,665    18,499 
Cost of services rendered   732    716 
Total   25,397    19,215 

 

(i) The increase in “Ores acquired from third parties” is mainly due to the significant increase in the reference price for iron ore and higher volumes of other ores compared to 2020.

 

Tax on mineral production (Taxa de Fiscalização de Recursos Minerais - “TFRM”) Several Brazilian states, including Minas Gerais, Pará and Mato Grosso do Sul, impose a TFRM, which is currently assessed at rates ranging from R$0.50 to R$3.72 per metric ton of minerals produced in or transferred from the state. The expenses related to the TFRM are presented in these interim financial statements under “Royalties”. In March 2021, a state decree increased the TFRM rate in the state of Para to R$11.19 per metric ton, with effectiveness as of April 2021. According to the prior rule, which would expire in 2031, the TFRM rate was R$3.72 per ton until the production of 10 million metric tons and R$0.74 for volumes over than 10 million metric tons. The Company is evaluating in the legal aspects of this change and, based on the Constitutional Principle of mandatory notice period, which sets out the tax increase would become in force only in the subsequent year of its enactment, therefore the Company does not expect any impact in 2021. The Company is also evaluating other legal aspects to defend the overcharge for the future.

 

b)            Selling and administrative expenses

 

   Consolidated 
   Three-month period ended March 31, 
   2021   2020 
Selling   98    71 
Personnel   260    211 
Services   92    79 
Depreciation and amortization   48    82 
Others   79    73 
Total   577    516 

 

c)            Other operating expenses (income), net

 

   Consolidated 
   Three-month period ended March 31, 
   2021   2020 
Provision for litigations   88    89 
Profit sharing program   122    150 
Others   (169)   28 
Total   41    267 

 

15 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

6.            Financial result

 

    Consolidated 
    Three-month period ended March 31, 
    2021   2020 
Financial income           
Short-term investments    149    231 
Others    253    261 
     402    492 
Financial expenses           
Loans and borrowings gross interest (note 18)    (1,133)   (954)
Capitalized loans and borrowing costs    87    138 
Participative stockholders' debentures (note 17)    (5,314)   (103)
Interest on REFIS    (38)   (109)
Interest on lease liabilities (note 18)    (98)   (78)
Financial guarantees    (201)   (703)
Expenses with cash tender offer redemption (note 18)    (354)   - 
Others    (487)   (481)
     (7,538)   (2,290)
Other financial items, net           
Net foreign exchange gains (losses)    1,740    (2,276)
Derivative financial instruments (note 15)    (2,422)   (6,394)
Reclassification of cumulative translation adjustment on VNC sale (note 12)    6,391    - 
Indexation gains (losses), net    1,251    (18)
     6,960    (8,688)
Total    (176)   (10,486)

 

7.            Income taxes

 

a) Deferred income tax assets and liabilities

 

   Consolidated 
   Assets   Liabilities   Deferred taxes, net 
Balance at December 31, 2020   53,711    9,198    44,513 
Effect in income statement   (1,406)   274    (1,680)
Translation adjustment   840    916    (76)
Other comprehensive income   (686)   690    (1,376)
Balance at March 31, 2021   52,459    11,078    41,381 

 

    Consolidated 
    Assets    Liabilities    Deferred taxes, net 
Balance at December 31, 2019   37,151    7,585    29,566 
Effect in income statement   4,468    (227)   4,695 
Transfers between asset and liabilities   186    186    - 
Translation adjustment   2,132    1,462    670 
Other comprehensive income   8,364    44    8,320 
Balance at March 31, 2020   52,301    9,050    43,251 

 

b)            Income tax reconciliation – Income statement

 

Income tax expense is recognized based on the estimate of the weighted average effective tax rate expected for the full year. The total amount presented as income taxes in the income statement is reconciled to the statutory rate, as follows:

 

   Consolidated 
   Three-month period ended March 31, 
   2021   2020 
Income (loss) before income taxes   40,139    (2,465)
Income taxes at statutory rate - 34%   (13,647)   838 
Adjustments that affect the basis of taxes:          
Tax incentives   2,501    1,379 
Equity results   (55)   (177)
Addition(reversal) of tax loss carryforward   (257)   1,015 
Others   1,508    47 
Income taxes   (9,950)   3,102 

 

16 

 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

c) Income taxes - Settlement program (“REFIS”)

 

The balance mainly relates to the settlement program of the claims related to the collection of income tax and social contribution on equity gains of foreign subsidiaries and affiliates from 2003 to 2012. As at March 31, 2021, the balance of R$13,856 (R$1,774 classified as current liabilities and R$12,082 classified as non-current liabilities) is due in 91 remaining monthly installments, bearing the SELIC interest rate (Special System for Settlement and Custody), which is the Brazilian federal funds rate. As at March 31, 2021, the SELIC rate was 2.75% per annum.

 

d) Uncertain tax positions

 

There have been no developments on matters related to the uncertain tax positions since the December 31, 2020 financial statements.

 

8.Basic and diluted earnings per share

 

The basic and diluted earnings per share are presented below:

 

   Three-month period ended March 31, 
   2021   2020 
Net income attributable to Vale's stockholders:          
Net income   30,564    984 
           
Thousands of shares          
Weighted average number of shares outstanding - common shares   5,130,188    5,128,598 
           
Basic and diluted earnings per share:          
Common share (R$)   5.96    0.19 

 

The Company does not have potential outstanding shares or other instruments with dilutive effect on the earnings per share computation.

 

9.Accounts receivable

 

   Consolidated 
   March 31, 2021   December 31, 2020 
Accounts receivable   20,306    26,205 
Expected credit loss   (280)   (261)
    20,026    25,944 
           
Revenue related to the steel sector - %   88.98%   87.25%

 

   Consolidated 
   Three-month period ended March 31, 
   2021   2020 
Impairment of accounts receivable recorded in the income statement   2    55 

 

As at March 31, 2021, there is no customer that individually represents more than 10% of the Company’s accounts receivable or revenues. In 2020, the Company had a customer of the Ferrous Minerals Segment whose revenue individually represented 10.1% of the Company’s total revenue.

 

17 

 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

10.Inventories

 

   Consolidated 
   March 31, 2021   December 31, 2020 
Finished products   18,498    13,659 
Work in progress   1,572    3,351 
Consumable inventory   4,282    4,093 
Total   24,352    21,103 

 

   Consolidated 
   Three-month period ended March 31, 
   2021   2020 
Reversal for net realizable value   70    314 

 

Finished and work in progress products inventories by segments are presented in note 4(b) and the cost of goods sold is presented in note 5(a).

 

11.            Other financial assets and liabilities

 

   Consolidated 
   Current   Non-Current 
   March 31, 2021   December 31, 2020   March 31, 2021   December 31, 2020 
Other financial assets                    
Restricted cash   -    -    329    197 
Derivative financial instruments (note 15)   799    698    324    347 
Investments in equity securities   -    -    6,189    3,936 
Related parties - Loans (note 25)   849    1,009    5,183    4,791 
    1,648    1,707    12,025    9,271 
Other financial liabilities                    
Derivative financial instruments (note 15)   1,755    1,712    4,875    3,578 
Related parties - Loans (note 25)   4,148    3,759    5,355    4,903 
Financial guarantees provided   -    -    4,762    4,558 
Liabilities related to the concession grant (note 13)   1,465    1,088    10,174    10,928 
Advance received   4,493    3,347    -    - 
    11,861    9,906    25,166    23,967 

 

Investment in equity securities – Mainly refers to 34.2 million common shares of The Mosaic Company (“Mosaic”), which is accounted for as a financial instrument measured at fair value through other comprehensive income. The recorded amount was calculated based on Mosaic’s share price at the end of each financial reporting period.

 

18 

 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

12.         Investments in subsidiaries, associates and joint ventures

 

a) Investment information

 

           Consolidated 
           Investments in associates and joint
ventures
   Equity results in the income
statement
   Dividends received 
                   Three-month period ended March
31,
   Three-month period ended March
31,
 
Associates and joint ventures  % ownership   % voting capital   March 31, 2021   December 31,
2020
   2021   2020   2021   2020 
Ferrous minerals                                        
Baovale Mineração S.A.   50.00    50.00    110    103    7    5    -    - 
Companhia Coreano-Brasileira de Pelotização   50.00    50.00    279    249    29    15    -    - 
Companhia Hispano-Brasileira de Pelotização (i)   50.89    50.89    224    223    -    12    -    - 
Companhia Ítalo-Brasileira de Pelotização (i)   50.90    51.00    250    228    22    24    -    - 
Companhia Nipo-Brasileira de Pelotização (i)   51.00    51.11    645    627    18    10    -    - 
MRS Logística S.A.   48.16    46.75    2,114    2,069    93    (9)   -    - 
Samarco Mineração S.A. (note 20)   50.00    50.00    -    -    -         -    - 
VLI S.A.   29.60    29.60    2,414    2,495    (83)   (131)   -    - 
              6,036    5,994    86    (74)   -    - 
Base metals                                        
Korea Nickel Corp.   25.00    25.00    96    91    -    2    -    - 
              96    91    -    2    -    - 
Others                                        
Aliança Geração de Energia S.A. (i)   55.00    55.00    1,825    1,909    56    46    -    - 
Aliança Norte Energia Participações S.A. (i)   51.00    51.00    601    606    (6)   (4)   -    - 
California Steel Industries, Inc.   50.00    50.00    1,406    1,218    68    (28)   -    - 
Companhia Siderúrgica do Pecém ("CSP") (ii)   50.00    50.00    -    -    (237)   (364)   -    - 
Mineração Rio do Norte S.A.   40.00    40.00    312    367    (51)   (46)   -    - 
Nacala Corridor Holding Netherlands B.V.   50.00    50.00    -    -    -    -    -    - 
Others             382    372    (78)   (53)   -    - 
              4,526    4,472    (248)   (449)   -    - 
Total             10,658    10,557    (162)   (521)   -    - 

 

19 

 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

(i) Although the Company held a majority of the voting capital, the entities are accounted under the equity method due to the stockholders' agreement where relevant decisions are shared with other parties. 

(ii) CSP is a joint venture and its results are accounted for under the equity method, in which the accumulated losses are capped to the Company ́s interest in the investee’s capital based on the applicable law and requirements. That is, after the investment is reduced to zero, the Company does not recognize further losses nor liabilities associated with the investee.

 

b) Movements during the period

 

   Consolidated 
   2021   2020 
Balance at January 1,   10,557    11,278 
Capital contribution to CSP   237    364 
Translation adjustment   134    311 
Equity results in income statement   (162)   (521)
Dividends declared   (195)   (182)
Others   87    49 
Balance at March 31,   10,658    11,299 

 

The amount of investments by segments are presented in note 4(b).

 

c) Acquisitions and divestitures

 

Investment Agreement with Mitsui & Co. Ltd. (“Mitsui”) - In January 2021, the Company signed a Heads of Agreement with Mitsui, both parties to structure Mitsui’s exit from Vale Moçambique and Nacala Logistics Corridor (“NLC”). Currently, Mitsui holds a non-controlling interest of 15% in Vale Moçambique and a 50% interest in NLC.

 

In April 2021 (subsequent event), the Company signed an Investment Agreement with Mitsui for the acquisition by Vale of the totality of Mitsui´s interest of Vale Moçambique and NLC. The Investment Agreement determines that Vale will acquire Mitsui's stake in the mine and logistics assets for an immaterial consideration and will undertake of the Nacala Corridor Project Finance in full, which is approximately R$14,181 (US$2,489 million) outstanding balance at March 31, 2021. 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 during 2021.

 

In addition, the Company informed the market its divestiture intention in the coal segment following the acquisition of Mitsui’s stake. Therefore, after completion of this acquisition transaction, the Company will assess whether the coal segment would meet the criteria to be classified as a discontinued operation in its future financial statements.

 

Boston Electrometallurgical Company (“Boston Metal”) In February 2021, the Company made an investment of R$33 (US$6 million) in Boston Metal to acquire a non-controlling interest of 3.24%, aiming promote the development of a technology focused on the reduction of carbon dioxide on the steel production. Boston Metal has a diverse shareholding structure which includes venture capital funds, mining companies and private investors. Since the Company does not have significant influence over Boston Metal, this investment has been classified as a financial instrument and recorded as “Investments in equity securities”.

 

Vale Nouvelle-Calédonie S.A.S. (“VNC”) – In December 2020, the Company signed a binding put option agreement to sell its interest in VNC for an immaterial consideration to a consortium constituted in a new company called “Prony Resources”, led by the current management and employees of VNC and supported by the Caledonian and French authorities with Trafigura Pte. Ltd. as a non-controlling shareholder. Under the terms of agreement, the Company has assumed an obligation to pay to the buyers an amount of R$2,573 (US$500 million) upon closing of the transaction and this amount has been provided for as at December 31, 2020.

 

In March 2021, the Company signed the share purchase agreement with Prony Resources, concluding the transaction to sell its interest in VNC. With the final agreement, Vale's obligation to pay to buyers increased by R$302 (US$55 million), which combined with other working capital adjustments, resulted in an additional loss of R$549, recorded as “Impairment and disposals of non-current assets”. On March 31, 2021, the Company disbursed R$3,134 (US$555 million) to VNC on the closing of the transaction, thus the liabilities recorded as at December 31, 2021 were settled and there is no outstanding balance in these interim financial statements.

 

The agreement also established that Vale may purchase a certain amount of VNC’s annual nickel production, with a cap price over a long-term period. Such cap included in contract is an embedded derivative, however, it is deemed closely related to the host contract (nickel supply agreement) because the cap was out of the money on inception of the contract. Therefore, this derivative will not be separated from the host contract, which will be accounted for as an executory contract.

 

20 

 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

Upon closing of the transaction, the Company also recognized a gain of R$6,391 (US$1,132 million) arising from the accumulated exchange differences reclassified from the stockholders’ equity to the income statement under “Other financial items, net”.

 

d) Financial guarantees provided

 

As at March 31, 2021 and December 31, 2020, the notional value of corporate financial guarantees provided by the Company (within the limit of its direct or indirect interest) for certain associates and joint ventures were R$8,481 and R$8,091, respectively. The fair value of these financial guarantees is shown in note 16.

 

13.         Intangibles

 

Movements during the period

 

   Consolidated 
   Goodwill   Concessions   Contract right   Software   Research and
development
project and
patents
   Total 
Balance at December 31, 2020   17,141    28,015    -    396    2,757    48,309 
Additions   -    183    -    78    -    261 
Disposals   -    (13)   -    -    -    (13)
Amortization   -    (297)   -    (41)   -    (338)
Translation adjustment   1,106    -    -    18    -    1,124 
Balance at March 31, 2021   18,247    27,888    -    451    2,757    49,343 
Cost   18,247    33,330    -    4,077    2,757    58,411 
Accumulated amortization   -    (5,442)   -    (3,626)   -    (9,068)
Balance at March 31, 2021   18,247    27,888    -    451    2,757    49,343 

 

   Consolidated 
   Goodwill   Concessions   Contract right   Software   Research and
development
project and
patents
   Total 
Balance at December 31, 2019   14,628    16,005    563    304    2,757    34,257 
Additions   -    87    -    30    -    117 
Disposals   -    (5)   -    -    -    (5)
Amortization   -    (215)   (1)   (30)   -    (246)
Translation adjustment   1,616    -    87    26    -    1,729 
Balance at March 31, 2020   16,244    15,872    649    330    2,757    35,852 
Cost   16,244    20,578    1,136    3,810    2,757    44,525 
Accumulated amortization   -    (4,706)   (487)   (3,480)   -    (8,673)
Balance at March 31, 2020   16,244    15,872    649    330    2,757    35,852 

 

21 

 

 

 

 

Selected Notes to the Interim Financial Statements
Expressed in millions of Brazilian reais, unless otherwise stated

 

14.        Property, plant and equipment

 

a) Movements during the period

 

   Consolidated 
   Building
and land
   Facilities   Equipment   Mineral
properties
   Railway
equipment
   Right of
use assets
   Others   Constructions
in progress
   Total 
Balance at December 31, 2020   44,646    39,448    25,637    41,853    13,108    8,121    12,968    28,055    213,836 
Additions (i)   -    -    -    -    -    209    -    5,144    5,353 
Disposals   (2)   -    (4)   -    -    -    -    (101)   (107)
Assets retirement obligation (ii)   -    -    -    (2,101)   -    -    -    -    (2,101)
Depreciation, depletion and amortization   (562)   (623)   (872)   (759)   (211)   (223)   (346)   -    (3,596)
Impairment (iii)   -    -    -    -    -    -    -    (244)   (244)
Translation adjustment   1,396    767    1,390    3,121    35    614    572    1,511    9,406 
Transfers   189    416    773    123    102    -    355    (1,958)   - 
Balance at March 31, 2021   45,667    40,008    26,924    42,237    13,034    8,721    13,549    32,407    222,547 
Cost   82,652    62,826    59,196    94,445    20,186    11,186    32,447    32,407    395,345 
Accumulated depreciation   (36,985)   (22,818)   (32,272)   (52,208)   (7,152)   (2,465)   (18,898)   -    (172,798)
Balance at March 31, 2021   45,667    40,008    26,924    42,237    13,034    8,721    13,549    32,407    222,547 

 

   Consolidated 
   Building
and land
   Facilities   Equipment   Mineral
properties
   Railway
equipment
   Right of
use assets
   Others   Constructions
in progress
   Total 
Balance at December 31, 2019   43,137