00:00There has been this rush to any kind of critical minerals and to secure it for security reasons, as well
00:06as the infrastructure build out.
00:08How much more demand have you seen just recently?
00:10Look, the amount of demand, first of all, good to see you, Lisa.
00:13The amount of demand is super constructive.
00:15It's historical for us, I think, across all the critical minerals we are seeing.
00:20And a very strong support from clients all over the world, from countries, in terms of looking for security of
00:28supply.
00:29Iron ore continues to be strong.
00:31If you look at copper, nickel.
00:32So across the board, we are seeing tremendous amount of demand for all of the mining that we produce.
00:38The bulk of your customers typically come from China.
00:41Have you seen more interest recently from the United States?
00:43We are.
00:45China continues to be a strong market for us, very relevant for everything we do.
00:49But we are seeing growth outside China.
00:51We are seeing growth in Southeast Asia.
00:53We are seeing growth in the U.S., Europe.
00:55So there is a diversification going on these days, with other markets looking to amplify their access to critical minerals.
01:03People talk about a commodity super cycle.
01:05Iron ore hasn't participated as much in terms of the price gains.
01:09And there has been a sort of plateauing in demand from China.
01:12Where are the growth opportunities specifically when it comes to iron ore?
01:16So we continue to be very optimistic about iron ore.
01:18If you step back and look at the overall demand, we have population growth, we have industrialization, we have other
01:24markets growing.
01:25Certainly China probably has plateaued and reached their overall peak in terms of production.
01:30They are doing more than a billion tons of crude steel production annually.
01:34We think they will continue to be at that level.
01:36But we are seeing growth in Southeast Asia.
01:38India is growing substantially.
01:40We are expecting India to double the crude steel production in the next 10 years.
01:44Even the U.S. is growing.
01:46So we are seeing more demand outside China.
01:48China will continue to be the key market for all of us.
01:51But we are seeing greater demand in other markets as well.
01:54You've seen your copper production increase, I believe, 5% to 10% of total revenues over the past five
01:59years.
02:00You've talked about wanting to double it again over the next 10 or so years.
02:05What does that entail in terms of investing in existing mines, in terms of acquiring new assets?
02:11What exactly are you looking at?
02:12Look, you're very optimistic also about the copper demand.
02:16I mean, the electrification of everything, which is a secular trend, data centers, all of AI.
02:22This will require an enormous amount of supply from copper.
02:26We in Brazil are sitting in a tremendous endowment.
02:29Vale has a great endowment, especially in the north of Brazil, to produce more copper.
02:35We've been doing, last year we did about 380 kilotons.
02:39We want to double this to about 700 kilotons.
02:41There is an enormous opportunity for us to accelerate the development of the critical minerals and the deposits that we
02:48have in the country.
02:49Well, does that require acquiring other companies?
02:53Does that require investing large sums in existing mines?
02:56So for us, it's more about brownfield, because the unique advantage of Vale is the fact that we operate with
03:02very efficient capital intensity for the projects.
03:05Because I have the rail, I have the port, I have the entire infrastructure.
03:08So for us, it's more about developing near mines and the brownfield around our existing operations.
03:15So it's less about M&A, but more about unlocking the potential that we already have.
03:19What about rare earths?
03:20Brazil sits on the biggest reserve of rare earths behind China.
03:24Are you planning to expand into that at all?
03:26Look, we've been studying if this is something that would make sense for Vale.
03:29We do have certain opportunities in Brazil that we are assessing.
03:35For us, there are some questions that we have to answer in terms of scale.
03:38Can we compete with some of the international players like the Chinese?
03:42So this is something that we are currently assessing.
03:44I would say our biggest bet is to focus on what we are good and have scale.
03:49At this point, iron ore, copper and nickel, but we are keeping an eye open for other opportunities.
03:54Are there any countries or players and countries that would be interested in assisting you to build that out,
03:59given the fact that there has been this focus by the U.S. on developing national security and sort of
04:04getting reserves?
04:05Certainly.
04:05A lot of investors, international investors, local investors that want to partner with us.
04:09And we have a few examples here in Brazil and outside where we are working together to unlock.
04:14Because it's a lot about accelerating the development of what we have, especially in the critical minerals agenda.
04:20So we are certainly open to discussions with partners that are willing to come and co-invest with us.
04:26What about the price of oil, given the fact that you have to move all of these very heavy materials
04:30from one place to your major customer, which is over in China?
04:34Has that hampered demand at all?
04:36No demand, no impact on demand.
04:38I think what we had, since we are more distant from our end user or end client, which in this
04:43case continues to be China,
04:44and our most relevant consumer, especially for iron ore, we had an impact in the overall cost for our transportation
04:51of the iron ore.
04:53Now, but when we look at the overall pricing for commodities, and in particular case for iron ore, price has
04:58increased more than the impact that we had in our cost.
05:01Because the marginal producers have been impacted more than Valley Valley, has long-term affreitment for our vessels, we are
05:09hedged on the fuel cost.
05:10So the impact for us hasn't been negative.
05:13In fact, we had a margin expansion as a result of the conflict.
05:18But we continue to monitor that very closely.
05:21Is there a limit to how much customers will accept in terms of price increases?
05:25Look, certainly we have to see.
05:27I think at this point there is no impact in demand destruction.
05:30We are not seeing the markets continue to be solid, strong, clients continue to produce.
05:36We have to continue to monitor to see to what extent they can absorb the price increase.
05:41But at this point, we are not seeing impact in the overall demand.
05:44You have a pellet manufacturing place in Oman, and it has been taken offline as a result of simply not
05:50being able to ship the pellets out from the area due to the conflict there.
05:54What is your plan in terms of reopening that?
05:56Look, we are ready to reopen.
05:58Certainly we are monitoring the conflict, and we want to make sure our people are safe, and that's the most
06:04important thing for us.
06:05It is very well located.
06:07Oman has a special strategic location, even within the Middle East.
06:12We have a great asset.
06:14It's a pelletizing facility, which is very important for decarbonization, for a lot of the energy transition discussions that we
06:21have.
06:21We are, in fact, as we speak, doubling the capacity of that facility.
06:25At this point, we are waiting for the conflict to end or to reduce in terms of the potential impact
06:32for us to resume operations.
06:33We continue to be very optimistic about the Omanian operations that we have, and we think that could be a
06:40hub for a lot of the clients that we have in the region.
06:43So this hasn't pushed out your ambitions at all for the region or curtailed them in any way, the fact
06:48that the conflict has been going?
06:49Not. Particularly with Oman, we continue to be very committed, and we think it's a great market for us to
06:53have, to serve India, to serve other markets, even Southeast Asia.
06:57So it's a very strategic asset that we have.
07:00Are you still confident about your full-year forecast for costs?
07:04Do you expect that to stay where it is?
07:05So, as we mentioned before, the overall expectation for the year is great, actually.
07:12I mean, we had a very strong first quarter production across the board, and all commodities are trending very nicely.
07:19We had record production in Copernico and Iron Ore in the Q1.
07:22So I'm very optimistic about the full-year performance.
07:25We did have an impact in the overall cost base, given the few costs, but overall margin has expanded.
07:32So I continue to expect a great year for us.
07:34You've been in the business a long time in terms of commodities and energy production in general.
07:38Do you have any analog to this period in terms of the super cycle that you're seeing and the demand
07:44level that you're seeing from clients?
07:46Look, I think what we've seen for Iron Ore back in 2010, 2014, that period with the super cycle is
07:54what we're seeing in the critical minerals.
07:56But the more I look into, the more we discuss with clients, I think the opportunity this time around is
08:02even greater.
08:03So I think we are in a unique moment of our history, particularly because, look, we are located in a
08:10country that has an enormous endowment, very well positioned from a geopolitical standpoint.
08:16I mean, we do businesses with the U.S., with Europe, with China.
08:20We have an enormous endowment.
08:22We have the infrastructure all in place.
08:25And the demand is growing across the board on all critical minerals, even Iron Ore continues to be very strong.
08:31So we are very optimistic.
08:32I think it's a unique, it's great to be a miner these days.
08:36So we are very excited with that.
Comments