Vale has started 2026 with a stronger first quarter, as higher iron ore shipments, firmer realised prices and a marked rebound in base metals lifted earnings and cash generation. The Brazilian miner also used the results call to reinforce its message on disciplined capital allocation, safety improvements and a willingness to return more cash to shareholders if market conditions hold.

Chief executive Gustavo Pimenta said the company remained focused on operational excellence and growth in copper and iron ore, while also pointing to further safety progress. Vale said it removed two additional structures from any emergency level in the quarter, extending what it described as an 80% reduction since 2020. In iron ore, output rose 3% year on year, helped by record production at S11D and Brucutu, as well as the ramp-up of Capanema and Vargem Grande. Sales volumes increased 4%, while stronger pricing support added to the uplift. Vale also said the Serra Sul +20 project was 86% complete and remains on track for a second-half start-up.

The biggest swing came from Vale Base Metals. Copper production rose 13% to 102,000 tonnes, the highest level since 2017, while nickel output increased 12% to 49,000 tonnes. The company said Salobo, Sossego, Voisey’s Bay and Onça Puma all contributed to the improvement. Shaun Usmar, chief executive of Vale Base Metals, said Sossego delivered its best quarter since 2008 and that the portfolio is positioned for further growth. Vale has also kept alive the option of a separate listing for the unit, but Pimenta said any such move would be a means to an end rather than a goal in itself.

Financially, Vale reported pro forma EBITDA of $3.9 billion, up 21% from a year earlier, while recurring free cash flow rose 61% to $813 million. Vale said the quarter was helped by better execution across its three main commodity lines, although the accounts also reflected a roughly $140 million drag from provisional price adjustments at period end. Net debt rose seasonally to BRL 17.8 billion, still inside management’s target range, and the company paid BRL 2.7 billion in dividends and interest on capital while repurchasing nearly 5 million shares. Finance chief Marcelo Bacci said Vale is increasingly confident about the possibility of extra payouts this year and suggested the balance between buybacks and special dividends could become more even than in the past.

Cost pressures remained visible, particularly in iron ore, where C1 cash costs excluding third-party purchases rose 12% to $23.6 a tonne. Vale attributed that increase largely to a stronger real and the drawdown of higher-cost inventory, though Bacci said the company still expects to reach the top end of its original cost guidance if market assumptions remain aligned with current forward curves. In base metals, the picture was notably better: copper all-in costs moved into negative territory and nickel all-in costs fell 48%, supported by by-product credits, higher output and efficiency gains. Commercial head Rogério Nogueira said the company sees a firmer industry cost base, stable pellet premiums and healthy demand for its higher-value products, including mid-grade Carajás material and China concentrate.

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Source: Noah Wire Services