Vale (NYSE:VALE) reported third-quarter 2026 pro forma EBITDA of $3.5 billion, down 20% from a year earlier, as lower realized iron ore prices, higher fuel costs and a stronger Brazilian real pressured its core iron ore business. The company said its base-metals unit partly offset those pressures, with EBITDA rising more than 60% year over year to $1.1 billion.
Chief Executive Officer Gustavo Pimenta said the company remained focused on operational execution, cost competitiveness and a “value-over-volume” approach amid volatile market conditions. Vale said it remained positioned to meet the low end of its annual iron ore production guidance and the upper half of production guidance for copper and nickel.
Iron Ore Production Declines as Serra Norte Faces Constraints
Iron ore production fell 6% year over year, primarily due to performance at Serra Norte in Carajás. Sales nevertheless rose slightly from the prior-year period to 86.3 million metric tons, supported by S11D and Southeastern system production as well as sales of inventories built during earlier quarters.
Pimenta said Serra Norte has experienced declining run-of-mine availability as the ore body matures, while operational constraints near cave-related exclusion zones have also affected mining. During the quarter, a lower-quality area of the ore body reduced processing efficiency.
Executive Vice President of Operations Carlos Medeiros said Serra Norte’s third-quarter performance was also affected by fleet reliability issues, including the startup of 28 autonomous trucks, rainfall while mining at the bottom of a pit, and ore with elevated manganese and alumina content that created clay-related hopper blockages.
Medeiros said October daily average production at Serra Norte was 15% higher than September, reflecting a return to hematite mining areas. He said Vale expects Serra Norte production to remain broadly flat next year at approximately 64 million tons annually, while growth at Serra Leste and the N3 ore body is expected to help restore northern-system output over time.
Vale said it has increased access to hematite in newly licensed areas and expects these actions, along with the resumption of Fábrica and Viga operations and continued S11D performance, to support year-over-year production growth in the fourth quarter.
Freight Contracts and Hedging Support Margins
Vale emphasized its freight strategy as a source of protection against higher shipping costs. Pimenta said about 75% of the company’s shipping needs over coming years are covered under fixed-rate medium- and long-term contracts, with the remainder generally managed through one- to two-year agreements. The company said it is fully covered for fourth-quarter freight needs and has secured more than 80% of its 2027 requirements.
Since the first quarter, Brazil-to-China spot freight rates have risen by $12 per ton, while Australia-to-China rates increased by $4.90 per ton, according to Vale. Its realized freight costs increased by $4.70 per ton over the same period. Pimenta said the company’s freight strategy is expected to generate more than $3 billion of benefit compared with spot-market exposure during 2026.
Executive Vice President of Finance and Investor Relations Marcelo Bacci said Vale’s currency and oil hedges have generated more than $700 million in cash benefits so far in 2026. The company has hedged 67% of expected 2027 bunker-fuel consumption at an average Brent-equivalent price of $78 per barrel, while its currency hedge position for 2027 carries an average exchange rate of BRL5.72.
Iron ore C1 cash cost, excluding third-party purchases, was $23.10 per ton, up 12% year over year but down 4% sequentially. All-in cost reached $60.40 per ton, up 21% from a year earlier. Including the cash benefit from oil hedges, all-in cost was $59 per ton. Vale expects both C1 and all-in costs to remain within 2026 guidance ranges.
Base Metals Results and Copper Growth Plans
Base metals results reflected mixed production trends. Copper output declined 6% year over year and sales fell 4%, largely due to planned maintenance at Sossego. However, Salobo recorded its highest third-quarter production on record, according to the company.
Nickel production increased 6% and sales rose 16% from a year earlier. Vale cited the highest quarterly output at its Sudbury refinery since the fourth quarter of 2013 and a strong third-quarter performance at Onça Puma following the commissioning of a second furnace.
Year to date, copper production has risen 4% and nickel production has increased 8%. Bacci said copper all-in cost was negative $200 per ton, aided by byproduct revenues and lower unit costs. Nickel all-in cost was $14,600 per ton, up 18% year over year due to planned maintenance in Canada, though Vale expects nickel costs to decline in the fourth quarter.
Vale approved its Coarse Particle Flotation project at Salobo, which is expected to add 6 million tons of annual ore-processing capacity and bring Salobo’s total capacity to 42 million tons. Once fully ramped up, the project is expected to add about 30,000 tons of copper annually in concentrate and 15,000 ounces of gold byproduct. Startup is expected in the first half of 2028.
The company said the project, together with Bacaba and Canadian productivity measures, supports its target of producing up to 500,000 tons of copper by 2030 and doubling copper capacity to 700,000 tons by 2035.
Cash Flow, Capital Allocation and Market Outlook
Free cash flow totaled $2.2 billion in the quarter, supported by working-capital release and hedging gains. Capital expenditures were $1.25 billion, and Vale expects full-year spending toward the lower end of its $5.4 billion to $5.7 billion guidance range.
Expanded net debt was $16.4 billion at quarter-end, down about $200 million and within Vale’s $10 billion to $20 billion target range. Bacci noted that debt declined despite $1.7 billion in dividends and interest on capital paid in September.
On capital returns, Bacci said an extraordinary dividend this year appears unlikely because the company wants to retain more cash amid geopolitical uncertainty. He said share repurchases remain an attractive option, while Vale does not currently foresee any major acquisition opportunity.
Vale also said it sees about 160 million tons of seaborne iron ore supply currently operating at a loss. Pimenta said the company may have roughly 5 million tons of its own and third-party volumes that could be adjusted if market conditions warrant, though all volumes currently shipped are contribution-margin positive.
About Vale (NYSE:VALE)
Vale SA is a Brazil-based global mining and logistics company best known for producing iron ore and iron ore pellets, key raw materials used in steelmaking. The company also produces nickel, copper, manganese ore, coal and other mineral products, with operations spanning exploration, extraction, processing and transportation.
Vale operates an extensive logistics network that includes railways, ports and maritime transportation systems, primarily supporting the movement of minerals from its production sites to domestic and international customers.
