Vale (NYSE:VALE) said its second-quarter 2026 operating performance supported confidence in meeting annual production guidance, as higher volumes, improved price realization and gains at its base-metals operations lifted pro forma EBITDA 19% year over year to $4.1 billion.
The company also announced $1.7 billion in dividends and interest on capital, scheduled for payment in September, and extended its share repurchase program. The board authorized a new buyback program for as many as 100 million shares over 18 months, equivalent to 2.3% of outstanding shares.
Iron Ore Output and Serra Sul Projects
Iron ore production reached Vale’s highest second-quarter level since 2018, supported by the ramp-up of the Capanema and Vargem Grande projects and record output at the S11D operation. Iron ore sales volumes rose 3% from a year earlier.
Vale said it began commissioning the second long-distance conveyor belt at S11D in July as part of the Serra Sul +20 project. The project, which includes mine and plant expansions, is intended to increase operating flexibility. The company expects to begin commissioning its Compact Crusher project in the fourth quarter, designed to address constraints involving jaspilite ore at Serra Sul.
Together, the projects are expected to add 20 million metric tons of capacity at Serra Sul and expand Vale’s high-grade product portfolio.
On costs, Executive Vice President of Finance and Investor Relations Marcelo Bacci said iron ore C1 cash cost, excluding third-party purchases, rose 9% year over year to $24.10 per ton in the second quarter. All-in costs increased 18% to $61.60 per ton, reflecting the appreciation of the Brazilian real, higher diesel costs and higher freight costs.
Vale revised its 2026 iron ore cost outlook to account for external conditions. It now expects C1 cash costs excluding third-party purchases of $22.50 to $23.50 per ton, compared with its prior range of $20 to $21.50 per ton. It raised all-in cost guidance to $58 to $62 per ton from $52 to $56 per ton.
Bacci said roughly 70% of the higher C1 outlook is attributable to exchange-rate and diesel effects. Vale’s Brent oil hedging program provided an approximately $100 million benefit during the quarter, or $1.60 per ton, bringing all-in costs to $60 per ton when the hedge’s impact is included.
Base Metals Performance and Copper Growth
Vale Base Metals generated $1.3 billion in EBITDA, nearly 80% higher than a year earlier, aided by stronger realized prices and operating execution. Copper production increased 6% year over year to its strongest second-quarter level in nine years, while copper sales rose 10%. The company cited record second-quarter production at Salobo and strong results at Sossego.
Nickel production rose 4% and nickel sales volumes increased 7%, supported by volumes from Onça Puma and Voisey’s Bay.
Vale lowered its 2026 base-metals cost guidance. Copper all-in cost is now expected to range from zero to $500 per ton, compared with prior guidance of $1,000 to $1,500 per ton. Nickel all-in cost guidance was reduced to $10,000 to $11,500 per ton from $12,000 to $13,500 per ton.
Chief Executive Officer of Vale Base Metals Shaun Usmar said construction at the Bacaba copper project is progressing ahead of schedule, with commissioning now expected in the third quarter of 2027 rather than the first half of 2028. Bacaba has 50,000 tons of capacity and is the first of six projects supporting Vale’s target to double copper production to about 700,000 tons annually by 2035.
Usmar said Vale had reduced Bacaba’s capital requirements by nearly 50% and was nearly 40% through the project. He added that the company expects to formally announce the Salobo coarse-particle flotation project in the coming weeks.
At Sossego, Vale expects a maintenance shutdown from August through November, including work on the SAG mill. Usmar said the shutdown will affect copper volumes and costs in the second half, particularly the third quarter.
Cash Flow, Capital Returns and Freight Strategy
Vale reported $1.5 billion in free cash flow for the quarter, supported by EBITDA and a $337 million positive cash impact from currency and oil hedge settlements. Capital expenditures totaled $1.1 billion. Expanded net debt declined by more than $1.1 billion sequentially to $16.7 billion, and Bacci said Vale expects the measure to continue moving toward its $15 billion reference level.
The company repurchased $140 million of shares during the quarter, bringing year-to-date repurchases to $214 million. Bacci said the level and composition of additional shareholder remuneration will depend on second-half cash generation, year-end net debt, share-price considerations and tax factors.
Executive Vice President of Commercial and Development Rogério Nogueira said Vale has reduced its spot freight exposure to below 10% for the second half through long-term time-charter agreements, shorter-term contracts of affreightment and freight derivatives. About 75% of its freight portfolio is under long-term time-charter contracts, he said.
Vale also said it has hedged close to 70% of its expected 2027 Brent exposure at an average equivalent price of about $77 per barrel through a combination of zero-cost collars and forward agreements.
Operations, Innovation and Market Outlook
Vale said Fábrica and Vega are operationally ready to restart after receiving municipal approvals, though it is still working with state and federal authorities. The company said it does not expect the status of those operations to affect its annual guidance. Its Oman pelletizing operation remains active, with a planned October stoppage for a tie-in to a new concentration plant.
Executive Vice President of Operations Carlos Medeiros said a project at the Conceição II concentration plant increased production volume by 25% after starting in March and shifted output toward direct-reduction feed. Vale is rolling out the technology at Brucutu and expects to complete that work during the first half of next year before extending it to other Minas Gerais plants.
On the iron ore market, Nogueira said Vale sees global pig iron production as broadly stable, with stronger steel production outside China helping offset softer Chinese domestic conditions. He said Vale’s cost-curve simulations suggest that, with Brent crude near $90 per barrel, about 120 million tons of iron ore supply would approach its cost limit at an iron ore price of $95 per ton.
About Vale (NYSE:VALE)
Vale SA is a Brazilian multinational mining company and one of the world’s largest producers of iron ore and iron ore pellets. In addition to iron ore, the company produces and sells a range of bulk commodities and metals, including nickel, copper, coal, manganese, ferroalloys and cobalt, and it participates in the fertilizer inputs market. Vale also operates extensive logistics assets — including rail, port and maritime logistics — that support its mining and export activities and provide services to third parties in some regions.
Headquartered in Brazil, Vale maintains a global operational footprint with mining, processing and shipping activities across the Americas, Africa, Asia and Oceania.
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