Table of Contents

 

 

 

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

July 2016

 

Vale S.A.

 

Avenida das Américas, No. 700 — Bloco 8, Sala 218
22640-100 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  o

 

(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   o 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   o 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  o No x

 

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-     .)

 

 

 



Table of Contents

 

Table of Contents:

 

Press Release

 

Signature Page

23

 

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Table of Contents

 

 

VALE PRODUCTION IN 2Q16

 

 

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www.vale.com

rio@vale.com

Tel.: (55 21) 3485-3900

 

Investor Relations Department

 

André Figueiredo

Carla Albano Miller

Fernando Mascarenhas

Andrea Gutman

Bruno Siqueira

Claudia Rodrigues

Denise Caruncho

Mariano Szachtman

Renata Capanema

 

BM&F BOVESPA: VALE3, VALE5

NYSE: VALE, VALE.P

EURONEXT PARIS: VALE3, VALE5

LATIBEX: XVALO, XVALP

 

This press release may include statements that present Vale’s expectations about future events or results. All statements, when based upon expectations about the future and not on historical facts, involve various risks and uncertainties. Vale cannot guarantee that such statements will prove correct. These risks and uncertainties include factors related to the following: (a) the countries where we operate, especially Brazil and Canada; (b) the global economy; (c) the capital markets; (d) the mining and metals prices and their dependence on global industrial production, which is cyclical by nature; and (e) global competition in the markets in which Vale operates. To obtain further information on factors that may lead to results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission (SEC), the Brazilian Comissão de ValoresMobiliários (CVM), the French Autorité des Marchés Financiers (AMF), and The Stock Exchange of Hong Kong Limited, and in particular the factors discussed under “Forward-Looking Statements” and “Risk Factors” in Vale’s annual report on Form 20-F.

 

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Production highlights

 

Rio de Janeiro, July 21, 2016 — Vale S.A. (Vale) reached 86.8 Mt of iron ore production(1) in the second quarter of 2016 (2Q16), 9.3 Mt higher than in 1Q16, mainly due to the good performance of the Northern System.

 

Carajás achieved a production record for a second quarter of 36.5 Mt in 2Q16, representing an increase of 4.9 Mt (or 15.5%) in relation to 2Q15, mainly due to the increase in the overall equipment efficiency of the truck fleet and the ramp-up of the N4WS and N5S extension pits.

 

Pellet production, excluding Samarco’s attributable production, reached 10.0 Mt in 2Q16, 12.4% and 17.9% lower than in 1Q16 and 2Q15, respectively, mainly as a result of  (i) the halt of the Fábrica pelletizing plant, due to delays in obtaining environmental permits for the expansion of adjacent mines; and (ii) the scheduled maintenance stoppages at the Tubarão plants in 2Q16. Tubarão 8 production achieved the monthly record of 637 kt in May.

 

Global Recovery (GR), measured by final production output divided by the total tons extracted, reached 39% in 2013, 41% in 2014 and 46% in 2015.  On a quarter-on-quarter basis, GR increased from 45.4% in 2Q15 to 46.1% in 2Q16(2).

 

Nickel production reached a record for a second quarter of 78,500 t in 2Q16, representing an increase of 11,400 t in relation to 2Q15, mainly due to the stronger operational performance from PTVI and the ongoing ramp-ups of Long Harbour and Vale New Caledonia (VNC).

 

Copper production reached a record for a second quarter of 107,400 t in 2Q16, representing an increase of 2,500 t in relation to 2Q15, mainly due to the better operational performance at Sudbury and the successful ramp-up of Salobo.

 

Gold production reached a record for a second quarter of 109,000 oz in 2Q16.

 

Coal production totaled 1.5 Mt in 2Q16, 9.5% and 25.2% lower than in 1Q16 and 2Q15, respectively, mainly due to the lower production at Carborough Downs as a result of geological instability issues in 2Q16.

 


(1) Excluding Samarco’s attributable production and including iron ore acquired from third parties

 

(2) Due to external factors, such as seasonal weather conditions, the comparison should always be made on a year-on-year basis.

 

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In June, the total mine movement in Mozambique reached a new monthly record of 12.7 Mt due to higher equipment productivity and the development of new mining areas which will feed the Moatize II coal handling and preparation plant. Commissioning of the Moatize II plant is almost concluded and its start-up is expected by early August. The ramp-up of Moatize II will enable the increase in production and the reduction in costs in the next quarters.

 

Production summary

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

Iron ore(1)

 

86,823

 

77,544

 

89,311

 

164,367

 

166,729

 

12.0

%

-2.8

%

-1.4

%

Pellets(1)

 

10,049

 

11,478

 

12,237

 

21,527

 

23,625

 

-12.4

%

-17.9

%

-8.9

%

Manganese Ore

 

553

 

596

 

554

 

1,149

 

1,146

 

-7.3

%

-0.2

%

0.3

%

Coal

 

1,505

 

1,663

 

2,012

 

3,168

 

3,707

 

-9.5

%

-25.2

%

-14.5

%

Nickel

 

78.5

 

73.5

 

67.1

 

152.0

 

136.3

 

6.8

%

17.0

%

11.5

%

Copper(2)

 

107.4

 

111.9

 

104.9

 

219.2

 

212.0

 

-4.0

%

2.4

%

3.4

%

Cobalt

 

1,312

 

1,400

 

1,122

 

2,711

 

2,092

 

-6.3

%

16.9

%

29.7

%

Gold (000’ oz troy)

 

109

 

118

 

100

 

227

 

203

 

-7.6

%

9.0

%

12.2

%

Potash

 

101

 

111

 

111

 

211

 

219

 

-9.1

%

-9.8

%

-3.8

%

Phosphate rock

 

1,805

 

1,615

 

2,114

 

3,420

 

4,106

 

11.8

%

-14.6

%

-16.7

%

 


(1) Excluding Samarco’s attributable production and including third party purchases.

 

(2) Including Lubambe’s attributable production.

 

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Iron Ore

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

Northern System

 

36,493

 

32,385

 

31,609

 

68,878

 

59,130

 

12.7

%

15.5

%

16.5

%

Carajás

 

36,493

 

32,385

 

31,609

 

68,878

 

59,130

 

12.7

%

15.5

%

16.5

%

Southeastern System

 

25,166

 

22,544

 

29,123

 

47,710

 

55,041

 

11.6

%

-13.6

%

-13.3

%

Itabira

 

8,491

 

7,512

 

9,428

 

16,003

 

16,751

 

13.0

%

-9.9

%

-4.5

%

Minas Centrais

 

10,008

 

9,987

 

10,006

 

19,995

 

18,925

 

0.2

%

0.0

%

5.7

%

Mariana

 

6,667

 

5,045

 

9,689

 

11,712

 

19,365

 

32.1

%

-31.2

%

-39.5

%

Southern System

 

24,575

 

22,033

 

27,299

 

46,608

 

49,941

 

11.5

%

-10.0

%

-6.7

%

Paraopeba

 

7,007

 

5,630

 

8,422

 

12,637

 

14,956

 

24.5

%

-16.8

%

-15.5

%

Vargem Grande

 

7,362

 

7,323

 

7,330

 

14,685

 

13,218

 

0.5

%

0.4

%

11.1

%

Minas Itabirito

 

10,206

 

9,080

 

11,547

 

19,286

 

21,768

 

12.4

%

-11.6

%

-11.4

%

Midwestern System

 

589

 

582

 

1,281

 

1,172

 

2,616

 

1.2

%

-54.0

%

-55.2

%

Corumbá

 

552

 

253

 

891

 

805

 

1,784

 

117.6

%

-38.1

%

-54.9

%

Urucum

 

38

 

329

 

390

 

367

 

832

 

-88.5

%

-90.3

%

-55.9

%

IRON ORE

 

86,823

 

77,544

 

89,312

 

164,367

 

166,729

 

12.0

%

-2.8

%

-1.4

%

 

Production summary

 

Vale’s iron ore production(3) was 86.8 Mt in 2Q16, 9.3 Mt higher than in 1Q16, due to weather-related seasonality and better productivity in the Northern System, and was 2.5 Mt

 

lower than in 2Q15 mainly due to: (i) the strategic decision to marginally reduce production from lower-margin operations and other actions; (ii) the stoppage of run of mine supply to Samarco.

 

Based on the same criterion of margin optimization, production in 1H16 and forecast projection for the remainder of 2016 adjusted to seasonality indicate an annual production in the lower end of the 340-350Mt guidance range for 2016.

 

Iron ore and pellets shipments from Brazil and Argentina reached 77.2 Mt in 2Q16, 5.6 Mt and 2.6 Mt higher than in 1Q16 and 2Q15 respectively, with the ongoing elimination of logistics bottlenecks.  Inventories were moved from the mines to the Distribution Centers (DCs) abroad

 


(3) Including third party purchases and excluding Samarco’s attributable production

 

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for offshore blending and additional commercial flexibility. Iron ore inventories at the mines and Brazilian ports decreased 4 Mt in 2Q16 vs. 2Q15, while inventories in China and Malaysia increased 2 Mt in the period. This is consistent with our target to reduce overall inventories by the end of 2016 and simultaneously achieve a downstream shift of products’ inventories along the supply chain.

 

These supply chain optimization efforts will continue in 2017, with important inventory reductions in the Southern System resulting in lower production volumes for Vale than the range of 380-400Mt announced at the 2015 Vale Day.

 

Aligned with Vale’s strategy of margin optimization, the Fe content decreased slightly from 64.3% in 1Q16 to 63.6% in 2Q16 due the change of some beneficiation plants from wet to dry processing in the Southeastern system in order to reduce the need to use tailing dams and to take the opportunity of lower demerit discounts for higher silica products.

 

Northern system

 

Carajás achieved a new production record for a second quarter of 36.5 Mt in 2Q16, 12.7% and 15.5% higher than in 1Q16 and 2Q15, respectively. The increase vs. 1Q16 is mostly due to the lower impact from rainfall and better overall equipment efficiency. The increase vs. 2Q15 was mainly due to the above-mentioned productivity gains and the ramp-up of the N4WS mine and N5S extension pits, which more than offset the impact of the higher precipitation in 2Q16 vs. 2Q15.

 

Southeastern system

 

The Southeastern System, which encompasses the Itabira, Minas Centrais and Mariana mining hubs, produced 25.2 Mt in 2Q16, 2.6 Mt higher than in 1Q16 and 4.0 Mt lower than in 2Q15, mainly due to the stoppage of supply of run of mine to Samarco (2.9 Mt).

 

Southern system

 

The Southern System, composed of the Paraopeba, Vargem Grande and Minas Itabirito mining hubs, produced 24.6 Mt in 2Q16, 11.5% higher than in 1Q16 and 10.0% lower than in 2Q15, due to the decision to reduce production from lower margin operations.

 

Midwestern system

 

The Midwestern System, composed of the Urucum and the Corumbá mines, produced 0.6 Mt in 2Q16, in line with 1Q16 and 0.7 Mt lower than in 2Q15, as a result of Vale’s strategy to optimize margins.

 

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Pellets

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

Southeastern System

 

6,657

 

7,221

 

7,199

 

13,878

 

14,320

 

-7.8

%

-7.5

%

-3.2

%

Itabrasco (Tubarão 3)

 

1,119

 

1,100

 

1,135

 

2,219

 

2,260

 

1.8

%

-1.4

%

-1.8

%

Hispanobras (Tubarão 4)

 

1,088

 

1,128

 

1,135

 

2,215

 

2,188

 

-3.5

%

-4.2

%

1.3

%

Nibrasco (Tubarão 5 and 6)

 

1,715

 

2,159

 

2,228

 

3,873

 

4,469

 

-20.6

%

-23.0

%

-13.3

%

Kobrasco (Tubarão 7)

 

969

 

1,088

 

1,088

 

2,058

 

2,176

 

-11.0

%

-10.9

%

-5.5

%

Tubarão 8

 

1,767

 

1,746

 

1,613

 

3,513

 

3,227

 

1.2

%

9.5

%

8.8

%

Southern System

 

1,544

 

2,330

 

2,619

 

3,874

 

4,991

 

-33.8

%

-41.1

%

-22.4

%

Fábrica

 

 

861

 

951

 

861

 

1,806

 

n.m.

 

n.m.

 

-52.3

%

Vargem Grande

 

1,544

 

1,469

 

1,667

 

3,012

 

3,184

 

5.1

%

-7.4

%

-5.4

%

Oman

 

1,848

 

1,927

 

2,419

 

3,776

 

4,314

 

-4.1

%

-23.6

%

-12.5

%

TOTAL PELLETS

 

10,049

 

11,478

 

12,237

 

21,527

 

23,625

 

-12.4

%

-17.9

%

-8.9

%

Samarco (1)

 

 

 

3,645

 

 

14,285

 

n.m.

 

n.m.

 

n.m.

 

 


(1) Vale’s attributable production capacity of 50%.

 

Production overview

 

Pellet production, excluding Samarco’s attributable production, totaled 10.0 Mt in 2Q16, 12.4% and 17.9% lower than in 1Q16 and 2Q15, respectively, mainly as a result of:  (i) the halt of the Fábrica pelletizing plant, due to delays in obtaining environmental permits for the expansion of adjacent mines; and (ii) the scheduled maintenance stoppages at the Tubarão plants in 2Q16.

 

Vale is currently studying the reopening of its pelletizing plants of Tubarão 1 and 2 in order to offset a supply shortage resulting from the stoppage of Samarco.

 

Southeastern system

 

Production at the Tubarão pellet plants — Tubarão 3, 4, 5, 6, 7 and 8 — reached 6.7 Mt in 2Q16, 7.8% and 7.5% lower than in 1Q16 and 2Q15, respectively, mainly due to the scheduled maintenance stoppages in 2Q16. Tubarão 8 production achieved the monthly record of 637 kt in May.

 

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Southern system

 

Production at the Fábrica pellet plant was suspended on March 28 th  due to delays in obtaining environmental permits for the expansion of adjacent mines. On July 2 nd  the environmental permits were granted and operations resumed, with production forecast to achieve nominal capacity by August.

 

Production at the Vargem Grande pellet plant totaled 1.5 Mt, 5.1% and 7.4% lower than in 1Q16 and 2Q15, respectively, mainly as a result of a lower availability of pellet feed.

 

Oman operations

 

Production at the Oman pellet plant reached 1.8 Mt in 2Q16, 4.5% and 23.9% lower than in 1Q16 and 2Q15, respectively, due to the scheduled cold maintenance shutdown in one of the lines from May to June.

 

Samarco

 

Samarco’s operations were suspended as a result of the failure of the Fundão tailings dam on November 5th, 2015. Samarco plans to resume operations by 2017, although timing is uncertain.

 

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Manganese ore and ferroalloys

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

MANGANESE ORE

 

553

 

596

 

554

 

1,149

 

1,146

 

-7.3

%

-0.2

%

0.3

%

Azul

 

397

 

434

 

346

 

831

 

753

 

-8.6

%

14.6

%

10.3

%

Urucum

 

156

 

162

 

208

 

318

 

392

 

-3.9

%

-25.0

%

-18.9

%

FERROALLOYS

 

29

 

25

 

31

 

53

 

58

 

15.3

%

-8.0

%

-8.4

%

Brazil

 

29

 

25

 

31

 

53

 

58

 

15.3

%

-8.0

%

-8.4

%

 

Production overview

 

Manganese ore production decreased by 7.3% in 2Q16 vs.1Q16 and was in line with 2Q15.

 

The Barbacena plant resumed production in February with the lower spot energy prices, while the Ouro Preto ferroalloy plant in Minas Gerais remains closed as market demand still does not justify the resumption of the operation.

 

Manganese ore production

 

Production at the Azul manganese mine reached 397,000 t in 2Q16, 8.6% lower than in 1Q16 as a result of lower physical availability in the plant, and 14.7% higher than in 2Q15 due to the availability of higher grade ore.

 

Production at the Urucum mine reached 156,000 t in 2Q16, 3.9% and 25.0% lower than in 1Q16 and 2Q15, respectively, as a result of lower availability of operation mining faces.

 

Ferroalloy production

 

Ferroalloy production in 2Q16 was 28,630 t, 15.3% higher than in 1Q16, due to the reopening of the Barbacena plant in February, driven by lower energy prices, and 8.0% lower than in 2Q15 due to lower efficiency at the Simões Filho plant.

 

Production was comprised of 20,090 t of ferrosilicon manganese alloys (FeSiMn), 6,640 t of high-carbon manganese alloys (FeMnHC) and 1,900 t of medium-carbon manganese alloys (FeMnMC).

 

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Nickel

 

Finished production by source

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

Canada

 

43.1

 

40.5

 

43.0

 

83.6

 

81.5

 

6.3

%

0.2

%

2.5

%

Sudbury

 

18.9

 

19.5

 

11.7

 

38.4

 

23.1

 

-3.1

%

61.5

%

66.2

%

Thompson

 

8.1

 

6.2

 

7.0

 

14.3

 

12.8

 

30.6

%

15.7

%

12.3

%

Voisey’s Bay

 

11.3

 

10.9

 

15.2

 

22.2

 

28.6

 

3.7

%

-25.7

%

-22.5

%

Feed from third parties(1)

 

4.8

 

3.9

 

9.1

 

8.7

 

17.1

 

24.8

%

-47.4

%

-49.3

%

Indonesia

 

20.7

 

17.8

 

13.4

 

38.5

 

31.4

 

16.3

%

54.5

%

22.6

%

New Caledonia(2)

 

8.4

 

9.7

 

4.8

 

18.0

 

11.3

 

-13.4

%

75.0

%

59.3

%

Brazil

 

6.4

 

5.6

 

5.9

 

11.9

 

12.0

 

14.3

%

8.5

%

-0.9

%

TOTAL NICKEL

 

78.5

 

73.5

 

67.1

 

152.0

 

136.3

 

6.8

%

17.0

%

11.5

%

 


(1) External feed purchased from third parties and processed into finished nickel in our operations.

 

(2) Production at VNC reached 8.400 t in 2Q16, whereas production of finished nickel from VNC also totaled 8.400 t in 2Q16, despite the differences stemming from the required processing time into finished nickel.

 

Production overview

 

Production of nickel reached a record for a second quarter of 78,500 t in 2Q16, being 6.8% higher than in 1Q16, mainly due to strong performances in Thompson, Indonesia (PTVI) and Onça Puma. Production was 17.0% higher than in 2Q15.

 

Canadian operations

 

Production from the Sudbury mine reached 18,900 t in 2Q16, in line with 1Q16 production and 61.5% higher than in 2Q15 as a result of an electrical fire in the matte processing plant in 2Q15.

 

Production from the Thompson mine reached 8,100 t in 2Q16, 30.6% higher than in 1Q16 and 15.7% higher than in 2Q15. The use of Thompson sourced ore was prioritized due to the severe winter weather conditions, which delayed shipments from Voisey’s Bay concentrates to the Thompson refinery. Thompson operations have a previously scheduled maintenance shutdown for three weeks in August, and during this period annual preventive work will be carried out in the smelter, refinery and utilities.

 

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Production from the Voisey’s Bay mine reached 11,300 t in 2Q16, 3.7% higher than in 1Q16. Production in 2Q16 was 25.7% lower than in 2Q15 as Voisey’s Bay sourced ore was negatively affected by winter weather conditions and logistics constraints in 2016, with on-site build-up of inventories for consumption in the following quarters.

 

Production at the Long Harbour processing plant reached 3,800 t in 2Q16, 72.5% higher than in 1Q16 and 154.8% higher than in 2Q15. Long Harbour product quality has exceeded the industry-wide accepted ASTM B39-79 refined Ni grade.

 

Indonesian operation (PTVI)

 

Production of finished nickel from PTVI reached 20,700 t in 2Q16, 16.3% and 54.5% higher than in 1Q16 and in 2Q15, respectively, mainly as a result of the scheduled maintenance in 2Q15 and in 1Q16.

 

New Caledonia operation (VNC)

 

Production of finished products from VNC reached a record level for a second quarter of 8,400 t in 2Q16, 13.4% lower and 75.0% higher than in 1Q16 and 2Q15, respectively. Production from VNC sourced ore was impacted by the termination of SUMIC’s off take since the share of VNC’s production, previously booked as sales volume for SUMIC, will now be further processed at Vale’s Dalian refinery. Production from VNC sourced ore decreased in 2Q16 due to the lag effect of further processing and should increase in the following quarters. Production of NiO and NHC at VNC reached 8,400 t in 2Q16. NiO represented 79.8% and NHC 20.2% of VNC’s 2Q16 site production. New Caledonia operations are undergoing their annual maintenance shutdown for three weeks in July. During this period a portion of the slurry pipeline will be replaced and annual descaling of pipes will be completed.

 

Brazilian operation (Onça Puma)

 

Production from the Onça Puma operation reached a record level for a second quarter of 6,400 t in 2Q16, 14.3% and 8.5% higher than in 1Q16 and in 2Q15, respectively. Production was positively impacted by improvements in calcine handling and additional kiln capacity.

 

13



Table of Contents

 

 

Copper

 

Finished production by source

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

BRAZIL

 

64.4

 

63.4

 

67.0

 

127.8

 

129.4

 

1.6

%

-3.9

%

-1.3

%

Sossego

 

23.6

 

22.3

 

29.0

 

46.0

 

56.2

 

5.8

%

-18.6

%

-18.1

%

Salobo

 

40.7

 

41.1

 

38.0

 

81.8

 

73.3

 

-1.0

%

7.1

%

11.6

%

CANADA

 

41.2

 

46.5

 

35.1

 

87.7

 

77.3

 

-11.4

%

17.4

%

13.4

%

Sudbury

 

28.9

 

30.9

 

22.4

 

59.8

 

47.7

 

-6.5

%

29.0

%

25.1

%

Thompson

 

0.8

 

0.6

 

0.7

 

1.4

 

0.8

 

33.3

%

14.3

%

74.4

%

Voisey’s Bay

 

7.3

 

7.8

 

5.9

 

15.1

 

13.4

 

-6.4

%

23.7

%

13.0

%

Feed from third parties

 

4.3

 

7.1

 

6.1

 

11.4

 

15.4

 

-39.4

%

-29.5

%

-25.6

%

TOTAL EX-LUBAMBE

 

105.6

 

109.9

 

102.1

 

215.5

 

206.7

 

-3.9

%

3.4

%

4.2

%

Lubambe(1)

 

1.7

 

2.0

 

2.7

 

3.8

 

5.3

 

-15.0

%

-37.0

%

-29.3

%

TOTAL COPPER

 

107.4

 

111.9

 

104.9

 

219.2

 

212.0

 

-4.0

%

2.4

%

3.4

%

 


(1) Attributable production.

 

Production overview

 

Production of copper(4) was a record for a second quarter with 105,600 t in 2Q16, 3.9% lower than in 1Q16, mainly due to less feed from third parties and 3.4% higher than in 2Q15 mainly due to higher production from Sudbury and Salobo’s ramp-up.

 

Brazilian operations

 

Production of copper in concentrate at Sossego totaled 23,600 t in 2Q16, 5.8% higher than in 1Q16 and 18.6% lower than in 2Q15, mainly as a result of lower ore grade.

 

Production of copper in concentrate at Salobo totaled a record for a second quarter of 40,700 t in 2Q16, in line with 1Q16 and 7.1% higher than in 2Q15. Salobo achieved a monthly production record of 14,600 t of copper in concentrates in May, with overall production in 2Q16 negatively impacted by planned maintenance works in June. Production is expected to reach its full production capacity on a monthly basis during 2H16.

 


(4) Excluding Lubambe attributable production

 

14



Table of Contents

 

Canadian operations

 

Production of copper from Sudbury reached 28,900 t in 2Q16, 6.5% lower than in 1Q16 due to a special campaign for recycling low copper grade slag and 29.0% higher than in 2Q15, mainly due to a fire in matte processing in May 2015.

 

Production of copper from Voisey’s Bay reached 7,300 t in 2Q16, 6.4% lower than in 1Q16, as less Voisey’s Bay copper concentrate was delivered to Sudbury. Production was 23.7% higher than in 2Q15 due to annual preventive maintenance carried out at Voisey’s Bay in 2Q15.

 

African operation (Lubambe)

 

Lubambe delivered 4,300 t of copper in concentrate on a 100% basis (attributable production of 1,700 t).

 

15



Table of Contents

 

 

Nickel and copper by-products

 

Finished production by source

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

 

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

COBALT (metric tons)

 

1,312

 

1,400

 

1,122

 

2,711

 

2,091

 

-6.3

%

16.9

%

29.6

%

Sudbury

 

225

 

173

 

97

 

398

 

309

 

30.1

%

132.0

%

29.0

%

Thompson

 

171

 

182

 

146

 

353

 

188

 

-6.0

%

17.1

%

88.4

%

Voisey’s Bay

 

194

 

145

 

367

 

339

 

495

 

33.8

%

-47.1

%

-31.6

%

VNC

 

682

 

849

 

441

 

1,531

 

1,000

 

-19.7

%

54.6

%

53.1

%

Others

 

40

 

50

 

70

 

90

 

100

 

-20.0

%

-42.9

%

-10.2

%

PLATINUM (000’ oz troy)

 

49

 

46

 

46

 

96

 

88

 

6.5

%

6.5

%

8.9

%

Sudbury

 

49

 

46

 

46

 

96

 

88

 

6.5

%

6.5

%

8.9

%

PALLADIUM (000’ oz troy)

 

95

 

100

 

109

 

195

 

206

 

-5.0

%

-12.8

%

-5.5

%

Sudbury

 

95

 

100

 

109

 

195

 

206

 

-5.0

%

-12.8

%

-5.5

%

GOLD (000’ oz troy)

 

109

 

118

 

100

 

227

 

203

 

-7.6

%

9.0

%

12.2

%

Sudbury

 

22

 

23

 

23

 

45

 

50

 

-4.3

%

-4.3

%

-9.3

%

Sossego

 

16

 

19

 

22

 

35

 

43

 

-15.8

%

-27.3

%

-17.8

%

Salobo

 

71

 

76

 

56

 

147

 

110

 

-6.6

%

26.8

%

33.7

%

SILVER (000’ oz troy)

 

554

 

516

 

255

 

1,070

 

736

 

7.4

%

117.3

%

45.3

%

Sudbury

 

554

 

516

 

255

 

1,070

 

736

 

7.4

%

117.3

%

45.3

%

 

Cobalt

 

Cobalt production totaled 1,312 t in 2Q16, 6.3% lower than in 1Q16 and 16.9% higher than in 2Q15, respectively, driven by higher production from Sudbury and New Caledonia sources.

 

Cobalt production from Ontario increased to 225 t in 2Q16 from the 173 t in 1Q16 and 97 t in 2Q15. Cobalt production from Voisey’s Bay totaled 194 t in 2Q16, up 33.8% from 1Q16. VNC cobalt production reached 682 t in 2Q16 as VNC continues the ramp-up of its production.

 

Platinum and palladium

 

Platinum production was 49,000 oz and palladium production was 95,000 oz, 6.5% higher than in 1Q16 and 5.0% lower than in 1Q16, respectively.

 

16



Table of Contents

 

Gold

 

Gold production in 2Q16 reached a record for a second quarter of 109,000 oz.

 

17



Table of Contents

 

 

Coal

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

METALLURGICAL COAL

 

1,062

 

1,366

 

1,628

 

2,428

 

2,896

 

-22.3

%

-34.8

%

-16.2

%

Moatize

 

808

 

603

 

886

 

1,411

 

1,613

 

34.0

%

-8.8

%

-12.5

%

Carborough Downs

 

254

 

763

 

742

 

1,017

 

1,283

 

-66.7

%

-65.8

%

-20.7

%

THERMAL COAL

 

443

 

297

 

384

 

740

 

811

 

49.2

%

15.4

%

-8.7

%

Moatize

 

443

 

297

 

384

 

740

 

811

 

49.2

%

15.4

%

-8.7

%

TOTAL COAL

 

1,505

 

1,663

 

2,012

 

3,168

 

3,707

 

-9.5

%

-25.2

%

-14.5

%

 

Production overview

 

Coal production totaled 1.5 Mt in 2Q16, 9.5% and 25.2% lower than in 1Q16 and 2Q15, respectively, mainly due to the lower production at Carborough Downs which faced geological instability issues in 2Q16.

 

Australian operations

 

Carborough Downs faced operational challenges in 2Q16, resulting in a production of 254,000 t, 66.7% and 65.8% lower than in 1Q16 and 2Q15, respectively. Carborough Downs experienced recent roof fall events with the start-up of operations after the longwall move in May 2016. Underground mining has been stopped as roof consolidation and overall recovery works are underway. This stoppage in production has impacted the ability to meet various sales contracts obligations and thus resulted in a declaration of force majeure on July 8 th , 2016.

 

Moatize operations

 

Production at Moatize was 1,251,000 t in 2Q16, with an increase in both metallurgical and thermal coal production vs. 1Q16. Production recovered after the maintenance stoppage and waste removal, which impacted production in 1Q16.

 

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Table of Contents

 

Production of metallurgical coal was 34.0% higher than in 1Q16 but 8.8% lower than in 2Q15. Production of thermal coal was 49.2% and 15.4% higher than in 1Q16 and 2Q15, respectively.

 

In June, the total mine movement reached a new monthly record of 12.7 Mt due to higher equipment productivity and the development of new mining areas which will feed the Moatize II coal handling and preparation plant. Commissioning of the Moatize II plant is almost concluded and its start-up is expected by early August. The ramp-up of Moatize II will enable the increase in production and the reduction in costs in the next quarters.

 

The ramp-up of the Nacala Logistics Corridor continued as planned, with 1.655 Mt being transported on the railway in 2Q16 against 761 kt in 1Q16. Nineteen shipments (1.567 Mt) were completed in 2Q16 compared to thirteen shipments (982 kt) in 1Q16.

 

Force majeure was declared at the Sena-Beira railway, which has been interrupted since June 8 th  due to incidents on the railway.

 

19



Table of Contents

 

 

Fertilizer Nutrients

 

Potash

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

POTASH

 

101

 

111

 

111

 

211

 

219

 

-9.1

%

-9.8

%

-3.8

%

Taquari-Vassouras

 

101

 

111

 

111

 

211

 

219

 

-9.1

%

-9.8

%

-3.8

%

 

Phosphates

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

PHOSPHATE ROCK

 

1,805

 

1,615

 

2,114

 

3,420

 

4,106

 

11.8

%

-14.6

%

-16.7

%

Brazil

 

969

 

702

 

1,102

 

1,671

 

2,203

 

38.1

%

-12.1

%

-24.2

%

Bayóvar

 

836

 

913

 

1,012

 

1,750

 

1,904

 

-8.5

%

-17.4

%

-8.1

%

MAP(1)

 

235

 

258

 

287

 

493

 

578

 

-9.1

%

-18.2

%

-14.8

%

TSP(2)

 

246

 

213

 

240

 

459

 

471

 

15.2

%

2.5

%

-2.5

%

SSP(3)

 

454

 

326

 

470

 

780

 

934

 

39.4

%

-3.4

%

-16.5

%

DCP(4)

 

114

 

122

 

84

 

236

 

222

 

-7.0

%

35.1

%

6.6

%

 


(1) Monoammonium phosphate

(2) Triple superphosphate

(3) Single superphosphate

(4) Dicalcium phosphate

 

Potash

 

Potash production totaled 101,000 t in 2Q16, 9.1% and 9.8% lower than in 1Q16 and 2Q15 respectively. The decline was due to an unscheduled maintenance stoppage at the Taquari-Vassouras beneficiation plant and the mining of a lower grade of ore.

 

Phosphate Rock

 

Production of phosphate rock was 1.8 Mt in 2Q16, 11.8% higher than in 1Q16 due to higher production in Brazil, which was partially offset by lower production in Peru (Bayóvar). Production was 14.6% lower than in 2Q15 due to a decline in production in the Brazilian and Peruvian (Bayóvar) operations.

 

20



Table of Contents

 

Production in Brazil was 969,000 t in 2Q16, 38.1% higher than in 1Q16, due to the resumption of the Araxá plant after the scheduled maintenance stoppage in 1Q16 and higher production at the Tapira plant despite an unscheduled maintenance stoppage in 2Q16. Production was 12.1% lower than in 2Q15 due to unscheduled maintenance stoppages at the Catalão, Tapira and Cajati plants in 2Q16 and the stoppage of the Patos de Minas plant since July 2015. After the unscheduled maintenance stoppages, all of the above mentioned plants resumed operations.

 

Production at Bayóvar was 836,000 t in 2Q16, 8.5% and 17.4% lower than in 1Q16 and 2Q15, respectively, due to an unscheduled maintenance stoppage at the concentration plant.

 

MAP

 

Production of MAP (monoammonium phosphate) totaled 235,000 t in 2Q16, 9.1% and 18.2% lower than in 1Q16 and 2Q15 respectively. The decline resulted from a scheduled maintenance stoppage in June 2016 at the Cubatão plant, which has already resumed production, and the prioritization of TSP production in the Uberaba plant due to market conditions.

 

TSP

 

Production of TSP (triple superphosphate) totaled 246,000 t in 2Q16, 15.2% and 2.5% higher than in 1Q16 and 2Q15, respectively. The increase was the result of better productivity at the Uberaba plant and the prioritization of phosphoric acid use for TSP production, rather than for MAP, due to market conditions.

 

SSP

 

Production of SSP (single superphosphate) totaled 454,000 t in 2Q16, 39.4% higher than in 1Q16 due to the resumption of operations at the Araxá, Cubatão and Catalão plants after scheduled maintenance stoppages in 1Q16. Production was 3.4% lower than in 2Q15 due to operational adjustments in Cubatão and unscheduled maintenance stoppages in Araxá.

 

DCP

 

DCP (dicalcium phosphate) production totaled 114,000 t in 2Q16, 7.0% lower than in 1Q16, as the Uberaba plant underwent production adjustments. Production was 35.1% higher than in 2Q15, due to a scheduled maintenance stoppage at the Cajati plant in 2Q15.

 

21



Table of Contents

 

Nitrogen

 

 

 

 

 

 

 

 

 

 

 

 

 

% change

 

000’ metric tons

 

2Q16

 

1Q16

 

2Q15

 

1H16

 

1H15

 

2Q16/1Q16

 

2Q16/2Q15

 

1H16/1H15

 

AMMONIA

 

40

 

26

 

46

 

66

 

90

 

53.0

%

-13.5

%

-26.3

%

NITRIC ACID

 

115

 

120

 

118

 

235

 

231

 

-3.6

%

-2.1

%

1.5

%

AMMONIUM NITRATE

 

128

 

135

 

122

 

263

 

242

 

-5.5

%

4.6

%

9.0

%

 

Ammonia production

 

Ammonia production totaled 40,000 t in 2Q16, 53.0% higher than in 1Q16 due unscheduled maintenance stoppages in that quarter, but 13.5% lower than in 2Q15 due to corrective stoppages at the Cubatão plant in 2Q16. This plant remains under corrective maintenance.

 

Nitric acid and ammonium nitrate production

 

Nitric acid production totaled 115,000 t in 2Q16, 3.6% and 2.1% lower than in 1Q16 and 2Q15, respectively, due to unscheduled maintenance stoppages at the Cubatão plants.

 

Ammonium nitrate production totaled 128,000 t in 2Q16, 5.5% lower than in 1Q16 due to lower availability of diluted nitric acid and 4.6% higher than in 2Q15, due to a scheduled maintenance stoppage at the Cubatão unit in April 2015.

 

22



Table of Contents

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Vale S.A.

 

(Registrant)

 

 

 

By:

/s/ Rogerio Nogueira

Date: July 21, 2016

 

Director of Investor Relations

 

23


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