The Company classifies its financial instruments in accordance with the purpose for which they were acquired, and determines the classification and initial recognition according to the following categories:

(i) Presented in note 31 as "Discontinued operations – Coal".

b) Hierarchy of fair value


	December 31, 2021				December 31, 2020
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
Financial assets
Short-term investments (note 23)	184	—	—	184	771	—	—	771
Derivative financial instruments (note 20)	—	118	13	131	—	182	18	200
Accounts receivable (note 10)	—	3,211	—	3,211	—	494	—	494
Investments in equity securities (note 14a)	6	—	—	6	757	-	—	757
Total	190	3,329	13	3,532	1,528	676	18	2,222

Financial liabilities
Derivative financial instruments (note 20)	—	835	—	835	—	998	19	1,017
Participative stockholders' debentures (note 22)	—	3,419	—	3,419	—	3,413	—	3,413
Financial guarantees (notes 15c and 23e)	—	542	—	542	—	877	—	877
Total	—	4,796	—	4,796	—	5,288	19	5,307

There were no transfers between levels 1, 2 and 3 of the fair value hierarchy during the years presented.

b.i) Changes in Level 3 assets and liabilities during the year


	Derivative financial instruments
	Financial assets	Financial liabilities
Balance at December 31, 2020	18	19
Gain and losses recognized in income statement	(7)	(16)
Translation adjustments	2	(3)
Balance at December 31, 2021	13	—

c) Fair value of loans and borrowings

Loans and borrowings are recorded at their contractual values. To determine the market values of these financial instruments traded in public markets, the closing market quotations on the balance sheet dates were used. The Company considers that for the other financial liabilities measured at amortized cost, their book values are close to their fair values and therefore information on their fair values is not being presented.


	December 31, 2021		December 31, 2020
	Carrying amount	Fair value	Carrying amount	Fair value
Quoted in the secondary market:
US$ Bonds	7,448	9,151	7,448	10,025
Eurobonds	—	—	920	985
Debentures	387	387	496	496
Debt contracts in Brazil in:
R$, indexed to TJLP, TR, IPCA, IGP-M and CDI	354	449	860	857
R$, with fixed interest	13	—	34	35
Basket of currencies and bonds in US$ indexed to LIBOR	11	11	56	56
Debt contracts in the international market in:
US$, with variable and fixed interest	3,615	3,231	3,225	3,278
Other currencies, with variable interest	87	54	—	—
Other currencies, with fixed interest	107	117	120	134
Total	12,022	13,400	13,159	15,866

Accounting policy

Classification and measurement - The Company classifies financial instruments based on its business model for managing the assets and the contractual cash flow characteristics of those assets. The business model test determines the classification based on the business purpose for holding the asset and whether the contractual cash flows represent only payments of principal and interest.

Financial instruments are measured at fair value through profit or loss (“FVTPL”) unless certain conditions are met that permit measurement at fair value through other comprehensive income (“FVOCI”) or amortized cost. Gains and losses recorded in other comprehensive income for debt instruments are recognized in profit or loss only on disposal.

Investments in equity instruments are measured at FVTPL unless they are eligible to be measured at FVOCI, whose gains and losses are never recycled to profit or loss.

All financial liabilities are initially measured at fair value, net of transaction costs incurred and are subsequently carried at amortized cost and updated using the effective interest rate method. Excepts for Participative stockholders' debentures and Derivative financial instruments that are measured at FVTPL.

Fair value hierarchy - The Company classifies financial instruments within the fair value hierarchy as:

Level 1: The fair value of financial instruments traded in active markets (e.g. derivatives and publicly traded shares) is based on quoted market prices at the end of the financial statements period.

Level 2: The fair value of financial instruments that are not traded in an active market (e.g. over the counter derivatives) is determined using valuation techniques that maximize the use of observable market data. If all significant data required for the fair value of an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant data are not based on observable market data, the instrument is included in level 3. The fair value of derivatives classified as level 3 is estimated using discounted cash flows and option valuation models with unobservable inputs of discount rates, stock prices and commodity prices.