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Information by business segment and geographic area | 12 Months Ended
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Dec. 31, 2022
Information By Business Segment And Geographic Area |
Information by business segment and geographic area |
| 4. | Information by business segment and geographic area
The segments are aligned with products and reflect the structure used by Management to evaluate the Company’s performance. The responsible bodies for making operational decisions, allocating resources and evaluating performance are the Executive Boards and Board of Directors. Accordingly, the performance of the operating segments is assessed based on a measure of adjusted EBITDA, among other measures. The Company renamed its main operating segments starting from these financial statements. The operating segment previously named “Ferrous Minerals” is now disclosed as “Iron Solutions” while the “Base Metals” operating segment is now disclosed as “Energy Transition Materials”. There were no changes in the allocation criteria for these operating segments and, therefore, no adjustments were made to the comparative financial information. In addition, during 2022, the Company has allocated the financial information of the Midwestern System to “Other” as this operation is no longer analyzed by the chief operating decision maker as part of to the performance of the Ferrous Minerals business segment due to the binding agreement to sell this operation (note 16b). The comparative information was reclassified to reflect the revision in the allocation criteria. Therefore, the Company operates the following reportable segments:
Segment | Main activities
Iron Solutions | Comprise of the production and extraction of iron ore, iron ore pellets, manganese, other ferrous products, and its logistic related services.
Energy Transition Materials | Includes the production and extraction of nickel and its by-products (gold, silver, cobalt, precious metals and others), and copper, as well as its by-products (gold and silver).
Coal (discontinued operation) | Comprise of the production and extraction of metallurgical and thermal coal and its logistic related services. The set of assets related to this segment is classified as “Non-current assets and liabilities related to assets held for sale” (note 16a).
Other | Includes the revenues and cost of other products, services, research and development, investments in joint ventures and associates of other business and unallocated corporate expenses and costs related to the Brumadinho event.
a) Adjusted EBITDA The definition of Adjusted EBITDA for the Company is the operating income or loss plus dividends received and interest from associates and joint ventures, and excluding the amounts charged as (i) depreciation, depletion and amortization and (ii) impairment reversal (impairment and disposals) of non-current assets.
Schedule of adjusted EBITDA |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Year ended December 31, 2022
|  | Iron ore |  | Iron ore pellets |  | Other ferrous products and services |  | Iron Solutions |  | Nickel and other products |  | Copper |  | Energy Transition Materials |  | Other (i) |  | Total of continuing operations |  | Coal (note 16a) |  | Total
Net operating revenue |  | 28,188 |  | 6,256 |  | 472 |  | 34,916 |  | 6,619 |  | 1,779 |  | 8,398 |  | 525 |  | 43,839 |  | 448 |  | 44,287
Cost of goods sold and services rendered |  | (11,929) |  | (2,682) |  | (335) |  | (14,946) |  | (4,541) |  | (1,049) |  | (5,590) |  | (443) |  | (20,979) |  | (264) |  | (21,243)
Sales, administrative and other operating expenses |  | (54) |  | (1) |  | 4 |  | (51) |  | (38) |  | (21) |  | (59) |  | (2,086) |  | (2,196) |  | (12) |  | (2,208)
Research and development |  | (208) |  | (4) |  | (3) |  | (215) |  | (115) |  | (127) |  | (242) |  | (203) |  | (660) |  | (1) |  | (661)
Pre operating and operational stoppage |  | (342) |  | (21) |  | (18) |  | (381) |  | (1) |  | (13) |  | (14) |  | (3) |  | (398) |  | - |  | (398)
Dividends received and interest from associates and joint ventures |  | 15 |  | 105 |  | - |  | 120 |  | - |  | - |  | - |  | 34 |  | 154 |  | - |  | 154
Adjusted EBITDA |  | 15,670 |  | 3,653 |  | 120 |  | 19,443 |  | 1,924 |  | 569 |  | 2,493 |  | (2,176) |  | 19,760 |  | 171 |  | 19,931
Depreciation, depletion and amortization |  | (1,345) |  | (447) |  | (98) |  | (1,890) |  | (908) |  | (329) |  | (1,237) |  | (44) |  | (3,171) |  | - |  | (3,171)
Equity results and other results in associates and joint ventures |  | (32) |  | 138 |  | (9) |  | 97 |  | 289 |  | - |  | 289 |  | (81) |  | 305 |  | - |  | 305
Dividends received and interest from associates and joint ventures |  | (15) |  | (105) |  | - |  | (120) |  | - |  | - |  | - |  | (34) |  | (154) |  | - |  | (154)
Impairment reversal (impairment and disposals) of non-current assets, net |  | (151) |  | (14) |  | (13) |  | (178) |  | (18) |  | (15) |  | (33) |  | 984 |  | 773 |  | (589) |  | 184
Adjusted EBITDA |  | 14,127 |  | 3,225 |  | - |  | 17,352 |  | 1,287 |  | 225 |  | 1,512 |  | (1,351) |  | 17,513 |  | (418) |  | 17,095
Unallocated items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial results |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,268 |  | 3,065 |  | 5,333
Income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (2,971) |  | (2) |  | (2,973)
Derecognition of noncontrolling interest |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | - |  | (585) |  | (585)
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 16,810 |  | 2,060 |  | 18,870
Net income attributable to noncontrolling interests |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 82 |  | - |  | 82
Net income attributable to Vale's shareholders |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 16,728 |  | 2,060 |  | 18,788
(i) Includes the reclassification of the EBITDA of Midwestern System in the amount of US$77.
|  | Year ended December 31, 2021
|  | Iron ore |  | Iron ore pellets |  | Other ferrous products and services |  | Iron Solutions |  | Nickel and other products |  | Copper |  | Energy Transition Materials |  | Other (i) |  | Total of continuing operations |  | Coal (Note 16a) |  | Total
Net operating revenue |  | 38,324 |  | 7,053 |  | 548 |  | 45,925 |  | 5,377 |  | 2,589 |  | 7,966 |  | 611 |  | 54,502 |  | 1,083 |  | 55,585
Cost of goods sold and services rendered |  | (11,199) |  | (2,231) |  | (400) |  | (13,830) |  | (3,606) |  | (878) |  | (4,484) |  | (558) |  | (18,872) |  | (1,317) |  | (20,189)
Sales, administrative and other operating expenses |  | (137) |  | 30 |  | 9 |  | (98) |  | (5) |  | (9) |  | (14) |  | (3,303) |  | (3,415) |  | (26) |  | (3,441)
Research and development |  | (198) |  | (3) |  | (4) |  | (205) |  | (77) |  | (81) |  | (158) |  | (185) |  | (548) |  | (7) |  | (555)
Pre operating and operational stoppage |  | (329) |  | (47) |  | (17) |  | (393) |  | (113) |  | (4) |  | (117) |  | (4) |  | (514) |  | - |  | (514)
Dividends received and interest from associates and joint ventures |  | 10 |  | 71 |  | - |  | 81 |  | - |  | - |  | - |  | 109 |  | 190 |  | 78 |  | 268
Adjusted EBITDA |  | 26,471 |  | 4,873 |  | 136 |  | 31,480 |  | 1,576 |  | 1,617 |  | 3,193 |  | (3,330) |  | 31,343 |  | (189) |  | 31,154
Depreciation, depletion and amortization |  | (1,255) |  | (388) |  | (107) |  | (1,750) |  | (841) |  | (372) |  | (1,213) |  | (71) |  | (3,034) |  | (69) |  | (3,103)
Equity results and other results in associates and joint ventures |  | (1,642) |  | 123 |  | (40) |  | (1,559) |  | 1 |  | - |  | 1 |  | 287 |  | (1,271) |  | (26) |  | (1,297)
Dividends received and interest from associates and joint ventures |  | (10) |  | (71) |  | - |  | (81) |  | - |  | - |  | - |  | (109) |  | (190) |  | (78) |  | (268)
Impairment and disposals of non-current assets, net |  | (92) |  | (7) |  | (35) |  | (134) |  | (27) |  | (20) |  | (47) |  | (245) |  | (426) |  | (3,282) |  | (3,708)
Adjusted EBITDA |  | 23,472 |  | 4,530 |  | (46) |  | 27,956 |  | 709 |  | 1,225 |  | 1,934 |  | (3,468) |  | 26,422 |  | (3,644) |  | 22,778
Unallocated items: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial results |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,119 |  | 447 |  | 3,566
Income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (4,697) |  | 821 |  | (3,876)
Net income (loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 24,844 |  | (2,376) |  | 22,468
Net income (loss) attributable to noncontrolling interests |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 108 |  | (85) |  | 23
Net income (loss) attributable to Vale’s shareholders |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 24,736 |  | (2,291) |  | 22,445
(i) Includes the reclassification of the EBITDA of Midwestern System in the amount of US$109.
|  | Year ended December 31, 2020
|  | Iron ore |  | Iron ore pellets |  | Other ferrous products and services |  | Iron Solutions |  | Nickel and other products |  | Copper |  | Energy Transition Materials |  | Other (i) |  | Total of continuing operations |  | Coal (note 16a) |  | Total
Net operating revenue |  | 27,123 |  | 4,242 |  | 551 |  | 31,916 |  | 4,652 |  | 2,175 |  | 6,827 |  | 802 |  | 39,545 |  | 473 |  | 40,018
Cost of goods sold and services rendered |  | (8,025) |  | (1,661) |  | (433) |  | (10,119) |  | (2,734) |  | (794) |  | (3528) |  | (956) |  | (14,603) |  | (1,456) |  | (16,059)
Sales, administrative and other operating expenses |  | (192) |  | 11 |  | 3 |  | (178) |  | (21) |  | (7) |  | (28) |  | (6,293) |  | (6,499) |  | (15) |  | (6,514)
Research and development |  | (127) |  | (5) |  | (4) |  | (136) |  | (42) |  | (68) |  | (110) |  | (169) |  | (415) |  | (28) |  | (443)
Pre operating and operational stoppage |  | (532) |  | (77) |  | (29) |  | (638) |  | (29) |  | (1) |  | (30) |  | (14) |  | (682) |  | - |  | (682)
Dividends received and interest from associates and joint ventures |  | 23 |  | 116 |  | 2 |  | 141 |  | - |  | - |  | - |  | 32 |  | 173 |  | 95 |  | 268
Adjusted EBITDA |  | 18,270 |  | 2,626 |  | 90 |  | 20,986 |  | 1,826 |  | 1,305 |  | 3,131 |  | (6,598) |  | 17,519 |  | (931) |  | 16,588
Depreciation, depletion and amortization |  | (1,277) |  | (388) |  | (101) |  | (1,766) |  | (921) |  | (430) |  | (1,351) |  | (98) |  | (3,215) |  | (19) |  | (3,234)
Equity results and other results in associates and joint ventures |  | (1,033) |  | 37 |  | (22) |  | (1,018) |  | - |  | - |  | - |  | (2) |  | (1,020) |  | (43) |  | (1,063)
Dividends received and interest from associates and joint ventures |  | (23) |  | (116) |  | (2) |  | (141) |  | - |  | - |  | - |  | (32) |  | (173) |  | (95) |  | (268)
Impairment and disposals of non-current assets, net |  | (76) |  | - |  | (79) |  | (155) |  | (133) |  | (14) |  | (147) |  | (1,006) |  | (1308) |  | (935) |  | (2,243)
|  | 15,861 |  | 2,159 |  | (114) |  | 17,906 |  | 772 |  | 861 |  | 1,633 |  | (7,736) |  | 11,803 |  | (2,023) |  | 9,780
Unallocated items: |  |  |  |  |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial results |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (4,813) |  | 2 |  | (4,811)
Income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (735) |  | 297 |  | (438)
Net income (loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 6,255 |  | (1,724) |  | 4,531
Loss attributable to noncontrolling interests |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (3) |  | (347) |  | (350)
Net income (loss) attributable to Vale's shareholders |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 6,258 |  | (1,377) |  | 4,881
(i) | Includes the reclassification of the EBITDA of Midwestern System in the amount of US$19.
b) Assets by segment
Asset by segment |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | December 31, 2022 |  | December 31, 2021
|  | Iron Solutions |  | Energy Transition Materials |  | Other (ii) |  | Total |  | Iron Solutions |  | Energy Transition Materials |  | Other (ii) |  | Total
Investments in associates and joint ventures |  | 1,296 |  | - |  | 502 |  | 1,798 |  | 1,113 |  | 17 |  | 621 |  | 1,751
Property, plant and equipment and intangibles |  | 33,048 |  | 19,655 |  | 2,473 |  | 55,176 |  | 28,988 |  | 20,127 |  | 1,827 |  | 50,942
Capital expenditures |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sustaining capital (i) |  | 2,236 |  | 1,521 |  | 102 |  | 3,859 |  | 2,481 |  | 1,518 |  | 35 |  | 4,034
Project execution |  | 866 |  | 338 |  | 383 |  | 1,587 |  | 531 |  | 344 |  | 124 |  | 999
Product inventory |  | 3,102 |  | 1,859 |  | 485 |  | 5,446 |  | 3,012 |  | 1,862 |  | 159 |  | 5,033
(i) | According to the Company's shareholder remuneration policy, dividends are calculated based on 30% of the adjusted EBITDA less sustaining capital investments. The calculation also considered the investments made on the coal operation (discontinued operation, note 16a), which was US$38 for the year ended December 31, 2022 (2021: US$194).
(ii) | The sustaining capital investments related to the Midwestern System were reclassified from “Iron Solutions” to “Other” for the year ended December 31, 2022 in the amount of US$5 (2021: US$15).
c) Assets by geographic area
Assets by geographic area |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | December 31, 2022 |  | December 31, 2021
|  | Investments in associates and joint ventures |  | Intangible |  | Property, plant and equipment |  | Total |  | Investments in associates and joint ventures |  | Intangible |  | Property, plant and equipment |  | Total
Brazil |  | 1,798 |  | 8,391 |  | 28,210 |  | 38,399 |  | 1,730 |  | 7,050 |  | 23,793 |  | 32,573
Canada |  | - |  | 1,845 |  | 11,178 |  | 13,023 |  | - |  | 1,958 |  | 12,441 |  | 14,399
Americas, except Brazil and Canada |  | - |  | - |  | 4 |  | 4 |  | - |  | - |  | 3 |  | 3
Europe |  | - |  | - |  | 747 |  | 747 |  | - |  | - |  | 739 |  | 739
Indonesia |  | - |  | 1 |  | 2,731 |  | 2,732 |  | - |  | 1 |  | 2,723 |  | 2,724
Asia, except Indonesia and China |  | - |  | - |  | 786 |  | 786 |  | 21 |  | - |  | 874 |  | 895
China |  | - |  | 1 |  | 19 |  | 20 |  | - |  | 2 |  | 21 |  | 23
Oman |  | - |  | - |  | 1,263 |  | 1,263 |  | - |  | - |  | 1,337 |  | 1,337
Total |  | 1,798 |  | 10,238 |  | 44,938 |  | 56,974 |  | 1,751 |  | 9,011 |  | 41,931 |  | 52,693
d) Net operating revenue by shipment destination
Net operating revenue by shipment destination |  |  |  |  |  |  |  |
|  | Year ended December 31, 2022
|  | Iron Solutions (i) |  | Energy Transition Materials |  | Other (ii) |  | Total
Americas, except United States and Brazil |  | 477 |  | 597 |  | 125 |  | 1,199
United States of America |  | 218 |  | 1,425 |  | - |  | 1,643
Germany |  | 373 |  | 1,148 |  | - |  | 1,521
Europe, except Germany |  | 1,713 |  | 2,123 |  | - |  | 3,836
Middle East, Africa, and Oceania |  | 2,594 |  | 27 |  | 25 |  | 2,646
Japan |  | 2,765 |  | 770 |  | - |  | 3,535
China |  | 20,593 |  | 1,610 |  | - |  | 22,203
Asia, except Japan and China |  | 2,434 |  | 638 |  | 47 |  | 3,119
Brazil |  | 3,749 |  | 60 |  | 328 |  | 4,137
Net operating revenue |  | 34,916 |  | 8,398 |  | 525 |  | 43,839
|  | Year ended December 31, 2021
|  | Iron Solutions |  | Energy Transition Materials |  | Other (ii) |  | Total
Americas, except United States and Brazil |  | 759 |  | 402 |  | 122 |  | 1,283
United States of America |  | 392 |  | 1,151 |  | - |  | 1,543
Germany |  | 618 |  | 1,416 |  | - |  | 2,034
Europe, except Germany |  | 2,373 |  | 2,323 |  | - |  | 4,696
Middle East, Africa, and Oceania |  | 2,140 |  | 15 |  | - |  | 2,155
Japan |  | 3,977 |  | 546 |  | - |  | 4,523
China |  | 27,510 |  | 1,093 |  | - |  | 28,603
Asia, except Japan and China |  | 3,536 |  | 965 |  | - |  | 4,501
Brazil |  | 4,620 |  | 55 |  | 489 |  | 5,164
Net operating revenue |  | 45,925 |  | 7,966 |  | 611 |  | 54,502
|  | Year ended December 31, 2020
|  | Iron Solutions |  | Energy Transition Materials |  | Other (ii) |  | Total
Americas, except United States and Brazil |  | 271 |  | 83 |  | 406 |  | 760
United States of America |  | 244 |  | 797 |  | - |  | 1,041
Germany |  | 326 |  | 1,169 |  | 31 |  | 1,526
Europe, except Germany |  | 1,202 |  | 2,356 |  | 12 |  | 3,570
Middle East, Africa, and Oceania |  | 1,418 |  | 17 |  | - |  | 1,435
Japan |  | 1,793 |  | 400 |  | - |  | 2,193
China |  | 22,169 |  | 922 |  | 33 |  | 23,124
Asia, except Japan and China |  | 2,068 |  | 931 |  | - |  | 2,999
Brazil |  | 2,425 |  | 152 |  | 320 |  | 2,897
Net operating revenue |  | 31,916 |  | 6,827 |  | 802 |  | 39,545
(i) | In 2022, the revenue from Iron Solutions decreased from prior year, among other factors, due to the decline of 23.5% in the average realized price of iron ore, following the decrease in the international price of this product.
(ii) | Includes the reclassification of the revenues of Midwestern System in the amount of US$231, for the year ended December 31, 2022 (2021: US$377 and 2020: US$162).
Accounting policy Revenue from sales - Revenue is recognized when the control of a good or service is transferred to a customer. Since Vale’s sales are under different shipping terms, revenue could be recognized when (i) the product is available at the loading port, (ii) loaded on the ship, (iii) at the port of discharge or (iv) at the customer’s warehouse. A relevant proportion of Vale’s sales are under Cost and Freight (“CFR”) and Cost, Insurance and Freight (“CIF”) Incoterms, in which the Company is responsible for providing shipping services after the date that Vale transfers control of the goods to the customers. Shipping services for CFR and CIF contracts are considered as a separate performance obligation in which a proportion of the transaction price is allocated and recognized over time as the shipping services are provided. In general, the contract payment terms consider the upfront payments or the use of letters of credit. The payment terms do not have a significant financing component. In some cases, the sale price is determined on a provisional basis at the date of sale and adjustments to the sale price subsequently occur based on movements in the quoted market or contractual prices up to the date of final pricing. Revenue is recognized based on the estimated fair value of the total consideration receivable, and the provisionally priced sale mechanism embedded within these sale arrangements has the character of a derivative. Accordingly, the fair value of the final sale price adjustment is re-estimated continuously and changes in fair value are recognized as operational revenue in the income statement.

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