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Information by business segment and geographic area
 12 Months Ended
Dec. 31, 2023
Notes and other explanatory information [abstract]  
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 Committee 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’s adjusted EBITDA is calculated based on the operating income or loss (i) increased by dividends received and interest from associates and joint ventures; excluding (ii) depreciation, depletion, and amortization; and (iii) impairment reversal (impairment) and results on disposal of non-current assets.

 

Due to the reorganization of assets and the governance established by the Company for the Energy Transition Metals segment (notes 15 and 16), the Company is reviewing the items currently included in the EBITDA under "Other", especially the expenditures related to general and administrative expenses, research and development, and the results from associates and joint ventures. As a result, starting from 2024, the Company will reclassify some of these items currently classified under "Other" to Iron Ore Solutions and Energy Transition Metals segments.

 

In 2022, the Company allocated the financial information of the Midwestern System to “Other” as this operation was no longer analyzed by the chief operating decision maker as part of the performance of the Iron Ore Solutions business segment due to the binding agreement to sell this operation (note 16g). The comparative information was reclassified to reflect the revision in the allocation criteria.

 

Segment Main activities
Iron Ore Solutions Comprise the extraction and production of iron ore, iron ore pellets, other ferrous products, and its logistic related services.
Energy Transition Metals Includes the extraction and production 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 the extraction and production of metallurgical and thermal coal and its logistic related services.
Other Includes the revenue and cost of other products, services, research and development, investments in joint ventures and associates of other business and corporate expenses unallocated to the reportable segments, as well as the financial information related to Midwestern system and costs related to the Brumadinho event.

 

a) Adjusted EBITDA

 

       
    Year ended December 31,
  Notes 2023 2022 2021
Iron ore (i)   14,888 15,670 26,471
Iron ore pellets   3,122 3,653 4,873
Other ferrous products and services   117 120 136
Iron Ore Solutions   18,127 19,443 31,480
         
Nickel   851 1,924 1,576
Copper   1,100 569 1,617
Energy Transition Metals   1,951 2,493 3,193
         
Other (ii)   (2,117) (2,176) (3,330)
         
Adjusted EBITDA from continuing operations   17,961 19,760 31,343
         
Depreciation, depletion and amortization (3,070) (3,171) (3,034)
Impairment reversal (impairment) and results on disposal of non-current assets, net and other (ii) 16 and 19 (482) 773 (426)
Dividends received and interest from associates and joint ventures (iii)   (204) (154) (190)
Operating income   14,205 17,208 27,693
         
Equity results and other results in associates and joint ventures 15 (1,108) 305 (1,271)
Financial results 6 (1,946) 2,268 3,119
Income before income taxes   11,151 19,781 29,541

(i) Includes the reclassification of the EBITDA of Midwestern System from the Iron Ore Solutions segment to “Other” in the amounts of US$77 and US$109 for the years ended December 31, 2022 and December 31, 2021, respectively.

(ii) Includes adjustments of US$216 for the year ended December 31, 2023, to reflect the performance of the streaming transactions at market prices.

(iii) In 2022, the Company received US$65 in dividends from California Steel Industries related to the sale transaction of this investment, which was treated as part of the result of the transaction (note 16h) and, therefore, this amount was not included in the adjusted EBITDA.

 

         
    Year ended December 31,
  Notes 2023 2022 2021
Adjusted EBITDA from discontinued operations (coal)   - 171 (189)
         
Depreciation, depletion and amortization   - - (69)
Impairment and results on disposals of non-current assets, net   - (589) (3,282)
Dividends received and interest from associates and joint ventures   - - (78)
Operating loss 16(l) - (418) (3,618)
         
Equity results and other results in associates and joint ventures   - - (26)
Financial results   - 3,065 447
Derecognition of noncontrolling interest   - (585) -
Income (loss) before income taxes from discontinued operations (coal) 16(l) - 2,062 (3,197)

 

b) Net operating revenue by shipment destination

 

 

             
  Year ended December 31, 2023
  Iron Ore Solutions Energy Transition Metals    
  Iron ore Iron ore pellets Other ferrous products and services Nickel and other products Copper Other Total
China 20,641 2 - 642 292 - 21,577
Japan 2,356 279 1 583 - - 3,219
Asia, except Japan and China 2,111 407 10 513 267 - 3,308
Brazil 1,370 1,684 502 63 - 136 3,755
United States of America - 262 - 1,361 - - 1,623
Americas, except United States and Brazil 1 398 1 456 41 - 897
Germany 244 55 2 458 592 - 1,351
Europe, except Germany 1,037 374 - 1,082 1,184 - 3,677
Middle East, Africa, and Oceania - 2,342 - 35 - - 2,377
Net operating revenue 27,760 5,803 516 5,193 2,376 136 41,784

 

  Year ended December 31, 2022
  Iron Ore Solutions Energy Transition Metals    
  Iron ore Iron ore pellets Other ferrous products and services Nickel and other products Copper Other Total
China 20,545 41 7 1,538 72 - 22,203
Japan 2,557 208 - 765 5 - 3,535
Asia, except Japan and China 2,028 393 13 484 154 47 3,119
Brazil 1,305 1,997 447 60 - 328 4,137
United States of America - 218 - 1,425 - - 1,643
Americas, except United States and Brazil - 472 5 597 - 125 1,199
Germany 357 16 - 597 551 - 1,521
Europe, except Germany 1,396 317 - 1,126 997 - 3,836
Middle East, Africa, and Oceania - 2,594 - 27 - 25 2,646
Net operating revenue 28,188 6,256 472 6,619 1,779 525 43,839

 

  Year ended December 31, 2021
  Iron Ore Solutions Energy Transition Metals    
  Iron ore (i) Iron ore pellets Other ferrous products and services Nickel and other products Copper Other Total
China 27,296 159 55 904 189 - 28,603
Japan 3,489 488 - 514 32 - 4,523
Asia, except Japan and China 2,998 515 23 592 373 - 4,501
Brazil 1,778 2,417 425 55 - 489 5,164
United States of America 23 369 - 1,151 - - 1,543
Americas, except United States and Brazil 5 725 29 362 40 122 1,283
Germany 558 48 12 657 759 - 2,034
Europe, except Germany 2,175 194 4 1,126 1,197 - 4,696
Middle East, Africa, and Oceania 2 2,138 - 15 - - 2,155
Net operating revenue 38,324 7,053 548 5,376 2,590 611 54,502

(i) Includes the reclassification of the revenues of Midwestern System from the Iron Ore Solutions segment to “Other” in the amounts of US$231 and US$377 for the years ended December 31, 2022 and December 31, 2021, respectively.

 

The revenue from a single customer from the Iron Ore Solutions segment amounted to US$4,239, individually representing 10% of the Company's total revenue for the year ended December 31, 2023. In 2022 and 2021, no customer individually represented 10% or more of the Company's revenue.

 

c) Assets by segment

 

 

                 
  December 31, 2023 December 31, 2022
  Iron Ore Solutions Energy Transition Metals Other Total Iron Ore Solutions Energy Transition Metals Other Total
Investments in associates and joint ventures 1,349 - 523 1,872 1,296 - 502 1,798
Property, plant and equipment and intangibles 38,376 18,341 3,310 60,027 33,048 19,655 2,473 55,176
                 
Capital expenditures                
Sustaining capital (i) 2,539 1,610 120 4,269 2,236 1,521 102 3,859
Project execution 1,219 358 74 1,651 866 338 383 1,587
Product inventory  3,758 1,968 194 5,920 3,102 1,859 485 5,446

 

(i) According to the Company's shareholders 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 discontinued operation (note 16l), which was US$38 for the year ended December 31, 2022.

 

d) Assets by geographic area

 

 

               
  December 31, 2023 December 31, 2022
  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 1,872 9,822 33,769 45,463 1,798 8,391 28,210 38,399
Canada - 1,808 11,890 13,698 - 1,845 11,178 13,023
Americas, except Brazil and Canada - - 4 4 - - 4 4
Indonesia (i) - - 59 59 - 1 2,731 2,732
China - 1 14 15 - 1 19 20
Asia, except Indonesia and China - - 731 731 - - 786 786
Europe - - 678 678 - - 747 747
Oman - - 1,251 1,251 - - 1,263 1,263
Total 1,872 11,631 48,396 61,899 1,798 10,238 44,938 56,974

 

(i) The reduction refers substantially to the reclassification of PTVI's assets presented in these financial statements as “held for sale” in accordance with IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations.

 

 

 

Accounting policy

 

Revenue from sales - Revenue from sales is recognized when control of a good or service is transferred to a customer. Given the diverse shipping terms associated with Vale's sales, revenue may be recognized at various stages: (i) when the product is available at the loading port, (ii) upon loading onto the ship, (iii) at the port of discharge, or (iv) at the customer's warehouse.

 

A substantial portion of Vale's sales operates under Cost and Freight ("CFR") and Cost, Insurance, and Freight ("CIF") Incoterms. In these instances, where the Company provides shipping services after the transfer of control, such services are treated as a distinct performance obligation. A portion of the transaction price is allocated and recognized over time as the shipping services are rendered.

 

Typically, contract payment terms involve upfront payments or the utilization of letters of credit. These terms generally do not have a significant financing component. Occasionally, sale prices are provisionally set at the sale date, with subsequent adjustments based on market fluctuations or contractual terms until the final pricing date.

 

Revenue recognition is based on the estimated fair value of the total consideration receivable. The provisional pricing mechanism embedded in these sales arrangements is deemed to have the characteristics of a derivative. Consequently, the fair value of the final sale price adjustment is continuously reassessed, and any changes are recognized as operational revenue in the income statement.