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

 

October, 2015

 

Vale S.A.

 

Avenida Graça Aranha, No. 26
20030-900 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

 

GRAPHIC

 

Interim Financial Statements

 

September 30, 2015

 

BRGAAP

 

 

 

Filed with the CVM, SEC and HKEx on

October 22, 2015

 

1



Table of Contents

 

GRAPHIC

 

Vale S.A.

Index to the Interim Financial Statements

 

 

Page

 

 

Independent auditor’s report on the review of the quarterly information - ITR

3

 

 

Condensed Consolidated and Parent Company Balance Sheets as at September 30, 2015 and December 31, 2014

5

 

 

Condensed Consolidated and Parent Company Statements of Income for the three-month and nine-month periods ended September 30, 2015 and 2014

7

 

 

Condensed Consolidated and Parent Company Statements of Comprehensive Income for the three-month and nine-month periods ended September 30, 2015 and 2014

9

 

 

Condensed Statement of Changes in Stockholder’s Equity for the nine-month period ended September 30, 2015 and 2014

10

 

 

Condensed Consolidated Statement of Cash Flow for the three-month and nine-month periods ended September 30, 2015 and 2014

11

 

 

Condensed Parent Company Statement of Cash Flow for the nine-month period ended September 30, 2015 and 2014

12

 

 

Condensed Consolidated and Parent Company Statement of Added Value for the three-month and nine-month periods ended September 30, 2015 and 2014

13

 

 

Selected Notes to the Interim Financial Statements

14

 

 

Board of Directors, Fiscal Council, Advisory Committees and Executive Officers

67

 

2



Table of Contents

 

GRAPHIC

 

GRAPHIC

 

KPMG Auditores Independentes

 

Central Tel

 

55 (21) 3515-9400

Av. Almirante Barroso, 52 - 4º

 

Fax

 

55 (21) 3515-9000

20031-000 - Rio de Janeiro, RJ - Brasil

 

Internet

 

www.kpmg.com.br

Caixa Postal 2888

 

 

 

 

20001-970 - Rio de Janeiro, RJ - Brasil

 

 

 

 

 

Report on the review of quarterly information - ITR

 

(A free translation of the original report in Portuguese, as filed with the Brazilian Securities and Exchange Commission (CVM), prepared in accordance with the accounting practices adopted in Brazil, rules of the CVM and of the International Financial Reporting Standards - IFRS)

 

To

 

The Board of Directors and Stockholders of

Vale S.A.

Rio de Janeiro - RJ

 

Introduction

 

1.              We have reviewed the interim accounting information of Vale S.A. (“the Company”), included in the quarterly information form - ITR for the quarter ended September 30, 2015, which comprises the individual and consolidated balance sheet as of September 30, 2015 and the respective individual and consolidated statements of income and comprehensive income for the three-month and nine-month periods ended on September 30, 2015, the individual and consolidated statements of changes in stockholders’ equity for the nine-month period then ended and the individual statement of cash flows for the nine-month period and the consolidated statement of cash flows for the three-month and nine-month periods then ended, including the explanatory notes.

 

2.              The Company`s Management is responsible for the preparation of the interim accounting information in accordance with the Accounting Pronouncement CPC 21(R1) — “Demonstração Intermediária” and the international accounting rule IAS 34 - Interim Financial Reporting, issued by the IASB, as well as the presentation of these information in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of quarterly information - ITR. Our responsibility is to express our conclusion on this interim accounting information based on our review.

 

Scope of the review

 

3.              We conducted our review in accordance with Brazilian and International Interim Information Review Standards (NBC TR 2410 - Revisão de Informações Intermediárias Executada pelo Auditor da Entidade and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity), respectively. A review of interim information consists of making inquiries primarily of the management responsible for financial and accounting matters and applying analytical procedures and other review procedures. The scope of a review is significantly less than an audit conducted in accordance with auditing standards and, accordingly, it did not enable us to obtain assurance that we were aware of all the material matters that would have been identified in an audit. Therefore, we do not express an audit opinion.

 

KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative (“KPMG International”), uma entidade suíça.

 

KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

 

3



Table of Contents

 

Conclusion on the interim accounting information

 

4.              Based on our review, we are not aware of any fact that might lead us to believe that the individual and consolidated interim accounting information included in the aforementioned quarterly information was not prepared, in all material respects, in accordance with CPC 21(R1) and IAS 34, applicable to the preparation of the quarterly review - ITR, and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.

 

Other matters

 

Statements of added value

 

5.              We have also reviewed the individual and consolidated interim information of added value for the nine-month period ended September 30, 2015, prepared under the responsibility of the Company`s Management, for which presentation is required in the interim information in accordance with the standards issued by the CVM applicable to the preparation of quarterly information - ITR, and considered as supplementary information by IFRS, which does not require the presentation of the statements of added value. These statements were submitted to the same review procedures described previously and, based on our review, we are not aware of any fact that might lead us to believe that they were not prepared, in all material respects, in accordance with the individual and consolidated interim accounting information, taken as a whole.

 

Rio de Janeiro, October 21, 2015

 

KPMG Auditores Independentes

CRC SP-014428/O-6 F-RJ

 

(Original report in Portuguese signed by)

Manuel Fernandes Rodrigues de Sousa

Accountant CRC RJ-052428/O-2

 

4



Table of Contents

 

GRAPHIC

 

Condensed Balance Sheet

 

In millions of Brazilian Reais

 

 

 

Consolidated

 

Parent Company

 

 

 

Notes

 

September 30,
2015

 

December 31,
2014

 

September 30,
2015

 

December 31,
2014

 

 

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

8

 

17,470

 

10,555

 

6,929

 

685

 

Financial investments

 

 

 

258

 

392

 

18

 

392

 

Derivative financial instruments

 

24

 

629

 

441

 

388

 

370

 

Accounts receivable

 

9

 

8,055

 

8,700

 

35,488

 

30,599

 

Related parties

 

31

 

1,362

 

1,537

 

1,199

 

2,227

 

Inventories

 

10

 

15,129

 

11,956

 

4,154

 

3,655

 

Prepaid income taxes

 

 

 

3,591

 

4,200

 

3,204

 

3,782

 

Recoverable taxes

 

11

 

5,420

 

4,515

 

3,197

 

2,687

 

Others

 

 

 

2,965

 

1,780

 

789

 

1,169

 

 

 

 

 

54,879

 

44,076

 

55,366

 

45,566

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets held for sale

 

6

 

15,448

 

9,669

 

 

1,501

 

 

 

 

 

70,327

 

53,745

 

55,366

 

47,067

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

Related parties

 

31

 

89

 

93

 

1,175

 

902

 

Loans and financing

 

 

 

772

 

609

 

103

 

104

 

Judicial deposits

 

18(c)

 

3,328

 

3,370

 

2,642

 

2,721

 

Prepaid income taxes

 

 

 

1,657

 

1,271

 

 

 

Deferred income taxes

 

20

 

31,710

 

10,560

 

24,044

 

6,430

 

Recoverable taxes

 

11

 

2,092

 

1,064

 

1,411

 

566

 

Derivative financial instruments

 

24

 

529

 

231

 

467

 

29

 

Others

 

 

 

2,950

 

1,873

 

756

 

349

 

 

 

 

 

43,127

 

19,071

 

30,598

 

11,101

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

12

 

12,320

 

10,978

 

149,431

 

118,628

 

Intangible assets, net

 

13

 

21,901

 

18,114

 

21,139

 

17,454

 

Property, plant and equipment, net

 

14

 

245,736

 

207,507

 

93,925

 

87,321

 

 

 

 

 

323,084

 

255,670

 

295,093

 

234,504

 

Total

 

 

 

393,411

 

309,415

 

350,459

 

281,571

 

 

5



Table of Contents

 

GRAPHIC

 

Condensed Balance Sheet

 

In millions of Brazilian Reais

(continued)

 

 

 

Consolidated

 

Parent Company

 

 

 

Notes

 

September 30,
2015

 

December 31,
2014

 

September 30,
2015

 

December 31,
2014

 

 

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

Suppliers and contractors

 

 

 

13,832

 

11,566

 

7,387

 

6,818

 

Payroll and related charges

 

 

 

1,810

 

3,089

 

1,028

 

2,017

 

Derivative financial instruments

 

24

 

5,649

 

3,760

 

1,665

 

948

 

Loans and financing

 

16

 

12,037

 

3,768

 

7,013

 

2,853

 

Related parties

 

31

 

560

 

813

 

8,753

 

5,622

 

Income taxes - Settlement program

 

19

 

1,310

 

1,213

 

1,285

 

1,189

 

Taxes payable

 

 

 

1,038

 

1,461

 

305

 

376

 

Provision for income taxes

 

 

 

862

 

937

 

 

 

Employee postretirement obligations

 

21(a)

 

276

 

177

 

73

 

66

 

Asset retirement obligations

 

17

 

320

 

361

 

83

 

89

 

Redeemable noncontrolling interest

 

 

 

536

 

 

 

 

Others

 

 

 

1,281

 

1,074

 

907

 

690

 

 

 

 

 

39,511

 

28,219

 

28,499

 

20,668

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities associated with non-current assets held for sale

 

6

 

1,111

 

294

 

 

 

 

 

 

 

40,622

 

28,513

 

28,499

 

20,668

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

24

 

11,157

 

4,276

 

9,332

 

3,866

 

Loans and financing

 

16

 

101,883

 

72,749

 

54,180

 

38,542

 

Related parties

 

31

 

304

 

288

 

63,523

 

43,606

 

Employee postretirement obligations

 

21(a)

 

7,473

 

5,941

 

454

 

466

 

Provisions for litigation

 

18(a)

 

3,410

 

3,405

 

2,261

 

2,448

 

Income taxes - Settlement program

 

19

 

15,860

 

15,572

 

15,532

 

15,254

 

Deferred income taxes

 

20

 

11,505

 

8,874

 

 

 

Asset retirement obligations

 

17

 

10,522

 

8,588

 

3,447

 

3,106

 

Participative stockholders’ debentures

 

30(b)

 

2,397

 

4,584

 

2,397

 

4,584

 

Redeemable noncontrolling interest

 

 

 

 

645

 

 

 

Deferred revenue - Gold stream

 

29

 

7,091

 

3,516

 

 

 

Others

 

 

 

4,390

 

2,863

 

2,945

 

2,617

 

 

 

 

 

175,992

 

131,301

 

154,071

 

114,489

 

Total liabilities

 

 

 

216,614

 

159,814

 

182,570

 

135,157

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

25

 

 

 

 

 

 

 

 

 

Preferred class A stock — 7,200,000,000 no-par-value shares authorized and 2,027,127,718 shares issued

 

 

 

29,879

 

29,879

 

29,879

 

29,879

 

Common stock — 3,600,000,000 no-par-value shares authorized and 3,217,188,402 shares issued

 

 

 

47,421

 

47,421

 

47,421

 

47,421

 

Treasury stock — 59,405,792 preferred and 31,535,402 common shares

 

 

 

(2,746

)

(2,746

)

(2,746

)

(2,746

)

Results from operations with noncontrolling stockholders

 

 

 

(307

)

(970

)

(307

)

(970

)

Results on conversion of shares

 

 

 

50

 

50

 

50

 

50

 

Unrealized fair value gain (losses)

 

 

 

(4,653

)

(4,553

)

(4,653

)

(4,553

)

Cumulative translation adjustments

 

 

 

59,319

 

24,248

 

59,319

 

24,248

 

Profit reserves

 

 

 

38,926

 

53,085

 

38,926

 

53,085

 

Total company stockholders’ equity

 

 

 

167,889

 

146,414

 

167,889

 

146,414

 

Noncontrolling stockholders’ interests

 

 

 

8,908

 

3,187

 

 

 

Total stockholders’ equity

 

 

 

176,797

 

149,601

 

167,889

 

146,414

 

Total liabilities and stockholders’ equity

 

 

 

393,411

 

309,415

 

350,459

 

281,571

 

 

The accompanying notes are an integral part of these interim financial statements.

 

6



Table of Contents

 

GRAPHIC

 

Condensed Statement of Income

 

In millions of Brazilian Reais, except as otherwise stated

 

 

 

 

 

Consolidated (unaudited)

 

 

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

Notes

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenue

 

26(c)

 

23,350

 

20,630

 

62,818

 

65,123

 

Cost of goods sold and services rendered

 

27(a)

 

(18,025

)

(14,810

)

(48,981

)

(41,548

)

Gross profit

 

 

 

5,325

 

5,820

 

13,837

 

23,575

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (expenses) income

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative expenses

 

27(b)

 

(458

)

(621

)

(1,501

)

(1,816

)

Research and evaluation expenses

 

 

 

(434

)

(442

)

(1,143

)

(1,141

)

Pre operating and stoppage operation

 

 

 

(936

)

(644

)

(2,491

)

(1,819

)

Other operating expenses, net

 

27(c)

 

(422

)

(398

)

(866

)

(1,268

)

 

 

 

 

(2,250

)

(2,105

)

(6,001

)

(6,044

)

Impairment of non-current assets

 

15

 

 

 

 

(1,730

)

Gain (loss) on measurement or sale of non-current assets

 

6 and 7

 

(189

)

 

185

 

 

Operating income

 

 

 

2,886

 

3,715

 

8,021

 

15,801

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial income

 

28

 

9,048

 

2,576

 

20,474

 

8,408

 

Financial expenses

 

28

 

(34,895

)

(10,366

)

(58,375

)

(15,999

)

Equity results from joint ventures and associates

 

12

 

(1,204

)

74

 

(1,361

)

1,075

 

Results on sale or disposal of investments from joint ventures and associates

 

6 and 7

 

 

(100

)

296

 

(139

)

Net income (loss) before income taxes

 

 

 

(24,165

)

(4,101

)

(30,945

)

9,146

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

20

 

 

 

 

 

 

 

 

 

Current tax

 

 

 

(353

)

138

 

(761

)

(3,282

)

Deferred tax

 

 

 

17,430

 

612

 

19,927

 

(541

)

 

 

 

 

17,077

 

750

 

19,166

 

(3,823

)

Net income (loss)

 

 

 

(7,088

)

(3,351

)

(11,779

)

5,323

 

Loss attributable to noncontrolling stockholders’ interests

 

 

 

(425

)

30

 

(721

)

(392

)

Net income (loss) attributable to the Company’s stockholders

 

 

 

(6,663

)

(3,381

)

(11,058

)

5,715

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to the Company’s stockholders:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share:

 

25(b)

 

 

 

 

 

 

 

 

 

Preferred share (R$)

 

 

 

(1.29

)

(0.66

)

(2.15

)

1.11

 

Common share (R$)

 

 

 

(1.29

)

(0.66

)

(2.15

)

1.11

 

 

The accompanying notes are an integral part of these interim financial statements.

 

7



Table of Contents

 

GRAPHIC

 

Condensed Statement of Income

 

In millions of Brazilian Reais, except as otherwise stated

 

 

 

 

 

Parent company (unaudited)

 

 

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

Notes

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenue

 

 

 

11,346

 

12,144

 

30,948

 

41,878

 

Cost of goods sold and services rendered

 

27(a)

 

(6,846

)

(6,612

)

(20,037

)

(18,499

)

Gross profit

 

 

 

4,500

 

5,532

 

10,911

 

23,379

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (expenses) income

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative expenses

 

27(b)

 

(266

)

(357

)

(845

)

(980

)

Research and evaluation expenses

 

 

 

(195

)

(284

)

(547

)

(664

)

Pre operating and stoppage operation

 

 

 

(129

)

(121

)

(353

)

(316

)

Equity results from subsidiaries

 

12

 

(1,759

)

(2,796

)

(3,359

)

(7,480

)

Other operating expenses, net

 

27(c)

 

(155

)

(56

)

(504

)

(829

)

 

 

 

 

(2,504

)

(3,614

)

(5,608

)

(10,269

)

Gain on measurement or sale of non-current assets

 

6

 

 

 

546

 

 

Operating income

 

 

 

1,996

 

1,918

 

5,849

 

13,110

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial income

 

28

 

9,190

 

1,923

 

19,652

 

7,238

 

Financial expenses

 

28

 

(31,518

)

(8,250

)

(52,858

)

(12,910

)

Equity results from joint ventures and associates

 

12

 

(1,204

)

74

 

(1,361

)

1,075

 

Results on sale or disposal of investments from joint ventures and associates

 

6

 

 

(100

)

55

 

(139

)

Net income (loss) before income taxes

 

 

 

(21,536

)

(4,435

)

(28,663

)

8,374

 

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

20

 

 

 

 

 

 

 

 

 

Current tax

 

 

 

18

 

393

 

18

 

(2,582

)

Deferred tax

 

 

 

14,855

 

661

 

17,587

 

(77

)

 

 

 

 

14,873

 

1,054

 

17,605

 

(2,659

)

Net income (loss)

 

 

 

(6,663

)

(3,381

)

(11,058

)

5,715

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to the Company’s stockholders:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share:

 

25(b)

 

 

 

 

 

 

 

 

 

Preferred share (R$)

 

 

 

(1.29

)

(0.66

)

(2.15

)

1.11

 

Common share (R$)

 

 

 

(1.29

)

(0.66

)

(2.15

)

1.11

 

 

The accompanying notes are an integral part of these interim financial statements.

 

8



Table of Contents

 

GRAPHIC

 

Condensed Statement of Comprehensive Income

 

In millions of Brazilian Reais

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

Net income (loss)

 

(7,088

)

(3,351

)

(11,779

)

5,323

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

Items that will not be reclassified subsequently to income

 

 

 

 

 

 

 

 

 

Retirement benefit obligations

 

 

 

 

 

 

 

 

 

Gross balance for the period

 

(25

)

10

 

(48

)

248

 

Effect of taxes

 

6

 

(8

)

80

 

(54

)

Equity results from entities, net taxes

 

 

 

 

3

 

 

 

(19

)

2

 

32

 

197

 

Total items that will not be reclassified subsequently to income

 

(19

)

2

 

32

 

197

 

 

 

 

 

 

 

 

 

 

 

Items that will be reclassified subsequently to income

 

 

 

 

 

 

 

 

 

Cumulative translation adjustments

 

 

 

 

 

 

 

 

 

Gross balance for the period

 

24,733

 

8,250

 

36,846

 

2,778

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedge

 

 

 

 

 

 

 

 

 

Gross balance for the period

 

254

 

(127

)

1,812

 

18

 

Effect of taxes

 

(6

)

4

 

(16

)

(4

)

Equity results from entities, net taxes

 

(8

)

5

 

(16

)

11

 

Transfer of realized results to income, net of taxes

 

(135

)

(27

)

(823

)

(98

)

 

 

105

 

(145

)

957

 

(73

)

Total of items that will be reclassified subsequently to income

 

24,838

 

8,105

 

37,803

 

2,705

 

Total comprehensive income (loss)

 

17,731

 

4,756

 

26,056

 

8,225

 

Comprehensive income (loss) attributable to noncontrolling stockholders’ interests

 

692

 

347

 

910

 

(266

)

Comprehensive income (loss) attributable to the Company’s stockholders

 

17,039

 

4,409

 

25,146

 

8,491

 

 

 

 

Parent company (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

Net income (loss)

 

(6,663

)

(3,381

)

(11,058

)

5,715

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

Items that will not be reclassified subsequently to income

 

 

 

 

 

 

 

 

 

Retirement benefit obligations

 

 

 

 

 

 

 

 

 

Gross balance for the period

 

(31

)

(62

)

(81

)

(189

)

Effect of taxes

 

11

 

21

 

27

 

64

 

Equity results from entities, net taxes

 

1

 

43

 

86

 

322

 

 

 

(19

)

2

 

32

 

197

 

Total items that will not be reclassified subsequently to income

 

(19

)

2

 

32

 

197

 

 

 

 

 

 

 

 

 

 

 

Items that will be reclassified subsequently to income

 

 

 

 

 

 

 

 

 

Cumulative translation adjustments

 

 

 

 

 

 

 

 

 

Gross balance for the period

 

23,616

 

7,933

 

35,215

 

2,652

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedge

 

 

 

 

 

 

 

 

 

Equity results from entities, net taxes

 

105

 

(145

)

957

 

(73

)

 

 

105

 

(145

)

957

 

(73

)

Total of items that will be reclassified subsequently to income

 

23,721

 

7,788

 

36,172

 

2,579

 

Total comprehensive income (loss)

 

17,039

 

4,409

 

25,146

 

8,491

 

 

The accompanying notes are an integral part of these interim financial statements.

 

9



Table of Contents

 

GRAPHIC

 

Condensed Statement of Changes in Stockholders’ Equity

 

In millions of Brazilian Reais

 

 

 

Nine-month period ended

 

 

 

Capital

 

Results on
conversion
of shares

 

Results from
operation with
noncontrolling
stockholders

 

Profit
reserves

 

Treasury
stocks

 

Unrealized fair
value gain
(losses)

 

Cumulative
translation
adjustments

 

Retained
earnings

 

Total
Company
stockholder’s
equity

 

Noncontrolling
stockholders’
interests

 

Total
stockholder’s
equity

 

December 31, 2013

 

75,000

 

50

 

(840

)

69,262

 

(7,838

)

(2,815

)

15,527

 

 

148,346

 

3,775

 

152,121

 

Net income (loss)

 

 

 

 

 

 

 

 

5,715

 

5,715

 

(392

)

5,323

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement benefit obligations

 

 

 

 

 

 

197

 

 

 

197

 

 

197

 

Cash flow hedge

 

 

 

 

 

 

(73

)

 

 

(73

)

 

(73

)

Translation adjustments

 

 

 

 

 

 

(4

)

2,656

 

 

2,652

 

126

 

2,778

 

Contribution and distribution to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions and disposal of participation of noncontrolling stockholders

 

 

 

 

 

 

 

 

 

 

(553

)

(553

)

Capitalization of reserves

 

2,300

 

 

 

(2,300

)

 

 

 

 

 

 

 

Capitalization of noncontrolling stockholders advances

 

 

 

 

 

 

 

 

 

 

209

 

209

 

Cancellation of treasury stock

 

 

 

 

(5,092

)

5,092

 

 

 

 

 

 

 

Dividends of noncontrolling stockholders

 

 

 

 

 

 

 

 

 

 

(15

)

(15

)

Dividends and interest on capital of Company’s stockholders

 

 

 

 

 

 

 

 

(4,632

)

(4,632

)

 

(4,632

)

September 30, 2014 (unaudited)

 

77,300

 

50

 

(840

)

61,870

 

(2,746

)

(2,695

)

18,183

 

1,083

 

152,205

 

3,150

 

155,355

 

 

 

 

Nine-month period ended

 

 

 

Capital

 

Results on
conversion
of shares

 

Results from
operation with
noncontrolling
stockholders

 

Profit
reserves

 

Treasury
stocks

 

Unrealized fair
value gain
(losses)

 

Cumulative
translation
adjustments

 

Retained
earnings

 

Total
Company
stockholder’s
equity

 

Noncontrolling
stockholders’
interests

 

Total
stockholder’s
equity

 

December 31, 2014

 

77,300

 

50

 

(970

)

53,085

 

(2,746

)

(4,553

)

24,248

 

 

146,414

 

3,187

 

149,601

 

Loss

 

 

 

 

 

 

 

 

(11,058

)

(11,058

)

(721

)

(11,779

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement benefit obligations

 

 

 

 

 

 

32

 

 

 

32

 

 

32

 

Cash flow hedge

 

 

 

 

 

 

957

 

 

 

957

 

 

957

 

Translation adjustments

 

 

 

 

 

 

(1,089

)

36,304

 

 

35,215

 

1,631

 

36,846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution and distribution to stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions and disposal of participation of noncontrolling stockholders

 

 

 

663

 

 

 

 

(1,233

)

 

(570

)

4,746

 

4,176

 

Capitalization of noncontrolling stockholders advances

 

 

 

 

 

 

 

 

 

 

86

 

86

 

Dividends of noncontrolling stockholders

 

 

 

 

 

 

 

 

 

 

(21

)

(21

)

Dividends and interest on capital of Company’s stockholders

 

 

 

 

(3,101

)

 

 

 

 

(3,101

)

 

(3,101

)

September 30, 2015 (unaudited)

 

77,300

 

50

 

(307

)

49,984

 

(2,746

)

(4,653

)

59,319

 

(11,058

)

167,889

 

8,908

 

176,797

 

 

The accompanying notes are an integral part of these interim financial statements.

 

10



Table of Contents

 

GRAPHIC

 

Condensed Statement of Cash Flow

 

In millions of Brazilian Reais

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

Cash flow from operating activities:

 

 

 

 

 

 

 

 

 

Net income (loss)

 

(7,088

)

(3,351

)

(11,779

)

5,323

 

Adjustments for:

 

 

 

 

 

 

 

 

 

Equity results from entities

 

1,204

 

(74

)

1,361

 

(1,075

)

Loss (gain) on measurement or sale of non-current assets

 

189

 

 

(185

)

 

Results on sale or disposal of investments of joint ventures and associates

 

 

100

 

(296

)

139

 

Gain on disposal of property, plant and equipment and intangibles

 

166

 

89

 

(565

)

783

 

Impairment of non-current assets

 

 

 

 

1,730

 

Depreciation, amortization and depletion

 

3,670

 

2,548

 

9,709

 

6,949

 

Deferred income taxes

 

(17,430

)

(612

)

(19,927

)

541

 

Foreign exchange and indexation, net

 

18,644

 

2,002

 

27,023

 

980

 

Unrealized derivative loss (gain), net

 

6,239

 

2,001

 

7,992

 

914

 

Participative stockholders’ debentures

 

(245

)

201

 

(2,073

)

848

 

Others

 

(649

)

800

 

(1,321

)

1,221

 

Decrease (increase) in assets:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

1,210

 

1,474

 

1,898

 

5,024

 

Inventories

 

(1,171

)

262

 

(690

)

(1,485

)

Recoverable taxes

 

(417

)

(975

)

(1,825

)

1,728

 

Others

 

(548

)

147

 

(397

)

419

 

Increase (decrease) in liabilities:

 

 

 

 

 

 

 

 

 

Suppliers and contractors

 

1,493

 

991

 

1,115

 

1,157

 

Payroll and related charges

 

188

 

586

 

(1,439

)

(377

)

Taxes and contributions

 

99

 

(594

)

396

 

(857

)

Deferred revenue - Gold stream

 

 

 

1,670

 

 

Income taxes - Settlement program

 

161

 

117

 

385

 

331

 

Others

 

260

 

950

 

(432

)

739

 

Net cash provided by operating activities

 

5,975

 

6,662

 

10,620

 

25,032

 

 

 

 

 

 

 

 

 

 

 

Cash flow from investing activities:

 

 

 

 

 

 

 

 

 

Financial investments redeemed

 

180

 

(983

)

917

 

(980

)

Loans and advances received (granted)

 

10

 

635

 

(23

)

751

 

Guarantees and deposits granted

 

73

 

(129

)

(64

)

(241

)

Additions to investments

 

(22

)

(51

)

(140

)

(507

)

Acquisition of subsidiary (note 7(e))

 

 

 

(237

)

 

Additions to property, plant and equipment and intangible

 

(6,616

)

(5,893

)

(19,366

)

(17,573

)

Dividends and interest on capital received from joint ventures and associates

 

71

 

591

 

722

 

1,081

 

Proceeds from disposal of assets and investments

 

1,793

 

2,000

 

3,542

 

2,709

 

Proceeds from gold stream transaction

 

 

 

1,156

 

 

Net cash used in investing activities

 

(4,511

)

(3,830

)

(13,493

)

(14,760

)

 

 

 

 

 

 

 

 

 

 

Cash flow from financing activities:

 

 

 

 

 

 

 

 

 

Financial institutions - Loans and financing

 

 

 

 

 

 

 

 

 

Loans and financing

 

 

 

 

 

 

 

 

 

Additions

 

3,772

 

1,891

 

12,196

 

3,464

 

Repayments

 

(3,287

)

(1,451

)

(5,930

)

(2,677

)

Repayments to stockholders:

 

 

 

 

 

 

 

 

 

Dividends and interest on capital paid to stockholders

 

 

 

(3,101

)

(4,632

)

Dividends and interest on capital attributed to noncontrolling stockholders

 

 

(24

)

(35

)

(24

)

Transactions with noncontrolling stockholders

 

4,000

 

 

3,875

 

 

Net cash provided by (used in) financing activities

 

4,485

 

416

 

7,005

 

(3,869

)

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

5,949

 

3,248

 

4,132

 

6,403

 

Cash and cash equivalents in the beginning of the period

 

9,799

 

15,560

 

10,555

 

12,465

 

Effect of exchange rate changes on cash and cash equivalents

 

1,722

 

511

 

2,783

 

451

 

Cash and cash equivalents at end of the period

 

17,470

 

19,319

 

17,470

 

19,319

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for (i):

 

 

 

 

 

 

 

 

 

Interest on loans and financing

 

(1,445

)

(920

)

(3,760

)

(2,758

)

Derivatives received (paid), net

 

(622

)

80

 

(2,709

)

313

 

Income taxes

 

(166

)

(187

)

(1,069

)

(713

)

Income taxes - Settlement program

 

(325

)

(294

)

(950

)

(860

)

Non-cash transactions:

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment - interest capitalization

 

689

 

488

 

1,789

 

901

 

 


(i) Amounts paid are classified as cash flows from operating activities.

 

11



Table of Contents

 

GRAPHIC

 

Condensed Statement of Cash Flow

 

In millions of Brazilian Reais

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Cash flow from operating activities:

 

 

 

 

 

Net income (loss)

 

(11,058

)

5,715

 

Adjustments for:

 

 

 

 

 

Equity results from entities

 

4,720

 

6,405

 

Results on sale or disposal of investments of joint ventures and associates

 

(601

)

139

 

Loss on disposal of property, plant and equipment and intangibles

 

160

 

158

 

Depreciation, amortization and depletion

 

3,330

 

2,577

 

Deferred income taxes

 

(17,587

)

77

 

Foreign exchange and indexation, net

 

39,459

 

2,643

 

Unrealized derivative loss (gain), net

 

6,036

 

485

 

Dividends and interest on capital received from subsidiaries

 

717

 

19

 

Participative stockholders’ debentures

 

(2,073

)

848

 

Others

 

(189

)

1,959

 

Decrease (increase) in assets:

 

 

 

 

 

Accounts receivable

 

(5,068

)

(13,711

)

Inventories

 

(173

)

19

 

Recoverable taxes

 

(1,422

)

1,478

 

Others

 

(595

)

197

 

Increase (decrease) in liabilities:

 

 

 

 

 

Suppliers and contractors

 

452

 

1,566

 

Payroll and related charges

 

(1,075

)

(252

)

Taxes and contributions

 

882

 

(219

)

Income taxes - Settlement program

 

375

 

324

 

Others

 

(126

)

1

 

Net cash provided by operating activities

 

16,164

 

10,428

 

 

 

 

 

 

 

Cash flow from investing activities:

 

 

 

 

 

Financial investments redeemed

 

374

 

8

 

Loans and advances received (granted)

 

147

 

652

 

Guarantees and deposits granted

 

(82

)

(214

)

Additions to investments

 

(5,109

)

(2,130

)

Additions to property, plant and equipment and intangible

 

(11,847

)

(10,349

)

Dividends and interest on capital received from joint ventures and associates

 

718

 

1,039

 

Proceeds from disposal of assets and investments

 

4,316

 

2,709

 

Net cash used in investing activities

 

(11,483

)

(8,285

)

 

 

 

 

 

 

Cash flow from financing activities:

 

 

 

 

 

Loans and financing (i)

 

 

 

 

 

Additions

 

14,503

 

7,426

 

Repayments

 

(9,839

)

(4,023

)

Repayments to stockholders:

 

 

 

 

 

Dividends and interest on capital attributed to noncontrolling interest

 

(3,101

)

(4,632

)

Net cash provided by (used in) financing activities

 

1,563

 

(1,229

)

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

6,244

 

914

 

Cash and cash equivalents in the beginning of the period

 

685

 

3,635

 

Cash and cash equivalents at end of the period

 

6,929

 

4,549

 

 

 

 

 

 

 

Cash paid during the period for (ii):

 

 

 

 

 

Interest on loans and financing (i)

 

(3,095

)

(2,116

)

Derivatives received (paid), net

 

(649

)

333

 

Income taxes

 

 

(60

)

Income taxes - Settlement program

 

(930

)

(842

)

Non-cash transactions:

 

 

 

 

 

Additions to property, plant and equipment - interest capitalization

 

892

 

462

 

Dividends received

 

 

181

 

 


(i) Includes debt flow with the Vale International S.A.  For the nine-month period ended on September 30, 2015 was captured R$3,003 (R$4,387 — 2014); repayments of R$4,049 (R$2,998 — 2014); and interest paid of R$1,256 (R$692 — 2014), respectively.

(ii) Amounts paid are classified as cash flows from operating activities

 

The accompanying notes are an integral part of these interim financial statements.

 

12



Table of Contents

 

GRAPHIC

 

Condensed Statement of Added Value

 

In millions of Brazilian Reais

 

 

 

Nine-month period ended (unaudited)

 

 

 

Consolidated

 

Parent Company

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

Generation of added value

 

 

 

 

 

 

 

 

 

Gross revenue

 

 

 

 

 

 

 

 

 

Revenue from products and services

 

63,889

 

66,366

 

31,621

 

42,537

 

Gain (loss) on measurement or sale of non-current assets

 

481

 

(139

)

601

 

(139

)

Other revenues

 

1,781

 

372

 

399

 

226

 

Revenue from the construction of own assets

 

21,156

 

17,573

 

12,739

 

10,349

 

Allowance for doubtful accounts

 

44

 

(48

)

(4

)

23

 

Less:

 

 

 

 

 

 

 

 

 

Acquisition of products

 

(1,931

)

(2,852

)

(515

)

(813

)

Material, service and maintenance

 

(32,770

)

(28,934

)

(18,588

)

(17,274

)

Oil and gas

 

(3,133

)

(2,960

)

(1,926

)

(1,898

)

Energy

 

(1,463

)

(1,049

)

(710

)

(519

)

Freight

 

(8,182

)

(5,621

)

 

 

Impairment of non-current assets (includes joint ventures and associates)

 

 

(1,730

)

 

 

Other costs and expenses

 

(7,033

)

(4,836

)

(1,502

)

(428

)

Gross added value

 

32,839

 

36,142

 

22,115

 

32,064

 

Depreciation, amortization and depletion

 

(9,709

)

(6,949

)

(3,330

)

(2,577

)

Net added value

 

23,130

 

29,193

 

18,785

 

29,487

 

 

 

 

 

 

 

 

 

 

 

Received from third parties

 

 

 

 

 

 

 

 

 

Equity results from entities

 

(1,361

)

1,075

 

(4,720

)

(6,405

)

Financial income

 

541

 

1,039

 

259

 

740

 

Monetary and exchange variation of assets

 

13,172

 

1,156

 

14,255

 

1,664

 

Total added value to be distributed

 

35,482

 

32,463

 

28,579

 

25,486

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

6,761

 

6,780

 

3,258

 

3,444

 

Taxes and contributions

 

6,136

 

6,090

 

4,756

 

5,092

 

Current income tax

 

761

 

3,282

 

(18

)

2,582

 

Deferred income tax

 

(19,927

)

541

 

(17,587

)

77

 

Financial expense (includes capitalized interest)

 

13,062

 

6,070

 

9,206

 

4,571

 

Monetary and exchange variation of liabilities

 

39,333

 

3,362

 

38,409

 

2,672

 

Other remunerations of third party funds

 

1,135

 

1,015

 

1,613

 

1,333

 

Reinvested net income (absorbed loss)

 

(11,058

)

5,715

 

(11,058

)

5,715

 

Net income (loss) attributable to noncontrolling interest

 

(721

)

(392

)

 

 

Distribution of added value

 

35,482

 

32,463

 

28,579

 

25,486

 

 

The accompanying notes are an integral part of these interim financial statements.

 

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Selected Notes to Interim Financial Statements

 

Expressed in millions of Brazilian Reais, unless otherwise stated

 

1.                                      Corporate information

 

Vale S.A. (the “Parent Company”) is a public company headquartered at 26, Av. Graça Aranha, Rio de Janeiro, Brazil with securities traded on the stock exchanges of São Paulo (“BM&F BOVESPA”), New York (“NYSE”), Paris (“NYSE Euronext”) and Hong Kong (“HKEx”).

 

Vale S.A. and its direct and indirect subsidiaries (“Vale”, “Group” or “Company”) are principally engaged in the research, production and sale of iron ore and pellets, nickel, fertilizer, copper, coal, manganese, ferroalloys, cobalt, platinum group metals and precious metals. The Company also operates in the segments of energy and steel. The information by segment is presented in note 26.

 

2.                                      Summary of the main accounting practices and accounting estimates

 

a)        Basis of presentation

 

The consolidated and individual interim financial statements of the Company (“interim financial statements”) have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as implemented in Brazil by the Brazilian Accountant Pronouncements Committee (“CPC”), approved by the Brazilian Securities Exchange Commission (“CVM”) and by the Brazilian Federal Accounting Council (“CFC”).

 

The interim financial statements have been prepared under the historical cost convention as adjusted to reflect: (i) the fair value of held for trading financial instruments measured at fair value through the statement of income or available-for-sale financial instruments measured at fair value through the statement of comprehensive income; and (ii) impairment of assets.

 

The principles, estimates, accounting practices, measurement methods and standards adopted are consistent with those presented on the financial statements for the year ended December 31, 2014. These interim financial statements were prepared by Vale to update users about relevant information presented in the period and should be read in conjunction with the financial statements for the year ended December 31, 2014.

 

The Company evaluated subsequent events through October 21, 2015, which is the date the interim financial statements were approved by the Board of Directors.

 

b)        Functional currency and presentation currency

 

The interim financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“functional currency”), which in the case of the Parent Company is the Brazilian real (“BRL” or “R$”). For presentation purposes, these interim financial statements are presented in R$.

 

Operations in other currencies are translated into the functional currency using the actual exchange rates in force on the respective transactions dates. The foreign exchange gains and losses resulting from the translation at the exchange rates in force at the end of the period are recognized in the statement of income as financial expense or financial income. The exceptions are transactions for which gains and losses are recognized in the comprehensive income.

 

The statement of income and balance sheet of the Group’s entities which functional currency is different from the presentation currency are translated into the presentation currency as follows: (i) assets, liabilities and stockholders’ equity (except components described in item (iii)) are translated at the closing rate at the balance sheet date; (ii) income and expenses are translated at the average exchange rates, except for specific transactions that, considering their significance, are translated at the rate at the transaction date and; (iii) capital, capital reserves and treasury stock are translated at the rate at the date of each transaction. All resulting exchange differences are recognized in comprehensive income as cumulative translation adjustment, and transferred to the statement of income when the operations are realized.

 

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The exchange rates of the major currencies that impact the operations are as follows:

 

 

 

Exchange rates used for conversions into R$

 

 

 

Closing rate as of

 

Average rate for the nine-month period ended

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2014

 

 

 

(unaudited)

 

 

 

(unaudited)

 

(unaudited)

 

US dollar (“US$”)

 

3.9729

 

2.6562

 

3.1684

 

2.2893

 

Canadian dollar (“CAD”)

 

2.9657

 

2.2920

 

2.5090

 

2.0933

 

Australian dollar (“AUD”)

 

2.7898

 

2.1765

 

2.4067

 

2.1016

 

Euro (“EUR” or “€”)

 

4.4349

 

3.2270

 

3.5285

 

3.1010

 

 

3.                                      Critical accounting estimates and judgment

 

The critical accounting estimates and judgment are the same as those adopted when preparing the financial statements for the year ended December 31, 2014.

 

4.                                      Accounting standards issued but not yet effective

 

The standards and interpretations issued by IASB but not yet effective are disclosed below:

 

IFRS 9 Financial instruments - In July 2014 the IASB issued IFRS 9 — Financial instruments, sets out the requirements for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This Standard replaces IAS 39 Financial Instruments: Recognition and Measurement. The adoption will be required from January 1, 2018 and the Company is currently analyzing potential impacts regarding this pronouncement on the financial statements.

 

IFRS 15 Revenue from contracts with customers - In May 2014 the IASB issued IFRS 15 statement - Revenue from Contracts with customers, sets out the requirements for revenue recognition that apply to all contracts with customer (except for contracts that are within the scope of the Standards on leases, insurance contracts and financial instruments), and replaces the current pronouncements IAS 18 - revenue, IAS 11 - Construction contracts and interpretations related to revenue recognition. The principle core in that framework is that a company should recognize revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The adoption will be required from January 1, 2018 and the Company is currently analyzing potential impacts regarding this pronouncement on the financial statements.

 

5.                                      Risk management

 

There was no significant change in relation to risk management policies disclosed in the financial statements for the year ended December 31, 2014.

 

6.                                      Non-current assets and liabilities held for sale

 

 

 

Consolidated

 

 

 

September 30, 2015

 

December 31, 2014

 

 

 

Australian assets

 

Nacala

 

Total

 

Energy

 

Nacala

 

Total

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

Non-current assets held for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

10

 

10

 

 

21

 

21

 

Other current assets

 

 

597

 

597

 

 

417

 

417

 

Investments

 

 

 

 

 

233

 

 

233

 

Intangible assets, net

 

 

84

 

84

 

 

 

 

Property, plant and equipment, net

 

505

 

14,252

 

14,757

 

1,268

 

7,730

 

8,998

 

Total assets

 

505

 

14,943

 

15,448

 

1,501

 

8,168

 

9,669

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities associated with non-current assets held for sale

 

 

 

 

 

 

 

 

 

 

 

 

 

Suppliers and contractors

 

 

545

 

545

 

 

143

 

143

 

Other current liabilities

 

505

 

61

 

566

 

 

151

 

151

 

Total liabilities

 

505

 

606

 

1,111

 

 

294

 

294

 

Net assets held for sale

 

 

14,337

 

14,337

 

1,501

 

7,874

 

9,375

 

 

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Australian assets - Integra and Isaac Plains mining complexes

 

In 2015, the Company signed agreements to sell its participation in the Integra and Isaac Plains mining complexes which were put into care and maintenance in 2014 (note 15). The completion of the transaction is subject to precedent conditions. The non-current assets and liabilities were transferred to assets held for sale with no impact in the statement of income.

 

Nacala logistic corridor (“Nacala”)

 

In December 2014, the Company signed an agreement with Mitsui & Co., Ltd. (“Mitsui”) to sell 50% of its stake of 70% in the Nacala corridor, Nacala is a combination of railroad and port concessions under construction located in Mozambique and Malawi. After completion of the transaction, Vale will share control of Nacala with Mitsui and therefore will not consolidate the assets, liabilities and results of those entities. The non-current assets and liabilities were transferred to assets held for sale with no impact in the statement of income.

 

Energy generation assets

 

In December 2013, the Company signed agreements with CEMIG Geração e Transmissão S.A. (“CEMIG GT”), as follows:

 

(a) A new entity Aliança Norte Participações S.A., was incorporated and Vale contributed its 9% investment in Norte Energia S.A. (“Norte Energia”), which is the company in charge of construction and operation of the Belo Monte Hydroelectric facility. Vale committed to sell 49% and share control of the new entity to CEMIG GT. In the first quarter of 2015, after receiving all regulatory approvals and other customary precedent conditions the Company concluded the transaction and received cash proceeds of R$306, recognizing a gain of R$55 as result on sale or disposal of investment from joint ventures and associates in the statement of income.

 

(b) A new entity Aliança Geração de Energia S.A. (“Aliança Geração”) was incorporated and Vale committed to contribute its shares over several power generation assets which use to supply energy for the Company’s operations. In exchange CEMIG GT committed to contribute its stakes in some of its power generation assets.  In the first quarter of 2015, after receiving all regulatory approvals and other customary precedent conditions, the exchange of assets was completed and Vale holds 55% and shares control of the new entity with CEMIG GT. A long term contract was signed between Vale and Aliança Geração for the energy supply. Due to the completion of this transaction, the Company (i) derecognized the assets held for sale related to this transaction; (ii) recognized as investment its share in the joint venture Aliança Geração; and (iii) recognized a gain of R$546 in the income statement as gain (loss) on measurement or sales of non-current asset based on the fair value of the assets transferred by CEMIG GT. This transaction has no cash proceeds or disbursements.

 

7.                                      Acquisitions and divestitures

 

a)        Divestiture of participation in Minerações Brasileiras Reunidas S.A. (“MBR”)

 

In the third quarter of 2015, the Company and Fundo de Investimento em Participações Multisetorial Plus II, whose shares are held by Banco Bradesco BBI S.A. (related party), completed the sale of class A preferred shares of MBR, representing 36.4% of its share capital. The Company received cash proceeds of R$4 billion and will keep a stake of 62.5% of the total capital of MBR, maintaining its stake in ordinary capital at 98.3%. The participation and rights of the new shareholder were recognized as noncontrolling stockholders’ equity.

 

b)        Divestiture of shipping assets

 

In the third quarter of 2015, the Company and China Merchants Energy Shipping Co. Ltd. (“China Merchants”), a state-owned enterprise and one of the largest shipping operators worldwide, completed the sale of four very large ore carriers with capacity of 400,000 tons each. The Company received cash proceeds of R$1,749 and recognized a loss of R$189 as a gain (loss) on measurement or sale of non-current assets.

 

In the second quarter of 2015, the Company and China Ocean Shipping Company (“Cosco”), the largest dry bulk carrier in China and one of the largest dry bulk shipping operators worldwide, completed the sale of four very large ore carriers with capacity of 400,000 tons each. The Company received cash proceeds of R$1,384 and recognized a loss of R$172 as a gain (loss) on measurement or sale of non-current assets.

 

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c)         Divestiture of Shandong Yankuang International Coking Co., Ltd. (“Yankuang”)

 

In the second quarter of 2015, the Company concluded the sale of its participation in Yankuang, a producer of coke, methanol and other products. In this transaction, Vale recognized a gain of R$241 as a results on sale or disposal of investments from joint ventures and associates.

 

d)        Divestiture of VBG-Vale BSGR Limited (“VBG”)

 

VBG is the holding company which held the Simandou mining rights located in Guinea. In April 2014, the Government of Guinea revoked VBG mining rights, without any finding of wrongdoing by Vale. During 2014, as a result of the loss of the mining rights, Vale recognized full impairment of the assets related to VBG. During the first quarter of 2015, the Company sold its stake in VBG to its partner in the project and kept the right to any recoverable amount it may derive from the Simandou project. The transaction had no impact on cash or in the statement of income.

 

e)         Acquisition of Facon Construção e Mineração S.A. (“Facon”)

 

During the first quarter of 2015, the Company acquired all shares of Facon, a wholly owned subsidiary of Fagundes Construção e Mineração S.A. (“FCM”). FCM is a logistic service provider for Vale Fertilizantes S.A. The Facon business was carved out from FCM with assets and liabilities directly related to the fertilizer business being transferred to Vale Fertilizantes S.A. The purchase price allocation based on the fair value of acquired assets and liabilities was calculated based on studies performed by the Company. Subsequently, Facon was merged into Vale Fertilizantes S.A.

 

Purchase price

 

237

 

Book value of property, plant and equipment

 

203

 

Book value of other assets acquired and liabilities assumed, net

 

(182

)

Adjustment to fair value of property, plant and equipment and mining rights

 

114

 

Goodwill

 

102

 

 

f)          Divestiture of Vale Florestar Fundo de Investimento em Participações (“Vale Florestar”)

 

In the second quarter of 2014, the Company signed an agreement with a subsidiary of Suzano Papel e Celulose S.A. for the sale of its entire stake in Vale Florestar. A loss on this transaction of R$39 was recorded as a results on sale or disposal of investments from joint ventures and associates in 2014.

 

8.                                      Cash and cash equivalents

 

 

 

Consolidated

 

Parent Company

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Cash and bank deposits

 

5,676

 

5,601

 

53

 

41

 

Short-term investments

 

11,794

 

4,954

 

6,876

 

644

 

 

 

17,470

 

10,555

 

6,929

 

685

 

 

Cash and cash equivalents includes cash, immediately redeemable deposits and short-term investments with an insignificant risk of change in value. They are readily convertible to cash, part in R$, indexed to the Brazilian Interbank Interest rate (“DI Rate”or”CDI”) and part denominated in US$, mainly time deposits.

 

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9.                                      Accounts receivable

 

 

 

Consolidated

 

Parent Company

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Ferrous minerals

 

5,699

 

5,724

 

32,796

 

28,809

 

Coal

 

276

 

324

 

 

 

Base metals

 

1,561

 

2,064

 

2,696

 

1,790

 

Fertilizers

 

490

 

361

 

16

 

18

 

Others

 

261

 

457

 

56

 

58

 

 

 

8,287

 

8,930

 

35,564

 

30,675

 

 

 

 

 

 

 

 

 

 

 

Provision for doubtful debts

 

(232

)

(230

)

(76

)

(76

)

 

 

8,055

 

8,700

 

35,488

 

30,599

 

 

The consolidated accounts receivable related to the steel sector represented 75.13% and 77.97% of total receivables on September 30, 2015 and December 31, 2014, respectively. In the parent company, accounts receivable of the steel sector represents 89.35% and 93.98% on September 30, 2015 and December 31, 2014, respectively.

 

No individual customer represents over 10% of receivables or revenues.

 

The provision for doubtful debts recorded in the consolidated statement of income for the three-month period ended on September 30, 2015 and 2014 totaled R$(39) and R$5 and for the nine-month period ended on September 30, 2015 and 2014 totaled R$(44) and R$48, respectively. The Company recognized write-offs for the three-month period ended on September 30, 2015 and 2014 in the amount of R$4 and R$(39) and for the nine-month period ended totaled R$(16) and R$57, respectively.

 

10.                               Inventories

 

 

 

Consolidated

 

Parent Company

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Product inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

Iron ore

 

3,826

 

2,949

 

2,076

 

1,842

 

Pellets

 

603

 

498

 

277

 

183

 

Manganese and ferroalloys

 

287

 

183

 

54

 

51

 

 

 

4,716

 

3,630

 

2,407

 

2,076

 

 

 

 

 

 

 

 

 

 

 

Coal

 

332

 

411

 

 

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

Nickel and other products

 

4,953

 

3,811

 

277

 

334

 

Copper

 

91

 

70

 

35

 

26

 

 

 

5,044

 

3,881

 

312

 

360

 

 

 

 

 

 

 

 

 

 

 

Fertilizers

 

 

 

 

 

 

 

 

 

Potash

 

40

 

31

 

 

 

Phosphates

 

782

 

822

 

 

 

Nitrogen

 

56

 

62

 

 

 

 

 

878

 

915

 

 

 

 

 

 

 

 

 

 

 

 

 

Other products

 

16

 

8

 

 

 

Total product inventory

 

10,986

 

8,845

 

2,719

 

2,436

 

 

 

 

 

 

 

 

 

 

 

Consumable inventory

 

4,143

 

3,111

 

1,435

 

1,219

 

Total

 

15,129

 

11,956

 

4,154

 

3,655

 

 

As at September 30, 2015 product inventory is stated net of provisions for nickel, coal, phosphate and pig iron in the amount of R$275 (R$50 as of December 31, 2014), R$1.602 (R$757 as of December 31, 2014), R$8 (R$0 as of December 31, 2014) and R$3 (R$0 as of December 31, 2014), respectively.

 

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Changes in inventories are as follows:

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Product inventory

 

 

 

 

 

 

 

 

 

Balance at beginning of the period

 

10,155

 

7,897

 

8,845

 

6,784

 

Production and acquisition

 

14,740

 

12,624

 

41,474

 

36,359

 

Transfer from consumable inventory

 

2,315

 

1,792

 

6,346

 

5,451

 

Cost of goods sold

 

(17,617

)

(14,197

)

(47,727

)

(39,823

)

Provision for market value adjustment

 

(650

)

(85

)

(1,081

)

(415

)

Translation adjustments

 

2,043

 

623

 

3,129

 

298

 

Balance at end of the period

 

10,986

 

8,654

 

10,986

 

8,654

 

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Product inventory

 

 

 

 

 

Balance at beginning of the period

 

2,436

 

2,114

 

Production and acquisition

 

17,097

 

15,133

 

Transfer from consumable inventory

 

2,418

 

2,649

 

Cost of goods sold

 

(19,232

)

(17,381

)

Balance at end of the period

 

2,719

 

2,515

 

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Consumable inventory

 

 

 

 

 

 

 

 

 

Balance at beginning of the period

 

3,585

 

3,084

 

3,111

 

2,878

 

Acquisition

 

2,276

 

1,801

 

6,412

 

5,661

 

Transfer to product inventory

 

(2,315

)

(1,792

)

(6,346

)

(5,451

)

Transfer to held for sale

 

(3

)

 

(3

)

 

Translation adjustments

 

600

 

82

 

969

 

87

 

Balance at end of the period

 

4,143

 

3,175

 

4,143

 

3,175

 

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Consumable inventory

 

 

 

 

 

Balance at beginning of the period

 

1,219

 

1,173

 

Acquisition

 

2,634

 

2,753

 

Transfer to product inventory

 

(2,418

)

(2,649

)

Balance at end of the period

 

1,435

 

1,277

 

 

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11.                               Recoverable taxes

 

Recoverable taxes are presented net of provisions for losses on tax credits.

 

 

 

Consolidated

 

Parent Company

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Value-added tax

 

3,286

 

2,806

 

1,383

 

1,189

 

Brazilian federal contributions

 

4,180

 

2,682

 

3,177

 

2,006

 

Others

 

46

 

91

 

48

 

58

 

Total

 

7,512

 

5,579

 

4,608

 

3,253

 

 

 

 

 

 

 

 

 

 

 

Current

 

5,420

 

4,515

 

3,197

 

2,687

 

Non-current

 

2,092

 

1,064

 

1,411

 

566

 

Total

 

7,512

 

5,579

 

4,608

 

3,253

 

 

12.                               Investments

 

Changes in investments are as follows:

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

Balance at beginning of the period

 

13,057

 

11,251

 

10,978

 

8,397

 

Aquisitions (i)

 

 

 

1,819

 

 

Additions

 

22

 

40

 

76

 

477

 

Disposals (ii)

 

 

(71

)

241

 

(71

)

Translation adjustment

 

482

 

176

 

732

 

80

 

Equity results on statement of income

 

(1,204

)

74

 

(1,361

)

1,075

 

Equity results on statement of comprehensive income and others

 

(12

)

3

 

(20

)

6

 

Dividends declared

 

(30

)

(25

)

(253

)

(1,321

)

Other transfers

 

5

 

 

123

 

181

 

Transfer to held for sale - Others

 

 

(28

)

(15

)

(244

)

Transfer to held for sale - VLI S.A.

 

 

 

 

2,840

 

Balance at end of the period

 

12,320

 

11,420

 

12,320

 

11,420

 

 


(i) Refers to Aliança Geração de Energia S.A., see note 6.

(ii) Refers to Shandong Yankuang International Coking Co., Ltd., see note 7(c).

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Balance at beginning of the period

 

118,628

 

123,370

 

Aquisitions

 

1,818

 

 

 

Additions

 

5,109

 

2,102

 

Disposals

 

(4,000

)

(71

)

Translation adjustment

 

32,763

 

2,745

 

Equity results on statement of income

 

(4,720

)

(6,405

)

Equity results on statement of comprehensive income and others

 

177

 

198

 

Dividends declared

 

(355

)

(1,819

)

Other transfers

 

41

 

(244

)

Transfer to held for sale - Others

 

(30

)

 

Transfer to held for sale - VLI S.A.

 

 

2,840

 

Balance at end of the period

 

149,431

 

122,716

 

 


(i) Refers to Aliança Geração de Energia S.A., see note 6.

 

20



Table of Contents

 

GRAPHIC

 

Investments (continued)

 

 

 

 

 

 

 

Investments

 

Equity results (unaudited)

 

Dividends received (iv)(unaudited)

 

 

 

 

 

% voting

 

As of

 

Three-month period ended

 

Nine-month period ended

 

Nine-month period ended

 

 

 

% ownership

 

capital

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subsidiaries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aços Laminados do Pará S.A.

 

100.00

 

100.00

 

338

 

332

 

 

 

 

 

 

 

Biopalma da Amazônia S.A.

 

89.05

 

89.05

 

361

 

646

 

(346

)

(110

)

(579

)

(148

)

 

 

Companhia Portuária da Baía de Sepetiba

 

100.00

 

100.00

 

677

 

385

 

80

 

65

 

292

 

222

 

 

181

 

Compañia Minera Miski Mayo S.A.C.

 

40.00

 

51.00

 

739

 

563

 

(2

)

(12

)

15

 

(23

)

83

 

 

Mineração Corumbaense Reunida S.A.

 

100.00

 

100.00

 

1,438

 

1,150

 

75

 

92

 

175

 

274

 

 

 

Minerações Brasileiras Reunidas S.A.

 

58.93

 

98.32

 

6,398

 

5,201

 

177

 

86

 

218

 

74

 

324

 

 

Potássio Rio Colorado S.A.

 

100.00

 

100.00

 

1,473

 

1,474

 

(28

)

(6

)

(34

)

(23

)

 

 

Salobo Metais S.A.

 

100.00

 

100.00

 

8,190

 

7,591

 

196

 

19

 

564

 

155

 

 

 

Tecnored Desenvolvimento Tecnológico S.A.

 

100.00

 

100.00

 

66

 

86

 

(2

)

(20

)

(29

)

(43

)

 

 

Vale International Holdings GmbH

 

100.00

 

100.00

 

13,519

 

7,283

 

(577

)

(593

)

1,949

 

(2,093

)

 

 

Vale Canada Holdings Inc.

 

100.00

 

100.00

 

6,408

 

5,127

 

(21

)

(7

)

(31

)

(14

)

 

 

Vale Canada Limited

 

100.00

 

100.00

 

25,782

 

16,182

 

(1,265

)

138

 

(2,700

)

(28

)

 

 

Vale Fertilizantes S.A.

 

100.00

 

100.00

 

13,415

 

13,236

 

1

 

(55

)

(372

)

(155

)

 

 

Vale International S.A.

 

100.00

 

100.00

 

43,952

 

20,978

 

1,097

 

(2,394

)

(671

)

(5,593

)

 

 

Vale Malaysia Minerals Sdn. Bhd.

 

100.00

 

100.00

 

4,393

 

3,251

 

(123

)

(21

)

(352

)

(31

)

 

 

Vale Manganês S.A.

 

100.00

 

100.00

 

666

 

721

 

5

 

5

 

(28

)

(5

)

 

 

Vale Mina do Azul S.A.

 

100.00

 

100.00

 

 

 

 

8

 

 

31

 

 

19

 

Vale Moçambique S.A.

 

100.00

 

100.00

 

(3,434

)

14,480

 

(795

)

(111

)

(1,698

)

(235

)

 

 

Vale Shipping Holding Pte. Ltd.

 

100.00

 

100.00

 

11,139

 

7,432

 

(176

)

77

 

(96

)

249

 

 

 

Others

 

 

 

 

 

1,591

 

1,532

 

(55

)

43

 

18

 

(94

)

537

 

 

 

 

 

 

 

 

137,111

 

107,650

 

(1,759

)

(2,796

)

(3,359

)

(7,480

)

944

 

200

 

Joint ventures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aliança Geração de Energia S.A. (i)

 

55.00

 

55.00

 

1,845

 

 

24

 

 

83

 

 

56

 

 

Aliança Norte Energia Participações S.A. (i)

 

51.00

 

51.00

 

304

 

 

(2

)

 

3

 

 

 

 

California Steel Industries, Inc.

 

50.00

 

50.00

 

647

 

489

 

(27

)

6

 

(68

)

24

 

 

 

Companhia Coreano-Brasileira de Pelotização

 

50.00

 

50.00

 

238

 

228

 

28

 

14

 

59

 

50

 

33

 

19

 

Companhia Hispano-Brasileira de Pelotização (i)

 

50.89

 

51.00

 

223

 

213

 

19

 

12

 

37

 

29

 

44

 

25

 

Companhia Ítalo-Brasileira de Pelotização (i)

 

50.90

 

51.00

 

208

 

162

 

24

 

13

 

51

 

31

 

36

 

13

 

Companhia Nipo-Brasileira de Pelotização (i)

 

51.00

 

51.11

 

401

 

378

 

40

 

51

 

112

 

129

 

51

 

63

 

Companhia Siderúrgica do Pecém (ii)

 

50.00

 

50.00

 

865

 

1,925

 

(865

)

(98

)

(1,060

)

(117

)

 

 

MRS Logística S.A.

 

48.16

 

46.75

 

1,444

 

1,355

 

28

 

44

 

98

 

125

 

 

54

 

Norte Energia S.A. (ii) (iii)

 

 

 

 

241

 

 

(1

)

 

(3

)

 

 

Samarco Mineração S.A.

 

50.00

 

50.00

 

 

533

 

(395

)

71

 

(532

)

876

 

459

 

906

 

Others

 

 

 

 

 

138

 

96

 

18

 

7

 

16

 

7

 

2

 

1

 

 

 

 

 

 

 

6,313

 

5,620

 

(1,108

)

119

 

(1,201

)

1,151

 

681

 

1,081

 

Associates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Henan Longyu Energy Resources Co., Ltd.

 

25.00

 

25.00

 

1,344

 

943

 

(36

)

18

 

(28

)

65

 

 

 

Mineração Rio Grande do Norte S.A.

 

40.00

 

40.00

 

309

 

243

 

38

 

(8

)

66

 

10

 

12

 

 

Teal Minerals Inc.

 

50.00

 

50.00

 

653

 

514

 

(32

)

(29

)

(96

)

(56

)

 

 

Thyssenkrupp Companhia Siderúrgica do Atlântico Ltd.

 

26.87

 

26.87

 

144

 

545

 

(104

)

(47

)

(199

)

(111

)

 

 

VLI S.A.

 

37.60

 

37.60

 

3,024

 

2,945

 

45

 

30

 

104

 

72

 

25

 

 

Zhuhai YPM Pellet Co.

 

25.00

 

25.00

 

85

 

64

 

 

 

 

1

 

 

 

 

Others

 

 

 

 

 

448

 

104

 

(7

)

(9

)

(8

)

(56

)

4

 

 

 

 

 

 

 

 

6,007

 

5,358

 

(96

)

(45

)

(160

)

(76

)

41

 

 

Total of joint ventures and associates

 

 

 

 

 

12,320

 

10,978

 

(1,204

)

74

 

(1,361

)

1,075

 

722

 

1,081

 

Total

 

 

 

 

 

149,431

 

118,628

 

(2,963

)

(2,722

)

(4,720

)

(6,405

)

1,666

 

1,281

 

 


(i)                  Although the Company held majority of the voting capital, the entities are accounted under equity method due to existing veto rights held by other stockholders.

(ii)               Pre-operational stage.

(iii)            The Company’s interest in Norte Energia S.A. is indirectly owned by Aliança Norte Energia Participações S.A. (note 6).

(iv)           Dividends received by the Parent Company during the years ended at September 30, 2015 and September 30, 2014 were R$1,435 and R$1,239, respectively.

 

21



Table of Contents

 

GRAPHIC

 

13.                               Intangible assets

 

 

 

Consolidated

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Cost

 

Amortization

 

Net

 

Cost

 

Amortization

 

Net

 

Indefinite useful life

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

12,531

 

 

12,531

 

9,987

 

 

9,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finite useful life

 

 

 

 

 

 

 

 

 

 

 

 

 

Concessions

 

10,581

 

(3,543

)

7,038

 

9,086

 

(3,210

)

5,876

 

Right of use

 

1,890

 

(1,005

)

885

 

1,375

 

(586

)

789

 

Software

 

3,967

 

(2,520

)

1,447

 

3,603

 

(2,141

)

1,462

 

 

 

16,438

 

(7,068

)

9,370

 

14,064

 

(5,937

)

8,127

 

Total

 

28,969

 

(7,068

)

21,901

 

24,051

 

(5,937

)

18,114

 

 

 

 

Parent Company

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Cost

 

Amortization

 

Net

 

Cost

 

Amortization

 

Net

 

Indefinite useful life

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

12,531

 

 

12,531

 

9,987

 

 

9,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finite useful life

 

 

 

 

 

 

 

 

 

 

 

 

 

Concessions

 

10,581

 

(3,543

)

7,038

 

9,086

 

(3,210

)

5,876

 

Right of use

 

223

 

(100

)

123

 

223

 

(94

)

129

 

Software

 

3,967

 

(2,520

)

1,447

 

3,603

 

(2,141

)

1,462

 

 

 

14,771

 

(6,163

)

8,608

 

12,912

 

(5,445

)

7,467

 

Total

 

27,302

 

(6,163

)

21,139

 

22,899

 

(5,445

)

17,454

 

 

Changes in intangible assets are as follows:

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

Goodwill

 

Concessions

 

Right of use

 

Software

 

Total

 

Balance on June 30, 2014

 

9,439

 

4,721

 

532

 

1,194

 

15,886

 

Additions

 

 

520

 

 

522

 

1,042

 

Disposals

 

 

(3

)

 

 

(3

)

Amortization

 

 

(108

)

(19

)

(176

)

(303

)

Translation adjustment

 

254

 

 

40

 

 

294

 

Balance on September 30, 2014

 

9,693

 

5,130

 

553

 

1,540

 

16,916

 

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

Goodwill

 

Concessions

 

Right of use

 

Software

 

Total

 

Balance on June 30, 2015

 

10,746

 

6,659

 

789

 

1,475

 

19,669

 

Additions

 

 

499

 

 

99

 

598

 

Amortization

 

 

(120

)

(37

)

(127

)

(284

)

Translation adjustment

 

1,785

 

 

133

 

 

1,918

 

Balance on September 30, 2015

 

12,531

 

7,038

 

885

 

1,447

 

21,901

 

 

22



Table of Contents

 

GRAPHIC

 

 

 

Consolidated

 

 

 

Nine-month period ended

 

 

 

Goodwill

 

Concessions

 

Right of use

 

Software

 

Total

 

Balance on December 31, 2013

 

9,698

 

4,466

 

594

 

1,338

 

16,096

 

Additions

 

 

1,125

 

 

534

 

1,659

 

Disposals

 

 

(11

)

 

 

(11

)

Amortization

 

 

(450

)

(51

)

(332

)

(833

)

Translation adjustment

 

(5

)

 

10

 

 

5

 

Balance on September 30, 2014 (unaudited)

 

9,693

 

5,130

 

553

 

1,540

 

16,916

 

 

 

 

Consolidated

 

 

 

Nine-month period ended

 

 

 

Goodwill

 

Concessions

 

Right of use

 

Software

 

Total

 

Balance on December 31, 2014

 

9,987

 

5,876

 

789

 

1,462

 

18,114

 

Additions

 

 

1,572

 

 

365

 

1,937

 

Disposals

 

 

(49

)

 

 

(49

)

Amortization

 

 

(361

)

(100

)

(380

)

(841

)

Translation adjustment

 

2,442

 

 

196

 

 

2,638

 

Acquisition of subsidiary (note 7(e))

 

102

 

 

 

 

102

 

Balance on September 30, 2015 (unaudited)

 

12,531

 

7,038

 

885

 

1,447

 

21,901

 

 

 

 

Parent Company

 

 

 

Nine-month period ended

 

 

 

Goodwill

 

Concessions

 

Right of use

 

Software

 

Total

 

Balance on December 31, 2013

 

9,698

 

4,466

 

134

 

1,338

 

15,636

 

Additions

 

 

1,125

 

 

534

 

1,659

 

Disposals

 

 

(11

)

 

 

(11

)

Amortization

 

 

(450

)

(4

)

(332

)

(786

)

Translation adjustment

 

(5

)

 

 

 

(5

)

Balance on September 30, 2014 (unaudited)

 

9,693

 

5,130

 

130

 

1,540

 

16,493

 

 

 

 

Parent Company

 

 

 

Nine-month period ended

 

 

 

Goodwill

 

Concessions

 

Right of use

 

Software

 

Total

 

Balance on December 31, 2014

 

9,987

 

5,876

 

129

 

1,462

 

17,454

 

Addition

 

102

 

1,572

 

 

365

 

2,039

 

Disposals

 

 

(49

)

 

 

(49

)

Amortization

 

 

(361

)

(6

)

(380

)

(747

)

Translation adjustment

 

2,442

 

 

 

 

2,442

 

Balance on September 30, 2015 (unaudited)

 

12,531

 

7,038

 

123

 

1,447

 

21,139

 

 

23



Table of Contents

 

GRAPHIC

 

14.                               Property, plant and equipment

 

 

 

Consolidated

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Cost

 

Accumulated
Depreciation

 

Net

 

Cost

 

Accumulated
Depreciation

 

Net

 

Land

 

3,083

 

 

3,083

 

2,839

 

 

2,839

 

Buildings

 

53,171

 

(11,049

)

42,122

 

37,569

 

(6,614

)

30,955

 

Facilities

 

52,494

 

(16,665

)

35,829

 

41,831

 

(13,110

)

28,721

 

Equipment

 

50,360

 

(18,112

)

32,248

 

38,200

 

(13,531

)

24,669

 

Mineral properties

 

67,213

 

(22,249

)

44,964

 

55,687

 

(16,033

)

39,654

 

Others

 

49,831

 

(14,063

)

35,768

 

39,543

 

(10,448

)

29,095

 

Construction in progress

 

51,722

 

 

51,722

 

51,574

 

 

51,574

 

 

 

327,874

 

(82,138

)

245,736

 

267,243

 

(59,736

)

207,507

 

 

 

 

Parent Company

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Cost

 

Accumulated
Depreciation

 

Net

 

Cost

 

Accumulated
Depreciation

 

Net

 

Land

 

1,688

 

 

1,688

 

1,452

 

 

1,452

 

Buildings

 

20,085

 

(2,572

)

17,513

 

15,631

 

(2,267

)

13,364

 

Facilities

 

24,712

 

(5,587

)

19,125

 

22,367

 

(5,030

)

17,337

 

Equipment

 

12,690

 

(4,725

)

7,965

 

11,368

 

(4,271

)

7,097

 

Mineral properties

 

5,794

 

(1,114

)

4,680

 

5,278

 

(882

)

4,396

 

Others

 

19,852

 

(6,871

)

12,981

 

16,016

 

(6,196

)

9,820

 

Construction in progress

 

29,973

 

 

29,973

 

33,855

 

 

33,855

 

 

 

114,794

 

(20,869

)

93,925

 

105,967

 

(18,646

)

87,321

 

 

Consolidated property, plant and equipment (net book value) pledged to secure judicial claims on September 30, 2015 and December 31, 2014 were R$158 and R$179, respectively. For the parent company, the amount were R$157 and R$179 at September 30, 2015 and December 31, 2014, respectively.

 

Changes in property, plant and equipment are as follows:

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance on June 30, 2014

 

2,561

 

18,207

 

27,294

 

19,473

 

36,006

 

24,433

 

60,358

 

188,332

 

Additions (i)

 

 

 

 

 

 

 

5,339

 

5,339

 

Disposals

 

(1

)

 

(3

)

(1

)

(20

)

 

(61

)

(86

)

Depreciation and amortization

 

 

(185

)

(622

)

(75

)

(721

)

(998

)

 

(2,601

)

Translation adjustment

 

(26

)

602

 

(274

)

678

 

2,530

 

2,229

 

2,705

 

8,444

 

Transfers

 

133

 

2,495

 

2,602

 

2,209

 

(2,269

)

769

 

(5,939

)

 

Balance on September 30, 2014

 

2,667

 

21,119

 

28,997

 

22,284

 

35,526

 

26,433

 

62,402

 

199,428

 

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance on June 30, 2015

 

3,098

 

37,430

 

31,296

 

29,100

 

40,777

 

32,046

 

47,397

 

221,144

 

Additions (i)

 

 

 

 

 

 

 

9,170

 

9,170

 

Disposals

 

 

 

(104

)

(45

)

 

(2,061

)

(21

)

(2,231

)

Depreciation and amortization

 

 

(444

)

(546

)

(849

)

(621

)

(622

)

 

(3,082

)

Transfer to non-current assets held for sale

 

 

 

 

 

(505

)

 

 

(505

)

Translation adjustment

 

179

 

3,528

 

1,881

 

3,589

 

4,611

 

4,413

 

3,039

 

21,240

 

Transfers

 

(194

)

1,608

 

3,302

 

453

 

702

 

1,992

 

(7,863

)

 

Balance on September 30, 2015

 

3,083

 

42,122

 

35,829

 

32,248

 

44,964

 

35,768

 

51,722

 

245,736

 

 


(i) Includes interest capitalized and ARO, see cash flow.

 

24



Table of Contents

 

GRAPHIC

 

 

 

Consolidated

 

 

 

Nine-month period ended

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance on December 31, 2013

 

2,215

 

18,236

 

25,622

 

19,689

 

38,129

 

24,642

 

62,775

 

191,308

 

Additions (i)

 

 

 

 

 

 

 

16,815

 

16,815

 

Disposals

 

(3

)

(110

)

(10

)

(14

)

(224

)

(71

)

(340

)

(772

)

Depreciation and amortization

 

 

(823

)

(1,360

)

(1,454

)

(1,629

)

(1,665

)

 

(6,931

)

Impairment (note 15)

 

 

 

(1

)

 

(1,715

)

(4

)

(10

)

(1,730

)

Translation adjustment

 

112

 

50

 

(1,329

)

131

 

333

 

1,229

 

212

 

738

 

Transfers

 

343

 

3,766

 

6,075

 

3,932

 

632

 

2,302

 

(17,050

)

 

Balance on September 30, 2014 (unaudited)

 

2,667

 

21,119

 

28,997

 

22,284

 

35,526

 

26,433

 

62,402

 

199,428

 

 

 

 

Consolidated

 

 

 

Nine-month period ended

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance on December 31, 2014

 

2,839

 

30,955

 

28,721

 

24,669

 

39,654

 

29,095

 

51,574

 

207,507

 

Additions (i)

 

 

 

 

 

 

 

20,445

 

20,445

 

Disposals

 

 

(14

)

(126

)

(105

)

(434

)

(3,653

)

(26

)

(4,358

)

Depreciation and amortization

 

 

(1,267

)

(1,713

)

(2,556

)

(1,992

)

(1,747

)

 

(9,275

)

Transfer to non-current assets held for sale

 

 

 

 

 

(505

)

 

 

(505

)

Translation adjustment

 

252

 

4,307

 

2,620

 

5,191

 

7,489

 

5,930

 

5,816

 

31,605

 

Transfers

 

(8

)

8,141

 

6,327

 

5,048

 

752

 

5,827

 

(26,087

)

 

Acquisition of subsidiary (note 7(e))

 

 

 

 

1

 

 

316

 

 

317

 

Balance on September 30, 2015 (unaudited)

 

3,083

 

42,122

 

35,829

 

32,248

 

44,964

 

35,768

 

51,722

 

245,736

 

 


(i) Includes interest capitalized and ARO, see cash flow.

 

 

 

Parent Company

 

 

 

Nine-month period ended

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance on December 31, 2013

 

1,322

 

9,449

 

14,350

 

5,641

 

2,366

 

8,680

 

28,897

 

70,705

 

Additions (i)

 

 

 

 

 

 

 

9,152

 

9,152

 

Disposals

 

 

(23

)

(1

)

(19

)

 

(4

)

(100

)

(147

)

Depreciation and amortization

 

 

(258

)

(636

)

(361

)

(256

)

(831

)

 

(2,342

)

Transfers

 

99

 

1,909

 

4,159

 

1,784

 

11

 

1,374

 

(9,336

)

 

Balance on September 30, 2014 (unaudited)

 

1,421

 

11,077

 

17,872

 

7,045

 

2,121

 

9,219

 

28,613

 

77,368

 

 

 

 

Parent Company

 

 

 

Nine-month period ended

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance on December 31, 2014

 

1,452

 

13,364

 

17,337

 

7,097

 

4,396

 

9,820

 

33,855

 

87,321

 

Additions (i)

 

 

 

 

 

 

 

9,614

 

9,614

 

Disposals

 

 

(10

)

(8

)

(92

)

 

(36

)

 

(146

)

Depreciation and amortization

 

 

(371

)

(656

)

(722

)

(259

)

(856

)

 

(2,864

)

Transfers

 

236

 

4,530

 

2,452

 

1,682

 

543

 

4,053

 

(13,496

)

 

Balance on September 30, 2015 (unaudited)

 

1,688

 

17,513

 

19,125

 

7,965

 

4,680

 

12,981

 

29,973

 

93,925

 

 


(i) includes capitalized and ARO, see cash flow.

 

25



Table of Contents

 

GRAPHIC

 

15.                               Impairment

 

The Company did not identify any impairment indicators for the period ended September 30, 2015.

 

During the second quarter of 2014, the Company identified evidence and recognized impairment in relation to certain of the Company’s operations as presented below.

 

Property plant and equipment

 

i.                                        Iron ore

 

VGB - Vale BSGR Limited

 

Vale’s former 51%-owned subsidiary VBG-Vale BSGR Limited (“VBG”) held iron ore concession rights in Simandou South (Zogota) and iron ore exploration permits in Simandou North (Blocks 1 & 2) in Guinea. On April 25, 2014 the government of Guinea revoked VBG’S mining concessions, based on the recommendation of a technical committee established pursuant to Guinean legislation. The decision was based on the allegations of fraudulent conduct in connection with the acquisition of licenses by BSGR (Vale´s former partner in VBG) more than one year before Vale had made any investment at VBG. The decision does not indicate any involvement by Vale and therefore does not prohibit Vale from participating in any future concession of the mining titles. Due to the uncertainties at that time R$1,118 was recognized as impairment. During the first quarter of 2015, the investment was sold (note 7d).

 

ii.                                    Coal

 

Australian assets

 

In May 2014, the Company announced that Integra and Isaac Plains mining complex, both in Australia, were put into care and maintenance since the operation were not considered economically feasible under current market conditions.  As a consequence, the Company recognized an impairment of R$612 in the second quarter of 2014. During the third quarter of 2015, the Company signed an agreement to sell its participation in the Integra and Isaac Plains mining complexes (note 6).

 

16.                     Loans and financing

 

a)        Total debt

 

 

 

Consolidated

 

 

 

Current liabilities

 

Non-current liabilities

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Debt contracts in the international markets

 

 

 

 

 

 

 

 

 

Floating rates in:

 

 

 

 

 

 

 

 

 

US$

 

1,362

 

950

 

21,431

 

13,531

 

Others currencies

 

55

 

 

726

 

7

 

Fixed rates in:

 

 

 

 

 

 

 

 

 

US$

 

6,957

 

183

 

49,517

 

35,166

 

EUR

 

 

 

6,652

 

4,841

 

Accrued charges

 

1,039

 

887

 

 

 

 

 

9,413

 

2,020

 

78,326

 

53,545

 

Debt contracts in Brazil

 

 

 

 

 

 

 

 

 

Floating rates in:

 

 

 

 

 

 

 

 

 

R$, indexed to TJLP, TR, IPCA, IGP-M and CDI

 

806

 

785

 

16,381

 

14,617

 

Basket of currencies and US$ indexed to LIBOR

 

1,063

 

561

 

5,641

 

3,623

 

Fixed rates in:

 

 

 

 

 

 

 

 

 

R$

 

227

 

128

 

1,053

 

964

 

Accrued charges

 

528

 

274

 

482

 

 

 

 

2,624

 

1,748

 

23,557

 

19,204

 

 

 

12,037

 

3,768

 

101,883

 

72,749

 

 

26



Table of Contents

 

GRAPHIC

 

 

 

Parent Company

 

 

 

Current liabilities

 

Non-current liabilities

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Debt contracts in the international markets

 

 

 

 

 

 

 

 

 

Floating rates in:

 

 

 

 

 

 

 

 

 

US$

 

980

 

670

 

17,928

 

11,721

 

Fixed rates in:

 

 

 

 

 

 

 

 

 

US$

 

3,178

 

159

 

7,390

 

3,984

 

EUR

 

 

 

6,652

 

4,841

 

Accrued charges

 

333

 

338

 

 

 

 

 

4,491

 

1,167

 

31,970

 

20,546

 

Debt contracts in Brazil

 

 

 

 

 

 

 

 

 

Floating rates in:

 

 

 

 

 

 

 

 

 

R$, indexed to TJLP, TR, IPCA, IGP-M and CDI

 

757

 

734

 

15,690

 

13,511

 

Basket of currencies and US$ indexed to LIBOR

 

1,054

 

554

 

5,627

 

3,609

 

Fixed rates in:

 

 

 

 

 

 

 

 

 

R$

 

180

 

123

 

893

 

876

 

Accrued charges

 

531

 

275

 

 

 

 

 

2,522

 

1,686

 

22,210

 

17,996

 

 

 

7,013

 

2,853

 

54,180

 

38,542

 

 

Below are the future flows of debt payments (principal and interest) per nature of funding:

 

 

 

Consolidated

 

Parent Company

 

 

 

Bank loans (i)

 

Capital market (i)

 

Development
agencies (i)

 

Debt principal
(i)

 

Estimated future
payments of
interest(ii)

 

Debt principal (i)

 

2015 

 

2,233

 

 

640

 

2,873

 

1,208

 

2,778

 

2016

 

1,048

 

3,778

 

3,534

 

8,360

 

5,714

 

4,029

 

2017

 

2,160

 

4,815

 

3,941

 

10,916

 

5,394

 

4,796

 

2018

 

6,502

 

3,326

 

4,124

 

13,952

 

4,961

 

13,249

 

2019

 

2,005

 

3,973

 

4,811

 

10,789

 

4,312

 

6,168

 

2020

 

6,372

 

5,073

 

3,107

 

14,552

 

3,840

 

8,438

 

Between 2021 and 2025

 

4,073

 

13,382

 

6,397

 

23,852

 

12,288

 

14,295

 

2026 onwards

 

228

 

25,754

 

595

 

26,577

 

23,065

 

6,576

 

 

 

24,621

 

60,101

 

27,149

 

111,871

 

60,782

 

60,329

 

 


(i)        Does not include accrued charges.

(ii)     Consists of estimated future payments of interest on loans, financings and debentures, calculated based on interest rate curves and foreign exchange rates applicable as of September 30, 2015 and considering that all amortization payments and payments at maturity on loans, financings and debentures will be made on their contracted payments dates. The amount includes the estimated values of future interest payments (not yet accrued), in addition to interest already recognized in the financial statements.

 

At September 30, 2015, the average annual interest rates by currency are as follows:

 

 

 

Consolidated

 

Parent Company

 

 

 

Average interest rate (i)

 

Total debt

 

Average interest rate (i)

 

Total debt

 

Loans and financing in US$

 

4.44

%

86,855

 

2.68

%

36,334

 

Loans and financing in R$ (ii)

 

10.73

%

19,446

 

10.61

%

18,018

 

Loans and financing in EUR (iii)

 

4.06

%

6,841

 

4.06

%

6,841

 

Loans and financing in others currencies

 

6.03

%

778

 

 

 

 

 

 

 

 

113,920

 

 

 

61,193

 

 


(i)        In order to determine the average interest rate for debt contracts with floating rates, the Company used the last renegotiated rate at September 30, 2015.

(ii)     R$ denominated debt that bears interest at IPCA, CDI or TJLP, plus spread. For a total of R$14,501, the Company entered into derivative transactions to mitigate the exposure to the cash flow variations of the floating rate debt denominated in R$, resulting in an average cost of 2.01% per year in US$.

(iii)  Eurobonds, for which the Company entered into derivatives to mitigate the exposure to the cash flow variations of the debt denominated in EUR, resulting in an average cost of 4.42% per year in US$.

 

27



Table of Contents

 

GRAPHIC

 

b)        Credit and financing lines

 

 

 

 

 

 

 

 

 

 

 

Amounts drawn on

 

Type

 

Contractual currency

 

Date of agreement

 

Available for

 

Total amount

 

September 30, 2015

 

 

 

 

 

 

 

 

 

 

 

(unaudited)

 

Credit lines

 

 

 

 

 

 

 

 

 

 

 

Revolving credit facility

 

US$

 

May 2015

 

5 years

 

11,919

 

 

Revolving credit facility

 

US$

 

July 2013

 

5 years

 

7,946

 

 

Financing lines

 

 

 

 

 

 

 

 

 

 

 

BNDES (i)

 

R$

 

April 2008

 

10 years

 

7,300

 

5,548

 

BNDES - CLN 150 (ii)

 

R$

 

September 2012

 

10 years

 

3,883

 

3,499

 

BNDES - Tecnored 3.5% (iii)

 

R$

 

December 2013

 

8 years

 

137

 

107

 

BNDES - S11D e S11D Logística (iv)

 

R$

 

May 2014

 

10 years

 

6,163

 

2,693

 

 


(i)             Memorandum of understanding signature date, however term is considered from the signature date of each contract amendment.

(ii)          Capacitação Logística Norte 150 Project (“CLN 150”).

(iii)       Support to Tecnored’s investment plan from 2013 to 2015.

(iv)      Iron ore project S11D and S11D Logistica implementation.

 

Total amounts and amounts disbursed, when not contracted in the reporting currency, are affected by exchange rate variation.

 

c)                                      Funding

 

On August 2015, Vale issued infrastructure debentures in the total amount of R$1,350.

 

d)                                     Guarantees

 

As of September 30, 2015 and December 31, 2014 financing and loans in the amount of R$3,079 and R$3,485, respectively, are secured by property, plant and equipment and receivables.

 

The securities issued through Vale’s 100%-owned finance subsidiary Vale Overseas Limited are fully and unconditionally guaranteed by Vale.

 

17.                     Asset retirement obligations

 

The Company applies judgment and assumptions when measuring its asset retirement obligation. The accrued amounts of these obligations are not deducted from the potential costs covered by insurance or indemnities.

 

The long term interest rates used to discount these obligations to present value and to update the provisions at September 30, 2015 was 5,51% p.a. in Brazil, 2,05% p.a. in Canada and between 1,61% - 8,8% p.a. for the others locations.

 

Changes in asset retirement obligations are as follows:

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Balance at beginning of the period

 

9,762

 

6,324

 

8,949

 

6,194

 

Interest expense

 

154

 

60

 

619

 

310

 

Settlements

 

(81

)

(33

)

(229

)

(57

)

Revisions on cash flows estimates

 

38

 

13

 

70

 

67

 

Translation adjustment

 

969

 

244

 

1,433

 

94

 

Balance at end of the period

 

10,842

 

6,608

 

10,842

 

6,608

 

 

 

 

 

 

 

 

 

 

 

Current

 

320

 

349

 

320

 

349

 

Non-current

 

10,522

 

6,259

 

10,522

 

6,259

 

 

 

10,842

 

6,608

 

10,842

 

6,608

 

 

28



Table of Contents

 

GRAPHIC

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Balance at beginning of the period

 

3,195

 

1,946

 

Interest expense

 

342

 

129

 

Settlements

 

(7

)

(13

)

Balance at end of the period

 

3,530

 

2,062

 

 

 

 

 

 

 

Current

 

83

 

89

 

Non-current

 

3,447

 

1,973

 

 

 

3,530

 

2,062

 

 

18.                     Litigation

 

a)        Provision for litigation

 

Vale is party to labor, civil, tax and other ongoing lawsuits, at administrative and court levels. Provisions for losses resulting from lawsuits are estimated and updated by the Company, based on analysis from the Company’s legal consultants.

 

Changes in provision for litigation are as follows:

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation
provision

 

Balance on June 30, 2014

 

891

 

478

 

1,840

 

97

 

3,306

 

Additions

 

135

 

44

 

140

 

11

 

330

 

Reversals

 

(55

)

(236

)

(86

)

 

(377

)

Payments

 

(9

)

 

(42

)

(2

)

(53

)

Indexation and interest

 

(118

)

58

 

67

 

84

 

91

 

Translation adjustment

 

31

 

 

 

10

 

41

 

Balance on September 30, 2014

 

875

 

344

 

1,919

 

200

 

3,338

 

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation
provision

 

Balance on June 30, 2015

 

1,003

 

405

 

1,939

 

212

 

3,559

 

Additions

 

46

 

30

 

204

 

1

 

281

 

Reversals

 

(4

)

(36

)

(246

)

(1

)

(287

)

Payments

 

(28

)

(126

)

(16

)

(30

)

(200

)

Indexation and interest

 

27

 

17

 

(85

)

24

 

(17

)

Translation adjustment

 

39

 

1

 

 

34

 

74

 

Balance on September 30, 2015

 

1,083

 

291

 

1,796

 

240

 

3,410

 

 

29



Table of Contents

 

GRAPHIC

 

 

 

Consolidated (unaudited)

 

 

 

Nine-month period ended

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation
provision

 

Balance on December 31, 2013

 

771

 

498

 

1,653

 

67

 

2,989

 

Additions

 

236

 

62

 

389

 

54

 

741

 

Reversals

 

(92

)

(217

)

(183

)

(9

)

(501

)

Payments

 

(25

)

(16

)

(74

)

(6

)

(121

)

Indexation and interest

 

(27

)

17

 

133

 

91

 

214

 

Translation adjustment

 

12

 

 

1

 

3

 

16

 

Balance on September 30, 2014 (unaudited)

 

875

 

344

 

1,919

 

200

 

3,338

 

 

 

 

Consolidated (unaudited)

 

 

 

Nine-month period ended

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation
provision

 

Balance on December 31, 2014

 

972

 

311

 

1,876

 

246

 

3,405

 

Additions

 

490

 

172

 

419

 

1

 

1,082

 

Reversals

 

(520

)

(126

)

(367

)

(2

)

(1,015

)

Payments

 

(22

)

(123

)

(64

)

(66

)

(275

)

Indexation and interest

 

79

 

56

 

(68

)

8

 

75

 

Translation adjustment

 

84

 

1

 

 

53

 

138

 

Balance on September 30, 2015 (unaudited)

 

1,083

 

291

 

1,796

 

240

 

3,410

 

 

 

 

Parent Company

 

 

 

Nine-month period ended

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation
provision

 

Balance on December 31, 2013

 

280

 

221

 

1,472

 

35

 

2,008

 

Additions

 

166

 

5

 

344

 

39

 

554

 

Reversals

 

(26

)

(39

)

(162

)

(9

)

(236

)

Payments

 

(15

)

(13

)

(64

)

(4

)

(96

)

Indexation and interest

 

7

 

9

 

124

 

2

 

142

 

Balance on September 30, 2014 (unaudited)

 

412

 

183

 

1,714

 

63

 

2,372

 

 

 

 

Parent Company

 

 

 

Nine-month period ended

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation
provision

 

Balance on December 31, 2014

 

436

 

186

 

1,732

 

94

 

2,448

 

Additions

 

369

 

89

 

379

 

1

 

838

 

Reversals

 

(500

)

(82

)

(330

)

(1

)

(913

)

Payments

 

(44

)

(4

)

(56

)

(34

)

(138

)

Indexation and interest

 

97

 

50

 

(127

)

6

 

26

 

Balance on September 30, 2015 (unaudited)

 

358

 

239

 

1,598

 

66

 

2,261

 

 

b)                                     Contingent liabilities

 

Contingent liabilities consist of administrative and judicial claims, which expectation of loss is classified as possible, and for which the recognition of a provision is not considered necessary by the Company, based on legal support.

 

 

 

Consolidated

 

Parent Company

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Tax litigations

 

19,301

 

16,187

 

15,890

 

13,084

 

Civil litigations

 

5,039

 

3,734

 

3,609

 

2,962

 

Labor litigations

 

7,596

 

5,194

 

5,948

 

4,491

 

Environmental litigations

 

5,182

 

2,981

 

5,027

 

2,881

 

Total

 

37,118

 

28,096

 

30,474

 

23,418

 

 

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c)                                      Judicial deposits

 

In addition to the provisions and contingent liabilities, the Company is required by law to make judicial deposits to secure a potential adverse outcome of certain lawsuits. These court-ordered deposits are monetarily adjusted and reported as non-current assets until a judicial decision to draw the deposit occurs.

 

 

 

Consolidated

 

Parent Company

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

December 31, 2014

 

 

 

(unaudited)

 

 

 

(unaudited)

 

 

 

Tax litigations

 

793

 

940

 

515

 

664

 

Civil litigations

 

352

 

333

 

118

 

115

 

Labor litigations

 

2,141

 

2,096

 

1,969

 

1,942

 

Environmental litigations

 

42

 

1

 

40

 

 

Total

 

3,328

 

3,370

 

2,642

 

2,721

 

 

d)             Others

 

In the third quarter of 2015, the Company filed an enforceable action in the amount of R$524 referring to the final court decision in favor of the Company of the accrued interest of compulsory deposits from 1987 to 1993. Currently it is not possible to estimate the economic benefit inflow as the counterparty can appeal on the calculation. Consequently, the asset was not recognized in the financial statements.

 

On April 30, 2014, Rio Tinto plc (“Rio Tinto”) filed a lawsuit against Vale, BSGR, and other defendants in the United States District Court for the Southern District of New York, alleging violations of the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO) in relation to Rio Tinto’s loss of certain Simandou mining rights, the Government of Guinea’s assignment of those rights to BSGR, and Vale’s subsequent investment in VBG.  Discovery has begun and under the current schedule will be completed in March 2016.  Vale intends to vigorously defend the action, which it believes to be without merit.

 

19.                     Income taxes - Settlement program (“REFIS”)

 

In November 2013, the Company elected to participate in the REFIS, a federal tax settlement program, to settle most of the claims related to the collection of income tax and social contribution on equity gain of foreign subsidiaries and affiliates from 2003 to 2012.

 

On September 30, 2015, the balance of R$17.170 (R$1.310 in current and R$15.860 in non-current) is due in 157 remaining monthly installments, bearing interest at the SELIC rate.

 

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20.                     Income taxes

 

a)        Deferred income tax

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

Assets

 

Liabilities

 

Total

 

Balance on June 30, 2014

 

9,670

 

7,406

 

2,264

 

Effect on statement of income

 

492

 

(120

)

612

 

Translation adjustment

 

369

 

666

 

(297

)

Other comprehensive income

 

21

 

25

 

(4

)

Balance on September 30, 2014

 

10,552

 

7,977

 

2,575

 

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

Assets

 

Liabilities

 

Total

 

Balance on June 30, 2015

 

13,341

 

9,585

 

3,756

 

Effect on statement of income

 

17,461

 

31

 

17,430

 

Translation adjustment

 

868

 

1,849

 

(981

)

Other comprehensive income

 

40

 

40

 

 

Balance on September 30, 2015

 

31,710

 

11,505

 

20,205

 

 

 

 

Consolidated

 

 

 

Nine-month period ended

 

 

 

Assets

 

Liabilities

 

Total

 

Balance on December 31, 2013

 

10,596

 

7,562

 

3,034

 

Effect on statement of income

 

(383

)

158

 

(541

)

Translation adjustment

 

120

 

134

 

(14

)

Other comprehensive income

 

65

 

123

 

(58

)

Transfers

 

154

 

 

154

 

Balance on September 30, 2014 (unaudited)

 

10,552

 

7,977

 

2,575

 

 

 

 

Consolidated

 

 

 

Nine-month period ended

 

 

 

Assets

 

Liabilities

 

Total

 

Balance on December 31, 2014

 

10,560

 

8,874

 

1,686

 

Effect on statement of income

 

19,796

 

(131

)

19,927

 

Translation adjustment

 

1,292

 

2,733

 

(1,441

)

Other comprehensive income

 

93

 

29

 

64

 

Acquisition of subsidiary

 

(31

)

 

(31

)

Balance on September 30, 2015 (unaudited)

 

31,710

 

11,505

 

20,205

 

 

 

 

Parent Company

 

 

 

Nine-month period ended

 

 

 

Assets

 

Balance on December 31, 2013

 

7,418

 

Effect on statement of income

 

(77

)

Other comprehensive income

 

64

 

Balance on September 30, 2014 (unaudited)

 

7,405

 

 

 

 

Parent Company

 

 

 

Nine-month period ended

 

 

 

Assets

 

Balance on December 31, 2014

 

6,430

 

Effect on statement of income

 

17,587

 

Other comprehensive income

 

27

 

Balance on September 30, 2015 (unaudited)

 

24,044

 

 

Brazilian corporate tax law was amended at the end of 2014 by the Law 12,973 and became effective for the fiscal year 2015. The change was to provide that profits from foreign subsidiaries will be taxed in Brazil, on an accrual basis, applying the differential between the nominal local tax rate and the Brazilian tax rates (34%). In accordance with paragraph 77 of the referred law, the accumulated losses of those subsidiaries, as of December 31, 2014, will be available to offset their future profits.

 

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On September 30, 2015, the Company filed the tax return and completed the review of the income tax loss carry-forwards available in each foreign subsidiary as of December 31, 2014. Accordingly, a deferred tax asset related to accumulated losses in certain of those foreign subsidiaries of R$11,729 was recognized as deferred income tax in the statement of income.

 

Deferred tax assets arising from tax losses, negative social contribution basis and temporary differences are registered taking into consideration the analysis of future performance, based on economic and financial projections, prepared based on internal assumptions and macroeconomic, trade and tax scenarios that may be subject to changes in future.

 

b)        Income tax reconciliation

 

The total amount presented as income taxes in the statement of income is reconciled to the rate established by law, as follows:

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Net income (loss) before income taxes

 

(24,165

)

(4,101

)

(30,945

)

9,146

 

Income taxes at statutory rates - 34%

 

8,216

 

1,394

 

10,521

 

(3,110

)

Adjustments that affect the basis of taxes:

 

 

 

 

 

 

 

 

 

Income tax benefit from interest on stockholders’ equity

 

 

659

 

1,054

 

1,976

 

Tax incentives

 

42

 

(97

)

117

 

315

 

Results of overseas companies taxed by different rates which differs from the parent company rate

 

 

(971

)

 

(1,946

)

Equity results on statement of income

 

(410

)

26

 

(463

)

366

 

Unrecognized current year gains/losses

 

(1,302

)

 

(1,807

)

 

Additions (reversals) of tax loss carryforward

 

11,174

 

 

11,174

 

(255

)

Others

 

(643

)

(261

)

(1,430

)

(1,169

)

Income taxes

 

17,077

 

750

 

19,166

 

(3,823

)

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Net income (loss) before income taxes

 

(28,663

)

8,374

 

Income taxes at statutory rates - 34%

 

9,745

 

(2,847

)

Adjustments that affect the basis of taxes:

 

 

 

 

 

Income tax benefit from interest on stockholders’ equity

 

1,054

 

1,976

 

Tax incentives

 

 

315

 

Equity results on statement of income

 

(1,605

)

(2,178

)

Additions of tax loss carryforward

 

8,818

 

 

Others

 

(407

)

75

 

Income taxes

 

17,605

 

(2,659

)

 

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21.                     Employee benefits obligations

 

At September 30, 2015 the Company contributed R$616 and does not expect significant changes in relation to the estimate disclosed in the financial statements for the year ended December 31, 2014.

 

a)        Employee postretirements obligations

 

i.            Reconciliation of assets and liabilities in balance sheet

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
underfunded
pension plans

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others

underfunded
pension plans

 

Balance at beginning of the period

 

3,455

 

 

 

2,790

 

 

 

Interest income

 

321

 

 

 

335

 

 

 

Changes on asset ceiling and onerous liability

 

(957

)

 

 

330

 

 

 

Balance at end of the period

 

2,819

 

 

 

3,455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount recognized in the balance sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

Present value of actuarial liabilities

 

(10,268

)

(15,229

)

(4,995

)

(9,902

)

(12,009

)

(3,981

)

Fair value of assets

 

13,087

 

12,475

 

 

13,357

 

9,872

 

 

Effect of the asset ceiling

 

(2,819

)

 

 

(3,455

)

 

 

Liabilities provisioned

 

 

(2,754

)

(4,995

)

 

(2,137

)

(3,981

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

(73

)

(203

)

 

(42

)

(135

)

Non-current liabilities

 

 

(2,681

)

(4,792

)

 

(2,095

)

(3,846

)

Liabilities provisioned

 

 

(2,754

)

(4,995

)

 

(2,137

)

(3,981

)

 

ii.        Costs recognized in the statement of income

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

 

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
underfunded
pension plans

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
underfunded
pension plans

 

Current service cost

 

16

 

89

 

22

 

17

 

45

 

18

 

Interest expense on liabilities

 

294

 

153

 

56

 

279

 

67

 

57

 

Interest income on plan assets

 

(404

)

(128

)

 

(368

)

(88

)

 

Interest expense on effect of asset (ceiling) and onerous liability

 

107

 

 

 

84

 

 

 

Total of cost, net

 

13

 

114

 

78

 

12

 

24

 

75

 

 

 

 

Consolidated (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

 

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
underfunded
pension plans

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
underfunded
pension plans

 

Current service cost

 

47

 

248

 

69

 

51

 

116

 

53

 

Interest expense on liabilities

 

883

 

431

 

161

 

837

 

308

 

167

 

Interest income on plan assets

 

(1,211

)

(363

)

 

(1,104

)

(266

)

 

Interest expense on effect of asset (ceiling) and onerous liability

 

320

 

 

 

252

 

 

 

Total of cost, net

 

39

 

316

 

230

 

36

 

158

 

220

 

 

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GRAPHIC

 

iii.    Costs recognized in the statement of comprehensive income

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

 

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
underfunded
pension plans

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
underfunded
pension plans

 

Balance at beginning of the period

 

(413

)

(1,653

)

(418

)

(274

)

(629

)

(438

)

Return on plan assets (excluding interest income) and others

 

(1,077

)

(121

)

129

 

(22

)

32

 

27

 

Changes on asset ceiling and onerous liability

 

1,044

 

 

 

3

 

(30

)

 

Gross balance for the period

 

(33

)

(121

)

129

 

(19

)

2

 

27

 

Deferred income tax

 

11

 

34

 

(39

)

6

 

(7

)

(7

)

Other comprehensive income

 

(22

)

(87

)

90

 

(13

)

(5

)

20

 

Translation adjustment

 

1

 

(434

)

(75

)

 

(69

)

(37

)

Accumulated comprehensive income

 

(434

)

(2,174

)

(403

)

(287

)

(703

)

(455

)

 

 

 

Consolidated (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

 

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
underfunded
pension plans

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
underfunded
pension plans

 

Balance at beginning of the period

 

(380

)

(1,515

)

(350

)

(219

)

(926

)

(460

)

Return on plan assets (excluding interest income) and others

 

(1,077

)

(40

)

74

 

12

 

439

 

27

 

Changes on asset ceiling and onerous liability

 

995

 

 

 

(112

)

(118

)

 

Gross balance for the period

 

(82

)

(40

)

74

 

(100

)

321

 

27

 

Deferred income tax

 

28

 

66

 

(14

)

34

 

(81

)

(7

)

Other comprehensive income

 

(54

)

26

 

60

 

(66

)

240

 

20

 

Translation adjustment

 

 

(685

)

(113

)

(2

)

(17

)

(15

)

Accumulated comprehensive income

 

(434

)

(2,174

)

(403

)

(287

)

(703

)

(455

)

 

b)                                     Profit sharing program (“PLR”)

 

The Company recorded as cost of goods sold and services rendered and other operating expenses related to the PLR R$180 as at September 30, 2015 (R$979 in September 30, 2014) in consolidated and R$105 in September 30, 2015 (R$774 in September 30, 2014) in parent company.

 

c)         Long-term compensation plan

 

In order to promote stockholder culture, in addition to increasing the ability to retain executives and to strengthen the culture of sustainability performance, Vale has a long-term incentive programs (Matching plan and long-term incentive plan — ILP) for some executives of the Company, covering 3 to 4 year cycles.

 

Liabilities of the plans are measured at fair value on the date of each issuance of the report, based on market rates. Compensation costs incurred are recognized by the defined vesting period of three years. At September 30, 2015 and December 31, 2014 the Company recorded a liability with the same impact in the statement of income in the amount of R$147 and R$163, respectively.

 

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22.                     Classification of financial instruments

 

 

 

Consolidated

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Loans and
receivables
(i)

 

At fair value
through
profit or
loss (ii)

 

Derivatives
designated
as hedge
(iii)

 

Total

 

Loans and

receivables
(i)

 

At fair value
through
profit or
loss (ii)

 

Derivatives
designated
as hedge (iii)

 

Total

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

17,470

 

 

 

17,470

 

10,555

 

 

 

10,555

 

Financial investments

 

258

 

 

 

258

 

392

 

 

 

392

 

Derivative financial instruments

 

 

629

 

 

629

 

 

441

 

 

441

 

Accounts receivable

 

8,055

 

 

 

8,055

 

8,700

 

 

 

8,700

 

Related parties

 

1,362

 

 

 

1,362

 

1,537

 

 

 

1,537

 

 

 

27,145

 

629

 

 

27,774

 

21,184

 

441

 

 

21,625

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Related parties

 

89

 

 

 

89

 

93

 

 

 

93

 

Loans and financing

 

772

 

 

 

772

 

609

 

 

 

609

 

Derivative financial instruments

 

 

529

 

 

529

 

 

231

 

 

231

 

 

 

861

 

529

 

 

1,390

 

702

 

231

 

 

933

 

Total of financial assets

 

28,006

 

1,158

 

 

29,164

 

21,886

 

672

 

 

22,558

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suppliers and contractors

 

13,832

 

 

 

13,832

 

11,566

 

 

 

11,566

 

Derivative financial instruments

 

 

4,937

 

712

 

5,649

 

 

2,539

 

1,221

 

3,760

 

Loans and financing

 

12,037

 

 

 

12,037

 

3,768

 

 

 

3,768

 

Related parties

 

560

 

 

 

560

 

813

 

 

 

813

 

 

 

26,429

 

4,937

 

712

 

32,078

 

16,147

 

2,539

 

1,221

 

19,907

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

11,157

 

 

11,157

 

 

4,273

 

3

 

4,276

 

Loans and financing

 

101,883

 

 

 

101,883

 

72,749

 

 

 

72,749

 

Related parties

 

304

 

 

 

304

 

288

 

 

 

288

 

Participative stockholders’ debentures

 

 

2,397

 

 

2,397

 

 

4,584

 

 

4,584

 

Others (iv)

 

 

243

 

 

243

 

 

303

 

 

303

 

 

 

102,187

 

13,797

 

 

115,984

 

73,037

 

9,160

 

3

 

82,200

 

Total of financial liabilities

 

128,616

 

18,734

 

712

 

148,062

 

89,184

 

11,699

 

1,224

 

102,107

 

 


(i) Non-derivative financial instruments with determinable cash flow.

(ii) Financial instruments for trading in short term.

(iii) See note 24(a).

(iv) See note 23(a).

 

36



Table of Contents

 

GRAPHIC

 

 

 

Parent Company

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Loans and
receivables (i)

 

At fair value
through profit
or loss (ii)

 

Total

 

Loans and
receivables (i)

 

At fair value
through profit
or loss (ii)

 

Total

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

6,929

 

 

6,929

 

685

 

 

685

 

Financial investments

 

18

 

 

18

 

392

 

 

392

 

Derivative financial instruments

 

 

388

 

388

 

 

370

 

370

 

Accounts receivable

 

35,488

 

 

35,488

 

30,599

 

 

30,599

 

Related parties

 

1,199

 

 

1,199

 

2,227

 

 

2,227

 

 

 

43,634

 

388

 

44,022

 

33,903

 

370

 

34,273

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

Related parties

 

1,175

 

 

1,175

 

902

 

 

902

 

Loans and financing

 

103

 

 

103

 

104

 

 

104

 

Derivative financial instruments

 

 

467

 

467

 

 

29

 

29

 

 

 

1,278

 

467

 

1,745

 

1,006

 

29

 

1,035

 

Total of financial assets

 

44,912

 

855

 

45,767

 

34,909

 

399

 

35,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

Suppliers and contractors

 

7,387

 

 

7,387

 

6,818

 

 

6,818

 

Derivative financial instruments

 

 

1,665

 

1,665

 

 

948

 

948

 

Loans and financing

 

7,013

 

 

7,013

 

2,853

 

 

2,853

 

Related parties

 

8,753

 

 

8,753

 

5,622

 

 

5,622

 

 

 

23,153

 

1,665

 

24,818

 

15,293

 

948

 

16,241

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

9,332

 

9,332

 

 

3,866

 

3,866

 

Loans and financing

 

54,180

 

 

54,180

 

38,542

 

 

38,542

 

Related parties

 

63,523

 

 

63,523

 

43,606

 

 

43,606

 

Participative stockholders’ debentures

 

 

2,397

 

2,397

 

 

4,584

 

4,584

 

Others (iv)

 

 

243

 

243

 

 

303

 

303

 

 

 

117,703

 

11,972

 

129,675

 

82,148

 

8,753

 

90,901

 

Total of financial liabilities

 

140,856

 

13,637

 

154,493

 

97,441

 

9,701

 

107,142

 

 


(i) Non-derivative financial instruments with determinable cash flow.

(ii) Financial instruments for trading in short term.

(iii) See note 24(a).

(iv) See note 23(a).

 

37



Table of Contents

 

GRAPHIC

 

23.                     Fair value estimate

 

The Company considered the same assumptions and calculation methods as presented on the financial statements for the year ended December 31, 2014, to measure the fair value of assets and liabilities for the period.

 

a)        Assets and liabilities measured and recognized at fair value

 

 

 

Consolidated

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Level 2

 

Level 3

 

Total

 

Level 2

 

Level 3

 

Total

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives at fair value through profit or loss

 

629

 

 

629

 

441

 

 

441

 

 

 

629

 

 

629

 

441

 

 

441

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives at fair value through profit or loss

 

529

 

 

529

 

231

 

 

231

 

 

 

529

 

 

529

 

231

 

 

231

 

Total of financial assets

 

1,158

 

 

1,158

 

672

 

 

672

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives at fair value through profit or loss

 

4,937

 

 

4,937

 

2,539

 

 

2,539

 

Derivatives designated as hedge

 

712

 

 

712

 

1,221

 

 

1,221

 

 

 

5,649

 

 

5,649

 

3,760

 

 

3,760

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives at fair value through profit or loss

 

11,157

 

 

11,157

 

4,273

 

 

4,273

 

Derivatives designated as hedge

 

 

 

 

3

 

 

3

 

Participative stockholders’ debentures

 

2,397

 

 

2,397

 

4,584

 

 

4,584

 

Others (minimum return instrument)

 

 

243

 

243

 

 

303

 

303

 

 

 

13,554

 

243

 

13,797

 

8,860

 

303

 

9,163

 

Total of financial liabilities

 

19,203

 

243

 

19,446

 

12,620

 

303

 

12,923

 

 

 

 

Parent Company

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Level 2

 

Level 3

 

Total

 

Level 2

 

Level 3

 

Total

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives at fair value through profit or loss

 

388

 

 

388

 

370

 

 

370

 

 

 

388

 

 

388

 

370

 

 

370

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives at fair value through profit or loss

 

467

 

 

467

 

29

 

 

29

 

 

 

467

 

 

467

 

29

 

 

29

 

Total of financial assets

 

855

 

 

855

 

399

 

 

399

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives at fair value through profit or loss

 

1,665

 

 

1,665

 

948

 

 

948

 

 

 

1,665

 

 

1,665

 

948

 

 

948

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives at fair value through profit or loss

 

9,332

 

 

9,332

 

3,866

 

 

3,866

 

Participative stockholders’ debentures

 

2,397

 

 

2,397

 

4,584

 

 

4,584

 

Others (minimun return instrument)

 

 

243

 

243

 

 

303

 

303

 

 

 

11,729

 

243

 

11,972

 

8,450

 

303

 

8,753

 

Total of financial liabilities

 

13,394

 

243

 

13,637

 

9,398

 

303

 

9,701

 

 

38



Table of Contents

 

GRAPHIC

 

b)             Fair value measurement compared to book value

 

The fair value estimate for level 1 is based on market approach considering the secondary market contracts. For loans allocated to level 2, the income approach is adopted and the fair value for both fixed-indexed rate debt and floating rate debt is determined on a discounted cash flows basis using LIBOR future values and Vale’s bonds curve.

 

The fair values and carrying amounts of non-current loans (net of interest) are as follows:

 

 

 

Consolidated

 

Parent Company

 

 

 

Balance

 

Fair value (ii)

 

Level 1

 

Level 2

 

Balance

 

Fair value (ii)

 

Level 1

 

Level 2

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2015 (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (long term) (i)

 

111,871

 

105,796

 

50,983

 

54,813

 

60,329

 

59,800

 

12,647

 

47,153

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (long term) (i)

 

75,356

 

78,302

 

42,077

 

36,225

 

40,782

 

46,886

 

9,953

 

36,933

 

 


(i) Net interest of R$2,049 on consolidated and R$864 on parent company at September 30, 2015 and US$1,161 on consolidated and US$613 on parent company at December 31, 2014.

 

24.                     Derivative financial instruments

 

a)        Derivatives effects on balance sheet

 

 

 

Consolidated

 

 

 

Assets

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Current

 

Non-current

 

Current

 

Non-current

 

Derivatives not designated as hedge accounting

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

CDI & TJLP vs. US$ fixed and floating rate swap

 

458

 

 

364

 

29

 

IPCA swap

 

4

 

44

 

18

 

 

Eurobonds swap

 

 

 

 

109

 

Pre dollar swap

 

5

 

 

5

 

 

 

 

467

 

44

 

387

 

138

 

Commodities price risk

 

 

 

 

 

 

 

 

 

Nickel

 

160

 

35

 

54

 

7

 

Bunker oil

 

2

 

3

 

 

 

 

 

162

 

38

 

54

 

7

 

 

 

 

 

 

 

 

 

 

 

Others

 

 

447

 

 

86

 

 

 

 

447

 

 

86

 

Total

 

629

 

529

 

441

 

231

 

 

 

 

Consolidated

 

 

 

Liabilities

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Current

 

Non-current

 

Current

 

Non-current

 

Derivatives not designated as hedge accounting

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

CDI & TJLP vs. US$ fixed and floating rate swap

 

1,110

 

8,504

 

1,173

 

3,599

 

IPCA swap

 

90

 

751

 

 

167

 

Eurobonds swap

 

567

 

157

 

24

 

238

 

Pre dollar swap

 

472

 

771

 

81

 

262

 

 

 

2,239

 

10,183

 

1,278

 

4,266

 

Commodities price risk

 

 

 

 

 

 

 

 

 

Nickel

 

127

 

37

 

60

 

7

 

Bunker oil (i)

 

2,571

 

520

 

1,201

 

 

 

 

2,698

 

557

 

1,261

 

7

 

Derivatives designated as cash flow hedge

 

 

 

 

 

 

 

 

 

Bunker oil (i)

 

674

 

 

1,152

 

 

Foreign exchange

 

38

 

 

69

 

3

 

 

 

712

 

 

1,221

 

3

 

 

 

 

 

 

 

 

 

 

 

Others

 

 

417

 

 

 

 

 

 

417

 

 

 

Total

 

5,649

 

11,157

 

3,760

 

4,276

 

 


(i) As at September 30, 2015 and December 31, 2014, includes R$294 and R$402, respectively, related to matured transactions with no financial settlement.

 

39



Table of Contents

 

GRAPHIC

 

 

 

Parent Company

 

 

 

Assets

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Current

 

Non-current

 

Current

 

Non-current

 

Derivatives not designated as hedge accounting

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

CDI & TJLP vs. US$ fixed and floating rate swap

 

383

 

 

354

 

29

 

IPCA swap

 

2

 

44

 

11

 

 

Pre dollar swap

 

3

 

 

5

 

 

 

 

388

 

44

 

370

 

29

 

 

 

 

 

 

 

 

 

 

 

Others

 

 

423

 

 

 

 

 

 

423

 

 

 

Total

 

388

 

467

 

370

 

29

 

 

 

 

Parent Company

 

 

 

Liabilities

 

 

 

September 30, 2015 (unaudited)

 

December 31, 2014

 

 

 

Current

 

Non-current

 

Current

 

Non-current

 

Derivatives not designated as hedge accounting

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

CDI & TJLP vs. US$ fixed and floating rate swap

 

1,103

 

7,753

 

867

 

3,535

 

IPCA swap

 

89

 

391

 

 

70

 

Pre dollar swap

 

473

 

770

 

81

 

261

 

 

 

1,665

 

8,914

 

948

 

3,866

 

 

 

 

 

 

 

 

 

 

 

Others

 

 

418

 

 

 

 

 

 

418

 

 

 

Total

 

1,665

 

9,332

 

948

 

3,866

 

 

b)             Effects of derivatives on the statement of income, cash flow and other comprehensive income

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

Amount of gain (loss) recognized
in the statement of income

 

Financial settlement
inflows(outflows)

 

Amount of gain(loss) recognized
in OCI

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

Derivatives not designated as hedge accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

 

 

 

 

CDI & TJLP vs. US$ fixed and floating rate swap

 

(3,174

)

(1,317

)

(5

)

83

 

 

 

IPCA swap

 

(396

)

(91

)

 

 

 

 

Eurobonds swap

 

(46

)

(228

)

 

 

 

 

Pre dollar swap

 

(690

)

(83

)

(11

)

4

 

 

 

 

 

(4,306

)

(1,719

)

(16

)

87

 

 

 

Commodities price risk

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel

 

(69

)

17

 

(77

)

8

 

 

 

Bunker oil

 

(1,821

)

(134

)

(117

)

12

 

 

 

 

 

(1,890

)

(117

)

(194

)

20

 

 

 

Derivatives designated as cash flow hedge

 

 

 

 

 

 

 

 

 

 

 

 

 

Bunker oil

 

(459

)

(4

)

(375

)

(4

)

96

 

(137

)

Foreign exchange

 

(37

)

(23

)

(37

)

(23

)

17

 

(13

)

 

 

(496

)

(27

)

(412

)

(27

)

113

 

(150

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

(169

)

(58

)

 

 

 

 

 

 

(169

)

(58

)

 

 

 

 

Total

 

(6,861

)

(1,921

)

(622

)

80

 

113

 

(150

)

 

40



Table of Contents

 

GRAPHIC

 

 

 

Consolidated (unaudited)

 

 

 

Nine-month period ended

 

 

 

Amount of gain (loss) recognized
in the statement of income

 

Financial settlement
inflows(outflows)

 

Amount of gain(loss) recognized
in OCI

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

Derivatives not designated as hedge accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

 

 

 

 

CDI & TJLP vs. US$ fixed and floating rate swap

 

(5,533

)

(122

)

(883

)

362

 

 

 

IPCA swap

 

(546

)

(55

)

19

 

 

 

 

Eurobonds swap

 

(386

)

(210

)

(38

)

24

 

 

 

Pre dollar swap

 

(925

)

(8

)

(21

)

16

 

 

 

 

 

(7,390

)

(395

)

(923

)

402

 

 

 

Commodities price risk

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel

 

(125

)

8

 

(157

)

17

 

 

 

Bunker oil

 

(1,737

)

(94

)

(499

)

(8

)

 

 

 

 

(1,862

)

(86

)

(656

)

9

 

 

 

Derivatives designated as cash flow hedge

 

 

 

 

 

 

 

 

 

 

 

 

 

Bunker oil

 

(950

)

(23

)

(1,021

)

(23

)

928

 

(96

)

Foreign exchange

 

(109

)

(75

)

(109

)

(75

)

45

 

12

 

 

 

(1,059

)

(98

)

(1,130

)

(98

)

973

 

(84

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

(390

)

(22

)

 

 

 

 

 

 

(390

)

(22

)

 

 

 

 

Total

 

(10,701

)

(601

)

(2,709

)

313

 

973

 

(84

)

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

Amount of gain (loss) recognized
in the statement of income

 

Financial settlement
inflows(outflows)

 

Amount of gain(loss) recognized
in OCI

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

Derivatives not designated as hedge accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

 

 

 

 

CDI & TJLP vs. US$ fixed and floating rate swap

 

(5,093

)

(136

)

(638

)

318

 

 

 

IPCA swap

 

(364

)

(8

)

11

 

 

 

 

Pre dollar swap

 

(925

)

(8

)

(22

)

15

 

 

 

 

 

(6,382

)

(152

)

(649

)

333

 

 

 

Cash flow hedge from entities

 

 

 

 

 

 

 

 

 

 

 

 

 

Bunker oil

 

 

 

 

 

928

 

(96

)

Foreign exchange

 

 

 

 

 

45

 

12

 

 

 

 

 

 

 

973

 

(84

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

(303

)

 

 

 

 

 

 

 

(303

)

 

 

 

 

 

Total

 

(6,685

)

(152

)

(649

)

333

 

973

 

(84

)

 

Related to the effects of derivatives in the consolidated statement of income, the Company recognized as cost of goods sold and services rendered and financial expense the amounts of R$451 and R$6,402 for the three-month period ended on September 30, 2015, respectively, and the amounts of R$944 and R$9,751 for the nine-month period ended on September 30, 2015, respectively.

 

The maturities dates of the derivative financial instruments are as follows:

 

 

 

Maturity dates

 

Currencies and interest rates

 

July 2023

 

Bunker oil

 

December 2016

 

Nickel

 

October 2017

 

Others

 

December 2027

 

 

41



Table of Contents

 

GRAPHIC

 

Additional information about derivatives financial instruments

(As at September 30, 2015, unaudited)

 

The risk of the derivatives portfolio is measured using the delta-Normal parametric approach, which considers that the future distribution of the risk factors and its correlations tends to present the same statistic properties verified in the historical data. The value at risk estimate considers a 95% confidence level for a one business day time horizon.

 

There was no cash amount deposited as margin call regarding derivative positions on September 30, 2015. The contracts subject to margin calls refer only to part of nickel trades executed by the wholly-owned subsidiary Vale Canada Ltd.

 

The derivative positions described in this document didn’t have initial costs associated.

 

The following tables detail the derivatives positions for Vale and its controlled companies as of September 30, 2015, with the following information: notional amount, fair value including credit risk, gains or losses in the period, value at risk and the fair value breakdown by year of maturity.

 

a)                           Foreign exchange and interest rates derivative positions

 

(i)       Protection programs for the R$ denominated debt instruments

 

In order to reduce cash flow volatility, swap transactions were implemented to convert into US$ the cash flows from certain debt instruments denominated in R$ with interest rates linked mainly to CDI, TJLP and IPCA. In those swaps, Vale pays fixed or floating rates in US$ and receives payments in R$ linked to the interest rates of the protected debt instruments.

 

The swap transactions were negotiated over-the-counter and the protected items are the cash flows from debt instruments linked to R$. These programs transform into US$ the obligations linked to R$ to achieve a currency offset in the Company’s cash flows, by matching its receivables - mainly linked to US$ - with its payables.

 

 

 

Notional

 

 

 

 

 

Fair value

 

Financial Settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

September 30, 2015

 

December 31, 2014

 

Index

 

Average rate

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

2015

 

2016

 

2017

 

2018+

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CDI vs. US$ fixed rate swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

R$

4,939

 

R$

4,511

 

CDI

 

109.03

%

5,264

 

4,736

 

2,053

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

2,199

 

US$

2,284

 

Fix

 

3.35

%

(8,693

)

(6,180

)

(2,562

)

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

(3,429

)

(1,444

)

(510

)

135

 

130

 

(2,112

)

(237

)

(1,211

)

Net adjusted for credit risk

 

 

 

 

 

 

 

(3,582

)

(1,453

)

 

 

 

 

128

 

(2,171

)

(262

)

(1,277

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CDI vs. US$ floating rate swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

 

R$

428

 

CDI

 

0.00

%

 

448

 

460

 

 

 

 

 

 

 

 

 

 

 

Payable

 

 

US$

250

 

Libor +

 

0.00

%

 

(668

)

(663

)

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

 

(220

)

(203

)

 

 

 

 

 

Net adjusted for credit risk

 

 

 

 

 

 

 

 

(220

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TJLP vs. US$ fixed rate swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

R$

5,701

 

R$

6,247

 

TJLP +

 

1.32

%

4,954

 

5,444

 

788

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

2,721

 

US$

3,051

 

Fix

 

1.70

%

(10,016

)

(7,802

)

(972

)

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

(5,062

)

(2,358

)

(184

)

263

 

(152

)

(1,020

)

(1,282

)

(2,609

)

Net adjusted for credit risk

 

 

 

 

 

 

 

(5,241

)

(2,531

)

 

 

 

 

(184

)

(1,062

)

(1,322

)

(2,673

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TJLP vs. US$ floating rate swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

R$

279

 

R$

295

 

TJLP +

 

0.93

%

231

 

243

 

24

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

163

 

US$

173

 

Libor +

 

-1.21

%

(550

)

(413

)

(23

)

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

(319

)

(170

)

1

 

16

 

(5

)

(18

)

(25

)

(271

)

Net adjusted for credit risk

 

 

 

 

 

 

 

(333

)

(175

)

 

 

 

 

(7

)

(21

)

(28

)

(277

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R$ sixed rate vs. US$ fixed rate swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

R$

1,495

 

R$

735

 

Fix

 

6.07

%

1.297

 

649

 

75

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

604

 

US$

395

 

Fix

 

-0.77

%

(2,318

)

(972

)

(86

)

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

(1,021

)

(323

)

(11

)

79

 

(148

)

(402

)

(41

)

(430

)

Net adjusted for credit risk

 

 

 

 

 

 

 

(1,240

)

(337

)

 

 

 

 

(151

)

(424

)

(50

)

(615

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IPCA vs. US$ fixed rate swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

R$

1,000

 

R$

1,000

 

IPCA +

 

6.55

%

1,138

 

1,113

 

56

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

434

 

US$

434

 

Fix

 

3.98

%

(1,812

)

(1,259

)

(38

)

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

(674

)

(146

)

19

 

37

 

 

2

 

1

 

(678

)

Net adjusted for credit risk

 

 

 

 

 

 

 

(734

)

(150

)

 

 

 

 

 

2

 

1

 

(738

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IPCA vs. CDI swap

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

R$

1,350

 

R$

0

 

IPCA +

 

6.62

%

1,303

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

1,350

 

US$

0

 

CDI

 

98.58

%

(1,347

)

 

 

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

(44

)

 

 

1

 

 

(88

)

(83

)

127

 

Net adjusted for credit risk

 

 

 

 

 

 

 

(58

)

 

 

 

 

 

 

(88

)

(85

)

116

 

 

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(ii)   Protection program for EUR denominated debt instruments

 

In order to reduce the cash flow volatility, swap transactions were implemented to convert into US$ the cash flows from certain debt instruments issued in Euros by Vale. In those swaps, Vale receives fixed rates in EUR and pays fixed rates in US$.

 

The swap transactions were negotiated over-the-counter and the protected items are the cash flows from debt instruments linked to EUR. The financial settlement inflows/outflows are offset by the protected items’ losses/gains due to EUR/US$ exchange rate.

 

 

 

Notional

 

 

 

 

 

Fair value

 

Financial Settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

September 30, 2015

 

December 31, 2014

 

Index

 

Average rate

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

2015

 

2016

 

2017

 

2018+

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

1,000

 

1,000

 

Fix

 

4.06

%

5,087

 

3,800

 

133

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

1,302

 

US$

1,302

 

Fix

 

4.51

%

(5,796

)

(3,941

)

(171

)

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

(709

)

(141

)

(38

)

80

 

 

(562

)

(22

)

(125

)

Net adjusted for credit risk

 

 

 

 

 

 

 

(724

)

(154

)

 

 

 

 

 

(567

)

(23

)

(135

)

 

(iii)                            Foreign exchange hedging program for disbursements in CAD

 

In order to reduce the cash flow volatility, forward transactions were implemented to mitigate the foreign exchange exposure that arises from the currency mismatch between revenues denominated in US$ and disbursements denominated in CAD.

 

The forward transactions were negotiated over-the-counter and the protected item is part of the CAD denominated disbursements. The financial settlement inflows/outflows are offset by the protected items’ losses/gains due to CAD/US$ exchange rate. This program is classified under the hedge accounting requirements.

 

 

 

Notional 

 

Bought /

 

Average rate

 

Fair value

 

Financial Settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

September 30, 2015

 

December 31, 2014

 

Sold

 

(CAD / USD)

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forward

 

CAD

42

 

CAD

230

 

B

 

1.023

 

(37

)

(73

)

 

1

 

(28

)

(9

)

Total adjusted for credit risk

 

 

 

 

 

 

 

(37

)

(73

)

 

 

 

 

(28

)

(9

)

 

b)                           Commodities derivative positions

 

(i)       Bunker Oil purchase cash flows protection program

 

In order to reduce the impact of bunker oil price fluctuation on maritime freight hiring/supply and, consequently, reducing the company’s cash flow volatility, bunker oil derivatives were implemented. These transactions are usually executed through forward purchases and zero cost-collars.

 

The derivative transactions were negotiated over-the-counter and the protected item is part of the Vale’s costs linked to bunker oil prices. The financial settlement inflows/outflows are offset by the protected items’ losses/gains due to bunker oil prices changes. Part of this program is classified under the hedge accounting requirements.

 

 

 

Notional (ton)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

September 30, 2015

 

December 31, 2014

 

Sold

 

(US$/ton)

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

2015

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bunker Oil protection

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forwards

 

2,520,000

 

2,205,000

 

B

 

462

 

(2,050

)

(964

)

(291

)

73

 

(250

)

(1,800

)

Call options

 

2,365,500

 

 

B

 

386

 

4

 

 

 

1

 

0

 

4

 

Put options

 

2,365,500

 

 

S

 

317

 

(898

)

 

(76

)

53

 

(142

)

(756

)

Total adjusted for credit risk

 

 

 

 

 

 

 

 

 

(2,969

)

(964

)

 

 

 

(394

)

(2,574

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bunker Oil hedge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forwards

 

472,500

 

1,950,000

 

B

 

496

 

(494

)

(986

)

(974

)

12

 

(494

)

 

Total adjusted for credit risk

 

 

 

 

 

 

 

 

 

(497

)

(987

)

 

 

 

 

(497

)

 

 

(ii)   Protection programs for base metals raw materials and products

 

In the operational protection program for nickel sales at fixed prices, derivatives transactions were implemented to convert into floating prices the contracts with clients that required a fixed price in order to keep nickel revenues exposed to nickel price fluctuations. Those operations are usually implemented through the purchase of nickel forwards, which are unwind before the original maturity in order to match the settlement dates of the commercial contracts in which the prices were fixed.

 

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In the operational protection program for the purchase of raw materials and products, derivatives transactions were implemented, usually through the sale of nickel and copper forward or futures, in order to eliminate the mismatch between the pricing period of purchases (concentrate, cathode, sinter, scrap and others) and the pricing period of the final product sales to the clients.

 

The derivative transactions are negotiated at London Metal Exchange or over-the-counter and the protected item is part of Vale’s revenues and costs linked to nickel and copper prices. The financial settlement inflows/outflows are offset by the protected items’ losses/gains due to nickel and copper prices changes.

 

 

 

Notional (ton)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

September 30, 2015

 

December 31, 2014

 

Sold

 

(US$/ton)

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

2015

 

2016

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed prices sales protection

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel forwards

 

14,319

 

11,264

 

B

 

13,270

 

(162

)

(65

)

(161

)

18

 

(44

)

(96

)

(23

)

Total adjusted for credit risk

 

 

 

 

 

 

 

(164

)

(65

)

 

 

 

 

(44

)

(97

)

(23

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Raw materials purchase protection

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel forwards

 

99

 

140

 

S

 

10,861

 

0.2

 

0.4

 

2.5

 

0.1

 

0.2

 

 

 

Copper forwards

 

284

 

360

 

S

 

5,464

 

0.3

 

0.3

 

1.5

 

0.1

 

0.3

 

 

 

Total adjusted for credit risk

 

 

 

 

 

 

 

0.5

 

0.7

 

 

 

 

 

0.5

 

 

 

 

c)                            Silver Wheaton Corp. warrants

 

The company owns warrants of Silver Wheaton Corp. (SLW), a Canadian company with stocks negotiated in Toronto Stock Exchange and New York Stock Exchange. Such warrants configure American call options and were received as part of the payment regarding the sale of 25% of gold payable flows produced as a sub product from Salobo copper mine during its life and 70% of gold payable flows produced as a sub product from some nickel mines in Sudbury during 20 years.

 

 

 

Notional (quantity)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value
by year

 

Flow

 

September 30, 2015

 

December 31, 2014

 

Sold

 

(US$/share)

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Call options

 

10,000,000

 

10,000,000

 

B

 

65

 

24

 

86

 

 

3

 

24

 

Total adjusted for credit risk

 

 

 

 

 

 

 

24

 

86

 

 

 

 

 

24

 

 

d)                           VLI S.A. (“VLI”) call options

 

Vale entered into agreements in which BNDES has call options of a specified quantity of VLI shares, originally of Ferrovia Norte Sul S.A. (“FNS”) shares as the options were part of the FNS debentures. The call option’s strike price is given by the FNS debentures’ remaining debt balance in each exercise date.

 

 

 

Notional (quantity)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value
by year

 

Flow

 

September 30, 2015

 

December 31, 2014

 

Sold

 

(R$/share)

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

2027

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Call options

 

140,239

 

 

S

 

8,570

 

(296

)

 

 

10

 

(296

)

Total adjusted for credit risk

 

 

 

 

 

 

 

(301

)

 

 

 

 

 

(301

)

 

e)                            Options related to Minerações Brasileiras Reunidas (“MBR”) shares

 

The Company entered into an agreement that has options related to MBR shares. Under certain restrict and contingent conditions, which are beyond the buyer´s control, such as illegality due to changes in the law, the contract gives the buyer the right to sell back its stake to the Company. In this case, the Company would have control over the decision whether to settle through cash or shares. On the other hand, the Company has the right to buy back this non-controlling interest in the subsidiary.

 

 

 

Notional (ton)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value
by year

 

Flow

 

September 30, 2015

 

December 31, 2014

 

Sold

 

(R$/aҫão)

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

2016+

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options

 

2,139

 

 

B/S

 

1.8

 

305

 

 

 

14

 

305

 

 

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GRAPHIC

 

f)                             Embedded derivatives in commercial contracts, insurance and debt instruments

 

The Company has some nickel concentrate and raw materials purchase agreements in which there are provisions based on nickel and copper future prices behavior. These provisions are considered as embedded derivatives.

 

 

 

Notional (ton)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value
by year

 

Flow

 

September 30, 2015

 

December 31, 2014

 

Sold

 

(US$/ton)

 

September 30, 2015

 

December 31, 2014

 

September 30, 2015

 

September 30, 2015

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel Forward

 

2,915

 

4,491

 

S

 

10,672

 

9.0

 

(1.5

)

 

 

 

 

9.0

 

Copper Forward

 

2,191

 

6,310

 

S

 

5,337

 

1.2

 

3.0

 

 

 

 

 

1.2

 

Total

 

 

 

 

 

 

 

 

 

10.2

 

1.5

 

 

4.2

 

10.2

 

 

The Company has also a natural gas purchase agreement in which there´s a clause that defines that a premium can be charged if the Company’s pellet sales prices trade above a pre-defined level. This clause is considered an embedded derivative and both the fair value and value at risk were not material as of September 30, 2015.

 

g)                           Sensitivity analysis of derivative financial instruments

 

The following tables present the potential value of the instruments given hypothetical stress scenarios for the market risk factors that impact the derivatives positions. The scenarios were defined as follows:

 

·   Scenario I: fair value calculation considering market curves and prices as of September 30, 2015

·   Scenario II: fair value estimated considering a 25% deterioration in the market curves of the main market risk factors

·   Scenario III: fair value estimated considering a 50% deterioration in the market curves of the main market risk factors

 

45



Table of Contents

 

GRAPHIC

 

Instrument

 

Instrument’s main risk events

 

Scenario I

 

Scenario II

 

Scenario III

 

 

 

 

 

 

 

 

 

 

 

CDI vs. US$ fixed rate swap

 

R$ depreciation

 

(3,582

)

(5,755

)

(7,928

)

 

 

US$ interest rate inside Brazil decrease

 

(3,582

)

(3,718

)

(3,859

)

 

 

Brazilian interest rate increase

 

(3,582

)

(3,600

)

(3,620

)

Protected item: R$ denominated debt

 

R$ depreciation

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

TJLP vs. US$ fixed rate swap

 

R$ depreciation

 

(5,241

)

(7,745

)

(10,249

)

 

 

US$ interest rate inside Brazil decrease

 

(5,241

)

(5,512

)

(5,804

)

 

 

Brazilian interest rate increase

 

(5,241

)

(5,567

)

(5,852

)

 

 

TJLP interest rate decrease

 

(5,241

)

(5,411

)

(5,589

)

Protected item: R$ denominated debt

 

 

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

TJLP vs. US$ floating rate swap

 

R$ depreciation

 

(333

)

(471

)

(608

)

 

 

US$ interest rate inside Brazil decrease

 

(333

)

(354

)

(377

)

 

 

Brazilian interest rate increase

 

(333

)

(353

)

(370

)

 

 

TJLP interest rate decrease

 

(333

)

(344

)

(355

)

Protected item: R$ denominated debt

 

R$ depreciation

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

R$ fixed rate vs. US$ fixed rate swap

 

R$ depreciation

 

(1,240

)

(1,819

)

(2,399

)

 

 

US$ interest rate inside Brazil decrease

 

(1,240

)

(1,318

)

(1,406

)

 

 

Brazilian interest rate increase

 

(1,240

)

(1,360

)

(1,459

)

Protected item: R$ denominated debt

 

R$ depreciation

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

IPCA vs. US$ fixed rate swap

 

R$ depreciation

 

(734

)

(1,187

)

(1,640

)

 

 

US$ interest rate inside Brazil decrease

 

(734

)

(784

)

(840

)

 

 

Brazilian interest rate increase

 

(734

)

(843

)

(938

)

 

 

IPCA index decrease

 

(734

)

(793

)

(849

)

Protected item: R$ denominated debt

 

R$ depreciation

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

IPCA vs. CDI swap

 

Brazilian interest rate increase

 

(58

)

(216

)

(349

)

 

 

IPCA index decrease

 

(58

)

(142

)

(222

)

Protected item: R$ denominated debt linked to IPCA

 

IPCA index decrease

 

n.a.

 

142

 

222

 

 

 

 

 

 

 

 

 

 

 

EUR fixed rate vs. US$ fixed rate swap

 

EUR depreciation

 

(724

)

(1,996

)

(3,267

)

 

 

Euribor increase

 

(724

)

(897

)

(778

)

 

 

US$ Libor decrease

 

(724

)

(804

)

(888

)

Protected item: EUR denominated debt

 

EUR depreciation

 

n.a.

 

1,996

 

3,267

 

 

 

 

 

 

 

 

 

 

 

CAD Forward

 

CAD depreciation

 

(37

)

(78

)

(118

)

Protected item: Disbursement in CAD

 

CAD depreciation

 

n.a.

 

78

 

118

 

 

Instrument

 

Instrument’s main risk events

 

Scenario I

 

Scenario II

 

Scenario III

 

 

 

 

 

 

 

 

 

 

 

Bunker Oil protection

 

 

 

 

 

 

 

 

 

Forwards and options

 

Bunker Oil price decrease

 

(2,969

)

(4,107

)

(5,266

)

Protected item: Part of costs linked to bunker oil prices

 

Bunker Oil price decrease

 

n.a.

 

4,107

 

5,266

 

 

 

 

 

 

 

 

 

 

 

Bunker Oil hedge

 

 

 

 

 

 

 

 

 

Forwards

 

Bunker Oil price decrease

 

(497

)

(606

)

(715

)

Protected item: Part of costs linked to bunker oil prices

 

Bunker Oil price decrease

 

n.a.

 

606

 

715

 

 

 

 

 

 

 

 

 

 

 

Nickel sales fixed price protection

 

 

 

 

 

 

 

 

 

Forwards

 

Nickel price decrease

 

(164

)

(311

)

(458

)

Protected item: Part of nickel revenues with fixed prices

 

Nickel price fluctuation

 

n.a.

 

311

 

458

 

 

 

 

 

 

 

 

 

 

 

Purchase protection program

 

 

 

 

 

 

 

 

 

Nickel forwards

 

Nickel price increase

 

0.2

 

(0.8

)

(1.8

)

Protected item: Part of costs linked to nickel prices

 

Nickel price increase

 

n.a.

 

0.8

 

1.8

 

 

 

 

 

 

 

 

 

 

 

Copper forwards

 

Copper price increase

 

0.3

 

(1.2

)

(2.7

)

Protected item: Part of costs linked to copper prices

 

Copper price increase

 

n.a.

 

1.2

 

2.7

 

 

 

 

 

 

 

 

 

 

 

SLW warrants

 

SLW stock price decrease

 

24

 

11

 

3

 

 

 

 

 

 

 

 

 

 

 

VLI call options

 

VLI stock value increase

 

(301

)

(433

)

(586

)

 

 

 

 

 

 

 

 

 

 

Options regarding non-controlling interest in subsidiary

 

Subsidiary stock value increase

 

305

 

49

 

(204

)

 

46



Table of Contents

 

GRAPHIC

 

Instrument

 

Main risks

 

Scenario I

 

Scenario II

 

Scenario III

 

Embedded derivatives - Raw material purchase (nickel)

 

Nickel price increase

 

9

 

(20

)

(48

)

Embedded derivatives - Raw material purchase (copper)

 

Copper price increase

 

1

 

(10

)

(21

)

 

h)                           Financial counterparties’ ratings

 

The transactions of derivative instruments, cash and cash equivalents as well as investments are held with financial institutions whose exposure limits are periodically reviewed and approved by the delegated authority. The financial institutions credit risk is performed through a methodology that considers, among other information, ratings provided by international rating agencies.

 

The table below presents the ratings in foreign currency published by agencies Moody’s and S&P regarding the main financial institutions that we had outstanding positions as of September 30, 2015.

 

Long term ratings by counterparty

 

Moody’s 

 

S&P

ANZ Australia and New Zealand Banking

 

Aa2

 

AA-

Banco Bradesco

 

Baa3

 

BB+

Banco de Credito del Peru

 

Baa1

 

BBB

Banco do Brasil

 

Baa3

 

BB+

Banco do Nordeste

 

Baa3

 

BB+

Banco Safra

 

Baa3

 

BB+

Banco Santander

 

Baa3

 

BB+

Banco Votorantim

 

Baa3

 

BB+

Bank of America

 

Baa1

 

A-

Bank of Nova Scotia

 

Aa2

 

A+

Banpara

 

Ba3

 

BB

Barclays

 

Baa3

 

BBB

BBVA

 

A3

 

BBB+

BNP Paribas

 

A1

 

A+

BTG Pactual

 

Baa3

 

BB

Caixa Economica Federal

 

Baa3

 

BB+

Citigroup

 

Baa1

 

A-

Credit Agricole

 

A2

 

A

Deutsche Bank

 

A3

 

BBB+

Goldman Sachs

 

A3

 

A-

HSBC

 

A1

 

A

Intesa Sanpaolo Spa

 

Baa1

 

BBB-

Itau Unibanco

 

Ba1

 

BB+

JP Morgan Chase & Co

 

A3

 

A

Macquarie Group Ltd

 

A3

 

BBB

Morgan Stanley

 

A3

 

A-

National Australia Bank NAB

 

Aa2

 

AA-

Royal Bank of Canada

 

Aa3

 

AA-

Societe Generale

 

A2

 

A

Standard Bank Group

 

Baa3

 

-

Standard Chartered

 

Aa3

 

A-

 

47



Table of Contents

 

GRAPHIC

 

i)                              Market curves

 

The curves used on the pricing of derivatives instruments were developed based on data from BM&F, Central Bank of Brazil, London Metals Exchange and Bloomberg.

 

(i)       Products

 

Nickel

 

Maturity

 

Price (US$/ton)

 

Maturity

 

Price (US$/ton)

 

Maturity

 

Price (US$/ton)

 

SPOT

 

10,070

 

MAR16

 

10,407

 

SEP16

 

10,422

 

OCT15

 

10,381

 

APR16

 

10,405

 

SEP17

 

10,483

 

NOV15

 

10,392

 

MAY16

 

10,406

 

SEP18

 

10,498

 

DEC15

 

10,399

 

JUN16

 

10,408

 

SEP19

 

10,498

 

JAN16

 

10,404

 

JUL16

 

10,413

 

 

 

 

 

FEB16

 

10,408

 

AUG16

 

10,418

 

 

 

 

 

 

Copper

 

Maturity

 

Price (US$/lb)

 

Maturity

 

Price (US$/lb)

 

Maturity

 

Price (US$/lb)

 

SPOT

 

2.37

 

MAR16

 

2.34

 

SEP16

 

2.33

 

OCT15

 

2.35

 

APR16

 

2.34

 

SEP17

 

2.33

 

NOV15

 

2.36

 

MAY16

 

2.34

 

SEP18

 

2.34

 

DEC15

 

2.36

 

JUN16

 

2.33

 

SEP19

 

2.35

 

JAN16

 

2.34

 

JUL16

 

2.33

 

 

 

 

 

FEB16

 

2.34

 

AUG16

 

2.33

 

 

 

 

 

 

Bunker Oil

 

Maturity

 

Price (US$/ton)

 

Maturity

 

Price (US$/ton)

 

Maturity

 

Price (US$/ton)

 

SPOT

 

224

 

MAR16

 

255

 

SEP16

 

277

 

OCT15

 

230

 

APR16

 

259

 

SEP17

 

308

 

NOV15

 

236

 

MAY16

 

263

 

SEP18

 

353

 

DEC15

 

241

 

JUN16

 

267

 

SEP19

 

415

 

JAN16

 

246

 

JUL16

 

270

 

 

 

 

 

FEB16

 

251

 

AUG16

 

274

 

 

 

 

 

 

48



Table of Contents

 

GRAPHIC

 

(ii) Foreign exchange and interest rates

 

US$-Brazil Interest Rate

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

11/03/15

 

1.51

 

09/01/16

 

5.28

 

01/02/18

 

5.64

 

12/01/15

 

1.88

 

10/03/16

 

5.42

 

04/02/18

 

5.62

 

01/04/16

 

2.56

 

11/01/16

 

5.59

 

07/02/18

 

5.61

 

02/01/16

 

2.76

 

12/01/16

 

5.71

 

10/01/18

 

5.52

 

03/01/16

 

3.11

 

01/02/17

 

5.82

 

01/02/19

 

5.39

 

04/01/16

 

3.78

 

02/01/17

 

5.90

 

04/01/19

 

5.39

 

05/02/16

 

4.03

 

03/01/17

 

5.91

 

07/01/19

 

5.27

 

06/01/16

 

4.52

 

04/03/17

 

5.87

 

10/01/19

 

5.27

 

07/01/16

 

4.81

 

07/03/17

 

5.84

 

01/02/20

 

5.33

 

08/01/16

 

5.07

 

10/02/17

 

5.70

 

04/01/20

 

5.36

 

 

US$ Interest Rate

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

1M

 

0.19

 

6M

 

0.44

 

11M

 

0.50

 

2M

 

0.26

 

7M

 

0.46

 

12M

 

0.50

 

3M

 

0.33

 

8M

 

0.47

 

2Y

 

0.77

 

4M

 

0.38

 

9M

 

0.48

 

3Y

 

1.02

 

5M

 

0.42

 

10M

 

0.49

 

4Y

 

1.25

 

 

TJLP

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

11/03/15

 

6.50

 

09/01/16

 

6.50

 

01/02/18

 

6.50

 

12/01/15

 

6.50

 

10/03/16

 

6.50

 

04/02/18

 

6.50

 

01/04/16

 

6.50

 

11/01/16

 

6.50

 

07/02/18

 

6.50

 

02/01/16

 

6.50

 

12/01/16

 

6.50

 

10/01/18

 

6.50

 

03/01/16

 

6.50

 

01/02/17

 

6.50

 

01/02/19

 

6.50

 

04/01/16

 

6.50

 

02/01/17

 

6.50

 

04/01/19

 

6.50

 

05/02/16

 

6.50

 

03/01/17

 

6.50

 

07/01/19

 

6.50

 

06/01/16

 

6.50

 

04/03/17

 

6.50

 

10/01/19

 

6.50

 

07/01/16

 

6.50

 

07/03/17

 

6.50

 

01/02/20

 

6.50

 

08/01/16

 

6.50

 

10/02/17

 

6.50

 

04/01/20

 

6.50

 

 

49



Table of Contents

 

GRAPHIC

 

BRL Interest Rate

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

11/03/15

 

14.29

 

09/01/16

 

15.53

 

01/02/18

 

15.85

 

12/01/15

 

14.44

 

10/03/16

 

15.57

 

04/02/18

 

15.87

 

01/04/16

 

14.61

 

11/01/16

 

15.58

 

07/02/18

 

15.88

 

02/01/16

 

14.78

 

12/01/16

 

15.59

 

10/01/18

 

15.86

 

03/01/16

 

14.90

 

01/02/17

 

15.60

 

01/02/19

 

15.82

 

04/01/16

 

15.15

 

02/01/17

 

15.64

 

04/01/19

 

15.80

 

05/02/16

 

15.25

 

03/01/17

 

15.67

 

07/01/19

 

15.78

 

06/01/16

 

15.38

 

04/03/17

 

15.70

 

10/01/19

 

15.76

 

07/01/16

 

15.42

 

07/03/17

 

15.78

 

01/02/20

 

15.69

 

08/01/16

 

15.48

 

10/02/17

 

15.82

 

04/01/20

 

15.66

 

 

Implicit Inflation (IPCA)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

11/03/15

 

7.39

 

09/01/16

 

8.56

 

01/02/18

 

8.08

 

12/01/15

 

7.53

 

10/03/16

 

8.59

 

04/02/18

 

7.99

 

01/04/16

 

7.70

 

11/01/16

 

8.55

 

07/02/18

 

7.93

 

02/01/16

 

7.85

 

12/01/16

 

8.52

 

10/01/18

 

7.85

 

03/01/16

 

7.97

 

01/02/17

 

8.48

 

01/02/19

 

7.78

 

04/01/16

 

8.20

 

02/01/17

 

8.48

 

04/01/19

 

7.73

 

05/02/16

 

8.30

 

03/01/17

 

8.48

 

07/01/19

 

7.70

 

06/01/16

 

8.42

 

04/03/17

 

8.48

 

10/01/19

 

7.67

 

07/01/16

 

8.45

 

07/03/17

 

8.33

 

01/02/20

 

7.60

 

08/01/16

 

8.51

 

10/02/17

 

8.18

 

04/01/20

 

7.57

 

 

EUR Interest Rate

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

1M

 

0.02

 

6M

 

0.02

 

11M

 

0.02

 

2M

 

0.02

 

7M

 

0.02

 

12M

 

0.02

 

3M

 

0.02

 

8M

 

0.02

 

2Y

 

0.05

 

4M

 

0.02

 

9M

 

0.02

 

3Y

 

0.13

 

5M

 

0.02

 

10M

 

0.02

 

4Y

 

0.24

 

 

CAD Interest Rate

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

1M

 

0.79

 

6M

 

0.83

 

11M

 

0.75

 

2M

 

0.79

 

7M

 

0.81

 

12M

 

0.75

 

3M

 

0.79

 

8M

 

0.79

 

2Y

 

0.79

 

4M

 

0.81

 

9M

 

0.77

 

3Y

 

0.91

 

5M

 

0.82

 

10M

 

0.76

 

4Y

 

1.04

 

 

Currencies - Ending rates

 

CAD/US$

 

0.7464

 

US$/BRL

 

3.9729

 

EUR/US$

 

1.1179

 

 

50



Table of Contents

 

GRAPHIC

 

25.                               Stockholders’ equity

 

a)        Capital

 

Stockholders’ equity is represented by common shares (“ON”) and preferred non-redeemable shares (“PNA”) without par value. Preferred shares have the same rights as common shares, with the exception of voting rights to elect members of the Board of Directors. The Board of Directors may, regardless of changes to bylaws, issue new shares (authorized capital), including the capitalization of profits and reserves to the extent authorized.

 

At September 30, 2015, the capital was R$77,300 corresponding to 5,244,316,120 shares without par value.

 

 

 

September 30, 2015 (unaudited)

 

Stockholders

 

ON

 

PNA

 

Total

 

Valepar S.A.

 

1,716,435,045

 

20,340,000

 

1,736,775,045

 

Brazilian Government (Golden Share)

 

 

12

 

12

 

Foreign investors - ADRs

 

845,961,584

 

664,257,819

 

1,510,219,403

 

FMP - FGTS

 

77,519,801

 

 

77,519,801

 

PIBB - BNDES

 

1,196,301

 

2,475,636

 

3,671,937

 

BNDESPar

 

206,378,882

 

66,185,272

 

272,564,154

 

Foreign institutional investors in local market

 

232,588,347

 

638,404,193

 

870,992,540

 

Institutional investors

 

71,583,556

 

179,225,601

 

250,809,157

 

Retail investors in Brazil

 

33,989,484

 

396,833,393

 

430,822,877

 

Treasury stock

 

31,535,402

 

59,405,792

 

90,941,194

 

Total

 

3,217,188,402

 

2,027,127,718

 

5,244,316,120

 

 

b)        Basic and diluted earnings per share

 

Basic and diluted earnings per share are as follows:

 

 

 

(unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

Net income (loss) attributable to the Company’s stockholders

 

(6,663

)

(3,381

)

(11,058

)

5,715

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share:

 

 

 

 

 

 

 

 

 

Income (loss) available to preferred stockholders

 

(2,544

)

(1,291

)

(4,222

)

2,182

 

Income (loss) available to common stockholders

 

(4,119

)

(2,090

)

(6,836

)

3,533

 

Total

 

(6,663

)

(3,381

)

(11,058

)

5,715

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding (thousands of shares) - preferred shares

 

1,967,722

 

1,967,722

 

1,967,722

 

1,967,722

 

Weighted average number of shares outstanding (thousands of shares) - common shares

 

3,185,653

 

3,185,653

 

3,185,653

 

3,185,653

 

Total

 

5,153,375

 

5,153,375

 

5,153,375

 

5,153,375

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share

 

 

 

 

 

 

 

 

 

Preferred share

 

(1.29

)

(0.66

)

(2.15

)

1.11

 

Common share

 

(1.29

)

(0.66

)

(2.15

)

1.11

 

 

c)         Remuneration paid to the Company’s stockholders

 

 

 

Dividends

 

Interest on capital

 

Total

 

Amount per share

 

Amounts paid in 2014

 

 

 

 

 

 

 

 

 

First installment - April

 

 

4,632

 

4,632

 

0.898904129

 

Total

 

 

4,632

 

4,632

 

0.898904129

 

 

 

 

 

 

 

 

 

 

 

Amounts paid in 2015

 

 

 

 

 

 

 

 

 

First installment - April

 

 

3,101

 

3,101

 

0.601760991

 

Total

 

 

3,101

 

3,101

 

0.601760991

 

 

In October, 2015, the board of directors approved the payment of the second installment of the 2015 remuneration of the stockholders in the amount of R$1,925.

 

51



Table of Contents

 

GRAPHIC

 

26.                     Information by business segment and by geographic area

 

The information presented to the Executive Board on the performance of each segment is derived from the accounting records, adjusted for reallocations between segments.

 

a)             Operating income (loss) and adjusted EBITDA

 

Adjusted EBITDA is used by management to support the decision making process for segments. The definition of adjusted EBITDA for the Company is the operating income or loss adding dividends received from joint ventures and associates and excluding the depreciation, depletion and amortization, impairment and results on measurement or sales of non-current assets.

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

September 30, 2015

 

 

 

Statement of income

 

Adjusted by

 

 

 

 

 

Net operating 
revenue

 

Costs

 

Expenses,net

 

Research and 
evaluation 
expenses

 

Pre operating and 
stoppage 
operation

 

Depreciation 
and others 
results

 

Operating 
income (loss)

 

Dividends 
received from 
joint ventures 
and 
associates

 

Depreciation,
depletion and 
amortization

 

Loss on
measurement
or sale of non-
current assets

 

Adjusted 
EBITDA

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iron ore

 

11,792

 

(6,574

)

(591

)

(92

)

(77

)

(1,251

)

3,207

 

1

 

1,062

 

189

 

4,459

 

Pellets

 

3,150

 

(1,811

)

49

 

(4

)

(17

)

(289

)

1,078

 

 

289

 

 

1,367

 

Ferroalloys and manganese

 

99

 

(107

)

(9

)

 

(15

)

(18

)

(50

)

 

18

 

 

(32

)

Others ferrous products and services

 

446

 

(247

)

13

 

(2

)

 

(62

)

148

 

 

62

 

 

210

 

 

 

15,487

 

(8,739

)

(538

)

(98

)

(109

)

(1,620

)

4,383

 

1

 

1,431

 

189

 

6,004

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

 

453

 

(735

)

(65

)

(25

)

(90

)

(300

)

(762

)

 

300

 

 

(462

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel and other products (i)

 

3,618

 

(2,953

)

35

 

(83

)

(340

)

(1,403

)

(1,126

)

 

1,403

 

 

277

 

Copper (ii)

 

1,245

 

(796

)

(4

)

(11

)

 

(167

)

267

 

 

167

 

 

434

 

 

 

4,863

 

(3,749

)

31

 

(94

)

(340

)

(1,570

)

(859

)

 

1,570

 

 

711

 

Fertilizers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Potash

 

146

 

(102

)

(4

)

(53

)

(28

)

(40

)

(81

)

 

40

 

 

(41

)

Phosphates

 

1,990

 

(1,291

)

(15

)

(26

)

(69

)

(291

)

298

 

 

291

 

 

589

 

Nitrogen

 

282

 

(180

)

(2

)

(2

)

(5

)

(21

)

72

 

 

21

 

 

93

 

Others fertilizers products

 

61

 

 

 

 

 

 

61

 

 

 

 

61

 

 

 

2,479

 

(1,573

)

(21

)

(81

)

(102

)

(352

)

350

 

 

352

 

 

702

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

68

 

(152

)

10

 

(135

)

 

(17

)

(226

)

70

 

17

 

 

(139

)

Total

 

23,350

 

(14,948

)

(583

)

(433

)

(641

)

(3,859

)

2,886

 

71

 

3,670

 

189

 

6,816

 

 


(i) Includes nickel and its by-products (ferro-nickel, copper, precious metal, cobalt and others).

(ii) Includes copper concentrate and does not include the cooper by-product of nickel.

 

52


 


Table of Contents

 

GRAPHIC

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

September 30, 2014

 

 

 

Statement of income

 

Adjusted by

 

 

 

 

 

Net operating 
revenue

 

Costs

 

Expenses, net

 

Research and 
evaluation 
expenses

 

Pre operating and 
stoppage operation

 

Depreciation 
and others 
results

 

Operating 
income (loss)

 

Dividends 
received from 
joint ventures 
and associates

 

Depreciation, 
depletion and 
amortization

 

Adjusted 
EBITDA

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iron ore

 

9,683

 

(5,473

)

(455

)

(180

)

(143

)

(959

)

2,473

 

54

 

959

 

3,486

 

Pellets

 

2,979

 

(1,585

)

(24

)

 

(14

)

(165

)

1,191

 

537

 

165

 

1,893

 

Ferroalloys and manganese

 

191

 

(141

)

(10

)

(1

)

(13

)

(19

)

7

 

 

19

 

26

 

Others ferrous products and services

 

394

 

(296

)

 

(11

)

 

(69

)

18

 

 

69

 

87

 

 

 

13,247

 

(7,495

)

(489

)

(192

)

(170

)

(1,212

)

3,689

 

591

 

1,212

 

5,492

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

 

457

 

(644

)

(117

)

(11

)

(25

)

(72

)

(412

)

 

72

 

(340

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel and other products (i)

 

4,028

 

(2,332

)

182

 

(69

)

(273

)

(881

)

655

 

 

881

 

1,536

 

Copper (ii)

 

818

 

(537

)

(6

)

(3

)

(15

)

(109

)

148

 

 

109

 

257

 

 

 

4,846

 

(2,869

)

176

 

(72

)

(288

)

(990

)

803

 

 

990

 

1,793

 

Fertilizers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Potash

 

99

 

(86

)

(25

)

(6

)

12

 

(15

)

(21

)

 

15

 

(6

)

Phosphates

 

1,214

 

(1,027

)

(24

)

(27

)

(27

)

(218

)

(109

)

 

218

 

109

 

Nitrogen

 

211

 

(145

)

(8

)

(3

)

(2

)

(27

)

26

 

 

27

 

53

 

Others fertilizers products

 

65

 

 

 

 

 

 

65

 

 

 

65

 

 

 

1,589

 

(1,258

)

(57

)

(36

)

(17

)

(260

)

(39

)

 

260

 

221

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

491

 

(286

)

(380

)

(130

)

(7

)

(14

)

(326

)

 

14

 

(312

)

Total

 

20,630

 

(12,552

)

(867

)

(441

)

(507

)

(2,548

)

3,715

 

591

 

2,548

 

6,854

 

 


(i) Includes nickel and its by-products (ferro-nickel, copper, precious metal, cobalt and others).

(ii) Includes copper concentrate and does not include the cooper by-product of nickel.

 

53


 


Table of Contents

 

GRAPHIC

 

 

 

Consolidated (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

 

 

Statement of income

 

Adjusted by

 

 

 

 

 

Net operating
revenue

 

Costs

 

Expenses,net

 

Research and 
evaluation 
expenses

 

Pre operating and 
stoppage
operation

 

Depreciation 
and others 
results

 

Operating 
income (loss)

 

Dividends 
received from 
joint ventures 
and
associates

 

Depreciation, 
depletion and 
amortization

 

Loss (gain) on
measurement 
or sale of non-
current assets

 

Adjusted 
EBITDA

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iron ore

 

30,102

 

(18,111

)

(1,665

)

(295

)

(225

)

(3,387

)

6,419

 

1

 

3,026

 

361

 

9,807

 

Pellets

 

8,916

 

(5,265

)

60

 

(11

)

(60

)

(803

)

2,837

 

624

 

803

 

 

4,264

 

Ferroalloys and manganese

 

471

 

(409

)

(9

)

(1

)

(43

)

(51

)

(42

)

 

51

 

 

9

 

Others ferrous products and services

 

1,199

 

(825

)

37

 

(8

)

(3

)

(190

)

210

 

25

 

190

 

 

425

 

 

 

40,688

 

(24,610

)

(1,577

)

(315

)

(331

)

(4,431

)

9,424

 

650

 

4,070

 

361

 

14,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

 

1,322

 

(1,855

)

(397

)

(59

)

(161

)

(513

)

(1,663

)

 

513

 

 

(1,150

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel and other products (i)

 

11,285

 

(7,953

)

(233

)

(233

)

(1,015

)

(3,836

)

(1,985

)

 

3,836

 

 

1,851

 

Copper (ii)

 

3,602

 

(2,127

)

(35

)

(20

)

(3

)

(466

)

951

 

 

466

 

 

1,417

 

Others base metals products

 

 

 

722

 

 

 

 

722

 

 

 

 

722

 

 

 

14,887

 

(10,080

)

454

 

(253

)

(1,018

)

(4,302

)

(312

)

 

4,302

 

 

3,990

 

Fertilizers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Potash

 

326

 

(221

)

14

 

(123

)

(52

)

(80

)

(136

)

 

80

 

 

(56

)

Phosphates

 

4,380

 

(2,949

)

(75

)

(65

)

(134

)

(646

)

511

 

 

646

 

 

1,157

 

Nitrogen

 

747

 

(496

)

(9

)

(6

)

(12

)

(54

)

170

 

 

54

 

 

224

 

Others fertilizers products

 

137

 

 

 

 

 

 

137

 

 

 

 

137

 

 

 

5,590

 

(3,666

)

(70

)

(194

)

(198

)

(780

)

682

 

 

780

 

 

1,462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

331

 

(326

)

(294

)

(322

)

(1

)

502

 

(110

)

72

 

44

 

(546

)

(540

)

Total

 

62,818

 

(40,537

)

(1,884

)

(1,143

)

(1,709

)

(9,524

)

8,021

 

722

 

9,709

 

(185

)

18,267

 

 


(i) Includes nickel and its by-products (ferro-nickel, copper, precious metal, cobalt and others).

(ii) Includes copper concentrate and does not include the cooper by-product of nickel.

 

54


 


Table of Contents

 

GRAPHIC

 

 

 

Consolidated (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2014

 

 

 

Statement of income

 

Adjusted by

 

 

 

 

 

Net operating
revenue

 

Costs

 

Expenses, net

 

Research and
evaluation 
expenses

 

Pre operating and 
stoppage 
operation

 

Depreciation 
and others 
results

 

Operating 
income (loss)

 

Dividends 
received from 
joint ventures 
and 
associates

 

Depreciation, 
depletion and 
amortization

 

Impairment

 

Adjusted 
EBITDA

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iron ore

 

33,693

 

(15,291

)

(1,695

)

(473

)

(274

)

(3,616

)

12,344

 

55

 

2,498

 

1,118

 

16,015

 

Pellets

 

9,154

 

(4,418

)

(64

)

(1

)

(80

)

(411

)

4,180

 

1,026

 

411

 

 

5,617

 

Ferroalloys and manganese

 

596

 

(420

)

(33

)

(1

)

(42

)

(55

)

45

 

 

55

 

 

100

 

Others ferrous products and services

 

1,352

 

(1,053

)

11

 

(11

)

 

(194

)

105

 

 

194

 

 

299

 

 

 

44,795

 

(21,182

)

(1,781

)

(486

)

(396

)

(4,276

)

16,674

 

1,081

 

3,158

 

1,118

 

22,031

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

 

1,227

 

(1,876

)

(334

)

(18

)

(64

)

(807

)

(1,872

)

 

195

 

612

 

(1,065

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel and other products (i)

 

10,761

 

(6,355

)

159

 

(219

)

(869

)

(2,520

)

957

 

 

2,520

 

 

3,477

 

Copper (ii)

 

2,374

 

(1,408

)

10

 

(6

)

(30

)

(272

)

668

 

 

272

 

 

940

 

 

 

13,135

 

(7,763

)

169

 

(225

)

(899

)

(2,792

)

1,625

 

 

2,792

 

 

4,417

 

Fertilizers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Potash

 

259

 

(236

)

(28

)

(25

)

(10

)

(47

)

(87

)

 

47

 

 

(40

)

Phosphates

 

3,211

 

(2,728

)

(107

)

(80

)

(97

)

(627

)

(428

)

 

627

 

 

199

 

Nitrogen

 

587

 

(405

)

(17

)

(13

)

(10

)

(83

)

59

 

 

83

 

 

142

 

Others fertilizers products

 

161

 

 

 

 

 

 

161

 

 

 

 

161

 

 

 

4,218

 

(3,369

)

(152

)

(118

)

(117

)

(757

)

(295

)

 

757

 

 

462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

1,748

 

(1,120

)

(614

)

(292

)

(6

)

(47

)

(331

)

 

47

 

 

(284

)

Total

 

65,123

 

(35,310

)

(2,712

)

(1,139

)

(1,482

)

(8,679

)

15,801

 

1,081

 

6,949

 

1,730

 

25,561

 

 


(i) Includes nickel and its by-products (ferro-nickel, copper, precious metal, cobalt and others).

(ii) Includes copper concentrate and does not include the cooper by-product of nickel.

 

55


 


Table of Contents

 

GRAPHIC

 

b)             Adjusted EBITDA and information of assets by segment

 

 

 

Consolidated (unaudited)

 

 

 

September 30, 2015

 

 

 

Three-month period ended

 

 

 

Adjusted EBITDA

 

Investments

 

Property, plant and
equipment and
intangible assets

 

Additions to
property, plant and
equipment and
intangible (iii)

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

Iron ore

 

4,459

 

1,581

 

105,139

 

3,838

 

Pellets

 

1,367

 

1,152

 

4,521

 

25

 

Ferroalloys and manganese

 

(32

)

 

671

 

14

 

Others ferrous products and services

 

210

 

3,024

 

806

 

11

 

 

 

6,004

 

5,757

 

111,137

 

3,888

 

 

 

 

 

 

 

 

 

 

 

Coal

 

(462

)

1,343

 

18,267

 

1,168

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

Nickel and other products (i)

 

277

 

72

 

104,333

 

1,160

 

Copper (ii)

 

434

 

651

 

8,736

 

142

 

 

 

711

 

723

 

113,069

 

1,302

 

Fertilizers

 

 

 

 

 

 

 

 

 

Potash

 

(41

)

 

516

 

 

Phosphates

 

589

 

 

15,387

 

195

 

Nitrogen

 

93

 

 

 

 

Others fertilizers products

 

61

 

 

 

 

 

 

702

 

 

15,903

 

195

 

 

 

 

 

 

 

 

 

 

 

Others

 

(139

)

4,497

 

9,261

 

63

 

Total

 

6,816

 

12,320

 

267,637

 

6,616

 

 


(i) Includes nickel and its by-products (ferro-nickel, copper, precious metal, cobalt and others).

(ii) Includes copper concentrate and does not include the cooper by-product of nickel.

(iii) Includes only acquisitions realized with cash and cash equivalents.

 

 

 

Consolidated (unaudited)

 

 

 

September 30, 2014

 

 

 

Three-month period ended

 

 

 

Adjusted EBITDA

 

Investments

 

Property, plant and
equipment and
intangible assets

 

Additions to
property, plant
and equipment
and intangible (iii)

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

Iron ore

 

3,486

 

1,456

 

87,010

 

3,250

 

Pellets

 

1,893

 

1,937

 

4,378

 

99

 

Ferroalloys and manganese

 

26

 

 

647

 

14

 

Others ferrous products and services

 

87

 

2,910

 

787

 

51

 

 

 

5,492

 

6,303

 

92,822

 

3,414

 

 

 

 

 

 

 

 

 

 

 

Coal

 

(340

)

936

 

16,811

 

1,412

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

Nickel and other products (i)

 

1,536

 

54

 

69,569

 

532

 

Copper (ii)

 

257

 

500

 

9,539

 

296

 

 

 

1,793

 

554

 

79,108

 

828

 

Fertilizers

 

 

 

 

 

 

 

 

 

Potash

 

(6

)

 

397

 

 

Phosphates

 

109

 

 

16,941

 

151

 

Nitrogen

 

53

 

 

 

 

Others fertilizers products

 

65

 

 

 

 

 

 

221

 

 

17,338

 

151

 

 

 

 

 

 

 

 

 

 

 

Others

 

(312

)

3,627

 

10,265

 

88

 

Total

 

6,854

 

11,420

 

216,344

 

5,893

 

 


(i) Includes nickel and its by-products (ferro-nickel, copper, precious metal, cobalt and others).

(ii) Includes copper concentrate and does not include the cooper by-product of nickel.

(iii) Includes only acquisitions realized with cash and cash equivalents.

 

56



Table of Contents

 

GRAPHIC

 

 

 

Consolidated (unaudited)

 

 

 

September 30, 2015

 

 

 

Nine-month period ended

 

 

 

Adjusted EBITDA

 

Investments

 

Property, plant and
equipment and
intangible assets

 

Additions to
property, plant and
equipment and
intangible (iii)

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

Iron ore

 

9,807

 

1,581

 

105,139

 

11,918

 

Pellets

 

4,264

 

1,152

 

4,521

 

103

 

Ferroalloys and manganese

 

9

 

 

671

 

38

 

Others ferrous products and services

 

425

 

3,024

 

806

 

28

 

 

 

14,505

 

5,757

 

111,137

 

12,087

 

 

 

 

 

 

 

 

 

 

 

Coal

 

(1,150

)

1,343

 

18,267

 

3,371

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

Nickel and other products (i)

 

1,851

 

72

 

104,333

 

2,623

 

Copper (ii)

 

1,417

 

651

 

8,736

 

576

 

Others base metals products

 

722

 

 

 

 

 

 

3,990

 

723

 

113,069

 

3,199

 

Fertilizers

 

 

 

 

 

 

 

 

 

Potash

 

(56

)

 

516

 

 

Phosphates

 

1,157

 

 

15,387

 

504

 

Nitrogen

 

224

 

 

 

 

Others fertilizers products

 

137

 

 

 

 

 

 

1,462

 

 

15,903

 

504

 

 

 

 

 

 

 

 

 

 

 

Others

 

(540

)

4,497

 

9,261

 

205

 

Total

 

18,267

 

12,320

 

267,637

 

19,366

 

 


(i) Includes nickel and its by-products (ferro-nickel, copper, precious metal, cobalt and others).

(ii) Includes copper concentrate and does not include the cooper by-product of nickel.

(iii) Includes only acquisitions realized with cash and cash equivalents.

 

 

 

Consolidated (unaudited)

 

 

 

September 30, 2014

 

 

 

Nine-month period ended

 

 

 

Adjusted EBITDA

 

Investments

 

Property, plant and
equipment and
intangible assets

 

Additions to
property, plant
and equipment
and intangible (iii)

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

Iron ore

 

16,015

 

1,456

 

87,010

 

8,950

 

Pellets

 

5,617

 

1,937

 

4,378

 

343

 

Ferroalloys and manganese

 

100

 

 

647

 

90

 

Others ferrous products and services

 

299

 

2,910

 

787

 

124

 

 

 

22,031

 

6,303

 

92,822

 

9,507

 

 

 

 

 

 

 

 

 

 

 

Coal

 

(1,065

)

936

 

16,811

 

4,154

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

Nickel and other products (i)

 

3,477

 

54

 

69,569

 

1,920

 

Copper (ii)

 

940

 

500

 

9,539

 

801

 

 

 

4,417

 

554

 

79,108

 

2,721

 

Fertilizers

 

 

 

 

 

 

 

 

 

Potash

 

(40

)

 

397

 

 

Phosphates

 

199

 

 

16,941

 

384

 

Nitrogen

 

142

 

 

 

 

Others fertilizers products

 

161

 

 

 

 

 

 

462

 

 

17,338

 

384

 

 

 

 

 

 

 

 

 

 

 

Others

 

(284

)

3,627

 

10,265

 

807

 

Total

 

25,561

 

11,420

 

216,344

 

17,573

 

 


(i) Includes nickel and its by-products (ferro-nickel, copper, precious metal, cobalt and others).

(ii) Includes copper concentrate and does not include the cooper by-product of nickel.

(iii) Includes only acquisitions realized with cash and cash equivalents.

 

57



Table of Contents

 

GRAPHIC

 

c)              Results by segment and revenues by geographic area

 

 

 

Consolidated (unaudited)

 

 

 

September 30, 2015

 

 

 

Three-month period ended

 

 

 

Ferrous
minerals

 

Coal

 

Base metals

 

Fertilizers

 

Others

 

Total

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenue

 

15,487

 

453

 

4,863

 

2,479

 

68

 

23,350

 

Cost and expenses

 

(9,484

)

(915

)

(4,152

)

(1,777

)

(277

)

(16,605

)

Loss on measurement or sale of non-current assets

 

(189

)

 

 

 

 

(189

)

Depreciation, depletion and amortization

 

(1,431

)

(300

)

(1,570

)

(352

)

(17

)

(3,670

)

Operating income (loss)

 

4,383

 

(762

)

(859

)

350

 

(226

)

2,886

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial result

 

(25,421

)

26

 

(176

)

(284

)

8

 

(25,847

)

Equity results from joint ventures and associates

 

(221

)

(37

)

(44

)

 

(903

)

(1,205

)

Income taxes

 

17,574

 

(376

)

(89

)

(40

)

8

 

17,077

 

Net income (loss)

 

(3,685

)

(1,149

)

(1,168

)

26

 

(1,113

)

(7,089

)

Income (loss) attributable to noncontrolling interests

 

2

 

(184

)

(197

)

(3

)

(43

)

(425

)

Income (loss) attributable to the Company’s stockholders

 

(3,687

)

(965

)

(971

)

29

 

(1,070

)

(6,664

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales classified by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

America, except United States and Brazil

 

293

 

44

 

741

 

68

 

 

1,146

 

United States of America

 

33

 

 

635

 

 

11

 

679

 

Europe

 

2,196

 

88

 

1,566

 

135

 

 

3,985

 

Middle East/Africa/Oceania

 

819

 

56

 

28

 

10

 

 

913

 

Japan

 

1,396

 

73

 

308

 

 

 

1,777

 

China

 

8,545

 

80

 

627

 

 

 

9,252

 

Asia, except Japan and China

 

808

 

107

 

799

 

43

 

 

1,757

 

Brazil

 

1,397

 

5

 

159

 

2,223

 

57

 

3,841

 

Net operating revenue

 

15,487

 

453

 

4,863

 

2,479

 

68

 

23,350

 

 

 

 

Consolidated (unaudited)

 

 

 

September 30, 2014

 

 

 

Three-month period ended

 

 

 

Ferrous
minerals

 

Coal

 

Base metals

 

Fertilizers

 

Others

 

Total

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenue

 

13,247

 

457

 

4,846

 

1,589

 

491

 

20,630

 

Cost and expenses

 

(8,346

)

(797

)

(3,053

)

(1,368

)

(803

)

(14,367

)

Depreciation, depletion and amortization

 

(1,212

)

(72

)

(990

)

(260

)

(14

)

(2,548

)

Operating income (loss)

 

3,689

 

(412

)

803

 

(39

)

(326

)

3,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial result

 

(7,769

)

223

 

(149

)

(71

)

(24

)

(7,790

)

Results on sale or disposal of investments from joint ventures and associates

 

 

 

 

 

(100

)

(100

)

Equity results from joint ventures and associates

 

233

 

26

 

(29

)

 

(156

)

74

 

Income taxes

 

885

 

26

 

(130

)

29

 

(60

)

750

 

Net income (loss)

 

(2,962

)

(137

)

495

 

(81

)

(666

)

(3,351

)

Income (loss) attributable to noncontrolling interests

 

155

 

(17

)

(43

)

(18

)

(47

)

30

 

Income (loss) attributable to the Company’s stockholders

 

(3,117

)

(120

)

538

 

(63

)

(619

)

(3,381

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales classified by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

America, except United States and Brazil

 

345

 

 

871

 

15

 

63

 

1,294

 

United States of America

 

20

 

 

731

 

 

4

 

755

 

Europe

 

2,023

 

57

 

1,464

 

49

 

8

 

3,601

 

Middle East/Africa/Oceania

 

879

 

97

 

90

 

 

 

1,066

 

Japan

 

1,351

 

146

 

565

 

 

4

 

2,066

 

China

 

5,889

 

28

 

450

 

 

 

6,367

 

Asia, except Japan and China

 

1,166

 

129

 

605

 

38

 

 

1,938

 

Brazil

 

1,574

 

 

70

 

1,487

 

412

 

3,543

 

Net operating revenue

 

13,247

 

457

 

4,846

 

1,589

 

491

 

20,630

 

 

58



Table of Contents

 

GRAPHIC

 

 

 

Consolidated (unaudited)

 

 

 

September 30, 2015

 

 

 

Nine-month period ended

 

 

 

Ferrous
minerals

 

Coal

 

Base metals

 

Fertilizers

 

Others

 

Total

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenue

 

40,688

 

1,322

 

14,887

 

5,590

 

331

 

62,818

 

Cost and expenses

 

(26,833

)

(2,472

)

(10,897

)

(4,128

)

(943

)

(45,273

)

Gain (loss) on measurement or sale of non-current assets

 

(361

)

 

 

 

546

 

185

 

Depreciation, depletion and amortization

 

(4,070

)

(513

)

(4,302

)

(780

)

(44

)

(9,709

)

Operating income (loss)

 

9,424

 

(1,663

)

(312

)

682

 

(110

)

8,021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial result

 

(37,011

)

319

 

(759

)

(478

)

28

 

(37,901

)

Results on sale or disposal of investments from joint ventures and associates

 

 

 

 

 

296

 

296

 

Equity results from joint ventures and associates

 

(123

)

(28

)

(108

)

 

 

(1,103

)

(1,362

)

Income taxes

 

20,176

 

(302

)

(162

)

(516

)

(30

)

19,166

 

Net income (loss)

 

(7,534

)

(1,674

)

(1,341

)

(312

)

(919

)

(11,780

)

Income (loss) attributable to noncontrolling interests

 

15

 

(277

)

(409

)

22

 

(72

)

(721

)

Income (loss) attributable to the Company’s stockholders

 

(7,549

)

(1,397

)

(932

)

(334

)

(847

)

(11,059

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales classified by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

America, except United States and Brazil

 

872

 

57

 

2,628

 

166

 

 

3,723

 

United States of America

 

76

 

 

2,027

 

 

57

 

2,160

 

Europe

 

5,992

 

239

 

4,582

 

322

 

 

11,135

 

Middle East/Africa/Oceania

 

2,552

 

255

 

195

 

19

 

 

3,021

 

Japan

 

3,668

 

188

 

872

 

 

 

4,728

 

China

 

20,719

 

118

 

1,599

 

 

 

22,436

 

Asia, except Japan and China

 

2,700

 

409

 

2,288

 

151

 

 

5,548

 

Brazil

 

4,109

 

56

 

696

 

4,932

 

274

 

10,067

 

Net operating revenue

 

40,688

 

1,322

 

14,887

 

5,590

 

331

 

62,818

 

 

 

 

Consolidated (unaudited)

 

 

 

September 30, 2014

 

 

 

Nine-month period ended

 

 

 

Ferrous
minerals

 

Coal

 

Base metals

 

Fertilizers

 

Others

 

Total

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenue

 

44,795

 

1,227

 

13,135

 

4,218

 

1,748

 

65,123

 

Cost and expenses

 

(23,845

)

(2,292

)

(8,718

)

(3,756

)

(2,032

)

(40,643

)

Impairment of non-current assets

 

(1,118

)

(612

)

 

 

 

(1,730

)

Depreciation, depletion and amortization

 

(3,158

)

(195

)

(2,792

)

(757

)

(47

)

(6,949

)

Operating income (loss)

 

16,674

 

(1,872

)

1,625

 

(295

)

(331

)

15,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial result

 

(7,269

)

387

 

(614

)

(53

)

(42

)

(7,591

)

Results on sale or disposal of investments from joint ventures and associates

 

 

 

 

 

(139

)

(139

)

Equity results from joint ventures and associates

 

1,310

 

65

 

(55

)

 

(245

)

1,075

 

Income taxes

 

(3,328

)

(138

)

(352

)

90

 

(95

)

(3,823

)

Net income (loss)

 

7,387

 

(1,558

)

604

 

(258

)

(852

)

5,323

 

Income (loss) attributable to noncontrolling interests

 

109

 

(69

)

(331

)

(34

)

(67

)

(392

)

Income (loss) attributable to the Company’s stockholders

 

7,278

 

(1,489

)

935

 

(224

)

(785

)

5,715

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales classified by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

America, except United States and Brazil

 

1,228

 

7

 

2,266

 

65

 

90

 

3,656

 

United States of America

 

25

 

 

1,937

 

 

537

 

2,499

 

Europe

 

7,061

 

133

 

4,396

 

168

 

22

 

11,780

 

Middle East/Africa/Oceania

 

2,769

 

193

 

266

 

 

 

3,228

 

Japan

 

4,541

 

346

 

1,469

 

 

12

 

6,368

 

China

 

20,542

 

118

 

1,184

 

 

 

21,844

 

Asia, except Japan and China

 

3,576

 

411

 

1,542

 

71

 

 

5,600

 

Brazil

 

5,053

 

19

 

75

 

3,914

 

1,087

 

10,148

 

Net operating revenue

 

44,795

 

1,227

 

13,135

 

4,218

 

1,748

 

65,123

 

 

d)             Investment, intangible and property, plant and equipment by geographic area

 

There was no significant change in relation to the information of assets by geographic area disclosed in the financial statements for the year ended December 31, 2014.

 

59



Table of Contents

 

GRAPHIC

 

27.                     Cost of goods sold and services rendered, and selling and administrative expenses and other operating expenses (income), net, by nature

 

a)                                     Cost of goods sold and services rendered

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Personnel

 

2,043

 

1,545

 

5,505

 

4,627

 

Material and service

 

3,426

 

2,972

 

9,248

 

8,731

 

Fuel oil and gas

 

1,113

 

950

 

3,085

 

2,917

 

Maintenance

 

2,213

 

1,881

 

6,252

 

4,429

 

Energy

 

500

 

390

 

1,443

 

1,031

 

Acquisition of products

 

464

 

875

 

1,931

 

2,851

 

Depreciation and depletion

 

3,077

 

2,257

 

8,444

 

6,238

 

Freight

 

3,275

 

2,078

 

8,181

 

5,621

 

Others

 

1,914

 

1,862

 

4,892

 

5,103

 

Total

 

18,025

 

14,810

 

48,981

 

41,548

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

17,617

 

14,197

 

47,727

 

39,823

 

Cost of services rendered

 

408

 

613

 

1,254

 

1,725

 

Total

 

18,025

 

14,810

 

48,981

 

41,548

 

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Personnel

 

2,636

 

2,233

 

Material and service

 

4,090

 

4,401

 

Fuel oil and gas

 

1,899

 

1,874

 

Maintenance

 

3,970

 

2,979

 

Energy

 

700

 

510

 

Acquisition of products

 

515

 

813

 

Depreciation and depletion

 

3,026

 

2,317

 

Others

 

3,201

 

3,372

 

Total

 

20,037

 

18,499

 

 

 

 

 

 

 

Cost of goods sold

 

19,232

 

17,381

 

Cost of services rendered

 

805

 

1,118

 

Total

 

20,037

 

18,499

 

 

b)                                     Selling and administrative expenses

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Personnel

 

196

 

246

 

658

 

727

 

Services (consulting, infrastructure and others)

 

94

 

117

 

252

 

330

 

Advertising and publicity

 

14

 

34

 

30

 

59

 

Depreciation and amortization

 

112

 

155

 

297

 

369

 

Travel expenses

 

9

 

10

 

26

 

36

 

Taxes and rents

 

11

 

15

 

40

 

34

 

Others

 

22

 

44

 

198

 

261

 

Total

 

458

 

621

 

1,501

 

1,816

 

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Personnel

 

386

 

413

 

Services (consulting, infrastructure and others)

 

136

 

194

 

Advertising and publicity

 

23

 

52

 

Depreciation and amortization

 

241

 

243

 

Travel expenses

 

13

 

20

 

Taxes and rents

 

16

 

7

 

Others

 

30

 

51

 

Total

 

845

 

980

 

 

60



Table of Contents

 

GRAPHIC

 

c)                                      Others operational expenses (incomes), net

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,

2014

 

Provision for litigation

 

(6

)

(47

)

67

 

240

 

Provision for loss with VAT credits (ICMS)

 

188

 

35

 

458

 

219

 

Provision for profit sharing program

 

5

 

148

 

59

 

260

 

Provision for disposal of materials and inventories

 

61

 

43

 

343

 

140

 

Gold stream transaction

 

 

 

(722

)

 

Others

 

174

 

219

 

661

 

409

 

Total

 

422

 

398

 

866

 

1,268

 

 

Includes depreciation in the amount of R$186 for the three-month and nine-month periods ended 30 September, 2015.

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Provision for litigation

 

(75

)

318

 

Provision for loss with VAT credits (ICMS)

 

458

 

35

 

Provision for profit sharing program

 

40

 

198

 

Provision for disposal of materials and inventories

 

(77

)

16

 

Others

 

158

 

262

 

Total

 

504

 

829

 

 

28.                     Financial result

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Financial expenses

 

 

 

 

 

 

 

 

 

Interest

 

(838

)

(234

)

(2,102

)

(1,918

)

Labor, tax and civil lawsuits

 

26

 

(62

)

(122

)

(161

)

Derivative financial instruments

 

(6,402

)

(1,943

)

(10,718

)

(2,037

)

Indexation and exchange rate variation (a)

 

(27,233

)

(6,664

)

(45,067

)

(8,393

)

Participative stockholders’ debentures

 

245

 

(201

)

2,073

 

(848

)

Expenses of REFIS

 

(486

)

(410

)

(1,333

)

(1,190

)

Others

 

(207

)

(852

)

(1,106

)

(1,452

)

 

 

(34,895

)

(10,366

)

(58,375

)

(15,999

)

Financial income

 

 

 

 

 

 

 

 

 

Short-term investments

 

188

 

135

 

326

 

351

 

Derivative financial instruments

 

 

22

 

967

 

1,436

 

Indexation and exchange rate variation (b)

 

8,710

 

2,160

 

18,907

 

6,173

 

Others

 

150

 

259

 

274

 

448

 

 

 

9,048

 

2,576

 

20,474

 

8,408

 

Financial results, net

 

(25,847

)

(7,790

)

(37,901

)

(7,591

)

 

 

 

 

 

 

 

 

 

 

Summary of indexation and exchange rate variation

 

 

 

 

 

 

 

 

 

Loans and financing

 

(24,473

)

(6,188

)

(36,828

)

(2,757

)

Related parties

 

 

 

(4

)

1

 

Others

 

5,950

 

1,684

 

10,672

 

536

 

Net (a) + (b)

 

(18,523

)

(4,504

)

(26,160

)

(2,220

)

 

61



Table of Contents

 

GRAPHIC

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

Financial expenses

 

 

 

 

 

Interest

 

(2,768

)

(2,079

)

Labor, tax and civil lawsuits

 

(110

)

(136

)

Derivative financial instruments

 

(7,209

)

(1,398

)

Indexation and exchange rate variation (a)

 

(43,020

)

(6,525

)

Participative stockholders’ debentures

 

2,073

 

(848

)

Expenses of REFIS

 

(1,305

)

(1,166

)

Others

 

(519

)

(758

)

 

 

(52,858

)

(12,910

)

Financial income

 

 

 

 

 

Short-term investments

 

177

 

268

 

Derivative financial instruments

 

524

 

1,246

 

Indexation and exchange rate variation (b)

 

18,866

 

5,518

 

Others

 

85

 

206

 

 

 

19,652

 

7,238

 

Financial results, net

 

(33,206

)

(5,672

)

 

 

 

 

 

 

Summary of indexation and exchange rate variation

 

 

 

 

 

Loans and financing

 

(13,938

)

(785

)

Related parties

 

(21,855

)

(1,730

)

Others

 

11,639

 

1,508

 

Net (a) + (b)

 

(24,154

)

(1,007

)

 

29.                               Deferred revenue - Gold stream

 

In 2013, the Company entered into a gold stream transaction (“original transaction”) with Silver Wheaton Corp. (“SLW”) to sell 25% of the gold extracted during the life of the mine as a by-product of Salobo copper mine (“Salobo transaction”) and 70% of the gold extracted during the next 20 years as a by-product of the Sudbury nickel mines (“Sudbury transaction”).

 

The original transaction was amended in March, 2015 to include an additional 25% of gold extracted during the life of the mine as a by-product of Salobo copper mine (“amended transaction”). The Company received up-front cash proceeds of US$900 (R$2,826). The Company may also receive an additional cash payment contingent on its decision to expand the capacity to process Salobo copper ores until 2036. The additional amount could range from US$88 million to US$720 million depending on timing and size of the expansion.

 

As the gold is delivered to SLW, Vale receives a payment equal to the lesser of: (i) US$400 per ounce of refined gold delivered (which payment will be subject to an annual increase of 1% per year commencing on January 1, 2017 for the original and amended transactions and each January 1 thereafter) and (ii) the reference market price on the date of delivery.

 

This transaction was bifurcated into two identifiable components: (i) the sale of the mineral rights and, (ii) the services for gold extraction on the portion in which Vale operates as an agent for SLW gold extraction.

 

The result of the sale of the mineral rights of R$722 was recognized in the statement of income under other operating expenses, net. The portion related to the provision of future services for gold extraction was recorded as deferred revenue (liability) in the amount of R$1,670 and will be recognized in the statement of income as the service is rendered and the gold extracted. During the three-month period ended September 30, 2015 and 2014, the Company recognized R$79 and R$37, respectively, and during the nine-month period ended September 30, 2015 and 2014, R$225 and R$144, respectively, in statement of income related to rendered services related to the original and amended transactions.

 

The deferred revenue is recognized based on the units of gold extracted compared to the total of proven and probable gold reserves negotiated with SLW. Defining the gain on sale of mineral interest and the deferred revenue portion of the transaction requires the use of critical accounting estimates as follow:

 

· Discount rates used to measure the present value of future inflows and outflows;

· Allocation of costs between copper and gold based on relative prices;

· Expected margin for the independent elements (sale of mineral rights and service for gold extraction) based on Company’s best estimate.

 

62



Table of Contents

 

GRAPHIC

 

30.                               Commitments

 

a)                                     Base metals operations

 

There has been no material changes to the commitments of the base metals operations disclosed in the financial statements as at December 31, 2014, except for letters of credit and guarantees in the amount of R$4,493 at September 30, 2015 (R$2,675 at December 31, 2014) associated with items such as environment reclamation, asset retirement obligation commitments, insurance, electricity commitments, post-retirement benefits, community service commitments and import and export duties.

 

b)                                     Participative stockholders’ debentures

 

During the period, there was no issuance of new debentures, or any change in the par value or the indicators affecting debentures issued. The Company paid as semiannual remuneration the amount of R$124 and R$124, respectively, for the nine-month period ended September 30, 2015 and 2014.

 

c)                                      Operating lease

 

The total amount of operational leasing expenses for the three-month period ended on September 30, 2015 and 2014 are R$302 and R$188, respectively, and for the nine-month period ended on September 30, 2015 and 2014 are R$705 and R$593, respectively.

 

d)                                     Concession agreements

 

The contractual basis and deadlines for completion of concessions railways and port terminals are unchanged in the period.

 

e)                                      Guarantees provided

 

At September 30, 2015, corporate guarantees provided by Vale (within the limit of its direct or indirect interest) for the companies Norte Energia S.A. and Companhia Siderúrgica do Pecém S.A. totaled R$1,025 and R$4,620, respectively. Due to the conclusion of the energy generation assets transaction (note 6), the guarantee of Norte Energia S.A. is shared with Cemig GT.

 

63



Table of Contents

 

GRAPHIC

 

31.                     Related parties

 

Transactions with related parties are made by the Company at arm´s-length, observing the price and usual market conditions and therefore do not generate any undue benefit to their counterparties or loss to the Company.

 

In the normal course of operations, Vale enters into contracts with related parties (subsidiaries, associates, joint ventures and stockholders), related to the sale and purchase of products and services, leasing of assets, sale of raw material and railway transportation services.

 

The balances of these related party transactions and their effects on the financial statements are as follows:

 

 

 

Assets

 

 

 

Consolidated

 

Parent Company

 

 

 

September 30, 2015
(unaudited)

 

December 31, 2014

 

September 30, 2015
(unaudited)

 

December 31, 2014

 

 

 

Accounts
receivable

 

Related
parties

 

Accounts
receivable

 

Related
parties

 

Accounts
receivable

 

Related
parties

 

Accounts
receivable

 

Related
parties

 

Aliança Geração de Energia S.A.

 

12

 

 

 

 

 

 

 

 

Baovale Mineração S.A.

 

 

 

10

 

24

 

 

 

10

 

24

 

Ferrovia Norte Sul S.A.

 

13

 

 

24

 

 

 

 

 

 

Mitsui & Co., Ltd.

 

46

 

 

25

 

 

 

 

 

 

MRS Logística S.A.

 

9

 

90

 

9

 

64

 

9

 

34

 

9

 

28

 

Samarco Mineração S.A.

 

170

 

326

 

63

 

822

 

170

 

326

 

63

 

822

 

Teal Minerals Inc.

 

 

938

 

 

573

 

 

 

 

 

VLI Multimodal S.A.

 

19

 

 

67

 

 

19

 

 

67

 

 

VLI Operações Portuárias S.A.

 

115

 

 

69

 

 

115

 

 

69

 

 

VLI S.A.

 

5

 

 

25

 

 

5

 

 

25

 

 

Biopalma da Amazônia S.A.

 

 

 

 

 

 

1,398

 

 

992

 

Mineração Brasileiras Reunidas S.A.

 

 

 

 

 

 

3

 

 

352

 

Mineração Corumbaense Reunidas S.A.

 

 

 

 

 

49

 

118

 

37

 

226

 

Vale International S.A.

 

 

 

 

 

34,524

 

336

 

30,019

 

276

 

Others

 

130

 

97

 

278

 

147

 

314

 

159

 

267

 

409

 

Total

 

519

 

1,451

 

570

 

1,630

 

35,205

 

2,374

 

30,566

 

3,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

519

 

1,362

 

570

 

1,537

 

35,205

 

1,199

 

30,566

 

2,227

 

Non-current

 

 

89

 

 

93

 

 

1,175

 

 

902

 

Total

 

519

 

1,451

 

570

 

1,630

 

35,205

 

2,374

 

30,566

 

3,129

 

 

 

 

Liabilities

 

 

 

Consolidated

 

Parent Company

 

 

 

September 30, 2015
(unaudited)

 

December 31, 2014

 

September 30, 2015
(unaudited)

 

December 31, 2014

 

 

 

Suppliers

 

Related
parties

 

Suppliers

 

Related
parties

 

Suppliers

 

Related
parties

 

Suppliers

 

Related
parties

 

Aliança Geração de Energia S.A.

 

34

 

 

 

 

34

 

 

 

 

Baovale Mineração S.A.

 

74

 

 

10

 

 

74

 

 

10

 

 

Companhia Coreano-Brasileira de Pelotização

 

193

 

80

 

3

 

227

 

193

 

 

3

 

 

Companhia Hispano-Brasileira de Pelotização

 

96

 

25

 

85

 

 

96

 

 

85

 

 

Companhia Ítalo-Brasileira de Pelotização

 

136

 

39

 

2

 

125

 

136

 

 

2

 

 

Companhia Nipo-Brasileira de Pelotização

 

289

 

145

 

5

 

389

 

289

 

 

5

 

 

Ferrovia Centro-Atlântica S.A.

 

 

265

 

 

261

 

1

 

265

 

 

261

 

Mitsui & Co., Ltd.

 

42

 

 

25

 

 

 

 

28

 

 

Minerações Brasileiras Reunidas S.A.

 

 

 

 

 

519

 

3,053

 

 

 

MRS Logística S.A.

 

28

 

 

67

 

 

28

 

 

67

 

 

VLI S.A.

 

 

102

 

 

 

 

102

 

 

 

Companhia Portuária Baía de Sepetiba

 

 

 

 

 

480

 

 

148

 

 

Vale International S.A.

 

 

 

 

 

5

 

68,497

 

314

 

48,532

 

Others

 

77

 

208

 

89

 

99

 

150

 

359

 

93

 

435

 

Total

 

969

 

864

 

286

 

1,101

 

2,005

 

72,276

 

755

 

49,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

969

 

560

 

286

 

813

 

2,005

 

8,753

 

755

 

5,622

 

Non-current

 

 

304

 

 

288

 

 

63,523

 

 

43,606

 

Total

 

969

 

864

 

286

 

1,101

 

2,005

 

72,276

 

755

 

49,228

 

 

64



Table of Contents

 

GRAPHIC

 

 

 

Consolidated (unaudited)

 

 

 

Three-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

 

 

Net operating
revenue

 

Costs and
expenses

 

Financial
results

 

Net operating
revenue

 

Costs and
expenses

 

Financial
results

 

Aliança Geração de Energia S.A.

 

22

 

 

 

 

 

 

Baovale Mineração S.A.

 

 

(2

)

 

 

(12

)

 

Companhia Coreano-Brasileira de Pelotização

 

 

(84

)

 

 

(44

)

 

Companhia Hispano-Brasileira de Pelotização

 

 

(58

)

 

 

(33

)

 

Companhia Ítalo-Brasileira de Pelotização

 

 

(73

)

 

 

(33

)

 

Companhia Nipo-Brasileira de Pelotização

 

 

(86

)

 

 

(78

)

 

Ferrovia Centro Atlântica S.A.

 

47

 

(32

)

(2

)

34

 

(32

)

 

Mitsui & Co., Ltd.

 

146

 

 

 

62

 

 

 

MRS Logística S.A.

 

 

(386

)

 

 

(373

)

 

Samarco Mineração S.A.

 

70

 

 

 

112

 

 

 

VLI Operações Portuárias S.A.

 

112

 

 

 

80

 

 

 

VLI S.A.

 

141

 

 

 

98

 

 

 

Others

 

39

 

(22

)

13

 

60

 

(11

)

7

 

Total

 

577

 

(743

)

11

 

446

 

(616

)

7

 

 

 

 

Consolidated (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

 

 

Net operating
revenue

 

Costs and
expenses

 

Financial
results

 

Net operating
revenue

 

Costs and
expenses

 

Financial
results

 

Aliança Geração de Energia S.A.

 

22

 

 

 

 

 

 

 

 

 

Baovale Mineração S.A.

 

 

(62

)

 

 

(35

)

 

California Steel Industries, Inc.

 

 

 

 

420

 

 

 

Companhia Coreano-Brasileira de Pelotização

 

 

(187

)

 

 

(156

)

 

Companhia Hispano-Brasileira de Pelotização

 

 

(121

)

 

 

(101

)

 

Companhia Ítalo-Brasileira de Pelotização

 

 

(156

)

 

 

(86

)

 

Companhia Nipo-Brasileira de Pelotização

 

 

(236

)

 

 

(250

)

 

Companhia Siderúrgica do Atlântico

 

 

 

 

 

(495

)

 

Ferrovia Centro Atlântica S.A.

 

120

 

(94

)

(4

)

111

 

(96

)

 

Mitsui & Co., Ltd.

 

471

 

 

 

209

 

 

 

MRS Logística S.A.

 

 

(1,161

)

 

 

(945

)

 

Samarco Mineração S.A.

 

336

 

 

 

394

 

 

 

VLI Operações Portuárias S.A.

 

112

 

 

 

380

 

 

6

 

VLI S.A.

 

528

 

 

 

211

 

 

21

 

Others

 

139

 

(92

)

19

 

162

 

(70

)

25

 

Total

 

1,728

 

(2,109

)

15

 

1,887

 

(2,234

)

52

 

 

 

 

Parent company (unaudited)

 

 

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

 

Net operating
revenue

 

Costs and
expenses

 

Financial
results

 

Net operating
revenue

 

Costs and
expenses

 

Financial
results

 

Baovale Mineração S.A.

 

 

 

 

 

(35

)

 

Biopalma da Amazônia

 

1

 

 

526

 

1

 

 

71

 

Companhia Coreano-Brasileira de Pelotização

 

 

(62

)

 

 

(156

)

 

Companhia Hispano-Brasileira de Pelotização

 

 

(187

)

 

 

(101

)

 

Companhia Ítalo-Brasileira de Pelotização

 

 

(121

)

 

 

(86

)

 

Companhia Nipo-Brasileira de Pelotização

 

 

(156

)

 

 

(250

)

 

Companhia Portuária Baia de Sepetiba

 

 

(602

)

 

 

(430

)

 

Ferrovia Centro Atlântica S.A.

 

120

 

(94

)

(4

)

111

 

(94

)

 

Mineração Brasileira Reunidas S.A.

 

 

(675

)

(53

)

 

(544

)

 

MRS Logística S.A.

 

 

(1,161

)

 

 

(945

)

 

Samarco Mineração S.A.

 

336

 

 

 

394

 

 

 

Vale International S.A.

 

26,945

 

 

(13,425

)

37,109

 

 

3,728

 

Vale Operações Ferroviárias S.A.

 

112

 

 

 

 

 

 

VLI Multimodal S.A.

 

 

 

 

380

 

 

6

 

Vale Energia S.A

 

 

(185

)

7

 

 

(116

)

 

VLI S.A.

 

528

 

 

 

211

 

 

21

 

Others

 

119

 

(254

)

55

 

110

 

(23

)

48

 

Total

 

28,161

 

(3,497

)

(12,894

)

38,316

 

(2,780

)

3,874

 

 

65



Table of Contents

 

GRAPHIC

 

 

 

Statement of income (unaudited)

 

 

 

Balance sheet

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30, 2015

 

December 31, 2014

 

September 30,

2015

 

September 30,

2014

 

September 30,
2015

 

September 30,

2014

 

 

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

Bradesco

 

1,217

 

61

 

18

 

3

 

21

 

5

 

 

 

1,217

 

61

 

18

 

3

 

21

 

5

 

Loans and financing payable

 

 

 

 

 

 

 

 

 

 

 

 

 

BNDES

 

14,768

 

11,981

 

(75

)

(112

)

(183

)

(333

)

BNDESPar

 

1,502

 

1,564

 

(30

)

(24

)

(62

)

(72

)

 

 

16,270

 

13,545

 

(105

)

(136

)

(245

)

(405

)

 

Remuneration of key management personnel

 

 

 

(unaudited)

 

 

 

Three-month period ended

 

Nine-month period ended

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Short-term benefits

 

9

 

9

 

59

 

59

 

Wages or pro-labor

 

6

 

6

 

18

 

19

 

Direct and indirect benefits

 

3

 

3

 

17

 

13

 

Bonus

 

 

 

24

 

27

 

 

 

 

 

 

 

 

 

 

 

Long-term benefits

 

 

 

2

 

2

 

Based on stock

 

 

 

2

 

2

 

 

 

 

 

 

 

 

 

 

 

Termination of position

 

2

 

 

18

 

 

 

 

11

 

9

 

79

 

61

 

 

66



Table of Contents

 

GRAPHIC

 

Board of Directors, Fiscal Council, Advisory Committees and Executive Officers

 

Board of Directors

 

 

 

 

Governance and Sustainability Committee

Dan Antonio Marinho Conrado

 

Fernando Jorge Buso Gomes

Chairman

 

Arthur Prado Silva

 

 

Eduardo de Oliveira Rodrigues Filho

Sérgio Alexandre Figueiredo Clemente

 

Ricardo Rodrigues Morgado

Vice-President

 

Ricardo Simonsen

 

 

 

Marcel Juviniano Barros

 

Fiscal Council

Gueitiro Matsuo Genso

 

 

Tarcísio José Massote de Godoy

 

Marcelo Amaral Moraes

Fernando Jorge Buso Gomes

 

Chairman

Hiroyuki Kato

 

 

Oscar Augusto de Camargo Filho

 

Marcelo Barbosa Saintive

Luciano Galvão Coutinho

 

Cláudio José Zucco

Lucio Azevedo

 

Aníbal Moreira dos Santos

Alberto Guth

 

Raphael Manhães Martins

 

 

 

Alternate

 

Alternate

Arthur Prado Silva

 

Paulo Fontoura Valle

Moacir Nachbar Junior

 

Marcos Tadeu Siqueira

Francisco Ferreira Alexandre

 

Oswaldo Mário Pego de Amorim Azevedo

Gilberto Antonio Vieira

 

Pedro Paulo de Souza

Robson Rocha

 

 

Luiz Mauricio Leuzinger

 

 

Yoshitomo Nishimitsu

 

Executive Officers

Eduardo de Oliveira Rodrigues Filho

 

 

Victor Guilherme Tito

 

Murilo Pinto de Oliveira Ferreira

Carlos Roberto de Assis Ferreira

 

Chief Executive Officer

 

 

 

Advisory Committees of the Board of Directors

 

Vânia Lucia Chaves Somavilla

 

 

Executive Officer (Human Resources, Health & Safety, Sustainability and Energy)

Controlling Committee

 

 

Eduardo Cesar Pasa

 

Luciano Siani Pires

Moacir Nachbar Junior

 

Executive Officer (Finance and Investors Relations)

Oswaldo Mário Pego de Amorim Azevedo

 

 

Marcos Paulo Pereira da Silva

 

Roger Allan Downey

 

 

Executive Officer (Fertilizers, Coal and Strategy)

Executive Development Committee

 

 

Oscar Augusto de Camargo Filho

 

Gerd Peter Poppinga

Marcel Juviniano Barros

 

Executive Officer (Ferrous)

Fernando Jorge Buso Gomes

 

 

Tatiana Boavista Barros Heil

 

Galib Abrahão Chaim

 

 

Executive Officer (Capital Projects Implementation)

Strategic Committee

 

 

Murilo Pinto de Oliveira Ferreira

 

Humberto Ramos de Freitas

Dan Antonio Marinho Conrado

 

Executive Officer (Logistics and Mineral Research)

Gueitiro Matsuo Genso

 

 

Luiz Carlos Trabuco Cappi

 

Jennifer Anne Maki

Oscar Augusto de Camargo Filho

 

Executive Officer (Base Metals)

Luciano Galvão Coutinho

 

 

 

 

Marcelo Botelho Rodrigues

Finance Committee

 

Global Controller Director

Gilmar Dalilo Cezar Wanderley

 

 

Fernando Jorge Buso Gomes

 

Murilo Muller

Eduardo de Oliveira Rodrigues Filho

 

Chief Accountant and Controllership Director

Tatiana Boavista Barros Heil

 

CRC-PR - 046788/O-5 “S” RJ

 

67



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 T. Nogueira

Date: October 22, 2015

 

Rogerio T. Nogueira

 

 

Director of Investor Relations

 

68