VALE

Good morning, ladies and gentlemen. Welcome to Vale's First Quarter 2026 Earnings Call. This conference is being recorded, and the replay will be available on our website at vale.com. The presentation is also available for download in English and Portuguese from our website. To listen to the call in Portuguese, please press the globe icon on the lower right side of your Zoom screen and then choose to enter the Portuguese room. Select Mute Original Audio so that you won't hear the English version in the background. We would like to inform that all participants are currently in a listen-only mode for the presentations. Further instructions will be provided before we begin the question-and-answer section of our call. We would like to advise that forward-looking statements may be provided in this presentation, including Vale's expectations about future events or results encompassing those matters listed in the respective presentation.

We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. To obtain information on factors that may lead to results different from those forecast by Vale, please consult the report Vale files with the U.S. Securities and Exchange Commission, the Brazilian Comissão de Valores Mobiliários, and in particular, the factors discussed under forward-looking statements and risk factors in Vale's annual report on Form 20-F. With us today are Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr. Rogério Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Shaun Usmar, CEO of Vale Base Metals. Now, I will turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin.

Hello, everyone, thank you for joining Vale's first quarter 2026 conference call. I would like to start by briefly reinforcing our strategy and our ambition to create superior value for our shareholders. This strategy is grounded in a relentless focus on operational excellence, combined with disciplined capital allocation and the development of highly accretive growth opportunities, particularly in copper and iron ore, leveraging Vale's unique asset base and endowment. Recent geopolitical events and the volatility they have introduced to the markets only reinforce the importance of building a resilient and competitive business that can perform across a wide range of market conditions. This is exactly what we are doing at Vale. Despite near-term uncertainties, I'm very excited about our Q1 performance and very optimistic about delivering another great year.

I'm highly confident about Vale's future and in our ability to navigate the current environment while delivering robust, value-accretive growth over the long run. With that in mind, I would like to now turn to the highlights of our first quarter performance. Safety is a core value at Vale and remains at the center of everything we do. In the first three months of the year, we safely removed two additional structures from any emergence level, reaching an 80% reduction since 2020. These achievements reflect disciplined governance, continuous investment in monitoring and engineering solutions, and a strong safety mindset across the organization. This journey goes beyond procedures and systems. It is fundamentally about culture, accountability, and leadership at every level of the organization. By consistently advancing safety, we not only protect our people and communities, but also reinforce Vale's position as a trusted partner.

Now let me turn to our operational performance. In iron ore, our focus on operational excellence, combined with the flexibility of our product portfolio, once again translated into solid performance this quarter. Production grew 3% year-on-year, supported by record output at S11D and Brucutu, as well as the successful ramp-up of the Capanema and Vargem Grande projects. At the same time, we continued to make solid progress on the Serra Sul +20 project. It has now reached 86% physical completion and remains on track to start up in the second half of the year. Once delivered, Serra Sul +20 will further strengthen our operational flexibility and add incremental volumes to one of the most competitive iron ore assets in the world. Sales volumes increased by 4% year-on-year, reflecting higher production and supported by healthy global demand.

Importantly, this volume growth leveraged our flexible product portfolio, allowing us to improve price realization with all link premiums increasing by $2.6 per ton quarter-on-quarter. This translates into around $800 million in annualized revenue, reinforcing the value of our commercial strategy. Let me now turn to Vale Base Metals. At Vale Base Metals, we continue to deliver a strong operational performance with double-digit production growth in both copper and nickel. In copper, production reached 102,000 tons in the first quarter, the highest level since 2017 and 13% higher year-on-year. This performance was supported by record output at Salobo and Sossego, as well as solid contribution from our Canadian polymetallic operations, especially at Voisey's Bay. In nickel, production also grew strongly, increasing 12% year-on-year, the best first quarter performance since 2020.

This reflects the stable production from the Voisey's Bay mining expansion project, along with the successful commissioning of the second furnace at Onça Puma, bringing total production to 49,000 tons. During the quarter, we also announced an agreement to form a consortium for the Thompson operations. This transaction is part of our strategic review of assets and supports our broader objective of strengthening the competitiveness of VBM's global mining portfolio while positioning these operations for long-term value creation. To that end, I would like to also highlight the release of new standalone asset reports post our VBM Day held in March. This initiative reinforce our commitment to transparency and to providing the market with greater visibility into the quality, scale, and potential of our Base Metals portfolio.

We firmly believe that this increased transparency will support a better understanding of the strategic importance and value creation potential of Vale Base Metals. Finally, I would like to highlight a pioneering initiative that reinforces Vale's leadership in innovation and decarbonization. In April, we announced an unprecedented agreement to introduce the world's first ethanol-powered ocean-going vessels with operations expected to begin in 2029. These next-generation Guaibamax vessels have the potential to reduce carbon emissions by up to 90%, marking a major milestone for decarbonization in global maritime transportation. Combined with advanced efficient technologies and wind-assisted rotor sails, this approach delivers environmental impact, operational flexibility, and energy security. This initiative reinforces our commitment to reducing Scope 3 emissions and positions Vale as a leader in shaping a more sustainable and competitive future for the industry. Now I'll turn to Marcelo Bacci to talk about our financial performance.

I'll be back for closing remarks before the Q&A session.

Thanks, Gustavo. Good morning, everyone. In the first quarter of 2026, our pro forma EBITDA reached $3.9 billion, representing a 21% increase year-on-year. This strong performance was primarily driven by another very solid operational execution in our three commodities, benefiting from higher volumes and improved price realization. Vale Base Metals' EBITDA more than doubled compared to last year, reaching $1.2 billion in the quarter. This is yet another demonstration of the significant value being unlocked in this business. VBM's EBITDA would have been even higher, absent the approximately $140 million negative impact of provisional price adjustments made at the end of the quarter. Based on today's forward curves, this impact would have been positive, implying a potential reversal in Q2.

In iron ore, EBITDA reached BRL 2.9 billion with a flat but solid performance year-on-year, supported by higher sales volumes and better all-in premiums, more than offsetting the appreciation of the Brazilian real during the quarter. Let's take a closer look at our cost performance. In the quarter, our C1 cash cost, excluding third-party purchases, reached $23.6 per ton, an increase of 12% year-on-year. As expected, this increase was mainly driven by the BRL's appreciation, combined with the effect of inventories consumption carried from the previous quarters at higher costs. The all-in cash cost, in turn, increased by 8%, with stronger all-in premiums and a solid performance in freight, helping to partially mitigate cost pressures.

While external variables such as exchange rates and oil prices can introduce volatility to our cost structure, they further reinforce the importance of our ongoing focus on efficiency, productivity, and operational excellence. Assuming market consensus estimates for 2026 of an average BRL of 5.25, an average oil prices of $90 per barrel, we are working to achieve the top end of our original guidances on a 61% FE basis. In this slide, you can see the different sensitivities for our C1 and all-in costs for iron ore. Through disciplined execution and a strong focus on controllable cost drivers, we remain confident in our ability to progressively and structurally reduce our cost base, supporting competitiveness and value creation across the cycle. Turning now to Vale Base Metals, both copper and nickel once again delivered solid and consistent reduction in all-in costs.

Starting with copper, all-in costs once again reached negative territory, declining by BRL 1,800 per ton year-on-year, reaching BRL -600 per ton. This very strong result was mainly driven by robust by-product revenues, supported by higher prices and increased gold volumes. In nickel, all-in costs declined by 48% year-on-year, reaching BRL 8,200 per ton. This improvement reflects stronger by-product revenues from our polymetallic assets, benefiting from favorable pricing as well as cost optimization initiatives at Voisey's Bay. Fixed cost dilution, driven by a 12% increase in production volumes, also further supported results. Looking ahead, we expect Vale Base Metals to continue delivering operational improvements beyond the contribution from by-product prices. In nickel, our focus is now on maximizing cash flow generation, leveraging on continued cost efficiency and on the polymetallic nature of our assets.

Let's talk about our cash generation. Our recurring free cash flow generation reached $813 million in the quarter, representing a 61% increase year-over-year. This stronger performance was primarily driven by solid EBITDA, combined with the settlement of currency swap and oil hedging programs. The more negative working capital variation reflected higher inventory levels and an increase in accounts receivable, with collections expected over the coming quarters. Despite the volatility that oil prices can introduce to the cost structures, we remain well-positioned thanks to our risk management strategy, which helps protect and stabilize our cash flow. Our oil hedge program was designed to limit exposure to tail scenarios through the use of zero-cost collar instruments.

These hedges provide Brent crude oil price protection above BRL 80 per barrel for around 70% of our bunker oil demand in 2026, supporting greater visibility and stability in cash generation. I would like to highlight the strength of our cash position and our continued commitment to shareholder returns. In the first quarter, we distributed BRL 2.7 billion in dividends and interest on capital, while we also repurchased nearly 5 million shares under the current share buyback program. As you can see on the next slide, these distributions resulted in a seasonally expected increase in extended net debt, which reached BRL 17.8 billion in the quarter. Our target range remains unchanged at BRL 10 billion-BRL 20 billion, with a clear objective of operating around the midpoint of this range.

Important to say that under the current price environment for iron ore, copper and nickel, we are increasingly confident on the possibility of paying extraordinary dividends and on further executing on our buyback program throughout the year. Before passing the floor back to Gustavo for his closing remarks, I would like to reinforce that we're building a company designed to be resilient through the cycle. Our flexibility, cost discipline, and capital allocation approach are key pillars of this strategy. With these elements in place, we expect to continue benefiting from the strength of our iron ore portfolio while fully unlocking the potential of our base metals business, consistently delivering value to all stakeholders. Gustavo, please.

Thanks, Marcelo. I would like to highlight the key takeaways from today's call. First, safety remains a core value at Vale, and we continue to make consistent progress in strengthening our safety culture and performance. Second, we continue to execute with discipline across our 3 business lines, maintaining a strong focus on operational excellence. Third, we are persistently pursuing cost efficiencies to preserve competitiveness and build resilience in the face of ongoing external cost pressures. Fourth, we remain fully committed to our sustainability agenda and our 2030 goals, advancing innovative solutions that support our decarbonization and sustainability targets. Lastly, our disciplined approach to capital allocation remains unchanged, enabling us to generate strong cash flow and deliver attractive returns to our shareholders. Now let's open for the Q&A session. Thank you.

We are now going to start the question and answer section of the call. If you have a question, please click on the Raise Hand button. If your question has already been answered, you can leave the queue by clicking on the Lower Hand button. Please ask your question in English and limit your questions to two at a time. Our first question comes from Leonardo Correa with BTG. You can open your microphone.

We're talking.

I believe Leonardo is having some problems with the connection. We are going to go ahead with Alexander Pearce with BMO. You can open your microphone, sir.

Great. Thanks. Can you hear me?

Yes, perfectly.

Yes, we can hear you.

Excellent. My question is just around the iron ore market at the minute. You've redirected pellet feed to Brazil, given Oman is offline at the minute. Maybe you can just talk about, is there any knock-on impact to product mix and cost? Then the second part of the question is, you know, can you provide an overview on what you're seeing in terms of demand for the premium products at the minute?

Thanks, Alexander. Let me start by giving you our view of the impact of the conflict in Iran and specifically what happens to Oman, and then I can give you a broader view on the market. Okay. The way we see it is the steel production remains stable globally. In the Middle East, specifically as per your question, steel production is also stable because they are keeping production based on scrap and pellet inventory. This is despite a contraction in Iran crude steel production. As you know, Iran crude steel production has been halted, but the rest of our clients in the region, they're still producing. Okay?

Important to say that in terms of pellet production, Bahrain, which is an important pellet plant in the region, has been mothballed because they had difficulties in receiving pellet feed. This pellet feed has been diverted to other markets, essentially for China and Asia in general. There's actually this additional supply has been offset by no exports from Iran in terms of iron ore. Our view on the market, specifically out of the conflict, is neutral. There has been a neutral impact on the global iron ore supply with the conflict in Iran. Just maybe to take the opportunity to highlight that looking forward, we believe that with the conflict, the cost curve has shifted upwards.

If we calculate, it has shifted forwards between $5-$10 per ton. We also noticed that this shift upwards is actually asymmetric, with some marginal players in the cost curve being more impacted, actually by more than $10 per ton, which actually supports a bit of the prices that we're seeing today. Okay, this is more general aspects of the conflict in Iran. Market in itself, I think you asked about the high quality iron ore, high quality pellet feed. We do expect the market to be stable for pellets, even with an eventual increase in supply net of supply of high-grade pellet feed and demand of high-grade pellet feed.

Coming the next quarter, we expect pellet premiums to be stable or even with a slight increase. On the general market, I think it's just a broader overview. We also see the broader market stable despite the conflict in Iran. China, as we see crude steel production is stable according to independent institutes. As a proxy, we always look into blast furnace utilization, and blast furnace utilization is at about 90%, which is extremely positive and high. We still believe and see continued annualized steel exports at a number of 100 million tons in 2026. Infrastructure and manufacturing offsetting a weak property sector that's still actually a challenged sector for China.

Another important point is when you look into iron ore port inventories, they actually reached 166 million tons, which is an increase of quarter-on-quarter. I'd like to highlight that our inventories of value ores have decreased about 10 million tons quarter-on-quarter. This is extremely important, right? The days to cover in the whole value chain remains at about 30 days. Ex-China, we see a stable overall market. There's a variation by region, but it is stable. Yeah. All in all, we see supply demand balance and the price outlook is also balanced.

Thank you. Our next question comes from Leonardo Correa with BTG. You can open your microphone.

Okay, everyone. Very sorry for the technical difficulties I had before. A couple questions on my side. First one on the cost side, specifically for iron ore, right? I mean, when we look at the C1 costs, clearly a lot of debate on trends and on what you reported, right? There was about $23 per ton with about 10% inflation year-over-year, right? I guess the question we've been receiving over the past hours is, how comfortable are you with your guidance at these levels, considering what you're seeing and so many moving parts with some cost inflation items, right? I think the guidance for the year is $21. You just delivered $23.

Just wanted to see how confident you are on that guidance. That's the first one. The second one, I can't not ask about CMRG and all the implications, right, for the iron ore markets. We've been seeing this back and forth with BHP. I think several observers in the market, they think that there could be some pressure from those inventories at Chinese ports, mainly Jimblebar Fines and some other specifications, moving back into the market and potential implications. I think that's one point. More importantly, we've been seeing other companies also settle with CMRG, right? Fortescue, I think, also announcing some deals. I wanted to hear from Vale's perspective, right? If anything changes.

I know that Vale already has about, I think, 10% of shipments in Yuan settled in China. I just wanted to hear how the relationship is with CMRG and what Vale has been doing with the group over the past weeks and implications. Those are the questions. Thank you so much.

Leo, this is Marcelo speaking. I'll take the first question on cost guidance. As you saw on our presentation, the main effect on costs come from seasonality, which is always the case on the first quarter of the year and also in the second quarter as a consequence of higher costs on the first one. FX and oil prices. If you take the forward curves that we see today on the market for oil, and if you take the projection for FX that we see on the focus report from the Central Bank of Brazil, which is currently at 5.25. If oil converges to $90 and FX at 5.25, we should be able to deliver the top end of our guidance in C1 for the whole year.

Second quarter is not gonna be too different from first quarter, we should see a second half better than the first half, in a way that we deliver the top end of the guidance for year-end. It's important to mention that the external factors are the main factors behind the cost inflation, and they impact everyone in the industry. It's not a Vale-specific situation. We're confident that if the market goes in the direction that the futures markets are indicating today, we should be able to deliver the top end of the guidance.

Leo, on CMRG, I think, acknowledging what you just said, they're talking to all the major players. As you mentioned, they've talked to BHP now, trying to come to an agreement with Fortescue. They have reached an agreement with Hancock. There will be probably negotiation with Rio. Same happened to us. We keep a collaborative dialogue with them. We're always seeking efficiencies, and that has to be the basis for us to negotiate. Also important to say that they understand the corrective nature of our iron ore grades and also the physical and metallurgical properties of our iron ore, which actually differentiates us a little bit. What we're doing with them is that we are working together to design the way we can collaborate to develop well-suited blends for the Chinese steel industry.

It's a bit of a different focus, trying to find the efficiencies, as I just mentioned. Ultimately, just to highlight the prices, we do believe the prices will be set up based on the supply demand, which is the ultimate driver.

Our next question comes from Liam Fitzpatrick with Deutsche. You can open your microphone.

Good morning. Hopefully you can hear me. It's Liam Fitzpatrick from Deutsche Bank. I've got two questions. Firstly, on the buyback, how do you want us to think about the pace of buybacks through the year? You're still some way above the midpoint of your net debt range, but you did repurchase some shares in Q1. Should we think about the pace picking up as net debt falls, or will this be more opportunistic around the share price levels? The second question is just on costs. I think you've answered most of it and you touched on it in your previous comments, but curious as to where you currently see marginal costs for the industry landed into China at current diesel and freight rates. Thank you.

This is Marcelo. I'll take the first question. We not only look at the current state of the expanded net debt, but most importantly, to the trend. The first quarter, it is always because of the dividend payment that we make. Seasonally, it's always a quarter where the net debt goes up. Our decision to start buying back again has to do with the outlook that we have for the year. As we mentioned before, we did have an impact on costs, but the price is more than compensated that impact in the way that margins are going up. We have a positive view for cash flow generation for the year. As a consequence of that, we have decided to start buying back again.

As we mentioned before, if we are in a situation where net debt trends below $15 billion, we should be, deciding, to distribute more to our shareholders in the form of a combined, situation between, extraordinary dividends and buybacks. This is what you can expect for the coming, months and quarters.

Liam, on the impact of diesel and bunker freight, ultimately, on the cost curve, I think as I mentioned, we believe that the industry cost curve has shifted upwards, as I just mentioned, from $5-$10 per ton. This is not so it's not symmetric. Some of the players who sit on the last quartile of the cost curve are more impacted, for example, for distances. What we view is that this asymmetric impact in the cost curve may actually shift it up, so the last quartile by about $10 per ton. It's a significant impact on the last quartile of the cost curve.

Liam, Gustavo here. I'll just add to this last question that Rogério answered that this only reinforces that the strategy that we have for long-term affreightment is the right one, and it's paying off, right? Because I think one of the things Rogério has done recently is to increase the level of affreightment for our fleet. We decided to do this last year for this year. This year, for example, we are mostly contracted close to 100%. The increase that we've seen in time charter, for example, we haven't been able or we're not impacted. Plus the hedges that we put on bunker.

We've been able to manage some of that impact to our own operations, and I think that is very important to highlight.

Next question from Daniel Sasson with Itaú BBA. You can open your microphone.

Hello, everyone. Thank you so much for taking my questions. My first question is actually related to the cost front also. More specifically, with the macro changes that you've already discussed, the change in FX, oil costs, how do you think that it has changed Vale's relative competitive position versus the Australian guys and maybe versus the junior miners in Brazil or the smaller players in Brazil? Because in the end of the day, it's a matter of what weighs more, right? Iron ore prices have actually increased more than the negative effect of your higher, of higher costs because of the higher oil prices and stronger BRL and so on, so forth.

If you could guide us on how you are thinking about your relative cost position versus the Australian guys or the main players, that would be great. The second thing, you also mentioned a little bit about the strong performance you had in copper volumes in the first quarter. We know that you have an important maintenance stoppage of Sossego throughout the year, and therefore maybe it's, it would be too optimistic to believe that you would be able to exceed your 350,000-380,000 tons copper production guidance for the year. Whether you think it's feasible or likely that it could stay somewhere closer to the upper range of this guidance.

How you're thinking about the evolution of your, of your base metal division throughout the year considering the maintenance stoppages, I guess the question is that. Thank you.

No, Daniel. Good. Thank you. Thank you for the question. Look, I think, dividing between the Australian miners and the Brazilian miners. I think, in regards to Australia, you know, we have a disadvantage of the distance. In absolute terms, when a bunker oil increases specifically, we have a disadvantage. Right? Having said that, we have been able to offset a lot of disadvantage by our hedge program. As Gustavo mentioned, we've reduced our exposure to the TC market. We had previously operated with between 25%-30% spot exposure. This year, we're operating with less than 5%, especially to Asia, which is a great advantage.

We have, as Marcelo Bacci talked in the beginning, a program that we are hedging about 70% of our exposures to the oil, to the bunker market. This actually has helped us to offset this logistics and geographic distance disadvantage. You will see more of this coming on the next quarter, but you shouldn't expect a full impact of bunker oil prices increase in our relative competitiveness. Okay. In regards to Brazilian players, I think we're really well-positioned because we have done all the hedging that I just talked about. We're shipping larger vessels which are more efficient. They do rely on spot market prices. Relative to the other Brazilian players, we have increased our competitive position.

Daniel, Gustavo here. Before passing on to Shaun, I'll just add to this question, the positive effect of premiums as well. If you look at our price realization, quarter-on-quarter, we have also improved substantially to $0.6 per ton. IOCJ premiums have improved BRBF. This is also just as an extent of setting some of the impacts that Rogério was saying. When you look at the overall margin of the company, it has expanded, in fact, right? More than offset the cost increase that we faced.

Yeah. Daniel, hi. It's Shaun. Look, I think firstly, the Q1 results for the portfolio as a whole really set us up well to answer your question directly. It was important for both the polymetallic or nickel part of the business that contributes meaningful amounts of copper as well as the copper side to deliver well this quarter. They've done that. Just to highlight that point, Sossego, I think it's the best performance since 2008. It was an 81% year-on-year increase. Even Salobo with lower grade did the same mine movement with 30% longer haul distances, slightly lower grade, and had 4.6% better recoveries and were able to actually increase copper output. How was that site loss? two weeks ago, they're knocking it out the park.

They're doing well. We've got that 110 day shutdown, as you've mentioned, at Sossego. We're gonna remain very focused and disciplined on that. Then in the polymetallic side that contributes, you know, Gustavo and Bacci commented on the performance overall. Voisey's where we, you know, we get meaningful copper. That was a 64% year-on-year increase, and they've hit record production. Across the board of what we control, I think the team is setting us up well to do exactly what you said. We're gonna remain cautious, and we'll update the market as we go through the PMP.

Next question from Rafael Barcellos with Bradesco BBI. You can open your microphone.

Hello, good morning. Thanks for taking my questions. My first question is on your commercial strategy. Can you give us more color on your strategy around the medium-grade Carajás going forward? I mean specifically, what is the outlook for growing these product shares in your mix? To what extent does that come at the expense of the IOCJ volumes? I'm particularly asking this because we have seen the 65, 62 spread improving recently. Moving to VBM on copper. I would say that Alemão appears to be your most important project as VBM. I know that you published your new reserve report recently, but my understanding is that the full potential of the project hasn't been fully disclosed yet, right?

Given that the drilling and exploration is only now being initiated in the second quarter, so probably as we speak, right? Can you give us a sense of what we can expect from these drilling and exploration initiative? You know, more important, I would say that when should we expect that the exploration plan will be concluded? Thank you.

Rafael, no, thanks for the question. Rogério, on the product portfolio. I think just restating what Gustavo has just mentioned, our fine premiums has actually been very positive this semester. $4.1 per ton versus $ 1.9 per ton in the fourth quarter of 2025. This is just on the fines, not accounting for pellets, right? This has to do with some factors. The first one, as you mentioned, is that we have seen a very good acceptance of our mid-grade Carajás globally. We're actually planning to increase it because the market has not only appreciated the product from a chemistry point of view, but also from a metallurgical performance.

We're actually moving to have 50 million tons-55 million tons of this product into the market, which is actually, quite frankly, beyond our expectations because the market accepted it so well and there's a huge demand for the product. Just to add some other points on the portfolio, which helps our realized premiums. The other one is a very good acceptance of our China concentrate. It is really becoming a standard product. This year, we expect to have an annual sales of about 40 million tons of the Chinese concentrate product. I mean, very good, very good for us, very good for the market.

Last but not least, I think the control as we look into the mid-grade Carajás, we can control, we can adjust the volumes of Carajás that we have, standalone Carajás that we have in the market, and that actually defines the premiums. We're always trying and looking into how to optimize it, shifting from mid-grade to high-grade Carajás to achieve the best result. Again, not the best result only on price realization, but as we have always been talking about, it's about maximizing total contribution, total margin contribution, optimizing production costs, price realization. Again, this semester we've been able to do it all and still increase price realization. Okay.

Rafael, hey, it's Shaun. I was actually at the project at Alemão a couple weeks ago with the team. Look, they're making incredible progress. Just to remind you, we published, you remember, just around BRBF and our MRMR statements. We are roughly doubling, where we already doubled last year, our exploration in Pará. A lot of that is gonna be concentrated around all our projects and sites. You know, we'll keep, as we get through probably a year from now, we're looking to target over 20% increase, as you'll recall, from 2024 in our mineral inventory. The real focus is on increasing NPV. You can expect that not just on Alemão, but on our projects as a whole.

When I was at site, we were just in the process of removing a very small alligator from an old exploration adit and starting the dewatering process to actually focus on some of that exploration drilling at that project. Just to reorient you again, remember we changed the mining method there. It's about half a billion BRL in CapEx improvements. We're on track, and the real focus at the moment is on the permitting timeframes and progressing the study. We'll have updates probably by Vale Day and certainly on the exploration, you know, similar time next year.

Our next question comes from Marcio Farid with Goldman Sachs. You can open your microphone.

Thank you. Morning, everyone. Two follow-ups on my side. I think the first one on Simandou, not only, you know, the view on volumes. We've seen Rio reporting two weeks ago. I think that's relatively clear. If you have any views in terms of expectations for ramp up. Also obviously, Simandou, everybody sees it as, you know, high-grade Fe content, right? Above 65%. At least the grades we've seen so far also show a high alumina content as well, which is interesting, right? It seems like Vale, it's still one of the few producers at scale that can offer the low alumina product.

Just wanna check with you on that, you know, and how you see Simandou obviously affecting the, you know, the premium market in terms of Fe grade, but how can Vale be positioned for that scenario with the current portfolio that you, that you guys have? Maybe secondly, quickly, maybe to Gustavo and to Shaun, in terms of Base Metal VBM IPO, there has been some news suggesting that you guys wanna be IPO ready. Just, you know, and we get a question a lot from investors, so it's probably good opportunity to, you know, have a view in terms of how to think about a business IPO, when, why, and why not. Thank you.

Hi, Marcio. Rogério, on Simandou, I think it's you're absolutely right. In the first quarter of 2026, the reported production was 1.5 million tons. There's gonna be, as we're seeing, a gradual ramp-up. The numbers for the years, again, official from them is from 10 million-15 million tons. Again, it's gradual, as we expected, right? To your point on the chemistry side, yes, it is indeed a high alumina relative to silica, which is a very important parameter for blast furnaces. That means that for this ore to be used effectively in blast furnaces, they need to have a blend with complementary ores, which have silica higher than alumina. A silica ratio to alumina higher. Again, the one who has this kind of iron ore in scale is Vale.

That actually positions us in the whole portfolio strategy to provide the ores that make the blends, the ultimate optimizer of blast furnace performance. We are looking into this and thinking about how to design and where to sell our ores on a product market strategy.

Marcio, Gustavo.

Well, on the VBM IPO question, what we've been, you know, sharing and discussing with our shareholders in the market is that the company had initially the goal to stabilize operations. I think Shaun and the team have been able to achieve that. As you've seen, as we've seen in the performance Q1, it's been very strong. It's been strong in the last several quarters. That has shown that the carve-out has worked. The next step is to make sure we can grow the business. We see an enormous potential to grow, particularly the corporate business. We have a goal to double the size of our corporate business. The more we drill and the more we explore, especially in Carajás, the more excited Shaun and the team get.

This is certainly a key priority. Any strategic market transaction will depend on market conditions if it is necessary for us to achieve that future. The priority today is to make sure we continue to operate our assets well, and we can grow the business. That's exactly what the team is working on. The good thing of the carve-out is that it gave us optionality, so we can do many things. I always say, the IPO, potential IPO, it is a means to an end. It's not an objective in itself and we continue to think that way.

Marcio, if I can add to Gustavo's comments. You know, our job, I think from the beginning, was to take a platform that wasn't visible and wasn't creating value and then position it where essentially Vale, [SM and Yara] have choices. I've mentioned before, I think we're probably two years ahead of what I thought the team could deliver. I think you would have seen in our VBM Day, which is part of also just revealing the value potential that I think was invisible. I think Marcelo pointed out that where the business had traditionally contributed maybe 10% or 15% of EBITDA to Vale, you know, it was on track for, say, 30%-35%. You can see this quarter, we're over 30% on EBITDA. We have further to go.

I think as Gustavo said, it's about maintaining that performance, also creating possibilities. We do not need the funding for our growth at this stage. I think if we deliver and prices remain even this year, we'll be around zero net debt in this business, and we can self-fund. It's more a strategic question for our owners at the right time.

Our next question comes from Carlos de Alba with Morgan Stanley. You can open your microphone.

Yeah. Thank you very much. Just wanted to ask a follow-up on the excess cash and return to shareholders. Given the earlier comments by Marcelo, what do you think Marcelo is where your preference is between buybacks and dividends? You clearly are already paying a regular dividend. Does that mean, or is fair to assume that maybe excess cash return to shareholders would be more on the buyback than special dividends? On the second question, I don't know, Gustavo, you can provide, please, an update on the railway discussions with the government. Clearly, it seems that you're back in the negotiating table, maybe that is a good indication. I don't know, any color in terms of timing, what are they asking?

Anything you can provide just to give us more certainty on the potential outcome.

Carlos, last year we gave a clear preference for dividends, because of the change in taxation that came at the year-end. This year the situation is different, and we tend to be more balanced between buybacks and dividends. Of course, depending on where share price is. I would say the answer is a balanced approach between buybacks and extraordinary dividends.

[Stellar], and Carlos, thanks for your question. On the railway concession discussions, just to recap everybody, we had signed an agreement, no mining agreement 2024, we're not able to conclude. To your point, we have resumed conversations with the several governmental entities early this year. I'm hopeful that we'll be able to conclude this in a way that works for everybody's, everybody including Vale. We are working hard and hopeful that we'll be able to conclude this discussion this year still.

Our next question comes from Marina Calero with RBC. You can open your microphone.

Good morning. Thanks for the call. I have a follow-up question on cost. Can you clarify whether the sensitivities you presented today include the impact of your hedges on the currency and the fuel? Maybe as an extension of that, have the recent developments in the Middle East changed the way you are thinking about your hedging strategy for 2027?

Thank you, Marina. The sensitivities do not include the hedging policy because the percentage of hedging that we have at different points in time is different. But for specifically for 2026, we have a significant hedging position on oil and also some of the effects exposure that is partially compensating, but the result of that comes as a financial result and not as part of our EBITDA or included in the C1 cost or all-in cost calculations. We tend to be, you know, balanced and also careful when talking about the hedging for 2027.

I think for 2026, what we have in our portfolio is already very significant, and we discuss at this moment what we're gonna do for 2027, in terms of a freight plan, in terms of oil exposure and also effects. The market gives us some opportunities. The market in oil, for instance, is very much inverted, and we are looking at the markets and deciding what to do.

Yes. Thank you.

Our next question comes from Alfonso Salazar with Jefferies. You can open your microphone.

Hello. Can you hear me?

We can. Yes, yeah, we can.

Thank you. Just quick question for Rogério. Rogério, regarding production of domestic concentrates in China, there were some targets to expand that capacity. It hasn't materialized. Just wondering what is your expectation for the future years regarding production in China, and also your expectations regarding more scrap use in China for the steel iron units. That would be interesting to hear your thoughts.

Hello, Alfonso. Thank you. Domestic concentrate in China these days because of not being so much impacted by freight. They've gained some relief. Longer term, it's really challenging because it's low grade iron ore in the ranges of lower than 20% Fe content. A lot of the mines are underground. They're smaller operations. Our perspective is that currently they are producing about 260 million tons per year, and they're gonna come down to about 160 million tons. That's our view, our expectation for the future, which is a decline in domestic iron ore production in China of concentrate. This is one of the trends. In terms of scrap, in the past we had a sort of more optimistic view.

Today, we believe the scrap is gonna increase gradually from the level they're operating, about 300 million tons of scrap per annum. This is gonna be very gradual and it's gonna be absorbed naturally within the system. Nothing that would create a major impact or disruption in the iron ore supply, seaborne imports.

Thank you, Alfonso Salazar from Scotiabank for your question. Now we're gonna go ahead with our next question from Yuri Pereira with Santander.

Hi, guys. Thank you. Back to Rogério. Please, back to the cost topic. Regarding your comments about high cost producers having a cost impact of more than $10 per ton, do you have it in terms of volumes? I mean, what's the negative impact on iron ore supply? I remember you guys talking about, roughly 150 million tons, if I'm not mistaken, impact with spot prices below $90 per ton.

Just trying to figure out this. How about now considering that $100 is the new $90, right? Thank you.

No. Yuri, this is a good question. You know, with this location, we've actually done a sort of initial calculation, okay. With layers would actually be on the anchor point of the cost curve. Our estimate is that prices reduced by $10 with the current other elements such as freight and diesel, staying the same, there will be more than 50 million tons of iron ore production that is going to be out of the market with negative margins. This is our preliminary assessment.

Our next question comes from Igor Guedes with Genial. You can open your microphone.

Good morning, everyone. Can you hear me?

We can.

Yeah. Thank you. Thank you for the opportunity. We have seen an increase in expenses related to iron ore, both in terms of the CFEM, the royalty rate, and the distribution costs, given the concentration of volumes in Chinese ports for subsequent. More specifically, regarding royalties, we note a recent decision by the Federal Attorney General Office overturning the preliminary injunction that deducted the CSM calculation basis using the CFEM payments. I'd like to get you guys' perspective on what you expect from this standpoint regarding royalty regulation and also on the level of distribution costs we have seen, which rose like 40% quarter-over-quarter, even as the volume declined sequentially. How can we model these expenses going forward? Thank you very much.

Igor, thank you for your question. Those are two different subjects. On the concentration part, I think this has to be seen as difficult to model on an isolated way because it is part of a portfolio strategy. This will tend to vary depending on how our commercial team is looking at the market and the different products that we're gonna offer to the market. You're gonna see always the flip side of these costs on the margin. That changes, and it's a dynamic decision. It's going to be difficult to model as an expense. When it comes to royalties, there is a continuing discussion with the different authorities. It's difficult to make comments about decisions that may come from justice, we are always working towards trying to reduce those costs.

There are some things that don't depend on us.

Even on the, on the second part of your question, we have started a strategy of concentration in China, especially because, you know, it, in one side, it increased costs for the concentration processing. It reduced recovery, but it does increase our, our realization price. Net, it is net zero or positive impact, but that has a very important impact in our product portfolio. Specifically to your question, we're actually improving this because sometimes we have concentrated volumes in certain regions, and we need to redistribute in China to find markets with better demand. This is a cabotage within China, and we have many initiatives in place to do that without incurring this redistribution cost. You should see an improvement.

Our next question comes from Caio Ribeiro with Bank of America. You can open your microphone.

Good morning, everyone. Thank you for the opportunity. I wanted to once again touch on the subject of your expanded net debt concept, you know, particularly as the proportion of non-financial liabilities within that metric drops significantly from 2027 onwards. I wanted to see if you can give us some color on how you think about that range, if you would consider increasing it. If you can give us some color as to what levels you could be contemplating. Assuming you change it to, say, a level closer to $15 billion-$25 billion, what that means for extraordinary dividends. You know, particularly as you had been looking at that $15 billion as that anchor to dictate these decisions to pay extraordinary dividends or not. Secondly, shifting gears here to the nickel front.

There were some important changes recently in Indonesia in the past six months to the mining quotas, to the reference price upon which royalties and taxes are calculated. I wanted to see if you could discuss from your point of view the implications that that has for your business and whether the price surge that we've seen on the nickel side of things since those measures were announced, if that compensates for that higher cost of operating in the country. Thank you, gentlemen.

To Caio, on the expanded net debt, today, around a third of our expanded net debt is related to the present value of the commitments related to reparation, which is a part of our debt that is not manageable. You cannot roll over, you cannot do anything other than pay. This number is going to reduce significantly between 2026 and 2027 as we pay the commitments that we have. I would say that for this year and next year, it is not in our plans to change the rule that we follow or to change the criteria or the range. But as the number of the expanded part of the net debt gets smaller, in the future, we probably are going to review this, but not till the end of 2027.

Yeah, it's Shaun. I think to your point, we started seeing late last year the impacts of the Ministry of Energy and Mineral Resources adjusting those RKAB quotas. I think they said, what, 250 million-260 million tons, whereas it was at, say, 379 million tons in the prior year. I think given that they're responsible now for about 65% of global nickel supply, I think we're realizing, you know, the impact of probably similar to what you see with the DRC and cobalt. We did see the market respond. I think what you're seeing at the moment is a combination of that effect.

Given that something like 90% of the sulfur supply, particularly impacting MHP and HPAL's Indonesian nickel production come from the Middle East. You know, the sulfuric acid and the sulfur supply going in there is having, I think, quite a significant impact on cost of production. I think we're seeing some early signs of curtailment of the supply for some of those areas. I think on our numbers, you know, you could see if these things sustain something like about a $3,000-$4,000 a ton increase in the cost of MHP. If, you know, if this persists, we're looking at about 500,000-600,000 tons of nickel and MHP should be produced in 2026. A fairly significant impact.

For us, we're net long sulfuric acid and sulfur. We're benefiting, I guess, from, you know, the higher pricing environment, which is obviously good news. I think we're all just making sure we can control costs and be as agile as we can. Our supply from PTVI of MHP, they currently have enough sulfur supply, so that's not a concern for us. We're definitely seeing, I'd say, the combination to your point of both that curtailment, but also some of the cost increases for producers in the country.

Thank you. This concludes today's question and answer session. Vale's conference is now concluded. We thank you for your participation.

Good morning, ladies and gentlemen. Welcome to Vale's Fourth Quarter 2025 Earnings Call. This conference is being recorded, and the replay will be available on our website at vale.com. The presentation is also available for download in English and Portuguese from our website. [Operator Instructions] We would like to advise that forward-looking statements may be provided in this presentation, including Vale's expectations about future events or results encompassing those matters listed in the respective presentation. We caution you that forward-looking statements are not guarantee of future performance and involve risks and uncertainties. To obtain information on factors that may lead results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission, SEC, the Brazilian Comissão de Valores Mobiliários, CVM, and in particular, the factors discussed under forward-looking statements and Risk Factors in Vale's annual report on Form 20-F. With us today are Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr.Rogério Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Shaun Usmar, CEO of Vale Base Metals. Now I'll turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin.

Hello, everyone, and welcome to Vale Fourth Quarter 2025 Conference Call. Last year, we delivered outstanding results by exceeding all production guidances while maintaining a strong focus on cost performance and capital discipline, both in iron ore and Base Metals. Our flexible commercial strategy in iron ore and the successful ramp-up of key growth projects such as Capanema, Vargem Grande, Onça Puma furnace 2 and Voisey's Bay expansion were fundamental in driving value for 2025 and will continue to do so in the years to come. At Vale Day, we outlined our strategy and presented our ambition to create superior value for our shareholders, driven by a relentless focus on operational excellence and adding high-quality growth projects to our portfolio, particularly in copper and iron ore, leveraging our unique endowment. I am extremely confident that by executing on this long-term strategy, we will generate significant value for all of our stakeholders. With that, I would like to now turn to the highlights of our 2025 performance. As I mentioned earlier, we were able to make significant progress in 2025. On our core value safety, we achieved a 21% reduction in high potential incidents, reflecting the continued evolution on our safety culture and on our focus on building an accident-free work environment. On tailings dams, in August, we fulfilled the commitment made to society in 2020 by eliminating all dams classified at emergency level 3 by 2025. We also ended the year with a 77% reduction in structures at any emergency level compared to 2020, and we expect it to reach an 86% reduction by the end of 2026. These are meaningful milestones in our commitment to nonrepetition. We also continue to make solid progress on reparations efforts, reaching 81% execution of the Brumadinho agreement and disbursing BRL 73 billion under the Mariana agreement, ensuring fair and comprehensive reparation. Operationally, 2025 was simply an outstanding year. We exceeded production guidances across all businesses while continuing to sharpen our competitiveness, once again delivering meaningful and sustainable cost reductions. I will cover that in more detail in the next slides. In February, we launched the Novo Carajás program, a transformation initiative that will help us double the copper output while enabling accretive growth in the world's highest quality iron ore endowment. Finally, the combination of strong execution in a more favorable cycle allowed us to exceed initial market expectations in terms of shareholder remuneration with a double-digit dividend yield. We entered 2026 with great optimism and the same focus to deliver strong results. Now let's look in more detail at our businesses, starting in the next slide. Iron ore production reached 336 million tons in 2025, 3% higher year-on-year and the highest level since 2018. The growth was primarily driven by the start-up of low capital-intensive projects such as Capanema and Vargem Grande, combined with a very solid performance in Brucutu and S11D. Together, these assets enhance the flexibility of our operations and strengthen our product mix. In the second half of 2026, we will begin commissioning the Serra Sul plus 20 million tons project, which will further increase volumes from our most competitive asset in terms of quality and cost. Enhanced operational flexibility, combined with our active product portfolio management enabled us to maximize value creation in the iron ore business while continuing to meet the evolving needs of our customers. Vale Base Metals also delivered outstanding results in 2025, achieving double-digit production growth in both copper and nickel. In copper, production reached 382,000 tons in 2025, 10% higher year-on-year, supported by record output in Brazil and solid performance across our polymetallic assets in Canada. Nickel production also showed a strong growth of 11% year-on-year, driven by the ramp-up of the Voisey's Bay mine extension project and the commissioning of the second furnace at Onça Puma, reaching 177,000 tons. This strong performance at Vale Base Metals underscores the exceptional work of our team in unlocking value from our existing assets and positioning the company to deliver on its long-term growth ambitions, particularly in copper. In 2025, we delivered cost reductions across all 3 commodities. This year-on-year improvement reflects the success of our efficiency programs and greater operational stability, which continued to translate into lower unit costs. In iron ore, all-in costs reached $54 per ton, representing a $2 per ton year-on-year reduction despite a much lower contribution from pellet premiums. In copper and nickel, all-in costs declined by 77% and 27%, respectively, driven by higher byproduct prices and volumes. Looking ahead, we remain firmly committed to further strengthen our cost competitiveness across the portfolio. We are very confident in our ability to deliver our guidance once again in 2026, reinforcing Vale's position at the very low end of the global industry cost curve. Before passing on to Marcelo, let me briefly touch on capital allocation. Our capital allocation remains robust and disciplined, combining consistent organic growth with above-average shareholder remuneration. The new Carajás program continues to advance as planned. In January, we received the construction license for the Bacaba project and construction works started on schedule. The start-up is expected in the first half of 2028, with an annual copper production capacity of 50,000 tons. We also conduct a thorough review of our CapEx program in 2025. This resulted in an annual optimization of more than $500 million and allowed us to establish a new long-term CapEx guidance below $6 billion. Finally, in November, we announced a $2.8 billion in dividends and interest on capital. In 2025, Vale delivered a dividend yield of 16%, reflecting our confidence in the long-term prospects of our businesses. As I mentioned at the beginning of this presentation, our ambition is clear. We are committed to creating superior value within the sector, and I'm highly confident we will achieve that by consistently executing on our strategy. I will now pass the floor to Marcelo Bacci, who will walk you through our financial performance. I will return afterwards for closing remarks. Marcelo, please.

Thanks, Gustavo, and good morning, everyone. As Gustavo highlighted in his opening remarks, 2025 was an outstanding year for Vale with strong performance and consistent execution across all 3 businesses. We delivered robust results and entered 2026 with great confidence and clear momentum. In the fourth quarter of 2025, our pro forma EBITDA reached $4.8 billion, representing an increase of 17% year-on-year and 10% quarter-on-quarter. As shown on the slide, this strong performance was primarily driven by an excellent quarter at Vale Base Metals, supported by favorable pricing conditions for copper and byproducts, while continuing to capture meaningful operational gains across our polymetallic operations in Canada. As a result, Vale Base Metals EBITDA more than doubled both year-on-year and sequentially, reaching $1.4 billion in the quarter, clearly demonstrating improved operating performance as well as the earnings power of this business. In iron ore, we also delivered strong results with EBITDA remaining at a solid $4 billion with higher sales volumes and improved realized prices compensating for the BRL appreciation in -- the quarter. Now let's turn to our cost performance. During the quarter, our C1 cash cost, excluding third-party purchases, increased by 13% year-on-year. This was primarily driven by the unfavorable BRL exchange rate and higher planned maintenance activities in the northern system with a clear focus on optimizing performance and ensuring long-term asset reliability. In addition, higher production volumes in the Southern and Southeastern systems contributed to higher overall average unit costs. However, this impact was more than offset by the positive contribution to EBITDA, reflecting the strong operating leverage of our portfolio. Importantly, this cost increase in Q4 was expected and fully in line with our 2025 guidance, which closed the year at $21.3 per ton, right at the midpoint of the guidance range. Looking ahead to 2026, we expect C1 cash costs to range between $20 and $21.5 per ton, representing a further year-on-year reduction supported by continued operational discipline and efficiency initiatives. The all-in cost also performed in line with full year guidance, reaching $54.3 per tonne in the fourth quarter and averaging $54.2 per ton in 2025. This annual performance reflects the downward trajectory in our C1 as well as gains from our long-term affreightment strategy. Turning now to Vale Base Metals. Once again, both copper and nickel delivered consistent reductions in all-in costs. In copper, all-in costs decreased by $2,000 per ton, moving into negative territory at minus $0.900 per ton, the lowest level in the history of the business. This outstanding performance was driven by strong byproduct revenues, supported by higher gold prices and increased gold production at Salobo, combined with solid operating performance in our Brazilian assets. In nickel, all-in costs declined 35% year-on-year, reaching $9,000 per ton. This significant improvement was mainly driven by higher byproduct revenues, particularly copper, as well as stronger performance at Voisey's Bay and Onça Puma, which helped dilute fixed costs. Looking ahead, we expect Vale Base Metals to continue delivering operational improvements throughout 2026, further reducing operating costs beyond the positive contribution from byproducts. In nickel, our focus remains firmly on achieving at least a cash breakeven position by the end of the year and we are clearly on track to deliver on this objective. Now let's move on to cash generation. Our recurring free cash flow generation reached approximately $1.7 billion in Q4, more than double versus a year ago. This improvement was driven by our strong EBITDA performance as well as cash inflows from exchange rate swap settlements, reflecting the appreciation of the Brazilian real. Our annual CapEx closed fully in line with the guidance we had announced, totaling $5.5 billion. Looking ahead to 2026, we remain firmly committed to disciplined and efficient capital allocation with expected CapEx in the range of $5.4 billion to $5.7 billion. We are confident that we can deliver all the growth initiatives discussed at Vale Day while keeping our operations at a very high standard with an annual CapEx below $6 billion in the long term, positioning Vale as one of the most accretive growth opportunities in the industry. Also in 2026, we already expect to see a significant reduction in cash outflows related to reparations and then decharacterization commitments as these programs advanced meaningfully over the last year. As a result, we anticipate a reduction of approximately $1.5 billion in cash disbursements compared to 2025. Finally, as Gustavo highlighted, we announced $2.8 billion in dividends and interest on capital. Of this amount, $1 billion were extraordinary dividends paid in January, while the remaining amount is scheduled for payment in March. As you can see on the next slide, our strong cash generation in the quarter led to a significant reduction in expanded net debt, which closed the period at $15.6 billion. Our target range remains unchanged at $10 billion to $20 billion with a clear objective of operating at the midpoint of this range. This level will continue to serve as our reference for additional shareholder remuneration. Before handing back to Gustavo, I would like to emphasize that the strong results we delivered in 2025 were made possible by clearly defined priorities and a company-wide focus on disciplined execution. Our value creation is anchored on a consistent, disciplined approach to capital allocation, which will continue to guide our decision going forward. With this foundation in place, we expect to continue advancing our growth strategy while consistently returning value to our shareholders. With that, I turn the call back to Gustavo for the key takeaways.

Thanks, Marcelo. I would like to highlight the key takeaways from today's call. First, safety remains at the center of everything we do, and our performance over the last years reinforces that we are on the right direction. Second, our culture and strategy are strong enablers of our ambition to consistently deliver superior value to our shareholders. Third, operational excellence continues to be a core pillar of our performance. We have delivered on all of our guidances in 2025 and we remain laser-focused on maintaining a solid operational performance in our businesses. At the same time, we are accelerating value-accretive growth opportunities such as the Novo Carajás program, offering a highly competitive and compelling value proposition. And finally, our disciplined approach to capital allocation remains unchanged, supporting our ability to deliver attractive shareholder returns. Before we open up the call for questions, I would like to reaffirm our confidence in the company and in its ability to unlock even greater value in 2026 and beyond. We experienced the strongest operational performance in Vale's history, allowing us to maximize value from our existing assets while positioning the company for accretive growth opportunities. All of that at a special moment for the industry, where mining becomes essential to everything we do from energy transition to AI, and we believe Vale can play a key role in that future. Now let's move on to the Q&A session. Thank you.

[Operator Instructions] Our first question comes from Leonardo Correa from BTG Pactual.

So a couple of ones for me. First one, maybe for Shaun on the very solid results coming from DBM, right, Shaun. So we saw a very strong cost performance, and my question relates to that. If we look at the copper all-in numbers, they were negative, right, around $800 per ton. Nickel was $9,000 per ton in the quarter, which I can imagine is highly influenced by the very strong byproduct credits that you guys are realizing in several precious metals and also gold, right? So curious to see, apart from that byproduct credit scenario, which isn't helping, I mean, just curious to hear about some other, let's say, bottom-up initiatives. In terms of the guidance, right, I mean, on this topic, the guidance at Vale Day is about $1,000 to $1,500 in copper all-in costs. In nickel, it's around, let's say, $13,000 all-in cost. So you guys are materially below the guidance that you delivered a couple of weeks ago, right? So I just wanted to understand whether you see, let's say, some upside potential or better, some downside potential on the cost guidance you gave some weeks ago. That's my first question. The second one, and this is for Gustavo. Gustavo, I think the introduction was very clear on how strategic this is all becoming, especially your copper assets, which the market for many years has not really looked into, right? And has not really valued. At this point, the market is still ascribing basically the same multiple for iron ore and copper, we think, right, something around 5x EBITDA inside Vale. You see a series of copper plays in the world trading at around 10x EBITDA or even higher. Vale has a lot of potential. There's a lot of growth in-house, which you guys are working on. I just wanted to hear a bit more of this opportunity and how to unlock this value, right? Is it going to be -- at some point, we're going to discuss again the IPO of VBM? Or you think it's more about delivering being consistent and just giving more, let's say, visibility on these projects?

It's good to chat to you again, and thank you for the 2 questions there. I think the questions around cost and ongoing improvements and sustainability. I mean, your thesis is correct. And I think we've talked a lot about this in the last year or so. You remember when I started in this role, we initiated a lot of restructuring, taking out significant -- about 1/3 of our global overhead. As a sort of catalyst as we changed the operating model for the organization to one that was more sort of lean and decentralized. Our targets at the time you'll recall, were about $200 million on a cash basis, almost half split between costs and capital as we improved capital allocation. And as we went through the year, we found more and more opportunity as we then also focused on operating execution. So as you think about this, we ended up over $400 million, so double what we expected. There is an intense focus on -- you've seen we successfully ramped up multiple projects. So we've reduced fixed costs. We've diluted fixed costs by increasing volumes, and we continue to focus on keeping discipline in copper as well as nickel. So you'll see that in our Vale Day guidance. You will see this year as we go forward that there's an increasing focus on getting our tons and also continuing to drive the cost performance of the business. So that's our commitment and we'll continue to update it. And as for guidance numbers, obviously, it's early in the year. I'd say we're well on track. You can appreciate the volatility on everything from gold price to the various byproducts that we have. But yes, it's definitely a feature. And I think if it continues in the sort of price regime, there's obvious upside.

So I'll take the second question. Yes, look, I think the market starts to appreciate and see the value that our Base Metals business can bring to the table. If you remember a few years ago, we had a series of discussions around turnaround, and it's great to see the business performing operationally well. That was our first objective when we did the carve-out, and I'm very happy to see the strong performance from the business. Now I think we still have a lot of work to do in terms of showing we can deliver growth. There is enormous growth potential within the endowment that Vale has. So we are doing, as you saw, around 380 kilotons a year. We can certainly work to double it and that's the mandate for the team. And the more Shaun and the team looks into our portfolio of assets and the development projects, the more excited they get in terms of the opportunity. So I think now it's on us to show that we'll be able to advance those projects. We got the installation license for Bacaba. We filed a preliminary license for Alemão last year. So things are moving forward. And I think once we can demonstrate to the market that we can operate the assets well, but also that we can grow faster than our peers, our copper endowment and portfolio, I think we will continue to, from our perspective, get share price recognition for it. So that's what the team is working on. And then if we, at some point in time, decide to do some particular capital market transactions, we will assess, right, what is the ideal way to fund the business. But at this point, I think the focus is making sure we continue to operate well and we accelerate the growth program.

Our next question comes from Daniel Sasson from Itau BBA.

My first question is for Rogério. Rogério, you changed the way Vale thinks about its product portfolio, right, shifting from a goal of maximizing value for the company instead of maximizing iron content in the portfolio. But looking at your realized prices in 4Q, there was actually a decline versus 3Q with weaker quality premiums. Can you try to help us think about the dynamics of that in the last quarter and discuss how comfortable you are with the implementation of your current strategy, which also involves the mid-grade products and so on and so forth? And my second question to Shaun, maybe a follow-up to Leo's previous question. It didn't become clear to me if you have -- what are your alternatives to try and reduce, for instance, your cash costs, especially in the nickel business, right, which is where you likely have more opportunities to -- so as not to depend on high byproduct revenues, right, which prices you can't really control. So what would you say are your more urgent operational goals that are not related only to ramping up volumes that would obviously allow you to dilute fixed costs if you could get in more detail on what are your goals to reduce costs? And that obviously, coupled with a more rational capital allocation also in the nickel business would drive you to become free cash flow neutral even if byproduct revenues decline, right? Those would be my questions.

Daniel, Rogério, I'll take the first question, and thank you for asking it. Indeed, our price realization for iron ore fines is slightly decreased, but primarily due to lower market premiums and mix optimization. But it's important to notice that it was not due to structural premium deterioration. This is a very important point here. There were 2 main drivers for this quarter-on-quarter change in price realization. First, the decline in premiums for IOCJ. We had about a decline of about $3.5 per ton. And also, we had a decline in premiums for BRBF of roughly $0.50. The second one was our sort of plan design, I would say, of another mid-grade product from Carajás, and we're trying to do it to optimize production, but also to maximize the use of our resources and test some additional specs in the market and see customer response. But having said that, I think we are always saying and I would like to reinforce that our revised commercial strategy aims primarily at optimizing contribution margin across the supply chain. We've been saying that it's not about optimizing price realization independently. It's looking at the whole supply chain and optimizing contribution margin. I think also I'd like to call the attention to the fact that the premiums of our flagship products, especially the main ones, remained very resilient despite low steelmakers margin globally. So in particular, if you look at IOCJ, it sustained premiums of around $13 per ton and BRBF about $2 per ton if you average all the indexes $62. So very resilient premiums for those products. And I guess more important to your question is that going forward, I think what we see is that this flexibility will be a real strength for Vale will be a real strength for us. So it may introduce some swings in price realization. I think this is something that you probably will observe. But we believe that it also will create optionality through the cycles. And with that, we believe we will be able to boost value through these cycles. So this is the view. It's always looking to total contribution across the supply chain, and that's why we're trying to drive a very flexible supply chain.

Yes. And Daniel, to your second question, just to give you a bit more color. I think the first thing is, as you say, we have to develop a track record of execution, not just on costs, but obviously, on volumes and asset integrity, maintenance, reliability and obviously, to do so safely. It's been 5 quarters you've seen the results relative to both market expectation. But I'll give you an example. Your question was specific to nickel. It's the first time, I think, since Vale acquired the business nearly 20 years ago that we actually -- we met budget. We obviously set stretched budgets. We are running this business not on backward-looking metrics, but we're continuing to build in low probability opportunities we see as we mature them into our rolling forecast and continuing to improve above and beyond what we can see. So specifically, Onça Puma last year brought on, on time, under budget, 13%. We achieved record production even last year for that asset with that second furnace. This year, we will be running at full entitlement and will, even in a lower cost environment, be generating cash. And [indiscernible] and her team have done a great job of both cost control, asset reliability and bringing that on. And we -- I have to say every single one of our assets contributed savings in that restructuring I mentioned, both in cost and CapEx. And to Gustavo's point earlier in his opening remarks, continue to find these opportunities, and that's what we're pushing. Voisey's Bay Long Harbour, we ramped up about 20% ahead of plan. That meant we had nearly a $200 million improvement in our EBITDA relative to our internal plans, not because of price. As you know, nickel price was weak, but because of the successful execution debottlenecking. And what happened in turn is the feed that we put through Long Harbour allowed us for the first time in its 11-year history to hit record production. Now with that asset now fully ramped up at Voisey's the challenges for us to continue to run that at capacity in the year ahead, which will -- while we continue to lower cost and dilute fixed costs. Sudbury, you remember, we were looking to maximize the throughput of our 6 mines through the Clarabelle Mill. It's the biggest throughput at 5 million tons we've had since 2016. We have to go, and we will go beyond towards 7 million in the coming years. And there's an intense focus. We've got broke out of where the dominant constraints are, what are the key value drivers in each of these different areas. There's initiatives that are going above and beyond, we'll perhaps talk about in an Investor Day later this year alongside our copper projects and others and just give you a bit more of a flavor. So the idea is beyond our current plans, we recognize that we have to be in the lower half of the cost curve, not relying on byproduct credits, and we're not there yet. And you'll recall Gustavo at Vale Day last year saying that we have made a commitment to get to cash flow breakeven in lower price environments by the end of this year, and there's a lot of initiatives to focus on us doing that. So hopefully, that gives you a bit of a focus, but I'd say things like that asset integrity, asset reliability and development rates in underground mines and improving productivities are a core focus.

Our next question comes from Alex Hacking from Citi.

I had a couple of questions on nickel. Given your experience operating in Indonesia, how do you interpret the changes to the licenses there, firstly? And then secondly, do you see this as something that could be a structural change for the nickel market in terms of supply and price?

Alex, I think it's a question that everyone is asking. You've seen the price response in the last periods. We've seen very clear guidance and I think a realization with the Indonesian government that they have an ability here to address some of the significant oversupply. And there's also environmental and other aspects, I think they're focusing on. So I'd say going to the thematic that was, I think, raised in the last couple of questions, we're cautiously optimistic, but we recognize we're on the wrong end of the cost curve still on our journey. And candidly, from a competitive point of view, I don't want to rely on the kindness of strangers to make sure that this business is resilient. So I'm cautiously optimistic. You will see that you saw the write-downs that we took on nickel really is a focus on our disciplined capital allocation. This is focused on legacy I want to make sure that this business is run as lean and as efficient and as cost competitive as we can. And then indeed, if we continue to find, let's say, more rational participation and supply occurring in Indonesia and elsewhere, we'll be -- our shareholders will be the net beneficiaries of that. The focus is on what we can control.

Our next question comes from Caio Ribeiro from Bank of America.

So my first question is on Fabrica and Viga. I just wanted to see if you could provide some color on the latest developments with these operations, if you have yet a conclusion on what caused the sentiment overflow and whether you see this generating any broader impacts to your other operations? In other words, if you see the need to upgrade safety parameters to prevent this type of event at other operations? And also, what is the current status quo in terms of freezing of assets or fines deriving from this incident? And then secondly, clearly, the company has been making notable progress with derisking with the decharacterization of dams, reduction of emergency levels of dams as well. And this has been key to unlock restricted AUM, right? So I just wanted to see if you could share some color on how much AUM you perceive is still restricted from investing in Vale at this point? And what you see as the key triggers catalysts that you as a company can deliver over the next years to unlock this restricted AUM?

Caio, thanks for the question, Gustavo here. I'll cover the first one and then Marcelo will cover the second one. So on Fabrica, Viga, what we had there was overflow of water with sediments, mostly related with very heavy rainfalls that we faced during that particular period. We've been since then working to restore the operational conditions of the site. The impact has been limited. So we expect that in the next 2 to 3 weeks, most of the work will be done and we'll be ready to reestablish operations, certainly depending on the authorities for us to resume operations. We are taking a deeper look at our facilities to see what else can we do to make sure we become even more resilient given the changes that we are all facing in terms of climate change and so on. And we will incorporate those learnings for our existing facilities and others. I think it is important to highlight that none of our dams and geotechnical structures have faced any impact. And they -- in fact, they performed very well during this rainy season. We do monitor them 24/7 and the work that we've been doing over the years have demonstrated that they continue to be resilient and performing very well. Nonetheless, we will look back at what else can we do to make sure a similar event doesn't happen, and that's what the team is working on. But from a practical standpoint, the impact has been limited, and we are working as we speak to make sure we can put those facilities in conditions to resume operations.

Caio, this is Marcelo speaking. About your second question, our estimate is that right after the accidents, we had about $5 trillion of assets under management between equity and fixed income that became restricted from investing in Vale. And since then and more recently, I would say, most of the recovery that we had was last year, apparently something like 30% of that or $1.5 trillion have been unlocked or unblocked from this restriction. I think the main events related to that is the improvement -- first, the improvement in the ESG ratings that some of these investors follow, and we've been consistently improving. But some of them also have their own criteria. So in parallel to working on delivering the KPIs that are important for the ESG ratings, we're also working directly with some of these investors in order to understand what we still have to do to come back to their portfolios. For instance, next month of May, we're going to have another roadshow in Scandinavia, which is an important part of those -- where those restrictions are to show our improvements and to have a direct interaction with those investors. So this is gradually coming. It's up to us to continue to deliver the results so that we can accelerate the process.

Our next question comes from Christopher LaFemina from Jefferies.

I apologize if you addressed this earlier, I had to dial in late. So my question is around the commercial strategy in iron ore. And I'm wondering a couple of different factors there. So first, obviously, with the emergence of CMRG, which is doing a lot of blending, does that impact the potential premiums that you might get on some of your blended ores because your blending strategy has been far ahead of your peers, and I'm wondering how what, CMRG is doing might impact that? And secondly, just in terms of your pricing, I mean, pricing against the benchmark historically, effectively against the Pilbara blend, which was 62% Fe content ore and now that's 61%. And I'm wondering if your discussions with your customers are in pricing relative to the benchmark, like where it is today versus where it's been historically? Or are you looking at bigger premiums just because the benchmark is lower quality? In other words, the Chinese that I would say historically you've gotten a 5% premium to the benchmark or whatever is 5% premium today, but the benchmark is lower quality ore, your premium should be bigger. Are you getting bigger premiums as a result of that? I'm not sure if that question was clear, but if it was, any help would be appreciated.

Chris, Rogério, it was very clear. To your first point about CMRG and the blending strategy, more broadly, I think we've been discussing with CMRG always with the view of creating win-win opportunities. So it has to be something for us to operate on a differential basis that we create value for both of us. In regards to the blending strategy, CMRG has its own goals of having its own blending yards, but it hasn't, and we don't believe it will affect our blending strategy in China. And in particular, even if they have their own blending yards, I think you may think about the world as a single big blast furnace. So whatever comes in makes is what makes a difference, and it's not how it is blended. So the strategic thinking is about what kind of product, what kind of chemistry, what kind of size distribution we offer to this sort of big world blast furnace, okay, if you will. Your second question about the benchmark. It's -- what we do generally in our contracts is that we have a basket of indexes. So some of them will use Platt 62, some of them will use metal bulletin 62, metal bulletin 62 low alumina. So to a certain extent, some clients are actually looking to move from the 62 to 61, which will become a more liquid index in the market, and it's a reality. But it doesn't affect our price realization, if you will. I think if anything, it will change the price differential.

Our next question comes from Marcio Farid from Goldman Sachs.

Maybe a follow-up to Rogério. Rogério, probably an important point there, what's happening in the market in terms of overall grade decline. And you mentioned that the 61% benchmark does not change our price realization. But I'm just wondering how does it change Vale's overall resources and ability -- I mean, if you think about cutoff grade being cut, you probably talk about potentially increasing life of mine, reducing replacement CapEx, to some extent, reducing OpEx as well. And that seems to be where the liquidity and where the demand for China is going to come from, right? So just trying to understand how does this kind of degrading trend we are seeing globally affects Vale's resources on the ground. That would be great. And if you can follow up in terms of CMRG discussions. So obviously hearing a lot about what's happening between CMRG and BHP at least on the news. But just wondering if that kind of hard conversation is -- it can eventually contaminate Vale as well. It's been very specific to this one case. And maybe an update on the Base Metals side. I think there was an expectation that some technical reports can pop up in early 2026. Just trying to understand how VBM is performing in terms of exploration program so we can better track the projects?

Marcio, thanks for the question. On the -- good that you follow up on the price realization on 61. Indeed, I think to your point, when everybody is moving down to a lower grade to a 61 index, alumina, in most cases, the ratio of alumina silica might increase. And if anything, that actually offers us an opportunity to improve our product mix to better suit to this new reality. So it tends to be favorable to us. To your second question about how do we use this mix optimization and you're spot on because the idea here is one to increase our resource base or to better use our resource base. If we keep the cutoff grades too high, sometimes what we end up being waste is really good iron ore. So the idea here was really think about an integrated portfolio, one that actually looks into the market and also look into our resources and capabilities. And obviously, as we reduce the cutoff grades, as you just pointed out, it actually increases the ability for us not only to improve the resource base but to reduce CapEx, reduce OpEx, increase production. So this is an integrated view together with [indiscernible] and we're working very close together to optimize the supply chain in this regard. CMRG, I think to your third question, this is hard for us to comment on third-party negotiations. But I mean, from what we know, BHP's conversations with CMRG are still ongoing. They will have second rounds or another rounds of negotiations with other -- more intense negotiations actually with other suppliers, iron ore suppliers, including ourselves. But we'll see it in due time.

Yes. And Marcio, on your questions on the technical exploration side and those reports, you recall Vale Day, there's a huge amount of work that's been done to take a different approach with our restructuring on projects in a fundamental way. We talk about what that looks like at a high level. The technical studies, SK 1300 level standard studies, a couple of hundred page reports are in final draft form right now, which we're reviewing. And the idea would be for us, certainly before the end of the quarter to be publishing those on the VBM website to make those available. So we just went through and discussed some of this with our Board today, and we'll be finalizing that work and looking to make that available to investors and analysts. And also the MRMR and the exploration results, the extensions and the results that we're seeing, which we're very excited about will be unveiled, and we will be able to talk more about that at an upcoming Investor Day. So stay tuned. And the last thing to reemphasize, you remember, we -- last year, particularly in copper and the Carajás, the exploration potential is huge. We do about $170 million a year of exploration globally, and we reprioritized. We went from about 8 to 23 drills in Pará. And indeed, from 20,000, 30,000 meters to 600 last year, we're on track for the 100,000 this year. And we'll be looking to update the market more regularly on some of those results because I think they're very exciting. I think it's a lot of what Gustavo had referred to in terms of the upside and the growth potential that we're focusing on simultaneously.

[Operator Instructions] Our next question comes from Rodolfo Angele from JPMorgan.

Interesting to see conference call Vale more biased towards Base Metals this time around. But I have a question on each of the 2 sides of the business, and I want to start with iron ore. And this is probably for you, Rogério. I think one question we got a lot from investors into this year is about the strength of iron ore pricing. I guess investors were more on the bear side. There is capacity coming in. Simandou is a reality already. But -- and we look at a few statistics, China importing record levels of iron ore despite the fact that data suggests that peak steel consumption or production is already behind us. So I don't know, I would like to hear from you what is your assessment? What is the state of affairs? What do you expect for 2026 in terms of iron ore business environment and whatever you can talk about prices. So this is my first question. My second is I'm going to get back to Base Metals. I'm not sure if I understood correctly, but there is some additional information to come up on the development plans soon. But I think investors are not yet pricing in the growth that Vale can deliver on iron ore. And ultimately, once we have a more detailed plan. Today, I think it's a very real ambition. But if we get like this is the -- how we're going to get there. It's 50 from this project with this CapEx intensity. So I think that will be a trigger to see everyone kind of starting to put more numbers and pricing that growth in Vale's copper growth story. So is it reasonable to expect that in the short term? And if not, if you could comment a little bit, at least on what should we expect in terms of CapEx intensity, at least on a relative basis compared to industry, if you cannot share numbers, just to give us an idea as well of potential returns.

Rodolfo, Rogério here. I know that China is not easy to understand these days, but we see indication of good fundamentals, I mean, for both steel and also iron ore. And we do see that globally. China, as you know, infrastructure and manufacturing continue to provide positive support to steel demand despite the challenges that we see and we know in the property sector. I think also, as we have seen, direct and indirect steel exports that we believe are likely to remain at very high levels. This is at least our view. So based on this, I mean, what we anticipate is that crude steel production for 2026 will be at the same level as last year in China. And outside China, we see market fundamentals are very positive or positive, I should say, across most regions. Some recovery we see more broadly in most of the world regions. In terms of iron ore supply and demand, we expect it to remain balanced at about 1.650 billion tons. That's our view. And we -- as you pointed out, we expect China's iron ore imports to remain broadly stable. This is our view. One point that everybody is noticing is the inventories, the high level of inventories at Chinese ports, which are roughly at 170 million tons currently, closed the year at 160 million. We believe that when you look at this on an aggregated basis, consolidated basis with steel mill inventories, you'll see that there is an offset. Steel mill inventories have increased about 20 million tons. So overall, when we look at it on a consolidated basis, iron ore inventory remains about 35 days of consumption, which is if you look back, it's within the typical range for this time of the year. So when we put this all together, we see that steel and iron ore fundamentals, and they point to a healthy price level for 2026 despite the usual volatility that we see. So when we say similar to last year, we're acknowledging that there may be volatility throughout the year, okay? Specifically on Simandou, we -- as you asked, we believe Simandou will come to the market gradually. And as we have been talking and we emphasized during the Vale Day, the Simandou additional volumes will be offset by depletion in the industry.

Yes. Thanks. And then specifically to your question, look, firstly, I came to this job excited actually about exactly what you just said that I think I can't think of, I'd say, a better underrecognized copper growth profile and what we are seeing in this business. And I think there was the very idea that brought Gustavo and the team to sort of carve out VBM. I'd direct you to a few quick things. The first is, and I think you see it in these results, we have to deliver in the immediate term. So there's quarterly delivery that we've been focusing on and you see that in a number of occasions exceeding guidance. That's the earning at least some recognition of what is possible operationally. And then if you go back to the Valid Day material on the website, there was a huge focus on this. We actually overlaid on the slide as we restructured our approach to projects, particularly the copper growth side, we took projects where we've dramatically lower capital intensity. So for example, Bacaba, we just got the LI. We're well on track now in execution, which will bring online in the first half of 2028. That is nearly half the capital it was a year ago. The return has gone from mid-teens to over 50%. And it's more of a brownfields project in terms of risk. As you can appreciate, it's extremely attractive from a capital intensity point of view. Of course, particle flotation at Salobo, next one, nearly 30,000 tons of additional copper. That's the 2029 time frame. We're well advanced on that. We're looking at actually doing some early works now and that's nearly half the capital intensity, and you're talking over 50% rate of return, brownfield site project. Alemão is the next one. It's a brownfield site. We've changed the mining method from sublevel cave to sublevel stoping. The returns have gone from mid-teens to mid-20s plus. And that will be the -- we just November last year, submitted the first license for that. So we've got this mapped out. We've accelerated. We've changed the sequence. It compares extremely favorably. You'll see it on our website, the capital intensities. And to your point, the technical studies, the execution, and I don't think at this point, the IR team has released a date. But in the near term, we'd be looking to have an Investor Day to go through more of the detail with the team on the projects, the details, the operational improvements and the things that have been discussed on this call in terms of cost improvements in both nickel and copper. And the other one is exploration because I think it's extremely exciting and it's underappreciated.

Our next question comes from Carlos De Alba from Morgan Stanley.

I want to go back now to capital allocation. Given the share price strong rally and where you are in the expanded net debt range, what is the view on returning excess cash to shareholders potentially more buybacks, more special dividends? How is the company thinking about it?

Carlos, Marcelo speaking here. I think the current market conditions are favorable for cash flow generation. So in case we start to go in the direction of lower than the midpoint of our range in terms of expanded net debt, there is a chance that we have additional returns to shareholders. Last year, we favored the dividends because of the change that came on the taxation that was effective in the beginning of this year. For future allocations, we will see what is the situation at the moment. We tend to be more balanced, but it will depend on the relative valuation. But definitely, we will consider both dividends and buybacks.

Our next question comes from Rafael Barcellos from Bradesco BBI.

Congratulations for the results. Rogério, how do you -- how should we think about your mid-grade volume strategy this year? I mean, especially considering the increase in this type of product coming from Carajás. And what are you seeing in the freight market, I mean, which appears seasonally stronger this year. I mean forward curves are pointing higher. So I'm interested to understand. I understand that Vale is protected against the short-term volatility, but what could be the potential impact of the freight dynamics on the company and in the overall cost curve? And my second question regarding M&A initiatives. Gustavo, we've continued to see a very active M&A news flow across the sector. So how should we think about Vale's positioning in this environment? And most recently, I mean, we saw discussions involving Rio Tinto and Glencore. So if something were to materialize there, how could that affect Vale's partnership with Glencore in the Victor operation in Canada? And more broadly, how should we think about future partnerships in Canada?

Rafael, thanks for the question. In terms of your question on mid-grade products from Carajás and the volume. I think as we mentioned, we are increasing recently, and we're expecting from 40 million to 50 million tons this year. But it is based on the market assumption of what the market wants is looking at what the market dynamics is currently. But again, the volume, the final volume will depend on the market. What we're trying to do, as we said in the beginning, is adjust our product offering according to the market. So if the market values more higher quality products, which actually yield higher productivity to the steel mills, we may shift our product portfolio. But again, it's all about maximizing total contribution, not necessarily volume, not necessarily price realization. On the freight market, the freight market, as you pointed out, is really going up for the future. But we have actually -- and I won't be able to give too much detail. We have revised our freight strategy this year with very positive results. And what I can tell you is that our exposure to the freight spot market today is very low. So the impact on us would be very limited. And I think on the positive side, it would increase our competitive position against other players.

Rafael, Gustavo here on your M&A question. Look, we continue to believe that we'll be able to capture more value by developing our unique endowment. This is a sort of competitive advantage for Vale vis-a-vis our peers. We have a tremendous endowment with the ability to bring projects online at below average cost of capital and capital intensity, as Shaun pointed out with some examples there. That applies also for iron ore. So we think from a value creation standpoint long term, developing our own endowment makes more sense, and that's where we're going to get more value. We are looking at alternatives and potential transactions all the time. But we have to appreciate we still trade at a discount to peers of about 20%. So for us, from a value accretion standpoint, it is certainly better to develop the endowment that we have. Now if we look at our story and the reason why I'm so optimistic about it is if we are able to deliver growth at very competitive capital intensity below market, but at the same time, return strong cash remuneration to shareholders. So I think this is highly unique within the sector these days. So we'll continue to be focused on that. If tomorrow, as we pointed out long term, if we are doing 360 million tons in iron ore, C1 below $20, all-in below $50 per ton, and we are doing 700 kilotons in copper. This is certainly a very valuable portfolio of assets, and that's what this team is going to pursue.

This concludes today's presentation. You may now disconnect, and have a nice day.