Table of Contents

 

 

 

United States
Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934

 

For the month of

 

March, 2016

 

Vale S.A.

 

Avenida das Américas, No. 700
22640-100 Rio de Janeiro, RJ, Brazil

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

(Check One) Form 20-F x Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)

 

(Check One) Yes o No x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)

 

(Check One) Yes o No x

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

(Check One) Yes o No x

 

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-      .

 

 

 



Table of Contents

 

 

Interim Financial Statements

 

March 31, 2016

 

BRGAAP

 

 

 

Filed with the CVM, SEC and HKEx on

April 28, 2016

 

1



Table of Contents

 

Vale S.A. Interim Financial Statements

Contents

 

 

Page

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

3

Condensed Consolidated and Parent Company Income Statement

5

Condensed Consolidated and Parent Company Statement of Comprehensive Income

6

Condensed Consolidated and Parent Company Cash Flow Statement

7

Condensed Consolidated and Parent Company Balance Sheet

8

Condensed Statement of Changes in Equity

9

Condensed Consolidated and Parent Company Value Added Statement

10

Selected Notes to the Interim Financial Statements

11

1.

Corporate information

11

2.

Basis for preparation of the interim financial statements

11

3.

Information by business segment and by geographic area

12

4.

Relevant event

16

5.

Assets held for sale

17

6.

Acquisitions and divestitures

17

7.

Cash and cash equivalents

17

8.

Accounts receivable

18

9.

Inventories

18

10.

Investments in associates and joint ventures

19

11.

Intangibles

19

12.

Property, plant and equipment

20

13.

Loans and borrowings

21

14.

Litigation

22

15.

Income taxes

24

16.

Employee benefits obligations

25

17.

Financial instruments classification

25

18.

Fair value estimate

26

19.

Derivative financial instruments

26

20.

Stockholders’ equity

35

21.

Costs and expenses by nature

36

22.

Financial results

37

23.

Deferred revenue - Gold stream

37

24.

Commitments

37

25.

Related parties

38

26.

Parent Company information (individual interim information)

40

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

44

 

2



Table of Contents

 

GRAPHIC

 

 

KPMG Auditores Independentes

Av. Almirante Barroso, 52 - 4º

20031-000 - Rio de Janeiro, RJ - Brasil

Caixa Postal 2888

20001-970 - Rio de Janeiro, RJ - Brasil

Central Tel
Fax
Internet

55 (21) 3515-9400
55 (21) 3515-9000

www.kpmg.com.br

 

Report on the review of quarterly information - ITR

 

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

 

To

The Board of Directors and Stockholders of

Vale S.A.

Rio de Janeiro - RJ

 

Introduction

 

1.              We have reviewed the interim accounting information of Vale S.A. (“the Company”), individual and consolidated, included in the quarterly information form - ITR for the quarter ended March 31, 2016, which comprises the balance sheet as of March 31, 2016 and the respective statements of income and comprehensive income, statements of changes in stockholders’ equity and statement of cash flows for the three-month period a then ended, including the explanatory notes.

 

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

 

Scope of the review

 

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

 

3



Table of Contents

 

GRAPHIC

 

Conclusion on the interim accounting information

 

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

 

Other matters

 

Statements of added value

 

5.              We have also reviewed the individual and consolidated interim information of added value for the three-month period ended March 31, 2016, prepared under the responsibility of the Company`s Management, for which presentation is required in the interim information in accordance with the standards issued by the CVM applicable to the preparation of quarterly information - ITR, and considered as supplementary information by IFRS, which does not require the presentation of the statements of added value. These statements were submitted to the same review procedures described previously and, based on our review, we are not aware of any fact that might lead us to believe that they were not prepared, in all material respects, in accordance with the individual and consolidated interim accounting information, taken as a whole.

 

Rio de Janeiro, April 27, 2016

 

KPMG Auditores Independentes

CRC SP-014428/O-6 F-RJ

 

(Original report in Portuguese signed by)

Manuel Fernandes Rodrigues de Sousa

Accountant CRC RJ-052428/O-2

 

 

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

 

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

 

4


 


Table of Contents

 

 

Condensed Income Statement

In millions of Brazilian Reais, except as otherwise stated

 

 

 

 

 

Consolidated

 

Parent Company

 

 

 

 

 

Three-month period ended March 31

 

 

 

Notes

 

2016

 

2015

 

2016

 

2015

 

Net operating revenue

 

3(c)

 

22,067

 

18,027

 

8,164

 

10,237

 

Cost of goods sold and services rendered

 

21(a)

 

(16,467

)

(14,988

)

(6,962

)

(6,424

)

Gross profit

 

 

 

5,600

 

3,039

 

1,202

 

3,813

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating (expenses) income

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative expenses

 

21(b)

 

(465

)

(555

)

(240

)

(293

)

Research and evaluation expenses

 

 

 

(232

)

(344

)

(119

)

(167

)

Pre operating and operational stoppage

 

 

 

(400

)

(758

)

(164

)

(113

)

Equity results from subsidiaries

 

 

 

 

 

2,899

 

(3,774

)

Other operating income (expenses), net

 

21(c)

 

(134

)

179

 

(427

)

39

 

 

 

 

 

(1,231

)

(1,478

)

1,949

 

(4,308

)

Results on measurement or sale of non-current assets

 

6

 

 

546

 

 

546

 

Operating income

 

 

 

4,369

 

2,107

 

3,151

 

51

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial income

 

22

 

11,753

 

6,953

 

11,362

 

6,923

 

Financial expenses

 

22

 

(6,980

)

(20,631

)

(6,720

)

(19,030

)

Equity results in associates and joint ventures

 

10

 

589

 

(825

)

589

 

(825

)

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

 

6

 

 

55

 

 

55

 

Net income (loss) before income taxes

 

 

 

9,731

 

(12,341

)

8,382

 

(12,826

)

 

 

 

 

 

 

 

 

 

 

 

 

Income taxes

 

15

 

 

 

 

 

 

 

 

 

Current tax

 

 

 

(1,292

)

(200

)

(1,017

)

 

Deferred tax

 

 

 

(2,111

)

2,850

 

(1,054

)

3,288

 

 

 

 

 

(3,403

)

2,650

 

(2,071

)

3,288

 

Net income (loss)

 

 

 

6,328

 

(9,691

)

6,311

 

(9,538

)

Income (loss) attributable to noncontrolling interests

 

 

 

17

 

(153

)

 

 

 

 

Net income (loss) attributable to Vale’s stockholders

 

 

 

6,311

 

(9,538

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to Vale’s stockholders:

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per share:

 

20(b)

 

 

 

 

 

 

 

 

 

Preferred share (R$)

 

 

 

1.22

 

(1.85

)

 

 

 

 

Common share (R$)

 

 

 

1.22

 

(1.85

)

 

 

 

 

 

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

 

5



Table of Contents

 

 

Condensed Statement of Comprehensive Income

In millions of Brazilian Reais

 

 

 

Consolidated

 

Parent Company

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

2016

 

2015

 

Net income (loss)

 

6,328

 

(9,691

)

6,311

 

(9,538

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Items that will not be reclassified subsequently to the income statement

 

 

 

 

 

 

 

 

 

Retirement benefit obligations

 

 

 

 

 

 

 

 

 

Gross balance for the period

 

(331

)

(318

)

(21

)

(10

)

Effect of taxes

 

104

 

157

 

7

 

3

 

Equity results in associates and joint ventures

 

 

 

(213

)

(154

)

 

 

(227

)

(161

)

(227

)

(161

)

Total items that will not be reclassified subsequently to the income statement

 

(227

)

(161

)

(227

)

(161

)

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to the income statement

 

 

 

 

 

 

 

 

 

Cumulative translation adjustments

 

 

 

 

 

 

 

 

 

Gross balance for the period

 

(6,429

)

14,938

 

(6,494

)

14,309

 

Effect of taxes

 

(549

)

 

 

 

 

 

(6,978

)

14,938

 

(6,494

)

14,309

 

Cash flow hedge

 

 

 

 

 

 

 

 

 

Gross balance for the period

 

21

 

724

 

 

 

Effect of taxes

 

(3

)

 

 

 

Equity results in associates and joint ventures

 

 

(7

)

8

 

300

 

Transfer of realized results to net income, net of taxes

 

(10

)

(417

)

 

 

 

 

8

 

300

 

8

 

300

 

Total of items that may be reclassified subsequently to the income statement

 

(6,970

)

15,238

 

(6,486

)

14,609

 

Total comprehensive income (loss)

 

(869

)

5,386

 

(402

)

4,910

 

Comprehensive income (loss) attributable to noncontrolling interests

 

(467

)

476

 

 

 

 

 

Comprehensive income (loss) attributable to Vale’s stockholders

 

(402

)

4,910

 

 

 

 

 

 

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

 

6



Table of Contents

 

 

Condensed Cash Flow Statement

In millions of Brazilian Reais

 

 

 

Consolidated

 

Parent Company

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

2016

 

2015

 

Cash flow from operating activities:

 

 

 

 

 

 

 

 

 

Net income (loss) before income taxes

 

9,731

 

(12,341

)

8,382

 

(12,826

)

Adjustments for:

 

 

 

 

 

 

 

 

 

Equity results from associates and joint ventures

 

(589

)

825

 

(3,488

)

4,599

 

Results on measurement or sale of non-current assets

 

 

(546

)

 

(546

)

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

 

 

(55

)

 

(55

)

Results on disposal of property, plant and equipment and intangibles

 

39

 

(682

)

6

 

58

 

Depreciation, amortization and depletion

 

3,314

 

3,000

 

1,164

 

988

 

Financial results, net

 

(4,773

)

13,678

 

(4,642

)

12,107

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(3,896

)

2,221

 

1,640

 

1,598

 

Inventories

 

(400

)

753

 

19

 

114

 

Suppliers and contractors

 

(1,430

)

(1,150

)

1

 

(654

)

Payroll and related charges

 

(11

)

(1,581

)

96

 

(1,097

)

Other taxes assets and liabilities, net

 

(183

)

75

 

22

 

172

 

Deferred revenue - Gold stream (note 23)

 

 

1,670

 

 

 

Other assets and liabilities, net

 

939

 

80

 

(142

)

(322

)

Cash generated from operations

 

2,741

 

5,947

 

3,058

 

4,136

 

Dividends and interest on capital received from subsidiaries

 

 

 

 

209

 

Interest on loans with related parties received (paid), net

 

 

 

(218

)

(152

)

Interest on loans and borrowings paid

 

(1,861

)

(1,321

)

(960

)

(769

)

Derivatives received (paid), net (note 19)

 

(1,976

)

(1,785

)

(502

)

(600

)

Interest on participative stockholders’ debentures paid

 

 

(124

)

 

(124

)

Income taxes

 

(631

)

(759

)

(20

)

 

Income taxes - Settlement program

 

(343

)

(308

)

(336

)

(302

)

Net cash provided by (used in) operating activities

 

(2,070

)

1,650

 

1,022

 

2,398

 

 

 

 

 

 

 

 

 

 

 

Cash flow from investing activities:

 

 

 

 

 

 

 

 

 

Financial investments redeemed (invested)

 

378

 

402

 

(5

)

388

 

Loans and advances received (granted)

 

(13

)

(6

)

62

 

205

 

Guarantees and deposits received (granted)

 

(138

)

(70

)

(157

)

(65

)

Additions to investments

 

(362

)

(30

)

(645

)

(740

)

Acquisition of subsidiary, net of cash acquired

 

17

 

(237

)

 

 

Additions to property, plant and equipment and intangible (note 3(b))

 

(5,354

)

(6,259

)

(3,607

)

(4,167

)

Dividends and interest on capital received from associates and joint ventures

 

2

 

74

 

4

 

71

 

Proceeds from disposal of assets and investments

 

47

 

339

 

 

309

 

Proceeds from gold stream transaction (note 23)

 

 

1,156

 

 

 

Net cash used in investing activities

 

(5,423

)

(4,631

)

(4,348

)

(3,999

)

 

 

 

 

 

 

 

 

 

 

Cash flow from financing activities:

 

 

 

 

 

 

 

 

 

Loans and borrowings (i)

 

 

 

 

 

 

 

 

 

Additions

 

12,950

 

3,676

 

5,669

 

3,686

 

Repayments

 

(4,735

)

(819

)

(640

)

(578

)

Transactions with related parties

 

 

 

(1,478

)

(1,154

)

Transactions with stockholders:

 

 

 

 

 

 

 

 

 

Dividends and interest on capital paid to noncontrolling interest

 

(17

)

(7

)

 

 

Transactions with noncontrolling stockholders

 

(69

)

 

 

 

Net cash provided by financing activities

 

8,129

 

2,850

 

3,551

 

1,954

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

636

 

(131

)

225

 

353

 

Cash and cash equivalents in the beginning of the period

 

14,022

 

10,555

 

518

 

685

 

Effect of exchange rate changes on cash and cash equivalents

 

(1,197

)

1,394

 

 

 

Cash and cash equivalents at end of the period

 

13,461

 

11,818

 

743

 

1,038

 

 

 

 

 

 

 

 

 

 

 

Non-cash transactions:

 

 

 

 

 

 

 

 

 

Additions to property, plant and equipment - capitalized loans and borrowing costs

 

670

 

556

 

401

 

283

 

 


(i) Includes transactions with related parties: Banco Bradesco, Banco do Brasil e Banco Nacional do Desenvolvimento economico e Social - BNDES.

 

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

 

7



Table of Contents

 

 

Condensed Balance Sheet

In millions of Brazilian Reais

 

 

 

Consolidated

 

Parent Company

 

 

 

Notes

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

December 31, 2015

 

Assets

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

13,461

 

14,022

 

743

 

518

 

Financial investments

 

 

 

97

 

109

 

24

 

18

 

Derivative financial instruments

 

19

 

500

 

474

 

288

 

196

 

Accounts receivable

 

8

 

9,088

 

5,763

 

31,292

 

36,026

 

Inventories

 

9

 

13,527

 

13,775

 

3,893

 

3,830

 

Prepaid income taxes

 

 

 

2,223

 

3,513

 

1,960

 

3,176

 

Recoverable taxes

 

 

 

5,420

 

5,482

 

3,429

 

3,352

 

Related parties

 

25

 

356

 

273

 

1,715

 

834

 

Others

 

 

 

2,072

 

1,215

 

403

 

581

 

 

 

 

 

46,744

 

44,626

 

43,747

 

48,531

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets held for sale

 

5

 

14,560

 

15,792

 

 

 

 

 

 

 

61,304

 

60,418

 

43,747

 

48,531

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

19

 

605

 

363

 

525

 

293

 

Loans

 

 

 

691

 

732

 

109

 

106

 

Prepaid income taxes

 

 

 

1,839

 

1,840

 

 

 

Recoverable taxes

 

 

 

1,936

 

1,956

 

1,458

 

1,457

 

Deferred income taxes

 

15(a)

 

27,317

 

30,867

 

16,245

 

17,292

 

Judicial deposits

 

14(c)

 

3,502

 

3,445

 

2,788

 

2,707

 

Related parties

 

25

 

 

5

 

1,074

 

1,468

 

Others

 

 

 

2,213

 

2,392

 

592

 

765

 

 

 

 

 

38,103

 

41,600

 

22,791

 

24,088

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

10

 

12,091

 

11,481

 

124,032

 

127,517

 

Intangibles

 

11

 

21,416

 

20,789

 

9,727

 

8,557

 

Property, plant and equipment

 

12

 

206,148

 

211,259

 

97,712

 

96,887

 

 

 

 

 

277,758

 

285,129

 

254,262

 

257,049

 

Total assets

 

 

 

339,062

 

345,547

 

298,009

 

305,580

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

Suppliers and contractors

 

 

 

11,200

 

13,140

 

6,420

 

7,084

 

Payroll and related charges

 

 

 

1,468

 

1,464

 

836

 

806

 

Derivative financial instruments

 

19

 

5,798

 

8,107

 

2,975

 

3,559

 

Loans and borrowings

 

13

 

11,584

 

9,788

 

6,195

 

4,736

 

Related parties

 

25

 

2,604

 

1,856

 

9,354

 

6,774

 

Income taxes - Settlement program

 

15(c)

 

1,383

 

1,348

 

1,355

 

1,320

 

Taxes payable

 

 

 

792

 

977

 

306

 

460

 

Provision for income taxes

 

 

 

596

 

943

 

 

 

Employee postretirement obligations

 

16

 

253

 

266

 

63

 

72

 

Asset retirement obligations

 

 

 

312

 

346

 

77

 

83

 

Others

 

 

 

4,240

 

2,531

 

624

 

825

 

 

 

 

 

40,230

 

40,766

 

28,205

 

25,719

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities associated with assets held for sale

 

5

 

336

 

416

 

 

 

 

 

 

 

40,566

 

41,182

 

28,205

 

25,719

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

19

 

4,359

 

5,581

 

3,715

 

4,745

 

Loans and borrowings

 

13

 

100,413

 

102,878

 

55,564

 

55,986

 

Related parties

 

25

 

438

 

830

 

54,954

 

63,837

 

Employee postretirement obligations

 

16

 

6,963

 

6,831

 

494

 

483

 

Provisions for litigation

 

14(a)

 

3,029

 

3,210

 

2,070

 

2,190

 

Income taxes - Settlement program

 

15(c)

 

16,023

 

15,953

 

15,694

 

15,626

 

Deferred income taxes

 

15(a)

 

6,467

 

6,520

 

 

 

Asset retirement obligations

 

 

 

9,333

 

9,313

 

1,466

 

1,291

 

Participative stockholders’ debentures

 

24(b)

 

1,787

 

1,336

 

1,787

 

1,336

 

Deferred revenue - Gold stream

 

23

 

6,102

 

6,830

 

 

 

Others

 

 

 

5,600

 

5,664

 

3,302

 

3,207

 

 

 

 

 

160,514

 

164,946

 

139,046

 

148,701

 

Total liabilities

 

 

 

201,080

 

206,128

 

167,251

 

174,420

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

Equity attributable to Vale’s stockholders

 

20

 

130,758

 

131,160

 

130,758

 

131,160

 

Equity attributable to noncontrolling interests

 

 

 

7,224

 

8,259

 

 

 

Total stockholders’ equity

 

 

 

137,982

 

139,419

 

130,758

 

131,160

 

Total liabilities and stockholders’ equity

 

 

 

339,062

 

345,547

 

298,009

 

305,580

 

 

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

 

8



Table of Contents

 

 

Condensed Statement of Changes in Equity

In millions of Brazilian Reais

 

 

 

Share 
capital

 

Results on 
conversion 
of shares

 

Results from
operation with
noncontrolling
interest

 

Profit 
reserves

 

Treasury 
stocks

 

Unrealized fair
value gain 
(losses)

 

Cumulative 
translation 
adjustments

 

Retained 
earnings

 

Equity 
attributable to
Vale’s 
stockholders

 

Equity 
attributable to
noncontrolling
interests

 

Total 
stockholder’s 
equity

 

Balance at December 31, 2015

 

77,300

 

50

 

(1,881

)

3,846

 

(2,746

)

(3,873

)

58,464

 

 

131,160

 

8,259

 

139,419

 

Net income

 

 

 

 

 

 

 

 

6,311

 

6,311

 

17

 

6,328

 

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement benefit obligations

 

 

 

 

 

 

(227

)

 

 

(227

)

 

(227

)

Cash flow hedge

 

 

 

 

 

 

8

 

 

 

8

 

 

8

 

Translation adjustments

 

 

 

 

 

 

208

 

(6,702

)

 

(6,494

)

(484

)

(6,978

)

Transactions with stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

(592

)

(592

)

Capitalization of noncontrolling interest advances

 

 

 

 

 

 

 

 

 

 

24

 

24

 

Balance at March 31, 2016

 

77,300

 

50

 

(1,881

)

3,846

 

(2,746

)

(3,884

)

51,762

 

6,311

 

130,758

 

7,224

 

137,982

 

 

 

 

Share 
capital

 

Results on 
conversion 
of shares

 

Results from
operation with
noncontrolling
interest

 

Profit 
reserves

 

Treasury 
stocks

 

Unrealized fair
value gain 
(losses)

 

Cumulative 
translation 
adjustments

 

Retained 
earnings

 

Equity 
attributable to
Vale’s 
stockholders

 

Equity 
attributable to
noncontrolling
interests

 

Total 
stockholder’s 
equity

 

Balance at December 31, 2014

 

77,300

 

50

 

(970

)

53,085

 

(2,746

)

(4,553

)

24,248

 

 

146,414

 

3,187

 

149,601

 

Loss

 

 

 

 

 

 

 

 

(9,538

)

(9,538

)

(153

)

(9,691

)

Other comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retirement benefit obligations

 

 

 

 

 

 

(161

)

 

 

(161

)

 

(161

)

Cash flow hedge

 

 

 

 

 

 

300

 

 

 

300

 

 

300

 

Translation adjustments

 

 

 

 

 

 

(548

)

14,857

 

 

14,309

 

629

 

14,938

 

Transactions with stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

(5

)

(5

)

Acquisitions and disposal of participation of noncontrolling interest

 

 

 

(5

)

 

 

 

 

 

(5

)

4

 

(1

)

Capitalization of noncontrolling interest advances

 

 

 

 

 

 

 

 

 

 

20

 

20

 

Balance at March 31, 2015

 

77,300

 

50

 

(975

)

53,085

 

(2,746

)

(4,962

)

39,105

 

(9,538

)

151,319

 

3,682

 

155,001

 

 

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

 

9


 


Table of Contents

 

 

Condensed Value Added Statement

In millions of Brazilian Reais

 

 

 

Consolidated

 

Parent Company

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

2016

 

2015

 

Generation of value added from continuing operations

 

 

 

 

 

 

 

 

 

Gross revenue

 

 

 

 

 

 

 

 

 

Revenue from products and services

 

22,377

 

18,363

 

8,333

 

10,552

 

Results on measurement or sale of non-current assets

 

 

601

 

 

601

 

Revenue from the construction of own assets

 

3,582

 

6,845

 

2,707

 

4,450

 

Allowance for doubtful accounts

 

(1

)

 

(2

)

(2

)

Other revenues

 

166

 

1,636

 

72

 

396

 

Less:

 

 

 

 

 

 

 

 

 

Acquisition of products

 

(326

)

(704

)

(137

)

(167

)

Material, service and maintenance

 

(8,096

)

(10,288

)

(4,851

)

(6,262

)

Oil and gas

 

(1,200

)

(902

)

(666

)

(574

)

Energy

 

(638

)

(421

)

(241

)

(209

)

Freight

 

(1,920

)

(2,269

)

(10

)

 

Other costs and expenses

 

(1,650

)

(3,024

)

(603

)

(861

)

Gross value added

 

12,294

 

9,837

 

4,602

 

7,924

 

Depreciation, amortization and depletion

 

(3,314

)

(3,000

)

(1,164

)

(988

)

Net value added

 

8,980

 

6,837

 

3,438

 

6,936

 

 

 

 

 

 

 

 

 

 

 

Received from third parties

 

 

 

 

 

 

 

 

 

Equity results from associates and joint ventures

 

589

 

(825

)

3,488

 

(4,599

)

Financial income

 

234

 

161

 

90

 

92

 

Monetary and exchange variation of assets

 

(3,700

)

6,227

 

(3,965

)

6,583

 

Total value added to be distributed

 

6,103

 

12,400

 

3,051

 

9,012

 

 

 

 

 

 

 

 

 

 

 

Personnel

 

1,971

 

2,074

 

886

 

1,033

 

Taxes and contributions

 

2,025

 

2,118

 

1,641

 

1,683

 

Current income tax

 

1,292

 

200

 

1,016

 

 

Deferred income tax

 

2,111

 

(2,850

)

1,055

 

(3,288

)

Financial expense (excludes capitalized interest)

 

1,272

 

4,627

 

1,047

 

3,487

 

Monetary and exchange variation of liabilities

 

(9,286

)

15,575

 

(9,650

)

15,172

 

Other remunerations of third party funds

 

390

 

347

 

745

 

463

 

Reinvested net income (absorbed loss)

 

6,311

 

(9,538

)

6,311

 

(9,538

)

Net income (loss) attributable to noncontrolling interest

 

17

 

(153

)

 

 

Distributed value added

 

6,103

 

12,400

 

3,051

 

9,012

 

 

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

 

10



Table of Contents

 

 

Selected Notes to the Interim Financial Statements

Expressed in millions of Brazilian Reais, unless otherwise stated

 

1.                            Corporate information

 

Vale S.A. (the “Parent Company”) is a public company headquartered at 700, Avenida das Américas, Rio de Janeiro, Brazil with securities traded on the stock exchanges of São Paulo - BM&F BOVESPA (Vale3 and Vale5), New York - NYSE (VALE and VALE.P), Paris - NYSE Euronext (Vale3 and Vale5) and Hong Kong - HKEx (codes 6210 and 6230).

 

Vale and its direct and indirect subsidiaries (“Vale”, “Group” or “Company”) are producers of iron ore and iron ore pellets, key raw materials for steelmaking, and producers of nickel, which is used to produce stainless steel and metal alloys employed in the production of several products. The Group also produces copper, metallurgical and thermal coal, potash, phosphates and other fertilizer nutrients, manganese ore, ferroalloys, platinum group metals, gold, silver and cobalt. The information by segment is presented in note 3.

 

2.                            Basis for preparation of the interim financial statements

 

a)        Statement of compliance

 

The condensed consolidated and individual interim financial statements of the Company (“interim financial statements”) have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as implemented in Brazil by the Brazilian Accountant Pronouncements Committee (“CPC”), approved by the Brazilian Securities Exchange Commission (“CVM”) and by the Brazilian Federal Accounting Council (“CFC”). All relevant information from its own financial statements, and only this information, are being presented and correspond to those used by the Company’s Management.

 

The consolidated financial statements present the accounts of the Group.

 

The individual financial statements present the accounts of the Parent Company and are presented in a summarized form in note 26.

 

b)        Basis of presentation

 

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

 

The accounting practices, accounting estimates and judgments, risk management and measurement methods are the same as those adopted when preparing the financial statements for the year ended December 31, 2015. These interim financial statements were prepared to update users about relevant information presented in the period and should be read in conjunction with the financial statements for the year ended December 31, 2015.

 

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

 

The exchange rates used by the Group for major currencies to translate its operations into R$ are as follows:

 

 

 

Closing rate

 

Average rate for the three-month period ended

 

 

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2015

 

US dollar (“US$”)

 

3.5589

 

3.9048

 

3.9022

 

2.8702

 

Canadian dollar (“CAD”)

 

2.7446

 

2.8171

 

2.8421

 

2.3120

 

Australian dollar (“AUD”)

 

2.7322

 

2.8532

 

2.8165

 

2.2543

 

Euro (“EUR” or “€”)

 

4.0539

 

4.2504

 

4.3008

 

3.2212

 

 

Subsequent events were evaluated through April 27, 2016, which is the date the interim financial statements were approved by the Board of Directors.

 

c)         Accounting standards issued but not yet effective

 

The standards and interpretations issued by IASB relevant to the Company but not yet effective are the same as those adopted when preparing the financial statements for the year ended December 31, 2015.

 

11



Table of Contents

 

 

3.         Information by business segment and by geographic area

 

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

 

a)   Operating income and adjusted EBITDA

 

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

 

 

 

Consolidated

 

 

 

Three-month period ended March 31, 2016

 

 

 

Income statement

 

Adjusted by

 

 

 

 

 

Net operating 
revenue

 

Costs

 

Expenses, net

 

Research and 
evaluation 
expenses

 

Pre operating 
and operational
stoppage

 

Depreciation and
other results

 

Operating 
income (loss)

 

Dividends 
received from 
associates and 
joint ventures

 

Depreciation, 
depletion and 
amortization

 

Adjusted 
EBITDA

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iron ore

 

11,188

 

(5,038

)

(599

)

(41

)

(126

)

(933

)

4,451

 

 

933

 

5,384

 

Pellets

 

2,918

 

(1,695

)

(59

)

(2

)

(15

)

(310

)

837

 

 

310

 

1,147

 

Ferroalloys and manganese

 

182

 

(175

)

6

 

 

(10

)

(29

)

(26

)

 

29

 

3

 

Other ferrous products and services

 

339

 

(230

)

18

 

(1

)

(3

)

(69

)

54

 

 

69

 

123

 

 

 

14,627

 

(7,138

)

(634

)

(44

)

(154

)

(1,341

)

5,316

 

 

1,341

 

6,657

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

 

599

 

(1,133

)

187

 

(7

)

(4

)

(96

)

(454

)

 

96

 

(358

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel and other products

 

3,883

 

(2,973

)

(89

)

(56

)

(124

)

(1,425

)

(784

)

1

 

1,425

 

642

 

Copper

 

1,371

 

(747

)

6

 

(3

)

 

(169

)

458

 

 

169

 

627

 

 

 

5,254

 

(3,720

)

(83

)

(59

)

(124

)

(1,594

)

(326

)

1

 

1,594

 

1,269

 

Fertilizers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Potash

 

91

 

(69

)

17

 

(7

)

(14

)

(22

)

(4

)

 

22

 

18

 

Phosphates

 

1,125

 

(910

)

(50

)

(12

)

(1

)

(220

)

(68

)

 

220

 

152

 

Nitrogen

 

228

 

(163

)

(7

)

(2

)

 

(19

)

37

 

 

19

 

56

 

Other fertilizers products

 

49

 

 

 

 

 

 

49

 

 

 

49

 

 

 

1,493

 

(1,142

)

(40

)

(21

)

(15

)

(261

)

14

 

 

261

 

275

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

94

 

(175

)

22

 

(100

)

 

(22

)

(181

)

1

 

22

 

(158

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

22,067

 

(13,308

)

(548

)

(231

)

(297

)

(3,314

)

4,369

 

2

 

3,314

 

7,685

 

 

12



Table of Contents

 

 

 

 

Consolidated

 

 

 

Three-month period ended March 31, 2015

 

 

 

Statement of income

 

Adjusted by

 

 

 

 

 

Net operating
 revenue

 

Costs

 

Expenses, net

 

Research and
evaluation 
expenses

 

Pre operating
and
operational 
stoppage

 

Depreciation and 
other results

 

Operating 
income (loss)

 

Results on 
measurement 
or sale of non-
current assets

 

Dividends 
received from
associates and 
joint ventures

 

Depreciation,
depletion and 
amortization

 

Adjusted 
EBITDA

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Iron ore

 

7,859

 

(5,548

)

(488

)

(94

)

(75

)

(1,058

)

596

 

 

 

1,058

 

1,654

 

Pellets

 

2,778

 

(1,703

)

10

 

(4

)

(16

)

(246

)

819

 

 

72

 

246

 

1,137

 

Ferroalloys and manganese

 

206

 

(138

)

 

 

(16

)

(17

)

35

 

 

 

17

 

52

 

Other ferrous products and services

 

335

 

(284

)

30

 

(3

)

(1

)

(58

)

19

 

 

 

58

 

77

 

 

 

11,178

 

(7,673

)

(448

)

(101

)

(108

)

(1,379

)

1,469

 

 

72

 

1,379

 

2,920

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

 

419

 

(544

)

(195

)

(14

)

(36

)

(67

)

(437

)

 

 

67

 

(370

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel and other products

 

3,855

 

(2,434

)

(187

)

(80

)

(306

)

(1,214

)

(366

)

 

 

1,214

 

848

 

Copper

 

1,102

 

(647

)

13

 

(4

)

(2

)

(137

)

325

 

 

 

137

 

462

 

Other base metals products

 

 

 

722

 

 

 

 

722

 

 

 

 

722

 

 

 

4,957

 

(3,081

)

548

 

(84

)

(308

)

(1,351

)

681

 

 

 

1,351

 

2,032

 

Fertilizers

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Potash

 

85

 

(59

)

(2

)

(29

)

(13

)

(17

)

(35

)

 

 

17

 

(18

)

Phosphates

 

1,020

 

(742

)

(47

)

(18

)

(25

)

(157

)

31

 

 

 

157

 

188

 

Nitrogen

 

223

 

(158

)

(8

)

(2

)

(2

)

(17

)

36

 

 

 

17

 

53

 

Other fertilizers products

 

34

 

 

 

 

 

 

34

 

 

 

 

34

 

 

 

1,362

 

(959

)

(57

)

(49

)

(40

)

(191

)

66

 

 

 

191

 

257

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

111

 

(79

)

(141

)

(96

)

(1

)

534

 

328

 

(546

)

2

 

12

 

(204

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

18,027

 

(12,336

)

(293

)

(344

)

(493

)

(2,454

)

2,107

 

(546

)

74

 

3,000

 

4,635

 

 

13



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b)   Assets by segment

 

 

 

Consolidated

 

 

 

As at March 31, 2016

 

Three-month
period ended
March 31, 2016

 

 

 

Trade receivables

 

Product inventory

 

Investments in
associates and
joint ventures

 

Property, plant
and equipment
and intangible
assets

 

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

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

 

 

Iron ore

 

2,653

 

3,404

 

1,575

 

105,635

 

3,542

 

Pellets

 

3,292

 

641

 

1,253

 

4,335

 

27

 

Ferroalloys and manganese

 

182

 

231

 

 

616

 

24

 

Other ferrous products and services

 

386

 

5

 

3,023

 

822

 

 

 

 

6,513

 

4,281

 

5,851

 

111,408

 

3,593

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

 

95

 

155

 

1,062

 

6,694

 

521

 

 

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

 

 

Nickel and other products

 

1,392

 

3,992

 

55

 

78,641

 

690

 

Copper

 

709

 

112

 

 

8,862

 

365

 

 

 

2,101

 

4,104

 

55

 

87,503

 

1,055

 

Fertilizers

 

 

 

 

 

 

 

 

 

 

 

Potash

 

22

 

75

 

 

541

 

 

Phosphates

 

381

 

1,194

 

295

 

14,289

 

153

 

Nitrogen

 

57

 

47

 

 

 

 

 

 

460

 

1,316

 

295

 

14,830

 

153

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

133

 

15

 

4,828

 

7,129

 

32

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

9,302

 

9,871

 

12,091

 

227,564

 

5,354

 

 


(i) Include only cash effect.

 

 

 

Consolidated

 

 

 

December 31, 2015

 

Three-month
period ended
March 31, 2015

 

 

 

Trade receivables

 

Product inventory

 

Investments in
associates and
joint ventures

 

Property, plant
and equipment
and intangible
assets

 

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

 

Ferrous minerals

 

 

 

 

 

 

 

 

 

 

 

Iron ore

 

289

 

3,168

 

1,581

 

104,539

 

4,154

 

Pellets

 

2,792

 

620

 

1,156

 

4,213

 

31

 

Ferroalloys and manganese

 

203

 

249

 

 

547

 

6

 

Other ferrous products and services

 

303

 

7

 

3,038

 

824

 

9

 

 

 

3,587

 

4,044

 

5,775

 

110,123

 

4,200

 

 

 

 

 

 

 

 

 

 

 

 

 

Coal

 

176

 

206

 

1,195

 

7,075

 

1,007

 

 

 

 

 

 

 

 

 

 

 

 

 

Base metals

 

 

 

 

 

 

 

 

 

 

 

Nickel and other products

 

1,606

 

4,460

 

66

 

83,118

 

617

 

Copper

 

67

 

92

 

 

8,731

 

202

 

 

 

1,673

 

4,552

 

66

 

91,849

 

819

 

Fertilizers

 

 

 

 

 

 

 

 

 

 

 

Potash

 

12

 

52

 

 

570

 

 

Phosphates

 

326

 

1,063

 

292

 

14,526

 

159

 

Nitrogen

 

55

 

41

 

 

 

 

 

 

393

 

1,156

 

292

 

15,096

 

159

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

159

 

10

 

4,153

 

7,905

 

74

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

5,988

 

9,968

 

11,481

 

232,048

 

6,259

 

 


(i) Include only cash effect.

 

14



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c)   Results by segment and revenues by geographic area

 

 

 

Consolidated

 

 

 

Three-month period ended March 31, 2016

 

 

 

Ferrous
minerals

 

Coal

 

Base metals

 

Fertilizers

 

Others

 

Total

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenue

 

14,627

 

599

 

5,254

 

1,493

 

94

 

22,067

 

Cost and expenses

 

(7,970

)

(957

)

(3,986

)

(1,218

)

(253

)

(14,384

)

Depreciation, depletion and amortization

 

(1,341

)

(96

)

(1,594

)

(261

)

(22

)

(3,314

)

Operating income (loss)

 

5,316

 

(454

)

(326

)

14

 

(181

)

4,369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial result

 

5,104

 

165

 

(531

)

52

 

(17

)

4,773

 

Equity results in associates and joint ventures

 

154

 

(35

)

(6

)

 

476

 

589

 

Income taxes

 

(3,558

)

 

179

 

(24

)

 

(3,403

)

Net income (loss)

 

7,016

 

(324

)

(684

)

42

 

278

 

6,328

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) attributable to noncontrolling interests

 

158

 

(95

)

(68

)

20

 

2

 

17

 

Income (loss) attributable to Vale’s stockholders

 

6,858

 

(229

)

(616

)

22

 

276

 

6,311

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales classified by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

America, except United States and Brazil

 

355

 

15

 

1,080

 

38

 

 

1,488

 

United States of America

 

131

 

 

671

 

 

14

 

816

 

Europe

 

1,882

 

26

 

1,637

 

83

 

 

3,628

 

Middle East/Africa/Oceania

 

634

 

71

 

35

 

 

 

740

 

Japan

 

994

 

137

 

202

 

 

 

1,333

 

China

 

8,678

 

95

 

613

 

 

 

9,386

 

Asia, except Japan and China

 

606

 

255

 

947

 

78

 

 

1,886

 

Brazil

 

1,347

 

 

69

 

1,294

 

80

 

2,790

 

Net operating revenue

 

14,627

 

599

 

5,254

 

1,493

 

94

 

22,067

 

 

 

 

Consolidated

 

 

 

Three-month period ended March 31, 2015

 

 

 

Ferrous
minerals

 

Coal

 

Base metals

 

Fertilizers

 

Others

 

Total

 

Results

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating revenue

 

11,178

 

419

 

4,957

 

1,362

 

111

 

18,027

 

Cost and expenses

 

(8,330

)

(789

)

(2,925

)

(1,105

)

(317

)

(13,466

)

Results on measurement or sales of non-current assets

 

 

 

 

 

546

 

546

 

Depreciation, depletion and amortization

 

(1,379

)

(67

)

(1,351

)

(191

)

(12

)

(3,000

)

Operating income (loss)

 

1,469

 

(437

)

681

 

66

 

328

 

2,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial result

 

(13,458

)

240

 

(272

)

(204

)

16

 

(13,678

)

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

 

 

 

 

 

55

 

55

 

Equity results in associates and joint ventures

 

(455

)

(1

)

(17

)

 

(352

)

(825

)

Income taxes

 

3,242

 

(73

)

(109

)

(398

)

(12

)

2,650

 

Net income (loss)

 

(9,202

)

(271

)

283

 

(536

)

35

 

(9,691

)

Income (loss) attributable to noncontrolling interests

 

(15

)

(33

)

(95

)

18

 

(28

)

(153

)

Income (loss) attributable to Vale’s stockholders

 

(9,187

)

(238

)

378

 

(554

)

63

 

(9,538

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales classified by geographic area:

 

 

 

 

 

 

 

 

 

 

 

 

 

America, except United States and Brazil

 

269

 

 

867

 

41

 

 

1,177

 

United States of America

 

28

 

 

684

 

 

22

 

734

 

Europe

 

1,856

 

35

 

1,254

 

82

 

 

3,227

 

Middle East/Africa/Oceania

 

859

 

99

 

115

 

9

 

 

1,082

 

Japan

 

1,171

 

83

 

417

 

 

 

1,671

 

China

 

4,792

 

 

419

 

 

 

5,211

 

Asia, except Japan and China

 

877

 

172

 

816

 

29

 

 

1,894

 

Brazil

 

1,326

 

30

 

385

 

1,201

 

89

 

3,031

 

Net operating revenue

 

11,178

 

419

 

4,957

 

1,362

 

111

 

18,027

 

 

15



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4.                                      Relevant event — Dam failure at Samarco Mineração S.A. (“Samarco”)

 

On November 5, 2015, Samarco experienced the failure of an iron ore tailings dam (Fundão) in the state of Minas Gerais - Brazil, which affected communities and ecosystems, including the Rio Doce river.

 

Following the dam failure, the state government of Minas Gerais ordered the suspension of Samarco’s operations.

 

Samarco and its shareholders, Vale and BHP Billiton Brasil Ltda. (“BHPB”), entered into a settlement agreement on March 2, 2016 with the federal Attorney General of Brazil, the two Brazilian states affected by the failure (Espírito Santo and Minas Gerais) and certain other parties. The settlement agreement, which includes no admission of civil, criminal or administrative liability for the Fundão dam failure, is expected to resolve the lawsuit brought in Brazilian courts by several Brazilian governmental authorities. The settlement agreement is already effective, though the resolution of claims pursuant to the agreement remains subject to judicial approval. There is no assurance as to whether and when the court will approve the resolution of claims.  The term of the agreement is 15 years, renewable for successive one-year periods until all obligations under the agreement have been performed.

 

Under the settlement agreement, Samarco, Vale and BHPB will establish a foundation to develop and implement remediation programs to restore the environment, local communities and the social condition of the affected areas, as well as compensation programs.

 

Samarco has agreed to provide funding to the foundation in the amount of R$2.0 billion in 2016, R$1.2 billion in 2017 and R$1.2 billion in 2018. Amounts that Samarco has already spent on remediation and compensation will be applied towards its funding obligations.  From 2019 to 2021, Samarco has agreed to provide funding based on the amounts needed to complete remaining remediation and compensation projects, subject to an annual minimum of R$800 and an annual maximum of R$1.6 billion.  The foundation will allocate an annual amount of R$240 over 15 years to the implementation of compensation programs, and these annual amounts are included in the annual contributions described above for the first six years. Through the end of 2018, the foundation will also set aside R$500 for basic sanitation in the affected areas.

 

To comply with the settlement agreement, Samarco will continue to conduct and fund the humanitarian and environmental recovery and compensation works until the foundation is operational, which is likely to occur before the end of 2016.

 

Samarco is currently unable to conduct ordinary mining and processing. Samarco’s management is working on a plan that would permit it to resume operations, but the feasibility, timing and scope of restarting remain uncertain.

 

To the extent of Samarco does not meet its funding obligations in the foundation, each of Vale and BHPB is liable, under the terms of the agreement, to provide funds to the foundation in proportion to its 50% interest in Samarco.

 

Samarco and its shareholders expect that Samarco will be able to generate all or a substantial part of the funding required under the arrangement. Therefore, Samarco’s future cash flow projections require the use of critical estimates and assumptions in their preparation, including but not limited to: (i) judicial approval of the agreement; (ii) the release of certain escrow accounts in connection with judicial proceedings in progress; (iii) the resumption of operations within a reasonable period of time; and (iv) the management of debt held by Samarco with financial institutions and bond holders.

 

Until new facts and circumstances are available and the referred uncertainties are reduced, it is not possible to estimate or reliably measure whether Vale will be required to provide the contributions to Samarco to comply with the agreement or to provide guarantees of its other obligations. Therefore, no provision was recognized in the Company´s interim financial statements as of March 31, 2016.

 

In addition, Samarco and its shareholders are named as a defendant in several other lawsuits brought by individuals, corporations and governmental entities seeking damages for personal injury, wrongful death, commercial or economic injury, breach of contract and violations of statutes. Because these pending lawsuits are at the very early stages, it is not possible to determine a range of outcomes or reliable estimates of the potential exposure at this time. Therefore, no provision has been recognized and no contingent liability has been quantified.

 

The Company will reassess each reporting period the key assumptions used in Samarco´s cash flow and any impact identified and related to this matter will be reflect in its financial statements.

 

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5.                            Assets held for sale

 

a)        Coal - Nacala logistic corridor (“Nacala”)

 

As at March 31, 2016 and December 31, 2015, assets held for sale refers to Nacala logistic corridor (“Nacala”).

 

In December 2014, the Company signed an agreement with Mitsui & Co., Ltd. (“Mitsui”) to sell 50% of its stake of 70% in the Nacala corridor. Nacala is a combination of railroad and port concessions under construction located in Mozambique and Malawi. After completion of the transaction, Vale will share control of Nacala with Mitsui and therefore will not consolidate the assets, liabilities and results of those entities. The assets and liabilities were classified as assets held for sale with no impact in the income statement. As at March 2016, completion of the transaction remains dependent upon certain conditions. The Company remains committed to its plan to sell its 50% interest.

 

 

 

March 31, 2016

 

December 31, 2015

 

Assets held for sale

 

 

 

 

 

Accounts receivable

 

30

 

13

 

Other current assets

 

431

 

522

 

Property, plant and equipments and Intangible, net

 

14,099

 

15,257

 

Total assets

 

14,560

 

15,792

 

 

 

 

 

 

 

Liabilities associated with assets held for sale

 

 

 

 

 

Suppliers and contractors

 

295

 

365

 

Other current liabilities

 

41

 

51

 

Total liabilities

 

336

 

416

 

Net assets held for sale

 

14,224

 

15,376

 

 

6.                            Acquisitions and divestitures

 

2016

 

Minas da Serra Geral S.A. (“MSG”) — In March 2016, the Company completed the purchase option on additional 50% participation at MSG which was owned by JFE Steel Corporation (“JFE”) in the amount of R$65. Vale now holds 100% of MSG’s total stockholder’s equity.

 

2015

 

Energy generation assets - In December 2013, the Company signed agreements with CEMIG Geração e Transmissão S.A. (“CEMIG GT”) to incorporate two joint ventures, Aliança Norte Participações S.A. and Aliança Geração de Energia S.A and exchange of assets and shares. The transaction was completed in the first quarter of 2015, in which Vale received cash proceeds of R$306 and recognized a gain of R$55 as result on sale or disposal of investments in associates and joint ventures and a gain of R$546 as results on measurement or sales of non-current assets.

 

7.                            Cash and cash equivalents

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

 

 

 

 

Cash and bank deposits

 

9,332

 

7,881

 

Short-term investments

 

4,129

 

6,141

 

 

 

13,461

 

14,022

 

 

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

 

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Table of Contents

 

 

8.                            Accounts receivable

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

 

 

 

 

Trade receivables

 

9,302

 

5,988

 

Provision for doubtful debts

 

(214

)

(225

)

 

 

9,088

 

5,763

 

 

 

 

 

 

 

Trade receivables related to the steel sector - %

 

76.25

%

75.32

%

 

 

 

Consolidated

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Provision for doubtful debts recorded in the income statement

 

 

 

Trade receivables write-offs recorded in the income statement

 

(1

)

 

 

Trade receivables by segments are presented in note 3(b). No individual customer represents over 10% of receivables or revenues.

 

9.                            Inventories

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

 

 

 

 

Product inventory

 

9,871

 

9,968

 

Consumable inventory

 

3,656

 

3,807

 

Total

 

13,527

 

13,775

 

 

Product inventory is stated net of provisions, as follows:

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

 

 

 

 

Product inventory, gross amount

 

11,445

 

11,991

 

Iron ore

 

(72

)

(72

)

Coal

 

(1,262

)

(1,652

)

Manganese

 

(17

)

(16

)

Nickel

 

(193

)

(275

)

Phosphate

 

(30

)

(8

)

Total

 

9,871

 

9,968

 

 

Product inventories by segments are presented in note 3(b).

 

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Table of Contents

 

 

10.                               Investments in associates and joint ventures

 

Changes in investments in associates and joint ventures are as follows:

 

 

 

Consolidated

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Balance at beginning of the period

 

11,481

 

10,978

 

Acquisitions (i)

 

 

1,819

 

Additions

 

334

 

30

 

Translation adjustment

 

(159

)

326

 

Equity results on income statement

 

589

 

(825

)

Equity results on statement of comprehensive income

 

 

(7

)

Dividends declared

 

(108

)

(76

)

Transfer to held for sale

 

 

 

(15

)

Others

 

(46

)

 

Balance at end of the period

 

12,091

 

12,230

 

 


(i) Refers to Aliança Geração transaction, see note 6.

 

In April 2016 (subsequent events), the Company announced the sale of its 26.87% interest at Thyssenkrupp Companhia Siderúrgica do Atlântico Ltd for a symbolic amount.  The transaction will result in R$339 loss on recycling the “Cumulative translation adjustments”.

 

The Company indirectly holds a 4.6% interest in Norte Energia S.A. (through Aliança Norte Energia Participações S.A.), and the Company’s investment and equity results as of March 31, 2016, are respectively R$390 and R$(6). The independent auditor’s opinion on the Norte Energia financial statements for the year ended December 31, 2015, was qualified due to an investigation related to possible breaches of law and regulation that had not been completed when the mentioned the opinion was issued. Vale believes that the auditor’s qualification has no quantitative or qualitative impact on its interim financial information as of March 31, 2016.

 

11.                     Intangibles

 

Changes in intangibles are as follows:

 

 

 

Consolidated

 

 

 

Goodwill (i)

 

Concessions (ii)

 

Right of use (ii)

 

Software (ii)

 

Total

 

Balance at December 31, 2015

 

11,544

 

7,084

 

811

 

1,350

 

20,789

 

Additions

 

 

1,421

 

3

 

6

 

1,430

 

Disposals

 

 

(2

)

 

(1

)

(3

)

Amortization

 

 

(125

)

(4

)

(145

)

(274

)

Translation adjustment

 

(530

)

 

(15

)

(6

)

(551

)

Transfers

 

 

 

(263

)

288

 

25

 

Balance at March 31, 2016

 

11,014

 

8,378

 

532

 

1,492

 

21,416

 

Cost

 

11,014

 

11,526

 

910

 

4,948

 

28,398

 

Accumulated amortization

 

 

(3,148

)

(378

)

(3,456

)

(6,982

)

 

 

11,014

 

8,378

 

532

 

1,492

 

21,416

 

 

 

 

Consolidated

 

 

 

Goodwill (i)

 

Concessions (ii)

 

Right of use (ii)

 

Software (ii)

 

Total

 

Balance at December 31, 2014

 

9,987

 

5,876

 

789

 

1,462

 

18,114

 

Additions

 

 

349

 

 

213

 

562

 

Disposals

 

 

(37

)

 

 

(37

)

Amortization

 

 

(119

)

(30

)

(125

)

(274

)

Translation adjustment

 

801

 

 

65

 

 

866

 

Acquisition of subsidiary

 

101

 

 

 

 

101

 

Balance at March 31, 2015

 

10,889

 

6,069

 

824

 

1,550

 

19,332

 

Cost

 

10,889

 

9,382

 

1,494

 

3,815

 

25,580

 

Accumulated amortization

 

 

(3,313

)

(670

)

(2,265

)

(6,248

)

 

 

10,889

 

6,069

 

824

 

1,550

 

19,332

 

 


(i) Indefinite useful life.

(ii) Finite useful life.

 

19



Table of Contents

 

 

12.                     Property, plant and equipment

 

Changes in property, plant and equipment are as follows:

 

 

 

Consolidated

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance at December 31, 2015

 

2,989

 

35,538

 

32,378

 

28,532

 

40,234

 

28,135

 

43,453

 

211,259

 

Additions (i)

 

 

 

 

 

 

 

3,406

 

3,406

 

Disposals

 

 

(2

)

(1

)

(40

)

(11

)

(33

)

(5

)

(92

)

Depreciation and amortization

 

 

(443

)

(547

)

(834

)

(690

)

(548

)

 

(3,062

)

Translation adjustment

 

(53

)

(955

)

(1,009

)

(1,205

)

(1,121

)

(474

)

(669

)

(5,486

)

Assets retirement obligations

 

 

 

 

 

147

 

 

 

147

 

Transfers

 

(14

)

887

 

186

 

895

 

367

 

126

 

(2,472

)

(25

)

Acquisition of subsidiary

 

 

1

 

 

 

 

 

 

1

 

Balance at March 31, 2016

 

2,922

 

35,026

 

31,007

 

27,348

 

38,926

 

27,206

 

43,713

 

206,148

 

Cost

 

2,922

 

52,510

 

50,074

 

46,722

 

65,023

 

40,179

 

43,713

 

301,143

 

Accumulated depreciation

 

 

(17,484

)

(19,067

)

(19,374

)

(26,097

)

(12,973

)

 

(94,995

)

 

 

2,922

 

35,026

 

31,007

 

27,348

 

38,926

 

27,206

 

43,713

 

206,148

 

 

 

 

Consolidated

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance at December 31, 2014

 

2,839

 

30,955

 

28,721

 

24,669

 

39,654

 

29,095

 

51,574

 

207,507

 

Additions (i)

 

 

 

 

 

 

 

6,019

 

6,019

 

Disposals

 

 

(14

)

(3

)

(14

)

(434

)

(18

)

(5

)

(488

)

Depreciation and amortization

 

 

(387

)

(596

)

(883

)

(624

)

(568

)

 

(3,058

)

Translation adjustment

 

93

 

1,667

 

1,162

 

2,331

 

3,378

 

2,028

 

2,667

 

13,326

 

Transfers

 

28

 

4,166

 

2,221

 

2,658

 

(1,312

)

1,166

 

(8,927

)

 

Acquisition of subsidiary

 

 

 

 

1

 

 

316

 

 

317

 

Balance at March 31, 2015

 

2,960

 

36,387

 

31,505

 

28,762

 

40,662

 

32,019

 

51,328

 

223,623

 

Cost

 

2,960

 

44,164

 

46,956

 

43,983

 

58,668

 

44,433

 

51,328

 

292,492

 

Accumulated depreciation

 

 

(7,777

)

(15,451

)

(15,221

)

(18,006

)

(12,414

)

 

(68,869

)

 

 

2,960

 

36,387

 

31,505

 

28,762

 

40,662

 

32,019

 

51,328

 

223,623

 

 


(i) Includes capitalized borrowing costs, see cash flow.

 

There are no material changes to the net book value of consolidated property, plant and equipment pledged to secure judicial claims and loans and borrowings (note 13(d)) compared to those disclosed in the financial statements as at December 31, 2015.

 

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13.                     Loans and borrowings

 

a)        Total debt

 

 

 

Consolidated

 

 

 

Current liabilities

 

Non-current liabilities

 

 

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

December 31, 2015

 

Debt contracts in the international markets

 

 

 

 

 

 

 

 

 

Floating rates in:

 

 

 

 

 

 

 

 

 

US$

 

859

 

943

 

28,795

 

20,203

 

Fixed rates in:

 

 

 

 

 

 

 

 

 

US$

 

6,858

 

4,651

 

40,628

 

50,463

 

EUR

 

 

 

6,081

 

6,376

 

Other currencies

 

59

 

56

 

638

 

659

 

Accrued charges

 

775

 

1,274

 

 

 

 

 

8,551

 

6,924

 

76,142

 

77,701

 

Debt contracts in Brazil

 

 

 

 

 

 

 

 

 

Floating rates in:

 

 

 

 

 

 

 

 

 

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

 

830

 

827

 

18,274

 

18,388

 

Basket of currencies and US$ indexed to LIBOR

 

1,114

 

1,133

 

4,497

 

5,239

 

Fixed rates in:

 

 

 

 

 

 

 

 

 

R$

 

248

 

246

 

985

 

1,047

 

Accrued charges

 

841

 

658

 

515

 

503

 

 

 

3,033

 

2,864

 

24,271

 

25,177

 

 

 

11,584

 

9,788

 

100,413

 

102,878

 

 

The future flows of debt payments (principal and interest) per nature of funding are as follows:

 

 

 

Consolidated

 

 

 

Bank loans (i)

 

Capital markets (i)

 

Development
agencies (i)

 

Debt principal (i)

 

Estimated future
payments of
interest(ii)

 

2016 

 

2,214

 

 

1,274

 

3,488

 

5,538

 

2017

 

3,395

 

4,313

 

3,861

 

11,569

 

5,627

 

2018

 

3,566

 

3,039

 

10,890

 

17,495

 

5,089

 

2019

 

4,196

 

3,559

 

2,484

 

10,239

 

4,377

 

2020

 

2,794

 

4,659

 

12,221

 

19,674

 

3,861

 

2021

 

2,701

 

299

 

1,413

 

4,413

 

3,274

 

Between 2022 and 2025

 

3,370

 

11,865

 

3,879

 

19,114

 

8,499

 

2026 onwards

 

488

 

23,083

 

303

 

23,874

 

20,667

 

 

 

22,724

 

50,817

 

36,325

 

109,866

 

56,932

 

 


(i)        Does not include accrued charges.

(ii)     Consists of estimated future payments of interest, calculated based on interest rate curves and foreign exchange rates applicable as at March 31, 2016 and considering that all amortization payments and payments at maturity on loans and borrowings will be made on their contracted payments dates. The amount includes the estimated values of future interest payments (not yet accrued), in addition to interest already recognized in the financial statements.

 

At March 31, 2016, the average annual interest rates by currency are as follows:

 

 

 

Consolidated

 

Loans and borrowings in

 

Average interest rate (i)

 

Total debt

 

US$

 

4.20

%

83,523

 

R$ (ii)

 

9.96

%

21,662

 

EUR (iii)

 

4.06

%

6,114

 

Other currencies

 

6.14

%

698

 

 

 

 

 

111,997

 

 


(i)        In order to determine the average interest rate for debt contracts with floating rates, the Company used the last renegotiated rate at March 31, 2016.

(ii)     R$ denominated debt that bears interest at IPCA, CDI, TR or TJLP, plus spread. For a total of R$15,036, the Company entered into derivative transactions to mitigate the exposure to the cash flow variations of the floating rate debt denominated in R$, resulting in an average cost of 2.21% per year in US$.

(iii)  Eurobonds, for which the Company entered into derivatives to mitigate the exposure to the cash flow variations of the debt denominated in EUR, resulting in an average cost of 4.29% per year in US$.

 

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b)        Credit and financing lines

 

 

 

Contractual

 

 

 

Period of the

 

 

 

Available amount

 

Type

 

currency

 

Date of agreement

 

agreement

 

Total amount

 

March 31, 2016

 

Credit lines

 

 

 

 

 

 

 

 

 

 

 

Revolving credit facilities

 

US$

 

May 2015

 

5 years

 

10,677

 

4,271

 

Revolving credit facilities

 

US$

 

July 2013

 

5 years

 

7,118

 

2,847

 

Financing lines

 

 

 

 

 

 

 

 

 

 

 

BNDES (i)

 

R$

 

April 2008

 

10 years

 

7,300

 

1,751

 

BNDES - CLN 150

 

R$

 

September 2012

 

10 years

 

3,883

 

21

 

BNDES - S11D e S11D Logística

 

R$

 

May 2014

 

10 years

 

6,163

 

2,847

 

 


(i)        Memorandum of understanding signature date, however term is considered from the signature date of each contract amendment. This credit line supported or supports the Usina VIII, Onça Puma, Salobo I and II and capital expenditure of Itabira projects.

 

c)         Funding

 

In January 2016, the Company drew down on R$12,065 (US$3,000) of its revolving credit facilities. The amount of R$7,239 (US$1,800) was drew down on by Vale International S.A. and R$4,826 (US$1,200) by the Parent Company.

 

d)        Guarantees

 

As at March 31, 2016 and December 31, 2015, loans and borrowings are secured by property, plant and equipment and receivables in the amount of R$1,804 and R$1,937, respectively.

 

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

 

e)         Covenants

 

Some of the Company’s debt agreements with lenders contain financial covenants. The main covenants in those agreements require maintaining certain ratios, such as debt to EBITDA (Earnings before Interest Taxes, Depreciation and Amortization) and interest coverage. The Company has not identified any instances of noncompliance as at March 31, 2016 and December 31, 2015.

 

14.                     Litigation

 

a)        Provision for litigation

 

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

 

 

 

Consolidated

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation
provision

 

Balance at December 31, 2015

 

1,052

 

309

 

1,771

 

78

 

3,210

 

Additions

 

12

 

47

 

175

 

7

 

241

 

Reversals

 

(30

)

(15

)

(66

)

(8

)

(119

)

Payments

 

(268

)

(70

)

(89

)

 

(427

)

Indexation and interest

 

23

 

94

 

13

 

4

 

134

 

Translation adjustment

 

(13

)

 

2

 

1

 

(10

)

Balance at March 31, 2016

 

776

 

365

 

1,806

 

82

 

3,029

 

 

 

 

Consolidated

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation
provision

 

Balance at December 31, 2014

 

1,088

 

311

 

1,876

 

130

 

3,405

 

Additions

 

402

 

47

 

101

 

 

550

 

Reversals

 

(496

)

(33

)

(74

)

 

(603

)

Payments

 

(9

)

7

 

(13

)

(35

)

(50

)

Indexation and interest

 

(56

)

34

 

20

 

(7

)

(9

)

Translation adjustment

 

51

 

1

 

 

141

 

193

 

Balance at March 31, 2015

 

980

 

367

 

1,910

 

229

 

3,486

 

 

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b)        Contingent liabilities

 

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

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

 

 

 

 

Tax litigation

 

22,768

 

20,796

 

Civil litigation

 

5,689

 

5,214

 

Labor litigation

 

6,434

 

7,288

 

Environmental litigation

 

5,682

 

5,393

 

Total

 

40,573

 

38,691

 

 

i - Tax litigation - The most significant claims relate to pending challenges by the Brazilian federal tax authority concerning the deductibility of Brazilian social contribution payments for income tax purposes and demands by Brazilian state tax authorities for additional payments of the value-added tax on services and circulation of goods (“ICMS”) in relation to the use of ICMS credits from sales and energy transmission. The change in the period is basically a new tax enforcement on services and circulation of goods (“ICMS”) and Tax on services of any nature (“ISS).

 

ii - Civil litigation - Most of these claim have been filed by suppliers for indemnification under construction contracts, primarily relating to certain alleged damages, payments and contractual penalties. A number of other claims involve disputed contractual terms for inflation indexation.

 

iii - Labor litigation - These line represent a very large number of individual claims by (i) employees and service providers, primarily involving demands for additional compensation for overtime work, time spent commuting or health and safety conditions; and (ii) the Brazilian federal social security administration (“INSS”) regarding contributions on compensation programs based on profits.

 

iv - Environmental litigation - The most significant claims concern alleged procedural deficiencies in licensing processes, non-compliance with existing environmental licenses or damage to the environment.

 

c)         Judicial deposits

 

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

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

 

 

 

 

Tax litigation

 

854

 

822

 

Civil litigation

 

354

 

399

 

Labor litigation

 

2,230

 

2,163

 

Environmental litigation

 

64

 

61

 

Total

 

3,502

 

3,445

 

 

d)        Others

 

i - Samarco – Vale S.A. and certain of its officers have been named as defendants in putative securities class action suits in federal court in New York brought by holders of Vale’s securities under U.S. federal securities laws. The lawsuits allege that Vale made false and misleading statements or omitted to make disclosures concerning the risks and dangers of the operations of Samarco’s Fundão dam and the adequacy of related programs and security procedures. The plaintiffs have not specified an amount of alleged damages in these actions. Vale intends to vigorously defend these actions and mount a full defense against the allegations, considering they do not represent true facts and therefore lack legal foundation. The litigation is at a very early stage. On March 7, 2016, the judge overseeing the putative securities class actions issued an order consolidating these actions and designating lead plaintiffs and counsel. The judge has given lead plaintiffs until April 29, 2016 to file a consolidated amended complaint that will serve as the operative complaint in the litigation. As a consequence of the preliminary nature of these suits, it is not possible to determine a range of outcomes or reliable estimates of the potential exposure at this time, and no provision has been recognized.

 

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

 

23



Table of Contents

 

 

15.                     Income taxes

 

a)        Deferred income tax

 

Changes in deferred tax are as follows:

 

 

 

Consolidated

 

 

 

Assets

 

Liabilities

 

Total

 

Balance at December 31, 2015

 

30,867

 

6,520

 

24,347

 

Effect in income statement

 

(2,288

)

(177

)

(2,111

)

Translation adjustment

 

(1,092

)

(154

)

(938

)

Transfers between asset and liabilities

 

350

 

350

 

 

Other comprehensive income

 

(520

)

(72

)

(448

)

Balance at March 31, 2016

 

27,317

 

6,467

 

20,850

 

 

 

 

Consolidated

 

 

 

Assets

 

Liabilities

 

Total

 

Balance at December 31, 2014

 

10,560

 

8,874

 

1,686

 

Effect in income statement

 

2,828

 

(22

)

2,850

 

Translation adjustment

 

676

 

1,244

 

(568

)

Acquisition of subsidiary

 

(31

)

 

(31

)

Other comprehensive income

 

3

 

(154

)

157

 

Balance at March 31, 2015

 

14,036

 

9,942

 

4,094

 

 

b)        Income tax reconciliation

 

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

 

 

 

Consolidated

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Net income (loss) before income taxes

 

9,731

 

(12,341

)

Income taxes at statutory rates - 34%

 

(3,309

)

4,196

 

Adjustments that affect the basis of taxes:

 

 

 

 

 

Income tax benefit from interest on stockholders’ equity

 

 

545

 

Equity results

 

214

 

(281

)

Additions of tax loss carry forward

 

209

 

 

Unrecognized tax losses of the period

 

(723

)

(1,191

)

Others

 

206

 

(619

)

Income taxes

 

(3,403

)

2,650

 

 

c)         Income taxes - Settlement program (“REFIS”)

 

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

 

At March 31, 2016, the balance of R$17,406 (R$1,383 as current and R$16,023 as non-current) is due in 151 remaining monthly installments, bearing interest at the SELIC rate.

 

24



Table of Contents

 

 

16.                               Employee benefits obligations

 

Reconciliation of assets and liabilities recognized in the balance sheet

 

 

 

Total

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
benefits

 

Overfunded
pension plans

 

Underfunded
pension plans

 

Others
benefits

 

Balance at beginning of the period

 

3,754

 

 

 

3,455

 

 

 

Interest income

 

128

 

 

 

427

 

 

 

Changes in asset ceiling and onerous liability

 

882

 

 

 

(128

)

 

 

Balance at end of the period

 

4,764

 

 

 

3,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount recognized in the balance sheet

 

 

 

 

 

 

 

 

 

 

 

 

 

Present value of actuarial liabilities

 

(9,758

)

(13,987

)

(4,676

)

(9,659

)

(14,407

)

(4,773

)

Fair value of assets

 

14,522

 

11,447

 

 

13,413

 

12,083

 

 

Effect of the asset ceiling

 

(4,764

)

 

 

(3,754

)

 

 

Liabilities

 

 

(2,540

)

(4,676

)

 

(2,324

)

(4,773

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

(70

)

(183

)

 

(67

)

(199

)

Non-current liabilities

 

 

(2,470

)

(4,493

)

 

(2,257

)

(4,574

)

Liabilities

 

 

(2,540

)

(4,676

)

 

(2,324

)

(4,773

)

 

17.                     Financial instruments classification

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

Loans and
receivables
or amortized
cost

 

At fair value
through net
income

 

Total

 

Loans and
receivables
or amortized
cost

 

At fair value
through net
income

 

Derivatives
designated as
hedge
accounting

 

Total

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

13,461

 

 

13,461

 

14,022

 

 

 

14,022

 

Financial investments

 

97

 

 

97

 

109

 

 

 

109

 

Derivative financial instruments

 

 

500

 

500

 

 

474

 

 

474

 

Accounts receivable

 

9,088

 

 

9,088

 

5,763

 

 

 

5,763

 

Related parties

 

356

 

 

356

 

273

 

 

 

273

 

 

 

23,002

 

500

 

23,502

 

20,167

 

474

 

 

20,641

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

605

 

605

 

 

363

 

 

363

 

Loans

 

691

 

 

691

 

732

 

 

 

732

 

Related parties

 

 

 

 

5

 

 

 

5

 

 

 

691

 

605

 

1,296

 

737

 

363

 

 

1,100

 

Total of financial assets

 

23,693

 

1,105

 

24,798

 

20,904

 

837

 

 

21,741

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Suppliers and contractors

 

11,200

 

 

11,200

 

13,140

 

 

 

13,140

 

Derivative financial instruments

 

 

5,798

 

5,798

 

 

7,909

 

198

 

8,107

 

Loans and borrowings

 

11,584

 

 

11,584

 

9,788

 

 

 

9,788

 

Related parties

 

2,604

 

 

2,604

 

1,856

 

 

 

1,856

 

 

 

25,388

 

5,798

 

31,186

 

24,784

 

7,909

 

198

 

32,891

 

Non-current

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

4,359

 

4,359

 

 

5,581

 

 

5,581

 

Loans and borrowings

 

100,413

 

 

100,413

 

102,878

 

 

 

102,878

 

Related parties

 

438

 

 

438

 

830

 

 

 

830

 

Participative stockholders’ debentures

 

 

1,787

 

1,787

 

 

1,336

 

 

1,336

 

Others (i)

 

 

599

 

599

 

 

551

 

 

551

 

 

 

100,851

 

6,745

 

107,596

 

103,708

 

7,468

 

 

111,176

 

Total of financial liabilities

 

126,239

 

12,543

 

138,782

 

128,492

 

15,377

 

198

 

144,067

 

 


(i) See note 18(a).

 

25



Table of Contents

 

 

18.                               Fair value estimate

 

a)        Assets and liabilities measured and recognized at fair value:

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

Level 2

 

Level 3

 

Total

 

Level 2

 

Level 3

 

Total

 

Financial assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

1,105

 

 

1,105

 

837

 

 

837

 

Total

 

1,105

 

 

1,105

 

837

 

 

837

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments

 

10,157

 

 

10,157

 

13,688

 

 

13,688

 

Participative stockholders’ debentures

 

1,787

 

 

1,787

 

1,336

 

 

1,336

 

Others (minimum return instrument)

 

 

599

 

599

 

 

551

 

551

 

Total

 

11,944

 

599

 

12,543

 

15,024

 

551

 

15,575

 

 

There are no changes in the methods and techniques of evaluation of instruments disclosed above in the financial statements as at December 31, 2015.

 

b)        Fair value of financial instruments not measured at fair value

 

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

 

 

 

Consolidated

 

Financial liabilities

 

Balance

 

Fair value

 

Level 1

 

Level 2

 

March 31, 2016

 

 

 

 

 

 

 

 

 

Debt principal

 

109,866

 

101,444

 

43,831

 

57,613

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

 

 

 

 

 

 

 

 

Debt principal

 

110,231

 

102,434

 

48,017

 

54,417

 

 

19.                               Derivative financial instruments

 

a)        Derivatives effects on balance sheet

 

 

 

Consolidated

 

 

 

Assets

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

Current

 

Non-current

 

Current

 

Non-current

 

Derivatives designated as economic hedge

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

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

 

349

 

95

 

269

 

 

IPCA swap

 

14

 

206

 

7

 

64

 

Eurobonds swap

 

9

 

 

 

 

Pré-dolar swap

 

4

 

 

 

 

 

 

376

 

301

 

276

 

64

 

Commodities price risk

 

 

 

 

 

 

 

 

 

Nickel

 

124

 

27

 

198

 

41

 

 

 

124

 

27

 

198

 

41

 

 

 

 

 

 

 

 

 

 

 

Others

 

 

277

 

 

258

 

 

 

 

277

 

 

258

 

Total

 

500

 

605

 

474

 

363

 

 

26



Table of Contents

 

 

 

 

Consolidated

 

 

 

Liabilities

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

Current

 

Non-current

 

Current

 

Non-current

 

Derivatives designated as economic hedge

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

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

 

2,815

 

3,357

 

3,119

 

4,419

 

IPCA swap

 

78

 

386

 

82

 

393

 

Eurobonds swap

 

20

 

49

 

572

 

111

 

Pre dollar swap

 

86

 

161

 

364

 

280

 

 

 

2,999

 

3,953

 

4,137

 

5,203

 

Commodities price risk

 

 

 

 

 

 

 

 

 

Nickel

 

107

 

27

 

153

 

42

 

Bunker oil

 

2,692

 

 

3,609

 

 

 

 

2,799

 

27

 

3,762

 

42

 

 

 

 

 

 

 

 

 

 

 

Others

 

 

379

 

 

336

 

 

 

 

379

 

 

336

 

Derivatives designated as cash flow hedge accounting

 

 

 

 

 

 

 

 

 

Bunker oil

 

 

 

198

 

 

Foreign exchange

 

 

 

10

 

 

 

 

 

 

208

 

 

Total

 

5,798

 

4,359

 

8,107

 

5,581

 

 

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

 

 

 

Consolidated

 

 

 

Three-month period ended March 31

 

 

 

Gain (loss) recognized in the
income statement

 

Financial settlement
inflows(outflows)

 

Gain(loss) recognized in other
comprehensive income

 

 

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

 

Derivatives designated as economic hedge

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange and interest rate risk

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

1,312

 

(2,893

)

(175

)

(915

)

 

 

IPCA swap

 

140

 

(224

)

5

 

11

 

 

 

Eurobonds swap

 

49

 

(426

)

(524

)

 

 

 

 

Pre dollar swap

 

107

 

(272

)

(295

)

(6

)

 

 

 

 

1,608

 

(3,815

)

(989

)

(910

)

 

 

Commodities price risk

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel

 

(94

)

(23

)

(69

)

(46

)

 

 

Bunker oil

 

(60

)

(151

)

(705

)

(412

)

 

 

 

 

(154

)

(174

)

(774

)

(458

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Others

 

(18

)

(18

)

 

 

 

 

 

 

(18

)

(18

)

 

 

 

 

Derivatives designated as cash flow hedge accounting

 

 

 

 

 

 

 

 

 

 

 

 

 

Bunker oil

 

 

(343

)

(203

)

(376

)

 

308

 

Foreign exchange

 

(10

)

(41

)

(10

)

(41

)

8

 

(1

)

 

 

(10

)

(384

)

(213

)

(417

)

8

 

307

 

Total

 

1,426

 

(4,391

)

(1,976

)

(1,785

)

8

 

307

 

 

Related to the effects of derivatives in the Income statements,  the Company recognized as costs of goods sold and financial results the amounts of R$343 and R$4,048, respectively, for the 1st quarter of 2015. In 2016, all derivatives impacts were charged to financial results.

 

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

 

 

 

Maturity dates

 

Currencies and interest rates

 

July 2023

 

Bunker oil

 

December 2016

 

Nickel

 

June 2018

 

Others

 

December 2027

 

 

27



Table of Contents

 

 

Additional information about derivatives financial instruments

 

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

 

There was no cash amount deposited as margin call regarding derivative positions on March 31, 2016. The derivative positions described in this document did not have initial costs associated.

 

The following tables detail the derivatives positions for Vale and its controlled companies as of March 31, 2016, with the following information: notional amount, fair value including credit risk, gains or losses in the period, value at risk and the fair value breakdown by year of maturity.

 

a)                           Foreign exchange and interest rates derivative positions

 

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

 

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

 

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

 

 

 

Notional

 

 

 

 

 

Fair value

 

Financial settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Index

 

Average rate

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2016

 

2017

 

2018

 

2019+

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CDI vs. US$ fixed rate swap

 

 

 

 

 

(2,423

)

(3,059

)

(295

)

154

 

(1,567

)

(111

)

(746

)

 

Receivable

 

R$

5,739

 

R$

5,239

 

CDI

 

107.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

2,399

 

US$

2,288

 

Fix

 

3.46

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TJLP vs. US$ fixed rate swap

 

 

 

 

 

(3,101

)

(3,965

)

(253

)

253

 

(572

)

(899

)

(444

)

(1,187

)

Receivable

 

R$

5,180

 

R$

5,484

 

TJLP +

 

1.31

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

2,486

 

US$

2,611

 

Fix

 

1.69

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TJLP vs. US$ floating rate swap

 

 

 

 

 

(204

)

(245

)

(2

)

16

 

(9

)

(15

)

(18

)

(161

)

Receivable

 

R$

32

 

R$

267

 

TJLP +

 

0.92

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

155

 

US$

156

 

Libor +

 

-1.21

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

R$ fixed rate vs. US$ fixed rate swap

 

 

 

 

 

(243

)

(644

)

81

 

75

 

(76

)

(25

)

23

 

(164

)

Receivable

 

R$

1,139

 

R$

1,356

 

Fix

 

7.32

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

398

 

US$

528

 

Fix

 

-0.83

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IPCA vs. US$ fixed rate swap

 

 

 

 

 

(299

)

(411

)

5

 

39

 

 

12

 

8

 

(319

)

Receivable

 

R$

1,000

 

R$

1,000

 

IPCA +

 

6.55

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

434

 

US$

434

 

Fix

 

3.98

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IPCA vs. CDI swap

 

 

 

 

 

55

 

6

 

 

1

 

(76

)

(58

)

(45

)

235

 

Receivable

 

R$

1,350

 

R$

1,350

 

IPCA +

 

6.62

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

1,350

 

US$

1,350

 

CDI

 

98.58

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(ii)   Protection program for EUR denominated debt instruments

 

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

 

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

 

28



Table of Contents

 

 

 

 

Notional

 

 

 

 

 

Fair value

 

Financial settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Index

 

Average rate

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2016

 

2017

 

2018

 

2019+

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EUR fixed rate vs. US$ fixed rate swap

 

 

 

 

 

(69

)

(683

)

(524

)

64

 

 

(17)

 

(15

)

(37

)

Receivable

 

500

 

1,000

 

Fix

 

3.75

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payable

 

US$

613

 

US$

1,302

 

Fix

 

4.29

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notional

 

Bought /

 

Average rate

 

Fair value

 

Financial settlement
Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Sold

 

(USD/EUR)

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2016

 

2017

 

Forward

 

500

 

 

B

 

1.143

 

9

 

 

 

22.9

 

 

9

 

 

(iii)                            Foreign exchange hedging program for disbursements in CAD

 

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

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial settlement

 

 

 

Fair value

 

 

 

Notional 

 

Bought /

 

Average rate

 

Fair value

 

Inflows (Outflows)

 

Value at Risk

 

by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Sold

 

(CAD / USD)

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forward

 

 

CAD 10

 

B

 

1.028

 

 

(10

)

 

 

 

 

b)                           Commodities derivative positions

 

(i)       Bunker Oil purchase cash flows protection program

 

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

 

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

 

 

 

 

 

 

 

 

 

 

 

Financial Settlement

 

 

 

Fair value

 

 

 

Notional (ton)

 

Bought /

 

Average strike

 

Fair value

 

Inflows (Outflows)

 

Value at Risk

 

by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Sold

 

(US$/ton)

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bunker Oil protection

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Forwards

 

1,410,000

 

1,867,500

 

B

 

513

 

(1,586

)

(2,252

)

(577

)

40

 

(1,586

)

Call options

 

1,507,500

 

2,041,500

 

B

 

383

 

0.6

 

0.1

 

 

0.2

 

0.6

 

Put options

 

1,507,500

 

2,041,500

 

S

 

308

 

(707

)

(1,158

)

(363

)

39

 

(707

)

Total

 

 

 

 

 

 

 

 

 

(2,292

)

(3,410

)

 

 

 

 

(2,292

)

 

As at March 31, 2016 and December 31, 2015, excludes R$400 and R$397, respectively, of transactions in which the financial settlement occurs subsequently of the closing month.

 

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

 

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

 

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

 

29



Table of Contents

 

 

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

 

 

 

Notional (ton)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement

Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Sold

 

(US$/ton)

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2016

 

2017

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed prices sales protection

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel forwards

 

16,102

 

16,917

 

B

 

10,892

 

(126

)

(180

)

(70

)

17

 

(87

)

(39

)

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Raw materials purchase protection

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nickel forwards

 

90

 

118

 

S

 

8,486

 

0.0

 

0.4

 

0.5

 

0.1

 

0.0

 

 

 

Copper forwards

 

398

 

385

 

S

 

4,598

 

(0.3

)

0.4

 

0.5

 

0.1

 

(0.3

)

 

 

Total

 

 

 

 

 

 

 

 

 

(0.3

)

0.7

 

 

 

 

 

(0.3

)

 

 

 

Silver Wheaton Corp. warrants

 

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

 

 

 

Notional (quantity)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement

Inflows (Outflows)

 

Value at Risk

 

Fair value
by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Sold

 

(US$/share)

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2023

 

Call options

 

10,000,000

 

10,000,000

 

B

 

65

 

54

 

28

 

 

6

 

54

 

 

c)                            Call options from debentures

 

The company has debentures in which lenders have call options of a specified quantity of Ferrovia Norte Sul ordinary shares, later changed to VLI SA shares. The call option’s strike price is given by the debentures’ remaining notional in each exercise date.

 

 

 

Notional (quantity)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement

Inflows (Outflows)

 

Value at Risk

 

Fair value
by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Sold

 

(R$/share)

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2027

 

Call options

 

140,239

 

140,239

 

S

 

8,570

 

(137

)

(152

)

 

8

 

(137

)

 

d)                           Options related to Minerações Brasileiras Reunidas S.A. (“MBR”) shares

 

The Company entered into a contract that has options related to MBR shares. Under certain restrict and contingent conditions, which are beyond the buyer’s control, the contract has a clause that gives the buyer the right to sell back its stake to the Company. It this case, the Company could settle through cash or shares. On the other hand, the Company has the right to buy back this non-controlling interest in the subsidiary.

 

 

 

Notional (quantity, in million)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement

Inflows (Outflows)

 

Value at Risk

 

Fair value
by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Sold

 

(R$/ação)

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2016+

 

Options

 

2,139

 

2,139

 

B/S

 

1.8

 

(14

)

57

 

 

25

 

(14

)

 

e)                            Embedded derivatives in commercial contracts

 

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

 

 

 

Notional (ton)

 

Bought /

 

Average strike

 

Fair value

 

Financial Settlement

Inflows (Outflows)

 

Value at Risk

 

Fair value
by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Sold

 

(US$/ton)

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2016

 

Nickel Forward

 

5,799

 

3,877

 

S

 

8,543

 

(0.9

)

11.7

 

 

 

 

 

(0.9

)

Copper Forward

 

4,325

 

5,939

 

S

 

4,653

 

(1.3

)

7.7

 

 

 

 

 

(1.3

)

Total

 

 

 

 

 

 

 

 

 

(2.2

)

19.4

 

 

7.6

 

(2.2

)

 

30



Table of Contents

 

 

The Company has also a natural gas purchase agreement in which there´s a clause that defines that a premium can be charged if the Company’s pellet sales prices trade above a pre-defined level. This clause is considered an embedded derivative.

 

 

 

Notional (volume/month)

 

Bought/

 

Average strike

 

Fair value

 

Financial Settlement

Inflows (Outflows)

 

Value at Risk

 

Fair value by year

 

Flow

 

March 31, 2016

 

December 31, 2015

 

Sold

 

(US$/ton)

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

March 31, 2016

 

2016

 

2017

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Call options

 

746,667

 

746,667

 

S

 

179

 

(4.8

)

 

 

3.1

 

(0.0

)

(0.0

)

(4.8

)

 

f)                             Sensitivity analysis of derivative financial instruments

 

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

 

-     Scenario I: fair value calculation considering market prices as of March 31, 2016

-     Scenario II: fair value estimated considering a 25% deterioration in the associated risk variables

-     Scenario III: fair value estimated considering a 50% deterioration in the associated risk variables

 

Instrument

 

Instrument’s main risk events

 

Scenario I

 

Scenario II

 

Scenario III

 

 

 

 

 

 

 

 

 

 

 

CDI vs. US$ fixed rate swap

 

R$ depreciation

 

(2,424

)

(4,603

)

(6,781

)

 

 

US$ interest rate inside Brazil decrease

 

(2,424

)

(2,481

)

(2,538

)

 

 

Brazilian interest rate increase

 

(2,424

)

(2,435

)

(2,446

)

Protected item: R$ denominated debt

 

R$ depreciation

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

TJLP vs. US$ fixed rate swap

 

R$ depreciation

 

(3,102

)

(5,243

)

(7,384

)

 

 

US$ interest rate inside Brazil decrease

 

(3,102

)

(3,238

)

(3,382

)

 

 

Brazilian interest rate increase

 

(3,102

)

(3,368

)

(3,606

)

 

 

TJLP interest rate decrease

 

(3,102

)

(3,266

)

(3,439

)

Protected item: R$ denominated debt

 

R$ depreciation

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

TJLP vs. US$ floating rate swap

 

R$ depreciation

 

(204

)

(328

)

(453

)

 

 

US$ interest rate inside Brazil decrease

 

(204

)

(215

)

(228

)

 

 

Brazilian interest rate increase

 

(204

)

(221

)

(237

)

 

 

TJLP interest rate decrease

 

(204

)

(215

)

(226

)

Protected item: R$ denominated debt

 

R$ depreciation

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

R$ fixed rate vs. US$ fixed rate swap

 

R$ depreciation

 

(242

)

(603

)

(963

)

 

 

US$ interest rate inside Brazil decrease

 

(242

)

(294

)

(350

)

 

 

Brazilian interest rate increase

 

(242

)

(352

)

(444

)

Protected item: R$ denominated debt

 

R$ depreciation

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

IPCA vs. US$ fixed rate swap

 

R$ depreciation

 

(300

)

(710

)

(1,119

)

 

 

US$ interest rate inside Brazil decrease

 

(300

)

(332

)

(366

)

 

 

Brazilian interest rate increase

 

(300

)

(419

)

(522

)

 

 

IPCA index decrease

 

(300

)

(366

)

(429

)

Protected item: R$ denominated debt

 

R$ depreciation

 

n.a.

 

 

 

 

 

 

 

 

 

 

 

 

 

IPCA vs. CDI swap

 

Brazilian interest rate increase

 

55

 

(126

)

(277

)

 

 

IPCA index decrease

 

55

 

(46

)

(141

)

Protected item: R$ denominated debt linked to IPCA

 

IPCA index decrease

 

n.a.

 

46

 

141

 

 

 

 

 

 

 

 

 

 

 

EUR fixed rate vs. US$ fixed rate swap

 

EUR depreciation

 

(68

)

(699

)

(1,331

)

 

 

Euribor increase

 

(68

)

(90

)

(112

)

 

 

US$ Libor decrease

 

(68

)

(121

)

(177

)

Protected item: EUR denominated debt

 

EUR depreciation

 

n.a.

 

699

 

1,331

 

 

 

 

 

 

 

 

 

 

 

EUR Forward

 

EUR depreciation

 

9

 

(498

)

(1,005

)

 

 

Euribor increase

 

9

 

6

 

3

 

 

 

US$ Libor decrease

 

9

 

5

 

1

 

Protected item: EUR denominated debt

 

EUR depreciation

 

n.a.

 

498

 

1,005

 

 

31



Table of Contents

 

 

Instrument

 

Instrument’s main risk events

 

Scenario I

 

Scenario II

 

Scenario III

 

Bunker Oil protection

 

 

 

 

 

 

 

 

 

Forwards and options

 

Bunker Oil price decrease

 

(2,292

)

(2,748

)

(3,207

)

Protected item: Part of costs linked to bunker oil prices

 

Bunker Oil price decrease

 

n.a.

 

2,748

 

3,207

 

 

 

 

 

 

 

 

 

 

 

Nickel sales fixed price protection

 

 

 

 

 

 

 

 

 

Forwards

 

Nickel price decrease

 

(126

)

(247

)

(369

)

Protected item: Part of nickel revenues with fixed prices

 

Nickel price fluctuation

 

n.a.

 

247

 

369

 

 

 

 

 

 

 

 

 

 

 

Purchase protection program

 

 

 

 

 

 

 

 

 

Nickel forwards

 

Nickel price increase

 

0.0

 

(0.7

)

(1.4

)

Protected item: Part of costs linked to nickel prices

 

Nickel price increase

 

n.a.

 

0.7

 

1.4

 

 

 

 

 

 

 

 

 

 

 

Copper forwards

 

Copper price increase

 

(0.3

)

(2.0

)

(3.7

)

Protected item: Part of costs linked to copper prices

 

Copper price increase

 

n.a.

 

2.0

 

3.7

 

 

 

 

 

 

 

 

 

 

 

SLW warrants

 

SLW stock price decrease

 

53

 

23

 

3

 

 

 

 

 

 

 

 

 

 

 

VLI call options

 

VLI stock value increase

 

(136

)

(221

)

(306

)

 

 

 

 

 

 

 

 

 

 

Options regarding non-controlling interest in subsidiary

 

Subsidiary stock value increase

 

19

 

(169

)

(266

)

 

Instrument

 

Main risks

 

Scenario I

 

Scenario II

 

Scenario III

 

Embedded derivatives - Raw material purchase (nickel)

 

Nickel price increase

 

(1

)

(46

)

(91

)

Embedded derivatives - Raw material purchase (copper)

 

Copper price increase

 

(1

)

(20

)

(39

)

Embedded derivatives - Gas purchase

 

Pellet price increase

 

(5

)

(10

)

(17

)

 

g)                           Financial counterparties’ ratings

 

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

 

The table below presents the ratings in foreign currency published by agencies Moody’s and S&P regarding the main financial institutions that we had outstanding positions as of March 31, 2016.

 

Long term ratings by counterparty

 

Moody’s

 

S&P

ANZ Australia and New Zealand Banking

 

Aa2

 

AA-

Banco Bradesco

 

Ba3

 

BB

Banco de Credito del Peru

 

Baa1

 

BBB

Banco do Brasil

 

Ba3

 

BB

Banco do Nordeste

 

Ba3

 

BB

Banco Safra

 

Ba3

 

BB

Banco Santander

 

Ba3

 

BB

Banco Votorantim

 

Ba3

 

BB

Bank of America

 

Baa1

 

BBB+

Bank of Nova Scotia

 

Aa3

 

A+

Bank of Tokyo Mitsubishi UFJ

 

A1

 

A

Banpara

 

Ba3

 

BB-

Barclays

 

Baa3

 

BBB

BBVA

 

A3

 

BBB+

BNP Paribas

 

A1

 

A

BTG Pactual

 

Ba3

 

B+

Caixa Economica Federal

 

Ba3

 

BB

Citigroup

 

Baa1

 

BBB+

Credit Agricole

 

A2

 

A

Deutsche Bank

 

A2

 

BBB+

Goldman Sachs

 

A3

 

BBB+

HSBC

 

A1

 

A

Intesa Sanpaolo Spa

 

A3

 

BBB-

Itau Unibanco

 

Ba3

 

BB

JP Morgan Chase & Co

 

A3

 

A-

Macquarie Group Ltd

 

A3

 

BBB

Morgan Stanley

 

A3

 

BBB+

National Australia Bank NAB

 

Aa2

 

AA-

Royal Bank of Canada

 

Aa3

 

AA-

Societe Generale

 

A2

 

A

Standard Bank Group

 

Baa3

 

Standard Chartered

 

A1

 

BBB+

 

h)                                     Market curves

 

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

 

32



Table of Contents

 

 

(i)       Products

 

Nickel

Maturity

 

Price (US$/ton)

 

Maturity

 

Price (US$/ton)

 

Maturity

 

Price (US$/ton)

 

SPOT

 

8,280

 

SEP16

 

8,531

 

MAR17

 

8,595

 

APR16

 

8,462

 

OCT16

 

8,543

 

MAR18

 

8,711

 

MAY16

 

8,476

 

NOV16

 

8,556

 

MAR19

 

8,813

 

JUN16

 

8,490

 

DEC16

 

8,567

 

MAR20

 

8,899

 

JUL16

 

8,503

 

JAN17

 

8,577

 

 

 

 

 

AUG16

 

8,519

 

FEB17

 

8,586

 

 

 

 

 

 

Copper

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Price (US$/lb)

 

Maturity

 

Price (US$/lb)

 

Maturity

 

Price (US$/lb)

 

SPOT

 

2.19

 

SEP16

 

2.19

 

MAR17

 

2.19

 

APR16

 

2.21

 

OCT16

 

2.19

 

MAR18

 

2.19

 

MAY16

 

2.20

 

NOV16

 

2.19

 

MAR19

 

2.19

 

JUN16

 

2.20

 

DEC16

 

2.19

 

MAR20

 

2.19

 

JUL16

 

2.20

 

JAN17

 

2.19

 

 

 

 

 

AUG16

 

2.20

 

FEB17

 

2.19

 

 

 

 

 

 

Bunker Oil

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Price (US$/ton)

 

Maturity

 

Price (US$/ton)

 

Maturity

 

Price (US$/ton)

 

SPOT

 

172

 

SEP16

 

192

 

MAR17

 

210

 

APR16

 

175

 

OCT16

 

195

 

MAR18

 

236

 

MAY16

 

178

 

NOV16

 

198

 

MAR19

 

274

 

JUN16

 

180

 

DEC16

 

201

 

MAR20

 

322

 

JUL16

 

184

 

JAN17

 

205

 

 

 

 

 

AUG16

 

188

 

FEB17

 

208

 

 

 

 

 

 

(ii)   Foreign exchange and interest rates

 

US$-Brazil Interest Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

05/02/16

 

3.73

 

03/01/17

 

3.25

 

07/01/19

 

3.34

 

06/01/16

 

3.65

 

04/03/17

 

3.23

 

10/01/19

 

3.37

 

07/01/16

 

3.41

 

07/03/17

 

3.26

 

01/02/20

 

3.45

 

08/01/16

 

3.35

 

10/02/17

 

3.22

 

04/01/20

 

3.52

 

09/01/16

 

3.20

 

01/02/18

 

3.20

 

07/01/20

 

3.65

 

10/03/16

 

3.12

 

04/02/18

 

3.17

 

10/01/20

 

3.86

 

11/01/16

 

3.11

 

07/02/18

 

3.19

 

01/04/21

 

4.01

 

12/01/16

 

3.11

 

10/01/18

 

3.21

 

07/01/21

 

4.09

 

01/02/17

 

3.20

 

01/02/19

 

3.23

 

01/03/22

 

4.36

 

02/01/17

 

3.24

 

04/01/19

 

3.29

 

01/02/23

 

4.81

 

 

US$ Interest Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

1M

 

0.44

 

6M

 

0.71

 

11M

 

0.75

 

2M

 

0.52

 

7M

 

0.72

 

12M

 

0.75

 

3M

 

0.63

 

8M

 

0.73

 

2Y

 

0.86

 

4M

 

0.67

 

9M

 

0.74

 

3Y

 

0.98

 

5M

 

0.69

 

10M

 

0.74

 

4Y

 

1.11

 

 

TJLP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

05/02/16

 

7.50

 

03/01/17

 

7.50

 

07/01/19

 

7.50

 

06/01/16

 

7.50

 

04/03/17

 

7.50

 

10/01/19

 

7.50

 

07/01/16

 

7.50

 

07/03/17

 

7.50

 

01/02/20

 

7.50

 

08/01/16

 

7.50

 

10/02/17

 

7.50

 

04/01/20

 

7.50

 

09/01/16

 

7.50

 

01/02/18

 

7.50

 

07/01/20

 

7.50

 

10/03/16

 

7.50

 

04/02/18

 

7.50

 

10/01/20

 

7.50

 

11/01/16

 

7.50

 

07/02/18

 

7.50

 

01/04/21

 

7.50

 

12/01/16

 

7.50

 

10/01/18

 

7.50

 

07/01/21

 

7.50

 

01/02/17

 

7.50

 

01/02/19

 

7.50

 

01/03/22

 

7.50

 

02/01/17

 

7.50

 

04/01/19

 

7.50

 

01/02/23

 

7.50

 

 

33



Table of Contents

 

 

BRL Interest Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

05/02/16

 

14.14

 

03/01/17

 

13.83

 

07/01/19

 

13.92

 

06/01/16

 

14.12

 

04/03/17

 

13.80

 

10/01/19

 

13.93

 

07/01/16

 

14.10

 

07/03/17

 

13.77

 

01/02/20

 

13.93

 

08/01/16

 

14.06

 

10/02/17

 

13.73

 

04/01/20

 

13.92

 

09/01/16

 

14.06

 

01/02/18

 

13.72

 

07/01/20

 

13.91

 

10/03/16

 

14.03

 

04/02/18

 

13.78

 

10/01/20

 

13.90

 

11/01/16

 

13.97

 

07/02/18

 

13.80

 

01/04/21

 

13.91

 

12/01/16

 

13.92

 

10/01/18

 

13.83

 

07/01/21

 

13.93

 

01/02/17

 

13.88

 

01/02/19

 

13.86

 

01/03/22

 

13.94

 

02/01/17

 

13.85

 

04/01/19

 

13.89

 

01/02/23

 

14.05

 

 

Implicit Inflation (IPCA)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

05/02/16

 

7.43

 

03/01/17

 

7.13

 

07/01/19

 

6.92

 

06/01/16

 

7.41

 

04/03/17

 

7.11

 

10/01/19

 

6.92

 

07/01/16

 

7.39

 

07/03/17

 

7.02

 

01/02/20

 

6.92

 

08/01/16

 

7.36

 

10/02/17

 

6.93

 

04/01/20

 

6.90

 

09/01/16

 

7.36

 

01/02/18

 

6.87

 

07/01/20

 

6.89

 

10/03/16

 

7.32

 

04/02/18

 

6.89

 

10/01/20

 

6.88

 

11/01/16

 

7.27

 

07/02/18

 

6.88

 

01/04/21

 

6.89

 

12/01/16

 

7.23

 

10/01/18

 

6.89

 

07/01/21

 

6.90

 

01/02/17

 

7.19

 

01/02/19

 

6.89

 

01/03/22

 

6.92

 

02/01/17

 

7.16

 

04/01/19

 

6.91

 

01/02/23

 

7.03

 

 

EUR Interest Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

1M

 

-0.33

 

6M

 

-0.18

 

11M

 

-0.15

 

2M

 

-0.28

 

7M

 

-0.17

 

12M

 

-0.15

 

3M

 

-0.25

 

8M

 

-0.16

 

2Y

 

-0.04

 

4M

 

-0.22

 

9M

 

-0.16

 

3Y

 

0.00

 

5M

 

-0.19

 

10M

 

-0.15

 

4Y

 

0.02

 

 

CAD Interest Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

Maturity

 

Rate (% p.a.)

 

1M

 

0.90

 

6M

 

1.01

 

11M

 

0.89

 

2M

 

0.90

 

7M

 

0.97

 

12M

 

0.88

 

3M

 

0.90

 

8M

 

0.95

 

2Y

 

0.89

 

4M

 

0.95

 

9M

 

0.92

 

3Y

 

0.91

 

5M

 

0.99

 

10M

 

0.91

 

4Y

 

0.95

 

 

Currencies - Ending rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CAD/US$

 

0.7709

 

US$/BRL

 

3.5589

 

EUR/US$

 

1.1380

 

 

34



Table of Contents

 

 

20.          Stockholders’ equity

 

a)   Share capital

 

At March 31, 2016 and December 31, 2015, the share capital was R$77,300 corresponding to 5,244,316,120 shares issued and fully paid without par value.

 

 

 

March 31, 2016

 

 

 

ON

 

PNA

 

Total

 

Stockholders

 

 

 

 

 

 

 

Valepar S.A.

 

1,716,435,045

 

20,340,000

 

1,736,775,045

 

Brazilian Government (Golden Share)

 

 

12

 

12

 

Foreign investors - ADRs

 

794,340,784

 

664,290,644

 

1,458,631,428

 

FMP - FGTS

 

78,297,758

 

 

78,297,758

 

PIBB - BNDES

 

1,186,115

 

1,098,260

 

2,284,375

 

BNDESPar

 

206,378,882

 

66,185,272

 

272,564,154

 

Foreign institutional investors in local market

 

277,441,505

 

710,319,270

 

987,760,775

 

Institutional investors

 

75,906,803

 

121,112,309

 

197,019,112

 

Retail investors in Brazil

 

35,666,108

 

384,376,159

 

420,042,267

 

Shares outstanding

 

3,185,653,000

 

1,967,721,926

 

5,153,374,926

 

Shares in treasury

 

31,535,402

 

59,405,792

 

90,941,194

 

Total issued shares

 

3,217,188,402

 

2,027,127,718

 

5,244,316,120

 

 

 

 

 

 

 

 

 

Amounts per class of shares (in millions)

 

47,421

 

29,879

 

77,300

 

 

 

 

 

 

 

 

 

Total authorized shares

 

7,200,000,000

 

3,600,000,000

 

10,800,000,000

 

 

b)   Basic and diluted earnings per share

 

Basic and diluted earnings per share are as follows:

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Net income (loss) attributable to Vale’s stockholders

 

6,311

 

(9,538

)

 

 

 

 

 

 

Basic and diluted earnings per share:

 

 

 

 

 

Income (loss) available to preferred stockholders

 

2,410

 

(3,642

)

Income (loss) available to common stockholders

 

3,901

 

(5,896

)

Total

 

6,311

 

(9,538

)

 

 

 

 

 

 

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

 

1,967,722

 

1,967,722

 

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

 

3,185,653

 

3,185,653

 

Total

 

5,153,375

 

5,153,375

 

 

 

 

 

 

 

Basic and diluted earnings per share

 

 

 

 

 

Preferred share

 

1.22

 

(1.85

)

Common share

 

1.22

 

(1.85

)

 

35



Table of Contents

 

 

21.          Costs and expenses by nature

 

a)   Cost of goods sold and services rendered

 

 

 

Consolidated

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Personnel

 

1,945

 

1,521

 

Material and service

 

3,074

 

2,776

 

Fuel oil and gas

 

1,193

 

886

 

Maintenance

 

2,420

 

1,909

 

Energy

 

635

 

414

 

Acquisition of products

 

326

 

704

 

Depreciation and depletion

 

3,159

 

2,653

 

Freight

 

1,920

 

2,269

 

Others

 

1,795

 

1,856

 

Total

 

16,467

 

14,988

 

 

 

 

 

 

 

Cost of goods sold

 

16,051

 

14,568

 

Cost of services rendered

 

416

 

420

 

Total

 

16,467

 

14,988

 

 

b)   Selling and administrative expenses

 

 

 

Consolidated

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Personnel

 

199

 

239

 

Services (consulting, infrastructure and others)

 

61

 

81

 

Advertising and publicity

 

3

 

8

 

Depreciation and amortization

 

89

 

82

 

Travel expenses

 

6

 

8

 

Taxes and rents

 

15

 

17

 

Others

 

92

 

120

 

Total

 

465

 

555

 

 

c)   Others operational expenses (incomes), net

 

 

 

Consolidated

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Provision for litigation

 

122

 

(53

)

Provision for loss with VAT credits (ICMS)

 

117

 

119

 

Provision for profit sharing program

 

 

61

 

Provision (reversal) for disposal of materials and inventories

 

(330

)

185

 

Gold stream transaction

 

 

(722

)

Result on sale or disposal of property, plant and equipment and intangible

 

39

 

40

 

Others

 

186

 

191

 

Total

 

134

 

(179

)

 

36



Table of Contents

 

 

22.          Financial result

 

 

 

Consolidated

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Financial expenses

 

 

 

 

 

Loans and borrowings gross interest

 

(1,611

)

(1,118

)

Capitalized loans and borrowing costs

 

690

 

556

 

Labor, tax and civil lawsuits

 

(81

)

(95

)

Derivative financial instruments

 

(228

)

(4,049

)

Indexation and exchange rate variation (a)

 

(4,279

)

(15,913

)

Participative stockholders’ debentures

 

(451

)

722

 

Expenses of REFIS

 

(448

)

(408

)

Others

 

(572

)

(326

)

 

 

(6,980

)

(20,631

)

Financial income

 

 

 

 

 

Short—term investments

 

164

 

73

 

Derivative financial instruments

 

1,654

 

1

 

Indexation and exchange rate variation (b)

 

9,865

 

6,779

 

Others

 

70

 

100

 

 

 

11,753

 

6,953

 

Financial results, net

 

4,773

 

(13,678

)

 

 

 

 

 

 

Summary of indexation and exchange rate variation

 

 

 

 

 

Loans and borrowings

 

9,592

 

(15,081

)

Others

 

(4,006

)

5,947

 

Net (a) + (b)

 

5,586

 

(9,134

)

 

23.          Deferred revenue - Gold stream

 

In 2013 and 2015, the Company entered into gold stream transactions with Silver Wheaton Corp. (“SLW”) to sell part of the gold extracted during the life of the mine as a by-product of Salobo copper mine and Sudbury nickel mines. The Company received up-front cash proceeds, which were initially recognized as deferred revenue. This transaction was bifurcated into two identifiable components: (i) the sale of the mineral rights and, (ii) the services for gold extraction on the portion in which Vale operates as an agent for SLW gold extraction.

 

In 2015, the result of the sale of the mineral rights of R$722 was recognized in the income statement of 2015 as other operating expenses, net and the portion related to the provision of future services for gold extraction was recorded as deferred revenue (liability) in the amount of R$1,670. During the three-month period ended March 31, 2016 and 2015, the Company recognized in income statement R$135 and R$44, respectively, related to rendered services of the gold extraction.

 

24.          Commitments

 

a)   Base metals operations

 

In March 2016, Vale Canada Limited purchased the equity interest held by Sumic Nickel Netherland B.V. in Vale Nouvelle-Calédonie S.A.S. for R$ 480 (US$135).

 

There have been no other material changes to the commitments of the base metals operations disclosed in the financial statements as at December 31, 2015, except for letters of credit and guarantees in the amount of R$ 3,666 (US$1,030) (R$ 3,870 (US$991) at December 31, 2015) associated with items such as environment reclamation, asset retirement obligation commitments, insurance, electricity commitments, post-retirement benefits, community service commitments and import and export duties.

 

b)   Participative stockholders’ debentures

 

The Company paid as semiannual remuneration the amount of R$124 for the three-month period ended March 31, 2015. At April 1st, 2016 (subsequently event), the company has paid the semiannual remuneration to stockholders debentures the amount of R$128.

 

37



Table of Contents

 

 

c)   Operating lease and purchase obligations

 

The future payment commitments for operating lease and purchase obligations are as follows:

 

2016

 

179

 

2017

 

196

 

2018

 

206

 

2019

 

177

 

2020 and thereafter

 

186

 

Total minimum payments required

 

944

 

 

d)   Guarantees provided

 

At March 31, 2016, corporate guarantees provided by Vale (within the limit of its direct or indirect interest) for the companies Norte Energia S.A. and Companhia Siderúrgica do Pecém S.A. totaled R$1,100 and R$4,445, respectively. Due to the conclusion of the energy generation assets transaction (note 6), the guarantee of Norte Energia S.A. is shared with Cemig GT.

 

25.          Related parties

 

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

 

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

 

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

 

 

 

Assets

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

Cash and
cash 
equivalents

 

Derivative 
financial 
instruments

 

Accounts 
receivable

 

Related 
parties

 

Cash and 
cash 
equivalents

 

Derivative
financial
instruments

 

Accounts
receivable

 

Related 
parties

 

Banco Bradesco S.A.

 

153

 

25

 

 

 

144

 

258

 

 

 

Banco do Brasil S.A.

 

904

 

78

 

 

 

1,544

 

62

 

 

 

Baovale Mineração S.A.

 

 

 

 

4

 

 

 

 

4

 

Companhia Coreano-Brasileira de Pelotização

 

 

 

 

22

 

 

 

 

22

 

Companhia Hispano-Brasileira de Pelotização

 

 

 

7

 

14

 

 

 

3

 

14

 

Companhia Ítalo-Brasileira de Pelotização

 

 

 

 

33

 

 

 

 

33

 

Companhia Nipo-Brasileira de Pelotização

 

 

 

 

35

 

 

 

 

35

 

Consórcio de Rebocadores Baia de São Marcos

 

 

 

74

 

 

 

 

60

 

 

Ferrovia Norte Sul S.A.

 

 

 

22

 

 

 

 

12

 

 

Mitsui & Co., Ltd.

 

 

 

3

 

 

 

 

5

 

 

MRS Logística S.A.

 

 

 

 

66

 

 

 

 

65

 

VLI Multimodal S.A.

 

 

 

17

 

 

 

 

36

 

 

VLI Operações Portuárias S.A.

 

 

 

43

 

 

 

 

99

 

 

VLI S.A.

 

 

 

422

 

37

 

 

 

 

39

 

Others

 

 

 

150

 

145

 

 

 

91

 

66

 

Total

 

1,057

 

103

 

738

 

356

 

1,688

 

320

 

306

 

278

 

 

38



Table of Contents

 

 

 

 

Liabilities

 

 

 

Consolidated

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

Suppliers and 
contractors

 

Derivative 
financial 
instruments

 

Related 
parties

 

Loans and 
borrowings

 

Suppliers and 
contractors

 

Derivative 
financial 
instruments

 

Related 
parties

 

Loans and 
borrowings

 

Aliança Geração de Energia S.A.

 

47

 

 

125

 

 

43

 

 

 

 

Banco Bradesco S.A.

 

 

598

 

 

1,662

 

 

800

 

 

1,445

 

Banco do Brasil S.A.

 

 

879

 

 

10,225

 

 

976

 

 

10,250

 

Baovale Mineração S.A.

 

42

 

 

 

 

29

 

 

 

 

BNDES

 

 

139

 

 

14,955

 

 

152

 

 

15,877

 

BNDES Participações S.A.

 

 

 

 

1,481

 

 

 

 

1,449

 

Companhia Coreano-Brasileira de Pelotização

 

74

 

 

222

 

 

15

 

 

273

 

 

Companhia Hispano-Brasileira de Pelotização

 

50

 

 

178

 

 

143

 

 

26

 

 

Companhia Ítalo-Brasileira de Pelotização

 

40

 

 

223

 

 

12

 

 

252

 

 

Companhia Nipo-Brasileira de Pelotização

 

138

 

 

367

 

 

34

 

 

436

 

 

Consórcio Rebocadores Baia de São Marcos

 

40

 

 

 

 

30

 

 

 

 

Ferrovia Centro Atlântica S.A.

 

 

 

268

 

 

 

 

266

 

 

Mitsui & Co., Ltd.

 

38

 

 

 

 

41

 

 

 

 

MRS Logística S.A.

 

84

 

 

 

 

91

 

 

 

 

Sumic Nickel Netherland B.V.

 

 

 

1,255

 

 

 

 

1,374

 

 

VLI S.A.

 

2

 

 

321

 

 

 

 

 

 

Others

 

95

 

 

83

 

 

93

 

 

59

 

 

Total

 

650

 

1,616

 

3,042

 

28,323

 

531

 

1,928

 

2,686

 

29,021

 

 

 

 

Consolidated

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

 

 

Net operating
revenue

 

Costs and 
expenses

 

Financial result

 

Net operating 
revenue

 

Costs and 
expenses

 

Financial result

 

Banco Bradesco S.A. (i)

 

 

 

(58

)

 

 

(199

)

Banco do Brasil S.A. (i)

 

 

 

(131

)

 

 

(406

)

Baovale Mineração S.A.

 

 

(13

)

 

 

(13

)

 

BNDES (i)

 

 

 

(170

)

 

 

(50

)

BNDES Participações S.A. (i)

 

 

 

(24

)

 

 

(28

)

Companhia Coreano-Brasileira de Pelotização

 

 

(69

)

 

 

(45

)

 

Companhia Hispano-Brasileira de Pelotização

 

 

(41

)

 

 

(36

)

 

Companhia Ítalo-Brasileira de Pelotização

 

 

(38

)

 

 

(40

)

 

Companhia Nipo-Brasileira de Pelotização

 

 

(127

)

 

 

(72

)

 

Companhia Siderúrgica do Pecem

 

64

 

 

 

 

 

 

Ferrovia Centro Atlântica S.A.

 

29

 

(19

)

(2

)

35

 

(33

)

 

Ferrovia Norte Sul S.A.

 

17

 

 

 

11

 

 

 

Mitsui & Co., Ltd.

 

79

 

 

 

171

 

 

 

MRS Logística S.A.

 

 

(240

)

 

 

(342

)

 

Samarco Mineração S.A.

 

 

 

 

90

 

 

 

VLI Operações Portuárias S.A.

 

114

 

 

 

 

 

 

VLI S.A.

 

107

 

 

 

178

 

 

5

 

Others

 

36

 

(33

)

4

 

52

 

(34

)

5

 

Total

 

446

 

(580

)

(381

)

537

 

(615

)

(673

)

 


(i) Not include exchange rate variation.

 

39



Table of Contents

 

 

26.          Select notes to Parent Company information (individual interim information)

 

(a) Investments

 

 

 

Parent Company

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Balance at beginning of the period

 

127,517

 

118,628

 

Acquisitions (i)

 

 

1,819

 

Additions

 

643

 

750

 

Capitalizations

 

5

 

 

Translation adjustment

 

(6,502

)

13,506

 

Equity results on income statement

 

3,488

 

(4,599

)

Equity results on statement of comprehensive income

 

(196

)

142

 

Dividends declared

 

(893

)

11

 

Transfer to held for sale

 

 

(131

)

Others

 

(30

)

 

Balance at end of the period

 

124,032

 

130,126

 

 


(i) Refers to Aliança Geração transaction, see note 6.

 

(b) Intangible

 

 

 

Parent Company

 

 

 

Concessions (i)

 

Right of use (i)

 

Software (i)

 

Total

 

Balance at December 31, 2015

 

7,084

 

123

 

1,350

 

8,557

 

Additions (ii)

 

1,421

 

 

5

 

1,426

 

Disposals

 

(2

)

 

 

(2

)

Amortization

 

(125

)

(2

)

(127

)

(254

)

Balance at March 31, 2016

 

8,378

 

121

 

1,228

 

9,727

 

Cost

 

11,526

 

223

 

4,002

 

15,751

 

Accumulated amortization

 

(3,148

)

(102

)

(2,774

)

(6,024

)

 

 

8,378

 

121

 

1,228

 

9,727

 

 

 

 

Parent Company

 

 

 

Concessions (i)

 

Right of use (i)

 

Software (i)

 

Total

 

Balance at December 31, 2014

 

5,876

 

129

 

1,462

 

7,467

 

Additions

 

349

 

 

213

 

562

 

Disposals

 

(37

)

 

 

(37

)

Amortization

 

(119

)

(2

)

(125

)

(246

)

Balance at March 31, 2015

 

6,069

 

127

 

1,550

 

7,746

 

Cost

 

9,382

 

223

 

3,815

 

13,420

 

Accumulated amortization

 

(3,313

)

(96

)

(2,265

)

(5,674

)

 

 

6,069

 

127

 

1,550

 

7,746

 

 


(i) Finite useful life.

(ii) Refers mainly duplication the Carajás Railroad.

 

40



Table of Contents

 

 

(c) Property, plant and equipment

 

 

 

Parent Company

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral 
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance at December 31, 2015

 

1,672

 

19,546

 

19,379

 

8,371

 

4,215

 

14,203

 

29,501

 

96,887

 

Additions (i)

 

 

 

 

 

 

 

1,722

 

1,722

 

Disposals

 

 

 

 

(4

)

 

 

(4

)

(8

)

Depreciation and amortization

 

 

(152

)

(233

)

(250

)

(44

)

(314

)

 

(993

)

Transfers to assets retirement obligations

 

 

 

 

 

104

 

 

 

104

 

Transfers

 

(13

)

280

 

(215

)

306

 

(86

)

263

 

(535

)

 

Balance at March 31, 2016

 

1,659

 

19,674

 

18,931

 

8,423

 

4,189

 

14,152

 

30,684

 

97,712

 

Cost

 

1,659

 

22,709

 

24,962

 

13,692

 

5,480

 

21,465

 

30,684

 

120,651

 

Accumulated depreciation

 

 

(3,035

)

(6,031

)

(5,269

)

(1,291

)

(7,313

)

 

(22,939

)

 

 

1,659

 

19,674

 

18,931

 

8,423

 

4,189

 

14,152

 

30,684

 

97,712

 

 

 

 

Parent Company

 

 

 

Land

 

Building

 

Facilities

 

Equipment

 

Mineral 
properties

 

Others

 

Constructions
in progress

 

Total

 

Balance at December 31, 2014

 

1,452

 

13,364

 

17,337

 

7,097

 

4,396

 

9,820

 

33,855

 

87,321

 

Additions (i)

 

 

 

 

 

 

 

2,780

 

2,780

 

Disposals

 

 

(14

)

(1

)

(10

)

 

 

 

(25

)

Depreciation and amortization

 

 

(111

)

(213

)

(228

)

(44

)

(281

)

 

(877

)

Transfers

 

27

 

2,167

 

736

 

544

 

(1,265

)

538

 

(2,747

)

 

Balance at March 31, 2015

 

1,479

 

15,406

 

17,859

 

7,403

 

3,087

 

10,077

 

33,888

 

89,199

 

Cost

 

1,479

 

17,709

 

23,094

 

11,782

 

3,987

 

16,448

 

33,888

 

108,387

 

Accumulated depreciation

 

 

(2,303

)

(5,235

)

(4,379

)

(900

)

(6,371

)

 

(19,188

)

 

 

1,479

 

15,406

 

17,859

 

7,403

 

3,087

 

10,077

 

33,888

 

89,199

 

 


(i) Includes capitalized borrowing costs, see cash flow.

 

(d) Loans and borrowings

 

 

 

Parent Company

 

 

 

Current liabilities

 

Non-current liabilities

 

 

 

March 31, 2016

 

December 31, 2015

 

March 31, 2016

 

December 31, 2015

 

Debt contracts in the international markets

 

 

 

 

 

 

 

 

 

Floating rates in:

 

 

 

 

 

 

 

 

 

US$

 

517

 

567

 

19,422

 

16,829

 

Fixed rates in:

 

 

 

 

 

 

 

 

 

US$

 

2,544

 

937

 

7,225

 

9,020

 

EUR

 

 

 

6,081

 

6,376

 

Accrued charges

 

212

 

479

 

 

 

 

 

 

3,273

 

1,983

 

32,728

 

32,225

 

Debt contracts in Brazil

 

 

 

 

 

 

 

 

 

Floating rates in:

 

 

 

 

 

 

 

 

 

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

 

785

 

780

 

17,520

 

17,658

 

Basket of currencies and US$ indexed to LIBOR

 

1,107

 

1,125

 

4,488

 

5,227

 

Fixed rates in:

 

 

 

 

 

 

 

 

 

R$

 

190

 

190

 

828

 

876

 

Accrued charges

 

840

 

658

 

 

 

 

 

 

2,922

 

2,753

 

22,836

 

23,761

 

 

 

6,195

 

4,736

 

55,564

 

55,986

 

 

The future flows of debt payments (principal) are as follows:

 

 

 

Parent Company

 

 

 

Debt principal

 

2016

 

3,113

 

2017

 

6,077

 

2018

 

16,881

 

2019

 

6,019

 

2020

 

8,155

 

2021

 

3,670

 

Between 2022 and 2025

 

10,832

 

2026 onwards

 

5,960

 

 

 

60,707

 

 

In January 2016, the Parent Company drew down on R$4,826 (US$1,200) of its revolving credit facilities.

 

41



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(e)  Provision for litigation

 

 

 

Parent Company

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation 
provision

 

Balance at December 31, 2015

 

332

 

241

 

1,562

 

55

 

2,190

 

Additions

 

12

 

45

 

160

 

7

 

224

 

Reversals

 

(29

)

(1

)

(62

)

(6

)

(98

)

Payments

 

(195

)

(70

)

(84

)

 

(349

)

Indexation and interest

 

 

95

 

5

 

3

 

103

 

Balance at March 31, 2016

 

120

 

310

 

1,581

 

59

 

2,070

 

 

 

 

Parent Company

 

 

 

Tax litigation

 

Civil litigation

 

Labor litigation

 

Environmental
litigation

 

Total of litigation 
provision

 

Balance at December 31, 2014

 

436

 

186

 

1,732

 

94

 

2,448

 

Additions

 

289

 

46

 

92

 

 

427

 

Reversals

 

(494

)

(30

)

(51

)

 

(575

)

Payments

 

(9

)

(7

)

(12

)

(35

)

(63

)

Indexation and interest

 

129

 

45

 

(31

)

3

 

146

 

Balance at March 31, 2015

 

351

 

240

 

1,730

 

62

 

2,383

 

 

(f)  Income taxes

 

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

 

 

 

Parent Company

 

 

 

Three-month period ended March 31

 

 

 

2016

 

2015

 

Net income (loss) before income taxes

 

8,382

 

(12,826

)

Income taxes at statutory rates — 34%

 

(2,850

)

4,361

 

Adjustments that affect the basis of taxes:

 

 

 

 

 

Income tax benefit from interest on stockholders’ equity

 

 

545

 

Equity results in income statement

 

1,186

 

(1,564

)

Reversals of tax loss carry forward

 

(271

)

 

Others

 

(136

)

(54

)

Income taxes

 

(2,071

)

3,288

 

 

(g) Related parties

 

 

 

Parent Company

 

 

 

Assets

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

Cash and 
cash 
equivalents

 

Accounts 
receivable

 

Derivative 
financial 
instruments

 

Related 
parties

 

Cash and 
cash 
equivalents

 

Accounts 
receivable

 

Derivative 
financial 
instruments

 

Related 
parties

 

Banco Bradesco S.A.

 

41

 

 

25

 

 

44

 

 

258

 

 

Banco do Brasil S.A.

 

290

 

 

78

 

 

217

 

 

62

 

 

Biopalma da Amazônia S.A.

 

 

 

 

1,170

 

 

 

 

1,360

 

Companhia Coreano-Brasileira de Pelotização

 

 

 

 

22

 

 

 

 

22

 

Companhia Hispano-Brasileira de Pelotização

 

 

7

 

 

14

 

 

 

 

14

 

Companhia Ítalo-Brasileira de Pelotização

 

 

 

 

33

 

 

 

 

33

 

Companhia Nipo-Brasileira de Pelotização

 

 

 

 

35

 

 

 

 

35

 

Companhia Portuária Baía de Sepetiba

 

 

 

 

121

 

 

 

 

119

 

Mineração Brasileiras Reunidas S.A.

 

 

 

 

924

 

 

 

 

161

 

Mineração Corumbaense Reunidas S.A.

 

 

 

 

45

 

 

51

 

 

 

MRS Logística S.A.

 

 

 

 

26

 

 

 

 

27

 

Salobo Metais S.A.

 

 

9

 

 

183

 

 

22

 

 

155

 

Vale International S.A.

 

 

33,329

 

 

2

 

 

36,518

 

 

331

 

VLI Multimodal S.A.

 

 

17

 

 

 

 

36

 

 

 

VLI Operações Portuárias S.A.

 

 

42

 

 

 

 

99

 

 

 

VLI S.A.

 

 

422

 

 

37

 

 

 

 

39

 

Others

 

 

236

 

 

177

 

 

230

 

 

6

 

Total

 

331

 

34,062

 

103

 

2,789

 

261

 

36,956

 

320

 

2,302

 

 

42



Table of Contents

 

 

 

 

Parent Company

 

 

 

Liabilities

 

 

 

March 31, 2016

 

December 31, 2015

 

 

 

Suppliers and
contractors

 

Derivative 
financial 
instruments

 

Related 
parties

 

Loans and 
borrowings

 

Suppliers and
contractors

 

Derivative 
financial 
instruments

 

Related 
parties

 

Loans and 
borrowings

 

Aliança Geração de Energia S.A.

 

47

 

 

125

 

 

43

 

 

 

 

Baovale Mineração S.A.

 

42

 

 

 

 

29

 

 

 

 

Banco Bradesco S.A.

 

 

598

 

 

1,663

 

 

800

 

 

1,445

 

Banco do Brasil S.A.

 

 

879

 

 

10,224

 

 

976

 

 

10,250

 

BNDES

 

 

139

 

 

13,477

 

 

152

 

 

14,405

 

BNDES Participações S.A.

 

 

 

 

1,479

 

 

 

 

1,449

 

Companhia Coreano-Brasileira de Pelotização

 

74

 

 

 

 

15

 

 

 

 

Companhia Hispano-Brasileira de Pelotização

 

50

 

 

 

 

143

 

 

 

 

Companhia Ítalo-Brasileira de Pelotização

 

40

 

 

 

 

12

 

 

 

 

Companhia Nipo-Brasileira de Pelotização

 

138

 

 

 

 

34

 

 

 

 

Companhia Portuária Baía de Sepetiba

 

540

 

 

 

 

484

 

 

 

 

Ferrovia Centro Atlântica S.A.

 

 

 

268

 

 

 

 

266

 

 

Mineração Brasileiras Reunidas S.A.

 

452

 

 

3,291

 

 

510

 

 

3,172

 

 

MRS Logística S.A.

 

84

 

 

 

 

91

 

 

 

 

Vale International S.A.

 

4

 

 

59,945

 

 

5

 

 

66,814

 

 

Others

 

231

 

 

679

 

 

257

 

 

359

 

 

Total

 

1,702

 

1,616

 

64,308

 

26,843

 

1,623

 

1,928

 

70,611

 

27,549

 

 

 

 

Parent Company

 

 

 

Three-month period ended March 31

 

 

 

Net operating revenue

 

Costs and expenses

 

Financial result

 

 

 

2016

 

2015

 

2016

 

2015

 

2016

 

2015

 

Banco Bradesco S.A. (i)

 

 

 

 

 

(59

)

(198

)

Banco do Brasil S.A. (i)

 

 

 

 

 

(131

)

(406

)

BNDES (i)

 

 

 

 

 

(166

)

(50

)

BNDES Participações S.A. (i)

 

 

 

 

 

(24

)

(28

)

Baovale Mineração S.A.

 

 

 

(13

)

(13

)

 

 

Biopalma da Amazônia S.A.

 

 

 

 

 

(104

)

 

Companhia Coreano-Brasileira de Pelotização

 

 

 

(69

)

(45

)

 

 

Companhia Hispano-Brasileira de Pelotização

 

 

 

(41

)

(36

)

 

 

Companhia Ítalo-Brasileira de Pelotização

 

 

 

(38

)

(40

)

 

 

Companhia Nipo-Brasileira de Pelotização

 

 

 

(127

)

(72

)

 

 

Companhia Portuária Baía de Sepetiba

 

 

 

(266

)

(172

)

 

 

Ferrovia Centro Atlântica S.A.

 

29

 

35

 

(19

)

(33

)

 

 

Mineração Brasileiras Reunidas S.A.

 

 

 

(374

)

(180

)

(119

)

 

MRS Logística S.A.

 

 

 

(240

)

(342

)

 

 

Samarco Mineração S.A.

 

 

90

 

 

 

 

 

Vale Energia S.A.

 

 

 

(5

)

 

 

 

Vale International S.A.

 

6,831

 

8,972

 

 

 

1,858

 

(485

)

VLI Operações Portuárias S.A.

 

114

 

 

 

 

 

 

VLI S.A.

 

107

 

177

 

 

 

 

5

 

Others

 

102

 

65

 

1

 

(88

)

(38

)

225

 

Total

 

7,183

 

9,339

 

(1,191

)

(1,021

)

1,217

 

(937

)

 


(i) Not include exchange rate variation.

 

43



Table of Contents

 

 

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

 

Board of Directors

 

 

 

 

Governance and Sustainability Committee

Gueitiro Matsuo Genso

 

Fernando Jorge Buso Gomes

Chairman

 

Arthur Prado Silva

 

 

Eduardo de Oliveira Rodrigues Filho

Sérgio Alexandre Figueiredo Clemente

 

Ricardo Rodrigues Morgado

Vice-President

 

Ricardo Simonsen

 

 

 

Dan Antonio Marinho Conrado

 

Fiscal Council

Marcel Juviniano Barros

 

 

Tarcísio José Massote de Godoy

 

Marcelo Amaral Moraes

Fernando Jorge Buso Gomes

 

Chairman

Motomu Takahashi

 

 

Oscar Augusto de Camargo Filho

 

Paulo José dos Reis Souza

Luciano Galvão Coutinho

 

Sandro Kohler Marcondes

Lucio Azevedo

 

Aníbal Moreira dos Santos

Alberto Guth

 

Raphael Manhães Martins

 

 

 

Alternate

 

Alternate

Gilberto Antonio Vieira

 

Paula Bicudo de Castro Magalhães

Moacir Nachbar Junior

 

Sergio Mamede Rosa do Nascimento

Arthur Prado Silva

 

Oswaldo Mário Pego de Amorim Azevedo

Francisco Ferreira Alexandre

 

Julio Sergio de Souza Cardozo

Robson Rocha

 

 

Luiz Mauricio Leuzinger

 

 

Yoshitomo Nishimitsu

 

Executive Officers

Eduardo de Oliveira Rodrigues Filho

 

 

Victor Guilherme Tito

 

Murilo Pinto de Oliveira Ferreira

Carlos Roberto de Assis Ferreira

 

Chief Executive Officer

 

 

 

Advisory Committees of the Board of Directors

 

Vânia Lucia Chaves Somavilla

 

 

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

Controlling Committee

 

 

Eduardo Cesar Pasa

 

Luciano Siani Pires

Moacir Nachbar Junior

 

Executive Officer (Finance and Investors Relations)

Oswaldo Mário Pego de Amorim Azevedo

 

 

Marcos Paulo Pereira da Silva

 

Roger Allan Downey

 

 

Executive Officer (Fertilizers, Coal and Strategy)

Executive Development Committee

 

 

Oscar Augusto de Camargo Filho

 

Gerd Peter Poppinga

Marcel Juviniano Barros

 

Executive Officer (Ferrous)

Fernando Jorge Buso Gomes

 

 

Tatiana Boavista Barros Heil

 

Galib Abrahão Chaim

 

 

Executive Officer (Capital Projects Implementation)

Strategic Committee

 

 

Murilo Pinto de Oliveira Ferreira

 

Humberto Ramos de Freitas

Gueitiro Matsuo Genso

 

Executive Officer (Logistics and Mineral Research)

Luiz Carlos Trabuco Cappi

 

 

Oscar Augusto de Camargo Filho

 

Jennifer Anne Maki

Luciano Galvão Coutinho

 

Executive Officer (Base Metals)

 

 

 

Finance Committee

 

 

Gilmar Dalilo Cezar Wanderley

 

 

Fernando Jorge Buso Gomes

 

 

Eduardo de Oliveira Rodrigues Filho

 

Marcelo Botelho Rodrigues

Tatiana Boavista Barros Heil

 

Global Controller Director

 

 

 

 

 

Murilo Muller

 

 

Controllership Director

 

 

 

 

 

Dioni Brasil

 

 

Accounting Manager

 

 

TC-CRC-RJ 083305/O-8

 

44



Table of Contents

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Vale S.A.

 

(Registrant)

 

 

 

 

By:

/s/ Rogerio T. Nogueira

Date: April 28, 2016

 

Rogerio T. Nogueira

 

 

Director of Investor Relations

 

45