Mozambique Mining: Vale coal operations with positive results in the fourth consecutive quarter

Vale Adjusted EBITDA of coal was US$46 million in 3Q17, reaching a positive result for the fourth consecutive quarter, US$ 111 million lower than 2Q17 as a result of lower prices (US$ 97 million) and net impact of higher tariff Nacala corridor (US$ 13 million), which were partially offset by lower mine costs (US $ 16 million).

The prices realized were mainly impacted by the provisional prices established in 2Q17, which considered a stable trend for market prices, and which were later adjusted to lower prices at the time of delivery of cargoes in 3Q17.

Coal production in Mozambique reached a quarterly record of 3.2 Mt in 3Q17, 5.8% and 38.3% higher than in 2Q17 and 3Q16, respectively, as a result of the better performance of the two Coal Handling and Preparation Plants (CHPP1 and CHPP2). CHPP2 reached a new monthly production record of 566 kt in July, as a result of its continuing ramp-up.

The share of metallurgical coal was 58% of overall production, due to a combination of the geological characteristics of the feed plus the continued optimization of the CHPPs.

The company expected the share of metallurgical coal to return to 60%-65% of overall production. Logistics operations in Mozambique reached all-time records, with railed volume reaching 3.5 Mt in 3Q17, 15% higher than in 2Q17.

Moatizeproducesmainlymetallurgicalor coking coal, but the mine also produces thermal coal. Its metallurgical coal output is divided into two categories or grades: Chipanga hard coking coal (HCC) and the recently launched Moatize Low Volatile HCC.