On April 28, Vale released its first quarter financial performance report. According to the report, in the first quarter of 2020, excluding the business related to provisions and expenses related to the dam break accident of the tailings pond in brumadinew, Brazil, the adjusted EBITDA (EBITDA) was US $3.041 billion, a decrease of US $1.636 billion or 34% compared with the previous quarter. Vale explained in the report that this was mainly affected by the decline in production and sales of products in the first quarter and the decline in prices of some products. In the first quarter, Vale free cash flow was $380 million, down $947 million from the previous quarter.
From the perspective of ferrous metal business, in the first quarter, the adjusted EBITDA of ferrous metal business was $2.847 billion, a decrease of $1.691 billion compared with the previous quarter, mainly due to a 34% decrease in sales volume compared with the previous quarter. The C1 cash cost of iron ore (powder ore) increased to $16.2/t from $14.5/t in the last quarter, mainly due to the decrease of seasonal production, which resulted in the decrease of fixed cost dilution (decrease of $1.2 / T), the increase of maintenance cost (increase of $0.5 / T), and the increase of demurrage cost (increase of $0.3 / T) due to the impact of heavy rainfall on logistics chain and delivery in the first quarter.
In addition, in the first quarter, the unit shipping cost of Vale iron ore decreased by US $1.1/t to US $17.1/t compared with the previous quarter, mainly due to the decrease of freight in the spot shipping market (down US $1.6 / T). In view of the decline of international oil price, Vale expects the unit shipping cost of iron ore in the second quarter to decrease by at least $3 / ton compared with the first quarter.
