VALE
Vale S.A.
Cyclical Commodities
★ Quality 34/100Price today
$15.27
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What this business is made of
The business
Vale won the geological lottery: it mines iron cheaper than anyone.
Vale mines and sells iron ore to the world's steelmakers, mostly China. It charges per ton at the iron spot price, with premium pellets and a growing base metals business (nickel and copper) for batteries.
Low-cost Brazilian mines and high-grade iron — it sits in the first quartile of the global cost curve. That's not a brand moat; it's geology. When the iron price falls, Vale survives while the marginal players die.
Revenue history
From $40.0B to $37.5B in 4 years. Sales are shrinking — the engine is losing steam.
Where each $100 of sales goes
Revenue $38.4B · FY2025
Of every $100 in sales, $95 goes to costs and operations; $5 is left as net profit (5% margin).
Catalysts and risks
Iron production at an all-time record of 336Mt, with guidance to keep scaling.
Base Metals EBITDA doubled — copper and nickel are starting to really matter.
Dividend yield ~7% sustained as long as iron holds above $90/t.
Chinese steel demand: if real estate keeps deflating, the iron price goes with it.
Brumadinho provisions still have $4.3B contingent — the dead don't expire.
Capex of $5.5B pressures reported FCF; the dividend depends on the cycle cooperating.
Charlie's note
“Paying 13.85x for first-quartile geology is reasonable: the moat is the cost curve, not the brand, and with 4% growth and a 37% gross margin you're paying to survive when iron falls and the marginal players die. Patience here means waiting on the cycle, not the quality.”
Analysis · May 2026
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