In 2022, Brazilian mining giant Vale posted a profit of USD 16.73 billion. Despite being 32 percent less than in 2021, it was the third-largest ever disclosed by a listed Brazilian company, behind Petrobras’s USD 19.1 billion and Vale’s USD 24.7 billion — both from 2021.
The mining firm’s Q4 figures, released last week, gave a faithful representation of the current commodities scenario in Brazil. Prices are still high for 2023, margins look good for producers and companies, though the situation is far from the peak of the commodities supercycle in 2021.
Vale posted net revenues of USD 43.8 billion — almost 20 percent less than the previous year — and an adjusted Ebitda of USD 19.76 billion, down 37 percent. In addition, Vale ended 2022 with a net debt of USD 5.45 billion — 8 percent higher than in 2021.
To understand why results dipped yet remained positive, it is necessary to go back to the beginning of the recent commodity boom in 2020. With the onset of the Covid pandemic and the resulting disruption of global production chains, commodity prices began to come under supply-side pressure.
Meanwhile, with populations struggling from income losses, governments began injecting money into their domestic economies, lowering interest rates, and facilitating access to credit. In August 2020, for instance, Brazil’s Central Bank cut its Selic benchmark rate to 2 percent, the lowest level in history.
“And precisely this injection of money into the economies during the pandemic caused the whole world to enter a moment of excess liquidity, which ultimately led to a more structural increase in demand worldwide, resulting in a 2021 with a favorable scenario for a commodity supercycle reading,” says Leonardo Alencar, head of agro at XP, speaking to The Brazilian Report.
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