Good morning, ladies and gentlemen. Welcome to Vale's Conference Call to discuss Third Quarter 2022 Results. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. This call is being simultaneously translated to Portuguese. [Operator instructions] As a reminder, this conference is being recorded, and the recording will be available on the company's website at vale.com at Investors link. This conference call is accompanied by a slide presentation also available at Investors link at the company's website and is transmitted via Internet as well. The broadcasting via Internet, both the audio and the slide chains has a few seconds delay in relation to the audio transmitted via phone. Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of Securities Litigation Reform Act of 1996. Actual performance could differ materially from that anticipated in any forward-looking statements comments as a result of macroeconomic conditions, market risks, and other factors. With us today are Mr. Eduardo De Salles Bartolomeo, Chief Executive Officer; Mr. Gustavo Pimenta, Executive Vice President, Finance, and Investor Relations. Mr. Marcello Spinelli, Executive Vice president, Iron Ore; and Ms. Deshnee Naidoo, Executive Vice President, Base Metals. First, Mr. Eduardo Bartolomeo will proceed the presentation on Vale's third quarter 2022 performance. And after that, he will be available for questions and answers. It's now my pleasure to turn the call over to Mr. Eduardo Bartolomeo. Sir, you may now begin.

Thank you very much. Good morning, everyone. I hope you're fine. I'd like to start guiding you through our main accomplishments in the quarter. We have made significant progress with regards to operational stability. In iron ore, our production was close to 90 million tons, an increase of 21% quarter-over-quarter. While the world is facing growing inflationary pressures, we remain focused on cost discipline, our C1 cost decreased $1.5 per ton. In our base metals business, performance improved significantly after extended assets maintenance. In Nickel, production increased 51%. But sales lag production impacting our EBITDA. Deshnee will give you more details on that later. Moving to our strategic agenda, we are delivering on our commitments to lead the Low Carbon mining. Our solar project, Sol do Cerrado is coming online to further reduce our carbon footprint. We're refining our strategy, positioning Vale as an iron solutions company and the partner of choice of the energy transition and the V megatrend. We continue to strengthen our business to deliver the products essential to a more sustainable future. In this sense, we are making progress in growing our supply of low carbon nickel, and other critical minerals for the energy transition. In Canada, we have successfully concluded the first phase of CCM1 in Sudbury. The project will nearly double our production at Copper Cliff mine. In Brazil, the reconstruction of the Onça Puma 2nd furnace was approved recently by our Board of Directors. On capital allocation, we stay committed to returning cash to our shareholders into our share buyback program. We're shaping the value of the future, supported by the uniqueness of our assets and resources, our investments in technology and productivity and in our discipline in capital allocation. To lead the mining transition, we are promoting solutions to expand the use…

Thank you, Eduardo and good morning everyone. I would like to start by highlighting the progress we continue to make towards achieving our base metals growth goals. I'm happy to announce and as Eduardo mentioned, we have approved our Onça Puma's 2nd furnace project this quarter, which will see our nickel production grow by 15,000 tons on average per year in South Atlantic. And I'm making progress at PT Vale Indonesia on the approval to establish the 120,000 ton JV with Zhejiang Huayou Cobalt and Ford Motor Company. Looking at our projects delivery, we officially opened the CCM South Mine refurbishment project earlier this month and had 98% physical progress at Salobo III, there we are on track with our commissioning activities. We are also on schedule with our revised VBME project. The next slide please. Now looking at the performance in the quarter. On the operational side, we recovered production in quarter three for both nickel and copper, following the completion of our major plant and some corrective maintenance work in each one, specifically the furnace for rebuilt at PT Vale Indonesia, and the SAG mill maintenance at Sossego both safely concluded last quarter. On the nickel sales, we have an 8,000 ton difference to production this quarter. Some tons were retained to meet quarter four commitments given our scheduled current maintenance at Onça Puma, Long Harbour and Matsusaka and linked to global supply chain constraints. We faced challenges to higher container ships at Onça Puma and shipping issues in the U.K. due to port industrial actions that lead to port conditions. These also affected sales. This timing lag will be trued up at the end of quarter four, where we would see higher sales and production volume. In copper and as previously highlighted when we revise the copper…

Thank you, Desh. Good morning. Good afternoon. Good to hear you all again. I'll start my presentation, give you some colors about our production in Q3 and also Q4. We are back to 90 million tons. That's a good news. After some headwinds with a heavy rainy season in the Q1 and the moisture problem encourages in Q2. We increased 10 million tons in the north system. It is below our expectations in the planning of the beginning of the year due to the delays of some license that made us increase the waste movement in that mind. We have better news in this regards. I'll give you an update in some minutes. Production guidance remains 310 to 320. You may notice the gap between the sales and production. It is the same pattern of previous years related to the sales and out of production and the lead time to reach China. We may expect a higher sales comparing to production in Q4. Now moving to the next slide. I'll give you now some update of all the production plan. We had some important progress north range Gelado project. We already started the commissioning of the first phase and we expect the ramp up next year and three product we got the previous license the LP after some delay that we are really working close to the agents to get installation license by the first half of next year started construction and bring volumes in the first half of 2024. The rolling licenses as an example is the vegetto suppression or a redesign of a mine cave. We had a wave of small license in the last month in September and we expect a lot of group of license in the first half of next year. A closer approach with…

Thanks, Marcello. And good morning everyone. Let me start with our EBITDA performance for the quarter. As you can see, we delivered a $4 billion EBITDA in Q3, $1.5 billion lower than Q2. This decline is largely explained by the 20% to 25% decline in the benchmark price for copper, nickel, and iron ore during the period. The other two external factors bunker and FX basically offset each other out. On volumes we have delivered a strong quarter across the board, contributing to better financial performance on a quarter-over-quarter basis. Same for costs and expenses, where we start to see the benefit of the efficiency program we launched last year. Just to remind everyone, our objective here is to keep up with total fixed costs and sustaining CapEx flat versus 2021 in local currencies, and we are on track to deliver that. Now moving to iron ore all-in costs, our C1 cash costs ex-third party purchase decreased by $1.5 per ton, mostly driven by higher production and the positive effect from the Brazilian real depreciation. Another important component of our all-in cost structure is freight, which went from $21.3 per ton to $22.4 per ton. This is explained by two factors. One is the seasonally larger freight, calling a strong production in the quarter as CFR shipments increased over 25%. Some of these cargoes are still in transit and should be recognized as sales in Q4. The other is the lag effect. It takes about 30 days for the cost to be recognized as cost of goods sold. Before Vale Q3 bunker cost has not yet captured, the drop in prices observed in September, and we should see a benefit in our Q4 performance. The premiums we earn in our products also play an important role in our all-in cash…

Thank you, ladies and gentlemen. We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Leonardo Correa with BTG Pactual.

Yes, good morning, everyone. So my first question on base metals to Eduardo, the unit is exposing results, which are I mean below what the company had been doing over the previous years? Right and what I mean, looking at the annualized EBITDA figure for base metals now the number is slightly above $1 billion right in EBITDA, so I just wanted to hear more about the path to normalization, right. I mean, I know that several issues have been impacting. We've been seeing maintenance issues and several other issues on the cost side. But I just wanted to hear more about this normalization process and how long you think it can last? And on a similar topic, I mean does this delay, the monetization of this base metals unit, right, because I mean, results being depressed. I can imagine this could impact I mean the perceived value of the assets. Second point on volumes on iron ore volumes, and maybe we can bring Spinelli in the discussion. Spinelli, there is a big debate on Vale on what I mean on how this normalizes as well, right, I mean, how iron ore volumes will normalize in the medium term, the company is running on, let's say 310 million tons of production now, right? Your nameplate capacities is 400 million. The market discusses whether 400 million is achievable. And whether this that's the effective production will be much lower than that maybe 340, 350. So I can understand that you'll give more guidance during Vale right, December 7. But can you just help us out understand exactly how the medium term path on Vale is in terms of production increases? And let's say what is the more realistic long-term targets for Vale's production? Thank you very much.

Thanks, Leonardo. Thanks for your question. I will throw it separate maybe I'll bring Deshnee to help as well. But anyhow, let's put this way. It's not fair to analyze a quarter like that. Because as Deshnee mentioned, there was one like, some carry from one quarter to the other. So it's not the number that you should look at us, by the way, so but on specifics, some of the first quarter and first half of the year, events are largely hangovers from COVID. A lot of maintenance were postponed, I think we're pretty good on track on what we're trying to achieve with North Atlantic with the refineries, the Underground mines are improving their productivity. I'm pretty comfortable with the nickel production, we just featured, I think the highest quarter since I was there, I think since '19. So pretty well, pretty comfortable with the nickel within the guidance. I don't see issues there. As Deshnee say, we have to replace the seeds. We're doing that very well in places. So no, that's not for me a question. On the copper, yes, more challenges that we expected in Salobo. But it is back on track after the long, very long maintenance that we had last year. So I think, going to your second question, I think it is more importantly, because this game is about R&R resources and reserves, and we have the base of all in the world like and this is where the value is, we'll fix that it is fixed, as I mentioned in nickel, I have no doubt about that. In copper, as I said, but the assets are there, the assets are located where you should be first world jurisdiction like Canada, Brazil, we know the whereabouts. And I encourage us with the…

Well, thank you for the question. First point, we couldn't -- weren't able actually to know to predict it to plan thing backed up to Brumadinho and also Mariana that happen when we change the way we are mining and disposing the tailings dams and in the southeastern system. But we got it and we are re-planning our growth our recover plan to the future. So this is the first point one side. The other side is we are -- we need to change the approach with agencies and we just did and we are closer to them. There is a lack of capacity with a huge amount of license that we need to bring online, in all the systems and not system mainly, but also in the southeastern system. So we work in differently with them. And we bring regulators volume. So we will give you some numbers and callers in the Vale Day.

Our next question comes from Caio Ribeiro with Bank of America.

Yes, good morning all. Thank you for taking my questions. So my first question is on the different avenues, right, that you're exploring to unlock value in the base metals business. And I know Eduardo that you recently mentioned at the Financial Times conference, right that IPO and the division was an option that you guys were looking at. But there are other options on the table, right, as you've mentioned in the past like selling a minority stake in the business, setting up a partnership with another miner. So I just wanted to see if you can give us more color on which of these avenues that you tend to be leaning more towards. And also if you can give us a sense on timing that would also be great. And then secondly, in regards to your value over volume strategy, right? Iron ore prices, they've come under considerable pressure lately, and in the fourth quarter of last year similar situation unfolded. So I wanted to see if this time around, you would consider removing lower quality or higher cost money from the market to try and protect prices? Thank you very much.

Hey Caio, thanks for your question. Let's see. Well, that's true. We've been very clear on the path to unlock value in base metals, as I mentioned in the previous question has exactly where we see enormous how can I say that amount of value to be delivered. What the execution path that we've been discussing. And again, as we mentioned, the IPO I'm going to get back to you tonight in a minute. We've been very disciplined on that. We've been communicating to you. First of all, no decision has been taken within our board. But we were going to segregate on our assets. We did that. So we just announced that there recently. Because, yes, we say avenues, but the avenues they have a path to that. And the best goes back to the execution of our operating assets, the execution of a growth plan. With being that we could see a partnership being built, I think this is the most natural, and it has been as again voiced by us even in the event that you mentioned in our calls. So we have engaged advisors to help us on that if we are able to find partners because one very strong point here for you and for everybody we not selling base metals. Base metals is the best assets in the world value, it will keep it. So what we want is a partnership events to look at these values that you just mentioned. And then the word that I use there was eventually and might be a confusing word for English investors and Portuguese, I feel it's an optionality is not the one that we believe that's going to be happy now because of the previous question. We need to fix the asset still, partnership can be done now because we can find partners that see this value that we see in this business. Help us deliver the growth, help us deliver the execution, help us with creating a new current. Yes. To go after these avenues when timing wise, I'll pass to Gustavo, because he can give you more color on that and then Spinelli can comment on the value of volume question.

Thanks, Eduardo. So Caio, on the timing, I think what we've been saying since beginning of the year is that we expected to be able to give you more color at Vale Day. So we continue to work with that timeframe. It's going to certainly take some time for execution. Probably early next year, it's going to be more the ideal time. So stay tuned, I think Vale Day we will probably be in a position to share more information in terms of the specifics there.

Caio, thank you for the question. And I'll split this, the instrument two into two parts. The first one [indiscernible] to layout from BTG. In a value for volume, we have all the time to check the value part -- the volume part of the value. So we really have to check the amount that we were bringing to the market to not give a problem to the cost curve and create a whole system. So that's the reason why because they care about the way we're bringing volumes in near future. And this is important. When we are talking about the mid to long-term production plan. We have a window to adjust that. It's important to say that. And you talked about quality. So all the volume you're bringing to the -- to our production plan is related to quality. So we need to address that mid to long-term, the long-term we have high demand for high-grade ores. Even agglomerated products, but pellets or briquettes. That's a trend. That's the volume we want to focus on. And in the everyday, Caio, we assess our supply chain. We have a flexibility to hold a low grade ore concentrate later in China, concentrate in our supply chain. And that's what we do. So today if you ask me. If you have in our supply chain low grade ores, you can hold it, blend it or concentrate. We are not selling in negative margins.

Our next question comes from Amos Fletcher with Barclays.

Yes, good morning and good afternoon, everyone. Couple of questions. First one for Deshnee. Just looking at the base metal of business and the cost base at the Sudbury assets it seems to have blown out to quite a big degree. If I look at the revenue minus EBITDA number of Sudbury it reached over a billion dollars in Q3 against a quarterly average for the last few years around $600 million. My question is what happened there? And should we expect it to mean revert in Q4? And then second question on Onça Puma. The CapEx for the 2nd Furnace seems to have gone up quite a bit to $555 million against $320 million you spoke about previously. Can I again ask why is that? Thanks very much.

Thank you, Amos. On the first question regarding the cost. As I guided in the presentation itself, and as you said, there's about $300 million in terms of the quarter and quarter increase. $200 million of that actually comes from the purchase of third-party material. So let me explain that. The third-party material that we buy is actually concentrates that we buy at market prices. Now during quarter two, you would recall that the nickel prices were sub. Well, actually it was above $26,000 to $28,000 per ton and that led to a very high price. So when we consumed that material, about 60,000 tons into -- and at a 10% grade that affected our cost about $200 million in quarter three itself. To put that number into context and at current LME prices, I will possibly treat about 7,000 tons in the coming quarter. And that price is around $120 to $130 million. So that's the impact of price. And as we indicated there was inventory that we priced again at a higher price in quarter two that came into this quarter. That's a one off of $15 million. But as with everyone else, we are experiencing inflationary pressure and I did have some inflationary pressure, both and a bit a few that came into my ops services. So on a go forward, and most definitely not seeing those numbers, and we should see the numbers from quarter one, quarter two, somewhere on the middle of that materializing. On the next question on Onça Puma furnace two. So you are right, that number is at a higher capital intensity than we were previously planning to. And a big factor there in the last six months, when we finalize the estimates, we had a very high inflationary ticket coming into these costs. And we approved it would imperil the team working towards relooking at some of those estimates. So inflation is a big factor there. In addition, I mean we can't be building furnaces in 2022, without relooking at the greening of these furnaces. So there is money in the capital budget to make sure that we can continue to work on fuel switching. And we are looking at using biomass down the line as a fuel option. So that's the other larger one. And we have put some money into the budget for some of the social obligations we have in the region. So this is not your typical budget from a capital point of view that we would typically see, I think, just to also mention that this project does bring a lot of synergies and to the current operation, because as you know, the complex was built for 40,000 tons to return the complex to 40,000 gives us a significant cost benefit. And we've seen that at least a 15% reduction in unit cost. Once the project ramped up, I hope that gives you sufficient color. Thank you.

Our next question comes from Carlos de Alba with Morgan Stanley.

Yes, thank you very much. Good morning, everyone. Couple of questions. One on iron ore costs, I think Gustavo you mentioned the expectation for the fourth quarter is to confer iron ore unit costs to come down to a level similar to the fourth quarter last year. But we're a little bit surprised, at least relative to our expectations on the third quarter. So very optimistic outlook for the fourth quarter. What can you talk about the outlook for the cost going forward? Every single mining company in the world is facing inflation pressures? How do you see iron one unit gas costs moving into 2023, maybe beyond that. On the one hand, you have the benefit of higher production. But again, the inflation cost, inflation pressures are negative. And so if you can share some color, that'll be great. The other will be in terms of the Mariana negotiations. I think Vale has done a tremendous effort to basically turn the page and do everything right to repair the damage that was done in implementing, obviously tremendous efforts as well done by your partner Samarco in Mariana, but you finally really move ahead from the situation. I think, the Mariana, the Mariana situation needs to reach to end. So you can share any colors there will also be very useful. Thank you.

Thanks, Carlos. So I'll take both. On cost, we've shown some improvement quarter-over-quarter $1.5 per ton. This quarter, particularly, we had a little higher percentage of third-party purchase, which impacted the all-in and C1 particularly, which should be normalized in Q4, as I said in my prep remarks, and they you've seen freight coming higher as well. A lot of the dropping costs, especially in September wasn't yet materialized, but we should see this in Q4. So overall, we should see a better picture in Q4 as we continue to bring volume and some of those pressures reduce rent. Looking forward for the next couple of years. Look, we'll talk in more detail at Vale certainly think the entire industry is suffering from high inflation it's affecting, particularly in terms of fuel costs, being bunker so we are seeing some impact on it. But we will share when more details do invalidate what is our view for 2023. I think one thing that we are doing very well is we continue to move on our cost reduction program. Remember we had announced the $1 billion cost reduction. It's moving super well. And that's certainly helping to offset some of those external pressures. On Mariana, look we're positive about reengaging and reaching an agreement I think for all parties here including ourselves. A solution makes sense and a potential settlement makes sense. So we think it's, we'll be able to sit down again and resolve this. As you said, I think it would be beneficial for Vale and for BHP for sure as well and we are optimistic that within the next couple of months, we'll be able to resume conversations and hopefully reach an agreement that works for everybody.

Our next question comes from [indiscernible] with Banco Santander.

Good morning, and thanks for taking my question. My first question is a quick follow-up on iron ore production. So could you please elaborate further on your production outlook for S11 operations? And in your view, what are the main challenges for Vale to deliver a better production figures in the Northern System in 2023? And my second question is related to your new extended net debt concept. So could you please give us more color on how was the decision process of revising these concepts? And as a result, can we assume that Vale will accelerate cash returns to shareholders after these announcements? Thank you.

Thank you, Rafael for the question. Well, let's talk about S11D, the nameplate for S11D is 90 million tons we are below that. And we had that knowledge with the OBK with the funding of the huge amount of just that made us change the mine planning in the way we are processing the realm. So what we can expect in stage here, we have this small just latches already done. So to mid-term, we expect to solve the problem only by 2025. But we have coming on line plus 10, so plus 10 cannot set this the nameplate difference between the what we are producing today, and the nameplate so that that will bring a volume for next year. So we can consider that and the plus 20 is under construction. So by 2025, we have an additional capacity solving definitely the problem of the thing and a tool there we haven't improved coming from the plus 10. And the whole picture for North System, the side North Ranch, we are facing the increase of strip ratio, because we've been waiting for license continuous licenses, it is delaying. So it forces us to move more waste. So increase your cost and you decrease your production volume. So what we have to do to keep the path to reach the license, to bring the license. And three, it's a body not a big one, but it will be important. We already grew up now the LP, the license. So we expect to have the final license by the end of next year. So we bring volumes in 2024. And we call it this a small license. So every time we need to have a suppression in the mine or to reduce the radios close to a cavity that we redesigned the key that we have, we will have to keep the [indiscernible] in the Brumadinho together to speed up this. So we've been doing this but it is not as fast as we can. So we are adjusting the plan to reflect this. All this sophistication in the right time line for that. But that's what we'll have to do, gelato now this year in three and this is more license try to be as fast as we can, but we are in the right planning.

So Rafael, Gustavo, here. Just to close in your second question. Look, I think the objectives were one to make sure we had an indicator more aligned with market. I think that was one of the reasons why we've revisited, the second one is to have an indicator that could inform us better in terms of our capital allocation decision, right? So the items that we took out of the expanding the net debt were very long-term in nature, operational in nature, so we thought it didn't make sense to have them included in our expand the net debt concept. And this at the end, just provide us with more financial flexibility, we have been extremely disciplined over the last several years since Eduardo came, and you should expect us to continue to be very disciplined and focused on cash return to shareholders.

Our next question comes from Rodolfo De Angele with JPMorgan.

Hey, good morning. I think most of my questions already answered, but I just wanted to insist a little bit on what's happening in the North. So the issue with licensing, just wanted to understand exactly what is the issue, because those that operation has been around stable, you had mining plans defined already. So, there should have been a lot of visibility of which areas need to be licensed, and just wondering what is happening, is it the authorities are being more tougher, or what exactly is the issue and how is it that it's going to be overcome? Thanks.

Thank you, Rodolfo. Many points here, first one after Brumadinho, we have a huge transformation the mine business in Brazil, and all are regarding the license, environmental license, but all the permits. And this is one point that we must take in consideration. The other point is the capacity of the agencies, so many times we have to prioritize and don't have enough capacity for that. And that's the main thing that we've been working together with them, bring in a priority to the agency and given them tools and hands to help them to speed up the process to refine the license as a whole. So the mine plan consider that, but your mine plan, if your mine plan consider to get a license in one year. And if you don't get, you have a problem in your mine plan. Every time you have to do this, you made a match in your mine plan. So two things here, as I mentioned, we need to be more realistic in our mine plan to consider that it's tougher. Yes, it's one point. It's after Brumadinho, that's not yes. And don't forget that is common. I can say way of the environmental props in every place in every world is getting more sophisticated, we need to bring more studies. And this is not a problem not only in Brazil, but in every part of the world. So the combination of these three factors, we need to implement a different approach. That's what we are doing, bringing more capability to the agencies.

Our next question comes from Daniel Sasson with Itau BBA.

Hi, everyone. Good morning. Thanks for taking my questions. My first question may be to Eduardo. If you could comment a bit Eduardo on how you think the entrance of concern into your insurer base, shareholders base could help you to develop in your strategic operations or their strategic planning. How have been the first conversations or interactions that you've had with members from concern? How you receive these increase or these participation that they just acquired in the market. That would be great. And maybe my second question to Gustavo and Spinelli, if you could comment a bit on your expectations for China now that the party Congress has finished and she was reelected for a new term. If you could comment a bit on the conditions on the ground that you're seeing for the property sector just wanted to move a bit the call towards these operational metrics or operational performance? Thank you.

Thanks, Daniel. Great question because I think we see [indiscernible] has a validation of our investment thesis, right? When you look at [indiscernible] with the record that the solid track record that they have on grading growth, people that have this mindset, and take this bet on us makes us extremely positive that our interactions so far have been great in the sense that they see the uniqueness of our assets. They act, by the way, they sense that as I mentioned in the beginning of my speech, we have materially de-risked, we have extreme compliant of ESG. So I think it just, it's a great movement, because somebody with track record that can offer obviously, within our Board of shareholders can help us see opportunities, help us unlock value, and see the value, as I mentioned before on my base metals discussion, it's only positive. So it's -- as I mentioned, it's a validation of our investment thesis. And Gustavo, right, if you want to moment up a little bit, because what about confirmation, right?

Yes, and I'll just say before passing to Spinelli to talk about China. We -- you probably saw a recent report from Moody's reaffirming our rating, but more importantly, or as importantly, giving us an upgrade on the ESG stats. I think this is, one external, very important external validator seen all the progress that we've done over the last couple of years, and you've seen [indiscernible] talking about that. So I think the company has evolved a lot in the last several years and we're starting to see some external validations of that progress.

Okay, Daniel, well now about China. So let's split this in short-term and mid to long-term. So best phrase for that is cautiously optimistic. Every time Gustavo says that and coming from the party Congress, we have some mixed feelings, the negative side the geopolitical message, no change to the COVID policies in short term. Some neutrality I think came from the properties, I know that the properties is declining, the demand is -- this is a bad thing, but nothing they are controlling the implementation of the three red lines. This is a good news. So no disruption is perceived. Despite as declining is at least being well controlled. And the good side for that of the party Congress is the infrastructure and manufacturing are -- you can see the FAI. So they are betting on that and their commitment to the environmental goals that will bring an extra demand for our high-grade ores. So this is what we heard from that macro numbers. We see GDP last quarter higher than expect. We expect a 5% growth for the GDP next year. We see a decline for properties in an upside for [indiscernible] and as a whole. We see this year the CSP there production in 1.20 billion tons around that. And next year are both 1 billion below these years. So we have this macro analysis. And I think the other point is mid to long-term we see it remains intact. Stability when the party said its stability we it means for at least 4% to 4.5% GDP growth in the coming years. CSP around 1 billion is a big market day wins in this front we see a strong demands coming from the decarbonization, infrastructure with a lot of stimulus. The remaining urbanization we need to keep this on track. We have a huge opportunity in China and the consumption this two intensitive in the construction. So these together with the environment commitment, we see the big long-term, our thesis it remains intact.

Our next question comes from Tyler Broda with RBC.

Great. Thanks. Thanks very much for the call today. I just had a question. The West III project, you mentioned that that's been halted now. And it was the blending facilities in China. I guess on a wider basis your -- according to our analysis, you'd be at record levels of inventory at the moment. I mean, how does that counseling the West III project change your blending strategy? And then secondly, I mean, how much capacity do you have to be able to hold iron ore within the system? And then the second question I want to ask is just around the base metals progress there in terms of the partnership, but I think sounds much more like this could be someone that's providing more of an industry partnership. I guess, Eduardo, from your thoughts. So how do you sort of play off the difference between the benefits from a more financial or downstream partner versus a sort of a peer? Thanks very much.

Thank you, Tyler. Well, we if you see the numbers of inventory in China, actually, it is low. So we are hitting now 130 million tons as a whole in China in our inventories, is in the low level, also. So we are confident we don't have any problem to raise any venture even for our operations and in blending. So we have spare capacity for that in the Vale's [indiscernible] the capacity we have in Malaysia, in our center. And in regarding the West III project, that's an expansion in Shulanghu port and main entrance of the yellow Delta river. So this is -- it's more related to a Chinese strategy to reorganize their establishment of the CMR the China mineral resource. So CMR is they have the mandate to expand or to optimize their services, and we are really close to them to make this happen. So I think they are holding this decision because of the organization, but in terms of the strategy and synergies with them. We are totally aligned. But we don't see any -- this is not a message of that is enough inventory or capacity. It's just a question to reorganization of the Chinese side.

Thanks, Spinelli. Tyler, I think I'll ask Gustavo to help me he's leading the process. But just to get clear, I think when you look, again, it's a question of value, right? So we want people that perceives, we want partners not Vale. We want people that perceives the same value that we do perceive in the asset, otherwise, we won't do it by the way. So it has to be -- I don't see appear in this case, because it does make it, doesn't make any sense. But Gustavo can give you more color on that, okay. But we want partners and partners that thinks like us.

Yes, I think it's as well as the COVID. Well, look, we are -- we have a very unique asset base here. We are sitting in tremendous amount of resources. In very good jurisdictions. They are very well positioned for two of the most relevant macro trends of our generation, right. The mobilities electrification. So everybody wants to be closer to us. That's clear. And we hear that loud and clear from the market. We are evaluating what is the preferred path, but as Eduardo said, it has to be -- if you were to partner with someone it has to be with someone that believes on those long-term fundamentals is willing to invest is willing to create probably the most exciting future facing commodity platforms in the world. And that's what we are after here.

This concludes today's question-and-answer session. Mr. Eduardo Bartolomeo, at this time you may proceed with your closing statements.

Well, thank you. Thank you guys. I think thanks for the interest and I think this quarter, it really changed a little bit. The perspective was a solid one. In terms of production costs came in line freight as Gustavo mentioned, eventually disappointed a little bit, but not because it's a spec based is a question. It says, is it just a moving or so. We -- I believe we're doing the right things around cost as Gustavo mentioned, I think was a solid quarter. We need to do much better. But we -- I think we're on the right path. As we've been saying, since day one, we will focus on people on reparation and safety, we are materially the risk the company. We have materially decreased. So the case of the characterization on the dams is one evidence of that. The mood is changing rates and is another certification. As a lot of the questions were done, I think we are taking profit of the uniqueness of our portfolio. We're able to deliver the soluble three. We start Onça Puma [indiscernible] as Spinelli went on discussing how we can improve and accelerate that, but the assets that resources are there, and we're going to get them out on the right time. Because we have a unique portfolio in a new unique time of the world. We've seen all the geopolitical tensions, but nobody questions that the way we are. Humanity has to face the climate change the challenge and value I believe, without any doubt is the one of the best miners, the best position miners in the world. Because we're good on both. We see this not as a threat, we see this as an opportunity. And we want to help the climate agenda and of course, create value for society. That's why we exist by the way otherwise, there is no reason to be a miner. And then lastly, I think not necessarily to be reinforced as being discussed as well. We will be extremely disciplined. We only -- we're here to create value to our shareholders, to our society, to our employees to all the stakeholders, so it will take time and as I used to say when we get after Onça Puma deem is not a sprint, it's a marathon, but it's a marathon that we still have a lot of guests to get it to the final end. And I think we weave in our team and our employees are doing the -- what it takes. And I hope to see and listen to you in the next call. Thanks a lot. Keep safe.

That does conclude Vale's conference call for today. Thank you very much for participation. You may now disconnect.