管理層發言
Good morning, ladies and gentlemen. Welcome to Vale's Second Quarter 2026 Earnings Call. This conference is being recorded, and the replay will be available on our website at vale.com. The presentation is also available for download in English and Portuguese from our website. We would like to advise that forward-looking statements may be provided in this presentation, including Vale's expectations about future events or results, encompassing those matters listed in the respective presentation. We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. To obtain information on factors that may lead to results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission, the Brazilian Comissão de Valores Mobiliários and in particular, the factors discussed under forward-looking statements and Risk Factors in Vale's annual report on Form 20-F. With us today are Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr. Rogério Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Shaun Usmar, CEO of Vale Base Metals. Now I will turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin.
Hello, everyone, and thank you for joining Vale's Second Quarter 2026 Conference Call. First, I would like to briefly reinforce our strategic direction and ambition to create superior value for our shareholders. In this context, we have been consistently focused on our key priorities of operational excellence, disciplined capital allocation and the advancement of highly accretive growth projects, particularly in copper and iron ore. Our objective is to build a business that is resilient through the cycle, competitive under different market environments and well positioned to deliver sustainable returns. Despite the uncertainties that continue to shape the global landscape, I'm very confident about Vale's future. And what gives me that confidence is not only the quality of our assets, but also the consistency in which our teams are executing and delivering results. Based on the strong performance in the first half of 2026, yesterday, our Board of Directors approved $1.7 billion in dividends and interest on capital to be paid in September. The Board also approved the extension of our share buyback program for up to 2.3% of our outstanding shares, reflecting our positive view on Vale's long-term outlook and our continued commitment to delivering superior returns to our shareholders. Let me now turn to the highlights of the second quarter performance. We once again delivered solid year-on-year results across all commodities, reinforcing our confidence in achieving all production guidances for the year. In the particular case of VBM, we have now narrowed the guidance ranges for copper and nickel, implying higher midpoints on the back of continued strong operational performance in both businesses. Starting with iron ore in Q2, production reached the highest second quarter level since 2018, supported by the continued ramp-up of the Capanema and Vargem Grande projects as well as the record output at S11D. Sales volumes also increased by 3% year-on-year. In copper, we delivered our strongest Q2 production in the last nine years with a 6% year-on-year increase, while sales volumes grew 10% in the same period. This growth was driven by record second quarter output at Salobo and a very strong performance at Sossego. In nickel, we also achieved solid results. Production increased by 4% year-on-year, while sales volume grew 7%, supported by additional volumes from Onça Puma and Voisey's Bay. Looking ahead, I would like to highlight two important milestones at Serra Sul that will further enhance the performance of this world-class asset. First, I'm very pleased to announce the start-up of the Serra Sul plus 20 project with the commissioning of S11D's second long-distance conveyor belt in July. This project, which also includes mine and plant expansions, will provide greater operational flexibility to the site. Second, in the fourth quarter, we expect to start commissioning the Compact Crushing project which is designed to address operational constraints related to dust and light ore at the Serra Sul mine, helping improve production consistency and strengthen asset reliability. Together, these projects will deliver 20 million tons of incremental capacity at Serra Sul, strengthening Vale's competitiveness and expanding our high-grade product portfolio. Turning now to our copper growth story. Last year, we launched the new Carajás program with the vision of accelerating the development of strategic projects in one of the world's most attractive mineral provinces. Today, I'm pleased to announce the earlier start-up expected for the Bacaba project. Construction is progressing ahead of schedule. As a result, Bacaba is now planning to begin commissioning in Q3 2027, significantly ahead of the original first half 2028 schedule. With 50,000 tons capacity, Bacaba is the first of six accretive growth projects that will support our ambition to double copper production to approximately 700,000 tons per year by 2035. Our second project, the Salobo coarse particle flotation, is expected to be formally announced soon and represents another important step in unlocking the potential of our unique endowment. As we continue to execute our project portfolio with below average capital intensity and compelling rates of return, we believe investors will increasingly recognize the significant upside embedded in our copper platform. Before moving on to our financial performance, I would like to briefly talk about innovation, a key enabler of Vale's long-term strategy. As we've discussed throughout this presentation, our operational results and growth projects are the outcome of consistent execution and a relentless focus on performance. Having said that, we continue to focus on innovation and on developing new technologies that increase our efficiency, enhance safety, reduce environmental impact and strengthen our competitiveness. This is our vision for the mining of the future, a strategic agenda built around five key pillars outlined here in this slide that will help shape Vale's journey. To provide greater transparency on this agenda, we recently published Vale's first Research, Development and Innovation report, showcasing several initiatives that are already transforming the way we operate. Among them, I would highlight the progress we are making with the module plant in Itabira and our autonomous mining initiatives at Brucutu, Capanema and Serra Norte, which demonstrate how innovation is being translated into tangible operational gains. I encourage everyone to explore this report and learn more about how innovation supports our strategic agenda and creates opportunities across the businesses. With that, I'll hand over to Marcelo Bacci to discuss our financial performance. I'll return later for my closing remarks before the Q&A session. Marcelo, please.
Thanks, Gustavo, and good morning, everyone. In the second quarter of 2026, our pro forma EBITDA reached $4.1 billion, representing a strong 19% increase year-on-year despite continued pressure from external cost factors. This performance reflects another quarter of solid execution across our businesses, supported by higher volumes, improved commercial performance and better price realization. At Vale Base Metals, EBITDA totaled $1.3 billion, increasing nearly 80% year-on-year. This performance was driven by stronger realized prices and solid operational execution. In iron ore, EBITDA exceeded $3 billion, supported by higher realized prices and increased sales volumes. These positive effects more than compensated for the higher freight costs and the appreciation of the Brazilian real. Overall, this quarter's numbers demonstrate the resilience of our business and our ability to consistently deliver a solid operational performance even in a more challenging external environment. Now let me turn to the details of our cost performance. In the quarter, our C1 cash cost, excluding third-party purchases, was $24.1 per ton, an increase of 9% year-on-year. The all-in cost reached $61.6 per ton, 18% higher year-on-year. The higher costs were mainly driven by external factors. The appreciation of the BRL impacted both C1 costs and expenses, while diesel and freight costs also increased during the quarter. As I mentioned in our last call, while external variables can introduce volatility into our cost structure, they also reinforce the importance of our relentless focus on productivity and operational excellence. The results of our efficiency program, combined with higher production from low-cost assets such as S11D demonstrate that we're moving in the right direction. Together, these initiatives contributed to $0.50 per ton reduction in C1 cost year-on-year, strengthening our structural competitiveness throughout the cycle. In addition, our hedging program helped reduce the impact of external variables in our results. Our Brent oil hedging program resulted in approximately $100 million benefit equivalent to $1.6 per ton. Considering this effect, our all-in costs were $60 per ton. If oil price volatility persists, this strategy will continue to provide cash flow support in the second half of 2026. Given the increased volatility in external variables, we have decided to update our 2026 iron ore C1 and all-in cost guidance. The revised guidances reflect an average BRL exchange rate of BRL 5.13 compared to BRL 5.60 in our previous guidance as well as an average Brent oil price of $86 per barrel versus $68 previously assumed. As a result, we now expect C1 cash cost ex third-party purchases to range between $22.5 and $23.5 per ton in 2026 compared with our previous guidance of $20 to $21.5 per ton. Roughly 70% of this increase is explained by the combined impact of external effects such as FX and diesel costs. In the same way, we're also updating the all-in cost guidance to $58 to $62 per ton compared with the previous range of $52 to $56 per ton, with around $5 per ton related to oil, FX and iron ore premiums. That said, despite this more challenging external backdrop, we remain fully focused on the variables within our control. Our teams continue to advance a robust pipeline of efficiency and productivity initiatives across the businesses. These efforts are targeting further gains in asset utilization, maintenance optimization, supply chain efficiency and procurement. While these initiatives do not fully offset the impact of FX and oil prices in the short term, they are essential to improving our structural cost position over time. Combined with the ramp-up of our low-cost assets, they will continue to strengthen our competitiveness throughout the cycle and support long-term value creation for our shareholders. Turning now to Vale Base Metals. Both copper and nickel delivered another quarter of strong cost performance, reflecting solid operational execution across our assets and a more supportive market environment. In copper, all-in costs reached a negative $300 per ton, an improvement of $1,700 per ton year-on-year, once again in negative territory. In nickel, all-in costs declined 17% year-on-year, reaching $10,300 per ton. Looking ahead, we expect Vale Base Metals to continue delivering operational improvements beyond the contribution from byproduct prices. As a result, we are lowering our cost guidance for the year. For copper, we now expect all-in cost to range between $0 and $500 per ton compared to our previous guidance of $1,000 to $1,500 per ton. For nickel, we now expect all-in cost to range between $10,000 and $11,500 per ton compared to our previous guidance of $12,000 to $13,500 per ton. This revised range reflects the operational progress we continue to deliver and reinforce the value creation potential for Vale Base Metals. With that, let me move on to our cash generation. Our free cash flow totaled $1.5 billion in the quarter, supported by our strong EBITDA performance and by the settlement of our currency and oil hedging programs, which contributed a positive cash impact of $337 million. CapEx totaled $1.1 billion, reflecting our continued capital discipline and the benefits of the efficiency initiatives we have implemented across the businesses. As Gustavo mentioned, consistent with our commitment to shareholder returns, our Board of Directors approved $1.7 billion in dividends and interest on capital to be paid in September. In addition, we bought back $140 million in shares during the quarter, bringing total repurchases to $214 million year-to-date. Building on this track record, our Board also approved a new share buyback program of up to 100 million shares over the next 18 months, equivalent to 2.3% of our outstanding shares. These decisions reflect our confidence in the strength of our business, our ability to generate cash throughout the cycle and our continued commitment to creating value for shareholders. With that, let's move to the next slide. Driven by our solid cash flow generation, expanded net debt closed the quarter at $16.7 billion, a reduction of over $1.1 billion from the previous quarter. We expect expanded net debt to continue converging towards our reference level of $15 billion over the coming quarters. As we approach that level, we create additional flexibility for shareholder remuneration while maintaining the financial discipline and balance sheet strength. Before handing back the call to Gustavo, I would like to reinforce that we remain focused on strengthening our competitiveness across all of our businesses. Despite the external headwinds facing the industry, our priorities remain unchanged. We continue to advance productivity and efficiency initiatives, improve asset performance, optimize our cost structure and maintain a disciplined approach to capital allocation. Together, these actions are strengthening Vale's position through the cycle, supporting consistent cash generation and reinforcing our ambition to lead value creation in the mining industry. Gustavo, please.
Thanks, Marcelo. Before we move to the Q&A session, let me go over the key takeaways from today's call. First, we continue to deliver a strong operational performance across our businesses, achieving record production and higher sales volumes, reinforcing our confidence in meeting our guidances for the year. Second, we are accelerating our pipeline of high-return growth projects with the start-up of Serra Sul plus 20 project and the earlier start-up expected for Bacaba. This demonstrates our ability to advance initiatives that will support Vale's growth and generate significant value to our shareholders. Third, we remain focused on enhancing cost competitiveness across the company by improving operational reliability, increasing efficiency and strengthening resilience through the cycle. At Vale Base Metals, we continue to capture the benefits of the carve-out. Operational performance is improving consistently, delivering gains not only in production, but also in costs. I'm very confident that we will continue to make meaningful progress over the coming quarters as we build a leading global energy transition metals business. Fourth, we continue to advance our mining of the future agenda, leveraging innovation and technology to improve safety, productivity and sustainability while creating new opportunities across the businesses. And finally, our commitment to shareholder returns remain unchanged. Supported by solid operational results and a strong balance sheet, we continue to allocate capital responsibly through dividends and share buybacks while also investing in Vale's future. Now let's open for the Q&A session. Thank you.
分析師問答
Our first question is from Rodolfo Angele from JPMorgan.
So my two questions are the following. First, on the iron ore business: we noticed the company has been very successful with its freight strategy, managing to pay more than $10 less than the benchmark freight rate to China. What do you expect going forward, since that's a substantial gain? And second, we increasingly discuss base metals when we talk about Vale, and there are many questions about the growth profile. It's interesting that you are able to anticipate Bacaba, the first of six. Could you comment on what was learned, the reason for that, and what it means for the other five? Should we expect similar performance? Also, could you comment on how mature each of the key projects on that front are? That would be very helpful. Those are my two questions and thank you very much.
Rodolfo, to start with Rogério and then Shaun can contribute with the VBM question.
Thank you, Gustavo. Thank you, Rodolfo. Obviously, what we expect looking forward will depend a lot on oil prices. But we do have a hedge program also in place. Let me give you a little background on our freight strategy and why we've been successful. In general, we have about 75% of our freight portfolio secured under long-term time charter contracts, which gives us a stable cost base. For example, in 2026, we have been reducing our spot exposure effectively through mini COAs, which are short-term contracts of affreightment, and also using the derivatives market for freight, the freight forward agreements. With those two instruments, we've been able to decrease the exposure that we had of 25% to about 10%, actually less than 10%. This is also what we're doing for the years ahead for 2027 and 2028. We're seeking opportunities to get into the market and reduce that exposure. On oil, we have a hedge program in place to reduce the volatility and the impact of fuel on our costs. Differently from the seaborne spot market, we have vessels that are scrubber-fitted. So generally, when you're talking about spot bunker prices, you're referring to low-sulfur oil, which currently carries a very high spread. So generally, we're paying about $250 per ton lower than the spot bunker prices. The exposure for the second semester is also low.
Yes, Rodolfo, it's Shaun. On your Bacaba projects question, if I take you back on our journey, the restructure of VBM was setting us up for execution. Late 2024 we moved to a decentralized organizational model, really simplified and completely changed our approach to capital allocation, project studies and project execution. What that has meant is a change in approach both in terms of breaking down silos, simplifying and focusing on our execution model. If you look at our Vale Day presentations and the Vale Base Metals Day we did a few months ago, we provided materials that show the evolution in approach and rates of return. Every quarter this team has excelled and delivered on or exceeded operating guidance. Those are table stakes. On the projects, it's earning credibility, which hopefully this latest announcement enhances so the market can start capturing it. On Bacaba, when we started the project it had a mid-teen return before our restructure. With our different approach we were able to substantially reduce capital by a couple hundred million dollars, nearly a 50% reduction, and we are able to accelerate execution. We're nearly 40% progressed already. The returns that we had previously at about 50% are now closer to 70%. The point is it's one thing for mining companies to talk about it, but the question is what can we make happen. Bacaba is the first cab off the rank and the real focus has been on identifying bottlenecks, accelerating execution and doing so safely. We continue to deploy that model to the other five projects that Gustavo has shown. A few quick things: we have taken roughly $0.5 billion of capital out, substantially boosting returns. We're targeting improvements that you'll see at Salobo when we announce the coarse particle flotation. The big one towards the end of the decade is Alemão, and we're on track. I won't suggest that will happen earlier at this stage. We started drilling more aggressively: we went from 30,000 meters to 60,000 last year, guided to 120,000 meters this year and we're already at 140,000 meters targeted. Around the pit at Bacaba we're seeing extension potential high grade at depth and at the sides; we were targeting 10,000 meters and are already at 22,000 meters. This indicates value beyond the single project. We guided to about a 30% capital reduction and well below industry capital intensity. I would like to think analysts and the investment community will start to build some of this in. This approach translates across risk and confidence in our ability to deliver on the pipeline Gustavo mentioned. Thank you.
Our next question is from Daniel Sasson from Itaú BBA.
My first question is actually a follow-up on Rodolfo's question. Shaun, you are bringing Bacaba six months ahead of the original schedule. That's significant. Can you say whether the differences you made in planning that led to the acceleration could be replicated across similar projects in your pipeline to support your ambition to double copper production by 2035? Is it too soon to tell, or could Vale reach its goals ahead of prior guidance? My second question to Marcelo: if you could walk us through your thought process regarding the trade-off between shareholder returns and balance sheet resilience in light of the upward revisions in your cost guidance. Specifically, what are you tracking to decide on executing the buyback program more aggressively or paying extraordinary dividends in the second half versus preserving the balance sheet given the volatile operating environment?
To your question, the short answer is yes. We're not assuming any two projects are the same because they're not, but we're looking at each project on its distinctive attributes. We published technical materials at our Base Metals Investor Day to help analysts and investors assess our claims. In the next number of weeks we'll publish the coarse particle flotation announcement, which is the next project and will increase throughputs and sustained throughput at Salobo with very high rates of return. That is a brownfield project with a 2029 time frame. The really big one is Alemão at the end of the decade and we're on track. As part of our life of business planning we've taken roughly $0.5 billion of capital out and boosted returns. Because of what we're finding in drilling and life of business planning, even the sequencing of projects may change. The rocks and metal are there and the focus is on execution to potentially go beyond the 700,000 tons target. We'll continue to provide updates at the next Vale Day and in quarterly reports. I'm confident this team is delivering and we aim to prove it by being on budget and early.
Daniel, on your second question: most of our cash flow generation comes in the second half of the year, so second-half performance will be key to determine capital allocation for that period. The new cost guidance does not materially change our potential for cash flow generation in the second half. Cash outflows related to reparation and other obligations are already provided for and considered in expanded net debt. We are confident we should be approaching close to $15 billion of expanded net debt at year-end. That year-end level will determine capital allocation in the second half. We re-established the share buyback program to leave that option open. The decision about the total level of shareholder remuneration will depend on cash flow generation; the choice between buybacks and dividends will consider share price and tax aspects. That decision will come later in Q3 or the beginning of Q4.
Our next question is from Carlos De Alba from Morgan Stanley.
I wanted to follow up on some of the questions on freight. I understand that exposure was reduced to 10%. Is that also the case for the second half of the year? Typically, you have more volumes in the last semester and therefore more exposure to freight. I wanted to make sure that 10% already includes this increased exposure in the second half. Second, any updates on Fábrica and Viga? When are those expected to come back? Also, what's the progress of the ramp-up at Oman, given the conflict in the Middle East escalated again? Any color on São Luís given we saw a big reduction in second-quarter production?
Carlos, on freight, you are right that generally we have more exposure in the second semester. The 10% number is a flat number averaged for the year, but we do have low exposure also for the second semester. I also want to highlight another important point: differently from the seaborne spot market, we have vessels that are scrubber-fitted. So when you look at spot bunker prices, which are driven by low-sulfur oil, they currently carry a very high spread. As a result, we're paying significantly less than spot bunker prices. Regarding Fábrica and Viga, from an operational standpoint both are ready to be resumed. We've received authorizations from the municipalities and we are now working with state and federal authorities to resume operations. We are optimistic we'll be able to do that in the near future and we are not expecting an impact on our annual guidance for the year. Oman is operational and supplies direct production to the Middle East. It's important to note that Bahrain's pelletizing plant, a main producer of direct reduction pellets in the region, has stopped, so demand for DR pellets is high and we are arranging different logistics to serve clients. Oman will have a stoppage in October to do a tie-in for the new concentration plant we are building there, but other than that the plant is operating well.
Our next question is from Rafael Barcellos from Bradesco BBI.
First question: looking at your new all-in cost guidance for iron ore and given what you delivered in the first half, it seems your guidance implies an all-in that is roughly flat with the first half, while your C1 guidance implies a more significant decline in the second half. Can you explain what drives the difference between your expectations for C1 and all-in trends into the second half? Second question: in your R&D and innovation report you mentioned an initiative at the Conceição operation delivering a 25% increase in productivity and cost savings from AI applications. To what extent do you believe this can be material for Vale and make you more confident in lower costs going forward?
Rafael, on the cost question: remember that oil prices have a much higher impact on the all-in than on C1. That's why you see C1 reducing in the second half while the all-in is flattish. Also, the oil price effect was concentrated in Q2; in Q1 prices were much lower. There is also a lagging effect: some realized costs in the first half, especially in Q1, were based on cost formation at the end of last year. Those accounting effects also play a role. This explains why all-in for the second half is flattish compared with the first half but lower than Q2.
Thanks for the question. On Conceição, this project is really a milestone for us. After it started operating in March, we noted a 25% increase in production volume and a fundamental change in the production mix. Prior to the project, the concentration plant used to produce 50% direct reduction feed and 50% blast furnace feed. Now the mix has changed to 75% direct reduction and 25% blast furnace. This is a fundamental change. We are rolling out this technology to other concentration plants: Brucutu is undergoing the same process and we expect to complete during the first half of next year. Conceição 2 produces between 11 and 12 million tons a year and Brucutu produces 30 million. Once Brucutu's work is completed, we will roll out to Vargem Grande complex (Vargem Grande 1 and 2) and also the Pico concentration plant. There is tremendous potential to stabilize processes and improve profitability in Minas Gerais.
The next question is from Alex Hacking from Citi.
A couple of questions on copper. How should we be modeling Sossego for the next two or three years with Bacaba accelerated? If you have success with additional drilling at Bacaba or other satellite deposits, what's the limit on the processing capacity there?
Thanks for those. Sossego is nearing its end of life with the Sequeirinho pit. Vini and his team have done a remarkable job; even with diesel price increases they have reduced specific consumptions and offset energy costs. Last year alone they reduced unit mining cost substantially, making previously uneconomic ore economic. They continue to extend the back end. We're targeting in our portfolio overall more than 20% increase in reserves and resources over 18 months to two years. We're well on track. The constraint, particularly in Pará, is how many drills we can get turning sooner because we are finding very promising targets nearby. Specifically, Sossego: the intercepts we published are being followed up with around 60,000 meters of drilling to see at depth; none of that is currently in our life of mine plan, so it is upside potential. On Bacaba, Bacaba is 50,000 tons. The work on the SAG mill will take us from 12 to 15, which is central to the Southern Hub economic potential unlock. We have planned downtime from August through November, which will impact costs and volumes for copper in the second half of the year. The incremental tons as you transition from the back end of Sossego and Bacaba coming online are roughly 15,000 to 25,000 tons incremental. I would like to think we can prove up more. We'll update the market as we revise life of business plans.
The next question is from Caio Ribeiro from Bank of America.
I wanted some color on the iron ore market, particularly after the recent escalation of the conflict and the impact on oil prices. We're still seeing freight prices at very high levels, yet iron ore has been correcting, which suggests it hasn't benefited from that cost push inflation the same way it did when the conflict first started. What are you seeing on the ground that is driving the recent weakness and what is your perspective for the next six months? Have you noted any slowdown in shipments or curtailments from smaller miners given depressed FOB prices? Second, on the caves decree modernization being proposed, what implications do you see for your long-term targets in terms of product mix, cost structure and ability to compensate for depletion in the Northern system?
Caio, overall we see the market fundamentals as resilient. Global pig iron production is broadly stable, which is the most important indicator for iron ore demand. Demand outside China is improving. China is more balanced than some domestic indicators suggest. Official data show crude steel production down about 3% year-on-year in the first half, but other public sources indicate a smaller decline closer to 0.5%. Exports are offsetting some domestic weakness: direct steel exports reached 55 million tons in the first half of 2026 and we think this will be an important stabilizer. Outside China, steel production increased about 2% year-on-year which provides more resilience. For the second half, when we simulate cost curves with freight rates and Brent near $90 per barrel, at $95 per ton price you'd have about 120 million tons of iron ore at the cost limit. That is significant and should create a stabilizing response in the market.
On the caves decree, we are monitoring the modernization closely. We think it will be an evolution that can include environmental protection while providing clarity for project development. We do not yet know the details, so it is early to say the potential impact. The Northern Range is likely to have the most impact over the years due to cave restrictions. We are hopeful it will mitigate some of that impact, but the final terms will determine the effect.
To complement Gustavo, our concentrate in China is becoming an important product because China is replacing some sintering strands with pelletizing plants, and we are successfully promoting our pellet feed concentrate in China. Demand is increasing significantly. The flexibility to blend and develop different products is a key element, and we will decide product mix based on market conditions and our mines.
Next question is from Amos Fletcher from Barclays.
A couple of questions. First, your thoughts on the future structure of Vale Base Metals given the positive outlook for copper and peers trying to grow copper exposure — does it make sense for Vale to reduce exposure? Second, on the unit cost guidance in copper, which implies sharp increases in H2, is that all driven by what's happening at Sossego or is there anything at Salobo we should be aware of?
Amos, Gustavo here. You heard Shaun articulating the prospects and I highlighted them in my remarks: there is tremendous opportunity to substantially grow the share of copper within Vale's portfolio. We are targeting to double production and Shaun indicated potential to go beyond that. You should expect us to continue to be highly invested in copper. Much of the growth is within Carajás where we already have a very strong operation.
To complement Gustavo and regarding the H2 cost guidance: I encourage you to look at the cadence of maintenance and capital we have disclosed. The primary impact to copper costs in H2 is the planned maintenance at Sossego running August through November. That will impact volumes and costs in Q3. We've factored this into guidance. Salobo is performing well; the main driver for the H2 increase in unit costs is Sossego's maintenance. Beyond that, we have ongoing cost improvement programs which will continue to feed into lower costs in the future.
Next question is from Marcio Farid from Goldman Sachs.
A few follow-ups. Rogério, on freight: looking mid- to long-term, contracts renew from time to time. Have you been able to roll new contracts at rates similar to your existing long-term contracts, or have spot prices influenced negotiations? On hedging, last time you mentioned about 30% hedged for bunker exposure into next year. Have you increased that? Also on the caves decree: if you get flexibility in Carajás and ramp up Northern Range production, will you add incremental supply or replace higher-cost, lower-margin volumes? Sorry for the long questions.
Marcio, we manage the freight book over long horizons. Some long COA contracts run for many years; we continuously enter into new contracts as others expire. This year alone we've done three rounds of bookbuilding for time charter contracts and contracted long term at attractive levels, though I cannot disclose exact numbers. We also work with mini COAs, which tend to be around five years, and we use freight forward agreements. We think we have a pretty balanced book for the coming five to ten years and longer. On hedging, we've increased our program: combined, we have roughly 70% of our requirements hedged using 0-cost collars and forward agreements.
That's correct. We have close to 70% hedging for 2027 at an average Brent-equivalent price of about $77 per barrel.
Thanks, Marcelo. To highlight, Rogério and the team implemented this strategy over the past years: increasing the long-term affreightment ratios and implementing hedges to protect fuel costs. We put these hedges in place well before recent geopolitical events, and we are seeing the benefits today. On the caves decree, being able to bring volumes from the Northern Range into production is strategic and would create substantial portfolio value, improve C1 and all-in costs. We will assess how this fits with our overall portfolio including product mix to China and other markets.
Just to confirm Carlos's earlier question: our exposure for the second half is below 10%.
Next question is from Marina Calero from RBC.
Follow-ups on cost. First, on FX strategy: can you remind us your hedging strategy for the currency and whether you're seeing any opportunities for 2027?
Marina, on FX we have a strong strategy related to real-denominated debt: essentially 100% of our real debt is hedged into dollars. A significant part of our other obligations, especially reparation obligations, are also hedged into dollars. For running costs we operate from time to time. Recently, volatility has been relatively low and the BRL has been around BRL 5 to BRL 5.10, so we have not been operating short-term cost-related FX hedges recently.
This concludes today's question-and-answer session. Vale's conference is now concluded. We thank you for your participation.