Eneva (ENEV3.SA): R$340mn settlement on Vale LNG contract termination;250k m³/day freed up

Research evidence excerpt

Eneva (ENEV3.SA): R$340mn settlement on Vale LNG contract termination;250k m³/day freed up

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23 Jul 2026 21:13:32 ET │ 11 pages

Eneva (ENEV3.SA)

R$340mn settlement on Vale LNG contract termination; 250k m³/day

freed up

CITI'S TAKE Buy

Price (23 Jul 26 18:00) R$25.70 Eneva announced today the receipt of R$340mn from Vale as part of an

Target price R$31.00 amicable settlement terminating the LNG supply contract from Eneva’s

Parnaíba Complex liquefaction plant to Vale’s São Luís pelletizing plant Expected share price return 20.6%

(UPSL). All supply obligations ceased effective May 31, 2026. The original Expected dividend yield 2.7%

contract, signed in July 2022, had a 5-year term and 250k m³/day of Expected total return 23.3%

contracted volume, with commercial deliveries starting after the plant’s Market Cap R$49,668M

ramp-up in late 2024/early 2025. We highlight that the termination is US$9,769M

specific to Vale; the Suzano contract, supplying up to 160k m³/day,

remains in force.

Joao PimentelACWhy Vale walked away. The termination follows Vale’s strategic decision to

+55-11-4009-2178suspend the São Luís pelletizing operation. This is consistent with the current weak

joao.pimentel@citi.compellet market conditions and global oversupply, with Vale bringing forward

preventive maintenance at UPSL and idling the asset, redirecting pellet feed to fines Felipe Lenza

sales. +55-11-4009-5231

felipe.lenza@citi.com

How to think about the R$340mn. The R$340mn settlement is equivalent to

roughly 20 months of contract revenue. Against a residual term of ~3.5 years, the

settlement is short of the full contractual value - so, on a strict NPV basis, a modest

value detractor relative to a scenario where Vale kept performing, though immaterial