Tubarão Port, ES, Brazil. Vale s Performance in 2Q16

Transcription

1 0 Tubarão Port, ES, Brazil Vale s Performance in Rio de Janeiro, July 28 th, 2016

2 1 Disclaimer This presentation may include statements that present Vale's expectations about future events or results. All statements, when based upon expectations about the future and not on historical facts, involve various risks and uncertainties. Vale cannot guarantee that such statements will prove correct. These risks and uncertainties include factors related to the following: (a) the countries where we operate, especially Brazil and Canada; (b) the global economy; (c) the capital markets; (d) the mining and metals prices and their dependence on global industrial production, which is cyclical by nature; and (e) global competition in the markets in which Vale operates. To obtain further 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 (SEC), the Brazilian Comissão de Valores Mobiliários (CVM), and the French Autorité des Marchés Financiers (AMF), and in particular the factors discussed under Forward-Looking Statements and Risk Factors in Vale s annual report on Form 20-F.

3 2 DOCUMENT CONTENT Operational performance Financial performance Capital expenditures Capital structure

4 3 DOCUMENT CONTENT Operational performance Financial performance Capital expenditures Capital structure

5 4 PRODUCTION VOLUMES Iron ore 1 Pellets 2 Nickel Copper 3 Gold Coal Phosphate Rock Mt Mt Kt Kt '000 oz Mt Mt 2Q Q Q Q Q Q Q Q Includes iron ore fines, lump, ROM, iron ore feed for Vale s pellet plants and third party ore purchases. Excludes Samarco s attributable production. 2 Excludes Samarco's attributable production. 3 Includes Lubambe s attributable production.

6 5 PRODUCTION VOLUMES YEAR-ON-YEAR Iron Ore 1 Pellets 2 Nickel Copper 3 Gold Mt Mt Kt Kt '000 oz -2.8% -17.9% 17.0% 2.4% 9.0% Q15 2Q15 2Q15 2Q15 2Q15 1 Includes iron ore fines, lump, ROM, iron ore feed for Vale s pellet plants and third party ore purchases. Excludes Samarco s attributable production. 2 Excludes Samarco s attributable production and includes third party purchases. 3 Includes Lubambe s attributable production.

7 6 SALES VOLUMES Iron ore 1 Pellets Nickel Copper 2 Gold Coal Phosphate Rock Mt Mt Kt Kt '000 oz Mt Mt 2Q Q Q Q Q Q Q Q figure includes 72.7 Mt of iron ore ex-rom and 0.4 Mt of ROM. Excludes Samarco s attributable production. 2 Excludes Lubambe s attributable production.

8 7 SALES VOLUMES YEAR-ON-YEAR Iron Ore¹ Pellets Nickel Copper² Gold Mt Mt Kt Kt 000 oz 2.4% -6.9% 14.9% 9.7% 11.8% Q15 2Q15 2Q15 2Q15 2Q15 ¹ figure includes 72.7 Mt of iron ore ex-rom and 0.4 Mt of ROM. Excludes Samarco s attributable production. ² Excludes Lubambe s attributable production.

9 8 DOCUMENT CONTENT Operational performance Financial performance Capital expenditures Capital structure

10 9 ADJUSTED EBITDA 1 US$ billion Adjusted EBITDA margin (%) Platts IODEX Iron Ore Price Average (US$/t) Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 1 Adjusted EBITDA excludes non-recurring effects.

11 10 ADJUSTED EBITDA BY BUSINESS SEGMENT 1 US$ million 1Q16 2Q15 Ferrous minerals 2,136 1,738 1,811 Coal (110) (93) (102) Base metals ² ³ Fertilizer nutrients Others (51) (39) (65) Total 2,383 2,005 2,213 1 Adjusted EBITDA excludes non-recurring effects. 2 Includes copper and by-products from our nickel operations. 3 Includes by-products from our copper operation.

12 11 EVOLUTION OF COSTS AND EXPENSES Costs 1 US$ million Expenses 1,2 US$ million -8.7% -31.9% 633 4,304 3,439 3, Q15 1Q16 2Q15 1Q16 1 Net of depreciation and amortization. 2 Includes SG&A, R&D, Pre-operating and stoppage and other expenses. Does not include gain/loss on sale of assets.

13 12 EVOLUTION OF EXPENSES US$ million Depreciation SG&A Pre-operating and stoppage expenses Q15 1Q16 2Q15 1Q16 R&D Other expenses Q15 1Q16 2Q15 1Q16

14 13 EVOLUTION OF IRON ORE FINES C1 CASH COST 1 R$/t -15.6% -7.8% Q15 2Q15 3Q15 4Q15 1Q figures were adjusted to the new allocation criteria, as reported in the 4Q15, and include acquisition costs and third party purchased ore.

15 14 EVOLUTION OF IRON ORE FINES CASH COST, FREIGHT AND EXPENSES US$/t C1 Cash Cost FOB Port 1 Freight Expenses 2 & Royalties -18.5% -29.8% 0.0% Q15 1Q16 2Q15³ 1Q16 2Q15 1Q16 1 Ex-ROM and ex-royalties. All figures were adjusted according to the new managerial allocation changes, as reported in the 4Q15, and include acquisition costs of third party purchased ore. 2 Net of depreciation. 3 Ex-bunker oil hedge.

16 15 EVOLUTION OF IRON ORE SUSTAINING CAPITAL US$/dmt 2.4 Last twelve months Q15 3Q15 4Q15 1Q16

17 16 BREAKEVEN LANDED IN CHINA FOR IRON ORE AND PELLETS US$/t C1 Cash Cost Freight¹ Royalties & Expenses Distribuition Moisture Quality EBITDA Breakeven Iron Ore fines Pellet Adjustment EBITDA Breakeven (pellets & Fines) Sustaining Iron Ore & Pellets Cash Breakeven Cost landed in China 1 Ex-ROM. 2 US$ 0.7/t relates to the dividends received from the pelletizing plants, which are usually paid every six months.

18 17 PRICE REALIZATION IRON ORE US$/t, US$/t Average Platts (dmt) Quality Premium/Discount and commercial conditions Provisional prices in prior quarter¹ Lagged prices Current Provisional prices in current quarter² CFR reference price (dmt) Adjustment for FOB Sales Moisture Vale CFR/FOB price (wmt)³ Impact of pricing system adjustments 1 Adjustment as a result of provisional prices booked in 1Q16 at US$/t Weighted average difference between prices provisionally set at the end of at US$/t 52.7 based on forward curves and US$/t 55.7 from the IODEX. ³ Vale price is net of taxes.

19 18 IRON ORE PRICING SYSTEMS Pricing System Breakdown % Impact of Pricing Mechanisms US$ / t Lagged Current Provisional - prior quarter 1Q16 Lagged 1Q16 Provisional % 34% -1.2 Current Provisional - current quarter 48% 52% 1Q Q % 14% Q16

20 19 FERROUS MINERALS EBITDA VARIATION US$ million, 2Q15 x US$ 257 M 1, ,136 EBITDA 2Q15 Price FX Bunker Commercial initiatives Volume CFR Freight Sales Cost saving initiatives Others EBITDA

21 20 DOCUMENT CONTENT Operational performance Financial performance Capital expenditures Capital structure

22 21 EVOLUTION OF CAPITAL EXPENDITURES US$ million Sustaining Growth Projects -35.4% 2, ,449 1, , Q15 1Q16

23 22 S11D INVESTMENT GROWTH S11D Plant Screening, crushing and patios S11D Logistics Port offshore S11D project, including mine, plant and associated logistics CLN S11D, achieved combined physical progress of 79% in with 90% progress at the mine site and 70% at the logistic infrastructure sites.

24 23 PROJECT PROGRESS INDICATORS Project Capacity Mtpy Estimated start-up Executed capex US$ million Estimated capex US$ million Physical progress 2016 Total 2016 Total Carajás Serra Sul S11D 90 2H , , % CLN S11D 230 (80) 2 1H14 to 2H ,851 1,154 7, % Moatize II 11 2H , , % 1 - Relative to Vale s stake in the project. 2 - Net additional capacity. 3 - Original Capex budget of US$ billion. 4 - Original Capex budget of US$ billion. 5 - There was an increase of US$ 29 million in the 2016 budget. 6 - Original Capex of US$ billion plus US$ 0.45 billion of rolling stock.

25 24 DOCUMENT CONTENT Operational performance Financial performance Capital expenditures Capital structure

26 25 DEBT POSITION US$ million Cash position June 30, 2016 Gross Debt Net Debt 4,306 29,773 31,470 31,814 27,661 27,508 26,509 2Q15 1Q16 2Q15 1Q16

27 26 FINANCIAL INDICATORS 1 Interest coverage - Ratio Net Debt / LTM 2 EBITDA - Ratio Q15 1Q16 2Q15 1Q16 Maturity - years Cost of Debt - % Q15 1Q16 2Q15 1Q16 1 Ex-Refis. 2 LTM last twelve months. Excluding non-recurring items.

28 27 FREE CASH FLOW US$ million 3, , Cash generated from operations Interest on loans Income taxes & Refis settlement program Derivatives Capex Net dividends received/ paid ¹ Net disposal/ acquisition of assets and investments Others ² Free Cash Flow ³ Net additions/ repayments of loans Dividends paid to shareholders Increase in cash & cash equivalents 1 Dividends and interest on capital received from associates and joint ventures and paid to noncontrolling interest. 2 Includes transactions with non-controling stockholders, including dividends related to MBR (US$ 57 million), and interest paid on stockholders debentures (US$ 37 million). ³ Cash flow before debt additions/repayments and distribution of dividends.

29 28 PERFORMANCE OF VALE S SHARES COMPARED TO PEERS Index, 01/01/2016 = Price recovery since Jan/2016 Vale US Peer 1 Peer 2 83% % % 50 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Source: Bloomberg

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