The premium mining player

Transcription

1 The premium mining player

2 isclaimer This presentation may include statements that presenting 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 in which 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), 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 0-F. Cautionary Note to U.S. Investors - The SEC permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We present certain information in this presentation, including measured resources, indicated resources, inferred resources, and geologic resources, which would not be permitted in an SEC filing. These materials are not measurements of proven or probable reserves, as defined by the SEC, and we cannot assure you that these materials measurements include only materials that will be converted into proven or probable reserves, as defined by the SEC. U.S. Investors should consider closely the disclosure in our Annual Report on Form 0-KF, which may be obtained from us, from our website or at

3 Fabio Schvartsman CEO

4 Vale will generate more value for shareholders than its global mining peers 4 Strategic pillars Performance Improvement Clear Strategy Governance Enhancement Sustainability Benchmark

5 Enhancing performance while improving capital allocation 5 Capital allocation Rigorous capital allocation process based on returns Cost efficiency Performance Improvement Integration and meritocracy Automation and cost management Price realization Product portfolio to capture flight to quality

6 Vale is using spot nickel prices to approve capital projects resulting in a capex reduction of US$.6 billion in Nickel capex US$ billion -40%.5 Updated production plan Previous production plan -5%.9 Projects reviewed and capex deferrals VNC dry stacking Voisey s Bay mine expansion Thompson mine extension Indonesia growth plan 07E 08E Previous nickel CAPEX relates to August 06 strategic production plan

7 Focus on competitiveness is expected to increase EBITDA of Ferrous Minerals by US$. -.0 billion by 00 vs EBITDA/t¹, US$/t, 07E vs. 00E SD Innovation and automation Structured cost management program Operational yield Supply chain optimization Total The US$.0-5.0/t gain will come on top of the US$.0/t in supply chain optimization already captured in 07 Assuming no change in Platts IODEX 6% reference price and bunker oil prices, and exchange rate of BRL.5 / USD Operational yield measured by global recovery rate. Global recovery = total production / (waste + ROM) Includes gain in price realization

8 Focus on a strong balance sheet while leveraging the assets and fostering EBITDA growth 8 Iron ore: margins, premium products and flexibility Base Metals Preserve optionality in nickel (Electric Vehicles) Clear Strategy Increase copper production (Salobo III, Victor and Hu u) Coal: leverage mine and logistics Deleverage: US$ 0 billion

9 Vale has adapted its production plan in order to maximize cash flow generation and reinforce supply discipline 9 Iron ore production volumes¹ Nickel production volume Mtpy Northern System Nominal capacity kt Updated production plan Previous production plan ~65 ~ ~400 ~400 ~400 ~ E 08E 09E 00E 0E 0E 08E 09E 00E 0E 0E Including third party purchases

10 Despite lower volumes, Vale willbecome cash flow positive in all nickel operations 0 Unit cash cost after by-product credits US$/t Operation 07E 08E Sudbury,87,98 US$,6 per ton in 09E Thompson 0,488 8,094 Voisey s Bay,06 4,680 VNC 0,5 9,77 PTVI 6,46 6,9 Onça Puma 8,6 7,704 Costs per operation based on site view / standalone companies

11 Better governance and Novo Mercado December nd, 07: important date for Vale Transformation of Vale into a corporation Governance Enhancement Two independent board members Re-rating

12 Sustainability Focus on systematic planning and execution Sustainability Benchmark Beyond Vale s operations

13 Paving the way to create value

14 Luiz Eduardo Osorio Executive Officer, Sustainability and Institutional Relations

15 Progress required to become a reference in sustainability 5 Vale s Pulse Reputation Index¹ Main progress in key areas >80 >70 >60 >40 <9 Excellent Strong Median Weak Poor 65 Reduction in total injury time² from. in to. in Creation of Renova Foundation in July Q6 Q6 4Q6 Q7 Q7 Reduction of 7% in greenhouse gas direct emissions ¹ Pulse Reputation Index (Reputation Institute) ² Number of total injuries/mhw x MM

16 Renova Foundation initiatives are on track 6 8. thousand families with financial assistance.5 thousand families from traditional communities and indigenous people are assisted under Renova Project scope: food, water and economic security 0 tributaries were rehabilitated 800 hectares were replanted Since H6 the level of metals along the Doce river has dropped to the standards seen prior to the dam failure 5 km of roads rehabilitated 689 construction works concluded 9 hectares of high productivity pasture restored Vale is fully committed to support the recovery of the affected areas and communities

17 In 08, the Renova Foundation will focus on the compensation for the affected families and on rebuilding the villages 7 Recovered tributary Rebuilding villages Reconstruction of Bento Rodrigues, Paracatu de Baixo and Gesteira Design of new urban plans based on public hearings Initiation of construction in 08 and expected delivery in 09 Data collection and registration Compensation programs Campaigns to register and identify the affected families Beginning of financial compensation in Governador Valadares (5,000 contacted and 5,000 payments) and in Colatina (8,000 contacted and 8,000 payments) in October 07

18 Coming next: new approach and goals for sustainability 8 Dispersed initiatives Systematic planning and execution Sustainability areas with very good initiatives and ideas but not interconnected, leading to suboptimal results for Vale s stakeholders Redefinition of purpose, operational and organizational models aligning the Sustainability, Vale Foundation, Community Relations and Crisis Management areas that will be completed and applied in Q8

19 Alexandre Pereira Executive Officer, Global Business Support

20 Global Business Support is the main driver to connect and integrate the entire organization 0 Procurement Operations excellence Energy Capital projects Digital technology Implement a Shape Secure a Implement strong Integrate global, integrated and streamlined procurement model competitiveness through a strong management model and a culture of performance sustainable energy model and drive energy efficiency, while moving towards self-sufficient production portfolio management to deliver all capital projects globally, with disciplined capital allocation technologies and drive the digital business transformation to unlock new levels of productivity

21 Global Business Support will drive the digital revolution across Vale to transform the performance of our core business Focus areas Productivity increase Examples of technologies Asset performance > 8-0% Autonomous trucks Advanced and predictive analytics Maintenance > -4% Smart planning and process optimization Automated inspection and maintenance Workforce effectiveness > 5-5% Real-time performance monitoring and optimization Supply chain > 4-6% 4 Initiatives prioritized in iron ore operations at the Northern System in 08 will generate a NPV of ~US$ 50 million and a cost reduction of ~US$ 0.5/t Examples: Overall equipment efficiency (OEE) increase with autonomous haul trucks; truck + conveyor belt; parts inventory reduction; 4 increase throughput

22 Global Business Support will play a key role in building the Vale of the future, increasing the competitiveness of all businesses Globally connected Examples of contributions Culture of performance Digital revolution Develop effective use of data Unlock new productivity levels Integrate functions, expand best practices and leverage scale Foster strong management model and a culture of excellence Engage workforce and share expertise Drive a cultural change

23 Peter Poppinga Executive Officer, Ferrous Minerals and Coal

24 Initiatives from the first wave of competitiveness improvement, ending 06, generated gains of US$. billion vs 04 4 US$ million US$. bi, 8,56, ,476,9,969 EBITDA 04 Price Exchange rate Bunker oil Commercial initiatives Volume Freight COGS Others EBITDA 06

25 In 07, Vale started its second wave of competitiveness based on further integration, capturing the structural "flight to quality trend 5 Performance Improvement SD ramp-up Innovation and automation development Structured cost management program implementation Operational yield¹ improvement Clear Strategy Supply chain optimization (efficiency and price realization) Pellet production increase Operational yield measured by global recovery rate. Global recovery = total production / (waste + ROM)

26 All of SD truckless systems are operating, with their start-ups ahead of schedule 6 System

27 The four truckless systems are operating at over 80% capacity, enabling good performance of the SD ramp-up 7 Truckless system productivity Tons per hour, Jan-Nov 07 SD production in 07 Mt 9.5 ~.5 ~.0 8,000 6,500 Nominal Capacity Realized Jan-Nov 07 Realized Dec 07E 07E

28 SD ramp-up will further decrease Vale s costs 8 Production volumes Mt C cash cost US$/t 90-47% % ~ 07E 08E 09E 00E Current Vale² Current Carajás³ Expected 4 SD C cash cost at the port (mine, plant, railroad and port, excluding royalties) Current Vale based on Q7 Carajás (ex-sd) based on Q7 4 SD fully ramped up, normalized to the exchange rate of BRL/USD.5

29 Investments in innovation and automation will improve operational efficiency and reduce costs by US$ 0.5/t in 00 9 US$ 0./t US$ 0./t MINE AND PLANT Autonomous trucks and drills Fully automatic stackers and reclaimers Modernization of dispatch system Equipment management LOGISTICS Train control optimization Semi-autonomous locomotives Automated maintenance and inspection Equipment management

30 The structured cost management pilot project in the pelletizing plants will be rolled out to the entire iron ore business 0 Pilot project for pellets Methodology - Mapping processes - Gap and goal definition - Action plan implementation Improve maintenance productivity Reduce consumption of raw materials and consumables Process and structure synergies Expected pellets costs reduction US$/t E¹ 00E¹ After the pilot project in the pelletizing plants, the structured cost management program will be implemented in the whole iron ore business with expected costs reduction of US$ 0.5.5/t in 00 Compared to 07E pellets costs for 08E and 00E, therefore 00E reduction is not incremental to 08E.

31 Highest operational yield¹ among peers as a result of increased share of dry processing and strip ratio optimization Operational yield, % Peer average Vale +7bps +0bps +4bps E 00E Operational yield measured by global recovery rate. Global recovery = total production / (waste + ROM) Source: Vale, WoodMac and peers public reports

32 Vale has adapted its production plan in order to maximize margins Production volumes¹ Mtpy Northern System Nominal capacity Global blended volumes Mt ~65 ~ ~400 ~400 ~400 ~400 > 00 ~ E 08E 09E 00E 0E 0E E 08E The increase of Northern System production will allow higher blended product volumes, therefore increasing the inventory level offshore (Malaysia and China) in 08 Including third party purchases

33 Vale has adjusted its product portfolio and quality according to market demand Sales composition, % Carajás Blend Southern Southeastern Others 40% 4% 7% 40% 5% 5% % 4% 5% 5% % 9% 8% 9% 8% 6% E 08E Does not include pellets and pellet feed for pelletizing Mid Western System and Lump

34 The Integrated Operations Center (COI) will support supply chain management, maximizing iron ore business margins 4 Value creation opportunities Better sales price realization and product quality management Improvements in the planning process for sales and operations from mine to port Optimization of ship distribution and response to client s demands Vale has an extensive and complex supply chain - 4 integrated production systems - mines operating and pelletizing plants - 4 railways and waterway - 4 loading ports and blending and distribution ports (Malaysia and China) ships dedicated to Vale (CFR sales) Future opportunities - Excellence Center: improvements in asset management - Local COIs: productivity gains through supply chain synchronization

35 Price realization will progressively improve based on constant supply chain optimization and the structural "flight to quality trend 5 Vale s average price premium¹, US$/t ~ E 08E The improvement in price realization is expected to add up to US$ 50 million in 08 EBITDA Premium over the index Platts IODEX 6% Fe content (includes VIU and premium, does not include pellets)

36 M7 On the iron ore supply side, there are continuous declines in iron ore grades and in investments in new mines to maintain quality 6 China iron ore imports average Fe content % FAI in ferrous mining industry in China RMB billion Fe content imported ore into China Fe content ex-carajás into China E 07e 0 FAI = Fixed Asset Investments Source: NBS, Metal Bulletin and Vale

37 Changes in the Steel Industry and declines in iron ore grades are leading to a consistent and structural flight to quality trend 7 Contaminants discount US$/t 8 % SiO Discount ( %) % SiO Discount ( %) % AlO Discount (.0-.5%) Price spread 65% and 58% Fe iron ore US$/t, net of Fe % adjustment % Phos Discount ( %) Oct-6 Dec-6 Feb-7 Apr-7 Jun-7 Aug-7 Oct-7 0 Jan-6 Apr-6 Jul-6 Oct-6 Jan-7 Apr-7 Jul-7 Oct-7 Source: NBS, Metal Bulletin and Vale

38 Vale is increasing its pellet production to respond to a strong market demand Pellets production volumes Mtpy 65 Nominal capacity Highlights Restart of São Luis and Tubarão I/II pellet plants scheduled for H ~50 ~55 ~60 ~60 - São Luis production capacity of 7.5 Mtpy - Tubarão plants I and II production capacity of 6. Mtpy - Total investments of US$ 50 million 06 07E 08E 09E 00E 0E 0E Vale is continuously looking for opportunities, including the increase in the availability of feed and higher productivity in the pellet plants, in order to respond to market demand Nominal capacity includes São Luís plant and Tubarão Plants I/II, which are currently under care and maintenance

39 Vale s competitiveness measured by normalized EBITDA/t is expected to increase by another US$ -5/t in 00 9 US$/t 4% E 00E In 07, Vale already captured US$.0/t in supply chain optimization Adjusted EBITDA of Ferrous Minerals (excluding manganese and ferroalloys) normalized by the Q7 Platts IODEX 6% of US$ 70.9/t, exchange rate of.5 BRL/USD and bunker oil of US$ 08/t

40 Peter Poppinga Executive Officer, Ferrous Minerals and Coal

41 Coal business will generate solid results by concluding the ramp-up and exploring growth options 4 Clear Strategy Project Finance signed on November 7 th, 07 Leverage mine and logistics Foster mineral exploration Performance Improvement Successfully conclude the ramp-ups of Moatize and Nacala Consolidate margin improvement

42 US$.7 billion Project Finance concludes the restructuring and optimization of the business portfolio 07 Vale coal transactions Proforma production costs through NLC 07E US$ million US$/t 4 Net Nacala tariff US$ 5/t,70, Equity transaction Project Finance Total Production costs Nacala tariff Interest on shareholders loan Cash cost through Nacala Production cost includes mine, plant, railway, port and royalties of coal shipped through Nacala, excluding inventory movement Nacala tariff is composed of debt service, taxes, capital maintenance and other costs

43 Sound ramp-ups of Moatize and Nacala Logistic Corridor increased production and sales volumes in 07 4 Production volume, Shipment volume, Mt Thermal Metallurgical Mt Beira Nacala +% % E E Includes only Mozambique operations Due to prioritization of higher margin metallurgical coal sales, thermal coal inventories built up until 06. Nacala corridor stepped up Vale s logistics capacity and enabled the drawdown of the material

44 The conclusion of the ramp-up will enable Moatize to be more competitively positioned in the industry cost curve 44 Moatize production volume Proforma production cash cost at the port Mtpy US$/t Non-recurring Net Nacala tariff Production cost E 08E 09E 00E 0E 0E 06 07E 08E 09E 00E 0E 0E Net Nacala tariff is composed of investments, working capital, debt service, amortization, taxes and others, net of interest received by Vale related to shareholder loans Production cost includes mine, plant, railway, port and royalties of coal shipped through Nacala, excluding inventory movement Net Nacala Tariff decreases US$ 6/t mainly due to a combined effect of lower net debt service (-US$ /t) and dilution of the tariff on higher 09 volumes (-US$ /t)

45 Greater volumes and higher market prices support the improvement of the business EBITDA 45 EBITDA 06 vs. 07E US$ million EBITDA 07E vs. 08E Stable price scenario US$ million Sales prices Volumes Cost Others Australian operations 07E 07E Volumes Cost Others 08E Mozambique operations Reported -US$ 54 million EBITDA adjusted for the positive effect of thermal coal inventory adjustment recorded in 06 (US$ 67 million) Effect of the positive US$ 56 million EBITDA from the Australian operations in 06 EBITDA Considers 08 average price at approximately US$ 70/t for metallurgical coal and US$ 70/t for thermal coal

46 Jennifer Maki Executive officer, Base Metals

47 Enhancing current performance while consolidating Vale s position for potential upside 47 Improve competitiveness of operations Transition to a smaller footprint in nickel Performance Improvement Clear Strategy Align investments and production based on the market conditions Preserve optionality in nickel (Electric Vehicles) Increase copper production (Salobo III, Victor, Hu u)

48 Changes to ensure all assets contribute to positive cash flow 48 Asset reviews Detailed review across all operations, especially nickel Reviewed at mine level within Canadian integrated operations Positive cash generation at low prices and reduction of non-value adding nickel units with limited upside Nickel asset optimization Care & maintenance of Stobie mine, in Sudbury, in May 07 Care & maintenance of Birchtree mine, in Thompson, in September 07 Care & maintenance of Taiwan nickel refinery Copper asset optimization Divestment of the stake in Lubambe mine, Zambia Core asset focus Acton Precious Metals refinery

49 Initiatives across all operations to increase competitiveness under current challenging market conditions 49 Sudbury Develop fit for purpose organization Implement structured cost management program Achieve CAD$ 00 million challenge by 0 Onça Puma Reduce C cost reaching US$ 7,600/t in 08 with plan to achieve US$ 7,000/t by 09 Solve stakeholder relations issues Thompson Close smelter and refinery in Q8 Reduce CAD$ 40 million of fixed costs in 08 PTVI Continue to improve operation through debottlenecking initiatives Evaluate options for required divestment for October 09 Voisey s Bay Ramp up the Long Harbour Processing Plant Review Voisey s Bay Mining Expansion project VNC Continue to reduce costs Reduce operational bottlenecks Find a potential equity partner to invest and help funding and de-risk Salobo Continue to improve processing plant reliability Sossego Access higher grades at the bottom of Sossego pit with utilization of a fleet of smaller trucks Transition to Pista pit

50 Transitioning to a smaller footprint in nickel by calibrating investments and production to reflect current market conditions Reduction of nickel production forecast kt E Vale Day 06 6 Sudbury Thompson Voisey's Bay -45kt 9 6 PTVI VNC Onça Puma 08E Vale Day 07 In 07: Successful transition to single furnace in Sudbury Completed with no impact on production Ramp-up of Long Harbour increasing from 5 kt in 06 to 7 kt in 07 Voisey s Bay feed being sent solely to Long Harbour Shift to one furnace in Thompson in January 07 Nickel refinery in Taiwan placed on care and maintenance in November 07 In 08: Shift to mine-mill in Thompson in Q8 Continued implementation of AER project in Sudbury Continued ramp-up of Long Harbour to 9 kt PTVI includes reduction of volumes for in-process inventory shipped to Vale s Clydach refinery in United Kingdom

51 Benefits from a single furnace operation in Sudbury 5 Surface plant unit cost US$, total finished nickel CCNR¹ + FMW² to Clydach AER/SFU³ project capex US$, million,6 8,498,584, E 08E 00 Target Following the 07 flowsheet transition, initiatives to right-size the operations will reduce surface plant unit costs 06 07E 08E 09E 00E Capital requirements for the flowsheet change will decrease in the coming years 9 Copper Cliff Nickel Refinery Nickel feed from Sudbury to Clydach AER = atmospheric emission reduction, SFU = surface facilities upgrades

52 Focus continues to be on improving stability of VNC operations and bringing a partner to close funding gap in the next few years 5 Vale New Caledonia VNC has continued to make improvements in ramp-up in 07 with forecast production of 40 kt EBITDA has progressed towards a neutral level in recent months with EBITDA of -US$ 7 million in Q7 Value generation opportunities Operational improvements to address bottlenecks¹ to increase production Reduction of over US$ 50 million in cost annually over the past two years Investment of US$ 500 million over the next four years associated with residue storage decision to proceed in H8 Process launched to find a potential partner to invest equity and help to fund and de-risk VNC Potential to capture upside of cobalt prices with electric vehicles roll-out, with VNC representing about 6% of global cobalt production after rampup In HPAL and Partial Neutralization Considers global production of cobalt in 06

53 Electric vehicles bring upside to the market longer-term 5 Market share of electric passenger vehicles Battery electric and plug-in hybrids only Internal Combustion Engines (ICE) EV s conservative scenario EV s upside considering "market news"¹ Nickel demand for the battery market Battery electric and plug-in hybrids only,000 Nickel in non-ev batteries Nickel in EV s conservative scenario Nickel in EV s upside considering "market news" Equivalent to the size of the nickel market today in kt % % 7% 7% 5%,500 99% 80% 48%, Vale is well positioned to supply the growing battery market Market news refers to public commitments by various auto manufacturers as well as governments (such as UK/France committing to no ICE sales by 040, and other announcements by California, China, etc.) Source: Public announcements, media, Vale analysis

54 Targeted investments and options for growth under the right nickel market conditions 54 Copper Cliff Mine Project Phase Sudbury exploration Indonesian growth options Replacement ore with full production by 0 Poly-metallic ore body (nickel, copper and PGMS) Potential for further phases Well positioned on prospective land in Sudbury Significant land yet to be explored at operating depths Multi-year exploration in place World class laterite ore deposits On-going partnering process to evaluate options to exploit Bahodopi and/or Pomalaa

55 Increase copper production 55 Salobo III Victor Hu u Second expansion to 6 Mtpy Production of 50 ktpy¹ of copper concentrate by processing lower grade material currently being stockpiled Economic feasibility aided by a bonus² to be paid by Wheaton Precious Metals High grade polymetallic project in Sudbury basin Potential for over 500 kt of copper and 00 kt of nickel Deep copper ores averaging: Cu 8-9%, Ni -% and 0 g/t PM/PGMs Currently in FEL II Project located in Indonesia and 80% owned by Vale FEL I to be concluded in Q9 Average volume of the first five years. ² Bonus value depends on the achieved concentration plant capacity after expansion, the grades and the date of the completion

56 Vale plans to consolidate around a smaller nickel business and leverage the quality of the copper assets Nickel Copper 56 kt Sudbury Thompson Voisey's Bay Sorowako Onça Puma VNC kt Sudbury Thompson Voisey's Bay Salobo Sossego E 08E 09E 00E 0E 07E 08E 09E 00E 0E Not including Lubambe

57 Nickel price (US$/t) EBITDA will directly respond to positive price movements from increased demand by electric vehicles EBITDA 00, US$ billion 57 Copper price (US$/t) 5,500 6,000 6,500 7,000 7,500 0, , , , , , With a transformed business, Vale s nickel operations will readily absorb any upside potential for nickel prices, with amplified impact on EBITDA

58 Luciano Siani Pires CFO

59 A glimpse of Vale in US$ billion Iron ore 400 Mt Total assets¹ 7. EBITDA less sustaining scenarios (prices in US$) Return on Assets Pre-tax I II III I II III 55/t 60/t 65/t % 0% 5% Nickel operations Ni 68 kt, Cu 40 kt 9.8 0,000/t,000/t 4,000/t % 6% 0% Copper operations Cu 9 kt. 6,000/t 7,000/t 8,000/t % 4% 57% Coal 8 Mt.8 0/t 50/t 70/t % % % Others². Total Vale 6.4 EBITDA (0.) (0.) (0.) % % 6% Forecast asset base does not include growth projects not approved Others include R&D expenses and energy segment

60 Total shareholder return will improve significantly based on several levers 60 Multiple re-rating Governance Better governance Predictable performance and capital allocation Improved Cash Flows Clear Strategy 4 Streamlined and optimized asset portfolio Optimized capital expenditures Reduced cash flow drags Low-debt Balance sheet

61 Novo Mercado listing on December nd should bear fruit in the near future 6 08E EV/EBITDA¹ Highlights Median of Peers: 5.9x 6.x 6.x Migrating to Novo Mercado ahead of schedule on December nd, 07 Benchmark transaction in the Brazilian Market, with a participation of 80% of retail investors 5.5x 5.6x Peer Peer Peer Dissolution of the current control block and consequent diversification of the shareholder base to give more independence to the management team Promotes higher liquidity for the Company s shareholders, who will have the same rights and benefits under a single class of shares Multiples expected to converge to peers Figures prior to the approval of the restructuring transaction

62 Consistent track record enhancing investor confidence and enabling a higher multiple Iron ore and pellets EBITDA breakeven landed-in-china US$/t Nickel operations cash costs after by-products US$/t 9, ,75 7,45 7,4 5, South Atlantic copper cash costs after by-products Capex US$/t US$ billion 5,5 4,084,86,0,

63 Vale s asset portfolio will be further simplified 6 Non-core Adjacent 4 Cubatão MRS VLI Eagle Downs Iron ore Pellets CSI Manga nese Coal Core Nickel Copper Mosaic MRN Cash Flow Drags Samarco Pre-Op Expenses CSP Aliança Biopalma REFIS Financial Expenses

64 Vale s core assets have low-cost options to increase production and returns Project Volume IRR Size of investments 64 Coal Moatize Expansion (00 s) 5 Mtpy¹ TBD TBD 4 Copper Salobo III ~50 Ktpy² 5% - 7% ~US$ 400 million³ Nickel Onça Puma nd furnace Indonesia expansion 5 Ktpy² 0-40 Ktpy 4 over 5% over 5% ~US$ 50 million US$ billion Pellets São Luís Tubarão plants I and II 7.5 Mtpy 6. Mtpy 6% - 8% 50% - 5% US$ 50 million Preliminary volume subject to reserve exploration activities ² Average volume of the first five years ³ Net of Wheaton Precious Minerals contribution of US$ 600 million 4 Refers to PTVI stake

65 Assets adjacent to the core present potential opportunities 65 Vale s share Normalized EBITDA 00 (Vale s share) Potential strategy Mosaic.0% US$ 40 million After lock in, decide to increase exposure or divest 4 VLI 7.6% US$ 45 million Expansion huge pent-up demand for logistics in Brazil MRS 48.% US$ 0 million Leverage logistics opportunities within the Southern System Aliança Geração de Energia 55.0% US$ 5 million Self-sufficiency in energy (today at 55% coverage) Manganese and Ferroalloys 00.0% US$ 70 million Focus on high-margin alloys through American market development Total US$,80 million Market estimate

66 Non-core assets have an exit plan Reference: US$ billion 66 Divestiture Potential proceeds Potential strategy Biopalma Sale after asset turnaround 4 Eagle Downs 08 Ongoing sales process Cubatão H8 Deal signed in Nov-7 Expected closing in H8 CSI Search for strategic opportunities and leverage performance under new U.S. steel environment MRN Under review CSP TBD? Build track record First positive EBITDA in October

67 Capital expenditures will remain low even incorporating new growth projects 67 US$ billion Growth Sustaining Replacement Growth non-approved E 08E 09E 00E 0E 0E

68 Cash Flow Drags are expected to decline 68 US$ million 07E 08E 09E 00E Reduction Samarco¹ ~69% 4 REFIS Potential decision in Brazilian Supreme Court Pre-operating expenses ~90% Financial Expenses,600 -,700,000 -, ~ 60-65% 07 includes the contributions to The Renova Foundation and working capital to Samarco. 08 onwards include only Renova Foundation contributions as working capital contributions are still subject to Vale s Board approval

69 Iron ore price (US$/t) As a result, Vale will generate substantial cash flow over the next years Free Cash Flow accumulated¹ 08-00, US$ billion Nickel price (US$/t) ,000,000 4, ~ ~ ~ ~4 ~5 ¹ Assumes US$.5 billion in divestment proceeds Note: BRL/USD exchange rate of BRL/USD.5 from 07 onwards. Copper prices fixed at US$ 6,000/t

70 Normalized multiples Resulting in significant shareholder return 70 Value vision 00, US$ billion EBITDA Enterprise Value x x x 9 4 Net debt 0 Market cap Accumulated dividends Total Shareholder Return (%) ¹ EBITDA scenarios from slide 59 ² Total shareholder return per year measured as the gain between November 4 th market cap and 00 market cap + dividends

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