A vintage time Merrill Lynch Pan-LatAm Conference March 2008 1
Disclaimer “This presentation may contain statements that express management’s expectations about future events or results rather than historical facts. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected in forward-looking statements, and Vale cannot give assurance that such statements will prove correct. These risks and uncertainties include factors: relating to the Brazilian and Canadian economies and securities markets, which exhibit volatility and can be adversely affected by developments in other countries; relating to the iron ore and nickel businesses and their dependence on the global steel industry, which is cyclical in nature; and relating to the highly competitive industries in which Vale operates. For additional information on factors that could cause Vale’s actual results to differ from expectations reflected in forward-looking statements, please see Vale’s reports filed with the Brazilian Comissão de Valores Mobiliários and the U.S. Securities and Exchange Commission.” 2
Agenda � A remarkable growth history � A successful investment performance � Confidence in the future 3
A remarkable growth history 4
2007: another vintage year � Outstanding operational performance : nine production records � Outstanding financial performance : record revenue, operational profit, net earnings, cash generation, dividend per share and investment 5
Sustained high performance over time Net earnings (US$ billion) adjusted EBIT margin (%)¹ CAGR: 66.2% 44.2% 41.2% 42.5% 11.825 38.7% 30.7% 7.260 4.841 2.573 1.548 2003 2004 2005 2006² 2007 1 excluding extraordinary inventory adjustment 6 ² pro forma figures
High operational margin across-the-board Operational margin 2007 Ferrous minerals 47.9% Non ferrous minerals¹ 47.1% Aluminum 31.2% Logistics 24.0% 1 excluding extraordinary inventory adjustment 7
Sales diversification by products, origin and destination Revenues - US$ 33.1 billion 2007 By destination By product By origin Brazil Europe Row Others 16.0% 1.9% Australia 4.1% 4.3% 0.5% Aluminum Iron ore and Asia 8.2% pellets Americas 8.5% 44.7% ex-Brazil Europe 17.5% 22.1% Brazil 61.5% North Nickel America 30.3% Manganese 27.6% and China ferroalloys Copper 17.7% Asia ex- Logistics 1.9% 6.0% China 4.6% 22.6% 8
Powerful cash flow generation originated from a well-balanced portfolio of bulks and exchange- traded metals Cash generation Adjusted EBITDA composition US$ billion 2007 2 CAGR: 67.7% 16.836 Ferrous minerals 47.3% Logistics 3.7% 12.397 Aluminum 5.8% 6.540 Non ferrous 3.722 minerals 2.130 43.2% 2003 2004 2005 2006¹ 2007² 1 pro forma figures, excluding extraordinary inventory adjustment 2 excluding extraordinary inventory adjustment 9
Prices and sales volumes were instrumental to EBITDA growth. The USD depreciation and cost inflation continued to pressure our cash flow US$ million Vale adjusted EBITDA (122) (204) (210) 1,490 (351) (364) (680) 5,750 (870) SG&A Dividends 16,836 R&D Non received Cost Volume cash Volume inflation ∆ FX costs 1 12,397 Price 2006 2007 1 cost rise derived from production increase 10
Iron ore: unrivaled global scale and scope � Record production of the world’s best iron ore: 295.9 Mt. � Record shipments: 296.4 Mt. � Leading supplier to China � Sales with global reach – all five continents. � Global price settler for the seventh consecutive year. � 65% rise for Southern and Southeastern Systems ores. � 2008 fines prices � US$ 0.0619 per Fe unit dmtu premium for Carajás ores. 11
Vale is the uncontested leader of the global iron ore market… Iron ore production million metric tons Vale +12% Rio Tinto +9% 2 0 0 7 +4% BHP Billiton 2 0 0 6 Anglo American +4% 150 Mt 300 Mt 12
… and the second largest nickel producer Nickel production ‘000 metric tons 21.0% ¹ Norilsk +5.6% Vale -1.0% BHP 2 0 0 7 -0.1% Xstrata 2 0 0 6 -6.2% Anglo 150 kt 300 kt ¹ Norilsk has acquired Lion Ore and OMX in 2007. Excluding acquisitions, its nickel production would decline by 3.9% 13
Capability to generate value through acquisition growth: successful integration of Vale Inco � Introducing discipline in capital allocation and our standards of relationship with communities and environmental protection � Exploitation of synergies: Sudbury Basin, global procurement and mineral exploration � Record nickel production: 247,900 metric tons � Totten: the first project to be developed in the Sudbury Basin over the last 30 years � Creighton Deep: reserves increase at Sudbury 14
Successful integration: the development of Goro December 2006 � Compliant with EU safety and environment standards � Construction of Prony December 2007 Bay port and power plant concluded � All relevant equipment already installed 15
Successful integration: the development of Goro � Operation license expected for June 2008 � First autoclave expected to start-up in October � Production to start- up by year end � Opportunity for a low cost brownfield project 16
A successful investment performance 17
A strong track record of project delivery, providing new value-creation vehicles Carajás 100 Mtpy Capão Taquari- São Luís Mo I Rana Xavier Vassouras Brucutu Pier III Fábrica Capim Trombetas PDM Nova Branco I 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 Carajás 85 Mtpy Alunorte 3 Sossego Aimorés Alunorte 4&5 Carajás Funil Candonga Capim 70 Mtpy Branco II Paragominas I 18
A proven track record of successful acquisitions - US$ 25 billion over the last years Consolidation Consolidation Growth Growth of of iron iron ore ore plataform plataform in in leadership coal leadership coal Becoming a Becoming a global leader global leader in nickel nickel in 19
Dealing with the growth trilemma: financing growth and distributing dividends… Financing high growth capex 1 Returning capital to shareholders US$ billion Dividend per share US$ per share 20.628 CAGR 26.8% 0.39 11.004 0.29 0.27 0.17 4.998 0.15 2.092 1.988 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 1 Capex figures includes acquisitions and are based on cash disbursements 20
… while maintaining a sound balance sheet and a low-risk debt portfolio Debt cost and maturity Debt and leverage 2.0 Years 1.9 % Total debt - US$ billion¹ 9.0 11.5 10.7 Total debt/LTM EBITDA (x)¹ 8.5 10.5 1.3 1.2 8.0 7.9 22.6 23.5 1.1 9.5 7.5 19.1 18.3 19.0 1.1 7.0 8.5 0.8 0.8 0.8 0.8 6.5 0.7 7.5 0.7 6.7 6.1 6.0 6.1 5.9 5.9 5.0 6.5 4.2 4.2 3.9 5.5 5.0 5.5 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 4Q07 4Q07 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 Average cost of debt Average debt maturity ¹ at end of quarter, excluding inventory adjustment. 21
Our investment program is anchored on a good track record of discipline on capital allocation Return on capital invested 48.0 Capital invested US$ billion 1 64.4% 54.3% ROIC % 2 54.7% 31.2 46.8% 39.4% 11.1 7.5 5.4 2003 2004 2005 2006³ 2007³ ¹ PP&E + working capital + R&D 2 before income taxes 3 excludes effect of extraordinary inventory adjustments 22
# 1 in the globe in shareholder value creation among large-caps 1 The large-cap Top Ten Total shareholder return 2 (TSR) 2002-2006 Vale 54.6% Vale América Móvil 53.3% Apple 50.6% British American Tobacco 25.8% Genentech 24.5% Anglo American 23.2% BHP Billiton 23.2% Endesa 20.8% Toyota 20.7% Boeing 20.1% 1 Boston Consulting Group “The 2007 Value Creators report”. Large cap = companies with market cap above US$ 50 billion 2 TSR average between 2002 and 2006 23
The best performance among large mining companies Total shareholder return 1 (TSR) 2003-2007 73.7% Vale Xstrata 65.4% BHP Billiton 46.3% Rio Tinto 43.4% Anglo 36.3% American ¹TSR average between 2003 and 2007 Source: Bloomberg 24
Organic growth continues: the largest capex in the mining industry in 2007 Total capex by business area 2007 - US$ 7.6 billion 2008E - US$ 11.0 billion Ferrous Others Ferrous minerals 3.9% minerals 22.9% Others 29.6% Steel 5.1% 3.7% Steel Power 0.7% generation Power 2.2% generation Coal 4.3% 2.2% Coal Logistics 3.5% 12.8% Logistics 17.0% Non ferrous minerals Aluminum Non ferrous 41.0% Aluminum 11.3% minerals 6.9% 32.9% 25
Shaping the future: investing US$ 59 billion over the next five years Reference Totten Greenfield Litoranea US$ 1 billion Karebbe Setentrional CSV Bayovar Equatorial UHC Estreito Vermelho Moatize Fazendão Papomono Oman Eastern Range Itabiritos Maquiné-Baú Tubarão VIII CSA Salobo I Serra Sul Goro Onça Puma NAR Barcarena 2008 2009 2010 2011 2012 Iron ore & pellets Alunorte 6&7 Voisey’s Bay Nickel Carajás 130 Mtpy Coal Paragominas II Copper Southern Corridor Paragominas III Bauxite & alumina Phosphates Logistics Carborough Downs Power generation Steel Brownfield 26
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