The journey to sustainable value creation October 18, 2010 1 - - PowerPoint PPT Presentation

1 October 18, 2010

Roger Agnelli

Chief Executive Officer

The journey to sustainable value creation

2

“This presentation may include declarations about Vale's expectations regarding future events or results. All declarations based upon future expectations, rather than historical facts, are subject to various risks and

• uncertainties. Vale cannot guarantee that such declarations will prove to

be correct. These risks and uncertainties include factors related to the following: (a) the countries where Vale operates, mainly Brazil and Canada; (b) the global economy; (c) capital markets; (d) the mining and metals businesses and their dependence upon global industrial production, which is cyclical by nature; and (e) the high degree of global competition in the markets in which Vale operates. To obtain further information on factors that may give rise to results different from those forecast by Vale, please consult the reports filed with the Brazilian Comissão de Valores Mobiliários (CVM), the French Autorité des Marchés Financiers (AMF), and with the U.S. Securities and Exchange Commission (SEC), including Vale’s most recent Annual Report on Form 20F and its reports on Form 6K.”

Disclaimer

3

1 0 th Vale listing anniversary

4

5 1 0 1 5 2 0 2 5 3 0 3 5 4 0 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 US$

¹ VALE – the ADR representative of our common shares - started trading on the NYSE on Wednesday, March 20, 2002

VALE P

VALEP started trading on the NYSE on Tuesday, June 20, 2000¹

June 2 0 , 2 0 0 0 October 1 2 , 2 0 1 0

5

2 0 0 4 0 0 6 0 0 8 0 0 1 ,0 0 0 1 ,2 0 0 1 ,4 0 0 1 ,6 0 0 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0

VALE P MSCI m etals & m ining MSCI W orld

It has been one of the best investment options. Each US$ 100,000 invested in VALEP has grown into US$ 1.2 million in October 2010

June 2 0 , 2 0 0 0 October 1 2 , 2 0 1 0 100

6

A promising outlook Growth and value creation The quest for sustainability Agenda

7

A promising outlook

8

• 4
• 3
• 2
• 1

1 2 3 4 5 6 7 8 9 1970 1975 1980 1985 1990 1995 2000 2005 2010E 2015E

Developed Econom ies Em erging Econom ies

Sources: Vale and IMF

Real GDP grow th % annual Convergence

Emerging economies will continue to be the key engine of global growth, with positive implications for the demand of minerals, metals and fertilizers

Convergence

9

5 10 15 20 25 30 35 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Emerging Economies Developed Economies

Steel consumption intensity

metric tons / US$ million of real GDP

Source: World Steel Association, WBMS, IMF and Vale

Intensity of metals consumption in emerging economies is expected to remain high in view

• f urbanization, industrialization and the rising

consumption of consumer durables

20% 30% 40% 50% 60% 70% 80% 90% 1997 1999 2001 2003 2005 2007 2009

Iron Ore Nickel Copper

Share of emerging economies in global consumption of metals

10 10 20 30 40 50 60 70 80 90 100 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Brazil Korea China I ndia

Urbanization rate

%

Source: UN Department of Economic and Social Affairs, “World Urbanization Prospects: the 2009 revision”.

China’s urbanization rate in 2010 is equal to Brazil’s position in the mid 50’s and Korea in the early 70’s

10 20 30 40 50 60 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

China W orld

Urbanization rate

%

11

In spite of the substantial expansion, there is still room for large flows of infrastructure spending in China

2005 2009 2020F Expressways (km) 41,000 65,000 100,000 Railways (km) 75,437 86,000 120,000 Airports (number) 140 166 244

F = Target Sources: NBS, NDRC, CAAC and Ministry of Transport of China

12

India's ability to improve infrastructure is critical for the sustainability of its high pace

• f economic growth

Indian energy and logistics infrastructure is inadequate to meet its growth aspirations. The Indian government intends to double infrastructure investment to US$ 1 trillion in 2012-2017 from US$ 500 billion in 2007- 2011.

13

China’s car industry is already bigger than the US industry. However, the penetration is still low, indicating a huge growth potential

Passenger cars per 1,000 people 2002

Sources: University of Sheffield, UK and CEIC

3 6 9 5 1 0 7 1 2 0 1 3 2 2 0 5 4 2 8 4 6 4 4 8 1 World Mexico Brazil Russia Korea Japan Western Europe US

China 2008

14

Geological and institutional factors will continue to constrain the supply response to price incentives contributing to lengthen the cycle

Grades are declining while stripping ratios are increasing. World-class assets tend to be increasingly dependent on more complex regions. Restrictions on environmental permits are a major cause

• f project delays.

Natural resources nationalism hampers mining investment. Higher taxes are a threat to mining investment.

15

Growth and value creation

16

Mineral exploration Mineral Mineral exploration exploration Greenfield projects Greenfield Greenfield projects projects Acquisitions Acquisitions Acquisitions Brow nfield projects Brow nfield Brow nfield projects projects Maxim izing asset perform ance Maxim izing Maxim izing asset asset perform ance perform ance

Our long-term growth strategy embodies a multilane road to value creation built on discipline in capital allocation and minimization of cost of capital Discipline in capital allocation Discipline in capital allocation Discipline in capital allocation

Existing assets Existing assets New assets New assets Shareholder Value Shareholder Value

Portfolio m anagem ent Portfolio Portfolio m anagem ent m anagem ent

17

Focus on organic growth. Massive investment in the development of world-class assets supported by the expansion

• f our infrastructure.

Enhancement of competitiveness in the Asian market. Development of an asset base in Africa. Confidence in long-term global fundamentals underlies the continuity of our strategy to deliver strong and steady growth and value

18

Iron ore & pellets Nickel Coal Copper Phosphates & Potash Logistics Energy Steel

Brow nfield Greenfield

2010 2012

Developing an exciting pipeline of world-class assets to exploit the opportunities stemming from rapid emerging economies growth

2011 2013 2014

Reference

US$ 1 billion Onça Puma Conceição Itabiritos Carajás Additional 30 Mtpy Teluk Rubiah Salobo Tubarão VIII Estreito Oman Bayovar Karebbe Long-Harbour Serra Sul (S11D) Rio Colorado Moatize Totten Apolo Biofuel Konkola North Carajás Additional 20 Mtpy Tres Valles Vargem Grande Itabiritos Salobo II CSA¹ ALPA² CSP² CSU² ¹ Total project capex. Vale has a stake of 26.87%. ² Total project capex. Vale’s investment depends on its final stake in the project

19

Many growth options to feed the project pipeline in the future

Cristalino Paulo Afonso Furnas Alemão Salobo III Polo Kalumines 118 Neuquén Carnalita Regina Bayovar III Evate Moatize II Eagle Downs Ellensfield Belvedere

Copper Phosphates Coal

Salitre Simandou

I ron ore

Malaysia

Potash

Corumbá Visconde Bayovar II

20

18 large projects are coming on stream in 2010 - 2012 Cash flow will start to be generated from the US$ 26 billion invested over time in these 18 projects. The delivery of these projects lays the ground for building new growth platforms through the development of low-capex brownfield projects.

21

Maximizing competitive advantages: boosting production of high-quality iron ore. Minimizing competitive disadvantages: building a low-cost portfolio of maritime freight and distribution centers. Changing the game in the Asian market

22

Carajás and Simandou, the best iron ore growth platform in the world Simandou Carajás

23

Lower operating costs and superior value-in- use recognized through price premia. The use of Vale’s iron ores and pellets leads to higher productivity and reduction in fuel consumption and CO2 emission, addressing Chinese concerns. Demand is less sensitive to recessions and tends to increase with rising needs for blending. The focus on high-quality iron ore output

24

Lower costs and mitigates freight price volatility for clients. Portfolio composed of own vessels - capesizes and VLOCs - and long-term contracts. VLOCs, an innovative idea launched by Vale, will promote a permanent cut in the costs of Atlantic-Pacific dry bulk shipping. The build up of a shipping fleet

25

The construction of Distribution Centers adds flexibility to our operations, strengthening competitiveness

Tubarão San Nicolas PDM

Malaysia Oman

Guaíba & Itaguaí

Low seaborne transit time, inventories synergy and blending flexibility are among the unique advantages of Vale’s DCs.

26

“Easy” discoveries are gone. The discovery of new world-class deposits is increasingly dependent on Africa. Vale is taking steps to build a large African asset base. Africa: the new mining frontier

27

Simandou The build up of an efficient logistics infrastructure to anchor our African bulk materials assets Moatize

28

The quest for sustainability

29

While the benefits of carbon-based energy use are current and highly focused, social costs are delayed and dispersed. Vale is developing several initiatives to reconcile short and long term interests, becoming an agent of global sustainability. Contributing to global sustainability

30

Vale has been developing and implementing several technological solutions in a quest for continuous improvement of mining

• Dry iron ore processing
• Truckless mine
• Green vessels
• Renewable energies
• Biodiesel
• Synthetic diesel

31

Run of mine Water Lump Sinter feed Run of mine Lump Sinter feed

Conventional wet process Reduction of water and energy consumption. Reduction of CO2 emissions. No need for tailings dam. Reduction of capex and opex

Tailings

Dry iron ore processing: saving water, an increasingly scarce resource

Vale’s dry ore process

Pellet feed

32

The truckless operation at Serra Sul will mean a reduction in carbon emissions, higher safety and forest preservation

Conventional mining Truckless transportation

33

Green vessels Increasing global focus on carbon emissions. Our 400,000 dwt vessels emit 34% less pollution.

VLOC 400,000 dwt LOA 360m Capesize 170,000 dwt LOA 288m

34

GHG emissions reduction

Reduction of 12 millions tons of CO2 equivalent in 25 years.

Income generation

Biodiesel

Allows the use of blend B‐20 (20% pure biodiesel and 80% regular diesel) from 2014 onwards. Benefits to about 2,000 families of small producers in the Amazon region.

• Creation of over 6,000 direct jobs.
• Recovery of degraded areas in the Amazon region.
• 70,000 ha. of natural forest.
• 60,000 ha. of palm trees.

Vale’s solutions for reduction of GHG emissions and carbon sequestration

Vale’s renewable source of energy - Biodiesel

35

Installation of wind fences at the port of Tubarão, Brazil, where we operate seven iron

• re pellet plants.

The wind fences minimize the emissions of up to 120 km/hour. Controlling dust pollution: wind fences

36

Vale protects 10,321 sq km of natural areas in South America, North America, Asia and Oceania. These include regions in several forests:

• Amazon rainforest
• Boreal
• Atlantic
• New Caledonia
• Wellacea

Protecting natural wealth

37

• Capacity to fund social investment through its own

endowment and fund raising with partners.

• Capacity to execute projects.
• Focus on infrastructure building, human and economic

development, quality of local administration and management of mining impacts.

• 2009 investment reached 0.75 % of Vale net revenues,

the highest among global metals and oil companies.

Fundação Vale : one of the largest corporate foundations in the world

38

Vale, a global leader

1 October 18, 2010

Tito Martins

Executive Officer of Basic Materials Operations

2

• Our base metals business involves nickel, copper,

aluminum and associated precious metals and PGM’s.

• Transfer of interests in aluminum to Norsk Hydro is

expected to be concluded before year-end.

• Centred in Toronto, Canada

Introduction

3

A global network of world-class assets

• Principal mines &
• perations
• Development

properties Other metal refineries

• JV refineries
• THOMPSON

SUDBURY VOISEYS BAY PTI VNC

• ONÇA PUMA, SALOBO

CRISTALINO, POLO, FURNAS, ALEMAO PORT COLBORNE CLYDACH ACTON

• TAIWAN NICKEL

MATSUZAKA KOREA NICKEL

• DALIAN
• TRES VALLES

SOSSEGO

• KONKOLA

KALUMINES LONG HARBOUR PARAGOMINAS

4

Nickel

5

An overview

• Two broad types of ore (laterite + sulphide) are used to produce nickel with

many different processing options dependant on the ore – There is an increasing shift to laterite ores – Sulphides are typically at the lower end of the cash cost curve

• Different end-products can target specific markets; stainless represents 60-

65% of global nickel demand – FeNi, NPI, and some other low grade products target stainless steel; represents majority of industry growth

• Unlike copper, nickel is mostly integrated. 3rd party volumes used as ‘top-up’

– Sulphide process assets (dealing with 3rd party trade) are generally controlled by the top 5 producers

• Our growth projects will contribute to maintain Vale’s share in 20% of the

global nickel market.

6

Carbonyl Electro

Thompson Sudbury Clydach Matsusaka KNC TNRC Dalian

Tonimet Utility

Voisey’s Bay PTI Onca Puma VNC

Refinery Mines Development properties

FeNi

Marketing or JV refinery

A global set of world-class refineries with a diversified portfolio of high-quality products for all nickel applications

7

Current

Sudbury Voisey’s Bay Thompson Indonesia (PTI)

Growth

Onça Puma Vale New Caledonia (VNC)

Vale has a strong platform to grow the nickel business – a balance of sulphide and laterite properties

8

Vale has world’s largest nickel reserves¹

2.6 2.8 2.9 4.6 6.4 7.9

Eramet BHP Billiton Xstrata Jinchuan Norilsk Nickel Vale

¹ proven and probable reserves in 2009. Source: Companies’ reports and Brookhunt, 2009

million metric tons of contained nickel

9

Norilsk 20.6% BHP 8.7% Xstrata 7.8% Jinchuan 7.6% Other 37.9% Vale 17.4%

Share of world finished nickel production - 2008

Vale is one of the world’s leading nickel producers

Source: CRU Quarterly Q2 2009

10

Nickel output from sulphides is generally the lowest

• n the cash cost curve

2010 cash cost curves

NPI BF

Sulphides

NPI EAF

Laterite - FeNi

Source: Brookhunt, 2010 Q2

Laterite Laterite – – HPAL, HPAL, Caron Caron

US$/lb million lb

11

Ensure success of projects Ensure success of projects

1 1

The main goal of our nickel business

Reduce sustaining capital Reduce sustaining capital

2 2

Improve cost efficiency Improve cost efficiency

3 3

Increase production Increase production

4 4

Improve price realization Improve price realization

5 5

Complete and ramp-up of VNC, Onça Puma, Long Harbour, Karebbe => Average gross fixed asset/throughput in ‘15 50% of ‘09 figure Complete and ramp-up of VNC, Onça Puma, Long Harbour, Karebbe => Average gross fixed asset/throughput in ‘15 50% of ‘09 figure Reduce the sustaining capital requirements of the Canadian operations to 3% of gross fixed assets Reduce the sustaining capital requirements of the Canadian operations to 3% of gross fixed assets Reduce the operating costs of the Canadian operations by 5% in ’15 over ‘09 Reduce the operating costs of the Canadian operations by 5% in ’15 over ‘09 Seek production improvements => Increase production in Indonesia Seek production improvements => Increase production in Indonesia Maximize premium and maintain consistency of sales Maximize premium and maintain consistency of sales

12

Integration of the North Atlantic nickel flows 2010

Ni Oxide Sinter Cobalt Pellets & Powders PGMs Gold Silver Copper anodes

Sudbury mines Clarabelle mill Copper Cliff smelter

Matte processing

Clydach nickel refinery Copper Cliff nickel refinery Port Colborne Acton

Copper concentrate

Cathode Rounds

Thompson mines Thompson mill Thompson smelter Thompson nickel refinery Voisey’s mill Voisey’s Bay mine

Copper concentrate

13

VNC - New Caledonia

• Design production of 60ktpa of

nickel.

• Ramping-up to full production

has commenced.

• Short-term strategy is to

produce an intermediate product.

14

Onça Puma - Brazil

• Design production rate of

58ktpa nickel as ferronickel.

• Commissioning underway with

first production in Q4 2010.

• Continuing construction on line

2 with commercial production in 2011.

15

Long Harbour - Canada

• Construction underway of

nickel concentrate refinery in Newfoundland.

• Design capacity of 50 ktpa

nickel.

• Start-up in 2013.

16

Copper

17

An overview

• In the copper industry the most value adding segment is mining /

concentration because: – The capex per ton in mining is only 50% higher than for smelting / refinery. – Mining/concentration gets 90% of LME prices (just 10% for smelting / refinery).

• There is no major problem to sell clean concentrates to existing smelters.

The industry is only 46% vertically integrated (in comparison to almost 90% in nickel).

• Declining costs at existing operations and low grades of existing resources
• f non developed projects demand high copper prices in the long term.
• In addition, TC/RCs are expected to remain low, given the deficit in mine

supply.

• Therefore, smelters must specialize in treating concentrates with impurities

in order to compensate for these very low TC/RCs.

18

Developing our copper business

• Executing a pipeline of projects that will take

advantage of potential copper deficits in the next 5 years.

• Acquisitions may be an option to ensure scale

and flexibility.

19

Tres Valles - Chile

• First international greenfield

copper project to be executed by Vale.

• First experience of downstream

and first cathode industrial scale production.

• The project is nearing completion

with commissioning in Q4 2010.

• It has an expected lifetime of 11

years, with a production capacity

• f 18.5 ktpa of copper cathodes.

20

Salobo - Brazil

• Phase 1 of the Salobo project is

currently under construction.

• The start-up for the Phase 1 is

scheduled for Q3 2011with a design production rate of 100 ktpa copper in concentrate.

• Phase 2 of Salobo will double

copper and gold production and is expected to be in production from 2013.

• A Phase 3 is being considered.

21

Konkola North - Zambia

• Konkola North, located at the north-

western extremity of the Zambian portion of the Copperbelt.

• It was discovered in 1924 and mined

until 1959.

• Konkola North will be Vale’s first
• peration in the Copperbelt and is a

JV with African Rainbow Minerals (ARM).

• All licenses and permits have already

been granted.

• Design production is 45 ktpa of copper

in concentrate.

• Start-up is expected in 2013.

22

Main projects by horizon and estimated production capacity

Horizon 1 Horizon 2

2010-2012 2012-2016

Horizon 3

2016 onwards Tres Valles 1 8 Salobo I 1 0 0 Salobo I I 1 0 0 Cristalino 1 0 0 Konkola North 1 0 0 1 1 8 Oxide 3 6 Polo 1 0 0 Salobo I I I 8 0 Alem ão 8 0 Kalum ines 3 6 Visconde 9 0 1 1 8 Sulphide 3 6 Furnas 1 0 0 Paulo Afonso 1 6 0

000’ metric tons

1 October 18, 2010

Eduardo Ledsham

Executive Officer of Exploration, Energy and Projects

2

Project overview Project details Short and medium term action plan Simandou

3

Vale will unlock the development of Simandou Project. Last high grade iron ore similar to Carajas

4

Opportunity for Vale

Vale will consolidate its position as main premium iron ore supplier in the seaborne market. Vale’s technologies and experience in the implementation of large iron ore projects will guarantee success of the project.

• The current expansion in Carajas will provide

the engineering to support Simandou

• The short distance between Brazil and

Guinea/ Liberia allows continuous training for different teams

5

Simandou project details

6

Extension:

• 40km

Average height:

• 600m

Hematite resources:

• 2 billion metric tons @ 66% Fe (potential)

Hematite resources:

• 6 billion metric tons @ 45% Fe (potential)

BSGR drilling campaign

• Drillholes : 38
• Metters drilled: 6,677m
• Average depth: 175m
• Access constructed: 70km
• Drilling platforms: 9.5km2

Simandou Project

Blocks 1 & 2 - highlights

7

2011 feasibility study drilling campaign (Hematite focus):

• Drillholes : 1009
• Metters to be drilled: 115,400m
• Average depth: 150m
• Access to be constructed: 217km
• Drilling platforms: 252.3km2

Simandou Project

Blocks 1 & 2 - highlights

8

Simandou Project

Blocks 1 & 2 - geology

9

Simandou Project

Blocks 1 & 2 - geology

10

Simandou Project

Blocks 1 & 2 - geology

11

Simandou Project

Blocks 1 & 2 - geology

12

Simandou Project

Blocks 1 & 2 – open pit mine

13

Simandou Project

Blocks 1 & 2 – dry process

14

Extension:

• 10km

Average height:

• 500m

Hematite resources:

• 220Mt @ 62% Fe (potential)

Hematite resources:

• 530Mt @ 45% Fe (potential)

Drilling campaign

• Drillholes : 139
• Metters drilled: 12,334m
• Average depth: 88m
• Access constructed: 39km
• Drilling platforms: 34.8km2

Simandou Project

Zogota highlights

15

2011 drilling campaign:

• Drillholes : 305
• Metters to be drilled: 28,000m
• Average depth: 100m
• Access to be constructed: 56km
• Drilling platforms: 76.3km2

Simandou Project

Zogota highlights

16

Zogota project

Process plant project

17

Zogota project

Beneficiation flowsheet

18

Zogota project

Master plan : hematite final pit and future expansion

19

Simandou Project

Liberian logistics corridor

20

Simandou Project

Transguinea railway: rehabilitation in progress

21

Simandou Project

Hematite estimated production

22

Action plan – finished

Project team organization Infrastructure Development Agreement (IDA) Liberia Construction companies bid process for the emergencial works Drilling companies bid, sampling preparation laboratory bid, sampling assay solution Drilling camp construction Basic engineering for Zogota process plant

Action plan – in progress

• 330Km (50% of the total extension) refurbishment of Transguinean railway, for general cargo

and passengers

• Aerial survey
• Environmental studies and licenses
• Definition of the VBG new port location
• Acquisition of the process plant main equipments
• Alternative sources of energy for the Guinean and Liberian operations
• Basic engineering for railway

Simandou Project

Short and medium term action plan

23

Simandou: the largest integrated iron ore mine and infrastructure project ever developed in Africa

1 October 18, 2010

Mário Barbosa

Executive Officer of Fertilizers

2

Fertilizers in Vale

Industry perception, perspectives, strategy and initiatives

3

Fundamentals are strong

Fertilizer demand has been boosted by the required increase in agriculture yields to support continued growth of food production

• Population growth
• Increasing per capita income and changing diets
• Limited Agricultural Resources
• Lower per capita arable land
• Unbalanced soil conditions
• Limited water availability
• Climate Changes

4

Fundamentals are strong

Soil conditions and available land drive fertilizer´s demand

Source: IFA

Soil Resilience Soil Performance

5

Fundamentals are strong

Agricultural land, world grain productivity and fertilizer consumption

50 100 150 200 61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06 09

Fertilizer Consumption (Mt)

1000 2000 3000 4000

Harvested Area (Mha) and Productivity(kg/ ha)

Harvest ed Area Fert ilizer Consumpt ion Grain Product ivit y

Fertilizer demand is driven by two main factors.

• Increasing demand for food

as a result of population and high per capita income growth.

• Limitation of arable, good-

quality land. Increase in grain production depends heavily on higher agricultural productivity, what leads to higher dosage of fertilizer.

Source: IFA

6

Fundamentals are strong

Pace of global demand growth is expected to accelerate in this decade

40 80 120 160 200 61 73 83 89 92 95 98 '01 '04 '07 10 13 16 19

Fertilizer consumption, Mt

K2O P2O5 N

Global fertilizer consumption is expected to reach ~ 200 Mt by the end of this decade.

• Global population is estimated to reach

7.7 billion, 1.1% CAGR

• Most refers to urban population, which

has higher dietary standards .

That implies an average 3% CAGR for the growth of fertilizers demand the following years. Emerging countries will lead this growth and Brazil´s rate is expected to keep is 6% aa pace.

3 % p.y.

Source: IFA

7

Fundamentals are strong

Fertilizer consumption has increased significantly specially in emerging countries. Brazil presented the highest growth rate among them in the last two decades

50 100 150 200 250 300 90 92 94 96 98 '00 '02 '04 '06 '08

Brazilian Market World Market

90 00 05 06 08 % China 27 34 44 46 48 3% India 13 17 20 22 22 3% USA 18 19 19 19 19 0% Brazil 3 7 8 9 9 6% World 137 137 153 159 160 1%

Source: IFA /ANDA

6% p.y.

Fertilizer consumption, Mt Fertilizer consumption, index 1990=100

CAGR

8 Source: IFA

7000 14000 21000 28000 35000 China India EUA UE Brasil Outros

Nitrogen consumption kt of N

3000 6000 9000 12000 15000 China India EUA Brasil UE Outros

Phosphate consumption kt of P2O5

1500 3000 4500 6000 7500 9000 China EUA Brasil UE India Outros

Potash consumption kt of K2O

Fundamentals are strong

China, India, the US, EU and Brazil represent more than 70%

• f the total demand for fertilizers

9

Fundamentals are strong

China is the main producer of nitrogen (ammonia) and phosphate (phosphate rock), but its production is mainly consumed internally

32% 9% 8% 6% 1%

China Russia India US Brazil

Ammonia production 153 Mt World in 2008 36% 18% 14% 6% 4%

China US Morocco Russia Brazil

Phos rock production 174 Mt World in 2008 33% 19% 15% 11% 2%

Canada Russia Belarus Germany Brazil

KCl production 54 Mt World in 2008 17% 15% 13% 6% 0%

US Canada Russia

• S. Arabia

Brazil

Sulphur production 48 Mt World in 2008

Source: IFA

10

Global trading of fertilizer

10

Origin Western Canada

Destination Brazil Destination Argentina

Origin Morocco Origin Arab Gulf Origin Eastern Europe Origin China **

Destination India Destination Southeast Asia Destination/Origin US/Mexico

Potash Phosphate Dry Nitrogen UAN (liquid Nitrogen)

* US exports only P. Us is a net importer of N and K. Mexico is a net importer of NPK ** China is the largest producer and consumer of fertilizer. China is the largest producer and a significant exporter of urea. Source: IFA

11

Fundamentals are strong

Raw material prices (excluding ammonia) are expected to stabilize in the near future, and final products still have room to increase more

199 233222 278 318 278 323 378 415435 475 505 545 102105113 154 195 235 325330 365 395 420 455 588 522 274

'00 '02 '04 '06 '08 10 12 14 16 18 20

Raw Materials Ammonia FOB Tampa US$/t Basic Fertilizer UREA Fob Black Sea US$/t

Nitrogen

117 118 118 175 210 620 520 420 360 440 480 480 480 480

100 300 500 700 900

'00 '02 '04 '06 '08 10 12 14 16 18 20 Basic Fertilizer KCl Fob Vancouver US$/t

Potash

43 40 434756 262 95 100 110 61 442 36 124 147 146 177 216 247 930 410 335 365 430 467 506 546 176 50 54 38 50 26 37 329 413 200 400 600 800 1000

'00 '02 '04 '06 '08 10 12 14 16 18 20

Raw Materials phosphate rock Fob Morocco US$/t Raw Material Sulphur Fob Vancouver US$/t Basic Fertilizer MAP Fob Black Sea US$/t

Phosphates

Source: CRU

12

80% 20% 47% 53%

92% 8% Imports in 2008 Brazilian production in 2008

Phosphate Potash

Source: IFA

Fundamentals are strong

Brazil is highly dependent on imported fertilizers

Nitrogen

13

KCl consumption Mt in 2010

Fundamentals are strong

Vale is the only producer of Potash in Brazil and supplies an average of 10 % of domestic demand (6.5 Mt KCl in 2010). Agricultural frontiers head to the northeastern part of the country and total KCl consumption is expected to reach almost 10 Mt/y by the end of the decade

KCl consumption Mt in 2020

> 900 > 600 and < 900 > 400 and < 600 > 100 and < 400 < 100

Source: Agroconsult

Taquari- Vassouras

14

> 500 > 300 and < 500 > 200 and < 300 > 100 and < 200

P205 consumption

kt < 100

Sources: ANDA, Conab, DIFM, Agroconsult

Uberaba Catalão Cubatão Guará Araxá Patos de Minas

Fundamentals are strong

P2O5 consumption in Brazil is 3.4 Mt and the projected demand is 4.7 Mt by the end of the decade. Vale assets supply around 45% of this total and are well located to support the regions with higher demand and growth potential

15

An exciting portfolio of projects and

• perations supports Vale’s growth strategy

Potash Phosphate

Neuquén ‐ Argentina Taquari Vassouras Carnalita Evate – Mozambique Bayovar ‐ Peru Regina ‐ Canada Rio Colorado ‐ Argentina Vale Fertilizantes Vale Fosfatados Salitre Anitápolis Vale Fosfatados expansions Expansion Bayovar Regina II ‐ Canada

16

Achievements made through organic growth and acquisitions have strengthen our positioning …

Acquisition of fertilizer assets. Start up of Bayovar in July 2010. Asset integration and

• ptimization: synergies

assessment and capture already in place. Salitre project to be submitted to Board approval on November 2010. Evate project under development Rio Colorado : submission to Board approval on November 2010. Carnalita and Regina (Canada) projects under development.

Phosphate Potash

17

… and have expanded Vale`s presence in the fertilizer industry

Natural gas Nafta Asphalt residue

N

Sulphur

S

Phosphate rock

P

Potash

K

Ammonia Nitric acid Sulfuric acid Phosphoric acid Urea Ammonium nitrate Ammonium sulphate MAP/DAP TSP SSP KCl

Natural Natural resources resources Initial Initial industrialization industrialization Final Final industrialization industrialization Granulation Granulation and and blending blending – – NPK NPK Farmer Farmer Vale presence

DCP

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Our goal is to become one of the global leaders in the industry

3.2 3.5 3.5 4.2 4.6 5.5 9.0 9.6 10.5 11.5 16.5 18.2 44.7

CF Industries Foskor Ferphos Kara Tau Rotem Amfert Negev Gecopham Ma'aden PCS Phosphates GCT / CPG JPMC Vale Mosaic OCP 18.9 10.7 9.7 7.0 6.3 6.1 4.3 3.0 2.8 2.4 2.3 1.5 1.2 1.2 1.2 15.1 Intrepid Mining Mengo Potash Project Cleveland Potash Iberpotasas EuroChem Arab Potash Agrium Qinghai Salt Lake Dead Sea Works K+S Silvinit Uralkaliy Belaruskaliy Vale Mosaic PotashCorp

Source: Fertecon, Vale

Potash production capacity 2017 (Mt KCl) Phosphate rock production capacity 2017 (Mt rock)

Note: Considers total capacity of the projects PRC 4.35 Mta, VSP I 2.9 Mta, Carnalita I and II 1.6 Mta, Neuquén 1.0 Mta; UOTV 0.8 Mta Note: Considers total capacity of the projects Bayovar 3.9 Mta, Bayovar II and III 3.8 Mta, Evate 3.5 Mta, Salitre 2.0 Mta, Anitápolis 0.3 Mta

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Current operations

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KCl production. Underground mine – room and pillar mining. Estimate production for 2010 ~ 710 kt. Average KCl grade of 27% (2009). Life of mine up to 2019.

Potash - Taquari -Vassouras

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Phosphate - Brazil

mines plants Araxá Tapira Cajati Guará Uberaba Catalão Cubatão/Piaçaguera (Mine and Port) Patos de Minas Araucária

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Phosphates - Bayovar (Peru)

Tonnage Grade P2O5 Tonage P2O5 MT % MT Proven 237.1 17.3 41.0 Probable 1.9 15.9 0.3 Total 239.0 17.2 41.1 Reserves

Located in Piura region in Peru. World class resource with lowest cost in phosphate rock production. Start up July 10, 2010. Estimated production of 3.96 Mtpa of phosphate rock to be reached in 2014. Life of mine: 27 years. Potential expansion under evaluation.

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Port Storage and conveyor belt Conveyor belt

Phosphates - Bayovar (Peru)

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Projects in the pipeline

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Potash - Rio Colorado

Located in Mendoza, Argentina Successful solution mining pilot trials undertaken Logistics and natural gas supply had been set on, mitigating project risk Proprietary technology defined and acquired Life of mine of at least 70 years Large resource and planned infrastructure can support further expansion Total capacity 4.3 Mt/y

• First phase starting in 2013 and

reaching 2.4 Mt/y by 2016

• Second phase starting in 2017 and

reaching 1.9 Mt/y by 2023

Tonnage Grade P2O5 Tonage P2O5 MT % MT Probable 360.8 34.2 123.4 Total 360.8 34.2 123.4 Reserves

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Implementation plan : critical path to guarantee schedule is

• ngoing.

Energy solution: JV 50% Vale to dedicated gas supply. Logistic solution: concession agreement already signed with Ferrosur. Permits already granted.

• general for mine and plant.
• electric line.
• port .

Potash - Rio Colorado

La Pampa Neuquén Rio Negro Buenos Aires

Zapala . Bahía Blanca Port

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Well drilling

Potash - Rio Colorado

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• Located in the leading potash

producing province of Saskatchewan, Canada, with logistics and infrastructure in place.

• Development stage: FEL 1 (to be

concluded in 2010).

• Solution mine envisaged.
• 9 new holes drilled in 2009-2010.
• All historic and new holes

intersected the 3 potash beds with a combined thickness of 20m - 30m.

• Resources to produce up 2.9 Mtpa
• f KCl/year.
• Start-up in 2015 and reaching full

capacity of 2.9 Mt/y by 2024.

Location

Potash - Regina

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Located in Sergipe, Brazil, near Taquari‐Vassouras

• perations

Solution mining method Development stage: FEL2 – pilot plant operation with two wells commenced in Aug/08

• Test of first layer concluded with good

results

• Geomechanic tests in progress
• Environmental permit granted in April

08, 2010 100% to domestic market. Gas supply (Long term): contract with Sergas First phase starting in 2015 and reaching 1.2 Mt/y by 2016

Potash - Carnalita

CARNALITA PROJECT UOTV ARACAJU TMIB

Pilot plant

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Located in Patrocínio/MG, Brazil, in the heart of a fast growing market. Open pit mine and sulfuric acid, phosphoric acid, MAP, DAP and TSP plants. Development stage: FEL 3. Start-up scheduled for 2014. Board approval in November/2010. Best practice on project development recognized by IPA (Independent Project Analysis). Pilot mining Mine, plant and infrastructure

Phosphate - Salitre

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Northeast Mozambique, 65 km from the port of Nacala

Location

Consists of 3 types of phosphates:

• High grade sands: 6Mt @ 20% P2O5
• Low grade sands: 54Mt @ 8% P2O5
• Hard rock: 208Mt @ 12% P2O5

Development stage: FEL 1 It is strategically located to supply the South and Southeast Asian markets

Phosphate - Evate

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Fertilizers

Summary of estimated production capacity

Current Additional Total 2017 Potash (KCl) Phosphates Ammonia MAP (high) 0.85 kt/y 10 Mt/t 11 Mt/y 9.2 Mt/y 8.0 Mt/y 17 Mt/y 620 kt/y 620 kt/y 1,180 kt/y 1,300 kt/y 2,480 kt/y TSP (high) 865 kt/y SSP Dicalcium Phosp Urea 2,500 kt/y 500 kt/y 610 kt/y 670 kt/y 1,535 kt/y 120 kt/y 620 kt/y 2,500 kt/y 610 kt/y

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Conclusion

• Vale has established a robust platform to build a world-class

fertilizer business.

• Strong position in the most important and fast growing

Brazilian market.

• Our goal is to become a global leader in fertilizer industry.
• Some important issues that should be addressed.
• Define optimal corporate structure for fertilizer assets.
• Integrate and capture synergies from acquired assets .
• Delivery of projects on time and on budget.
• Cost control and operational efficiency.