The build up of an efficient logistics infrastructure to anchor our African bulk materials assets Simandou Moatize 27
The quest for sustainability 28
Contributing to global sustainability � 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. 29
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 30
Dry iron ore processing: saving water, an increasingly scarce resource Conventional wet process Vale’s dry ore process Run of mine Run of mine Water Lump Lump Sinter feed Sinter feed � Reduction of water and energy consumption. Tailings � Reduction of CO2 emissions. Pellet feed � No need for tailings dam. � Reduction of capex and opex 31
The truckless operation at Serra Sul will mean a reduction in carbon emissions, higher safety and forest preservation Conventional mining Truckless transportation 32
Green vessels � Increasing global focus on carbon emissions. � Our 400,000 dwt vessels emit 34% less pollution. Capesize 170,000 dwt LOA 288m VLOC 400,000 dwt LOA 360m 33
Vale’s renewable source of energy - Biodiesel � Vale’s solutions for reduction of GHG emissions and carbon sequestration Biodiesel Allows the use of blend B ‐ 20 (20% pure biodiesel and 80% regular diesel) from 2014 onwards. GHG emissions reduction Reduction of 12 millions tons of CO 2 equivalent in 25 years. Income generation Benefits to about 2,000 families of � Creation of over 6,000 direct jobs. small producers in the Amazon region. � Recovery of degraded areas in the Amazon region. � 70,000 ha. of natural forest. � 60,000 ha. of palm trees. 34
Controlling dust pollution: wind fences � Installation of wind fences at the port of Tubarão, Brazil, where we operate seven iron ore pellet plants. � The wind fences minimize the emissions of up to 120 km/hour. 35
Protecting natural wealth � 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 36
Fundação Vale : one of the largest corporate foundations in the world � 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. 37
Vale, a global leader 38
Tito Martins Executive Officer of Basic Materials Operations October 18, 2010 1
Introduction � 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 2
A global network of world-class assets THOMPSON VOISEYS BAY CLYDACH � � � KOREA NICKEL SUDBURY � � ACTON � LONG HARBOUR � MATSUZAKA PORT COLBORNE DALIAN � TAIWAN NICKEL PARAGOMINAS Principal mines & SOSSEGO PTI KALUMINES operations � � � � Development ONÇA PUMA, SALOBO CRISTALINO, POLO, � KONKOLA properties FURNAS, ALEMAO VNC TRES VALLES � Other metal refineries � JV refineries 3
Nickel 4
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. 3 rd party volumes used as ‘top-up’ • Sulphide process assets (dealing with 3 rd 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. 5
A global set of world-class refineries with a diversified portfolio of high-quality products for all nickel applications Tonimet Electro Thompson Voisey’s Bay Clydach Sudbury KNC Matsusaka Dalian TNRC PTI Onca Carbonyl Puma Refinery VNC Marketing or JV Utility FeNi refinery Mines Development properties 6
Vale has a strong platform to grow the nickel business – a balance of sulphide and laterite properties � Current Sudbury Voisey’s Bay Thompson Indonesia (PTI) � Growth Onça Puma Vale New Caledonia (VNC) 7
Vale has world’s largest nickel reserves¹ million metric tons of contained nickel Vale 7.9 Norilsk Nickel 6.4 Jinchuan 4.6 Xstrata 2.9 BHP Billiton 2.8 Eramet 2.6 ¹ proven and probable reserves in 2009. Source: Companies’ reports and Brookhunt, 2009 8
Vale is one of the world’s leading nickel producers Share of world finished nickel production - 2008 Vale 17.4% Other 37.9% Norilsk 20.6% Jinchuan BHP Xstrata 7.6% 8.7% 7.8% Source: CRU Quarterly Q2 2009 9
Nickel output from sulphides is generally the lowest on the cash cost curve 2010 cash cost curves US$/lb Laterite Laterite – – HPAL, HPAL, Caron Caron Laterite - FeNi NPI BF NPI EAF Sulphides million lb Source: Brookhunt, 2010 Q2 10
The main goal of our nickel business Complete and ramp-up of VNC, Onça Puma, Complete and ramp-up of VNC, Onça Puma, Ensure success of Ensure success of Long Harbour, Karebbe Long Harbour, Karebbe 1 1 projects projects => Average gross fixed asset/throughput in ‘15 50% of ‘09 figure => Average gross fixed asset/throughput in ‘15 50% of ‘09 figure Reduce sustaining Reduce the sustaining capital requirements of the Reduce sustaining Reduce the sustaining capital requirements of the 2 2 capital Canadian operations to 3% of gross fixed assets capital Canadian operations to 3% of gross fixed assets Improve cost Reduce the operating costs of the Improve cost Reduce the operating costs of the 3 3 efficiency Canadian operations by 5% in ’15 over ‘09 efficiency Canadian operations by 5% in ’15 over ‘09 Seek production improvements Seek production improvements Increase production Increase production 4 4 => Increase production in Indonesia => Increase production in Indonesia Improve price Improve price Maximize premium and maintain consistency of sales 5 Maximize premium and maintain consistency of sales 5 realization realization 11
Integration of the North Atlantic nickel flows 2010 Thompson Thompson Thompson Thompson mines nickel refinery mill smelter Cathode Rounds Ni Oxide Sinter Pellets Clydach nickel refinery & Copper Cliff Powders Sudbury Clarabelle Matte smelter mines mill processing Copper Cliff nickel refinery Cobalt Port Colborne PGMs Copper Gold concentrate Silver Acton Voisey’s Voisey’s Bay Copper mill mine anodes Copper concentrate 12
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. 13
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. 14
Long Harbour - Canada • Construction underway of nickel concentrate refinery in Newfoundland. • Design capacity of 50 ktpa nickel. • Start-up in 2013. 15
Copper 16
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 of 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. 17
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. 18
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 of 18.5 ktpa of copper cathodes. 19
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. 20
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 operation 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. 21
Main projects by horizon and estimated production capacity Horizon 3 Horizon 2 Horizon 1 000’ metric tons � Visconde 9 0 � Salobo I I 1 0 0 � 1 1 8 Sulphide 3 6 � Cristalino 1 0 0 � Furnas 1 0 0 � Tres Valles � Konkola North 1 0 0 1 8 � Paulo Afonso 1 6 0 � Salobo I � 1 1 8 Oxide 3 6 1 0 0 � Polo 1 0 0 � Salobo I I I 8 0 � Alem ão 8 0 � Kalum ines 3 6 2010-2012 2012-2016 2016 onwards 22
Eduardo Ledsham Executive Officer of Exploration, Energy and Projects October 18, 2010 1
Simandou � Project overview � Project details � Short and medium term action plan 2
Vale will unlock the development of Simandou Project. Last high grade iron ore similar to Carajas 3
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 4
Simandou project details 5
Simandou Project Blocks 1 & 2 - highlights 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: 9.5km 2 6
Simandou Project Blocks 1 & 2 - highlights 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 7
Blocks 1 & 2 - geology Simandou Project 8
Blocks 1 & 2 - geology Simandou Project 9
Blocks 1 & 2 - geology Simandou Project 10
Blocks 1 & 2 - geology Simandou Project 11
Simandou Project Blocks 1 & 2 – open pit mine 12
Simandou Project Blocks 1 & 2 – dry process 13
Simandou Project Zogota highlights 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: 34.8km 2 14
Simandou Project Zogota highlights 2011 drilling campaign: • Drillholes : 305 • Metters to be drilled: 28,000m • Average depth: 100m • Access to be constructed: 56km • Drilling platforms: 76.3km 2 15
Process plant project Zogota project 16
Beneficiation flowsheet Zogota project 17
Zogota project Master plan : hematite final pit and future expansion 18
Simandou Project Liberian logistics corridor 19
Simandou Project Transguinea railway: rehabilitation in progress 20
Simandou Project Hematite estimated production 21
Simandou Project Short and medium term action plan 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 22
Simandou: the largest integrated iron ore mine and infrastructure project ever developed in Africa 23
Mário Barbosa Executive Officer of Fertilizers October 18, 2010 1
Fertilizers in Vale Industry perception, perspectives, strategy and initiatives 2
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 3
Fundamentals are strong Soil conditions and available land drive fertilizer ´ s demand Soil Resilience Soil Performance Source: IFA 4
Fundamentals are strong Agricultural land, world grain productivity and fertilizer consumption � Fertilizer demand is driven by 200 4000 two main factors. Harvest ed Area Harvested Area (Mha) and Productivity(kg/ ha) Fert ilizer Consumpt ion - Increasing demand for food Grain Product ivit y 150 3000 Fertilizer Consumption (Mt) as a result of population and high per capita income growth. 100 2000 - Limitation of arable, good- quality land. � Increase in grain production 50 1000 depends heavily on higher agricultural productivity, what leads to higher dosage of 0 0 61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06 09 fertilizer. Source: IFA 5
Fundamentals are strong Pace of global demand growth is expected to accelerate in this decade � Global fertilizer consumption is 3 % p.y. 200 expected to reach ~ 200 Mt by the K2O P2O5 end of this decade. N 160 Fertilizer consumption, Mt - Global population is estimated to reach 7.7 billion, 1.1% CAGR 120 - Most refers to urban population, which has higher dietary standards . � That implies an average 3% CAGR 80 for the growth of fertilizers demand the following years. 40 � Emerging countries will lead this growth and Brazil ´ s rate is expected 0 61 73 83 89 92 95 98 '01 '04 '07 10 13 16 19 to keep is 6% aa pace. Source: IFA 6
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 Fertilizer consumption, Mt Fertilizer consumption, index 1990=100 CAGR 300 90 00 05 06 08 % China 27 34 44 46 48 3% 6% p.y. 250 India 13 17 20 22 22 3% 200 USA 18 19 19 19 19 0% Brazilian Market World Market Brazil 3 7 8 9 9 6% 150 World 137 137 153 159 160 1% 100 Source: IFA /ANDA 50 90 92 94 96 98 '00 '02 '04 '06 '08 7
Fundamentals are strong China, India, the US, EU and Brazil represent more than 70% of the total demand for fertilizers Nitrogen consumption Phosphate consumption Potash consumption kt of N kt of P 2 O 5 kt of K 2 O 35000 15000 9000 7500 28000 12000 6000 9000 21000 4500 14000 6000 3000 7000 3000 1500 0 0 0 EUA UE EUA EUA India UE UE China Brasil Outros China India Brasil Outros China Brasil India Outros Source: IFA 8
Fundamentals are strong China is the main producer of nitrogen (ammonia) and phosphate (phosphate rock), but its production is mainly consumed internally 36% Phos rock production 32% Ammonia production 174 Mt World in 2008 153 Mt World in 2008 18% 14% 9% 8% 6% 4% 6% 1% China Russia India US Brazil China US Morocco Russia Brazil Sulphur production KCl production 33% 48 Mt World in 2008 54 Mt World in 2008 19% 17% 15% 15% 13% 11% 6% 2% 0% US Canada Russia S. Arabia Brazil Canada Russia Belarus Germany Brazil Source: IFA 9
Global trading of fertilizer Origin Origin Western Canada Eastern Europe Destination/Origin Origin US/Mexico China ** Origin Origin Arab Gulf Destination Morocco India Destination Destination Brazil Southeast Asia Potash Phosphate Destination Dry Nitrogen Argentina 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 10 10
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 Nitrogen Phosphates 545 1000 505 588 930 Raw Materials phosphate 475 455 522 rock Fob Morocco US$/t 415435 420 395 378 365 Raw Material Sulphur Fob 325330 323 318 800 Vancouver US$/t 278 278 235 233222 Raw Materials Ammonia FOB 199 274 195 Basic Fertilizer MAP Fob Tampa US$/t 154 Black Sea US$/t Basic Fertilizer UREA Fob 102105113 Black Sea US$/t 600 546 506 '00 '02 '04 '06 '08 10 12 14 16 18 20 467 442 430 410 Potash 413 365 400 335 Basic Fertilizer KCl Fob Vancouver US$/t 262 329 247 900 216 177 200 147 146 620 176 700 124 110 100 95 520 480 480 480 480 61 440 434756 420 43 500 40 36 360 50 37 54 50 38 26 0 210 300 175 117 118 118 '00 '02 '04 '06 '08 10 12 14 16 18 20 100 '00 '02 '04 '06 '08 10 12 14 16 18 20 11 Source: CRU
Fundamentals are strong Brazil is highly dependent on imported fertilizers Brazilian production in 2008 Imports in 2008 Nitrogen Phosphate Potash 8% 20% 47% 53% 80% 92% Source: IFA 12
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 KCl consumption Mt in 2010 Mt in 2020 Taquari- Vassouras > 900 > 600 and < 900 > 400 and < 600 > 100 and < 400 < 100 Source: Agroconsult 13
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 P 2 0 5 consumption kt Catalão Patos de Minas Uberaba Araxá Cubatão > 500 > 300 and < 500 Guará > 100 and < 200 > 200 and < 300 < 100 Sources: ANDA, Conab, DIFM, Agroconsult 14
An exciting portfolio of projects and operations supports Vale’s growth strategy Salitre Vale Potash Fertilizantes Phosphate Expansion Bayovar Taquari Regina II ‐ Bayovar ‐ Peru Vassouras Canada Carnalita Rio Colorado ‐ Argentina Vale Fosfatados Neuquén ‐ Vale Regina ‐ Argentina Fosfatados Canada Evate – Mozambique expansions Anitápolis 15
Achievements made through organic growth and acquisitions have strengthen our positioning … Phosphate Potash � Acquisition of fertilizer assets. � Rio Colorado : submission to � Start up of Bayovar in July 2010. Board approval on November � Asset integration and 2010. optimization: synergies � Carnalita and Regina (Canada) assessment and capture already projects under development. in place. � Salitre project to be submitted to Board approval on November 2010. � Evate project under development 16
… and have expanded Vale`s presence in the fertilizer industry Natural gas Ammonium Nafta Nitric nitrate Asphalt residue Ammonia acid NPK – NPK N Urea industrialization Initial industrialization blending – industrialization Final industrialization and blending Natural resources resources Ammonium Sulphur Sulfuric sulphate acid S Farmer Farmer MAP/DAP Granulation and Phosphoric Natural acid DCP Phosphate rock Granulation Final Initial P TSP SSP Potash KCl K Vale presence 17
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