October 18, 2010

Roger Agnelli
Chief Executive Officer

The journey to
sustainable
value creation

October 18, 2010

2

Disclaimer
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
Comisso de Valores Mobilirios (CVM), the French Autorit des Marchs
Financiers (AMF), and with the U.S. Securities and Exchange Commission
(SEC), including Vales most recent Annual Report on Form 20F and its

reports on Form 6K.

3

10th Vale listing

anniversary

VALEP started trading on the NYSE on

Tuesday, June 20, 2000
VALE P

40
35

October 12,
2010

30

US$

25
20
15
10
5
0
2000
June
20, 2001

2002

2003

2004

2005

2006

2007

2000

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

2008

2009

2010

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
1,600

October 12,
2010

1,400
VALE P

1,200

MSCI metals & mining

MSCI World

1,000
800
600
400
200
100
0
June2000
20,
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Agenda

A promising outlook
Growth and value creation
The quest for sustainability

A promising outlook

Emerging economies will continue to be the

key engine of global growth, with positive
implications for the demand of minerals,
metals and fertilizers
9

Convergence

Real GDP growth

% annual

Developed Economies

Emerging Economies

Convergence

6
5
4
3
2
1
0
-1
-2
-3
-4
1970

1975

Sources: Vale and IMF

9

1980

1985

1990

1995

2000

2005

2010E

2015E

Intensity of metals consumption in emerging

economies is expected to remain high in view
of urbanization, industrialization and the rising
consumption of consumer durables
Share of emerging economies in global
consumption of metals

Steel consumption intensity

metric tons / US$ million of real GDP

35

90%

Iron Ore

30

80%

Nickel
25

70%

Copper
20

60%

15

50%

10

40%

Emerging Economies
30%

10 Source: World Steel Association, WBMS, IMF and Vale

2009

2007

2005

2003

20%

2001

2008

2006

2004

2002

2000

1998

1996

1994

1992

1990

1999

Developed Economies

1997

Chinas urbanization rate in 2010 is equal to Brazils

position in the mid 50s and Korea in the early 70s
Urbanization rate

Urbanization rate

60

100
90

Brazil

50

80

Korea

70

40

60

China
50
40

India

30

20

30
20

China

10

World

10

Source: UN Department of Economic and Social Affairs, World Urbanization Prospects: the 2009 revision.
11

2020

2015

2010

2005

2000

1995

1990

1985

1980

1975

1970

1965

1960

1955

2020

2010
2015

2005

1995
2000

1985
1990

1980

1970
1975

1965

1955
1960

1950

1950

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

140

166

244

Airports (number)

12

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

India's ability to improve infrastructure is

critical for the sustainability of its high pace
of 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 20072011.

13

Chinas 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
481

US

464

Western Europe

428

Japan
205

Korea
132

Russia

120

Brazil

107

Mexico

95

World

China 2008

36

Sources: University of Sheffield, UK and CEIC

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
of project delays.
Natural resources nationalism hampers mining
investment.
Higher taxes are a threat to mining investment.
15

Growth and value creation

16

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
Maximizing
asset
performance

Existing assets
New assets

Brownfield
projects

Shareholder
Value

Mineral
exploration

Acquisitions
Greenfield
projects

17

Portfolio
management

Confidence in long-term global fundamentals

underlies the continuity of our strategy to
deliver strong and steady growth and value
Focus on organic growth.
Massive investment in the development of
world-class assets supported by the expansion
of our infrastructure.
Enhancement of competitiveness in the Asian
market.
Development of an asset base in Africa.
18

Developing an exciting pipeline of world-class assets

to exploit the opportunities stemming from rapid
emerging economies growth
Biofuel

Greenfield

ALPA
CSU
Konkola North

Tres Valles
Karebbe

Apolo

Bayovar

Ona
Puma

CSP
Teluk Rubiah

Moatize

Serra Sul
(S11D)

Estreito
Long-Harbour
Rio Colorado

Salobo
Oman
Tubaro VIII
CSA

2010
Carajs
Additional 20 Mtpy

2011

Totten

2012

2014

2013
Carajs
Additional 30 Mtpy

Salobo II

Iron ore & pellets

Conceio
Itabiritos

Reference
US$ 1 billion

Vargem Grande
Itabiritos

Brownfield
Total project capex. Vale has a stake of 26.87%.
Total project capex. Vales investment depends on its final stake in the project
19

Nickel
Coal
Copper
Phosphates & Potash
Logistics
Energy
Steel

Many growth options to feed the project

pipeline in the future
Alemo

Paulo Afonso
Cristalino

118

Malaysia

Iron ore

20

Salobo
III

Eagle
Downs
Neuqun

Visconde

Simandou

Corumb

Regina

Kalumines

Furnas

Copper

Polo
Evate

Ellensfield

Carnalita

Bayovar II

Bayovar III

Salitre

Phosphates

Potash

Belvedere

Moatize II

Coal

18 large projects are coming on stream in

2010 - 2012

Cash flow will start to be generated from the

US$ 26 billion of 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

Changing the game in the Asian market

Maximizing competitive advantages: boosting

production of high-quality iron ore.

Minimizing competitive disadvantages:

building a low-cost portfolio of maritime

freight and distribution centers.

22

Carajs and Simandou, the best iron ore

growth platform in the world
Carajs
Simandou

23

The focus on high-quality iron ore output

Lower operating costs and superior value-in-

use recognized through price premia.

The use of Vales 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.
24

The build up of a shipping fleet

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.
25

The construction of Distribution Centers adds

flexibility to our operations, strengthening
competitiveness

Low seaborne transit time,

inventories synergy and blending
flexibility are among the unique
advantages of Vales DCs.
Oman

PDM

Tubaro
Guaba
&
Itagua
San Nicolas

26

Malaysia

Africa: the new mining frontier

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.

27

The build up of an efficient logistics

infrastructure to anchor our African bulk
materials assets

Simandou
Moatize

28

The quest for sustainability

29

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.

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

Dry iron ore processing: saving water, an

increasingly scarce resource
Vales dry ore process

Conventional wet process

Run of mine

Run of mine

Water
Lump

Lump

Sinter feed

Tailings

Sinter feed

Reduction of water and energy

consumption.
Reduction of CO2 emissions.

Pellet feed

No need for tailings dam.

Reduction of capex and opex

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.
Capesize
170,000 dwt
LOA 288m

VLOC
400,000 dwt
LOA 360m

34

Vales renewable source of energy - Biodiesel

Vales 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 CO2

equivalent in 25 years.
Income generation

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.

35

Benefits to about 2,000 families of

small producers in the Amazon region.

Vales renewable sources of energy

Synthetic diesel
Synthetic diesel is sulfur free.
Ready for carbon sequestration.
High carbon
feedstock
Coal to liquids
Mozambique*
Biomass to liquids
Brazil

Gasification

Fischer
Tropsch

monetization of high ash coal (no commercial use)

development of local economy
Supply of palm oil** from
Vales biodiesel project
Sugar cane bagasse*

Waste to liquids
to be developed

Output of high value products

(synthetic fuels) without increasing
agriculture area nor competing with
food industry

reduce waste volume in mills

use of non recycled waste

* Under study / ** Demonstration plant under implementation and commercial plant under study

36

Synthetic
Diesel

Controlling dust pollution: wind fences

Installation of wind fences at the port of

Tubaro, Brazil, where we operate seven iron
ore pellet plants.
The wind fences minimize the emissions of up

to 120 km/hour.

37

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
38

Fundao 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.
39

Tito Martins
Executive Officer of Basic
Materials Operations

October 18, 2010

40

Introdution
Our base metals business involves nickel, copper,
aluminum and associated precious metals and
PGMs.

Transfer of interests in aluminum to Norsk Hydro is

expected to be concluded before year-end.
Centred in Toronto, Canada

41

A global network of world-class assets

THOMPSON
VOISEYS BAY
CLYDACH

SUDBURY

LONG HARBOUR

KOREA NICKEL
ACTON

PORT COLBORNE

DALIAN

MATSUZAKA

TAIWAN NICKEL

PARAGOMINAS

Principal mines &

operations

42

Development
properties

SOSSEGO

TRES VALLES

Other metal
refineries

JV refineries

ONA PUMA, SALOBO

CRISTALINO, POLO,
FURNAS, ALEMAO

KALUMINES

PTI

KONKOLA
VNC

Nickel

43

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 Vales share in 20% of the
global nickel market.
44

A global set of world-class refineries with a

diversified portfolio of high-quality products
for all nickel applications
Tonimet
Electro

Thompson

Voiseys
Bay

Sudbury

Clydach
KNC
Matsusaka

Dalian

TNRC
PTI
Onca
Puma

Carbonyl
Refinery
Marketing or JV
refinery
Mines
Development
properties
45

VNC

FeNi

Utility

Vale has a strong platform to grow the nickel

business a balance of sulphide and laterite
properties

Current
Sudbury
Voiseys Bay
Thompson

Indonesia (PTI)

Growth
Ona Puma

Vale New Caledonia (VNC)

46

Vale has worlds largest nickel reserves

million metric tons of contained nickel

Vale

7,9

Norilsk Nickel

6,4

Jinchuan

Xstrata

BHP Billiton

Eramet

47

proven and probable reserves in 2009.

Source: Companies reports and Brookhunt, 2009

4,6

2,9

2,8

2,6

Vale is one of the worlds leading nickel

producers
Share of world finished nickel production - 2008
Vale
17,4%
Other
37,9%

Norilsk
20,6%
Jinchuan
7,6%

Source: CRU Quarterly Q2 2009

48

Xstrata
7,8%

BHP
8,7%

Nickel output from sulphides is generally the lowest

on the cash cost curve
2010 cash cost curves
US$/lb

Laterite
HPAL,
Caron

Sulphides

million lb
Source: Brookhunt, 2010 Q2
49

NPI BF

NPI EAF

Laterite - FeNi

The main goal of our nickel business

50

Ensure success of
projects

Complete and ramp-up of VNC, Ona Puma,

Long Harbour, Karebbe
=> Average gross fixed asset/throughput in 15 50% of 09 figure

Reduce sustaining
capital

Reduce the sustaining capital requirements of the

Canadian operations to 3% of gross fixed assets

Improve cost
efficiency

Increase production

Improve price
realization

Reduce the operating costs of the

Canadian operations by 5% in 15 over 09
Seek production improvements
=> Increase production in Indonesia

Maximize premium and maintain consistency of sales

Integration of the North Atlantic nickel flows

2010
Thompson
mines

Thompson
mill

Thompson
smelter

Thompson
nickel refinery
Cathode
Rounds

Ni Oxide
Sinter

Sudbury
mines

Clarabelle
mill

Copper Cliff
smelter

Clydach nickel refinery

Matte
processing

Pellets
&
Powders

Copper Cliff nickel refinery

Cobalt

Port Colborne
Copper
concentrate

Acton
Voiseys Bay
mine

Voiseys
mill

PGMs
Gold
Silver

Copper
anodes
Copper
concentrate

51

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.

52

Ona 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.

53

Long Harbour - Canada

Construction underway of
nickel concentrate refinery in

Newfoundland.
Design capacity of 50 ktpa
nickel.

Start-up in 2013.

54

Copper

55

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).

56

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.

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.

57

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.

58

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.

59

Konkola North - Zambia

Konkola North, located at the northwestern extremity of the Zambian
portion of the Copperbelt.
It was discovered in 1924 and mined
until 1959.
Konkola North will be Vales 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.
60

Main projects by horizon and estimated

production capacity
Horizon 3
Horizon 2
Horizon 1

000 metric tons

Tres Valles
Salobo I

Salobo II

100

Cristalino

100

18

Konkola North

100

100

118 Oxide

36

Polo

100

Salobo III

80

Alemo

80

Kalumines

36

2010-2012

61

2012-2016

Visconde

90

118 Sulphide

36

Furnas

100

Paulo Afonso

160

2016 onwards

Eduardo Ledsham
Executive Officer of
Exploration, Energy and Projects

October 18, 2010

62

Simandou
Project overview
Project details
Short and medium term action plan

63

Vale will unlock the development of

Simandou Project.
Last high grade iron ore similar to Carajas

64

Opportunity for Vale

Vale will consolidate its position as main

premium iron ore supplier in the seaborne
market.
Vales 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

65

Simandou project details

66

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

67

Drillholes : 38

Metters drilled: 6,677m

Average depth: 175m

Access constructed: 70km

Drilling platforms: 9.5km2

Simandou Project
Blocks 1 & 2 - highlights

2011 feasibility study drilling

campaign (Hematite focus):

68

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 - geology

69

Simandou Project
Blocks 1 & 2 - geology

70

Simandou Project
Blocks 1 & 2 - geology

71

Simandou Project
Blocks 1 & 2 - geology

72

Simandou Project
Blocks 1 & 2 open pit mine

73

Simandou Project
Blocks 1 & 2 dry process

74

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: 34.8km2

75

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: 76.3km2

76

Zogota project
Process plant project

77

Zogota project
Beneficiation flowsheet

78

Zogota project
Master plan : hematite final pit and future expansion

79

Simandou Project
Liberian logistics corridor

80

Simandou Project
Transguinea railway: rehabilitation in progress

81

Simandou Project
Hematite estimated production

82

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

83

Simandou: the largest integrated iron ore mine

and infrastructure project ever developed in Africa

84

Mrio Barbosa
Executive Officer of Fertilizers

October 18, 2010

85

Fertilizers in Vale
Industry perception, perspectives, strategy and initiatives

86

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

87

Lower per capita arable land

Unbalanced soil conditions

Limited water availability

Climate Changes

Fundamentals are strong

Soil conditions and available land drive fertilizers demand
Soil Resilience
Soil Performance

88

Source: IFA

Fundamentals are strong

Agricultural land, world grain productivity and fertilizer consumption
200

two main factors.

4000
Harvested Area
Fertilizer Consumption

growth.
- Limitation of arable, goodquality land.

Increase in grain production

depends heavily on higher
agricultural productivity, what
leads to higher dosage of
fertilizer.

Grain Productivity

Fertilizer Consumption (Mt)

- Increasing demand for food

as a result of population and
high per capita income

150

3000

100

2000

50

1000

0
61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06 09

Source: IFA
89

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

Fertilizer demand is driven by

Fundamentals are strong

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

200

expected to reach ~ 200 Mt by the

end of this decade.
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.

Fertilizer consumption, Mt

- Global population is estimated to reach

160

K2O
P2O5
N

120

80

40

Emerging countries will lead this

growth and Brazils rate is expected

to keep is 6% aa pace.

0
61 73

Source: IFA
90

83

89 92

95

98 '01 '04 '07 10

13

16 19

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%

India

13

17

20

22

22

3%

USA

18

19

19

19

19

0%

Brazil

6%

World

137

137

153

159

160

1%

250

200
Brazilian Market
World Market

150

100

Source: IFA /ANDA

50
90

91

92

94

96

98

'00

'02

'04

'06

'08

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 P2O5

kt of K2O

35000

15000

28000

12000

9000

7500

6000
9000

21000

4500
14000

6000
3000

3000

7000

1500

92

Source: IFA

ut
ro
s
O

ia
In
d

E
U

ra
si
l
B

A
EU

hi
na

ut
ro
s
O

ra
si
l
B

A
EU

ia

In
d

hi
na
C

ut
ro
s
O

ra
si
l
B

E
U

A
EU

ia
In
d

hi
na

Fundamentals are strong

China is the main producer of nitrogen (ammonia) and phosphate
(phosphate rock), but its production is mainly consumed internally
36%
32%

Ammonia production
153 Mt World in 2008

Phos rock production

174 Mt World in 2008

18%
14%
9%

China

Russia

8%
India

6%

1%

US

Brazil

China

Morocco

4%

Russia

Brazil

Sulphur production
48 Mt World in 2008

KCl production
54 Mt World in 2008

33%

US

6%

19%

17%
15%

15%

13%

11%
6%

2%
Canada

93

Russia

Source: IFA

Belarus

Germany

Brazil

US

Canada

Russia

S. Arabia

0%
Brazil

Global trading of fertilizer

Origin
Origin

Western Canada

Eastern Europe
Destination/Origin

Origin

US/Mexico

China **

Origin
Origin
Morocco

Arab Gulf

Destination
India

Destination
Brazil

Destination
Southeast Asia

Potash
Phosphate
Dry Nitrogen

Destination
Argentina

UAN (liquid Nitrogen)

*
**
94

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

94

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
505
475
455
435
420
415
395
365
325330

588
522
378
323
278

318
278

'02

930

Raw Materials phosphate

rock Fob Morocco US$/t
Raw Material Sulphur Fob
Vancouver US$/t

800

235

233222
195
154
102105113
199

'00

1000

Raw Materials Ammonia FOB

Tampa US$/t
Basic Fertilizer UREA Fob
Black Sea US$/t

274

'04

'06

'08

10

12

14

16

18

Basic Fertilizer MAP Fob

Black Sea US$/t

600

546
506
467
430

20
442

Potash

400

335

Basic Fertilizer KCl Fob Vancouver US$/t

216
177
200 147 146
176

620
520
420
360

500

300

117 118118

480 480
440

480480

43

95

'02

Source: CRU

'04

'08

61

43 47 56

50
50

'00 '02
10

12

14

16

18

20

'04 '06 '08

110

100

36

210
175

'06

40

124
95

37

100

'00

365

247 262 329

900

700

410

413

10

54

26 38

12

14

16

18

20

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
96

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 2010

KCl consumption
Mt in 2020

TaquariVassouras

> 900
97

> 600 and < 900

Source: Agroconsult

> 400 and < 600

> 100 and < 400

< 100

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

P205 consumption
kt

Catalo
Patos de Minas
Uberaba

> 500
> 300 and < 500
> 100 and < 200
> 200 and < 300
< 100
Sources: ANDA, Conab, DIFM, Agroconsult
98

Arax
Cubato
Guar

An exciting portfolio of projects and

operations supports Vales growth strategy
Salitre

Vale
Fertilizantes

Potash
Phosphate

Expansion
Bayovar

Regina II Canada

Taquari
Vassouras

Bayovar - Peru

Carnalita

Rio Colorado Argentina

Vale Fosfatados
Regina Canada

Neuqun Argentina
Anitpolis

99

Vale
Fosfatados
expansions

Evate Mozambique

Achievements made through organic growth

and acquisitions have strengthen our
positioning
Phosphate

Acquisition of fertilizer assets.

Start up of Bayovar in July 2010.
Asset integration and
optimization: synergies
assessment and capture already
in place.
Salitre project to be submitted to
Board approval on November
2010.
Evate project under development
100

Potash

Rio Colorado : submission to

Board approval on November
2010.
Carnalita and Regina (Canada)
projects under development.

Ammonia

Ammonium
nitrate

Nitric
acid

Phosphate
rock

Sulfuric
acid

Phosphoric
acid

Final industrialization

Sulphur

Urea

Initial industrialization

Natural resources

Ammonium
sulphate

MAP/DAP

DCP

TSP

SSP
Potash
KCl

K
Vale presence

101

Farmer

Natural gas
Nafta
Asphalt residue

Granulation and blending NPK

and have expanded Vale`s presence in the

fertilizer industry

Our goal is to become one of the global

leaders in the industry
Phosphate rock production capacity 2017 (Mt rock)
OCP

PotashCorp

44,7

Mosaic

Potash production capacity 2017 (Mt KCl)

18,9

Mosaic

18,2

15,1

Vale

Vale

10,7

16,5

Belaruskaliy

JPMC

11,5

GCT / CPG

Uralkaliy

10,5

PCS Phosphates

9,6

Ma'aden

9,0

9,7
7,0

Silvinit

6,3

K+S

6,1

Dead Sea Works

4,3

Qinghai Salt Lake

Gecopham

5,5

Rotem Amfert Negev

4,6

Kara Tau

4,2

Ferphos

3,5

Foskor

3,5

CF Industries

3,2

Source: Fertecon, Vale

102

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,
Anitpolis 0.3 Mta

3,0

Agrium

2,8

Arab Potash

2,4

EuroChem

2,3

Iberpotasas

1,5

Cleveland Potash

1,2

Mengo Potash Project

1,2

Intrepid Mining

1,2

Note: Considers total capacity of the

projects PRC 4.35 Mta, VSP I 2.9
Mta, Carnalita I and II 1.6 Mta,
Neuqun 1.0 Mta; UOTV 0.8 Mta

Current operations

103

Potash - Taquari -Vassouras

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.

104

Phosphate - Brazil

Catalo
Uberaba

Patos de Minas
Arax
Tapira

Guar
Cubato/Piaaguera
Cajati(Mine and Port)
Araucria

mines
plants

105

Phosphates - Bayovar (Peru)

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.

Reserves
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

Life of mine: 27 years.

Potential expansion under
evaluation.

106

Phosphates - Bayovar (Peru)

Port

Storage and conveyor belt

107

Conveyor belt

Projects in the pipeline

108

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

109

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

Reserves
Tonnage

Grade
P2O5

Tonage
P2O5

MT

MT

Probable

360.8

34.2

123.4

Total

360.8

34.2

123.4

Potash - Rio Colorado

Implementation plan : critical

path to guarantee schedule is
ongoing.
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 .

110

Zapala
Neuqun
Rio Negro

La Pampa

Buenos Aires

. Baha Blanca Port

Potash - Rio Colorado

Well drilling

111

Potash - Regina
Location

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

of KCl/year.
-

112

Start-up in 2015 and reaching full

capacity of 2.9 Mt/y by 2024.

Potash - Carnalita
Located in Sergipe, Brazil, near Taquari-Vassouras
operations
CARNALITA
PROJECT

Solution mining method

UOTV

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
113

TMIB
ARACAJU

Pilot plant

Phosphate - Salitre
Located in Patrocnio/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

114

Mine, plant and infrastructure

Phosphate - Evate

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

115

Fertilizers
Summary of estimated production capacity

116

Current

Additional

Total 2017

Potash (KCl)

0.85 kt/y

10 Mt/t

11 Mt/y

Phosphates

9.2 Mt/y

8.0 Mt/y

17 Mt/y

Ammonia

620 kt/y

620 kt/y

MAP (high)

1,180 kt/y

1,300 kt/y

2,480 kt/y

TSP (high)

865 kt/y

670 kt/y

1,535 kt/y

SSP

2,500 kt/y

2,500 kt/y

Dicalcium
Phosp

500 kt/y

120 kt/y

620 kt/y

Urea

610 kt/y

610 kt/y

Conclusion

117

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.

Vale,

a global leader

118