Slide 1: Moatize and the Nacala Logistics Corridor
0 Moatize and the Nacala Logistics Corridor welcome New Investor Rio de Janeiro, December 09, 2014
Slide 2: Document objective
1 Document objective Explain the rationale and the structure of the partnership with Mitsui on the Mozambiquean coal assets and provide some highlights from Vale´s coal business
Slide 3: Content
2 CONTENT Explanation of the coal transaction Highlights from Vale’s coal business
Slide 4: Content
3 CONTENT Explanation of the coal transaction Highlights from Vale’s coal business
Slide 5: Strategic rationale for the transaction
4 Strategic rationale for the transaction Outcomes Transaction objectives • Completion of the mine and logistics projects with: • Fund the Reduction in Vale´s funding completion of requirements our world class Improvement of Vale´s balance coal project in sheet Mozambique Reduction of the expo
Slide 6: Transaction overview
5 Transaction overview Upon completion of the transaction, Mitsui will become Vale´s partner in Final both the Moatize mine and the Nacala logistics corridor Ownership Vale´s equity stake will reduce from: ‒ 95% to 81%1 in Vale Mozambique (investment vehicle for the Moatize mine) ‒ Approximately
Slide 7: Transaction Structure – Moatize mine
6 Transaction Structure – Moatize mine Highlights • The transaction entails the • Upon completion³ of the transaction, Vale will incorporation of new coal investment own approximately 81% of the Moatize mine vehicles into which: i. Vale will contribute its equity Vale´s Current Vale´s ownership shar
Slide 8: Cash flow impact – Moatize Mine
7 Cash flow impact – Moatize Mine US$ million Reduction in Vale´s funding requirements 2,068 1,124 US$ 638 million 449 110 1 1,283 450 944 2 188 645 Moatize II Executed Pending Reclassified Executed Pending Mitsui Mitsui´s Vale's Capex Rolling Rolling Stock capex Payment Outstanding Outstanding Stoc
Slide 9: Transaction Structure – Nacala Logistics Corridor
8 Transaction Structure – Nacala Logistics Corridor Highlights • Upon completion of the transaction, Vale will • The transaction entails the own approximately 35% of the logistics incorporation of investment vehicles corridor into which: NLC´s Current NLC´s ownership i. Vale will contribute its equi
Slide 10: Cash flow impact – Nacala Logistics Corridor
9 Cash flow impact – Nacala Logistics Corridor US$ million Reduction in Vale´s funding requirements 4,444 1,947 ~ US$ 3.013 million 2,497 449 2,048 313 2,700 965 NLC Capex Executed¹ Pending Reclassified Pending Capex Contribution Project Cash available Rolling (adjusted) Mitsui Finance² for repaying
Slide 11: Capital Structure – Nacala Corridor post partnership with Mitsui
10 Capital Structure – Nacala Corridor post partnership with Mitsui US$ million Total of US$ Non-recourse debt 626 million from Project finance up to US$ 2.7 bi, i.e., up to 80% of total debt 1 313 3,995 313 669 2,700 Project finance Vale´s shareholder Vale Mitsui Total loan Capital Debt Equity & Qu
Slide 12: Overall impact on Vale's cash flow
11 Overall impact on Vale’s cash flow US$ million 2,700 3,651 US$ 3.013 Mitsui´s capital million of comtri-bution² for a capital 15%avoided stake at the Nacala US$ 638 logistics million of corridor capital avoided at the mine 313 188 450 Mitsui upfront Mitsui contribution Mitsui equity Project Finan
Slide 13: Content
12 CONTENT Explanation of the coal transaction Highlights from Vale’s coal business
Slide 14: Highlights for Vale's coal business
13 Highlights for Vale´s coal business Guiding principles Examples Managing the portfolio for value, Integra and Isaac Plains placed not for production volumes under care & maintenance¹ Eagle Downs under review together with new partner Successfully implementing our Nacala already operatio
Slide 15: Evolution of Vale's coal production
14 Evolution of Vale´s coal production Mt, attributable production Integra Isaac Plains Carborough Downs Moatize 8.8 8.9 Moatize 7.1 production up 34% yoy 3.8 (14/13)¹ 5.1 3.8 Integra and Isaac Plains placed under 2.4 Care and 0.9 1.9 Maintenance in 1.1 1.0 2Q14 and 3Q14 1.1 respectively 1.3 1.5
Slide 16: Expected production growth
15 Expected production growth Production Breakdown of Logistics corridors Mt %, 2015-20171 Overall logistic capacity for coal initially limited to 22.5Mt Beira 20% 26 26 22 17 Nacala 80% 8 5 2014E 2015 2016 2017 2018 2019 ¹ Current Sena-Beira commitments expire in 2017
Slide 17: Nacala will play a key role in connecting remote geographies
Nacala will play a key role in connecting remote geographies, providing rail and port solution Export flow Containerized tobacco Sugar Sand Timber Ore Pig iron Grains Import flow Fertilizer Fuel Wheat Clinker Sulfur Dual flow Others Other Containerized General cargo demand is forecasted to be about
Slide 18: Strong commitment to health & safety, local communities and the environment
17 Strong commitment to health & safety, local communities and the environment are key to the success of Moatize and Nacala Corridor Pharmacy in Cateme Health Care Center in Cateme Environmental protection Health and Safety Development of technical skills Trade courses in public schools
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