Vale S.a. · BMFBOVESPA:VALE3
Vale — Investor Day (September 2009)
75 slides from Vale's investor day presentation, September 2009
Slide 1: 2009 Analyst & Investor Tour
VW va _ 2009 Analyst & Investor Tour
Slide 2: Vale Nickel business
Vale Nickel business Roberto Moretzsohn Rio de Janeiro Executive Vice President, Marketing Vale Inco September 2009 1
Slide 3: Vale has a strong platform to grow the nickel business
Vale has a strong platform to grow the nickel business A balance of sulphide and laterite properties Current Sudbury Voisey’s Bay Thompson Indonesia Growth Onca Puma Goro 2
Slide 4: Vale nickel business is located…
Vale nickel business is located… Electro Tonimet Thompson Voisey’ Voisey’s Bay Clydach Sudbury KNC Dalian Matsusaka TNRC PTI Carbonyl Onca Puma Goro Refinery Utility Mines Development Properties 3
Slide 5: We continue to develop and build our leading position in the nickel market
We continue to develop and build our leading position in the nickel market Nickel reserves (100% Basis)1 million metric tons of contained nickel Vale 8.9 Norilsk Nickel 5.8 Jinchuan 4.5 BHPB 4.1 Xstrata 2.6 Eramet 2.0 ¹ P&P reserves Sources: BrookHunt 2008 edition Nickel Industry Cost Study and Vale
Slide 6: Continued focus on employee health and safety
Continued focus on employee health and safety Canadian mines have won the John T. Ryan award for “Safest Metal Mine in Canada” for a record 5 years in a row. - Birchtree Mine (Thompson) – 2004. - Garson Mine (Sudbury) – 2005. - North Mine (Sudbury)– 2006, 2007 & 2008 . In January 2009, Copper Cl
Slide 7: We continue to grow our production capability to leverage our resource base
We continue to grow our production capability to leverage our resource base kt of Nickel 275 Increases with the addition of Voisey's Bay, additional mine 248 development and processing 235 improvements in Canada, as well 220 as increased thermal power in Indonesia. 2008 production curtailed in Q
Slide 8: Managed the near term impacts of the market downturn
Managed the near term impacts of the market downturn with focus on sustainable improvements Production Flexing the production capacity in PTI utilizing the fuel fired power sources. Optimizing product mix to meet changing market demands. Review of mine design and processing configurations to a
Slide 9: Onca Puma
Onca Puma Nickel laterite operation in the state of Para to produce ferronickel. Annual capacity: 58 kt of nickel in ferronickel. Estimated investment: US $ 2.297 billion. Construction progressing again. Operational readiness assessment underway . Operations training taking place. Firs
Slide 10: Goro Project
Goro Project High Pressure Acid Leach (HPAL). Process for laterite ores in the Southern Province of New Caledonia. Annual capacity: 60 kt nickel oxide and 4,600 t cobalt intermediate. Estimated investment: US $4.083 billion. Project construction complete. Commissioning underway. Recove
Slide 11: Voisey's Bay processing plant
Voisey’s Bay processing plant Hydrometallurgical plant to process sulphide concentrates. Annual capacity: - 50 kt electronickel. - 5,000 t copper. - 2,500 t cobalt. Scheduled completion by Feb 2013. Project released from further Environmental Assessment, 2008. Hydromet technology selected
Slide 12: Nickel prices have recovered from their 2009 lows
Nickel prices have recovered from their 2009 lows LME LME cash nickel price and stocks LME Stocks January 2005 to Sept 25 2009 Cash Price (tonnes) (US$/ tonne) 140,000 50,000 120,000 100,000 40,000 80,000 30,000 60,000 20,000 40,000 10,000 20,000 0 0 2005 2006 2007 2008 2009 11 Source: LME
Slide 13: Market update
Market update Robust Chinese nickel demand drove the market in H1 2009. Stainless production continues improvements. - China setting production records in Q2/Q3 – potential Q4 moderation. - Recovery outside China gathering pace in Q3 – representing 70%+ of world SS market in 2008. - Declining sc
Slide 14: China and Taiwan drove stainless production in first half of 2009
In the first half of 2009, China and Taiwan drove stainless production – improvements have broadened to all markets into Q3 Index Quarterly stainless production trends Q1 2006 = 100 Q1 2006 – Q2 2009 (f) 225 175 China/Taiwan 125 Rest of World 75 25 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2e 2006 200
Slide 15: We have a strong presence in the growing Asian market
We have a strong presence in the growing Asian market World nickel demand by geography versus Vale sales 12% 33% 53% 27% 60% 9% 1% 5% 2008 World nickel use Vale 2008 sales Rest of World Europe North America Asia 14
Slide 16: Selling nickel to the stainless steel industry can be challenging given the inherent volatility
15 Y-O-Y Q-O-Q Change Change -25% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% -35% -25% -15% -5% 5% 15% 25% 1Q70 1Q70 35% 4Q70 4Q70 3Q71 3Q71 2Q72 2Q72 1Q73 1Q73 4Q73 4Q73 3Q74 3Q74 2Q75 2Q75 1Q76 1Q76 4Q76 4Q76 3Q77 3Q77 2Q78 2Q78 1Q79 1Q79 4Q79 4Q79 3Q80 3Q80 2Q81 2Q81 1Q82 1Q82 4Q82 4Q82 3Q83 3Q83 2
Slide 17: Strong position in Non-Stainless sectors providing flexibility
We have a strong position in Non-Stainless sectors providing flexibility to shift nickel in and out of the Stainless sector to manage demand variability World Nickel demand by application versus Vale sales 33% 42% 43% 58% 57% 67% 2008 World nickel use Vale 2008 sales Vale 2009 H1 sales Stainless Non
Slide 18: Vale is positioned to remain a global nickel leader
In summary, Vale is positioned to remain a global nickel leader for many years to come Nickel demand poised to rebound with global economic recovery. Vale has the best in-ground nickel assets with cost structure improvements underway to maximize value. Flexibility in our nickel production, bot
Slide 19: Iron ore market outlook
Iron ore market outlook Pedro Gutemberg Rio de Janeiro Director of Iron Ore Marketing and R&D September 2009 1
Slide 20: Disclaimer
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
Slide 21: Agenda
Agenda Company overview Steel market outlook Iron ore market outlook Final comments 3
Slide 22: Company Overview
ColocarOverview Company aqui o divisor da seção, definido em 50pts. 4
Slide 23: Vale has the largest reserve base in the iron ore industry
Vale has the largest reserve base in the iron ore industry Reserves (t)1 2008 Production (Mt) Northern System 6 mines 7.2 Bi 96.5 Southeastern System 13 mines 3.7 Bi 116.4 Southern System 10 mines 3.5 Bi 80.5 TOTAL VALE 14.3 Bi 293.4 5 ¹ Proven and probable reserves, as of Dec, 2008.
Slide 24: Vale: products for the steel industry
Vale: products for the steel industry Vale can deliver all the major inputs of the steel industry, with outstanding quality and reliability. DR Pellets BF DR R Lump Iron Ore Products Sinter Feed Sinter SM Pig iron DRI BOF Manganese & BF Pellets Mn Alloys Nickel Coal Coke Coke plant Crude steel Crude
Slide 25: Steel market outlook
Colocar Steel aqui market o divisor da outlook seção, definido em 50pts. 7
Slide 26: Crude steel production has significantly recovered in recent months
Crude steel production has significantly recovered in recent months Reasons for steel production Crude steel production by region improvement: 130 Better than expected economic indicators 120 Government incentives: 110 - In the US the program “cash for clunkers” 100 have boosted the auto secto
Slide 27: Chinese steel production
Chinese steel production Steel production is running at record levels, driven by domestic consumption in the absence of large export volumes in 2009. Chinese crude steel production (Mt) (YoY) 2008 2009 Var YoY 70 25% 65 YTD: ´09 - 370Mt 20% 60 ´08 - 351Mt 15% 55 50 10% 45 5% 40 0% 35 30 -5% ay ar ec
Slide 28: Stimulated by government incentives, end-users are showing signs of recovery
Stimulated by government incentives, end- users are showing signs of recovery Steel consumption Auto Sales Construction China Japan Europe USA Korea Japan Europe USA Korea China¹ (%YoY) 160 40 Index –Sep / 07 = 100 Index –Sep / 07 = 100 160 140 140 35 120 120 30 100 100 25 80 80 20 60 60 15 40 40 10
Slide 29: Chinese fixed asset investment is rising strongly because of massive credit expansion
Chinese fixed asset investment is rising strongly because of massive credit expansion Monetary/fiscal stimulus resulted in strong growth in construction FAI in China. Further expansion is now occurring in the property construction sector, which should provide further steam for steel consumption in c
Slide 30: Chinese steel consumption
Chinese steel consumption The recovery has been strong, driven by massive government infrastructure spending, in a sustainable recovery process. Chinese Apparent finished steel consumption (Mt) 2008 2009 Var YoY (YoY) 70 50% 65 45% 40% 60 35% 55 30% YTD: ´09 - 393Mt 50 ´08 - 325Mt 25% 45 20% 15% 40
Slide 31: Steel prices have recovered from bottom levels in recent months
Steel prices have recovered from bottom levels in recent months Steel price Billet Hot rolled coils 450 Europe USA 700 400 650 600 US$ /ton US$ /ton 350 550 500 300 450 250 400 9 9 9 9 9 9 9 9 9 9 -0 -0 -0 l-0 -0 -0 -0 -0 l-0 -0 a n ar a y J u ep a n ar a y J u ep J M M S J M M S Billet – European S
Slide 32: Iron ore market outlook
Colocar Iron aquioutlook ore market o divisor da seção, definido em 50pts. 14
Slide 33: European seaborne imports expected to rebound in 2H09
European seaborne imports expected to rebound in 2H09 Steel & iron ore de-stocking development in 2009 Positioned in the upstream of the supply chain, iron ore performs as a late cycle. In order to promote stock adjustments to new steel production levels, the swings of iron ore imports are much st
Slide 34: Chinese iron ore imports have been very strong in 2009
Chinese iron ore imports have been very strong in 2009 In the first eight months of 2009 Chinese iron ore imports reached 405Mt, increasing 32% YoY, partially compensating the weaker demand in other regions. Chinese iron ore imports 2007 2008 2009 60 50 (Mt) 40 30 20 ec ct n pr b n ov ug ar p ay l J
Slide 35: Share of imported ore is increasing in China
Share of imported ore is increasing in China The share of imported ore in China has reached more than 70% of total consumption year to date in 2009. Share of iron ore consumption in China 700 75% imported ore 600 domestic concentrates 1 500 share of imported ore 60% 400 (Mt) 300 45% 200 100 0 30% 2
Slide 36: Iron ore stocks in China remain relatively tight
In spite of the increase in absolute terms, iron ore stocks in China remain relatively tight According to August pig iron production, stock levels at the ports can only meet steel mill's demand for around 40 days. Chinese iron ore stocks 18 Source: Mysteel
Slide 37: A tight market situation is expected for 2H09
A tight market situation is expected for 2H09 On the supply side: ¾ large downward capacity adjustments were implemented by seaborne suppliers in 1H09; ¾ Lead times and monsoon period in India compromise quick pick up in production volumes for the short term; ¾ Additionally, higher domestic demand
Slide 38: Iron ore prices
Iron ore prices Premium for higher VIU of Vale´s iron ore has been recognized by the market, especially in periods when high productivity is required, such as today. Spot iron ore prices in China 200 SFCJ Spot CFR China Platts 62% Index 175 150 US$/dmt 125 100 75 50 09 8 8 9 9 8 9 8 9 8 09 08 8 09 0
Slide 39: Final comments
Colocar Final aqui o divisor da comments seção, definido em 50pts. 21
Slide 40: Our long term market overview and strategy remains unchanged
Our long term market overview and strategy remains unchanged We continue to believe in the strong long term fundamentals for global iron ore demand; We continue strongly committed to long term relationship with our clients; We continue developing our projects; We are implementing several log
Slide 41: Conclusion
Conclusion Global economy is performing better than previously expected and steel production is accelerating in several regions, also helped by government stimulus packages. Chinese steel consumption is on a sustainable growth path, and production should follow the trend accordingly. Seaborne
Slide 42: www.vale.com
www.vale.com rio@vale.com 24
Slide 43: 2009 Analyst & Investor Tour
VW va _ 2009 Analyst & Investor Tour
Slide 44: Vale's iron ore systems
Vale’s iron ore systems DEJM /DIOF / DIPF Rio de Janeiro Ferrous Minerals Planning and Development Department September 2009 2
Slide 45: Outline
Outline Current iron ore production structure 3
Slide 46: Vale's iron ore systems at a glance
Vale’s iron ore systems at a glance Production (Mt)¹ 2007 2008 Iron Ore 296 293 Pellets 18 27 4 ¹ USGAAP
Slide 47: Reserves base
Reserves base Our proven reserves are capable of meeting the present demand for more than 40 years. Reserves (t)1 Northern System 6 mines 7.2 Bi Southeastern System VALE has the largest reserves 13 mines 3.7 Bi base in the iron ore industry Southern System 10 mines 3.5 Bi TOTAL VALE 14.3 Bi ¹ Proven
Slide 48: Vale's iron ore logistics
Vale’s iron ore logistics 1 port and 3 maritime terminals for seagoing vessels: Tubarão, Ponta da Madeira, Guaíba and Itaguai. 2 world-class railroads – EFC and EFVM Guaíba Itaguaí 6
Slide 49: Current iron ore production structure
Current iron ore production structure Iron ore production systems Northern System Production (Mt)¹ 2007 2008 Iron Ore 91.7 96.5 7 ¹ USGAAP
Slide 50: Northern System
Northern System The Northern System is composed by 3 major iron ore deposits, called Serra Norte, Serra Sul and Serra Leste; Presently, mining operations are carried out only at Serra Norte. Serra Leste Serra Norte Key: Iron Ore Serra Sul Formation 8
Slide 51: Carajás mining complex
Carajas mining complex PROJETO NSS.
Slide 52: Northern System - historical production
Northern System - historical production Iron Ore: production doubled from 48 (2000) to 97 Mtpy (2008). 1 Billion tons in Oct/07 million metric tons 97 92 82 69 72 59 52 54 48 2000 2001 2002 2003 2004 2005 2006 2007 2008 10
Slide 53: Carajás railroad
Carajás railroad General Information: . Length: 892 km (single track) . 56 crossing yards . 62 bridges and overpasses . Train-type (2008): 4 locomotives and 330 cars . Net cargo: 33,000 t (SF) . Cars (total): 10,670 . Locomotives (total): 216 . Cycle time: 90 h CONTROL ROOM 11
Slide 54: Northern System - Ponta da Madeira maritime terminal
Northern System - Ponta da Madeira maritime terminal PIER I PIER II Vessels up to 420,000 dwt Draft: 23 m Ships up to 155,000 dwt Ships up to 420,000 dwt Maximum draft: 18m Vessels up to 155,000 dwt Maximum draft: 23m Loading rate: 8,000 t/h Draft: 18 m Loading rate: 16,000 t/h PIER III Shipping Mt
Slide 55: Northern System - São Luis pelletizing plant
Northern System - São Luis pelletizing plant PRODUCTION CAPACITY: 7.0 Mtpy Production (Mt) ¹ 2007 7.1 2008 7.0 13 ¹ USGAAP
Slide 56: Current iron ore production structure
Current iron ore production structure Iron ore production systems Southeastern System: Production (Mt)¹ 2007 2008 Iron Ore 114.9 116.4 Pelletizing Plants 6.4 6.1 MG Southern System: Production (Mt)¹ 2007 2008 Iron Ore 89.3 80.5 Pelletizing Plants 4.1 4.2 14 ¹ USGAAP
Slide 57: Iron ore quadrangle overview
Iron ore quadrangle overview Southern & Southeastern Systems CAUÊ MINAS DO MEIO ITABIRA CONCEIÇÃO CÓRREGO DO MEIO To Tubarao ANDRADE PATRIMÔNIO HISTORICO BRUCUTU Port CAPE LA PIE DADE DA BELO DOIS IRMÃOS HORIZONTE GONGO SOCO ÁGUA LIMPA APOLO BAÚ JANGADA MAR AZUL CAPÃO TAMANDUÁ XAVIER CAP. DO MATO AB
Slide 58: Southeastern System - historical production
Southeastern System - historical production Iron Ore: production increased from 71 (2000) to 116 Mtpy (2008). million metric tons 115 116 98 91 81 73 76 71 70 2000 2001 2002 2003 2004 2005 2006 2007 2008 16
Slide 59: Itabira complex
Itabira complex Minas do Meio ROM 17
Slide 60: Minas Centrais complex
Minas Centrais 5 complex Agua Limpa Mine Mineral Processing ~ Plant Mineral Processing — __Plant Mineral Processing Plant
Slide 61: Mariana complex
Mariana complex Alegria Mine . eS Fabrica Nova Mine
Slide 62: Urucum mine
Urucum mine 20
Slide 63: Southeastern System
Southeastern System
Slide 64: Southeastern System - Tubarão port
Southeastern System Tubarão port Shipping 2008 Mt 94 PIER 2 PIER 1 Vessels up to 365,000 dwt Draft = 20 m North Berth Vessels up to 200,000 dwt Draft = 17 m South Berth Vessels up to 170,000 dwt Draft = 15.5 m 22
Slide 65: Southeastern System - Pelletizing at Tubarão complex
Southeastern System - Pelletizing at Tubarão complex I & II 100% Vale Production (Mt)¹ 2007 2008 Pellets 6.4 15.4² JV with Ilva JV with ArcelorMittal NIBRASCO Companhia Nipo-Brasileira de Pelotização JV with JSM JV with Posco ¹ USGAAP 23 ² Figures includes actual production, including production fro
Slide 66: Southern System - historical production
Southern System - historical production Iron Ore: production increased from 27 (2000) to 81 Mtpy (2008). 89 84 81 70 61 53 46 47 27 2000 2001 2002 2003 2004 2005 2006 2007 2008 24
Slide 67: Itabirito complex
Itabirito complex Pico Mine
Slide 68: Vargem Grande complex
m Grande complex ~Tamandua Mine f Aboboras Mine » VARGEM GRANDE’s MINERAL PROCESSING PLAN ——~_~ “see Vargem Grande = to Guaiba Port i
Slide 69: Paraopeba complex
Paraopeba complex CAPAO XAVIER MINE
Slide 70: Vale's pipeline of iron ore projects
Vale`s pipeline of iron ore projects iron ore and pellets Projects Capacity Expected Total capex Mtpy start-up US$ million Iron ore Carajás - additional 10 Mtpy +10 1H10 290 Carajás 130 Mtpy +30 1H12 2,478 Carajás Serra Sul (mine S11D)¹ +90 1H13 11,297 Apolo¹ +24 1H13 2,509 Pellets Oman +9
Slide 71: Ferrous minerals product portfolio - iron ore and pellets
Ferrous minerals product portfolio - iron ore and pellets Non-agglomerated iron ore products: - Sinter Feed; - Pellet Feed; - Lump Ore. Agglomerated iron ore products: - Pellets for blast furnaces; - Pellets for direct reduction. Product Specifications: - Chemical assays (such as Fe, SiO2, Al2
Slide 72: Iron ore and pellets portfolio
Iron ore and pellets portfolio Examples of products Sinter Feed - SFCJ - Sinter Feed Carajás - SSFT - Standard Sinter Feed Tubarão - SSFG - Standard Sinter Feed Guaíba Pellet Feed - PFCJ - Pellet Feed Carajás - PFIT - Pellet Feed Iron Tubarão - PFFT - Pellet Feed Fines Tubarão - PFFG - Pellet Fe
Slide 73: Iron ore - current portfolio
Iron ore - current portfolio Examples of products Distribution by port Ore type Ponta da Guaíba + Number of Tubarão (number) Madeira Itaguaí products SFCJ 1 SSFT SSFG 2 Sinter feed (6) SFXT 1 SFOT SFOG 2 PFIT 1 Pellet feed (4) PFCJ PFFT PFFG 3 Lump ore (1) LOBG 1 Total 2 5 4 11 31
Slide 74: Iron ore - current portfolio
Iron ore - current portfolio Examples of products Expected quality (2009-2012) 32
Slide 75: www.vale.com
www.vale.com rio@vale.com 33