Vale S.a. · BMFBOVESPA:VALE3
Vale — Investor Presentation (May 2017)
24 slides from Vale's investor presentation, May 16, 2017
Slide 1: Disclaimer
1 “This presentation may include statements that present Vale's expectations about future events or results. All statements, when based upon expectations about the future and not on historical facts, involve various risks and uncertainties. Vale cannot guarantee that such statements will prove corre
Slide 2: A transformational leadership with three main pillars
2 A transformational leadership with three main pillars • Zero harm • Enhancement of relationship with government environmental agencies • Relentless focus on world-class assets • Divestment of non-core assets • Cultural shift towards managing costs and expenses • Transformational approaches for pro
Slide 3: The revision of our values was the foundation for the company's transformation
3 The revision of our values transformation was the foundation for the company’s planet people happen Make it Improve together Value our Do what is right Prize our Life matters most
Slide 4: Based on these values, Vale achieved higher levels of sustainable development
4 Based on these values, Vale achieved higher levels of sustainable development Examples Health and safety • Annual Safety Reflection Day promoted for all employees and third-party workers • Zero Harm targeted throughout all operations Community • Approximately 70% of work force local hires • Priori
Slide 5: Zero Harm in our operations is our prime goal
5 Zero Harm in our operations is our prime goal Accomplishments Total recordable injuries frequency rate Per million hours worked -42% 3.3 2.8 2.6 2.2 2.1 1.9 2011 2012 2013 2014 2015 2016 • Promotion of “Safe Choices” through “Stop, Think, Care” campaign • Reduction of risks through increased contr
Slide 6: Cultural transformation was needed to align investment requirements to the new reality
6 Cultural transformation was needed to align investment requirements to the new reality of the mining business Total investments wish list in 2012 Examples of project simplification US$ billion, for 2013-2017 period Sust. capex R&D World class assets Iron ore Base Metals Australia Fertilizer coal O
Slide 7: Strengthening of capital discipline led to the delivery of key projects
7 Strengthening of capital discipline with focus on world-class assets led to the delivery of key projects Projects delivered in the last 5 years Capex US$ billion Main examples Sustaining Expansion projects Ferrous Minerals Nickel Copper Coal US$ 44.6 billion 2012 2013 2014 2015 2016 14.2 Salobo Ca
Slide 8: Project delivery supported the overall production increase in the last 6 years
8 The successful delivery of projects supported the overall production increase in the last 6 years Iron ore Copper1 Mt kt 446 349 346 414 369 361 332 302 291 321 319 310 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Mozambique coal Nickel Mt kt 5.5 5.0 4.9 311 291 275 260 3.8 3.8 242
Slide 9: Vale divested over US$ 16 billion in non-core assets over 6 years
9 With focus on world-class assets and capital discipline, Vale divested over US$ 16 billion in non-core assets over 6 years US$ billion Tres Valles Fosbrasil Log-In CADAM Oil and gas concessions Ferroalloys in Europe Araucária Belo Monte stake Norsk Hydro 8 VLOCs¹ El Hatillo Paragominas Capesizes G
Slide 10: Simplification of processes led to a reduction in SG&A expenses
10 Focus on simplification of processes led to a reduction in SG&A expenses US$ million1 of US$ 1.6 billion -78% 2,000 1,110 876 519 439 2012 2013 2014 2015 2016 1 Excluding depreciation and amortization.
Slide 11: Focus on world-class assets reduced R&D expenses by US$ 1.2 billion
11 The focus on world-class assets led to a reduction of US$ 1.2 billion in R&D expenses US$ million -78% 1,478 801 734 395 319 2012 2013 2014 2015 2016
Slide 12: Pre-operating and stoppage expenses were reduced by US$ 1.1 billion
12 As we delivered and successfully ramped up several projects, pre-operating and stoppage expenses were reduced by US$ 1.1 billion US$ million -72% 1,859 1,592 1,083 942 453 2012 2013 2014 2015 2016
Slide 13: Iron ore and pellets EBITDA breakeven landed-in-China was reduced
13 The iron ore and pellets EBITDA breakeven landed-in-China was reduced by almost US$ 32 per ton from 2012 to 2016 US$/t -52% 2012 2013 2014 2015 2016 60.7 55.8 54.3 34.6 28.9
Slide 14: Base Metals costs significantly reduced in nickel and copper
14 Likewise, costs in Base Metals have been significantly reduced by US$ 4,000 per ton in nickel and US$ 4,000 per ton in copper operations Nickel operations after by-products South Atlantic Copper after by-products US$/t US$/t -41% -72% 5,512 9,681 4,084 7,243 7,145 6,715 5,726 2,826 2,022 1,545 20
Slide 15: In coal, Moatize II and Nacala ramp-up were crucial for unit cost reduction
15 In coal, the ramp-up of Moatize II and the Nacala Logistics Corridor were crucial for the reduction in unit cost production1 US$/t -42% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 1 Production FOB cash cost (mine, plant, railroad and port) considering both Nacala and Sena-Beira ports. 175.6 156.
Slide 16: Cash flow generation enabled a substantial reduction in net debt
16 As a result of all these changes, cash flow generation enabled a substantial US$ billion reduction in our net debt Cash position on March 31st, 2017 US$ 6.793 billion -18% 1Q16 4Q16 1Q17 27,661 25,042 22,777
Slide 17: Vale distributed almost US$ billion in dividends to shareholders since 2011
17 Vale distributed almost US$ 30 billion in dividends1 to its shareholders since 2011 US$ billion Share buyback US$ 18.7 billion US$ 29.9 billion 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1 Includes share buy-back and interest on capital. 3.0 9.0 6.0
Slide 18: Future shareholder returns will be supported by business options created
18 Future shareholder returns will be supported by the business options created over these past years Ramping up Moatize successfully Maintaining a healthy balance sheet Boosting shareholder returns Improving operational efficiency in Base Metals uilding upon austerity culture Maxi ing margins in ir
Slide 19: Optimization of iron ore costs
19 Optimization of iron ore costs Vale’s competitive position and price realization will increase • Ramp-up of S11D (90 Mtpa @ C1 Cash Cost of US$ 7.7/t) • Increase of global supply chain efficiency through productivity and cost reduction • Improvement of price realization through the development of
Slide 20: Increasing Base Metals operational efficiency while developing options for the future
20 Increasing Base Metals operational efficiency while developing options for the future • Continue the successful ramp-up of the Long Harbour refinery, with all the processing circuits in place and reaching nominal capacity of 50 kt per year in 2019 • Position operations for capturing additional de
Slide 21: Improving productivity and cost reduction with the best logistics solution for coal
21 Improving productivity and cost reduction with the best logistics solution to meet coal demand • Ramp-up Moatize II and Nacala Logistic Corridor, reaching total production volume of 20 Mt per year by 2021 • Reduce costs1 down to the US$ 74-82/t range by 2021 through the increase of volumes for di
Slide 22: A leaner, more competitive Vale set to generate higher cash flow and shareholder remuneration
22 With a leaner and more competitive company Vale is set to generate higher clash flow and shareholder remuneration Reaching a robust financial position • High productivity • Low requirement of capex with the end of the investment cycle • Strong cash generation • Prospect of robust shareholder remu
Slide 23: Generate higher cash flow and shareholder remuneration
generate higher clash flow and shareholder remuneration With a leaner and more competitive company Vale is set to c Reaching a robust financial position * High productivity + Low requirement of capex with the end of the investment cycle * Strong cash generation + Prospect of robust shareholder remun
Slide 24: Signatures
Table of Contents Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Vale S.A. (Registrant) By: /s/ André Figueiredo Date: May 16, 2017 Director of Invest