Slide 1: Forward-looking statements and cautionary note
“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 correct
Slide 2: Murilo Ferreira, President & CEO
Murilo Ferreira President & CEO
Slide 3: We overcame the challenges in 2015 but are aware of the work ahead in 2016
We overcame the challenges in 2015 but are fully aware of the work ahead in 2016 2015 was a year of significant progress as a result of our ongoing restructuring initiatives 2015 2016 and we are prepared to meet the challenges created by continued demand uncertainty and volatility in commodity price
Slide 4: 2015 was a year of significant progress from restructuring initiatives
2015 was a year of significant progress as a result of our ongoing restructuring initiatives The N4WS and N5S extension mines were opened in Carajás Productivity efforts drove higher production volumes and lower costs in all our main commodities Iron ore fines C1 cash cost decreased by 41% from 4Q14
Slide 5: We are prepared to meet the 2016 challenges
We are prepared to meet the 2016 challenges created by demand uncertainty and volatility in commodity prices 2016 will be another challenging year with still unfavorable demand & supply outlook and volatile commodity prices We will maintain our operational discipline and preserve our balance sheet a
Slide 6: Positive FCF by 2017 with gradual leverage reduction and higher dividends
and we expect positive FCF by 2017 with a gradual reduction in leverage and an increase in dividend distribution Capex will reduce and reach around US$ 4-5 billion with the completion of our investment cycle by 2018 Volumes will increase by about 30% in iron ore, 10% in nickel and copper and also up
Slide 7: Peter Poppinga, Executive director, Ferrous Minerals
Peter Poppinga Executive director, Ferrous Minerals
Slide 8: Main accomplishments: supply chain, cost reduction, project implementation
Supply Chain Optimization Berthing of fully loaded Valemaxes in China Ramp up of the Malaysia Distribution Center, producing the “Brazilian Blend” Fines with excellent acceptance by the market Main accomplishments Cost and Expenses Reduction Significant cost and expenses reductions since the end of
Slide 9: Projects delivered for start-up in 2015
Projects delivered for start-up in 2015 Cauê Itabiritos Conceição Itabiritos II Status: Ramp-up completed Start-up: 1H15 Approved Capex: US$ 1,137 million Executed Capex: US$ 1,026 million Status: Ramp-up initiated Start-up: 2H15 Approved Capex: US$ 1,317 million Executed Capex: US$ 927 million
Slide 10: The S11D project is progressing according to plan
Mine and Plant Railway Port Physical Progress of 77% 100% of the modules positioned at site Physical Progress Railway spur at 75% Railway duplication at 36% with 6 segments and 7 semi-segments out of 48 segments delivered Physical Progress: Onshore at 68% Offshore at 67% The S11D project is progress
Slide 11: S11D mine reached 77% physical progress
S11D mine reached 77% physical progress Mine Construction Site East Wing West Wing Mine Buffer Stockpile TS01 Mine Substation TS02
Slide 12: S11D plant overview
S11D plant overview Secondary Screening Plant Secondary Crushing Plant Buffer Stockyard Tertiary Crushing Plant Product Stockyard Loading Line
Slide 13: S11D railway spur – Bridge over the Verde river
S11D railway spur – Bridge over the Verde river
Slide 14: Offshore – Pier 4 North Berth Construction
Auxiliary platform Track SL4 Pavement A Dolphin D10 Dolphin D12 Dolphin D13 Offshore – Pier 4 North Berth Construction
Slide 15: Significant costs and expenses reductions since the end of 2014
Significant costs and expenses reductions since the end of 2014 C1 Cash Cost FOB¹ port Brazil US$/t Freight Costs US$/t -44% 1 Cost of mine, plant, railway and port, excluding ROM, third party acquisitions and royalties 2 Expenses increased in October due to seasonality effects Source: Company repor
Slide 16: Cash cost landed in China fell by more than US$ 5/t
4Q14 3Q15 Cash cost landed in China1 fell by more than US$ 25/t since 4Q14 US$/dmt, adjusted for quality Oct15 1 [Cash cost + royalties + freight (without hedge) + expenses (SG&A + R&D + pre-operating and stoppage expenses) + moisture, adjusted for quality, premium and discounts] / [volume of iron o
Slide 17: Vale's initiatives generated a further US$ 2.1 billion in EBITDA in 9M15
Despite the drastic fall in prices, Vale’s initiatives generated a further US$ 2.1 billion in EBITDA in 9M15 US$ million, 9M14 vs. 9M15 External Effects Vale’s Initiatives US$ 762 million of net reductions 9,573 8,420 1,695 165 299 1,342 257 379 54 72 4,487 EBITDA 9M14 Price FX Dividends Received Bu
Slide 18: Initiatives to increase productivity and reduce costs
Initiatives underway to increase productivity, reduce costs and extend life cycle of equipment Replacement of trucks by belt conveyors (Carajás and Itabira site) Operational cost reduction and productivity increase 40% lower transported distance No loaders needed Use of equipment from fewer manufact
Slide 19: Examples of mine productivity improvements
Examples of mine productivity improvements Long Distance Belt Conveyors Haulage Truck Productivity (t/h) 3Q15 2Q15 1Q15 +22% N4 N4WS BSM1 BSM4 BSM5 Plant 2 Plant 1 N4WS Belt Conveyor Ramp-up of the N4WS mine allowed the full utilization of Plant 2 which is loaded entirely through belt conveyors Redu
Slide 20: Brazilian Blend Fines facilities in Malaysia
“Brazilian Blend” Fines facilities in Malaysia Highlights Blending of Vale’s Northern System ore (Carajás) and Southern System ore in Malaysia, bringing our mines closer to our clients Delivery to Asia ranging from 1 to 10 days Reduction of moisture and of quality variation Mix of 70% of Carajás ore
Slide 21: Brazilian Blend Fines strategy is proving successful
Establishment of “Brazilian Blend Fines” strategy is proving to be successful Products Fe SiO² Al2O3 P Carajás Iron Ore 65.0 2.1 1.7 0.06 Standard Sinter Feed Tubarão 63.1 6.3 1.0 0.06 Standard Sinter Feed Guaíba 62.3 5.7 2.1 0.07 Brazilian Blend Fines 63.5 4.5 1.8 0.06 Brazilian Blend Fines (BRBF)
Slide 22: Key initiatives to remain competitive in any price scenario
Vale will deliver on 5 key initiatives to remain competitive in a sustainable way in any price scenario Ramp-up of N4WS, N5S extension and S11D Further reduction of all-in1 costs landed in China Broadening of the “Brazilian Blend Fines” commercial opportunities Blending and investment deferral Manag
Slide 23: Vale's operational mine parameters are outstanding
Vale’s operational mine parameters are outstanding and sustainable in the long run Average Strip Ratio Average Mine Haulage Distance Km, 2015 Ratio, 2015 Average Product Fe Content Global Metallic Recovery1 %, 2015 %, 2015 1 [Mass of Fe in final product / (mass of Fe in ROM + waste)] Source: Vale, W
Slide 24: Full-year logistics capacity for the Northern System with S11D
Full-year logistics capacity for the Northern System with S11D Mt 150 165 180 230 2015E 2016E 2017E 2018E
Slide 25: Vale's iron ore and pellets production plan
Vale’s iron ore and pellets production plan ¹ Includes pellet feed; excludes 9Mt of fines and 8Mt of ROM related to Samarco incident ² Note: About 11-12% of iron ore fines production go to pellets production Iron ore¹ Pellets² Mt Production range Non additive production 340 340 - 350 380 - 400 420 -
Slide 26: S11D will have the lowest C1 cash cost in the world
C1 cash cost¹ reduction US$/t S11D capex reduction US$ billion S11D will have the lowest C1 cash cost in the world ¹ C1 cash cost at the port (mine, plant, railroad and port, excluding royalties) ² Vale’s Current and Carajás cash cost based on 3Q15 ³ Exchange rate of BRL/USD 3.80 4 As presented at V
Slide 27: Key initiatives will result in significant C1 cash cost reductions
The 5 key initiatives will result in significant C1 cash cost¹ reductions Northern System Southeastern System3 Southern System² 1 C1 Cash cost at the port (mine, plant, railroad and port, excluding royalties) with exchange rate of BRL/USD 3.80 2 Including dividends from MRS 3 Including Miniminas eff
Slide 28: Iron ore all-in cash cost landed in China after S11D
Iron ore all-in¹ cash cost landed in China after S11D Delta to 3Q15 2.3 2.7 1.5 2.4 8.6 0.0 2 2 ¹ [Cash cost + Royalties + freight (without hedge) + expenses (SG&A + R&D + pre-operating and stoppage expenses) + moisture, adjusted for quality premium] / [volume of iron ore sales (ex ROM and third par
Slide 29: 2016 cost curve for seaborne iron ore fines
2016 cost¹ curve (seaborne iron ore fines ex-pellets plus domestic Chinese production) US$/dmt, IODEX 62% CFR China Chinese producers 2016 Demand from 1,350 to 1,400 Mt ¹ Mining, processing, overhead, royalties, transport and port handling, sustaining capital, freight to China, normalization to 62%
Slide 30: Jennifer Maki, Executive director, Base Metals
Jennifer Maki Executive director, Base Metals
Slide 31: Base Metals main accomplishments
Main accomplishments 1 Nominal capacity in October 2015 Project Delivery Production Increase Cost & expenses Reduction Production increased from 2012 to 2015 Nickel production increased 25% Copper production increased 55% Costs and expenses reduced consistently from 2012 to 2015 Copper costs decreas
Slide 32: Base Metals has consistently reduced costs in nickel and copper
Base Metals has consistently reduced costs in nickel and copper -35% US$/t Nickel operations1 after by-products South Atlantic Copper after by-products US$/t -64% 1 Includes VNC and Long Harbour 5,512 4,084 2,826 1,970 2012 2013 2014 2015E 12,101 8,634 8,312 7,900 2012 2013 2014 2015E
Slide 33: In the last three years expenses decreased 60%
In the last three years expenses1,2 decreased 60% ¹ Net of insurance effects, depreciation and amortization. ² Includes SG&A, R&D, Pre-operating and stoppage and Other expenses. ³ Excludes the positive one-off impact of US$ 244 million of the goldstream transaction in 1Q13 4 Excludes the positive on
Slide 34: Significant strides to increase Base Metals' competitive position
Salobo¹ Clydach Vale New Caledonia¹ Thompson Voisey’s Bay Sudbury Sossego Onça Puma Acton PTVI Matsuzaka VTL Dalian Copper Nickel South Atlantic Asia Pacific Port Colborne Long Harbour¹ KNC Lubambe¹ We have made significant strides and remain focused on increasing Base Metal’s competitive position N
Slide 35: Base Metals will consistently increase its cash flow
Base Metals will consistently increase its cash flow and enhance Vale’s competitive position Optimize North Atlantic flowsheet Progress the ramp-up of Long Harbour Turn VNC around Preserve the option for a staged development in Indonesia Explore the development of the Salobo III growth option 1 2 3
Slide 36: Optimize North Atlantic flowsheet
Optimize North Atlantic flowsheet Complete key initiatives to further increase productivity, reduce costs and improve environmental sustainability Ramp up Totten Operate with a single furnace Avoid US$ 1 billion of capex with the decision to operate a single furnace Streamline flowsheet to maximize
Slide 37: Optimize North Atlantic flowsheet
Optimize North Atlantic flowsheet1 From Processing feed from Sudbury and Voisey’s Bay Mining, concentrating, smelting and refining operation Mining and concentrating with refining at Thompson and Sudbury To Processing feed from Sudbury in a single furnace Mining and concentrating only, producing con
Slide 38: Progress the ramp-up of Long Harbour
Currently ramping up and operating with a blend of Voisey’s Bay concentrate and PTVI matte Target of feeding Long Harbour directly from Voisey’s Bay by the end of 2015 Significant operational improvements in 2016 and 2017 Pre-operating expenses to be reduced by US$ 20 million in 2016 Operating costs
Slide 39: Turn VNC around
Performance improvement achieved after major maintenance shutdown concluded in 2Q15 4th filter and second redesigned fluid bed roaster brought on line Capacity utilization at 72% in October and expected to reach 75% by year-end Operational targets set for 2016 Production of 45 kt, 79% of capacity Co
Slide 40: Vale is analysing all options for VNC
Vale is analysing all options for VNC Operational Cost Stakeholder Support Nickel Outlook Government and communities support Permits Stable business environment Production at 79% of nameplate capacity EBITDA neutral at LME nickel prices of US$ 14,000/t (after accounting for downstream processing res
Slide 41: Preserve the option for a staged development in Indonesia
Preserve the option for a staged development in Indonesia Potential for expanding our mining and processing facilities through staged expansions Value maximization De-risking of investments Stage 1: 20% annual increase in nickel in matte production from 75 kt to 90 kt Construction of additional drye
Slide 42: PTVI has significant potential to increase its resource base
PTVI has significant potential to increase its resource base PTVI Reserves/Resource Mt of nickel contained 4.8 Mt of resource in the Sorowako area allowing for brownfield expansion and continued extension of mining life (over 50 years of life at current production rates) World-class deposits from a
Slide 43: Explore the development of the Salobo III growth option
Explore the development of the Salobo III growth option Concentration plant with 12 Mtpy processing capacity to reclaim previously stockpiled ore – processing at lower cost – along with substantial gold by-product volumes Salobo III is under study and involves the construction of a new plant to recl
Slide 44: Increased production of nickel and copper towards 2019
Increased production of nickel and copper towards 2019 Nickel kt Copper kt 237 260 275 296 324 322 320 318 278 359 380 430 459 477 466 485 2012 2013 2014 2015E 2016E 2017E 2018E 2019E Sudbury Thompson Voisey's Bay Sorowako Onça Puma VNC 2012 2013 2014 2015E 2016E 2017E 2018E 2019E Sudbury Thompson V
Slide 45: Sound EBITDA generation going forward
Sound EBITDA generation going forward even with moderate increases in nickel and copper prices EBITDA 2018 US$ billion Modest increases in commodity prices produce an amplified impact on our EBITDA generation As we ramp-up our copper production, our EBITDA will be more sensitive to changes in copper
Slide 46: Roger Downey, Executive director, Fertilizers
Roger Downey Executive director, Fertilizers
Slide 47: Vale Fertilizers is in the right place at the right time
Only country that can respond to the global food challenge in a major way Largest agricultural expansion potential (acreage and productivity) Fertilizer intensity increasing due to geography and farming model Grain production higher than 200 Mtpy and commercial cattle herd bigger than 200 million (a
Slide 48: Brazil is the agricultural powerhouse of the world
Brazil is the agricultural powerhouse of the world Brazilian agricultural production Index, 2010=100% Fertilizer deliveries in Brazil Mt, products 154 134 106 CAGR 11% 7% 1% 4% 7% Brazil has shown solid and consistent agricultural production growth over the years Fertilizer demand remains strong Sou
Slide 49: Vale Fertilizers market share and the advantage of being local
Vale Fertilizers (VF) market share The advantage of being local Brazilian production vs. imports +3pp 26% 30% 74% 70% 10M14 10M15 Domestic deliveries Imports 17% 20% 83% 80% 10M14 10M15 Vale Others
Slide 50: Costs and expenses reduced in 9M15 vs. 9M14
Costs and expenses¹ reduced in 9M15 vs. 9M14 Costs and expenses¹ fell by 21% Potash costs¹ decreased by 32%, phosphate costs¹ by 23% and nitrogen costs¹ by 11% SG&A¹ and other expenses¹ reduced by 65% and pre-operating expenses by 16% Cost & Expenses Reduction Productivity Increase Sales & Marketing
Slide 51: Margin improvement initiatives more than offset BRL inflation
Margin improvement initiatives more than offset the inflation in BRL in 9M15 vs. 9M14 EBITDA, US$ million 188 21 110 8 59 21 203 450 9M14 FX Inflation Prices Operational and commercial initiatives Sales volume Others 9M15
Slide 52: VF beats 2011 margins despite price decreases
VF beats 2011 margins despite price decreases -28% MAP Prices1, US$/t -41% Phosphate Rock Prices², US$/t -28% Ammonium Nitrate Prices³, US$/t KCl Prices1, US$/t 5 pp Adjusted EBITDA Margin % ¹ Market reference prices, CFR Brazil ² Market reference prices, FOB Morocco ³ Market reference prices, FOB B
Slide 53: Stronger results will enable VF to self-fund projects
Stronger results will enable VF to self-fund value-accretive projects Start up planned for 2017 Total Capex¹ of US$ 144 million Phosphate rock cost in Araxá from $149/t² in 2014 to $76/t³ Sales volume increase of 340 ktpy of SSP, 40 ktpy of TSP and 44 ktpy of DCP P ROM replacement K Carnalita Potash
Slide 54: Leveraging Brazilian agricultural potential to maximize value
Leveraging Brazilian agricultural potential and VF’s competitive position to maximize value Ideal footprint to service Brazilian markets ROM replacement project to add significant value Productivity mindset to get more from our assets Supply chain strategies to capture commercial opportunities Brazi
Slide 55: Roger Downey, Executive director, Coal
Roger Downey Executive director, Coal
Slide 56: Market conditions demand severe measures
Market conditions demand severe measures 1 Constant currency, US$ 2015 Source: CRU, Woodmac Metallurgical coal prices¹, US$/t Supply surplus World financial crisis Queensland floods China becomes relevant to the seaborne market 0 50 100 150 200 250 300 350 400 2005 2006 2007 2008 2009 2010 2011 2012
Slide 57: Operational improvements in Mozambique pave the way for a turnaround
20% Yield CHPP 10% Truck Productivity Operational improvements in Mozambique are paving the way for a turnaround in our coal business Index, 2013 = 100 tph 100 110 120 2013 2014 10M15 420 448 461 2013 2014 10M15
Slide 58: Completion of the project provides the basis for a competitive operation
The completion of the project will provide the basis for a competitive operation Project information Coal Plant – Modules ¹ Original Capex approved US$ 2.068 billion plus US$ 0.45 billion rolling stock ² Original Capex approved US$ 4.444 billion less US$ 0.45 billion of rolling stock allocated to th
Slide 59: Ramp-up will be adjusted to preserve value
The ramp-up will be adjusted to preserve value under current market conditions Mozambique production volume, Mt Source: Vale’s budget 4 5 5 10 15 16 18 18 2013 2014 2015E 2016E 2017E 2018E 2019E 2020E
Slide 60: Costs will be gradually reduced following the ramp-up
Costs will be gradually reduced following the ramp-up of the project COGS¹,², US$/t ¹ Net of depreciation ² Opex costs only, without accounting for the eventual charges for the Nacala Logistics Corridor after completion of the transaction with Mitsui 145 105 79 63 60 62 2015E 2016E 2017E 2018E 2019E
Slide 61: Luciano Siani Pires, Chief Financial Officer
Luciano Siani Pires Chief Financial Officer
Slide 62: Sustainable savings reached more than US$ billion in 2015
Sustainable savings reached more than US$ 5 billion¹ in 2015 US$ billion SG&A and others2,3 Capex R&D + Pre-operating and stoppage expenses² Costs² ¹ Includes reductions in costs and expenses in 2015 vs. 2014. 2 Net of depreciation. 3 Excludes the positive one-off impacts of US$ 244 million and US$
Slide 63: Reduction of US$ 1.2 billion in costs and expenses not related to FX
Reduction of US$ 1.2 billion in 2015¹ in costs and expenses not related to FX Costs² US$ billion 1 Realized reduction in the period of 9M15 vs 9M14. 2 Net of depreciation. 3 Net of depreciation. Includes SG&A, R&D, pre-operating and stoppage expenses and others. Excludes the positive one-off impact
Slide 64: Financial impact on Vale from the Samarco accident
Financial impact on Vale from the Samarco´s accident Comments on 2016 impacts Cash impact in 2016 US$ million Total impact of approximately US$ 443 million without accounting for the potential positive impact of higher pellet premiums on Vale’s pellet sales Loss of revenues totaling US$ 543 million
Slide 65: Vale's growth investment cycle is almost over
Vale’s growth investment cycle is almost over Main capital projects 2015E 2016E 2017E Iron ore S11D 2.8 2.3 1.5 Itabiritos Projects¹ 0.5 0.1 - CSP - 0.2 0.1 Coal Moatize II / Nacala 1.3 0.3 - Main replacement projects Phosphate ROM replacement - 0.1 - Voisey’s Bay - 0.1 0.3 Copper Cliff - - 0.2 Tota
Slide 66: Investments will be mostly sustaining and replacement
Investments in the coming years will be mostly in sustaining and replacement US$ billion Note: BRL/USD exchange rate of BRL/USD 3.80 from 2016 onwards 5.4 3.2 1.8 1.1 1.1 1.1 2.8 3.0 3.5 3.5 3.3 3.1 8.2 6.2 5.3 4.6 4.4 4.2 2015E 2016E 2017E 2018E 2019E 2020E Growth projects Sustaining and Replacemen
Slide 67: Divestments of non-core assets reached US$ 3.0 billion in 2015
US$ billion Divestments of non-core assets reached US$ 3 billion in 2015 2011 US$ 1.1 billion 10 VLOCs¹ El Hatillo Araucária Ferroalloys in Europe Oil and gas concessions CADAM Goldstream I Goldstream II VLI Log-In Fosbrasil Tres Valles Belo Monte stake Aluminum assets Norsk Hydro 2012 US$ 1.5 billi
Slide 68: Potential divestments could generate US$ 4.0 to 5.5 billion in 2016
Cash Impact Potential divestments could generate US$ 4.0 to 5.5 billion in 2016 Strategic rationale Initiatives 11 VLOCs MRN Improve the balance sheet while guaranteeing long-term, low cost freight agreements Focus on core business Fertilizers JV Unlock value and improve the balance sheet Additional
Slide 69: Committed financing lines and debt amortization schedule
Committed financing lines2 US$ 6.4 billion available in financing lines Debt amortization schedule¹ 80% of our debt settlement will occur after 2018 Debt amortization is under control in 2016 ¹ As of September 30, 2015. Does not include hedge transactions. 4Q15 includes all accrued interests. ² Amou
Slide 70: Free Cash Flow is close to equilibrium in 2016
Free Cash Flow is close to equilibrium in 2016 US$ billion 1 Average of 21 banks, as of 11/23/15. Divestments will more than offset a potentially negative cash flow 7.6 6.2 1.5 0.5 0.3 0.6 1.5 Analysts' average EBITDA 2016¹ CAPEX Interest payment Income tax REFIS Hedge bunker oil FCF
Slide 71: Accumulated FCF can reach US$ 18-20 billion by 2020
3 Accumulated FCF (pre-divestments) can reach US$ 18-20 billion’ by Iron prices @ US$5OIt 2020 USS billion, accumulated FCF 2016-2020E Iron prices @ USS4oIt Iron prices @ USS45It 18-20 11-13 20-30 03-09 — — (28)-(2.2) (1.2)~ (08) 2016 Cumulative 2016 Cumulative Cumulative eons ery —— 2016 2016-2020
Slide 72: 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/ Rogerio T. Nogueira Date: December 1, 2015 Rogerio T.