0

The future is now

Luciano Siani Pires, Vale CFO

Bradesco 3rd Brazil Investment Forum

São Paulo, April 6th, 2016

1

Dis

clai

mer

“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.

These risks and uncertainties include factors related to the

following: (a) the countries where we operate, especially

Brazil and Canada; (b) the global economy; (c) the capital

markets; (d) the mining and metals prices and their

dependence on global industrial production, which is cyclical

by nature; and (e) global competition in the markets in which

Vale operates. To obtain further information on factors that

may lead to results different from those forecast by Vale,

please consult the reports Vale files with the U.S. Securities

and Exchange Commission (SEC), the Brazilian Comissão de

Valores Mobiliários (CVM), the French Autorité des Marchés

Financiers (AMF) and The Stock Exchange of Hong Kong

Limited, and in particular the factors discussed under

“Forward-Looking Statements” and “Risk Factors” in Vale’s

annual report on Form 20-F.”

2

Age

nda 1. Market outlook

2. Impact on Vale’s performance

3. Paving the future

3

Market outlook

4

A recent adjustment in the prices of certain commodities reflecting a

positive feeling in the balance of supply and demand

Source: Bloomberg

Copper

Nickel

Iron Ore

Oil (US$/barrel)

24% 7%

20%

7%

Percentual raise in prices from

11/02/2016 to 05/04/2016 US$/ton

35

40

45

50

55

60

65

11-Feb-16 26-Feb-16 12-Mar-16 27-Mar-16

20

25

30

35

40

45

11-Feb-16 26-Feb-16 12-Mar-16 27-Mar-16

4200

4400

4600

4800

5000

5200

11-Feb-16 26-Feb-16 12-Mar-16 27-Mar-16

7500

8000

8500

9000

9500

11-Feb-16 26-Feb-16 12-Mar-16 27-Mar-16

5

On the demand side, the rebound in some chinese economic

indicators contributed positively

Source: CEIC

% y/y 3mma

-40

-20

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Floor space sold

Started constructions

Completed buildings

Example

6

The iron ore forecasted oversupply for 2016 tends to be softened

1.611 1.645 (10-20) (10-15) (25-35) 10-15 1.585 – 1.615

Oferta2015¹

Projeçõesiniciais2016¹

Majorsaustralianos

Ramp upnovos

projetos

Domésticochinês

Índia Ofertarevisada

2016

2

¹ Mercado transoceânico, incluindo pelotas, e oferta doméstica chinesa

Mt

+2%

-2% a 0%

7

35

119

166

102

63

-79

2011 2012 2013 2014 2015 2016E

Supply and demand balance¹

kt

1,997 1,9571,821

2014 2015 2016E

World Ni supply

kt

-5% -2%

1 Supply and demand balance excluding the inventories in the LME and SHFE.

Source: Macquarie

However, the nickel inventory levels in the London Metal Exchange and Shanghai Futures Exchange

(approximately 500kt) will hamper any significant price recovery in the short term

Forecasts indicate a potential deficit¹ in the nickel market in 2016

8

35

5

14

13

33

100

The LME-deliverable nickel volumes represent only 35% of the total

market and there are positive indicators in the other segments

Non-Deliverable LME Products (65% of total)

%

LME

Deliverable1

Non-

Deliverable

Finished

Nickel

FeNi Stainless

Steel Scrap

NPI Total

1 Considers all the on-spec and hi-spec products according to the LME physical and chemical standards

Source: Wood Mackenzie and Vale’s analysis

• Increase of FeNi and

finished nickel imports in

China

• Substantial improvement

at the discounts and

premiums over the LME

prices in scrap, FeNi and

other finished nickel

products

9

Impact on Vale’s

performance

10

The drastic fall in prices has significantly impacted Vale’s adjusted

EBITDA¹

US$ billion Adjusted EBITDA margin (%)

33,7

19,2

22,6

13,4

7,1

169,2

130,0 135,2

96,9

55,5

2011 2012 2013 2014 2015

40.2

¹ Adjusted EBITDA excludes gains and/or losses on sales of assets and non-recurring expenses and includes dividends received from

non-consolidated affiliates

48.2 35.6 27.7 55.3

Platts IODEX Iron Ore Price

Average (US$/t)

11

13.353 14.005

4.092

1.237

1.699

955 250 7.081

2014 Prices Exchange rate Volume Cost Expenses Dividendsreceived

2015

Adjusted EBITDA¹, 2014 - 2015, US$ million

¹ Adjusted EBITDA excludes gains and/or losses on sales of assets and non-recurring expenses and includes dividends received from

non-consolidated affiliates

.

In 2015, the loss in prices was partially offset by the exchange rate,

higher volumes and lower costs and expenses

12

Costs¹

US$ million

Expenses1,2

US$ million

¹ Net of depreciation and amortization, includes exchange rate and volume.

² Includes SG&A, R&D, Pre-operating and stoppage and Other expenses.

³ Favorably impacted by US$ 244 million due to the one-off effect of the goldstream transaction in 1Q13. 4 Favorably impacted by the following one-off effects: US$ 230 million of the goldstream transaction in 1Q15 and US$ 331 million of

the revision of the asset retirement obligations in 4Q15.

Costs and expenses¹ substantially decreased, despite the increase

in volumes

-33.1%

6.857

4.521

3.547

1.861

2012 2013 2014 2015

-72.8%

22.661

20.520 21.207

16.984

2012 2013 2014 2015

3

4

13

Despite the increased pressure from prices and the current stage

in our investment cycle, debt remained relatively stable

24.685 24.213 25.234

4Q14 3Q15 4Q15

Gross Debt

US$ million

Net Debt

Cash position in

December 31, 2015

3,619

28.807 28.675 28.853

4Q14 3Q15 4Q15

14

Paving the way for the

future

15

We are prepared to face the challenges caused by the uncertainty in

demand and the volatility in commodities prices

2016 and 2017 will be years of optimization of our business, with

the continuous structured reduction of cost and expenses

Free cash flow is approaching equilibrium in 2016, therefore, Vale’s

main priority becomes the strengthening of its balance sheet, with

reduction in levels of indebtedness

1

2

16

US$/t

57,6

41,6

37,1

32,9 31,1

23,0

27-28

14-19

4Q14 1Q15 2Q15 3Q15 4Q15 Currentmarginal cost

2016E S11D

Iron ore will reduce even more, and in a structured way, so will its

cost landed in China¹

-46%

¹ Considers: [Cash cost + Royalties + freight + distribution + expenses(SG&A + R&D + pre-operating and stoppage expenses) + moisture,

adjusted by quality and pellets premiums] / [iron ore sales volume (ex ROM and ex TPP)]

² Considers C1 cost average and spot freight, assuming that the transport of additional production tons will be contracted in spot

³ Exchange rate BRL 3,80 / USD 4 Considers freight between the current spot level (US$ 6.0/t) and the forecasted average of Vale’s freight portfolio for 2018 (US$ 10.6/t)

1

2

2

3,4 3

17

11,0

11,9

2,9

2,3 4,7

23,4 1,0 22,4

C1 Cash Cost Freight anddistribution

Expenses andRoyalties

Moisture Quality Total beforepellets'

adjustment

Pellets'adjustment

Total

The leverage in operations will enable a further reduction of the

breakeven of our ore landed in China¹

1.1 2.7 1.0 3.6 8.8 0.2

2

2

¹ Considers: [Cash cost + Royalties + freight + distribution + expenses(SG&A + R&D + pre-operating and stoppage expenses) + moisture, adjusted by quality

and pellets premiums] / [iron ore sales volume (ex ROM and ex TPP)]; excludes maintaining capex of US$3,3/t in 2018 ² Exchange rate of BRL/USD 3,80 in 2018

³ Considers average freight of US$ 10.6/t (bunker oil of US$ 180/t and freight spot Brazil-China US$ 6,0/t) and distribution cost of US$ 1.3/t 4 Includes quality premium, discounts and commercial conditions

US$/t, 2018

8.6 0.2

Delta for 4Q15

3

4

1

2

18

8.1 6.5

11.6

7.9

0.6 0.2

Original Budget Total 2015 2016 2017 2018 2019

Logistics

Mine and Plant

1.6

2.6

9.4 14.4

19.7

The S11D project will complete most of its capital expenditure within

the next 2 years

US$ billion¹

Mine, Plant and Logistics

¹ Includes project expenses, which are not capitalized and are comprised of US$ 289 million accumulated until 2015, US$ 84 million

in 2016, US$ 52 million in 2017, US$ 15 million in 2018 and US$ 5 million in 2019.

19

Significant advances in the S11D mine, plant and railway

Assembly area between mine and conveyor

belts Status February 2016

• Combined physical progress of 71%

− 83% of physical progress at the mine

site

− 62% of physical progress at logistic

sites

− 83% of physical progress at the railway

spur

• The existing railway capacity increased to

approximately 150 Mtpy with the

duplication of 59km upon completion of 8

segments in 2015

Railway expansion

20

Conclude the ramp up of Salobo

Base Metals business portfolio will be optimized

• Conclusion of Salobo’s ramp up

• Significant reduction in New

Caledonia’s losses

• Optimization of operational flows

and progression of Long

Harbour’s ramp-up, with

consequent reduction of cost

and expenses in North Atlantic

1

2

21

The conclusion of Salobo’s ramp-up will significantly contribute to

increase the segment’s operational cash flow

Production

Kt

EBITDA

US$ million

259

371

624

2014 2015 2016E

98

155

194

2014 2015 2016E

¹ Considers LME copper price of US$ 5.000/t and Exchange rate of BRL 3,80 / USD

1

1

2

22

The conclusion of our initiatives will enable consistent EBITDA

generation

EBITDA 2016, US$ billion

Copper price (US$/t)

4,500 5,000 5,500 6,000 6,500 7,000

Nic

ke

l p

ric

e (

US

$/t

)

8,000 1.3 1.5 1.7 1.9 2.1 2.3

8,500 1.4 1.6 1.8 2.0 2.2 2.5

9,000 1.6 1.8 2.0 2.2 2.4 2.6

9,500 1.7 1.9 2.1 2.3 2.6 2.8

10,000 1.9 2.1 2.3 2.5 2.7 2.9

10,500 2.0 2.2 2.4 2.7 2.9 3.1

• Conclusion of Salobo’s

ramp-up

• Progression of Long

Harbour’s ramp-up

• Significant reduction in

New Caledonia’s losses

• Optimization of

operational flows in North

Atlantic, with consequent

reduction of cost and

expenses

1

2

23

Fertilizers will increase even more its competitive with the delivery

of the project of phosphate rock replacement in Brazil 1

2

• Start up planned for 2017

• Phosphate rock cost in Araxá will

reduce from US$113/t in 2015 to

US$76/t¹

• Increase in rock capacity will allow an

increase in phosphates’² production of

approximately 700 ktpy

• Increase of US$ 80-90million in EBITDA

per year

P Patrocinio project

¹ Exchange rate of BRL 3.50/USD. Weighted average (2017-2031)

² SSP, TSP, MAP and DCP

24

The ramp up of the Nacala Logistics Corridor will bring

competitiveness for the Coal business

Mozambique’s production volume

Mt

5

10

15

16

18

18

2015

2016E

2017E

2018E

2019E

2020E

Mozambique COGS1,2

US$/t

157

97

78

61

57

60

2015

2016E

2017E

2018E

2019E

2020E

¹ Net of depreciation

² Only operating cost, without considering possible fees of the Nacala Logistics Corridor after the conclusion of the transaction

with Mitsui

1

2

25

Free cash flow is approaching equilibrium in 2016

• The discipline in capital allocation will enable a further CAPEX

reduction of about US$ 3 billion from 2015 to 2016

• The divestment of non core assets of US$ 4-5.5 billion will help

to balance the cash flow and to initiate the Company’s leverage

reduction

• The execution of the ongoing initiatives will allow solid cash

generation at any price scenario

1

2

26

Capex, US$ billion

11,7 11,6

9,6

7,9

5,5

4,6 4,6

4,6

4,1

2,9

16,3 16,2

14,2

12,0

8,4

5,5

2011 2012 2013 2014 2015 2016E¹

Sustaining

Growth Projects

Vale has been increasing its discipline in capital allocation with

focus on world-class assets

¹ Considers exchange rate of BRL/USD 3.80

27

Potential divestments will help to balance the cash flow and will

enable the strengthening of the balance sheet, independently of

prices

Evaluation of transactions involving

core assets, aiming to reduce net debt

by US$ 10 billion

Continuity of non core assets sales, with the

aim to simplify the portfolio, amounting to

US$ 4 – 5.5 billion

• Coal JV

• 2nd tranche preferred shares

• Precious metals streaming

• 7 VLOCs

• MRN

• Energy assets

• Analysis of merits and demerits of the

assets’ portfolio that we want for the long

term

• Assessment of the transaction value in

the current market

• Estimate of the potential debt reduction

that would accompany each of these

transactions

1

2

2016

2016 - 2017

28

US$ billion, FCF accumulated 2016-2020E (before divestments)

1 FCF before divestments, dividends and debt amortization; assuming for all scenarios nickel price US$ 8,500/t, copper price US$

4.500/t, bunker oil US$ 150/t, exchange rate of BRL/US$ 3,80 and including the contingency plan for 2016.

2016 Accumulated2016-2020

(2,5) – (2,0)

4,3 – 5,3

2016 Accumulated2016-2020

(1,2) – (0,7)

12,2 – 13,2

2016 Accumulated2016-2020

0,1 – 0,6

19,0 – 20,0

Marginal distribution of

dividends and/or debt

reduction

Moderate distribution of

dividends and debt decreasing

consistently

High distribution of dividends

and debt decreasing quickly

Iron ore price US$40/t Iron ore price US$45/t Iron ore price US$50/t

Free cash flow¹ generation will be positive in the next years, even in adverse price scenarios

1

2

29