vl' f ivale's performance in 3q14...vl' f ivale's performance in 3q14 october...
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V l ' f iV l ' f i 33Q14Q14Vale's performance in Vale's performance in 33Q14Q14October 30, 2014
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Disclaimer
“This presentation may include statements that present Vale's expectations aboutp y p pfuture events or results. All statements, when based upon expectations about thefuture and not on historical facts, involve various risks and uncertainties. Valecannot guarantee that such statements will prove correct. These risks anduncertainties include factors related to the following: (a) the countries where weoperate, especially Brazil and Canada; (b) the global economy; (c) the capitalmarkets; (d) the mining and metals prices and their dependence on globalindustrial production, which is cyclical by nature; and (e) global competition in themarkets in which Vale operates. To obtain further information on factors that maylead to results different from those forecast by Vale, please consult the reportsV l fil ith th U S S iti d E h C i i (SEC) th B iliVale files with the U.S. Securities and Exchange Commission (SEC), the BrazilianComissão de Valores Mobiliários (CVM), the French Autorité des MarchésFinanciers (AMF) and The Stock Exchange of Hong Kong Limited, and in particularthe factors discussed under “Forward Looking Statements” and “Risk Factors” inthe factors discussed under Forward-Looking Statements and Risk Factors inVale’s annual report on Form 20-F.”
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DOCUMENT CONTENT
Operational performance
Financial performance
C it l ditCapital expenditures
Capital structurep
Cash flow generation
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DOCUMENT CONTENT
Operational performance
Financial performance
C it l ditCapital expenditures
Capital structurep
Cash flow generation
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PRODUCTION VOLUMES
Nickel
Kt
Copper²
Kt
Gold
'000 oz
Phosphate rock
Mt
Iron ore¹
Mt
Coal
Mt
Pellets
Mt Kt Kt 000 oz MtMt Mt
64.91Q13 65.1 89.5 57.9 1.8 2.0
Mt
9.1
70.62Q13 65.2 91.3 63.2 2.4 1.99.7
83.1
81.3
3Q13
4Q13
62.0
67.9
94.6
94.6
76.1
88.3
2.4
2.3
2.1
2.3
9.7
10.4
71.11Q14 67.5 88.4 73.7 1.8 1.99.9
79.4
85.7
2Q14
3Q14
61.7
72.1
81.0
104.8
70.0
84.0
2.2
2.3
2.1
2.2
10.0
11.4
¹ Includes iron ore fines, lump, ROM and iron ore feed for Vale’s pellet plants. Excludes Samarco’s attributable production of 3.8 Mt.² 2013 figures include Tres Valles production (1Q13: 3.7 Kt, 2Q13: 3.6 Kt, 3Q13: 2.9 Kt and 4Q13: 0.8 Kt).
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PRODUCTION VOLUMES YEAR-ON-YEAR
Iron Ore¹
Mt
Nickel
Kt
Copper
Kt
85 7
Mt Kt
+3.1% +16.4%
Kt
+10.8%
83.1 85.7
62.0
72.1
94.6
104.8
3Q13 3Q14 3Q13 3Q14 3Q13 3Q14
¹ Includes iron ore fines, lump, ROM and iron ore feed for Vale’s pellet plants. Excludes Samarco’s attributable production of 3.8 Mt.
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SALES VOLUMES
Iron ore¹
Mt
Nickel
Kt
Copper
Kt
Gold
'000 oz
Phosphate rock
Mt
Coal
Mt
Pellets
Mt
55.71Q13
Mt Kt Kt 000 oz MtMt
63.0 72.3 47.2 1.5 0.69.4
Mt
61.92Q13 65.0 76.9 70.2 1.9 0.710.2
73.4
73.6
3Q13
4Q13
62.0
69.0
103.2
99.4
85.5
94.2
1.8
2.9
0.9
0.9
10.2
11.2
57.81Q14 65.0 83.8 78.9 1.4 0.810.0
67.4
66.6
2Q14
3Q14
67.0
71.0
76.3
97.5
68.7
107.0
1.9
2.1
0.8
0.7
9.5
11.5
¹ 3Q14 figure includes 63.0 Mt of iron ore ex-ROM and 3.5 Mt of ROM.
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SALES VOLUMES YEAR-ON-YEAR
Iron Ore Nickel Copper
Mt Kt Kt
-9.3% +14.5% -5.5%
73.4
66.662.0
71.0103.2
97.5
3Q13 3Q14 3Q13 3Q14 3Q13 3Q14
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DOCUMENT CONTENT
Operational performance
Financial performance
C it l ditCapital expenditures
Capital structurep
Cash flow generation
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ADJUSTED EBITDA¹Adj t d EBITDA i (%)
US$ billionAdjusted EBITDA margin (%)
49 0 45 9 47 4 50 6 42 7 41 4 33 1
5 8
6.6
49.0 45.9 47.4 50.6 42.7 41.4 33.1
5.24.9
5.8
4 14.1 4.1
3.0
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
¹ Adjusted EBITDA excludes gains and/or losses on sale of assets and non-recurring expenses and includes dividends received from non-consolidated affiliates
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EBITDA BY BUSINESS SEGMENTUS$ million
3Q14 2Q14 3Q13
2,411 Ferrous minerals 3,604 5,626
(149) Coal (154) (72)
781 Base
metals
Fertilizer
609 303
96
(135)
Fertilizer nutrients
Others
72
(27)
(64)
13 ( )
3,004 Total
( )
4,104 5,806
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EBITDA COMPARISON – 2Q14 VS 3Q14US$ million
1 2494,104 1,249
85 40 85 52 178148 87
85 1783,004
2Q14 Iron ore and
pellets prices
Pellet volumes
Base metals prices & volumes
Base metals costs &
expenses
Coal costs &
expenses
Ferrous mineralscosts &
expenses
Dividends¹ Others 3Q14
¹ Dividends received from non-consolidated affiliates.
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PRICE REALIZATION – IRON OREUS$/ 3Q14US$/t, 3Q14 US$/t
22.2
90,2 6.8
10.0
2.0 1.4 2.4 1.8 3.8
2.8 68,0 2.8
65,2
AveragePlatts
3Q14 (dmt)
Humidity Freight Quality Provisional prices on
priorquarter¹
Laggedprices
Current Provisional prices in current quarter²
Others Iron ore prices
(ex-ROM)
ROM Valeprice
3Q14 (wmt)q q
Pricing system
¹ Adjustment as a result of provisional prices booked in the previous quarter.² Prices provisionally set at the end of the quarter at US$ 77.8/t based on forward curves compared to US$ 90.2/t from IODEX current quarter.
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IRON ORE PRICING SYSTEMS
Impact of Pricing Mechanisms
US$ / t
Pricing System Breakdown
%
Lagged
Current
Provisional
Provisional - prior quarter Lagged
2Q14 3Q14
3.02.4
2Q14 3Q14
28% 31%¹
-2.2-1.4
58% 54%Current Provisional - current quarter
58% 54%2Q14 3Q14 2Q14 3Q14
14% 15%
2Q14 3Q14-1.4 -1.8
-0.8
-3.8
¹ Provisional prices were settled at US$ 77.8 /t in the end of 3Q14.
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EVOLUTION OF COSTS AND EXPENSES¹
Costs¹ Expenses1,2
US$ million US$ million
2.8% -34.2%
¹ COGS less depreciation and amortization.² Includes SG&A, R&D, Pre-operating and stoppage and Other expenses.
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EVOLUTION OF EXPENSESDepreciation
SG&A
US$ million
Pre-operating and stoppage expenses
Depreciation
50
60
315
237274
549
264 284499
217 224
47 60
3Q13 2Q14 3Q14
280
3Q13 2Q14 3Q14
R&D Other expenses¹
280
165184
3Q13 2Q14 3Q14
¹ Includes contingencies, provisions, profit sharing.
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DOCUMENT CONTENT
Operational performance
Financial performance
C it l ditCapital expenditures
Capital structurep
Cash flow generation
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CAPITAL EXPENDITURES EVOLUTIONUS$ billionUS$ billion
Nine-month evolution Quarterly evolution
Sustaining
Projects11,19710,393
3,003
3,192 8,232
3,177
2,591
753 906
9332,587 2,4698,194
7,2015,641
1,834 1,5632,244
1Q14 2Q14 3Q149M12 9M13 9M14
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PROJECT PROGRESS INDICATORS3Q14
Project CapacityMtpy
Estimated start-up
Executed capexUS$ million
2014 Total
Estimated capexUS$ million2014 Total
Physical progress
Carajás Serra Sul S11D 90 2H16 700 3,331 1,091 8,089 54%
CLN S11D 230 (80¹) 1H14 to 2H18 942 2,098 1,914 11,582 25%
V. Grande Itabiritos 10 2H14 360 1,652 376 1,910 94%
Conceição Itabiritos II 19 (0¹) 1H15 193 846 240 1,189 91%
Cauê Itabiritos 24 (4¹) 2H15 259 612 373 1 504 71%Cauê Itabiritos 24 (4¹) 2H15 259 612 373 1,504 71%
CSP² 1.5 2H15 182 1,055 197 2,570 68%
Moatize II 11 2H15 464 1,303 761 2,068 70%
Nacala corridor 18 2H14 1,219 2,560 1,812 4,444 74%
¹ Net additional capacity
² Relative to Vale’s stake in the project
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PROJECTS DELIVERED IN 3Q14
• Distribution center in Malaysia with capacity to receive and import 30 Mtpy of iron ore
Teluk Rubiah
• Already unloaded 8 Valemaxes and loaded 5 Capesizes
• Executed capex of US$ 1.222 billion out of a ecuted cape o US$ b o out o aoriginally estimated capex of US$ 1.371 billion
• Dry processing plant in Carajás with nominalSerra Leste
Salobo II
Dry processing plant in Carajás with nominal capacity of 6 Mtpy
• Produced 1.0 Mt in the quarter
E ec ted cape of US$ 446 million o t of a• Executed capex of US$ 446 million out of a originally estimated capex of US$ 456 million
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DOCUMENT CONTENT
Operational performance
Financial performance
C it l ditCapital expenditures
Capital structurep
Cash flow generation
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DEBT POSITION (EX-REFIS)
Gross Debt
US$ million
Net Debt
Cash positionSeptember 30, 2014
8,332
29,776 30,25729,366
22 57423,190
3Q13 2Q14 3Q14
22,574
21,034
3Q13 2Q14 3Q14
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FINANCIAL INDICATORS¹US$ million
Interest coverage - Ratio
US$ million
Net Debt / LTM² EBITDA - Ratio
13.7 13.411.1 1.4 1.3 1.5
3Q13 2Q14 3Q14 3Q13 2Q14 3Q143Q13 2Q14 3Q14 3Q13 2Q14 3Q14
Maturity - years Cost of Debt - %
9.7 9.5 9.1
4.58 4.55 4.50
3Q13 2Q14 3Q14 3Q13 2Q14 3Q143Q13 2Q14 3Q14 3Q13 2Q14 3Q14
¹ Ex-Refis² LTM – last twelve months
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DOCUMENT CONTENT
Operational performance
Financial performance
C it l ditCapital expenditure
Capital structuresp
Cash flow generation
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FREE CASH FLOW – 9M14US$ billion
13.544 1.236
0.69011.618 8.364
Includes a reduction of US$ 447 million in cash flows due to short-term investments
0.479
1.246 0.4094.57 0.285 2.111
2.744
Cash flowfrom
operating activities
Interest on loans
Income taxes
& settlementprogram
Net cash provided by operating activities
Capex Dividends received¹
Disposal of assets and investments
Others FCF² Net additions/
repayments of loans
Dividends paid
Increase in cash &
cash flow equivalents
¹ Dividends and interest on capital received from associates and joint ventures² Before debt additions/repayments and amortization and payment of dividends.
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FREE CASH FLOW – 3Q14US$ billion
3.597 0.438
0.2172.942 3.269
Includes a reduction of US$ 450 million in cash flows due to short term investments
0.929 0.2350 627
0.155 0.011 0.771
cash flows due to short-term investments
0.260
0.627
Cash flowfrom operating
activities
Interest on loans
Income taxes
& settlementprogram
Net cash provided by operating activities
Capex Dividendsreceived¹
Disposal of assets and
investments²
Others³ FCF Net additions/repayments
of loans
Dividends paid
Increase in cash &
cash flow equivalents
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¹ Dividends and interest on capital received from affiliates and joint ventures² Proceeds from the sale of VLI to Brookfield R$ 2bi³ Includes short-term investments, guarantees and deposits, additions to investments and loans4 Before debt additions/repayments and amortization and payment of dividends.
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CHANGES IN VALE'S NET DEBTUS$ billion, 2Q14 to 3Q14
23.190 0.7710.450
0.7370.400 0.598
21.034
Net Debt Cash and cash Short term Translation Interest Others Net DebtNet Debtend 2Q14
Cash and cash Equivalents
Short-terminvestments¹
TranslationImpact²
Interestprovisioned
Others Net Debtend 3Q14
¹ Short-term investments which are not considered cash or cash equivalents² Impact on debt and cash denominated in BRL. The impact of the translation of BRL denominated debt in is counterbalanced by US$ 740
million resulting from the translation of the BRL denominated portion of the currency swap derivatives
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EXPLANATION OF VALE’S REALIZED COPPER PRICESUS$/t
6,992 222 43770 323 5 940323 5,940
C LME i P i i l i i TC/RC ( T f l i Oth V l ' R li dCopper LME price Provisional pricing TC/RC (copper concentrate)
Taxes for sales in Brazil
Others Vale's Realized Prices
Note: Others include contractual differences between contained and payable copper as well as discounts due to deleterious elements in the copper concentrate.