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Vale: Production System Update

August, 2010 Victor Padula, mining engineer, M. Sc. Integrated Planning and Product Development.

Iron ore provinces in Brazil

Our current iron ore production structure is based in Brazil, a country where there are three major iron ore provinces: Iron Ore Quadrangle, Carajs and Corumb.
Pacific Ocean Brazil in the World Worlds fifth country. largest
Carajs

Atlantic Ocean

Area: 8,514,876 km Coastal line: 7,491 km.

Iron Ore Quadrangle

Iron Ore in Brazil (2009): Worlds second largest iron ore producer; 2009 iron ore production: 300 Mt.
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Corumb

SOUTH AMERICA

Iron ore production systems

Vale operates three integrated iron ore systems
Pacific Ocean Atlantic Ocean

NORTHERN SYSTEM
Ponta da Madeira Port

Carajs

Vale Total Production: 2009 iron ore production: 232 Mt;

Paraguay River

Corumb

Iron Ore Quadrangle

SOUTHEASTERN SYSTEM
Tubaro Port

Iron ore 2010 production forecast: 302 Mt Iron ore 2011 production forecast: 321 Mt

Itagua Port and Guaba Port

SOUTHERN SYSTEM

SOUTH AMERICA

San Nicols Port (Argentina)

Northern System (Carajs System)

Atlantic Ocean NORTHERN SYSTEM
Ponta da Madeira Port

EFC
Carajs

NORTHERN SYSTEM: 2009 iron ore production: 84.6 Mt; Iron ore 2010 production forecast: 98.3 Mt Iron ore 2011 production forecast: 109.7 Mt BRAZIL - SOUTH AMERICA
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Northern System
MINING BENEFICIATION

CARAJAS MINES Production forecast 2010: 98.3 Mt

MINERAL PROCESSING FACILITIES Sinter feed, pellet feed ( seaborne market) Lump ore (domestic market)

RAILWAY

PORT

EFC Extension: 892 km; single track Train-type: 330 wagons + 4 locos Payload: 33 kt/train (SF)

PDM MARITIME TERMINAL 3 piers / 4 berths Vessels up to 420,000 DWT Draft: up to 23 m

Carajs is a great example of a fully controlled and integrated iron ore supply chain! 5

Iron Ore Quadrangle overview (Southern and Southeastern Systems)

This area is responsible for 70% of Brazils iron ore production. (*)
CAU MINAS DO MEIO
ITABIRA

Minas Gerais
ES

CONCEIO

N
RJ
BELO HORIZONTE

PATRIMNIO HISTORICO CAPE LA PIE DADE DA

BRUCUTU

GONGO SOCO
NOVA LIMA

GUA LIMPA

APOLO JANGADA CAPO XAVIER

BRUMADINHO

MAR AZUL TAMANDU CAP. DO MATO ABBORAS VARGEM GRANDE

FEIJO

FAZENDO ALEGRIA

KEY
Iron Ore Formation
Italic Font

City or Town
Iron Ore Mine, Production Site or Mining Rights

SAPECADO PICO GALINHEIRO

ITABIRITO

TIMBOPEBA

FBRICA NOVA

OURO PRETO

CAPS LOCK

FBRICA
CONGONHAS

EFVM FCA MRS

Railways

(*) 2009 figures.

Southeastern System (Tubaro System)

Atlantic Ocean

SOUTHEASTERN SYSTEM: 2009 iron ore production: 90.1 Mt; Iron ore 2010 production forecast: 124.0 Mt. Iron ore 2011 production forecast: 125.1 Mt. BRAZIL - SOUTH AMERICA
San Nicols Port (Argentina) Western Complex Corumb Iron Ore Quadrangle

SOUTHEASTERN SYSTEM
Tubaro Port

EFVM
Paraguay River

Note: figures include outsourced iron ore.

Southeastern System
Iron ore production capacity: 124 Mt/y (*).
ITABIRA COMPLEX 40 Mt/y
CAU MINAS DO MEIO
ITABIRA

TRAIN LOADING FACILITIES

CONCEIO

CENTRAL MINES COMPLEX 44 Mt/y

P HISTORICO A T C R PIEDADE D A IA P ME L N I A O

BRUCUTU

GONGO SOCO

GUA LIMPA

EFVM

APOLO

CATAS ALTAS

MARIANA COMPLEX 36 Mt/y

KEY
Iron Ore Formation
Italic Font Normal Font

FAZENDO ALEGRIA

N
TIMBOPEBA FBRICA NOVA

City or Town
Iron Ore Mine or Production Site

OURO PRETO

EFVM

WESTERN COMPLEX 4 Mt/y

TUBARO PORT

(*) 2010, including outsourced iron ore.

Southern System (Guaba System)

Atlantic Ocean

SOUTHERN SYSTEM: 2009 iron ore production: 56.5 Mt; Iron ore 2010 production capacity: 79.4 Mt. Iron ore 2011 production forecast: 81.0 Mt BRAZIL - SOUTH AMERICA
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Iron Ore Quadrangle

MRS
Itagua Port and Guaba Port

SOUTHERN SYSTEM

Note: figures include outsourced iron ore.

Southern System
Iron ore production capacity: 79.4 Mt/y (*).
BELO HORIZONTE

TRAIN LOADING FACILITIES

PARAOPEBA COMPLEX 23.1 Mt/y

TOD

Jangada Feijo

VARGEM GRANDE COMPLEX Mar Azul Capo 23.8 Mt/y Tamandu Xavier
Capito do Mato Abboras
TFA Galinheiro Pico Sapecado MRS LOGISTICS SYSTEM

Mutuca

ITABIRITOS COMPLEX 32.5 Mt/y

KEY
Iron Ore Formation
Italic Font Normal Font

Fbrica

City or Town
Iron Ore Mine or Production Site

EFVM MRS

ITAGUA PORT GUABA PORT

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(*) 2010, including outsourced iron ore.

Vales current iron ore structure in key-figures

Integration is the key for running an iron ore business successfully !

3 integrated iron ore production systems; 32 iron ore mines;

Integrated management 316 Mt/y of iron ore final products; 11 pelletizing plants; approx. 20 final iron ore products and 230 proto-products. Integrated planning Integrated operations Integrated control

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Vales current seaborne iron ore portfolio

Final Products Seaborne Ports
PDM
(Northern System)

SINTER FEED

TUBARO PELLET FEED

LUMP ORE

Flexibility to guarantee iron ore seaborne market leadership

SAN NICOLAS
(Southeastern System)

GUABA
(Southern System)

PELLETS
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ITAGUA
(Southern System)

Master Plan and iron ore production evolution (2000-2014)

Goal: increasing production capacity by 50%, achieving 450 Mt/y plus in 2014.
550 500 455 450
BRUCUTU

400 350
FABRICA NOVA

397
World turmoil

Mt 300
250 200 150 100 50 0

Acquisition of 3 major Brazilian mining companies

297 266 235

294

302

321

342

212 162 168 174 189

232

UNDER REVISION

00

01

02

03

04

05

06

07

08

09

'10

'11

'12

'13

'14

Southeastern
* Forecast
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Southern

Northern

Simandou

Reserves base

Vale the largest reserve bases in iron ore industry !

2010 updated information:

Northern System

Reserves (t)1

5 mines
Southeastern System

7.1 Bi

15 mines2
Southern System

5.9 Bi
Note

9 mines

3.4 Bi

(1): figures in billion metric tonnes (Bi t); (2) Including former MCR (0.3 Bt) and Samarco (2.1 Bt) reserves. Vale's equity interest in Samarcos mines is 50%

Reserves Vale

16.4 Bi

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A robust project pipeline

Northern System is responsible for most of Vales future sinter feed production increase.

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Disclaimer: Simandou not considered (classified).

Projects for Northern System: S11D

Summary: a project to meet the foreseeable demand for Northern Systems iron ore. Run-of-mine is a high quality resource that can be dry screened, and the goal is to reach capacity of 250 Mt/y plus in Carajs.

Resources: 6.38 billion tonnes (areas C and D only); Reserves: 4.23 billion tonnes; Production split: 100% sinter feed;

New berthing facilities at PDM (Pier # 4); Start-up 2014

S11D is Vales most important iron ore project (90 Mt/y in the first phase, areas C and D of Carajs Southern Range) !

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Projects for the recently acquired Simandou

Reserves: potentially 8 billion tonnes, being 2 billion tonnes of hematite (Fe > 66%); 561 Km railway leading to a new port in Liberia, as well as refurbishment of 660 Km railway in Guinea; Start-up: 2012.
Large scale, West African high grade iron ore deposit, with a well defined logistic route.

Atlantic Ocean

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Carajs and Simandou

Carajs and Simandou are the best platforms for iron ore growth in the world !

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Projects for Southeastern System: Apolo

Summary: a Greenfield project comprised of mining, mineral processing plant and an exclusive railway system with train loading facilities, with 24 Mt/y of final products.

Reserves: 279 million tonnes. Production split: 66 % sinter feed, 34 % pellet feed. Start-up: 2014.

A truly Greenfield project right in the middle of the iron ore quadrangle !

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Projects for Southern System: VGRs ITM-I

Summary: a mineral processing plant to produce pellet feed from Vargem Grandes (VGR) reserves of itabirites (initially Abboras mine, then Tamandu and Capito do Mato mine). Project approved and under construction.

Reserves: 1.3 billion tonnes (to feed ITM-I and also the existing plant). Production split: 100% pellet feed. Start-up: 2013

An engineering solution to produce 10 Mt/y of pellet feed from VGRs itabirites !

On first plan, Abboras Mine, Vargem Grande Complex

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Distribution Centers (DCs) in Oman and Malaysia

DCs strategically positioned using vessels larger than VLOC (more than 270 kt) resulting in a competitive edge in logistics !

Oman

PDM

Malaysia

Tubaro Guaba & Itagua San Nicolas

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Environmental and social responsibility

Sustainable growth is the most relevant challenge facing Vale ! Environmental licenses and negotiations with local communities are indeed challenging!!

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Final comments
A competitive edge Vale operates three integrated iron ore production systems, comprised of mines, pelletizing plants, transportation logistics and port facilities; Ready for the future supported by the largest reserve bases in iron ore industry, Vale has a pipeline of projects capable of boosting its production capacity by up to 50% to meet market demand and maintaining competitive operational costs; A sustainable product portfolio each one of Vales production systems is able to deliver iron ore products and pellets to seaborne market, based on a product portfolio focused on long term sustainability; Maximizing Value-In-Use strategic actions in shipping to minimize freight cost differences for Asia market in association with high-quality iron ore product deliveries .
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Thank you!