Report to the Community

May 2018

The past year has truly been a time of transformation, and we have a lot of information to share with you about our current operations and plans for the future.

Having experienced a prolonged global downturn in the nickel market, the past few years have been challenging for many of us who live and work in Sudbury. Nickel price volatility, capital requirements, operating cost and productivity issues represent long-term challenges we are dealing with head on to ensure we continue to operate in Sudbury for years to come.

For example, in 2017 we successfully transitioned from two furnaces to a more efficient single furnace in our Copper Cliff Smelter, and upgraded and modernized many aspects of our surface facilities. These efforts, coupled with our $1 billion Clean AER Project, will see sulphur dioxide (SO2) emissions from our Smelter reduced by 85% from current levels this year. This is a huge milestone for our operations – and for our community – and we look forward to celebrating this proud achievement later this summer.

A Message from the Sudbury Leadership TeamThe City of Greater Sudbury is very important to Vale, so we are pleased to provide this 2017-2018 Annual Report to the Community to you, our neighbours.

Preparing ourselves for the future has also necessarily meant marking the end of some aspects of our operations. Last year, for example, we made a historic announcement that due to the significant reduction in emissions we will achieve, our iconic Superstack will be decommissioned in 2019 and replaced by two smaller 137 metre (450 foot) stacks. The two smaller and more efficient stacks will require far less energy to operate, which will assist in reducing greenhouse gas emissions from our Smelter by approximately 40%.

In addition, with higher levels of copper being removed and sold as a product from Clarabelle Mill, in 2017 we marked the end of an era in our copper smelting history with our final copper anode cast. We also made a decision to decommission the Crushing Plant at Clarabelle Mill, and operate more efficiently today with a Semi-Autonomous Grinding (SAG) Mill only.

Finally, after more than 120 years in operation, we made a decision to place Stobie Mine on care and maintenance. Recognized as one of the most prolific mines in the world, more than 375,000,000 tonnes of ore have been mined out of the Frood-Stobie complex over the years, and the remnant ore that was left was simply no longer economic to mine in the current price environment.

While these decisions were significant and not made lightly, they were the right ones for our business and set us up to be a simpler, stronger and safer operation – one that is competitive even at the bottom of the price cycle. And as we made these decisions, we did our best to minimize job losses and impacts to our people – our most important resource.

With work to upgrade our surface plants now coming to an end, we have a renewed focus on modernizing and optimizing our mines. In fact, our exploration budget increased by 50% in 2018 over last year, and our project to expand operations at Copper Cliff Mine is well underway. In addition, we’re piloting the use of new and innovative technologies such as autonomous vehicles and equipment -- technologies that will be the building blocks upon which new mines are built as we look toward the future.

As stewards of a business that has been around for more than 100 years, our team is committed to make the right decisions to carry our business forward and pave the way for future generations to live and work here in Sudbury. We invite you to learn more about our operations in the pages that follow.

From back to front, left to right: Bruce Bichel, Director of Production Services; Stephanie Hart, Director, Finance, Ontario and Manitoba Operations; Mitch Medina, Director of Human Resources, Health, Safety & Environment; Mike McCann, Director of Milling, Smelting & Refining; Jody Kuzenko, Director of Business Strategy; Alistair Ross, Director of Mining; Angie Robson, Manager of Corporate & Indigenous Affairs.

What’s Inside:Health & Safety ................... 2Investing in Our Mines .... 3Sustainability ....................... 4Tailings Management ...... 6Community .......................... 7Proud of Our People ......... 8

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MSD Injury Prevention Mining Technology NEO Kids Foundation Partnership

Health & SafetyHomeSafe, our safety program that was launched in 2015, reinforces two of our most important values: ‘Life Matters Most’ and ‘Value our People’. The primary goal is to effectively manage risk so that everyone goes home to their loved ones everyday safely and without injury.

As we look back on 2017, we remember Ron Lepage, a contract employee involved in a fatal accident last April while disposing waste materials in our Central Tailings Area. This was a tragic incident for everyone involved and we continue to offer our condolences to Ron’s family, co-workers and friends. This reinforces why HomeSafe will always be our most important priority.

While our total recordable injury rate has improved over the past two decades, we seem to have flat lined in our safety performance over the past number of years. We are committed to continue to work with our industry, government and labour partners to achieve the next breakthrough in safety as we continue to strive to get our people home safely every single day.

Over the past year, we did reach some impressive safety milestones that we are proud of. In 2017, both Garson Mine and the Copper Cliff Nickel Refinery recorded one year without a single lost-time injury (LTI). These operations join many other areas that have experienced significant runs without an LTI. In addition, every one of our surface plants in Ontario went the entire month of October without a single recordable injury – something we’ve never experienced before in the history of our operations.

Below are a few of the safety initiatives we are working on to further improve safety performance within Vale’s Sudbury Operations.

About Vale

Mission

Vision

Values

Vale is the one of the world’s largest mining companies, present across five continents. Vale is also the world’s largest producer of nickel, with our Base Metals business headquartered in Toronto. Operating in Canada for more than 100 years, our Canadian operations also produce copper, cobalt, platinum group metals, gold and silver. We aim to be profitable, but only as a safe, high-quality and sustainable mining company where our most important value is “Life Matters Most.”

Vale’s operations in Sudbury are home to one of the largest integrated mining complexes in the world, including five operating mines, a mill, a smelter and a nickel refinery. For more information about Vale’s Sudbury Operations, please visit: vale.com/canada.

To transform natural resources into prosperity and sustainable development.

To be the number one global natural resources company in creating long term value, through excellence and passion for people and the planet.

• Life matters most• Value our people• Prize our planet• Do what is right• Improve together• Make it happen

MSDsMusculoskeletal disorder type injuries (MSDs) such as strains make up more than 50% of injuries at Vale due to the nature of work many of our employees perform. As such, we are working on a number of different strategies to prevent these injuries from occurring.

For example, we have installed tablets in warm rooms at Garson and Totten Mines to survey how employees physically feel before and after their shift, taking into account where they may feel sore, their role at the company, their age and what part of their shift rotation they are in. This anonymous data is then used to spot trends in various job roles to help prevent future MSD injuries.

A pilot project is also underway at our Copper Cliff Nickel Refinery and Electrowinning facility with professional frontline ergonomic coaching for employees in real time in the field. While this is a relatively new project, preliminary indications already point to a significant drop in MSD injuries where the project is being piloted.

Total Recordable Injury Frequency - Vale Ontario OperationsTR

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Sonia Scott, Kinesiologist, shows Nick Taricani, a Chemical Operator at Vale’s Electrowinning Plant, various lifting and handling techniques.

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Investing in Our Mines

AEDs

In 2017, more than 100 automated external defibrillators (AEDs) were placed across Vale’s Sudbury Operations in both our surface plants and mines, in addition to the AEDs already present in our First Aid offices. These AEDs are an important life-saving investment and, since 2010, the use of an AED has saved the lives of three people at our Sudbury Operations.

Mining Mental HealthGetting HomeSafe isn’t just about physical health and wellness – it’s about taking care of our mental well-being as well. At our Sudbury Operations, Vale is funding a ‘Mining Mental Health’ study in partnership with the United Steelworkers, the Canadian Guards Association and the Centre for Research in Occupational Safety and Health (CROSH) at Laurentian University in order to develop strategies that promote positive mental health for ouremployees. The study is now in the final stages with results expected to be released later this year. In the meantime, we have implemented a number of activities to raise awareness about mental health issues. We are also providing Mental Health First Aid trainingto our leaders and MINES for Minds training for employees across our operations.

Mining Technology We are currently exploring new technologies in all five of our mines that will upgrade and modernize our mines to be safer, more productive and more cost-effective, and to provide the basis upon which we plan for new mining projects going forward.

With our long-term mining technology roadmap for underground equipment, we are piloting the use of electric and battery powered vehicles at Coleman, Creighton and Copper Cliff Mines as well as commissioning a tele-remote drill and scoop at Totten Mine. And, as part of an industry-wide focus, we are also exploring advanced analytics to allow for more responsive decision making. At the same time, we are researching new mining methods that could take us beyond traditional drilling and blasting with equipment such as mechanical cutters, which use discs or picks on the end of a large boom to break rock faces into small pieces.

Importantly, we are continuing to move towards a digital mine format which involves upgrading our underground mines with wireless communications. At Totten Mine, for example, our field mechanics are now equipped with tablets to allow them to access reference manuals and service records, take photos, make notes and trouble-shoot maintenance solutions right next to mobile equipment underground. Wireless tagging and tracking of all personnel and equipment is also used to control and manage ventilation throughout the mine in a way that protects worker safety while realizing substantial energy savings.

Copper Cliff Mine Last Year, the Vale Board of Directors approved Phase 1 of an expansion project at Copper Cliff Mine to provide ore to replace feed from older mines such as Stobie Mine. The project represents an expenditure of $760 million spread over four years, with completion scheduled for 2020. Phase 1 is focused on re-activating and expanding Copper Cliff Mine South (formerly South Mine), and involves work on the South shaft, hoists and headframe. It also involves underground development to access new mining fronts between Copper Cliff and the South shaft down to approximately 1,585 metres (5,200 feet) below surface. At the peak of construction, the project is expected to employ approximately 400 – 450 people. Phase 2 of the project is currently in the final stages of a pre-feasibility study.

2017 Ontario Operations Production Performance

89 kt of Nickel

115 kt of Copper

Photo courtesy of Epiroc

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Steve Parcey, a Protection Services Professional at Vale, provides AED training for employees.

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Sustainability

The Clean AER ProjectIn 2018, we will celebrate the successful completion of the Clean AER (Atmospheric Emissions Reduction) Project, which began construction in 2012. Once fully commissioned in September of this year, the Clean AER Project will reduce SO2 emissions from Vale’s Smelter in Copper Cliff by 85% and metal particulate emissions by 40% from current levels. This is a massive accomplishment for our operations and something for all citizens in Sudbury to celebrate.

The major work scheduled for completion this year includes commissioning of a new Secondary Baghouse and Fan Building, which will capture metals particulate and recycle it back into the smelting process. Vale will also commission its new Wet Gas Cleaning Plant, which will capture SO2 emissions that are currently dispersed by the Superstack.

Natural gas consumption at the Smelter is estimated to drop by nearly half with the decommissioning of the Superstack and operation of the two new stacks. This savings is equivalent to the average fuel consumption of approximately 17,500 homes, or approximately 1/3 of all the households in Greater Sudbury. Importantly, greenhouse gas emissions from our Smelter operations will also be reduced by 40%.

Given the large reduction in emissions, our iconic Superstack will no longer be required and construction of two smaller and more efficient 137 metre (450 foot) stacks is now underway. The steel liners for these new stacks will be installed next year and tied in to the Smelter, allowing the Superstack to be decommissioned in 2020.

Environmental PerformanceVale’s SO2 air monitoring network, co-owned by Sudbury Integrated Nickel Operations, a Glencore Company, includes 18 fixed continuous monitoring stations, two meteorological towers and Vale’s mobile SO2 monitoring unit. The mobile unit is used to measure ground level concentrations of SO2 in areas of the community not covered by the 18 fixed stations. Vale also owns and operates nine particulate (metals) monitoring stations, with most of them located in the vicinity of the Copper Cliff Smelter Complex.

In addition to the real time monitoring data, quarterly and annual reports of SO2 concentrations measured at the fixed stations are compiled and reported by an independent consultant and submitted to the Ontario Ministry of Environment and Climate Change (MOECC). The reports are then posted on Vale’s website quarterly at: goo.gl/1F4f6x.

From back row, left to right: Environmental Monitoring Members Wayne Manson, Danica Pagnutti (Vale), Ron Paolin (MOECC), Gerard Courtin, Monika Greenfield (Vale), Tom Zanetti (Vale), Colleen Zilio, Lisa Lanteigne (Vale), Margaret Julian and Alain Richard.

Wet Gas Cleaning Plant

Rendering of Clean AER Project facility improvements

Decommissioning the Roaster Kiln Building

Vale is decommissioning its Roaster Kiln Building this year. Visible along Highway 17 and within the footprint of the Copper Cliff Nickel Refinery, it operated from 1955 to the late 1980s as part of Inco’s Iron Ore Recovery Plant. Removal of exterior portions of the building has already begun and demolition is expected to be completed by the end of the year. Material handling at the demolition site is being carefully managed with recycling planned for the ferrous and scrap metals that are recovered from the site.$1 Billion

InvestmentVale’s Clean AER Project is the largest single environmental investment in Greater Sudbury’s history

85% reduction in Sulphur DioxideThis is in addition to a 40% reduction in metals particulate

40% reduction in Greenhouse Gas from the SmelterThis is good news for the planet

Green Economy NorthVale is a proud member and founding sponsor of ReThink Green’s Green Economy North program. The program brings business, educational institutions and the municipal sector together to achieve more sustainable business practices with support and coaching to build a network of shared success.

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Environmental performance continued...These reports are also reviewed on a bi-annual basis by Vale’s Environmental Monitoring Team, which serves as a forum for consultation, review and exchange of information regarding environmental issues. The group includes Vale representatives, a representative from the MOECC, members of Vale’s Copper Cliff Liaison Committee and two representatives from the Gatchell Community Action Network (CAN).

Results from our monitoring network indicate that annual mean SO2 concentrations in 2017 were lower at all stations than in previous years, with some stations reporting mean concentrations that were less than half the values measured in 2016. We have also seen more than a 50% reduction in the number of community concerns received related to air quality, primarily with fewer calls about SO2 stack emissions and fallout.

BiodiversityDid you know, Vale...• Grows over 300,000 trees annually in its greenhouse for planting on its

own property and throughout the City of Greater Sudbury

• Has approximately 20 bee hives on its Smelter property along Highway 55

• Plants milkweed for monarch butterflies, which are great pollinators

• Seeds hundreds of acres each year by air, approximately 3,200 hectares (8,000 acres) since 1990

• Has released more than 100,000 fish into local waterways through its fish stocking program

Tailings area revegetated with the use of biosolids

Raising bees for pollination

Planting milkweed for monarch butterflies

Raising fish for stocking local lakes and rivers

Regreened slag hill Aerial seeding

Planting trees and shrubs in partnership with the City of Greater Sudbury

Community Concerns Comparison 2015-2017

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SO2 Stack Emissions

Odour(Fluid Bed Dryer Stack Emissions)

SO2 Fugitive Emissions

Fallout Noise *Unknown **Other EmergencyAlarms

(e.g. Sirens duringemergency Drills

2015 2016 2017

The public may call Vale’s Emissions Reduction Program operators directly with questions and concerns about air quality 24 hours per day, 7 days per week at 705-682-8283. Vale also has a general Community Concerns Line at 705-222-VALE (8253) that is also answered 24 hours per day, 7 days a week by an answering service. Vale employees respond to the concerns received on this line within one business day.

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Tailings Management

Emergency Management

Vale has earned the highest rating that can be achieved (AAA) for Tailings Management under the Mining Association of Canada’s Towards Sustainable Mining program.

From left to right: Mark Palkovits, Glen Watson and Lisa Lanteigne from Vale’s Environment Department with hay grown on tailings reclaimed with biosolids.

This accomplishment is the result of an industry-leading approach to tailings management that is independently verified and adheres to rigorous protocols, guidelines and best practices.

Vale is committed to continuously improving our tailings facilities and we have an active capital investment program for dam upgrades. In fact, since 2007, Vale has spent approximately $60 million on upgrades to tailings facilities in Sudbury.

Our M-Area Project, which will remove a tailings holding pond from service by 2020, is well underway and will improve dam safety by dramatically reducing potential flooding risk to the community of Copper Cliff.

At the same time, we are also having great success reclaiming and regreening inactive tailings areas with the use of biosolids. In fact, the Water Environment Association of Ontario (WEAO) has awarded Vale with its 2018 Exemplary Biosolids Management Award for a full scale operating project. The awards committee commended Vale for the utilization of municipal biosolids as a new method of sustainable land reclamation.

In early 2017, Vale funded and implemented a mass public notification service called “Sudbury Alerts” in partnership with the City of Greater Sudbury. The system notifies residents of a potential hazard or concern that is an imminent threat to public safety and provides instructions on how to respond.

A test of Sudbury Alerts took place during Emergency Preparedness Week in May 2017 and it was successfully used for its first real emergency when a gas leak took place at the Rainbow Centre in downtown Sudbury took place in November 2017.

If you would like Sudbury Alerts or ACT posters or magnets for your home or workplace, please send a request to: ontario.questions@vale.com.

If a hazardous material release occurs at Vale’s Copper Cliff Smelter or Nickel Refi nery, area residents will hear Vale’s emergency signal – a repeating 15-second air horn blast followed by 5 seconds of silence. Be sure to ACT accordingly.

Do not use the telephone unless you require immediate emergency assistance. Stay tuned to local media for information updates and remain inside until an “all clear message” is broadcast and the air horn has stopped.

Vale tests its air horn, every Monday at 1:30 pm to enhance system maintenance requirements. If you hear the horn at this time, please remember it is simply a regular test of our emergency system.

Always go indoors

Close all doors and windows

Turn off furnace, air conditioners or other air intakes

Vale is a proud partner of Sudbury Alerts, the City of Greater Sudbury’s new emergency mass notification service.

Sign up, get notified and be prepared at: www.greatersudbury.ca/sudburyalerts

How to ACT in an emergency.

Vale is a proud partner of Sudbury Alerts, the City of Greater Sudbury’s new emergency mass notification service.

Sign up, get notified and be prepared at: www.greatersudbury.ca/sudburyalerts

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Community

Angie Robson, Manager of Corporate & Indigenous Affairs for Vale’s Ontario Operations (right) receives an OBAA Corporate Citizen Award from the Ontario Chamber of Commerce.

OBAA Award

Neo Kids Foundation Partnership

Vale’s Ontario Operations won the 2017 Corporate Citizen Award at the Ontario Business Achievement Award Ceremony (OBAA), hosted by the Ontario Chamber of Commerce. This award recognizes a large business that has a sustained commitment to investing in the community in which it operates. Vale was recognized for environmental initiatives such as the Clean AER Project and the Vale Living with Lakes Centre as well as its community giving program.

“We chose to nominate Vale because we know how committed they have been, and continue to be, to Greater Sudbury. The company’s economic contribution is felt locally, provincially and nationally, and impacts our lives in many positive ways.”

Debbi Nicholson,President and CEO of the Greater Sudbury Chamber of Commerce.

In 2017, Vale began a new community partnership with the NEO Kids Foundation through the sponsorship of the Foundation’s NHL vs. Docs and Superheroes for Little Heroes fundraising events.

The NHL vs. Docs event took place in August to a sold out crowd and raised more than $50,000. Following the event, an anonymous donor matched the funds raised, for a total of $100,000. Now going into its third year, NHL vs Docs has successfully raised more than $225,000 for services, equipment and research for our community’s youngest and most vulnerable patients.

In October of last year, children at Health Sciences North (HSN) were greeted with a surprise from some of their favourite Superheroes during Superheroes for Little Heroes, presented by Vale. With members of the Greater Sudbury Police Service Tactical Unit dressed as superheroes, the officers rappelled down HSN to surprise patients on the pediatric and neonatal intensive care units.

For more information about Vale’s community investments and how to apply for funding, visit: goo.gl/32L2md

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We want to hear from you!

If you have any questions or concerns about Vale’s Sudbury Operations, please call our Community Concerns Line at: 705-222-VALE (8253).

We appreciate all of the feedback we’ve received on our previous reports. We’ve heard that you enjoy receiving information about our operations, learning about our environmental initiatives and how to reach out to us. We’ve updated this report to reflect that feedback and we’re always looking to improve, so please continue to send your questions, concerns and comments to: ontario.questions@vale.com.

Please also visit our website at: www.vale.com/canada

Proud of Our People

Gilbert Lamarche, Coleman Mine Manager, and Theresa Nyabeze, Production Supervisor at Coleman, both received a 40 Under 40 Award from Northern Ontario Business in 2017. The awards celebrate the next generation of business and community leaders in Greater Sudbury.

Samantha Espley, Technical Director of Mining and Milling for Vale’s Base Metals Division, received an Engineering Medal in the Management category from the Ontario Society of Professional Engineers in December 2017.

Please join us for our annual Open House at Dynamic Earth September 19th, 2018 from 11 am to 6 pm.

Visitors will have the opportunity to learn more about our operations, current projects and community initiatives. You can also enjoy Dynamic Earth exhibits and outdoor science park and take a trip down the Vale Chasm to experience an underground mine, compliments of Vale.

40 Under 40

Woman of Distinction

Engineering Medal

You’re invited to our annual open house!

Helen Francis, Program Leader for Vale’s Digital Mine Transformation, received a YWCA Women of Distinction Award this year in the Active Living Category. The awards celebrate exceptional women withinour community.

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