vale nickel business

1

Roberto MoretzsohnExecutive Vice President, MarketingVale Inco

Vale Nickel business

Rio de Janeiro

September 2009

2

Vale has a strong platform to grow the nickel business

Current

Sudbury

Voisey’s Bay

Thompson

Indonesia

Growth

Onca Puma

Goro

A balance of sulphide and laterite properties

3

Vale nickel business is located…

Carbonyl

Electro

ThompsonThompson

SudburySudburyClydachClydach

MatsusakaMatsusakaKNCKNC

TNRCTNRCDalianDalian

Tonimet

Utility

VoiseyVoisey’’s s BayBay

PTIPTIOnca PumaOnca Puma

GoroGoro

Refinery

Mines

Development Properties

4

Nickel reserves (100% Basis)1million metric tons of contained nickel

¹ P&P reservesSources: BrookHunt 2008 edition Nickel Industry Cost Study and Vale annual report 2008Note: Xstrata includes 100% Koniambo

We continue to develop and build our leading position in the nickel market

2.0

2.6

4.1

4.5

5.8

8.9

Eramet

Xstrata

BHPB

Jinchuan

Norilsk Nickel

Vale

5

Continued focus on employee health and safety

Canadian mines have won the John T. Ryan award for “Safest Metal Mine in Canada” for a record 5 years in a row.

- Birchtree Mine (Thompson) – 2004.

- Garson Mine (Sudbury) – 2005.

- North Mine (Sudbury)– 2006, 2007 & 2008 .

In January 2009, Copper Cliff North Mine celebrated 3 years disabling injury (DI) free – a milestone virtually unprecedented in the industry.

Indonesian Operations lead Vale Nickel business in safety performance.

6

We continue to grow our production capability to leverage our resource base

220235

248

275

2005 2006 2007 2008

kt of Nickel

Source: Vale

Increases with the addition of Voisey's Bay, additional mine development and processing improvements in Canada, as well as increased thermal power in Indonesia.

2008 production curtailed in Q4 due to market conditions.

With the commissioning of Goro and Onca Puma, production will increase by ~ 45% when fully ramped up.

7

Managed the near term impacts of the market downturn with focus on sustainable improvements

Production

Flexing the production capacity in PTI utilizing the fuel fired power sources.

Optimizing product mix to meet changing market demands.

Review of mine design and processing configurations to allow formore efficient operations.

Operating Costs

Workforce efficiency improvements.

Reorganization – corporate functions and operations.

Cost reduction targets in all operations and corporate office.

Capital and Sustaining Investments

Prioritization of key projects to deliver long term growth whilemaintaining the sustainability of the asset base.

8

Nickel laterite operation in the state of Para to produce ferronickel.

Annual capacity: 58 kt of nickel in ferronickel.

Estimated investment: US $ 2.297 billion.

Onca Puma

Construction progressing again.

Operational readiness assessment underway .

Operations training taking place.

First line is expected to be commissioned in 2H10.

9

Goro Project

Project construction complete.

Commissioning underway.

Recovered from the impact of the acid plant incident.

Operations fully staffed.

First production late 2009.

High Pressure Acid Leach (HPAL).

Process for laterite ores in the Southern Province of New Caledonia.

Annual capacity: 60 kt nickel oxide and 4,600 t cobalt intermediate.

Estimated investment: US $4.083 billion.

10

Voisey’s Bay processing plant

Project released from further Environmental Assessment, 2008.

Hydromet technology selected in November 2008.

Feasibility level of engineering completed.

Early works started in April 2009.

Detailed engineering, procurement and construction activities in progress.

Hydrometallurgical plant to process sulphide concentrates.

Annual capacity:- 50 kt electronickel.- 5,000 t copper.- 2,500 t cobalt.

Scheduled completion by Feb 2013.

11

Nickel prices have recovered from their 2009 lows

LME Stocks (tonnes)

LME Cash Price

(US$/ tonne)

Source: LME

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

2005

2006

2007

2008

2009

0

10,000

20,000

30,000

40,000

50,000

LME cash nickel price and stocksJanuary 2005 to Sept 25 2009

12

Robust Chinese nickel demand drove the market in H1 2009.

Stainless production continues improvements.

- China setting production records in Q2/Q3 – potential Q4 moderation.

- Recovery outside China gathering pace in Q3 – representing 70%+ of world SS market in 2008.

- Declining scrap availability and higher austenitic ratio to drive primary nickel demand growth.

- Potential remains for stainless re-stocking outside China .

Non-stainless remains mixed – improvements in a number of sectors.

Nickel supply declining in first half of 2009.

Market update

13

In the first half of 2009, China and Taiwan drove stainless production – improvements have broadened to all markets into Q3

IndexQ1 2006 = 100

Quarterly stainless production trendsQ1 2006 – Q2 2009 (f)

* Source: Vale estimates

25

75

125

175

225

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2e2006 2007 2008 2009

China/Taiwan

Rest of World

14

We have a strong presence in the growing Asian market

World nickel demand by geography versus Vale sales

53%

5%9%

33%

Rest of World Europe

North America Asia

60%

1%

27%

12%

2008 World nickel use Vale 2008 sales

15

Quarterly stainless steel production1970 to 2009Q2 (f)

Selling nickel to the stainless steel industry can be challenging given the inherent volatility

Source: 1970-2000 Macquarie Bank, 2001-2009 Vale

-35%

-25%

-15%

-5%

5%

15%

25%

35%1Q

704Q

703Q

712Q

721Q

734Q

733Q

742Q

751Q

764Q

763Q

772Q

781Q

794Q

793Q

802Q

811Q

824Q

823Q

832Q

841Q

854Q

853Q

862Q

871Q

884Q

883Q

892Q

901Q

914Q

913Q

922Q

931Q

944Q

943Q

952Q

961Q

974Q

973Q

982Q

991Q

004Q

003Q

012Q

021Q

034Q

033Q

042Q

051Q

064Q

063Q

072Q

081Q

09E

Y-O-Y Change

Q-O-Q Change

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

1Q70

4Q70

3Q71

2Q72

1Q73

4Q73

3Q74

2Q75

1Q76

4Q76

3Q77

2Q78

1Q79

4Q79

3Q80

2Q81

1Q82

4Q82

3Q83

2Q84

1Q85

4Q85

3Q86

2Q87

1Q88

4Q88

3Q89

2Q90

1Q91

4Q91

3Q92

2Q93

1Q94

4Q94

3Q95

2Q96

1Q97

4Q97

3Q98

2Q99

1Q00

4Q00

3Q01

2Q02

1Q03

4Q03

3Q04

2Q05

1Q06

4Q06

3Q07

2Q08

1Q09

E

16

We have a strong position in Non-Stainless sectors providing flexibility to shift nickel in and out of the Stainless sector to manage demand variability

World Nickel demand by application versus Vale sales

58%

42%

Stainless Non-Stainless

33%

67%

43%

57%

Vale 2009 H1 sales2008 World nickel use Vale 2008 sales

17

Nickel demand poised to rebound with global economic recovery.

Vale has the best in-ground nickel assets with cost structure improvements underway to maximize value.

Flexibility in our nickel production, both in terms of product mix and volume, to meet the market needs.

Excellent growth potential to continue to provide nickel as one of the essential ingredients of people’s everyday lives far into the future.

In summary, Vale is positioned to remain a global nickel leader for many years to come

1

Pedro Gutemberg

Director of Iron Ore Marketing and R&D

Iron ore market outlook

Rio de Janeiro

September 2009

2

Disclaimer

“This presentation may include declarations about Vale's expectations

regarding future events or results. All declarations based upon future

expectations, rather than historical facts, are subject to various risks and

uncertainties. Vale cannot guarantee that such declarations will prove to be

correct. These risks and uncertainties include factors related to the following:

(a) the countries where Vale operates, mainly Brazil and Canada; (b) the global

economy; (c) capital markets; (d) the mining and metals businesses and their

dependence upon global industrial production, which is cyclical by nature; and

(e) the high degree of global competition in the markets in which Vale

operates. To obtain further information on factors that may give rise to results

different from those forecast by Vale, please consult the reports filed with the

Brazilian Comissão de Valores Mobiliários (CVM), the French Autorité des

Marchés Financiers (AMF), and with the U.S. Securities and Exchange

Commission (SEC), including Vale’s most recent Annual Report on Form 20F

and its reports on Form 6K.”

3

Agenda

Company overview

Steel market outlook


Final comments

4

Colocar aqui o divisor da seção, definido em 50pts.

Company Overview

5

Vale has the largest reserve base in the iron ore industry

¹ Proven and probable reserves, as of Dec, 2008.

6 mines

Northern System

7.2 Bi

13 mines 3.7 Bi

Southeastern System

10 mines 3.5 Bi

Southern System

Reserves (t)1

14.3 BiTOTAL VALE

96.5

116.4

80.5

2008Production (Mt)

293.4

6

Vale: products for the steel industry

Vale can deliver all the major inputs of the steel industry, with outstanding quality and reliability.

BF

Iron OreProducts

Coal

Coke plant

Coke

SM

SinterSinterFeed

BF Pellets

Lump

Crude steel

Pig iron

BOF Manganese & Mn Alloys

DR R

DRI

Crude steel

Nickel

DR Pellets

7


Steel market outlook

8

Crude steel production has significantly recovered in recent months

Source: WSA

Crude steel production by regionReasons for steel production

improvement:

Better than expected economic indicators

Government incentives:- In the US the program “cash for clunkers”

have boosted the auto sector;- European countries adopted some programs

to stimulate auto sector;- Chinese stimulus package for infrastructure

and construction sectors;- Brazil: IPI (Tax on industrialized products)

reduction and improvement of credit conditions

End of de-stocking process in several markets

40

50

60

70

80

90

100

110

120

130

Dec-07

Feb-08

Apr-08

Jun-0

8Aug

-08Oct-

08Dec

-08Feb

-09Apr

-09Ju

n-09

Aug-09

EU 27

Americas

China

Asia Ex-China

9

Chinese steel production

Chinese crude steel production

(Mt) (YoY)

Steel production is running at record levels, driven by domesticconsumption in the absence of large export volumes in 2009.

YTD: ´09 - 370Mt´08 - 351Mt

Source: WSA

303540455055606570

Jan

Feb Mar AprMay Ju

n Jul

AugSep OctNovDec

-5%

0%

5%

10%

15%

20%

25%2008 2009 Var YoY

10

020406080

100120140160

Sep-07

Nov-07

Jan-0

8Mar-

08May

-08Ju

l-08

Sep-08

Nov-08

Jan-0

9Mar-

09May

-09Ju

l-09

China Japan Europe USA Korea

020406080

100120140160

Sep-07

Nov-07

Jan-0

8Mar-

08May

-08Ju

l-08

Sep-08

Nov-08

Jan-0

9Mar-

09May

-09Ju

l-09

0510152025303540

Japan Europe USA Korea China

Auto Sales Construction

Sources: NBS, JAMA, ACEA, FED Sources: CEIC, METI, EUROSTAT, FED

Inde

x –S

ep /

07 =

100

Steel consumption

¹ Construction in China as a percentage of last period (YoY)

Inde

x –S

ep /

07 =

100

Stimulated by government incentives, end-users are showing signs of recovery

Aug-

09

¹(%YoY)

Aug-

09

11Source: NBS, Macquarie

Chinese fixed asset investment - % change yoy

0%5%

10%15%20%25%30%35%40%45%50%

Jan-2007 Jul-2007 Jan-2008 Jul-2008 Jan-2009

% c

hang

e yo

y

Total urbanReal estateInfrastructure

Chinese fixed asset investment (% YoY)

Chinese fixed asset investment is rising strongly because of massive credit expansion

Monetary/fiscal stimulus resulted in strong growth in construction FAI in China. Further expansion is now occurring in the property construction sector, which should provide further steam for steel consumption in coming years.

12

Chinese steel consumption

Chinese Apparent finished steel consumption

(Mt) (YoY)

The recovery has been strong, driven by massive government infrastructure spending, in a sustainable recovery process.

YTD: ´09 - 393Mt´08 - 325Mt

303540455055606570

Jan

Feb Mar AprMay Ju

n Jul

AugSep OctNovDec

0%5%10%15%20%25%30%35%40%45%50%

2008 2009 Var YoY

Source: WSA, Mysteel

13

Billet – EuropeanSource: Vale, SBB and Bloomberg

Steel priceHot rolled coilsBillet

Steel prices have recovered from bottom levels in recent months

400

450

500

550

600

650

700

Jan-09

Mar-09

May-09

Jul-0

9

Sep-09

US$

/ton

Europe USA

250

300

350

400

450

US$

/ton

Jan-09

Mar-09

May-09

Jul-09

Sep-09

14



15

European seaborne imports expected to rebound in 2H09

2030405060708090

100110

2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

Seaborne ImportsPig Iron ProductionReal steel consumption

Steel & iron ore de-stocking development in 2009

23456789

101112

2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09

Iron Ore Inventories (weeks)

Inde

x-b

ase

2Q08

= 1

00

Quarterly evolution IO inventory trend

forecast forecast

Positioned in the upstream of the supply chain, iron ore performs as a late cycle. In order to promote stock adjustments to new steel production levels, the swings of iron ore imports are much stronger than the variation of both steel consumption and pig iron production.

As a result, the severe importing contraction of 1H09 should be followed by relatively strong reaction in the 2H09, when some stock formation is expected.

Expected beginning of stock build up

Source: Eurofer, Eurostat and Vale estimates

16

Chinese iron ore imports have been very strong in 2009

In the first eight months of 2009 Chinese iron ore imports reached 405Mt, increasing 32% YoY, partially compensating the weaker demand in other regions.

Chinese iron ore imports

Source: Mysteel

20

30

40

50

60

Jan

Feb Mar AprMay Ju

n Jul

Aug

Sep OctNov

Dec

(Mt)

2007 2008 2009

17

Share of iron ore consumption in China

Share of imported ore is increasing in China

The share of imported ore in China has reached more than 70% of total consumption year to date in 2009.

2) Jan-Aug annualized figures

Source: Mysteel

1) Domestic concentrates adjusted to 65% Fe equivalent ore

0

100

200

300

400

500

600

700

2001 2002 2003 2004 2005 2006 2007 2008 2009*

(Mt)

30%

45%

60%

75%imported ore

domestic concentrates

share of imported ore

1

2

18

In spite of the increase in absolute terms, iron ore stocks in China remain relatively tight

According to August pig iron production, stock levels at the ports can only meet steel mill's demand for around 40 days.

Chinese iron ore stocks

Source: Mysteel

19

On the supply side:

large downward capacity adjustments were implemented by seaborne

suppliers in 1H09;

Lead times and monsoon period in India compromise quick pick up in

production volumes for the short term;

Additionally, higher domestic demand in regions such as Brazil, CIS and

USA may negatively affect seaborne ore availability.

On the demand side:

recovery of steel consumption is currently observed in several regions;

Additional volumes to meet restocking requirements in world ex-China;

Maintenance of solid demand in China.

A tight market situation is expected for 2H09

392

20

Iron ore pricesPremium for higher VIU of Vale´s iron ore has been recognized by the market, especially in periods when high productivity is required, such as today.

Source: Vale

Spot iron ore prices in China

50

75

100

125

150

175

200

Jun-0

8Ju

l-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

Jan-09

Feb-09

Mar-09

Apr-09

May-09

Jun-09

Jul-0

9Aug

-09Sep

-09

US$

/dm

t

SFCJ Spot CFR China

Platts 62% Index

21


Final comments

22

We continue to believe in the strong long term fundamentals for global iron ore demand;

We continue strongly committed to long term relationship with our clients;

We continue developing our projects;

We are implementing several logistic initiatives to reduce landed costs and increase our competitiveness in Asia:

- Investments in shipbuilding – creating a shuttle service to Asia.

- Further initiatives under analysis

Our long term market overview and strategy remains unchanged

23

Conclusion

Global economy is performing better than previously expected and steel production is accelerating in several regions, also helped by government stimulus packages.

Chinese steel consumption is on a sustainable growth path, and production should follow the trend accordingly.

Seaborne iron ore supply suffered large downward capacity adjustments in early 2009.

On the other hand, recovery in global demand for iron ore is broadening due to gradual acceleration of steel consumption combined with restocking requirements in several regions.

As a result, seaborne market is more balanced among the different demanding regions, leading to a tight situation in 2H09.

After the adjustments during worst part of the downturn, Vale is currently reaccelerating production to meet increasing seaborne demand in 2H09.

Vale´s strategy of long term commitment to its clients remains unchanged.

24

[email protected]

2

DEJM /DIOF / DIPFFerrous Minerals Planning and Development Department

Vale’s iron ore systems

Rio de JaneiroSeptember 2009

3

Outline

Current iron ore production structure

4

Vale’s iron ore systems at a glance

2718Pellets

293296Iron Ore

20082007Production (Mt)¹

¹ USGAAP

5

Reserves base

¹ Proven and probable reserves, as of December 2008.

VALE has the largest reserves base in the iron ore industry

6 mines

Northern System

7.2 Bi

13 mines 3.7 Bi

Southeastern System

10 mines 3.5 Bi

Southern System

Reserves (t)1

14.3 BiTOTAL VALE

Our proven reserves are capable of meeting the present demand for more than 40 years.

6

Vale’s iron ore logistics1 port and 3 maritime terminals for seagoing vessels: Tubarão, Ponta daMadeira, Guaíba and Itaguai.

2 world-class railroads – EFC and EFVM

GuaíbaItaguaí

7

Northern System

Current iron ore production structureIron ore production systems

96.591.7Iron Ore


¹ USGAAP

8

Serra Sul

Serra Norte

Serra Leste

The Northern System is composed by 3 major iron ore deposits, called Serra Norte, Serra Sul and Serra Leste;

Presently, mining operations are carried out only at Serra Norte.

Northern System

Iron OreFormation

Key:

9

Carajás mining complex

10

Iron Ore: production doubled from 48 (2000) to 97 Mtpy (2008).

1 Billion tons in Oct/07

Northern System - historical production

48 52 54 5969 72

8292 97

2000 2001 2002 2003 2004 2005 2006 2007 2008

million metric tons

11

General Information: . Length: 892 km (single track). 56 crossing yards. 62 bridges and overpasses. Train-type (2008):

4 locomotives and 330 cars. Net cargo: 33,000 t (SF) . Cars (total): 10,670 . Locomotives (total): 216. Cycle time: 90 h

CONTROL ROOM

Carajás railroad

12

Ships up to 155,000 dwtMaximum draft: 18mLoading rate: 8,000 t/h

PIER III

1 Vessel up to 250,000 dwt 2 Vessels up to 180,000 dwtDraft: 21 m

Northern System - Ponta da Madeira maritime terminal

Vessels up to 420,000 dwtDraft: 23 m

Vessels up to 155,000 dwtDraft: 18 m

PIER I PIER II

Ships up to 420,000 dwtMaximum draft: 23mLoading rate: 16,000 t/h

922008

MtShipping

13

Northern System - São Luis pelletizing plant

PRODUCTION CAPACITY: 7.0 Mtpy

Production (Mt) ¹

7.02008

7.12007

¹ USGAAP

14

MG

Current iron ore production structureIron ore production systems

Southeastern System:

116.4114.9Iron Ore

6.16.4Pelletizing Plants


Southern System:

80.589.3Iron Ore

4.24.1Pelletizing Plants


¹ USGAAP

15

Southern & Southeastern Systems

To Guaíba and Itaguaí maritime terminals

ATLANTICOCEAN

TubaraoPort

Guaíba &Itaguaí Ports

Minas Gerais

ES

RJ

Belo Horizonte

To Tubarao

Port

EFVM

FCA

MRS

Iron Ore Formation

BELOHORIZONTE

ITABIRA

OUROPRETO

BRUMADINHO

ITABIRITO

CONGONHAS

PIEDADECAPELA

HISTORICOPATRIMÔNIO

DA

N

BAÚ

FAZENDÃOALEGRIA

TIMBOPEBA

ÁGUA LIMPA

DOIS IRMÃOS

GONGO SOCO

CÓRREGO DO MEIO

FÁBRICA

FEIJÃO

CONCEIÇÃO

FÁBRICA NOVA

MINAS DO MEIO

ANDRADE

CAUÊ

CAPÃO XAVIER

MAR AZUL

ABÓBORAS

PICO

JANGADA

City or Town

Iron Ore Mine, Production Site or Vale’s Mining Rights

KEY

APOLO

TAMANDUÁCAP. DO MATO

VARGEM GRANDE

BRUCUTU

Iron ore quadrangle overview

Italic Font

Normal Font

16

Iron Ore: production increased from 71 (2000) to 116 Mtpy (2008).

71 70 73 76 8191

98

115 116

2000 2001 2002 2003 2004 2005 2006 2007 2008

million metric tons

Southeastern System - historical production

17

Itabira complex

ROMMinas do Meio

18

Minas Centrais complex

19

Mariana complex

20

Urucum mine

Southeastern System

22

North BerthVessels up to 200,000 dwtDraft = 17 m

PIER 2Vessels up to 365,000 dwtDraft = 20 m

PIER 1

South BerthVessels up to 170,000 dwtDraft = 15.5 m

Tubarão port

Southeastern System

94

2008Mt

Shipping

23

Southeastern System - Pelletizing at Tubarão complex

JV with Posco

Companhia Nipo-Brasileira de PelotizaçãoNIBRASCO

JV with JSM

JV with ArcelorMittal

JV with Ilva

100% ValeI & II

15.4²6.4Pellets


¹ USGAAP² Figures includes actual production, including production from four pellet plants we leased in 2008.

24

Iron Ore: production increased from 27 (2000) to 81 Mtpy (2008).

Southern System - historical production

27

46 4753

6170

8489

81

2000 2001 2002 2003 2004 2005 2006 2007 2008

25

Itabirito complex

26

Vargem Grande complex

ROM

27

Paraopeba complex

28

Vale`s pipeline of iron ore projectsiron ore and pellets

1 The project is still subject to approval by the Board of Directors.2 Start-up is subject to market conditions.

Projects Capacity Expected Total capexMtpy start-up US$ million

Iron ore Carajás - additional 10 Mtpy +10 1H10 290 Carajás 130 Mtpy +30 1H12 2,478 Carajás Serra Sul (mine S11D)¹ +90 1H13 11,297 Apolo¹ +24 1H13 2,509

Pellets Oman +9.0 2H10 1,356 Tubarão VIII +7.5 1H11² 636

29

Ferrous minerals product portfolio - iron ore and pellets

Non-agglomerated iron ore products:- Sinter Feed;

- Pellet Feed;

- Lump Ore.

Agglomerated iron ore products:- Pellets for blast furnaces;

- Pellets for direct reduction.

Product Specifications:- Chemical assays (such as Fe, SiO2, Al2O3, P, Mn and LOI);

- Moisture (% H2O);

- Size distribution (such as +31.5 mm; -6.3 mm; -0.15 mm; -0.045 mm);

- Specific parameters (such as tumbler indexes ISO 3271).

30

Iron ore and pellets portfolio Examples of products

Sinter Feed- SFCJ - Sinter Feed Carajás- SSFT - Standard Sinter Feed Tubarão- SSFG - Standard Sinter Feed Guaíba

Pellet Feed- PFCJ - Pellet Feed Carajás- PFIT - Pellet Feed Iron Tubarão- PFFT - Pellet Feed Fines Tubarão- PFFG - Pellet Feed Guaíba

Lump Ore- LOBG - Lump Ore Blast Furnace Guaíba- LOBT - Lump Ore Blast Furnace Tubarão

Pellets- AF08 - Blast Furnace Standard Pellet- AF70 - Carajás Blast Furnace Pellet- AF40 - Blast Furnace Pellet Vargem Grande

31

Distribution by port

Iron ore - current portfolioExamples of products

11452Total

1LOBGLump ore (1)

3PFFGPFFTPFCJ

1PFITPellet feed (4)

2SFOGSFOT

1SFXT

2SSFGSSFT

1SFCJ

Sinter feed (6)

Number ofproducts

Guaíba + ItaguaíTubarãoPonta da

MadeiraOre type(number)

32

Expected quality (2009-2012)

Iron ore - current portfolioExamples of products

33

[email protected]

vale nickel business

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