Vale Day, New York, 2016

Tuesday, November 29, 2016

Officers

Murilo Ferreira; CEO

Clovis Torres; EO, Human Resources, Sustainability, Compliance, General Counsel

Peter Poppinga; EO, Ferrous Minerals

Jennifer Maki; EO, Base Metals

Roger Downey; EO, Coal, Fertilizers

Luciano Siani Pires; CFO

Participants/Analyst

John Tuttle; New York Stock Exchange; Global Head of Listings

Jon Brandt; HSBC

Andreas Bokkenheuser; UBS

Alex Hacking; Citi

Tony Rizzuto; Cowen

Thiago Lofiego; Bradesco BBI

Marcos Assumpcao; Itau BBA

Leonardo Correa; BTG Pactual

Felipe Hirai; BoA Merrill Lynch

John Tumazos; John Tumazos Very Independent Research

Bruno Giardino; Santander

Mark Hassey: Oaktree Capital Management;

Alfonso Salazar; Scotiabank

Danny McConvey; Rossport Investments

Denny Parisien; Schroder's Investment Management

Presentation

John Tuttle: Good morning, everybody. I hate to break up the buzz in the room here, but

we want to stay on a tight schedule.

For those of you I haven't met, I'm John Tuttle. I'm Global Head of Listings here at the

New York Stock Exchange, and on behalf of our entire team, a very, very warm welcome

to the NYC and welcome to Vale Day.

This is one of our favorite annual traditions here, and you kicked it off the right way this

morning by ringing the opening bell. And I'm not sure whether they told you this when

you rang the bell. But on an average day, it's the most highly viewed news event in the

world. So it was perfectly executed, but it was also a great way to get the Vale brand in

front of an audience of global investors.

For those of you that have been to previous Vale Days, your surroundings may look a

little bit different. We've just completed a massive renovation of the New York Stock

Exchange. So this boardroom, if you were here a year ago, the archways were closed, the

ceiling had been dark for 96 years. And we've invested a lot in really converting this

building into the field office in Lower Manhattan for many of our great listed companies.

So we're proud to have you here.

We're very proud of our relationship with Vale, which dates back about 16 years. But

we're also particularly proud of our relationship with Brazil, which dates back nearly a

century to when we floated some bonds for the Brazilian government to help fund some

infrastructure projects across the country.

And since that time, we've been proud to report that we've been the listing venue of

choice for every Brazilian company that's chosen to list in the United States, and led by

Vale, of course. So now we're home to 27 companies from Brazil, approaching a $0.5

trillion worth of market capitalization.

So we're incredibly proud to welcome you here. We're thrilled to have you at Vale Day.

And I'll turn it over to you, Murilo. Thank you.

Murilo Ferreira: Good morning, everyone. Thanks for coming. And it is, indeed, a great

pleasure to be here again.

Yesterday we had a chance to announce that we will pay dividends in 2016. This is a

recognition of our confidence on the outcome of our ongoing initiatives and on the

broader market outlook. It's also a demonstration of our commitment to continue to pay

dividends to our shareholders.

The payment is this symbolic amount. It's a symbolic amount. It does not move us from

our goal of reducing the leverage in the short term.

Now let's start the presentation. We have our disclaimer.

2016 was an important year for Vale. And I am proud to say that we have reached

unprecedented levels of operational efficiency and productivity, which enable us to reach

a stronger competitive position.

The improvement in our competitive position comes from some key accomplishments.

First, Vale overcame the freeze of the environment license process, a first step to deliver

our projects according to plan.

I am proud to say that over 300 permits were granted since 2011. And these license were

key to timely project implementation.

Second, we delivered 18 main projects in the last five years, with the main ones

concluded on budget and on time. With new mines and upgraded logistic infrastructure,

we managed to increase production, life of mining, and product quality, and reduce

sustaining investment costs and expenses.

Third, we reduced our costs by over 30% and our expenses by over 80% since 2012,

despite increase in volume and inflationary pressures.

And last, but not least, we focused in our world-class assets and divest almost $13 billion

worth in non-core assets in the last six years.

Our dedication and focus on the environment license process was crucial to timely

conclude our project implementation. We're strengthening our environment teams and

fostered a multidisciplinary team efforts based on collaboration, extreme focus and

dedication, regular follow-up, and the utmost resilience to overcome the normal

challenges of the task at hand.

As a result of this process, we can see on the map, the main environment license granted

in each of our iron ore production system in the past six years. The permits granted as a

result of this process, such as N5 South, N4WS, and S11D, are important not only for our

operations, but today also for our future. Our high quality, long lasting deposits are the

base of our enduring competitive position.

Successful project implementation provide us with higher flexibility and extension of the

life of our mines while reducing cost and sustaining investments.

In 2012, for example, we delivered Salobo, the most competitive copper project in our

asset base.

In 2013, we delivered Carajas Plant II, or Additional 40, and Conceicao Itabiritos.

In 2014, we delivered Serra Leste, Vargem Grande Itabiritos, and a pelletizing plant

Tubarao VIII.

In 2015, we delivered three more projects, Conceicao Itabiritos II, Caue Itabiritos, and

Nacala Corridor.

And finally, this year we delivered Moatize II, and S11 mine and part of its logistics.

As you can see on the right-hand side of the slide, we are concluding our investment

program, having reduced our investments by 65% since 2012. We shall further reduce

our investments in the coming years.

New mines and infrastructure allowed Vale to increase product quality and improve price

realization. Vale is the leading provider of our high quality grade iron ore to the industry,

with an average grade of 63.8% in the third quarter of 2016.

For example, one of our products, Carajas 65%, represented about 40% of our production

in the first nine months of 2016, and is realizing over $10 on the top of the benchmark

IODEX 62%. This is an important outcome of our competitive position.

Along with project implementation, Vale's discipline led to the material reduction in costs

and expenses. Cost decreased over 30% in the last five years, despite the increase in

volumes and inflationary pressures. Expense dropped over 80% in the same period.

Later on this presentation, Peter, Jennifer, and Roger will give you more details on the

initiatives that led to do this substantial reduction.

After five years of ongoing cost discipline efforts, I can say that the cost management

became part of our culture, and that ongoing discipline are constantly seeking to do more

with less.

The fourth pillar supporting the Company's results is the optimization of its asset base.

We divested almost $13 billion worth of assets since 2011. And thus, have been able to

focus on our world-class assets.

The divestment program not only generated an important cash inflow during our

investment cycle, but also an opportunity for unlocking substantial value. For example,

the three Goldstream transaction, which amounted to over $3.5 billion, unlocked value

from our high quality Salobo operation.

This is an ongoing process, and we expect to announce the conclusion of other

transaction in the near term.

Although we celebrate the progress achieved so far, we are not satisfied. Our main focus

remain on strengthening our balance sheet to reach our net debt target of $15 to $17

billion, while maintaining our commitment to shareholders' return and dividends.

I am confident that more than ever, Vale is well positioned to generate great returns to

our shareholders.

Now I would like to hand over to my colleague, Clovis Torres, Executive Officer of

Human Resources, Sustainability, Compliance, and General Counsel. Thank you very

much.

Clovis Torres: Good morning, everybody. Hopefully you won't hear from me today

anything about new legal issues or problems. It's very good for me to be here to say

something more positive, especially sustainability is one of the Vale's pillars.

I've been handling part of the governance for a while, especially the anticorruption effort.

And I have to say that we're very happy that we're not involved in any of the ordeals that

are taking place in Brazil at the moment. We're about 150,000 employees in 30 different

countries.

And we're very happy and proud to say that we consider ourself a company of integrity.

And the sustainability's part of the KPIs of every operation of Vale. Each employee has

in its KPIs that will generate part of their remuneration, the KPI on sustainability. Each

one has agreed with the business areas, and they are followed up not only by our area, but

also Murilo and the Board of Directors of the Company.

In terms of communities, what we can say is that 70% of the workforce is now engaged

in the local communities. It's extremely important to understand that, because at Vale the

size of our projects when we come into certain communities, we may destroy it or

actually help them grow. So we've always chosen the second path. And [in a sense] the

main thing is labor, is avoid people coming from outside to add to the infrastructure

needs, hospital, safety, and the like. So we've been working on training the local

workforce, preparing suppliers locally as well, and to avoid people coming from outside

and create trouble in the cities.

As to the environment, we have a matrix that composes 25% of renewable energy. I'm

going to talk a little bit more about energy soon after.

We have our own hydroelectric plants and power plants and also eolic energy suppliers.

So this has been very important for us.

Also, we have 280,000 squared kilometers of natural areas preserved. Those of you who

have had the chance to visit Carajas noticed that we have a very, very strong presence

there, but not only in the mining, but also in the preservation of nature.

The only part of the natural forest of that area, the Amazon Forest, is the one preserved

by Vale. It's like an island in the midst of the forest, where it's all surrounded by cattle

ranchers. And you will see that they're all devastated except for that very, very big part

being preserved by Vale.

In terms of safety, I'm also going to show you a shot that explains what have been

happening since Murilo took over in 2011, and the very, very strong reduction in the

number of accidents at Vale.

And we have this target that is zero harm.

In terms of health and safety, you can see we have a total of 18% reduction in injury rate

and the risk management is 17% reduction in the number of incidents.

The environment, 85% recycling and reuse process, we've been using more and more the

dry processing to avoid use of water, and, consequently tailing dams. 19% reduction in

particulate emissions in pelletizing plants. There's been an effort in the state ofEspírito

Santo, very strong from our side working with the authorities to not only reduce

emissions, but to test new technologies to avoid adding to the already strong presence of

particulates in the environment.

As to social and environment investment, we have approximately this year $800 million,

not only in those that are mandatory according to the laws for the purpose of licensing,

but voluntary investment. And 8% purchases locally. This is still not strong, but it's part

of the works that procurement is doing, is to bring suppliers to the region where we are

working, not only during the construction phase, but afterwards.

As zero harm, you will see that we fell from a 3.3 in 2011 injuries frequency rate, it's per

million hours worked, to 1.8 this year in 2016. This has been a very, very strong change

in culture. But we set up the golden rules for health and safety and what we call is one of

our values that is to genuinely care, is that the colleagues helping each other, not only

using the channels of communications when they are forced to do something that they are

not willing to do, but also to help the colleagues on a daily basis to avoid accidents. This

has been very, very strong in our Companies, very, very successful.

Environmental licenses, you will see that has been a constant achievement of our

Company. This year, because we have reduced the number of projects, we don't have

many new licenses to ask. But the government has been responding very quickly.

Hopefully by the end of this year we're going to have all that we need for the LO, the

operational license for S11D.

And talking about S11D, this is really a new benchmark in terms of sustainability. We

use 93% less water than common practice in the industry. Not only is it drying process,

but also the reuse from that 7% that we use, 86% is reused in our activity.

Also, the truckless system reduces a lot with 37 kilometers of conveyor belts, reduces [a

lot] emission of gas. It's a very, very low carbon emission. And also, the saving of

energy, 18,000 megawatts of electricity saving per year in that project. So it's definitely a

benchmark in the industry.

And in terms of energy, we hold 55% of Alianca, which is a joint venture with Cemig.

And through that and through some of our own hydroelectric plants, we guarantee at least

51% of our electricity needs.

And through what we call self-production status, we have a roughly $60 discount to the

energy common practice in the market as a self producer.

So this is extremely important for our productivity, for our operations and, consequently,

to our cost. Though Alianca holds 700 electric plants, about 1.2 megawatts installed

capacity. And 100% of the energy is sold through long-term power purchase agreements.

And that guarantees to us an average of 652 megawatts of energy per year.

And last, but not least, it's priority agenda for us is to deal with the Samarco accident.

Renova was the foundation that was established after the settlement agreement with the

Brazilian authorities.

We've been working very hard to remediate the damages and also compensate the

communities. This is ongoing from day one of the accident, but formally with the

authorities, this started with the foundation, the three companies, Samarco, Vale, and

BHP, are working together to provide every source of funding necessary to the

foundation to reconstruct and remediate any and all damages from the accident.

There are some images of what they've been doing, not only infrastructure, but also from

the environmental standpoint, reforestation, bringing animals back, fishes at the river.

And put in, if not the same way, in a better way that the river was at that time.

So lots of work, lots of time has been given to that project, to that situation that

everybody heard of and everybody's aware of. But we're trying as much as possible to

remediate sooner than later. But it will stay some years to come with us, and we certainly

put that in the top of the priority for Vale.

Now I'm going to pass to Peter Poppinga, Executive Director for Ferrous Metals (sic -

Minerals, see slide 22 of 85)

Peter Poppinga: Morning, ladies and gentlemen. Let's talk about iron ore. We have

divided this presentation into three parts. The first is to show the achievements in 2016.

The second part you will see our initiatives going forward to increase the competitiveness

of Vale even more. And the last part we'll show you production guidance for the

midterm.

So, here are the main accomplishments. But before we go into that, I just wanted to say

that we are, in terms of health and safety in iron ore and Vale, we achieved a 20%

reduction on our lost time injury numbers. And we are very happy about that.

Now going into the chart, there is, of course, the project implementation progress. S11D

is ramping up, is commissioning, and will ramp up now from December this year,

onwards. It's going well. 85% on total physical progress.

But let's not forget about the other projects we have delivered the last years, which are the

Itabiritos project, for instance, where let's recall Conceicao I and II, Caue, and Vargem

Grande. All of them are now between 90% and 100% of the capacity, except Caue,

which recently only started up, and we are at 70% there, soon arriving 100%.

There's other gains of productivity. We are going to detail that during the presentation.

And significant margin improvements, I think you all know, you have followed that from

2014 to 2016, our cost, our C1 cost in Brazilian reais, the local currency, they have

decreased actually by more than 20%. And also ore cash breakeven is now 50% lower

today when compared to 2014. And price realization has improved as well to110%.

Competitive reference, we are now going to look into that as we go -- but before I would

like to show you some pictures. This is a picture right after the secondary crusher in

Carajas, in S11D. You see already some ore being commissioned or produced. It's 96%

complete. And as I said, we are going to start up in December 2016.

Then we see here the railway spur. There the progress is 59%, okay. But from the 570

kilometers, more than half is already duplicated. So it's a very good process as well.

And then here you can see the port with the new berth, Pier IV. We have loaded already

several shipments, not, of course, with S11D ore, but with Carajas ore. And including

one Valemax already was loaded as well, everything was okay, 93% of physical progress.

And we stick to the plan that in January 2017, the first S11D ore will be exported from

this terminal.

Onshore, we have other things going on. Seven out of six car dumpers already

operational, five out of six stackers, five out of six reclaimers as well operational. So

things are very well in the port.

Now let's talk then on Carajas. We have achieved a lower C1 cost there, comparing last

year to this year, 13% less in local currency. And we are using, as you can see, we are

using more and more the ores from the new mines, the N4W South and N5 South as well.

And deposit was 50%, now we are using two-thirds of the production come from these

ore bodies. This is because simply the cost is coming down because those already, they

have low strip ratio by nature and because now our mine fleet can develop at much better

productivity, because we can actually allocate the equipment where the optimum

allocation should be.

Here I would like to recap a concept that we have talked about in the recent quarterly

results. It's about global recovery. What is the global recovery? This is the total amount

of products you sell, the saleable products divided by the amount of waste you move and

the run of mine you move together as tailings, right.

So you want to maximize your total products and you want to minimize the waste you

move and you want to minimize the tailings you dispose.

So how would Vale decrease the strip ratio in a sustainable way? I'm stressing the point

sustainable way. This is very important.

So in part because the new mines mainly in the northern region, they have, by nature, a

lower strip ratio. In parts, as well mainly in the Southern and Southeastern System, it's

because we are simply speaking the projects be implemented. We are transforming waste

into ore. There's lots of compact hematites, compact itabirites which we couldn’t treat.

Now we have the grinding facilities, the crushing facilities, and the beneficiation so that

waste can actually become ore.

And this is what exactly the combined factor of that is reflected in this graph and, of

course, has a direct impact in our operational costs.

And what about the generation of tailings? That's the other pillar where we are going

more and more into dry processing, and then you generate more tailings as well. That's

going on.

We have come a long way. As you know, in 2014, our C1 cost was more than $20. I

think it was $21, $22. We are now at the level of $13. And in spite of the recent local

currency appreciation, as you can see, we are succeeding in keeping that level of $13.

You see on this chart the exchange rate by variation, $1, and compensated by global

recovery, fixed cost dilution, and productivity gains. And I think that's very important to

keep that level.

There's also on the price realization, a progress. Measured against the 62% Platts

reference grade, we evolve from 103% to 110%, when you compare the first half of 2015

to the first half of 2016. And should now we be able, after all the data are in, to compare

with the second half of 2016, we all know what happened to the premiums. We will

probably have a much higher price realization than this 110% we are seeing here.

So if we now translate that into and speak a little about competitiveness and measure

competitiveness in terms of cash, total cash generation, which means EBITDA per ton

minus sustaining per ton, you can see that Vale has definitely closed our competitiveness

gap we had in the past, in spite of the higher freight costs.

And you can see that we increased from $13 to $22, again the same comparison of the

same period.

And since we already reported in the third quarter our results in 2016, on top of this little

bullet there, 26.4 means Vale's results in the third quarter of 2016.

Now let's look into the future, and we will speak here about mainly key three initiatives.

The first one is the ramp-up of the S11D. It is a competitive advantage to have

something like S11D. But it's not only about the cost reduction of the C1, which S11D

will lead to, but it's also that S11D actually enables the other two lines you see there, the

optimization of global supply chain and the improvement of global recovery. Without

S11D, we wouldn't be able to do that. You will understand in a minute.

The optimization of global supply chain is a recognition from our side that our supply

chain isn't sufficiently integrated and optimized. There's two levers here. You have the

efficiency gains to do. It's a complex supply chain. We have still efficiency gains to

work on and, mainly what people often forget, we have price realization upsides here,

which we are not exploring enough. [Tell] you in a minute.

The other one is the improvement of global recovery, we have talked before. And we

believe in some years we will have those numbers. Remember, we were at 48%, 50%,

and in some years we were between 55% and 60% in total Vale.

There's one other item which we haven't put here, but it's worth to talk about, it's our

competitive advantage in pelletizing. We have that competitive advantage. We have a

huge big industrial platform in pelletizing. And now that we have the licenses and that

we have enough feed coming from the Itabiritos projects, right, the Itabiritos projects in

the Southeastern System, they produce a very pure high feed suitable for pelletizing, now

we can try to increase our pellet production progressively.

For that we are considering reopening some idle pellet plants we have. You know that

we have idle pellet plants in the Tubarao port complex, but also, in São Luis one of both

we will bring back probably.

And the other one is about feeding the existing pellet plants exactly with Carajas

material, because our bottlenecks is the grinding and Carajas material is easy to grind.

And that means that even if you have a little higher cost bringing Carajas into the

Tubarao pellet plants, you have an enormous effect in productivity and you boost your

production, including to Oman pellet plants.

So we are up to 25% of all the feed in the pelletizing plant will now come from Carajas in

some time.

Let's go through the presentation. The S11D, we already talked about it. You will see a

drop in our C1 cost when it comes from 10.8 to 7.7. This is a 29% reduction. And you

will also see a sustaining Capex reduction from 2.4 to 1.8. This is 25% reduction. This

comes simply because the truckless operation uses less sustaining than the truck-and-

shovel operation in Carajas.

Now, the second point is about the supply chain optimization. And here I'm talking about

the first part, which is the pure operational efficiency. There are several initiatives,

several examples. We have more of them. Why can we still increase our efficiency,

operational efficiency in the supply chain?

For instance, belt conveyors in the mines, let's start in the mines, we have already we are

installing the N4W South ore body. [If you remind], it's a very, very narrow ore body,

but very big. So it makes sense to place there some conveyor belts instead of using

trucks.

Same thing is happening in the Caue area. Minas do Meio will have a conveyor belt to

the Caue concentration plant. And the same thing we are studying for Agua Limpa and

also Brucutu.

Another one is the increase of productivity of port operations in Brazil. This is also very

logical. We are talking about this later. We are decreasing the number of final products

we offer to the market, and this will, of course, increase productivity at the port. And

also, the simple fact that we now have more and more Valemaxes at berthing, also

increases the productivity of the port.

Speaking about Valemax, this is another subject, the Valemax can help discharge directly

into China. Don't need a second port. Don't need a lightening anymore, so we can

increase productivity there.

And also, the second generation of Valemax is already being built. They are cheaper and

they have less fuel consumption. And we think there's a $2 to $3 lower freight rate here.

Then we have the integrated management of the freight portfolio and floating transfer

stations, the FTS in the Philippines. We have two of them. They cost a lot of money.

We don't need them anymore, going to scrap them.

And those are the examples why we are decreasing, why we still can have a high

efficiency in the supply chain.

The next one is about price realization. It's also supply chain, but now focused on price

realization. That's basically development of new distribution channels, talking about

market capillarity and customer base, more offshore blending, even selling in RMB.

That's all going on now.

On the right side you see the realization of full value in use of high grade ore. As you

know, our production increase will mostly come from the Northern System where the

Carajas ore is a richer ore and has advantages. It's high productivity for steel mills, less

usage of coking coal and less emissions during the steel making process.

We also are going to strengthen our ability to capture value gaps in the market through

improved management of blending optionalities. This will increase our price realization

as well.

And there is this opportunity to further develop the market opportunities for low alumina

ore. This is another competitive advantage we have and we are not exploring enough.

There's two micro trends going on in the industry. First is that the, as you know, the

Chinese concentrate was shrinking through the years, and these Chinese concentrates,

they happen to have low alumina.

And on the other hand, in Australia, as you know, the depletion going on there, the

Australian ore is getting -- there is less and less low alumina ore.

So both things together gives us the opportunity to develop this market for our low

alumina ore and get the right price for that.

This is a graph where it shows the evolution of some of our ore grades and others relative

to the 62% line. Imagine the 62% is the horizontal line where the zero is. This is the

62% reference. And on the top you'll have the evolution of Carajas premiums. The

second line, the blue one, is the Brazilian blend. It's actually a horizontal line on purpose.

And then you will see, depending on the market, on the lower side there's the 58%

grades. The upper one is the low alumina 58% and the lower one is the normal alumina

58% quality.

So you see the first quarter of 2016, there was no need for productivity and there was

even a silica deficit because China's concentrate coming out of the market. So no

premiums. Premiums depressed.

Second half 2016 until today, things changed dramatically, as you'll see. The curves got

asymmetrically away from each other. There was need for productivity. And you know,

we all know, the coking coal story contributing to that.

The Brazilian blend, however, is kept constant. We are having a $3, roughly $3 -- it's

very well established in the market. Everybody likes the Brazilian blend, and we get a $3

premium across the board.

And then that's the important thing I wanted to convey to you, this message. So by

keeping the Brazilian blend constant, that's our management. And by blending

sometimes more and by blending sometimes less, we actually can, Vale can increase its

overall margins.

All these premiums and discounts happens naturally in the marketplace. It's daily

tenders. It's very transparent. Nobody's imposing anything here to anybody. It's really a

normal market.

Next one, little bit on the pipeline on the blending, you can see on the left side that we

started blending in 2015, 18 million tons. 2016, we are now at 40 million tons, and 2017,

at 80 million tons is the forecast, and probably will stabilize and come to a certain level

which is a healthy level in 2018.

Now, what do we want actually? We want to decrease our stock level in overall Vale. At

the same time, we want to blend more. And at the same time, we want to move, the stock

should move downstream closer to the customers. And this, you can see on the right-

hand side, you can see that in 2015, only 10% were offshore, the stocks, and now in

2017, the focus is 35% offshore.

The global recovery comes again. It's another lever to decrease cost. And remember, we

had a 48%, 50%. Now we are forecasting 54% in 2020. This is linked to a dry

processing, overall dry processing of 60% at Vale. Remember today we are at 40% dry

processing, going to 60%. Global recovery goes to 55%, 54%. And once we get to 70%

in 2022, then global recovery will be probably between 55% and 60%.

And according to the own reports of our peers, their own reports, this is not going to

happen with our competitors. And they are showing much lower numbers in global

recovery.

Now here somehow this summarizes a little bit what I wanted to say of maximizing the

global recovery. It's a very simple graph showing the Fe content, how we were planning

to come back to higher levels of Fe and how we are now planning, what we are now

planning to do.

So by letting the quality stay at the current level and instead of trying to lift it up back to

previous levels, we will still have the best average quality in the market. That's number

one.

And by doing that, we will have lower OpEx, lower CapEx, and postpone a lot of our

replacement CapEx into the future. And all this equation together is a very positive NPV.

And we're happy to say that we have no major investment, no major replacement

investments to be done within the next 10 years.

And, of course, should the market desire some Carajas fines, some more Carajas fines

separately, of course, they can have it at any time by recognizing the right premium, of

course.

While this is a graph, it's a little confusing, but I wanted to say to you, forget about the

left side. The left side is about dry and wet processing, but the right side is that there's

two other things in our operational practice which is going to happen and which we are

changing. It's about where we are going to make the final products and how many

products we need. In the ports we have too many products. We are rationalizing into

fewer products.

And where we are going to make those products, some of them in the port, yes, but the

others, since we have to blend anyway offshore, we will, in some cases in some ports,

mainly Southern System, only make intermediate products at the port. This we de-

bottleneck the port and we are going to make the final products offshore.

Last, but not least, my favorite subject, depletion, I started to talk about depletion three,

four years ago, and I think we underestimate depletion. What I want to show you here is

that Vale, because of the recent investment we have done, the recent investments, but

also because of our global recovery approach, we are now very well positioned to face

depletion. In the next 10 years, we have no needs for major investment [so soon].

The left side and the right side, the left side compares the number of projects we had in

our strategic plans in 2014, 2015, and now. And you'll see it's only six. This is to refill

the pipeline of 450 million tons. Doesn't mean that we are going to use and go there, 450

million tons. But if we do so, we need six projects.

And on the right side, the six project translates into $5 billion from today until 2030.

And 65% of this $5 billion is not due before 2025. So it's far away. That's why I said in

the next 10 years, we will have very, very few replacement Capex to sustain our

operations.

Another slide about depletion, this we borrowed from JP Morgan. The left-hand side

where JP Morgan showed us that the majors, the four majors, in the next five years, they

need, if you add those numbers together, they need probably 170 million tons will need to

be replaced. And Vale has the lowest number here, of course.

But it makes also sense to look what is happening in China. And, of course, we don't

have precise numbers out of China. We have some market intelligence, but that's not

official numbers.

And so what we can show here is that in China you see a decreasing trend in iron ore

miners investing, investing less. And this is the line going down here, investment

growth. The Chinese iron ore miners are investing less and less into their mines. That

means troubles ahead either in terms of quantity or in terms of quality in the very near

term.

I will come to my production guidance, which is, again, one thing is to have the capacity

of the 450 million, the other thing is, of course, if you are going to use it. And what we

are signaling here is that we are working always with margin optimization, so this range

between 400 million and 450 million in the midterm will depend on the margin

optimization and is now definitely showing that the real production will be between those

numbers, between 400 million and 450 million tons.

The Northern System, now to the right side, the Northern System, as you know, we

recently -- no, not recently -- one year ago, we changed the ramp-up profile. Instead of

two years ramping up, we are now ramping it up in four years. This was better also to

avoid interference with existing operations. Doesn't change the Capex, though.

And if you now come back to the left side, in 2017, you see we are keeping our

production guidance of 360 million to 380 million.

And drawing your attention to 2018, since it's very unlikely that we increase our

production in the South and Southeastern System, right, it's not very difficult for you to

estimate where we are probably going to be in 2018, if you do the math.

But should markets surprise us on the upside, we can always accelerate and speed up our

S11D logistic system in order to produce more at S11D.

So finalizing my presentation, I would like to show you the main levers again in terms of

numbers, in terms of how much could they contribute to additional EBITDA per ton, cash

generation compared to the same price levels, bunker prices and our foreign exchange

rates.

So you see that the S11D is good for $1 to $1.5 increase in our EBITDA per ton, the

optimization of supply chain, $1 to $2, global recovery up to $1, and other initiatives

$0.5. So we are estimating that we can, with those initiatives, get another $3 to $5 on

additional EBITDA per ton.

That's what I wanted to talk to you and thank you very much for your attention. And I

would like to hand over now to Jennifer Maki for Base Metals. Thank you.

Jennifer Maki: Thank you, Peter. Hi, everyone. It's my pleasure to be here today to talk

about the performance for base metals for 2016, but also to talk about the promise and the

potential we see for 2017, and going forward.

As you can see on this slide, in the last four years, we've seen the successful ramp-up of

some of our projects, namely Salobo and Vale New Caledonia. We've also seen

productivity gains through the supply chain and significant reductions in our cost and

expenses which have improved our margin substantially.

We've managed to increase nickel production 21%, with Vale New Caledonia production

driving that, increasing 140%. Our copper production has increased 24%, with Salobo

production increasing by over 170%.

Our unit cash cost of nickel has come down by 31%, and copper by 58%.

In this slide, you can look, and even without numbers, the chart clearly tells a picture.

And once again, as I said, we've gone through a period of investment in the past in base

metals, and we're seeing the results of that with our ramp-up projects, both in nickel and

copper. And what's also nice to see, not only in terms of the increase in nickel being

driven by Vale New Caledonia, but our Long Harbour project is also starting to

contribute in a measured way.

But also, you know, it's not just about the ramp-ups. We've also seen our mature

operations deliver, whether it be Sudbury, PT Vale Indonesia, or Sossego in 2016, to help

us achieve these new limits that we've never reached before in our history.

And I think the other thing that's worth mentioning in terms of this, in the second half of

2016, we've achieved production records in over 50% of our operating sites.

When you look at our cost performance here, again, we're on a favorable decline

downwards. And I think, really, it's our focus that we've had on cost reductions in the

last few years, but also the successful ramp-up of our projects.

And when you look at what we've been able to achieve in 2016 specifically, I think

there's two key factors that drive that. Our Canadian operations have a much higher

degree of fixed cost than our other operations and they've delivered on their production,

which has drove down the unit costs in 2016.

As well, Vale New Caledonia has had a significant improvement in its cost performance -

and I think everyone would agree, much needed improvement in its cost performance - in

2016. But year to date, to October, it's reduced its cost by over $100 million. And 80%

of that cost reduction is fixed.

On the copper side, the improvement in terms of the unit costs here is really driven by the

ramp-up of Salobo. But I would say, whether you're a ramp-up site for us or you're a

mature operation, what we're really trying to do in base metals, evolve the culture to one

of continuous improvement being in our DNA. And we're still working on that

throughout our operations.

I think if there's one slide in terms of that tells the pictures of the last few years in base

metals, I think it's this one, where you can see our expenses have decreased 75% since

2013. And when you look beneath those numbers and that $1.4 billion in expenses in

2013, $800 million, or close to $800 million of that was pre-operating expenditures at our

ramp-ups.

And when you look for the comparable number in 2016, it's about $100 million. So

you've seen a huge reduction there, and that's plagued us for many years, and it's behind

us. It's $100 million in 2016, and decreasing as we go forward.

I think also, we've tackled our SG&A over the years and reduced that in half. And we've

also focused our R&D program and been able to curb the spending there.

When you look at 2017, our focus is really on increasing our competitiveness. And that's

through optimizing our North Atlantic flow sheet, continuing our de-risking plan in Vale

New Caledonia, and also working on the potential we have in PT Vale, and consolidating

the Salobo's cash generation.

And I'm going to start in Sudbury. And of all the slides I'm going to speak to today, I'm

going to spend the most time on this, because we have a lot of changes happening in

Sudbury in 2017.

And the driver of these changes and the optimization of the North Atlantic flow sheet is

what you've heard us refer to as our atmospheric emissions reduction, our clean AER

project.

When the project is complete at the end of 2018, we will have reduced our SO2

emissions in Sudbury by 85%, and will be capturing 95% of all the SO2 produced. That

iconic stack, for those of you who have been to Sudbury, will no longer be needed. And

we'll have more on that in the coming weeks. But we also will have achieved a 40%

reduction in greenhouse gases.

Today, our physical progress on this project is at 65%. And I think it's clear to say these

changes in 2017 are the most significant changes we've done in Sudbury in decades. And

the first place we're going to start is with the mill.

The mill will be reconfigured, and we're going to remove more copper from the flow

sheet earlier on in the process. Today, about 45% of Sudbury's copper con is sold to the

market. Total copper production is about 45% is copper con sold to the market. And in

2017, we'll increase that to 70%. And by 2018, we'll level off, about 80% of Sudbury

copper production being sold in the form of copper concentrate.

And why we're doing that is because we want to maximize the room for nickel

concentrate in the smelter. And we want to do that because we're moving to one furnace

operation from a two furnace operation we've had for many years, in September/October

of 2017.

And that furnace that will continue to operate, we will be rebuilding it from March to

June of next year, and we will be expanding its capacity. So most people would assume

if you're shifting from two furnaces to one, your production is going to go down by 50%.

But with that expanded capacity, our net reduction in the long term in terms of the

Sudbury production is about 25% to 30%.

Also, the other change that I think is worth mentioning in the nickel concentrate that will

process through the smelter, there is some copper. So we'll being selling copper matte to

the market as well in 2017. And by 2018, 12% of our copper production will be sold in

the form of copper matte to the market.

And we're no longer going to be producing anode in Sudbury.

So there are some key messages that I'd like you to take away, is 2017 is definitely a year

of transition in Sudbury. You will see reduced production from our Sudbury operation.

You will also see greater quarterly variability in our production, as we have the shutdown

for the furnace one for the rebuild from March to June. We also have a surface-wide

plant shutdown for preventative maintenance in the month of June, to do the required

work for the acid plant. And 2016 didn't have the shutdown because we have to do it

every 18 months.

And at the end of the day, this does result in a slight increase in the Sudbury unit cash

cost, driven by fewer production units, but as well as increased maintenance expenses

because of the shutdown.

However, as a result of the changes we're doing in 2017, by the time we reach 2018,

you'll see a net reduction in direct costs in the smelting area of over $40 million. And

there'll also be indirect cost savings associated with that.

Sudbury's not the only Canadian operation undergoing significant change in 2017.

Manitoba also begins its transition to a mine mill operation, which it'll be at by the end of

2018, in 2017, as we transition to one furnace effective January 2nd.

For both Sudbury and Manitoba, 2017 marks the end of a 10-year period where we

process significant amounts of Voisey's Bay concentrate through these operations. With

the moves to single furnaces, this will largely be offset as we redirect this concentrate to

our state-of-the-art refinery in Newfoundland, Long Harbour, which is ramping up right

now.

In 2017, we will have the final design flow sheet completely in operation, which means

we're turning on the cobalt and copper electrowinning circuits for the first time and all

impurity circuits will be operating. This will result in increased purity of the nickel

produced by Newfoundland and Labrador.

We're targeting production of 31,000 tons in 2017, almost double what we'll produce in

2016. And with that, you see the costs come down on a unit cost basis in terms of our

operations in Newfoundland and Labrador.

If we move to New Caledonia, we're going to continue our de-risking efforts there. But I

don't think I can continue without acknowledging once again the significant cost

reductions with the operations achieved in 2016. As I mentioned, year-to-date October

results are already showing in excess of $100 million in cost reductions.

Also, earlier this month, the French state announced a support package for Vale New

Caledonia, which included a euro 200 million dollar loan. This, of course, is welcome

relief. But as I tell the team in New Caledonia, it's only short-term relief for the year

ahead, given the challenging nickel price environment.

Ultimately, our work continues to build a long-term sustainable and competitive future

for our operations there. And in 2017, that effort will really focus on further improving

our operational performance by increasing production and further reduction in costs,

building on what we've already achieved.

In terms of our guidance in Vale New Caledonia for the next five years, you see a

continual ramp-up of production. And ultimately, you see that operation will be below

$10,000 a ton.

And I think it's important in this slide to point out that the production ramp-up is pretty

flat between 2017 and 2018. And that's on purpose. We made the decision not to invest

in an increased mine fleet. And I think if the nickel price is higher than we expect, and

we always have that optionality with us to go at that curve a little more steeper on the

ramp-up.

In terms of our operations in Indonesia, which I think everybody knows offer tremendous

potential for future growth. We're working on one of those opportunities right now and

that's the expansion of our existing mining and processing facilities in Sorowako, where

we're targeting to increase our production capacity by 8,000 tons by 2019. And this is

really being achieved through debottlenecking, continuous improvement, and

modernization of our furnaces.

We're applying lots of the technology we have at our newer furnaces in Onca Puma, to

our older furnaces in Indonesia to improve the production capacity.

We also continue to explore our opportunities in Pomalaa and Bahodopi. We're working

with strategic partners to explore the potential to exploit the saprolite ore bodies there.

Lastly, I think it's worth mentioning that by 2018, with the changes going on in Sudbury,

PT Vale will be the largest nickel producer within the base metals family.

Salobo has really established itself with a consistent pattern of continual increases in the

last two years. It's increased its EBITDA by 98%. And in my opinion, a little internal

competition is always good. And Salobo is challenging Sudbury for our highest

EBITDA-generating site, but it's not quite there yet.

It did reach nominal monthly capacity in the month of October, setting a new record at

17.2 kilotons. And in 2017, we're working to expand production a further 15%.

Also, as everybody knows, that Salobo offers great growth potential under the right

market conditions. We're completing the feasibilities for Salobo III, which represents a

brownfield expansion from 24 million tons per annum to 36 million tons per annum,

leveraging our knowledge with the ore body. We're working on those feasibility studies,

and we expect to be able to make an investment decision towards the end of 2018. Of

course, as I said, it'll depend on the market conditions as well.

Also in 2017, we're quite excited we're going to begin our first deep underground drills in

Salobo to begin to assess the potential for an underground mine there.

Looking forward at our guidance in terms of production for the next year, as you can see,

our nickel production is relatively stable as we increase our copper production in 2017,

and then maintain at that level going forward.

I think it's also important to note that in base metals we have many long-life operations in

addition to growth opportunities available under the right market conditions. And that's

really driven by the enviable reserve and resource position we have.

Brazil, Indonesia, New Caledonia, have the potential well to go beyond 25 years.

Pomalaa and Bahodopi, continued exploration at our operations in Canada. And we're

really, as I mentioned, just starting an underground drill program in Salobo.

Lastly, I think as this matrix illustrates, even moderate price increases in copper and

nickel can really deliver an amplified increase in our EBITDA generation. In base

metals, we believe we're doing the right things to position ourselves for a very bright

future, and our work isn't done.

We'll continue to focus relentlessly on safety first and the cost reductions, productivity,

and general performance improvements that you'd expect from any industry leader.

Thank you.

And now I'll turn it over to Roger.

Roger Downey: Morning, ladies and gentlemen. Coal and fertilizers now. If I can

summarize this year for coal with Vale, it's a year of fulfillment. In one word, it's a year

of fulfillment.

The delivery of the Nacala Corridor and our second washing plants within budget, within

schedule, as promised, has had not just a refreshing effect on the business, but also the

fulfillment of keeping a promise to markets in a very tough environment.

So in addition to those two very remarkable milestones, a lot more has gone on at our

operations in Moatize. I can't overstate the challenge it is to set up an operation of that

sort of magnitude in Africa, but we're there. We got a very large, probably one of the

largest, if not the largest open pit met coal mine in the world up and running.

We today have 2,000, just over 2,000 skilled employees, who we have been developing

over the past four or five years, since we began operations.

The results are beginning to show up, not just the dilution from the actual scale and the

ramp-up, obviously, that dwarfs any other initiative that we've got in a very large, bulk

operation. But we've seen a lot more productivity come out of the shop floor. So that's

very rewarding.

And, well, obviously, prices are helping a lot, but we haven't seen those effects in our

numbers yet. And still, we've seen another very remarkable milestone in October with

our first-ever positive EBITDA.

So there's the Nacala train, pushing our coal to the port in Nacala. Started up in the last

quarter of last year, and we've done 4.6 million tons on the Nacala railway to date and

have loaded 54 ships.

That's the second washing plant. In September, we reached a two million ton run rate.

We actually started it up in August, and went through very successful commissioning of

it between March and August. So today what we're seeing is a very stable washing plant,

having addressed some of the issues that we had learned already from the first washing

plant. So it's a very promising new phase in our mine.

Together with the washing plant, we opened up a new section in the mine, Section 4, with

different sort of material and a different product in the market. And we'll talk a little bit

about that in a minute.

But generally speaking, the Moatize products have been very, very well accepted in the

market. And we can go on to see that in a minute.

As I said, although the ramp-up does dwarf any of our initiatives, we have seen costs

come down from $110 to $80, and going. And you can see there the dramatic effect that

that's had on our EBITDA.

As we ramp up, and by next year we're planning to reach an intermediate level about of

about 13 million tons. And this is considering basically the ramp-up in Nacala, given that

we are reducing the use of the Sena-Beira rail, and then reaching the 18 million ton level

and then gradually growing to 20 through the end of 2021.

And what does that do to our costs? Naturally, it brings us down to where we ought to be

if we want to be a world-class, low-cost competitive high quality coal producer wherever

we are. And, of course, we have to adjust for the Nacala tariff. We have, as you all

know, a very important negotiation underway, delivering project finance for -- it's four

countries - Brazil, Japan, Mozambique, Malawi, involved in a project finance for a very

big operation in Mozambique. So that has been another very big challenge, which we

have been very successful with so far.

Then prices, and this is interesting. With the new array of products that we have from the

Moatize mine and a very stable market split, and you can see from that graph there on

your left, that you don't see China there, right. We don't want to be in China at this stage.

There's nothing wrong with China. But China produces 1.2 billion tons of coal. 400

million tons of that is coking coal.

So anything that happens in China, for instance, the recent restriction, the curfew on

production days and then the relaxation of that, just makes it swing, it's 30 million, 40

million tons either way at each one of those, at just a wave of a pen. So we are out of that

market, and we've got very good relationships with our customers around the world. And

some of those are on benchmark and some of those are on spot or index.

So that's really good, because what happens now is that as we grow, we're growing more

on the index side of pricing. And for 2017, especially with current market conditions, we

will probably be seeing a much higher realized coal price from our operations.

So more volume, better price realization, that's really going to help us a lot.

2016, I might add, we also went through a de-stocking of all of the thermal coal that we

couldn't ship over the past five years of production in Mozambique. As you will

remember, we were basically bottlenecked by the Sena-Beira line, where we could only

do about three million tons a year. So we prioritized all of the met coal, and the thermal

coal was left behind.

So this year our numbers are impacted by tremendous amount of thermal coal in the mix.

And next year that will be corrected. We're talking about a two-thirds met coal mix next

year.

And there we are. The effect of all of that is that we have a very promising outlook for

2017 in this business. We've got tailwind from prices, of course. We've got much better

costs. We've got much better volumes. So it's no surprise that -- and a better product

mix. So it's no surprise that we should see Moatize show up in the numbers with much

more relevance.

And again, our October numbers for this year already showed positive EBITDA, despite

prices, because we had a force majeure issue this year. We're still catching up on the

volumes. So all of the volumes shipped through October were still under the old prices.

So even with that, we already achieved a positive EBITDA. That's, again, a very

important milestone.

Now to fertilizers. Well, fertilizers is a little bit different. It's a challenge. The world,

and I'll summarize the whole year for us is a challenge. Last year we thought we'd seen

the worst in terms of prices.

Last year, MAP prices declined so much -- it's been declining year on year since 2011,

when we thought we had seen the bottom of the big deep valley that that's been digging.

But it didn't. This year prices have come down another 28%. That's 40%, nearly 45%

with some products, since 2012.

So it takes all the running we can do to stay in the same place. And we have a lot more

work to do ahead of that. And it met us at a difficult time as well. We'll go onto this a

little bit more. We have a project being developed and we have a lot of our mines

reaching near depletion. So it means that our mines are more expensive to run. So it's

really a lot of headwind in the fertilizer industry.

There again, you can see that prices have not behaved themselves. And in particular, I

want to point out to the ammonium nitrate prices, they were down 30%. Not that affects

us in a major way in terms of our numbers and our sales. Our major products are

phosphates. But that's created a big change in the behavior in the market.

Brazilian farmers had drought, they experienced drought and lost a lot of their production

in the 2015/2016 harvest, which meant that going into the 2016/2017 harvest, they were

very short of working capital.

In addition to that, credit restrictions from all the things that are going on in Brazil made

it worse for them to finance their use of fertilizers. So unable to really do what they had

to do in terms of fertilizing their farms, and with nitrogen, the nitrogenic products being

as cheap as they are right now in the market, most farmers, not just in Brazil, also in India

and other major producers, with the exception of the United States, they used more

nitrogenic products, which has a short-term effect on crops. It's very good. You get a

good reaction, but what you're really doing is depleting the soil. But when times are

tough, that's what farmers do.

So that's hit us very hard. And Brazil, as I said, was no exception. And when you look at

deliveries, even though deliveries this year are up, total fertilizer deliveries into Brazil are

up about just over 7%, nitrogenic products are up just over 11%.

So what happened is that phosphates have been rather stable. There's not been a lot of

growth there. So we lost a bit of volume there as well. So that has really impacted our

business indirectly, if you like.

Result is a shrinking of our EBITDA, mainly due to prices. We got some tailwind from

the exchange rate, but that didn't help us much. We lost all of that with our costs. As I

said, a lot of our mines are regionally staged where their intrinsic cost, the structural costs

of running those mines is more expensive. And, obviously, they will be replaced as of

this year. We'll go into that in a minute.

So we're left with a much more miserable EBITDA than we had expected and wanted.

So what do we need to do? Again, this is the challenge, right? I summarized the

fertilizer business this year as a challenge. And we need to replace the high cost

phosphate inputs that we have.

So we are developing the Patrocínio project. The Patrocínio project will replace Araxá

mainly and will deliver a fresh, low cost 1.3 million tons of concentrate. That will allow

the Araxá chemical plant, the SSP plant, to resume production above a million tons - and

of late, it's been running below a million tons a year - with a significant, almost 40%,

35%, 40% reduction in cost just there.

The Capex is on budget. And we will start up ROM production on the 20th of December

from Patrocínio, feeding into Araxá in the first quarter next year. So that's going well.

It's a low cost, ingenious, I would say, project where we basically used installations that

we already had and just opened up a new pit and railed it to the Araxá plant, reducing

Capex significantly.

Well, as I said, it takes all the running you can do to stay in the same place. So we're

going to have to continue to cut costs, some pretty serious renegotiations of our contracts.

As you all know, most of the commodities industry, most of the mining industry has lived

through pretty dynamic years in the past 15 years. So it's time, really, to check all of

those contracts to see whether the deflation in commodity prices we can actually bring

those contractors, those suppliers down to realistic levels for a different stage in the cycle.

So we are revisiting every single contract in the business.

We are also going through a severe restructuring of our business to reduce our fixed

costs, mainly.

With the delivery of the Patrocínio project, we will have more SSP. SSP is our highest

margin product and is really the project that is tailored for the soybean market. Brazil is

the largest producer of soybeans. So this is a product that is tailored for that. So we will

be able to increase our sales of SSP to the market, and, therefore, increase market share

with our product and our geographical advantage of being right inside the big farm called

Brazil.

In addition to that, we are working hard on streamlining our sales so we have more direct

sales to bigger farmers. There are thousands, something like 65,000 farmers in Brazil.

We don't want to service 65,000 farmers, it doesn't pay off.

So what we're doing is we're focusing through blenders who we have a relationship with

on the bigger guys where we have more volume and more stable sales.

So the challenge continues. We're looking forward to a better 2017, certainly with a

better cost as a benefit of the Patrocínio product coming on stream and becoming an

operation, and from all of the cost-cutting initiatives that we've got. Thank you very

much.

Murilo Ferreira: Before going to Luciano, Peter is so kind that he jump at page 46, and

for sure I would like to ask someone to see page 46. It's about the cash generation and

different scenarios, potentially reaching more than $18 billion dollars in accordance with

some price. Page 46.

Yes, precisely. Peter, then we can explain. I think that you left with myself.

Peter Poppinga: Yes, I --

Murilo Ferreira: You are so kind.

Peter Poppinga: I forgot the most important thing. Actually, depending on what price

you believe in, you see that our EBITDA can reach potentially $18 billion in 2020. It's

not so much affected by the exchange rate. It's also not so much affected by the bunker.

Each 100 in bunker changes $1 billion, plus/minus.

But it's a nice chart showing that once we have all these projects ramping up which is

going to happen in 2017, you should take, for instance, a price level of 60, that would be,

under today's exchange rates, we would have $14 billion EBITDA generation. Thank

you.

Murilo Ferreira: Just for clarification, the railway spur is 100% ready. And what they

have in place, in average, is regarding the duplication of the exist one.

Luciano, please?

Luciano Siani Pires: So big numbers, very good setting for talking about big ambitions.

And so my role here is to try to summarize to you what this all means for you as an

investor.

The stock market was very tough on us about two years, one year and a half ago. The

message we heard from you was that Vale was too risky to invest in a scenario in which

commodities were also risky in terms of their price outlook.

You said to us, you're not as competitive as your peers. You're spending more money on

Capex than your peers. And you have a more leveraged balance sheet in this

environment, which is also bad.

But that's what I call the conundrum of the triple leverage of every single dollar of

revenues, Vale received less at the end than its peers, because it was earning less,

spending more in Capex, and paying more on interest rates.

So what I'm going to show you is that we're about to finish the journey towards de-

risking the Company in those three dimensions. And hopefully the market will reward

Vale in this new shape and form after the journey's complete.

So in our view, we have closed and we will surpass our peers. But at least we've closed

the competitiveness gap in iron ore, in base metals. We turned around loss making

operations.

I'm going to show you that we also closed the gap in terms of the Capex requirements,

and we're going to discuss a little bit more the de-leverage.

So starting on competitiveness, which you heard a lot about today, just as a brief

summary, on the left-hand side, you see how iron ore stands compared to its peers. These

are the numbers of the first half of 2016. Absolute EBITDA generation was the greatest

in the industry.

Sometimes you still see comparison taking the full year, including the second half of

2015. That's true, second half of 2015, we were still not on par. But if you take the first

half and going forward, certainly, we have the best position in the iron ore industry.

Roger Downey, he was humble enough not to give you the number on the coal

operations, but I can give you. We posted $38 million EBITDA in the month of October

for Moatize. So ending a string of bad results.

And finally, on the right, an interesting comparison, if you look at base metals operations,

we actually generated more cash than three years ago, measured by EBITDA, in an

environment of nickel prices, which you see below, which is $5,500 less than it was three

years ago. So significant turnaround as well. We definitely closed the competitiveness

gap.

Now let's talk about Capex requirements a little bit. This is the chart you were waiting

for. So we're guiding for 2017, $4.5 billion in capital expenditures. Normalized Capex

over the longer run trends towards $3 billion, but still we have 2018, that we're expected

to spend a little bit more, not more than 2017, but at least we interrupt slightly our

downward trend.

Reason being, because as you see in the gray bars, the replacement Capex has a peak in

2018 and in 2019, of $0.9 billion and $1.2 billion, and that's pretty much associated with

investments we need to do, especially base metals, to keep production constant.

We need to do investments in Sudbury and we need also to start to explore and to prepare

for going underground in Newfoundland in Voisey's Bay.

So it's pretty much base metals going through the same phase where iron ore was a few

years ago, with the Itabirites projects. But once this is complete in 2018 and in 2019, we

again start to lower and go down with our replacement investments. And, as I mentioned,

normalized Capex would trend towards $3 billion.

This does not have any growth options. So when Jennifer talked, for example, about the

Salobo III opportunity, this is not in here, because this will only be here if it makes sense

from a market perspective.

And how does that compare us to our peers? So if you look into the past few years, so

Vale was basically spending proportionately to its size, even more than all of its peers,

and in absolute terms and in proportional terms or more.

But if you look at 2017 onwards, you see that some of our peers, because of the depletion

phenomena that Peter described now need to start upgrading and investing in replacement

of their capacity. So you see an increase in one of our peers in 2017, 2018, the other peer

also not being able to reduce, whereas, Vale, as I pointed out, is trending towards a

normalized Capex after 2018, of $3 billion.

So therefore, we hope you don't see us now as the guy who were spending more than the

others, but, rather, that we, longer term, will be the ones who spend the less.

Which leaves us with the discussion on the balance sheet, right? So let's start with free

cash flow, which is the driver of balance sheet de-leveraging. This chart we have

presented to you over the past two years, basically starts with an average of analysts

EBITDA. As we speak, they're being upgraded, those estimates right now.

And we basically show you our own, now Vale estimates of the deductions from

EBITDA to get to the free cash flow.

The two things I would like to point out is, first off, is the Capex has reduced compared

to 2016. But also, if you look at the hedge settlements, remember that 2016 was a very

tough year. We had to spend a lot of money settling former hedge operations, especially

in bunker oil. We don't have that anymore.

We still have, you might be wondering about the payments related to Sumic. This is a

put option on Vale New Caledonia that was exercised against Vale. So, therefore, that's

in there.

And as you can see, obviously, that does not include any divestitures nor the coal

operation nor the remaining vessels that need to be sold. So, therefore, as we stand, Vale

will have free cash flow, positive free cash flow next year.

And the perspective is, now going back to the big numbers that Peter mentioned, that we

shall have, at different iron ore prices, and here we're keeping nickel and copper constant

just for the sake of demonstrating.

The profile of cash flows, and, obviously, you will study those numbers and some of you

will compare those to your own models, the perspective is that cash flows will improve

substantially, even at a price of $50 per ton iron ore. That is on the back of lower Capex,

increased volumes and margins in iron ore from S11D and lower costs, increased

production in Salobo, lower costs because of the ramp-ups also at Long Harbour and the

end of the transition in Sudbury that you heard, lower costs in coal, increased volumes in

coal.

So everything is positioned for that increase in cash flows. And needless to say, if prices

surprise on the upside, then the numbers get really, really, really big.

So now moving on to debt. Just two final slides. And before I talk to you about what

we're going to do with our money, let me just give you a profile of where we stand in

terms of our debt. In the beginning of 2016, we were in a tough position. You

remember, we had drawn down the revolving credit facilities. So as you see, 2020

onwards, there was a $1.2 billion due amount in 2018, and another $1.8 billion exactly in

2020. Total debt was $31.2 billion, and we had also sort of a concentration in the first

few years.

For next year, I just want to say to you that we pretty much erased all our bank debt to be

repaid in 2017. The $1.3, which is actually, as we speak, $1.0, the $1.3 which you see

there, it's basically agencies, which doesn't make sense to repay beforehand. So it's the

BNDES. It's other ECAs, like EDC from Canada, and so on.

So now we're starting to work on moving backwards the 2018 debt. That's what we're

doing right now. And we have recovered the $5 billion of revolving credit facilities by

repaying the amounts that were drawn down in the beginning of the year. So much more

comfortable position.

So finally, to close, we closed the competitiveness gap. We closed the capital

expenditures gap. We're about to close, through de-leveraging, the balance sheet gap.

And how we're thinking about this, this is a table that shows you, for a number of iron ore

prices, making the hypothesis that those prices stay until 2017 only, and then they fall, or

they stay until 2018, and then they fall, or if they stay up until 2019.

This is a hypothesis. This shows us where will we be in terms of net debt? And that

should be compared to our target of reaching $15 billion to $17 billion of net debt soon.

So as you can see, in many of these scenarios, for example, if we have $60 just for 2017,

we reach the goal without the need of any further divestitures.

By the way, the only one divestiture which is considered in that chart is the coal deal.

But we have here $3 billion of cash proceeds from the coal transactions.

At $55, we get very close - so you see the green - to where we want to be. And so we

need marginal additional divestitures in 2017 alone.

If prices, on average, are as low as $50, we can still go organically to where we want to

be in two years. But if we want to do it just in one year, we would need $2 billion to $4

billion of divestitures, and so on.

The key message here is that we are in a much more comfortable position to be very

thoughtful about the divestitures we want to undertake in order to get to our goal, which

means that we will look for divestitures which are accretive in terms of valuations, which

deliver value, and we do not feel pressured because of a tough environment anymore for

prices.

Nevertheless, we shall not fool ourselves. Things change very quickly and volatility is

here. We will continue to pursue relentlessly that goal of $15 billion to $17 billion. And,

therefore, we will continue to develop our current initiatives.

Finally, about the dividend, Vale will deliver positive net profits for 2016. So we have,

by corporate law in Brazil, we have the duty to distribute at least 25% for shareholders.

The way it works is we would declare this minimum 25% when we publish the full-year

results. And we would have until the end of 2017 to pay those amounts.

So take this anticipation of $250 million of these results that are mandatory, as a gesture,

as a glimpse on the future, as a messaging that we want to convey to you of the

confidence that we have in the outlook for the Company and the outlook for our business.

That's why we're anticipating this. And we believe that even the mandatory dividends are

still going to be a fraction of the cash flows that we will generate going forward. And,

therefore, it will not jeopardize the distribution of dividends, the trajectory, and going

towards the $15 billion to $17 billion, which is the last leg that we believe is missing for

the equity story of Vale to be complete, hopefully, for the market to reward us with a

richer valuation. Thank you.

Murilo Ferreira: Thank you, Clovis, Peter, Jennifer, Roger, and Luciano.

Luciano Siani Pires: Murilo, I believe we are going to start serving lunch as well, and we

are going to be here available for you for Q&A while you enjoy your lunch.

Questions and Answers

Jon Brandt: Jon Brandt from HSBC. Thank you very much for the presentation. I'm

wondering if you can give us an update on the asset disposals. I know with the current

commodity environment you're being a bit more selective and not fire selling any assets.

But specifically on the timing, both the coal transaction and the fertilizer transaction, if

that's something we could look forward to potentially in the first quarter of 2017.

And then my second question relates to iron ore production. With higher commodity

prices, specifically iron ore, when prices were lower, you had talked a lot about your

margin optimization strategy.

Now that commodity prices are higher, is that something that you would re-look at? I

imagine at $80, everything is very profitable for you. So would you increase your

utilization rates and increase production to 100%, if you think the $80 is a sustainable

level. Thank you.

Murilo Ferreira: First of all, our divestment program is in place. We have already signed

our agreement with Mitsui. We needed to send a notification to them in order to get the

disbursement. I think that will be in the next few days. And we are forecasting to have

the disbursement of the project finance in March.

About the fertilizer, we continue work in the transaction. We know that some news by

the press doing an announcement, I think that it was not precisely. We needed to finalize

some discussion, but we continue very positive.

We must stress that is not just a divestment we needed to -- and we are considering to

open new window for us in the future and to have any cash, you need this transaction.

Then I believe that everything gets in place. We don't want this to change our strategy,

regardless at what's happen outside in terms of iron ore price and nickel price.

And, Peter, please?

Peter Poppinga: If I understand you well, you're asking if prices stay structurally

speaking above a certain level, say $80, not just volatility, just for one or two months, but

for good, right, or for longer time?

In that case, of course, we will try to keep our production levels high. We have roughly

when you take Southeastern System and the Southern System together, it's something

around 190 million tons.

And in parallel you have the ramp-up very clearly defined - I showed you the picture -

that we are going to reach 230 million in four years and not in one year. So those things

you have to match together and see what we can do.

Port capacity, we have enough. What to do with the feed and what gives us the best

margin, sometimes you could also, let's say curtail 10 million tons by achieving a higher

margin for the overall picture.

So I will, of course, say, yes, there is always the possibility that we increase production.

But I prefer to be cautious and say we want to optimize our margins. And it does not

necessarily mean that we are going to increase dramatically our production, especially

because you can't do that in the South, Southeastern System.

Murilo Ferreira: Thank you.

Andreas Bokkenheuser: Andreas with UBS. Thank you very much again for hosting

Vale Day. Always a good time of the year.

Peter, to your point, again going back to the ramp-up strategy at S11D, we're seeing a lot

of small producers now around the world ramping up. The latest data out of China that

we've seen differs, is a little bit different from yours. We're seeing 280 million tons

annualized, Chinese iron ore, up from about 150 million early in the year. We've got

other non-traditional smaller iron ore mine is ramping up. So all the supply is hitting the

market probably going into next year.

If you slow the ramp-up of S11D to support prices, there's a good chance that all of these

guys, these smaller producers stay in the market. Wouldn't it be better just to get S11D

up and running as quickly as possible, allowing you to reduce your cost? Iron ore gets

hit, yes, for a short period of time, but at least we get some of the smaller producers out

of the market.

Why not approach your production strategy from that angle rather than supporting iron

ore prices and smaller producers at this level? Thank you.

Peter Poppinga: We have not the same view. We are not after the strategy to eliminate

or to make life more difficult for junior companies. What we are is we are looking after

our own margins and own strategy.

Let me remind you that the four years ramp-up of S11D is not only about be careful with

the additional quantities and the seaborne, but it has also another rationale, which is to

not to interfere too much in our existing operations.

Now, on the market, I would like to add that everybody was afraid in 2016 what would

happen to the market. And on a net basis, 110 million tons of seaborne were added to the

market this year. And it was easily absorbed by the slightly higher demand like you can

see on the iron ore prices. So nothing happened.

Next year you are looking to what, less than half of that, 50 million tons net, 55 million

tons net coming into the market.

If you admit a slight improvement in demand and, let's say demand won't collapse from

one year to the other. Since all the supply cards are on the table, I doubt that we will

have a imbalanced market.

Actually, I think next year we will have a balanced market. Some Chinese concentrate

will still come out of the production. And then the rest will be balanced through the

increase in demand.

And may I please also point out that it's not only about cost. It's about the quality you

sell. And some companies have premiums, others have discounts actually. So it's not

only about what is your delivered cost into China.

You have to take into account when you look after the Indian swing producers or even

some Brazilian juniors, they have sometimes a discount in terms of pricing. So this must

be taken into account, too.

So, no, I think we are pursuing our path with a pertinent ramp-up of S11D. We are not so

much concerned about junior companies coming back. They will come back. They will

go. It will depend on the depletion, what they are going to do with the depletion. And so

we are going to pursue our strategy.

And I indicated to you clearly, production level will be between 400 million and 450

million, depending on the margins. And that will be our window of operations.

Murilo Ferreira: And for sure, Peter, what market is looking is for high grade material.

And you know that today they are paying $15, around $15 is the premium, which can

demonstrate that the level of anxiety, it's not regarding looking for below 60%. By

contrary, is looking for material with high grade that Vale can offer to the market.

Alex Hacking: Alex Hacking from Citi. Thank you for the presentations and

congratulations on all the success.

The first question is for Peter. Murilo, you just mentioned how the Carajas premiums

have increased substantially this year. And, Peter, you mentioned earlier the increased

blending capacity that you have for 2017.

How does the potential partnership with Fortescue fit into that framework? Because

since you announced that MOU, the Carajas premiums have gone way up, the 58%

discounts have widened out. Superficially, that deal looks less attractive to Vale and

more attractive to Fortescue than it did when it was announced.

So I'm curious if there's any update there.

And then a second question for Jennifer, if I may. What's the timeline or the decision-

making framework for approving Salobo III? Thank you.

Murilo Ferreira: If you'll allow me, I think that our discussion with FMG is very poor,

almost nothing.

Jennifer Maki: On Salobo III, in 2017 into early 2018, we're finishing the final feasibility

study. And we hope to be in a position to make a recommendation, obviously subject to

market conditions, by the end of 2018.

And I think it's important to remember for that project we've already pre-negotiated some

funding through the Goldstream agreement with Silver Wheaton.

Alex Hacking: Thank you.

Tony Rizzuto: Tony Rizzuto with Cowen. Thank you for the presentations, and, again,

congratulations on all the successes.

My question is on the metallurgical coal market and how it's been intertwined with iron

ore. And you talked a little bit about there's been a buildup of inventory in the port

warehouses and the port stocks in China. And it's a relatively high percentage of low

grade ore.

How impactful has the metallurgical coal market with prices going to stratospheric levels

been?

And if that were to begin to unwind as we're getting restart activity now, timing is

unclear, could there be further downward pressure than the market maybe is anticipating

because you've got a lot of lower grade iron ore that could become more favored as you

begin to take away some of the advantages of utilizing that higher grade iron ore. How

do you see that playing out?

Peter Poppinga: Of course, no doubt that the coal event, the coking coal pressure adds to

the advantage of Carajas premium.

But I think even if -- this will not last forever. This will come down to more reasonable

levels probably.

But even if this happens, I think it's not only about the Carajas premium on a standalone

basis. What we are doing is, since we have some low grade material, right, and we have

this Carajas and we have the blending opportunities, the trick is or the real question is

how much do you blend at a given market situation?

The market situation you are talking about, you would probably blend more so that you

absorb some more Carajas and that you be more on the average. In the market situation

we are in today, you sell more Carajas separately.

So that's the ability we have. The advantage of a complex value chain is that, that you

use advantage of that and you try to balance it to have more margin.

Tony Rizzuto: Just a follow-up, if I may. On the metallurgical coal side, what kind of

supply increases are you building into your base case scenario as you think about 2017?

Roger Downey: With coal prices where they were over the past five years, there's not a

lot of supply coming online. A lot of projects have been dropped. A lot of existing

mines have been decommissioned.

And so we do have supply increases, of course. Ours is probably the biggest. Moatize in

its own right is, between now and 2018, is another 15 million tons of coal in the market.

[That] is probably about another 10 million tons of met coal. It's pretty significant in a

300 million ton seaborne market.

So, yes, we are factoring in. And not only that, we're also factoring in, in our

assumptions, the fact that China can actually relax the curfew on the production,

domestic production. And that's another 40 million tons that can appear from just one

minute to the other.

Fact is, though, most Chinese producers are happier producing little bit less with the

curfew and making money than they were before. So the incentive for them to come up

and produce more and go back to where we were before is not huge. I would say that --

and we have already seen that. Time will tell. But fact is that the reaction to the

relaxation in China has demonstrated that we won't see supply kickback quite as quickly

as you might have anticipated.

Tony Rizzuto: But you do expect 40 million tons incremental in China?

Roger Downey: That could happen.

Tony Rizzuto: Pardon?

Roger Downey: It could --

Tony Rizzuto: It could happen.

Roger Downey: The 40 million tons could happen. It doesn't seem likely at this stage.

Tony Rizzuto: Okay. Thank you.

Thiago Lofiego: Thiago Lofiego from Bradesco BBI. Murilo, from an asset portfolio

point of view and not from an urgency point of view, would you be considering selling a

stake or going back to the stake sale story in the base metals business, considering the

fact that your profitability levels have increased substantially over the last year?

So would you be willing to look at that, again, not from an urgency point of view, but just

from an asset portfolio management point of view?

And the second question, maybe to Clovis, if you could give us an update on the Samarco

situation in terms of the licensing process, and also the whole situation with BHP, where

that is heading, that would be appreciated. Thank you.

Murilo Ferreira: What we can see in base metal is very interest, because people, they're

following LME. But what's happened in the premium with some material, it's extremely

impressive. Some of them in the range of $4,000.

What's the reason? Because we can't discuss about nickel pig iron, what's happened in

China with nickel pig iron, the source of material from Philippines, from Indonesia. But

we are talking differently.

As you know, we produce [inaudible] material. And we are extremely positive about the

future of EV. I think that the next five years we will see a big change in this market,

probably 10 years time, it will be so popular, like the mobile phone. And I think that

Vale has a unique position in order to supply material to the market. Then I don't think

that is the right time to go in the process, as we had some discussion in the past. Thank

you. Clovis?

Clovis Torres: Well, first of all, thank you very much, as I forgot to say when I was on

the stand.

Samarco licensing is ongoing. Last week we had a position in the papers from one of the

environmental agencies in Minas Gerais, that the process of being licensed was very

simple and shouldn't be a problem for them to go ahead.

We're still maintaining mid-next year as a target for Samarco to return to its operations.

As to the deal with BHP, it's part of it. We believe that the two companies are engaged in

finding a solution, the best possible solution. This last week we've agreed that we could

go ahead and, let's say put the license forward to the authorities with Vale's infrastructure,

regardless of us signing an agreement, because it's the only way that we feel is possible.

So we still maintain that December is the month for us to reach, come into an agreement

with BHP.

Marcos Assumpcao: Marcos Assumpcao from Itau BBA. Congratulations on the results

achieved on the cost side. First question to Peter on the pellet premium, if you could

comment a bit. What is your expectations for next year, premiums on the pellet side?

And the second question is, I was just taking a look at my last year's Vale Day's notes,

and we were seeing the scenario of an unfavorable demand and also quite loose

supply/demand situation for the iron ore.

So just looking backwards, what has change in the market? And if you believe that the

conditions that changed the market will prevail going forward?

Peter Poppinga: On the pellet premium, we cannot, of course, disclose our prices

individually. However, we are happy to say that we have concluded already all our

commercial negotiations for next year. Some of them are half year agreements, others

are for the full year agreement.

And that the pellet premium increased significantly and on average twelve dollars from

one year to the other.

So that is, of course, not a normal situation. That is because there's really pellet shortage

and we struck this deal with everybody to have a fair outcome.

We are also using some, let's say some idle pelletizing plants around the world, where we

feeding material and we are having discussing some toiling agreements in order to soften

the pressure in the market, okay.

So we're doing everything we can in order to have a normal situation again from a price

perspective. It's fair and everybody agreed very quickly. So that's on the pellets.

On the iron ore, you ask about the demand, right, what changed, right? So what you see

today, you see what changed was, of course, the demand, right. The demand is -- and

you see it's still healthy. China's exporting less steel. That means there's internal

demand. Steel prices are still going up. That means there's domestic demand, right.

And this is one side. This is the supply side, the -- the demand side. The supply side, I

used to say the cards are on the table. There is not much big tonnage coming, except us.

And we already conveyed you the message, hopefully, that we are going to look not on

prioritize volume. We are going to prioritize the margins, right.

So it comes down to until when this demand will hold. I think that we have no reasons to

believe that it will collapse.

Now, looking in the first half of next year, for instance, what happens normally? And

that shows you that already the first half is probably going to be a balanced situation.

The first quarter is normally affected in terms of seasonality. So the supply drops, right.

It's already -- we know that. It will come.

Second quarter, what happens? It's normally a peak in terms of consumption from the

steel mills after Chinese New Year and stuff like that.

So the first half shouldn't be a big question mark, a big problem. It's a balance situation

which we see. And it comes down to how people will, in the long term, it will come

down how people will handle depletion, right.

I remind you that half of the Chinese producers still in operation. They have a breakeven,

if you add sustaining, they have a breakeven of over $60. Of course, dynamics in China

are a little different. But that's one thing.

If you look to incentive price of, let's say of the major companies to bring in the decent

return of 10%, 12%, you're looking at $50 plus to have this incentive price.

If you go to Indian swing producers, they are in the same ballpark, because you need to

deduct the quality. They don't get -- it's not only about cost, like I said. You have to

increase their cost by deducting their discounts. So it's very difficult to see long-term

prices lower than $60, because of all what I said. That's the vision we have.

Leonardo Correa: Leonardo Correa from BTG Pactual. Thank you very much for the

very comprehensive presentation.

The question for Luciano, on the net debt target of $15 billion to $17 billion, the date that

that target was established, we were living a different reality of iron ore prices and also

base metals and coal.

Just wanted to get your sense on how you see Vale's balance sheet going forward in terms

of net debt to EBITDA. Under the spot scenario, I mean, Vale could be generating

between $15 billion and $20 billion EBITDA per year. If that net debt target is achieved,

we would be seeing Vale running on one times net debt to EBTIDA.

So just wanted to hear you regarding your future targets. Do you see Vale going forward

at around one times net debt to EBITDA or you think that from a capital structure

perspective is too low?

And my second question on dividends, which is a very important part of the story now.

Will these dividends be calibrated by a threshold of net debt to EBITDA? Again, will

they need to respect a certain limit? And will you be, let's say willing to deliver the $15

billion net debt targets to start paying out the dividends or can you start paying in 2017,

2018, big dividend payments even with a higher net debt level?

So those are the questions. Thank you.

Luciano Siani Pires: The logic behind $15 billion to $17 billion, it's because under

certain stress scenarios, that takes you to two, two and a half times net debt to EBITDA.

So if you put the worst case scenarios in terms of pricing for iron ore and nickel, some of

which are still around, the Company should generate cash, EBITDA, that would put Vale

in this range, two, two and a half times.

So, therefore, what we're saying is, we want to be, in the worst case scenario at two, two

and a half times.

If that takes you to one times EBITDA under certain scenarios, the outcome is that the

Company will have a lot of financial flexibility, right. We have learned that financial

flexibility is important in a cyclical industry.

So what to do with our financial flexibility is a question which is not on the table right

now? What is more important is to get to a point. The $15 billion to $17 billion is a hard

target in terms of absolute numbers because it speaks to the worst case scenarios of lower

prices.

In terms of dividend payments, the more you're confident about your ability to reach your

target levels of debt, the higher should be the payouts in terms of your free cash flows.

So if you're still in the beginning of your trajectory, you should pay smaller percentage of

your projected cash flows and leave more to de-leveraging.

If you're closer to your goal, you should pay a higher percentage and leave less to de-

leveraging. That's somehow the overall logic. But it will be debated case by case with

the shareholders, given the market, the prevailing market scenarios at each point in time.

Murilo Ferreira: Leonardo, one point that is very important about the net debt is we are

not just analyzed one times, two times EBITDA. We needed to see in absolute terms

what's happened with our debt. You know that we have some instability in Brazil, the

political side.

And I think sometime it's not so health to go to the international market and to have some

bonds, for instance. Then I think that we must be very prudent in terms of the leverage of

the company based in the ratio, but also the absolute terms. Thank you.

Felipe Hirai: Felipe Hirai from Bank of America Merrill Lynch. Thanks a lot for the

presentation. I guess my question is for Jennifer.

So, Jennifer, if you could just clarify a little bit more what is all these investments in

Sudbury. So if you could just, say give us some more numbers, what's the Capex?

What's going to be total impact in production? Because it seems that, okay, you might

have this gain of $40 million a year, but it seems, according to the numbers, it seems that

you're losing a little bit of production. And I know if the change in production of copper

in anodes to matte, if that has any impact on prices.

Just curious to hear more information, more numbers on this projects and what kind of

NPV or returns you're talking about. Thank you.

Jennifer Maki: Yes. So the AER project is a mandated project from the government,

both federal and provincial. So it's really to get into environmental compliance to

maintain the social license.

And so really, it was about finding the best way to execute it that preserved production at

the lowest cost.

And also, we had an opportunity to go to one furnace because we have the ramp-up of

Long Harbour, and Sudbury and Manitoba had been processing Voisey's Bay feed for the

past 10 years.

And so I think the kind of long-term reduction in Sudbury production is in the 25% to

30% range. Next year it's less than that, because we're running two furnaces for part of

the year. So next year's probably closer to 15%.

And in terms of capital, I would say we're 65% in terms of physical progress and in term

-- so we've been going at this project for the past really three years, and we'll finish at the

end of 2018. And the cost of the AER project is about $1 billion, and then there's a

couple hundred million for the single furnace as well in there. But some of that, largely, I

would say more than half of it has been spent.

And then, I think in terms of the $40 million in terms of cost reduction that I quoted is

essentially the impact in the smelter. But I said we're also looking at the indirect costs,

because ultimately we need to come back to a competitive position so that that's the goal

to regain where we started. We actually got some additional fixed cost in Sudbury over

the next years.

John Tumazos: John Tumazos. Thank you. My question is similar to the man from

Bank Pactual. The question's, what will you do with the money? Now, Peter's slide had

$18 billion of EBITDA at $60 a ton in 2020. But yesterday the price was higher.

And Jennifer's slide had $5. 6 billion of EBITDA in 2018, at $3.50 copper, but it was $4

in 2011, and $9 nickel, but it was $14 in 2007.

And then that doesn't include coal and fertilizers. And there's opportunities for you to

produce a little bit more in every one of your product lines. So I'm thinking of $23.6

billion, $18 billion plus $5.6 billion. But it could be $35 billion or it could be $47 billion.

So if all that money came in for one or two years in a row, would you do a

transformational acquisition like Inco again or Alcan again? Would you erase all your

debt and your $19 billion of non-debt liabilities? Or would you just pay out dividends

after giving yourself a little bonus that you deserve?

(Laughter)

John Tumazos: What will you do with all the money?

Murilo Ferreira: Thank you very much for your question. For sure, I think that one thing

that we have learned during this super cycle, that doing some investment and some

acquisition, a high price investment that can leave our friends in the investment bank very

happy, but not the whole industry.

I think that we must be extremely prudent. We don't believe that we can see a super

cycle shortedly. We are not forecasting the next 20 years in a super cycle. Then, in case

of not having a good project that can replace our existing operation or something that

could be considered world-class project, we believe that the best that we can do right

after reaching the level of $15 billion to $17 billion as net debt is to pay high dividends.

I could say that since 2000, Vale has paid more than $48 billion in dividends. During my

period as CEO, $28.4 billion. And you know that in the last two years it was not so

gorgeous.

But we prefer to pay dividends than to go in some acquisition or in some project that it's

not well analyzed or some ventures as we did in the past. Thank you for your question.

Bruno Giardino: Bruno Giardino from Santander. Thanks for the presentation. First

question, do you have an idea of how would be your cost delivery in China when the

S11D will be ready, when you read the $70 per ton in the C1 cost?

And the second question, with iron ore at $80 per ton, do you consider locking part of

this price in the futures market? Thank you.

Murilo Ferreira: For sure, Peter. We have an inspiration of $25, huh? Don't forget it.

Peter Poppinga: Yes, that is true, Murilo. Today we are at $30 delivered in china, $30-

something, $30. But, of course, as you know, this depends on bunker and exchange rate,

right.

So I prefer to answer your question not only on C1, because on C1 you saw S11D will

come and it will change. All the rest kept constant, it will change $1 to $1.5 on the total

Vale, right. So from $13 you'll go to $12.

Something only about C1, the major thing I want to try to convey to you today here, it's

about the supply chain, which isn't integrated enough yet on the efficiency and on the

price realization, and on the global recovery. This will give us the other, let's say $4,

which we need in order to get below $30, right.

What was the other question?

Bruno Giardino: About the future prices on iron ore.

Peter Poppinga: Future prices, I think what we are doing, sometimes we are hedging a

little bit on the bunker price. But on future price in terms of iron ore, we are not in this

game. So the moment Vale starts to play big games on future prices, I think it will

disturb the whole market.

Murilo Ferreira: We strongly believe that someone buying Vale shares wanted to take

the risk of iron ore, in base metals and coal, fertilizer.

Bruno Giardino: Thank you.

Luciano Siani: Just an observation. When Peter talks about $30, right, Peter, you're

including sustaining capital?

Peter Poppinga: Yes.

Luciano Siani: So that's very important.

Andreas Bokkenheuser, UBS: Sorry. Just one follow-up question on the production

strategy. I saw a headline earlier in the year that you were talking about the optionality of

potentially taking 20 million, 25 million tons of iron ore out of your production chain if

prices were to fall to a certain level.

I don't know whether this was just a headline or whether this was actually a comment that

you made. But if that is confirmed, do you have, obviously, again, it depends on cost. It

depends on the BRL, of course.

But do you have an iron ore price in mind where you start thinking about lowering

volumes out of the Southern and Southeastern Systems?

Peter Poppinga: Well, at today's prices, and even under when we recently tanked to $40,

we had not one single mine in Vale losing money, right.

On the 20 million to 25 million tons we took out of the market, because it already

happened long time ago, that included also to reduce purchased feed. But this happened

already.

But we replaced that by other alternatives. For instance, in Carajas, we increased

Carajas. So at the end of the day last year and this year's production will be roughly the

same. Went down in some mines in the South, went up in Carajas. It's the same

production. It's the margin optimization going on. It's not only about taking out tonnage,

tonnage, especially if I'm -- I repeat, there is not one single mine today when the price

was at $40, losing money.

So it's a constant exercise, which we are doing. And this year, the production will be

roughly the same like we had last year. Next year, we are going to be in this range, I

projected to you.

Alfonso Salazar: Alfonso Salazar from Scotiabank. At the beginning of the year, iron

ore was very attractively priced relative to ferrous scrap. But I don't think at $80 that's

the case anymore.

So how do you see the threat of using more ferrous scrap in China in the coming years?

How do you see that come?

Peter Poppinga: I think this will happen. But this will happen -- and China's not a

mature economy. There is not enough scrap around for this to influence the market. I

think this will happen, but we are looking 10 to 15 years into the future when this will

have a big influence.

Danny McConvey: Thank you for the presentation. Danny McConvey, Rossport

Investments. Question for Jennifer. With what's happening with nickel pig iron in

Indonesia, now it's being ramped up there, given your infrastructure and over time

expansion plans, why not get into that game?

If the cost structure is so much lower than what you're doing, especially on a capital

intensity, why not get into that game yourself or through a joint venture to produce nickel

pig iron in Indonesia?

Jennifer Maki: I think in Indonesia and particularly in Sorowako, where we have a

footprint with four furnaces and a full complex, it's easier to leverage the infrastructure

we have, like how we talked about expanding the furnace capacity to produce an

additional 9,000 tons by 2019. I think for Bahodopi and Pomalaa, we are studying

different alternatives with strategic partners to exploit those ore bodies, and I would say

that it's focused in ferronickel.

Murilo Ferreira: Last two questions, please.

Mark Hassey: Mark Hassey from Oaktree Capital. Could you talk about the conditions,

thinking longer term for iron ore, how do we get from 400 to 450? Could you talk about

the conditions that would take production from 400 to 450, maybe on margin? What do

you need to see to ramp that up?

Peter Poppinga: I couldn't hear you well. Are you asking how? What are the factors

between 400 and 450?

Unidentified Audience Member: Exactly. Yes.

Peter Poppinga: It's the margin. So we have always signaled that we have the capacity,

we will have the capacity of 450. That is roughly 35 to 40 in domestic market and the

rest is for export. So we have an export capacity of 410, 415.

We have a feed capacity and now comes the S11D and some licenses we got in the South

and Southeastern Systems to fill this pipeline. It has to make sense. We are not there --

the capacity's there. It doesn't mean that we are going to use it. We are going to be very

prudent. We are not going to pump volumes into the market when there is an imbalance.

On the other hand, we also look at our own pockets and it means we want to maximize

our margin.

I don't know how I can explain this in a more neutral and a more objective way. We have

the capacity. We aren't going to use it at all costs. 400 seems to be a very healthy lower

limit. And probably the reality will be in the beginning closer to the 400. In the future,

who knows, somewhere between 400 to 450, okay.

Denny Parisien: Denny Parisien from Schroder's Investment Management. I'm just

wondering, given where your bond yields and spreads are and where you expect to be in

terms of cash flow and de-leveraging, what plans do you have in terms of further liability

management?

And in your discussions with rating agencies, where do you see your, given your targets

and let's just assume that you hit your targets, where do you expect your credit ratings to

be a year from now or at the end of 2017, when you meet your targets? How are your

discussions going with the rating agencies?

Luciano Siani Pires: Okay. Before I go into the second question, the first question, I

quite didn't get it.

Denny Parisien: The first question was your plans for any additional liability

management on your bond curve.

Luciano Siani Pires: Okay. So on liability management, we have in recent years

shortened the duration of our debt because of costs. We felt that because the investment

program was going down and the Company would generate more cash, that there

wouldn't be the need to have such long duration for our debt.

Then there was distress in the markets, and, perhaps, we have shortened too much the

duration of our debt. So, therefore, I would say right now we need to lengthen a little bit

the duration. The focus will be naturally on the transactions which mature over the next

years. So 2018 is the focus right now.

So you shall see some liability management operations to refinance 2018 debt, and

lengthen it. And the exact instruments are going to be used will depend on opportunity.

And as you saw, we tapped the bull markets here in the US twice already this year. We

were also accessing other sources, the bank market, agencies, and so on.

In terms of the rating agencies, two of the three rating agencies, I would say they saw

through the cycle and they capped, although they changed outlooks here and there, they

kept the overall ratings, I would say, of Vale on par with the view of management.

There was one of the rating agencies that reacted more aggressively and on the back of

substantial reviews of pricing outlooks for commodities as a whole. So that was a

widespread review in the oil and gas and mining sectors.

So in that respect, we've already provided them feedback that we thought it was

precipitated, and the reality's showing that they may have moved too aggressively.

Obviously, for them to come back, the journey needs to be more of a, I would assume, an

internal debate with a much broader scope than Vale alone in itself.

But within that, while we still wait for this more overarching, let's say, review of the

prospects on this particular rating agency, we believe that the de-leveraging will provide

room for sequential upgrades in the rating, regardless of this more overall assessment on

the commodity space.

Murilo Ferreira: My final remarks. I think that it's very important to say that our strategy

has received full support from our Board, and we stay with the strategy. What we did in

Vale in terms of costs is not a cost reduction program. It was a cultural change.

The day before yesterday, we had a decision by the unions in Carajas regarding the

increase, the increase in the compensation.

As you know last year we gave zero. And this year, our proposal is to follow the

inflation. And the recognition in the speech by the president of the union, Vale was right

last year, because the scenario was not good. And Vale's right this year because being

prudent, we don't know about tomorrow. Then, in my view, I was so happy because,

which means it's a culture change.

In terms of projects, it's a discipline in capital allocation. They delivered all the projects

on time and below budget. Then we wanted to stay on the same page. We don't want to

see Vale as the largest mining company in the world, but bringing the best return to our

shareholders. Thank you very much.