Simandou Project - Vale.com

Roger Agnelli 

Chief Executive Officer 

The journey to 

sustainable 

value creation 

1 

October 18, 2010

Disclaimer 

“This presentation may include declarations about Vale's expectations 

regarding future events or results. All declarations based upon future 

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

uncertainties. Vale cannot guarantee that such declarations will prove to 

be correct. These risks and uncertainties include factors related to the 

following: (a) the countries where Vale operates, mainly Brazil and 

Canada; (b) the global economy; (c) capital markets; (d) the mining and 

metals businesses and their dependence upon global industrial 

production, which is cyclical by nature; and (e) the high degree of global 

competition in the markets in which Vale operates. To obtain further 

information on factors that may give rise to results different from those 

forecast by Vale, please consult the reports filed with the Brazilian 

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

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

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

reports on Form 6K.” 

2

3 

10 th Vale listing 

anniversary

VALEP started trading on the NYSE on 

Tuesday, June 20, 2000¹ 

40 

VALE P 

35 

30 

October 12, 

2010 

25 

US$ 

20 

15 

10 

5 

0 

June 2000 20, 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 

2000 

4 

¹ VALE – the ADR representative of our common shares - started trading on the NYSE on 

Wednesday, March 20, 2002

It has been one of the best investment options. 

Each US$ 100,000 invested in VALEP has 

grown into US$ 1.2 million in October 2010 

1,600 

1,400 

1,200 

1,000 

800 

600 

400 

VALE P 

MSCI metals & mining 

MSCI World 

October 12, 

2010 

200 

100 

0 

June 2000 20, 

2000 

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 

5

Agenda 

• A promising outlook 

• Growth and value creation 

• The quest for sustainability 

6

7 

A promising outlook

Emerging economies will continue to be the 

key engine of global growth, with positive 

implications for the demand of minerals, 

metals and fertilizers 

9 

8 

7 

6 

5 

4 

3 

2 

1 

0 

-1 

-2 

-3 

Convergence 

Real GDP growth 

% annual 

Developed Economies 

Emerging Economies 

Convergence 

-4 

1970 1975 1980 1985 1990 1995 2000 2005 2010E 2015E 

8 

Sources: Vale and IMF

Intensity of metals consumption in emerging 

economies is expected to remain high in view 

of urbanization, industrialization and the rising 

consumption of consumer durables 

35 

Steel consumption intensity 

metric tons / US$ million of real GDP 

90% 

Share of emerging economies in global 

consumption of metals 

30 

25 

20 

80% 

70% 

60% 

Iron Ore 

Nickel 

Copper 

15 

50% 

10 

5 

Emerging Economies 

Developed Economies 

40% 

30% 

0 

20% 

1990 

1992 

1994 

1996 

1998 

2000 

2002 

2004 

2006 

2008 

1997 

1999 

2001 

2003 

2005 

2007 

2009 

9 

Source: World Steel Association, WBMS, IMF and Vale

China’s urbanization rate in 2010 is equal to Brazil’s 

position in the mid 50’s and Korea in the early 70’s 

100 

Urbanization rate 

% 

60 

Urbanization rate 

% 

90 

80 

70 

60 

50 

40 

30 

Brazil 

Korea 

China 

India 

50 

40 

30 

20 

20 

10 

10 

China 

World 

0 

0 

1950 

1955 

1960 

1965 

1970 

1975 

1980 

1985 

1990 

1995 

2000 

2005 

2010 

2015 

2020 

1950 

1955 

1960 

1965 

1970 

1975 

1980 

1985 

1990 

1995 

2000 

2005 

2010 

2015 

2020 

10 

Source: UN Department of Economic and Social Affairs, “World Urbanization Prospects: the 2009 revision”.

In spite of the substantial expansion, there is 

still room for large flows of infrastructure 

spending in China 

2005 2009 2020F 

Expressways (km) 41,000 65,000 100,000 

Railways (km) 75,437 86,000 120,000 

Airports (number) 140 166 244 

11 

F = Target 

Sources: NBS, NDRC, CAAC and Ministry of Transport of China

India's ability to improve infrastructure is 

critical for the sustainability of its high pace 

of economic growth 

• Indian energy and logistics infrastructure is 

inadequate to meet its growth aspirations. 

• The Indian government intends to double 

infrastructure investment to US$ 1 trillion in 

2012-2017 from US$ 500 billion in 2007- 

2011. 

12

China’s car industry is already bigger than 

the US industry. However, the penetration is 

still low, indicating a huge growth potential 

Passenger cars per 1,000 people 

2002 

US 

Western Europe 

Japan 

428 

481 

464 

Korea 

205 

Russia 

Brazil 

Mexico 

World 

132 

120 

107 

95 

China 2008 

36 

13 

Sources: University of Sheffield, UK and CEIC

Geological and institutional factors will 

continue to constrain the supply response to 

price incentives contributing to lengthen the 

cycle 

• Grades are declining while stripping ratios are 

increasing. 

• World-class assets tend to be increasingly dependent on 

more complex regions. 

• Restrictions on environmental permits are a major cause 

of project delays. 

• Natural resources nationalism hampers mining 

investment. 

• Higher taxes are a threat to mining investment. 

14

15 

Growth and value creation

Our long-term growth strategy embodies a multilane 

road to value creation built on discipline in capital 

allocation and minimization of cost of capital 

Discipline in capital allocation 

Maximizing 

asset 

performance 

Existing assets 

New assets 

Shareholder 

Value 

Brownfield 

projects 

Portfolio 

management 

Mineral 

exploration 

Greenfield 

projects 

Acquisitions 

16

Confidence in long-term global fundamentals 

underlies the continuity of our strategy to 

deliver strong and steady growth and value 

• Focus on organic growth. 

• Massive investment in the development of 

world-class assets supported by the expansion 

of our infrastructure. 

• Enhancement of competitiveness in the Asian 

market. 

• Development of an asset base in Africa. 

17

Developing an exciting pipeline of world-class assets 

to exploit the opportunities stemming from rapid 

emerging economies growth 

Greenfield 

Onça 

Puma 

CSA¹ 

Tres Valles 

Bayovar 

Estreito 

Oman 

Karebbe 

Moatize 

Salobo 

Tubarão VIII 

Teluk Rubiah 

2010 2011 2012 

2013 2014 

ALPA² 

CSP² 

Rio Colorado 

Konkola North 

Long-Harbour 

Biofuel 

CSU² 

Apolo 

Serra Sul 

(S11D) 

Carajás 

Additional 20 Mtpy 

Reference 

US$ 1 billion 

Brownfield 

Totten 

¹ Total project capex. Vale has a stake of 26.87%. 

² Total project capex. Vale’s investment depends on its final stake in the project 

18 

Carajás 

Additional 30 Mtpy 

Conceição 

Itabiritos 

Vargem Grande 

Itabiritos 

Salobo II 

Iron ore & pellets 

Nickel 

Coal 

Copper 

Phosphates & Potash 

Logistics 

Energy 

Steel

Many growth options to feed the project 

pipeline in the future 

Paulo Afonso 

Simandou 

Cristalino 

118 

Alemão 

Salobo 

III 

Polo 

Regina 

Visconde 

Neuquén 

Carnalita 

Eagle 

Downs 

Ellensfield 

Corumbá 

Kalumines 

Evate 

Bayovar II 

Belvedere 

Malaysia 

Furnas 

Bayovar III 

Salitre 

Moatize II 

Iron ore 

Copper Phosphates Potash 

Coal 

19

18 large projects are coming on stream in 

2010 - 2012 

•Cash flow will start to be generated from the 

US$ 26 billion invested over time in these 18 projects. 

•The delivery of these projects lays the ground 

for building new growth platforms through the 

development of low-capex brownfield projects. 

20

Changing the game in the Asian market 

• Maximizing competitive advantages: boosting 

production of high-quality iron ore. 

• Minimizing competitive disadvantages: 

building a low-cost portfolio of maritime 

freight and distribution centers. 

21

Carajás and Simandou, the best iron ore 

growth platform in the world 

Carajás 


22

The focus on high-quality iron ore output 

• Lower operating costs and superior value-inuse 

recognized through price premia. 

• The use of Vale’s iron ores and pellets leads 

to higher productivity and reduction in fuel 

consumption and CO2 emission, addressing 

Chinese concerns. 

• Demand is less sensitive to recessions and 

tends to increase with rising needs for 

blending. 

23

The build up of a shipping fleet 

• Lower costs and mitigates freight price 

volatility for clients. 

• Portfolio composed of own vessels - 

capesizes and VLOCs - and long-term 

contracts. 

• VLOCs, an innovative idea launched by Vale, 

will promote a permanent cut in the costs of 

Atlantic-Pacific dry bulk shipping. 

24

The construction of Distribution Centers adds 

flexibility to our operations, strengthening 

competitiveness 

Low seaborne transit time, 

inventories synergy and blending 

flexibility are among the unique 

advantages of Vale’s DCs. 

Oman 

PDM 

Malaysia 

San Nicolas 

Guaíba 

& 

Itaguaí 

Tubarão 

25

Africa: the new mining frontier 

• “Easy” discoveries are gone. 

• The discovery of new world-class deposits is 

increasingly dependent on Africa. 

• Vale is taking steps to build a large African 

asset base. 

26

The build up of an efficient logistics 

infrastructure to anchor our African bulk 

materials assets 


Moatize 

27

28 

The quest for sustainability

Contributing to global sustainability 

• While the benefits of carbon-based energy use 

are current and highly focused, social costs 

are delayed and dispersed. 

• Vale is developing several initiatives to 

reconcile short and long term interests, 

becoming an agent of global sustainability. 

29

Vale has been developing and implementing 

several technological solutions in a quest for 

continuous improvement of mining 

• Dry iron ore processing 

• Truckless mine 

• Green vessels 

• Renewable energies 

- Biodiesel 

- Synthetic diesel 

30

Dry iron ore processing: saving water, an 

increasingly scarce resource 

Conventional wet process 

Vale’s dry ore process 

Run of mine 

Run of mine 

Water 

Lump 

Lump 

Sinter feed 

Sinter feed 

Tailings 

Pellet feed 

• Reduction of water and energy 

consumption. 

• Reduction of CO2 emissions. 

• No need for tailings dam. 

• Reduction of capex and opex 

31

The truckless operation at Serra Sul will mean 

a reduction in carbon emissions, higher safety 

and forest preservation 

Conventional mining 

Truckless transportation 

32

Green vessels 

• Increasing global focus on carbon 

emissions. 

• Our 400,000 dwt vessels emit 34% less 

pollution. 

Capesize 

170,000 dwt 

LOA 288m 

VLOC 

400,000 dwt 

LOA 360m 

33

Vale’s renewable source of energy - Biodiesel 

‣Vale’s solutions for reduction of GHG emissions and carbon sequestration 

Biodiesel 

Allows the use of blend B‐20 (20% pure 

biodiesel and 80% regular diesel) from 

2014 onwards. 

GHG emissions reduction 

Reduction of 12 millions tons of CO 2 

equivalent in 25 years. 

Income generation 

• Creation of over 6,000 direct jobs. 

• Recovery of degraded areas in the Amazon region. 

• 70,000 ha. of natural forest. 

• 60,000 ha. of palm trees. 

Benefits to about 2,000 families of 

small producers in the Amazon region. 

34

Controlling dust pollution: wind fences 

• Installation of wind fences at the port of 

Tubarão, Brazil, where we operate seven iron 

ore pellet plants. 

• The wind fences minimize the emissions of up 

to 120 km/hour. 

35

Protecting natural wealth 

• Vale protects 10,321 sq km of natural areas in 

South America, North America, Asia and 

Oceania. 

• These include regions in several forests: 

• Amazon rainforest 

• Boreal 

• Atlantic 

• New Caledonia 

• Wellacea 

36

Fundação Vale : one of the largest corporate 

foundations in the world 

• Capacity to fund social investment through its own 

endowment and fund raising with partners. 

• Capacity to execute projects. 

• Focus on infrastructure building, human and economic 

development, quality of local administration and 

management of mining impacts. 

• 2009 investment reached 0.75 % of Vale net revenues, 

the highest among global metals and oil companies. 

37

Vale, 

a global leader 

38

Tito Martins 

Executive Officer of Basic 

Materials Operations 

1 

October 18, 2010

Introduction 

• Our base metals business involves nickel, copper, 

aluminum and associated precious metals and 

PGM’s. 

• Transfer of interests in aluminum to Norsk Hydro is 

expected to be concluded before year-end. 

• Centred in Toronto, Canada 

2

A global network of world-class assets 

THOMPSON 

VOISEYS BAY 

SUDBURY 

PORT COLBORNE 

• 

LONG HARBOUR 

PARAGOMINAS 

CLYDACH 

ACTON 

KOREA NICKEL 

DALIAN 

 

 

 

MATSUZAKA 

TAIWAN NICKEL 

Principal mines & 

operations 

• Development 

properties 

Other metal 

refineries 

 

JV refineries 

• 

TRES VALLES 

SOSSEGO 

• 

ONÇA PUMA, SALOBO 

CRISTALINO, POLO, 

FURNAS, ALEMAO 

KALUMINES 

• 

• 

KONKOLA 

PTI 

VNC 

3

4 

Nickel

An overview 

• Two broad types of ore (laterite + sulphide) are used to produce nickel with 

many different processing options dependant on the ore 

– There is an increasing shift to laterite ores 

– Sulphides are typically at the lower end of the cash cost curve 

• Different end-products can target specific markets; stainless represents 60- 

65% of global nickel demand 

– FeNi, NPI, and some other low grade products target stainless steel; 

represents majority of industry growth 

• Unlike copper, nickel is mostly integrated. 3 rd party volumes used as ‘top-up’ 

– Sulphide process assets (dealing with 3 rd party trade) are generally 

controlled by the top 5 producers 

• Our growth projects will contribute to maintain Vale’s share in 20% of the 

global nickel market. 

5

A global set of world-class refineries with a 

diversified portfolio of high-quality products 

for all nickel applications 

Electro 

Tonimet 

Thompson 

Sudbury 

Voisey’s 

Bay 

Clydach 

KNC 

Dalian 

Matsusaka 

TNRC 

Carbonyl 

Onca 

Puma 

PTI 

Refinery 

Marketing or JV 

refinery 

FeNi 

Utility 

VNC 

Mines 

Development 

properties 

6

Vale has a strong platform to grow the nickel 

business – a balance of sulphide and laterite 

properties 

• Current 

Sudbury 

Voisey’s Bay 

Thompson 

Indonesia (PTI) 

• Growth 

Onça Puma 

Vale New Caledonia (VNC) 

7

Vale has world’s largest nickel reserves¹ 

million metric tons of contained nickel 

Vale 

7.9 

Norilsk Nickel 

6.4 

Jinchuan 

4.6 

Xstrata 

2.9 

BHP Billiton 

2.8 

Eramet 

2.6 

8 

¹ proven and probable reserves in 2009. 

Source: Companies’ reports and Brookhunt, 2009

Vale is one of the world’s leading nickel 

producers 

Share of world finished nickel production - 2008 

Other 

37.9% 


17.4% 

Norilsk 

20.6% 

Jinchuan 

7.6% 

Xstrata 

7.8% 

BHP 

8.7% 

Source: CRU Quarterly Q2 2009 

9

Nickel output from sulphides is generally the lowest 

on the cash cost curve 

2010 cash cost curves 

US$/lb 

Laterite – 

HPAL, 

Caron 

Laterite - FeNi 

Sulphides 

NPI EAF 

NPI BF 

Source: Brookhunt, 2010 Q2 

million lb 

10

The main goal of our nickel business 

11 

Ensure success of 

projects 

Complete and ramp-up of VNC, Onça Puma, 

Long Harbour, Karebbe 

=> Average gross fixed asset/throughput in ‘15 50% of ‘09 figure 

22 

Reduce sustaining 

capital 

Reduce the sustaining capital requirements of the 

Canadian operations to 3% of gross fixed assets 

33 

Improve cost 

efficiency 

Reduce the operating costs of the 

Canadian operations by 5% in ’15 over ‘09 

44 

Increase production 

Seek production improvements 

=> Increase production in Indonesia 

55 

Improve price 

realization 

Maximize premium and maintain consistency of sales 

11

Integration of the North Atlantic nickel flows 

2010 

Thompson 

mines 

Thompson 

mill 

Thompson 

smelter 

Thompson 

nickel refinery 

Cathode 

Rounds 

Ni Oxide 

Sinter 

Sudbury 

mines 

Clarabelle 

mill 

Copper Cliff 

smelter 

Matte 

processing 

Clydach nickel refinery 

Copper Cliff nickel refinery 

Pellets 

& 

Powders 

Port Colborne 

Cobalt 

Copper 

concentrate 

Acton 

PGMs 

Gold 

Silver 

Voisey’s Bay 

mine 

Voisey’s 

mill 

Copper 

anodes 

Copper 

concentrate 

12

VNC - New Caledonia 

• Design production of 60ktpa of 

nickel. 

• Ramping-up to full production 

has commenced. 

• Short-term strategy is to 

produce an intermediate 

product. 

13

Onça Puma - Brazil 

• Design production rate of 

58ktpa nickel as ferronickel. 

• Commissioning underway with 

first production in Q4 2010. 

• Continuing construction on line 

2 with commercial production 

in 2011. 

14

Long Harbour - Canada 

• Construction underway of 

nickel concentrate refinery in 

Newfoundland. 

• Design capacity of 50 ktpa 

nickel. 

• Start-up in 2013. 

15

16 

Copper

An overview 

• In the copper industry the most value adding segment is mining / 

concentration because: 

– The capex per ton in mining is only 50% higher than for smelting / 

refinery. 

– Mining/concentration gets 90% of LME prices (just 10% for smelting / 

refinery). 

• There is no major problem to sell clean concentrates to existing smelters. 

The industry is only 46% vertically integrated (in comparison to almost 90% 

in nickel). 

• Declining costs at existing operations and low grades of existing resources 

of non developed projects demand high copper prices in the long term. 

• In addition, TC/RCs are expected to remain low, given the deficit in mine 

supply. 

• Therefore, smelters must specialize in treating concentrates with impurities 

in order to compensate for these very low TC/RCs. 

17

Developing our copper business 

• Executing a pipeline of projects that will take 

advantage of potential copper deficits in the 

next 5 years. 

• Acquisitions may be an option to ensure scale 

and flexibility. 

18

Tres Valles - Chile 

• First international greenfield 

copper project to be executed by 

Vale. 

• First experience of downstream 

and first cathode industrial scale 

production. 

• The project is nearing completion 

with commissioning in Q4 2010. 

• It has an expected lifetime of 11 

years, with a production capacity 

of 18.5 ktpa of copper cathodes. 

19

Salobo - Brazil 

• Phase 1 of the Salobo project is 

currently under construction. 

• The start-up for the Phase 1 is 

scheduled for Q3 2011with a 

design production rate of 100 ktpa 

copper in concentrate. 

• Phase 2 of Salobo will double 

copper and gold production and is 

expected to be in production from 

2013. 

• A Phase 3 is being considered. 

20

Konkola North - Zambia 

• Konkola North, located at the northwestern 

extremity of the Zambian 

portion of the Copperbelt. 

• It was discovered in 1924 and mined 

until 1959. 

• Konkola North will be Vale’s first 

operation in the Copperbelt and is a 

JV with African Rainbow Minerals 

(ARM). 

• All licenses and permits have already 

been granted. 

• Design production is 45 ktpa of copper 

in concentrate. 

• Start-up is expected in 2013. 

21

Main projects by horizon and estimated 

production capacity 

Horizon 3 

Horizon 1 

Horizon 2 

000’ metric tons 

• Tres Valles 18 

• Salobo I 100 

• Salobo II 100 

• Cristalino 100 

• Konkola North 100 

• 118 Oxide 36 

• Polo 100 

• Salobo III 80 

• Alemão 80 

• Kalumines 36 

• Visconde 90 

• 118 Sulphide 36 

• Furnas 100 

• Paulo Afonso 160 

2010-2012 2012-2016 

2016 onwards 

22

Eduardo Ledsham 

Executive Officer of 

Exploration, Energy and Projects 

1 

October 18, 2010


• Project overview 

• Project details 

• Short and medium term action plan 

2

3 

Vale will unlock the development of 

Simandou Project. 

Last high grade iron ore similar to Carajas

Opportunity for Vale 

Vale will consolidate its position as main 

premium iron ore supplier in the seaborne 

market. 

Vale’s technologies and experience in the 

implementation of large iron ore projects 

will guarantee success of the project. 

• The current expansion in Carajas will provide 

the engineering to support Simandou 

• The short distance between Brazil and 

Guinea/Liberia allows continuous training for 

different teams 

4

5 

Simandou project details

Simandou Project 

Blocks 1 & 2 - highlights 

Extension: 

• 40km 

Average height: 

• 600m 

Hematite resources: 

• 2 billion metric tons @ 66% Fe (potential) 


• 6 billion metric tons @ 45% Fe (potential) 

BSGR drilling campaign 

• Drillholes : 38 

• Metters drilled: 6,677m 

• Average depth: 175m 

• Access constructed: 70km 

• Drilling platforms: 9.5km 2 

6


Blocks 1 & 2 - highlights 

2011 feasibility study drilling 

campaign (Hematite focus): 


• Metters to be drilled: 115,400m 


• Access to be constructed: 217km 

• Drilling platforms: 252.3km2 

7


Blocks 1 & 2 - geology 

8

9 


Blocks 1 & 2 - geology



10



11


Blocks 1 & 2 – open pit mine 

12


Blocks 1 & 2 – dry process 

13


Zogota highlights 

Extension: 

• 10km 

Average height: 

• 500m 


• 220Mt @ 62% Fe (potential) 


• 530Mt @ 45% Fe (potential) 

Drilling campaign 


• Metters drilled: 12,334m 


• Access constructed: 39km 


14


Zogota highlights 

2011 drilling campaign: 


• Metters to be drilled: 28,000m 


• Access to be constructed: 56km 


15

16 

Zogota project 

Process plant project


Beneficiation flowsheet 

17


Master plan : hematite final pit and future expansion 

18


Liberian logistics corridor 

19


Transguinea railway: rehabilitation in progress 

20


Hematite estimated production 

21


Short and medium term action plan 

Action plan – finished 

Project team organization 

Infrastructure Development Agreement (IDA) Liberia 

Construction companies bid process for the emergencial works 

Drilling companies bid, sampling preparation laboratory bid, sampling assay solution 

Drilling camp construction 

Basic engineering for Zogota process plant 

Action plan – in progress 

• 330Km (50% of the total extension) refurbishment of Transguinean railway, for general cargo 

and passengers 

• Aerial survey 

• Environmental studies and licenses 

• Definition of the VBG new port location 

• Acquisition of the process plant main equipments 

• Alternative sources of energy for the Guinean and Liberian operations 

22 

• Basic engineering for railway

23 

Simandou: the largest integrated iron ore mine 

and infrastructure project ever developed in Africa

Mário Barbosa 

Executive Officer of Fertilizers 

1 

October 18, 2010

2 

Fertilizers in Vale 

Industry perception, perspectives, strategy and initiatives

Fundamentals are strong 

Fertilizer demand has been boosted by the required increase in 

agriculture yields to support continued growth of food production 

• Population growth 

• Increasing per capita income and changing diets 

• Limited Agricultural Resources 

- Lower per capita arable land 

- Unbalanced soil conditions 

- Limited water availability 

• Climate Changes 

3


Soil conditions and available land drive fertilizer´s demand 

Soil Resilience 

Soil Performance 

4 

Source: IFA


Agricultural land, world grain productivity and fertilizer consumption 

• Fertilizer demand is driven by 

200 

4000 

two main factors. 

- Increasing demand for food 

as a result of population and 

high per capita income 

growth. 

- Limitation of arable, goodquality 

land. 

• Increase in grain production 

depends heavily on higher 

agricultural productivity, what 

Fertilizer Consumption (Mt) 

150 

100 

50 

Harvested Area 

Fertilizer Consumption 

Grain Productivity 

3000 

2000 

1000 

Harvested Area (Mha) and Productivity(kg/ha) 

leads to higher dosage of 

fertilizer. 

0 

61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06 09 

0 

5 

Source: IFA


Pace of global demand growth is expected to accelerate in this 

decade 

• Global fertilizer consumption is 

expected to reach ~ 200 Mt by the 

end of this decade. 

- Global population is estimated to reach 

7.7 billion, 1.1% CAGR 

- Most refers to urban population, which 

has higher dietary standards . 

• That implies an average 3% CAGR 

for the growth of fertilizers demand 

the following years. 

• Emerging countries will lead this 

growth and Brazil´s rate is expected 

to keep is 6% aa pace. 

Fertilizer consumption, Mt 

200 

160 

120 

80 

40 

0 

K2O 

P2O5 

N 

3 % p.y. 

61 73 83 89 92 95 98 '01 '04 '07 10 13 16 19 

6 

Source: IFA


Fertilizer consumption has increased significantly specially in 

emerging countries. Brazil presented the highest growth rate among 

them in the last two decades 

Fertilizer consumption, Mt Fertilizer consumption, index 1990=100 

CAGR 

90 00 05 06 08 % 

300 

China 27 34 44 46 48 3% 

India 13 17 20 22 22 3% 

USA 18 19 19 19 19 0% 

250 

200 

6% p.y. 

Brazilian Market 

Brazil 3 7 8 9 9 6% 

150 

World Market 

World 137 137 153 159 160 1% 

Source: IFA /ANDA 

100 

50 

90 92 94 96 98 '00 '02 '04 '06 '08 

7


China, India, the US, EU and Brazil represent more than 70% 

of the total demand for fertilizers 

Nitrogen consumption 

kt of N 

35000 

Phosphate consumption 

15000 

Potash consumption 

kt of K 2 O 

9000 

28000 

21000 

14000 

7000 

0 

kt of P 2 O 5 

0 

12000 

7500 

9000 

6000 

4500 

6000 

3000 

3000 

1500 

0 

China 

India 

EUA 

UE 

Brasil 

Outros 

China 

India 

EUA 

Brasil 

UE 

Outros 

China 

EUA 

Brasil 

UE 

India 

Outros 

8 Source: IFA


China is the main producer of nitrogen (ammonia) and phosphate 

(phosphate rock), but its production is mainly consumed internally 

32% 

Ammonia production 

153 Mt World in 2008 

36% 

Phos rock production 


18% 

14% 

9% 8% 

6% 1% 

6% 4% 

China Russia India US Brazil 

China US Morocco Russia Brazil 

33% 

KCl production 


Sulphur production 


19% 

15% 

11% 

17% 

15% 

13% 

2% 

6% 

0% 

Canada Russia Belarus Germany Brazil 

US Canada Russia S. Arabia Brazil 

9 

Source: IFA

Global trading of fertilizer 

Origin 

Western Canada 

Origin 

Eastern Europe 

Destination/Origin 

US/Mexico 

Origin 

Morocco 

Origin 

Arab Gulf 

Destination 

India 

Origin 

China ** 

Potash 

Phosphate 

Dry Nitrogen 

UAN (liquid Nitrogen) 

Destination 

Brazil 

Destination 

Argentina 

Destination 

Southeast Asia 

* US exports only P. Us is a net importer of N and K. Mexico is a net importer of NPK 

** China is the largest producer and consumer of fertilizer. China is the largest producer and a significant exporter of urea. 

10 

Source: IFA 

10


Raw material prices (excluding ammonia) are expected to stabilize in the 

near future, and final products still have room to increase more 

Nitrogen 

Phosphates 

278 

233 222 

199 195 

154 

102105 113 

318 

235 

588 

274 

522 

323 

278 

378 

415 435 475 505 545 

455 

365 395420 

325330 

Raw Materials Ammonia FOB 

Tampa US$/t 

Basic Fertilizer UREA Fob 

Black Sea US$/t 

'00 '02 '04 '06 '08 10 12 14 16 18 20 

Potash 

1000 

800 

600 

400 

413 

930 

442 

410 

Raw Materials phosphate 

rock Fob Morocco US$/t 

Raw Material Sulphur Fob 

Vancouver US$/t 

Basic Fertilizer MAP Fob 

Black Sea US$/t 

506 

467 

335 365 430 

546 

900 

700 

500 

300 

117 118118 

Basic Fertilizer KCl Fob Vancouver US$/t 

175 210 620 

520 

420 

360 

480 480 480480 

440 

200 

37 

0 

247 

262 329 

216 

147 146 177 176 

124 

95 100 110 

61 

43 40 43 47 56 36 

50 

50 38 

54 

26 

'00 '02 '04 '06 '08 10 12 14 16 18 20 

100 

'00 '02 '04 '06 '08 10 12 14 16 18 20 

11 

Source: CRU


Brazil is highly dependent on imported fertilizers 

Brazilian production in 2008 

Imports in 2008 

Nitrogen 

Phosphate 

Potash 

20% 

47% 

8% 

53% 

80% 

92% 

Source: IFA 

12


Vale is the only producer of Potash in Brazil and supplies an average of 10 % of 

domestic demand (6.5 Mt KCl in 2010). Agricultural frontiers head to the 

northeastern part of the country and total KCl consumption is expected to reach 

almost 10 Mt/y by the end of the decade 

KCl consumption 

Mt in 2010 

KCl consumption 

Mt in 2020 

Taquari- 

Vassouras 

> 900 > 600 and < 900 > 400 and < 600 > 100 and < 400 < 100 

13 

Source: Agroconsult


P2O5 consumption in Brazil is 3.4 Mt and the projected demand is 4.7 Mt by 

the end of the decade. Vale assets supply around 45% of this total and are 

well located to support the regions with higher demand and growth potential 

P 2 0 5 

consumption 

kt 

Catalão 

Patos de Minas 

Uberaba 

Araxá 

> 500 

> 300 and < 500 

> 100 and < 200 

> 200 and < 300 

< 100 

Cubatão 

Guará 

Sources: ANDA, Conab, DIFM, Agroconsult 

14

An exciting portfolio of projects and 

operations supports Vale’s growth strategy 

Salitre 


Fertilizantes 

Potash 

Phosphate 

Expansion 

Bayovar 

Regina II ‐ 

Canada 

Bayovar ‐ Peru 

Taquari 

Vassouras 

Rio Colorado ‐ 

Argentina 

Carnalita 

Vale Fosfatados 

Regina ‐ 

Canada 

Neuquén ‐ 

Argentina 

Anitápolis 


Fosfatados 

expansions 

Evate – Mozambique 

15

Achievements made through organic growth 

and acquisitions have strengthen our 

positioning … 

Phosphate 

• Acquisition of fertilizer assets. 

• Start up of Bayovar in July 2010. 

• Asset integration and 

optimization: synergies 

assessment and capture already 

in place. 

• Salitre project to be submitted to 

Board approval on November 

2010. 

• Evate project under development 

Potash 

• Rio Colorado : submission to 

Board approval on November 

2010. 

• Carnalita and Regina (Canada) 

projects under development. 

16

Farmer 

… and have expanded Vale`s presence in the 

fertilizer industry 

Natural gas 

Nafta 

Asphalt residue 

N 

Sulphur 

S 

Phosphate 

rock 

P 

Potash 

Ammonia 

Sulfuric 

acid 

Nitric 

acid 

Phosphoric 

acid 

Ammonium 

nitrate 

Urea 

Ammonium 

sulphate 

MAP/DAP 

TSP 

Natural resources 

Initial industrialization 

Final industrialization 

Granulation and blending – NPK 

DCP 

SSP 

K 

Vale presence 

KCl 

17

Our goal is to become one of the global 

leaders in the industry 

Phosphate rock production capacity 2017 (Mt rock) 

Potash production capacity 2017 (Mt KCl) 

OCP 44.7 

PotashCorp 

18.9 

Mosaic 


JPMC 

18.2 

16.5 

11.5 

Mosaic 


Belaruskaliy 

Uralkaliy 

7.0 

9.7 

10.7 

15.1 

GCT / CPG 

10.5 

Silvinit 

6.3 

PCS Phosphates 

Ma'aden 

Gecopham 

5.5 

9.6 

9.0 

K+S 

Dead Sea Works 

Qinghai Salt Lake 

Agrium 

3.0 

2.8 

4.3 

6.1 

Rotem Amfert Negev 

Kara Tau 

Ferphos 

Foskor 

4.6 

4.2 

3.5 

3.5 

Note: Considers total capacity of the projects 

Bayovar 3.9 Mta, Bayovar II and III 3.8 

Mta, Evate 3.5 Mta, Salitre 2.0 Mta, 

Anitápolis 0.3 Mta 

Arab Potash 

EuroChem 

Iberpotasas 

Cleveland Potash 

Mengo Potash Project 

2.4 

2.3 

1.5 

1.2 

1.2 

Note: Considers total capacity of the 

projects PRC 4.35 Mta, VSP I 2.9 

Mta, Carnalita I and II 1.6 Mta, 

Neuquén 1.0 Mta; UOTV 0.8 Mta 

CF Industries 

3.2 

Intrepid Mining 

1.2 

18 

Source: Fertecon, Vale

19 

Current operations

Potash - Taquari -Vassouras 

• KCl production. 

• Underground mine – room and pillar mining. 

• Estimate production for 2010 ~ 710 kt. 

• Average KCl grade of 27% (2009). 

• Life of mine up to 2019. 

20

Phosphate - Brazil 

Catalão 

Uberaba 

Patos de Minas 

Araxá 

Tapira 

Guará 

Cubatão/Piaçaguera 

Cajati(Mine and Port) 

Araucária 

mines 

plants 

21

Phosphates - Bayovar (Peru) 

• Located in Piura region in Peru. 

• World class resource with lowest 

cost in phosphate rock 

production. 

• Start up July 10, 2010. 

• Estimated production of 3.96 

Mtpa of phosphate rock to be 

reached in 2014. 

• Life of mine: 27 years. 

• Potential expansion under 

evaluation. 

Reserves 

Tonnage 

Grade 

P 2 O 5 

Tonage 

P 2 O 5 

MT % MT 

Proven 237.1 17.3 41.0 

Probable 1.9 15.9 0.3 

Total 239.0 17.2 41.1 

22

Phosphates - Bayovar (Peru) 

Port 

Conveyor belt 

Storage and conveyor belt 

23

24 

Projects in the pipeline

Potash - Rio Colorado 

• Located in Mendoza, Argentina 

• Successful solution mining pilot trials 

undertaken 

• Logistics and natural gas supply had 

been set on, mitigating project risk 

• Proprietary technology defined and 

acquired 

• Life of mine of at least 70 years 

• Large resource and planned 

infrastructure can support further 

expansion 

• Total capacity 4.3 Mt/y 

Reserves 

Tonnage 

Grade 

P 2 O 5 

Tonage 

P 2 O 5 

MT % MT 

Probable 360.8 34.2 123.4 

Total 360.8 34.2 123.4 

- First phase starting in 2013 and 

reaching 2.4 Mt/y by 2016 

25 

- Second phase starting in 2017 and 

reaching 1.9 Mt/y by 2023


• Implementation plan : critical 

path to guarantee schedule is 

ongoing. 

• Energy solution: JV 50% Vale to 

dedicated gas supply. 

• Logistic solution: concession 

agreement already signed with 

Ferrosur. 

• Permits already granted. 

- general for mine and plant. 

- electric line. 

- port . 

Zapala 

Neuquén 

Rio Negro 

Buenos Aires 

La Pampa 

. Bahía Blanca Port 

26


Well drilling 

27

Potash - Regina 

Location 

• Located in the leading potash 

producing province of 

Saskatchewan, Canada, with 

logistics and infrastructure in place. 

• Development stage: FEL 1 (to be 

concluded in 2010). 

• Solution mine envisaged. 

- 9 new holes drilled in 2009-2010. 

- All historic and new holes 

intersected the 3 potash beds with 

a combined thickness of 20m - 

30m. 

• Resources to produce up 2.9 Mtpa 

of KCl/year. 

28 

- Start-up in 2015 and reaching full 

capacity of 2.9 Mt/y by 2024.

Potash - Carnalita 

Located in Sergipe, Brazil, near Taquari‐Vassouras 

operations 

Solution mining method 

CARNALITA 

PROJECT 

Development stage: FEL2 – pilot plant operation 

with two wells commenced in Aug/08 

UOTV 

TMIB 

ARACAJU 

• Test of first layer concluded with good 

results 

• Geomechanic tests in progress 

• Environmental permit granted in April 

08, 2010 

100% to domestic market. 

Pilot plant 

Gas supply (Long term): contract with Sergas 

First phase starting in 2015 and reaching 

1.2 Mt/y by 2016 

29

Phosphate - Salitre 

• Located in Patrocínio/MG, Brazil, in the heart of a fast growing market. 

• Open pit mine and sulfuric acid, phosphoric acid, MAP, DAP and TSP plants. 

• Development stage: FEL 3. 

• Start-up scheduled for 2014. 

• Board approval in November/2010. 

• Best practice on project development recognized by IPA (Independent Project 

Analysis). 

Pilot mining 

Mine, plant and infrastructure 

30

Phosphate - Evate 

Northeast Mozambique, 65 km from 

the port of Nacala 

Location 

Consists of 3 types of phosphates: 

• High grade sands: 6Mt @ 20% P2O5 

• Low grade sands: 54Mt @ 8% P2O5 

• Hard rock: 208Mt @ 12% P2O5 

Development stage: FEL 1 

It is strategically located to supply the South 

and Southeast Asian markets 

31

Fertilizers 

Summary of estimated production capacity 

Current Additional Total 2017 

Potash (KCl) 

Phosphates 

Ammonia 

MAP (high) 

0.85 kt/y 10 Mt/t 11 Mt/y 

9.2 Mt/y 8.0 Mt/y 17 Mt/y 

620 kt/y 0 620 kt/y 

1,180 kt/y 1,300 kt/y 2,480 kt/y 

TSP (high) 

SSP 

Dicalcium 

Phosp 

865 kt/y 

2,500 kt/y 

500 kt/y 

670 kt/y 1,535 kt/y 

0 2,500 kt/y 

120 kt/y 620 kt/y 

Urea 

610 kt/y 

0 

610 kt/y 

32

Conclusion 

• Vale has established a robust platform to build a world-class 

fertilizer business. 

• Strong position in the most important and fast growing 

Brazilian market. 

• Our goal is to become a global leader in fertilizer industry. 

• Some important issues that should be addressed. 

- Define optimal corporate structure for fertilizer assets. 

- Integrate and capture synergies from acquired assets . 

- Delivery of projects on time and on budget. 

- Cost control and operational efficiency. 

33

Simandou Project - Vale.com

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