Vale Day 2019

December 2, 2019

Vale Day 2019

December 2, 2019 1

Vale Day 2019

CHRIS TAYLOR: Great community of companies, more than $1.2

billion worth of shares trade every single day from Brazil on

the New York Stock Exchange. In fact, Vale trades close to $20

million a day on the New York Stock Exchange. We’re very, very

proud of our relationship with Vale. Next year will mark, in

fact, 20 years of Vale on the New York Stock Exchange. So when

we welcome the team back next year, we’ll not only be informing

investors on what’s next at Vale, but we’ll be marking the 20th

anniversary of the company on the New York Stock Exchange. So,

without further ado, I’d like to welcome CEO Eduardo Bartolomeo

up to the stage. Eduardo, thank you.

EDUARDO BARTOLOMEO: Good morning, everyone. It’s okay here?

Okay. First of all, thanks a lot for being today here with us,

to listen to our narrative, our history. As well, I hope you

have nice holidays. Well, 2019 for sure has been the most

difficult year for Vale in its history, with the tragedy of

Brumadinho. We lost colleagues, friends, and community members.

In this Vale Day, my first as Vale CEO, I would like to ask you

a moment of silence in respect for the victims in their

memories. We’ll show a little video now.

[Video playing]

EDUARDO BARTOLOMEO: Thank you. We will never forget Brumadinho.

For that, myself and my team, we are committed to building a

much safer and more reliable company. Since I took over Vale’s

leadership, three words have guided me, and I’m very insistent

on repeating. It’s people. It’s safety, and it’s reparation.

Those three words, they have guided us to design the roadmap

that will lead, in our view, for the de-risking of Vale.

The first stop of this journey is the full reparation of

Brumadinho. Today we have already 400 people directly involved

in this reparation with an executive directly reporting to me.

The second part of this journey is to assure that we operate

under the strictest safety standards, that we guarantee our dam

integrities and asset integrities of the other assets of Vale.

Third, we will bring production, but in a sustainable way. And

finally, we will allocate capital, in the most disciplined way,

as you’re going to see later in the presentation.

By the way, the presentation was designed on those four topics

because we understand, talking to you during this period that

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the main question around Vale, around Vale’s performance is how

are we going to de-risk Vale? So, you’re going to see the blocks

of the presentation will follow that.

Secondly, I would like to call your attention for two words

that we hope and they will repeatedly be said here, I believe,

during the presentations. First one is listening. Second one

is execution. Vale is well known for its extreme capacity to

execute. We are doing things in a faster way, at a faster pace.

But we have to improve a lot our ability to listen.

So those two things together can create a better company. With

that said, I would like to invite Marcelo Klein, the director

that I just mentioned, that is responsible for the reparation

efforts. And he will detail to you how this thing is evolving.

Thank you. Thanks.

MARCELO KLEIN: Thank you, Eduardo. Good morning, everyone. Our

mission at Vale is the full reparation of Brumadinho, the

reparation of the damage caused to the people and territories.

We have structured our reparation actions inspired by the United

Nations guiding principles on business and human rights.

There is the 31st principle that says that business enterprise

must establish operational level mechanisms to guarantee that

the grievances that come from the communities where we have

operations are treated, addressed, and based on engagement and

dialogue. So, we really pay a lot of attention to that, to how

can we improve our listening skills?

I brought you here a simplified version of a typical weekly

schedule, my own schedule, what is a typical week for me. My

week starts on Monday, with meeting with Eduardo, our CEO and

executive directors, when I have one hour to talk about how

reparation is evolving. What are the critical issues for the

week? What are the medium and long-term risks?

And I also ask for help and support from other functions

represented there in that meeting, IT, procurement, legal,

corporate social affairs, and so on. So, I have all Vale there,

welcoming me and putting all the resources available for

reparation. That’s very important. Along the week, on Tuesday,

for example, I have meetings with prosecutors and other public

authorities. There are a lot of issues to discuss.

On Wednesday, I have discussions with the fire officers, just

remembering that you’re talking about 270 fatalities, and we

still have 14 victims who are missing. So, for those families,

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it is still very important to keep the rescue operations going

on. And this rescue operation has been lasting for 10 months,

for more than 300 days now.

On Thursday, we’re meeting with the families, the

representatives from the families of the victims. We have a

huge agenda to cover as well. They bring a lot of demands to

us. And we’re also discussing the construction of a memorial,

so we need to listen to them, to how they want us to address

that.

So, this is an illustration of how we wanted to put that

concept, carrying it forward in our reparations. That social

dialogue and social listening drives our reparation efforts.

To talk to you a bit more about what we are doing for reparation

of Brumadinho, we have organized our main actions in four main

pillars. And I’m going to talk some more details about them.

The first one is restoring the livelihoods and the dignity of

those affected. The second one is the economic and the non-

economic compensations. The third pillar is restoring the

productive capacity of affected areas. And the fourth pillar

is restoring the environment. I’m going to give you some more

details on how we’re acting in each of those different pillars.

The first one, restoring the livelihood and dignity of affected

people is the most important one. We have to understand that

we have a framework of grief, sorrow, mourning, so that demands

a lot of sensitivity from our side. We need to be very sensible

in the way we are talking to people.

So, having those people allowing us to get close to them,

sitting side by side, listening to their difficulties is a big

privilege for us. In fact, they talk about the memories of the

people they lost in Brumadinho. They share with us their

concerns and fears about the future. And for sure that helps

us to develop a very deep empathy with their grief.

So, as a natural consequence, reparation becomes a personal

matter. It has been a huge learning for us, sitting side by

side with the families of the victims, trying to build up the

restorations of their lives, something very important. By

welcoming the families, by providing information, care,

attention, and all kinds of resources and service to those

families, we want to guarantee that they’re going through

probably the most difficult moments of their lives with dignity.

And as we’re talking about sorrow and grief, you need to pay

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attention to details. The reparation can be divided in two big

issues. We’re talking about the physical stuff and the emotional

ones. So, the physical side will take care of water, food,

toilets, and healthcare, and housing. That’s the easiest part.

But when you talk about emotional issues, things are much more

complicated. So, for reparations and mental health, and the

psychosocial report to give to the victims and families of the

victims is very important. We understand and we follow all the

technical backgrounds on those disciplines that were provided

from expert teams from United Nations.

And we also recognize that this is one of the most challenging

areas, how to guarantee that people will be recovering,

psychologically speaking. So we also recognize there is too

improvements to be captured in that area.

One example on those details that we need to take care, in one

of those meetings, the families came to us, saying, “Vale,

please change the color of the buses that provide the commuter

service, picking up and dropping off the employees every day,

from home to work, and back to home, because for widows, for

wives, for mothers who lost their sons, it’s very difficult to

see the buses going through the city, and that reminds them of

the huge loss they had.”

So, we are doing that. We are changing all the colors of the

buses. And we also suggested to them to change the routes of

the buses, avoiding those streets where several families of the

victims live. So, things that to many people sounds like details

become critical or very important to them. And you can only

capture that when you exercise good listening.

Our second pillar talks about economic and non-economic

compensation. Economic compensation is very important but it

is not enough. So let us first talk about why it is important.

It’s important because it helps restoring the normality of the

lives of people as much as possible.

So the collapse of the dam happening January 25th, and February

the 20th, you have the signing of our first big framework

agreement that provided emergency financial support to all the

citizens in Brumadinho and all the inhabitants, along with the

Paraopeba river that lives in 1 kilometer from one bank and the

other bank of the river. So that is a huge help, lasting for

12 months, from February until next January.

And it’s already covered 108,000 people, and we have spent—we

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have applied more than 1 billion reais with that emergency

help. Last week we have renewed that agreement for 10 months

more by using different eligibility criteria, more concentrated

on those territories that were dramatically affected, and

reducing the amount paid for those who were not directly

connected in the affected areas.

On April 5th, we have signed another important agreement,

framework agreement with the Public Defenders that was covering

all the material and the moral indemnifications for the

families. So, we have established that, using very fair and

competitive criteria, conditions to restore the houses, the

means of living, if they have stopped having - interrupted

their sources of income we also are restoring. So, per those

agreements, we have already 2,300 people benefited from them.

And in June, we carried out the third big framework agreement

that talks about labor, reminding you that from the 270 victims,

250 were workers, so it’s basically a labor tragedy. So, we

also discussed with the government prosecutors, the labor

prosecutors about the conditions and the details for the labor

indemnifications. We have more than 1,500 people already signed

those agreements.

And for the 250 families of the victims, of the workers, 244

have already signed agreements, showing that we’re really

providing a fair and competitive package of indemnification.

Besides the economic issues, we have also signed 22 other

agreements with different public agents, that are related, for

example, to the water quality monitoring, to rescue and care

of animals of fauna, to finding new sources of water, like

drilling wells in critical areas, so that we can compensate for

the possibilities of taking water from the river for a limited

period of time, and also some other measures to increase the

quality of our operations.

So again, we are here talking about construction, joint

construction with different stakeholders. By the end of this

year, we will be a total of disbursements and general expense

related to the reparation of Brumadinho, it amounts to $1.6

billion. We stress again that numbers are not the most important

figure, but they are key elements as well to make things happen,

and that we can faster try to get back the normality of the

area.

Our third pillar talks about the restoring the development of

socioeconomic capacity. Once you have provided the rough stuff,

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the main stuff for people to recover, how you start to think

about the future. And this socioeconomic capacity, you have to

think about individuals, communities, entities, and

governments.

At the individual level, we are providing a full reparation

support program, mainly for those who have signed the

indemnification agreements. And once they have received a

considerable amount of money, they get financial planning

education, so that they make better choices on what they do

with the money and how they restore the conditions of their

lives.

We also provide supports on real estate acquisition for small

agricultures and how they will resume their plantations, and

also for those people who run small businesses, we also provide

advisory package supports for them. At the community level, we

are trying to sponsor. We are in fact sponsoring many projects

to reconnect the people as a group.

So, we are sponsoring programs related to productive

backgrounds, community backyards, and gardens, and community

culture, handcraft workshops, so all different kinds of

activities that put the people from the communities together,

so they start to reconnect among themselves and find back the

power of the collective. It’s very important. And talking about

entities, we are also providing and discussing with several

public actors what can be done in order to improve the quality

of the population. For example, with the secretary of health,

of social assistance, of tourism, of the Municipality of

Brumadinho, we are providing training of people, resources, and

offices so that they can provide better services to the

community, to the population.

And if the government that like to reinforce that we take part

of Aliança for Brumadinho. It’s a group of several multinational

and national companies that are taking actions to help

Brumadinho. They wanted to leave a legacy for the long term,

so they are also sponsoring and supporting different

activities.

And as our fourth pillar, I want to talk about the—

[Video playback]

Okay. This video talks about the fourth pillar. That is the

environmental recovery. So those are actions related to -

since the very beginning there was a big concern on how you can

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prevent the environment damage to go on, to avoid all the

sediments that we spread to go to the river. So, we have put

in place a lot of engineering structures to avoid sediments to

be carried out during the wet season.

We have heavy rains from November to February. And we started

to have those rains. We have noticed that those apparatus are

working very well, so that we can—while we are cleaning the

area and removing the sediments, we need to avoid the sediments

from going back to the river. We also have actions related to

the protection of the springs of the river, of re-vegetation,

of whole sets of actions to guarantee that we’re restoring the

conditions of the environment, and the fauna as well.

Well, finishing my presentation, I’d like just to reinforce

first that we are really taking social dialogue and listening

as a key driver for reparation, and we understand that this

legit makes our action in the territories. We also have a strong

and bold presence on the ground. We have more than 200 people

working every day in Brumadinho, spreading along different

areas, talking to the community every day and taking care of

those demands, and also providing fastly a fair and competitive

reparation through indemnifications so that the people affected

can quickly restore as much as possible the matters of their

lives. Okay. Thank you very much. I’m going to now hand it back

to Eduardo.

EDUARDO BARTOLOMEO: Okay. Thank you, Klein. Well I think you

could see that reparation is happening at a fast pace, but much

more importantly, with quality. But I think we need to go beyond

and build a better Vale. Those two new pillars they were already

announced. I think Barcelona, first time we mentioned that is

the pillar of safety and operational excellence. The second one

was the new pact with society. The formal one was presented

here in New York and in London in the last year, is well known

by you, is the flight to quality, is the transformation of base

metals and the capital allocation.

We would like to go now for the first two. They are what we

call the quarter cross. They will make Vale a better company.

And we will start with the safety and operational excellence.

I think Vale has an ambition and we have to search that is to

be one of the safest miners in the industry. So, for sure we

need to talk about governance, about processes, about people.

And one of the first decisions that we took with support of our

board, is to create a C-level function to deal with that. We

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had some reference around the industry. And we created this

safety in operational executive officer. We invited Carlos

Medeiros, a well-rounded executive from manufacturing to run

it because around safety we see another pillar that is the

operational excellence. With that said, I’ll ask Carlos to come

here and explain how he’s going to achieve this dream and

objective. Thanks.

CARLOS MEDEIROS: Good morning. Following Vale’s decision to

strengthen its governance on risk management and safety, this

office was created. I lead Vale’s second line of defense, and

I report directly to Eduardo Bartolomeo, Vale’s CEO. It’s

important to clarify that my compensation package is not tied

to any operational target whatsoever.

Also, it’s also important to clarify that my team and I have

the full authority to stop any given operation, whenever

necessary. In order to avoid another major unwanted event, this

office has been organized around four areas, first one tailing.

We have to ensure that our dams are safe and comply with the

international standards.

In asset integrity our assets are well maintained and safe to

operate with. Operational excellence is about our VPS, the Vale

management system that will be the vehicle that will sustain

all the changes going forward. And the health, and safety, and

operational risks to enhance the safety culture and also map

all the risks around the company.

So, we believe that every accident is preventable. And as such,

every action that we’ll be taking is to build a safer and more

reliable company. So there will be a few—there will be some

milestones that will be achieved in the next couple of years

that I would like to share with you.

So global risk assessment is about using our very comprehensive

methodology for hazard identification and risk assessment in

all of our operations. On the tailing management system is to

build a TMS, a tailing management system, in line with the best

international practices. VPS revised and relaunched—that’s the

Vale management system that has been revised and more than

60,000 people trained so far to use the VPS as a means to

support all the ongoing transformation.

And strengthening our global maintenance structure is about

implementing one single maintenance strategy to guarantee our

asset integrity. Governance plays a fundamental role in

accident prevention. This is why this slide is showing our

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governance before our previous and our current governance.

Our board has approved a new risk policy. And since then four

executive risk committees have been created. We believe that

with this configuration we can monitor risks in a very—in a

much closer way. And also, it allows information to flow very

openly at all organizational levels. As far as geotechnical

structures are concerned, we have chosen to adopt a different

model, a model that has several redundancies in it. This is by

design.

And let me walk you through this slide. So, starting on your

far left, the first two boxes, they belong to our first line

of defense which is our operation. So, the very first box on

your left, that’s the geotechnical operations team. They own

the risk. They operate the asset. And they are overseen by the

second box, the geotechnical support team.

Then there comes the second line of defense, the one I lead as

another layer in this governance. Then we have the independent

board committee for dam safety that reports directly to our

board. So, this committee is built with external advisors that

support us with our structures. And then we have the third line

of defense, which is our internal audit.

So, on top of all this, we have two external layers. The first

one is the companies that work with us on a continuous basis

to certify the stability of our dams. And the second one is the

companies that also work with us on a continuous basis, but

they report to the public prosecutors. So, all in all, we have

seven instances where safety and operations of our geotechnical

structures are discussed to maximize safety. This goes way

beyond the traditional three lines of defense model used in the

industry.

So, this slide shows our plans for de-characterizing nine

upstream dams similar to the one at Brumadinho. The yellow

stars there, they show the completion date for the containment

walls for the most critical structures. De-characterizing them

is a very complex process that encompasses several steps.

So, as a matter of fact, the 8B dam, the one at the top, has

been already fully de-characterized, and the area it used to

occupy has been returned to society. Actions taking place as

we speak, so companies have been hired, people mobilized, so

we can meet the planned timetable for that. There is a video

that you watch that will walk you through the—will help you

understand the de-characterization process.

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[Video playback]

Before I conclude, I would like to leave with you three key

messages. First one is in order to de-risk its business, Vale

is building an independent and strong second line of defense.

The second message is risk and safety is at the very center of

every decision we are making at Vale. And the third one is a

strong and robust tailing management system is being put in

place. I will hand over now to Marcello Spinelli, who will

present how Vale will treat the remaining dams going forward.

Please.

MARCELLO SPINELLI: Good morning. In addition to risk management

and also the de-characterization of the dams that Carlos just

said, we’ve been investing in alternatives for tailing dams.

But I’m the operator of Iron Ore. I’m the first line of defense.

Now I want to say that I’m really committed to avoid the use

of dams. We want to change this.

How we are doing this? Well, 2014, the capacity of production

with dry processing method was 40%. This year, it reached 60%

with the dry processing method. And we’re going to reach 70%

in 2023. In the northern system, we’re going to reach 100% in

two years. And as we have a strategy to blend products in China,

you know very well about this, using the high grades, high

products, high-quality products from the north, blending with

the southern products, we can reduce the necessity of wet

processing in the south.

That’s the main strategy, but we still have a remaining 30% of

the production using dams. So, what we are doing to avoid the

use of dams. So, this is our new information here. We’re

anticipating $1.8 billion to invest in filters that we can

separate the tailings from the water, reuse the water, and have

the dry stacking of the tailings.

This is a process that is under construction for the main sites,

like Cauê, Conceição, and Brucutu. But we still have a remaining

14, 15 production use wet processing. So this another important

information here. We just bought this year the New Steel

Company. This is a company that used the method of dry magnetic

concentration. We even don’t use water to separate the ore from

the tailings.

We’re going to be the first in the industry that is going to

use, on a scale basis, a process that will use this technology

in 2022. And if we succeed, we’re going to close the gap of the

remaining 40%. So, I think what is the main message here? We

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want to avoid the use of the dams, and we are committed to make

that happen.

And the future of the iron ore operation will be without dams.

Now Eduardo, please come to the stage again.

EDUARDO BARTOLOMEO: So, as you could see, I think we have

effective actions towards what we believe is an ambitious plan,

an ambitious goal, but we’re effectively fixing our governance,

resourcing and teams. We’re effectively decommissioning the

dams as fast as we can. We’re effectively moving to a safer way

to operate. But that brings us to the second pillar that I

mentioned earlier. Being safe is key, but it’s not enough.

Society has demanded from Vale, from the industry as well,

after Brumadinho, a new way to create and share value.

So, we see this as ourselves being an enabler, a development

beginning with the local territory, up to the society. We need

to look at where we operate and how we impact the whole. As you

remember, last year we announced several goals, most of them

about environment, the last one about the social development

focus in Brazil, and on climate change, on energy, water, and

forest.

But as I said to you, we need to move further. We need to go

beyond. People are expecting much more. So, with the commitment

of our board listening again to stakeholders, we did a very

bold change in our goals. We understand that being in a mining

company, in a supply chain that has the steel industry behind,

it’s a huge contributor to the carbon emissions.

Luciano is going to come in a little while to explain how we

will lead the transition to a carbon neutral mining industry.

We have assets that nobody has. And actually, about listening

sometimes, you need to talk as well. We have a lot of our clean,

we have huge bases of clean energy, a huge footprint on the

first station, water, as Spinelli just mentioned, on the right

processing. So, we can and will lead the transition to carbon

neutral mining.

And importantly, I’ll come back later to explain this sixth

goal that we created. There is a roadmap. We mapped all the

gaps that we have around ESG. And we are dealing with it. And

we did a roadmap and a plan to eliminated that. But for that,

I would like to invite Luciano to go in each of those dimensions

and explain, how are we going to get there?

LUCIANO SIANI: So, we put a lot of effort in thinking about how

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can we go beyond simply fixing Brumadinho, repairing and

improving safety? That’s the baseline. That’s not enough. So,

we need to go beyond. So, everyone is talking about purpose for

corporations. Everyone is talking about climate change.

Everyone is talking about sustainability.

So should we just jump in the bandwagon and do what everyone

is doing? Well we realize that we can lead. And that’s the key

word for today. We can lead because we are endowed with certain

assets and the position on our products to lead the way. Of

those six goals here, in three of them at least, we believe we

can be different from anyone else.

The first one is climate change. We are announcing today that

we’re going to become carbon neutral by 2050. Others have done

that. We’re announcing today that we’ll be compliant with the

Paris Agreement. Others have done that. This implies a twofold

reduction. Instead of 15% to 16% reduction of CO2 emissions

till 2030, we’re going to do around 30%.

So where are we different? We’re different because we do have

the products to help our customers reduce their footprint. We

have the high-grade iron ore. We have the pellets. We have the

nickel who will electrify the world. So, we will establish a

scope three steelmaking and shipping target, ambitious one, to

help our customers make that transition. In that we’re

different.

And we will develop, as a business opportunity, products to

cater to their needs. And Spinelli will describe to you the

opportunity in metallic products and the technologies we’re

using to that.

The second pillar, we believe we can also lead is in energy.

And why is that? Because we’re endowed with a footprint, in

Brazil, in Canada, in Indonesia. And today, 60% of the power

that Vale generates is already self-generation and it’s already

renewable.

And we are now committing to go to a hundred percent globally

until 2030. And by 2025, we’re going to be a hundred percent

self-sufficient, renewable power generation in Brazil. So, we

believe also we have a unique position in that. The other pillar

that we believe we are unique is forest, as Eduardo mentioned.

I don’t know if you know about it, but we already protect and

preserve a million hectares of native forest, and most of it

in the Amazon. How much is a million hectares? This is about

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170 times the size of the Manhattan Island. It’s about three

times the size of Long Island, which is 120 miles long. It’s

about the size of the State of Connecticut.

And we will increase this by 50%. That’s the goal, to increase

recovery and protection of areas by 50%. We are in the Amazon.

We have the largest iron ore mines in the world within the

Amazon, and we’re doing this. Finally, when we go to the

socioeconomic contribution, we want to go further. We’re going

to go beyond simply corporate social responsibility and paying

our taxes. And we want to act as a true development enabler.

And I’m going to show you a video about the things we’re

starting to do in Itabira. Itabira is the city where Vale was

born 70 years ago. And its mines will exhaust in 15 years. And

we’re already making bold plans to leave a true legacy for

Itabira. So, jumping straight to the video. Here we go.

[Video playing]

This was done in consultation with society. This has been an

aspiration for them for a long time. And even the architectural

designs are very bold. So, this will lead a lot of self-esteem

and will make a true impact in the vicinity of the city of

Itabira.

Okay. So, we will lead in many things. However, we heard you

and we know that we have gaps, especially in governance. We

talked about ESG, but in governance, we made this survey to

identify the gaps. And Eduardo, back on stage will give you an

idea of how we are—some of them which we’re tackling.

EDUARDO BARTOLOMEO: Thank you Luciano. Well, as you saw, I

think we have the chance and we will do it. But the sixth pillar

is key to, I would say, amalgamate these decisions. We talk

to investors, shareholders, opinion makers, NGOs. We map the

gaps. We already are acting on them. Of course, they run through

the three, the ESG.

40% are in G, 40% in S—sorry, in E. And some in the social

part. Just to give you some flavor, those things are already

undergoing. On the social side, the new gender balance. Vale

is no different from several industries. It has a low gender

balance, so we need to double that.

We have a goal to double from 16% to 26% by 2030. On the

environmental side, it’s certifying all of our operations in

ISO 14001 that deals with operational excellence towards the

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environment. On the governance side, we are establishing the

audit committee on 2020.

On the human rights that goes back to the social, we engage

in a very interesting process and have a public consultation.

We advise the policy, going back to the fact that talking is

better. So, it’s a good decision that we made. But I would like

to finalize here with a very important thing. And I think it’s

new, in the sense that we will be the big three miners that are

going to put ESG on their long-term compensation.

I think we might say, “Look, these guys are looking for 50, are

looking to 30. So, let’s put your money where your mouth is.”

So ESG is a governance gap as well. It’s being asked for us to

do it. And it will align those ambitious goals together with

that.

And for that we are glad to tell you that yesterday we launched

a transparence portal that shows this action plan, to be exactly

as we have been saying, give each time more transference. So,

I’ll invite you to have a quick view on how it works. And later,

please go online.

[Video playing]

Okay. Now let’s shift gear a little bit to the other three

pillars. Just to recap, I think we will make strides on

reparation for sure. We are doing it. We’re improving

effectively our governance about safety. And the impact of

society is embedded already in our actions and goals.

Now Spinelli will come and discuss how are we going to bring

back our flexibility, our competitiveness, but not that only,

but how we’re going to behave ourselves in the future. What

opportunities do we have? Later, Mark Travers will come and

explain how our work at base metals is being dealt with, the

transformation and the opportunities that arise from that.

And last, Luciano is going to come and wrap up, how are we

going to allocate capital? What are the options, opportunities

we have. In the end, I’ll come back and do a wrap-up. Okay,

Spinelli, please.

MARCELLO SPINELLI: Thank you, Eduardo. Well business strategy

for iron or is about de-risking. And if you want to talk about

de-risking, we need to talk about the resumption of operations,

of capacity, and about the cost level of 2018. That was the

best in the world.

Vale Day 2019

December 2, 2019 15

But nevertheless, this is a mantra today. I’m really committed,

and also our team, really committed to people, safety of people,

and asset integrity. Well, talking about resumption of

operation. After Brumadinho tragedy, you know very well we’ve

been talking about this through the year, we lost 93 million

tons of capacity.

During the year, we reestablished a lot of the operations. We

still have 40 million tons of capacity that still needs to come

back. So, we are planning to go back, come back with 15 million

tons next year, and another 25 million tons in 2021.

It’s important to understand that the way we’re going to return

is divided in two main phases, just to simplify the process.

The first phase is about returning with mechanical dismantling,

without an impact in the operation of the dams.

When you do this, we can get the volumes back, but not the

quality back as you used to have. So, it’s important to

understand capacity means quality and volumes also. The second

phase is related to the improvement of the dams. When we improve

the dams, we can get the wet processing, the quality, and the

end of the process is to use the blast for the mining process,

and you get the efficiency back.

So that’s the roadmap for the return of the operations. It’s

very important to say that we’ve been through a phase that we

need to assess all the risk we have in our dams. I want to

point three cases that we’ve been—that just happened two months

ago. And today we have an update about this.

Two months ago, we had a problem with a big operation, ferrous,

that we found a problem in a permit. So, we stopped operation.

It’s a risk assessment. And now we reestablished the operation

last Friday. One month ago, we found a problem, our team led

by Vale found a problem in Itabiruçu dam that is related to

Itabira operation.

So, we decided to assess, to improve the assessment, the

investigation for that dam. We have good news. We are

anticipating part of the production that we are delaying. So

that’s an impact that is positive. But based on assessing new

problems, if you need to go further and understand what is

going on, we can decide, myself, my team, Carlos’ team, to make

it happen.

Today just happened another case. In Laranjeiras dam, that is

for Brucutu operation, the last week we found, using analysis

Vale Day 2019

December 2, 2019 16

of satellites, we found that there’s a crack, a small crack in

the top of the dam. So, my team called me, actually, this

morning, called me and Carlos’s cell. We’ve got to stop the

operation. We’ve got to reduce 60% of the production.

We need another one month to check it out, what is going on.

And after one month, we can return. So that’s the kind of

decision we’re going to face during the year. And that’s very

important to say that it’s all related to safety. And after

that, we can return the operations with volumes and quality.

So, let’s talk about what is expected for capacity, the next

year and the next years. So, this is the production for next

year. We expect for production a number between 340 and 355.

And in two to three years, we can reestablish the capacity of

the operation, capacity that we had in 2018.

But the important message here is that value over volume is a

key strategy for Vale. If we don’t have the necessity to supply

the clients, in terms of quality or in terms of volumes, we can

adjust the production to feed the necessity, the right necessity

for the market. So, this is a brand-new number that is new for

you.

Another information here that we have, the production for

pellets next year, we are estimating 49 million tons of pellet

production. Another important information, this is an annual

number and we are returning gradually. So, the first half of

next year will be impacted, we need to restore the BRBF quantity

in China. We sold more than we produced in this year.

So, we have to recover the quantity there. And also, we have

this evolution of quality process during the year. So, first

half it’s unbalanced, if you compare to the second half of the

year. It’s another important information for you.

Well let’s talk about competitiveness. So, I want to share in

three steps here. Let’s talk about the cost, divided in three

phases. So, first one, C1, the cost from the mine to the

Brazilian port. We expect to reach again in four years, four

to five years, 13 to 13.5. That’s the same cost that we were

running last year.

Why are we going to do this? First one. If you return to the

operations, we can dilute the fixed cost. It’s really directly

linked. The second lever here is about efficiency. So, we’ve

been investing a lot in digital transformation, automation,

autonomous track. So, we’re going to reinforce.

Vale Day 2019

December 2, 2019 17

It’s my challenge, my job here, to make operations more and

more efficient. And I want to emphasize one thing here. This

is negative here. We’re going to increase our cost because we

are using filters to make our operations safer, without the use

of the dam.

But we want to offset this increase of cost using the efficiency

that we have in our operations. So, this is a long to midterm

view of what we have in our operations. The second part of the

cost is about the freight. So, this is good news. We are on

the right truck.

You know very well about our strategy to have big vessels. The

Valemaxes is going very well. You know also very well that we

can reduce 40% of the emissions, using the Valemaxes compared

to Cape Size. And the freight in midterm, long-term, will be

around 16.

Well next year, specific, we have the IMO regulation. Also, you

know very well about this. And we need to use the low sulfur

bunker. Today the spread between low sulfur and high sulfur is

about $200. What we are doing to offset this problem?

We are using the scrubbers. Scrubbers is a technology that you

can use the high sulfur bunker and reduce this gap. Another

possibility, supply and demand of low sulfur bunker can be more

balanced, and the price of low sulfur can go down. But in this

case, this year, 76% of the fleet will be with the scrubbers

installed. And in two years, 96%, 99%. So that’s the way we see

the freight.

Another component of our efficiency and competitiveness is

about the premiums. So, this is something really tricky that

we need to go. This is a complex slide. I want to walk through

them. Just to remind you, you know very well about this, that

the premiums is a function of two margins, two industries, and

the coke and coal price.

This is a table that you compare the 65 index and the 62 index,

and the spread between them. If you have steel margins going

higher, our clients are stimulated to use better ores, high-

quality ores to make the production more efficient. And if you

combine this with the higher cost of energy, they can save more

if they use a high-quality ore.

So if you see this table, what happened last year was the right

side and the upside here, premium spread about 22%. And what

happened this year was the opposite. So, the middle of this

Vale Day 2019

December 2, 2019 18

year was on the lower side, the left side. If you walk through

what happened this year, just to remind you know very well

about this but remember that we had a problem with the balance

of supply and demand after Brumadinho and also, we had problems

with the Australians, that they had problems with weather.

And the index went up. When the index went up, we invited other

competitors to go to the market. The concentrates in China,

other concentrates from other places in the world, they went

to the market. Steel price declined. First, trade war. Second,

China boosted their production to fight against trade war. And

the margins just narrowed.

So that’s the end of the game of this year. Now what we have,

what is going on, the margins are coming back, not at the level

that happened last year. So, we are something between the 12

here. And we see that the model is going really well, and this

is trying to explain the model. Long term, what we see that the

margins will stabilize in something of the middle, and the

price index can be something between 60 and 80.

Well to summarize this, what you see, our business is still a

strong business. In 2018 our EBITDA break even the cost of the

three components that’s just mentioned, was 28.5. And what we

see next year, we’re going to go back to 28 to 30, if you

compare to all the initiatives that you just mentioned.

And if you consider $60 per ton, the lower cost that we

forecast, this is a business that we have 50% of margin. So,

it’s a strong operation. Well, let’s talk about the future,

what we see in the future. Marcelo just mentioned that we are

going to be—our clients are clamoring for solutions about

emissions.

In Europe they are really under pressure. The cost of the CO2

there is already $30 to $40 a ton. So what we are doing to face

this? We are the best company in the world for iron ore to face

this challenge. We already have a great portfolio of quality

products that we can face this.

This is an example. Today, if you simulate what is the impact

of our product in the production of our clients, we can save

30 million tons of CO2 today, just using the best ores in the

world, like Carajás fines. It’s about 9% of the emissions, of

the emissions is Scope 3, what we call Scope 3.

We have in our portfolio more than 85% based on high-quality

products, and you know very well our portfolio. I want to just

Vale Day 2019

December 2, 2019 19

emphasize here the GF88 is a new product. This is a ground

Carajás fines that we are doing grounding in China to supply

the necessity of pellet feed that you are expanding pelletizing

plants in China. So, we don’t need to use water, just grounded

and supply them.

This is a market of 30 billion tons of pellet feed that we are

going after that. This year probably we’re going to supply 5

million to 7 million. We are just launching this product this

year. And we can go beyond. And that’s what Luciano mentioned

about metallic.

Well our clients are struggling about how can it be reduced?

They have problems to end of capacity in some part of their

assets. They need to achieve the new goals about CO2. What do

they have in place? HBI is an example. HBI Brazil will now,

with the pre-sal we have a lot of natural gas. How can you use

these industrialized plants in Brazil, and use natural gas to

transform iron and reduce iron, using the HBI technology?

That’s a possibility. Bring the clients to Brazil. It’s like a

pelletizing plant of the future. We can go beyond in the chain,

and bring them to talk about that. So, we establish a lot of

conversation with our clients to bring the technology, the

supply, and the location.

Second alternative here is about what we call green pig iron.

We already have in place, in house for 15 years the Tecnored

technology. We just did a trial, industrial trial to produce

the pig iron. Pig iron can be used in the furnace during all

the chain of our clients.

If you compare here the effect when you do, to make the

technology, the pig iron with the Tecnored, using the biomass.

We just tried using 50% of biomass and 50% of thermo coal we

can reduce 50% the emissions of our client. And we are working

hard to design something that we can use 100% of biomass with

our clients to supply them in the new kind of technology.

So, and I’ll say more. We have other things that are coming.

And then we have huge, a lot of people, technical people design

new products to fulfill this kind of solutions. Something will

be coming in the future. So, just to wait one more minute to

summarize what we are talking here. Well first thing, we have

to understand that the return of our operations is something

that we need to do step by step, safety first, every time.

If you find something, stop. Go deeper. Check and return.

Vale Day 2019

December 2, 2019 20

That’s the mindset. That’s what we said. That’s what Carlos

said. We need to understand that you’re going to decide and we

will be on top of this. Every time we decide something, it’s

because we are leading this.

Second, information. We’re going to return our efficiency,

definitely. We have many things, many works to do, despite the

return of the volumes, but it’s obviously to return to the

volumes but respecting the value over volume for sure.

And thirdly, I can say that we are ready now to face the

challenge of our clients considering the CO2 emissions, all of

the effect of the pressure of the society. And we can say more.

We’re going beyond, join the chain. Bring your other

technologies, and be really close to our clients to solve their

problem.

No I call my friend here, Mark, to continue with the base metal

strategy.

MARK TRAVERS: Thanks, Marcelo. Good afternoon, everyone.

Marcelo just concluded his presentation by speaking about some

of the opportunities we have with our iron ore products in a

greener future. I want to talk to you today about some of the

opportunities we have in the nickel business.

We’re in the middle of the journey of the turnaround of the

base metals business, a transformation in the business. And

there is also an incredible opportunity here as nickel plays a

key role in the EV and renewable energy driven world. Nickel

is poised for a dramatic change in its market.

Nickel in the electric vehicle is a key commodity that will

improve the performance of the battery and will improve the

cost. It will enable the mass adoption of the electric vehicle.

I want to talk to you a little bit about what we see in the

market. Of course, with the mass adoption of the electric

vehicle, we see incredible increase in demand for nickel.

I want to talk to you a little bit about what’s going to happen

in the supply of nickel to match that demand. Currently, we

have an excess of supply of what we call class one nickel, high

purity nickel. Right now, we have high inventories, and that

type of nickel is going into supplying the electric vehicle

market, and the nickel sulfate.

However, that won’t last. It won’t be enough, come two, three,

four years down the road. What we’re going to need to see is

Vale Day 2019

December 2, 2019 21

laterite ores being processed, primarily through high pressure

acid leach technology. It’s a technology that our industry has

not been quite successful at.

And so, we have a clear challenge in our industry to meet the

demand through this type of supply. Overall, as we look forward

over the next few years we see the tightening of the supply-

demand metrics, and we see a trifurcation of the market. We’re

going to see separate supply-demand dynamics for class-one

products or high-quality nickel in the stainless-steel

industry, and finally the battery industry.

And I’ll talk to you a little bit now about how we’ve developed

our commercial strategy to meet these developments in the nickel

market. Vale has incredible strengths in the class-one market.

We have a broad range of high purity type products in different

forms, that can be used in many different applications.

It’s a part of our industry that hasn’t been strong recently

because of excess supply that I mentioned earlier, that is

currently going to the battery industry. Obviously, that’s

going to tighten. And it’s going to be our strategy to recover

and to strengthen our market share in this industry.

We want to be exposed to the LME pricing on this LME deliverable

nickel and play the dynamics that will play out in the premiums

as the demand for this type of product increases. We will look

for selective opportunities in the EV market, as well as the

stainless-steel market.

In the stainless-steel market, we have opportunities with

robust potential returns to expand our operations, for example,

in Onça Puma. In the battery industry, we will be selective and

look for opportunities. I will talk to you a little bit about

a greenfield project in Indonesia which is well suited for the

batter industry.

But we can also play the game, as the market tightens and the

premiums increase, and as the demand increases for battery

products, our powder products are very well suited for

batteries. And if the market demands it with better premiums

for the batteries, then we have the opportunity and the option

to shift over to that type of market.

As I mentioned, base metals is in a journey to transform its

business. We have not been a reliable operator, and in fact,

this year we are suffering from issues with our assets. We need

to invest in our assets and become a safe and reliable operator.

Vale Day 2019

December 2, 2019 22

We’re spending a great deal of effort and resources in our

asset integrity and also bolstering our preventative

maintenance programs. Another key component of the

transformation is the investment in our replacement lines in

Canada.

Currently we have very significant investments in the Voisey’s

Bay underground mine and the Copper Cliff Mine extension in

Sudbury. It demands a very high amount of capital in the next

two to three years. But it’s very important to say that we will

be cash flow positive in this period, this transitional period.

And to secure that, we initiated and announced a nickel hedging

strategy which will help secure our cash flows next year at

good prices. As we move forward and as we solidify this

transformation, we have options for growth, which are primarily

in Indonesia at the current moment, and I’ll talk to you about

that in a moment.

But as we move through this period of transition, we see robust

cash generation opportunities in our business. To secure the

future and secure the optionality for growth in Indonesia, we

have our contract of work which will expire in 2025. And we’re

working hard to secure that extension, that time.

We just announced the signing of a heads of agreement with the

state-owned entity Inalum, to meet our divestment requirement

in Indonesia. This will be a clear milestone in our path to

extending that contract of work in 20125, and it brings along

a very important strategic partner in Indonesia, where we’ll

see a lot of that growth occur which I referred to earlier as

the HPAL projects to supply the batter industry.

Just a little bit on the opportunities we have within our

business portfolio. Our Sorowako processing facility has been

a very successful operation for decades, and we have the

opportunity to expand that. We have a current project that

we’re looking at to expand by another 10,000 tons of ferro

nickel.

We also have two greenfield projects. It is very important to

be very clear here. While we will maintain 100% interest in the

mines in Indonesia, we will look to bring in partners in these

greenfield projects to de-risk the project and to ensure that

we will not be funding at a Vale level, these projects.

All of these projects on this page will be funded at the PT

Vale Indonesian subsidiary level, and will not demand cash

Vale Day 2019

December 2, 2019 23

resources at the parent level. So what does all of this mean?

I’m going to talk to you a little bit about the production

numbers for base metals.

These numbers do not include the production from Vale New

Caledonia. And Luciano will speak to you in a few moments about

why that’s the case. As I mentioned, we’re currently struggling

with our production, but we are investing in our assets and we

do see improvements coming, but we are currently producing at

a rate of about 210,000 tons per annum, not including New

Caledonia.

We see the opportunity to increase very quickly up to 240,000

tons, as we bring online some of these investments in North

America, in Canada, as well as the opportunity to bring on a

second furnace in Onça Puma, which is an excellent project. In

the future, as we bring on-stream the Indonesian growth

projects, we see opportunities to grow up to 360,000 tons.

Just like nickel, there’s great opportunities for copper in

this electric vehicle and the renewable energy world. In

addition to the traditional industrial applications of copper,

we see tremendous opportunities for copper in the EV engine,

as well as in the renewable energy industry, just as the mines

in copper are depleting, and the grades are decreasing.

So, we see we have a lot of faith, incredible opportunities in

copper. I want to talk to you a little bit about our growth

opportunities in our current portfolio on copper. We are

currently producing around 400,000 tons per annum. And in the

short term, we have the ability in 2021 to get up to about

430,000 tons, as we increase production in our Canadian

operations, as well as our Sossego mine.

Our Salobo 3 growth project will start to come online and ramp

up in 2022, 2023. And we’re going to see a very significant

increase in production coming from the Salobo 3 at that point.

And in the future, I’ll just highlight a few opportunities for

us.

Last year at Vale Day, we talked to you about the Victor mine

in Canada. It’s a mine that sits alongside the Glencore Nickel

Rim Mine. And we’re jointly studying the opportunity for a

joint development of this mine. It’s going very well, and we

expect that we’ll be making a project sanction decision in the

second half of next year.

We also have the LMO project in the Carajás region of Brazil,

Vale Day 2019

December 2, 2019 24

which has the ability to bring on another 60,000 tons. And

again, the project decision will be the second half of next

year. And finally, I want to highlight an incredibly large

project that we have been exploring in Indonesia called Project

Hu’u on the island of Sumbawa.

It’s a copper gold project which has the capacity to produce

at current estimate, about 250,000 tons per annum. So, in

summary, we’re turning around the base metals business at a

time when we’re getting ready for the market opportunities. If

we secure this transition, and we will, we will see a period

of robust cash generation and returns in the future.

At this point, I’ll pass it back to Luciano.

LUCIANO SIANI: So, where does all of this lead us? Where is the

opportunity? What’s the equity story for Vale today? Why should

you consider investing in our company? You notice probably that

we spent 70% of this presentation talking about safety,

reparation, sustainability because we are very mindful that

there is a cloud of risk hanging on top of Vale.

And we’ll spare no efforts to reduce that risk, to the benefit

of the valuation of the stock as well. So, three key things I

would like to call your attention to. The first one, under the

value opportunity, is the business.

If you summarize, if you look at this chart, our core businesses

in the next three years, and please bear in mind we’re talking

about three years, 2022 is a key year for Vale. All the three

businesses are going to be in much better shape. Iron ore

production will come back.

We’ve been saying since the very first, the aftermath of the

Brumadinho tragedy that it would take two to three years to

normalize. It will take two to three years to normalize, but

it will normalize. Remember we said S11D would take four years

to ramp up? The fourth year is next year. And in the plan we

have 91 kilotons of production from S11D.

So, these things will happen. We are obsessed with creating the

conditions for this to happen, and the competitiveness will

come back.

Nickel, as Mark showed you, will also improve production. We

will slowly bring back the production we took offline. And

copper, you are seeing the growth. So, if you do the math,

between 10% to 30% growth from today’s position in all of our

Vale Day 2019

December 2, 2019 25

business, and at a low cost. We always show you the Capex

numbers. Here are they again. The long-term capital

expenditures for Vale continues to be seen at a level of $4.5

billion.

So, there will be no offense towards the cash flows from excess

capital expenditures. But you notice also that next year and

the year after, you have $5 billion U.S., and that’s different

from last year. And why $5 billion U.S.? Because of the

investments in filtering and in dry stacking that Spinelli

mentioned that are being front loaded.

They would spread out over 10 years. They’re going to be

concentrated in order to eliminate tailings dams and their

consequences in the short term. But the big picture doesn’t

change from ‘22 onwards.

So that’s the first opportunity. The business will improve

dramatically over three years. The second opportunity is what

is outside of the core business. We do have a lot of cash flow

drains outside the business. And we will attack them vigorously.

The first ones are Moatize, Vale New Caledonia, and the other

JVs. These other assets have bold plans to attack them. Let’s

start with Moatize. Look at what is written on the left-hand

side, a short-term shock will lead to strong gains and near-

term cash flows.

The reason why we messed up Moatize this year is because the

ore body was not sufficiently drilled, and it disappointed us

in the sections we’re mining today. It’s very poor quality.

So, we’re changing completely the mine plan. It will reduce,

yes, the life of mine. It will reduce, yes, the reserves. You

saw the impairments.

But we’re going to go after the good stuff, and especially the

coking coal use are also going to go up. So that’s the left-

hand side of the plan. On the right-hand side of the plan,

we’re talking about the process plant. The process plant was

not made to treat the ore that we were taking from the ground

this year.

So, we will stop the process plant for three months. We will

produce nothing for three months, to fix all the issues and

glitches, and to even make changes in the flow sheet to make

sure that the process plan now is adequate to the new mining

plan. And we’re going to come back in the second half of 2020.

Our goal is to come back at a 15 million ton rate, at which the

Vale Day 2019

December 2, 2019 26

asset is EBITDA positive. So that’s the plan.

I keep pressuring the guys, is this going to work, guys? So

far, they’re promising me that it will. We’ll see. Vale New

Caledonia, we are working on different scenarios to exit VNC.

We have communicated this to the French authorities, both in

France and in the south province. What has changed that prompted

us in this direction?

Three things. First, we were not able to take VNC production

to the levels we intended to. Something on the technology,

we’re missing it. The second thing, the second reason is that

there’s more people now engaged with that technology around the

world, because to make battery sulfide, nickel sulfide for

batteries from laterites that we have in New Caledonia and in

Indonesia, you require HPAL technology, precisely what you have

there.

So, there’s a lot of people looking into this technology, and

we believe that some of them also have a better grasp of it

than we do. And the third thing is that New Caledonia produces

intermediates which were disregarded a few years ago but today

are very important intermediates for the battery industry.

So, there is an opportunity, yes, to maybe change the flow

sheet ourselves or others, in order to fix what is happening

in the asset. So, by the first half of 2020, we will tell you

what is the path going forward. But that’s not all of what’s

on the table.

This table over here shows that in 2019, if you do the math,

almost $3 billion were spent outside of the core, and were

dragged by other assets or liabilities. We talked about Moatize

and VNC, and we promise you that by 2022, again 2022, there

will be no cash outflows with those two assets.

We have the stoppage expenses of all this idle iron ore

production which will not be there in 2022. They will decrease

accordingly to the resumption of production. You have Samarco.

Remember Samarco, which is still dragging cash flows and next

year it’s going to be heavy because of the investments in the

restart, and because of Renova, the foundation commitments

which are also there.

But they are expected also to come down until 2022. And you

have other opportunities to also reduce those cash outflows.

So almost $3 billion in 2019, a negligible amount in 2022, a

lot of opportunity to improve the cash flows of the company,

Vale Day 2019

December 2, 2019 27

regardless of what happens in the outside world.

I’m going to jump through that. But you can see also there’s

an updated table here with the expenses of Brumadinho expected

to—reparation of Brumadinho, it will still be there in 2022,

but they also have a path downwards. We can discuss this in Q&A

if you want to.

So that’s the second opportunity. The cash flows of the

business, regardless what happens outside will improve because

we will attack the inefficiencies. And finally, when you put

all those cash flows together, again, 2022 is the reference

date here. You see the EBITDA to the left, cash flows to the

right, different scenarios for iron ore and nickel prices.

The first thing that calls attention is obviously this is very

robust, on the left-hand side. Secondly the translation between

EBITDA towards cash flows is also very impressive. But most

importantly, and that’s the third opportunity, how are these

cash flows going to translate into valuation?

The valuation today is very low because you perceive very high

risks hanging on Vale. And that’s why we spend 70% of our time

showing you that we’re obsessed with reducing that level of

risk to make sure that the company has the proper valuation.

And what would be that valuation?

There is an exercise here. You have three scenarios of EBITDA

for 2022. Those scenarios, they come from the table of the last

page. You can then go to the site and make your own map. We’re

just saying, guys, what with a lower level of risk, we may come

back to the 5.5, perhaps 6 times EBITDA multiples that we had

10 years ago, for example, from today’s 4, less than 4, perhaps.

That’s why de-risking is so important. And if we do that, we

will have a firm value. For example, take the middle column,

just as an example, of close to $100 billion. Less of net debt,

you have the market cap. And if you add up the free cash flow

accumulated from here or there, which will be on the balance

sheet, which will reduce debt or will be distributed, you get

total shareholder return, in excess of 25%. 2022, three years

only. That’s what we intend to deliver to you.

Eduardo, for your closing remarks.

EDUARDO BARTOLOMEO: Thank you, Luciano. Well, I hope we were

successful in leading you through the roadmap. I think there

is an effective intent to execute. The way we see, making an

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analogy, it’s not a sprint. It’s much more a marathon. But two

things we can expect from Vale. It’s discipline and persistence.

We’ve been, as we said, on the reparation effort, taking steps

with quality, effectiveness. On the safe side, our ambition is

real. We’re going to pursue it, and we’re giving examples of

that commitment to safety. On production, we’ll bring it back

when it’s possible but already coming, and increasing our

volumes and reducing or increasing our activities.

And lastly, as Luciano said, we are primed for a valuation, if

we do it right, if we keep our discipline. But I think, just

to conclude, we have to take this opportunity to create a better

Vale, a Vale that adjusts its processes, its products, aligned

with demands of the society.

So, for that, I would like to thank you for your attention, and

let’s go to the Q&A. Thank you.

CHRIS TERRY: Hi guys. Chris Terry from Deutsche Bank, just over

here. I had three questions, two on iron ore, and then one base

metals. The questions in iron ore relate to you put up the

production numbers. I just wondered if you could comment on

what you need to replenish from your Malaysian and China

stockpiles, as a result of 2019 and 2020 and forward. That was

the first one in iron ore.

The second one in iron ore is just around the pellet market.

If you could comment on China’s activities and what’s happening

within China’s own pellet market. And then the question on base

metals just relates to hedging. Just wanted to make sure, in

the medium term, I understood. You’re hedging at the moment,

but in the medium term, the plan would be to remove that

hedging, not to continue that. Those are my questions. Thanks.

MARCELLO SPINELLI: Well regarding the production, this is the

way we see the plan for production. But we need to understand

capacity and production, sometimes the numbers are different

because we cannot reestablish capacity regarding volumes, but

not the quality yet. So, we are planning the limit to lower

quality products to blend Carajás fines together BRBF. So, the

constraint is how can we ramp up this and reach there?

So, the range is poor if you have some ups and downs, like if

you need to lead some different investigation or supply in a

different way. So, we have that range to guarantee that the

momentum will be there. But we are on track to return to

production with all the investigation and authorization of the

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third parties, the prosecutors and the agency in Brazil to make

it happen. So that’s the way we’re going to return.

LUCIANO SIANI: So maybe to add, we could have made a plan to

produce 370 million tons, for example. But as he mentioned, the

quality is such and the cost is so high because of all the

restrictions towards production in the south, it’s simply not

worth it. So that’s where the value over volume approach kicks

in.

MARCELLO SPINELLI: If you have a discount, a high silica

product. So, you need to balance that return step by step, the

right quality to the right market. The pellets, you asked about

pellets in China, right, if I understand. Well we don’t sell

pellets in China. If you have any sale there, it’s a spot sale

for just some adjustment. But that’s not the premium market for

us.

We go to Middle East, or Europe, or Japan. So that’s the main

market for pellets. What we are developing is that they are

increasing their plans to reduce the sinter for—the problem of

pollution in China is not regarding CO2, but more related to

dust. So they want to reduce the use of the sintering process,

moving to the blast furnace. And the pellets are good because

you can go directly to the blast furnace. So that’s the reason

they are in increasing that.

They will need pellet feed, so we want to sell pellet feed to

them, using Carajás fines, performing just—changing the grains

of the Carajás, grinding the Carajás fines and fulfill the

pellets. So that’s the way we want to be in the pellet market,

feeding the pellet, the pellet feed.

LUCIANO SIANI: On hedging, unlike iron ore, we are price takers

in nickel. Nickel prices are decided by what happens in China

and in Indonesia, and not by the traditional producers. So, we

saw the window of opportunity. We hedged about 30% of our

production until 2020, and look at the financial statements to

see the derivatives position.

And that window has closed. And one of the key strategic reasons

why we did this is because we do have substantial cash outflows

in the nickel business in 2020 and 2021. We wanted to make sure

that the business itself could stand its own expenditures and

therefore securing, in this transition, a higher price.

EDUARDO BARTOLOMEO: And just to add, I think it proved right

afterwards. We knew it was a speculation around the prices that

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would not be sustainable. And I think it’s more important to

sustain the investment that we have to do in this transition

period.

CHRIS TERRY: Thanks guys. Just to follow up on the first point,

around the iron ore. I understand the production ramp, but just

wondering if you could make a few more comments on your sales

expectations and some of the moving parts in a restocking and

different parts of the business, to think about the sales that

we might see in 2020. Thanks.

MARCELLO SPINELLI: To guidance of production since last year.

Actually, we changed this year after Brumadinho, but we were

going to return to talk about production as a guidance for you.

But what can I say, that the number is quite the same but there

are some unbalance, if you compare some quarters because we are

again, for BRBF, we need to raise stock to get flexibility in

the operation in China, so we have some unbalance in the

beginning of the year, first quarter and second quarter.

We see this as a picture of the market, not only for Vale, but

also the unbalance from China steel high production, and

seasonal production of Australian and also Vale just a little

bit lower. So, the unbalance is there. But we’re going to talk

about production as a guidance for this year.

DANIEL SASSON: Thank you. This is Daniel Sasson from Itaú BBA.

Thanks for the presentation and for the updates on the efforts

you are doing on the compensations, reparations for Brumadinho.

My first question is related to ESG and capital allocation.

Probably with all these efforts, they are doing to become more

ESG friendly, ESG focused. Does it make sense to maintain all

of your businesses, or are you strategically considering

divesting some of your businesses?

And in the sense that maybe talking a bit about the iron ore

production in the north system which is where you do have dry

processing and higher quality, are you planning to expand

production in the northern system, maybe to replace part of the

production in Minas Gerais? Do you think that’s something that

could make or could help you guys to move from the 30%, 40% dry

processing today to the 70% in a few years, which is your goal?

Thank you.

EDUARDO BARTOLOMEO: I think first, to the question, we don’t

see yet, we are reviewing our portfolio towards a risk analysis

for sure. It has to do with ESG as well. But still, we didn’t

have to take any decisions about that. VNC was one that we

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December 2, 2019 31

already mentioned. It doesn’t fit in our portfolio. The skills

that are needed to run that are not here. So, it’s a matter of

accepting the facts, and of course it just goes to a better

portfolio of risks, for sure.

But that’s an undergoing process. We are of course doing that.

I don’t think on capital allocations, specific issues now on

that sense. About iron ore, we just ran our master plan for the

next five years. It’s balanced as we need the product. I think

some people sometimes don’t understand the fact that we need

to do both systems. We cannot only produce Carajás.

But we know we have the flexibility to expand Carajás if needed,

on a cost base, on a margin basis that we’re going to take. I

don’t know if Spinelli wants to elaborate a little bit more,

but fundamentally it’s that. On the level of our five-year

plan, we are balancing both systems.

MARCELLO SPINELLI: I think BRBF is going really well. It will

become the base of the blast furnace in China in years. And so,

we need to blend. But the name of the game is quality. You just

saw all the pressures regarding the CO2 emissions. So Carajás

is the key product for Vale. We are studying some expansion to

reach in S11D 150. It’s under study, this possibility.

But step by step, from 90, 100, 120, and 150. And it’s very

important to replace some capacity even in the north, but we

can build to the market, if you respect the value over volume.

We’ll be ready for that. And considering that we have lower

quality in the south, we can blend.

But you’re right, the trend is higher quality, but with the

BRBF, we have really succeeded with this product, so we’re

going to keep this.

TIAGO LOFIEGO: This is Tiago Lofiego from Bradesco BBI. When

can we expect, Eduardo, the collective more damage agreement

to be sealed with authorities, with Brumadinho? Can we expect

that for this year still, or is this something that can linger

on for a few months more? And then within that scope, when

should we expect you guys to come back and reinstate the

dividend policy? Do you think first half of next year should

be a reasonable timing for us to expect that, or you don’t have

a specific time in your head?

EDUARDO BARTOLOMEO: Would you repeat the second question

please?

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TIAGO LOFIEGO: Second question is reinstatement of the dividend

policy. Would the first half of 2020 make sense for us to expect

you to announce that?

EDUARDO BARTOLOMEO: Okay. Let me answer your first question.

I think we are undergoing a discussion with the government,

with the prosecutors, with the judge—the judicial system. So,

there is an expectation that we might come to an agreement but

it’s not feasible to do it this year. I don’t think there is

an expectation now, due to the complexity of stakeholders.

Remember that we have several lawsuits, in a sense, one for

environment, one for socioeconomic. So, you shouldn’t expect a

big bang like to solve everything. So, we believe there will

be an agreement around compensation and […] for environment,

an agreement for socioeconomic, for compensation and

reparation. So those both things are—and as you saw—as you

said, I think there’s several agreements around that are

supporting that.

But it’s not feasible to do it, as I mentioned, because there

are several stakeholders. People have to be connected. There

is leadership going on around that through the government. So,

the process, I would say is undergoing well, but it will take

time. And dividend , we have to keep our speech. Reparation is

improving. I think we were able to show to you today. But when

the time comes, the time will be announced. We don’t want to

give deadlines or first half, second half. But it will be

restored when it’s the time.

LUCIANO SIANI: It’s important, since we provision for the

reparation estimated outflows, we have always been considering

those types of agreements. So for example, ever since we made

a provision for the environmental liabilities in the second

quarter of this year, we put into that provision the estimate

that we have of where those conversations are going.

For example, you saw in the movie, sanitation. Sanitation has

been discussed for months now in a row. So, it’s there. It’s

already reserved there. Those conversations are not new.

They’ve been there for a while.

TIAGO LOFIEGO: And given recent conversations, do you see any

scope for more provisions, or you guys are comfortable with the

provision levels you have done?

LUCIANO SIANI: We are comfortable with the provisions so far.

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TIAGO LOFIEGO: And last question here from me, on the ESG, back

to ESG, you mentioned the 2030 target and the gaps. But what

are more specific milestones that we should be watching in the

next maybe two to three years, something like a shorter term

for us to be following?

EDUARDO BARTOLOMEO: Good question. I think first of all, I

think the ESG goals, we were discussing that, we believe we can

close most of them around 2021 to 2022. There are some more

pragmatical goals like ISO 14001. It takes time. But it’s not

unreasonable to see. And that goes back to the transparence

portal. We’re going to follow up there, all the evolution for

that, or governance, things that […] I’m going to go back.

A lot of this stuff is already disclosure. We have in sight and

we’re going to disclose. So that’s why. Out of the gaps that

we have, we believe we’ve closed already 40%. The remaining,

as mentioned, is like 40% in governance, 40% in environment,

and 20% in social. One thing that is very important to bear in

mind is that when next year we close the shareholder agreement

is finished, like one big thing for the governance is

independent committee, not independence of the board will be

in a way solved because everybody that comes after is going to

be assigned as an independent.

So, we believe there is an ESG will be taking two years to

three years. And we can follow up on the portal, the goals for

that. So that’s why we defined this roadmap.

DANIEL MCCONVEY: This is Daniel McConvey from Rossport

Investments. Talking with a Brazilian friend of mine, who knows

your company well and the events of the last two or three years,

she maintains that part of the issue is part of the culture and

maybe the Latin American macho Brazilian culture, where

managers going up the chain of management are less likely to

be forthcoming if there’s a problem.

In other words, be totally transparent if there’s something

that’s not in their control underneath or that they’re not

controlling properly. Is that the case? And if so, how do you

address it?

EDUARDO BARTOLOMEO: Thanks for your question. I think there’s

two questions. And one, we cannot infer something for a cause

that we don’t know. So, the efforts that we are doing around

solving or finding the solutions from the accident is being

taken because that’s very important to level off.

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First of all, we have an independent committee that’s directed

to the board. We did our own internal panel of specialists.

That is almost coming to an end now. Then we will have the—how

can I say that? The findings about what was the cause of the

accident. Inferring causes now is of course premature, and we

might not even solve the problem if we attack them.

But on the flip side, everything can be improved. Everything

has to be improved. Of course flow of information, VPS as what

Carlos mentioned here, it’s the basis of Toyota production

system. Any system that you see on total quality. What we want

to do, expose problems, solve problems, improve, get to a level

of efficiency and excellence that helps risk.

Remember when I said we didn’t put—how did I call—safety and

risk. We say safety and operational excellence because the

support for the safety will be operational excellence.

Operational excellence happens when you have flow of

information. You have capability. You have people trained to

do several things.

So, I would be mindful that we are working on that. When Carlos

mentioned cultural transformation, we need to create chronical

[…] for everything. That’s one thing that is in the industry.

So that’s why we want to foster that. But I will be very

mindful not to infer consequences from something that we don’t

know yet what happened.

DANIEL MCCONVEY: How do you encourage managers to be more

forthcoming?

EDUARDO BARTOLOMEO: Sorry?

DANIEL MCCONVEY: How do you encourage your managers, up the

management chain to be more forthcoming if there is a problem

they’re not disclosing?

EDUARDO BARTOLOMEO: I think everything. It flows naturally. We

do performance meetings. We talk to people. I walk around.

Spinelli has an approach to do that as well, the creation of

the second line of defense. It’s checks and balances, talking

to people, creating an environment that people want to talk.

That’s all. You have to do that in all companies. I worked for

other companies beside Vale. You have to do it everywhere.

So that’s the fostering that you have by walking the talk. And

I think we are doing that, with the actions that you’re

perceiving here.

Vale Day 2019

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DANIEL MCCONVEY: Thank you.

MARCELLO SPINELLI: Not only talk about the flow of people but

technicians along the chain to give information better and

better. So, the key is technical.

EDUARDO BARTOLOMEO: When I say just—I think your question

because I think it’s in my speech, by the way. Remember we said

reparation, people, and safety. We think those three things

work together, so people are the center, everything, either the

technician, either the director. Everybody has to be involved.

That’s what we’re trying to foster to create a better company

in any situation, in any condition.

And I think even the Brumadinho event creates a powerful

movement towards that goal. And even though it might not be the

case for the case of the accident.

CARLOS DE ALBA: This is Carlos de Alba from Morgan Stanley.

First question is regarding the discussion with the

prosecutors, in terms of the flow of information and the details

about the dam that collapsed. There had been some news

suggesting that some people that did investigations believe

that Vale did not provide full information on the dam

conditions. Have you had conversations with the prosecutors on

this?

Do you know, what are they thinking, and if you could be charged

under a different law that could result in an incremental

liability from what you have booked?

And the second one, Luciano, maybe you can give us an update

on the uses of cash flows to take care of balance sheet

liabilities, any timing and details. That would be useful.

EDUARDO BARTOLOMEO: Let me go to the first one. And Carlos,

just go back to the previous question. We don’t know yet the

causes. What we are doing is we are supporting the

investigations with everything that we can. And as soon as we

have the information, we’ll pass to you. It’s too premature to

infer anything. There’s an external investigation doing by the

authorities. There’s an internal investigation doing by the

board. When those things become public, we will deal with it.

But we don’t know yet. And I think the second question is about—

LUCIANO SIANI: Well the only update I may give you is that we

intend to withdraw the MBR preferred shares this year already,

so we’re hoping to retire them. It’s around $800 million. As

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you saw, there’s about $200 million cash outflows this year

alone, on those preferred shares, and we intend to retire those

preferred shares.

THIAGO OJEA: Hi. This is Thiago Ojea from Goldman Sachs. Thanks

for the presentation. I have two questions. First on the

guidance of iron ore, you’re providing now again guidance on

iron ore production, given that this year, you provided guidance

on sales. If you can comment a little bit, what are expectations

in terms of sales for next year? How is the inventory level at

Vale throughout the chain? And also, what is your expectation,

in terms of Chinese steel production?

And second, on Moatize. I understand that you are trying to

give a shock in the operations to try to improve the

profitability. But how do you see this business in the medium

and long term? Would you consider to divest from this business?

What is the end game on the coal business? Thank you.

MARCELLO SPINELLI: Okay. Well, the annual basis, what we expect

the sales will be quite the same as the production. But there

will some imbalanced moments that we have lower production, a

lower quality, and the necessity to restore the BRBF stocks.

So, there are some difference between the quarters. But in

terms of volumes, during the year, we expect the same number,

just to understand that. You asked another thing about iron

ore. Steel production.

THIAGO OJEA: Steel production in China, what is your view and

expectations for next year?

MARCELLO SPINELLI: Well, we see the production will be stable,

the same as we expect this year, something between 930 million

to 1 billion tons. That will be the same. We see strong stimulus

to infrastructure coming, so there is a delay for the result

in the end of the year. But we have some information that are

coming better.

Also, there is spike now for industry. The recovery last month

was really good but we don’t get in this area. But the other

part is regarding the real estate. Real estate is still the

locomotive of China demand for rebar. So, if you talk to the

clients, they see a stable production for next year with some

talking about the cuts, the winter cuts.

We don’t see a strong winter cut. We are trying to keep the

production. Some specific cuts regarding the pollution, the end

of the year. But the combination of that is to keep the

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December 2, 2019 37

production of steel as a key against all the problem between

trade war or other possibilities to keep the growth of China

at 6% a year. That’s our mindset, and that’s what we check with

our clients.

EDUARDO BARTOLOMEO: About Moatize, I think it’s too premature

to say anything now. It’s extremely—how can I say that—complex,

what we are trying to do, who follows Vale knows, how difficult

it has been to operate the mine, not the railway by the way.

The railway we are doing fine. So, talking about partnership,

exiting anything now, it doesn’t add value to Vale. So, our

focus, as Luciano mentioned, is completely on restoring the

business.

TIMNA TANNERS: Hi. This Timna Tanners from BOFA. Just to follow

up on the Chinese steel production questions, if I could try

to pin you down to a little bit more precision on like a

forecast, just because beginning of the year was 10% plus

growth. Recently declined year over year.

So do you think there will be stimulus measures to keep forecast

next year? Are you looking at mid-single digits or more like

this year? And then my second question. I’m fascinated by your

HBI or pig iron discussion. How soon would you be thinking

about providing those alternative metallics to the customers?

And when you do have those discussions with particular Europeans

steelmakers looking to reduce their carbon footprint, do they

have a problem with using met coal and natural gas still, or

are there other alternatives, maybe the green pig? How far

along is that? If you could just provide a little more detail.

MARCELLO SPINELLI: Well production in China is, again, we think

that will be stable, about the same as this year, around 950,

930. It can be like this. Why? The same base for what happened

this year, the current year, based on the three pillars there.

Real estate is still the locomotive for demand.

But we have the—similar for infrastructure coming, so there is

a delay to recover that. They centralize a lot of the decision

for infrastructure. They are trying to decentralize this

decision again. But they have the problem of that in the

communities and the municipalities. They are solving this

problem.

We have been talking to […] University so close. We are partners

in the studies for China. And they are saying that they are

trying to solve the pattern of the loans to go, to bring to the

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December 2, 2019 38

central government and leave the municipalities to invest.

That’s the trend that is going on. And we can see the

infrastructure will return for levels not that we saw some 10

years ago, but it will return.

And some problem that we can find in the real estate business

because the real estate business is just a short-term solution.

It’s not a long-term solution. You can have a bubble, so there

are concerns about, okay, the imbalance that keeps the industry

fighting against all the problems that have to keep the growth

and also the trade war problem.

In this case, it puts a lot of pressure in the industry goods.

So that’s the big picture of the demand side. So, combining

everything, we see stable production for next year. Ex China

is recovering some operations. Japan is recovering after all

the problems with the weather, going back to ‘18. We have

something outside in the Southeast Asia, it is growing, a

different level, but they are growing. They are coming back

And Europe, we see a better road for growth. We can say that

they are growing 2%, 3% of the Ex China globally. So that’s we

are seeing demand. HBI, well what we are doing with HBI, HBI

is a proven technology in the world for more than 15 years, 20

years. You can use the HBI in many parts of the process. You

have a trend to use more scraps. That’s the trend for China.

It’s a long-term trend.

You can see to 2030. It depends on the quality of the scrap.

We don’t see good quality for scrap in China, so it is not

going to move so fast from blast furnace to EAF. That’s a trend

that probably will go over to 2030. That’s not a short term,

but really long-term transformation.

On the other hand, in the U.S., even in Europe, U.S. is based

on the EAF. Europe, that’s a possibility to change from the

blast furnace to the EAF. That is the way we are. So, we can

use HBI to clean, to improve the quality of the scrap. That is

one possibility. The other possibility you can use directly in

the operations, blast furnace or the EAF.

So, we are studying with our clients together with them. We’re

not going to this market and investing alone. So, we want to

do something close. We don’t want to spend a lot of Capex but

we want that they spend the Capex and you can combine location,

source of energy, and the technology.

So that’s the pillars that we want to combine to supply them.

Vale Day 2019

December 2, 2019 39

That’s one trend. Another one is regarding the Tecnored.

Tecnored is pig iron. Pig iron for the U.S. is the best product.

They love pig iron. So, they can use this. They can correct it.

It’s more flexible.

And the way we produce pig iron in Brazil today, there are many

restrictions regarding the source of energy. So, they use

eucalyptus to make this happen, but there are some concerns

about the limitation of that. So, when we go and bring the

Tecnored, that is a better process, safer and more efficient.

We can introduce the use of biomass, and also blend with the

thermal coal. So that’s another trend to discuss.

We are also developing other products, not ready yet, that we

can anticipate this trend using other—changing or adapting

products that are in place in our production like pellets. The

way we can produce pellets is a possibility to introduce

solutions that we can foster and celebrate the change and the

save of CO2 in these markets.

But it’s important to understand there are different trends in

this market. China will take some more time. Europe is under

pressure. U.S.A. is already done with EAF. So, in all of these

options we are—then we’ll need good products, good iron ore.

We need the pellets to feed all these possibilities. And we are

ready to do that. So that’s why Luciano said we are in the best

position to face all the transition.

Because then we’ll need iron ore. HBI is based on good iron ore

and pellet products, to make it happen. So that’s the reason

why we are trying to help them to localize the best solutions

and give them the best product that we have.

LUCIANO SIANI: General market will be very different. And we

as the leaders will continue to be the go-to firm to supply

solutions to our clients. Only Vale has the differentiated

portfolio and will continue to develop products dedicated to

those needs.

CAIO RIBEIRO: This is Caio Ribeiro from Credit Suisse. So, my

first question is regarding the timing of the technical report

of the causes of the accident. I’m just wondering if you guys

can provide more color when you expect that the report that was

hired by the auditing firm that Vale hired to provide this

report, when you expect that’s coming out, and also the public

prosecutor’s technical report on the causes of the accident.

And then secondly, regarding some of the potential changes that

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December 2, 2019 40

the government is discussing to implement in regards to a

special participation tax or even a change in royalties, I just

wanted to see what your perspective is on where these

conversations are headed and what you think will potentially

change in terms of the regulatory framework, and what you think

today is necessary to change from the regulatory standpoint.

Thank you.

EDUARDO BARTOLOMEO: I think first of all, first question, I

think until the end of the year. We are expecting that until

the end of the year, the technical report that we are preparing.

The second one is a little bit more complex because there are

several initiatives or noises. One is like exempting...There

was a revision undergoing in the Congress to only go after the

mining sector. We understand that that is not reasonable.

And of course, Vale is a part of a bigger system, and we are

not the only mining company in Brazil. And ABRAN is dealing

with that through CNI as well. And we believe there’s no solid

grounds to do something like that. Participation, special

participation is even more complex because you have to choose

which kind of taxation or royalty.

Again, this constitution is the law, so it’s very hard to have

two systems working together. And finally, about royalties,

we’ve just been under an increase in royalties. You know that

in 2017 it happened. So, we don’t believe there will be room

for that kind of discussion. And Brazil is undergoing a big

revision on the tax system.

That I think will help clarify all these issues but it will

take a little bit of time. But it’s natural. But we think we

are very grounded at the facts that we are taxed correctly.

The other tax, there is a complex to implement, even legally

speaking. So that’s the way.

But again. Vale is one of the other members from the industry

that follows, that has the same perception, and are reacting

as a group to try to, of course avoid any damage to the industry.

ANDREAS BOKKENHEUSER: Thank you. Actually, two questions from

me, this is Andreas Bokkenheuser from UBS, first question being

on your iron ore breakeven cost. In the third quarter, we saw

it, I think just short of $45 a ton. Based on your cash cost

and freight cost guidance today, I think we could be looking

at $3 to $4 a ton drop in cost going forward. So, based on

that, should we think about your iron ore breakeven cost to

China in the $40, $42 a ton range going forward, sustainably?

Vale Day 2019

December 2, 2019 41

That’s the first question.

And the second question is one of the things we’ve seen in

China in the past 12 months is a lot of steel mills investing

in scrubbers, in filtration systems, effectively allowing them

to consume a lot of more lower grade iron ore, and possibly

even move away from the higher-grade iron ore consumption. Is

that how you see it as well? And if so, are you adjusting your

blending strategy for this particular development, going into

next year? Thank you.

MARCELLO SPINELLI: Well the breakeven cost, as I mentioned, we

are going to return our level of competitiveness in a few years.

So, as I mentioned, the key component is related to this

operation. We need the volume to dilute the cost. This is a

gradual process. If we reach all the volumes that we are

planning for that, obviously if you have market for that.

Just to remind you, we are really concerned about value over

volume, so we can change the production if you don’t need the

product even quality and also volume. So that will be the step

by step process. So first tackle, we need to tackle the

capacity, second more efficiency. So, in the end, the trend is

there. It’s really solid, the way we’re going to have the return

of the breakeven EBITDA can break even.

So gradually, three, four years, we’ll be there. Luciano is

really happy about this. And the filtering process, I mentioned

also we’re going to increase the cost of that. The first one

will be Vargem Grande to be in this year. It will be ready in

this year. The others will come in the end of 2020, 2021. So,

there will be a process. And this is part of that.

That’s the way we’re going to do. We need to filter that. We

have another investment New Steel, as I mentioned, New Steel.

We also have other initiatives to bring and avoid the use of

the dams. That’s an obsession to make it happen. It will cost.

But we can combine this with the possibility to operate in a

safer way. If you compare the cost of safety, all the

possibilities that we can have.

That’s another thing that we can generate co products with this

filter because we have—the co product is the sand, silica. It

will be a cleaner silica. We can dispose the silica to the

markets. We are studying this kind of things. So, in our minds

that this is a cycle operation. If you can close the cycle

without any disposal, any necessity of waste, we can bring the

waste and turn it in products, a whole product.

Vale Day 2019

December 2, 2019 42

We can stabilize and have a sustainable production. So in the

end of the game is avoid the dams and use in the future the

products that we are going to generate, the co-products and

turn the waste in co products, not only in—for us it’s not

ready to talk to you, not ready to talk about this but that’s

the mindset I want you to put in your mind. So, we are going

to solve the necessity of dams. And after that, we want to

solve the necessity to dry stacking this product and return to

the society in a way that we call the share value situation

because we can use this in industry like construction and other

kind of necessity of society.

So, this is the perfect cycle we want to get. It will take some

time. There are a lot of initiatives together. So, we are

prioritizing the filtering, and after that the reduction of the

dams. And the next step will be to circulate all the products,

and all the materials in an internal cycle, in a closed cycle.

That’s the trend we have.

LEONARDO CORREA: Good afternoon, everyone, this is Leonardo

Correa from BTG Pactual. Thank you. My first question maybe for

Luciano, still on the dividend topic, which clearly Vale is not

in position at this point to give much more detail on the

dividends. Just so the market can follow and can track the

additional events, is there any specific event that Vale is

waiting for to resume dividends?

What should we look out for? Is it just a matter of signing the

agreement with the government, and then Vale would be in

position to resume the announcement? Is it more of a

qualitative, potentially a political decision? What exactly is

the consideration for Vale? If you can add some disclosure for

investors, that would be great.

My second question for Spinelli, I wanted to return to the

guidance for 2020 on shipments. The range is 340 to 355. You’ll

recover 15 million tons of vital capacity which maybe is a bit

below what the market was expecting. So how optimistic is,

let’s say the mid to higher end of the range? Should 340

probably be more of a base case, considering that the first

quarter of 2020 you’ll be running on 70 million tons, more or

less, of capacity? There’s typical seasonality.

So just wanted to get a sense of what maybe the better number

is. The impression I have is 340 is probably the better number

for 2020. Just wanted to hear your thoughts. Thank you.

EDUARDO BARTOLOMEO: You asked Luciano. I’ll pass to Luciano,

Vale Day 2019

December 2, 2019 43

but I think it’s clearly something a little bit qualitative.

Of course, if we find and strike a deal in the environment and

on the social side, of course that would be a reason why we

could move forward. But we cannot attach to it, because it

might not be the case, because as before it might be too complex

to do it here. We don’t think that has logic on that. So that’s

the first, I think, element. We’re trying hard. That’s why we

say all the time that the reparation effort is key to the

perception.

And by the way, this is a decision that has been taken by the

board as well, so it’s a collective decision that people have

to perceive that the moment has arrived. That’s it. I think

that’s fundamentally what’s driving us. It’s too early to talk

about that. But of course, one day we will talk about that.

Unfortunately, we cannot give you a specific milestone. There’s

no milestone. There’s no specific event that would trigger

that.

If Luciano can add, of course, I think that would be welcome

but this is the position from Vale and from Vale board of

directors, as well, not only for the management team. We are

extremely focused on reparation, extremely focused on that.

That’s all the time that we need to do. And of course, improving

what we just mentioned here, de-risking the company, that’s

what you’re expecting from us. When the time comes, of course

we will come to the market.

MARCELLO SPINELLI: Talking about the range, well, for the range,

you know that we have initiatives for both numbers. So, you can

understand that we can reach the 355. So that’s a real

possibility. On the other hand, just mentioned here, many times

we can find something that we don’t know we had, so just

reassessing some dams and we can discover that we need to go

deeper in some investigation, so we can reduce the production.

So, this is a good range for that. But I think 350, that’s the

number we are going after, but the range is there for ups and

downs.

CICERO MACHADO: Hi, this is Cicero Machado from Wood Mackenzie.

The first question is about the pellet plans Vargem Grande

Fabrica. When do you see those coming back? And the second

question is about New Steel Technologies. Which are the major

constraints with the scalability of new steel technologies? Is

it Capex or is it geology, or anything else?

MARCELLO SPINELLI: Well, Fabrica will be the last to return.

Vale Day 2019

December 2, 2019 44

On that side, we need many conditions to return regarding the

dams. We have a big cap dam that is under construction. We have

the wall that is under construction that will be ready in March,

early March, something like that. So just only after that we

can go to the site and make the improvements in the dam,

actually.

And we need the production from Fabrica to the pellet feed to

make the plant return. We expect this for the end of the year.

We’re not counting on that, but we’re expecting to have this

in the end of the year. That’s the general plan. And the second

question, sorry. New Steel is a great technology. It’s going

really well. We have a small plant that we have a trial.

We are investing this year in Vargem Grande will be the site

for that trial. We’re going to use the older facilities that

are already installed in Vargem Grande that we can make the

installation faster. We expect to have this in one year or one

year and a half we will have the first plant. It’s going really

well. The technology is—we have a good team, technical team to

develop that. And what is good that you can define the size of

the production.

So, you can have 1 million tons of production or 2 million tons

of production. Sometimes you can be closer to the client. So,

it’s very flexible, the way we’re going to use the solution.

We can install close to the mine, close to the client, so we

can have a flexible solution for that. We’re really happy about

the evolution of the technology. And soon we’re going to have

good news about this.

LUCIANO SIANI: We have room for just one more question. Sorry,

we are well past time, and lots of flight cancellations today

as well. We just heard, and so everyone needs to deal with

that.

JOHN TUMAZOS: This is John Tumazos. Concerning the nickel

projections, the 210,000 tons drops to about 190 pro forma the

Indonesian ownership stake changing. And you project 360. So,

could you tell us how you’ll get to 360 and why bother if

they’re haircutting you to 36.5? Why do it? There are better

places in the world than Indonesia to invest money.

MARK TRAVERS: The 360 is on a full inclusion basis. So

obviously, in those two projects we mentioned, we would not—PT

Vale would not take a full interest in, so it would be—on an

equity basis, it would be less. I think the Bahodopi project,

we anticipate a 49% interest. In the Pomalaa project, we

Vale Day 2019

December 2, 2019 45

anticipate about 25% interest.

So I think with respect to Indonesia, we have fantastic ore

bodies in Indonesia and a great portfolio. And we believe that

there’s great value in securing that for the future, great

returns on those projects as well. And we believe also with the

addition of Inalum to the ownership interest, we do have a key

strategic government player in there that will help us in

particular with the extension of the contract to work.

EDUARDO BARTOLOMEO: Well, once again, thanks a lot for your

time, for your interest, for your attention. I want to reinforce

what we’ve been saying since minute one in this meeting. We are

extremely committed with discipline, with persistence to de-

risk Vale. Thanks a lot, and have a good day.

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