Why invest in Vale?

Why invest in Vale?

Invest in Vale

Why invest in Vale?

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Why invest in Vale?

10 reasons to invest in Vale

1. We are one of the largest mining companies in the world and we focus on five main business areas: iron ore, nickel, copper, coal and fertilizers.
2. We are world leaders in the production of iron ore, pellets and nickel. We are a player in fertilizers in Brazil and we are growing in coal.
3. Vale is prepared to face the challenging scenario of the mining industry, even with the slowing down of the world’s economy and the fall in commodity prices.
4. One of our strategies is to produce at lower cost: with the conclusion of a range of improvement and expansion projects by 2017, our production volumes will grow in all business segments.
5. In the second half of 2016, Vale will start operation of its S11D project: the largest project in the history of international mining.
6. This new iron ore mine in Pará brings together the principal technological innovations developed by Vale, produces the best iron ore in the world and will have the lowest costs in the industry.
7. As a result of increases in production and productivity, our costs will continue to fall. Over recent years we have reduced our expenses and costs by over 50%.
8. We have a well-defined strategy for competitively distributing our production across five continents.
9. In the last five years, our Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), which measures our cash flow generation, has reached over US$ 115 billion and we have paid US$ 26.7 billion in dividends.
10. We are in the process of gradually reducing our investments while at the same time starting to operate a range of new projects. From 2018, we expect significant growth in our free cash flow and dividends.

Business strategy

We are focusing on increasing our competitiveness. Look at our strategic pillars.

Increasing productivity
Increasing volumes
Delivering projects
Strengthening our license to operate
Reducing costs and expenses

Setting the
basis for strong
Free Cash Flows

1Q17 Operational Results

Thousand metric tons

  • Iron ore 86,198
  • Pellets 12,422
  • Coal (Mozambique) 2,434
  • Manganese 544
  • Copper 109.0
  • Nickel 71.4
  • The production of iron ore achieved the record of 86,2 Mt in the first quarter
  • The production of coal reached the quarterly record of 2,4 Mt

Premium for ore quality

Vale has the highest-concentration iron ore in the world with the lowest levels of impurities. As a result, our clients have lower furnace processing costs. This makes all the difference when market demand is high, and our price carries a premium for the quality of our product.

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Looking to the future

The S11D project, the largest in the mining industry, will add 90 million tons of iron ore to Vale’s annual production. Expected to enter into operation in the second half of 2016, it brings together the principal technological innovations developed by Vale over recent years: modularized construction, processing based on natural moisture and the truckless system, which dispenses with the need for off-road trucks.

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More reasons for you to invest in Vale

  • We are one of the largest private companies in the Americas
  • We operate in around 30 countries and over 14 states in Brazil
  • We employ approximately 200,000 in-house and outsourced professionals
  • We invest in sustainability
  • We are considered a benchmark in corporate governance practices

Risk factors

Before investing in Vale, understand some of the risks related to our business.

1. Our business is exposed to the cyclicality of global economic activity and requires significant capital investments

As a mining company, we are a supplier of industrial raw materials. Industrial production tends to be the most cyclical and volatile component of global economic activity, which affects demand for minerals and metals. At the same time, investment in mining requires a substantial amount of funds in order to replenish reserves, expand and maintain production capacity, build infrastructure and preserve the environment. Sensitivity to industrial production, together with the need for significant long-term capital investments, are important sources of risk for our financial performance and growth prospects.

2. Adverse economic developments in China could have a negative impact on our revenues, cash flow and profitability.

China has been the main driver of global demand for minerals and metals over the last few years. In 2014, Chinese demand represented 69% of global demand for seaborne iron ore, 52% of global demand for nickel and 44% of global demand for copper. Therefore, any contraction of China’s economic growth could result in lower demand for our products, leading to lower revenues, cash flow and profitability.

3. Our business may be adversely affected by declines in the demand for, and prices of, the products our customers produce.

Demand for our iron ore, coal and nickel products depends on the global demand for steel. Demand for steel depends heavily on global economic conditions, but it also depends on a variety of regional and sectorial factors. The prices of different steels and the performance of the global steel industry are highly cyclical and volatile, and these business cycles in the steel industry affect demand and prices for our products.

4. The prices we charge, including prices for iron ore, nickel, copper, coal and fertilizers, are subject to volatility.

Our prices and revenues are volatile, which may adversely affect our cash flow. Global prices for metals are subject to significant fluctuations and are affected by many factors, including actual and expected global macroeconomic and political conditions, levels of supply and demand, the availability and cost of substitutes, inventory levels, investments by commodity funds and others and actions of participants in the commodity markets. A continuous decrease in the market prices for the products we sell may result in the suspension of certain of our projects and operations and the impairment of assets, and would adversely affect our financial position and results of operations.

5. Concessions, authorizations, licenses and permits are subject to expiration, limitations on renewal and various other risks and uncertainties.

Our operations depend on authorizations and concessions from governmental regulatory agencies in the countries in which we operate. We are subject to laws and regulations in many jurisdictions that can change at any time, and changes in laws and regulations may require modifications to our technologies and operations and result in unanticipated capital expenditures.

Find out more about risk factors in our annual Form 20-F.

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