Vale presents strategic planning for 2016 in London. The following are some of the highlights

About Vale

11/26/2015

Vale presents strategic planning for 2016 in London. The following are some of the highlights

Vale Day 2015 - Londres
Vale presents strategic planning for 2016 in London. The following are some of the highlights

Vale Day London was held on Friday, December 04 at the Mayfair Hotel for the purpose of presenting our strategic planning for 2016 to the market. The initial presentation was by Vale CFO/Investor Relations Officer Luciano Siani Pires. He expressed regret over the collapse of Samarco’s Fundão Dam on November 05 and emphasized his commitment to the recovery of the River Doce. "Our commitment is to ensure that the River Doce becomes better than it was prior to the accident,” he stated. Vale CEO Murilo Ferreira had to go back to Brasilia due to developments relating to the Samarco accident and was unable to attend.

Last Tuesday, December 01, Vale’s strategic planning for the coming year was presented to the New York Stock Exchange. During the live webcast, our Executive Officer spoke about our achievements this year, such as the delivery of projects and an expressive reduction in production costs, which underlines our commitment to make the company ever more competitive within the challenging commodity prices scenario. “We are aware of the challenges ahead and are ready to face them,” he guaranteed.

Capex

The plan for 2016 will involve an investment of US$6.2 billion. By 2018, capital expenditure will fall to between US$4 and 5 billion, with the finalization of our investment cycle.

We remain focused on maintaining operational discipline to protect our bottom line by:

  • Continuing to simplify our organizational structure, increase productivity, cut costs and optimize capital expenditure.

  • Reducing our iron ore cash cost and improving the quality of our products

  • Reducing our investments to around US$6 billion

  • Completing our disinvestment and partnership program

Downloads and Replays

Watch the replay of the webcasts and download the presentation.

Presentation Vale Day London Investors Conference Press Conference

Highlights

Metais Ferrosos
Peter Poppinga (Ferrous)

Project Implementation Progress

  • Delivery of another two projects on time and under budget

  • Conceição Itabiritos II is expected to be completed 7% below budget

  • Cauê Itabiritos will start up in 4Q15 as planned

  • Consistent progress at S11D (on schedule and below budget)

  • 77% of physical progress on mine and plant

Cost and Expenses Reduction

  • Significant cost and expenses reductions since the end of 2014 *

  • C1 cash costs reduced by 44%

  • Freight costs reduced by 34%

  • Expenses* reduced by 51%

Supply Chain Optimization

  • Berthing of fully loaded Valemaxes in China

  • Ramp up of the Malaysia Distribution Center, producing the “Brazilian Blend” Fines with excellent acceptance by the market

Metais Básicos
Jennifer Maki (Base Metals)

Costs and expenses reduction

  • Costs and expenses reduced consistently from 2012 to 2015

  • Copper costs decreased 64% and nickel costs decreased 35%

  • SG&A* reduced 52% and pre-operating expenses decreased 55%

  • * Selling, General and Administrative

Production increase

  • Production increased from 2012 to 2015

  • Nickel production increased 25%

  • Copper production increased 55%

Project delivery

  • Successful delivery and ramp-up of projects *

  • Totten achieved 86% of nominal capacity (run-rate of 100% in Dec/15)

  • Onça Puma achieved 100% of nominal capacity

  • Salobo achieved 82% of nominal capacity (run-rate of 100% in Dec/15)

  • * Nominal capacity in October 2015

Fertilizantes e Carvão
Roger Downey (Fertilizers)

Cost & Expenses Reduction

  • Costs and expenses1 reduced in 9M15 vs. 9M14

  • Costs and expenses1 fell by 21%

  • Potash costs 1 decreased by 32%, phosphate costs1 by 23% and nitrogen costs1 by

1 Net of Depreciation charges

Productivity Increase

  • Production increased in 9M15 vs. 9M14

  • Phos Rock from Bayovar by 2.3%

  • Ammonium Nitrate by 7.4% – MAP by 4.5% and SSP by 2.5%

Sales & Marketing Initiatives

  • Value captured through improved supply chain initiatives with customers

  • Price decreases mitigated by marketing strategies focused on margins

Fertilizantes e Carvão
Roger Downey (Coal)

Cost & expenses reduction

  • Cost1 and expenses1 reduced consistently since 2013

  • Unit COGS1 decreased by 13% in Mozambique and by 36% in Australia

  • SG&A1 reduced by 39%, R&D by 43% and other expenses1 by 46%

Production optimization

  • Production increased by 37% in Mozambique since 2013

  • Production increased from 9M14 to 9M15 by 57% in Carborough Downs, contributing to its turnaround

  • Sale of non profitable operations in Australia

  • Isaac Plains placed in care and maintenance (C&M) in Sep/14 and sold in Jul/152

  • Integra placed in C&M in Jul/14 and sold in Aug/152

Project delivery

    Advanced physical progress

  • 97% at the Moatize mine expansion in Oct/15 (completion by Dec 2015)

  • 96% at the Nacala corridor in Oct/15 (completion by Dec 2015)

  • First shipment from Nacala port in Nov/15

Indicadores Financeiros
Luciano Siani Pires (Financial)
  • Sustainable savings reached more than US$ 5 billion1 in 2015

  • 1Includes reductions in costs and expenses in 2015 vs. 2014.

  • Reduction of US$ 1.2 billion in 20151 in costs and expenses not related to FX

  • 1Realized reduction in the period of 9M15 vs 9M14

  • Vale’s growth investment cycle is almost over

  • Financial impact on Vale from the Samarco´s accident

  • Divestments of non-core assets reached US$ 3 billion in 2015

  • Potential divestments could generate US$ 4.0 to 5.5 billion in 2016

  • Debt amortization is under control in 2016

  • Free Cash Flow is close to equilibrium in 2016

Vale Day photo gallery

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Vale presents strategic planning for 2016 in London. The following are some of the highlights