Challenges for an efficient and competitive logistic system, as faced by the biggest iron ore exporter in the world

Transcription

1 Challenges for an efficient and competitive logistic system, as faced by the biggest iron ore exporter in the world April, 2015 Giane Zimmer - Logistic Strategy and Management Director

2 Disclaimer This presentation may include statements that present Vale's expectations about future events or results. All statements, when based upon expectations about the future and not on historical facts, involve various risks and uncertainties. Vale cannot guarantee that such statements will prove correct. These risks and uncertainties include factors related to the following: (a) the countries where we operate, especially Brazil and Canada; (b) the global economy; (c) the capital markets markets; (d) the mining and metals prices and their dependence dependence on global industrial production, which is cyclical by nature; and (e) global competition in the markets in which Vale operates. To obtain further information on factors that may lead to results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission (SEC), the Brazilian Comissão de Valores Mobiliários (CVM), the French Autorité des Marchés Financiers (AMF) and The Stock Exchange of Hong Kong Limited, and in particular particular the factors factors discussed discussed under Forward Forward-Looking Looking Statements Statements and Risk Factors in Vale s annual report on Form 20-F.

3 Agenda VALE Iron Ore Market Logistics Our Challenges

4 Challenges over the years...

5 Logistics Railways Ports Shipping Over the years Vale has been turning into a more modern and efficient company...

6 Railways The importance of logistics: the railways modernization 5

7 Ports Tubarão: the most efficient iron ore export facility in the world 6

8 Shipping From Handymax to Valemax Handymax (40kt) Valemax ( 400Kt) 7

9 1997 overview Around 5 countries...

10 Current overview Over 30 countries...

11 Key facts about Vale...

12 Achievements In its first year,the iron ore production was 40,000 tons, the same amount It now ships out every hour.

13 US$ US$ Market Cap: 39,815 BI Net Profit: 4,4 Bi Employees: More than 200k (including employees & service providers ) VALE Overview 2014

14 Agenda VALE Iron Ore Market Logistics Our Challenges

15 Over the years VALE s Iron Ore production & productivity has sharply increased and we were able to meet the market demand 2014 Iron Ore Vale s production 331,4 Mt million tons Vale Privatization ,065 Mt CAGR 9%p.a CAGR 38%p.a Since its beginning, Vale has reached the milestone of approximately 5.8 billion tons of iron ore produced

16 The mining industry has been modified over the last years 2011 Iron Ore: Industry scenario Industry focused on "time to market", seeking to reduce costs and dealing with shortages of critical resources Companies begin to react reducing investments and costs due to greater uncertainty Companies cut investments and reduces costs more aggressively. Assets divestments due to China slowing down Sharp drop in Iron Ore price & Market Oversupply. 15

17 Strategy today: Stronger capital discipline & Focus on core business are key success factors Last wave of investments ( ) Next wave of investments ( ) Rapid demand growth not easily met by supply led prices to fly up Demand continues to rise fast, but supply keeps up High number of projects Majority being brownfield projects Grow and diversify no matter what CapEx & OpEx reduction Divestments of non - core business Capital discipline and strategic focus Time to market is the priority Social Environmental pressure

18 Agenda VALE Iron Ore Market Logistics Our Challenges

19 VALE Logistics Infrastructure - Brazil At a Glance Vitória-Minas Railway in Minas Gerais Eugênio Sávio / Agência Vale

20 Vale s Logistics infrastructure - Brazil EFC Northern System Terminal Marítimo Ponta da Madeira Logistic Network 3 Integrated Logistic System Conecting Mines,Railways,Ports FNS Southern System FCA Southeastern System EFVM Around Km of railway lines 4 in each 10 Km brazilian railways are operated by VALE, subsidiares and affiliated companies. (e.g. VLI, MRS) Fleet About... 1/3 of rail cars in Brazil belongs to Vale 1 in 5 locomotives in Brazil belongs to Vale MRS Complexo Portuário de Tubarão ( Tubarão, TPM, TPD, TGL) CPBS e TIG TIPLAM (Terminal Integrador Portuário Luiz Antonio) Maritime Terminals 4 dedicated to Iron Ore handling Terminal ( Ponta de Madeira, Tubarão, TIG, CPBS) & 5 Handling Thirdie Parties General Cargo

21 Agenda VALE Iron Ore Market Logistics Our Challenges

22 Logistic Challenges Asset Management Subsidiaries & Affiliated Companies Efficiency and competitiveness Investments

23 Asset Management Our main logistics assets are located in Brazil, Asia and Africa To ensure speed and safety of ore transportation, Vale has a logistics network integrating mines, railroads, ports and ships. Malaysia Ponta da Madeira Teluk Rubiah Brazil 892 Km 905 Km Km Tubarão CPBS TIG 912 Km Mozambique Nacala à Velha... where Vale operates directly, or through its subsidiaries, rails, ports, ships and barges.

24 Asset Management Northern System EFC Railway and TMPM Port EFC Terminal Marítimo Ponta da Madeira Around 120 Million tons transported 2014 FNS Northern System FCA Southern System Southeastern System EFVM MRS Complexo Portuário de Tubarão ( Tubarão, TPM, TPD, TGL) CPBS e TIG TIPLAM (Terminal Integrador Portuário Luiz Antonio)

25 Asset Management Southeastern System EFVM Railway and Tubarão Port Northern System EFC Terminal Marítimo Ponta da Madeira Around 142 Million tons transported 2014 FNS FCA Southern System Southeastern System EFVM MRS Complexo Portuário de Tubarão ( Tubarão, TPM, TPD, TGL) CPBS e TIG TIPLAM (Terminal Integrador Portuário Luiz Antonio)

26 Asset Management Southern System MRS Railway and TIG/CPBS Ports Northern System EFC Terminal Marítimo Ponta da Madeira Around 164,1 Million tons transported 2014 FNS FCA Southern System EFVM Southeastern System MRS Complexo Portuário de Tubarão ( Tubarão, TPM, TPD, TGL) CPBS e TIG TIPLAM (Terminal Integrador Portuário Luiz Antonio) VALE owns 48,0% of MRS s shares

27 Asset Management Vale s Logistics infrastructure - Africa Nacala Corridor Integrated Logistic System Conecting Mine - Railway - Port Nacala Corridor Extension: 912 kilometers Partnership Mitsui Agreement 50% of Vale s 70% equity stake Railway and port Infrastructure connecting the Moatize site to the Nacala-a-Velha maritime terminal, located in Nacala, Mozambique

28 Logistic Challenges Asset Management Subsidiaries & Affiliated Companies Efficiency and competitiveness Investments

29 Subsidiaries & Affiliated Companies Vale s Logistics participation in Brazil VALE owns 37,6% of VLI s shares VLI was established in 2011 Logistics operator with integrated system (terminal-railway-port) Holds 1/3 of the extent of the rail network in Brazil (10,000 km) Main cargoes handled: agriculture, industrial and steel Railway operator focused on the transportation of iron ore and general cargo VALE owns 48,0% of MRS s shares Holds 1,643 km in the Southeast, important region in Brazil Strategic logistics connection with major railroads and ports

30 Logistic Challenges Asset Management Subsidiaries & Affiliated Companies Efficiency and competitiveness Investments

31 Our biggest challenge Bringing our mines closer to our customers But how to overcome this challenge? 10 days 35 days MALAYSIA DC BRAZIL...Shifting our mines to Asia We need to combine low cost, high quality and flexibility to offer better customer service and to be competitive.

32 Efficiency and competitiveness Vale operates large vessels, ensuring economy and speed in the transportation of our ore. Valemax ships are part of our strategy Vale s iron ore supply chain Mines Railways Ports Vessels DCs Clients VALEMAX The world s largest ore carrier ship... Carries 2.3x more than ships in the same category Constructed with Multinational Engineering Vale currently has 30 Valemax

33 Efficiency and competitiveness Vale added complexity in its seaborne Iron Ore chain to overcome the barrier of distance from its markets. Vale s iron ore supply chain Mines Railways Ports Vessels DCs Clients Malasya Distribution Center Combined with the highest grade iron ore reserves in the world, the Malaysia DC will bring the iron ore closer to our customers in a efficient supply chain

34 Logistic Challenges Asset Management Subsidiaries & Affiliated Companies Efficiency and competitiveness Investments

35 Main Logistic Investments Vale has heavily invested in each part of the supply chain. Regarding Railway and Ports we have some points to develop Vale s iron ore supply chain AP Mines Railways Ports Vessels DCs Clients Northern System Expansion PA Start Up: 2S Mtpy of Iron Ore S11D & CLN S11D Porto Ponta da São Luis Madeira US$ ~16-17 Bi* CapEx (Original CapEx 19,7 Bi) Logistics, Mine and Plant *About 60% Logistics / Source: Vale Day 2014 MAIN LOGISTIC INVESTMENTS Carajás Marabá Parauapebas Açailândia Imperatriz Santa Inês MA Duplication of ~ 570 km of railways. Construction of a railway spur of 101 km. S11D TO Estreito PI Acquisition of wagons & locomotives. Onshore and offshore expansion of Ponta da Madeira Maritime Terminal

36 Main Logistic Investments Nacala Corridor Capacity: 18Mtpy Approved Capex: US$ 4.44 billion 2S14: Successfully delivered of the greenfield sections. 2015: Expected the upgrade of a brownfield section of the railway which is already operational.

37 In Mozambique, Vale has applied its know-how, generating value and developing infrastructure in local communities, with sustainability Communities Development Income generation Technical training Public and social infrastructure

38 VALE moving forward facing Iron Ore Industry current scenario...

39 VALE s Strategy has been consistent and remains unchanged since To be the number one global natural resources company in creating long term value, through excellence and passion for people and the planet Strategic Pillars Take care of our people Embed sustainability into our business Focus on Iron Ore Grow through the world-class assets Manage our portfolio with discipline and efficiency Key factors for portfolio management: World-class assets Hubs/Production platforms Generate Value

40 Key Enablers OUR OBJECTIVE Be competitive in any price scenario in a sustainable way Processes Simplification Strategic Partnerships Technology Application Reengineering

41 Thank you! facebook.com/valeglobal twitter.com/valeglobal youtube.com/valeglobal Giane Zimmer Logistic Strategy and Management Director

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