Vale - The Steel Industry s Partner of Choice. Roberto Gottschalk 22 nd International Iron Ore Symposium June 1 6 th, 2016

Transcription

1 Vale - The Steel Industry s Partner of Choice Roberto Gottschalk 22 nd International Iron Ore Symposium June 1 6 th, 2016

2 Disclaimer This presentation may include declarations stating Vale s expectations concerning future events or results. All declarations, when based on future expectations rather than historical facts, involve various risks and uncertainties. Vale cannot guarantee that such declarations will prove to be accurate. Such risks and uncertainties include factors related to the following: (a) countries where we have operations, especially Brazil and Canada; (b) the global economy; (c) the capital markets; (d) mining and metals businesses and their dependence on global industrial production, which is cyclical by nature; and (e) the high degree of global competition in the markets in which Vale operates. To obtain additional information about factors that could give rise to results different from those estimated by Vale, please consult the reports filed with the Brazilian Securities Commission (CVM), the Autorité des Marchés Financiers (AMF), the US Securities and Exchange Commission (SEC), The Stock Exchange of Hong Kong Limited, and, in particular, the factors discussed in the Estimates and projections and Risk factors sections of Vale s Annual Report Form 20F. 2

3 Agenda Market Outlook Our Strategy The Future Conclusion 3

4 Market Outlook 4

5 5 European economies are expected to continue the gradual improvement seen in the last year Stronger domestic consumption is outweighing a weakening in net exports GDP in the EU28 is expected to grow 1.9% in 2016 and 2017 In Turkey, GDP growth of 3.8% in 2016 and 3.4% in 2017 Selected economies and EU28 GDP growth Forecast EU28 France Germany Italy Spain UK Source: 5 IMF WEO Update Apr-16

6 6 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 The Eurozone Manufacturing PMI has been above 50 for almost 3 years indicating expansion Manufacturing PMI has been supported by stronger consumption but performances are mixed within the region Industrial production for 2015 rose by 1.4% in the euro area and by 1.7% in the EU28 Manufacturing PMI Eurozone France Germany Italy EU Industrial Production Sources: 6 Markit, HSBC, Eurostat

7 7 In 2016, all the main steel using sectors in Europe should see moderate growth Since 2014, expectations for main steel using sectors have turned positive again The automotive sector has seen great performance and is set to continue increasing. EU Steel End User Growth Forecast Forecast E 2016F 2017F Construction -2.6% 3.7% -5.1% -2.9% 1.7% 1.3% 2.0% 2.5% Mechanical Engineering 9.9% 10.2% -0.5% -3.8% 1.5% -0.4% 0.5% 2.9% Automotive 20.7% 10.9% -4.6% 1.0% 4.9% 8.3% 3.0% 3.8% Domestic Appliances 2.7% -5.5% -1.3% 0.2% -0.3% 4.1% 2.6% 2.2% Metal Goods 8.6% 8.8% -2.7% -0.3% 2.5% 2.1% 1.5% 2.7% TOTAL 5.9% 6.6% -3.7% -2.5% 2.2% 2.0% 1.9% 2.9% 7Source: WSA, Eurofer, Apr-2016

8 8 Global steel consumption is expected to resume growth from next year Lower demand has made steel overcapacity in the globe more apparent with steel prices reaching low levels, leading to an increasing number of anti-dumping and countervailing duties especially in Europe and in the United States Steel demand forecast, finished steel products (Mt) China 1, Ex-China 1,411 1,437 1,532 1,540 1,500 1,488 1, EU Other Europe (f) 2017 (f) (f) 2017 (f) 8 Source: WSA, Short Range Outlook Apr-2016

9 Seaborne iron ore imports are set to keep increasing with displacement of higher cost producers Crude steel production forecast China Ex-China Seaborne iron ore imports forecast Seaborne Iron Ore Chinese Domestic Source: Vale s internal data

10 Our strategy 10

11 Vale s strategy for this new era is anchored in 4 pillars Pellets S11D Improved quality Lower costs Reduced environmental impact Optimum Portfolio Diversified products Blending Logistics Extended logistics solution Mines, railways, ports, ships, distribution centers Pellets Increase efficiency Reduction of fuel/coke consumption Those pillars ensure Vale s cost competitiveness, supply chain flexibility, low sustaining capex and increased mines lifetime Source : Vale

12 S11D - the largest project in the iron ore industry The lowest cost and highest quality in the market Reduction in environmental impact 70% 18,000 MW 93% 50% reduction in the use of fuel of electricity saved per year less water used in the ore processing reduction 12 in greenhouse gas emissions 12 Production capacity: 90 Mtpy Production: 100% high grade sinter feed Start-up: 2H2016 Stripping ratio: 0.27 Physical progress: 85% Product yield: 100% Fe: ~ 66.0% 06.May.2016 Salviano Machado / Agência Vale

13 Our diversified product portfolio enables us to offer comprehensive solutions to match our clients needs Here in Europe, we are able to offer an optimum portfolio with more Carajás ore and an overall size distribution very well-suited to the sintering process. Lump Sinter Feed Blending Northern Iron Ore Southern Iron Ore Products with Improved Metallurgical and Physical properties Pellet Feed Pellets 13 Source : Vale

14 14 Vale s comprehensive integrated supply chain offers a unique solution in the industry to reach customers competitively and reliably 22 mines in 4 production systems 12 pelletizing plants (Brazil and Oman) 14 3 railways and 4 ports in Brazil 2 DCs and 5 blending ports

15 15 Vale is the leading iron ore pellets producer Operating 12 pellet plants being 10 in Brazil and 2 in Oman We produce blast furnace and direct reduction pellets in large scale Efficiency Fuel/Coke consumption We currently have 8 different types of pellets in our portfolio to meet a wide range of market needs Vale s pellets production Million metric tonnes Environmentally friendly ore Vale s pellet production reached a record 46.2 Mt in 2015 with the ramp-up of the Tubarão VIII plant

16 The Future 16

17 Vale holds all the pre-requisites for a sustainable long-term mining operation Health and safety Access to first tier assets Efficient logistics Environmental responsibility Low operating cost Long-term return Skilled labor and expertise Access to capital Source : Vale

18 At Vale, innovation is part of our routine Carajás Railway Valemax Ferrous Tech Center Some of the initiatives include one of the world s longest trains in regular operation, the largest ore carrier, one of the most advanced ferrous technology centers, virtual reality rooms, a fired pellet physical quality robotic analyzer, simulators, among others 18 Virtual 18 Reality Room S11D Pellet Conveyor Robotic Analyzer belts Source: Vale Simulators

19 We have contributed with over 2 billion tons of the highest quality iron ore to the European market Vale s iron ore and pellets accumulated sales to the European market Series bn tons Enough to build Eiffel Towers or to produce 1.44 bn Passenger cars Our quality product portfolio makes us the iron ore and pellets supplier of choice in Europe Source: Vale estimates based on publicly available information

20 Vale is prepared to support and to strengthen its partnership with the European steel industry further We are a reliable partner Quality iron ore World Class Assets Environment Large Scale Cost Competitive Productivity Operating for over 70 years, Vale is a large scale producer of high quality iron ore World class asset base well positioned in the cost curve, S11D will reduce our costs even further We are focused on the sustainability of our operations in the long run Source: Vale

21 Conclusion 21

22 Conclusion 22 European economies set for a gradual improvement, but we recognize volatility has created a challenging scenario for the industry Vale is prepared for this new era as it holds all the pre-requisites for a sustainable and reliable long-term mining operation Innovation has allowed us to better support the steel industry We have contributed with over 2 bi tons of high quality iron ore to Europe and intend to further strengthen our partnership with this natural market in the coming years Vale is the steel industry s partner of choice in Europe

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