XVI Analyst & Investor Tour The comeback of a leader

XVI Analyst & Investor Tour The comeback of a leader

This presentation may include statements that present Vale s expectations about future events or results. All statements, when based upon expectations about the future, 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; (d) the mining and metals prices and their 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), and the French Autorité des Marchés Financiers (AMF), and in particular the factors discussed under Forward- Looking Statements and Risk Factors in Vale s annual report on Form 0-F. isclaimer

. Market outlook. Ferrous minerals competitiveness 3. Closing remarks 4. Q&A session genda3 3

4 Market outlook Peter Poppinga

Credit easing and public FAI have helped kick-start the property market 5 Monthly overall credit Share in GDP %y/y 3mma with seasonal adjustment Fixed Asset Investment Growth, %y/y 3 mma 50 40 Local Government Bonds Corporate bonds Off-balance sheet credit RMB & FX loans Overall credit 5 Total Infrastructure Real Estate Industry 0 30 5 0 0 0 5 0 0-0 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6-5 Jan-5 Apr-5 Jul-5 Oct-5 Jan-6 Apr-6 Jul-6 The expansion of credit in China with the record issuance of local government bonds and RMB loans to households, primarily composed of mortgage loans, helped to support FAI recovery Credit helped to boost the Real Estate market and to keep the growth of infrastructure investments, thus positively impacting steel demand 5 Sources: UBS and CEIC

Property has responded to government stimulus and should continue stable, as a result of the inventory reduction 6 Property sales and new construction Property inventory in China % y/y, 3 mma 50 Property sales Property new starts Months of sales 35 T Cities T Cities T3 Cities 40 30 Stock in Tier 3 continues dropping 30 0 5 0 0 7 0 5-0 -0 0 7-30 5 6-40 Jan-4 Jul-4 Jan-5 Jul-5 Jan-6 Jul-6 0 Jan-3 Jul-3 Jan-4 Jul-4 Jan-5 Jul-5 Jan-6 Jul-6 6 Source: UBS, WIND

Jan-5 Mar-5 May-5 Jul-5 Sep-5 Nov-5 Jan-6 Mar-6 May-6 Jul-6 Aug-3 Dec-3 May-4 Sep-4 Feb-5 Jun-5 Nov-5 Mar-6 Aug-6 Utilization rate Share of profitable mills The surge in demand boosted steel prices and margins, thus motivating mills to increase steel production 7 Steel price in China Profitability and utlization of Chinese steel mills RMB/ton % Blast Furnace Operating Rate % of steel mills making profits (RHS) 3,500 Rebar spot Tangshan Billet 97% 90% 3,000 9% 75% 60%,500 87% 45%,000 8% 30%,500 77% 5%,000 7% 0% 7 Source: CISA, Mysteel

CISA mill inventory, mt Days of prod'n Steel inventory throughout the supply chain is at a low level, despite the increase in steel production 8 Steel inventory held by mills Mt Steel trader inventory Mt 9 7 5 3 CISA mill inventory (mt) 0 9 8 7 4 0 8 6 4 03 04 05 06 9 6 0 7 Jan- Jan-3 Jan-4 Jan-5 Jan-6 5 8 Jan Apr Jul Oct Stock at mills is still at a healthy/low level Stock at traders dropped responding to good demand and steel prices, but it is expected to increase, as traders restock ahead of seasonal peak in construction 8 Source: CISA, Mysteel

The total iron ore stock remained stable throughout the chain, despite the increase in port inventories 9 Iron ore inventory throughout the supply chain Million tons 60 Mill owned stock Chart TitleTrader stock Domestic mines stock Iron ore inventory throughout the supply chain Days of consumption 60 Mill owned stock Chart TitleTrader stock Domestic mines stock Average 40 50 0 00 40 80 30 60 0 40 0 0 0 4Q4 Q5 Q5 3Q5 4Q5 Q6 Q6 0 4Q4 Q5 Q5 3Q5 4Q5 Q6 Q6 Total stock level measured in million tons has been stable since 4Q5 Stock level measured by days of consumption has decreased as steel production picked-up in Q6 9 9 Source: Vale Market Intel

On the supply side, Chinese domestic concentrate in 06 is expected to drop ~0% vs. 05 based on seaborne ore competitiveness 0 Domestic Iron ore concentrate production Million tons Highlights 0 -% 57 Vale estimates a reduction of 44 Mt of Chinese domestic production in 06 vs. 05 - More than 50% of the expected reduction will occur at the coastal provinces, mostly in Hebei (4 Mt) and Liaoning (9 Mt) - The remaining expected reduction will occur in the inland provinces, mostly in Sichuan (4 Mt), Anhui (3 Mt), Inner Mongolia (3 Mt) and Shanxi ( Mt) 05 06E A reduction of 6 Mt already occurred in H6 vs. H5, supporting Vale s estimate for the annual reduction 0 6% Fe wmt Reduction of 6Mt estimated based on the balance of steel production, seaborne imports and iron ore inventories Source: Vale Market Intel

Looking ahead, the expectations for Chinese steel production improved, potentially absorbing additional iron ore supply Crude steel production Mt Seaborne & Chinese iron ore supply Mt Ex-China crude steel production Chinese crude steel production Chinese Domestic Production Iron Ore Seaborne Trade,63,6,637,659,685,709,60,63 0 57,67 49,79,734,74 35 0 89 86 836 855 878 899 804 796 80 804 807 80 05 06E 07E 08E 09E 00E 05 06E 07E 08E 09E 00E Seaborne market, including pellets. Source : World Steel Association and Vale.

Maintaining the current balance of supply and demand Iron ore supply/demand balance expected for 07 Mt Supply change in iron ore seaborne market, 07 Mt Percentage of seaborne and Chinese supply Net addition in the seaborne market 48 Australia 8 Change in Chinese domestic supply -8 Brazil 8 Total change 40 India 4 Change in global demand - Others - Potential oversupply 8.7% Total 48 It also accounts for change in stock between production and consumption of Chinese concentrate. In 07 increase of pig iron production expected of ~.5%. Source: Vale s Market Intelligence

3 Ferrous minerals competitiveness Peter Poppinga 3

Ferrous Minerals competitiveness 4 Operational overview Future developments Ferrous minerals overview Key initiatives for further enhancing competitiveness Vale Day commitment accomplishment Expected outcome 4

Ferrous Minerals competitiveness 5 Operational overview Future developments Ferrous minerals overview Key initiatives for further enhancing competitiveness Vale Day commitment accomplishment Expected outcome 5

Sustainability is a major factor in Vale s company and business decisions 6 Health and Safety Environment Local development Safety management % reduction in the number of accidents Water resources 85% of recycle and reuse in the process Social and environmental investment US$ 800 million of funds invested Risk management 7% reduction in the number of incidents with high potential impact Atmospheric emissions 9% reduction in particulate emissions in pelletizing plants Favoring local regions Increase of 8% in local purchases, totaling 7% Values of Ferrous Minerals business segment, 05 vs. 04 Values for Vale

Vale s integrated supply chain offers operational flexibility to maximize margins 7 mines in 4 integrated production systems pelletizing plants (Brazil and Oman) 3 railways and 4 ports in Brazil DCs and 5 blending ports and 4 ships (90% chartered) 7

Current mineral reserves sustain 00 s production level for more than 30 years 8 Iron ore reserves, proven and probable, in billion tons 7.5 5.0 5.5 6.9 Southeastern Southern Northern Total ¹ Tonnages are stated as of December 05 and in billions of metric wet tons of run-of-mine. Moisture contents stated in Vale 8 0F Form. Source: Vale s 0F Form

Vale has a lower depletion rate than its main peers, needing lower replacement capex in the future 9 Company Depletion (Mt) 5-7yr view Proportion of production¹ Replacement capex estimate² (US$ billion) Type of project Vale 4³ 4% 0.3-0.4 Brownfield Peer 50 5%.0-3.5 Greenfield Peer 80 3%.6-3. Brownfield Peer 3 5 5%.0 -.5 Greenfield Total 69 5% 4.9-8.6 Vale will not invest in replacement projects until 0 and has enough brownfield options to replace its production, with the lowest capital intensity of the industry ¹ Considering production volumes of 06 ² Absolute capital disbursement to implement the projects ³ Only in 0 Source: Vale internal data and JP Morgan report

Vale progressed significantly on the 5 key initiatives presented at its 05 Vale Day 0 Ramp-up of N4WS, N5S extension and construction of SD Further reduction of all-in costs landed in China 3 Broadening of the Brazilian Blend Fines commercial opportunities 4 Blending and investment deferral 5 Management of capacity to maximize margins

Vale s initiatives boosted Ferrous Minerals EBITDA by US$. billion in H6 vs. H4, partly offsetting lower prices Ferrous Minerals EBITDA H4 X H6, US$ million 7,08 7,836 US$. bi,068 64 698 7 3,873,057,607 784 EBITDA H4 Price FX Bunker Commercial initiatives Volume CFR Freight Sales Cost saving initiatives Others EBITDA H6 Volume impact of higher CFR sales

Costs reduced significantly with the ramp-up of new mines and productivity gains and will decrease further with the start-up of SD Northern system production cost R$ / t SD mine and plant physical progress % 3 4 5-0% 37.8 9 78 80 33.9 H5 H6 Oct 3, 05 Dec 3, 05 Jul 3, 06 The ramp-up of N4WS and N5S extension mines improved the productivity at Carajás Commercial shipments expected to begin in January 07 Includes mine, railway and the discharge at port

Vale s indicators improved, optimizing the operations and enhancing the cost reduction 3 Operational indicators evolution H6 vs. 04, % 3 Mine 4 5-3% Strip Ratio -3% Haulage distance +6% Operational efficiency -% Operational efficiency of OHT¹ +4% Reliability (MTBF²) of OHT¹ Processing Plant +3% Production rate at plant Railway and Port +3% Operational rate of OHT¹ +4% Average speed of OHT¹ -8% Operational efficiency at Pellet plants ³ 0% Locomotives productivity +7% Shipment rate Off-highway trucks Mean-time between failures 3 Pelletizing: impact on operational efficiency of H6 due to stop at Fábrica plant and two lines at Oman

The iron ore fines and pellets cash breakeven on a landed in China basis were further reduced 4 Iron ore and pellets cash breakeven US$ / dmt Breakeven EBITDA Sustaining C cash cost in BRL R$ / t 3 4 5-54% -5% 65.6 54.5-8% -% 55. 33.0 30.3 47.0 46. 30.9 8.5 4Q4 4Q5 Q6 4Q4 4Q5 Q6 Management of freight portfolio was the main contributor for the cash breakeven reduction C cash cost reduction goes beyond the exchange rate variation Including sustaining investment C cash cost at the port (mine, plant, railroad and port)

Aug-5 Sep-5 Oct-5 Nov-5 Dec-5 Jan-6 Feb-6 Mar-6 Apr-6 May-6 Jun-6 Jul-6 Aug-6 Vale is adjusting quality and blending capabilities to maximize premiums, thus shaping its supply to any market scenario 5 Sales volumes of Brazilian Blend Fines Million tons +90% 7 9 Product premiums and discounts evolution¹ US$/t 6 8 4 0-4 -8 - -6 IOCJ BRBF premium 58% Fe LAPS discount 58% Fe MB 3 4 5 H5 H6 The off-shore blending capacity is expected to increase, bringing more flexibility to the integrated supply chain IOCJ premium recent increase reflects its perceived value as market dynamics² changes Relative to the 6% Fe reference Better steel margins and higher coal prices driving the need for higher productivity at the blast furnaces

Vale has been adjusting its production to market conditions in order to maximize margins 6 Iron ore production guidance for 06 Million tons Production range Iron ore production guidance for 07 Million tons Production range 3 4 5 4 380-400 376 Lower than 380 340-350 Lower range of 340-350 04 Vale Day guidance 05 Vale Day guidance Current guidance 04 Vale Day guidance 05 Vale Day guidance Current guidance

These productivity and cost reduction efforts have placed the company in a new competitive position 7 Iron ore and pellets cash breakeven landed in China, US$/dmt C costs Freight and Distribution Others² Sustaining 04 05 H6 +33% 7. 4. 63. 47.5 5.8 Header.3 9.9 5.5 5.4 4.7 8.3 8.6 0.9.6 6.5 8.7 3.8 Header 3. +8% 34. 3.5 4.9.3.9 5.9 5. 4.4 38.0 3.4.7 7. 5.9 6.0 5.4 8.5 +8% 30.0 30.7 3.0 3.3 4.3.4. 3.3.3 6.6 7.. 4.3 3.7 4.0 9.5 3.0 0.9 4.9 6. 4.9 0. 4.3 4.9.8 4.5 Peer Peer Vale Peer 3 Peer Peer Vale Peer 3 Peer Peer Vale Peer 3 Considers: [Cash cost + Royalties + freight + distribution + expenses (SG&A + R&D + pre-operating and stoppage expenses) + 7 moisture, adjusted for quality and pellets premiums, + sustaining investments] / [iron ore sales volume (ex ROM and third parties)] Includes royalties, expenses, moisture, quality and pellets adjustments

Making Vale the company with the highest EBITDA generation in the iron ore business in H6 8 Iron ore EBITDA¹, US$ billion 8. Vale Peer 7. Peer 6. 6. Peer 3 Platts IODEX iron ore price average (US$/t) 4.8.4 4..8 4. 3.5 3. 3.7 3.9 3.4.7.8.9.4..3 H4 H4 H5 H5 H6.5 8.4 60.4 50.7 5. ¹ Underlying EBITDA of iron ore, pellets, ROM and other ferrous for Vale s figures. Source: Financial reports of Vale and Peers

As a result of all the initiatives, Vale s iron ore operations delivered a consistent improvement 9 Iron ore EBITDA¹ per ton, US$/t Vale Peer 80.0 70.0 67.9 8.3 6.7. 3.9 Peer Peer 3 Gap to most competitive peer, US$/t 0 5 60.0 50.0 40.0 30.0 0.0 49.6 35. 4.0 45. 45.0 7.8 3.3 3.9 8.0 7.5 3. 7.0 3.9 4.5 5.4 4.3 4.0. 5.7. 0 5 0-5 -0-5 0.0-0 0.0 H4 H4 H5 H5 H6 Underlying EBITDA of iron ore, pellets, ROM and other ferrous for Vale s figures. Source: Financial reports of Vale and Peers -5

Ferrous Minerals competitiveness 30 Operational overview Future developments Ferrous minerals overview Key initiatives for further enhancing competitiveness Vale Day commitment accomplishment Expected outcome 30

Vale will deliver on 5 key initiatives to remain competitive in a sustainable way in any price scenario 3 Increase operational efficiency thus further reducing costs Enhance price realization 3 Optimize its integrated global supply chain 4 Review mine and production plan, increasing the proportion of dry processing 5 Ramp up successfully the SD project

Initiatives are underway to increase operational efficiency and productivity, to reduce costs and to extend life cycle of equipment Impact on: C cash cost Sustaining capex Freight and Distribution costs 3 4 5 3 Testing/Concept Implemented/Ongoing Reduction of strip ratio Optimization of truck fleet Replacement of trucks by conveyor belts Increase of life cycle of mine s equipment Under development Automation of mine operations Semi-automation of locomotives Recovery of hematite from tailings Implementation of system to optimize the vessel fleet schedule

The impact of these initiatives will be tracked by key performance indicators Diesel (trucks) (USD / t) Maintenance (USD / t) 3 4 5 33 Cost per ton moved (USD / t) + Personnel (USD / t) Mine (USD / t) / Others (USD / t) Global recovery (t prod / waste + ROM) / Mass recovery (t prod / t ROM) C cash cost (USD / t) + Strip ratio + (waste + ROM / ROM) Plant (USD / t) Metallic recovery (%) Railway (USD / t) Port (USD / t) Strip ratio: (waste / ROM)

Those indicators are expected to further improve, thus enhancing Vale s competitive position 34 Global Recovery Rate % 50 Vale Peer Peer Peer 3 Metallic recovery % 35 Vale Peer Peer Peer 3 3 4 5 45 30 40 5 35 30 0 5 04 05 H6 08 5 04 05 H6 08 Source: Vale, Woodmac, Peers reports

Growing share in new markets and portfolio management in mature ones will absorb the production growth with improved price realization Initiatives Develop the option to sell in RMB from distribution centers in China, increasing capillarity into smaller plants 3 4 5 35 Adjust pellet product portfolio to market demand and analyze the resumption of Tubarão Plants and Increase of CFR sales Explore market opportunities through the optionality of blending Capture premiums for Alumina content Grow presence on iron ore spot sales Leverage geographical advantage in natural markets

Supply chain integration allows flexibility and its continuous optimization will bring further margin improvements Benefits 3 4 5 36 Productivity improvement in Brazil operations, as the quality of final product is adjusted downstream Freight reductions as a result of the increase of Valemax full discharge in China and the increase of vessels discharging at a single port Southeastern System Vessel speed, utilization and productivity optimization positively impacting bunker consumption, freight and queues at ports Management of the entire supply chain, allowing further cost reduction opportunities

Other initiatives aim to reduce Vale s geographic disadvantage 37 Ongoing initiatives Increase spot and short tem chartering, taking advantage of the current low freight market rate Renew old contracts at competitive rates, as they expire 3 4 5 Cease operations of FTS (Floating Transfer Stations) in the Philippines Medium / Long term Start the operations of 30 new chartered Valemax to be delivered in 08-00 US$.5/t lower freight rate 0% more efficient in bunker consumption Manage freight portfolio, adjusting the volumes of spot chartering and short term Contracts of Afreightement (COAs) according to market conditions Contract freight at competitive levels via new eco-type VLOCs and additional nd generation Valemaxes Based on the freight basis, excludes possible bunker oil fluctuations.

Vale will increase the proportion of dry processing through its integrated supply chain 3 38 Iron ore production breakdown Impacts 4 5 Dry processing Wet processing Avoids major capex to adapt the plants, as the new process will use two phases of the existing concentration plants (crushing and screening) 30% Enables a revision of the mine plan, with lower 30% production costs and flexibility to adjust product quality 60% Decreases water use, thus reducing the need 70% for future tailing dams 70% Reduces and postpones future sustaining 40% investments 06 0E Increases the life of mines, thus postponing replacement investments

Operational flexibility also allows a review of Vale s mine plan 39 Fe Content % Impacts vs. previous mine plan 3 4 66.5 Real / New projection Lower production costs 5 66.0 05 Plan Postponement of replacement investments 65.5 Adjustment of quality according to market 65.0 Volumes of lower quality ore from Southern and Southeastern systems higher than 64.5 previous plan Volumes of higher quality ore from Carajás 64.0 same as previous plan 63.5 63.0 008 00 0 04 06 08 00 0 04 Increase of blending capacity allowing dynamic management of final product quality, according to market conditions

Vale will continue to maintain discipline in capital allocation concentrating mostly on sustaining investment 40 Ferrous business segment capital expenditures, US$ billion 8.5-85% Colunas Sustaining Others¹ SD Sustaining per ton 3 4 5. 4.9. 5.3 0.9.3.7 3.0.0.3.0 0.3 0.4 0 05 0E 0. 3.8 <3.0 Includes growth and replacement projects

SD hot commissioning is on track with first commercial ore due to be shipped in January 07 4 SD Mine Excavation, crushing and conveyor SD Hot commissioning on truckless system 3 4 5 SD Port Test berthing vessels SD Plant

SD will increase full-year logistics capacity in the Northern System Mtpy 3 4 5 4 06 8 30 75 53 06E 07E 08E 09E 00E Estimates may change until completion of current planning cycle and are subject to Board s approval

Vale will maintain its competitiveness in iron ore and pellets in the future 43 Iron ore and pellets cash margin in the future, US$/dmt 45-60 5 0-35 Iron ore price Iron ore and pellets cash break-even¹ Cash margin Iron ore and pellets cash break-even on a landed-in-china basis considers: [Cash cost + Royalties + freight + distribution + expenses (SG&A + R&D + pre-operating and stoppage expenses) + moisture, adjusted for quality and pellets premiums, + sustaining investment] / [iron ore sales volume (ex ROM)].

44 Closing remarks Luciano Siani Pires

Vale s focus and managerial discipline allowed a substantial reduction in costs and expenses, despite the increase in volumes 45 Costs¹ US$ billion Expenses, US$ billion -3% -80%.7 0.5. 6.9 7.0 5.6 5.8 4.5 3 3.5.9 4.3.4 0 03 04 05 06E 5 5 0 03 04 05 06E Net of depreciation and amortization. Includes SG&A, R&D, Pre-operating and stoppage and other expenses. Does not include gain/loss on sale of assets. 3 Positive impact of US$ 44 million from the goldstream transaction in Q3. 4 Positive impacts of US$ 30 million from the goldstream transaction in Q5 and US$ 33 million of Asset Retirement Obligations - ARO). 5 FX Rate of BRL/USD 3.30 for H6 on average, includes the positive impact of the goldstream transaction in 3Q6 in expenses.

Stabilized prices and continuous cost discipline boosted Vale s Adjusted EBITDA in 06 46 US$ billion 8.0 6,554 7,88 LME Cash Nominal Nickel Prices (US$/t) Platts IODEX Iron Ore Price Average (US$/t) Adjusted EBITDA 6.0 3,698 60.0 4.0.0.5 8.3 0,005 8,66 0,500 0.0 0.0 8.0 8. 60.5 50.8 5.9 50 55 60.0 6.0 4.0 5. 3.8 3.3 4.4 4.5 5.4 0.0.0 0.0 H4 H4 H5 H5 H6 H6E² -40.0 04 05 06 Adjusted EBITDA excludes gains and/or losses on sales of assets and non-recurring expenses and includes dividends received from non-consolidated affiliates. FX Rate BRL/USD of 3.30 average in H6, nickel prices of US$ 0,500/t and copper prices of US$ 4,750/t.

Vale increased its discipline in capital allocation with significant reduction in capital expenditures 47 Capex, US$ billion Sustaining Growth Projects 6.3 6. 4.6 4.6 4. 4.6.0 4. 8.4.7.6 9.6 7.9.9 5.5 5.8 < 4.5 0 0 03 04 05 06E¹ 07E Considers exchange rate of BRL/USD 3.30 in H6.

Potential divestments and strategic transactions will help balance free cash flow and strengthen the balance sheet 48 Divestments 06-07, US$ billion 5-7 4-6. Already concluded in 06 Previously announced Potential transactions 3 VLOCs Coal JV Core assets Gold streaming Vessels Energy assets Fertilizers

Vale will decrease its debt going forward, on track to reach the target of US$ 5-7 billion of net debt 49 Net Debt, US$ billion 5. 7.5 6-7 9-5 - 7 05 year-end Q6 06E year-end 06E year-end 07E without previously announced transactions with previously announced transactions

Vale expects to close the free cash flow¹ gap in 06 50 FCF estimate for 06 (before divestments), US$ billion 8.9-9.8 5.8.6 0.4 0.4 0.8 0.4 (0.4) - 0.5 Cash from operations 06¹ CAPEX Interest payment Income tax REFIS Hedge bunker oil Others² FCF For 06, accumulated numbers up to July were used. For H6 FX Rate of 3.30 average in H6, nickel prices of US$ 0.500/t, copper prices of US$ 4.750/t and iron ore ranging from US$50/t to US$55/t. Includes dividends related to MBR, interest paid on stockholders debentures and other loan costs.

Free cash flow¹ generation will be positive in the next years, even in adverse price scenarios 5 FCF accumulated 07-00E (before divestments, dividends and debt amortization), US$ billion Iron ore price US$45/t Iron ore price US$60/t 7.5 8.0 5.9 6. Accumulated 07-00 Accumulated 07-00 Marginal distribution of dividends and/or debt reduction High distribution of dividends and debt decreasing quickly FCF before divestments, dividends and debt amortization. Assumes nickel prices of US$0,500/t in 07, US$,800/t in 08, US$4,400/t in 09 and US$5,500/t in 00; copper prices of US$4,900/t in 07, US$5,00/t in 08, US$5,500/t in 09 and US$6,000/t in 00; bunker oil prices of US$30/t in 07, US$366/t in 08 and US$378/t in 09 and 00, exchange rate of BRL/US$ 3,37 from 07 onwards.

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