Announcement of Vale's Performance in 1Q10

By Vale, PRNE
Wednesday, May 5, 2010

RIO DE JANEIRO, May 6, 2010 - We would like to share with you the highlights of Vale's Webcast about
the company's performance for Q1 2010.

Main highlights of Vale's Webcast:

The main highlights of Vale's performance in 1Q10 were:

    - Operating revenue of US$ 6.8 billion in 1Q10, 4.7% more than the US$
      6.5 billion attained in 4Q09.
    - Operational income, as measured by adjusted EBIT(a) (earnings before
      interest and taxes), of US$ 2.1 billion in 1Q10, 86.9% above 4Q09.
    - Operational margin, as measured by adjusted EBIT margin, recovered to
      31.2%, from 17.4% in 4Q09.
    - Cash generation, as measured by adjusted EBITDA(b) (earnings before
      interest, taxes, depreciation and amortization), rose to US$ 2.9
      billion in 1Q10 from US$ 2.1 billion in 4Q09.
    - Net earnings of US$ 1.6 billion, equal to US$ 0.30 per share on a fully
      diluted basis, against US$ 1.5 billion in 4Q09.

A webcast was held today in Rio de Janeiro (Brazil) on Vale's performance
during the first quarter of 2010, and the company reported a solid
performance during the period, reflecting primarily their efforts to minimize
costs and the strong recovery of the global demand for minerals and metals.

As a consequence of the structural changes in the global iron ore market,
Vale has reached agreements, both permanent and provisional, with all its
iron ore clients around the globe, to move existing contracts to index based
prices1. The new pricing system will reflect in the company's financial
performance in 2Q10.

Vale has taken a pro-active stance towards the optimization of their
asset portfolio, entering into transactions involving mainly their aluminum
assets and the acquisition of world-class Brazilian fertilizer assets, which
gives Vale a strong regional operating base in leading consumers markets
around the globe, including Simandou in West Africa, one of the best
undeveloped iron ore deposits in the world, combining high quality with large
scale. The availability of Carajas and Simandou allows Vale to have by far
the best and the largest growth potential in the global iron ore industry.


Market Forecast

"What we saw in the first quarter confirmed the expectations of our
industry and market, we achieved a positive level of development that was in
line with what we had discussed in previous quarters. Recovery is on the way
and we are happy to see that we are on the right path, preserving growth
capacity despite facing the largest crisis we've seen in the past 80 years,"
affirmed Fabio Barbosa, Finance Director of Vale

"The results we achieved increased sharply and cost reduction was a very
important element in this variation. We achieved 354 million dollars in cost
savings, and have now reached 4.4 billion dollars in savings, down from 5
billion dollars
," declared Barbosa.

China operation and pricing systems

"China is a driving factor behind iron demand. The exports to China are a
major factor, resulting in major increases in the demand for iron ore, which
is driving the market at the moment. We never had a liquid market to drive
the price before, and now we do," affirmed Jose Carlos Martins, Executive
Officer for Ferrous Minerals

"With the crisis we learned that the benchmark system was not working
anymore, so we are no longer committed to this system. We want to improve our
relationship with the market using spot iron ore prices. In the past we
didn't use this price reference, but now we do. If it is going to allow us
greater liquidity and avoid manipulation, then I think it is reasonable to
use this system," stated Martins.

"For this quarter, 100% of our sales are in this new system, based on a
market price average," completed Jose Carlos Martins.

"Transparency is also a major factor for choosing this pricing system.
Today, you can find several spot price sources in China, you can find
references in websites and newspapers, publications have laid out all
processes, so it's transparent. We are open to negotiating different indexes
and different averages, according to our costumers' needs," affirmed Vale's
Executive Officer for Ferrous Minerals.

"This allows us as well as our clients to have more freedom to negotiate,
avoiding yearly disputes and allowing a more practical and beneficial
relationship with our clients. We can avoid a lot of discussion with this new
system," completed Jose Carlos Martins.

On the shipping operations, Jose Carlos Martins highlighted Vale's
strategy: "We will maintain our shipping strategy, but now we'll make use of
a more flexible pricing mechanism. We will have as many ships as needed.
Currently, there are 20 ships being built for us and we've signed contracts
with ship owners for their work and support on this market. We hope to have a
low as possible fleet differential."

Stainless steel market

"We have had a strong recovery in the stainless steel market, led by a
very strong demand from China in nickel consumption. We are not sure of the
levels of the stocks in the Chinese market, but if the situation remains as
it is today, we should continue seeing stable nickel prices," declared Tito
, Executive Director of non-ferrous minerals of Vale.

Vale Inco

"We have restarted our production in Canada. In the 2nd quarter we should
be able to show strong numbers from this return. We are estimating at least
6.3 million tons of nickel in Sudbury. The market is eager to see our product
coming back," completed Tito Martins.

Acquisition of Assets - Simandou

"The Simandou area was always on our radar. Vale arrived a little later
than our competitors. We took some time to arrive there, but we have finally
been given an opportunity to do so. It's one of the largest resources of high
quality iron ore in the world, similar to Canada in quality and quantity,"
affirmed Jose Carlos Martins, Executive Director of non-ferrous minerals of

"Now that we have reached an agreement with BSG Resources Ltd our plans
are to work as fast as possible in that area. We already got the legal
approvals and the rights to invest in a new port and new tracks, as well as
modernizing existing ones in Liberia and Guinea, with the objective of
optimizing operations locally. By 2012 we want to produce 10 to 15 million
tons with this project," completed Martins.

Martins also added: "Simandou is only 4 hours from Brazil by plane, so
Vale is in a very strong position and has leverage because of this. With our
experience in new technologies and our proximity to the area it will be
easier for us to develop this project."

Regarding the operations in Carajas, Jose Carlos Martins reported some
difficulty in getting licenses: "Our operations in Carajas already have a 2
year delay due to the difficulties in getting environmental licenses, so
Simandou will give us more flexibility to start producing sooner, because the
conditions are better. Both projects are going forwards, but in different
time lines."

Norsk Hydro

Regarding the recent announcement on Hydro, Fabio Barbosa said: "It was a
natural choice to join Norsk Hydro is this transaction. They have knowledge
and expertise in aluminum production. By combining assets in this new
organization, Vale is not leaving the business, remaining with 22% of the new
company, enjoying the potential upside of this 5.3 billion dollars

India supply and demand

"India has increased the supply but other factors have increased the
demand in the country for iron ore. Before the crisis the supply of iron ore
in Europe and many other countries was only for the local market, during the
world financial crisis this local supply was spread to other countries. With
the recovery of the economy, we expect the supply will be available only
locally at least for the next semester," declared Jose Carlos Martins.



In the first quarter of 2010, Vale's operating revenues totaled US$ 6.848
, with an increase of 4.7% from the total of US$ 6.541 billion in
4Q09. Higher sales prices produced a positive effect of US$ 775 million on
operating revenues, which was partially offset by the negative impact of
lower volumes (US$ 468 million.)

The strike in two of the Canadian nickel operations, the rainy season in
the Southern Hemisphere and operational problems at iron ore maritime
terminals contributed to hinder the performance of shipments.

Revenues generated from the sales of ferrous minerals accounted for 69.0%
of 1Q10 operating revenues, thus returning to the levels prevailing in early
2006. Non-ferrous minerals contributed 23.9% to the revenues, logistics
services 4.5%, coal 1.8% and other products 0.8%.

Sales to Asia represented 51.6% of total revenues, while sales to the
Americas accounted for 25.2%, to Europe 19.8% and the rest of the world 3.3%.

Operating Income

Vale's operating income, as measured by adjusted EBIT, staged a
significant improvement, achieving US$ 2.062 billion, thus showing a 86.9%
quarter-on-quarter increase .

The increase of US$ 959 million in Vale's quarterly adjusted EBIT was due
to the positive impact of operating revenues, driven by price increases (US$
271 million
), lower COGS (US$ 456 million) and lower expenses (US$ 232

Net Earnings

Net earnings reached US$ 1.604 billion in 1Q10, up 5.6% compared to US$
1.519 billion
in the previous quarter. Earnings per share, on a fully diluted
basis, were US$ 0.30 against US$ 0.28 in 4Q09.

Simultaneously to its increase, there was an improvement in earnings
quality. While in 4Q09 operating income represented 73% of net earnings, in
1Q10 it rose to 129%, as the financial result, which in a extent reflects the
effect of non-cash charges, contributed to reduce net earnings by US$ 677


In the first quarter of 2010, Vale's investments totaled US$ 2.158
, of which US$ 1.725 billion went to financing organic growth - US$
1.540 billion
for project development and US$ 185 million for R&D - and US$
433 million
for the support of existing operations. Investments were up 25.8%
against those made in 1Q09.

To watch the webcast of this conference and previous events please go to

About Vale

Vale is the world's second largest diversified mining company in market
capitalization. Present in more than 30 countries, Vale is the world's
largest producer of iron ore and pellets, key raw materials for the steel
industry, and one of the largest producers of nickel, which is used to
produce stainless steel, batteries, special alloys, chemicals and other
products. The company also produces copper, manganese, ferroalloys, bauxite,
alumina, aluminum and coal, among other raw materials important to the global
industrial sector and present in people's daily lives. For more information,
please access

Rodrigo Ferrari, Account Manager, Hill & Knowlton, +55-11-5503-2884, Cell: +55-11-9344-0206, Fax: +55-11-5505-9487, at

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