Vale Released 2Q Production Report

OREANDA-NEWS. July 29, 2011. Vale S.A. (Vale) operations had a solid performance in 2Q11, overcoming the effects of the adverse weather conditions faced in 1Q11.

Despite the production increases, there is still room for growth and ultimately to expand our exposure to the expansionary cycle. The growth potential stems from the solution to problems faced in 2Q11 in the production of iron ore, coal, nickel and copper, as well as from the progress in the ramp up of several new operations.

Iron ore production in 2Q11 reached 80.3 Mt, being the best performance ever for a second quarter. In the first half of 2011, we produced 146.51 Mt, 47% of the targeted output for 2011. The second half of the year is seasonally stronger, with the production curve accelerating and reaching its peak in the 3Q.

Pellet production kept setting new records, achieving 13.1 Mt, which is the highest level for a second quarter. Output totaled 25.6 Mt in 1H11, another all-time high figure, surpassing by 2.5 Mt the previous record in 1H10.

Although the production of base metals in 2Q11 was affected by the shutdown of furnace #2 of Sudbury's Copper Cliff smelter, we were able to minimize expected losses through improved performance of furnace #1. Realized nickel output loss was 2,800 t less than previously estimated.

Following our strategy of focusing on organic growth, four projects were ramping up in 2Q11: (i) VNC, in New Caledonia, produced 2,000 t of nickel hydroxide cake; (ii) On5a Puma, in Brazil, saw line #1 commissioned and started its ramp up process, delivering 1,080 t of nickel in ferronickel; (iii) Tres Valles, in Chile, reached an output of 2,200 t of copper cathodes in 2Q11 and (iv) the first pellet plant of Oman produced 336,000 t.

Including Samarco's attributable production.