OREANDA-NEWS. July 29, 2011. Vale S.A. (Vale) reports a superb performance in the second quarter of 2011 (2Q11), which reflects our superior asset quality in a global environment of strong demand and high prices of minerals and metals.

Our 2Q11 operational and financial performance demonstrates a significant improvement when compared to the previous quarter, and has generated a positive momentum. Given the normalization of our existing operations and the successful ramp up of projects recently delivered against a backdrop of benign seasonal and cyclical factors, we are positioned to obtain even further improvements in Vale's performance.

Revenues and cash generation reached all-time high levels, while operating income, operating margin and net earnings were the highest for a second quarter.

The strong cash generation allows Vale to deal successfully with the trilemma faced by growth companies, which is to satisfy simultaneously the demand for financing investment opportunities, maintain a sound balance sheet and return excess free cash flow to shareholders.

The commitment to discipline in capital allocation and shareholder value creation was evidenced once again by decisions made up to now to return to shareholders a record amount of cash in 2011. The Board of Directors has approved a buyback program of up USD  3.0 billion to be concluded until November 25th, 2011. In addition to the USD  3.0 billion already paid in 1H11 and a minimum of USD  2.0 billion to be approved and paid in October, we announced today a proposal by Vale's Executive Directors to the Board of Directors to distribute USD  3.0 billion as an additional dividend. By the same token, our senior management decided for the termination of a deal to acquire African copper assets.

As a consequence of a Brazilian court decision in a case related to the exemption of Social Contribution tax ("Contribuigao Social sobre o Lucro Liquido"), at a rate of 9% on earnings generated from exports, on July 29, 2011, Vale will make a payment of BRL  5.83 billion, equivalent to approximately USD  3.8 billion, corresponding to the tax obligation due. There will be no impact on net earnings as the value of the tax payment was already provisioned in our books.