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NEWS-LEADING DEVELOPMENTS Vale's $14.75B Budget for 2014 is Third Year of Capex Decline More than 80% of Vale's 2014 budget for project execution will go toward expansion of its iron ore production and distribution network, development of its integrated mine-plant-railway-port coal operations in Mozambique, and expansion of its Salobo copper and gold project in Brazil. Vale has budgeted $14.75 billion in capital spending during 2014: $9.30 billion for project execution, $4.55 billion for sustaining capital at existing operations, and $903 million for research and development. These planned expenditures are showing a decline for the third year in a row, after peaking at $18 billion in 2011. More than 80% of Vale's 2014 budget for project execution is dedicated to expansion of its iron ore production and distribution network, development of its integrated mine-plant-railway-port coal operations in Mozambique, and expansion of its Salobo copper and gold project in Brazil. "We are strongly committed to deploying capital only in world-class assets with large reserves, low costs, high-quality products, and opportunities for low-cost brownfield expansions," Vale CEO Murilo Ferreira said. "On the environmental permit front, all our major projects in Brazil have already obtained the licenses required for their execution." Vale's main growth initiatives account for 83% of its 2014 project execution budget. These include: 4 E&MJ; • JANUARY 2014 • Expansion of its integrated iron ore operations in the Carajás region of Brazil, $3.283 billion; • Construction and ramp-up of its integrated Moatize/Nacala coal operation in Mozambique, $2.573 billion; • Capacity replacement, production increase, and quality improvement in the iron ore from its Southern/Southeastern Systems in Brazil, $1.067 billion; • Expansion and improvement of its global iron ore distribution network, $436 million, including construction of the Teluk Rubia distribution center in Malaysia, $278 million; vessels, $155 million; and barges, $3 million; and • Salobo II in Marabá, Pará, Brazil, $332 million, which will add an estimated 100,000 metric tons per year (mt/y) to Vale's production of copper in concentrate. The remainder of the capex budget for projects is allocated to the construction of the Tubarão VIII pellet plant, the CSP steel slab plant, and biodiesel, all in Brazil, and to finalizing projects that have recently started up such as the Long Harbour nickel smelting and refining project in Newfoundland and the reopening of the Totten nickel mine in Sudbury, Canada. Vale's sustaining capital budget for 2014 primarily provides funding for five classes of initiatives: operations, mainly equipment replacement; building and expanding waste dumps and tailings dams; health and safety; corporate social responsibility; and administrative and others. Ferrous minerals account for $2.9 billion of the sustaining capital budget, and base metals account for $1 billion. Fertilizers and coal account for most of the remainder. Vale's 2014 R&D; budget includes $384 million for mineral exploration; $356 million for conceptual, pre-feasibility and feasibility studies; and $163 million for new processes, technological innovation and adaptation. Approximately 85% of the mineral exploration expenditures is focusing on four countries: Brazil, Canada, Australia and Peru. In terms of commodities, Vale's exploration expenditures will be mainly dedicated to further developing reserves of iron ore ($123 million) and nickel ($53 million), and to exploring opportunities in copper ($80 million), fertilizers ($47 million), and coal ($20 million). Iron ore, fertilizers and nickel are the main priorities for brownfield exploration, which accounts for 53% of the expenditures. Greenfield exploration, with 47%, will focus on finding copper deposits. Vale CEO Murilo Ferreira: "We are strongly committed to deploying capital only in world-class assets." www.e-mj.com