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Vale SA

Vale SA. Presented by: Harpreet Singh Johannes Tannert. Disclaimer.

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Vale SA

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  1. Vale SA Presented by: Harpreet Singh Johannes Tannert

  2. Disclaimer This is to certify that the opinions expressed in this presentations are essentially those of the presenters and do not represent the opinions expressed by FMA. The charts and data collected are from reliable sources and no agreement was breached while presenting this data. This presentation is intended to analyze VALE SA for investment purposes.

  3. Summary/Agenda • Introduction • Overview – Mining Sector • Company Overview • Outlook – Mining Sector • Technical Analysis • Recommendation

  4. SectorConsideration • High risksworldwide • Sectorswhere companies are not concentrated on one region • High futuredemand • ConsideredSectors: • Consumer Goods • Pharamceuticals • Mining • FMA Portfolio

  5. FMA portfolio

  6. Mining Sector • Largestsegments: Iron, Aluminium andCoal ; Dependent on steel • Cyclical, highlycompetitive • Biggest Producers: Australia, Brazil • Biggest Demand: China, India • Market canbedividedinto Major and Junior Companies • Junior Companies mainlyexplorenewareas, veryrisky • Market controlledby a fewcompanies; biggest BHP Billiton, Vale, Rio Tinto

  7. Market Cap for top mining companies

  8. Development ofCommodity Prices

  9. Overview of the company • Name: VALE • Market Capitalization: US $ 120 bn • Sector: Mining Energy Logistics Steelmaking • Listed on: NYSE, BM&F BOVESPA, Euronext Paris, The Stock Exchange of Hong Kong Limited • Second largest mining company in the world • Leader in Total Shareholder Return (38.1% for 2001-2010)

  10. Vale sector distribution Areas in which VALE is involved in mining source: vale.com.br

  11. Vale global Presence source: vale.com.br

  12. Sustainability • Introduced programs like Vale Carbon Program to control carbon foot print. • Big investment in Bio-diversity • Botanical Gardens • Natural diversity parks • Heritage Reserves • Started Environmental Management System in 2010 aimed at waste management and pollution reduction • The Vale Fund for Sustainable Development works in partnership with public sector companies to support projects aimed at a sustainable development • Vale foundation: Works for improving the Economic, Environmental and Social conditions

  13. Vale joint ventures, subsidiaries and affiliates

  14. Financials source: vale.com.br

  15. Segmented Earnings source: vale.com.br

  16. Vale operational revenue by region

  17. Dividends source: vale.com.br

  18. Vale- Key ratios source: stock-analysis-co.net dailyfinance.com

  19. Stock Price History source: ycharts.com

  20. Investments- 2012

  21. Vale production estimates: 2012

  22. Vale in news • Vale voted as one of the 6 ‘must-own-Brazilian’ stocks for the next decade. • Source: seekingalpha.com • Vale listed as one of the 7 stocks with yields as high as 16%. • Source: seekingalpha.com • Vale plans to offer notes due 2022 through its subsidiary- Vale Overseas Limited and the proceeds are to go towards corporate business. • Source: Vale press release • Vale sees little effect to iron ore market from Brazil rains • Source: Vale newsroom

  23. Economic Situation: GDP growth Source: IMF

  24. ProductivityOpportunitiesuntil 2030 Source: McKinsey & Company

  25. TSR – Mining Sector

  26. TSR – Mining Sector Source: PwC

  27. Outlook: Potential Shortages Source: McKinsey & Company

  28. Outlook: Steel Demand Source: McKinsey & Company

  29. World Steel Production (growth rate) Source: Short Range Outlook by World Steel Association

  30. Iron oreprices Source: Goldman Sachs & Partners AustraliaPty Ltd • Iron oreshortage 2012 and 2013 • Over-Supplyfrom 2014 on

  31. Nickel Supply/Demand Source: Macquarie Research, September 2011

  32. Nickel imports by China • Nickel prices fell from over $29,000 to under $17,000

  33. NPI-Nickel Outlook

  34. ExploringExpenditures Source: McKinsey & Company

  35. Technical Analysis • 52 weeklow: • $24.26 • 52 weekhigh: • $37.25 • Current: • $24.46

  36. Risk Assesment Opportunities Risks Price drop in 2014 Dependence on Economic Situation ExploringExpenses • Strong Emerging Markets • High demandof Iron, Steel and Nickel • Joint Ventures and Investments only in 2012 around $13 Billion, among others, in Brasil, China and Africa • High Dividends Recommendation:Buy

  37. THANK YOU

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