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Electric Vehicle Revolution and

Implications for the Nickel Market

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“This presentation may include statements that present Vale's expectations

about future events or results. All statements, when based upon expectations

about the future and not on historical facts, involve various risks and

uncertainties. Vale cannot guarantee that such statements will prove correct.

These risks and uncertainties include factors related to the following: (a) the

countries where we operate, especially Brazil and Canada; (b) the global

economy; (c) the capital markets; (d) the mining and metals prices and their

dependence on global industrial production, which is cyclical by nature; and

(e) global competition in the markets in which Vale operates. To obtain further

information on factors that may lead to results different from those forecast by

Vale, please consult the reports Vale files with the U.S. Securities and

Exchange Commission (SEC), the Brazilian Comissão de Valores Mobiliários

(CVM), the French Autorité des Marchés Financiers (AMF) and in particular the

factors discussed under “Forward-Looking Statements” and “Risk Factors” in

Vale’s annual report on Form 20-F.”

“Cautionary Note to U.S. Investors - The SEC permits mining companies, in

their filings with the SEC, to disclose only those mineral deposits that a

company can economically and legally extract or produce. We present certain

information in this presentation, including ‘measured resources,’ ‘indicated

resources,’ ‘inferred resources,’ ‘geologic resources’, which would not be

permitted in an SEC filing. These materials are not proven or probable

reserves, as defined by the SEC, and we cannot assure you that these

materials will be converted into proven or probable reserves, as defined by the

SEC. U.S. Investors should consider closely the disclosure in our Annual

Report on Form 20-K, which may be obtained from us, from our website or at

http://http://us.sec.gov/edgar.shtml.”

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Government regulation is the key driver

towards electrification

2010 2015 2020 2025

180

200

160

140

120

100

0

g CO2 / km

EU

Japan

China

USA

Planned emission standards in select regions, total fleet average for new sales

Source: McKinsey, EU Commission

Current standards:

China: China 5 Canada/USA: Tier2

EU: Euro6 South Korea: Kor 3

Japan: JPN2009

4

Battery electric vehicles are becoming

cheaper faster

Source: Bank of America Meryl Lynch “Global Electric Vehicle Primer: Fully Charged by 2050” October 4, 2017

5

Electric vehicles are simpler and faster to build

compared to internal combustion engines

Source: Ford Motor Company ‘CEO Strategic Update”, October 3, 2017

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Market Share of Electric Passenger Vehicles (Battery Electric and Plug-in Hybrids only)

ICE

1%

99%

EV’s

+27%

48%

25%

2017 20352025

+13%

80%

7%

ICE EV’s conservative EV’s upside

considering "market news"

This enables electric vehicles to take a

commanding share of the personal vehicle

market

“Market News” refers to public commitments by various auto

manufacturers as well as governments (such as UK/France

committing to no ICE sales by 2040, California, China, etc.)

Source: Public Announcements, Media, Vale Analysis

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Implications

for the nickel

market

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Nickel and cobalt are key ingredients for the

manufacture of lithium-ion batteries

Lithium

Carbonate

Cobalt

Sulphate

Nickel

Sulphate

NCA Cathode

Material

Aluminum

Sulphate

An example of

a Nickel-Cobalt-

Aluminum

(NCA) battery

Cell(shell is nickel plated)

Pack

8 parts 1 part 1 part

Source: Vale Analysis

1 part

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Nickel based lithium-ion batteries offer the

highest energy densities on the market today

0

50

100

150

200

250

300

Lithium

Titanium

oxide

(LTO)

Nickel Metal

Hydride

(NMH)

Lead Acid Lithium Iron

Phosphate

(LFP)

Nickel-

Cadmium

(NiCd)

Nickel-Iron

(NiFe)

Lithium

Nickel

Cobalt

Aluminum

(NCA)

Lithium

Cobalt

Oxide

(LCO)

Lithium

Nickel

Cobalt

Manganese

(NCM)

Lithium

Manganese

Oxide

(LMO)

Nickel Containing

Non-Nickel Containing

Comparing Energy Density for a range of Battery Technologies (Wh/kg)

Source: batteryuniversity.com

increasing nickel

content in NCM

batteries increases

energy densityChina approves NCM

battery for use in

2016, abandoning LFP

technology

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The transition to higher nickel content batteries is

accelerating due to cost benefits as well as concerns

with securing cobalt

1,223

734

363

217

391

520

1,125

NCM811NCM622

883

1,440

NCM111

-39%

Nickel and Cobalt costs for a 60kWh battery

(USD at Q3 2017 average LME prices)

20kg Ni

20kg Co

37kg Ni

13kg Co

50kg Ni

6kg Co203020252015

100%

2020

NCM622

NCM811

NCM111

NCA

Distribution of Battery Chemistries (%)

Source: Vale Analysis

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Drive Range (km)

The size of the battery is increasing as well –

another large impact on commodity demand

Nissan Leaf 2019

60 kWh

Hyundai Ioniq

28 kWh

Ford Focus

23 kWh

OLD Pure EV NEW Pure EV

Old Nissan Leaf

30 kWh

Tesla Model 3

50-75 kWh

Chevrolet Bolt

60 kWh

150-200 km 350-400 km

Source: Public Announcements

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Nickel demand for the Battery Market (kt Ni)

As a result, the nickel demand for battery

manufacturing is expected to increase

0

500

1,000

1,500

2,000size of nickel

market today

2015 2017 2020 2025 2030

Ni Conservative Ni in non xEV batteries (kt)Ni EV’s Upside - considering "Market news"

“Market News” refers to public commitments by various auto manufacturers as well as

governments (such as UK/France committing to no ICE sales by 2040, California, China, etc.)

Source: Public Announcements, Media, Vale Analysis

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The nickel market is made up of two

very different classes of product

52%Class II48% Class I

FeNi

(15-30% nickel,

balance iron)

Nickel Pig Iron

(2-12% nickel,

balance iron)

99.98% nickel or higher

(also chemicals such as

nickel sulphate)

powdersbriquette

pellets

cathodeSource: Wood Mackenzie, CRU, Vale Analysis (statistics for 2017e)

Nickel Oxide

Sinters

(>70% nickel)

2Mt

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Stainless steel does not need the

high purity and if available

prefers using Class II due to iron,

while Class II due to iron and

impurities can only be

used in stainless steel (with few niche exceptions)

Stainless

Steel

Class IClass II

Non-ferrous

Alloys

Alloy

steels

Foundry

Plating

Batteries

Non-stainless steel

markets need high

purity nickel

Source: Wood Mackenzie, CRU, Vale Analysis (statistics for 2017e)

4%

10%

7%

5%

3%

71%

2Mt

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Roughly half of the global nickel production is

suitable for use to make batteries

Source: Vale Analysis

dissolving

metal

Class II products are too expensive

to purify and dissolve although

non-ferrous Class II a candidate

Not all Class I products are the

same – dissolvability and

impurities differentiate

suitability for battery market

refineries

optimizing

production

refining

intermediates(of acid leaching operations)

Class II

Class I

Shift existing production

from nickel cathode to

nickel sulphate

well suited although more

costly than dissolving

~50% of world

production is

suitable

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The nickel industry needs to grow in

suitable units

Source: Wood Mackenzie, CRU, Vale Analysis (takes into account Alloy, Plating, Foundry and minimum Stainless Steel Class I load against expected Class I supply with remainder less Battery demand shown as balance above)

Battery Suitable Nickel Market Balance (kt Ni)

-2,100

-1,800

-1,500

-1,200

-900

-600

-300

0

300

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Conservative

Upside

"Market News"

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There are no easy ways to grow in battery

nickel

Source: Vale Analysis

dissolving

metal

supply ability

to respond

Class II products are too expensive

to purify and dissolve although

non-ferrous Class II a candidate

Not all Class I products are the

same – dissolvability and

impurities differentiate

suitability for

battery market

optimizing

production

refining

intermediates

Class II

Class I

Shift existing production

from nickel cathode to

nickel sulphate

well suited although more

costly than dissolving

All new nickel supply

growth is in Nickel Pig

Iron – not suitable for

battery use

Mines are closing, capital

is being deferred. Class I

is too expensive to

grow.

Very limited, cannibalizing

nickel cathodes (not

growth)

Very limited today while

this is the most likely

candidate for future

supply growth

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The nickel industry is likely to turn to Limonite

deposits in order to meet battery demand

Source: SNL, Vale Analysis

1.31%

29%

20% 64%

10% 16%

17%

41%

Global nickel mine production

4%

Undeveloped

Resources* (outside

existing mining camps)

High Grade SulphidesSaprolite

Limonite Low Grade Sulphide

World nickel production and undeveloped resources

largely untapped limonite

deposits are accessible via

acid leaching to produce

nickel intermediates

these deposits also contain

large amounts of cobalt to

help offset production costs

makes Class I

makes Class II

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However, it will be costly to increase

production of suitable nickel units

Recent capital cost to bring nickel into production – comparing Class I vs. Intermediate vs. Class II

(USD/t Ni installed capacity)

Source: Wood Mackenzie, Vale Analysis

Class I Nickel and suitable intermediate

120.000

90.000

60.000

30.000

0

Indonesian Nickel Pig IronTaganitoRamuAmbatovy

Additional capital is required for

refining the intermediate to remove

impurities and make nickel sulphate

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o Electric vehicles will usher in a new age for nickel

o A more balanced nickel consumption profile between

stainless and non-stainless applications

o Batteries need high purity nickel sulphate, cannot

readily use Class II such as nickel pig iron or

ferronickel units – today, only ~50% of global

production is suitable

o Nickel industry needs to grow significantly in suitable

units to meet demand for battery manufacture

o Growing in suitable nickel units is expensive

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