ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Federative Republic of Brazil
(Jurisdiction of incorporation or organization)

Tito Botelho Martins, Chief Financial Officer
phone: +55 21 3814 8888
fax: +55 21 3814 8820
tito.martins@vale.com

Avenida Graça Aranha, No. 26
20030-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive offices)

Title of Each Class		Name of Each Exchange on Which Registered

Preferred class A shares of Vale, no par value per share		New York Stock Exchange*
American Depositary Shares (evidenced by American Depositary Receipts), each representing one preferred class A share of Vale		New York Stock Exchange
Common shares of Vale, no par value per share		New York Stock Exchange*
American Depositary Shares (evidenced by American Depositary Receipts), each representing one common share of Vale		New York Stock Exchange
6.75% Guaranteed Notes due 2012, Series VALE, issued by Vale Capital II		New York Stock Exchange
6.75% Guaranteed Notes due 2012, Series VALE.P, issued by Vale Capital II		New York Stock Exchange
9.0% Guaranteed Notes due 2013, issued by Vale Overseas		New York Stock Exchange
6.25% Guaranteed Notes due 2016, issued by Vale Overseas		New York Stock Exchange
6.250% Guaranteed Notes due 2017, issued by Vale Overseas		New York Stock Exchange
5⁵/8% Guaranteed Notes due 2019, issued by Vale Overseas		New York Stock Exchange
4.625% Guaranteed Notes due 2020, issued by Vale Overseas		New York Stock Exchange
4.375% Guaranteed Notes due 2022, issued by Vale Overseas		New York Stock Exchange
8.25% Guaranteed Notes due 2034, issued by Vale Overseas		New York Stock Exchange
6.875% Guaranteed Notes due 2036, issued by Vale Overseas		New York Stock Exchange
6.875% Guaranteed Notes due 2039, issued by Vale Overseas		New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
The number of outstanding shares of each class of stock of Vale as of December 31, 2011 was:
3,256,724,482 common shares, no par value per share
2,108,579,618 preferred class A shares, no par value per share
12 golden shares, no par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer" and "large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ý International Financial Reporting Standards as issued by the International Accounting Standards Board o Other o

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Item	Form 20-F caption	Location in this report	Page


1	Identity of directors, senior management and advisers	Not applicable	–

2	Offer statistics and expected timetable	Not applicable	–

3	Key information
	3A Selected financial data	Selected financial data	13
	3B Capitalization and indebtedness	Not applicable	–
	3C Reasons for the offer and use of proceeds	Not applicable	–
	3D Risk factors	Risk factors	2

4	Information on the Company
	4A History and development of the company	Business Overview, Capital expenditures and projects	15, 64
	4B Business overview	Business overview, Lines of business, Reserves, Regulatory matters	15, 21, 52, 68
	4C Organizational structure	Exhibit 8	–
	4D Property, plant and equipment	Lines of business, Capital expenditures and projects, Regulatory matters	21, 64, 68

4A	Unresolved staff comments	None	–

5	Operating and financial review and prospects
	5A Operating results	Results of operations (2011 compared to 2010, and 2010 compared to 2009)	79, 85
	5B Liquidity and capital resources	Liquidity and capital resources	91
	5C Research and development, patents and licenses, etc.	Capital expenditures and projects	64
	5D Trend information	Results of operations (2011 compared to 2010, and 2010 compared to 2009)	79, 85
	5E Off-balance sheet arrangements	Off-balance sheet arrangements	95
		Critical accounting policies and estimates	95
	5F Tabular disclosure of contractual obligations	Contractual obligations	95
	5G Safe harbor	Forward-looking statements	1

6	Directors, senior management and employees		–
	6A Directors and senior management	Management	118
	6B Compensation	Management compensation	129
	6C Board practices	Management—Board of directors	118
	6D Employees	Employees	130
	6E Share ownership	Major shareholders, Employees—Performance-based compensation	110, 131

7	Major shareholders and related party transactions
	7A Major shareholders	Major shareholders	110
	7B Related party transactions	Related party transactions	113
	7C Interests of experts and counsel	Not applicable	–

8	Financial information
	8A Consolidated statements and other financial information	Financial statements	F-1
		Distributions	113
		Legal proceedings	132
	8B Significant changes	Not applicable	–

9	The offer and listing
	9A Offer and listing details	Share price history	115
	9B Plan of distribution	Not applicable	–
	9C Markets	Trading markets	115

Item	Form 20-F caption	Location in this report	Page


	9D Selling shareholders	Not applicable	–
	9E Dilution	Not applicable	–
	9F Expenses of the issue	Not applicable	–

10	Additional information
	10A Share capital	Memorandum and articles of association—Common shares and preferred shares	136
	10B Memorandum and articles of association	Memorandum and articles of association	136
	10C Material contracts	Lines of business; Results of operations; Related party transactions	21, 79, 113
	10D Exchange controls	Exchange controls and other limitations affecting security holders	143
	10E Taxation	Taxation	144
	10F Dividends and paying agents	Not applicable	–
	10G Statement by experts	Reserves	52
	10H Documents on display	Information filed with securities regulators	155
	10I Subsidiary information	Not applicable	–

11	Quantitative and qualitative disclosures about market risk	Risk management	99

12	Description of securities other than equity securities
	12A Debt securities	Not applicable	–
	12B Warrants and rights	Not applicable	–
	12C Other securities	Not applicable	–
	12D American Depositary Shares	Depositary shares	116

13	Defaults, dividend arrearages and delinquencies	Not applicable	–

14	Material modifications to the rights of security holders and use of proceeds	Not applicable	–

15	Controls and procedures	Evaluation of disclosure controls and procedures	151
		Management's report on internal control over financial reporting	151

16	16A Audit Committee financial expert	Management—Fiscal Council	126
	16B Code of ethics	Code of ethics	154
	16C Principal accountant fees and services	Principal accountant fees and services	154
	16D Exemptions from the listing standards for audit committees	Management—Fiscal Council; Corporate governance	126, 152
	16E Purchase of equity securities by the issuer and affiliated purchasers	Purchases of equity securities by the issuer and affiliated purchasers	117
	16F Change in registrant's certifying accountant	Not applicable	–
	16G Corporate governance	Corporate governance	152
	16H Mine safety disclosure	Not applicable	–

17	Financial statements	Not applicable	–

18	Financial statements	Financial statements	F-1

19	Exhibits	Exhibits	156

This annual report contains statements that may constitute forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Many of those forward-looking statements can be identified by the use of forward-looking words such as "anticipate," "believe," "could," "expect," "should," "plan," "intend," "estimate" and "potential," among others. Those statements appear in a number of places and include statements regarding our intent, belief or current expectations with respect to:

We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in forward-looking statements as a result of various factors. These risks and uncertainties include factors relating to (a) the countries in which we operate, mainly Brazil and Canada, (b) the global economy, (c) capital markets, (d) the mining and metals businesses and their dependence upon global industrial production, which is cyclical by nature, and (e) the high degree of global competition in the markets in which we operate. For additional information on factors that could cause our actual results to differ from expectations reflected in forward-looking statements, see Risk factors. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments. All forward-looking statements attributed to us or a person acting on our behalf are expressly qualified in their entirety by this cautionary statement, and you should not place undue reliance on any forward-looking statement.

Vale S.A. is a stock corporation, or sociedade por ações, organized on January 11, 1943 and existing under the laws of the Federative Republic of Brazil for an unlimited period of time. Its head offices are located at Avenida Graça Aranha, No. 26, 20030-900 Rio de Janeiro, RJ, Brazil, and its telephone number is 55-21-3814-4477.

In this report, references to "Vale" are to Vale S.A. References to "we," "us" or the "Company" are to Vale and, except where the context otherwise requires, its consolidated subsidiaries. References to our "preferred shares" are to our preferred class A shares. References to our "ADSs" or "American Depositary Shares" include both our common American Depositary Shares (our "common ADSs"), each of which represents one common share of Vale, and our preferred class A American Depositary Shares (our "preferred ADSs"), each of which represents one

class A preferred share of Vale. American Depositary Shares are represented by American Depositary Receipts ("ADRs") issued by the depositary. References to our "HDSs" or "Hong Kong Depositary Shares" include both our common Hong Kong Depositary Shares (our "common HDSs"), each of which represents one common share of Vale, and our class A preferred Hong Kong Depositary Shares (our "preferred HDSs"), each of which represents one preferred Class A share of Vale. Hong Kong Depositary Shares are represented by Hong Kong Depositary Receipts ("HDRs") issued by the depositary. Unless otherwise specified, we use metric units.

References to "real," "reais" or "R$" are to the official currency of Brazil, the real (singular) or reais (plural). References to "U.S. dollars" or "US$" are to United States dollars. References to "CAD" are to Canadian dollars, and references to "A$" are to Australian dollars.

The mining industry is primarily a supplier of industrial raw materials. Industrial production tends to be the most cyclical and volatile component of global economic activity, which affects demand for minerals and metals. At the same time, investment in mining requires a substantial amount of funds in order to replenish reserves, expand production capacity, build infrastructure and preserve the environment. The sensitivity to industrial production, together with the need for significant long-term capital investments, are important sources of risk for the financial performance and growth prospects of Vale and the mining industry generally.

China has been the main driver of global demand for minerals and metals over the last few years. In 2011, Chinese demand represented 63% of global demand for seaborne iron ore, 43% of global demand for nickel and 39% of global demand for copper. The percentage of our gross operating revenues attributable to sales to consumers in China was 32.4% in 2011. Although China largely withstood the global recession of 2008/2009, a contraction of China's economic growth could result in lower demand for our products, leading to lower revenues, cash flow and profitability. Poor performance in the Chinese real estate sector, the largest consumer of carbon steel in China, could also negatively impact our results.

Demand for our iron ore, coal and nickel products depends on global demand for steel. Iron ore and iron ore pellets, which together accounted for 71.5% of our 2011 operating revenues, are used to produce carbon steel. Nickel, which accounted for 9.5% of our 2011 gross operating revenues, is used mainly to produce stainless and alloy steels. Demand for steel depends heavily on global economic conditions, but it also depends on a variety of regional and sectoral factors. The prices of different steels and the performance of the global steel industry are highly cyclical and volatile, and these business cycles in the steel industry affect demand and prices for our products. In addition, vertical backward integration of the steel industry and the use of scrap could reduce the global seaborne trade of iron ore.

The demand for fertilizers is affected by global prices of agricultural commodities. A sustained decline in the price of one or more agricultural commodities could negatively impact our fertilizer nutrients business.

Our iron ore prices are based on a variety of pricing options, which generally use spot price indices as a basis for determining the customer price. Our prices for nickel and copper are based on reported prices for these metals on commodity exchanges such as the London Metal Exchange ("LME") and the New York Mercantile Exchange ("NYMEX"). Our prices and revenues for these products are consequently volatile, which may adversely affect our cash flow. Global prices for metals are subject to significant fluctuations and are affected by many factors, including actual and expected global macroeconomic and political conditions, levels of supply and demand, the availability and cost of substitutes, inventory levels, investments by commodity funds and others and actions of participants in the commodity markets.

Scrap nickel competes directly with primary nickel as a source of nickel for use in the production of stainless steel, and the choice between them is largely driven by their relative prices and availability. In 2011, the stainless steel scrap ratio remained relatively unchanged from 2010, at 43%. Nickel pig iron, a product developed by Chinese steel and alloy makers that utilizes lateritic nickel ores, competes with other nickel sources in the production of stainless steel. In 2011, estimated Chinese nickel pig iron and ferro-nickel production increased 67%, representing 16% of global nickel output. Demand for primary nickel may be negatively affected by the direct substitution of primary nickel with other materials in current applications. In response to high nickel prices or other factors, producers and consumers of stainless steel may partially shift from stainless steel with high nickel content (series 300) to stainless steels with either lower nickel content (series 200) or no nickel content (series 400), which would adversely affect demand for nickel.

During periods of high demand, our ability to rapidly increase production capacity is limited, which could render us unable to satisfy demand for our products. Moreover, we may be unable to complete expansions and greenfield projects in time to take advantage of rising demand for iron ore, nickel or other products. When demand exceeds our production capacity, we may meet excess customer demand by purchasing iron ore, iron ore pellets or nickel from joint ventures or unrelated parties and reselling it, which would increase our costs and narrow our operating margins. If we are unable to satisfy excess customer demand in this way, we may lose customers. In addition, operating close to full capacity may expose us to higher costs, including demurrage fees due to capacity restraints in our logistics systems.

Conversely, operating at significant idle capacity during periods of weak demand may expose us to higher unit production costs since a significant portion of our cost structure is fixed in the short-term due to the high capital intensity of mining operations. In addition, efforts to reduce costs during periods of weak demand could be limited by labor regulations or previous labor or government agreements.

Our financial performance may be negatively affected by regulatory, political, economic and social conditions in countries in which we have significant operations or projects, particularly Argentina, Australia, Brazil, Canada, Chile, China, Colombia, France, Guinea, Indonesia, Japan, Liberia, Malawi, Mozambique, New Caledonia, Norway, Oman, Peru, the United Kingdom and Zambia.

Our operations depend on authorizations and concessions from governmental regulatory agencies in the countries in which we operate. For details about the authorizations and concessions upon which our operations depend, see Information on the Company—Regulatory matters. We are subject to laws and regulations in many jurisdictions that can change at any time, and changes in laws and regulations may require modifications to our technologies and operations and result in unanticipated capital expenditures.

Actual or potential political changes and changes in economic policy may undermine investor confidence, which may hamper investment and thereby reduce economic growth, and otherwise may adversely affect the economic and other conditions under which we operate in ways that could have a materially negative effect on our business.

Disputes with communities in which we operate may arise from time to time. Although we contribute to local communities with taxes, job and business opportunities and social programs, community expectations are complex and involve multiple stakeholders with different interests. Some of our operations and reserves are located on or near lands owned or used by indigenous or aboriginal tribes or other groups. These indigenous peoples may have rights to review or participate in natural resource management, and we negotiate with them to mitigate impacts of our operations or to obtain access to their lands.

Disagreements or disputes with local groups, including indigenous or aboriginal groups, could cause delays or interruptions to our operations, adversely affect our reputation or otherwise hamper our ability to develop our reserves and conduct our operations. Protesters have taken actions to disrupt our operations and projects, and they may continue to do so in the future. Although we vigorously defend ourselves against illegal acts, future attempts by protesters to harm our operations could adversely affect our business.

Mining is subject to government regulation in the form of taxes and royalties, which can have an important financial impact on our operations. In the countries where we are present, governments may impose new taxes, raise existing taxes and royalty rates, reduce tax exemptions and benefits, or change the basis on which taxes are calculated in a manner that is unfavorable to us. Governments that have committed to provide a stable taxation or regulatory environment may shorten the duration of those commitments.

Some of our mining concessions are subject to fixed expiration dates and might only be renewed a limited number of times for a limited period of time. Apart from mining concessions, we may need to obtain various authorizations, licenses and permits from governmental or other regulatory bodies in connection with the operation of our mines, which may be subject to fixed expiration dates or periodic review or renewal. While we anticipate that renewals will be given as and when sought, there is no assurance that such renewals will be granted as a matter of course and there is no assurance that new conditions will not be imposed in connection therewith. Fees for mining concessions might increase substantially due to the passage of time from the original issuance of each individual exploration license. If so, our business objectives might be impeded by the costs of holding or renewing our mining concessions. Accordingly, we need to continually assess the mineral potential of each mining concession, particularly at the time of renewal, to determine if the costs of maintaining the mining concessions are justified by the results of operations to date, and might elect to let some of our concessions lapse. There can be no assurance that concessions will be obtained on terms favorable to us, or at all, for our future intended mining or exploration targets.

In a number of jurisdictions where we have exploration projects, we may be required to retrocede to the state a certain portion of the area covered by the exploration license as a condition to obtaining a mining concession. This retrocession requirement can lead to a substantial loss of part of the mineral deposit originally identified in our feasibility studies. For more information on mining concessions and other similar rights, see Regulatory matters.

We are investing to maintain and further increase our production capacity, logistics capabilities and to expand the scope of the minerals we produce. Our projects are subject to a number of risks that may adversely affect our growth prospects and profitability, including the following:

Ineffective project management and operational breakdowns might require us to suspend or curtail operations, which could generally reduce our productivity. Ineffective project management could mean that we are not able to perform the continuous operation of our activities. Operational breakdowns could entail failure of critical plant and machinery. There can be no assurance that ineffective project management or other operational problems will not occur. Any damages to our projects or delays in our operations caused by ineffective project management or operational breakdowns could materially and adversely affect our business and results of operations.

Our business is subject to a number of operational risks that may adversely affect our results of operations, such as:

A portion of our production is in the form of non-concentrate iron ore. This type of ore has been occasionally compared to fines, which are small particles of ore. Current studies are analyzing whether these ores, when transported with a high moisture content, may begin to act like a fluid, although we have no record of such an event occurring. This might cause cargo to become less stable, presenting potential dangers to navigation. The operational risks depend on many factors, including the characteristics of the ore, the circumstances under which they are transported and the type of vessel used. To manage these risks, the shipping industry and maritime insurers generally follow rules adopted under the International Maritime Solid Bulk Cargoes (IMSBC) Code, but those rules do not currently specifically address the transportation of non-concentrate iron ore such as we produce in the Carajás mineral province in our Northern System. Potential changes to the rules are currently under consideration under the auspices of the International Maritime Organization (IMO). We believe that the safety of our shipping practices is evidenced by our long track record of safe operations, but regulatory changes could require us to modify our practices for handling or shipping our Carajás production, and these measures could increase our costs, require new investment, and even limit the volume of our exports of Carajás iron ore.

Customers, suppliers, contractors and other counterparties may fail to perform existing contracts and obligations, which may unfavorably impact our operations and financial results. The ability of suppliers and customers to perform their obligations may be adversely affected in times of financial stress and economic downturn. Suppliers are also subject to capacity constraints in times of high demand which may affect their ability to fulfill their commitments.

We currently operate important parts of our pelletizing, bauxite, nickel, coal, copper and steel businesses through joint ventures with other companies. Important parts of our electricity investments and our oil and gas projects are operated through consortia. Our forecasts and plans for these joint ventures and consortia assume that our partners will observe their obligations to make capital contributions, purchase products and, in some cases, provide skilled and competent managerial personnel. If any of our partners fails to observe its commitments, the affected joint venture or consortium may not be able to operate in accordance with its business plans, or we may have to increase the level of our investment to implement these plans. For more information about our joint ventures, see Information on the Company—Lines of business.

Our operations involve the use, handling, discharge and disposal of hazardous materials into the environment and the use of natural resources, and the mining industry is generally subject to significant risks and hazards, including the potential for fire or explosion, gas leaks, escape of polluting substances or other hazardous materials, rockfall incidents in underground mining operations and incidents involving mobile equipment or machinery. This could occur by accident or by a breach of operating standards, and could result in a significant incident, including damage to or destruction of mineral properties or production facilities, personal injury or death, environmental damage, delays in production, monetary losses and possible legal liability. Vale has health, safety and environmental standards in place to mitigate the risk of such incidents or accidents. Notwithstanding our standards, policies and controls, our operations remain subject to incidents or accidents, which could adversely affect our business or reputation.

Nearly all aspects of our activities, products, services and projects around the world are subject to environmental, health and safety regulation, which may expose us to increased liability or increased costs. Such regulations require us to obtain environmental licenses, permits and authorizations for our operations, and to conduct environmental impact assessments in order to get approval for our projects and permission for initiating construction. Additionally, all significant changes to existing operations must also undergo the same

procedures. Difficulties in obtaining permits may lead to construction delays or cost increases, and in some cases may lead us to postpone or even abandon a project. Environmental regulation also imposes standards and controls on activities relating to mineral research, mining, pelletizing activities, railway and marine services, ports, decommissioning, refining, distribution and marketing of our products. Such regulation may give rise to significant costs and liabilities. In addition, community activist groups and other stakeholders may increase demands for socially responsible and environmentally sustainable practices, which could entail significant costs and reduce our profitability. Private litigation relating to these or other matters may adversely affect our financial condition or cause harm to our reputation.

Environmental regulation in many countries in which we operate has become stricter in recent years, and it is possible that more regulation or more aggressive enforcement of existing regulations will adversely affect us by imposing restrictions on our activities and products, creating new requirements for the issuance or renewal of environmental licenses, raising our costs or requiring us to engage in expensive reclamation efforts.

Concern over climate change and efforts to comply with international undertakings could lead governments to impose limits on carbon emissions or carbon taxes and emissions trading schemes applicable to our operations, which could adversely affect our operating costs or our capital expenditure requirements. For example, the Brazilian government has adopted a decree under the carbon emissions law (Política Nacional de Mudanças Climáticas) that contemplates specific limits on carbon emissions to be established in 2012 and phased in through 2020, and the Australian government has introduced a carbon pricing mechanism that commences in July 2012.

Natural disasters, such as wind storms, floods, earthquakes and tsunamis may adversely affect our operations and projects in the countries where we operate, and may cause a contraction in sales to countries adversely affected due to, among other factors, power outages and the destruction of industrial facilities and infrastructure. Moreover, although the physical impact of climate change on our business remains highly uncertain, we may experience changes in rainfall patterns, water shortages, rising sea levels, increased storm intensity and flooding as a result of climate change, which may adversely affect our operations. On January 11, 2012, we determined that force majeure had occurred under a number of our iron ore sales contracts due to high rainfall in the Brazilian states of Minas Gerais, Rio de Janeiro and Espírito Santo, which created serious challenges to the operations of our Southeastern and Southern Systems. The force majeure was lifted on January 23, 2012.

Our businesses are generally subject to a number of risks and hazards, which could result in damage to, or destruction of, mineral properties, facilities and equipment. The insurance we maintain against risks that are typical in our business may not provide adequate coverage. Insurance against some risks (including liabilities for environmental pollution or certain hazards or interruption of certain business activities) may not be available at a reasonable cost, or at all. As a result, accidents or other negative developments involving our mining, production or transportation facilities could have a material adverse effect on our operations.

Our reported ore reserves are estimated quantities of ore and minerals that we have determined can be economically mined and processed under present and assumed future conditions to extract their mineral content. There are numerous uncertainties inherent in estimating quantities of reserves and in projecting potential future rates of mineral production, including factors beyond our control. Reserve reporting involves estimating deposits of minerals that cannot be measured in an exact manner, and the accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation and

judgment. As a result, no assurance can be given that the indicated amount of ore will be recovered or that it will be recovered at the rates we anticipate. Estimates may vary, and results of our mining and production subsequent to the date of an estimate may lead to revisions of estimates. Reserve estimates and estimates of mine life may require revisions based on actual production experience and other factors. For example, fluctuations in the market prices of minerals and metals, reduced recovery rates or increased operating and capital costs due to inflation, exchange rates or other factors may render proven and probable reserves uneconomic to exploit and may ultimately result in a restatement of reserves. Such restatement could affect depreciation and amortization rates, and have an adverse effect on our financial performance.

We engage in mineral exploration, which is highly speculative in nature, involves many risks and frequently is non-productive. Our exploration programs, which involve significant expenditures, may fail to result in the expansion or replacement of reserves depleted by current production. If we do not develop new reserves, we will not be able to sustain our current level of production beyond the remaining lives of our existing mines.

Once mineral deposits are discovered, it can take a number of years from the initial phases of drilling until production is possible, during which the economic feasibility of production may change. Substantial time and expenditures are required to:

If a project proves not to be economically feasible by the time we are able to exploit it, we may incur substantial losses and be obliged to take write-downs. In addition, potential changes or complications involving metallurgical and other technological processes arising during the life of a project may result in delays and cost overruns that may render the project not economically feasible.

Reserves are gradually depleted in the ordinary course of a given mining operation. As mining progresses, distances to the primary crusher and to waste deposits become longer, pits become steeper and underground operations become deeper. In addition, for some types of reserves, mineralization grade decreases and hardness increases at increased depths. As a result, over time, we usually experience rising unit extraction costs with respect to each mine. Several of our mines have been operating for long periods, and we will likely experience rising extraction costs per unit in the future at these operations in particular.

A substantial number of our employees, and some of the employees of our subcontractors, are represented by labor unions and are covered by collective bargaining or other labor agreements, which are subject to periodic negotiation. Negotiation may become more difficult in times of higher prices and consequently higher profits in the mining and metals industries, as labor unions may seek wage increases and other forms of additional compensation.

Strikes and other labor disruptions at any of our operations could adversely affect the operation of facilities and the timing of completion and cost of our capital projects. For more information about labor relations, see Management and employees—Employees. Moreover, we could be adversely affected by labor disruptions involving unrelated parties that may provide us with goods or services.

The mining industry has faced worldwide shortages of mining and construction equipment, spare parts, contractors and other skilled personnel during periods of high demand for minerals and metals and intense development of mining projects. We may experience longer lead-times for mining equipment and problems with the quality of contracted engineering, construction and maintenance services. We compete with other mining companies for highly skilled management and staff with relevant industry and technical experience, and we may not be able to attract and retain such people. Shortages during peak periods could negatively impact our operations, resulting in higher production or capital expenditure costs, production interruptions, higher inventory costs, project delays and potentially lower production and revenues.

Energy costs are a significant component of our cost of production, representing 13.4% of our total cost of goods sold in 2011. To fulfill our energy needs, we depend on the following sources: oil by-products, which represented 37% of total energy needs in 2011, electricity (21%), coal (19%), natural gas (15%) and other energy sources (8%), using figures converted into tons of oil equivalent ("TOE").

Fuel costs represented 9.3% of our cost of goods sold in 2011. Increases in oil and gas prices adversely affect margins in our logistics services, mining, iron ore pellets and nickel businesses.

Electricity costs represented 4.1% of our total cost of goods sold in 2011. If we are unable to secure reliable access to electricity at acceptable prices, we may be forced to curtail production or may experience higher production costs, either of which would adversely affect our results of operations. We face the risk of energy shortages in the countries where we have operations and projects due to excess demand or weather conditions, such as floods or droughts.

Electricity shortages have occurred throughout the world, and there can be no assurance that growth in power generation capacity in the countries in which we operate will be sufficient to meet future consumption increases. Future shortages, and government efforts to respond to or prevent shortages, may adversely impact the cost or supply of electricity for our operations. Through our subsidiary PT Vale Indonesia Tbk ("PTVI") (formerly known as PT International Nickel Indonesia Tbk), we process lateritic nickel ores using a pyrometallurgical process, which is energy-intensive. Although PTVI currently generates a majority of the electricity for its operations from its own hydroelectric power plants, low rainfall or other hydrological factors could adversely affect electricity production at PTVI's plants in the future, which could significantly increase the risk of higher costs or lower production volume.

A substantial portion of our revenues and debt is denominated in U.S. dollars, and changes in exchange rates may result in (i) losses or gains on our net U.S. dollar-denominated indebtedness and accounts receivable and (ii) fair value losses or gains on our currency derivatives used to stabilize our cash flow in U.S. dollars. In 2011, we had currency losses of US$1.382 billion, while in 2010 and 2009 we had currency gains of US$102 million and US$665 million, respectively. In addition, the price volatility of the Brazilian real, the Canadian dollar, the Australian dollar, the Indonesian rupiah and other currencies against the U.S. dollar affect our results since most of our costs of goods sold are denominated in currencies other than the U.S. dollar, principally the real (59% in 2011) and the Canadian dollar (15% in 2011), while our revenues are

mostly U.S. dollar-denominated. We expect currency fluctuations to continue to affect our financial income, expense and cash flow generation.

Significant volatility in currency prices may also result in disruption of foreign exchange markets and may limit our ability to transfer or to convert certain currencies into U.S. dollars and other currencies for the purpose of making timely payments of interest and principal on our indebtedness. The central banks and governments of the countries in which we operate may institute restrictive exchange rate policies in the future and impose taxes on foreign exchange transactions.

We may not be able to successfully integrate our acquired businesses. We have grown our business in part through acquisitions, and some of our future growth could depend on acquisitions. Integration of acquisition targets might take longer than expected and the costs associated with integration of acquisition targets might be higher than anticipated. In addition, if the focus on post-acquisition integration impacts the performance of our existing businesses, our results and operations may be adversely affected. Completed acquisitions could fail to achieve the increased revenues, cost savings or operational benefits that were anticipated at the time of their conception. Acquisitions could lead to the incurrence of substantial costs as a result of, for example, unforeseen liabilities arising from acquired businesses, inability to retain key staff, inconsistencies in standards, controls, procedures and policies between the Company and the acquisition target which could negatively affect our financial condition and results of operations. In addition, management attention could be diverted from ordinary responsibilities to integration issues.

We are involved in several legal proceedings in which adverse parties have claimed substantial amounts. Although we are vigorously contesting them, the outcomes of these proceedings are uncertain and may result in obligations that could materially adversely affect our business and the value of our shares, ADSs and HDSs. In addition, under Brazilian law, a taxpayer intending to challenge a tax assessment in the judicial system must ordinarily provide the court with a bond or security in the amount of the assessment in order to suspend collection efforts. In some of our tax litigation cases, we may be required to post bond or some form of security with the court, and, depending on the nature, amount and scope of such a bond or pledge, this may have a significant financial impact on our business. For additional information, see Additional information—Legal proceedings.

As of March 31, 2012, Valepar S.A. ("Valepar") owned 52.7% of our outstanding common stock and 32.4% of our total outstanding capital. As a result of its share ownership, Valepar can control the outcome of some actions that require shareholder approval. For a description of our ownership structure and of the Valepar shareholders' agreement, see Share ownership and trading—Major shareholders.

The Brazilian government owns 12 golden shares of Vale, granting it limited veto power over certain company actions, such as changes to our name, the location of our headquarters and our corporate purpose as it relates to mining activities. For a detailed description of the Brazilian government's veto powers, see Additional information—Memorandum and articles of association—Common shares and preferred shares.

We operate in a global environment, and our activities straddle multiple jurisdictions and complex regulatory frameworks with increased enforcement activities worldwide. Our governance and compliance processes, which include the review of internal control over financial reporting, may not prevent future breaches of law, accounting or governance standards. We may be subject to breaches of our Code of Ethical Conduct, business conduct protocols and instances of fraudulent behavior and dishonesty by our employees, contractors or other agents. Our failure to comply with applicable laws and other standards could subject us to fines, loss of operating licenses and reputational harm.

Our investors may be located in jurisdictions outside Brazil and could seek to bring actions against us or our directors or officers in the courts of their home jurisdictions. The Company is a Brazilian company, and the majority of our officers and directors are residents of Brazil. The vast majority of our assets and the assets of our officers and directors are likely to be located in jurisdictions other than the home jurisdictions of our investors. It might not be possible for the investors to effect service of process within their home jurisdictions on us or on our officers or directors who reside outside their home jurisdictions. In addition, foreign court orders will be enforceable in the courts of Brazil without a re-examination of the merits only if previously confirmed by the Brazilian Superior Court of Justice (Superior Tribunal de Justiça), which confirmation will only be granted if such judgment: (a) fulfills all formalities required for its enforceability under the laws of the country where it was issued; (b) was issued by a competent court after due service of process on the Company or after sufficient evidence of the Company's absence has been given, as required under applicable law; (c) is not subject to appeal; (d) was authenticated by a Brazilian consulate in the country in which it was issued and is accompanied by a sworn translation into the Portuguese language; and (e) is not contrary to Brazilian national sovereignty, public policy or good morals. Therefore, investors might not be able to recover against us or our directors and officers on judgments of the courts of their home jurisdictions predicated upon the laws of such jurisdictions.

The custodian for the shares underlying our ADSs and HDSs maintains a registration with the Central Bank of Brazil entitling it to remit U.S. dollars outside Brazil for payments of dividends and other distributions relating to the shares underlying our ADSs and HDSs or upon the disposition of the underlying shares. If an ADR holder or HDR holder exchanges its ADSs or HDSs for the underlying shares, it will be entitled to rely on the custodian's registration for U.S. dollars for only five business days from the date of exchange. Thereafter, an ADR holder or HDR holder may not be able to obtain and remit foreign currency abroad upon the disposition of, or distributions relating to, the underlying shares unless it obtains its own registration under Resolution No. 2,689 of the National Monetary Council ("CMN"), which permits qualifying institutional foreign investors to buy and sell securities on the BM&FBOVESPA. For more information regarding these exchange controls, see Additional information—Exchange controls and other limitations affecting security holders. If an ADR holder or HDR holder attempts to obtain its own registration, it may incur expenses or suffer delays in the application process, which could delay the receipt of dividends or other distributions relating to the underlying shares or the return of capital in a timely manner.

We cannot assure ADR holders or HDR holders that the custodian's registration or any registration obtained will not be affected by future legislative changes, or that additional restrictions applicable to ADR holders or HDR holders, the disposition of the underlying shares or the repatriation of the proceeds from disposition will not be imposed in the future.

ADR holders and HDR holders may not be able to exercise preemptive rights or other types of rights with respect to the underlying shares. The ability of ADR holders and HDR holders to exercise preemptive rights is not assured, particularly if the applicable law in the holder's jurisdiction (for example, the Securities Act in the United States or the Companies Ordinance in Hong Kong) requires that either a registration statement be effective or an exemption from registration be available with respect to those rights, as is in the case in the United States, or that any document offering preemptive rights be registered as a prospectus, as is the case in Hong Kong. We are not obligated to file a registration statement in the United States, or to make any other similar filing in any other jurisdiction, relating to preemptive rights or to undertake steps that may be needed to make exemptions from registration available, and we cannot assure holders that we will file any registration statement or take such steps. We are also not obligated to extend the offer of preemptive rights to HDR holders through the depositary. For a more complete description of preemptive rights with respect to the underlying shares, see Additional information—Memorandum and articles of association—Preemptive rights.

ADR holders and HDR holders do not have the rights of shareholders. They have only the contractual rights set forth for their benefit under the deposit agreements. ADR holders and HDR holders are not permitted to attend shareholders' meetings, and they may only vote by providing instructions to the depositary. In the event that we fail to provide the depositary with voting materials on a timely basis, or the depositary does not provide sufficient time for ADR holders and HDR holders to submit voting instructions, ADR holders and HDR holders will not be able to vote. With respect to ADSs for which instructions are not received, the depositary may, subject to certain limitations, grant a proxy to a person designated by us.

We are a global company with securities traded in several different markets and investors located in many different countries. The legal regime for the protection of investors varies around the world, sometimes in important respects, and investors in our securities should recognize that the protections and remedies available to them may be different from those to which they are accustomed in their home markets. We are subject to securities legislation in several countries, which have different rules, supervision and enforcement practices. The only corporate law applicable to us is the law of Brazil, with its specific substantive rules and judicial procedures. We are subject to corporate governance rules in several jurisdictions where our securities are listed, but as a foreign private issuer, we are not required to follow many of the corporate governance rules that apply to U.S. domestic issuers with securities listed on the New York Stock Exchange, and we are not subject to the U.S. proxy rules. Similarly, we have been granted waivers and exemptions from certain requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("HKEx Listing Rules"), the Codes on Takeovers and Mergers and Share Repurchases and the Securities and Futures Ordinance of Hong Kong that are generally applicable to issuers listed in Hong Kong.

We have prepared our financial statements in this annual report in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). We also publish financial statements in accordance with International Financial Reporting Standards ("IFRS"), which differ in certain respects from U.S. GAAP, and use IFRS in reports to Brazilian shareholders, in CVM filings, and in determining the legal minimum dividend under Brazilian law.

Our financial statements and the other financial information in this annual report have been translated from Brazilian reais into U.S. dollars on the basis explained in Note 3 to our financial statements, unless we indicate otherwise.

The tables below present selected consolidated financial information as of and for the periods indicated. You should read this information together with our consolidated financial statements in this annual report.

	For the year ended December 31,

	2007			2008			2009			2010			2011
	(US$ million)
Net operating revenues		32,242			37,426			23,311			45,293			58,990
Cost of products and services		(16,463	)		(17,641	)		(13,621	)		(18,814	)		(23,573	)
Selling, general and administrative expenses		(1,245	)		(1,748	)		(1,130	)		(1,701	)		(2,334	)
Research and development		(733	)		(1,085	)		(981	)		(878	)		(1,674	)
Impairment of goodwill		–			(950	)		–			–			–
Gain on sale of assets		–			–			–			–			1,513
Other expenses		(607	)		(1,254	)		(1,522	)		(2,205	)		(2,810	)

Operating income		13,194			14,748			6,057			21,695			30,112

Non-operating income (expenses):
Financial income (expenses), net		(1,291	)		(1,975	)		351			(1,725	)		(1,672	)
Exchange and monetary gains, net		2,553			364			675			344			(1,641	)
Gain on sale of investments		777			80			40			–			–

Subtotal		2,039			(1,531	)		1,066			(1,381	)		(3,313	)

Income before income taxes and equity results		15,233			13,217			7,123			20,314			26,799
Income taxes charge		(3,201	)		(535	)		(2,100	)		(3,705	)		(5,282	)
Equity in results of affiliates and joint ventures and change in provision for gains on equity investments		595			794			433			987			1,135

Net income from continuing operations		12,627			13,476			5,456			17,596			22,652
Discontinued operations, net of tax		–			–			–			(143	)		–
Net income		12,627			13,476			5,456			17,453			22,652

Net income (loss) attributable to non-controlling interests		802			258			107			189			(233	)

Net income attributable to Company's shareholders		11,825			13,218			5,349			17,264			22,885

Total cash paid to shareholders(1)		1,875			2,850			2,724			3,000			9,000

	At December 31,

	2007		2008		2009		2010		2011
	(US$ million)
Current assets		11,380		23,238		21,294		31,791		21,736
Property, plant and equipment, net and intangible assets		54,625		49,329		68,810		84,370		90,030
Investments in affiliated companies and joint ventures and other investments		2,922		2,408		4,585		4,497		8,093
Other assets		7,790		5,017		7,590		8,481		8,869

Total assets		76,717		79,992		102,279		129,139		128,728

Current liabilities		10,083		7,237		9,181		17,912		11,043
Long-term liabilities(1)		13,195		10,173		12,703		17,195		16,033
Long-term debt(2)		17,608		17,535		19,898		21,591		21,538

Total liabilities		40,886		34,945		41,782		56,698		48,614
Redeemable non-controlling interests		375		599		731		712		505
Shareholders' equity:
Capital stock		12,306		23,848		23,839		23,726		36,903
Additional paid-in capital		498		393		411		2,188		(61	)
Mandatorily convertible notes—common ADSs		1,288		1,288		1,578		290		290
Mandatorily convertible notes—preferred ADSs		581		581		1,225		644		644
Reserves and retained earnings		18,603		16,446		29,882		42,051		39,939

Total Company shareholders' equity		33,276		42,556		56,935		68,899		77,715

Non-controlling interests		2,180		1,892		2,831		2,830		1,894

Total shareholders' equity		35,456		44,448		59,766		71,729		79,609

Total liabilities and shareholders' equity		76,717		79,992		102,279		129,139		128,728

We are the second-largest metals and mining company in the world and the largest in the Americas, based on market capitalization. We are the world's largest producer of iron ore and iron ore pellets and the world's second-largest producer of nickel. We are one of the world's largest producers of manganese ore and ferroalloys. We also produce copper, thermal and metallurgical coal, phosphates, potash, cobalt and platinum group metals ("PGMs"). To support our growth strategy, we are actively engaged in mineral exploration efforts in 27 countries around the globe. We operate large logistics systems in Brazil and other regions of the world, including railroads, maritime terminals and ports, which are integrated with our mining operations. In addition, we have a maritime freight portfolio to transport iron ore. Directly and through affiliates and joint ventures, we also have investments in energy and steel businesses.

The following table presents the breakdown of our total gross operating revenues attributable to each of our main lines of business.

	Year ended December 31,

	2009		2010		2011
	(US$ million)	(% of total)	(US$ million)	(% of total)	(US$ million)	(% of total)
Bulk materials:
Iron ore	US$12,831	53.6%	US$26,384	56.8%	US$35,008	58.0%
Iron ore pellets	1,352	5.6	6,402	13.7	8,150	13.5
Manganese	145	0.6	258	0.6	171	0.3
Ferroalloys	372	1.6	664	1.4	561	0.9
Coal	505	2.1	770	1.6	1,058	1.7

Subtotal–bulk materials	US$15,205	63.5%	US$34,478	74.2%	US$44,948	74.4%
Base metals:
Nickel	US$ 3,260	13.6%	US$ 3,835	8.2%	US$ 5,720	9.5%
Copper	1,130	4.7	1,608	3.4	2,692	4.4
PGMs	132	0.6	101	0.2	492	0.8
Other precious metals	65	0.3	72	0.2	246	0.4
Cobalt	42	0.2	30	0.1	94	0.2
Aluminum	2,050	8.6	2,554	5.5	383	0.6

Subtotal–base metals	US$ 6,679	28.0%	US$ 8,200	17.6%	US$ 9,627	15.9%
Fertilizer nutrients	413	1.7	1,846	4.0	3,547	5.9
Logistics	1,104	4.6	1,465	3.2	1,726	2.9
Other products and services(1)	538	2.2	492	1.1	541	0.9

Total gross operating revenues	US$23,939	100.0%	US$46,481	100.0%	US$60,389	100.0%

Our mission is to transform natural resources into prosperity and sustainable development. Our vision is to become the number one global natural resources company, creating long-term value through excellence and passion for people and the planet. We aim to increase our demand driver, mineral and geographical diversification and logistics capabilities. Iron ore and nickel will continue to be our main businesses while we boost the production capacity of our copper, coking coal and fertilizer nutrients businesses. To enhance our competitiveness, we will continue to invest in our railroads, maritime terminals, maritime freight portfolio and power generation capacity. We continue to seek opportunities to make strategic acquisitions and partnerships, while focusing on disciplined capital management in order to maximize return on invested capital and total return to shareholders. We also dispose of assets from time to time that we have determined to be non-strategic or in order to optimize the structure of our business portfolio, but no such divestitures occurred in 2011. Below are the highlights of our major business strategies.

We continue to consolidate our leadership in the global iron ore market. In 2011 and 2010, we had an estimated market share of 24.3% and 24.7%, respectively, of the total volume traded in the seaborne market. We are committed to maintaining our leadership position in the global iron ore market, by focusing our product line to capture industry trends, increasing our production capacity in line with demand growth, controlling costs, strengthening our logistics infrastructure of railroads, ports, shipping and distribution centers, and strengthening relationships with customers. Our diversified portfolio of high quality products, strong technical marketing strategy, efficient logistics and strong and long-standing relationships with major customers will help us achieve this goal. We have also encouraged steelmakers to develop steel projects in Brazil through joint ventures in which we may hold minority stakes, in order to create additional demand for our iron ore.

We are the world's second-largest nickel producer, with large-scale, long-life and low-cost operations, a substantial resource base, diversified mining operations producing nickel from nickel sulfides and laterites, advanced technology and a robust growth profile. We have refineries in North America, Europe and Asia, which produce an array of products for use in most nickel applications. We are a leading producer of high-quality nickel products for non-stainless steel applications, such as plating, alloy steels, high nickel alloys and batteries, which represented 66% of our nickel sales in 2011. Our long-term goal is to strengthen our leadership in the nickel business.

We operate the Sossego copper mine in Carajás, in the Brazilian state of Pará, and the Tres Valles copper mine in Chile. We also recover copper in conjunction with our nickel operations, principally at Sudbury and Voisey's Bay, in Canada. We believe that our copper projects, most of which are situated in Carajás, could be among the most competitive in the world in terms of investment cost per metric ton of ore. We are in the final phase of construction of the Salobo project to produce copper concentrate. We expect these copper mines to benefit from our infrastructure facilities serving the Northern System. We are developing the Konkola North copper mine in Zambia, Africa through a joint venture with African Rainbow Minerals Limited ("ARM"), which has an 80% stake in the project, with the remaining 20% stake held by Zambia Consolidated Copper Mines Ltd. We are also engaged in mineral exploration in several countries in order to increase our reserve base.

We are pursuing various opportunities to become a large global player in the coal business. We have coal operating assets and a portfolio of exploration projects in Mozambique, Australia and Colombia, and minority interests in two joint ventures in China. We intend to continue pursuing organic growth in the coal business through the expansion of the Moatize project in Mozambique, the development of more advanced coal exploration projects in Australia and Colombia, and mineral exploration initiatives in several countries.

We are actively investing to become one of the world's largest producers of potash and phosphate rock in order to benefit from rising global consumption of agricultural products, which is expected to grow significantly in coming years, especially in emerging market countries. We expect per capita income growth and the growing use of biofuels to drive demand for fertilizers. In this context, Brazil is expected to play a key role in the global agricultural market, given its position as a global agricultural powerhouse and its growth potential, mainly due to its access to water and arable land.

We operate a potash mine in Brazil (Taquari-Vassouras) and the Bayóvar phosphate rock operation in Peru, and, in 2010, we expanded our fertilizer nutrients operations through the acquisition of Brazilian phosphate and nitrogen operations, now consolidated under our wholly owned subsidiary Vale Fertilizantes. Our portfolio also includes potash projects in Argentina, Brazil and Canada, as well as several phosphate rock and potash mineral exploration projects around the world as part of our growth strategy. For more information, see—Significant changes in our business below.

We are actively engaged in a mineral exploration program, with efforts in 27 countries around the globe. We are mainly seeking new deposits of coal, copper, iron ore, manganese ore, nickel, phosphates and potash. Mineral exploration is an important part of our organic growth strategy.

We believe that the quality of our railway assets and extensive experience as a railroad and port operator, together with the lack of efficient transportation for general cargo in Brazil, position us as a leader in the logistics business in Brazil. We have been expanding the capacity of our railroads, primarily to meet the needs of our iron ore business.

To support our commercial strategy for our iron ore business, we continue to invest in a dedicated maritime freight shuttle service from Brazil to Asia and in the development of distribution centers in Asia and the Middle East, in order to minimize freight costs and maximize flexibility, so as to enhance the competitiveness of our iron ore business in these regions.

In order to position ourselves for future expansion of our coal production in Mozambique and leverage our presence in Africa, we acquired an additional 16% of SDCN, bringing our total stake in SDCN

to 67% at year-end, and we plan to expand its capacity, by rehabilitating the existing railroad. New railroads will be constructed to develop the logistics corridor from our mine to a new port to be built at Nacala-à-Velha.

Energy management and efficient supply have become a priority for us. As a large consumer of electricity, we believe that investing in power generation projects to support our operations will help protect us against volatility in the price of energy, regulatory uncertainties and the risk of energy shortages. Accordingly, we have developed hydroelectric power generation plants in Brazil, Canada and Indonesia, and we currently generate 48% of our worldwide electricity needs from our own plants, after accounting for the transfer of our aluminum production portfolio.

We are seeking to develop a cleaner energy matrix by investing to develop clean energy sources such as biofuels and windpower, and focusing on reducing our carbon footprint.

We summarize below major acquisitions, divestitures and other significant developments since the beginning of 2011.

Starting in the first half of 2010, we reached agreements with all our iron ore customers to move contracts from annual benchmark pricing to index-based pricing to better reflect market fundamentals. The previous annual benchmark pricing system for iron ore, based on annual bilateral negotiations, was initially replaced by a system under which iron ore prices were established quarterly, based on a three-month average of price indices for the period ending one month before the beginning of the new quarter. Since the last quarter of 2011, we have also reached agreements with some customers to price our products on a quarterly basis using the current quarter's three-month average of price indices and, with other customers, using the monthly average of the price indices or spot prices. The move towards increased price flexibility brings more efficiency and transparency to iron ore pricing and allows for the recognition of quality differences, which helps encourage long-term investment. In addition, many customers value the ability to know beforehand the price to be paid in each quarter.

On December 12, 2011, our wholly owned subsidiary Mineração Naque S.A. concluded a tender offer to acquire up to 100% of the publicly held shares of our subsidiary Vale Fertilizantes. As a result of the public offer, we acquired 211,014 common shares and 82,919,456 preferred shares of Vale Fertilizantes, representing 83.8% of the publicly held common shares and 94.0% of the publicly held preferred shares of Vale Fertilizantes, which correspond to 0.1% of the total common shares and 29.8% of the total preferred shares of Vale Fertilizantes. Both the common and preferred shares were acquired for R$25.00 per share, amounting to a total of R$2.1 billion (US$1.1 billion). Shortly thereafter, Vale Fertilizantes' registration as a publicly listed company in Brazil was cancelled. In January 2012, the shareholders of Vale Fertilizantes approved the redemption of the remaining free floating common and preferred shares. As a result, Vale holds 100% of the common shares and 100% of the preferred shares of Vale Fertilizantes.

In February 2011, we invested US$173.5 million to acquire control of Biopalma, in the Brazilian state of Pará. Biopalma will produce palm oil, a raw material used to make biodiesel, and most of the production will be used for a B20 mix (a blend of 20% biodiesel and 80% regular diesel) to power our fleet of locomotives, heavy-duty machinery and equipment. Our investment in producing biodiesel is part of our strategic emphasis on global sustainability and greenhouse gas emissions reduction.

In June 2011, we acquired 9% of Norte Energia S.A. ("NESA"). NESA was established to develop and operate the Belo Monte hydroelectric plant in the Brazilian state of Pará. Vale reimbursed the seller for capital invested in NESA and will assume future capital investment commitments related to the acquired stake, which are estimated at US$1.6 billion. The acquisition is consistent with our strategy of reducing operational costs and minimizing energy price and supply risks.

We have an extensive program of investments in the organic growth of our businesses. Our main investment projects are summarized under—Capital expenditures and projects. The most significant projects that have come on stream since the beginning of 2011 are summarized below:

In February 2011, we transferred a substantial part of our aluminum businesses to Hydro, an integrated aluminum company with operations in Norway and other countries that is listed on the Oslo Stock Exchange and the London Stock Exchange (ticker symbol: NHY). We transferred our interests in Alumínio Brasileiro S.A. ("Albras"), Alumina do Norte do Brasil S.A. ("Alunorte") and Companhia de Alumina do Pará ("CAP"), with net debt of US$655 million, along with off-take rights and outstanding commercial contracts, for US$503 million in cash and shares in Hydro representing a 22% interest in its equity. As part of the transaction, we transferred the Paragominas bauxite mine and all of our other Brazilian bauxite mineral rights (apart from rights owned through our stake in MRN) to the newly incorporated company Paragominas, 60% of which we transferred to Hydro in exchange for US$578 million in cash. We will transfer our interest in Paragominas in two equal tranches in 2014 and 2016, each in exchange for US$200 million in cash, subject to certain contingent adjustments. In addition, under the agreement, we have appointed one director to Hydro's board.

Our principal lines of business consist of mining and logistics services. We also invest in energy to supply part of our consumption. This section presents information about operations, production, sales and competition and is organized as follows.

Our bulk materials business includes iron ore mining, iron ore pellet production, manganese ore mining, ferroalloy production and coal production. Each of these activities is described below.

We conduct our iron ore business in Brazil primarily at the parent-company level and through our wholly owned subsidiary Mineração Corumbaense Reunidas S.A. ("MCR"). Our mines, all of which are open-pit, and their related operations are mainly concentrated in three systems: the Southeastern System, the Southern System and the Northern System, each with its own transportation capabilities. We also conduct mining operations in the Midwestern System and through our joint venture Samarco Mineração S.A. ("Samarco").

The Southeastern System mines are located in the Iron Quadrangle region of the state of Minas Gerais, where they are divided into three mining sites: Itabira (comprised of two mines, with two major beneficiation plants), Minas Centrais (comprised of three mines, with three major beneficiation plants and one secondary plant) and Mariana (comprised of three mines, with four major beneficiation plants).

The ore reserves in these mining sites have high ratios of itabirite ore relative to hematite ore. Itabirite ore has iron grade of 35-60% and requires concentration to achieve shipping grade.

We conduct open-pit mining operations in the Southeastern System. At the three mining sites, we generally process the run-of-mine by means of standard crushing, classification and concentration steps, producing sinter feed, lump ore and pellet feed in the beneficiation plants located at the mining sites. In 2011, we produced 64% of the electric energy consumed in the Southeastern System at our hydroelectric power plants.

We own and operate integrated railroad and terminal networks in the three mining sites, which are accessible by road or by spur tracks of our EFVM railroad. The EFVM railroad connects these mines to the Tubarão port in Vitória, in the state of Espírito Santo. For a more detailed description of the networks, see—Logistics.

The Southern System mines are located in the Iron Quadrangle region of the state of Minas Gerais in Brazil. The mines of our subsidiary Minerações Brasileiras Reunidas S.A. ("MBR") are operated at the parent-company level pursuant to an asset lease agreement. The Southern System has three major mining sites: Minas Itabirito (comprised of four mines, with two major beneficiation plants and three secondary beneficiation plants); Vargem Grande (comprised of three mines and one major beneficiation plant); and Paraopeba (comprised of four mines and four beneficiation plants).

We beneficiate run-of-mine obtained from open pit mining operations into sinter feed, lump ore and pellet feed. In 2011, we produced 94% of the electric energy consumed in the Southern System at our hydroelectric power plants.

The ore reserves in the mining sites have high ratios of itabirite ore relative to hematite ore. Itabirite ore has iron grade of 35-60% and requires concentration to achieve shipping grade. We generally process the run-of-mine by means of standard crushing, classification and concentration steps, producing sinter feed, lump ore and pellet feed in the beneficiation plants located at the mining sites.

We enter into freight contracts with MRS, an affiliate railway company in which we own a 45.8% stake, to transport our iron ore products at market prices from the mines to our Guaíba Island and Itaguaí maritime terminals in the state of Rio de Janeiro.

The Northern System mines, located in the Carajás mineral province of the Brazilian state of Pará, contain some of the largest iron ore deposits in the world. The reserves are divided into Serra Norte, Serra Sul and Serra Leste (northern, southern and eastern ranges) situated 35 kilometers apart. Since 1985, we have been conducting mining activities in the northern range, which is divided into three main mining bodies (N4W, N4E and N5). The Northern System has open-pit mines and an ore-processing plant. The mines are located on public lands for which we hold mining concessions.

The ore reserves in the Northern System are comprised of hematite. Because of the high grade (66.7% on average) of the Northern System deposits, we do not need to operate a concentration plant at Carajás. The beneficiation process consists simply of sizing operations, including screening, hydrocycloning, crushing and filtration. Output from the beneficiation process consists of sinter feed and pellet feed. We obtain all of the electrical power for the Northern System at market prices from regional utilities.

We operate an integrated railroad and maritime terminal network in the Northern System. After completion of the beneficiation process, our EFC railroad transports the iron ore to the Ponta da Madeira maritime terminal in the state of Maranhão. To support our Carajás operations, we have housing and other facilities in a nearby township. These operations are accessible by road, air and rail.

The Midwestern System is comprised of the mines of Urucum and Corumbá, located in the state of Mato Grosso do Sul.

We conduct open-pit mining operations in the Midwestern System. The Urucum ore reserves contain a high ratio of hematite ore. In September 2009, we concluded the acquisition of the Corumbá mine, where we produce lump ores. At the Urucum and Corumbá mines, we generally process the run-of-mine by means of standard crushing and classification steps, producing lumps and fines.

Iron ore products from the Urucum and Corumbá mines are delivered to customers by barges traveling along the Paraguay and Paraná rivers.

We own 50.0% of Samarco, which operates an integrated system comprised of a mine site, pipeline, three pellet plants and a port. Samarco's Alegria mine site, located in Mariana, Minas Gerais, is in the same region as our Mariana site in the Southeastern System.

The ore reserves of Samarco are typically of itabirite type. Two beneficiation plants, located at the site, process the run-of-mine by means of standard crushing, milling and concentration steps, producing pellet feed and sinter feed.

Iron ore from Alegria and Fazendão, in our Southeastern System, supplies the Samarco pellet plants using a 396-kilometer pipeline, the longest pipeline in the world for the conveyance of iron ore. Samarco has its own port facilities to transport its production.

		Production for the year ended December 31,

		Production for the year ended December 31,			Recovery rate
Mine/Plant	Type	2009	2010	2011	Recovery rate
		(million metric tons)			(%)
Southeastern System
Itabira
Cauê(1)	Open pit	13.8	19.3	18.6	63.7
Conceição(1)	Open pit	17.3	19.4	21.4	74.2
Minas Centrais
Água Limpa(2)	Open pit	1.4	5.0	5.0	52.2
Gongo Soco	Open pit	2.7	6.8	5.3	100
Brucutu	Open pit	23.6	29.7	30.9	73.1
Andrade(3)	Open pit	0.7	–	–	–
Mariana
Alegria	Open pit	12.1	13.6	14.7	80.9
Fábrica Nova(4)	Open pit	13.7	12.5	13.2	72.4
Fazendão(5)	Open pit	3.1	10.6	11.1	100

Total Southeastern System		88.5	116.9	120.2
Southern System
Minas Itabirito
Segredo/João Pereira(6)	Open pit	8.4	12.4	11.8	72.2
Sapecado/Galinheiro(7)	Open pit	9.8	17.7	18.6	64.7
Vargem Grande
Tamanduá(8)	Open pit	7.3	8.6	8.8	79.7
Capitão do Mato(8)	Open pit	8.0	8.2	7.3	79.7
Abóboras	Open pit	5.4	5.2	5.3	100
Paraopeba
Jangada	Open pit	–	3.5	5.1	100
Córrego do Feijão	Open pit	5.6	6.8	6.8	77.9
Capão Xavier(9)	Open pit	10.9	9.3	8.4	78
Mar Azul	Open pit	–	3.0	4.1	100

Total Southern System		55.2	74.7	76.3
Midwestern System
Corumbá	Open pit	0.4	2.8	4.1	50.0
Urucum	Open pit	0.5	1.4	1.5	76.0

Total Midwestern System		1.0	4.2	5.6
Northern System
Serra Norte(10)
N4W	Open pit	30.9	33.4	38.9	92.4
N4E	Open pit	16.9	22.2	20.1	92.4
N5	Open pit	36.8	45.6	50.8	92.4

Total Northern System		84.6	101.2	109.8

Vale		229.3	297.0	311.8
Samarco(11)		8.6	10.8	10.8	57.6

Total		238.0	307.8	322.6

Directly and through joint ventures, we produce iron ore pellets in Brazil, Oman and China, as set forth in the following table. Our total estimated nominal capacity is 43.7 Mtpy, not including the nominal capacity of our joint ventures of 22.2 Mtpy from Samarco, 4.5 Mtpy from Hispanobras, 1.2 Mtpy from Zhuhai YPM and 1.2 Mtpy from Anyang Yu Vale Yongtong Pellet Co., Ltd. ("Anyang"). After ramping up our pellet plants in Oman, we will add 9.0 Mtpy of nominal capacity.

In the Tubarão port area, in the Brazilian state of Espírito Santo, we operate our wholly owned pellet plants, Tubarão I and II, four plants we lease under operating leases and our jointly-owned plant, Hispanobras. We send iron ore from our Southeastern System mines to these plants and use our logistics infrastructure to distribute their final products.

Our São Luís pellet plant, located in the Brazilian state of Maranhão, is part of the Northern System. We send Carajás iron ore to this plant and ship its production to customers through our Ponta da Madeira maritime terminal.

The Fábrica and Vargem Grande pellet plants, located in the Brazilian state of Minas Gerais, are part of the Southern System. We send some of the iron ore from the Fábrica mine to the Fábrica plant, and iron ore from the Pico mine to the Vargem Grande plant. We transport pellets from the Vargem Grande plant using MRS, and pellets from the Fábrica plant using both MRS and EFVM.

We started up a pelletizing operation in the Sohar industrial complex in Oman, in the Middle East. The two pellet plants will each have production capacity of 4.5 Mtpy, totaling 9 Mtpy of capacity for direct reduction pellets. The first plant is producing at full capacity rates and the second plant has been ramping up since November 2011. The pellet plants are located in an area where we will have a distribution center with capacity to handle 40 Mtpy.

Samarco operates three pellet plants in two operating sites with nominal capacity of 22.3 Mtpy. The pellet plants are located in the Ponta Ubu unit, in Anchieta, Espírito Santo. In April 2011, our Board of Directors approved the construction of a fourth pellet plant with capacity of 8.3 Mtpy, increasing Samarco's iron ore pellet capacity to 30.5 Mtpy.

The Zhuhai YPM pellet plant, in China, is part of the Yueyufeng Steelmaking Complex. It has port facilities, which we use to receive feed from our mines in Brazil. Zhuhai YPM's main customer is Zhuhai Yueyufeng Iron & Steel ("YYF"), which is also located in the Yueyufeng Steelmaking Complex. We also own a 25.0% interest in Anyang, which is a pelletizing operation in China with the capacity to produce 1.2 Mtpy that started production in March 2011.

We sell pellet feed to our pelletizing joint ventures at market prices. Historically, we have supplied all of the iron ore requirements of our wholly owned production pellet plants and joint ventures, except for Samarco, Zhuhai YPM and Anyang, to which we supply only part of their requirements. Of our total 2011 pellet production, 71.2% was blast furnace pellets and 28.8% was direct reduction pellets, which are used in steel mills that employ the direct reduction process rather than blast furnace technology.

We sell iron ore to our pelletizing joint ventures. In 2011, we sold 4.5 million metric tons to Hispanobras, 12.0 million metric tons to Samarco and 1.2 million metric tons to Zhuhai YPM.

The following table sets forth information about our main iron ore pellet production.

We supply all of our iron ore and iron ore pellets (including our share of joint-venture pellet production) to the steel industry. Prevailing and expected levels of demand for steel products affect demand for our iron ore and iron ore pellets. Demand for steel products is influenced by many factors, such as global manufacturing production, civil construction and infrastructure spending. For further information about demand and prices, see Operating and financial review and prospects—Demand and prices.

In 2011, China accounted for 44.1% of our iron ore and iron ore pellet shipments, and Asia as a whole accounted for 62.4%. Europe accounted for 18.9%, followed by Brazil with 13.4%. Our 10 largest customers collectively purchased 131.7 million metric tons of iron ore and iron ore pellets from us, representing 44.0% of our 2011 iron ore and iron ore pellet shipments and 46.0% of our total iron ore and iron ore pellet revenues. In 2011, no individual customer accounted for more than 10.0% of our iron ore and iron ore pellet shipments.

In 2011, the Asian market (mainly Japan, South Korea and Taiwan) and the European market were the primary markets for our blast furnace pellets, while North America, the Middle East and North Africa were the primary markets for our direct reduction pellets.

We strongly emphasize customer service in order to improve our competitiveness. We work with our customers to understand their main objectives and to provide them with iron ore solutions to meet specific customer needs. Using our expertise in mining, agglomeration and iron-making processes, we search for technical solutions that will balance the best use of our world-class mining assets and the satisfaction of our customers. We believe that our ability to provide customers with a total iron ore solution and the quality of our products are both very important advantages helping us to improve our competitiveness in relation to

competitors who may be more conveniently located geographically. In addition to offering technical assistance to our customers, we operate sales support offices in Tokyo (Japan), Seoul (South Korea), Singapore, Dubai (UAE) and Shanghai (China), which support the sales made by our wholly owned subsidiary Vale International, located in St. Prex, Switzerland. These offices also allow us to stay in close contact with our customers, monitor their requirements and our contract performance, and ensure that our customers receive timely deliveries.

The global iron ore and iron ore pellet markets are highly competitive. The main factors affecting competition are price, quality and range of products offered, reliability, operating costs and shipping costs.

Our biggest competitors in the Asian market are located in Australia and include subsidiaries and affiliates of BHP Billiton plc ("BHP Billiton") and Rio Tinto Ltd ("Rio Tinto"). Although the transportation costs of delivering iron ore from Australia to Asian customers are generally lower than ours as a result of Australia's geographical proximity, we are competitive in the Asian market for two main reasons. First, steel companies generally seek to obtain the types (or blends) of iron ore and iron ore pellets that can produce the intended final product in the most economic and efficient manner. Our iron ore has low impurity levels and other properties that generally lead to lower processing costs. For example, in addition to its high grade, the alumina grade of our iron ore is very low compared to Australian ores, reducing consumption of coke and increasing productivity in blast furnaces, which is particularly important during periods of high demand. When market demand is very strong, our quality differential is in many cases more valuable to customers than a freight differential. Second, steel companies often develop sales relationships based on a reliable supply of a specific mix of iron ore and iron ore pellets. We have a customer-oriented marketing policy and place specialized personnel in direct contact with our customers to help determine the blend that best suits each particular customer.

In terms of reliability, our ownership and operation of logistics facilities in the Northern and Southeastern Systems help us ensure that our products are delivered on time and at a relatively low cost. In addition, we continue to develop a low-cost freight portfolio, aimed at enhancing our ability to offer our products in the Asian market at competitive prices and to increase our market share. To support this strategy, we ordered new ships, purchased used vessels and entered into medium- and long-term freight contracts.

Our principal competitors in Europe are Kumba Iron Ore Limited, Luossavaara Kiirunavaara AB ("LKAB"), Société Nationale Industrielle et Minière ("SNIM") and Iron Ore Company of Canada ("IOC"), a subsidiary of Rio Tinto. We are competitive in the European market not only for the same reasons we are competitive in Asia, but also due to the proximity of our port facilities to European customers.

The Brazilian iron ore market is also competitive. There are several small iron ore producers and new companies with developing projects, such as Anglo Ferrous Brazil, MMX, Ferrous Resources and Bahia Mineração. Some steel companies, including Gerdau S.A. ("Gerdau"), Companhia Siderúrgica Nacional ("CSN"), V&M do Brasil S.A. ("Mannesmann"), Usiminas and Arcelor Mittal, also have iron ore mining operations. Although pricing is relevant, quality and reliability are important competitive factors as well. We believe that our integrated transportation systems, high-quality ore and technical services make us a strong competitor in the Brazilian market.

The demand for iron ore is seasonally stronger in the months of December, March and April. Demand also tends to be moderately weaker in the first half of each year relative to the second half.

With respect to pellets, our major competitors are LKAB, Cliffs Natural Resources Inc., Arcelor Mittal Mines Canada (formerly Quebec Cartier Mining Co.), IOC and Gulf Industrial Investment Co.

We conduct our manganese mining operations in Brazil through our wholly owned subsidiaries Vale Manganês S.A. ("Vale Manganês"), Vale Mina do Azul S.A. ("Vale Mina do Azul") and MCR.

We operate on-site beneficiation plants at our Azul mine and at the Urucum mines, which are accessible by road. The Azul and Urucum mines have high-grade ores (at least 40% manganese grade), while our Morro da Mina mine has low-grade ores (24% manganese grade). All of these mines obtain electrical power at market prices from regional electric utilities. The following table sets forth information about our manganese production.

The following table sets forth the subsidiaries through which we conduct our ferroalloys business.

We produce several types of manganese ferroalloys, such as high carbon and medium carbon ferro-manganese and ferro-silicon manganese. Our facilities have total nominal capacity of 651,000 metric tons per year. The production of ferroalloys consumes significant amounts of electricity, representing 11.7% of our total consumption in 2011. The electricity supply for our ferroalloy plant in the Brazilian states of Minas

Gerais and Bahia and Mo I Rana, Norway are provided through long-term contracts. For information on the risks associated with potential energy shortages, see Risk factors.

The markets for manganese ore and ferroalloys are highly competitive. Competition in the manganese ore market takes place in two segments. High-grade manganese ore competes on a global seaborne basis, while low-grade ore competes on a regional basis. For some ferroalloys, high-grade ore is mandatory, while for others high- and low-grade ores are complementary. The main suppliers of high-grade ores are located in South Africa, Gabon, Australia and Brazil. The main producers of low-grade ores are located in the Ukraine, China, Ghana, Kazakhstan, India and Mexico.

The ferroalloy market is characterized by a large number of participants who compete primarily on the basis of price. The principal competitive factors in this market are the costs of manganese ore, electricity, logistics and reductants. We compete both with stand-alone producers and integrated producers that also mine their own ore. Our competitors are located principally in countries that produce manganese ore or steel. For further information about demand and prices, see Operating and financial review and prospects—Demand and prices.

We produce metallurgical and thermal coal through our subsidiaries Vale Moçambique, which operates Moatize, and Vale Australia, which operates coal assets in Australia through wholly owned companies and unincorporated joint ventures, and thermal coal through our subsidiary Vale Colombia.

We also have a minority interest in two Chinese companies, Henan Longyu Energy Resources Co., Ltd. ("Longyu") and Shandong Yankuang International Coking Company Ltd. ("Yankuang"), as set forth in the following table.

Company	Business	Location	Our share of capital	Partners

			(%)
Vale Australia		Australia:
Integra Coal	Metallurgical and thermal coal	Hunter Valley, New South Wales	61.2	Nippon Steel ("NSC"), JFE Group ("JFE"), Posco, Toyota Tsusho Austrália, Chubu Electric Power Co. Ltd
Carborough Downs	Metallurgical coal	Bowen Basin, Queensland	85.0	JFE, Posco, Tata Steel
Isaac Plains	Metallurgical and thermal coal	Bowen Basin, Queensland	50.0	IP Coal Pty Ltd (a 100% owned subsidiary of Aquila Resources Limited)(1)
Broadlea	Metallurgical and thermal coal	Bowen Basin, Queensland	100.0	–
Vale Colombia
El Hatillo	Thermal coal	Colombia	100.0	–
Longyu	Coal and other related products	Henan Province, China	25.0	Yongmei Group Co., Ltd. (former Yongcheng Coal & Electricity (Group) Co. Ltd.), Shanghai Baosteel International Economic & Trading Co., Ltd. and other minority shareholders
Yankuang	Metallurgical coke and methanol	Shandong Province, China	25.0	Yankuang Group Co. Limited, Itochu Corporation
Vale Moçambique
Moatize	Metallurgical and thermal coal	Tete, Mozambique	95.0	Empresa Moçambicana de Exploração Mineira, S.A. ("EMEM")

Integra Coal Operations (underground and open-cut). The Integra Coal Operations are located 10 kilometers northwest of Singleton in the Hunter Valley of New South Wales, Australia. The operations are comprised of an underground coal mine that produces coal by longwall methods and an open-cut mine. Coal from the mines is processed at a coal handling and processing plant ("CHPP") with a capacity of 1,200 metric tons per hour, loaded onto trains at a purpose-built rail loadout facility for transport to the port of Newcastle, New South Wales, Australia.

Carborough Downs. Carborough Downs is located in the Central Bowen Basin in central Queensland, Australia, 15 kilometers east of the township of Moranbah and 180 kilometers southwest of the coastal city of Mackay. Carborough Downs mining leases overlie the Rangal Coal Measures of the Bowen Basin with the economic seams of Leichardt and Vermont. Both seams have coking properties and can be beneficiated to produce coking coal and pulverized coal injection ("PCI") products. The Leichardt seam is currently our main target for development and constitutes 100% of the current reserve and resource base. Carborough Downs coal is processed at the Carborough Downs CHPP, which is capable of processing 1,000 metric tons per hour, and which operates seven days per week. The product is loaded onto trains at a rail loadout facility and transported 172 kilometers to the Dalrymple Bay Coal Terminal, Queensland, Australia.

Isaac Plains. The Isaac Plains open-cut mine is located close to Carborough Downs in central Queensland. The mine is managed by Isaac Plains Coal Management on behalf of the joint venture parties. The coal is classified as a medium volatile bituminous coal with low sulfur content. Coal is processed at the Isaac Plains CHPP and railed 180 kilometers to the Dalrymple Bay Coal Terminal.

El Hatillo. The El Hatillo coal mine in Colombia is located in the central portion of the Cesar Department, 210 kilometers southeast of Santa Marta. The concession area is adjacent to the town of La Loma and encompasses an area of 9,693 hectares. El Hatillo is mined with truck-and-shovel methodology and uses crushing and screening to produce a thermal coal product that is loaded onto trains at a dedicated rail loading facility for transport to the port of SPRC. Most of the thermal coal product is exported to Europe and United States.

Moatize. Moatize is an open-cut mine located in the province of Tete, Mozambique. It started operations in August 2011 and is expected to reach full capacity in 2015 with a nominal production capacity of 11 Mtpy, comprising 8.5 Mtpy of metallurgical coal and 2.5 Mtpy of thermal coal. The coal production is being transported by the Linha do Sena railway to the Port of Beira. Currently, Moatize's main branded product is the Chipanga prime hard coking coal while a regular hard coking coal product is still being studied.

		Production for the year ended December 31,

Operation	Mine type	2009		2010		2011
		(thousand metric tons)
Thermal coal:
Vale Colombia
El Hatillo(1)	Open-cut		1,143		2,991		3,565
Vale Australia
Integra Coal(2)	Open-cut		702		305		325
Isaac Plains(3)	Open-cut		551		371		274
Broadlea(4)	Open-cut		497		165		0
Vale Moçambique
Moatize(5)	Open-cut		–		–		342

Total thermal coal			2,892		3,832		4,506

Metallurgical coal:
Vale Australia
Integra Coal(3)	Underground and open-cut		1,184		1,151		467
Isaac Plains(3)	Open-cut		487		590		635
Carborough Downs(6)	Underground		604		1,216		1,390
Broadlea	Open-cut		252		101		0
Vale Moçambique
Moatize(5)	Open-cut		–		–		275

Total metallurgical coal			2,527		3,057		2,766

Longyu produces coal and other related products. Yankuang, a metallurgical coke plant, has production capacity of 2.0 Mtpy of coke and 200,000 metric tons per year of methanol.

The coal sales from our Australian operations are primarily focused on East Asia. In 2011, our Chinese coal joint ventures directed their sales mainly to the Chinese domestic market. The coal sales from our Colombian operations are primarily destined for Europe and Central and South America. The coal sales from our Mozambican operations will be directed to the main seaborne coal markets, including East Asia, the Americas, Europe and India.

The global coal industry, which is primarily comprised of the markets for hard coal (metallurgical coal and thermal coal) and brown coal/lignite, is highly competitive. Growth in the demand for steel, especially in Asia, underpins strong demand for metallurgical coal. Major port and rail constraints in some of the countries in which major suppliers are located could lead to limited availability of incremental metallurgical coal production.

The global seaborne thermal coal market has significantly expanded in recent years. Growth in thermal coal demand is closely related to growth in electricity consumption, which will continue to be driven by global economic growth, particularly from emerging economies. Large existing fleets of coal-fired power plants with long life cycles take decades to replace or upgrade, keeping a high share of thermal coal in the electricity matrix of countries with high consumption. The cost of fuel is typically the largest variable cost involved in electricity generation and coal is currently the most competitively priced fossil fuel for this purpose.

Competition in the coal industry is based primarily on the economics of production costs, coal quality and transportation costs. We believe that our operations and project pipeline are competitive, and our key competitive strengths include the strategic geographic location of our current and future supply bases and our production cash costs relative to several other coal producers.

Major participants in the coal seaborne market are subsidiaries and affiliates of Xstrata plc ("Xstrata"), BHP Billiton, PT Bumi Resources Tbk., Anglo Coal, Drummond Company, Inc., Rio Tinto, Teck Cominco, Peabody and the Shenhua Group, among others.

We conduct our nickel operations primarily through our wholly owned subsidiary Vale Canada, which operates two nickel production systems, one in the North Atlantic and the other in the Asia Pacific. In March

2011, we began production of nickel at the Onça Puma project in the Brazilian state of Pará. Our nickel operations are set forth in the following table.

System	Company	Location	Operations	Our share of capital (%)	Partners

North Atlantic	Vale Canada	Canada — Sudbury, Ontario	Fully integrated mines, mill, smelter and refinery (producer of intermediates and finished nickel and by-products)	100.0	–
	Vale Canada	Canada — Thompson, Manitoba	Fully integrated mines, mill, smelter and refinery (producer of finished nickel and by-products)	100.0	–
	Vale Newfoundland & Labrador Limited	Canada — Voisey's Bay, Newfoundland and Labrador	Mine and mill (producer of nickel and copper concentrates)	100.0	–
	Vale Europe Limited	U.K. — Clydach, Wales	Stand-alone nickel refinery (producer of finished nickel)	100.0	–
Asia Pacific	PT Vale Indonesia Tbk (previously PT International Nickel Indonesia Tbk)	Indonesia — Sorowako, Sulawesi	Mining and processing operations (producer of nickel matte, an intermediate product)	59.2	Sumitomo Metal Mining Co., Ltd, others
	Vale Nouvelle-Calédonie S.A.S	New Caledonia — Southern Province	Mining and processing operations (producer of nickel oxide and cobalt carbonate)	74.0	Sumic Nickel Netherlands B.V., Société de Participation Minière du Sud Caledonien SAS
	Vale Japan Limited	Japan — Matsuzaka	Stand-alone nickel refinery (producer of intermediate and finished nickel)	87.2	Sumitomo Metal Mining Co., Ltd
	Taiwan Nickel Refining Corporation	Taiwan — Kaoshiung	Stand-alone nickel refinery (producer of finished nickel)	93.7	Approx. 25 investors
	Vale Nickel (Dalian) Co. Ltd	China — Dalian, Liaoning	Stand-alone nickel refinery (producer of finished nickel)	98.3	Ningbo Sunhu Chem. Products Co., Ltd.
	Korea Nickel Corporation	South Korea—Onsan	Stand-alone nickel refinery (producer of finished nickel)	25.0	Korea Zinc Co., Ltd, Posteel Co., Ltd, Young Poong Co., Ltd., others
South Atlantic	Vale	Brazil — Ourilândia do Norte, Pará	Mining and processing operations (producer of ferro-nickel)	100.0	–

Our long-established mines in Sudbury, Ontario, are primarily underground operations with nickel sulfide ore bodies. These ore bodies also contain co-deposits of copper, cobalt, PGMs, gold and silver. We have integrated mining, milling, smelting and refining operations to process ore into finished nickel at Sudbury. We also smelt and refine nickel concentrates from our Voisey's Bay operations. We ship a nickel intermediate product, nickel oxide, from our Sudbury smelter to our nickel refineries in Wales, Taiwan, China and South Korea for processing into finished nickel. In 2011, we produced 16% of the electric energy consumed in Sudbury at our hydroelectric power plants there. The remaining electricity was purchased from Ontario's provincial electricity grid.

In February 2011, we shut down one furnace at our Sudbury smelter due to an operational problem. The furnace was restarted in late June 2011. The furnace stoppage resulted in a negative impact of approximately 16,700 metric tons of production of nickel and 17,300 metric tons of copper.

Our long-established mines in Thompson, Manitoba, are primarily underground operations with nickel sulfide ore bodies. The ore bodies also contain co-deposits of copper and cobalt. We currently have integrated mining, milling, smelting and refining operations to process ore into finished nickel at Thompson. We also smelt and refine an intermediate product, nickel concentrate, from our Voisey's Bay operations. Low-cost energy is available from purchased hydroelectric power at our Thompson operations.

We are transitioning our Thompson operations to a mining and milling business, and phasing out smelting and refining by 2015. This enables us to better align processing capacity with mineral reserves while meeting our environmental commitments. The current mineral reserves in Thompson are not sufficient to sustain the operation of the smelter and refinery at full capacity over the long term and do not support the investment of the significant capital that would be required under new pending federal sulfur dioxide emission standards that are expected to come into effect in 2015.

Our Voisey's Bay operation in Newfoundland and Labrador is comprised of the Ovoid mine, an open-pit mine, and deposits with the potential for underground operations at a later stage. We mine nickel sulfide ore bodies, which also contain deposits of copper and cobalt. Until 2013, we will mill Voisey's Bay ore on site and ship it as an intermediate product (nickel concentrates) primarily to our Sudbury and Thompson operations for final processing (smelting and refining), while copper concentrate produced is sold in the market. Beyond 2013, the nickel concentrates will be shipped to our hydrometallurgical plant being constructed at the Long Harbour site to produce finished nickel, while the copper concentrate will continue to be produced at Voisey's Bay and sold in the market. The electricity requirements of our Voisey's Bay operations are supplied through diesel generators.

Clydach is a stand-alone nickel refinery in Wales, U.K., that processes a nickel intermediate product, nickel oxide, supplied from our Sudbury operations to produce finished nickel in the form of powders and pellets.

Our subsidiary PTVI operates an open cast mining area and related processing facility in Sorowako on the Island of Sulawesi, Indonesia. PTVI mines nickel saprolitic laterite ore and produces nickel matte, which is shipped primarily to our nickel refinery in Japan. Pursuant to life-of-mine off-take agreements, PTVI sells 80% of its production to our wholly owned subsidiary Vale Canada and 20% of its production to Sumitomo Metal Mining Co., Ltd. ("Sumitomo"). PTVI is a public company whose shares are traded on the Indonesia Stock Exchange. We hold 59.2% of its share capital, Sumitomo holds 20.3%, and 20.5% is publicly held.

Energy costs are a significant component of our nickel production costs for the processing of lateritic saprolitic ores at our PTVI operations in Indonesia. A major part of the electric furnace power requirements of PTVI is supplied at low cost by its three hydroelectric power plants on the Larona River: Larona, Balambano and Karebbe. PTVI has thermal generating facilities in order to supplement its hydroelectric power supply with a source of energy that is not subject to hydrological factors. In 2011, the hydroelectric

power plants provided 93% of the electric energy consumed at our Indonesian operations, with the thermal generators providing the remainder.

Our 87.2%-owned subsidiary Vale Japan Limited ("Vale Japan") operates a refinery in Matsuzaka, Japan, which produces intermediate and finished nickel products, primarily using nickel matte sourced from PTVI. Vale Japan is a privately-owned company controlled by Vale, with the minority interest held by Sumitomo (12.8%).

We also operate or have investments in nickel refining operations in Taiwan through our 93.7% stake in Taiwan Nickel Refining Corporation ("TNRC"), in China through our 98.3% interest in Vale Nickel (Dalian) Co. Ltd. ("VNDC") and in South Korea through our 25.0% stake in Korea Nickel Corporation ("KNC"). TNRC, VNDC and KNC produce finished nickel for the local stainless steel industry in Taiwan, China and South Korea, respectively, primarily using intermediate products containing about 75% nickel (in the form of nickel oxide) from our Matsuzaka Japan and Sudbury operations.

We are ramping up our Vale Nouvelle-Calédonie S.A.S ("VNC") nickel operation in New Caledonia in the South Pacific. VNC utilizes a High Pressure Acid Leach ("HPAL") process to treat limonitic laterite and saprolitic laterite ores. We expect to ramp up VNC over a four-year period to reach nominal production capacity of 60,000 metric tons per year of nickel contained in nickel oxide and 4,600 metric tons of cobalt, once nickel oxide production starts. In order to accelerate cash generation, the resulting nickel and cobalt solution from HPAL is currently sold to customers as an intermediate product, nickel hydroxide cake ("NHC"). We hold 74% of the share capital of VNC, Sumic Nickel Netherlands B.V. ("Sumic") (a joint venture between Sumitomo and Mitsui) holds 21% and Société de Participation Minière du Sud Calédonien SAS holds 5%. Sumic has a put option to sell us 25%, 50%, or 100% of its shares, at a price based on the lower of the book value or the market value of the shares, and we are currently in discussions with Sumic concerning its continued participation in VNC.

We are continuing to ramp up the Onça Puma project in Ourilândia do Norte, in the Brazilian state of Pará. The Onça Puma mine is built on lateritic nickel deposits of saprolitic laterite ore, and is expected to reach a nominal capacity of 53,000 metric tons per year of nickel contained in ferro-nickel, its final product.

The following table sets forth our annual mine production by operating mine (or on an aggregate basis for PTVI because it has mining areas rather than mines) and the average percentage grades of nickel and copper. The mine production at PTVI represents the product from PTVI's dryer kilns delivered to PTVI's smelting operations and does not include nickel losses due to smelting. For our Sudbury, Thompson and Voisey's Bay operations, the production and average grades represent the mine product delivered to those operations' respective processing plants and do not include adjustments due to beneficiation, smelting or refining. The following table sets forth information about ore production at our nickel mining sites.

	2009								2010								2011

	(thousands of metric tons, except percentages)
			Grade								Grade								Grade
	Production		% Copper			% Nickel			Production		% Copper			% Nickel			Production		% Copper			% Nickel
Ontario operating mines
Copper Cliff North		524		0.96			1.06			326		1.13			1.13			892		1.15			1.03
Copper Cliff South(1)		78		1.45			1.40			–		–			–			–		–			–
Creighton		395		1.57			1.82			426		2.65			3.10			991		1.72			2.22
Stobie		1,198		0.64			0.72			775		0.59			0.69			1,568		0.61			0.74
Garson		328		1.93			1.45			246		2.16			1.60			640		1.78			2.08
Coleman		624		3.28			1.64			786		2.74			1.73			1,363		3.02			1.77
Ellen		–		–			–			86		0.56			0.75			131		0.45			0.90
Totten		–		–			–			16		2.54			1.74			28		1.01			0.97

Total Ontario operations		3,145		1.49	%		1.19	%		2,660		1.78	%		1.53	%		5,612		1.61	%		1.45	%

Manitoba operating mines
Thompson		1,270		–			1.98			1,325		–			1.83			1,182		–			1.76
Birchtree		769		–			1.48			832		–			1.41			721		–			1.36

Total Manitoba operations		2,040		–			1.79	%		2,158		–			1.67	%		1,903		–			1.61	%

Voisey's Bay operating mines
Ovoid		990		2.57			3.20			1,510		2.44			3.20			2,366		2.39			3.38

Total Voisey's Bay operations		990		2.57	%		3.20	%		1,510		2.44	%		3.20	%		2,366		2.39			3.38	%

Sulawesi operating mining areas
Sorowako		3,598		–			2.02			4,176		–			2.00			3,848		–			1.95

Total Sulawesi operations		3,598		–			2.02	%		4,176		–			2.00	%		3,848		–			1.95	%

New Caledonia operating mines
VNC		–		–			–			326		–			1.31			1,043		–			1.29

Total New Caledonia Operations		–		–			–			326		–			1.31	%		1,043		–			1.29	%

Brazil operating mines
Onça Puma		–		–			–			1,259		–			1.93			1,466		–			1.86

Total Brazil operations		–		–			–			1,259		–			1.93	%		1,466		–			1.86	%

The following table sets forth information about our nickel production, including: (i) nickel refined through our facilities, (ii) nickel further refined into specialty products and (iii) intermediates designated for sale. The numbers below are reported on an ore-source basis.

Our nickel customers are broadly distributed on a global basis. In 2011, 53% of our total nickel sales were delivered to customers in Asia, 27% to North America, 17% to Europe and 3% to other markets. We have short-term fixed-volume contracts with customers for the majority of our expected annual nickel sales. These contracts generally provide stable demand for a significant portion of our annual production.

Nickel is an exchange-traded metal, listed on the LME, and most nickel products are priced according to a discount or premium to the LME price, depending primarily on the nickel product's physical and technical characteristics. Our finished nickel products represent what is known in the industry as "primary" nickel, meaning nickel produced principally from nickel ores (as opposed to "secondary" nickel, which is recovered from recycled nickel-containing material). Finished primary nickel products are distinguishable in terms of the following characteristics, which determine the product price level and the suitability for various end-use applications:

In 2011, 66% of our refined nickel sales were made which into non-stainless steel applications, compared to the industry average for primary nickel producers of 36%, which brings more stability to our sales volumes. As a result of our focus on such higher-value segments, our average realized nickel prices for refined nickel have typically exceeded LME cash nickel prices.

We offer sales and technical support to our customers on a global basis. We have a well-established global marketing network for finished nickel, based at our head office in Toronto, Canada. We also have sales and technical support offices in St. Prex (Switzerland), Saddle Brook, New Jersey (United States), Tokyo (Japan), Shanghai (China), Singapore, Kaohsiung (Taiwan), Bangkok (Thailand) and Bridgetown (Barbados). For information about demand and prices, see below Operating and financial review and prospects—Demand and prices.

The global nickel market is highly competitive. Our key competitive strengths include our long-life mines, our low cash costs of production relative to other nickel producers, sophisticated exploration and processing technologies, and a diversified portfolio of products. Our global marketing reach, diverse product mix, and technical support direct our products to the applications and geographic regions that offer the highest margins for our products.

Our nickel deliveries represented 16% of global consumption for primary nickel in 2011. In addition to us, the largest suppliers in the nickel industry (each with its own integrated facilities, including nickel mining, processing, refining and marketing operations) are Mining and Metallurgical Company Norilsk Nickel, Jinchuan Nonferrous Metals Corporation, BHP Billiton and Xstrata. Together with us, these companies accounted for about 51% of global finished primary nickel production in 2011.

While stainless steel production is a major driver of global nickel demand, stainless steel producers can use nickel products with a wide range of nickel content, including secondary nickel (scrap). The choice between primary and secondary nickel is largely based on their relative prices and availability. In recent years, secondary nickel has accounted for about 43-48% of total nickel used for stainless steels, and primary nickel has accounted for about 52-57%. In 2006, a new primary nickel product entered the market, known as nickel pig iron. This low-grade nickel product made in China from imported lateritic ores (primarily from the Philippines and Indonesia) is primarily suitable for use in stainless steel production. With higher nickel prices and strong demand from the stainless steel industry, Chinese domestic production of nickel pig iron and low-grade ferro-nickel continues to expand. In 2011, Chinese nickel pig iron and ferro-nickel production is estimated to have been greater than 250,000 metric tons, representing 16% of world primary nickel supply.

Competition in the nickel market is based primarily on quality, reliability of supply and price. We believe our operations are competitive in the nickel market because of the high quality of our nickel products and our relatively low production costs.

There is no material seasonality in the demand for nickel, although demand for nickel has been slightly weaker in the third quarter.

We conduct our copper operations at the parent-company level in Brazil and through our wholly owned subsidiaries in Canada and Chile.

Our Sossego copper mine in Carajás, in the state of Pará, has two main copper ore bodies, Sossego and Sequeirinho. The copper ore is mined by open-pit method, and the run-of-mine is processed by means of standard primary crushing and conveying, SAG milling (a semi-autogenous mill that uses a large rotating drum filled with ore, water and steel grinding balls to transform the ore into a fine slurry), ball milling, copper concentrate flotation, tailings disposal, concentrate thickening, filtration and load out. We truck the concentrate to a storage terminal in Parauapebas and then transport it via the EFC railroad to the Ponta da Madeira maritime terminal in São Luís, in the state of Maranhão.

We constructed an 85-kilometer road to link Sossego to the Carajás air and rail facilities and a power line that allows us to purchase electrical power at market prices. We have a long-term energy supply contract with Eletronorte.

In Canada, we recover copper in conjunction with our nickel operations, principally at Sudbury and Voisey's Bay. At Sudbury, we produce two intermediate copper products, copper concentrates and copper anodes, and we also produce electrowon copper cathode as a by-product of our nickel refining operations. At Voisey's Bay, we produce copper concentrates.

In Chile, we produce copper cathodes at the Tres Valles operation, located in Salamanca, in the Coquimbo region. The plant has an estimated annual production capacity of 18,500 metric tons of copper cathode (metal plate), and is our first industrial-scale cathode plant using a hydrometallurgical process. The Tres Valles operations include two copper oxide mines: Don Gabriel, an open-pit mine, and Papomono, an underground mine, as well as an SX-EW plant that produces copper cathodes.

Copper concentrates from Sossego are sold under medium- and long-term contracts to copper smelters in South America, Europe and Asia. We have long-term off-take agreements to sell the entire production of copper concentrates from the first phase of the Salobo project to smelters. We have long-term copper supply agreements with Xstrata Copper Canada for the sale of copper anodes and most of the copper concentrates produced in Sudbury. Copper concentrates from Voisey's Bay are sold under medium-term contracts to customers in Europe. Electrowon copper from Sudbury is sold in North America under short-term sales agreements.

The global copper cathode market is highly competitive. Producers are integrated mining companies and custom smelters, covering all regions of the world, while consumers are principally wire rod and copper-alloy producers. Competition occurs mainly on a regional level and is based primarily on production costs, quality, reliability of supply and logistics costs. The world's largest copper cathode producers are Corporación Nacional del Cobre de Chile ("Codelco"), Aurubis AG, Freeport-McMoRan Copper & Gold Inc. ("Freeport-McMoRan"), Jiangxi Copper Corporation Ltd. and Xstrata, operating at the parent-company level or through subsidiaries. Our participation in the global copper cathode market is marginal.

Copper concentrate and copper anode are intermediate products in the copper production chain. Both the concentrate and anode markets are competitive, having numerous producers but fewer participants and smaller volumes than in the copper cathode market due to high levels of integration by the major copper producers.

In the copper concentrate market, the main producers are mining companies located in South America and Indonesia, while consumers are custom smelters located in Europe and Asia. Competition in the custom copper concentrate market occurs mainly on a global level and is based on production costs, quality, logistics costs and reliability of supply. The largest competitors in the copper concentrate market are Freeport-McMoRan, Xstrata, BHP Billiton, Antofagasta plc and Anglo American plc, operating at the parent-company level or through subsidiaries. Our market share in 2011 was about 3.0% of the total custom copper concentrate market.

The copper anode/blister market has very limited trade within the copper industry; generally, anodes are produced to supply each company's integrated refinery. The trade in anodes/blister is limited to those facilities that have more smelting capacity than refining capacity or to those situations where logistics cost savings provide an incentive to source anodes from outside smelters. The largest competitors in the copper anode market are Codelco, Anglo American and Xstrata, operating at the parent-company level or through subsidiaries.

There is no material seasonality in the demand for copper, although demand for copper is generally weaker throughout the second half of the year.

We hold a 22.0% interest in Hydro, a major aluminum producer, which we account for on the equity method. In the past, we engaged in bauxite mining, alumina refining and aluminum smelting through subsidiaries in Brazil, our interests in which we transferred to Hydro in February 2011. We still own minority interests in MRN and Paragominas, which are bauxite mining businesses located in Brazil, and which we also account for on the equity method. We will transfer our remaining interest in Paragominas to Hydro in two equal tranches in 2014 and 2016.

As by-products of our Sudbury nickel operations in Canada, we recover significant quantities of PGMs, as well as small quantities of gold and silver. We also recover gold as a by-product of our operations at our Sossego copper mine in Carajás, in the Brazilian state of Pará. We operate a processing facility in Port Colborne, Ontario, which produces PGMs, gold and silver intermediate products. We have a refinery in Acton, England, where we process our intermediate products, as well as feeds purchased from unrelated parties and toll-refined materials. In 2011, PGM concentrates from our Sudbury operations supplied about 54% of our PGM production, which also includes metals purchased from unrelated parties. Our base metals marketing department sells our own PGMs and other precious metals, as well as products from unrelated parties and toll-refined products, on a sales agency basis.

We recover significant quantities of cobalt as a by-product of our Canadian nickel operations. In 2011, we produced 1,469 metric tons of refined cobalt metal at our Port Colborne refinery and 594 metric tons of cobalt in a cobalt-based intermediate product at our Thompson nickel operations in Canada. Our remaining cobalt production consisted of 611 metric tons of cobalt contained in other intermediate products (such as nickel concentrates). We are increasing our production of cobalt as a by-product of our nickel production at the VNC operations in New Caledonia, which is currently ramping up. We sell cobalt on a global basis. Our cobalt metal, which is electro-refined at our Port Colborne refinery, has very high purity levels (99.8%). Cobalt metal is used in the production of various alloys, particularly for aerospace applications, as well as the manufacture of cobalt-based chemicals.

We operate our phosphates business through subsidiaries and joint ventures, as set forth in the following table.

Vale Fertilizantes is a producer of phosphate rock, phosphate fertilizers ("P") (e.g., monoammonium phosphate ("MAP"), dicalcium phosphate ("DCP"), triple superphosphate ("TSP") and single superphosphate ("SSP")) and nitrogen ("N") fertilizers (e.g., ammonium nitrate and urea). It is the largest producer of phosphate and nitrogen crop nutrients in Brazil. Vale Fertilizantes operates the following phosphate rock mines: Catalão, in the state of Goiás, and Tapira, Patos de Minas and Araxá, all in the state of Minas Gerais, and Cajati, in the state of São Paulo, in Brazil. In addition, Vale Fertilizantes has nine processing plants for the production of phosphate and nitrogen nutrients, located at Catalão, Goiás; Araxá and Uberaba, Minas Gerais; Guará, Cajati, and three plants in Cubatão, São Paulo; and Araucária, Paraná.

Besides the phosphate and nitrogen operations of Vale Fertilizantes, since 2010 we have also operated the Bayóvar phosphate rock mine in Peru, which is expected to reach nominal capacity of 3.9 Mtpy by 2014. Bayóvar is a world-class resource with a low mining cost of phosphate rock production.

The following table sets forth information about our phosphate and nitrogen nutrients production.

We conduct potash operations in Brazil at the parent-company level. We lease Taquari-Vassouras, the only potash mine in Brazil (in Rosario do Catete, in the state of Sergipe), from Petrobras—Petróleo Brasileiro S.A., the Brazilian state-owned oil company. The lease, signed in 1991, became effective in 1992 for an initial period of 25 years, and the parties have recently agreed upon an extension of the lease agreement for 30 more years. The following table sets forth information on our potash production.

All potash sales from the Taquari-Vassouras mine are to the Brazilian market. In 2011, our production represented approximately 9% of total potash consumption in Brazil. We have a strong presence and long-standing relationships with the major players in Brazil, with more than 60% of our sales generated from four traditional customers.

Our phosphate products are mainly sold to fertilizer blenders. In 2011, our production represented approximately 37% of total phosphate consumption in Brazil, with imports representing 35% of total supply. In the high-concentration segment, our production supplied more than 33% of total Brazilian consumption, with products like MAP and TSP. In the low-concentration phosphate nutrients segment, our production represented approximately 49% of total Brazilian consumption, with products like SSP and DCP.

Fertilizers have strong demand growth potential, which is anchored in market fundamentals similar to those underlying the global demand for minerals, metals and energy. Rapid per capita income growth in emerging economies causes diet changes towards an increasing consumption of proteins that ultimately contribute to boost fertilizer use. More recently, global output of biofuels has started to boom as they emerged as an alternative source of energy to reduce world reliance on sources of climate-changing greenhouse gases. Given that key inputs for the production of biofuels—sugar cane, corn, palm and soy beans—are intensive in the use of fertilizers, they are becoming another major driver of the global demand for crop nutrients.

The industry is divided into three major nutrients: potash, phosphate and nitrogen. There are very limited resources of potash around the world, with Canada, Russia and Belarus being the most important sources. Due to the lack of mineral resources, the high level of investment and the long time required for a project to mature, it is unlikely that other regions will emerge as major potash producers over the next few years. In addition, the potash industry is highly concentrated, with the 10 major producers accounting for

more than 94% of total world production capacity. While potash is a very scarce resource, phosphate is more available, but all major exporters are located in the northern region of Africa (Morocco, Algeria and Tunisia) and in the United States. The top five phosphate rock producers (China, Morocco, the United States, Russia and Tunisia) account for 76% of global production, of which roughly 9% is exported. However, higher value-added products such as MAP and DAP are usually traded instead of phosphate rock due to cost efficiency.

Brazil is one of the largest agribusiness markets in the world due to its high production, exports and consumption of grains and biofuels. It is the fourth-largest consumer of fertilizers in the world and one of the largest importers of potash, phosphates, phosphoric acid and urea. Brazil imports 91% of its potash consumption, which amounted to 7.5 Mtpy of KCl (potassium chloride) in 2011, 44% higher than 2010, from Russian, Belarussian, Canadian and German producers, in descending order. In terms of global consumption, China, the United States, Brazil and India represent 59% of the total, with Brazil alone representing 13% of the total. Our project portfolios are highly competitive in terms of cost and logistics within these regions.

Most phosphate rock concentrate is consumed locally by downstream integrated producers, with the seaborne market corresponding to 16% of total phosphate rock production. Major phosphate rock exporters are concentrated in North Africa, mainly through state-owned companies, with Moroccan OCP Group holding 37% of the total seaborne market. Brazil imports 19% of the total phosphate nutrients it needs through both phosphate fertilizer products and phosphate rock. The phosphate rock imports supply non-integrated producers of phosphate fertilizers products such as SSP, TSP and MAP.

Nitrogen-based fertilizers are derived primarily from ammonia (NH3), which, in turn, is made from nitrogen present in the air and natural gas, making this an energy-intensive nutrient. Ammonia and urea are the main inputs for nitrogen-based fertilizers. Consumption of nitrogen-based fertilizers has a regional profile due to the high cost associated with transportation and storage of ammonia, which requires refrigerated and pressurized facilities. As a result, only 12% of the ammonia produced worldwide is traded. North America is the main importer, accounting for 35% of global trade. Main exporting regions are Central America, Russia, Eastern Europe and the Middle East.

We have developed our logistics business based on the transportation needs of our mining operations and we also provide transportation services for other customers. We conduct our logistics businesses at the parent-company level and through subsidiaries and joint ventures, as set forth in the following table.

			Our share of capital

Company	Business	Location	Voting		Total		Partners
			(%)
Vale	Railroad (EFVM and EFC), port and maritime terminal operations	Brazil		100.0		100.0	–
FCA	Railroad operations	Brazil		100.0		99.9	–
FNS(1)	Railroad operations	Brazil		100.0		100.0	–
MRS	Railroad operations	Brazil		45.7		45.8	CSN, Usiminas and Gerdau
CPBS	Port and maritime terminal operations	Brazil		100.0		100.0	–
Log-In	Port and maritime terminal operations and intermodal logistics services	Brazil		31.3		31.3	Mitsui, public investors
PTVI	Port and maritime terminal operations	Indonesia		59.2		59.2	Sumitomo, public investors
SPRC	Port and maritime terminal operations	Colombia		100.0		100.0	–
FENOCO	Railroad operations	Colombia		8.4		8.4	Drummond, Glencore and Comercializadora Internacional Colombian Natural Resources I S.A.S.
Vale Logística Argentina	Port operations	Argentina		100.0		100.0	–
CEAR(2)	Railroad and maritime terminal operations	Mozambique		51.0		51.0	Portos e Caminhos de Ferro de Moçambique, P.E.
CDN(3)	Railroad and maritime terminal operations	Mozambique		51.0		51.0	Portos e Caminhos de Ferro de Moçambique, P.E.
Vale Logistics Limited	Railroad operations	Malawi		100.0		100.0	–
Transbarge Navigación	Paraná and Paraguay Waterway System (Convoys)	Paraguay		100.0		100.0	–

Vitória a Minas railroad ("EFVM"). The EFVM railroad links our Southeastern System mines in the Iron Quadrangle region in the Brazilian state of Minas Gerais to the Tubarão Port, in Vitória, in the Brazilian state of Espírito Santo. We operate this 905-kilometer railroad under a 30-year renewable concession, which expires in 2027. The EFVM railroad consists of two lines of track extending for a distance of 601 kilometers to permit continuous railroad travel in opposite directions, and single-track branches of 304 kilometers. Industrial manufacturers are located in this area and major agricultural regions are also accessible to it. The EFVM railroad has a daily capacity of 342,000 metric tons of iron ore. In 2011, the EFVM railroad carried a total of 69.3 billion ntk of iron ore and other cargo, of which 9.4 billion ntk, or 7.4%, consisted of cargo transported for customers, including iron ore for Brazilian customers. The EFVM railroad also carried 1.0 million passengers in 2011. In 2011, we had a fleet of 322 locomotives and 14,221 wagons at EFVM.

Carajás railroad ("EFC"). We operate the EFC railroad under a 30-year renewable concession, which expires in 2027. EFC is located in the Northern System, beginning at our Carajás iron ore mines in the Brazilian state of Pará and extending 892 kilometers to our Ponta da Madeira maritime terminal complex facilities located near the Itaqui Port in the Brazilian state of Maranhão. Its main cargo is iron ore, principally carried for us. It has a daily capacity of 313,970 metric tons of iron ore. In 2011, the EFC railroad carried a total of 98.1 billion ntk of iron ore and other cargo, 2.8 billion ntk of which was cargo for customers, including iron ore for Brazilian customers. EFC also carried 352,928 passengers in 2011. EFC supports the largest capacity train in Latin America, which measures 3.4 kilometers, weighs 42,300 gross metric tons when loaded and has 330 cars. In 2011, EFC had a fleet of 234 locomotives and 14,261 wagons.

Ferrovia Centro-Atlântica ("FCA"). Our subsidiary FCA operates the central-east regional railway network of the Brazilian national railway system under a 30-year renewable concession, which expires in 2026. The central east network has 8,023 kilometers of track extending into the states of Sergipe, Bahia, Espírito Santo, Minas Gerais, Rio de Janeiro and Goiás and Brasília, the Federal District of Brazil. It connects with our EFVM railroad near the cities of Belo Horizonte, in the state of Minas Gerais and Vitória, in the state of Espírito Santo. FCA operates on the same track gauge as our EFVM railroad and provides access to the Santos Port in the state of São Paulo. In 2011, the FCA railroad transported a total of 10.7 billion ntk of cargo for customers. In 2011, FCA had a fleet of 481 locomotives and 12,413 wagons.

Ferrovia Norte-Sul railroad ("FNS"). We have a 30-year renewable subconcession for the commercial operation of a 720-kilometer stretch of the FNS railroad in Brazil. Since 1989, we have operated a segment of the FNS, which connects to the EFC railroad, enabling access to the port of Itaqui, in São Luís, where our Ponta da Madeira maritime terminal is located. A 452-kilometer extension was concluded in December 2008. In 2011, the FNS railroad transported a total of 1.9 billion ntk of cargo for customers. This new railroad creates a new corridor for the transportation of general cargo, mainly for the export of soybeans, rice and corn produced in the center-northern region of Brazil. In 2011, FNS had a fleet of 6 locomotives and 375 wagons.

We charge market prices for customer freight, including iron ore pellets originating from joint ventures and other enterprises in which we do not have a 100% equity interest. Market prices vary based on the distance traveled, the type of product transported and the weight of the freight in question, and are regulated by the Brazilian transportation regulatory agency, ANTT (Agência Nacional de Transportes Terrestres).

MRS Logística S.A. ("MRS"). The MRS railroad is 1,643 kilometers long and links the Brazilian states of Rio de Janeiro, São Paulo and Minas Gerais. In 2011, the MRS railroad carried a total of 151.87 million metric tons of cargo, including 113.51 million metric tons of iron ore and other cargo from Vale.

Ferrocarriles del Norte de Colombia S.A. ("FENOCO"). We own an 8.4% equity stake in FENOCO, a company that owns a concession to restore and operate the Chiriguana—Santa Marta tranche (220

kilometers) of the Atlantic Railroad, which connects the Cesar coal-producing region with various ports in the Atlantic Ocean.

On August 24, 2010, through our subsidiary Potasio Río Colorado S.A., we executed an agreement with Ferrosur Roca S.A. for partial assignment, subject to governmental approvals, of a 756-kilometer railroad administrative concession. This concession is important to the support of the Rio Colorado potash project and our strategy to become a leading global player in the fertilizer business.

Consistent with our decision to invest in the Nacala Corridor and following on our September 2010 acquisition of a 51.0% stake in SDCN, in June 2011, we acquired an additional 16% stake in SDCN for US$8 million, reaching a 67% total participation in the company at year end. In December 2011, we executed a concession agreement with the Republic of Malawi with respect to a 137-kilometer railroad to be built from Chikwawa to Nkaya Junction in Malawi. The SDCN acquisition and the concession in Malawi will allow the expansion of Moatize and facilitate the creation of a world-class logistics infrastructure to support our operations in Central and Eastern Africa. We will invest in the capacity expansion of the Nacala logistics corridor through the rehabilitation of the existing railroads in Mozambique and Malawi, respectively owned by Corredor de Desenvolvimento do Norte S.A. ("CDN") and Central East African Railway Company Limited ("CEAR"), each a 51%-owned subsidiary of SDCN, and through the construction of railway links from Moatize to a new deep water maritime terminal to be built in Nacala-à-Velha.

We are currently studying the possible construction of an integrated railway-port system for transporting iron ore output from Simandou, in Guinea.

We operate a port and six maritime terminals principally as a means to complete the delivery of our iron ore and iron ore pellets to bulk carrier vessels serving the seaborne market. See—Bulk materials—Iron ore pellets—Operations. We also use our port and terminals to handle customers' cargo. In 2011, 10% of the cargo handled by our port and terminals represented cargo handled for customers.

Tubarão Port. The Tubarão Port, which covers an area of 18 square kilometers, is located near the Vitória Port in the Brazilian state of Espírito Santo and contains four maritime terminals: (i) an iron ore maritime terminal, (ii) Praia Mole Terminal, (iii) Terminal de Produtos Diversos, and (iv) Terminal de Granéis Líquidos.

Ponta da Madeira maritime terminal. The Ponta da Madeira maritime terminal is located near the Itaqui Port in the Brazilian state of Maranhão. The terminal facilities can accommodate four vessels. Pier I can accommodate vessels displacing up to 420,000 DWT. Pier II can accommodate vessels of up to 155,000 DWT. Pier I has a maximum loading rate of 16,000 tons per hour. Pier II has a maximum loading rate of 8,000 tons per hour. Pier III, which has two berths and three shiploaders, can accommodate vessels of up to 220,000 DWT at the south berths and 180,000 DWT at the north berths and has a maximum loading rate of 8,000 metric tons per hour in each shiploader. Cargo shipped through our Ponta da Madeira maritime terminal consists principally of our own iron ore production. Other cargo includes manganese ore, copper concentrate and pig iron produced by us and pig iron and soybeans for unrelated parties. In 2011, 100.5 million metric tons of iron ore were handled through the terminal. The Ponta da Madeira maritime terminal has a stockyard capacity of 6.2 million metric tons.

Itaguaí maritime terminal—Cia. Portuária Baía de Sepetiba ("CPBS"). CPBS is a wholly owned subsidiary that operates the Itaguaí terminal, in the Sepetiba Port, in the Brazilian state of Rio de Janeiro. Itaguaí's maritime terminal has a pier that allows the loading of ships up to 18 meters of draft and up to 230,000 DWT. In 2011, the terminal uploaded 21.5 million metric tons of iron ore.

Guaíba Island maritime terminal. We operate a maritime terminal on Guaíba Island in the Sepetiba Bay, in the Brazilian state of Rio de Janeiro. The iron ore terminal has a pier that allows the loading of ships of up to 300,000 DWT. In 2011, the terminal uploaded 37.6 million metric tons of iron ore.

Inácio Barbosa maritime terminal ("TMIB"). We operate the Inácio Barbosa maritime terminal, located in the Brazilian state of Sergipe. The terminal is owned by Petrobras. Vale and Petrobras entered into an agreement in December 2002, which allows Vale to operate this terminal for a period of 10 years. In 2011, 1.0 million metric tons of fuel and agricultural and steel products were shipped through TMIB.

Santos maritime terminal ("TUF"). We operate a maritime terminal, through our subsidiary Vale Fertilizantes, in Santos, in the Brazilian state of São Paulo. The terminal has a pier that is equipped to receive ships of up to 67,000 DWT. In 2011, the terminal handled 2.6 million metric tons of ammonia and bulk solids, 21.4% higher than 2010. In July 2011, we signed an agreement to form a joint venture with Vale Fertilizantes to exploit the concession of TUF previously enjoyed by Vale Fertilizantes. Under the agreement, we will pay R$150 million (US$95 million) for the acquisition of 51% of the joint venture and will invest an additional R$432 million (US$274 million) to finance the investment program of TUF.

Sociedad Portuaria Rio Cordoba ("SPRC"). SPRC is a seaport facility wholly owned by Vale and used to export coal from the El Hatillo operation, as well as other nearby mines. The port is located in Cienaga, on the Caribbean coast of Colombia, in the Magdalena Department, about 67 kilometers from Barranquilla and 31 kilometers from Santa Marta.

Vale Logística Argentina S.A. ("Vale Logística Argentina") operates a terminal at the San Nicolas port located in the province of Buenos Aires, Argentina, where Vale Logística Argentina has a permit to use a stockyard of 20,000 square meters until October 2016 and an agreement with third parties for an extra stockyard of 27,000 square meters. We expect to handle 1.9 million metric tons of iron and manganese ore through this port in 2012, which will come from Corumbá, Brazil, through the Paraguay and Paraná rivers, for shipment to Asian and European markets. The loading rate of this port is 15,000 tons per day and the unloading rate is 11,000 tons per day.

PTVI owns and operates two ports in Indonesia to support its nickel mining activities.

In addition to the iron ore seaborne shipping conducted to support our iron ore and pellets business (See—Bulk Materials—Iron Ore—Operations), and the shipping and loading in the Paraná and Paraguay waterway system conducted to support our bulk material operations, we also operate tug boat services.

We continue to develop and operate a low-cost fleet of vessels, comprised of our own ships and ships hired pursuant to medium and long-term contracts, to support our bulk materials business. Over the last few years, we purchased 22 used capesize vessels. We have also placed orders with shipyards for the construction of 19 very large ore carriers ("VLOC") each with a capacity of 400,000 DWT and 4 additional capesize vessels, each with a capacity of 180,000 DWT. The first 4 very large ore carriers and the 4 capesize vessels were delivered in 2011. At the end of 2011, 30 of our own vessels were in operation, along with 22 used capesizes, 4 VLOC and 4 new capesizes of 180,000 DWT. In addition to our VLOCs, another 16 have been ordered for construction by third party ship owners to be chartered by Vale and dedicated to transport Vale's iron ore to its customers. We expect this service to enhance our ability to offer our iron ore products in the Asian market at competitive prices and to increase our market share in China and the global seaborne market. In 2011, we shipped 89.9 million metric tons of iron ore and pellets on a CFR basis, of which 82.4 million metric tons were shipped to China.

In the Paraná and Paraguay waterway system, we transport iron ore and manganese ores through our wholly owned subsidiary Transbarge Navigación, which transported 1.7 million tons through the waterway system in 2011, and our wholly owned subsidiary Vale Logística Argentina, which loaded 1.5 million tons of ore at Saint Nicolas Port into ocean-going vessels in 2011. In 2010, we also purchased two new convoys (two pushers and 32 barges) that will begin operations in 2012.

We operate a fleet of 28 tug boats in maritime terminals in Brazil, specifically in Vitória (in the state of Espírito Santo), Trombetas and Vila do Conde (in the state of Pará), São Luís (in the state of Maranhão), Mangaratiba (in the state of Rio de Janeiro) and Aracaju (in the state of Sergipe).

We own 31.3% of Log-In, which conducts intermodal logistics services. Log-In offers port handling and container transportation services by sea as well as container storage. It operates owned and chartered ships for coastal shipping, a container terminal (Terminal Vila Velha—TVV) and multimodal terminals. In 2011, Log-In's coastal shipping service transported 153,350 twenty-foot equivalent units ("teus") and TVV handled 276,245 teus.

We have developed our energy assets based on the current and projected energy needs of our mining operations, with the goal of reducing our energy costs and minimizing the risk of energy shortages.

Energy management and efficient supply in Brazil are priorities for us, given the uncertainties associated with changes in the regulatory environment, and the risk of rising electricity prices and electric energy shortages (as experienced in Brazil in the second half of 2001). We currently have nine hydroelectric power plants and four smaller hydroelectric power plants in operation. The hydroelectric power plants of Igarapava, Porto Estrela, Funil, Candonga, Aimorés, Capim Branco I, Capim Branco II and Machadinho are located in the Southeastern and Southern regions. Vale's first hydroelectric power plant in the Northern region, Estreito, started generating power in March 2011. In addition, in June 2011, we acquired a 9% stake in NESA, the entity established to develop and operate the Belo Monte hydroelectric plant in the Brazilian state of Pará. In 2011, our installed capacity in Brazil was 981 MW. We use the electricity produced by these plants for our internal consumption needs. As a large consumer of electricity, we expect that investing in power projects will help us reduce costs and will protect us against energy supply and price volatility. However, we may experience delays in the construction of certain generation projects due to environmental and regulatory issues, which may lead to higher costs.

In 2011, our wholly owned and operated hydroelectric power plants in Sudbury generated 16% of the electricity requirements of our Sudbury operations. The power plants consist of five separate generation stations with an installed generator nameplate capacity of 56 MW. The output of the plants is limited by water availability, as well as by constraints imposed by a water management plan regulated by the provincial government of Ontario. Over the course of 2011, the power system operator distributed electrical energy at the rate of 179 MW to all surface plants and mines in the Sudbury area.

In 2011, diesel generation provided 100% of the electric requirements of our Voisey's Bay operations. We have six diesel generators on-site, of which normally only four are in operation, producing 12 MW.

Energy costs are a significant component of our nickel production costs for the processing of lateritic saprolitic ores at PTVI operations in Indonesia. A major portion of PTVI's electric furnace power requirements are supplied at a low cost by its three hydroelectric power plants on the Larona River: (i) the Larona plant, which generates an average of 136 MW, (ii) the Balambano plant, which generates an average of 97 MW and (iii) the Karebbe plant, which recently came on stream with 90 MW of average generating capacity. The Karebbe plant helps reduce production costs by substituting oil used for power generation with hydroelectric power, reduce CO2 emissions by replacing non-renewable power generation, as well as enable us to increase our current nickel production capacity in Indonesia. PTVI has thermal generating facilities with 77 MW, which includes 53 MW from 23 Caterpillar diesel generators with capacity of 1 MW each and five Mirrlees Blackstone diesel generators with a capacity of 6 MW each, as well as a 24 MW high sulfur fuel oil burning steam turbine generator located in Sorowako.

Since 2007, we have developed a hydrocarbon exploration portfolio in Brazilian onshore and offshore basins. We believe that natural gas will play an important role in the global energy matrix in the future, given its advantages of lower carbon emissions and greater flexibility with regard to power generation.

We own a 50.0% stake in California Steel Industries, Inc. ("CSI"), a producer of flat-rolled steel and pipe products located in the United States. The remainder is owned by JFE Steel. CSI successfully concluded the commissioning of a second reheating furnace with state-of-the-art environmental technology at a cost of US$71.0 million, which increased CSI's annual production capacity to approximately 2.8 million metric tons of flat rolled steel and pipe.

We have a 26.9% stake in the ThyssenKrupp Companhia Siderúrgica do Atlântico ("TKCSA") integrated steel slab plant in the Brazilian state of Rio de Janeiro. The plant started operations during the third quarter of 2010, and produced 3.2 Mt in 2011. The plant will ultimately have a production capacity of 5.0 Mtpy and will consume 8.5 million metric tons of iron ore and iron ore pellets per year, supplied exclusively by Vale. We are also involved in three other steel projects in Brazil, Companhia Siderúrgica do Pecém ("CSP"), which was already approved by our Board of Directors, as well as Aços Laminados do Pará ("Alpa") and Companhia Siderúrgica Ubu ("CSU"), which are both in earlier stages of development.

We have a 61.5% stake in CADAM S.A. ("CADAM"), located on the border of the Brazilian states of Pará and Amapá, in the Amazon area in northern Brazil. CADAM produces kaolin for paper coating and also conducts research into other uses for kaolin products in order to develop a more diversified portfolio. CADAM's reserves are principally concentrated in the open-pit Morro do Felipe mine, in Vitória do Jari, in the state of Amapá. The beneficiation plant and private port facilities are situated on the west bank of the Jari River, in Munguba, in the Brazilian state of Pará. CADAM produces the following products: Amazon SB, Amazon Premium and Amazon Plus. They are sold mainly in the European, Asian and Latin American markets. CADAM obtains electricity from its own thermal power plant. In 2011, CADAM produced 370,969 metric tons of kaolin.

Until recently, we conducted a pig iron operation in northern Brazil, which utilized two conventional mini-blast furnaces to produce 350,000 metric tons of pig iron per year, using iron ore from our Carajás mines in northern Brazil. In February 2012, we began shutting down all of our pig iron operations.

The estimates of proven and probable ore reserves at our mines and projects and the estimates of mine life included in this annual report have been prepared by our staff of experienced geologists and engineers, unless otherwise stated, and calculated in accordance with the technical definitions established by the SEC. Under the SEC's Industry Guide 7:

We periodically revise our reserve estimates when we have new geological data, economic assumptions or mining plans. During 2011, we performed an analysis of our reserve estimates for certain projects and operations, which is reflected in new estimates as of December 31, 2011. Reserve estimates for each operation assume that we either have or will obtain all of the necessary rights and permits to mine, extract and process ore reserves at each mine. Where we own less than 100% of the operation, reserve estimates have not been adjusted to reflect our ownership interest. Certain figures in the tables, discussions and notes have been rounded. For a description of risks relating to reserves and reserve estimates, see Risk factors.

Our reserve estimates are based on certain assumptions about future prices. We have determined that our reported reserves could be economically produced if future prices for the products identified in the following table were equal to the three-year average historical prices through December 31, 2011. For this purpose, we used the three-year historical average prices set forth in the following table.

Commodity	Three-year average historical price	Pricing source

	(US$ per metric ton, unless otherwise stated)
Iron ore:
Lump ore—Midwestern System	78.42	Average realized price
Pellet feed—Samarco	111.83	Average realized price
Pellet feed—Southeastern System	106.23	Average realized price
Pellet feed—Southern System	95.58	Average realized price
Sinter feed—Northern System	102.56	Average realized price
Sinter feed—Southeastern System	100.37	Average realized price
Sinter feed—Southern System	95.63	Average realized price
Coal:
Hard metallurgical—Moatize	209.70	Reference price for standard hard coking coal
Metallurgical—Australia	177.26	Average realized price
Thermal—Australia	93.43	Average realized price
Thermal—El Hatillo	81.90	Average realized price
PCI—Australia	147.98	Average realized price
Base metals:
Nickel	19,775.44	Average LME spot price for nickel
Copper	7,165.02	Average LME spot price for copper
Nickel by-products:
Platinum	1,484.00/ t oz	Average realized price
Palladium	530.93/ t oz	Average realized price
Gold	1,310.23/ t oz	Average realized price
Cobalt	16.37/ lb	99.3% low cobalt metal (source: Metal Bulletin)
Fertilizer nutrients:
Phosphate	145.00	Average benchmark price for phosphate concentrate, FOB Morocco (source: Fertilizer Week)
Potash	466.00	Average benchmark price for potash, FOB Vancouver (source: Fertilizer Week)
Other:
Manganese	260.00	CIF China, 44% manganese grade (source: CRU)
Kaolin	238.00	Average realized price

The following tables set forth our iron ore reserves and other information about our iron ore mines. Total iron ore reserves increased 6.4% from 2010 to 2011, reflecting an updated geological model which

incorporated new drilling data from Conceição, Galinheiro, Sapecado and Serra Leste deposits, which more than offset mining depletion.

	Iron ore reserves per mine in the Southeastern System(1)

	Proven – 2011				Probable – 2011				Total – 2011				Total – 2010
	Tonnage		Grade		Tonnage		Grade		Tonnage		Grade		Tonnage		Grade
Itabira site
Conceição		524.6		46.1		105.9		47.9		630.5		46.4		295.5		51.9
Minas do Meio		235.8		51.7		81.6		48.5		317.4		50.9		471.6		54.6
Minas Centrais site
Água Limpa(2)		34.2		41.8		10.1		42.1		44.2		41.9		45.1		41.7
Gongo Soco		40.0		66.7		10.8		66.2		50.8		66.6		54.8		65.4
Brucutu		247.5		51.0		288.2		48.7		535.7		49.8		652.2		49.0
Apolo		292.4		57.4		339.7		55.1		632.1		56.1		632.1		56.1
Mariana site
Alegria		139.9		49.1		26.6		46.6		166.5		48.7		178.9		49.2
Fábrica Nova		451.1		45.6		349.0		44.1		800.1		45.0		830.9		45.2
Fazendão		235.2		49.8		95.7		50.1		330.9		49.9		337.8		49.9

Total Southeastern System		2,200.6		49.6		1,307.7		49.2		3,508.3		49.4		3,499.0		50.6

	Iron ore reserves per mine in the Southern System(1)

	Proven – 2011				Probable – 2011				Total – 2011				Total – 2010
	Tonnage		Grade		Tonnage		Grade		Tonnage		Grade		Tonnage		Grade
Minas Itabiritos site
Segredo		131.9		51.7		162.3		48.2		294.3		49.8		299.4		49.8
João Pereira		217.0		42.4		300.4		41.4		517.4		41.8		527.6		41.9
Sapecado		354.3		46.3		208.7		42.9		563.0		45.0		231.7		53.0
Galinheiro		570.4		45.4		410.5		43.8		980.9		44.7		311.8		54.2
Vargem Grande site
Tamanduá		245.4		54.2		244.0		51.2		489.3		52.7		502.5		52.9
Capitão do Mato		190.5		55.2		557.0		50.6		747.5		51.8		761.3		52.0
Abóboras		224.3		45.2		216.5		43.5		440.8		44.4		446.8		44.5
Paraopeba site
Jangada		34.1		66.8		14.0		66.3		48.1		66.7		52.8		66.6
Córrego do Feijão		27.4		67.0		3.3		63.7		30.7		66.6		31.9		66.6
Capão Xavier		74.4		65.0		6.8		64.3		81.2		65.0		86.5		65.0
Mar Azul		15.5		58.1		1.4		58.2		16.8		58.1		19.0		58.1

Total Southern System		2,085.2		49.0		2,124.9		46.6		4,210.1		47.8		3,271.3		50.3

	For the year ended December 31,(1)

	2007		2008		2009		2010		2011
	(US$, except as noted)
Earnings per share:
Per common share		2.41		2.58		0.97		3.23		4.33
Per preferred share		2.41		2.58		0.97		3.23		4.33
Weighted average number of shares outstanding (in thousands)(2)(3):
Common shares		2,943,216		3,028,817		3,181,706		3,210,023		3,197,063
Preferred shares		1,889,171		1,946,454		2,030,700		2,035,783		1,984,030
Treasury common shares underlying convertible notes		34,510		56,582		74,998		18,416		18,416
Treasury preferred shares underlying convertible notes		18,478		30,295		77,580		47,285		47,285

Total		4,885,375		5,062,148		5,364,984		5,311,507		5,246,794

Distributions to shareholders per share(4):
In US$		0.39		0.56		0.53		0.57		1.74
In R$		0.74		1.09		1.01		0.98		2.89

	Production for the year ended December 31,

Product	2010	2011
	(thousand metric tons)	(thousand metric tons)
Monoammonium phosphate (MAP)	898	823
Triple superphosphate (TSP)	788	811
Single superphosphate (SSP)	2,239	2,638
Dicalcium phosphate (DCP)	491	580
Ammonia	508	619
Urea	511	628
Nitric acid	454	468
Ammonium nitrate	447	458

	Iron ore reserves per mine in the Northern System(1)

	Proven – 2011				Probable – 2011				Total – 2011				Total – 2010
	Tonnage		Grade		Tonnage		Grade		Tonnage		Grade		Tonnage		Grade
Serra Norte site
N4W		1,167.0		66.5		279.2		66.1		1,446.2		66.5		1,486.7		66.5
N4E		275.5		66.5		88.7		66.0		364.2		66.4		384.6		66.4
N5		297.4		66.9		727.8		67.2		1,025.3		67.2		1,088.2		67.1
Serra Sul
S11		3,045.8		66.8		1,193.7		66.7		4,239.6		66.7		4,239.6		66.7
Serra Leste
SL1		143.0		65.7		164.4		65.1		307.4		65.4		60.9		66.2

Total Northern System		4,928.7		66.7		2,453.9		66.6		7,382.7		66.7		7,260.0		66.7

	Iron ore reserves per Samarco(1)(2)

	Proven – 2011				Probable – 2011				Total – 2011				Total – 2010
	Tonnage		Grade		Tonnage		Grade		Tonnage		Grade		Tonnage		Grade
Samarco
Alegria Norte/Centro		681.3		44.0		548.0		40.7		1,229.3		42.5		1,252.1		42.6
Alegria Sul		423.0		39.6		377.1		38.5		800.1		39.1		816.8		39.1

Total Samarco		1,104.2		42.3


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o

			Page

Form 20-F cross reference guide			ii
Forward-looking statements			1
Risk factors			2
Presentation of financial information			12
Selected financial data			13
I. Information on the company
Business overview			15
Lines of business			21
	1.	Bulk materials	23
	2.	Base metals	33
	3.	Fertilizer nutrients	43
	4.	Infrastructure	46
	5.	Other investments	51
Reserves			52
Capital expenditures and projects			64
Regulatory matters			68
II.	Operating and financial review and prospects
Overview			74
Results of operations—2011 compared to2010			79
Results of operations—2010 compared to2009			85
Liquidity and capital resources			91
Contractual obligations			95
Off-balance sheet arrangements			95
Critical accounting policies and estimates			95
Risk management			99
III.	Share ownership and trading
Major shareholders			110
Related party transactions			113
Distributions			113
Trading markets			115
Share price history			115
Depositary shares			116
Purchases of equity securities by the issuer and affiliated purchasers			117
IV.	Management and employees
Management			118
Management compensation			129
Employees			130
V.	Additional information
Legal proceedings			132
Memorandum and articles of association			136
Exchange controls and other limitations affecting security holders			143
Taxation			144
Evaluation of disclosure controls and procedures			151
Management's report on internal control over financial reporting			151
Corporate governance			152
Code of ethics			154
Principal accountant fees and services			154
Information filed with securities regulators			155
Exhibits			156
Glossary			157
Signatures			163
Index to consolidated financial statements			F-1


1. Bulk materials 1.1 Iron ore 1.1.1 Operations 1.1.2 Production 1.2 Iron ore pellets 1.2.1 Operations 1.2.2 Production 1.3 Iron ore and iron ore pellets 1.3.1 Customers, sales and marketing 1.3.2 Competition 1.4 Manganese ore 1.5 Ferroalloys 1.6 Manganese ore and ferroalloys: sales and competition 1.7 Coal 1.7.1 Operations 1.7.2 Production 1.7.3 Customers and sales 1.7.4 Competition 2. Base metals 2.1 Nickel 2.1.1 Operations 2.1.2 Production 2.1.3 Customers and sales 2.1.4 Competition		2.2 Copper 2.2.1 Operations 2.2.2 Production 2.2.3 Customers and sales 2.2.4 Competition 2.3 Aluminum 2.4 PGMs and other precious metals 2.5 Cobalt 3. Fertilizer nutrients 3.1 Phosphates 3.2 Potash 3.3 Customers and sales 3.4 Competition 4. Infrastructure 4.1 Logistics 4.1.1 Railroads 4.1.2 Ports and maritime terminals 4.1.3 Shipping 4.2 Energy 4.2.1 Electric power 4.2.2 Oil and natural gas 5. Other investments

		Our share of capital

Company	Site of operation	Voting (%)		Total		Partners
	Brazil:
Vale	Tubarão, Fábrica, Vargem Grande and São Luís		–		–	–
Hispanobras	Tubarão		51.0		50.9	Arcelor Mittal
Samarco	Mariana and Anchieta		50.0		50.0	BHP Billiton plc
	Oman:
Vale Oman Pelletizing Company LLC (VOPC)(1)	Sohar industrial complex		100.0		100.0	–
	China:
Zhuhai YPM	Zhuhai, Guangdong		25.0		25.0	Zhuhai Yueyufeng Iron and Steel Co. Ltd., Pioneer Iron and Steel Group Coo, Ltd.(2)
Anyang	Anyang, Henan		25.0		25.0	Anyang Iron & Steel Co. Ltd.

		Production for the year ended December 31,

		Production for the year ended December 31,			Recovery rate
Mine	Type	2009	2010	2011	Recovery rate
		(million metric tons)			(%)
Azul	Open pit	1.4	1.6	2.1	66.6
Morro da Mina	Open pit	0.1	0.1	0.1	88.0
Urucum	Underground	0.2	0.2	0.3	80.4

Total		1.7	1.8	2.5

Mine(1)	Type	2009

		(thousand troy ounces)
Sudbury:
Platinum	Underground		103	35	174
Palladium	Underground		152	60	248
Gold	Underground		49	42	182
Sossego:
Gold	Open pit		98	102	90