e6vk
Table of Contents

 
 
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934
For the month of
For the quarterly period ended June 30, 2010
May 2011
Vale S.A.
Avenida Graça Aranha, No. 26
20030-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
(Check One) Form 20-F þ Form 40-F o
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))
(Check One) Yes o No þ
(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))
(Check One) Yes o No þ
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)
(Check One) Yes o No þ
(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82-___.)
 
 

 


Table of Contents

     
(IMAGE)   (VALE LOGO)
Financial Statements — March 31, 2011
BR GAAP/IFRS
Filed at CVM, SEC and SFC on 05/05/2011
Gerência Geral de Controladoria — GECOL

 


 

(VALE LOGO)
Vale S.A.
INDEX TO THE INTERIM FINANCIAL STATEMENTS
         
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(VALE LOGO)
(A free translation from the original in Portuguese)
Review Report of Independent
Accountants
To the Board of Directors and Shareholders
Vale S.A.
Introduction
We have reviewed the accompanying parent company and consolidated interim accounting information of Vale S.A., for the quarter ended March 31, 2011, comprising the balance sheet and the statements of income, comprehensive income, changes in equity and cash flows, for the quarter then ended, and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of the parent company interim accounting information in accordance with the accounting standard CPC 21, Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC), and of the consolidated interim accounting information in accordance with accounting standard CPC 21 and International Accounting Standard (IAS) 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB). Our responsibility is to express a conclusion on this interim accounting information based on our review.
Scope of review
We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 — Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 — Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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(VALE LOGO)
Conclusion on the parent
company interim information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying parent company interim accounting information included in the quarterly information referred to above is not prepared, in all material respects, in accordance with CPC 21 applicable to the preparation of the Quarterly Information.
Conclusion on the consolidated interim information
Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim accounting information included in the quarterly information referred to above is not prepared, in all material respects, in accordance with CPC 21 and IAS 34 applicable to the preparation of the Quarterly Information.
Other matters
Interim statements
of value added
We have also reviewed the parent company and consolidated interim statements of value added for the quarter ended March 31, 2011, which are required to be presented in accordance with standards issued by the Brazilian Securities Commission (CVM) and are considered supplementary information under IFRS, which does not require the presentation of the statement of value added. These statements have been submitted to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they are not properly prepared, in all material respects, in relation to the interim accounting information taken as a whole.
Rio de Janeiro, May 5, 2011.
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5 “F” RJ
Marcos Donizete Panassol
Contador CRC 1SP155975/O-8 “S” RJ

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(VALE LOGO)
(A free translation from the original in Portuguese)
Balance Sheet
     
Balances as of   In thousands of reais
 
                                         
    Consolidated     Parent Company  
    Notes     March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
            (unaudited)             (unaudited)          
Assets
                                       
Current assets
                                       
Cash and cash equivalents
    7       19,138,882       13,468,958       10,126,446       4,823,377  
Short-term investments
    8       869,017       2,987,497              
Derivatives at fair value
    23       168,448       87,270       76,394       36,701  
Financial assets available for sale
            15,522       20,897              
Accounts receivable
    9       12,629,803       13,962,306       13,852,977       18,378,124  
Related parties
    27       185,829       90,166       2,168,941       1,123,183  
Inventories
    10       8,310,415       7,592,024       2,441,332       2,316,971  
Recoverable taxes
    12       2,926,240       2,795,557       2,013,802       1,960,606  
Advances to suppliers
            616,970       318,002       221,872       273,414  
Others
            1,366,498       1,070,123       62,551       178,655  
 
                               
 
            46,227,624       42,392,800       30,964,315       29,091,031  
 
                                       
Assets held for sale
            341,369       11,875,931              
 
                               
 
            46,568,993       54,268,731       30,964,315       29,091,031  
Non-current assets
                                       
Related parties
    27       15,807       8,032       1,930,346       1,936,328  
Loans and financing agreements to receive
            499,396       274,464       168,162       163,775  
Prepaid expenses
            422,445       254,366              
Judicial deposits
    17       3,133,748       3,062,337       2,367,482       2,312,465  
Deferred income tax and social contribution
    18       2,597,279       2,439,984       1,978,313       1,788,980  
Recoverable taxes
    12       766,036       612,384       130,817       124,834  
Derivatives at fair value
    23       763,006       501,722       450,348       284,127  
Reinvestment tax incentive
            540,240       239,269       540,240       239,269  
Accounts receivable on realized assets held for sale
            651,480                    
Others
            654,965       695,638       282,473       283,180  
 
                               
 
            10,044,402       8,088,196       7,848,181       7,132,958  
 
                                       
Investments
    13       9,963,231       3,944,565       97,089,292       92,111,361  
Intangible assets
    14       18,735,518       18,273,788       13,528,217       13,563,108  
Property, plant and equipment, net
    15       132,008,067       130,086,834       46,052,365       44,461,771  
 
                                       
 
                               
 
            170,751,218       160,393,383       164,518,055       157,269,198  
 
                               
Total assets
            217,320,211       214,662,114       195,482,370       186,360,229  
 
                               

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(VALE LOGO)
(A free translation from the original in Portuguese)
Balance Sheet
     
Balance as of   In thousands of reais, except number of shares
 
    (Continued)
                                         
    Consolidated     Parent Company  
                    December 31,             December 31,  
    Notes     March 31, 2011     2010     March 31, 2011     2010  
            (unaudited)             (unaudited)          
Liabilities and stockholders’ equity
                                       
Current liabilities
                                       
Suppliers and contractors
            6,739,356       5,803,709       2,843,389       2,863,317  
Payroll and related charges
            1,316,791       1,965,833       775,666       1,270,360  
Derivatives at fair value
    23       40,687       92,182              
Current portion of long-term debt
    16       2,699,585       4,866,399       565,856       616,153  
Short-term debt
    16       967,773       1,144,470              
Related parties
    27       34,319       24,251       5,540,320       5,325,746  
Taxes payable and royalties
            442,636       441,609       168,173       203,723  
Provision for income taxes
            1,191,578       1,309,630       570,238       413,985  
Employee postretirement benefits obligations
            328,357       311,093       194,856       175,564  
Provision for asset retirement obligations
    17       115,200       128,281       40,016       44,427  
Dividends and interest on capital
            6,435,079       8,104,037       6,435,079       8,104,037  
Others
            1,529,723       1,852,688       731,808       705,227  
 
                               
 
            21,841,084       26,044,182       17,865,401       19,722,539  
 
                                       
Liabilities direclty associated with assets held for sale
            121,809       5,339,989              
 
                               
 
            21,962,893       31,384,171       17,865,401       19,722,539  
Non-current liabilities
                                       
Derivatives at fair value
    23       99,426       102,680              
Long-term debt
    16       37,625,077       37,779,484       16,010,429       15,907,762  
Related parties
    27       236       3,362       26,748,541       27,597,237  
Employee postretirement benefits obligations
            3,194,009       3,224,893       442,688       503,639  
Provisions for contingencies
    17       3,712,180       3,712,341       2,129,772       2,107,773  
Deferred income tax and social contribution
    18       14,115,012       12,947,141       4,616,911       3,574,271  
Provision for asset retirement obligations
    17       2,400,036       2,463,154       794,384       760,838  
Stockholders’ Debentures
            2,258,268       2,139,923       2,258,268       2,139,923  
Redeemable non-controlling interest
            1,054,951       1,186,334              
Others
            3,913,103       3,391,768       1,917,881       1,928,244  
 
                               
 
            68,372,298       66,951,080       54,918,874       54,519,687  
Stockholders’ equity
    22                                  
Preferred class A stock - 7,200,000,000 no-par-value shares authorized and 2,108,579,618 (2010 - 2,108,579,618) issued
            19,650,141       19,650,141       19,650,141       19,650,141  
Common stock - 3,600,000,000 no-par-value shares authorized and 3,256,724,482 (2010 - 3,256,724,482) issued
            30,349,859       30,349,859       30,349,859       30,349,859  
Mandatorily convertible notes — common shares
            440,663       445,095       440,663       445,095  
Mandatorily convertible notes — preferred shares
            984,809       996,481       984,809       996,481  
Treasury stock - 99,649,562 (2010 - 99,646,571) preferred and 47,375,394 (2010 - 47,375,394) common shares
            (4,826,127 )     (4,826,127 )     (4,826,127 )     (4,826,127 )
Results from operations with non-controlling stockholders
            685,035       685,035       685,035       685,035  
Results in the translation/issuance of shares
            1,867,210       1,867,210       1,867,210       1,867,210  
Valuation adjustment
            (15,554 )     (25,383 )     (15,554 )     (25,383 )
Cumulative translation adjustments
            (10,216,841 )     (9,512,225 )     (10,216,841 )     (9,512,225 )
Retained earnings
            83,778,900       72,487,917       83,778,900       72,487,917  
 
                               
Total company stockholders’ equity
            122,698,095       112,118,003       122,698,095       112,118,003  
Non-controlling interests
            4,286,925       4,208,860       -          
 
                               
Total stockholders’ equity
            126,985,020       116,326,863       122,698,095       112,118,003  
 
                               
Total liabilities and stockholders’ equity
            217,320,211       214,662,114       195,482,370       186,360,229  
 
                               
The accompanying notes are an integral part of these financial statements.

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(VALE LOGO)
(A free translation from the original in Portuguese)
Statement of Income
     
Period ended in (unaudited)   In thousands of reais, except as otherwise stated
 
                                         
    Consolidated     Parent Company  
    Notes     March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Net operating revenue
            22,985,283       12,583,322       13,542,978       6,630,537  
Cost of goods solds and services rendered
    25       (9,513,771 )     (6,635,200 )     (4,677,964 )     (3,671,422 )
 
                                       
 
                               
Gross profit
            13,471,512       5,948,122       8,865,014       2,959,115  
 
                               
 
                                       
Operating (expenses) income
                                       
Selling and administrative expenses
    25       (756,054 )     (565,487 )     (369,354 )     (306,196 )
Research and development expenses
    25       (573,537 )     (313,642 )     (278,875 )     (211,946 )
Other operating expenses, net
    25       (715,832 )     (1,044,443 )     (156,179 )     (356,582 )
Equity results from subidiaries
                        2,871,370       2,365,423  
Realized gain on assets available for sales
(equity results on the parent company)
            2,492,175             2,492,175        
 
                               
 
            446,752       (1,923,572 )     4,559,137       1,490,699  
 
                               
 
                                       
Operating profit
            13,918,264       4,024,550       13,424,151       4,449,814  
 
                               
 
                                       
Financial income
    25       881,069       435,379       438,057       140,064  
Financial expenses
    25       (1,148,952 )     (1,772,079 )     (1,076,157 )     (1,717,310 )
 
                                       
Equity results from associates
    13       17,674       7,214       17,674       7,214  
 
                               
Income before income tax and social contribution
            13,668,055       2,695,064       12,803,725       2,879,782  
 
                               
 
                                       
Current
            (2,756,574 )     (511,930 )     (1,715,474 )     (339,064 )
Deferred
            289,406       865,377       202,732       563,074  
 
                               
Income tax and social contribution
    18       (2,467,168 )     353,447       (1,512,742 )     224,010  
 
                               
 
                                       
Income from continuing operations
            11,200,887       3,048,511       11,290,983       3,103,792  
Results on discontinued operations
                  (224,448 )           (224,448 )
 
                               
Net income of the period
            11,200,887       2,824,063       11,290,983       2,879,344  
 
                               
 
                                       
Net loss attributable to non-controlling interests
            (90,096 )     (55,281 )                
Net income attributable to the Company’s stockholders
            11,290,983       2,879,344                  
 
                                   
 
                                       
Basic earnings per share:
                                       
Continuing operations
                                       
Preferred share
            2,12       0.58       2,12       0.58  
Common share
            2,12       0.58       2,12       0.58  
 
                                       
Discontinued operations
                                       
Preferred share
                  (0.04 )           (0.04 )
Common share
                  (0.04 )           (0.04 )
 
                                       
Diluted earnings per share:
                                       
Continuing operations
                                       
Preferred share
            2.36       0.58       2.36       0.58  
Common share
            2.36       0.58       2.36       0.58  
 
                                       
Discontinued operations
                                       
Preferred share
                  (0.04 )           (0.04 )
Common share
                  (0.04 )           (0.04 )
The accompanying notes are an integral part of these financial statements.

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(VALE LOGO)
(A free translation from the original in Portuguese)
Statement of Comprehensive Income
     
Period ended in (unaudited)   In thousands of reais
 
                                         
    Consolidated     Parent Company  
            March 31,     March 31,     March 31,     March 31,  
    Notes     2011     2010     2011     2010  
Net income of the period
            11,200,887       2,824,063       11,290,983       2,879,344  
Other comprehensive income
                                       
Cumulative translation adjustments
            (721,473 )     1,407,181       (704,616 )     1,401,656  
 
                                       
Unrealized gain (loss) on available-for-sale securities
                                       
Gross balance as of the period/year end
            (813 )     11,434       (813 )     11,434  
Tax (expense) benefit
                  (8,219 )           (8,219 )
 
                               
 
            (813 )     3,215       (813 )     3,215  
 
                               
Cash flow hedge
                                       
Gross balance as of the period/year end
            25,885       18,159       24,041       10,053  
Tax (expense) benefit
            (14,043 )     (46,530 )     (13,399 )     (46,530 )
 
                               
 
            11,842       (28,371 )     10,642       (36,477 )
 
                               
Total comprehensive income of the period
    23       10,490,443       4,206,088       10,596,196       4,247,738  
 
                               
 
Net income attributable to non-controlling interests
            (105,753 )     (41,650 )                
Net income attributable to the Company’s stockholders
            10,596,196       4,247,738                  
 
                                   
The accompanying notes are an integral part of these financial statements.

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(VALE LOGO)
(A free translation from the original in Portuguese)
Statement of Changes in Stockholders’ Equity
     
Period ended in (unaudited)   In thousands of reais
 
                                                                                                         
                                                            Income from                                      
                    Transaction                                     operations                             Non-        
                    cost of     Mandatorily                           with non-     Cumulative                   controlling     Total  
                    capital     convertible     revenue     Treasury     Valuation     controlling     translation     retained     Parent company     stockholders’s     stockholders’’  
    Notes     Capital     increase     notes     reserves     stock     adjustment     stockholders     adjustment     earnings     stockholders ´equity     interests     equity  
December 31, 2009
            47,434,193       (160,771 )     4,587,011       49,272,210       (2,470,698 )     81,485             (8,886,380 )     5,901,065       95,758,115       4,535,112       100,293,227  
 
                                                                             
Net income of the period
                                                            2,879,344       2,879,344       (55,281 )     2,824,063  
Cash flow hedge, net of taxes
    23                                     (36,477 )                       (36,477 )     8,106       (28,371 )
Unrealized results on valuation at market
                                          3,215                         3,215             3,215  
Translation adjustments for the period
                                                      1,401,656             1,401,656       5,525       1,407,181  
Dividends to non-controlling stockholders
                                                                        (9,686 )     (9,686 )
 
                                                                             
March 31, 2010
            47,434,193       (160,771 )     4,587,011       49,272,210       (2,470,698 )     48,223             (7,484,724 )     8,780,409       100,005,853       4,483,776       104,489,629  
 
                                                                             
 
                                                                                                       
December 31, 2010
            50,000,000       1,867,210       1,441,576       72,487,917       (4,826,127 )     (25,383 )     685,035       (9,512,225 )           112,118,003       4,208,860       116,326,863  
 
                                                                             
Net income of the period
                                                            11,290,983       11,290,983       (90,096 )     11,200,887  
Additional remuneration to securities
    22                   (16,104 )                                         (16,104 )           (16,104 )
Cash flow hedge, net of taxes
    23                                     10,642                         10,642       1,200       11,842  
Unrealized results on valuation at market
                                          (813 )                       (813 )           (813 )
Translation adjustments for the period
                                                      (704,616 )           (704,616 )     (16,857 )     (721,473 )
Dividends to non-controlling stockholders
                                                                        (9,970 )     (9,970 )
Increase (decrase) on non-controlling interest
                                                                        193,788       193,788  
 
                                                                             
March 31, 2011
            50,000,000       1,867,210       1,425,472       72,487,917       (4,826,127 )     (15,554 )     685,035       (10,216,841 )     11,290,983       122,698,095       4,286,925       126,985,020  
 
                                                                             
 
(I)   period adjusted by new accounting pronouncements.
The accompanying notes are an integral part of these financial statements.

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(VALE LOGO)
(A free translation from the original in Portuguese)
Statement of Cash Flows
     
Period ended in (unaudited)   In thousands of reais
 
                                         
    Consolidated     Parent
Company
 
    Notes     March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Cash flows from operating activities:
                                       
Net income of the period
            11,200,887       2,824,063       11,290,983       2,879,344  
Adjustments to reconcile net income to cash from operations
                                       
Results of equity investments
            (17,674 )     (7,214 )     (2,889,044 )     (2,372,637 )
Realized gain on assets held for sale
            (2,492,175 )           (2,492,175 )      
Results from descontinued operations
                  224,448             112,505  
Depreciation, amortization and depletion
            1,599,038       1,360,305       468,702       493,250  
Deferred income tax and social contribution
            (289,406 )     (865,377 )     (202,732 )     (563,074 )
Monetary and exchange rate changes, net
            494,186       (188,341 )     (596,370 )     775,063  
Loss on disposal of property, plant and equipment
            301,520       193,717       100,402       175,877  
Net unrealized losses (gains) on derivatives
    23       (353,552 )     403,663       (166,505 )     78,256  
Dividends / interest on capital received
                        639,919       91,240  
Others
            (48,436 )     241,578       54,356       397,842  
Decrease (increase) in assets:
                                       
Accounts receivable from customers
            288,935       (1,482,069 )     4,525,153       (335,683 )
Inventories
            (1,290,119 )     (435,710 )     (69,360 )     (5,591 )
Recoverable taxes
            (128,747 )     (10,019 )     (59,178 )     68,004  
Others
            451,967       566,784       (47,465 )     51,938  
Increase (decrease) in liabilities:
                                       
Suppliers and contractors
            338,243       146,025       539,055       34,690  
Payroll and related charges
            (624,001 )     (521,208 )     (494,694 )     (379,525 )
Taxes and contributions
            527,374       (157,723 )     1,108,449       164,101  
Others
            895,920       172,205       264,810       181,093  
 
                               
Net cash provided by operating activities
            10,853,960       2,465,127       11,974,306       1,846,693  
 
                               
 
                                       
Cash flows from investing activities:
                                       
Short-term investments
            2,118,480       6,503,263              
Loans and advances receivable
            (289,200 )     16,560       (1,095,454 )     91,408  
Guarantees and deposits
            (49,550 )     (82,619 )     (34,097 )     (188,026 )
Additions to investments
            (103,411 )     (50,000 )     (561,044 )     (538,033 )
Additions to property, plant and equipment
            (4,892,203 )     (3,354,333 )     (2,460,494 )     (1,376,505 )
Proceeds from disposal of investments held for sale
            1,794,985                    
 
                               
Net cash provided by (used in) investing activities
            (1,420,899 )     3,032,871       (4,151,089 )     (2,011,156 )
 
                               
 
                                       
Cash flows from financing activities:
                                       
Short-term debt
                                       
Additions
            1,564,302       3,075,770       1,014,250       379,444  
Repayments
            (1,640,278 )     (3,106,801 )     (2,457,767 )     (779,760 )
Long-term debt
                                       
Additions
            959,071       2,005,499       1,300,306       1,815,921  
Repayments
            (2,926,045 )     (463,330 )     (706,837 )     (165,212 )
Dividends and interest on capital paid to stockholders
            (1,670,100 )     (2,227 )     (1,670,100 )      
 
                               
Net cash provided by (used in) financing activities
            (3,713,050 )     1,508,911       (2,520,148 )     1,250,393  
 
                               
 
                                       
Increase (decrease) in cash and cash equivalents
            5,720,011       7,006,909       5,303,069       1,085,930  
Cash and cash equivalents of cash, beginning of the period
            13,468,958       13,220,598       4,823,377       1,249,980  
Effect of exchange rate changes on cash and cash equivalents
            (50,087 )     39,364              
Initial cash in new consolidated subsidiary
                                    8  
 
                               
Cash and cash equivalents, end of the period
    7       19,138,882       20,266,871       10,126,446       2,335,918  
 
                               
Cash paid during the period for:
                                       
Short-term interest
            (6,134 )     (7,816 )     (2,476 )     (1,660 )
Long-term interest
            (581,255 )     (448,669 )     (558,467 )     (185,960 )
Income tax and social contribution
            (1,697,264 )     (251,890 )     (3,103,414 )      
Non-cash transactions:
                                       
Additions to property, plant and equipment — interest capitalization
            (63,498 )     (83,002 )     (27,616 )     (26,791 )
Transfer of advance for future capital increase to investments
                        (334,756 )     (321,500 )
The accompanying notes are an integral part of these financial statements.

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(VALE LOGO)
(A free translation from the original in Portuguese.)
Statement of Added Value
     
Period ended in (unaudited)   In thousands of reais
 
                                 
    Consolidated     Parent company  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Generation of added value
                               
Gross revenue
                               
Revenue from products and services
    23,573,306       13,029,349       13,916,246       6,971,347  
Gain on realization of assets available for sale
    2,492,175               2,492,175          
Revenue from the construction of own assets
    4,088,559       3,211,819       2,479,986       1,385,397  
Allowance for doubtful accounts
    11,893       (6,597 )     14,907       (5,098 )
Less:
                               
Acquisition of products
    (557,382 )     (413,160 )     (586,826 )     (256,792 )
Outsourced services
    (2,857,576 )     (1,691,695 )     (1,699,685 )     (1,098,966 )
Materials
    (4,743,680 )     (4,727,239 )     (2,510,274 )     (2,490,098 )
Fuel oil and gas
    (981,365 )     (773,598 )     (470,005 )     (316,569 )
Energy
    (510,274 )     (445,504 )     (205,913 )     (217,480 )
Other costs (expenses)
    (2,247,993 )     (2,009,716 )     (789,180 )     (943,381 )
 
                       
Gross added value
    18,267,663       6,173,659       12,641,431       3,028,360  
 
                               
Depreciation, amortization and depletion
    (1,599,038 )     (1,360,305 )     (468,702 )     (493,250 )
Net added value
    16,668,625       4,813,354       12,172,729       2,535,110  
 
                               
Financial revenue
    748,064       103,151       403,762       40,405  
Equity results
    17,674       7,214       2,889,044       2,260,694  
 
                               
 
                       
Total added value to be distributed
    17,434,363       4,923,719       15,465,535       4,836,209  
 
                       
 
                               
Personnel
    1,698,685       1,123,241       892,790       629,504  
Taxes, rates and contribution
    1,051,676       (109,989 )     727,158       (66,280 )
Current income tax
    2,756,574       511,930       1,715,474       339,064  
Deferred income tax
    (289,406 )     (865,377 )     (202,732 )     (563,074 )
Remuneration on third party’s capital
    1,067,857       1,261,691       956,797       837,491  
Monetary and exchange rates changes, net
    (51,910 )     178,160       85,065       780,160  
Net income attributable to the company’s stockholders
    11,290,983       2,879,344       11,290,983       2,879,344  
Net income (loss) attributable to non-controlling interest
    (90,096 )     (55,281 )            
 
                               
 
                       
Distribution of added value
    17,434,363       4,923,719       15,465,535       4,836,209  
 
                       
The accompanying notes are an integral part of these financial statements.

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(VALE LOGO)
(A free translation from the original in Portuguese.)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
In thousands of real, unless otherwise stated.
1- Operational Context
Vale S.A. (“Vale” or the “Company”) is a Public Limited Liability Company with its headquarters in the city of Rio de Janeiro, Brazil. The initial public offering was in October 1943 on the Rio de Janeiro Stock Exchange and now has its securities traded on the stock exchanges in Sao Paulo (BM&F and BOVESPA), New York (NYSE), Paris (NYSE Euronext) and Hong Kong (HKEx).
Vale is the world leader in the production of iron ore and pellets, and the second largest producer of nickel. It is a Brazilian mining company present in 38 countries, on the five continents and with a mission to transform mineral resources into prosperity and sustainable development.
The Company and its direct and indirect subsidiaries (“Group”) is principally engaged in the research, production and marketing of iron ore and pellets, nickel, fertilizer, copper, coal, manganese, iron alloys, cobalt, metals platinum group metals and metals precious. In addition, it operates in the segments of energy, logistics and steel.
As at March 31, 2011, the main consolidated operating subsidiaries and jointly controlled entities proportionately consolidated are:
                         
            % voting   Head office    
Entities   participation %   capital   location   Main activity
Subsidiaries
                       
Compañia Mienera Misky Mayo S.A.C
    40.00       51.00     Peru   Fertilizers
Ferrovia Centro-Atlântica S. A.
    99.99       99.99     Brazil   Logistic
Ferrovia Norte Sul S.A.
    100.00       100.00     Brazil   Logistic
Mineração Corumbá Reunidas S.A.
    100.00       100.00     Brazil   Iron ore
PT International Nickel Indonesia Tbk
    59.14       59.14     Indonesia   Nickel
Vale Australia Pty Ltd.
    100.00       100.00     Australia   Coal
Vale Colombia Ltd.
    100.00       100.00     Colombia   Coal
Vale Fertilizantes S.A
    84.27       99.90     Brazil   Fertilizers
Vale Canada Limited
    100.00       100.00     Canada   Nickel
Vale International S.A
    100.00       100.00     Switzerland   Trading
Vale Manganês S.A.
    100.00       100.00     Brazil   Manganese and Ferroalloys
Vale Nouvelle-Caledonie SAS
    74.00       74.00     New Caledonia   Nickel
Sociedad Contractual Minera Tres Valles
    90.00       90.00     Chile   Cooper
Urucum Mineração S.A.
    100.00       100.00     Brazil   Iron ore and Manganese
Vale Austria Holdings GMBH
    100.00       100.00     Austria   Holding and Research
 
                       
Jointly-controlled entities
                       
California Steel Industries, Inc.
    50.00       50.00     United States   Steel industry
MRS Logística S.A
    41.50       37.86     Brazil   Logistic
Samarco Mineração
    50.00       50.00     Brazil   Iron ore

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(VALE LOGO)
2 Summary of the Main Accounting Practices and Accounting Estimates
a) Basis of presentation
Interim consolidated financial statements
The interim consolidated financial statements of the company have been prepared according with the international accounting standards issued by the International Accounting Standards Board-IASB, and interpretations issued by International Financial Reporting Interpretations Committee — IFRIC, implemented in Brazil through the Committee of Accounting Pronouncements — CPC and its technical interpretation — ICPCs and guidelines — OCPCs approved by the Securities Exchange Commission — CVM.
The interim financial statements have been prepared considering historical cost as the basis of value and adjusted to reflect the financial assets available for sale, and financial assets and liabilities (including derivative instruments) measured at fair value against income. The interim financial statements follow the principles, methods and standards in relation to those adopted at the closing of last fiscal year ended December 31, 2010, and therefore should be read in together with this.
In preparing the interim financial statements, the use of estimative is required to account for certain assets, liabilities and transactions. Accordingly, the interim financial statements include certain estimates related to the useful lives of fixed assets, provisions for losses on assets, contingencies, operating provisions and other similar evaluations. Actual results of operations for the quarterly periods are not necessarily an indication of expected results for the fiscal year ending on December 31, 2011.
Interim financial statements of the parent company
The interim individual financial statements of the parent company and associated companies have been prepared under accounting practices adopted in Brazil issued by the CPCs. Those pronouncements are published together with interim consolidated financial statements.
In the case of Vale SA accounting practices adopted in Brazil applicable to the individual interim financial statements differ from IFRS, applicable to the separated financial statements, only by valuation of investments in subsidiaries and associated companies by the equity method, while according IFRS would be as cost or fair value.
Transactions and balances
The operations with others currencies are translated into the functional currency of the parent company using the actual exchange rates on the transaction or valuation dates, in which the items were remeasured. The foreign exchange gains and losses resulting from the settlement of these transactions and from the translation by exchange rates at the end of the year, relating to monetary assets and liabilities in other currencies are recognized in the statement of income, as financial expense or financial income, except when deferred in stockholders’ equity.
Major currencies impacting our operations:
                 
    Year-end price in Brazilian real  
    March 31, 2011     December 31, 2010  
US dollar — USD
    1.6287       1.6662  
US canadian dollar — CAD
    1.6813       1.6700  
US australian dollar — AUD
    1.6880       1.6959  
Euro — EUR
    2.3129       2.2280  
 
           
Changes in fair value of monetary securities in other currencies, classified as available for sale are separated between translation differences resulting from changes in the amortized costs of the security and other changes in the carrying amount of the security. Translation differences related to the changes in amortized costs are recognized in income, and other changes in the carrying amount of the security are recognized in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities are recognized in income as part of fair value gain or loss. The exchange rate gain or loss of non-monetary financial assets, such as investments in shares classified as available for sale, is included in other comprehensive income.
The Company has assessed subsequent events through May 5, 2011, which is the date of the interim financial statements.

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b) Principles of consolidation
The consolidated financial statements reflect the balances of assets, liabilities and stockholder’s equity at March 31, 2011, December 31, 2010 and the operations of the three-months period ended on March 31, 2011 and March 31, 2010, of the parent company, of its direct and indirect subsidiaries and of its jointly controlled entities, in proportion to the interest maintained. For associates, entities over which the Company has significant influence but not control the investments are accounted for under the equity method.
The operations in other currencies are translated into the presentation currency of the financial statements in Brazil for the purposes of registration of equity and full or proportional consolidation. Accounting practices of subsidiaries and associated companies are set to ensure consistency with the policies adopted by the parent company. Transactions between consolidated companies, as well as balances, profits and unrealized losses on these transactions are eliminated.
The interests in hydroelectric projects are done through consortium agreements under which the Company participates in assets and liabilities of these enterprises in the proportion that holds on the consortium. The Company has joint responsibility for any obligation. According to Brazilian law, there is no separate legal entity for the consortium, therefore no financial statements, income tax statement, statement of income and shareholders’ equity separately. Thus, the Company recognizes the proportionate interest of the costs and non-divisible interests in the assets related to hydropower projects.
Investments in controlled entities
Controlled entities are entities, including special purpose entities, in which directly or indirectly way the parent company has the power to regulate the accounting and operational policies to obtain benefits from its activities, usually accompanied by a participation of more than one half of voting rights (voting capital). In the consolidation of controlled entities, the third party involvement is recorded in the statement of changes in stockholders’ equity, in the line of non-controlling stockholders.
The use of the equity method is suspended from the date that the Company ceased to have significant influence over the associated companies and no longer has control over the parent company (except in the individual balance sheet, if the investee moves from subsidiary to associated company). When the equity method is suspended, the investment is treated as a financial instrument in accordance with the requirements of CPC 38/IAS39 — Financial Instruments: Recognition and Measurement.
When there is a loss of influence and control, the remaining investment in the ex-associated company or former subsidiary shall be valued at fair value. The Company recognizes in income of the period any difference between:
  a)   the fair value of the remaining investment, if any, and any amount from the partial sale of its participation in the subsidiary and associated company, and
 
  b)   the carrying value of investment on the date that significant influence is lost or has lost the control.
Investments in jointly controlled entities (joint ventures)
Interests in jointly-controlled entities were consolidated by the proportional consolidation method, from the date on which joint control is acquired. According to this method the assets, liabilities, revenues, costs and expenses of these entities have been included in the consolidated financial statements, in the proportion of control attributable to the stockholders.

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(VALE LOGO)
Investments in associated entities
Associated entities are investments in entities where the company has the power to exercise a significant influence, but they do not have control or joint control through participation in the financial and operational decisions of the entity. Usually the stockholding is 20% to 50% of the voting rights. Investments in associated entities are accounted for under the equity method and include goodwill identified on acquisition, net of any accumulated impairment loss.
c) Business combinations
The company adopts the acquisition method for business combinations to account for businesses under the company’s control. In these operations, the identifiable assets acquired and liabilities and contingent liabilities assumed are initially measured at fair values at the acquisition date. The Group recognizes non-controlling stockholders’ interests on the acquired business, either at their fair value or at the proportionate share of non-controlling interest of the acquirer’s net assets. The measurement of the non-controlling shareholder interest to be recognized is determined for each acquisition made.
The excess of the consideration transferred over the fair value at the date of acquisition, inclusive of any prior equity interest in the acquired business is recorded as goodwill. For acquisitions that the Group presents fair value non-controlling Stockholders, the determination of goodwill also includes the value of any non-controlling stockholder participation in the acquiree, and the goodwill is determined by considering the participation of the Group and non-controlling interests. When the consideration transferred is less than the fair value of net assets of the subsidiary acquired, the difference is recognized directly in the statement of income.
The goodwill recorded as an intangible asset is not subject to amortization. Goodwill (goodwill) is allocated to cash-generating units — CGU or groups of cash generating units, and recoverability was tested (impairment test), during the fourth quarter. When it was identified that recorded goodwill would not be fully recovered, the respective portion of goodwill was written down to the income statement.
Non-controlling stockholders’ interests
The Company treats transactions with non-controlling stockholders’ interests as transactions with equity owners of the Group. For purchases of non-controlling stockholders’ interests, the difference between any consideration paid and the portion acquired of the carrying value of net assets of the subsidiary is recorded in stockholders’ equity. Gains or losses, on disposals of non-controlling stockholders’ interest, are also recorded in stockholders’ equity.
For the Company hold control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognized in profit or loss. Furthermore, any amounts previously recognized in other comprehensive income relating to that entity are accounted for as if the Group had directly sold the related assets or liabilities. This means that the amounts previously recognized in other comprehensive income are reclassified in income.
d) Cash and cash equivalents and short-term investments
The amounts recorded as cash and cash equivalents correspond to the values available in cash, bank deposits and investments in the short-term that have immediately liquidity and maturity within three months. Other investments with maturities exceeding three months, and up to one year, are recognized at fair value in income and recorded in short-term investments.
e) Financial assets
The Company classifies its financial assets in accordance with the purpose for which they were purchased, and determine the classification and initial recognition according to the following categories:
    Measured at fair value through the statement of income — recorded in this category are held for trading financial assets acquired for the purpose of selling in the short term. Derivatives not designated as hedging instruments are recorded in this category. Assets in this category are classified as current assets.
 
    Loans and receivables — non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are recorded in current assets, except those with a maturity greater than 12 months after the balance sheet date, which are recorded as non-current assets. The Company’s loans and receivables comprise of the accounts receivables, other receivables, and cash and cash equivalents. Loans and receivables are measured at fair value and subsequently carried at amortized cost using the effective interesting rate method, less impairment. The interest income is recognized with the effective tax rate application, except for short-term credits, because the interest recognition would be immaterial.
 
    Available for sale — investments in equity instruments that are not listed and for which it is not possible to estimate fair value with certainty are held at acquisition cost less any losses not recoverable. The gains or losses from changes in fair value of available for sale investments are recorded in equity under the description “equity adjustments” and included in “other comprehensive income”, and are reclassified to income when an available for sale investment is derecognized as a

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      result of sale or impairment. When there is a significant or prolonged decline in the fair value of the security below its cost, it is also evident that the available for sale investments might be impaired.
 
      Investments in equity instruments that are not listed and for which it is not possible to estimate with certainty its fair value, are held at acquisition cost less any losses not recoverable. Gains or losses from changes in fair value of investments available for sale are recorded in stockholders’ equity under the caption “Equity adjustments” included in “Other comprehensive income“until the investment is sold or received or until the fair value of the investment is below its acquisition cost and this corresponds to a significant loss or prolonged, when the accumulated loss is transferred to the statement of income.
 
      All purchases and sales of these investments are recognized on the date of signing, regardless of their date of settlement.
f) Accounts receivables
Accounts receivables represent amounts receivable from the sale of products and services made by the Company. The receivables are initially recorded at fair value and subsequently measured at amortized cost, net of estimates of potential losses.
The estimated losses from doubtful accounts are provided in an amount considered sufficient to cover potential losses. The value of the loss estimated for doubtful debts is made based on experience of defaults occurred in the past.
g) Inventories
Inventories are stated at the lower of average cost of acquisition or production and replacement values or realization. The inventories production cost is determined by variable and fixed costs, and direct and indirect costs of production, using the average cost method. The net value of inventories is the estimated selling price in the ordinary course of business, less all estimated costs to completion and other costs necessary to sell. The Company periodically assesses its inventories to identify obsolete or slow-moving inventories, and if needed the Company recognizes definitive allowances for them.
Inventories of ore are recognized in the moment of yours physical extraction. And they are no longer part of the calculation of proven and probable reserves anymore, and now are part of the stock pile of ore, and therefore is not part of the calculation of depreciation, amortization and depletion per unit of production.
The inventory costs include gains and losses from cash flow hedging derivatives, acquisition of stock material (raw materials, price of products, and others), initially recorded in Stockholders’ equity and transferred to the product cost by realization through the selling of the product.
h) Non-current assets held for sale
Assets held for sale (or discontinued operations) are recorded as non-current assets, separated from other current assets in the balance sheet, when their carrying amounts are recoverable when: a) the realization of the sale is a virtual certainty; b) management is committed to a plan to sell these assets; and c) the sale takes place within a period of 12 months. Assets recorded in this group are valued by the lower of book value and fair value less costs to sell.
i) Non-current
The amount expected to be recovered or settled after more than 12 months of the reporting date is classified as non-current.
j) Property, plant and equipment
Fixed assets represented by tangible assets are carried at acquisition or production cost. The assets include financial charges, incurred during the construction period, expenses attributable to the acquisition and losses through non-recovery of the asset.
Assets are depreciated by the straight-line method based on estimated useful lives, from the date on which the assets are available for use in the intended way, except for land which is not depreciated. The depletion of reserves is calculated based on the ratio between actual production and the total amount of reserves proven and probable.
Vale did not exercise the option of adopting the cost attributed to its fixed assets, as identified no significant amounts of goods with a book value substantially below or above their fair value, primarily due to the significant volume of investments and acquisitions made by the company in recent years.
In the case of railroads, where the company holds the concession, the assets acquired, related to grant activities to provide public services (returned goods), the will be returned to the grantor termination of the concession period, without any compensation or cost to the grantor. The returned tangible fixed assets are originally recorded by the cost of acquisition or construction, during the construction period. The assets related to the concession are depreciated based on the estimated useful life of assets, since the entry into operation.
The carrying value of an asset is written down immediately to its recoverable amount in income, if the asset’s carrying value is greater than its estimated recoverable amount.

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Depreciation and depletion of assets of the Company, is represented in accordance with the following estimated useful lives:
     
Buildings   between 10 and 50 years
Installations   between 5 and 50 years
Equipment   between 3 and 33 years
Computer Equipment   between 5 and 10 years
Mineral rights   between 2 and 33 years
Locomotives   between 12,5 and 33 years
Wagon   33 years
Railway equipment   between 5 and 50 years
Ships   between 5 and 20 years
Other   between 2 and 50 years
The residual values and useful lives of assets are reviewed and adjusted, if necessary, at the end of each fiscal year.
The relevant expenditures for maintenance of industrial areas and relevant assets (as example, ships), including spare parts, assembly services, and others, are recorded in fixed assets and depreciated over the benefits of this maintenance period until the next stop.
l) Intangible assets
Intangible assets comprise basically the contractual rights and expenses incurred on specific projects with future economic value, are valued at acquisition cost, less accumulated amortization and losses by reducing the recoverable amount where applicable. Intangible assets are recognized only if it is likely they that will generate economic benefits to the Company, are controllable under the Company’s control and their respective value can be measured reliably.
Intangible assets that have finite useful lives are amortized over their effective use or a method that reflects their economic benefits, while those with indefinite useful lives are not amortized; consequently these assets are tested at least annually as to their recovery (impairment test). The estimated useful life and amortization methods are reviewed at the end of each financial year and the effect of any changes in estimates are recorded in a prospective manner.
Internally generated intangible assets, during the research phase, have their expenditure recorded in expenses of the period when incurred. Expenditure on development activities (or stage of development of an internal project) is recorded as intangible assets if and only if it meets all of the requirements of the standard. Initial recognition of this asset corresponds to the sum of the expenditures incurred from when the intangible asset has passed to meet the recognition criteria required by the standard. Intangible assets generated internally, are recorded at cost value less amortization and loss on the accumulated impairment.
Intangible assets acquired in a business combination and recognized separately from goodwill are recorded at fair value at the acquisition date, which is equivalent to cost. As required at a later date, these assets are recorded at cost value less amortization and loss on the impairment accumulated.
m) Biological assets
The biological assets are valued and recognized at fair value less cost to sell (less depreciation and accumulated impairment losses), when a market value can be determined, otherwise they are value and recognized at cost. In the absence of an active market, the valuation method used is the discounted cash flow method. Related gains and losses are recognized in the statement of income.
n) Impairment
Financing assets
The Company assess each reporting period if there are objective evidences that an asset is impaired. Case the existence of impacts on cash flow caused by asset impaired and this impact can be reliable estimated; Company recognizes in the results an impairment loss.
Long-term non-financial assets
The Company assesses impairment of non financial assets annually to asses whether there is evidence that the book value of a long-term non-financial asset will not be recoverable. Regardless of existing indication of non recoverability of its carrying amount, goodwill balances from business combinations and intangible assets with indefinite useful lives are tested for recovery at least once a year. When the residual value book of this non-financial asset exceeds its recoverable value, the Company recognizes a reduction in the carrying balance of its non-financial asset (impairment), and also in this moment review the non-financial assets, except goodwill, that have suffered reduction of the accounting balance for non-recovery for a possible reversal of these write-down values. If it is not possible to determine the recoverable amount of a nonfinancial asset individually, the

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recoverable value of non-financial assets grouped at the lowest levels for which there are separately identifiable cash flows of the cash-generating unit - CGU, which the asset belongs is realized.
o) Expenditures on research and development
Expenditure on ore research and development are considered operating expenses until the effective proof of the economic feasibility of commercial exploration of a given field. From this evidence, the expenditures incurred are to be capitalized as mine development costs.
During the development phase of mine before production begins, the cost of waste removal, and associated costs with removal of waste and other residual materials are recorded as part of asset in development cost of the mine. Subsequently, these costs are amortized over the useful life of the mine based on proven and probable reserves. After the start of the production phase from the mine, the ore removal expenditures are treated as production costs.
p) Leases
The Company classifies its contracts as financial leases or operational leases based on the substance of the contract, regardless of its form.
For financial leases, the lower of the fair value of the leased asset and the present value of minimum lease payments is recorded in tangible fixed assets offsetting the corresponding obligation recorded is liabilities. For operating leases, payments are recognized linearly during the term of the contract as a cost or expense in the statement of income in the year to which they belong.
q) Accounts payable to suppliers and contractors
Accounts payable to suppliers and contractors are obligations to pay for goods and services that were acquired in the ordinary course of business, and are classified as current liabilities if the payment is due within twelve months. After this period, they are presented in non-current liabilities. The amounts are initially recognized at fair value and subsequently measured at amortized cost using effective interest rate method. In practice accounts payable are normally recognized by the value of the corresponding invoice or receipt.
r) Loans and financing
Loans are initially measured at fair value, net of transaction costs incurred and are subsequently carried at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the statement of income over the period of the loans, using the effective interest rate method. Fees paid on the establishment of the loan are recognized as transaction costs of the loan.
Financial instruments, including perpetual debentures that are mandatorily redeemable on a specific date are classified as liabilities.
Compound financial instruments (which have components of a financial liability — debt — and of Stockholders’ equity) issued by the Company comprise of mandatorily convertible notes into Stockholders’ equity, and the number of shares to be issued does not vary with changes in its fair value.
The liability component of a compound financial instrument is initially recognized at fair value. The fair value of the liability portion of a convertible debt security is determined using discounted cash flow, considering the interest rate market for a debt instrument with similar characteristics (period, value, credit risk), but not convertible. The Stockholders’ equity component is recognized initially by the difference between the total value received by the Company with the issuance of the title, and the fair value as a financial liability component recognized. The transaction costs directly attributable to the title are allocated to the components of liabilities and stockholders’ equity in proportion to amounts initially recognized.
After initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest rate method. The equity component of a compound financial instrument is not remeasured after the initial recognition, except for upon conversion.
Loans are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
s) Provisions
Provisions are recognized only when there is a present obligation (legal or constructive) resulting from a past event, and it is probable that settlement of this obligation would result in an outflow of resources and the amount of the obligation could be reasonably estimated. Provisions are reviewed and adjusted to reflect the current best estimate at the end of each reporting period. Provisions are measured at the present value of the expenditure expected to be required to settle an obligation using a

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pre-tax rate, which reflects current market assessments of time value of money and the risks specific to the obligation. The increase in the obligation due to the passage of time is recognized as interest expense.
Provision for asset retirement obligations
The Company, at the end of each year reviews and updates the values of provisions for asset retirement obligations. This provision has the primary goal of long-term value, for financial use in the future at the closing moment of the asset. Provisions made by the Company refer basically to mine closure and the completion of mining activities and decommissioning of assets linked to mine. The calculation of this provision begins with a valuation of the asset conditions at the time of provision. The next step consist s of the formation of amounts to be discounted to present value by the interest rate before income tax that reflects the assessment of market conditions and specific risks associated with the liability to be disabled Finally, the amount at present value is recorded. The revised calculations of this provision occur at the end of each year, or if there is a new asset, or if the situation indicates a need to review the provision. The provision is set up initially with the record of non-current liabilities in counterpart with a main fixed asset item. The increase in the provision due to passage of time is recognized as interest expense, using the current discount rate plus the inflation index. The asset is depreciated linearly at the rate of useful life of the main asset, and registered against the statement of income.
Provisions for contingent liabilities
The judicial provisions are recognized when the loss is considered probable, and would cause an outflow of resources for the settlement of the liabilities, and when the amounts are reliably measurable taking into consideration the opinion of legal counsel, the nature of actions, similarity with previous cases, complexity, and the positioning of the courts.
t) Employee benefits
Current benefit — wages, vacations and related taxes
Payments of benefits such as wages, vacation past due or accrued vacation, as well their related social security taxes over those benefits, are recognized monthly in the results.
Current benefit — profit sharing
The Company has a policy of profit sharing, based on the achievement of individual performance goals, and on the area of operation and performance of the Company. The amount is formed based on the best estimates of the amount to be paid by the company based on the results, and periodic verification (measurement) of the compliance with all performance goals. The Company makes monthly provision with respect to the accrual basis and recognition of present obligation arising from past events, and believes that the estimated amount is reasonable and a future outflow of resources should occur. The counterpart of the provision is recorded as cost of sales or service rendered or operating expenses in accordance with the activity of the employee in productive or administrative activities, respectively.
Non-current benefit — pension cost and other post-retirement benefits
For defined benefit plans in which the Company has the responsibility for or has some kind of risk actuarial calculations are periodically obtained of liabilities determined in accordance with the Projected Unit Credit Method in order to estimate the liability for payment of those installments. The liability recognized in the balance sheet regarding the defined benefit plan a the present value of the defined benefit obligation at the balance sheet date, less the fair value of plan assets, with adjustments for past service cost not recognized. Actuarial gains and losses are appointed and controlled by the corridor method, this method only affects the income of the period if it exceeds the limits of 10% of the fair value of plan assets and the present value of the defined benefit obligations, whichever is greater, and the amount exceeding the deferred portion by the number of active participants of the plan. Past service costs that arise with changes in plans are released immediately in income.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using an interest rates consistent with market rates, which are denominated in the currency in which benefits will be paid and which have maturities close to the respective liabilities of the pension plan obligation.
The Company has several pension plans, among them plans presenting surplus and deficit situations. For plans with a surplus position, the Company recognize on the balance sheet, neither on the statement of income, as there was not a clear position about the use of this surplus by the Company, being only demonstrated in a note. For plans with a deficit position, the Company recognizes liabilities and results arising from the actuarial valuation and the actuarial gains and losses generated by the evaluation of these plans in income, according to the corridor method and also further demonstrated in a note.
With respect to defined contribution plans, the Company has no further obligation after the contribution is made.

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Current benefit — current incentive
The Company has established a mechanism to award its eligible executives (Matching Plan and Long-Term Incentive Plan — ILP) with the goal of encouraging loyalty and sustained performance among others. The Matching plan allows eligible executives to acquire preferred class A stocks of the Company, through criteria activated with targets reached, and shall be entitled at the end of three years to a cash sum corresponding to the market value of the shares lot initially purchased by the executives, provided that they are under the ownership of executives throughout the entirety of the period. As well as matching, the ILP provides at the end of three years the payment in the amount equivalent to a certain number of shares based on the assessment of the executives’ career and company performance factors in relation to a group of companies of similar size (per group). Liabilities are measured at each reporting date, at fair value, based on market quotations. Obligations are measured at each reporting date, to the fair value based on market quotations. The compensation costs incurred are recognized in income during the three-year vesting period as defined.
u) Derivative financial instruments and hedging operations
The Company uses derivative instruments to manage their financial risks as a way to hedge these risks, not being used derivative instruments for the purpose of negotiation. Derivative financial instruments are recognized as assets or liabilities on the balance sheet and are measured at fair value. Changes in fair value of derivatives are recorded in each year as gains or losses in the statements of income or in equity adjustments in comprehensive income in shareholders’ equity when the transaction is illegible and characterized as an effective hedge, in the form of cash flow, and which has been in effect during the period listed.
The method of registration of an item that is being hedged depends on its nature. The derivatives will be designated and recognized as fair value hedges of assets and liabilities when there is a firm commitment, such as cash flow hedges when a specific risk associated with a recognized asset or liability or a highly probable forecast transaction, and to hedge a net investment in a foreign operation. The Company documents the relationship between hedging instruments and hedged items at the beginning of the operation, with the objective of risk management and strategy for carrying out hedging operations. The Company also documents its assessment, both initially and continuously, that the derivatives used in hedging transactions are highly effective in their changes in fair value or cash flows of hedged items.
The cash flow hedges the effective portion of changes in fair value of designated and qualified as hedges, in this mode, is recorded in shareholders’ equity accounted for in comprehensive income. The effective amount released in shareholders’ equity in comprehensive income, will only be transferred to the result of the period, in the results appropriated for the hedged item (cost, operating expense, interest expense, etc.) when the hedged item is actually performed. However, when a hedged item prescribed, sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain and loss, at the time, stay logged in shareholders’ equity until the forecast transaction is finally done and finally recognized in income.
Derivative instruments that do not qualify for hedge accounting records, its fair value changes should be recorded immediately in statements of income, which are derivatives measured at fair value through income.
v) Current and Deferred Income tax and social contribution
The costs of income tax and social contribution are recognized in the statement of income, except for items recognized directly in Stockholders’ equity or comprehensive income. In such cases the tax is also recognized in Stockholders’ equity or comprehensive income.
The Company records a provision for current income tax based on taxable profit for the year. Taxable income differs from net income (profit presented in the statement of income), because it excludes income and expenses taxable or deductible in other years, and excludes items not permanently taxable or not deductible. The provision for income tax is calculated individually for each entity of the group based on tax rates and tax rules in force at the location of the entity. The recognition of deferred taxes by the Company is based on temporary differences between the book value and the tax base value of assets and liabilities on tax losses of income tax, and offsetting social contribution on profits where their achievement against future taxable results is considered likely. If the Company is unable to generate future taxable income or if there is a significant change in the time required for the deferred taxes to be deductible, management evaluates the need to record a provision for loss of those deferred taxes. The deferred income tax, assets and liabilities, are offset when there is a legally enforceable right to offset current tax assets against current liabilities, and when the deferred income tax, assets and liabilities, are related to income taxes released by the same taxation authority on the same taxable entity.
Deferred income tax asset is recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.

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w) Revenue recognition
Revenue comprises the fair value of the consideration received or receivable by the trading of products and services in the ordinary course of business of the Company. Revenue is presented net of taxes, repayment of rebates and discounts, and in the consolidated financial statements net of eliminations of sales between consolidated entities of the Group.
•      Product sales
Revenues with product sales are recognized when value can be measured reliably, it is probable that future economic benefits will flow to the Company, and when there is a transfer to the purchaser of the significant risks and benefits related to the product.
Sales revenues are dependent on negotiated commercial terms, including transportation clauses, which are most often the determining factor in a defining the transfer of risks and benefits of the products sold. The Company uses separate commercial arrangements where substantial part of the Company’s revenue from sales has being recognized at the delivery time of goods to the responsible company for the transportation. In other circumstances, the commercial clauses negotiated require that the revenue is recognized only in the delivery of goods at the port of destination.
•     Sales of services
Revenues from services rendered by the Company are related to contracts of transport services rendered and are recognized over the period that the services are performed.
•     Financial income
Interest income is recognized with the time elapsed, using the effective interest rate applicable.
x) Government grants and support
Government grants and support are accounted for when the Company complies with reasonable security conditions set by the government related to grants and assistance received. The Company records via the statement of income, as reducing taxes or spending according to the nature of the item, and through the distribution of results on statement of income, earnings reserve account in stockholders’ equity.
y) Allocation of income and distribution of remuneration to stockholders
At year end, the Company allocated results between remuneration to Stockholders and reserves as required by Brazilian corporate law. Regarding remuneration of Stockholders, the Company may use interest on capital in line with the criteria and limits set by Brazilian legislation. The tax reflection of interest on own capital is recognized in income for the year.
z) Capital
In the stockholders’ equity, capital is represented by common and preferred shares non-redeemable, all without no par value. The preferred shares have the same rights as common shares, with the exception of voting for electing members of the Board. The Board may, regardless of statutory reform, resolve the issue of new shares (authorized capital), including by the capitalization of profits and reserves to the authorized limit.
The Company periodically practices the repurchase of shares to remain in treasury for future sale or cancellation. These programs are approved by the Board with a term and quantities by determined type of shares.
Incremental costs directly attributable to the issuance or repurchase of new shares or options are demonstrated in Stockholders’ equity as a deduction from the amount raised, net of taxes.
aa) Statements of added value
The Company publishes its consolidated and the parent company statements of added value (DVA) in accordance with the pronouncements of CPC 09, which are submitted as part of the financial statements in accordance with Brazilian accounting practices applicable to Limited Liability companies that for IFRS are presented as additional information, without prejudice to the set of financial statements.
This statement represents one of the component elements of the Social Balance which has the main objective to present with great evidence the wealth creation by the entity and its distribution during the year reported.

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3 Critical Accounting Estimates and Assumptions
The presentation of financial statements in accordance with the principles of recognition and measurement by the accounting standards issued by the CPC and IASB requires that management of the Company make judgments, estimates and assumptions that may affect the value of assets and liabilities presented.
These estimates are based on the best knowledge existing at any period and the planed actions, being constantly reviewed based on available information. Changes in facts and circumstances may lead to revision of estimates, so the actual future results could differ from estimates.
Significant estimates and assumptions used by Company’s management in preparing these financial statements are presented as such:
Mineral reserves and mine useful life
The estimates of proved reserves and probable reserves are regularly evaluated and updated. The proved reserve and probable reserve are determined using generally accepted geological estimates. The calculation of reserves requires that the company take positions on future conditions that are highly uncertain, including future ore prices, exchange rates, inflation rates, mining technology, availability of permits and production costs. Changes in some of these assumptions could have a significant impact on proved reserves and probable reserves recorded.
The estimated volume of mineral reserves is based as the calculation of the portion of depletion of their respective mines, and its estimated useful life is a major factor to quantity the provision of environmental rehabilitation of mines. Any change in the estimates of the volume of mine reserves, and the useful life of assets linked to them may have significant impact on charges for depreciation, depletion and amortization recognized in the financial statements as cost of goods sold. Changes in estimated useful life of the mines could cause significant impact on the estimates of environmental spending provision through the write-down of fixed assets and the impairment analysis.
Environmental costs of reclamation
Expenses incurred related to compliance with environmental regulations are recorded in income or capitalized. These programs were created to minimize the environmental impact of activities.
The Company recognizes an obligation under the market value for disposal of assets during the period in which they are incurred in accordance with Note 2.s). Vale considers the accounting estimates related to reclamation and closure costs of a mine as a critical accounting policy and to involve significant values for the provision and it is estimated using several assumptions, such as interest rate, inflation, useful life of the asset considering the current state of depletion and the projected date of depletion of each mine. Although the estimates are revised each year, this provision requires that we project cash flows applicable to the operations.
Income tax and social contribution
The determination of the provision for income taxes or deferred income tax, assets and liabilities, and any valuation allowance on tax credits requires estimates of the Company. For each future credit tax, the company assesses the probability that part or total tax assets will not be recovered. The valuation allowance made with respect to accumulated tax losses depends on the assessment of the Company of the probability of generating future taxable profits in the deferred income tax asset recognized based on production and sales planning, commodity prices, operational costs, restructuring plans, reclamation costs and planned capital costs.
The Company recognizes a provision for loss where it believes that tax credits are not fully recoverable in the future.
Contingencies
Contingent liabilities are recorded and/or disclosed, unless the possibility of loss is considered remote by our legal advisors. Contingencies, net of escrow deposits, are arranged in notes to the financial statements Notes 2.s) and 17.
The contingencies of a given liability on the date of the financial statements are recorded when the amount of loss can be reasonably estimated. By their nature, contingencies will be resolved when one or more future event occurs or fails to occur. Typically, the occurrence of such events depends not on our performance, which complicates the realization of precise estimates about the date on which such events are recorded. Assessing such liabilities, particularly in the uncertain Brazilian legal environment, and other jurisdictions involves the exercise of significant estimates and judgments of management regarding the results of future events.
Post-retirement benefits for employees
The Company sponsors various plans for post-retirement benefits to their employees in Brazil and abroad, the parent company and group entities, as Notes 2 (t).

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The values reported in this section depend on a number of factors that are determined based on actuarial calculations using several assumptions in order to determine costs, liabilities, among others. One of the assumptions used in determining the amounts to be recorded in accounting is the discount rate. Any changes in these assumptions will affect the accounting records made.
The Company, together with external actuaries, reviews at the end of each exercise, which assumptions should be used for the following year. These premises are used for upgrades and discounts to fair value of assets and liabilities, costs and expenses and determination of future values of estimated cash outflows, which are needed to settle the plan obligations.
Reduction in recoverable value of assets
The Company annually tests the recoverability of its tangible and intangible assets, with indefinite useful lives that are mostly of the portion of goodwill for expected future earnings arising from processes of the business combination. The accounting policy is presented in Note 2 (n).
Recoverability of assets based on the criterion of discounted cash flow depends on several estimates, which are influenced by market conditions prevailing at the time that such impairment is tested and thus the administration believes it is not possible to determine whether new impairment losses occur in the future.
Fair value of the derivatives and others financial instruments
Fair value of the not traded financial instruments in active market is determined by using valuation techniques. The Company uses your own judgment to choose the various methods and assumptions set which are based on market conditions, at the end of the year.
The analysis of the impacts, if actual results were different from management’s estimate, is presented in note 23 on the topic of sensitivity analysis.
4 Accounting pronouncements
There was no issuance of new pronouncements affecting the statements of the period. The pronouncements mentioned in the financial statements ending 31 December 2010 were adopted with no significant impact on financial statements.
The Company believes that the other recently issued accounting pronouncements, which are not effective as of and for the year ended December 31, 2011, should not be relevant to the consolidated financial statements and for the parent company.
5 Risk Management
Vale considers that effective risk management is a key objective to support its growth strategy and financial flexibility. The risk reduction on Vale’s future cash flow and on its business and operations contribute to a better perception of the company’s credit quality, improving its ability to access different markets and reduce financing costs.
Vale has developed its risk management strategy in order to provide an integrated approach of the risks the Company is exposed to. In order to do that, we have developed an enterprise wide risk management approach that encompasses all kinds of risk — market, credit, operational and liquidity.
a) Risk management policy
The board of directors established a risk management policy, as well as an Executive Risk Committee.
The risk management policy determines that Vale should evaluate regularly the potential impact of risk factors on its cash flows, as well, mitigation risk proposals. Any risk mitigation strategy should only be put in place with the objective of reducing the risks related to the fulfillment of commitments assumed by the Company, either with third parties, as well as its stockholders.
The executive board is responsible for the evaluation and approval of the risk mitigation strategies recommended by the Executive Risk Committee. The committee is responsible for overseeing and reviewing our risk management principles and procedures, besides reporting periodically to the executive board about the management process and risk monitoring and the main risks in which the Company is exposed, as well as, the cash flow impact.
The risk Management policy and procedures, that complement the risk management governance model, require the diversification of financial operations and counterparties and prohibit speculative transactions with derivatives.
Besides the risk management governance model, Vale has put in place a corporate governance structure with well defined roles and responsibilities. Regarding financial risks, the recommendation and execution of risk strategies are implemented by different and independent areas. It is the responsibility of the risk management department to define and propose to the Executive Risk Committee risk mitigation strategies consistent with Vale and it’s wholly owned subsidiaries corporate strategy,

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while it is the responsibility of the finance department to execute the risk mitigation strategies through the use of financial instruments. The independence of the areas guarantees an effective control on these operations.
b) Liquidity risk
Our liquidity risk arises from the possibility that we may not be able to settle or meet our obligations and daily cash requirements given liquidity constraints in the financial markets.
Vale has revolving credit lines, which increases liquidity in a short-term period and makes a better efficient cash management, being consistent with Vale’s strategic focus on the reduction of capital cost. The revolving credit line was entered into a syndicate composed by several global commercial banks, according note 23.
c) Credit risk
Vale’s credit risk arises from the negative impact in cash flows of the Company in the cases our counterparties don’t meet their contractual obligations. To manage this risk Vale maintains group-wide procedures such as controlling credit limits, guaranteeing counterparty diversification and monitoring Vale’s credit portfolios.
    Vale’s counterpart exposure
Generally speaking, credit risk is the risk due to uncertainty in counterparty’s ability to meet its obligations. From a credit risk standpoint, Vale’s counterparties can be divided into three main categories: 1) commercial customers which owe money to Vale further to sales on credit; 2) financial institutions which either keep cash of Vale or are counterparty in a derivative transaction; 3) suppliers which have been paid in advance for part of their service.
Vale has a well diversified Account Receivable portfolio from a geographical standpoint. The regions in which we have more significant credit risk exposure include China, Europe, Brazil, Japan and the US. According to the region, different kind of guarantees can be used to enhance the credit quality of the receivables.
The credit exposure to counterparties due to derivatives is defined as the sum of the credit exposures given by each derivative that Vale has with that counterpart. And, finally, the credit exposure for each derivative is defined as the potential future MtM calculated within the life of the derivative, considering a 95% probability scenario for the joint distribution of the market risk factors that affect that derivative.
Regarding the commercial credit exposure that arises from sales to customers, Vale manages it in two credit portfolios: i) “Current / Not yet due” receivables and ii) “Past due” receivables. The past due receivables are closely monitored by the risk management and cash collection areas so as to check for the financial solvency of the counterparties and to minimize the working capital requirements of Vale.
    Management of Vale’s credit risk
For the commercial credit exposure arising from sales to final customers, the Risk Management Department approves a credit risk limit for every counterpart. Also, a global working capital limit for Vale is approved by the Executive Board and monitored on a monthly basis.
For counterparties exposures arising from cash investments and derivatives, credit limits to counterparties (Banks, Insurance Companies, Countries, and Corporations) are annually approved by the Executive Board and monitored on a daily basis. Also, the Risk Management Department controls the portfolio diversification and the overall credit risk (default probability) of Vale’s consolidated treasury portfolio.
    Risk profile of commercial counterparties
Vale uses an internal credit rating for each customer which results from a credit analysis which is based on three sources of information: i) Expected Default Frequency (Expected Default Frequency - EDF) provided by KMV (Moodys); ii) Credit Ratings from Moodys, Standard & Poors and Fitch; iii) Financial Statements from which financial ratios are built.
Whenever deemed appropriate, the quantitative credit analysis is complemented by a qualitative analysis which takes into consideration the payment history of that counterparty, the strategic position of the counterparty in its economic sector, and other factors. The internal credit rating model of Vale is divided into 4 categories: i) insignificant risk; ii) low risk; iii) moderate risk; iv) high risk.

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Depending on the counterparty’s credit risk or on the credit risk profile of a given line of business, risk mitigation strategies — such as credit insurance, mortgage, corporate guarantees or secured payment methods like letters of credit and cash against documents — are used to manage Vale’s credit risk.
d) Market risk
The monitoring and monthly evaluations of the consolidated risk exposure allow us to evaluate the financial results and the impact on Vale’s cash flow, as well as guarantee that the initial goals will be achieved. The fair value measurements of the trades are reported weekly to Management.
All derivative trades were recognized in our balance sheet at fair value and their respective gains or losses were recognized in earnings, note 23
Considering the nature of Vale’s business and operations, the main market risk factors to which the Company is exposed are:
    Interest rates;
 
    Foreign exchange;
 
    Products prices and input and other costs;
Foreign exchange and interest rate derivative positions
The Company’s cash flow is subject to volatility of several different currencies against the US Dollar. While most of our product prices are indexed to US dollars, most of our costs, disbursements and investments are indexed to currencies other than the US Dollar, mainly Brazilian Reais and Canadian dollars.
In order to reduce the company’s potential cash flow volatility arising from this currency mismatch we use FX derivatives instruments. Our main strategy is to swap Debts linked to BRL into USD so as to attenuate the impact of BRL/USD exchange rate as most of our revenues are denominated in USD.
The swap transactions used to convert debt linked to Brazilian reais into US Dollars have similar — and sometimes shorter — settlement dates than the final maturity of the debt instruments. Their amounts are similar to the principal and interest payments, subject to liquidity market conditions. The swaps with shorter settlement dates than the debt’s final maturity are renegotiated through time so that their final maturity matches — or becomes closer — to the debt’s final maturity. At each settlement date, the results on the swap transactions partially offset the impact of the foreign exchange rate in our obligations, contributing to stabilize the cash disbursements in US Dollars for the interest and/or principal payment of our Brazilian Real denominated debt.
In the event of an appreciation (or depreciation) of the Brazilian Real against the US Dollar, the negative (or positive) impact on Vale debt service (interest and/or principal payment) measured in US Dollars will be almost totally offset by a positive (or negative) effect from the swap transaction, regardless of the US dollar / Brazilian Real exchange rate on the payment date.
Vale has also a cash flow exposure to interest rates risks over loans and financings. The US Dollars floating rate debt in the portfolio consists mainly of loans including export pre-payments, commercial banks and multilateral organizations loans. In general, the US Dollar floating rate debt is mainly subject to changes in the Libor. To mitigate the impact of the interest rate volatility on the cash flow, Vale takes advantage of natural hedges allowed by the positive correlation of metal prices and US Dollar floating rates. When natural hedges are not present, Vale enters into financial instruments to obtain the same effect.
e) Operational risk
The Company has a comprehensive risk management program, which provides coverage and protection for all assets, as well as possible losses caused by interruption of production, through a type policy of all risks. This program includes inspections, training on-site and using the structure of various risk committees throughout the Company, its subsidiaries and associates. Vale seeks to align the risks in all areas, providing a unique and uniform treatment, seeking the domestic and international market coverage compatible with a company of its size.
Insurance
With the aim of mitigating the appropriate risks, Vale hires several different types of insurance such as insurance of operational risks and civil responsibility, and a life insurance policy for their employees. The coverage of these policies is contracted in line with the policy of Corporate Risk Management and similar insurance contract by other companies in the mining industry. Among the management instruments, Vale since 2002 have used a captive reinsurance company that allows us to contract insurances on a competitive basis as well as direct access to key international markets of insurance and reinsurance.
 
1   The details for products prices inputs and other costs risks are in the note “Additional information about derivatives financial instruments”, note 23

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Insurance management is performed in Vale with the support of existing insurance committees in the various operational areas of the Company which are composed of various professionals in these units.
6 Acquisitions and Divestments
Fertilizers Businesses
In 2010, Vale acquired 78.92% of the total capital and 99.83% of the voting do capital of Vale Fertilizantes and 100% of the total capital of Vale Fosfatados. In 2011, after the incorporation of Vale Fosfatados by Vale Fertilizantes, Vale interest increased to 84.27%.
The information concerning to the allocation of the purchase price based on the fair value of identifiable assets and assumption liabilities were based in studies realized by the company with the assistance of specialists.
         
Purchase Price
    10,696,105  
Portion attributed to non-controlling interest
    1,416,208  
Book value of proprerty, plant and equipment and mining assets
    (3,664,933 )
Book value of the assets and assumption liabilities, net
    (729,613 )
Adjustment to fair value of property, plant and equipment
    (9,499,360 )
Adjustment to fair value of inventory
    (180,762 )
Deferred income taxes on above adjustments
    3,291,241  
 
     
Goodwill
    1,328,886  
 
     
7 Cash and Cash Equivalents
                                 
    March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
    (unaudited)             (unaudited)          
Cash and bank accounts
    1,688,010       1,211,748       103,688       59,159  
Short-term investments
    17,450,872       12,257,210       10,022,758       4,764,218  
 
                       
 
    19,138,882       13,468,958       10,126,446       4,823,377  
 
                       
Cash and cash equivalents includes cash values, demand deposits, and investment in financial investments with insignificant risk of changes in value, being part reais indexed to CDI and part in US dollars in Time deposits with maturity less than three months.
8 Short-term investments
                 
    Consolidated  
    March 31, 2011     December 31, 2010  
    (unaudited)          
Time deposits
    869,017       2,987,497  
 
           
This includes the financial investments in low risk investments with a maturity of between 91 and 360 days, classified as a financial asset.
9 Accounts Receivables
                                 
    Consolidated     Parent Company  
    March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
    (unaudited)             (unaudited)          
Denominated in “brazilian reals”
    2,518,427       1,861,137       1,655,199       1,595,149  
Denominated in other currencies, mainly US dolar
    10,309,013       12,297,553       12,316,757       16,903,668  
 
                       
 
    12,827,440       14,158,690       13,971,956       18,498,817  
 
                               
Allowance for doubtful accounts
    (197,637 )     (196,384 )     (118,979 )     (120,693 )
 
                       
 
    12,629,803       13,962,306       13,852,977       18,378,124  
 
                       

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10 Inventories
                                 
    Consolidated     Parent Company  
    March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
    (unaudited)             (unaudited)          
Inventories of finished products
    3,796,721       3,100,890       1,557,947       1,534,837  
Inventories in process
    2,325,252       1,657,976              
Inventories of expenditure
    2,188,442       2,833,158       883,385       782,134  
 
                       
Total
    8,310,415       7,592,024       2,441,332       2,316,971  
 
                       
On March 31, 2011, inventory balances include a provision for adjustment to market value of steel industry products in the amount of R$0 (R$4,550 in December 31, 2010).
The cost of inventories recognized in income of the year in relation to the continued operations of the Company was R$8,768,542 on March 31, 2011, and R$6,099,577 on March 31, 2010, at the consolidated, and R$4,139,093 on March 31, 2011, and R$3,296,287 on March 31, 2010 for the parent company.
11 Assets and Liabilities Non Current Held for Sale
  Aluminum
In February 2011, Vale concluded the transaction announced in May 2010 with Norsk Hydro ASA (Hydro), to transfer all of yours interest in Albras-Alumínio Brasileiro S.A. (Albras), Alunorte - Alumina do Norte do Brasil S.A. (Alunorte) and Companhia de Alumina do Pará (CAP), along with their respective off-take rights, outstanding commercial contracts, 60% of Mineração Paragominas S.A., and all of yours other Brazilian bauxite mineral rights.
For this transactions, Vale received R$1,081,225 in cash, and 22% (equivalent to 447,834,465 shares) of Hydro’s outstanding common shares (approximately R$5,866,105, in accordance with the Hydro’s quotation of closing price on the date of the transaction). Vale will also receive two equal tranches in 2013 and 2015 of US$200 million in cash each one, in three and five years after completion of the transaction, related to the remaining payment of 40% of the Mineração Paragominas S.A. After transaction date, Hydro’s investment is being evaluated by equity method.
The gain on this transaction, in the amount of R$2,492,175, was recorded in results as realized gain on assets available for sales (investments in the parent company).
  Kaolin
As part of the portfolio of assets management, Vale is in talks aimed at the sale of liquid assets linked to activity of kaolin. In 2010, Vale sold part of its kaolin’s assets and measured the remaining assets at fair value less cost to sell. The effect of realized and unrealized losses is recognized in income of discontinued operations in 2010. The balances of assets and liabilities classified as held for sale are:
         
    March 31, 2011  
Assets held for sale
       
Property, plant and equipment
    151,311  
Advances to suppliers — energy
     
Inventories
    32,080  
Recoverable taxes
    2,587  
Other assets
    155,391  
 
     
Total
    341,369  
 
     
 
       
Liabilities related to assets held for sale
       
Non-controlling interest
    74,769  
Long-term debt
     
Suppliers
    7,340  
Others
    39,700  
 
     
Total
    121,809  
 
     

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12 Recoverable Taxes
Recoverable taxes are stated at net value of any realized loss and are represented as follows:
                                 
    Consolidated     Parent Company  
    March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
    (unaudited)             (unaudited)          
Income taxes
    874,821       781,656       137,539       137,097  
Value-added tax - ICMS
    938,930       871,074       499,057       479,439  
PIS and COFINS
    1,728,571       1,655,119       1,431,147       1,393,703  
Others
    149,954       100,092       76,876       75,201  
 
                       
Total
    3,692,276       3,407,941       2,144,619       2,085,440  
 
                       
 
                               
Current
    2,926,240       2,795,557       2,013,802       1,960,606  
Non-current
    766,036       612,384       130,817       124,834  
 
                       
 
    3,692,276       3,407,941       2,144,619       2,085,440  
 
                       
13 Investments
                 
Changes in investments (unaudited)   Consolidated     Parenty Company  
Balance as of December 31, 2010
    3,944,565       92,111,361  
 
           
Acquisitions
    6,191,872       1,029,309  
Dividends
          (693,195 )
Cumulated translation adjustment
    (188,709 )     (707,118 )
Equity result
    17,674       5,381,219  
Valuation adjustments
    (2,171 )     (32,284 )
 
           
Balance as of March 31, 2011
    9,963,231       97,089,292  
 
           
 
               
Balance as of December 31, 2019
    4,562,088       87,894,653  
 
           
Acquisitions
    50,000       509,973  
Dividends
    (76,234 )     (1,058,043 )
Cumulated translation adjustment
    8,592       1,135,182  
Equity result
    7,214       2,372,637  
Incorporation
          (352,619 )
Valuation adjustments
          (84,751 )
 
           
Balance as of March 31, 2010
    4,551,660       90,417,032  
 
           

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(VALE LOGO)
                                                 
    Investments     Equity results (unaudited)     Received dividends (unaudited)  
    March 31, 2011     December 31, 2010     March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
    (unaudited)                                      
Major subsidiaries and affiliated companies
                                               
Direct and indirect subsidiaries
                                               
ALBRAS — Alumínio Brasileiro S.A. (a)
          1,087,500             (51,696 )            
ALUNORTE — Alumina do Norte do Brasil S.A. (a)
          2,731,679             4,947              
Aços Laminados do Pará
    116,213       84,516       (6,712 )     (6,417 )            
Belém — Administrações e Participações LTDA. ( b )
                                   
BSG Resources S.À R.L
    803,295       832,859       (11,404 )                  
Cadam S.A (a)
    122,516       124,170       (1,654 )     (7,181 )            
Companhia Portuária da Baía de Sepetiba — CPBS
    376,353       346,525       29,728       29,078              
Companhia Coreano-Brasileira de Pelotização — KOBRASCO
    208,252       207,813       16,274       11,552              
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS
    201,251       212,446       4,703       14,314              
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO
    152,605       143,496       16,209       2,643              
Companhia Nipo-Brasileira de Pelotização — NIBRASCO
    328,896       333,380       13,541       9,291              
Ferrovia Norte Sul S.A.
    1,734,434       1,743,480       (9,050 )     (4,047 )     2,922        
Ferrovia Centro Atlantica ( c )
    2,028,966       1,916,286       (61,320 )     (22,879 )            
Minerações Brasileiras Reunidas S.A. — MBR
    3,246,741       3,291,156       (71,467 )     25,901              
Mineração Corumbá Reunidas S.A
    1,227,654       1,225,371       4,010       (48,597 )            
Mineração Paragominas
          1,812,936       (45,810 )                  
Mineração Rio do Norte S.A.
    238,901       235,567       3,334       1,816              
Minas da Serra Geral S.A. — MSG
    59,259       57,972       1,287       315              
MRS Logística S.A.
    868,530       851,202       60,492       23,123              
Salobo Metais S.A. ( c )
    3,534,409       3,270,948       (4,839 )     18,060              
Samarco Mineração S.A.
    610,777       676,146       346,719       84,893       412,088       91,240  
Sociedad Contractual Minera Tres Valles
    466,221       394,076       (771 )                  
Vale Austria Holdings GMBH (d)
    2,457,962       1,549,736       1,359,929       30,248              
Vale Fertilizantes S.A
    10,607,870       7,384,350       58,881                    
Vale Fosfatados S.A.
          3,217,447       1,018                    
Vale Manganês S.A.
    724,020       890,074       39,424       20,076       183,792        
Vale Florestar
    233,274       235,366       (2,092 )                  
Vale Canada Limited
    9,274,882       9,250,155       508,364       (386,844 )            
Vale International S.A. (d )
    45,462,280       42,441,747       3,108,676       2,518,360              
Vale Colombia Ltd
    1,042,623       825,860       (26,703 )     1,373              
Vale Soluções em Energia
    237,859       198,622       (14,447 )                  
Urucum Mineração
    129,832       120,006       9,826       3,681       41,117        
Biopalma da Amazonia SPA
    479,048                                
Others
    151,138       473,909       37,399       93,413              
 
                                   
 
    87,126,061       88,166,796       5,363,545       2,365,423       639,919       91,240  
 
                                   
Affiliated companies
                                               
LOG-IN — Logística Intermodal S/A
    223,908       223,908             (1,456 )            
Henan Longyu Energy Resources
    449,475       416,092       39,295       35,700              
Thyssenkrupp CSA Companhia Siderúrgica do Atlântico
    3,079,550       3,064,924       (14,178 )     (7,661 )            
Norsk Hydro ASA
    5,751,340                                
Tecnored Desenvolvimento Tecnologico S.A.
    89,702       65,855       (1,390 )     (18,188 )            
Korea Nickel Corp.
    9,703       18,382       612       592              
Zhuhai YPM Pellet e Co., Ltd.
    42,783       42,180       (1,165 )     6,012              
Others
    316,770       113,224       (5,500 )     (7,785 )            
 
                                   
 
    9,963,231       3,944,565       17,674       7,214              
 
                                   
 
    97,089,292       92,111,361       5,381,219       2,372,637       639,919       91,240  
 
                                   
 
(a)   Investments available for sale in 2010
 
(b)   Incorporated in the Mineração Naque
 
(c)   Investments balances contain values of Advance for Future Capital Increase
 
(d)   Excluded from stockholder’s equity, the entities’ investments already detailed

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14 Intangible
                                         
    Consolidated ( Unaudited )  
            Concessions and                    
    Goodwill     subconcessions     Right to use     Others     Total  
Costs:
                                       
Balance at December 31, 2010
    8,654,307       11,287,322       1,138,336       1,793,186       22,873,151  
Additions
          716,310       12,498       98,566       827,374  
Disposals
          (674,356 )     (4,201 )     (28,464 )     (707,021 )
Transfers
          178,000             (158 )     177,842  
Translation adjustments
    2,502             (9,662 )           (7,160 )
 
                             
Balance at March 31, 2011
    8,656,809       11,507,276       1,136,971       1,863,130       23,164,186  
 
                             
 
                                       
Amortization:
                                       
Balance at December 31, 2010
          (3,407,820 )     (84,906 )     (1,106,637 )     (4,599,363 )
Additions
          (138,223 )     (5,988 )     (109,072 )     (253,283 )
Disposals
          589,069             12,751       601,820  
Transfers
          (178,000 )           158       (177,842 )
 
                             
Balance at March 31, 2011
          (3,134,974 )     (90,894 )     (1,202,800 )     (4,428,668 )
 
                                       
 
                             
Net Balance
    8,656,809       8,372,302       1,046,077       660,330       18,735,518  
 
                             
 
                                       
Costs:
                                       
Balance at December 31, 2009
    7,180,763       10,610,571       1,325,129       1,423,780       20,540,243  
Additions
    1,328,886       648,181       17,955       58,090       2,053,112  
Disposals
          (166,494 )           (19,000 )     (185,494 )
Translation adjustments
    144,658             10,040             154,698  
 
                             
Balance at March 31, 2010
    8,654,307       11,092,258       1,353,124       1,462,870       22,562,559  
 
                             
 
                                       
Amortization:
                                       
Balance at December 31, 2009
          (3,197,247 )     (59,000 )     (841,799 )     (4,098,046 )
Additions
          (115,713 )     (5,988 )     (44,008 )     (165,709 )
Disposals
          38,284             4,228       42,512  
Translation adjustments
                9,055             9,055  
 
                             
Balance at March 31, 2010
          (3,274,676 )     (55,933 )     (881,579 )     (4,212,188 )
 
                                       
 
                             
Net Balance
    8,654,307       7,817,582       1,297,191       581,291       18,350,371  
 
                             
                                         
    Parent Company ( unaudited )  
            Concessions and                    
    Goodwill     subconcessions     Right to use     Others     Total  
Costs:
                                       
Balance at December 31, 2010
    8,654,307       6,189,850       715,676       1,329,150       16,888,983  
Additions
          81,567             98,566       180,133  
Disposals
          (557,544 )           (30,104 )     (587,648 )
Transfers
                      (158 )     (158 )
Translation adjustments
    2,502                         2,502  
 
                             
Balance at March 31, 2011
    8,656,809       5,713,873       715,676       1,397,454       16,483,812  
 
                             
 
                                       
Amortization:
                                       
Balance at December 31, 2010
          (2,366,332 )     (84,906 )     (874,637 )     (3,325,875 )
Additions
          (80,959 )     (5,988 )     (109,072 )     (196,019 )
Disposals
          553,255             12,886       566,141  
Transfers
                      158       158  
 
                             
Balance at March 31, 2011
          (1,894,036 )     (90,894 )     (970,665 )     (2,955,595 )
 
                                       
 
                             
Net Balance
    8,656,809       3,819,837       624,782       426,789       13,528,217  
 
                             
 
                                       
Costs:
                                       
Balance at December 31, 2009
    7,180,763       5,811,024       715,676       1,064,780       14,772,243  
Additions
    1,328,886       251,226             58,090       1,638,202  
Disposals
          (149,891 )           (19,000 )     (168,891 )
Translation adjustments
    144,658                         144,658  
 
                             
Balance at March 31, 2010
    8,654,307       5,912,359       715,676       1,103,870       16,386,212  
 
                             
 
                                       
Amortization:
                                       
Balance at December 31, 2009
          (2,241,075 )     (59,000 )     (683,799 )     (2,983,874 )
Additions
          (55,309 )     (5,988 )     (44,008 )     (105,305 )
Disposals
          61,790             7,000       68,790  
 
                             
Balance at March 31, 2010
          (2,234,594 )     (64,988 )     (720,807 )     (3,020,389 )
 
                                       
 
                             
Net Balance
    8,654,307       3,677,765       650,688       383,063       13,365,823  
 
                             

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(VALE LOGO)
15 Property, Plant and Equipment
                                                                 
    Consolidated ( Unaudited )  
                            Computer                     Construction in        
    Land     Buildings     Facilities     Equipment     Mineral assets     Others     progress     Total  
Costs:
                                                               
Balance at December 31, 2010
    593,245       10,792,431       31,756,304       1,222,170       43,645,207       43,264,232       20,529,685       151,803,274  
Additions
                                        4,892,203       4,892,203  
Disposals
          (191,210 )     (1,519,177 )     (198 )     (98,566 )     (945,762 )     (386,322 )     (3,141,235 )
Transfers
    (8,431 )     2,447,532       754,920       (82,650 )     (1,540,195 )     (370,850 )     (1,200,326 )      
Translation adjustments
          (510,762 )     (308,379 )     (5,497 )     (432,983 )     (141,439 )     (1,535,818 )     (2,934,878 )
 
                                               
Balance at March 31, 2011
    584,814       12,537,991       30,683,668       1,133,825       41,573,463       41,806,181       22,299,422       150,619,364  
 
                                               
 
                                                               
Depreciation/ Depletion:
                                                               
Balance at December 31, 2010
          (2,115,889 )     (5,799,491 )     (765,982 )     (2,972,974 )     (10,062,104 )           (21,716,440 )
Additions
          (46,530 )     (227,033 )     (30,236 )     (90,110 )     (701,781 )           (1,095,690 )
Disposals
          190,572       1,519,057             8,357       913,581             2,631,567  
Transfers
          (175,959 )     387,201       82,469       (957,183 )     663,472              
Translation adjustments
          7,677       1,462,713       2,956       69,515       26,405             1,569,266  
 
                                               
Balance at March 31, 2011
          (2,140,129 )     (2,657,553 )     (710,793 )     (3,942,395 )     (9,160,427 )           (18,611,297 )
 
                                               
 
                                                               
Net Balance
    584,814       10,397,862       28,026,115       423,032       37,631,068       32,645,754       22,299,422       132,008,067  
 
                                               
 
                                                               
Costs:
                                                               
Balance at December 31, 2009
    477,304       7,919,556       26,105,215       825,208       32,426,010       36,538,246       31,237,806       135,529,345  
Additions
                                        3,354,333       3,354,333  
Disposals
          (776 )     (68,057 )     (62 )           (66,161 )     (129,666 )     (264,722 )
Transfers
    54,127       1,670,352       1,610,546       261,746       7,345,105       (2,635,814 )     (8,306,062 )      
Translation adjustments
          53,385       55,376       6,734       468,164       539,505       353,757       1,476,921  
 
                                               
Balance at March 31, 2010
    531,431       9,642,517       27,703,080       1,093,626       40,239,279       34,375,776       26,510,168       140,095,877  
 
                                               
 
                                                               
Depreciation/ Depletion:
                                                               
Balance at December 31, 2009
          (2,226,824 )     (9,051,291 )     (780,251 )     (3,471,812 )     (11,051,274 )           (26,581,452 )
Additions
          (50,508 )     (267,077 )     (81,244 )     (38,143 )     (436,870 )           (873,842 )
Disposals
          132       60,709       41             10,123             71,005  
Transfers
          46,569       188,863       (161,814 )     259,985       (333,603 )            
Translation adjustments
          (8,942 )     (15,759 )     (2,918 )     (70,146 )     (31,366 )           (129,131 )
 
                                               
Balance at March 31, 2010
          (2,239,573 )     (9,084,555 )     (1,026,186 )     (3,320,116 )     (11,842,990 )           (27,513,420 )
 
                                               
 
                                                               
Net Balance
    531,431       7,402,944       18,618,525       67,440       36,919,163       22,532,786       26,510,168       112,582,457  
 
                                               

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(VALE LOGO)
                                                                 
    Parent Company ( Unaudited )  
                            Computer                     Construction in        
    Land     Buildings     Facilities     equipment     Mining assets     Others     progress     Total  
Costs:
                                                               
Balance as of December 31, 2010
    361,738       3,425,775       13,252,111       216,753       3,267,659       17,075,281       17,961,535       55,560,852  
Acquisitions
                                        2,460,494       2,460,494  
Disposals
          (188,992 )     (1,518,967 )     (169 )     (13,271 )     (165,866 )     (357,336 )     (2,244,601 )
Transfers
    33,892       64,518       322,527       (71,827 )     4,959       336,280       (690,349 )      
 
                                               
Balance as of March 31, 2011
    395,630       3,301,301       12,055,671       144,757       3,259,347       17,245,695       19,374,344       55,776,745  
 
                                               
 
                                                               
Depreciation/ depletion:
                                                               
Balance as of December 31, 2010
          (882,563 )     (4,672,694 )     (39,844 )     (502,922 )     (5,001,058 )           (11,099,081 )
Acquisitions
          (27,856 )     (497,140 )     (26,177 )     (19,199 )     (199,126 )           (769,498 )
Disposals
          188,992       1,782,451       162       8,357       164,237             2,144,199  
Transfers
          (15,249 )     15,155                   94              
 
                                               
Balance as of March 31, 2011
          (736,676 )     (3,372,228 )     (65,859 )     (513,764 )     (5,035,853 )           (9,724,380 )
 
                                               
 
                                                               
Net balance
    395,630       2,564,625       8,683,443       78,898       2,745,583       12,209,842       19,374,344       46,052,365  
 
                                               
 
                                                               
Costs:
                                                               
Balance as of December 31, 2009
    271,802       3,111,165       14,222,317       904,330       1,975,980       16,545,646       14,255,961       51,287,201  
Acquisitions
                                        1,376,505       1,376,505  
Disposals
          (752 )     (35,302 )     (63 )     (54,128 )     (2,427 )     (171,179 )     (263,851 )
Transfers
    30,944       92,414       412,338       88,019       1,457,142       158,261       (2,239,118 )      
 
                                               
Balance as of March 31, 2010
    302,746       3,202,827       14,599,353       992,286       3,378,994       16,701,480       13,222,169       52,399,855  
 
                                               
 
                                                               
Depreciation/ depletion:
                                                               
Balance as of December 31, 2009
          (779,554 )     (4,469,905 )     (601,960 )     (444,630 )     (5,297,919 )           (11,593,968 )
Acquisitions
          (26,215 )     (95,281 )     (78,743 )     (28,271 )     (66,691 )           (295,201 )
Disposals
          122       27,953       41       58,177       1,681             87,974  
Transfers
          (3,472 )     4,628       (646 )           (510 )            
 
                                               
Balance as of March 31, 2010
          (809,119 )     (4,532,605 )     (681,308 )     (414,724 )     (5,363,439 )           (11,801,195 )
 
                                               
 
                                                               
Net balance
    302,746       2,393,708       10,066,748       310,978       2,964,270       11,338,041       13,222,169       40,598,660  
 
                                               

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(VALE LOGO)
Depreciation of the period allocated to the production cost and to expenses, is R$1,599,038 in March 31, 2011 and R$1,360,305 in March 31, 2010 for the consolidated and R$468,702 in March 31, 2011 and R$493,250 in March 31, 2010 for the parent company.
Residual value of fixed assets given in guarantees of judicial lawsuits corresponding at March 31, 2011 and March 31, 2010 to R$246,359 and R$302,818 in the consolidated, and R$185,301 and R$234,057 in the parent company, respectively.
16 Loans and Financing short-term debt
                 
    Consolidated  
    March 31, 2011     December 31, 2010  
    (unaudited)          
Export-import financing
    726,190       804,754  
Working capital
    241,583       339,716  
 
           
 
    967,773       1,144,470  
 
           
Refer to short-term financing for export denominated in US dollars, with an average interest rate of 1,99% at March 31, 2011.
Long-term debt
                                 
                    Consolidated  
    Current liabilites     Non-Current liabilities  
    March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
    (unaudited)             (unaudited)          
Foreign operations
                               
Loans and financing denominated in the following currencies:
                               
U.S. dollars
    1,829,485       4,061,900       5,451,751       5,416,060  
Other debt securities
    35,831       29,400       452,779       361,590  
Fixed rate notes US dollares
                16,671,373       17,065,330  
Euro
                1,718,700       1,671,000  
Perpetual notes
                127,039       130,260  
Accrued charges
    309,906       400,930              
 
                       
 
    2,175,222       4,492,230       24,421,642       24,644,240  
 
                       
 
                               
Domestic operations
                               
Indexed by TJLP, TR, IGP-M and CDI
    218,959       186,520       7,000,139       6,962,050  
Basket of currencies
    8,144       2,040       231,275       208,244  
Loans in U.S. dollars
    8,756       2,299       1,339,998       1,229,300  
Non-convertible debentures
                4,632,023       4,735,650  
Accrued charges
    288,504       183,310              
 
                       
 
    524,363       374,169       13,203,435       13,135,244  
 
                       
 
    2,699,585       4,866,399       37,625,077       37,779,484  
 
                       
                                 
                    Parent company  
    Current liabilites     Non-Current liabilities  
    March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
    (unaudited)             (unaudited)          
Foreign operations
                               
Loans and financing in:
                               
U.S. dollars
    115,780       235,565       2,416,502       2,530,855  
Other currencies
    5,518       5,016       15,975        
Euro
                1,718,700       1,671,000  
Accrued charges
    15,154       73,166              
 
                       
 
    136,452       313,747       4,151,177       4,201,855  
 
                       
 
                               
Domestics operations
                               
Indexed by TJLP, TR, IGP-M and CDI
    138,977       121,009       6,292,522       6,274,547  
Basket of currencies
    2,292       2,343       231,505       207,044  
Loans in U.S. dollars
    4,141             1,335,225       1,224,316  
Non-convertible debentures
                4,000,000       4,000,000  
Accrued charges
    283,994       179,054              
 
                       
 
    429,404       302,406       11,859,252       11,705,907  
 
                       
 
    565,856       616,153       16,010,429       15,907,762  
 
                       

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The long-term portions at March 31, 2011 have maturity in the following years (unaudited):
                                 
    Consolidated     Parent Company  
2012
    2,010,520       5 %     66,705        
2013
    6,017,767       16 %     102,872       1 %
2014
    2,105,364       6 %     119,761       1 %
2015
    1,593,436       4 %     119,761       1 %
2016 onwards
    25,137,387       67 %     15,601,330       97 %
No due date (Perpetual notes and non-convertible debentures)
    760,603       2 %            
 
                       
 
    37,625,077       100 %     16,010,429       100 %
 
                       
As at March 31, 2010, annual interest rates on long-term debt were as follows (unaudited):
                 
    Consolidated     Parent Company  
Up to 3%
    7,482,753       3,073,440  
3,1% to 5%
    3,789,415       2,787,694  
5,1% to 7% (*)
    15,373,068       1,269,646  
7,1% to 9% (**)
    6,026,308       2,190,651  
9,1% to 11% (**)
    278,340       5,215,613  
Over 11% (**)
    7,244,472       2,039,241  
Variable (Perpetual notes)
    130,306        
 
           
 
    40,324,662       16,576,285  
 
           
 
(*)   Includes the operation of Eurobonds which we have entered derivative financial instrument at a cost of 4.71% per year in US dollars.
 
(**)   Includes non-convertible debentures and other Brazilian real denominated debt that interest at Brazilian Certificate of Deposit (CDI) and Brazilian Government long-term Interest Rates (TJLP) plus a spread. These operations derivative financial instruments were contracted to protect the Company’s exposure to variations in the floating debt in reais. The total contracted amount for these transactions is R$10,742,369, of which R$9,373,949 has an original interest rates above 7.1% per year. The average cost after taking into account the derivative transaction is 3.04% per year in US dollars.
The total average cost of all derivative transactions is of 3.27% per year in US dollars.
In September 2010, Vale signed an agreement with The Export-Import Bank of China and Bank of China Limited to finance the construction of 12 vessels with a capacity of 400,000 dwt (dead weight tonnage — dwt), totaling up to US$1,229 million (equivalent to R$2,048 million). The financing has a total term for payment of 13 years and Vale will receive the funds over the next three years according to the schedule of construction of ships. Until March 31, 2011, US$291 million (equivalent to R$474 million) was disbursed under this facility.
In September 2010, Vale issued US$1 billion (equivalent to R$1,694 million) in notes maturing in 2020 and US$750 million (equivalent to R$1,271 million) in notes maturing 2039. Notes for 2020 will have a coupon of 4.625% per year, payable semi-annually half yearly at a price of 99.030% of face value of the title. The notes of 2039 issued at a price of 110.872% of face value of the title, will be consolidated with the bonus of US$1 billion issued by Vale Overseas in November 2009 with a coupon of 6.875% and maturing in 2039, forming a single series.
In June 2010, Vale established some credit lines totaling R$774 million with the Banco Nacional de Desenvolvimento Econômico Social — BNDES, in order to finance the acquisition of domestic equipments. In March 31, 2011, Vale increased in R$103 million the total amount of credit lines in order to finance the acquisiction of those equipments. Until March 31, 2011, R$262 million was disbursed in this agreement.
In June 2010, a prepayment Export in the amount of US$500 million (equivalent to R$901 million) a captured maturing in 10 years.
Credit lines
Vale has available lines of revolving credit that can be disbursed and paid optionally. On March 31, 2011, the amount available involving credit lines was US$1,600 million (equivalent to R$2,606 million), being US$850 million (equivalent to R$1,384 million) available to Vale International and the remaining for Vale Canada Limited (formerly Vale Inco). Until March 31, 2011, no amounts were withdrawn by Vale International or Vale Canada Limited, but letters of credit were issued totaling US$118 million (equivalent to R$192 million) relating to the line of credit of Canada Vale Limited. In April 2011, Vale and some of its subsidiaries entered into a new revolving credit line agreement with a syndicate of commercial banks. The new credit line, in the amount of US$3 billion (equivalent to R$4,886 million), add to US$1.6 billion of existing revolving credit line.
In January 2011, Vale entered into an agreement with some commercial banks with the guarantee of Italian credit bureau, Servizi Assicurativi Del Commercio Estero S.p.A. (SACE) to provide the amount of US$300 million (equivalent to R$503 million) with a final maturity of 10 years. As of March 31, 2011 we had drawn US$300 million (equivalent to R$489 million) under this facility.

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In October 2010, Vale signed an agreement with Export Development Canada (EDC) to finance its investment program. Under the agreement, EDC will provide a credit line of up to US$1 billion (equivalent to R$1,629 million on March 31, 2011), US$500 million (equivalent to R$815 million on March 31, 2011) for investment in Canada and the remaining US$500 million (equivalent to R$815 million on March 31, 2011) are available to financing of purchases of goods and services of Vale in Canada. On March 31, 2011, Vale disbursed US$250 million (equivalent to R$407 million) in this line.
In May 2008, the Company has signed agreements with the Japan Bank for International Cooperation, in the amount of US$3 billion (equivalent to R$4,886 million on March 31, 2011), and with Nippon Export and Investment Insurance, in the amount of US$2 billion (equivalent to R$3,257 million at March 31, 2011), to finance mining projects, logistics and energy generation. In November 2009, Vale signed a credit line in the amount of US$300 million (equivalent to R$489 million at March 31, 2011), through its subsidiary PT International Nickel Indonesia Tbk (PTI), with Japanese financial institutions, using insurance of Nippon Export and Investment Insurance (NEXI) to finance the construction of the hydroelectric plant of Karebbe, Indonesia. Until March 31, 2011, PT International withdrew US$300 million (equivalent to R$489 million) this facility.
In 2008, Vale has signed a credit line in the amount of US$7,300 million with Banco Nacional de Desenvolvimento Economico e Social — BNDES to finance its investment program. Until March 31, 2011, Vale withdrew R$1,973 million in this line.
Guarantees
On March 31, 2011, R$2 million (December 31, 2010 — R$3 million) of the outstanding debt was secured by receivables. The balance due of R$40,323 million (December 31, 2010 — R$42,642 million) has no guarantees.
Some of the long-term financial instruments contain obligations related to financial indicators. The main indicators are debt on Stockholders’ equity, debt on Earnings Before Interest Tax, Depreciation and Amortization (EBITDA) and interest coverage. Vale is in compliance with the required levels for the indicators.
17 Provision
Vale and its subsidiaries are involved parties in labor, civil, tax and other ongoing lawsuits and are discussing these issues in court proceedings, which, when applicable, are supported by judicial deposits. Provisions for losses resulting from these processes are estimated and updated by the Company management, supported by the legal opinion of the legal board of the Company and by its external legal consultants.
a) Provision for contingences
Provisions that are considered by management of the Company and its legal counsel as necessary to cover possible losses in legal proceedings of any kind are detailed as follows:
                                 
    Consolidated     Parent Company  
    March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
    (unaudited)             (unaudited)          
Tax contingencies
    1,493,718       1,477,488       367,294       324,518  
Civil contingencies
    835,834       893,434       619,741       680,338  
Labor contingencies
    1,318,839       1,277,360       1,110,610       1,072,097  
Environmental contingencies
    63,789       64,059       32,127       30,820  
 
                       
 
                               
Total accrued liabilities
    3,712,180       3,712,341       2,129,772       2,107,773  
 
                       
                                 
    Consolidated     Parent Company  
    March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
    (unaudited)             (unaudited)          
Balance at the beginning of the period
    3,712,341       4,201,617       2,107,773       2,730,560  
Provisions, net of reversals
    136,089       76,307       135,465       (61,458 )
Payments
    (142,124 )     (606,231 )     (115,713 )     (601,677 )
Monetary update
    5,874       40,648       2,247       40,348  
 
                       
Balance at the end of period
    3,712,180       3,712,341       2,129,772       2,107,773  
 
                       
  I)   Provisions for Tax Contingencies
 
      The main nature of tax causes refer to discussions on the basis of calculation of the Financial Compensation for Exploiting Mineral Resources — CFEM and about denials of compensation claims of credits in the settlement of federal taxes. The other causes refer to the charges of Additional Port Workers Compensation — AITP and questions about the location for the purpose of incidence of Service Tax — ISS.

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  II)   Provision for Civil Contingencies
 
      They are related to the demands that involve contracts between Vale and other group companies with their service providers, requiring differences in values due to alleged losses that have occurred due to various economic plans, other demands are related to accidents, actions damages and still others related to monetary compensation in action vindicatory.
 
  III)   Provision for Labor Contingencies
 
      Consist of lawsuits filed by employees and service providers, questioning parcels arising from the employment relationship. The most recurring objects are payment of overtime, hours in “intinere”, hazard pay and unhealthy.
 
      The social security contingencies are also included in this context because arising from parcels of labor, in the case of legal and administrative disputes between the INSS and the Vale/group companies, whose core is the incidence of compulsory social security or not.
In addition to those provisions, there are judicial deposits as at March 31, 2011, December 31, 2010 totaling R$3,133,748, R$3,062,337, in the consolidated company and R$2,367,482 and R$2,312,465 in the parent company, respectively. Judicial deposits are made by us following the court requirements, in order to be entitled to either initiate or continue a legal action. These amounts are released to us, upon receipt of a final favorable outcome from the legal action; in the case of an unfavorable outcome, the deposits are transferred to the prevailing party.
There are also obligations arising from past events whose existence will be confirmed by the occurrence or not of one or more uncertain future events, outside control of the Company. Contingent liabilities are classified as possible losses and are not recognized in the balance sheet of the Company, only disclosed in the notes.
The Company is challenging in court actions for which there is the expectation of possible losses. The company believes that these shares would not fall under the provision, since there is a strong legal foundation for such. These contingent liabilities are distributed among tax, civil, social security, and labor claims, and represent on March 31, 2011 and December 31, 2010, the amount of R$10,076,226 and R$9,605,546 in the consolidated company and R$4,705,863 and R$4,484,876 on the parent company, respectively.
b) Asset Retirement Obligations
The Company uses various judgments and assumptions when measuring the obligations related to discontinuation of use of assets. Changing circumstances, law or technology may affect the estimates and periodically the amount allocated is reviewed and adjusted when necessary. The provision does not reflect duties unclaimed because there is no information about it. The accrued amount is not deducted from the potential costs covered by insurance or indemnities, because their recovery is considered uncertain.
Long term interest rates used to discount to present value and update the provision to March 31, 2011, December 31, 2010 were 7,96%. The recorded liability is periodically updated based on these discount rates plus the inflation index (IGPM) for the period in reference.
The variation in the provision for asset retirement is demonstrated as follows:
                                 
    Consolidated     Parent Company  
    March 31, 2011     December 31, 2010     March 31, 2011     December 31, 2010  
    (unaudited)             (unaudited)          
Accrual in the begining of
    2,591,435       2,086,800       805,265       846,022  
Expenses additions
    68,039       204,536       33,547       132,275  
Financing settlement in the period
    (16,392 )     (78,140 )     (4,412 )     (77,057 )
Estimative review on cash flows
    (130,153 )     383,941             (95,975 )
Cumulative translation adjustment
    2,307       (5,702 )            
 
                       
Accrual in the end of
    2,515,236       2,591,435       834,400       805,265  
 
                       
Current
    115,200       128,281       40,016       44,427  
Non-Current
    2,400,036       2,463,154       794,384       760,838  
 
                       
Total of liabilities accrued
    2,515,236       2,591,435       834,400       805,265  
 
                       

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18 Income Tax and Social Contribution Deferred
The Company’s income is subject to a common taxable rule applicable to all companies in general. The net deferred movements are presented as follows:
                                 
    Consolidated     Parent company (*)  
    Asset     Liability     Total     Total  
Deffered tax balance on December 31, 2010
    2,439,984       (12,947,141 )     (10,507,157 )     (1,785,291 )
 
                               
Net income effects
    236,540       52,866       289,406       202,732  
Cumulative translation adjustment
    72,186       (164,054 )     (91,868 )      
Tax losses consumption
    (151,431 )           (151,431 )      
Defferred social contribution
          (1,042,640 )     (1,042,640 )     (1,042,640 )
Other comprehensive income
          (14,043 )     (14,043 )     (13,399 )
 
                       
Deffered tax balance on December 31, 2010
    2,597,279       (14,115,012 )     (11,517,733 )     (2,638,598 )
 
                       
 
(*)   Changes in Parent company represented by an asset of R$1,978,313 at March 31, 2011 and R$1,788,980 at December 31, 2010 and liabilities of R$4,616,911 at March 31, 2011 and R$3,574,271 at December 31, 2010.
The income tax in Brazil comprises the taxation on income and social contribution on profit. The composite statutory rate applicable in the period presented is 34%. In other countries where we have operations are subjects to vary rates depending on jurisdiction.
The total amount presented as income tax and social contribution results in the financial statements is reconciled with the rates established by law, as follows:
                                 
    Consolidated     Parent Company  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
    (unaudited)             (unaudited)          
Income before tax and social contribution
    13,668,055       2,695,064       12,803,725       2,879,782  
Results of equity investments
    (17,674 )     (7,214 )     (5,381,219 )     (2,372,637 )
Tax effect on non-taxable functional currency
    80,162       (768,482 )            
 
                       
 
    13,730,543       1,919,368       7,422,506       507,145  
Income tax and social contribution at statutory rates - 34%
    (4,668,385 )     (652,585 )     (2,523,652 )     (172,429 )
Adjustments that affects the basis of taxes:
                               
Income tax and social contribution on interest on capital
    728,867       374,000       708,467       374,000  
Tax incentives
    352,631       48,312       284,789       25,168  
Results of overseas companies taxed by different rates which differs from the parent company rate
    1,200,710       568,261              
Others
    (80,991 )     15,459       17,654       (2,729 )
 
                       
Income tax and social contribution on the income for the period
    (2,467,168 )     353,447       (1,512,742 )     224,010  
 
                       
Vale in Brazil has a tax incentive of partial reduction of income tax due to the amount equivalent to the portion allocated by tax law to transactions in the north and northeast with iron, railroad, manganese, copper, bauxite, kaolin and potash. The incentive is calculated based on the tax profit of the activity (called operating income), takes into consideration the allocation of operating profit by incentive production levels during the periods specified for each product as grantees, and generally expire until 2018. Part of the iron and railroad operations in the North was recognized as incentives by 10 years since 2009. An amount equal to that obtained with the tax saving must be appropriated in a retained earnings reserve account in Stockholders’ equity, and may not be distributed as dividends to Stockholders.
Vale benefits from the allocation of part of income tax due to be reinvested in the purchase of equipment in incentive operation, subject to subsequent approval by the regulatory agency in the incentive area of Superintendence for the Development of Amazonia — SUDAM and the Northeast Development Superintendence — SUDENE. When the reinvestment approved, the tax benefit is also appropriate in retained earnings reserve, which impaired is the distribution as dividends to Stockholders.
Vale also has tax incentives related to the Goro project in New Caledonia (Goro). These tax incentives include total temporary exemptions of the total income tax during the construction phase of the project, and also for a period of 15 years beginning in the first year of commercial production as defined by applicable law, followed by 5 years with 50% of temporary tax incentives. Moreover, Goro is eligible for certain exemptions from indirect taxes such as import tax during the construction phase and throughout the commercial life of the project. Some of these tax benefits, including temporary tax incentives, are subject to an early break; in case the project reaches a specific cumulative rate of return. Goro is taxable for a portion of profits starting in the first year that commercial production is reached, as defined by applicable law. So far, there has been no taxable income realized in New Caledonia. The benefits of this legislation are expected to apply any taxes then applicable when the Goro project is in operation. Vale has obtained tax incentives for projects in Mozambique, Oman and Malaysia, which will take effect when the projects begin commercial operations.

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Vale is subject to the revision of income tax by local tax authorities for up to five years in companies operating in Brazil, ten years for operations in Indonesia and up to seven years for companies with operations in Canada.
In Brazil, the use of compensatory of tax losses accurate not prescribing, and its use is restricted to 30% of taxable income in calculating the annual and quarterly income tax.
19 Employee Benefits Obligations
a) Costs of retirement benefit obligations
In the 2010 annual statements of Vale disclosed that expects to disburse in 2011 with pension plans and other benefits to the consolidated R$540,039 and for the parent company R$222,151. Until March 31, 2011, contributions totaled R$149,338 in consolidated and R$67,305 in the parent company. Vale does not expect significant changes in estimates disclosed in 2010.
                                                 
    Consolidated  
    Three-months period ended (unaudited)  
    March 31, 2011     March 31, 2010  
                    Underfunded                    
    Overfunded     Underfunded     other     Overfunded     Underfunded     Underfunded  
    pension (*)     pension     benefits     pension (*)     pension     other benefits  
Service cost — benefits earned during the period
    920       33,137       13,475             30,191       11,786  
Interest cost on projected benefit obligation
    162,316       173,073       42,151       126,046       159,094       42,804  
Expected return on assets of the plan
    (275,215 )     (154,652 )     (333 )     (209,838 )     (145,719 )      
Amortizations of transitory initial obligation
          14,506       (7,051 )                  
Effect of the limit on paragraph 58 (b)
    111,979                   83,792              
 
                                   
Net pension cost
          66,064       48,242             43,566       54,590  
 
                                   
                                                 
    Parent company  
    Three-months period ended (unaudited)  
    March 31, 2011     March 31, 2010  
    Overfunded     Underfunded     Underfunded     Overfunded     Underfunded     Underfunded  
    pension     pension     other benefits     pension     pension     other benefits  
Service cost — benefits earned during the period
    16       6,928       1,182             6,787       984  
Interest cost on projected benefit obligation
    143,173       76,021       10,584       126,046       63,676       8,598  
Expected return on assets of the plan
    (248,538 )     (69,208 )           (209,838 )     (55,702 )      
Effect on the limit of paragraph 58 (b)
    105,349                   83,792              
 
                                   
Net pension cost
          13,741       11,766             14,761       9,582  
 
                                   
 
(*)   The Company did not recorded on its balance sheet the assets and related counterparts resulting from actuarial valuation of surplus plans, because there is none a clearly evidence about its performance, in accordance as established in the paragraph 58 (b) of CPC 33.
b) Profit Sharing Plan
The Company, based in the Profit Sharing Program — PPR allows defining, monitoring, evaluation and recognition of individual and collective performance of its employees.
The Profit Sharing in the Company for each employee is calculated individually depending on the achievement of goals previously established by indicators blocks according performance as: the Company, Department or Business Unit, Team, individual, and related on the individual competence. The contribution of each block of performance in the score of employees is discussed and agreed each year, between Vale and the unions representing their employees.
The Company accrued expenses / costs related to profit sharing as follows (Unaudited):

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(VALE LOGO)
                                 
    Consolidated     Parent company  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Operacional expenses
    159,177       91,776       131,555       61,739  
Cost of products
    203,888       113,643       158,878       113,643  
 
                       
Total
    363,065       205,419       290,433       175,382  
 
                       
c) Non-current incentive compensation plan
Aiming to promote the vision of “shareholder”, in addition to increasing the ability to retain executives and to strengthen the performance culture supported the Board of Directors approved a Long-term Compensation Plan, for some executives of the Company, which was implemented for 3-year cycles.
Under the terms of the plan, the participants, restricted to certain executives, may allocate a portion of their annual bonus plan. Part of the bonus allocated to the plan is used by the executive to purchase preferred shares of Vale, through a financial institution prescribed under market conditions and without any benefit provided by Vale.
The shares purchased by the executive have no restrictions and can according to its own criteria of each participant, be sold at any time. However, actions need to be kept for a period of three years and executives need to keep your employment with the Vale during this period. The participant shall be entitled, in this manner, to receive from the Vale, a payment in cash equal to the amount of stock holdings based on market quotations. The total number of shares subject to the plan on March 31, 2011 and December 31, 2010 is 2,458,627 and 2,458,627, respectively.
Additionally, certain executives eligible to long-term incentives have the opportunity to receive at the end of a three years cycle a monetary value equivalent to market value of a determined number of shares based on an assessment of their careers and performance factors measured as an indicator of total return to the Stockholders.
We account for the cost of compensation provided to our executives who are under this incentive long-term compensation plan according to requirements of the CPC as 10 “Share-based payments.” Liabilities are measured at fair value on the date of each issuance of the report, based on market rates. The compensation costs incurred are recognized by the vesting period defined in three years. On March 31, 2011 and December 31, 2010, we recognized a provision of R$206,184 and R$199,730, respectively, in income.

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20 Classification of Financial Instruments
The assets and liabilities are classified into four categories of measurement: assets and liabilities at fair value through income (not including derivatives designated as hedges), assets available for sale, loans and receivables and held to maturity.
The classification of financial assets and liabilities is shown in the following tables:
                                         
    Consolidated ( Unaudited)  
            At fair value through     Derivatives designated             Total at March 31,  
    Loans and receivables     profit or loss     as hedge     Available-for-sale     2011  
Financial assets
                                       
Current
                               
Cash and cash equivalents
    19,138,882                         19,138,882  
Short-term investments
    869,017                         869,017  
Derivatives at fair value
          93,193       75,255             168,448  
Assets available-for-sale
                      15,522       15,522  
Accounts receivable from customers
    12,629,803                         12,629,803  
Related parties
    185,829                         185,829  
 
                             
 
    32,823,531       93,193       75,255       15,522       33,007,501  
 
                                       
Non current
                                       
Related parties
    15,807                         15,807  
Loans and financing
    499,396                         499,396  
Derivatives at fair value
          763,006                   763,006  
 
                             
 
    515,203       763,006                   1,278,209  
 
                             
Total of financial assets
    33,338,734       856,199       75,255       15,522       34,285,710  
 
                             
Financial liabilities
                                       
Current
                                       
Suppliers and contractors
    6,739,356                         6,739,356  
Derivatives at fair value
          40,687                   40,687  
Current portion of long-term debt
    2,699,585                         2,699,585  
Loans and financing
    967,773                         967,773  
Related parties
    34,319                         34,319  
 
                             
 
    10,441,033       40,687                   10,481,720  
 
                                       
Non current
                                       
Derivatives at fair value
          876       98,550             99,426  
Loans and financing
    37,625,077                         37,625,077  
Related parties
    236                         236  
Debentures
    2,258,268                         2,258,268  
 
                             
 
    39,883,581       876       98,550             39,983,007  
 
                                       
 
                             
Total of financial liabilities
    50,324,614       41,563       98,550             50,464,727  
 
                             

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(VALE LOGO)
                                         
    Consolidated  
            At fair value through     Derivatives designated             Total at December 31,  
    Loans and receivables     profit or loss     as hedge     Available-for-sale     2010  
Financial assets
                                       
Current
                                       
Cash and cash equivalents
    13,468,958                         13,468,958  
Short-term investments
    2,987,497                         2,987,497  
Derivatives at fair value
          51,423       35,847             87,270  
Assets available-for-sale
                      20,897       20,897  
Accounts receivable from customers
    13,962,306                         13,962,306  
Related parties
    90,166                         90,166  
 
                             
 
    30,508,927       51,423       35,847       20,897       30,617,094  
 
                                       
Non-current
                                       
Related parties
    8,032                         8,032  
Loans and financing
    274,464                         274,464  
Derivatives at fair value
          501,722                   501,722  
 
                             
 
    282,496       501,722                   784,218  
 
                             
Total of financial assets
    30,791,423       553,145       35,847       20,897       31,401,312  
 
                             
 
                                       
Financial liabilities
                                       
Current
                                       
Suppliers and contractors
    5,803,709                         5,803,709  
Derivatives at fair value
          92,182                   92,182  
Current portion of long-term debt
    4,866,399                         4,866,399  
Loans and financing
    1,144,470                         1,144,470  
Related parties
    24,251                         24,251  
 
                             
 
    11,838,829       92,182                   11,931,011  
 
                                       
Non-current
                                       
Derivatives at fair value
          14,929       87,751             102,680  
Loans and financing
    37,779,484                         37,779,484  
Related parties
    3,362                         3,362  
Debentures
    2,139,923                         2,139,923  
 
                             
 
    39,922,769       14,929       87,751             40,025,449  
 
                                       
 
                             
Total of financial liabilities
    51,761,598       107,111       87,751             51,956,460  
 
                             
 
    Parent Company (Unaudited)  
            At fair value     Derivatives                
    Loans and     through profit or     designated as             Total at March 31,  
    receivables     loss     hedge     Available-for-sale     2011  
Financial assets
                                       
Current
                                       
Cash and cash equivalents
    10,126,446                         10,126,446  
Derivatives at fair value
          1,139       75,255             76,394  
Accounts receivables from customers
    13,852,977                         13,852,977  
Related parties
    2,168,941                         2,168,941  
 
                             
 
    26,148,364       1,139       75,255             26,224,758  
 
                                       
Non-current
                                       
Related parties
    1,930,346                         1,930,346  
Loans and financing
    168,162                         168,162  
Derivatives at fair value
          450,348                   450,348  
 
                                       
 
                             
Total of financial assets
    28,246,872       451,487       75,255             28,773,614  
 
                                       
Financial liabilities
                                       
Current
                                       
Suppliers and contractors
    2,843,389                         2,843,389  
Current portion of long-term debt
    565,856                         565,856  
Related parties
    5,540,320                         5,540,320  
 
                             
 
    8,949,565                         8,949,565  
 
                                       
Non-current
                                       
Loans and financing
    16,010,429                         16,010,429  
Related parties
    26,748,541                         26,748,541  
Debentures
    2,258,268                         2,258,268  
 
                             
 
    45,017,238                         45,017,238  
 
                             
Total of financial liabilities
    53,966,803                         53,966,803  
 
                             

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(VALE LOGO)
                                         
    Consolidated  
            At fair value     Derivatives                
    Loans and     through profit or     designated as             Total at December  
    receivables     loss     hedge     Available-for-sale     31, 2010  
Financial assets
                                       
Current
                                       
Cash and cash equivalents
    4,823,377                         4,823,377  
Derivatives at fair value
          854       35,847             36,701  
Accounts receivables from customers
    18,378,124                         18,378,124  
Related parties
    1,123,183                         1,123,183  
 
                             
 
    24,324,684       854       35,847             24,361,385  
 
                                       
Non-current
                                       
Related parties
    1,936,328                         1,936,328  
Loans and financing
    163,775                         163,775  
Derivatives at fair value
          284,127                   284,127  
 
                             
 
    2,100,103       284,127                   2,384,230  
 
                                       
 
                             
Total of financial assets
    26,424,787       284,981       35,847             26,745,615  
 
                             
 
                                       
Financial liabilities
                                       
Current
                                       
Suppliers and contractors
    2,863,317                         2,863,317  
Current portion of long-term debt
    616,153                         616,153  
Related parties
    5,325,746                         5,325,746  
 
                             
 
    8,805,216                         8,805,216  
 
                                       
Non-current
                                       
Loans and financing
    15,907,762                         15,907,762  
Related parties
    27,597,237                         27,597,237  
Debentures
    2,139,923                         2,139,923  
 
                             
 
    45,644,922                         45,644,922  
 
                                       
 
                             
Total of financial liabilities
    54.450.138                         54.450.138  
 
                             
21 Fair Value Estimation
The Company reports its assets and liabilities at fair value, based on relevant accounting pronouncements that define fair value, a framework for measuring fair value, which refers to evaluation concepts and practices and requires certain disclosures about fair value.
Due to the short-term cycle, it is assumed that the fair value of cash and cash equivalents balances, short-term investments, accounts receivable and accounts payable are close to their book values. For measurement and determination of fair value, the Company uses various methods including market approaches, income or cost. Based on these approaches, the Company assumes the value that market participants would use when pricing the asset or liability, including assumptions about risks and inherent risks in the inputs used in valuation techniques.
These entries can be easily observed, confirmed by the market or not observed. The Company uses techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs. According to the pronouncement, those inputs to measure the fair value are classified into three levels of hierarchy. The financial assets and financial liabilities recorded at fair value should be classified and disclosed in accordance with the following levels:
 Level 1 — Unadjusted quoted prices on an active, liquid and visible market for identical assets or liabilities that are accessible at the measurement date;
 Level 2 — Quoted prices (adjusted or not) for identical or similar assets or liabilities on active markets, inputs other than quoted prices that are not observed on level 1, either directly or indirectly, for the term of the asset or liability; and
 Level 3 - Assets and liabilities, which quoted prices, do not exist, or those prices or valuation techniques are supported by little or no market activity, unobservable or illiquid. At this point fair market valuation becomes highly subjective.

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(VALE LOGO)
The tables below present the assets and liabilities of the parent company and consolidated measured at fair value on March 31, 2011 and December 31, 2010.
                                                                 
    Consolidated (Unaudited)     Parenty Company (Unaudited)  
    March 31, 2011     March 31, 2011  
    Level 1     Level 2     Level 3     Total     Level 1     Level 2     Level 3     Total  
Assets
                                                               
Current
                                                               
- Derivatives
                                               
At fair value through profit or loss
    25,424       67,769             93,193             1,139             1,139  
Derivatives designated as hedges
          75,255             75,255             75,255             75,255  
 
                                               
 
    25,424       143,024             168,448             76,394             76,394  
Available-for-sale
                                                               
- Financial assets available-for-sale
    15,522                   15,522                          
 
                                               
 
    40,946       143,024             183,970             76,394             76,394  
Non-current
                                                               
- Derivatives
                                               
At fair value through profit or loss
    570       762,436             763,006             450,348             450,348  
Derivatives designated as hedges
                                               
 
                                               
 
    570       762,436             763,006             450,348             450,348  
 
                                               
Total of financial assets
    41,516       905,460             946,976             450,348             450,348  
 
                                               
 
                                                               
Liabilities
                                                               
Current
                                                               
- Derivatives
                                               
At fair value through profit or loss
          40,687             40,687                          
Derivatives designated as hedges
                                               
 
                                               
 
          40,687             40,687                          
Non-current
                                                               
- Derivatives
                                               
At fair value through profit or loss
          876             876                          
Derivatives designated as hedges
          98,550             98,550                          
 
                                               
 
          99,426             99,426                          
 
                                                               
- Stockholders’ debentures
          2,258,268             2,258,268             2,258,268             2,258,268  
 
                                               
 
          2,357,694             2,357,694             2,258,268             2,258,268  
 
                                               
Total of financial liabilities
          2,398,381             2,398,381             2,258,268             2,258,268  
 
                                               

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(VALE LOGO)
                                                                 
    Consolidated     Parenty Company  
    December 31, 2010     December 31, 2010  
    Level 1     Level 2     Level 3     Total     Level 1     Level 2     Level 3     Total  
Assets
                                                               
Current
                                                               
- Derivatives
                                               
At fair value through profit or loss
    21,660       29,763             51,423             36,701             36,701  
Derivatives designated as hedges
          35,847             35,847                          
 
                                               
 
    21,660       65,610             87,270             36,701             36,701  
Available-for-sale
                                                               
- Financial assets available-for-sale
    20,897                   20,897                          
 
                                               
 
    42,557       65,610             108,167             36,701             36,701  
Non-current
                                                               
- Derivatives
                                               
At fair value through profit or loss
          501,722             501,722             284,127             284,127  
Derivatives designated as hedges
                                               
 
                                               
 
          501,722             501,722             284,127             284,127  
 
                                               
Total of financial assets
    42,557       567,332             609,889             320,828             320,828  
 
                                               
 
                                                               
Liabilities
                                                               
Current
                                                               
- Derivatives
                                               
At fair value through profit or loss
    19,650       72,532             92,182                          
Derivatives designated as hedges
                                               
 
                                               
 
    19,650       72,532             92,182                          
Non-current
                                                               
- Derivatives
                                               
At fair value through profit or loss
    784       14,145             14,929                          
Derivatives designated as hedges
          87,751             87,751                          
 
                                               
 
    784       101,896             102,680                          
 
                                                               
- Stockholders’ debentures
          2,139,923             2,139,923             2,139,923             2,139,923  
 
                                               
 
    784       2,241,819             2,242,603             2,139,923             2,139,923  
 
                                               
Total of financial liabilities
    20,434       2,314,351             2,334,785             2,139,923             2,139,923  
 
                                               
Methods and Techniques of Evaluation
    Assets and liabilities at fair value through profits or loss
      Comprise derivatives not designated as hedges and stockholders’ debentures.
 
  o   Derivatives designated or not as hedge
      We used evaluation methodologies commonly employed by participants in the derivatives market to the estimated fair value. The financial instruments were evaluated by calculating their present value through the use of curves that impact the instrument on the dates of verification. The curves and prices used in the calculation for each group of instruments are detailed in the “market curves”.
 
      The pricing method used in the case of European options is the Black & Scholes model, widely used by market participants for valuing options. In this model, the fair value of the derivative is a function of volatility and price of the underlying asset, the exercise price of the option, the interest rate and period to maturity. In the case of options when the income is a function of the average price of the underlying asset over a period of life of the option, called Asian, we use the model of Turnbull & Wakeman, also widely used to price this type of option. In this model, besides the factors that influence the option price in the Black-Scholes model, is considered the forming period of the average price.
 
      In the case of swaps, both the present value of the active tip and the passive tip are estimated by discounting cash flows by the interest rate of the currency in which the swap is denominated. The difference between the present value of active tip and passive tip of swap generates its fair value.
 
      In the case of swaps tied to TJLP “Long-Term Interest Rate”, the calculation of fair value considers the TJLP constant, that is, projections of future cash flows in brazilian real are made considering the last TJLP disclosed.
 
      Contracts for the purchase or sale of products, inputs and costs of selling with future settlement are priced using the forward curves for each product. Typically, these curves are obtained in the stock exchange where the products are

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      traded, such as the London Metals Exchange (LME), the COMEX (Commodity Exchange) or other providers of market prices. When there is no price for the desired maturity, Vale uses interpolation between the available maturities.
  o   Stockholders’ Debentures
      Their fair values are measured based on market approach, and their reference prices are available on the secondary market.
 
    Available-for-sale assets
 
      Comprise the assets that are neither held for trading nor held-to-maturity, for strategic reasons, and have readily available price on the market. Investments are valued based on quoted prices in active markets where available. When there is no market value, we use inputs other than quoted prices.
Measurement of Fair Value Compared to the Accounting Balance
For the loans allocated in the level 1, the evaluation method used to estimate the fair value of debt is the market approach to the contracts listed on the secondary market. And for the loans allocated in the level 2, the fair value for both fixed-indexed rate debt and floating rate is determined from the discounted cash flow using the future values of the Libor rate and the curve of Vale’s Bonds (income approach).
The fair values and carrying amounts of non-current loans (net of interest) are shown in the table below:
                                 
    Consolidated (Unaudited)  
    Balance as per March 31,     Fair value at March 31,              
    2011     2011     Level 1     Level 2  
Loans (long term)*
    39,726,252       41,188,194       28,772,614       12,415,580  
 
*   net of interest of R$584.410
                                 
    Consolidated  
    Balance as per December     Fair value at December              
    31,2010     31,2010     Level 1     Level 2  
Loans (long term)*
    42,061,643       44,232,611       33,607,254       10,625,357  
 
*   net of interest of R$584
                                 
    Parent Company (Unaudited)  
    Balance as per March 31,     Fair value at March 31,              
    2011     2011     Level 1     Level 2  
Loans (long term)*
    16,277,137       16,155,930       9,773,055       6,382,875  
 
*   net of interest of R$299.148
                                 
    Parent Company  
    Balance as per December     Fair value at December              
    31,2010     31,2010     Level 1     Level 2  
Loans (long term)*
    16,271,695       16,628,059       13,943,811       2,684,248  
 
*   net of interest of R$252,220

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22 Stockholders’ Equity
a) Capital
As at December 31, 2010 the capital was R$50.000.000 corresponding to 5,365,304,100 (3,256,724,482 common and 2,108,579,618 preferred) shares with no par value.
                         
Shareholders   Common (ON)     Preferred (PNA)     Total  
Valepar S.A.
    1,716,435,045       20,340,000       1,736,775,045  
Brazilian government (Tesouro Nacional / BNDES / INSS / FPS)
          12       12  
Foreign investors — ADRs
    788,643,403       799,425,287       1,588,068,690  
FMP — FGTS
    102,366,447             102,366,447  
PIBB — BNDES
    2,913,190       3,726,849       6,640,039  
BNDESPar
    218,386,481       69,432,770       287,819,251  
Foreign institutional investors in the local market
    140,556,985       342,549,937       483,106,922  
Institutional investors
    186,746,010       420,671,600       607,417,610  
Retail investors in Brazil
    53,301,527       352,783,601       406,085,128  
Treasury stock in Brazil
    47,375,394       99,649,562       147,024,956  
 
                 
Total
    3,256,724,482       2,108,579,618       5,365,304,100  
 
                 
Each holder of common and preferred class A shares is entitled to one vote for each share on the issues presented in the general assembly, except the election of the Board, which is restricted to holders of common shares. The Brazilian government owns twelve special preferred shares, which confer permanent rights to veto over specific items.
The Company is registered with the Securities and Exchange Commission — SEC, which allows its preferred shares and common shares to be traded on the New York Stock Exchange — NYSE in the form of ADR — American Depositary Receipts since June 2000 and March 2002 respectively. Each ADR represents 1 (one) preferred Class “A” or common share, negotiated with the codes “VALEP” and “VALE”, respectively.
Hong Kong Depositary Receipts evidencing our Common Shares and Class A Preferred Shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited since December 8, 2010, under the stock code “6210” and “6230”, respectively. Each Common Hong Kong Depositary Receipt represents one Common Share and each Class A Preferred Depositary Receipt represents one Class A Preferred Share.
The holders of common and preferred shares has the same right to receive a mandatory minimum dividend of 25% of annual adjusted net income, based on the books in Brazil, with the approval of the annual general meeting of Stockholders. In the case of preferred Stockholders, this dividend can not be less than 6% of preferred capital determined on the basis of statutory accounting records or, if greater, 3% of equity value per share. This dividend is considered legal or statutory obligation.
The directors and executive officers as a group hold 257,294 common shares and 1,145,338 preferred shares.
The Board of Directors may, regardless of statutory reform, deliberate the issuance of new shares (authorized capital), including the capitalization of profits and reserves to the extent authorized of 3,600,000,000 common shares and 7,200,000,000 preferred shares, all no-par-value shares.
b) Resources linked to the future mandatory conversion in shares
The mandatory convertible notes to be settled as at March 31, 2011 are presented:
                                         
    Date     Amount (thousands of reais)        
Series   Emission     Expiration     Gross     Net of changes     Coupon  
Series VALE and VALEP - 2012
  July/2009     Junho/2012       1.858       1.523       6,75% a.a.  
The securities have coupons payable quarterly and are entitled to receive additional compensation equivalent to cash distribution paid to holders of American Depositary Shares (ADS). These notes were bifurcated between the equity instruments and liabilities.
Linked resources for future conversion, net of taxes, are equivalent to the maximum quantity of common and preferred shares, as shown below. All shares are currently held in treasury stock.
                                 
    Maximum amount of shares     Amount (thousands of reais)  
Series   Common     Preferred     Common     Preferred  
Series VALE and VALEP - 2012
    18.415.859       47.284.800       473       1.050  

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In April 2011 (subsquent event), Vale will pay additional remuneration to holders of mandatorily convertible notes, series VALE-2012 and VALE P-2012, in the amount of R$1.627851 e R$1.882788 per note, respectively. These amounts in reais will be converted in US$ by the exchange rate prevaling in April 29, 2011.
In January 2011, Vale paid additional remuneration to holders of mandatorily convertible notes, series VALE-2012 and VALEP-2012, R$0.7776700 to R$0.8994610, respectively, and in October 2010, VALE-2012 and VALEP-2012, R$1.381517 and R$1.597876 per note, respectively.
In June 2010, the notes of Rio and Rio P series were converted into ADSs and representing a total of 49,305,205 common shares and 26,130,033 preferred class A shares, respectively. The conversion was performed using 75,435,238 shares in treasury stock held in by the Company. The difference between the amount converted and the book value of the shares of R$2,028 was recognized as capital reserve in Stockholders’ equity.
In April 2010, the Company paid additional interest to holders of mandatorily convertible notes, series RIO and RIO P, R$0.722861 and R$0.857938 per note, respectively, and series VALE-2012 and VALE.P-2012, R$1.042411 and R$1.205663 per note, respectively.
c) Treasury stocks
In September 2010, the Board of Directors approved the repurchase shares program up to the amount of US$2 billion involving up to 64,810,513 common shares and 98,367,748 preferred shares. The shares remain in treasury stock for future sale or cancellation. The repurchase program was completed in October 2010 when the financial limit approved by the Board of Directors was reached.
On March 31, 2011, there are 147,024,956 treasury stocks, in the amount of R$4,826,127, as follows (unaudited):
                                                                         
Classes   Shares quantity     Unit acquisition cost     Average quoted market price  
    December 31, 2010     Addition     reduction     March 31, 2011     Average     Low(*)     High     March 31, 2011     December 31, 2010  
Preferred
    99,649,571             (9 )     99,649,562       34.69       14.02       46.50       49.61       45.08  
Common
    47,375,394                   47,375,394       28.90       20.07       52.96       56.21       51.50  
                                                         
Total
    147,024,965             (9 )     147,024,956                                          
                                                         
Shares value with splits: R$1,17 preferred and R$1,67 common.
d) Basic and diluted earnings per share
Basic earnings per share
Basic earnings per share are calculated by dividing the profit attributable to Stockholders of the company by the weighted average number of shares outstanding (total shares less treasury stock).
Diluted earnings per share
Diluted earnings per share are calculated by adjusting the weighted average quantity of shares outstanding to assume conversion of all potential diluted shares. The Company has in its records, mandatorily convertible notes into shares, which will be converted using treasury stock held by the Company. It is assumed that the convertible debt was converted into common shares and net income is adjusted to eliminate interest expense less the tax effect. These notes were recorded as an equity instrument, mainly because there is no option, both for the company and for the holders to liquidate, all or part of, the transactions with financial resources, therefore, recognized net of financial charges, as specific component of Stockholders’ equity.

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The values of basic and diluted earnings per share were calculated as follows (Unaudited):
                 
    Consolidated  
    March 31, 2011     March 31, 2010  
Net income from continuing operations attributable to the Company’s stockholders
    11,200,887       3,103,792  
 
           
Discontinued operations, net of tax
          (224,448 )
 
           
Net income attributable to the Company’s stockholders
    11,200,887       2,879,344  
 
               
Interest to convertible notes linked to preferred
    (11,672 )      
Interest to convertible notes linked to ordinary
    (4,432 )      
 
           
 
               
Interest to convertible notes linked to ordinary
    11,184,783       2,879,344  
 
           
 
               
Income available to preferred stockholders
    4,252,372       1,089,956  
Income available to common stockholders
    6,793,340       1,707,506  
Income available to convertible notes linked to preferred shares
    100,089       41,634  
Income available to convertible notes linked to common shares
    38,982       40,248  
Weighted average number of shares outstanding (thousands of shares) — preferred shares
    2,008,930       2,030,998  
Weighted average number of shares outstanding (thousands of shares) — common shares
    3,209,349       3,181,727  
Treasury preferred shares linked to mandatorily convertible notes
    47,285       77,580  
Treasury common shares linked to mandatorily convertible notes
    18,416       74,998  
 
           
Total
    5,283,980       5,365,303  
 
           
 
               
Basic
               
Earnings per preferred share
    2.12       0.54  
Earnings per common share
    2.12       0.54  
Diluted
               
Earnings per convertible notes linked to preferred share (*)
    2.36       0.54  
Earnings per convertible notes linked to common share (*)
    2.36       0.54  
 
               
Continuous operations
               
Basic
               
Earnings per preferred share
    2.12       0.58  
Earnings per common share
    2.12       0.58  
Diluted
               
Earnings per convertible notes linked to preferred share (*)
    2.36       0.58  
Earnings per convertible notes linked to common share (*)
    2.36       0.58  
 
               
Discontinued operations
               
Basic
               
Earnings per preferred share
          (0.04 )
Earnings per common share
          (0.04 )
Diluted
               
Earnings per convertible notes linked to preferred share (*)
          (0.04 )
Earnings per convertible notes linked to common share (*)
          (0.04 )
e) Remuneration of Stockholders
In April 2011 (subsequent event), the Board of Directors approved the payment on April 29, 2011, of the first installment of interest on capital, in the amount of R$3,174 million, corresponding to R$0.608246495 per outstanding share, common or preferred shares, of Vale’s issuance.
On January 14, 2011, the Board of Directors approved the payment from January 31, 2011, of interest on capital, in the total gross amount of R$1,670 millions, which corresponds to approximately R$0.320048038 per outstanding shares, common or preferred, of Vale issuance. This value is subject to the incidence of income tax withheld at the actual rate.

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23 Derivatives
Effects of Derivatives on the balance sheet
                                                                 
    Consolidated  
    Assets     Liabilities  
    March 31, 2011 (Unaudited)     December 31, 2010     March 31, 2011 (Unaudited)     December 31, 2010  
    Current     Non-current     Current     Non-current     Current     Non-current     Current     Non-current  
Derivatives not designated as hedge
                                                               
Foreign exchange and interest rate risk
                                                               
CDI & TJLP vs. floating & fixed swap
          703,115             499,479                          
EURO floating rate vs. USD floating rate swap
    1,139             853                                
Swap USD fixed rate vs. CDI
                            31,229       313       33,992       328  
Swap USD floating rate vs. fixed rate
                                        602       168  
USD floating rate vs. fixed USD rate swap
                            3,893       563       6,342        
EuroBond Swap
          54,983                                     13,649  
Pre Dollar Swap
          4,338             1,447                          
AUD floating rate vs. fixed USD rate swap
                4,131                                
 
                                               
 
    1,139       762,436       4,984       500,926       35,122       876       40,936       14,145  
Commodities price risk
                                                               
Nickel
                                                               
Purchase/ sell fixed price
    27,059       570       20,864       796       5,565             19,650       784  
Strategic program
                                        24,863        
Copper
                                                               
Copper scrap / Strategic copper
    111                                            
Maritime Freight
                                        2,838        
Bunker oil
    64,884             25,575                                
Coal
                                        3,385        
Copper
                                        510        
 
                                               
 
    92,054       570       46,439       796       5,565             51,246       784  
Derivatives designated as hedge
                                                               
Cash flow hedge
    75,255             35,847                                
Stategic nickel
                                  98,550             87,751  
Aluminum
                                               
 
                                               
 
    75,255             35,847                   98,550             87,751  
 
                                               
Total
    168,448       763,006       87,270       501,722       40,687       99,426       92,182       102,680  
 
                                               
                                 
    Parent Company  
    Assets  
    March 31, 2011     December 31, 2010  
    Current     Non-current     Current     Non-current  
Derivatives not designated as hedge
                               
Foreign exchange and interest rate risk
                               
CDI & TJLP vs. floating & fixed swap
          446,010             282,680  
EURO floating rate vs. USD floating rate swap
    1,139             854        
Swap USD fixed rate vs. CDI
                       
Swap USD floating rate vs. fixed rate
                       
Pre Dollar Swap
          4,338             1,447  
 
                       
 
    1,139       450,348       854       284,127  
Commodities price risk
                               
Nickel
                               
Derivatives designated as hedge
                               
Cash flow hedge
    75,255             35,847        
Aluminum
                       
 
                       
 
    75,255             35,847        
 
                       
Total
    76,394       450,348       36,701       284,127  
 
                       

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Effects of Derivatives on the Income Statement
                                 
    Consolidated (Unaudited)     Parent Company (Unaudited)  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Derivatives not designated as hedge
                               
Foreign exchange and interest rate risk
                               
CDI & TJLP vs. floating & fixed swap
    290,107       (76,284 )     197,763       (53,768 )
Swap USD floating rate vs. fixed rate
    (97 )     1,500              
EURO floating rate vs. USD floating rate swap
    286       (750 )     286       (750 )
AUD floating rate vs. fixed USD rate swap
    (286 )     2,834              
Swap USD fixed rate vs. CDI
    2,778       (254 )            
Swap NDF
          (317 )            
Swap floating Libro vs. fixed Libor
    (99 )     (1,804 )            
EuroBond Swap
    69,883                    
Pre Dollar Swap
    2,891             2,891        
 
                       
 
    365,463       (75,075 )     200,940       (54,518 )
Commodities price risk
                               
Nickel
                               
Purchase/ sell fixed price
    22,757       (15,923 )            
Strategic program
    24,993       (249,371 )            
Copper
                       
Scraps/ strategic copper
    131       8              
Maritime Freight
          (5,078 )            
Bunker oil
    53,394       (11,110 )            
Coal
    (33 )     (2,059 )            
 
                       
 
    101,242       (283,533 )            
Embedded derivatives:
                               
Energy purchase/ aluminum option
    (12,074 )     (40,943 )            
 
                       
 
    (12,074 )     (40,943 )            
Derivatives designated as hedge
                               
Stategic nickel
    (55,353 )                  
 
                       
 
    (55,353 )                  
 
                       
Total
    399,278       (399,551 )     200,940       (54,518 )
 
                       
Financial Income
    467,220       4,342       200,940        
Financial (Expense)
    (67,942 )     (403,893 )           (54,518 )
 
                       
 
    399,278       (399,551 )     200,940       (54,518 )
 
                       
Effects of derivatives on the cash
                                 
    Consolidated (Unaudited)     Parent Company (Unaudited)  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Derivatives not designated as hedge
                               
 
                               
Foreign exchange and interest rate risk
                               
CDI & TJLP vs. floating & fixed swap
    (81,067 )     (51,446 )     (34,435 )     (23,738 )
Swap USD floating rate vs. fixed rate
    1,873       3,069              
AUD floating rate vs. fixed USD rate swap
    (3,866 )     (1,996 )            
Swap USD fixed rate vs. CDI
          18,722              
Swap floating Libro vs. fixed Libor
          246              
 
                       
 
    (83,060 )     (31,405 )     (34,435 )     (23,738 )
Commodities price risk
                               
Nickel
                               
Purchase/ sell fixed price
    (1,517 )     (1,462 )            
Strategic program
          24,853              
Scraps/ strategic copper
    493                    
Maritime Freight
    2,852       (18,105 )            
Bunker oil
    (12,556 )     (22,900 )            
Aluminum
          27,640              
Coal
    3,436                    
 
                       
 
    (7,292 )     10,026              
Embedded derivatives:
                               
Derivatives designated as hedge
                               
Stategic nickel
    55,353                    
Cash flow hedge
    (22,592 )     (6,403 )            
Aluminum
    11,865       23,670              
 
    44,626       17,267              
 
                       
Total
    (45,726 )     (4,112 )     (34,435 )     (23,738 )
 
                       
 
                               
Gains (losses) unrealized derivative
    353,552       (403,663 )     166,505       (78,256 )
 
                       

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Effects of derivatives designated as hedge:
Cash Flow Hedge
The effects of cash flow hedge impact the stockholders’ equity and are presented on the following tables (unaudited):
                                                 
    Parent Company     Non-controlling     Consolidated  
    Currencies     Nickel     Others     Total     interest     Total  
Fair value measurements
    23,838       (69,798 )     1,249       (44,711 )     1,200       (43,511 )
Reclassification to results due to realization
          55,353             55,353             55,353  
 
                                   
Changes in March 31, 2011
    23,838       (14,445 )     1,249       10,642       1,200       11,842  
 
                                   
 
                                               
Fair value measurements
    62,631       (95,928 )     (20,446 )     (53,743 )     8,106       (45,637 )
Reclassification to results due to realization
    (6,403 )           23,669       17,266             17,266  
 
                                   
Changes in March 31, 2010
    56,228       (95,928 )     3,223       (36,477 )     8,106       (28,371 )
 
                                   
The maturities dates of the consolidated financial instruments are as follows:
     
Interest rates/ Currencies   December 2019
Bunker Oil   December 2011
Nickel   December 2012
Copper   February 2011
Additional information about derivatives financial instruments
Value at Risk computation methodology
The Value at Risk of the positions was measured using a delta-Normal parametric approach, which considers that the future distribution of the risk factors — and its correlations — tends to present the same statistic properties verified in the historical data. The value at risk of Vale’s derivatives current positions was estimated considering one business day time horizon and a 95% confidence level.
Contracts subjected to margin calls
Vale has contracts subject to margin calls only for part of nickel trades executed by its wholly-owned subsidiary Vale Canada Ltd. The total cash amount as of March 31 2011 was not relevant.
Initial Cost of Contracts
The financial derivatives negotiated by Vale and its controlled companies described in this document didn’t have initial costs (initial cash flow) associated. Even the option contracts were executed trough zero cost structures (zero cost collars).
The following tables show as of March 31, 2011, the derivatives positions for Vale and controlled companies with the following information: notional amount, fair value, value at risk, gains or losses in the period and the fair value for the remaining years of the operations per each group of instruments:
Protection program for the Real denominated debt indexed to CDI
  CDI vs. USD fixed rate swap — In order to reduce the cash flow volatility, Vale entered into swap transactions to convert the cash flows from debt instruments denominated in Brazilian Reais linked to CDI to U.S. Dollars. In those swaps, Vale pays fixed rates in U.S. Dollars and receives payments linked to CDI.
 
  CDI vs. USD floating rate swap — In order to reduce the cash flow volatility, Vale entered into swap transactions to convert the cash flows from debt instruments denominated in Brazilian Reais linked to CDI to U.S. Dollars. In those swaps, Vale pays floating rates in U.S. Dollars (Libor — London Interbank Offered Rate) and receives payments linked to CDI.

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Those instruments were used to convert the cash flows from debentures issued in 2006 with a nominal value of R$5.5 billion, from the NCE (Credit Export Notes) issued in 2008 with nominal value of R$ 2 billion and also from property and services acquisition financing realized in 2006 and 2007 with nominal value of R$1 billion.
                                                                                                         
                                                                       
                                                    Realized           R$ Million  
    Notional ($ million)                     Fair value     Gain/Loss     VaR     Fair value by year  
Flow   31-Mar-11     31-Dec-10     Index     Average rate     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011     2012     2013     2014     2015  
CDI vs. fixed rate swap
                                                                                                       
Receivable
  R$  5,542     R$  5,542     CDI     101.14 %     5,771       5,743       77                                                  
Payable
  USD 3,144     USD 3,144     USD+     3.87 %     (5,282 )     (5,412 )     (30 )                                                
 
                                                                                     
Net
                                    489       331       47       67       368       430       (215 )     36       (130 )
 
                                                                                     
 
                                                                                                       
CDI vs. floating rate swap
                                                                                                       
Receivable
  R$  428     R$  428     CDI     103.50 %     442       453       23                                                  
Payable
  USD 250     USD 250     Libor+     0.99 %     (425 )     (437 )     (3 )                                                
 
                                                                                     
Net
                                    17       16       20       5       21       40       33       22       (99 )
 
                                                                                     
Type of contracts: OTC Contracts

Protected Item: Debts linked to BRL
The protected items are the Debts linked to BRL because the objective of this protection is to transform the obligations linked to BRL into obligations linked to USD so as to achieve a currency offset by matching Vale’s receivables (mainly linked to USD) with Vale’s payables.
Protection program for the real denominated debt indexed to TJLP
  TJLP vs. USD fixed rate swap — In order to reduce the cash flow volatility, Vale entered into swap transactions to convert the cash flows of the loans with Banco Nacional de Desenvolvimento Econômico e Social (BNDES) from TJLP2 to U.S. Dollars. In those swaps, Vale pays fixed rates in U.S. Dollars and receives payments linked to TJLP.
 
  TJLP vs. USD floating rate swap — In order to reduce the cash flow volatility, Vale entered into swap transactions to convert the cash flows of the loans with BNDES from TJLP to U.S. Dollars. In those swaps, Vale pays floating rates in U.S. Dollars and receives payments linked to TJLP.
                                                                                                         
                                                                       
                                                    Realized           R$ Million    
    Notional ($ million)                     Fair value     Gain/Loss     VaR     Fair value by year  
Flow   31-Mar-11     31-Dec-10     Index     Average rate     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011     2012     2013     2014-2016     2017-2019  
Swap TJLP vs. fixed rate swap
                                                                                                       
Receivable
  R$  2,595     R$  2,418     TJLP+     1.45 %     2,201       2,072       32                                                  
Payable
  USD 1,327     USD 1,228     USD+     2.95 %     (2,058 )     (1,966 )     (20 )                                                
 
                                                                                     
Net
                                    143       106       12       28       95       127       110       (118 )     (71 )
 
                                                                                     
 
                                                                                                       
Swap TJLP vs. floating rate swap
                                                                                                       
Receivable
  R$  737     R$  733     TJLP+     0.96 %     615       618       4                                                  
Payable
  USD 371     USD 372     Libor +     -1.14 %     (561 )     (571 )     (2 )                                                
 
                                                                                     
Net
                                    54       47       2       10       5       142       24       (49 )     (68 )
 
                                                                                     
Type of contracts: OTC Contracts

Protected Item: Debts linked to BRL
The protected items are the Debts linked to BRL because the objective of this protection is to transform the obligations linked to BRL into obligations linked to USD so as to achieve a currency offset by matching Vale’s receivables (mainly linked to USD) with Vale’s payables.
Protection program for the Real denominated fixed rate debt
  BRL fixed rate vs. USD fixed rate swap: In order to hedge the cash flow volatility, Vale entered into a swap transaction to convert the cash flows from loans rate with Banco Nacional de Desenvolvimento Econômico e Social (BNDES) in Brazilian Reais linked to fixed rate to U.S. Dollars linked to fixed. Vale receives fixed rates in Reais and pays fixed rates in U.S. Dollars.
 
2   2Due to TJLP derivatives market liquidity constraints, some swap trades were done through CDI equivalency.

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                                                    Realized             R$ Million  
    Notional ($ million)                     Fair value     Gain/Loss     VaR     Fair value by year  
Flow   31-Mar-11     31-Dec-10     Index     Average rate     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011     2012     2013     2014     2015     2016  
BRL fixed rate vs. USD fixed rate swap
                                                                                                               
Receivable
  R$ 229     R$ 204     Fixed       4.50 %     176       157       0.6                                                          
Payable
  USD 136     USD 121     USD +       -1.77 %     (172 )     (156 )     0.2                                                          
 
                                                                                           
Net
                                    4       1       0.8       3       10       14       6       3             (29 )
 
                                                                                           
Type of contracts: OTC Contracts

Protected Item: Debts linked to BRL
The protected items are the Debts linked to BRL because the objective of this protection is to transform the obligations linked to BRL into obligations linked to USD so as to achieve a currency offset by matching Vale’s receivables (mainly linked to USD) with Vale’s payables.
Foreign Exchange cash flow hedge
  Brazilian Real fixed rate vs. USD fixed rate swap — In order to reduce the cash flow volatility, Vale entered into swap transactions to mitigate the foreign exchange exposure that arises from the currency mismatch between the revenues denominated in U.S. Dollars and the disbursements and investments denominated in Brazilian Reais.
                                                                         
                                                                    R$ million  
                                                    Realized           Fair value by  
    Notional ($ million)                     Fair value     Gain/Loss     VaR     year  
Flow   31-Mar-11     31-Dec-10     Index     Average rate     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011  
Receivable
  R$ 880     R$ 880     Fixed     8.78 %     892       869                        
Payable
  USD 510     USD 510       USD+       0.00 %     (817 )     (833 )                      
 
                                                             
Net
                                    75       36             10       75  
 
                                                             
Type of contracts: OTC Contracts
Hedged Item: part of Vale’s revenues in USD
The P&L shown in the table above is offset by the hedged items’ P&L due to BRL/USD exchange rate.
Protection program for the Euro denominated floating rate debt
  Euro floating rate vs. USD floating rate swap — In order to reduce the cash flow volatility, Vale entered into a swap transaction to convert the cash flows from loans in Euros linked to Euribor to U.S. Dollars linked to Libor. This trade was used to convert the cash flow of a debt in Euros, with an outstanding notional amount of € 2 million, issued in 2003 by Vale. In this trade, Vale receives floating rates in Euros (Euribor) and pays floating rates in U.S. Dollars (Libor).
                                                                         
                                                                    R$ million  
                                                    Realized             Fair value by  
    Notional ($ million)                     Fair Value     Gain/Loss     VaR     year  
Flow   31-Mar-11     31-Dec-10     Index     Average rate     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011  
Receivable
  2     2     EUR   Euribor+0,875 %     5       5.3                        
Payable
  USD 3     USD 3     USD   Libor+1,0425 %     (4 )     (4.5 )                      
 
                                                             
Net
                                    1       0.8             0.04       1  
 
                                                             
Type of contracts: OTC Contracts

Protected Item: Vale’s Debt linked to EUR.
The P&L shown in the table above is offset by the hedged items’ P&L due to EUR/USD exchange rate.
  EUR fixed rate vs. USD fixed rate swap: In order to hedge the cash flow volatility, Vale entered into a swap transaction to convert the cash flows from loans in Euros linked to fixed rate to U.S. Dollars linked to fixed rate. Vale receives fixed rates in

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Euros and pays fixed rates in U.S. Dollars. This trade was used to convert the cash flow of a debt in Euros, with an outstanding notional amount of € 750 million, issued in 2010 by Vale.
                                                                                                 
                                                    Realized             R$ million  
    Notional ($ million)                     Fair value     Gain/Loss     VaR     Fair value by year  
Flow   31-Mar-11     31-Dec-10     Index     Average rate     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011     2012     2013     2014  
Receivable
  500     500     EUR     4.375 %     1,256       1,267       49                                          
Payable
  USD 675     675     USD     4.712 %     (1,201 )     (1, 281 )     (51 )                                        
 
                                                                                     
Net
                                    55       (14 )     (2 )     11             (3 )     (2 )     60  
 
                                                                                     
Type of contracts: OTC Contracts

Protected Item: Vale’s Debt linked to EUR
The P&L shown in the table above is offset by the hedged items’ P&L due to EUR/USD exchange rate.
Protection program for the USD floating rate debt
  USD floating rate vs. USD fixed rate swap – In order to reduce the cash flow volatility, Vale Canada Ltd., Vale’s wholly-owned subsidiary, entered into a swap to convert U.S. Dollar floating rate debt into U.S Dollar fixed rate debt. Vale Canada used this instrument to convert the cash flow of a debt issued in 2004 with notional amount of US$ 200 million. In this trade, Vale pays fixed rates in U.S. Dollars and receives floating rates in U.S. Dollars (Libor).
                                                                         
                                                                    R$ million  
                                                    Realized             Fair value  
    Notional ($ million)                     Fair value     Gain/Loss     VaR     by year  
Flow   31-Mar-11     31-Dec-10     Index     Average rate     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011  
Receivable
  USD 100     USD 100     USD   Libor       164       167       0               163  
Payable
                  USD     4,795 %     (168 )     (173 )     (2 )             (168 )
 
                                                             
Net
                                    (4 )     (6 )     (2 )     0.1       (5 )
 
                                                             
Type of contracts: OTC Contracts

Protected Item: Vale Canada’s floating rate debt.
The P&L shown in the table above is offset by the protected items’ P&L due to Libor.
Foreign Exchange protection program for Coal Fixed Price Sales
In order to reduce the cash flow volatility associated with a fixed price coal contract, Vale used Australian Dollar forward purchase in order to equalize production cost and revenues currencies.
                                                                         
                                                                    R$ million  
                                                    Realized             Fair value by  
    Notional ($ million)             Average rate     Fair value     Gain/Loss     VaR     year  
Flow   31-Mar-11     31-Dec-10     Buy/Sell     (AUD/USD)     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011  
Forward
    0       AUD 7       B                   4       4              
 
                                                             
Type of contracts: OTC Contracts

Protected Item: part of Vale’s costs in Australian Dollar.

The P&L shown in the table above is offset by the protected items’ P&L due to USD/AUD exchange rate.
Commodity Derivative Positions
The Company’s cash flow is also exposed to several market risks associated to global commodities price volatilities. To offset these volatilities, Vale contracted the following derivatives transactions:
Nickel Sales Heading Program

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In order to reduce the cash flow volatility in 2011 and 2012, hedging transactions were implemented. These transactions fixed the prices of part of the sales in the period.
                                                                                 
                                                    Realized                     R$ million  
    Notional (ton)             Average Strike     Fair value     Gain/Loss     VaR     Fair value by year  
Flow   31-Mar-11     31-Dec-10     Buy/Sell     (USD/ton)     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011     2012  
Forward
    52,311       18,750     S       24,840       (85 )     (87 )     (43 )     74       (69 )     (16 )
 
                                                                   
Type of contracts: OTC Contracts
Protected Item: part of Vale’s revenues linked to Nickel price.
The P&L shown in the table above is offset by the protected items’ P&L due to Nickel price.
Nickel Fixed Price Program
In order to maintain the exposure to Nickel price fluctuations, we entered into derivatives to convert to floating prices all contracts with clients that required a fixed price. These trades aim to guarantee that the prices of these operations would be the same of the average prices negotiated in LME in the date the product is delivered to the client. It normally involves buying Nickel forwards (Over-the-Counter) or futures (exchange negotiated). Those operations are usually reverted before the maturity in order to match the settlement dates of the commercial contracts in which the prices are fixed. Whenever the ‘Nickel Strategic cash flow protection program’ or the ‘Nickel Sales Hedging Program’ are executed, the ‘Nickel Fixed Price Program’ is interrupted.
                                                                                 
                                                    Realized             R$ million  
    Notional (ton)             Average Strike     Fair value     Gain/Loss     VaR     Fair value by year  
Flow   31-Mar-11     31-Dec-10     Buy/Sell     (USD/ton)     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011     2012  
Nickel Futures
    822       2,172     B       21,045       7       22       21       1       6       1  
 
                                                                   
Type of contracts: LME Contracts
Protected Item: part of Vale’s revenues linked to fixed price sales of Nickel.
The P&L shown in the table above is offset by the protected items’ P&L due to Nickel price.
Nickel Purchase Protection Program
In order to reduce the cash flow volatility and eliminate the mismatch between the pricing of the purchased nickel (concentrate, cathode, sinter and others) and the pricing of the final product sold to our clients, hedging transactions were implemented. The items purchased are raw materials utilized to produce refined Nickel. The trades are usually implemented by the sale of nickel forward or future contracts at LME or over-the-counter operations.
                                                                         
                                                                    R$ million  
                                                    Realized             Fair value by  
    Notional (ton)             Average Strike     Fair value     Gain/Loss     VaR     year  
Flow   31-Mar-11     31-Dec-10     Buy/Sell     (USD/ton)     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011  
Nickel Futures
    4,778       108     S       27,974       19       (0.3 )     2       7       19  
 
                                                             
Type of contracts: LME Contracts
Protected Item: part of Vale’s revenues linked to Nickel price.
The P&L shown in the table above is offset by the protected items’ P&L due to Nickel price.
Bunker Oil Purchase Protection Program
In order to reduce the impact of bunker oil price fluctuation on Vale’s freight hiring and consequently reducing the company’s cash flow volatility, bunker oil derivatives were implemented. These transactions are usually executed through forward purchases and swaps.
                                                                         
                                                                    R$ million  
                                                    Realized             Fair value by  
    Notional (mt)             Average Strike     Fair value     Gain/Loss     VaR     year  
Flow   31-Mar-11     31-Dec-10     Buy/Sell     (USD/mt)     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011  
Forward
    246,000       240,000     B       491       58       19       13       11       58  
 
                                                             

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(VALE LOGO)
Type of contracts: OTC Contracts
Protected Item: part of Vale’s costs linked to Bunker Oil price.
The P&L shown in the table above is offset by the protected items’ P&L due to Bunker Oil price.
Copper Scrap Purchase Protection Program
This program was implemented in order to reduce the cash flow volatility due to the quotation period mismatch between the pricing period of copper scrap purchase and the pricing period of final products sale to the clients, as the copper scrap combined with other raw materials or inputs of Vale’s wholly-owned subsidiary, Vale Canada Ltd, to produce copper. This program usually is implemented by the sale of forwards or futures at LME or Over-the-Counter operations.
                                                                         
                                                                    R$ million  
                                                    Realized             Fair value by  
    Notional (lbs)             Average Strike     Fair value     Gain/Loss     VaR     year  
Flow   31-Mar-11     31-Dec-10     Buy/Sell     (USD/lbs)     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011  
Forward
    535,699       386,675       S       4.4       0.1       (0.5 )     (0.5 )     0.1       0.1  
 
                                                                       
Tipo de contrato: OTC Contracts
Item protegido: part of Vale’s revenues linked to Coal price.
The P&L shown in the table above is offset by the protected items’ P&L due to Coal price
Embedded Derivative Positions
The Company’s cash flow is also exposed to several market risks associated to contracts that contain embedded derivatives or derivative-like features. From Vale’s perspective, it may include, but is not limited to, commercial contracts, procurement contracts, rental contracts, bonds, insurance policies and loans. The following embedded derivatives were observed in 2011:
Raw material and intermediate products purchase
Nickel concentrate and raw materials purchase agreements of Vale Canada Ltd, Vale’s wholly-owned subsidiary, in which there are provisions based on nickel and copper future prices behavior. These provisions are considered as embedded derivatives.
                                                                         
                                                                    R$ million  
                                                    Realized             Fair value by  
    Notional (ton)             Average Strike     Fair value     Gain/Loss     VaR     year  
Flow   31-Mar-11     31-Dec-10     Buy/Sell     (USD/ton)     31-Mar-11     31-Dec-10     31-Mar-11     31-Mar-11     2011  
Nickel Forwards
    2,087       1,960       S       26,959       (1 )     (2 )     (11 )             [1 )
Copper Forwards
    6,093       6,389               9,645       (1 )     (5 )     (11 )             (1 )
 
                                                                       
Total
                                    (2 )     (7 )     (22 )     6       (2 )
 
                                                                       
Derivative Positions from jointly controlled companies
Below we present the fair values of the derivatives from jointly controlled companies. These instruments are managed under the risk policies of each company. However the effects of mark-to-market are recognized in financial statements to the extent of participation of each of these companies.
Protection program
In order to reduce the cash flow volatility, swap transactions was contracted to convert into Reais the cash flows from debt instruments denominated in US Dollars. In this swap, fixed rates in U.S. Dollars are received and payments linked to Reais (CDI index) are made.
                                                         
                                                    R$ million
    Notional ($ million)                     Fair Value     VaR  
Flow   31-Mar-11     31-Dec-10     Index     Average rate     31-Mar-11     31-Dec-10     31-Mar-11  
Swap fixed rate vs. CDI Receivable
                                                   
Receivable
  USD 93     USD 89     USD     2.3 %     155       152          
Payable
  $ 171     $ 170     CDI     100 %     (186 )     (186 )        
 
                                                       
Net
                                    (31 )     (34 )     2  
 
                                                       

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(VALUE LOGO)
Type of contracts: OTC Contracts

Protected Item: Debts indexed to USD
The P&L shown in the table above is offset by the protected items’ P&L due to BRL/USD exchange rate.
a) Market Curves
 
To build the curves used on the pricing of the derivatives, public data from BM&F, Central Bank of Brazil, London Metals Exchange (LME) and proprietary data from Thomson Reuters, Bloomberg L.P. and Enerdata were used.
  1.   Commodities
                                         
Nickel
Maturity   Price (USD/ton)   Maturity     Price (USD/ton)   Maturity     Price (USD/ton)
SPOT
    26,075.00       JAN12       25,834.75       NOV12       25,199.86  
APR11
    26,089.17       FEB12       25,786.78       DEC12       25,121.94  
MAY11
    26,095.94       MAR12       25,736.70       JAN13       25,056.88  
JUN11
    26,098.82       APR12       25,679.46                  
JUL11
    26,089.07       MAY12       25,626.73                  
AGO11
    26,069.38       JUN12       25,567.22                  
SEP11
    26,044.63       JUL12       25,485.29                  
OCT11
    25,999.40       AGO12       25,412.87                  
NOV11
    25,947.16       SEP12       25,342.57                  
DEC11
    25,887.79       OCT12       25,269.10                  
                                         
Copper
Maturity   Price (USD/lb)   Maturity     Price (USD/lb)   Maturity     Price (USD/lb)
SPOT
    4.27       JUN11       4.28       AGO11       4.28  
APR11
    4.27       JUL11       4.28       SEP11       4.28  
MAY11
    4.28                                  
                                         
Bunker Oil
Maturity   Price (USD/ton)   Maturity     Price (USD/ton)   Maturity     Price (USD/ton)
SPOT
    654.00       JAN12       615.25       NOV12       607.88  
APR11
    648.19       FEB12       614.50       DEC12       606.29  
MAY11
    643.00       MAR12       614.32       JAN13       604.21  
JUN11
    636.75       APR12       614.88                  
JUL11
    631.67       MAY12       612.89                  
AGO11
    628.50       JUN12       610.66                  
SEP11
    625.25       JUL12       616.19                  
OCT11
    621.25       AGO12       613.80                  
NOV11
    618.25       SEP12       611.40                  
DEC11
    616.37       OCT12       609.58                  

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    (VALE LOGO)
     2. Rates
                                 
USD-Brazil Interest Rate
Maturity   Rate (% a.a.)   Maturity   Rate (% a.a.)   Maturity   Rate (% a.a.)
05/02/11
    3.37     07/01/13     3.43     01/04/16     4.70  
06/01/11
    3.10     10/01/13     3.54     04/01/16     4.81  
07/01/11
    2.89     01/02/14     3.68     07/01/16     4.91  
10/03/11
    2.81     04/01/14     3.81     01/02/17     5.04  
01/02/12
    2.83     07/01/14     3.94     01/02/18     5.39  
04/02/12
    2.87     10/01/14     4.09     01/02/19     5.74  
07/02/12
    2.90     01/02/15     4.22     01/02/20     5.94  
10/01/12
    3.01     04/01/15     4.33     01/04/21     6.28  
01/02/13
    3.15     07/01/15     4.45     01/03/22     6.60  
04/01/13
    3.28     10/01/15     4.58     01/02/23     6.90  
 
USD Interest Rate
Maturity   Rate (% a.a.)   Maturity   Rate (% a.a.)   Maturity   Rate (% a.a.)
USD1M
    0.24     USD6M     0.46     USD11M     0.73  
USD2M
    0.27     USD7M     0.51     USD12M     0.78  
USD3M
    0.30     USD8M     0.56     USD2A     1.02  
USD4M
    0.35     USD9M     0.61     USD3A     1.62  
USD5M
    0.41     USD10M     0.67     USD4A     2.17  
                                 
TJLP
Maturity   Rate (% a.a.)   Maturity   Rate (% a.a.)   Maturity   Rate (% a.a.)
04/01/11
    6.00     10/01/12     6.00     10/01/14     6.00  
05/02/11
    6.00     01/02/13     6.00     01/02/15     6.00  
06/01/11
    6.00     04/01/13     6.00     04/01/15     6.00  
07/01/11
    6.00     07/01/13     6.00              
10/03/11
    6.00     10/01/13     6.00              
01/02/12
    6.00     01/02/14     6.00              
                                 
BRL Interest Rate
Maturity   Rate (% a.a.)   Maturity   Rate(% a.a.)   Maturity   Rate (% a.a.)
04/01/11
    11.66     10/01/12     12.61     10/01/14     12.94  
05/02/11
    11.72     01/02/13     12.68     01/02/15     12.94  
06/01/11
    11.83     04/01/13     12.77     04/01/15     12.96  
07/01/11
    11.89     07/01/13     12.85     07/01/15     12.93  
10/03/11
    12.03     10/01/13     12.87     10/01/15     12.93  
01/02/12
    12.11     01/02/14     12.88     01/04/16     12.90  
04/02/12
    12.29     04/01/14     12.88     04/01/16     12.85  
07/02/12
    12.48     07/01/14     12.91     07/01/16     12.85  
                                 
EUR Interest Rate
Maturity   EUR/USD   Maturity   EUR/USD   Maturity   EUR/USD
EUR1M
    0.92     EUR6M     1.50     EUR11M     1.88  
EUR2M
    1.04     EUR7M     1.58     EUR12M     1.95  
EUR3M
    1.18     EUR8M     1.65     EUR2A     1.18  
EUR4M
    1.28     EUR9M     1.73     EUR3A     1.35  
EUR5M
    1.38     EUR10M     1.81     EUR4A     1.47  
                                 
Currencies — Ending rates                    
USD/CAD
    1.0321     USD/BRL     1.6287     EUR/USD     1.4172  
Sensitivity Analysis on Derivatives from Parent Company
We present below the sensitivity analysis for all derivatives outstanding positions as of March 31, 2011 given predefined scenarios for market risk factors behavior. The scenarios were defined as follows:
  MtM: the mark to market value of the instruments as at March 31st, 2011;
 
  Scenario I: unfavorable change of 25% — Potential losses considering a shock of 25% in the market risk factors used for MtM calculation that negatively impacts the fair value of Vale’s derivatives positions;

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(VALE LOGO)
  Scenario II: favorable change of 25% — Potential profits considering a shock of 25% in the market curves used for MtM calculation that positively impacts the fair value of Vale’s derivatives positions;
 
  Scenario III: unfavorable change of 50% — Potential losses considering a shock of 50% in the market curves used for MtM calculation that negatively impacts the fair value of Vale’s derivatives positions;
 
  Scenario IV: favorable change of 50% — Potential profits considering a shock of 50% in the market curves used for MtM calculation that positively impacts the fair value of Vale’s derivatives positions;
Sensitivity analysis for Derivatives Instruments (all amounts in R$ million)
     
Sensitivity analysis — Foreign Exchange and Interest Rate Derivative Positions
Amounts in R$ million
 
                                                 
Program   Instrument   Risk   Fair Value     Scenario I     Scenario II     Scenario III     Scenario IV  
 
      USD/BRL fluctuation             (1,320 )     1,320       (2,641 )     2,641  
 
  CDI vs. USD fixed rate swap   USD interest rate inside Brazil variation     489       (84 )     80       (171 )     156  
Protection program for the Real
      Brazilian interest rate fluctuation             (2 )     2       (4 )     3  
denominated debt indexed to
      USD Libor variation             (9 )     9       (19 )     18  
CDI
      USD/BRL fluctuation             (106 )     106       (212 )     212  
 
  CDI vs. USD floating rate swap   Brazilian interest rate fluctuation     17       (1.17 )     1.4       (2.50 )     1.97  
 
      USD Libor variation             (0.3 )     0.2       (0.7 )     0.3  
 
                                               
 
  Protected Items - Debt indexed to CDI   USD/BRL fluctuation     n.a.                          
 
                                               
 
      USD/BRL fluctuation             (514 )     514       (1,029 )     1,029  
 
  TJLP vs. USD fixed rate swap   USD interest rate inside Brazil variation             (32 )     30       (65 )     58  
 
      Brazilian interest rate fluctuation     143       (142 )     162       (189 )     233  
Protection program for the Real
      TJLP interest rate fluctuation             (82 )     81       (165 )     161  
denominated debt indexed to
      USD/BRL fluctuation             (140 )     140       (281 )     281  
TJLP
      USD interest rate inside Brazil variation             (10 )     10       (22 )     19  
 
  TJLP vs. USD floating rate swap   Brazilian interest rate fluctuation     54       (58 )     69       (59 )     74  
 
      TJLP interest rate fluctuation             (36 )     36       (73 )     72  
 
      USD Libor variation             (20 )     20       (40 )     40  
 
                                               
 
  Protected Items - Debts indexed to TJLP   USD/BRL fluctuation     n.a.                          
Protection program for the Real
      USD/BRL fluctuation             (43 )     43       (86 )     86  
denominated fixed rate debt
  BRL fixed rate vs. USD   USD interest rate inside Brazil variation     4       (2 )     2       (3 )     3  
 
      Brazilian interest rate fluctuation             (11 )     13       (16 )     19  
 
                                               
 
  Protected Items - Debts indexed to BRL   USD/BRL fluctuation     n.a.                          
Foreign Exchange cash flow hedge
  BRL fixed rate vs. USD   USD/BRL fluctuation             (204 )     204       (409 )     409  
 
      USD interest rate inside Brazil variation     75       (3 )     3       (7 )     7  
 
      Brazilian interest rate fluctuation             (14 )     14       (27)       29  
 
                                               
 
  Hedged Items - Part of Revenues denominated in USD   USD/BRL fluctuation     n.a.       204       (204 )     409       (409 )
 
                                               
 
      USD/BRL fluctuation             (0.3 )     0.3       (0.6 )     0.6  
Protection Program for the Euro
  EUR floating rate vs. USD floating rate swap   EUR/USD fluctuation             (1 )     1       (3 )     3  
denominated floating rate debt
      EUR Libor variation     1.0     (0.00 )     0.00       (0.01 )     0.01  
 
      USD Libor variation           (0.00 )     0.00       (0.00 )     0.00  
 
                                               
 
  Protected Items - Debts indexed to EUR   EUR/USD fluctuation     n.a.       1       (1 )     3       (3 )
 
      USD/BRL fluctuation             (14 )     14       (27 )     27  
Protection program for the Euro
denominated fixed rate debt
  EUR fixed rate vs. USD fixed rate swap   EUR/USD fluctuation
EUR Libor variation
    55       (314
(12
)
)
    314
12
      (628
(23
)
)
    628
24
 
 
      USD Libor variation             (13 )     13       (27 )     26  
 
  Protected Items - Debts indexed to EUR   EUR/USD fluctuation     n.a.       314       (314 )     628       (628 )
 
                                               
Protection Program for the USD
  USD floating rate vs. USD fixed rate swap   USD/BRL fluctuation     (4 )     (1 )     1       (2 )     2  
floating rate debt
      USD Libor variation             (0 )     0       (0 )     0  
 
                                               
 
  Protected Items - USD Floating rate debt   USD Libor variation     n.a.       0       (0 )     0       (0 )
     
Sensitivity analysis - Commodity Derivative Positions   Amounts in R$ million
 
                                                 
Program   Instrument   Risk   Fair Value     Scenario I     Scenario II     Scenario III     Scenario IV  
 
      Nickel price fluctuation             (547 )     547       (1,094 )     1,094  
Nickel sales hedging program
  Sale of nickel future/forward contracts   Libor USD fluctuation     (85 )     (3 )     3       (6 )     6  
 
      USD/BRL fluctuation             (21 )     21       (43 )     43  
 
                                               
 
  Hedged Item: Part of Vale’s revenues linked to Nickel price   Nickel price fluctuation     n.a.       547       (547 )     1.094       (1,094 )
 
      Nickel price fluctuation             (9 )     9       (17 )     17  
Nickel fixed price program
  Purchase of nickel future/forward contracts   Libor USD fluctuation     7       (0.0 )     0.0       (0.0 )     0.0  
 
      USD/BRL fluctuation             (2 )     2       (3 )     3  
 
                                               
 
  Protected Item: Part of Vale’s nickel revenues from sales with fixed prices   Nickel price fluctuation     n.a.       9       (9 )     17       (17 )
 
      Nickel price fluctuation             (51 )     51       (101 )     101  
Nickel purchase protection
  Sale of nickel future/forward contracts   Libor USD fluctuation     19       (0.022 )     0.022       0.044     0.044  
program
      USD/BRL fluctuation             (4.8 )     4.8       (9.7 )     9.7  
 
                                               
 
  Protected Item: Part of Vale’s revenues linked to Nickel price   Nickel price fluctuation     n.a.       51       (51 )     101       (101 )
 
                                               
Bunker Oil Purchase Protection Program
      Bunker Oil price fluctuation             (64 )     64       (127 )     127  
 
  Bunker Oil forward   Libor USD fluctuation     58       (0.1 )     0.1       (0.1 )     0.1  
 
      usd/brl fluctuation             (14 )     14       (29 )     29  
 
                                               
 
  Protected Item: part of Vale’s costs linked to Bunker Oil price   Bunker Oil price fluctuation     n.a.       64       (64 )     127       (127 )
 
                                               
 
      Copper price fluctuation             (1 )     1       (2 )     2  
Copper Scrap Purchase
  Sale of Copper future/forward                                            
Protection Program
  contracts   Libor USD fluctuation     0.1       (0.001 )     0.01       (0.002 )     0.002  
 
      BRL/USD fluctuation             0.0       0.0       0.0       0.0  
 
                                               
 
  Protected Item: Part of Vale’s revenues linked to Copper price   Copper price fluctuation     n.a.       1       (1 )     2       (2 )

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(VALE LOGO)
     
Sensitivity analysis — Embedded Derivative Positions   Amounts in R$ million
 
                                                 
Program   Instrument   Risk   Fair Value     Scenario I     Scenario II     Scenario III     Scenario IV  
Embedded derivatives - Raw
  Embedded derivatives - Raw material   Nickel price fluctuation     (1 )     (22 )     22       (44 )     44  
material purchase (Nickel)
 
purchase
  BRL/USD fluctuation             (1 )     1       (1 )     1  
Embedded derivatives -Raw
  Embedded derivatives - Raw material   Copper price fluctuation             (23 )     23       (47 )     47  
material purchase (Copper)
 
purchase
  BRL/USD fluctuation     (1 )     (1 )     1       (1 )     1  
     
Sensitivity Analysis on Derivatives from jointly controlled companies
Amounts in R$ million
 
                                                 
Program   Instrument   Risk   Fair Value     Scenario I     Scenario II     Scenario III     Scenario IV  
 
      USD/BRL fluctuation             (39 )     39       (77 )     77  
Protection program
  CDI vs. USD fixed rate swap   USD interest rate inside Brazil variation     (31 )     (0.5 )     0.5       (1.0 )     1.0  
 
      Brazilian interest rate fluctuation             0.00       0.00       0.00       0.00  
 
  Protected item-Debt indexed to USD   USD/BRL fluctuation     n.a.       39       (39 )     77       (77 )
Sensitivity Analysis on Debt and Cash Investments
The Company’s funding and cash investments linked to currencies different from Brazilian Reais are subjected to volatility of foreign exchange currencies, such as EUR/USD and USD/BRL.
     
    Amounts in R$ million
 
                                         
Program   Instrument   Risk   Scenario I     Scenario II     Scenario III     Scenario IV  
Funding
  Debt denominated in BRL   No fluctuation                        
Funding
  Debt denominated in USD   USD/BRL fluctuation     (6,141 )     6,141       (12,282 )     12,282  
Funding
  Debt denominated in EUR   EUR/USD fluctuation     (6 )     6       (13 )     13  
Cash Investments
  Cash denominated in BRL   No fluctuation                        
Cash Investments
  Cash denominated in USD   USD/BRL fluctuation     (1,722 )     1,722       (3.444 )     3,444  
Financial counterparties ratings
Derivatives transactions are executed with financial institutions that we consider to have a very good credit quality. The exposure limits to financial institutions are proposed annually for the Executive Risk Committee and approved by the Executive Board. The financial institutions credit risk tracking is performed making use of a credit risk valuation methodology which considers, among other information, published ratings provided by international rating agencies. In the table below, we present the ratings in foreign currency published by Moody’s and S&P agencies for the financial institutions that we had outstanding trades as of March 31, 2011.

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(VALE LOGO)
                 
Vale’s Counterparty   Moody’s*   S&P*
Banco Santander
  Aa2   AA
Itau Unibanco*
    A2     BBB
HSBC
    A1     AA-
JP Morgan Chase & Co
    A1       A+  
Banco Bradesco*
    A1     BBB
Banco do Brasil*
    A2     BBB-
Banco Votorantim*
    A3       BB+  
Credit Agricole
  Aa2   AA-
Standard Bank
    A3       A  
Deutsche Bank
    A3       A+  
BNP Paribas
  Aa3   AA
Standard Bank
           
Citigroup
  Baa1     A  
Banco Safra*
  Baa1   BBB-
ANZ Australia and New Zealand Banking
  Aa2   AA
Banco Amazônia SA
           
Societe Generale
  Aa3     A+  
Bank of Nova Scotia
  Aa2   AA-
Natixis
    A1       A+  
Royal Bank of Canada
  Aa2   AA-
China Construction Bank
    A1       A-  
Goldman Sachs
    A2       A  
Bank of China
    A1       A-  
Barclays
  Baa1     A+  
BBVA Banco Bilbao Vizcaya a Argentaria
  Aa3   AA
 
*   For brazilian Banks we used local long term deposit rating
 
**   Parent company’s rating

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(VALE LOGO)
24 Information by Business Segment and Consolidated Revenues by Geographic Area
The Company discloses information by consolidated operating business segment and revenues by consolidated geographic area in accordance with the principles and concepts as the “main manager of operations” by which financial information should be presented in the internal bases used by decision makers to performance evaluation of the segments and to decide how to allocate resources to segments.
The Executive Board, based on the available information makes analysis for strategic decision making, reviewing and directing the application of resources, considering the performance of the productive sectors, of the business and performing analysis of results by geographic segments from the perspective of marketing, market concentration, logistics operation and product placement.
Our data was analyzed by product and segment as follows:
Bulk Material — includes the extraction of iron ore and pellet production and transport systems of North and Southeast, including railroads, ports and terminals, and related mining operations. The manganese ore and ferroalloys are also included in this segment.
Basic metals — comprises the production of non-ferrous minerals, including nickel (co-products and byproducts), copper and aluminum through investments in joint ventures and affiliated companies.
Fertilizers — comprises three major groups of nutrients: potash, phosphate and nitrogen. This business is being formed through a combination of acquisitions and organic growth. This is a new business reported in 2010.
Logistic services — includes our system of cargo transportation for third parties divided into rail transport, port and shipping services.
Others — comprises our investments in joint ventures and associate in other businesses.
Information presented to senior management with the performance of each segment is generally derived from accounting records maintained in accordance with accounting principles generally accepted in Brazil, with some minor reallocations between segments.

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(VALE LOGO)
Results by segment — before eliminations (segment)
                                                                                                                 
    Consolidated ( Unaudited)
    March 31, 2011   March 31, 2010
                                              Eliminination and                                                       Eliminination and      
      Bulk Materials       Basic Metals       Fertilizers       Logistic       Others       reclassification       Consolidated       Bulk Materials       Basic Metals       Fertilizers       Logistic       Others       reclassification       Consolidated  
RESULTS
                                                                                                               
Net revenue
    28,689,624       5,208,298       1,384,577       821,503       570,700       (13,689,419 )     22,985,283       14,408,523       3,948,958       117,812       876,293       313,823       (7,082,087 )     12,583,322  
 
                                                                                                               
Cost and expenses
    (17,487,533 )     (3,289,455 )     (1,176,320 )     (714,343 )     (981,924 )     13,689,419       (9,960,156 )     (9,557,404 )     (3,512,151 )     (91,487 )     (730,722 )     (388,790 )     7,082,087       (7,198,467 )
Realized gain on assets available for sale
          2,492,175                               2,492,175                                                          
Deprecitation, depletion and amortization
    (692,556 )     (598,521 )     (203,749 )     (88,707 )     (15,505 )           (1,599,038 )     (658,300 )     (606,196 )     (12,716 )     (77,623 )     (5,470 )           (1,360,305 )
 
                                                                                                               
 
    10,509,535       3,812,497       4,508       18,453       (426,729 )           13,918,264       4,192,819       (169,389 )     13,609       67,948       (80,437 )           4,024,550  
 
                                                                                                               
Financial results
    118,275       (381,952 )     105,746       (46,298 )     (63,654 )           (267,883 )     (910,695 )     (410,588 )           (13,445 )     (1,972 )           (1,336,700 )
Equity results from associates
    30,020       3,028                   (15,374 )           17,674       (12,176 )     592             (1,456 )     20,254             7,214  
Income tax and social contribution
    (1,732,007 )     (709,159 )     9,526       (30,624 )     (4,904 )           (2,467,168 )     247,857       131,757             (9,291 )     (16,876 )           353,447  
 
                                                                                                               
 
                                                                                                               
Income from continuing operations
    8,925,823       2,724,414       119,780       (58,469 )     (510,661 )           11,200,887       3,517,805       (447,628 )     13,609       43,756       (79,031 )           3,048,511  
Results on discontinued operations
                                                    (224,448 )                             (224,448 )
 
                                                                                                               
 
                                                                                                               
Net income of the period
    8,925,823       2,724,414       119,780       (58,469 )     (510,661 )           11,200,887       3,517,805       (672,076 )     13,609       43,756       (79,031 )           2,824,063  
 
                                                                                                               
Income attributable to non-controlling interests
    (3,395 )     (25,879 )     (20,435 )           (40,387 )           (90,096 )     3,010       (55,161 )                 (3,130 )           (55,281 )
 
                                                                                                               
Income attributable to the company’s stockholders
    8,929,218       2,750,293       140,215       (58,469 )     (470,274 )           11,290,983       3,514,795       (616,915 )     13,609       43,756       (75,901 )           2,879,344  
 
                                                                                                               
 
                                                                                                               
Sales classified by geographic area:
                                                                                                               
 
                                                                                                               
America, except United States
    899,637       915,689       31,054       5,612             (520,583 )     1,331,409       324,400       574,242             20,504       5,520       (264,092 )     660,574  
United States of America
    72,255       806,692                   280,986       (77,784 )     1,082,149       17,802       288,940                   193,695       (39,690 )     460,747  
Europa
    6,223,613       1,143,676       55,043       1,738       11,718       (2,921,133 )     4,514,655       3,654,507       1,204,637                   175       (2,322,601 )     2,536,718  
Middle East/Africa/Oceania
    1,539,000       27,894                         (694,445 )     872,449       623,645       111,509                         (231,347 )     503,807  
Japan
    3,264,996       629,223                         (1,361,006 )     2,533,213       2,198,938       507,129                         (1,179,975 )     1,526,092  
China
    11,666,367       552,139                   63,879       (5,321,523 )     6,960,862       4,971,575       363,550                         (1,375,763 )     3,959,362  
Asia, except Japan and China
    2,385,318       789,023       22,797                   (1,109,936 )     2,087,202       902,072       565,640                         (420,632 )     1,047,080  
Brazil
    2,638,438       343,962       1,275,683       814,153       214,117       (1,683,009 )     3,603,344       1,715,584       333,311       117,812       855,789       114,433       (1,247,987 )     1,888,942  
 
                                                                                                               
Net revenue
    28,689,624       5,208,298       1,384,577       821,503       570,700       (13,689,419 )     22,985,283       14,408,523       3,948,958       117,812       876,293       313,823       (7,082,087 )     12,583,322  
 
                                                                                                               
 
                                                                                                               
Assets
                                                                                                               
Fixed assets and intangibles
    59,350,707       57,695,644       18,140,849       7,608,368       7,948,017             150,743,585       45,770,534       63,719,690       3,191,552       5,254,177       11,265,546             129,201,499  
Investments
    530,903       6,015,307       37,062       223,908       3,156,051             9,963,231       476,611       47,378             216,607       3,838,866             4,579,462  

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(VALE LOGO)
25 Cost of Goods Sold and Services Rendered, and Sales and Administrative Expenses by Nature, Other operational expenses (incomes), net and Financial Results
The costs of goods sold and services rendered are as follows (unaudited):
                                 
    Consolidated     Parent Company  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Cost of goods sold and services rendered
                         
Personnel
    1,211,131       823,381       526,744       450,190  
Material
    1,868,084       1,335,740       763,368       744,098  
Fuel oil and gas
    981,365       773,598       470,005       316,569  
Outsourcing services
    1,478,048       933,274       875,178       758,443  
Energy
    501,988       440,638       202,974       214,053  
Aquisiction of products
    557,382       413,160       586,826       256,792  
Depreciation and depletion
    1,441,240       1,153,888       400,855       416,798  
Others
    1,474,533       761,521       852,014       514,479  
 
                       
Total
    9,513,771       6,635,200       4,677,964       3,671,422  
 
                       
The expenses are demonstrated in the tables as follows (unaudited):
 
    Consolidated     Parent Company  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Selling and Administrative expenses
                               
Personnel
    249,931       179,683       149,675       109,562  
Services (consulting, infrastructure and others)
    132,555       100,021       80,512       63,444  
Advertising and publicity
    30,571       31,139       28,688       25,185  
Depreciation
    95,917       103,768       67,848       76,941  
Travel expenses
    15,683       3,864       9,890       2,421  
Taxes and rents
    12,238       23,059       4,020       4,259  
Rouanet law
    843             843        
Others
    110,300       37,095       13,922       19,282  
Sales
    108,020       86,861       13,960       5,104  
 
                       
Total
    756,058       565,490       369,358       306,198  
 
                       
 
    Consolidated (Unaudited)     Parent Company (Unaudited)  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Others operational expenses (incomes), net
                               
Provision for loss with taxes credits (ICMS)
    18,386       41,822       5,280       31,018  
Provision for variable remuneration
    159,178       91,776       131,556       61,739  
Vale do Rio Doce Foundation — FVRD
    45,458       577       45,458       577  
Waived mining rights — PTI
          376,003              
Provision for losses on materials/inventory
    57,203       169,213       22,000       169,213  
Pre operational, plant stoppages and idle capacity
    219,228       140,904             46,069  
Others
    216,381       224,148       (48,115 )     47,966  
Research and development
    573,538       313,642       278,875       211,946  
 
                       
Total
    1,289,372       1,358,085       435,054       568,528  
 
                       

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(VALE LOGO)
                                 
    Consolidated     Parent Company (Unaudited)  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Financial expenses
                               
Interest
    (581,112 )     (420,902 )     (662,320 )     (401,287 )
Labor, tax and civil contingencies
    (10,016 )     (70,682 )     (3,941 )     (70,503 )
Derivatives
    (67,942 )     (403,893 )           (54,518 )
Monetary and exchange rate changes
    (81,095 )     (510,388 )     (119,360 )     (879,819 )
Stockholders’ debentures
    (119,917 )     (161,666 )     (119,917 )     (161,666 )
IOF
    (1,736 )     (3,500 )     (617 )     (607 )
Others
    (287,134 )     (201,048 )     (170,002 )     (148,910 )
 
                       
 
    (1,148,952 )     (1,772,079 )     (1,076,157 )     (1,717,310 )
 
                       
Financial income
                               
Related parties
    4,202             8,145       5,845  
Short-term investments
    253,979       71,363       190,347       18,182  
Derivatives
    467,220       4,342       200,940        
Monetary and exchange rate changes
    133,005       332,228       34,295       99,659  
Others
    22,663       27,446       4,330       16,378  
 
                       
 
    881,069       435,379       438,057       140,064  
 
                       
 
                               
Financial results, net
    (267,883 )     (1,336,700 )     (638,100 )     (1,577,246 )
 
                       
26 Commitments
Nickel Project — New Caledonia
Regarding the agreement on tax relief for finance lease sponsored by the French Government, we provide some assurances in December 2004 in favor of New Caledonia Vale SAS (“VNC”) for which we guarantee payments due from the VNC to a maximum amount of US$100 million (equivalent to R$163 on March 31, 2011) (“Maximum Amount”) in relation to indemnity. This guarantee was provided by BNP Paribas for the benefit of taxes investors of Gnifi, a special purpose entity that owns a portion of assets in our nickel cobalt processing plant in New Caledonia (Girardin Assets). We also provide an additional guarantee covering the payments due to VNC of (a) amounts that exceed the Maximum Amount in relation to indemnity and (b) certain other amounts payable by VNC under the lease agreement covering the Girardin Assets. This guarantee was provided by BNP Paribas for the benefit of GniFi.
Another commitment related to VNC was that Girardin Assets would be substantially completed by December 31, 2010. Due to the Administration delay, proposed an extension of the term to December 31, 2011, which was accepted. Consequently, the benefits of the financing structure are highly probable and we do not anticipate losses from the tax advantages provided under this financing structure.
In March 31, 2011, two new bank guarantees totaling US$61 million (€$43 million, equivalent to R$99 million in March 31, 2011). were made by Vale on behalf of the VNC and on behalf of the Province of Southern New Caledonia in order to guarantee the performance of VNC with respect to certain environmental liabilities relating to metallurgical plant and storage facility for waste of Kwe West.
Sumic Nickel Netherlands BV (Sumic), holder of 21% shares of VNC, have an option to sell to us 25%, 50% or 100% of its shares of VNC. The option may be exercised if the defined cost of the initial project of development of nickel-cobalt as defined by funding granted to VNC, and in local currency converted to US dollars at specific exchange rates, in the form of financing Girardin, Stockholders’ loans and equity contributions from Stockholders to VNC exceed US$4.2 billion (equivalent to R$6,8 billion in March 31, 2010) and an agreement is not reached on how to proceed with the project. On February 15, 2010, we added formally to our agreement with Sumic to raise the limit to approximately US$4.6 billion at specific exchange rates7,4 billion in March 31, 2011. On May 27, 2010 the limit was reached, and in October 22, 2010 an agreement was signed to extend the date of the put option for the first half of 2011. On 2011, a new extension of the agreement was signed extending the date of the put option to 2012.
We granted a warranty covering certain indemnity payments of VNC (Vale Inco New Caledonia) to supplier, under a supply agreement for electricity (“ESA”), concluded in October 2004 for the VNC project. The amount of indemnity payments depends on a number of factors, including whether the termination of ESA is the result of any breach of contract by the VNC and that date of early termination of contract. During the first quarter of 2010 the supply of electricity by ESA began and guaranteed amounts were reduced Lifelong ESA based on the maximum amount. On December 31, 2010, the guarantee was US$177 million (€$125 million, equivalent to R$288 million on March 31, 2011).
In February 2009, we and our subsidiary Vale Newfoundland and Labrador Limited (“VNL”) celebrate additions to the Development Agreement of Voisey’s Bay with the Government of Newfoundland and Labrador, Canada, which allows VNL to ship up to 55,000 t of nickel concentrate from mines in the area of Voisey’s Bay. As part of the agreement, VNL has agreed to

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provide to the Government of Newfoundland and Labrador financial security in the form of letters of credit, each one in the amount of US$16 million (CAD$16 million, equivalent to R$26 million in March 31, 2011) for each shipments of nickel concentrate sent out of the province from January 1, 2009 through August 31, 2009. The amount of this collateral was US$110 million (CAD$112 million, equivalent to R$179 million on March 31, 2011).
On March 31, 2011 there was an additional US$118 million (equivalent to R$192 million on March 31, 2011) of letters of credit issued and unsettled in accordance with our revolving line of credit as well as an additional US$84 million (equivalent to R$137 million in March 31, 2011) in letters of credit and US$68 million (equivalent to R$111 million on March 31, 2010) in bank guarantees issued and unsettled. These are associated with environmental complaints and other operational items associated, as well as insurance, electricity commitments and rights to import and export.
In April 2011, Vale had paid compensation of stockholders’ debentures in the amount of R$13,448.

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27 Related Parties
In the normal course of operations, Vale contract rights and obligations with related parties (subsidiaries, associated companies, jointly controlled entities and Stockholders), derived from operations of sale and purchase of products and services, leasing of assets, sale of raw material, so as rail transport services, with prices agreed between the parties and also mutual transactions with interest rate of 94% of CDI.
Transactions with related parties are made by the Company in a strictly commutative manner, observing the price and usual market conditions and therefore do not generate any undue benefit to their counterparties or loss to the Company.
The balances of these related party transactions and their effect on financial statements may be identified as follows:
                                 
    Consolidated  
    Assets  
    March 31, 2011 (unaudited)     December 31, 2010  
    Customers     Related parties     Customers     Related parties  
Baovale Mineração S.A.
    2,850               1,026        
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS
    144,215       134       215,566       134  
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO
    339             338        
Companhia Nipo-Brasileira de Pelotização — NIBRASCO
                (369 )      
Korea Nickel Corporation
                19,656        
Minas da Serra Geral S.A.
    4                    
Mineração Rio do Norte S.A.
          48              
MRS Logistica S.A.
    9,470       360       1,370       360  
Samarco Mineração S.A.
    35,145       6,325       44,182       6,343  
Others
    141,726       194,769       188,849       91,361  
 
                       
Total
    333,749       201,636       470,618       98,198  
 
                       
 
                               
Recorded as:
                               
Current
    333,749       185,829       470,618       90,166  
Non-current
          15,807             8,032  
 
                       
 
    333,749       201,636       470,618       98,198  
 
                       
                                 
    Consolidated  
    Assets  
    March 31, 2011 (unaudited)     December 31, 2010  
    Suppliers     Related parties     Suppliers     Related parties  
Baovale Mineração S.A.
    27,957             25,395        
Companhia Coreano-Brasileira de Pelotização — KOBRASCO
    24,559       1,068       4,641       1,068  
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS
    100,950       27       245,447       32  
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO
    23,067             8,013        
Companhia Nipo-Brasileira de Pelotização — NIBRASCO
    32,449       9,519       8,662       9,519  
Log-in S.A.
                8,068        
Minas da Serra Geral S.A.
                24,534        
Mineração Rio do Norte S.A.
    8,092             8,073        
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS
    79,150             101,038        
Others
    56,618       23,941       118,064       16,994  
 
                       
Total
    352,842       34,555       551,935       27,613  
 
                       
 
                               
Recorded as:
                               
Current
    352,842       34,319       551,935       24,251  
Non-current
          236             3,362  
 
                       
 
    352,842       34,555       551,935       27,613  
 
                       

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                    Parent Company  
                    Assets  
                    March 31, 2011 (unaudited)     December 31, 2010  
                    Customers     Related parties     Customers     Related parties  
Baovale Mineração S.A.
                    5,700       3,323       2,053       3,323  
Companhia Portuária Baía de Sepetiba — CPBS
                    1,128       6,028       804       6,029  
CVRD OVERSEAS Ltd.
                                1,244,415       144  
Ferrovia Centro — Atlântica S.A.
                    87,617       29,173       49,738       44,232  
Companhia Coreano-Brasileira de Pelotização — KOBRASCO
                    551       16,295              
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS
                    292,899       16,170       438,329       273  
Minerações Brasileiras Reunidas S.A. — MBR
                    5,166       684,020       4,212       676,768  
MRS Logistica S.A.
                    16,192       25,576       941       20,894  
Companhia Nipo-Brasileira de Pelotização — NIBRASCO
                          18,025              
Salobo Metais S.A.
                    8,471       5,167       6,678       5,167  
Samarco Mineração S.A.
                    70,289       12,650       88,364       12,685  
Vale International S.A.
                    12,248,402       2,586,767       15,614,231       1,552,782  
Vale Manganês S.A.
                    41,089       203,740       32,495       182,054  
Others
                    213,818       492,353       275,598       555,160  
 
                                       
Total
                    12,991,322       4,099,287       17,757,858       3,059,511  
 
                                       
 
                                               
Registrado no:
                                               
Current
                    12,991,322       2,168,941       17,757,858       1,123,183  
Non-current
                          1,930,346             1,936,328  
 
                                       
 
                    12,991,322       4,099,287       17,757,858       3,059,511  
 
                                       
 
                    Parent Company  
                    Liabilities  
                    March 31, 2011 (unaudited)     December 31, 2010  
                    Suppliers     Related parties     Suppliers     Related parties  
Baovale Mineração S.A.
                    55,914             50,790        
Companhia Portuária Baía de Sepetiba — CPBS
                    21,357       209       27,512       213  
CVRD OVERSEAS Ltd.
                                3       217,150  
Ferrovia Centro — Atlântica S.A.
                    14,324       69       18,564       59  
Companhia Coreano-Brasileira de Pelotização — KOBRASCO
                    49,117             9,281        
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS
                    205,559       56       499,791       65  
Minerações Brasileiras Reunidas S.A. — MBR
                    111,778       270,775       31,778       270,775  
MRS Logistica S.A.
                    25,063             25,121        
Companhia Nipo-Brasileira de Pelotização — NIBRASCO
                    66,222       21,201       17,678       21,201  
Salobo Metais S.A.
                    20,400                    
Vale International S.A.
                    610,738       31,989,369       3,972       32,412,197  
Mitsui & CO, LTD
                    79,150             101,038        
Others
                    260,126       7,182       213,854       1,323  
 
                                       
Total
                    1,519,748       32,288,861       999,382       32,922,983  
 
                                       
 
                                               
Registrado no:
                                               
Current
                    1,519,748       5,540,320       999,382       5,325,746  
Non-current
                          26,748,541             27,597,237  
 
                                       
 
                    1,519,748       32,288,861       999,382       32,922,983  
 
                                       
 
    Consolidated (Unaudited)  
    Income     Cost/Expense     Financial  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Baovale Mineração S.A
    852       1,552       4,873       4,523              
Companhia Coreano-Brasileira de Pelotização — KOBRASCO
                23,542       10,631             28  
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS
    152,053       65,217       178,437       104,145       (1,814 )     1,389  
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO
                28,957       5,253             (10 )
Companhia Nipo-Brasileira de Pelotização — NIBRASCO
                30,341       9,213             27  
Log-in S.A.
    1,642       4,968                         (42 )
Mineração Rio do Norte S.A.
    22             17,552       34,244             (101 )
Mitsui e Co Ltd
                97,357       14,357              
MRS Logistica S.A.
    3,638       2,754       138,767       119,336             (3,701 )
Samarco Mineração S.A
    113,442       59,318                          
Vale Austrália Pty Ltd.
                            (33,288 )      
Others
    8,547             6,232       7,716       1,747       1,171  
 
                                   
Total
    280,196       133,809       526,058       309,418       (33,355 )     (1,239 )
 
                                   

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    Parent Company (Unaudited)  
    Income     Cost/Expense     Financial  
    March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010     March 31, 2011     March 31, 2010  
Baovale Mineração S.A.
    1,704       3,419       9,745       9,046              
Companhia Coreano-Brasileira de Pelotização — KOBRASCO
                47,084       21,261             56  
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS
    302,375       141,909       363,341       185,867       (3,694 )     2,819  
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO
                58,975       10,699             (20 )
Companhia Nipo-Brasileira de Pelotização — NIBRASCO
                61,921       18,801             56  
Companhia Portuária Baia de Sepetiba — CPBS
                84,526       61,080       3        
CVRD Overseas Ltd.
          623,937                         (7,220 )
Ferrovia Centro — Atlântica S.A.
    48,330       41,223       12,528       18,319       (292 )     3,592  
Ferrovia Norte Sul S.A.
    5,347                                
Vale Canada Limited
    5,620                                
Mitsui e Co Ltd
                97,357       14,357              
MRS Logistica S.A.
    5,044       3,901       235,713       203,993              
Samarco Mineração S.A.
    223,333       118,636                         (13 )
Vale Energia S.A.
                36,120       83,081             5  
Vale International S.A.
    11,370,205       4,418,565                   (374,606 )     (870,577 )
Vale Manganês S.A.
    22,386       25,144                         30  
Others
    190       4,762       84,824       5,378       (8,358 )     4,800  
 
                                   
Total
    11,984,534       5,381,496       1,092,134       631,882       (386,947 )     (866,472 )
 
                                   
Additionally, Vale retains with its Stockholders, Banco Nacional de Desenvolvimento Social and the BNDES Participacoes S. A., in the amount of R$3,795,637 and R$1,252,503, respectively, as at March 31, 2011, relating to operations of interest-bearing loans at market interest rates, whose maturity is September 2029. The operations generated interest expense in the amount of R$68,422. And financial transactions with Bradesco in the amount of R$2,821,858 as at March 31, 2011, generated in income interest expenses in the amount of R$52,140.
Remuneration of key management personnel:
                 
    As of March 31, (Unaudited)  
    2011     2010  
Short-term benefits:
    38,679       43,343  
 
           
- Wages or pro-labor
    4,852       3,963  
- Direct and indirect benefits
    9,123       11,487  
- Bonus
    24,704       27,893  
 
               
Long-term benefits:
    11,186       23,575  
 
           
- Based on stock
    11,186       23,575  
Termination of position
    570       379  
 
           
 
               
 
    50,435       67,297  
 
           

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28 Correlation of explanatory notes of interim financial statements as of March 31, 2011 with the financial statements as of December 31, 2010
             
March 2011       December 2010
note       note
1
  Operational Context     1  
 
           
2
  Summary of the Main Accounting Practices and Accounting Estimates     2  
 
           
3
  Critical Accounting Estimates and Assumptions     3  
 
           
4
  Amendments and Interpretations to Existing International Standards that are not yet in Force     4  
 
           
5
  Risk Management     4  
 
           
6
  Acquisitions and Disposals     6  
 
           
7
  Cash and Cash Equivalents     8  
 
           
8
  Short-term Investments     9  
 
           
9
  Accounts Receivables     11  
 
           
10
  Inventories     12  
 
           
11
  Assets and Liabilities Held for Sale     13  
 
           
12
  Recoverable Tax     14  
 
           
13
  Investments     15  
 
           
14
  Intangible Assets     16  
 
           
15
  Property, Plant and Equipment     17  
 
           
16
  Loans and Financing     19  
 
           
17
  Provision     20  
 
           
18
  Income Tax and Social Contribution     21  
 
           
19
  Employee Benefits Obligations     22  
 
           
20
  Classification of Financial Instruments     23  
 
           
21
  Fair Value Estimation     24  
 
           
22
  Stockholders’ Equity     25  
 
           
23
  Derivatives     26  
 
           
24
  Information by Business Segment and Consolidated Revenues by Geographic Area     27  
 
           
25
  Costs of Goods Sold and Services Rendered and Expenses by Nature     28/29  
 
           
26
  Commitments     30  
 
           
27
  Related Parties     31  
 
           
28
  Subsequent events     N/D  
N/D — Not disclosed
The note 10 — Financial Assets Available for Sales and note 8 — Impairment, of the Financial Statements as of December 2010 are not being disclosed because there is no relevant changes in the period. Regarding note 5 — First-time Adoption of the Consolidated Financial Statements in Accordance with IFRS and Individual Financial Statements in Accordance with CPC, of the same financial statements, was applicable only for the first adoption.

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29 Subsequent events
On April 29, 2011, Vale has approved the project of the fourth pelletizing plant of Samarco. With a capacity of 8.3 million of tons per year — Mtpy. The startup is scheduled alongside the first half of 2014 and total investment is estimated of US$ 3.0 billion (Vale holds a jointly-controll of 50% of Samarco), which is not part of the own investment program of Vale.
On April 28, 2011, the Board of Directors approved the purchase of up to 9% stake in Norte Energia S.A. (NESA), parcel owned by Gaia Energia e Participações S.A (Gaia), subject to meeting certain conditions. The NESA is a company that has as its sole objective the implementation, operation and exploitation of the UHE Belo Monte hydroelectric plant. Vale estimated an investment of R$ 2.3 billion to repay the Gaia by capital contributions made in the NESA and commitments of future capital contributions arising from the shareholding acquired.
In April 2011, Vale announced that has defined with the terms of an offer to acquire, through a subsidiary, the total capital of Metorex Limited (Metorex) of copper and cobalt producer, with operations in the African copper belt, listed on the Johannesburg Stock Exchange (JSE), by the amount of 7.35 South African rand per share, totaling ZAR 7,524 million on a diluted basis, equivalent to US $ 1,125 million at the exchange rate US $ / ZARof the last closing, to be paid in cash. The Metorex owns two mines in operation, Chibuluma is located in Zambia with an estimated capacity of 18,600 metric tons per year of concentrate copper and proven and probable reserves of 3.5 million metric tons (Mt) @ 3.8% Cu, in which it owns a 85% interest, and Ruashi is located in DRC that include a hydrometallurgical SX-EW plant, have an estimated capacity of 36,000 metric tons per year of cathode copper and 4,500 tonnes of cobalt per year, based on proven and probable reserves of 22.2 (MT) @ 2.4% Cu, in which it owns a 75% stake. In addition, Metorex has three projects in the DRC, one in development and two in the exploration stage. The acquisition is subject to approvals, consents and government permits and regulatory requirements in South Africa, Zambia and DRC, and approval of minority shareholders in subsidiary companies, as well as usual closing conditions. Moreover, the sale or transfer of Sable Zinc Kabwe Limited, a processing operation of cathode copper and cobalt in Zambia, by Metorex to third parties is also one of the conditions of the offer.

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(VALE LOGO)
30 Board of Directors, Fiscal Council, Advisory committees and Executive Officers
     
Board of Directors   Governance and Sustainability Committee
    Gilmar Dalilo Cezar Wanderley
Ricardo José da Costa Flores   Renato da Cruz Gomes
Chairman   Ricardo Simonsen
     
Mário da Silveira Teixeira Júnior   Fiscal Council
Vice-President    
    Marcelo Amaral Moraes
Fuminobu Kawashima   Chairman
José Mauro Mettrau Carneiro da Cunha    
José Ricardo Sasseron   Aníbal Moreira dos Santos
Luciano Galvão Coutinho   Antônio Henrique Pinheiro Silveira
Nelson Henrique Barbosa Filho   Arnaldo José Vollet
Oscar Augusto de Camargo Filho    
Paulo Soares de Souza   Alternate
Robson Rocha   Cícero da Silva
Renato da Cruz Gomes   Marcus Pereira Aucélio
    Oswaldo Mário Pêgo de Amorim Azevedo
Alternate    
Deli Soares Pereira   Executive Officers
Eustáquio Wagner Guimarães Gomes    
Eduardo de Oliveira Rodrigues Filho    
Hajime Tonoki    
     
João Moisés de Oliveira   Roger Agnelli
Chief Executive Officer
Luiz Carlos de Freitas    
Marco Geovanne Tobias da Silva    
Paulo Sergio Moreira da Fonseca   Carla Grasso
Raimundo Nonato Alves Amorim    
Sandro Kohler Marcondes   Executive Officer for Human Resources and Corporate
    Eduardo de Salles Bartolomeo
Advisory Committees of the Board of Directors   Executive Officer for Integrated Bulk Operations
     
Controlling Committee   Eduardo Jorge Ledsham
    Executive Office for Exploration, Energy and Projects
Luiz Carlos de Freitas    
Paulo Ricardo Ultra Soares   Guilherme Perboyre Cavalcanti
Paulo Roberto Ferreira de Medeiros   Chief Financial Officer and Investor Relations
     
Executive Development Committee   José Carlos Martins
João Moisés de Oliveira   Executive Officer for Marketing, Sales and
José Ricardo Sasseron   Strategy
Oscar Augusto de Camargo Filho    
    Mario Alves Barbosa Neto
Strategic Committee   Executive Officer for Fertilizers
Roger Agnelli    
Luciano Galvão Coutinho   Tito Botelho Martins
Mário da Silveira Teixeira Júnior   Executive Officer for Base Metals Operations
Oscar Augusto de Camargo Filho    
Ricardo José da Costa Flores   Marcus Vinícius Dias Severini
    Chief Officer of Accounting and Control Department
Finance Committee    
Guilherme Perboyre Cavalcanti   Vera Lúcia de Almeida Pereira Elias
Eduardo de Oliveira Rodrigues Filho   Chief Accountant
Luiz Maurício Leuzinger   CRC-RJ - 043059/O-8
Luciana Freitas Rodrigues    

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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
         
  Vale S.A.
(Registrant)
 
 
  By:   /s/ Roberto Castello Branco    
Date: 5 May, 2011   Roberto Castello Branco   
    Director of Investor Relations