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Presented during the XIV Brazil-Japan Joint Economic Committee Meeting, that took place in the city of Salvador, in Brazil, during august 9th and 10th of 2011.
Citation preview
Vale: A Global Strategic Partner
Comitê de Cooperação Econômica Brasil - Japão
August 09th, 2011
Dire
toria
de
Est
raté
gia
2
Vale expresses condolences for the country and people who have lost members of their families and friends in the Tohoku earthquake that claimed 15.645 lives and left 10.682 others missing and injured, and trusts Japanese people strength and determination to rebuild their country.
March ,11th March ,17th
1 Japan National police agency as of July 29, 2011
3
“This presentation may include declarations about Vale's expectations regardingfuture events or results. All declarations based upon future expectations, ratherthan historical facts, are subject to various risks and uncertainties. Vale cannotguarantee that such declarations will prove to be correct. These risks anduncertainties include factors related to the following: (a) the countries where Valeoperates, mainly Brazil and Canada; (b) the global economy; (c) capital markets;(d) the mining and metals businesses and their dependence upon globalindustrial production, which is cyclical by nature; and (e) the high degree ofglobal competition in the markets in which Vale operates. To obtain furtherinformation on factors that may give rise to results different from those forecastby Vale, please consult the reports filed with the Brazilian Comissão de ValoresMobiliários (CVM), the French Autorité des Marchés Financiers (AMF), and withthe U.S. Securities and Exchange Commission (SEC), including Vale’s mostrecent Annual Report on Form 20F and its reports on Form 6K.”
Disclaimer
4
1
2
Brazil: A mineral powerhouse
Brazil and Japan: A case of success
3 Vale and Japan: A long term partnership
5
1
2
Brazil: A mineral powerhouse
Brazil and Japan: A case of success
3 Vale and Japan: A long term partnership
6 Sources: Vale and Banco Central do Brasil
Brazil has a consolidated institutional framework that encourages investment
Stable political and economic institutions
Rule of law and commitment to property rights
Strong democracy
7
2,3%
3,5%4,0%
1980-2002 2003-2009 2010-2012E
1 Unctad (Conferência das Nações Unidas para o Desenvolvimento e Comércio) report – Estimates for 2011 – First Semester US$ 30 billionSources: IBGE and IMF
After two decades of slow growth, Brazil has resumed a faster growth path and is a major destination for foreign direct investments
Brazil’s GDP growth
FDI inflow into Brazil
US$ billion
65,052,6
25,945,1
34,618,8
15,118,1
10,116,6
22,532,8
2011E20102009200820072006200520042003200220012000
US$ 292 bi of FDI inflows along the last decade
1
8
Brazil is one of the richest countries in natural resources …
Zinc
Uranium
Titanium
Tungstenio
Gold
Nickel
Niobium
Manganese
Iron Ore
Tin
Copper
Lead
Bauxite
Beryllium
Diamond
Fluorine
Phosphorious
LimestoneCoal
Salt
Oil& Gas
Sources: Vale Exploration department
9 Sources: Vale and Banco Central do Brasil, Plano Nacional de Mineração 2030 (MME): Sumário Mineral, 2009, DNPM e Sinopse 2010, SGM-DNPM.
#1
Iron Ore Manganese
#2
… as well as one of the global leaders in minerals and other products
#1
Orange juice
Coffee
#1
Chickenmeat
#1
Ethanol
#2#2
SoybeansSugar
#1
Bauxite
#3
Niobium
#1
Tantalita
#2 #3
Ornamental Rock
10
Mining has been contributing to the Brazilian GDP growth…
Sources: MME - Plano Nacional de Mineração 2030 (MME), World Bank , Vale internal data and Ministério do Desenvolvimento, Indústria e Comércio Exterior website
Mining sector value addedUS$ bn
0,3 1,9 2,8 3,97,1
18,2
1970 1980 1990 2000 2005 2008
CAGR11%
11
…and should remain as a lever for Brazilian development due to forecasted future investments and job creation
Source: MME - Plano Nacional de Mineração 2030
1,5 2,3 3,6
27,4 26,1
36,8
2010-2015 2016-2022 2023-2030
Mineral research Mining
Forecasted investmentsUS$ bn
187 297 419 590903
1.323
1.894
2.747
2008 2015 2022 2030
Mineral exploration Mining
People employedThousands
US$ 98 Bn forecasted in investments in mineral research and mining until 2030, almost exclusively originated by the private sector– not counting an additional 30% for infrastructure and logistics
Due to the rise in production, a sound of employment is expected, more than tripling during the next two decades
12
Brazil is also concerned over a more sustainable mining growth specially in the Amazon region – Brazilian new frontier
Mining Projects versus protected areas
Vale mining area: Less than 4% of interference on the protected area
Vale protects this area since 80’s
Carajás Area is an Example
Source: MME - Plano Nacional de Mineração 2030, Vale environment report
13
Vale has also been investing a substantial amount of resources in Corporate Social Responsibility…
In Carajas, in the North of Pará, where Vale operates the largest open pit iron ore mine in the world, we help protect around 8,000 km² of native forest
Carajás mineral complex is an example
736
1.136
1.194
Average 2007-2009
2010
2011E
Investments in CSR¹ US$ million
E=Planned¹ Social and environmental investments
Vale has broad based selection of pioneering initiatives Responsible operations Reforestation and flora renovation Use of clean fuels Responsible residue management
Source: Vale environment report GRI
14
… And in technology development in Brazil to improve efficiency since mining is a complex business
MINE LOADING UNLOADING SHIPPING TRANSPORT DC DISTRIBUTION CLIENTSRAILROAD
15 days 1-2 days 9 days 75 days 100 days
Synchronism across the entire chain demands absolute precision in the operation, to ensure the continuous flow of the product
Advanced control technologies and specific skills are required
Control Center of FCA
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1
2
Brazil: A mineral powerhouse
Brazil and Japan: A case of success
3 Vale and Japan: A long term partnership
16
Japan’s direct investment in petrochemical, steel, soybean and paper&pulp sectors
Brazil became the 3rd main receiver of FDI from Japan
In 1974 JFE invests in CST (Cia Siderúgica Tubarão)
The 50’s and the 60’s The 70’s
Japan implemented the Usiminas Steel Complex in Brazil (1958)
A great number of Japanese companies started operations in Brazil: Ishikawajima, Toyota, Sharp, Toshiba, Matsushita, Honda, Yamaha, etc
Bilateral trade surged from US$ 57 million to US$1.7 billion
The 90’s onwards…The 80’s
Brazilian share on the total FDI from Japan reduced due to macroeconomic instability and Japanese attraction by the new industrialized countries in Asia
New course of trade relations was established, with the opening up of the Brazilian economy
Japanese companies invested US$1.4 billion in Brazil in telecommunications, capital goods, mining, and metallurgy
Over the decades Brazil and Japan relationship grew stronger underpinning a series of new ventures and a mutual investment relation
17
Brazil- Japan trade flowUS$ million
5.053
4.450
4.836
5.643
7.734
8.931
12.922
9.637
14.122
6.888
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: IMF/Haver Analytics, Brazilian Central Bank
Brazil and Japan maintain a significant trade, strengthening this partnership in different areas in recent years
Japanese FDI inflows to BrazilUS$ million
Total 2000 – 2010 US$ 13.5 bn
2.4971.673
4.099501
660779
2431.368
504827
385274278342
192
201020092008200720062005200420032002200120001999199819971996
“Dow Chemical announced yesterday a joint-venture with Japanese Mitsui (…) to produce polyethylene from ethanol”
Valor Econômico
“Sumitomo Rubber Industries Ltd is planning to invest in a tire factory in Paraná…”
Folha de São Paulo
“Japanese AGC will own a Glass factory in São Paulo”
Brasil Econômico
“Itochu Japanese trading company is investing with Bunge in 2 ethanol plants in Minas Gerais and Tocantins”
Valor Econômico
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1
2
Brazil: A mineral powerhouse
Brazil and Japan: A case of success
3 Vale and Japan: A long term partnership
19
Japan is present in Vale’s shareholders controlling group
Brazilian investors
29,0%
Non-Brazilian investors
38,6%
VALEPAR*32,4%
,
**As of June 30, 2011
BNDESPar11%
Bradespar22%
Mitsui18%
Brazilian pension funds49%
Source: Vale monthly relation investors report
20
Japan played a crucial role for Vale development and expansion
The 50’s and 60’s The 70’s The 80’s The 90’s
Vale starts to sell iron ore to Japanese steel companies
Albrás starts operation
VALE, JFE Steel and other Japanese steel makers start a joint venture to develop mines in Minas Gerais– Capanema complex (MSG)
Support to Carajásfunding as a corporate guarantee
Alunorte starts operation
Mitsui acquires CAEMI,sharing with Vale the control of the company
Vale established a partnership with Mitsui to develop Vale’s intermodal transportation business
Carajas complex
In 1978 was founded Alunorte and Albrás in partnership with NAAC
Mitsui finances MBR iron ore project
Japanese Steel Mills and Vale invest in two pelletizing plants in Espírito Santo state -Nibrasco
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Ferrous– Nibrasco Japanese Steel Mills (49%)1
– California Steel JFE Steel (50%) Nickel
– Vale Japan (Matsuzaka) Sumitomo Metal Mining Co (12,8%), Mitsui (6,8%) and others2
– PT Inco (Indonesia) Sumitomo Metal Mining Co (20,1%)3
– Goro Nickel S.A.(New Caledonia) Sumic -Sumitomo Metals and Mitsui (21%)
Aluminum4
– Albras Nippon Amazon Aluminum Co. (NAAC) (13,8%)– Alunorte NAAC, JAIC, Mitsui and Mitsubishi (5,3%)
Logistics– Log-In Mitsui (3,8%)
Phosphate Rock– Bayovar Mitsui (25%)
Business / company Japanese Partner
And still has ongoing successful partnerships with Vale
¹ Nippon steel- NSC (25 ,4%), JFE steel corporation (12%), Sumitomo Metal Industries (6%), Kobe steel (3%), Nisshin Steel (1,6%),Sojitz Corporation (1%)
4 Vale stake in Norsk Hydro Source: 20F and Vale’s reports3 Others 20,1% publicly held and 0.6% held by others
2 Others- Sumitomo Corporation (2.6%) and Sojitz Corporation (1.7%)
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17,1
16,3
18,1
20,8
27,9
27,5
34,1
22,5
30,8
24,8
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Vale iron ore sales to JapanMt
Over the last 10 years Vale has shipped 240 Mt of iron ore and pellets to Japan
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Implementation of distribution centers nearby Japanese steel makers and Asian market, decreasing the freight differential between Brazil and Australians in the Asian basin
Reducing 35% of CO2 emission in Brazil-Asia route
Maximizing competitive advantages: boosting production of high-quality iron ore
Minimizing competitive disadvantages: building a low-cost portfolio of maritime freight and distribution centers
Lower costs mitigating freight price volatility for clients
VLOCs will promote a permanent cut in the costs of Atlantic-Pacific dry bulk shipping
Vale is investing heavily in shipping capabilities to be closer to its Asian clients
Capacity = 400,000 mt
Speed = 14.8 Knots
Fuel consumption = 96,7 tons / day HFO (heavy fuel oil)
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Vale is also investing in distribution centers adding flexibility to operations and strengthening competitiveness in Asia
Tubarão
San Nicolas
PDM Malaysia
Oman
Guaíba & Itaguaí
Low seaborne transit time, inventories synergy and blending flexibility are among the unique advantages of Vale’s Distribution Centers
VLOCs
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Vale has other partnerships with Japan, such as the JV Vale Japan Nickel Refinery in Matsuzaka
Operations began in 1965,currently supplied with nickel matte from PT Inco in Indonesia Tonimet produced is sold to Japanese stainless and specialty steel manufacturers, e.g.
JFE, Sumitomo Metal, Nisshin, Nippon Steel, Hitachi, etc. About 50% of the production is exported to Taiwan and Korea, as sinter, tonimet
granules/briquette
26
There could be some other opportunities for Vale and Japan in the future
Infrastructure
Japan Building of new ports in Japan that could handle Valemax fleet (400kt of capacity)
Technology Development
1
Vale Institute of Technology (ITV)
Vale Energy Solutions (VSE)
Foster and strengthen external and internal Science & Technology communities
Develop R&D outside lines of business scope
Motogenerators: Ethanol-fueled motor-generator to produce electric energy Combcycle: Steam turbine which uses salty water to generate
energy, purifying and making it drinkable (used in oil platforms) Turbines: Gas turbines for the oil industry to generate energy
Renewable and Cleaner
Energy
Biodiesel Project
Synthetic Diesel
Palm Oil production, biodiesel raw material in Brazil and Indonesia
Synthetic diesel (without sulphur) that contributes to carbon capture:– Coal-to-Liquids in Mozambique– Biomass to Liquids in Brazil2
Brazil General Cargo
Steel projects3
Mining
4
Rare Earths Exploration of Rare Earths in Brazil
27
Reinforcing and strengthening mutual cooperation established in many fields, even in the national passion for Brazilians: Soccer!
Congratulations!
28
Vitoria Port 1959 Albras 1990 Itabira 1978
EFVM – Vitoria Minas Tubarao Complex 1979 Ponta da Madeira
Mitsui & Vale exchange program
Alunorte
Vale: グローバルリーダー
Obrigado!
Thank you!
ありがとう