Announcement Of Vale's Performance In 1Q10

RIO DE JANEIRO, May 6 /PRNewswire-FirstCall/ -- We would like to share with you the highlights of Vale's Webcast about the company's performance for Q1 2010.

Main highlights of Vale's Webcast:   http://www.vale.com/vale_us/media/vale_usgaap_1t10i.pdf

The main highlights of Vale's performance in 1Q10 were:

• Operating revenue of US$ 6.8 billion in 1Q10, 4.7% more than the US$ 6.5 billion attained in 4Q09.
• Operational income, as measured by adjusted EBIT(a) (earnings before interest and taxes), of US$ 2.1 billion in 1Q10, 86.9% above 4Q09.
• Operational margin, as measured by adjusted EBIT margin, recovered to 31.2%, from 17.4% in 4Q09.
• Cash generation, as measured by adjusted EBITDA(b) (earnings before interest, taxes, depreciation and amortization), rose to US$ 2.9 billion in 1Q10 from US$ 2.1 billion in 4Q09.
• Net earnings of US$ 1.6 billion, equal to US$ 0.30 per share on a fully diluted basis, against US$ 1.5 billion in 4Q09.

A webcast was held today in Rio de Janeiro ( Brazil) on Vale's performance during the first quarter of 2010, and the company reported a solid performance during the period, reflecting primarily their efforts to minimize costs and the strong recovery of the global demand for minerals and metals.

As a consequence of the structural changes in the global iron ore market, Vale has reached agreements, both permanent and provisional, with all its iron ore clients around the globe, to move existing contracts to index based prices1. The new pricing system will reflect in the company's financial performance in 2Q10.

Vale has taken a pro-active stance towards the optimization of their asset portfolio, entering into transactions involving mainly their aluminum assets and the acquisition of world-class Brazilian fertilizer assets, which gives Vale a strong regional operating base in leading consumers markets around the globe, including Simandou in West Africa, one of the best undeveloped iron ore deposits in the world, combining high quality with large scale. The availability of Carajas and Simandou allows Vale to have by far the best and the largest growth potential in the global iron ore industry.

KEY COMMENTS MADE BY VALE'S EXECUTIVES DURING THE WEBCAST

Market Forecast

"What we saw in the first quarter confirmed the expectations of our industry and market, we achieved a positive level of development that was in line with what we had discussed in previous quarters. Recovery is on the way and we are happy to see that we are on the right path, preserving growth capacity despite facing the largest crisis we've seen in the past 80 years," affirmed Fabio Barbosa, Finance Director of Vale

"The results we achieved increased sharply and cost reduction was a very important element in this variation. We achieved 354 million dollars in cost savings, and have now reached 4.4 billion dollars in savings, down from 5 billion dollars," declared Barbosa.

China operation and pricing systems

" China is a driving factor behind iron demand. The exports to China are a major factor, resulting in major increases in the demand for iron ore, which is driving the market at the moment. We never had a liquid market to drive the price before, and now we do," affirmed Jose Carlos Martins, Executive Officer for Ferrous Minerals

"With the crisis we learned that the benchmark system was not working anymore, so we are no longer committed to this system. We want to improve our relationship with the market using spot iron ore prices. In the past we didn't use this price reference, but now we do. If it is going to allow us greater liquidity and avoid manipulation, then I think it is reasonable to use this system," stated Martins.