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TABLE OF CONTENTS
ContentsVale S.A. Financial Statements

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As filed with the Securities and Exchange Commission on March 31, 2016April 18, 2019

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 20-F

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

For the fiscal year ended: December 31, 20152018
Commission file number: 001-15030

VALE S.A.
(Exact name of Registrant as specified in its charter)

Federative Republic of Brazil
(Jurisdiction of incorporation or organization)

Luciano Siani Pires, Chief Financial Officer
phone: +55 21 3814 8888
fax: +55 21 3814 88203485 5000

Avenida das Américas, 700Praia de Botafogo 186 – Bloco 8offices 701 – Loja 3181901 – Botafogo
22640-10022250-145 Rio de Janeiro, RJ, Brazil
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

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FORM 20-F CROSS REFERENCECROSS-REFERENCE GUIDE

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Form 20-F cross-reference guide

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I.  OVERVIEW

We are one of the largest metals and mining companies in the world, based on market capitalization. We are the world's largest producer of iron ore and iron ore pellets and the world's largest producer of nickel. We also produce manganese ore, ferroalloys, metallurgical and thermal coal, copper, platinum group metals (PGMs), gold, silver and cobalt. We are presently engaged in greenfield mineral exploration in five countries. We operate large logistics systems in Brazil and other regions of the world, including railroads, maritime terminals and ports, which are integrated with our mining operations. In addition, we have a distribution center to support the delivery of iron ore worldwide. Directly and through affiliates and joint ventures, we also have investments in energy and steel businesses.

In this report, references to "Vale" are to Vale S.A. References to "we," "us" or the "Company" are to Vale and, except where the context otherwise requires, its consolidated subsidiaries. References to our "ADSs" or "American Depositary Shares" are to our common American Depositary Shares (our "common ADSs"), each of which represents one common share of Vale. American Depositary Shares are represented by American Depositary Receipts ("ADRs") issued by the depositary.

Vale S.A. is a stock corporation, orsociedade por ações, that was organized on January 11, 1943 under the laws of the Federative Republic of Brazil for an unlimited period of time. Its head office is located at Praia de Botafogo 186 – offices 701-1901 – Botafogo, 22250-145 Rio de Janeiro, RJ, Brazil, and its telephone number is 55-21-3485-5000.

Unless otherwise specified, we use metric units. References to "real," "reais" or "R$" are to the official currency of Brazil, thereal (singular) orreais (plural). References to "U.S. dollars" or "US$" are to United States dollars. References to "€" are to Euros.

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BUSINESS OVERVIEW

FAILURE OF THE TAILINGS DAM AT THE CÓRREGO DO FEIJÃO MINE

On January 25, 2019, a tailings dam ("Dam I") failed at our Córrego do Feijão mine, in the city of Brumadinho, state of Minas Gerais. The failure released a flow of tailings debris, which affected our administrative area at the Córrego do Feijão mine and parts of the communities of Córrego do Feijão and Parque da Cachoeira outside of Brumadinho, reaching the nearby Paraopeba River. The dam failure resulted in nearly 300 fatalities or presumed fatalities, and also caused extensive property and environmental damage in the region. Our priority now is to provide support to those affected by the dam failure.

The causes of the accident are still uncertain and are being investigated by us and by several governmental authorities. We are providing our full cooperation to the authorities and to the investigations into the dam failure.

Dam I

The Córrego do Feijão mine is part of the Paraopeba complex, in the Southern System. Dam I was first built in 1976 by Ferteco Mineração, a company we acquired in 2001. Dam I received disposed tailings from the Córrego do Feijão and Jangada mines from 1976 until it became inactive in 2016. Dam I contained approximately 11.7 million cubic meters of iron ore tailings.

The dam was raised by building successive layers (lifts) above the tailings accumulated in the reservoir, a technique known as the "upstream" method. There are two other raising methods, the "downstream" method and the "centerline" method, in which the dam is raised by placing new layers away from the initial dam or on top of it, as opposed to over the accumulated tailings. Each of these methods presents a different risk profile.

Dam VI, another dam located at the Córrego do Feijão mine, was impacted by the tailings debris flow from the failure of Dam I. Due to the ongoing investigation into potential damages from the impact of the tailings debris, it has not received the certification of stability (Stability Condition Statement, or "DCE") required by the rules of the national mining agency, the ANM (Agência Nacional de Mineração). Dam VI is being continuously monitored.

The Jangada mine, also located in the Paraopeba complex, was not affected by the tailings debris flow, but its operations were suspended because of the closure of Feijão processing plant, which processed the run-of-mine of the Jangada mine.

Vale's response

Our senior management has been focused on emergency and long-term initiatives, with three main purposes: (i) providing assistance to victims and remediation of the affected area, (ii) determining the causes of the failure of Dam I, and (iii) preventing further accidents through improved standards and accelerated decommissioning of upstream dams.

(i) Assistance and remediation efforts

Immediately following the failure of Dam I, we contacted the local authorities and activated our Emergency Mining Dam Response Plan (Plano de Ação de Emergência de Barragens de Mineração (PAEBM)) to rescue and provide immediate humanitarian assistance to affected parties, including employees and members of the community. We also mobilized our teams to monitor the Paraopeba River basin, rescue wildlife and domestic animals and support sanitation measures. We mobilized over 400

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doctors, nurses, psychologists, social workers and volunteers to set up assistance centers for those affected. These assistance centers provided humanitarian aid, including medical, psychological and social assistance, distributed basic emergency items, including pharmaceuticals, food, potable water and clothing, and provided duplicate records (such as identification cards, marriage certificates, and birth certificates) to those who lost their homes. We also provided 40 ambulances, a support helicopter, shopping vouchers for clothing, accommodation and transportation for over 800 people.

On January 31, 2019, we presented an emergency plan to the Minas Gerais Public Prosecutor's Office, and to the state and federal environmental agencies, including containment, retention, remediation and recovery actions. The plan contemplates removing debris, installing hydraulic barriers and small dams to assist in the tailings control process, establishing water treatment stations, restoring roads and installing membrane barriers downstream to contain ultrafine sediments and protect the water system on the Paraopeba River basin.

On February 6, 2019, we entered into an agreement with various governmental authorities undertaking to gradually replace our professionals who had been providing assistance to the populations affected since the dam failure, with a team to join the health and social service teams of the city of Brumadinho. We will bear for at least six months the costs of employing 142 professionals, including doctors, nurses, psychologists, physical therapists, occupational therapists, social workers and endemic disease control agents, in addition to administrative and operational professionals, as well as logistics costs incurred by these teams.

We have donated resources to the Municipality of Brumadinho, the fire department of Minas Gerais and other entities that provided assistance to the affected parties. For those affected by the dam failure, we established a three-tiered financial assistance program, under which, we have made donations to more than 440 people. We are also providing funeral assistance and contributing to funeral expenses for each affected family. These donations are without prejudice to any right that any person affected by the dam failure may have to claim damages against us.

(ii) Determination of the causes for the failure of the dam

We are investigating the causes of the failure of Dam I. We engaged a legal advisor and technical experts to conduct an investigation into the causes of the failure of the dam. In addition, our Board of Directors established the Independent Ad Hoc Consulting Committee for Investigation (CIAEA), an independent committee to investigate and advise the Board of Directors in connection with the determination of the causes of the dam failure.

(iii) Prevention of further accidents and accelerated decommissioning of upstream dams

On January 29, 2019, we decided to accelerate our existing plan to decommission our tailings dams built using the upstream method. "Decommissioning" or "decharacterization" means reintegrating the dam and its contents into the local environment, so that the structure is effectively no longer a dam. We will determine the appropriate actions to decommission each dam safely, in accordance with the geotechnical and geographic conditions of each dam. For certain of our upstream dams, we will first convert the dam into a downstream or centerline dam and conclude the decommissioning subsequently. Some of our existing downstream or centerline dams contain smaller dikes or structures that were built using the upstream technique, and we are also planning to remove these upstream dikes or structures. At this point, we cannot predict the costs and timing for decommissioning our upstream tailings dams.

We have been taking steps to decommission upstream dams since late 2015, in response to the failure of Samarco's Fundão dam. In February 2019, we announced our plan to accelerate this process and our

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decision to temporarily suspend our operations at mines and concentration plants located in areas where upstream dams are located. Also, based on our initial assessments, we determined that certain dams would not meet the requirements of new safety requirements imposed by ANM, and evacuated certain areas and relocated the population located within the Self-Rescue Zone of these dams. We expect to resume production at these mines and concentration plants in the future.

Independent Committees

Our Board of Directors has created three independent ad hoc advisory committees to support the Board in matters relating to the dam failure. All of these committees are composed of external and independent members appointed by our Board of Directors. These committees are described below.

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Independent Ad Hoc Consulting Committee for Investigation (CIAEA): established to conduct an independent investigation into the causes of the dam failure and to advise our Board of Directors in connection with these matters. The committee is chaired by Dr. Ellen Gracie, former Justice of the Brazilian Supreme Court, and also includes Manuel Martins and Jose Francisco Compagno.



•

Independent Ad Hoc Consulting Committee for Support and Recovery (CIAEAR): established to monitor our measures to support the affected community and to remediate the impacted area, and our provision of resources for this purpose, and to recommend measures to our Board of Directors in connection with these matters. The committee is chaired by Leonardo Pereira, former chair of the Brazilian Securities Commission, and also includes Ana Cristina Barros and Márcio Gagliato.



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Independent Ad Hoc Consulting Committee for Dam Safety (CIAESB): established to monitor safety initiatives, risk management and risk mitigation efforts related to our tailings dams and recommending measures to strengthen safety at these dams. This committee is chaired by Flávio Miguez de Mello, and also includes Willy Lacerda and Pedro Repetto.

Impacts of the failure of Dam I on Vale

The impacts of the dam failure on our operations and results of operations will be very significant, but their full scale and scope remains uncertain. Some of major impacts are described below.

(i) Freeze orders

Various Brazilian courts have ordered freezes, attachments, deposits and similar measures affecting an aggregate of R$17.6 billion (US$4.5 billion) of our financial assets, including balances in our bank accounts and judicial deposits to secure the payment of damages resulting from the dam failure. This total amount also includes common shares that we hold in treasury and that have been attached. We are also subject to a number of other proceedings and investigations related to the dam failure, which may result in additional attachment of assets and seizure of balances in our bank accounts.

(ii) Liabilities and legal proceedings

Our potential legal liabilities resulting from the dam failure are significant, and we cannot estimate the total amount at this time. We are already the subject of several investigations and legal proceedings relating to the failure of Dam I, and we expect to face other investigations and proceedings. For additional information regarding the legal proceedings relating to the failure of Dam I, seeAdditional Information—Legal proceedings. We will continue to cooperate fully with the authorities and to support the investigations into the dam failure. We will also contest any actions that we believe are unjustified.

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The proceedings are all in very early stages, and we cannot reasonably estimate the size of potential losses or settlements or the timing for decisions. We estimate that we will recognize provisions in our financial statements for the first quarter of 2019 in the amount of R$850 million (US$220 million) in connection with an ongoing public civil action brought by labor prosecutors and provisions ranging from R$1.0 billion to R$2.0 billion (US$260 million to US$520 million) in connection with our preliminary agreement with the State of Minas Gerais and other authorities. Our potential liabilities resulting from the dam failure are significant, and additional provisions are expected.

(iii) Suspension of operations

Following the dam failure, we have suspended various operations, either voluntarily or as a result of revocation of licenses or court orders. As of April 15, 2019, the estimated impact of the suspension of operations following the dam failure on our production is 92.8 million metric tons per year (including the estimated annual impact of the suspension of the Brucutu mine). Additional operations may be suspended as a result of new laws and regulations relating to the use of dams, or our inability to obtain the required licenses or the stability reports required by applicable regulations, as discussed below.

Below is a summary of operations suspended since the date of the dam failure.

•

Southern System:  Immediately after the dam failure, we suspended our operations at the Córrego do Feijão site, including the Jangada mine, pursuant to an order of the environmental authority of the State of Minas Gerais (SEMAD). Also, to permit the acceleration of our decommissioning plan for upstream dams, and following a determination of the ANM, we temporarily suspended operations at the entire Vargem Grande and Fábrica complexes and at the Vargem Grande and Fábrica pelletizing plants on February 20, 2019. The estimated impact of the suspension of these operations is a reduction of approximately 40 million metric tons of iron ore production per year, including the pellet feed needed for the production of 11 million metric tons of pellets per year.



•

Southeastern System:  Our operations at the Timbopeba mine and Alegria mine are currently suspended. Our operations at the Brucutu mine have been suspended since February 4, 2019, but on April 15, 2019, the court of appeals of the State of Minas Gerais partially reversed the last injunction that prevented us from operating the Brucutu mine. We expect to resume operations at Brucutu soon, but the proceedings challenging our right to use the dams supporting our operations at Brucutu are still ongoing. The estimated impact of the suspension of these operations is a reduction of approximately 30 million metric tons of iron ore production per year for the Brucutu mine, 12.8 million metric tons of iron ore production per year for the Timbopeba mine and 10 million metric tons of iron ore production per year for the Alegria mine.

(iv) New regulations

Various governmental authorities have approved or proposed new regulations relating to licensing, use and operations of dams in response to the Dam I failure. Additional rules imposing restrictions on mining operations and ancillary activities are expected. Also, new taxes, contributions or other obligations may be imposed on us as a result of the failure of Dam I or its direct or indirect impacts. These rules may affect not only our iron ore operations, but also our base metals operations in Brazil and other operations that rely on dams.

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Minas Gerais state law on licensing of dams.  A new statute approved by the state of Minas Gerais in February 2019 prohibits the increase, modification or construction of any upstream dam, and provides for the full decommissioning of any upstream tailings dam by February

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2022. The statute also prohibits the increase, modification or construction of any dam if communities are established within its Self-Rescue Zone (Zona de Autossalvamento or "ZAS"), an area which encompasses the portion of the valley downstream of the dam where timely evacuation and intervention by the competent authorities in emergency situations is not possible. Although this statute permits the construction of new dams and the use of existing dams built using other techniques, it imposes significant restrictions on them as well. As a result, we may not be able to rely on tailings dams for new projects and expansion of existing operations.

•

ANM rules.  In February 2019, the ANM, Brazil's national mining agency, issued a resolution on dam safety requiring companies that own upstream tailings dams to submit a technical decommissioning project by August 2019 and to fully decommission any inactive upstream tailings dam by August 2021, and any active upstream tailings dam by August 2023. In addition, the resolution requires the decommissioning of our facilities located within the Self-Rescue Zone of a tailings dam. This new resolution, which imposes more stringent safety requirements, is already in effect, but is under public consultation for potential adjustments until May 1, 2019. We are reviewing the impact of this resolution on our operations.

As a result of new regulations, the licensing process for our operations may become longer and more uncertain, and our costs of monitoring and compliance are expected to increase. These additional laws and regulations may impose restrictions on our operations, require additional investments or eventually require us to suspend additional operations.

We will need to rely on alternative methods to continue operating certain of our mines and plants, particularly those that rely on tailings dams. We have studies in progress, and we have developed a pilot project, to apply a waste disposal technology that consists of filtering and stacking of partially or totally dewatered tailings, which will reduce our reliance on tailings dams in the medium and long term. These alternative technologies will cause an increase in our production costs and require additional investments in our mines and plants.

(v) Impact on reserves

As a result of the dam failure and our decision to accelerate the decommissioning of our upstream tailings dams, we are not in a position to report reserves for the Feijão, Jangada and Capim Branco mines (in the Paraopeba complex).

We are reviewing the impact on our reported reserves of the ongoing investigations and legal proceedings involving the use of dams in our mining operations and of the new rules relating to licensing, use and operations of dams, which were adopted in response to the Dam I failure. These proceedings and regulations may impact our iron ore reserves and reserves for other products for which the production process involves dams. Because alternative methods are available, particularly the dry stockpiling and dry processing technologies, we currently believe that our iron ore reserves will not be materially impacted by these new rules, but we have not concluded our analysis.

(vi) Uncertainties arising from increased safety requirements and external expert certification

Brazilian state and federal authorities are strengthening regulations on dam safety. Many regulations applicable to our mines require us to obtain independent reports and certificates from external experts on the safety and stability of our dams. External experts may be unwilling to provide these reports and certificates as a result of the uncertainties regarding the causes of the Dam I failure, the increasing risk of liability and uncertainties about interpretation of new regulations. If any of our dams is unable to comply

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with safety requirements, we may need to evacuate the area surrounding this dam, relocate communities and take other emergency actions.

•

On February 8, 2019, we started emergency actions after an external consultant revoked a stability report relating to the Sul Superior dam at our Gongo Soco mine (in the Minas Centrais complex in the Southeastern System), in Barão de Cocais, Minas Gerais. As a result, we relocated about 500 residents of the Socorro, Tabuleiro and Piteiras neighborhoods of Barão de Cocais in the downstream area of the Sul Superior tailings dam. The Sul Superior dam has been inactive since April 2016, when we suspended iron ore production at the Gongo Soco mine. As an additional safety measure, we intensified inspections of the Sul Superior dam, installed new monitoring equipment and engaged additional consultants to perform a new safety assessment.



•

On February 16, 2019, the Emergency Action Plan for Mining Dams (PAEBM) for the B3/B4 dam at the Mar Azul mine, in the city of Nova Lima, Minas Gerais, triggered a preventive measure after data from analysis reports from specialized advisory firms indicated increased risk. As a result, we relocated about 200 people from the Macacos neighborhood in the downstream area of the B3/B4 tailings dam, which has been inactive.



•

On March 20, 2019, we temporarily suspended our operations at the Alegria mine, in the Mariana complex, because the results from a preliminary analysis of the stability of its structures under stress conditions were inconclusive.



•

On March 31, 2019, following an auditing process, external auditors renewed the certification of stability (Stability Condition Statements, or DCE) for 80 of our operational structures. We were not able to renew the DCE for 18 other operational structures, and, as a result, we suspended our activities in these structures.

(vii) Impacts on our financial performance and results of operations

We expect the failure of Dam I, and the consequences summarized above, to have extensive impact on our financial performance and results of operations. We have not yet determined the nature and amount of all the consequences. SeeOperating and financial review and prospects—Impact of the failure of Dam I at the Córrego do Feijão Mine. These will include:

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Reduced revenues, and increased costs and expenses, due to the suspension of operations.



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Increased expenditures for assistance and remediation.



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Impairments of fixed assets, which may result in the write-down and write-off of assets.



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Provisions for costs of decommissioning and further remediation.



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Provisions for legal proceedings.

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We may also need to incur additional debt to pay for assistance and remediation actions.

Temporary leave of executive officers

On March 1, 2019, our Board of Directors received a formal recommendation from the federal and state (Minas Gerais) public prosecution offices, the federal police and the civil police of Minas Gerais that we suspend certain of our employees and executive officers. In response to this recommendation, our CEO, Fabio Schvartsman, and our executive officer for Ferrous Minerals and Coal, Gerd Peter Poppinga, requested temporary leave from their positions. Our Board of Directors approved these requests on March 2, 2019, and appointed Eduardo de Salles Bartolomeo as interim chief executive officer and Claudio de Oliveira Alves as interim executive officer for Ferrous Minerals and Coal. Mark James Travers has been appointed executive officer for Base Metals, subject to obtaining the requisite visa and relocating to Brazil, as required under Brazilian law.

OPERATIONAL SUMMARY

The following table presents the breakdown of total net operating revenues attributable to each of our lines of business with continuing operations.

Ferrous minerals:

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Iron ore and iron ore pellets.    We operate four systems in Brazil for producing and distributing iron ore, which we refer to as the Northern, Southeastern, Southern and Midwestern Systems. The Northern and the Southeastern Systems are fully integrated, consisting of mines, railroads, maritime terminals and a port. The Southern System consists of three mining complexes and two maritime terminals. We also have iron ore pellet operations in several locations, some of which are conducted through joint ventures. We currently operate eleven pellet plants in Brazil (the operations of two of these plants are currently

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suspended), and two in Oman. We also have a 50% stake in Samarco Mineração S.A. ("Samarco") and 25% stakes in two pellet companies in China.

•

Ferroalloys and manganese.    We conduct our manganese mining operations through Vale S.A. and subsidiaries in Brazil, and we produce several types of manganese ferroalloys through a wholly owned subsidiary in Brazil.

Base metals:

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Nickel.    Our principal nickel mines and processing operations are conducted by our wholly owned subsidiary Vale Canada Limited ("Vale Canada"), which has operations in Canada, Indonesia and New Caledonia. We also have nickel operations in Onça Puma, in the Brazilian state of Pará. We also control and operate nickel refining facilities in the United Kingdom, Japan and China, and have interests in a nickel refinery in South Korea.



•

Copper.    In Brazil, we produce copper concentrates at Sossego and Salobo, in Carajás, in the Brazilian state of Pará. In Canada, we produce copper concentrates, copper matte and copper cathodes in conjunction with our nickel mining operations at Sudbury and Voisey's Bay.



•

Cobalt, PGMs and other precious metals.    We produce cobalt as a byproduct of our nickel mining and processing operations and refine it at our Port Colborne facilities, in the Province of Ontario, Canada. We began producing refined cobalt in our Long Harbour facilities in Newfoundland and Labrador in 2017. We also produce cobalt as a byproduct of our nickel operations in New Caledonia. We produce PGMs as byproducts of our nickel mining and processing operations in Canada. The PGMs are concentrated at our Port Colborne facilities. We produce gold and silver as byproducts of our nickel mining and processing operations in Canada, and gold as a byproduct of our copper mining at Sossego and Salobo in Brazil.

Coal:

•

We conduct our coal operations primarily in Mozambique, through Vale Moçambique S.A. ("Vale Moçambique"), where we are ramping up our metallurgical and thermal coal operations. We also have a minority interest in a Chinese coal producer.

Logistics infrastructure:

•

We are a leading operator of logistics services in Brazil and other regions of the world, with railroads, maritime terminals, distribution centers and ports. Two of our four iron ore systems include an integrated railroad network linked to port and terminal facilities. We also have an interest in MRS Logística S.A. ("MRS"), which transports our iron ore products from the Southern System mines to our maritime terminals, and VLI S.A. ("VLI"), which provides integrated logistics solutions to general cargo through railroads, inland and maritime terminals in Brazil. We operate the logistics infrastructure to support our coal operations in Southeastern Africa. We own and charter dry bulk vessels to transport the products that we sell on a cost and freight ("CFR") basis to customers.

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BUSINESS STRATEGY

The year of 2019 has been a very challenging year for us. We know that there is much to be done to address the effects of the failure of the tailings dam at the Córrego do Feijão mine. We are committed to remediating the damages caused to the city of Brumadinho and the surrounding communities. We will manage the liabilities arising from this deeply regretted event, and we are committed to learning and sharing the lessons from the dam failure. With this purpose, we are dedicated to:

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Keeping our people and communities safe and restoring trust from our stakeholders;



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Capital discipline;



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Maintaining our value over volume approach for the iron ore business;



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Transforming our base metals business into a significant cash generator;



•

Concluding the ramp-up of our coal business; and



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Enhancing corporate governance.

Below are the highlights of our major business strategies.

Keeping our people and communities safe and restoring trust from our stakeholders

We are fully committed in addressing the effects of the failure of Dam I at the Feijão mine, with three key initiatives: (i) assistance to victims and recovery of the area affected by the rupture of the dam, (ii) determination of the causes of the dam failure, and (iii) prevention of further accidents through adoption of the highest standards and accelerated decommissioning of all upstream dams. SeeBusiness overview—Failure of the tailings dam at the Córrego do Feijão mine. We continue making every effort to provide relief and support to those affected by the dam failure and to restore the trust of our stakeholders on us. We are committed to rebuilding our reputation in Brazil and in the global mining industry.

Capital discipline

We reiterate our strong commitment to a sound balance sheet. In 2018, we completed our deleveraging process and achieved our net debt target of US$10 billion. We will allocate capital in a disciplined way, which will be key to enable us to address the effects of Dam I failure. In January 2019, our Board of Directors approved the suspension of our shareholder remuneration policy, so that no payment of dividends or interest on shareholders' equity will be made pursuant to this policy in excess of mandatory payments required by law, and we will not approve any share buyback for the time being.

Maintaining our value over volume approach for the iron ore business

In the iron ore business, we are committed to delivering the highest possible margins under the current circumstances, by managing our extensive supply chain and flexible product portfolio to cope with production constraints in the short-term. We will constantly seek better price realization, based on adjustments to our product portfolio according to market demand and supply chain optimization. We are focusing our product line to capture industry trends, improving quality and productivity, controlling costs, strengthening our logistics infrastructure of railroads, ports, shipping and distribution centers, and

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strengthening relationships with customers. Our diversified portfolio of high-quality products, strong technical marketing strategy, efficient logistics and long-standing relationships with major customers will help us overcome the immediate challenges and achieve this goal.

With the continuous increase of the share of dry processing production, from 45% in 2014 to 60% in 2018, and aimed at 70% by 2023, our reliance on new dams and dam raisings tend to reduce. To treat the tailings from wet processing, we are investing in studies and new technologies with a view to allowing us to operate certain of our mines and plants without having to rely on the use of tailings dams. In particular, we have studies in progress, and we have developed a pilot project, to apply a waste disposal technology that consists of filtering and stacking of partially or totally dewatered tailings, which will reduce our reliance on tailings dams in the medium and long term. These alternative technologies will cause an increase in our production costs and require additional investments in our mines and plants. In line with this goal, we acquired New Steel in January 2019, bringing innovative technologies for the dry beneficiation of iron ore.

We will continue to promote the Brazilian blend fines (BRBF), a product standard with silica (SiO2) content limited to 5% and lower alumina (1.5%), offering strong performance in any kind of sintering operation. We produce BRBF by blending fines from Carajás, which contain a higher concentration of iron and a lower concentration of silica in the ore, with fines from the Southern and Southeastern Systems, which contain a lower concentration of iron in the ore, but also low concentration of alumina. It is produced in our Teluk Rubiah Maritime Terminal in Malaysia and in sixteen ports in China. This process reduces the time needed to reach Asian markets and increases our distribution capillarity by allowing the use of smaller vessels. The blending strategy also permits the use of iron ore with lower concentration from the Southern and Southeastern Systems, allowing more efficient mining plans and increasing the use of dry processing methods, which in turn reduce capital expenditures, extend the life of our mines and reduce the use of water in our operations: a key flexibility to cope with the short-term challenges.

Transforming our base metals business into a significant cash generator

Our strategy for our nickel business is to complete its turnaround, continuing to review our asset utilization and optimize our operations and aiming to increase productivity and improve returns, while preserving capacity for growth based on the prospects for an electric vehicle revolution. We are the world's largest nickel producer, with large-scale, long-life and low-cost operations, a substantial resource base and diversified mining operations that produce nickel from nickel sulfide and laterite sources using advanced technology.

We have transitioned to a smaller footprint in our nickel business by calibrating investments and production to reflect current market conditions, and our nickel turnaround plan is now based on three pillars: supply chain integration, operational excellence and digital transformation. In Canada, we are optimizing the flowsheet, running a cost reduction program and improving underground mine performance at Sudbury and finalizing the ramp-up of operations at Long Harbour. In Indonesia, we are renewing truck and mine equipment, increasing efficiency of the furnaces and increasing fuel efficiency through coal conversion. In New Caledonia, we are developing a mine plan revision and a study to increase efficiency of the VNC plant. In the long term, the battery segment shows important upside potential as electric vehicle production continues to attract significant investments, which could positively affect nickel price and our nickel premiums.

A key aspect of our strategy for our copper assets in the Carajás region is to improve efficiency and asset utilization while we evaluate opportunities to increase copper production. We have plans to develop a multi-year copper expansion plan, with Salobo III being the first approved project in the pipeline.

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Concluding the ramp-up of our coal business

We have been working to increase our coal production, mainly through the ramp-up of the Moatize operations and the ramp-up of the Nacala Logistics Corridor (NLC) in Mozambique and Malawi, where we have entered into a strategic partnership with Mitsui. As we complete the ramp-up in Moatize and the NLC, we expect our costs to diminish, enhancing the competitiveness of our coal operations. Key initiatives, such as knowledge transfer from our iron ore operations, opening of new mine sections and preparation of selected mining pits for future disposals are expected to lead to higher capacity utilization, mine productivity and yields.

Enhancing corporate governance

We are committed to continuing to improve our corporate governance. Following the conversion of our class A preferred shares into common shares, in December 2017, we completed our listing on the Novo Mercado segment of the B3 exchange (formerly BM&FBovespa), the special listing segment of B3 for companies committed to the highest standards of corporate governance. In 2018, our Board of Directors revised some of our policies, including our Corporate Integrity Policy, Code of Ethical Conduct, Socio-Environmental Investment Policy, Risk Management Policy, Remuneration to Shareholders Policy and Securities Trading Policy.

In 2018, as required under Brazilian rules, we started reporting our compliance with the Code of Best Practices for Corporate Governance of the Brazilian Corporate Governance Institute (IBGC). The code is based on the "comply or explain" principle, and we currently fully comply with 80% of the practices recommended by the IBGC and partially comply with 17% of practices recommended by the code.

SIGNIFICANT CHANGES IN OUR BUSINESS

We summarize below major events related to our acquisitions, divestitures and other significant developments in our business since the beginning of 2018.

Acquisitions

•

Ferrous Resources.  On December 6, 2018, we entered into an agreement with IEP Ferrous Brazil LLC to buy Ferrous Resources Limited, a company that owns and operates iron ore mines near our operations in Minas Gerais, for US$550 million. The transaction is expected to be concluded in 2019, subject to certain conditions precedent, including approval by antitrust authorities in Brazil.



•

New Steel.  On December 10, 2018 we entered into an agreement with Hankoe FIP to buy New Steel Global NV (New Steel), a company that develops innovative iron ore beneficiation technologies, for US$500 million. All conditions have been fulfilled, including approval by antitrust authorities in Brazil, and we concluded the transaction on January 24, 2019. New Steel currently owns patents in 56 countries for Fines Dry Magnetic Separation (FDMS), a dry processing concentration technique.

Dispositions and asset sales

We are always seeking to optimize the structure of our portfolio of businesses in order to achieve the most efficient allocation of capital. We summarize below our most significant dispositions since the beginning of 2018.

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Business Overview

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Sale of Fertilizer Business—In January 2018, we completed the sale to The Mosaic Company ("Mosaic") of a substantial part of our fertilizer business, which includes (i) our phosphate assets in Brazil; (ii) our stake in the joint venture that operates the phosphate rock mine in Bayóvar, Peru; (iii) our potash assets located in Brazil; and (iv) our potash project based in Canada (Kronau). We received US$1.080 billion in cash and approximately 34.2 million shares of Mosaic's common stock, which corresponds to approximately 8.9% (on a post-issuance basis) of Mosaic's outstanding common stock. Subject to limited exceptions, the Mosaic shares issued to us cannot be transferred for two years following closing. We have the right to appoint two members of Mosaic's board of directors, one of whom must be independent, for so long as we hold at least 90% of the Mosaic shares received at closing, or one member of Mosaic's board for so long as we hold at least 50% of the Mosaic shares received at closing. We appointed Mr. Luciano Siani and Mr. Oscar P. Bernardes to Mosaic's board of directors.



•

Sale of Cubatão assets—In May 2018, we completed the sale to Yara International ASA of our wholly owned subsidiary, Vale Cubatão Fertilizantes Ltda., which owned and operated nitrogen and phosphate assets in Cubatão, Brazil. We received the purchase price of US$255 million in cash upon the closing of the transaction.



•

Sale of interest in coking coal project in Australia.  In September 2018, we concluded the sale of our 50% interest in the Eagle Downs hard coking coal project (including all associated rights and obligations) in Central Queensland, Australia, to BS Coal Pty Ltd for a total consideration of: (i) US$90 million in cash upon completion, (ii) US$27 million in cash upon the third anniversary of closing and (iii) royalties to be paid over 50% of all coal produced and sold from the Eagle Downs Project tenements.

Project Financing for the Nacala Logistics Corridor

We have a partnership with Mitsui in coal assets in Mozambique. In February 2018, we concluded the agreements for a project financing for the Nacala Logistics Corridor, which connects the Moatize coal mine to the Nacala-à-Velha maritime terminal, located in Nacala, Mozambique, in the total amount of US$2.730 billion, as follows:

•

US$1.030 billion provided by Japan Bank for International Cooperation (JBIC);



•

US$1.000 billion loan insured by Nippon Export and Investment Insurance (NEXI), provided by Sumitomo Mitsui Banking Corporation, The Bank of Tokyo Mitsubishi UFJ Ltd; Mizuho Bank Limited, Sumitomo Mitsui Trust Bank Limited, Nippon Life Insurance Company and Standard Chartered Bank;



•

US$400 million loan insured by Export Credit Insurance of South Africa Limited (ECIC), provided by ABSA Bank Limited, Investec Bank Limited; Rand Merchant Bank and The Standard Bank of South Africa Limited;



•

US$300 million provided by the African Development Bank (AfDB).

Vale received US$2.6 billion in proceeds, in repayment of certain shareholders loans provided for construction of NLC, net of certain commissions paid by NLC. The project financing will be repaid in 14 years with the proceeds obtained from the tariff charged by NLC in connection with its provision of coal transportation services.

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Business Overview

Optimizing our base metals operations in Canada

We have optimized our nickel operations across Canada, as part of an overall strategy to prioritize value over volume, reduce our atmospheric emissions and comply with local regulations. In 2018, we phased out our smelting and refining activities in Thompson, focusing our operations on nickel concentrate production. The concentrate is then shipped to our Sudbury operation to be further processed. In Sudbury, we produce copper concentrate, copper matte, copper cathodes and refined nickel. In Long Harbour, we produce nickel rounds, copper cathodes and cobalt rounds. We successfully blended nickel intermediates from Sudbury and Asia in our refinery in Wales to make higher premium products.

We will now turn our focus to the optimization of the mining assets to ensure a sustainable and value-accretive ore supply to our three concentrators in Canada:

•

Sudbury, Ontario—In the second half of 2017, we converted our two-furnace operation in Sudbury into a single furnace operation. As a result of this change, we increased the proportion of production of copper concentrate to total copper production from a rate of 66% in 2017 to 72% in 2018, maximizing the smelter capacity for nickel. In addition, we ceased production of copper anode and increased production of copper matte. At the end of 2018, 11% of our copper production was sold in the form of copper matte.



•

Thompson, Manitoba—We changed our operations in Thompson, Manitoba, from an integrated operation to a mine-mill operation. We permanently shut down one of the two smelter furnaces at the site in 2017, and decommissioned the other furnace in 2018, therefore closing the remaining smelting and refining activities to focus the operation solely on nickel concentrate production. We currently send all nickel concentrate from Thompson to be refined in Sudbury.



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Voisey's Bay and Long Harbour, Newfoundland and Labrador—Starting in 2018, all Voisey's Bay nickel concentrate is being shipped to our Long Harbour refinery. Our Long Harbour processing facilities produce nickel rounds, copper cathode and cobalt rounds from the Voisey's Bay concentrate.

Cobalt streaming transaction

In June 2018, we sold to Wheaton Precious Metals Corp. (Wheaton) and Cobalt 27 Capital Corp. (Cobalt 27) a combined 75% of the cobalt produced as a byproduct at our Voisey's Bay mine from January 1, 2021, which includes the ramp-down of production from the existing mine and the life-of-mine production from our underground mine expansion project. In consideration, we received US$690 million in cash from Wheaton and Cobalt 27 upon closing of the transaction on June 28, 2018, and will receive additional payments of 20%, on average, of cobalt prices upon delivery. We remain exposed to approximately 40% of future cobalt production from Voisey's Bay, through our retained interest in 25% of cobalt production and the additional payments upon delivery. These transactions enabled the development of the Voisey's Bay underground mine extension project, which will extend the mine life of Voisey's Bay.

Resumption of operations of São Luis and Tubarão I and II pellet plants

In 2018, we resumed the operations of our Tubarão I, Tubarão II and São Luis pellet plants. The operations of these plants had been suspended since 2012 due to market conditions.

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Business Overview

FAILURE OF SAMARCO'S TAILINGS DAM IN MINAS GERAIS

In November 2015, the Fundão tailings dams owned by Samarco S.A. failed, releasing tailings downstream, flooding certain communities and causing impacts on communities and the environment along the Doce river. The failure resulted in 19 fatalities and caused property and environmental damage to the affected areas. Samarco is a joint venture equally owned by Vale S.A. and BHP Billiton Brasil Ltda. ("BHPB").

In June 2016, Samarco and its shareholders (Vale and BHPB) created the Fundação Renova, a not-for-profit private foundation, to develop and implement (i) social and economic remediation and compensation programs and (ii) environmental remediation and compensation programs in the region affected by the dam failure.

The creation of Fundação Renova was provided for under the agreement for settlement and conduct adjustment (the "Framework Agreement") signed in March 2016 by Vale, BHPB, Samarco, the Brazilian federal government, the two Brazilian states affected by the failure (Minas Gerais and Espírito Santo) and other governmental authorities. The Framework Agreement has a 15-year term, renewable for successive one-year periods until all the obligations under the Framework Agreement have been performed. The Framework Agreement does not provide for admission of civil, criminal or administrative liability for the Fundão dam failure. The Framework Agreement provides that, within three years of the date of the agreement, the parties would review its terms to assessing the effectiveness of the ongoing remediation and compensation activities.

On June 25, 2018, Samarco, Vale and BHPB entered into a comprehensive agreement with the offices of the federal and state (Minas Gerais and Espírito Santo) prosecutors, public defenders and attorney general, among other parties, improving the governance mechanism of Fundação Renova and establishing, among other things, a process for potential revisions to the remediation programs provided under the Framework Agreement based on the findings of experts hired by Samarco to advise the MPF (Federal Prosecutor's Office) over a two-year period (the "June 2018 Agreement"). SeeAdditional information—Legal proceedings.

Under the Framework Agreement and the June 2018 Agreement, Fundação Renova must be funded by Samarco, but to the extent that Samarco is unable to fund, Vale and BHPB must ratably bear the funding requirements under the Framework Agreement. As Samarco is currently unable to resume its activities, we and BHPB have been funding the Fundação Renova and also providing funds directly to Samarco, to preserve its operations and to support Samarco's funding obligations. At this point, we cannot predict when Samarco will resume its operations.

Pursuant to the Framework Agreement, Fundação Renova and Samarco allocated R$2.1 billion to social and economic remediation and compensation programs in 2018 and have allocated R$5.3 billion to these programs since the dam failure. From 2019 to 2021, Samarco, or Vale and BHP, will provide to Fundação Renova funding based on the amounts needed to implement the projects approved for each year, subject to an annual minimum of R$800 million and an annual maximum of R$1.6 billion. Starting in 2022, Samarco will provide the necessary funding in order to complete remaining programs approved for each year.

Additionally, Fundação Renova must allocate a minimum annual amount of R$240 million over 15 years (from 2016) to the implementation of compensation programs. Under the terms of the Framework Agreement, Fundação Renova must spend an additional amount of at least R$500 million on sewage collection and treatment and solid waste disposal.

For a discussion of the legal proceedings resulting from the failure of Samarco's tailings dam, seeAdditional information—Legal proceedings.

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SELECTED FINANCIAL DATA

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

Consolidated statement of income data

Earnings (loss) per share

The table below shows our earnings (loss) per share. The earnings (loss) per share for 2014 to 2016 have been retrospectively adjusted to reflect the conversion of our Class A preferred shares into common shares, which was concluded in November 2017, as if the conversion had occurred at the beginning of the earliest year presented.

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Selected Financial Data

Balance sheet data

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FORWARD-LOOKING STATEMENTS

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

·•

the impact of the tailings dam failure at the Córrego do Feijão mine and related remediation measures on our operations, cash flows and financial position;



•

the outcome of the various regulatory, governmental and legal proceedings in which we are involved;



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our direction and future operation;



·•

the implementation of our financing strategy and capital expenditure plans;



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the exploration of mineral reserves and development of mining facilities;



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the depletion and exhaustion of mines and mineral reserves;



•

trends in commodity prices, supply and demand for commodities;



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the future impact of competition and regulation;



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the payment of dividends or interest on shareholders' equity;



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compliance with financial covenants;



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industry trends, including the direction of prices and expected levels of supply and demand;



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the implementation of our principal operating strategies, including our potential participation in acquisition, divestiture or joint venture transactions or other investment opportunities;



·

the implementation of our financing strategy and capital expenditure plans;



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the exploration of mineral reserves and development of mining facilities;



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the depletion and exhaustion of mines and mineral reserves;



·

trends in commodity prices, supply and demand for commodities;



·

the future impact of competition and regulation;



·

the payment of dividends or interest on shareholders' equity;



·

compliance with financial covenants;



·

industry trends, including the direction of prices and expected levels of supply and demand;



·

the outcome of the various regulatory, governmental and legal proceedings in which we are involved;



·•

other factors or trends affecting our financial condition or results of operations; and



·•

the factors discussed underRisk factors.

We caution you that forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in forward-looking statements as a result of various factors. These risks and uncertainties include factors relating to (a)(i) economic, political and social issues in the countries in which we operate, (b)(ii) the global economy, (c)(iii) commodity prices, (d)(iv) financial and capital markets, (e)(v) the mining and metals businesses, which are cyclical in nature, and their dependence upon global industrial production, which is also cyclical, (f)(vi) regulation and taxation, (g)(vii) operational incidents or accidents, and (h)(viii) the high degree of global competition in the markets in which we operate. For additional information on factors that could cause our actual results to differ from expectations reflected in forward-looking statements, seeRisk factors. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments. All forward-looking statements attributed to us or a person acting on our behalf are expressly qualified in their entirety by this cautionary statement, and you should not place undue reliance on any forward-looking statement.

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Vale S.A. is a stock corporation, orsociedade por ações, that was organized on January 11, 1943 under the laws of the Federative Republic of Brazil for an unlimited period of time. Its head office is located at Avenida das Américas, 700 – bloco 8 – loja 318 – Barra da Tijuca, Rio de Janeiro, RJ, Brazil, and its telephone number is 55-21-3485-5000.

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

Unless otherwise specified, we use metric units.

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

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RISK FACTORS

RISKS RELATING TO DAM FAILURE

The failure of Dam I in Minas Gerais has adversely affected our business, financial condition and reputation, and the overall impact of the dam failure on us is still uncertain.

RisksOn January 25, 2019, Dam I failed, resulting in nearly 300 fatalities or presumed fatalities, in addition to personal, property and environmental damages. SeeBusiness Overview—Failure of the tailings dam at the Córrego do Feijão mine. The causes of the dam failure are uncertain and are being investigated by us and by several governmental authorities. This event has adversely affected our operations, but the overall impact of the dam failure is still uncertain.

•

Liabilities and legal proceedings.  Our potential liabilities resulting from the dam failure are significant, and the total amount cannot be estimated at this time. The dam failure resulted in fatalities and property and environmental damages. We are a defendant in a number of legal proceedings, in which plaintiffs claim significant amounts in damages resulting from the event. SeeAdditional Information—Legal proceedings andOperating and financial review and prospects—Impact of the failure of Dam I at the Córrego do Feijão Mine. These liabilities may have a material adverse effect on our business and financial condition.



•

Liquidity.  Brazilian courts have ordered the freezing of more than R$17.6 billion (US$4.5 billion) of our assets, including cash in our bank accounts, judicial deposits and common shares we held in treasury. Additional assets may be attached in the future. These pre-judgment attachments and asset freezes may adversely impact our business and liquidity.



•

Suspension of operations.  Following the dam failure, we have suspended various operations, which will adversely impact our production and cash flows. We suspended our operations at the Córrego do Feijão and Jangada mines immediately following the event. We temporarily suspended various mining and pellet plant operations to be able to expedite the decommissioning of our upstream dams. We also suspended operations in response to judicial injunctions and new determinations by ANM, Brazil's national mining agency. Other developments resulting from the failure of Dam I or questioning the safety of our existing dams may result in the suspension of other operations. As of April 15, 2019, the estimated impact of the suspension of operations following the dam failure on our production is 92.8 million metric tons per year, (including the estimated annual impact of the suspension of the Brucutu mine), including the pellet feed needed for the production of 11 million metric tons of pellets per year. As a result of the suspended operations, we may need to purchase iron ore and iron ore pellets in the market to honor our obligations under existing commercial contracts, which may increase our overall costs and adversely impact our business and financial condition. It is possible that certain of these operations may not be resumed.



•

Increase in production costs.  We may need to make investments or adjustments in the operations not impacted by the dam failure to increase production, mitigate the impact of suspended operations or comply with additional safety requirements. We may also have to use alternative disposal methods to continue operating certain of our mines and plants, particularly those that rely on tailings dams. These alternative methods may be more expensive or require significant capital investments in our mines and plants. As a result, we expect our costs to increase, which may have a material adverse effect on our business and financial condition.

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Risk Factors

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Increased taxation.  We may be subject to new or increased taxes or other obligations to fund remediation measures and compensate direct and indirect impacts of the failure of Dam I. Also, we have entered into settlement agreements with the state of Minas Gerais and certain municipalities to minimize the impact of the shutdown of some of our operations in state and municipal tax revenues. Also, the state of Minas Gerais has proposed the adoption of a new fiscal framework, under which the state would be entitled to collect from us an additional R$107 million per year on ICMS (a state tax on the circulation of goods) starting in 2020. Retroactive amounts could also be applied over the last five years, with an estimated impact of R$550 million on us.



•

Additional regulation and restrictions on mining operations.  Various governmental authorities have proposed and approved new rules relating to licensing, use and operations of dams in response to the Dam I failure. For instance, a new statute approved by the state of Minas Gerais in February 2019 precludes the use of upstream dams and imposes new obligations for design, construction and operation of any other type of tailings dams. This new statute also provides for the full decommissioning of any upstream tailings dam by February 2022, and a rule approved by ANM in February 2019 requires us to fully decommission any inactive upstream tailings dam by August 2021 and any active upstream tailings dam by August 2023. New rules imposing restrictions on mining operations and ancillary activities may be approved. The licensing process for our operations may become longer and subject to more uncertainties. These additional laws and regulations may impose restrictions on our operations, require additional investments or even require us to suspend additional operations, which may adversely affect our business.



•

Reserves.  Developments resulting from the failure of Dam I, particularly new regulations applicable to dam licensing and use and the ongoing proceedings and investigations involving the use of dams in our mining operations, may result in decreases in our reported reserves or reclassification of proven reserves as probable reserves. We continuously review the impact of new regulations, proceedings and investigations on our reported reserves. These new regulations, proceedings and investigations may impact our iron ore reserves and the reserves for other products the production of which involve dams.



•

Inability to comply with additional safety requirements or to obtain required certifications.  Rules on dam safety are getting stricter following the dam failure. Also, external experts may be reluctant to attest to the stability and safety of our dams, as a result of the uncertainties regarding the causes of the Dam I failure and the increasing risks of liability. If any of our dams is unable to comply with the safety requirements or if we are unable to obtain the required certification for any of our dams, we may need to suspend operations, evacuate the area surrounding this dam, relocate communities and take other emergency actions. These measures are costly, may adversely impact our business and financial condition and cause further damage to our reputation.



•

Inability to pay dividends.  Reduced cash flows and increased liabilities may adversely affect our ability to pay dividends or make other distributions to our shareholders. Immediately after the dam failure, our Board of Directors determined the suspension of our shareholder remuneration policy.



•

Increased funding requirements.  We may need to raise funds in the financial markets to meet our existing commitments and the potential liabilities and capital expenditures associated with the remediation of environmental damages. We may not be able to obtain funds at acceptable costs.

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Risk Factors

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•

Increased cost of insurance.  Our cost of insurance is expected to rise, and we may not be able to obtain insurance for certain risks.



•

Management attention.  Since the date of the dam failure, attention of our senior management and our Board of Directors is focused on the emergency actions and other measures in response to the crisis and diverted from our core business.



•

Management continuity.  Following the dam failure, our CEO and our executive officer for Ferrous Minerals and Coal requested temporary leave from their positions, following the recommendation of Brazilian prosecutors. Other changes in our senior management may occur, which may have an adverse effect on our business. A shareholders' meeting is scheduled for April 30, 2019, and shareholders may approve changes in the composition of our Board of Directors, which may result in further changes to the composition of our senior management.



•

Impact on our financial performance.  We expect the failure of Dam I to have a significant impact on our financial performance. We have not yet determined the nature and amount of the consequences, but they will include reduced revenues due to the suspension of operations, increased expenditures for assistance and remediation, impairments of fixed assets, provisions for costs of decommissioning and remediation, and provisions for legal proceedings. See Operating and financial review and prospects—Impact of the failure of Dam I at the Córrego do Feijão Mine.



•

Additional impacts.  The overall consequences of the dam failure remain uncertain. The contamination of the Paraopeba river and other water systems may affect the water supply of surrounding cities. If our preventive measures fail to contain the tailings and debris flow, other rivers may be contaminated, causing additional environmental damages. If the tailings and debris flow from the failure of Dam I reach interstate rivers, we may be subject to additional proceedings and investigations by federal authorities.

The failure of a tailings dam or similar structure may cause severe damages, and the decommissioning of our upstream tailings dams may be long and costly.

We own a number of tailings dams and similar structures. In addition, we own stakes in companies that own a number of dams or similar structures, including Samarco and Mineração Rio do Norte S.A. (MRN). The failure of any of these structures could cause losses of lives and severe personal, property and environmental damages, and could have adverse effects on our business and reputation, as evidenced by the consequences of the failure of Dam I at Córrego do Feijão. SeeBusiness Overview—Failure of the tailings dam at the Córrego do Feijão mine. Some of our dams, and some of the dams owned by our investees, such as Samarco and MRN, were built using the "upstream" method, which presents specific stability risks.

Recently approved laws and regulations require us to decommission all of our upstream dams on a specified timetable. We are still determining the appropriate measures for decommissioning each upstream dam. This process will require significant expenditures, and the decommissioning process may take a long time. At this point, we cannot estimate the costs and timing for conclusion of the decommissioning process. We may not be able to conclude the decommissioning process for all of our upstream dams within the time-frame imposed by the new laws and regulations.

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Risk Factors

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We are involved in legal proceedings that could have a material adverse effect on our business in the event of unfavorable outcomes.

We are involved in legal proceedings in which adverse parties have sought injunctions to suspend certain of our operations or claimed substantial amounts, including several legal proceedings and investigations relating to the failure of our Dam I and the failure of Samarco's Fundão tailings dam. The outcomes of these proceedings are uncertain and may materially and adversely affect our business, our liquidity and the value of the securities issued by us or our subsidiaries. SeeAdditional information—Legal proceedings.

Our obligations and potential liabilities arising from the failure of a tailings dam owned by Samarco in Minas Gerais could negatively impact our business, our financial conditions and our reputation.

In November 2015, the Fundão tailings dam owned by Samarco failed, causing fatalities and environmental damage in the surrounding area. The failure of Samarco's tailings dam has adversely affected and will continue to affect our business, and the full impact is still uncertain and cannot be estimated. Below is a discussion of the main effects of the dam failure on our business.

•

Legal proceedings.  We are involved in multiple legal proceedings and investigations relating to the failure of the Fundão tailings dam, and other proceedings and investigations may arise in the future. These proceedings include securities class actions in the United States against us and some of our officers, a criminal proceeding in Brazil, public civil actions brought by Brazilian authorities and multiple proceedings involving claims for significant amounts of damages and remediation measures. Adverse results in these proceedings may impact our liquidity and our financial condition. Brazilian federal tax authorities have tried to assert that we may be liable for certain tax obligations of Samarco, and other tax authorities or other creditors of Samarco may try to recover from us amounts due by Samarco. See Additional information—Legal proceedings.



•

Reparation obligations and other undertakings.  In March 2016, Samarco and its shareholders (Vale and BHPB) entered into the Framework Agreement with certain governmental authorities, pursuant to which Samarco, Vale and BHPB agreed to create a foundation (Fundação Renova) to develop and implement long-term remediation and compensation programs. Under the Framework Agreement, these programs shall be reviewed within 3 years. In June 2018, Samarco, Vale and BHPB entered into a comprehensive agreement with the offices of the federal and state (Minas Gerais and Espírito Santo) prosecutors, public defenders and attorneys general, among other parties, in line with these preliminary agreements and in order to improve the governance mechanism of Fundação Renova. The comprehensive agreement established, among other things, a process for potential revisions to the remediation programs provided under the Framework Agreement based on the findings of experts hired by Samarco to advise the MPF over a two-year period. As Samarco is currently unable to resume its activities, we and BHPB have been funding Fundação Renova to support certain remediation measures undertaken by Samarco and also providing funds directly to Samarco, to preserve its operations. At this point, we cannot predict when Samarco will resume its operations. If Samarco is unable to resume operations or to generate sufficient cash flows to fund the remediation measures required under these agreements, we will be required to continue funding these remediation measures, which in turn may adversely affect our liquidity and financial conditions. See Business overview—Failure of Samarco's tailings dam in Minas Gerais.

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Risk Factors

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•

Risk of additional environmental damages.  Failure to contain the remaining tailings in Samarco's dams could cause additional environmental damages, additional impacts on our operations, and additional claims, fines and proceedings against Samarco and against us. Failure to contain the remaining tailings could also impact the feasibility and timing for the restart of Samarco's operations.



•

Other impacts.  We may encounter delays in the receipt of environmental and other licenses for our tailings dams and other facilities, and Brazilian authorities may impose more stringent conditions in connection with the licensing process of our projects and operations. Also, as one of Samarco's shareholders, our reputation has been adversely affected by the failure of Samarco's tailings dam.

EXTERNAL RISKS

Our business is exposed to the cyclicality of global economic activity and requires significant investments of capital.

As a mining company, we are a supplier of industrial raw materials. Industrial production tends to be the most cyclical and volatile component of global economic activity, which affects demand for minerals and metals. At the same time, investment in mining requires a substantial amount of funds in order to replenish reserves, expand and maintain production capacity, build infrastructure, and preserve the environment.environment, prevent fatalities and occupational hazards and minimize social impacts. Sensitivity to industrial production, together with the need for significant long-term capital investments, are important sources of risk for our financial performance and growth prospects.

Adverse economic developmentsAlso, we may not be able to adjust production volume in China could have a negative impact on our revenues, cash flow and profitability.

          China has been the main drivertimely or cost-efficient manner in response to changes in demand. Lower utilization of globalcapacity during periods of weak demand for minerals and metals over the last few years. In 2015, Chinese demand represented 69% of global demand for seaborne iron ore, 51% of global demand for nickel and 46% of global demand for copper. The percentagemay expose us to higher unit production costs since a significant portion of our net operating revenues attributablecost structure is fixed in the short-term due to salesthe capital intensity of mining operations. In addition, efforts to customers in China was 35.5% in 2015. Therefore, any contractionreduce costs during periods of China's economic growthweak demand could result in lowerbe limited by labor regulations or previous labor or government agreements. Conversely, during periods of high demand, our ability to rapidly increase production capacity is limited, which could prevent us from meeting demand for our products. Moreover, we may be unable to complete expansions and greenfield projects in time to take advantage of rising demand for iron ore, nickel or other products. When demand exceeds our production capacity, we may meet excess customer demand by purchasing iron ore fines, iron ore pellets or nickel from joint ventures or unrelated parties processing and reselling it, which would increase our costs and narrow our operating margins. If we are unable to satisfy excess customer demand in this way, we may lose customers. In addition, operating close to full capacity may expose us to higher costs, including demurrage fees due to capacity restraints in our logistics systems.

The prices for our products leadingare subject to lower revenues, cash flowvolatility, which may adversely affect our business.

Global prices for metals are subject to significant fluctuations and profitability. Poor performanceare affected by many factors, including actual and expected global macroeconomic and political conditions, regional and sectorial factors, levels of supply and demand, the availability and cost of substitutes, inventory levels, technological developments, regulatory and international trade matters, investments by commodity funds and others and actions of participants in the Chinese real estate sector, the largest consumer of carbon steel in China, would also negatively impact our results.

Our business may be adversely affected by declines in demandcommodity markets. Sustained low market prices for and prices of the products we sell may result in the suspension of certain of our customers produce, including steel (forprojects and operations, decrease in our iron oremineral reserves, impairment of assets, and coal business), stainless steel (formay adversely affect our nickel business), copper wire (for copper)cash flows, financial position and agricultural commodities (for our fertilizer nutrients business).results of operations.

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Demand for our iron ore, coal and nickel products depends on global demand for steel. Iron ore and iron ore pellets, which together accounted for 62.2%73.8% of our 20152018 net operating revenues, are used to produce carbon steel. Nickel, which accounted for 18.3%8.8% of our 20152018 net operating revenues, is used mainly to produce stainless and alloy steels. Demand for steel depends heavily on global economic conditions, but it also depends on a variety of regional and sectorial factors. The prices of different steels and the performance of the global steel industry are highly cyclical and volatile, and these business cycles in the steel industry affect demand and prices for our products. In addition, vertical backward integration of the steel and stainless steel industries and the use of scrap could reduce the global seaborne trade of iron ore and primary nickel. The demand for copper is affected by the demand for copper wire, and a sustained decline in the construction industry could have a negative impact on our copper business. The demand for fertilizers is

We are mostly affected by prices of agricultural commodities in the international and Brazilian markets, and a sustained decline in the price of one or more agricultural commodities could negatively impact our fertilizer nutrients business.

The prices we charge, including prices for iron ore, nickel, copper, coal and fertilizers, are subject to volatility.

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

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          In 2015, prices of steelmaking raw materials, such as iron ore, coal and nickel, decreased as supply grew more than demand. Additionally, copper prices dropped as a result of lower demand, in spite of some disruptions in supply.

          We are most exposed to movements in iron ore prices. For example, a price reduction of US$1 per dry metric ton unit ("dmt") in the average iron ore price would have reduced our operating income for the year ended December 31, 20152018 by approximately US$320340 million. Average iron ore prices decreased 59%significantly changed in the last twofive years, from US$135 per dmt in 2013 to US$9797.0 per dmt in 2014, and US$55.5 per dmt in 2015, US$58.5 per dmt in 2016, US$71.3 per dmt in 2017 and US$69.5 per dmt in 2018, according to the average Platts IODEX (62% Fe CFR China). On FebruaryMarch 29, 20162019, the year to dateyear-to-date average Platts IODEX iron ore price was US$44.1087.05 per dmt. In addition to reduced demand for iron ore, an excess in supply has adversely affected our prices since 2014 and may grow with the expected conclusion of certain iron ore projects in coming years.

          World nickel prices have also been adversely affected by lower demand and by strong supply growth in the nickel industry, especially in China. Nickel refining in China, primarily using imported nickel ores and related raw materials, increased by an estimated 417,000 metric tons from 2006 to 2015, with Chinese nickel pig iron production representing 19% of global nickel output. Chinese nickel pig iron production has been adversely affected by export restrictions in feed-producing countries, and prices could be further affected if these restrictions are revoked.

          For additional information about the average realized prices for the products we sell, seeSeeOperating and financial review and prospects—Overview—Major factors affecting prices.

          The financial performanceAdverse economic developments in China could have a negative impact on our revenues, cash flow and economic viabilityprofitability.

China has been the main driver of certain of our operations may be significantly impacted by a continuing decline in theglobal demand for minerals and pricesmetals over the last few years. In 2018, Chinese demand represented 72% of our products. For instance, in 2015, we suspended certainglobal demand for seaborne iron ore, and manganese operations, and other operations may be suspended in the future. Also, in the case51% of our nickel operations in New Caledonia, the impact of lower prices andglobal demand for nickel is heightened dueand 49% of global demand for copper. The percentage of our net operating revenues attributable to sales to customers in China was 41.7% in 2018. Therefore, any contraction of China's economic growth could result in lower demand for our products, leading to lower revenues, cash flow and profitability. Poor performance in the stageChinese real estate sector, the largest consumer of the ramp up of that facility. We are considering various options to ensure the continuation of the operationscarbon steel in New Caledonia as it continues to ramp up. If those options are not available and current conditions continue to be adverse, we may consider a reduction or stoppage of production for a period of time.China, would also negatively impact our results.

We may not be able to adjust production volumeChanges in a timely or cost-efficient mannerexchange rates for the currencies in response to changes in demand.which we conduct operations could adversely affect our financial condition and results of operations.

          Lower utilization of capacity during periods of weak demand may expose us to higher unit production costs since a significantA substantial portion of our cost structurerevenues, trade receivables and our debt is fixeddenominated in U.S. dollars, and given that our functional currency is the short term dueBrazilianreal, changes in exchange rates may result in (i) losses or gains on our net U.S. dollar-denominated indebtedness and accounts receivable and (ii) fair value losses or gains on currency derivatives we use to the high capital intensitystabilize our cash flow in U.S. dollars. In 2018, we had net foreign exchange losses of mining operations.US$2.247 million, while we had net foreign exchange losses of US$463 million in 2017 and net foreign exchange gains of US$3.252 billion in 2016. In addition, effortschanging values of the Brazilianreal, the Canadian dollar, the Euro, the Indonesian rupiah, the Chineseyuan and other currencies against the U.S. dollar affects our results since most of our costs of goods sold is denominated in currencies other than the U.S. dollar, principally thereal (50.9% in 2018) and the Canadian dollar (5.4% in 2018), while our revenues are mostly U.S. dollar-denominated. We expect currency fluctuations to reduce costs during periodscontinue to affect our financial income, expense and cash flow generation.

Significant volatility in currency prices may also result in disruption of weak demandforeign exchange markets, which could be limited by labor regulations or previous labor or government agreements.

          Conversely, during periods of high demand,limit our ability to rapidly increase production capacity is limited,transfer or to convert certain currencies into U.S. dollars and other currencies for the purpose of making timely payments of interest and principal on our indebtedness. The central banks and governments of the countries in which could prevent us from meeting demand for our products. Moreover, we operate may be unable to complete expansionsinstitute restrictive exchange rate policies in the future and greenfield projects in time to take advantage of rising demand for iron ore, nickel or other products. When demand exceeds our production capacity, we may meet excess customer demand by purchasing iron ore, iron ore pellets or nickel from joint ventures or unrelated parties and reselling it, which would increase our costs and narrow our operating margins. If we are unable to satisfy excess customer demand in this way, we may lose customers. In addition, operating close to full capacity may expose us to higher costs, including demurrage fees due to capacity restraints in our logistics systems.impose taxes on foreign exchange transactions.

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FINANCIAL RISKS

Lower cash flows, resulting from suspension of operations or decreased prices of our products, havemay adversely affectedaffect our credit ratings and the cost and availability of financing.

          A continuous decreaseThe suspension of operations or a decline in the prices of our products and the volatility in the global economy may adversely affect our future cash flows, credit ratings and our ability to secure financing at attractive rates. Decreased prices have resulted in lower cash flows, which haveIt may also adversely affected our credit rating and our costs to access the capital markets. This may negatively affect our ability to fund our capital investments, including disbursements required to remediate and compensate damages resulting from the failure of Dam I, provide the financial assurances required to obtain licenses in certain jurisdictions, pay dividends and comply with the financial covenants in some of our long-term debt instruments. SeeOperating and financial review and prospects—Liquidity and capital resources.

          Also, certain Canadian provinces where we operate require us to provide financial assurances, such as letters of credit, surety bonds or cash collateral, to cover certain closure and remediation costs after we conclude our operations. We may be required to increase the amount of these financial assurances if our credit ratings are downgraded below certain levels. If we are unable to provide these financial assurances, we would need to have discussions with the relevant jurisdictions about other options and ultimately it could impact our ability to operate in these jurisdictions.POLITICAL, ECONOMIC, SOCIAL AND REGULATORY RISKS

The failure of a tailings dam of Samarco Mineração S.A. ("Samarco") in Minas Gerais could negatively impact our business.

          On November 5, 2015, one of Samarco's tailings dams (Fundão) failed unexpectedly, releasing muddy tailings downstream, reaching and flooding certain communities and causing environmental damage to the surrounding area. As a result of the failure of the Fundão tailings dam, our Alegria mine, located near the dam, is operating with a dry beneficiation process at a lower mine productivity, and a conveyor belt connecting our Fábrica Nova mine to our Timbopeba beneficiation plant was damaged, decreasing production at the Mariana mining complex in the Brazilian state of Minas Gerais. In addition, we have interrupted the sale of run of mine (ROM) from our Fazendão mine to Samarco. We are still exploring alternatives for these mines; however if we are unable to find adequate alternatives, this may negatively affect our overall production. SeeInformation on the Company—Business overview—Significant changes in our business—Failure of Samarco's tailings dam in Minas Gerais.

We are involved in legal proceedings that could have a material adverse effect on our business in the event of unfavorable outcomes.

          We are involved in legal proceedings in which adverse parties have claimed substantial amounts. These include several legal proceedings and investigations relating to the failure of Samarco's Fundão tailings dam. For additional information, seeAdditional information—Legal proceedings. Although we are vigorously contesting them, the outcomes of these proceedings are uncertain and may result in obligations that could materially adversely affect our business and the value of our securities.

Our obligations under a settlement agreement arising from the failure of Samarco's tailings dam could have a material impact on our financial condition.

          Samarco and its shareholders, Vale and BHPB Brasil Ltda. ("BHPB"), a Brazilian subsidiary of BHP Billiton plc ("BHP Billiton"), entered into a settlement agreement on March 2, 2016 with governmental authorities, including the federal Attorney General of Brazil and the two Brazilian states affected by the failure (Espírito Santo and Minas Gerais). Under the agreement, Samarco, Vale and BHPB will create a foundation to develop and implement remediation and compensation programs in substantial amounts over many years. SeeInformation on the Company—Business overview—Significant changes in our business—Failure of Samarco's tailings dam in Minas Gerais.

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          Samarco is currently unable to conduct ordinary mining and processing. Samarco's management is working on a plan that would permit it to resume operations, but the feasibility, timing and scope of restarting remain uncertain. If Samarco does not meet its funding obligations, each of Vale and BHPB is obligated to provide funding to the foundation in proportion to its 50% interest in Samarco. Vale does not currently expect to record a provision in its financial statements in respect of these obligations, but if Samarco is eventually unable to resume operations or to meet its funding obligations, Vale could determine that it should recognize a provision.

Regulatory, political,Political, economic and social conditions in the countries in which we have operations or projects could adversely impact our business and the market price of our securities.business.

Our financial performance may be negatively affected by regulatory, political, economic and social conditions in countries in which we have significant operations or projects.

In many of these jurisdictions, we are exposed to various risks such as potential renegotiation, nullification or forced modification of existing contracts and licenses, expropriation or nationalization of property, foreign exchange controls, changes in local laws, regulations and policies, political instability, bribery, cyber-attacks, extortion, corruption, robbery, sabotage, kidnapping, civil strife, acts of war, guerilla activities, piracy in international shipping lanesroutes and terrorism. We also face the risk of having to submit to the jurisdiction of a foreign court or arbitration panel or having to enforce a judgment against a sovereign nation within its own territory.

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

Political, social and economic instability in Brazil could adversely impact our business and the market price of our securities.

The Brazilian federal government's economic policies may have important effects on Brazilian companies, including us, and on market conditions and prices of securities of Brazilian securities.companies. Our financial condition and results of operations may be adversely affected by the following factors and the Brazilian federal government's response to these factors:

·•

exchange rate movements and volatility;



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inflation and high interest rates;



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financing of the current account deficit;



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liquidity of domestic capital and lending markets;



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tax policy;



·•

pension, tax and other reforms;



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political instability resulting from allegations of corruption involving political parties, elected officials or other public officials; and



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other political, diplomatic, social and economic developments in or affecting Brazil.

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Historically, the country's political situation has influenced the performance of the Brazilian economy, and political crises have affected the confidence of investors and the general public, which resulted in economic deceleration, downgrading of credit ratings of the Brazilian government and Brazilian issuers, and heightened volatility in the securities issued abroad by Brazilian companies. Ongoing corruption investigations have led to charges against public officials and members of several political parties. Political instability may aggravate economic uncertainties in Brazil and increase volatility of securities of Brazilian issuers.

Brazil held presidential and federal and state legislative elections in October 2018. We cannot predict whether the new administration will result in changes in Brazilian governmental and economic policies or in the Brazilian securities markets and securities issued by Brazilian issuers.

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In 2015,the last years, Brazil faced an economic recession, adverse fiscal developments and political instability, which have continuedinstability. Brazilian GDP grew by 1.1% in 2018 and 1.1% in 2017 but declined by 3.6% in 2016. Brazilian GDP declined by 3.85%Unemployment rate was 12.3% in 20152018, 12.7% in 2017 and unemployment increased to 6.9%11.5% in 2015 from 4.3% 2014.2016. Inflation, for the year of 2015 was 10.67% (asas reported by IBGE, the Brazilian Institute of Geographyconsumer price index (IPCA), was 3.75% in 2018, 2.95% in 2017 and Statistics), as compared to 6.41%6.29% in 2014.2016. The Brazilian Central Bank's base interest rate (SELIC) increased to 14.25% inwas 3.5% on December 31, 2015 from 11.75% in2018, 7.00% on December 31, 2014.2017 and 13.75% on December 31, 2016. Future economic, social and political developments in Brazil may impair our business, financial condition or results of operations, or cause the market value of our securities to decline.

Disagreements with local communities in which we operate could adversely impact our business and reputation.

Disputes with communities where we operate may arise from time to time. Accidents or incidents involving mines, industrial facilities and related infrastructure, such as the failure of Dam I, may significantly impact the communities where we operate. In some instances, our operations and mineral reserves are located on or near lands owned or used by indigenous people or other groups of stakeholders. Some of these indigenous peoples may have rights to review or participate in natural resource management. Some of our mining and other operations are located in territories where title may be subject to disputes or uncertainties, or in areas claimed for agriculture or land reform purposes, which may lead to disagreements with landowners, organized social movements, local communities and the government. WeIn some jurisdictions, we may be required to consult and negotiate with these groups as part of the process to obtain licenses required to operate, to mitigate impact on our operations or to obtain access to their lands.

Disagreements or disputes with local communities and groups, including indigenous groups, organized social movements and local communities, could cause delays in obtaining licenses, increases in planned budget, delays or interruptions to our operations,operations. These issues may adversely affect our reputation or otherwise hamper our ability to develop our reserves and conduct our operations. Protesters have taken actions to disrupt our operations and projects, and they may continue to do so in the future, which may harm our operations and could adversely affect our business. As one of Samarco's shareholders, our reputation, particularly in the affected communities, has been adversely affected by the failure of Samarco's tailings dam in 2015. SeeInformation on the Company—Business overview—Significant changes in our business—Failure of Samarco's tailings dam in Minas GeraisCompany—Regulatory matters andAdditional information—Legal proceedings.

We could be adversely affected by changes in government policies or by trends such as resource nationalism, including the imposition of new taxes or royalties on mining activities.

Mining is subject to government regulation, including taxes and royalties, which can have a significant financial impact on our operations. In the countries where we are present, governments may imposewe are subject to potential renegotiation, nullification or forced modification of existing contracts and licenses, expropriation or nationalization of property, foreign exchange controls, changes in local laws, regulations and policies and audits and reassessments. We are also subject to new taxes raiseor raising of existing taxes and royalty rates, reducereduction of tax exemptions and benefits, request or force renegotiation of tax stabilization agreements or changechanges on the basis on which taxes are calculated in a manner that is unfavorable to us. Governments that have committed to provide a stable taxation or regulatory environment may alter those commitments or shorten their duration. We also face the risk of having to submit to the jurisdiction of a foreign court or arbitration panel or having to enforce a judgment against a sovereign nation within its own territory. SeeInformation on the Company—Regulatory matters andAdditional information—Royalties and other taxes on mining activities.

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We are also required to meet domestic beneficiation requirements in certain countries, in which we operate, such as local processing rules, export taxes or restrictions or charges on unprocessed ores. The imposition of or increase in such requirements, taxes or charges can significantly increase the risk profile and costs of operations in those jurisdictions. We and the mining industry are subject to rising trends of resource nationalism in certain countries in which we operate that can result in constraints on our operations, increased taxation or even expropriations and nationalizations.

As a supplier of iron ore, nickel and other raw materials to the global integrated steel industry, we are subject to additional risk from the imposition of duties, tariffs, import and export controls and other trade barriers impacting our products and the products our customers produce. Global trade is subject to a growing trend of increased trade barriers, which could exacerbate commodities' price volatility and in turn result in instability in the prices of our products.

Concessions, authorizations, licenses and permits are subject to expiration, limitation on renewal and various other risks and uncertainties.

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

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

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

          After the failure of Samarco's Fundão tailings dam at its iron ore operations in the Brazilian state of Minas Gerais, Brazilian authorities ordered the suspension of its operations in Minas Gerais and other measures. SeeInformation on the Company—Business overview—Significant changes in our business—Failure of Samarco's tailings dam in Minas Gerais.OPERATIONAL RISKS

Our projects are subject to risks that may result in increased costs or delay in their implementation.

We are investing to maintain and further increase our production capacity and logistics capabilities and to expand the scope of the minerals we produce.capabilities. We regularly review the economic viability of our projects. As a result of this review, we may decide to

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postpone, suspend or interrupt the implementation of certain projects. Our projects are also subject to a number of risks that may adversely affect our growth prospects and profitability, including the following:

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We may not be able to obtain financing at attractive rates.



•

We may encounter delays or higher than expected costs in obtaining the necessary equipment or services and in implementing new technologies to build and operate a project.



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Our efforts to develop projects on schedule may be hampered by a lack of infrastructure, including reliable telecommunications services and power supply.



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Suppliers and contractors may fail to meet their contractual obligations to us.



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We may face unexpected weather conditions or otherforce majeure events.



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We may fail to obtain or renew the required permits and licenses to build a project, or we may experience delays or higher than expected costs in obtaining or renewing them.



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Changes in market conditions or regulations may make a project less profitable than expected at the time we initiated work on it.



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There may be accidents or incidents during project implementation.



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We may face shortages of skilled personnel.

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Operational problems could materially and adversely affect our business and financial performance.

Ineffective project management and operational breakdowns might require us to suspend or curtail operations, which could generally reduce our productivity. Operational breakdowns could entail failure of critical plant and machinery. There can be no assurance that ineffective project management or other operational problems will not occur. Any damages to our projects or delays in our operations caused by ineffective project management or operational breakdowns could materially and adversely affect our business and results of operations. Our business is subject to a number of operational risks that may adversely affect our results of operations, such as:

·•

Unexpected weather conditions or otherforce majeure events.



·•

Adverse mining conditions delaying or hampering our ability to produce the expected quantity of minerals and to meet specifications required by customers, which can trigger price adjustments.



·•

Accidents or incidents involving our mines, industrial facilities and related infrastructure, such as dams, plants, railroads,railway and railway bridges, ports and ships.



·•

Delays or interruptions in the transportation of our products, including with railroads, ports and ships.



·•

Tropical diseases, HIV/AIDS and other contagious diseases in regions where some of our operations or projects are located, which pose health and safety risks to our employees.

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Labor disputes that may disrupt our operations from time to time.



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Changes in market conditions or regulations may affect the economic prospects of an operation and make it inconsistent with our business strategy.



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Failure to obtain the renewal of required permits and licenses, or delays or higher than expected costs in obtaining them.



•

Disruptions to or unavailability of critical information technology systems or services resulting from accidents or malicious acts.

Our business could be adversely affected by the failure or unavailability of certain critical assets or infrastructure.

We rely on certain critical assets and infrastructure to produce and to transport our products to our customers. These critical assets include mines, industrial facilities, ports, railways, roads and bridges. The failure or unavailability of any critical asset, whether resulting from natural events or operational issues, could have a material adverse effect on our business.

Substantially all of our iron ore production from the Northern system is transported from Carajas, in the Brazilian state of Pará, to the port of Ponta da Madeira, in the Brazilian state of Maranhão, through the Carajás railroad (EFC). Any interruption of the Carajás railroad or of the port of Ponta da Madeira could significantly impact our ability to sell our production from the Northern system. With respect to the Carajás railroad, there is particular risk of interruption at the bridge over the Tocantins river, in which the trains run on a single line railway. In the port of Ponta da Madeira, there is particular risk of interruption at the São Marcos access channel, a deep-water channel that provides access to the port. Also, any failure or interruption of our long distance conveyor belt (TCLD) used to transport our iron ore production from the S11D mine to the beneficiation plant, could adversely impact our operations at the S11D mine.

Our business could be adversely affected by the failure of our counterparties, joint venture partners or joint ventures we do not control to perform their obligationsobligations..

Customers, suppliers, contractors, financial institutions, joint venture partners and other counterparties may fail to perform existing contracts and obligations, which may unfavorably impact our operations and financial results. The ability of suppliers and customers to perform their obligations may be adversely affected in times of financial stress and economic downturn.

          We currently operate importantImportant parts of our iron ore, pelletizing, bauxite, nickel, coal, copper, fertilizersenergy and steelother businesses are held through joint ventures. Important partsThis may reduce our degree of control, as well as our electricity investmentsability to identify and projects are operated through consortia or joint ventures.manage risks. Our forecasts and plans for these joint ventures and consortia assume that our partners will observe their obligations to make capital contributions, purchase products and, in some cases, provide skilled and competent managerial personnel. If any of our partners fails to observe its commitments, the affected joint venture or consortium may not be able to operate in accordance with its business plans, or we may have to increase the level of our investment to implement these plans.

Some of our investments are controlled by joint venture partners or have separate and independent management. These investments may not fully comply with our standards, controls and procedures, including our health, safety, environment and community standards. Failure by any of our partners or joint ventures to adopt adequate standards, controls and procedures could lead to higher costs, reduced production or

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environmental, health and safety incidents or accidents, which could adversely affect our results and reputation.

We may not have adequate insurance coverage for some business risks.

Our businesses are generally subject to a number of risks and hazards, which could have impact on people, assets and the environment. The insurance we maintain against risks that are typical in our business may not provide adequate coverage. Insurance against some risks (including liabilities for environmental damages, damages resulting from dams breaches, spills or leakage of hazardous substances and interruption of certain business activities) may not be available at a reasonable cost, or at all. Even when it is available, we may self-insure where we determine that is more cost-effective to do so. As a result, accidents or other negative developments involving our mining, production or transportation facilities may not be covered by insurance, and could have a material adverse effect on our operations.

Labor disputes may disrupt our operations from time to time.

A substantial number of our employees, and some of the employees of our subcontractors, are represented by labor unions and are covered by collective bargaining or other labor agreements, which are subject to periodic negotiation. Strikes and other labor disruptions at any of our operations could adversely affect the operation of facilities and the timing of completion and cost of our capital projects. For more information about labor relations, seeManagement and employees—Employees. Moreover, we could be adversely affected by labor disruptions involving unrelated parties that may provide us with goods or services.

Higher energy costs or energy shortages would adversely affect our business.

Costs of fuel oil, gas and electricity are a significant component of our cost of production, representing 11.1% of our total cost of goods sold in 2018. To fulfill our energy needs, we rely on the following sources: oil byproducts, which represented 31% of total energy needs in 2018, electricity (31%), natural gas (17%), coal (17%) and other energy sources (4%).

Electricity costs represented 4.1% of our total cost of goods sold in 2018. If we are unable to secure reliable access to electricity at acceptable prices, we may be forced to curtail production or may experience higher production costs, either of which would adversely affect our results of operations. We face the risk of energy shortages in the countries where we have operations and projects, especially Brazil, due to lack of infrastructure or weather conditions, such as floods or droughts. Future shortages, and government efforts to respond to or prevent shortages, may adversely impact the cost or supply of electricity for our operations.

Failures in our information technology, operational technology, cybersecurity and telecommunications systems may adversely affect our business and reputation.

We rely heavily on information technology, operational technology and telecommunications systems for the operation of many of our business processes. Failures in those systems, whether caused by obsolescence, technical failures, negligence, accident or malicious acts, may result in the disclosure or theft of sensitive information, misappropriation of funds and disruptions to or interruption in our business operations. We may be the target of attempts to gain unauthorized access to information technology and operational technology systems through the internet, including sophisticated and coordinated attempts often referred to as advanced persistent threats. Disruption of critical information technology, operational technology, cybersecurity or telecommunications systems, or breaches of

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information security, may harm our reputation and have a material adverse effect on our operational performance, earnings and financial condition.

HEALTH, SAFETY AND ENVIRONMENTAL RISKS

Our business is subject to environmental, health and safety incidents.

Our operations involve the use, handling, storage, discharge and disposal of hazardous substances into the environment and the use of natural resources, and the mining industry is generally subject toresulting in significant risks and hazards, including fire, explosion, toxic gas leaks, spilling of polluting substances or other hazardous materials, rockfallrockfalls, incidents in mining operations and incidentsinvolving dams, failure of other operational structures, as well as activities involving mobile equipment, vehicles or machinery. This couldmachinery and other potentially fatal incidents and accidents. Incidents may occur by accidentdue to deficiencies in identifying and assessing risks or by breach of operatingin implementing sound risk management, and maintenance standards, andonce these risks materialize, they could result in a significant environmental impact,and social impacts, damage to or destruction of mineral propertiesmines or production facilities, personal injury, illness and fatalities, involving employees, contractors or death, environmental damage,community members near our operations, as well as delays in production, monetary losses and possible legal liability. Additionally, in remote localities, our employees may be exposed to tropical and contagious diseases that may affect their health and safety. Notwithstanding our standards, policies, controls and controls,monitoring procedures, our operations remain subject to incidents or accidents that could adversely affectimpact our business, stakeholders or reputation.

Our business may be adversely affected by social, environmental and health and safety regulation, including regulations pertaining to climate change.

Nearly all aspects of our activities, products and services associated with capital projects and projectsoperations around the world are subject to social, environmental regulations and health and safety regulations, which may expose us to increased liability or increased costs. These regulations require us to obtainhave environmental licenses, permits and authorizations for our operations and projects, and to conduct environmental and social impact assessments in order to get approval for our projects and permission for initiating construction.construction and continuing operating. Significant changes to existing operations are also subject to these requirements. Difficulties in obtaining or renewing permits may lead to construction delays, cost increases, and may adversely impact our production volumes. EnvironmentalSocial, environmental and health and safety regulations also impose standards, procedures and monitoring controls on activities relating to mineral research, mining, beneficiation, pelletizing activities, railway and marine services, ports, decommissioning, refining, distribution and marketing of our products. Such regulation may give rise to significant costs and liabilities.

          In addition, communities and other stakeholders may increase demands for socially responsible and environmentally sustainable practices, and their efforts may lead to the creation or revision of government regulations and policies, which could entail significant costs and reduce our profitability. Private litigation Litigation relating to these or other related matters may adversely affect our financial condition or cause harm to our reputation.

          EnvironmentalSocial, environmental and health and safety regulationregulations in many countries in which we operate hashave become stricter in recent years, and it is possible that more regulation or more aggressivestringent enforcement of existing regulations will adversely affect us by imposing restrictions on our activities and products, creating new requirements for the issuance or renewal of environmental licenses and labor authorizations, resulting in licensing and operation delays, raising our costs or requiring us to engage in expensive reclamation efforts. For example, changes in Brazilian legislation for the protection of caves have required us to conduct extensive technical studies and to negotiate compensatory measures with Brazilian environmental regulators in order to continue to operate in certain sites. It is possible that in certain of our iron ore mining operations or projects, we may be required to limit or modify our mining plans or to incur additional costs to preserve caves or to compensate for the impact on them, with potential consequences for production volumes, costs or reserves in our iron ore business. For more information about Brazilian environmental regulations related to caves, seeInformation on the Company—Regulatory matters—Environmental regulations.

In response to the failure of Samarco's tailings dam in Minas Gerais,Dam I, additional environmental and health and safety laws and regulations have been approved, and other may be forthcoming, in Brazil and authorities may impose more stringent conditions in connection with the licensing process of our projects and operations. Also, we mayWe will encounter more stringent requirements for and delays in the receipt of environmental operating license for other tailings dams.

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National policies and international regulations regarding climate change may affect a number of our businesses in different countries, because we operate worldwide. For example, there is legislationvarious countries. The ratification of the Paris Agreement in many countries where we operate that limits greenhouse gas emissions from2016 increased international pressure for the mining industry. There is increased pressure from international organizations for establishingestablishment of a global carbon price, and foron companies and governments to adopt carbon pricing strategies, whichstrategies. The pricing of greenhouse gas emissions may adversely affectimpact our operational costs, mainly through higher price for fossil fuels as mining is an energy intensive industry, and our cost of international freight. In particular, consumption of thermal coal, one of the coal business.

Table of Contentsproducts we sell, is facing pressure from international institutions due to its carbon intensity.

Regulatory initiatives at the national and international levels that affect our shipping practices could increase our costs or require us to make new capital expenditures. Regulations, mainly from the European Union and China, may impose additional requirements for our products related to the safety of downstream users.

Natural disasters may cause severe damage to our operations and projects in the countries where we operate and may have a negative impact on our sales to countries adversely affected by such disasters.

Natural disasters, such as wind storms, droughts, floods, earthquakes and tsunamis may adversely affect our operations and projects in the countries where we operate, and may cause a contraction in sales to countries adversely affected due to, among other factors, power outages and the destruction of industrial facilities and infrastructure. The physical impact of climate change on our business remains highly uncertain, but we mayare likely to experience changes in rainfall patterns, increased temperatures, water shortages, rising sea levels, increased storm intensityfrequency and floodingintensity as a result of climate change, which may adversely affect our operations. On some occasions in recent years, we have determined thatforce majeure events have occurred due to the effect of severe weather on our mining and logistics activities.

RISKS RELATING TO OUR MINING RESERVES

We may not have adequate insurance coverage for some business risks.

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

Our reserve estimates may materially differ from mineral quantities that we are actually able to recover; our estimates of mine life may prove inaccurate; more stringent regulations and market price fluctuations and changes in operating and capital costs may render certain ore reserves uneconomical to mine.

Our reported reserves are estimated quantities of ore and minerals that we have determined can be economically and legally mined and processed under present and assumed future conditions. There are numerous uncertainties inherent in estimating quantities of reserves and in projecting potential future rates of mineral production, including factors beyond our control. Reserve reporting involves estimating deposits of minerals that cannot be measured in an exact manner, and the accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgment. As a result, no assurance can be given that the indicated amount of ore will be recovered or that it will be recovered at the rates we anticipate. Reserve estimates and estimates of mine life may require revisions based on actual production experience, projects, updated exploration drilling data and other factors. For example, lowerLower market prices of minerals and metals, more stringent regulations, reduced recovery rates or increased operating and capital costs due to inflation, exchange rates, changes in regulatory requirements or other factors may render proven and probable reserves uneconomic to exploit and may ultimately result in a restatementreduction of reserves. Also, our inability to obtain licenses for new operations, supporting structures or activities, or to renew our existing licenses, can cause a reduction of our reserves. Such a restatementreduction could affect depreciation and amortization rates and have an adverse effect on our financial performance.

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We may not be able to replenish our reserves, which could adversely affect our mining prospects.

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

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The feasibility of new mineral projects may change over time.

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

·•

establish mineral reserves through drilling;



·•

determine appropriate mining and metallurgical processes for optimizing the recovery of metal contained in ore;



·•

obtain environmental and other licenses;



·•

construct mining, processing facilities and infrastructure required for greenfield properties; and



·•

obtain the ore or extract the minerals from the ore.

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

We face rising extraction costs orand investment requirements over time as reserves deplete.

Reserves are gradually depleted in the ordinary course of a given open pit or underground mining operation. As mining progresses, distances to the primary crusher and to waste deposits become longer, pits become steeper, mines may move from being open pit to underground, and underground operations become deeper. In addition, for some types of reserves, mineralization grade decreases and hardness increases at greater depths. As a result, over time, we usually experience rising unit extraction costs with respect to each mine, or we may need to make additional investments, including adaptation or construction of processing plants and expansion or construction of tailings dams. Several of our mines have been operating for long periods, and we will likely experience rising extraction costs per unit in the future at these operations in particular.

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Labor disputes may disrupt our operations from time to time.​

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          A substantial number of our employees, and some of the employees of our subcontractors, are represented by labor unions and are covered by collective bargaining or other labor agreements, which are subject to periodic negotiation. Strikes and other labor disruptions at any of our operations could adversely affect the operation of facilities and the timing of completion and cost of our capital projects. For more information about labor relations, seeManagement and employees—Employees. Moreover, we could be adversely affected by labor disruptions involving unrelated parties that may provide us with goods or services.

Higher energy costs or energy shortages would adversely affect our business.

          Energy costs are a significant component of our cost of production, representing 9.1% of our total cost of goods sold in 2015. To fulfill our energy needs, we depend on the following sources: oil by-products, which represented 43% of total energy needs in 2015, electricity (26%), natural gas (16%), coal (13%) and other energy sources (2%).

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          Electricity costs represented 2.8%Risk Factors

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RISKS RELATING TO OUR CORPORATE STRUCTURE

The shareholders that are party to our shareholders' agreement have significant power over Vale.

On August 14, 2017, Litel Participações S.A. ("Litel"), Bradespar S.A. ("Bradespar"), Mitsui & Co., Ltd. ("Mitsui") and BNDES Participações S.A. ("BNDESPAR") entered into a shareholders' agreement pursuant to which they undertook to vote jointly on certain key matters (the "Shareholders' Agreement"). The Shareholders' Agreement is expected to expire on November 9, 2020. SeeShare ownership and trading—Major shareholders. On December 31, 2018, Litel, Bradespar, Mitsui and BNDESPAR together held 39.03% of our total costcapital stock. As long as no other shareholder or group of goods sold in 2015. If we are unableshareholders owns more shares than the parties to secure reliable access to electricity at acceptable prices, wethe Shareholders' Agreement, these major shareholders may be forced to curtail production or may experience higher production costs, eitherelect a majority of which would adversely affectthe members of our resultsBoard of operations. We faceDirectors and control the riskoutcome of energy shortages in the countries where we have operations and projects, especially Brazil, due to lack of infrastructure or weather conditions, such as floods or droughts. Future shortages, and government efforts to respond to or prevent shortages, may adversely impact the cost or supply of electricity for our operations.certain actions requiring shareholder approval.

Price volatility—relative to the U.S. dollar—of the currencies in which we conduct operations could adversely affect our financial condition and results of operations.

          A substantial portion of our revenues and our debt is denominated in U.S. dollars, and changes in exchange rates may result in (i) losses or gains on our net U.S. dollar-denominated indebtedness and accounts receivable and (ii) fair value losses or gains on currency derivatives we use to stabilize our cash flow in U.S. dollars. In 2015, 2014 and 2013 we had foreign exchange losses of US$7.2 billion, US$2.1 billion and US$2.8 billion, respectively. In addition, the price volatility of theThe Brazilianreal, the Canadian dollar, the Australian dollar, the Indonesian rupiah and other currencies against the U.S. dollar affects our results since most of our costs of goods sold are denominated in currencies other than the U.S. dollar, principally thereal (49% in 2015) and the Canadian dollar (13% in 2015), while our revenues are mostly U.S. dollar-denominated. We expect currency fluctuations to continue to affect our financial income, expense and cash flow generation.

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

Failures in our information technology systems or difficulties in integrating new enterprise resource planning software may interfere with the normal functioning of our business.

          We rely on information technology ("IT") systems for the operation of many of our business processes. Failures in our IT systems, whether caused by accident or malicious acts, may result in the disclosure or theft of sensible information, misappropriation of funds and disruptions to our business operations.

Risks relating to our corporate structure

Our controlling shareholder has significant influence over Vale, and the Brazilian government Government has certain veto rights.

          As of February 29, 2016, Valepar S.A. ("Valepar") owned 53.9% of our outstanding common stock and 33.7% of our total outstanding capital. As a result of its share ownership, Valepar can elect the majority of our board of directors and control the outcome of some actions that require shareholder approval. For a description of our ownership structure and of the Valepar shareholders' agreement, seeShare ownership and trading—Major shareholders.

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

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Our governance and compliance processes may fail to prevent regulatory penalties and reputational harm.breaches of legal, accounting or governance standards.

We operate in a global environment, and our activities extend over multiple jurisdictions and complex regulatory frameworks, with increasedincreasing enforcement activities worldwide. Our governance and compliance processes, which include the review of internal control over financial reporting, may not timely identify or prevent future breaches of legal, accounting or governance standards. We may be subject to breaches of our Codecode of Ethics and Conduct,ethical conduct, anti-corruption policies and business conduct protocols and to instances of fraudulent behavior, corrupt practices and dishonesty by our employees, contractors or other agents. Our failure to comply with applicable laws and other standards could subject us to investigations by authorities, litigation, fines, loss of operating licenses, disgorgement of profits, involuntary dissolution and reputational harm.

It could be difficult for investors to enforce any judgment obtained outside Brazil against us or any of our associates.

Our investors may be located in jurisdictions outside Brazil and could seek to bring actions against us or our directors or officers in the courts of their home jurisdictions. The Company isWe are a Brazilian company, and the majority of our officers and directors are residents of Brazil. The vast majority of our assets and the assets of our officers and directors are likely to be located in jurisdictions other than the home jurisdictions of our foreign investors. It might not be possible for investors outside Brazil to effect service of process within their home jurisdictions on us or on our officers or directors who reside outside their home jurisdictions. In addition, a final conclusive foreign judgment will be enforceable in the courts of Brazil without a re-examination of the merits only if previously confirmed by the Brazilian Superior Court of Justice ((STJ—Superior Tribunal de Justiça), and confirmation will only be granted if the foreign judgment: (a)(i) fulfills all formalities required for its enforceability under the laws of the country where it was issued; (b)(ii) was issued by a competent court after due service of process on the defendant, as required under

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applicable law; (c)(iii) is not subject to appeal; (iv) does not conflict with a final and unappealable decision issued by a Brazilian court; (v) was authenticated by a Brazilian consulate in the country in which it was issued or is duly apostilled in accordance with the Convention for Abolishing the Requirement of Legalization for Foreign Public Documents and is accompanied by a sworn translation into Portuguese, unless this procedure was exempted by an international treaty entered into by Brazil; (vi) it does not cover matters subject to the Portuguese language;exclusive jurisdiction of the Brazilian courts; and (d)(vii) is not contrary to Brazilian national sovereignty, public policy or good morals. Therefore, investors might not be able to recover against us or our directors and officers on judgments of the courts of their home jurisdictions predicated upon the laws of such jurisdictions.

Risks relating to our depositary sharesRISKS RELATING TO OUR DEPOSITARY SHARES

If ADR holders or HDR holders exchange ADSs or HDSs, respectively, for the underlying shares, they risk losing the ability to remit foreign currency abroad.

The custodian for the shares underlying our ADSs and HDSs maintains a registration with the Central Bank of Brazil permitting qualifying institutional foreign investors to buy and sell securities on the B3 and entitling itthe custodian to remit U.S. dollars outside Brazil for payments of dividends and other distributions relating to the shares underlying our ADSs and HDSs or upon the disposition of the underlying shares. If an ADR holder or HDR holder exchanges its ADSs or HDSs for the underlying shares, it will be entitled to rely on the custodian's registration for only five business days from the date of exchange. Thereafter, an ADR holder or HDR holder may not be able to obtain and remit foreign currency abroad upon the disposition of, or distributions relating to, the underlying shares unless it obtains its own registration under applicable regulation, which permits qualifying institutional foreign investors to buy and sell securities on the BM&FBOVESPA. For more information regarding these exchange controls, seeregulation. SeeAdditional information—Exchange controls and other limitations affecting security holders. If an ADR holder or HDR holder attempts to obtain its own registration, it may incur expenses or suffer delays in the application process, which could delay the receipt of dividends or other distributions relating to the underlying shares or the return of capital in a timely manner.

The custodian's registration or any registration obtained could be affected by future legislative changes, and additional restrictions applicable to ADR holders, or HDR holders, the disposition of the underlying shares or the repatriation of the proceeds from disposition could be imposed in the future.

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ADR holders may not have all the rights of our shareholders, and HDR holders may be unable to exercise preemptive rights relating to the shares underlying their ADSs and HDSs.ADSs.

          TheADR holders may not have the same rights that are attributed to our shareholders by Brazilian law or our bylaws, and the rights of ADR holders may be subject to certain limitations provided in the deposit agreement or by the securities intermediaries through which ADR holders hold their securities. Also, the ability of ADR holders and HDR holders to exercise preemptive rights is not assured, particularly if the applicable law in the holder's jurisdiction (for example, the Securities Act in the United States or the Companies Ordinance in Hong Kong)States) requires that either a registration statement be effective or an exemption from registration be available with respect to those rights, as is in the case in the United States, or that any document offering preemptive rights be registered as a prospectus, as is the case in Hong Kong.States. We are not obligated to extend the offer of preemptive rights to holders of ADRs, or HDRs, to file a registration statement in the United States, or to make any other similar filing in any other jurisdiction, relating to preemptive rights or to undertake steps that may be needed to make exemptions from registration available, and we cannot assure holders that we will file any registration statement or take such steps.

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ADR holders and HDR holders may encounter difficulties in the exercise of voting rights.

ADR holders and HDR holders do not have the rights of shareholders. They have only the contractual rights set forth for their benefit under the deposit agreements. ADR holders and HDR holders are not permitted to attend shareholders' meetings, and they may only vote by providing instructions to the depositary. In practice, the ability of a holder of ADRs or HDRs to instruct the depositary as to voting will depend on the timing and procedures for providing instructions to the depositary either directly or through the holder's custodian and clearing system. With respect to ADSs for which instructions are not received, the depositary may, subject to certain limitations, grant a proxy to a person designated by us.

The legal protections for holders of our securities differ from one jurisdiction to another and may be inconsistent, unfamiliar or less effective than investors anticipate.

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

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​SELECTED FINANCIAL DATA

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

Consolidated statement of income data

	​	For the year ended December 31,														​
	​	2011		​	2012		​	2013		​	2014		​	2015		​
	​	(US$ million)														​
Net operating revenues	​	60,075		​	46,553		​	46,767		​	37,539		​	25,609		​
Cost of products and services	​	(24,528		)	(25,390		)	(24,245		)	(25,064		)	(20,513		)
Selling, general and administrative expenses	​	(2,271		)	(2,172		)	(1,302		)	(1,099		)	(652		)
Research and evaluation expenses	​	(1,671		)	(1,465		)	(801		)	(734		)	(477		)
Pre-operating and operational stoppage and other operating expenses, net	​	(2,775		)	(3,588		)	(2,843		)	(2,145		)	(1,233		)
Impairment of non-current assets and onerous contracts	​	–		​	(4,023		)	(2,298		)	(1,152		)	(8,926		)
Gain (loss) on measurement or sales of non-current assets	​	1,494		​	(506		)	(215		)	(167		)	61		​
​	​	​		​	​		​	​		​	​		​	​		​
Operating income	​	30,324		​	9,409		​	15,063		​	7,178		​	(6,131		)
​	​	​		​	​		​	​		​	​		​	​		​
Non-operating income (expenses):	​			​			​			​			​			​
Financial income (expenses), net	​	(3,549		)	(4,022		)	(8,332		)	(6,069		)	(10,801		)
Equity results in associates and joint controlled entities	​	1,138		​	645		​	469		​	505		​	(439		)
Results on sale of investments from associates and joint ventures	​	–		​	–		​	41		​	(30		)	97		​
Impairment on investments	​	–		​	(1,941		)	–		​	(31		)	(446		)
​	​	​		​	​		​	​		​	​		​	​		​
Income (loss) before income taxes	​	27,913		​	4,091		​	7,241		​	1,553		​	(17,720		)
Income taxes	​	(5,265		)	1,174		​	(6,833		)	(1,200		)	5,100		​
Income (loss) from continuing operations	​	22,648		​	5,265		​	408		​	353		​	(12,620		)
Income (loss) attributable to non-controlling interests	​	(233		)	(257		)	(178		)	(304		)	(491		)
​	​	​		​	​		​	​		​	​		​	​		​
Net income (loss) attributable to Company's shareholders, from continuing operations	​	22,881		​	5,522		​	586		​	657		​	(12,129		)
​	​	​		​	​		​	​		​	​		​	​		​
Loss from discontinued operations, net of tax	​	(86		)	(68		)	(2		)	–		​	–		​
Net income (loss) attributable to Company's shareholders	​	22,795		​	5,454		​	584		​	657		​	(12,129		)
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
Income (loss) attributable to non-controlling interests	​	(233		)	(257		)	(178		)	(304		)	(491		)
​	​	​		​	​		​	​		​	​		​	​		​
Net income (loss)	​	22,562		​	5,197		​	406		​	353		​	(12,620		)
​	​	​		​	​		​	​		​	​		​	​		​
Total cash paid to shareholders(1)	​	9,000		​	6,000		​	4,500		​	4,200		​	1,500		​

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(1)

Consists of total cash paid to shareholders during the period, whether classified as dividends or interest on shareholders' equity.

Earnings per share

	​	For the year ended December 31,														​
	​	2011		​	2012		​	2013		​	2014		​	2015		​
	​	(US$, except as noted)														​
Earnings (loss) per share:	​			​			​			​			​			​
Per common share	​	4.34		​	1.06		​	0.11		​	0.13		​	(2.35		)
Per preferred share	​	4.34		​	1.06		​	0.11		​	0.13		​	(2.35		)
Weighted average number of shares outstanding (in thousands)(1):	​			​			​			​			​			​
Common shares	​	3,197,063		​	3,172,179		​	3,185,653		​	3,185,653		​	3,185,653		​
Preferred shares	​	1,984,030		​	1,933,491		​	1,967,722		​	1,967,722		​	1,967,722		​
Treasury common shares underlying convertible notes	​	18,416		​	–		​	–		​	–		​	–		​
Treasury preferred shares underlying convertible notes	​	47,285		​	–		​	–		​	–		​	–		​
​	​	​		​	​		​	​		​	​		​	​		​
Total	​	5,246,794		​	5,105,670		​	5,153,375		​	5,153,375		​	5,153,375		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
Distributions to shareholders per share(2):	​			​			​			​			​			​
Expressed in US$	​	1.74		​	1.17		​	0.87		​	0.81		​	0.29		​
Expressed in R$	​	2.89		​	2.26		​	1.81		​	1.89		​	0.98		​

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(1)

Each common ADS represents one common share and each preferred ADS represents one preferred share.

(2)

Our distributions to shareholders may be classified as either dividends or interest on shareholders' equity. In many years, part of each distribution has been classified as interest on shareholders' equity and part has been classified as dividends. For information about distributions paid to shareholders, seeShare ownership and trading—Distributions.

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Balance sheet data

	​	At December 31,														​
	​	2011		​	2012		​	2013		​	2014		​	2015		​
	​	(US$ million)														​
Current assets	​	21,538		​	22,069		​	20,611		​	16,594		​	11,429		​
Property, plant and equipment, net and intangible assets	​	91,863		​	94,093		​	88,536		​	84,942		​	59,426		​
Investments in associated companies and joint ventures	​	8,013		​	6,384		​	3,584		​	4,133		​	2,940		​
Other assets	​	5,502		​	8,031		​	11,866		​	10,820		​	14,697		​
​	​	​		​	​		​	​		​	​		​	​		​
Total assets	​	126,916		​	130,577		​	124,597		​	116,489		​	88,492		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
Current liabilities	​	11,093		​	12,402		​	9,164		​	10,626		​	10,438		​
Liabilities associated with assets held for sale and discontinued operations	​	–		​	169		​	448		​	111		​	107		​
Long-term liabilities(1)	​	16,470		​	16,380		​	22,379		​	22,043		​	15,896		​
Long-term debt(2)	​	21,538		​	26,799		​	27,670		​	27,388		​	26,347		​
​	​	​		​	​		​	​		​	​		​	​		​
Total liabilities	​	49,101		​	55,750		​	59,661		​	60,168		​	52,788		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
Shareholders' equity:	​			​			​			​			​			​
Capital stock	​	60,578		​	60,578		​	60,578		​	61,614		​	61,614		​
Additional paid-in capital	​	7		​	(552		)	(552		)	(601		)	(854		)
Mandatorily convertible notes—common ADSs	​	191		​	–		​	–		​	–		​	–		​
Mandatorily convertible notes—preferred ADSs	​	422		​	–		​	–		​	–		​	–		​
Retained earnings and revenue reserves	​	14,902		​	13,213		​	3,299		​	(5,891		)	(27,171		)
​	​	​		​	​		​	​		​	​		​	​		​
Total Company shareholders' equity	​	76,100		​	73,239		​	63,325		​	55,122		​	33,589		​
​	​	​		​	​		​	​		​	​		​	​		​
Non-controlling interests	​	1,715		​	1,588		​	1,611		​	1,199		​	2,115		​
​	​	​		​	​		​	​		​	​		​	​		​
Total shareholders' equity	​	77,815		​	74,827		​	64,936		​	56,321		​	35,704		​
​	​	​		​	​		​	​		​	​		​	​		​
Total liabilities and shareholders' equity	​	126,916		​	130,577		​	124,597		​	116,489		​	88,492		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​

---

(1)

Excludes long-term debt.

(2)

Excludes current portion of long-term debt.

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I.II.    INFORMATION ON THE COMPANY

BUSINESS OVERVIEW

Summary

          We are one of the largest metals and mining companies in the world, based on market capitalization. We are the world's largest producer of iron ore and iron ore pellets and the world's largest producer of nickel. We also produce manganese ore, ferroalloys, metallurgical and thermal coal, copper, platinum group metals ("PGMs"), gold, silver, cobalt, potash, phosphates and other fertilizer nutrients. We are engaged in greenfield mineral exploration in six countries around the globe. We operate large logistics systems in Brazil and other regions of the world, including railroads, maritime terminals and ports, which are integrated with our mining operations. In addition, we have a portfolio of maritime freight assets, floating transfer stations and distribution centers to support the distribution of iron ore worldwide. Directly and through affiliates and joint ventures, we also have investments in energy and steel businesses.

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

	​	Year ended December 31,
	​	2013			​	2014			​	2015
	​	US$ million	​	% of total	​	US$ million	​	% of total	​	US$ million	​	% of total
Ferrous minerals:	​		​		​		​		​		​
Iron ore	​	27,844	​	59.6%	​	19,301	​	51.4%	​	12,330	​	48.2%
Iron ore pellets	​	6,000	​	12.8	​	5,263	​	14.0	​	3,600	​	14.1
Manganese and ferroalloys	​	523	​	1.1	​	392	​	1.0	​	162	​	0.6
Other ferrous products and services	​	425	​	0.9	​	741	​	2.0	​	470	​	1.8
​	​	​	​	​	​	​	​	​	​	​	​	​
Subtotal—ferrous minerals	​	34,792	​	74.4	​	25,697	​	68.4	​	16,562	​	64.7
​	​	​	​	​	​	​	​	​	​	​	​	​
Coal	​	1,010	​	2.2	​	739	​	2.0	​	526	​	2.0
Base metals:	​		​		​		​		​		​
Nickel and other products(1)	​	5,839	​	12.5	​	6,241	​	16.6	​	4,693	​	18.3
Copper(2)	​	1,447	​	3.1	​	1,451	​	3.9	​	1,470	​	5.8
​	​	​	​	​	​	​	​	​	​	​	​	​
Subtotal—base metals	​	7,286	​	15.6	​	7,692	​	20.5	​	6,163	​	24.1
​	​	​	​	​	​	​	​	​	​	​	​	​
Fertilizer nutrients	​	2,814	​	6.0	​	2,415	​	6.4	​	2,225	​	8.7
Other(3)	​	865	​	1.8	​	996	​	2.7	​	133	​	0.5
​	​	​	​	​	​	​	​	​	​	​	​	​
Total net operating revenues from continued operations	​	46,767	​	100.0%	​	37,539	​	100.0%	​	25,609	​	100.0%
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​

---

(1)

Includes nickel co-products (copper) and by-products (precious metals, cobalt and others).

(2)

Does not include copper produced as a nickel co-product.

(3)

Includes pig iron and energy.

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·

Ferrous minerals:



o

Iron ore and iron ore pellets.    We operate four systems in Brazil for producing and distributing iron ore, which we refer to as the Northern, Southeastern, Southern and Midwestern Systems. The Northern and the Southeastern Systems are fully integrated, consisting of mines, railroads, maritime terminals and a port. The Southern System consists of three mining complexes and two maritime terminals. We also have iron ore pellet operations in several locations, some of which are conducted through joint ventures. We operate 11 pellet plants in Brazil and two in Oman. The operations of three of our pellet plants in Brazil have been suspended since the fourth quarter of 2012 in response to market conditions, and their capacity was partially replaced by Tubarão VIII, a more efficient plant. Additionally, we have a 50% stake in Samarco, which operates an integrated system in the Brazilian states of Minas Gerais and Espírito Santo. Samarco's operations have been suspended following the failure of its tailings dam in November 2015 (see—Significant Changes in Our Business—Failure of Samarco's tailings dam in Minas Gerais). We also have 25% stakes in two pellet companies in China.



o

Manganese ore and ferroalloys.    We conduct our manganese mining operations through Vale S.A. and subsidiaries in Brazil, and we produce several types of manganese ferroalloys through a wholly-owned subsidiary in Brazil.



·

Base metals:



o

Nickel.    Our principal nickel mines and processing operations are conducted by our wholly-owned subsidiary Vale Canada Limited ("Vale Canada"), which has operations in Canada and Indonesia. We also have nickel operations in Onça Puma, in the Brazilian state of Pará. We also own and operate, or have interests in, nickel refining facilities in the United Kingdom, Japan, Taiwan, China and South Korea. We are currently ramping up nickel operations in New Caledonia.



o

Copper.    In Brazil, we produce copper concentrates at Sossego and Salobo, in Carajás, in the Brazilian state of Pará. We are concluding the ramp-up of Salobo operations. In Canada, we produce copper concentrates, copper anodes and copper cathodes in conjunction with our nickel mining operations at Sudbury and Voisey's Bay. In Zambia, our joint venture produces copper concentrates at Lubambe, located in the Zambian Copperbelt.



o

Cobalt, PGMs and other precious metals.    We produce cobalt as a by-product of our nickel mining and processing operations in Canada and refine the majority of it at our Port Colborne facilities, in the Province of Ontario, Canada. We also produce cobalt as a by-product of our nickel operations in New Caledonia, which we are currently ramping up. We produce PGMs as by-products of our nickel mining and processing operations in Canada. The PGMs are concentrated at our Port Colborne facilities and refined at our precious metals refinery in Acton, England. We produce gold and silver as by-products of our nickel mining and processing operations in Canada, and gold as a by-product of our copper mining in Brazil.



·

Coal:



o

We conduct our coal operations primarily in Mozambique, through Vale Moçambique, S.A. ("Vale Moçambique"), where we are ramping up our metallurgical and thermal coal operations. We also have a coal operation in Australia through Rio Doce Australia Pty Ltd ("Vale Australia"), where we produce metallurgical coal in Carborough Downs. We also have minority interests in a Chinese coal and coke producer.

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·

Fertilizer nutrients:



o

We conduct our potash operations in Rosario do Catete, in the Brazilian state of Sergipe. We conduct our main phosphate operations through our subsidiary Vale Fertilizantes S.A. ("Vale Fertilizantes"), which holds most of our fertilizer assets in Brazil. Vale Fertilizantes is the largest Brazilian producer of phosphate rock and phosphate fertilizers and the second-largest Brazilian producer of nitrogen fertilizers. We also have a phosphate rock mine operation in Peru.



·

Logistics infrastructure:



o

We are a leading operator of logistics services in Brazil and other regions of the world, with railroads, maritime terminals, distribution centers and ports. Two of our four iron ore systems include an integrated railroad network linked to port and terminal facilities. We also have an interest in MRS Logística S.A. ("MRS"), which transports our iron ore products from the Southern System mines to our maritime terminals, and VLI S.A. ("VLI"), which provides integrated logistics solutions to general cargo through railroads, inland and maritime terminals in Brazil. We are ramping up the logistics infrastructure to support our operations in Southeastern Africa. We own and charter dry bulk vessels to transport the products that we sell on a cost and freight ("CFR") basis to customers.

Business strategy

          Our mission is to transform natural resources into prosperity and sustainable development. Our vision is to be the number one global natural resources company in creating long-term value through excellence and passion for people and the planet. We are committed to investing mainly in world-class assets, with long life, low cost, potential to expand and high quality output, capable of creating value through different economic cycles. A lean management organization, with teamwork and accountability, excellence in project execution and firm commitment to transparency and shareholder value creation, are principles of paramount importance that guide us towards the achievement of our goals. Health and safety, investment in human capital, a positive work environment and sustainability are also critical to our long-term competitiveness.

          We aim to maintain our competitive position in the global iron ore market and to grow through world-class assets while exercising disciplined capital management and maintaining a low cost structure. Iron ore and nickel will continue to be our main businesses while we work to maximize the value of our copper, coal and fertilizer nutrients businesses. To enhance our competitiveness, we will continue to improve our railroads and our global distribution network. We seek opportunities to make strategic partnerships focusing on disciplined capital management. We have also suspended operations of assets in response to market conditions, and disposed of assets that we have determined to be non-strategic or in order to optimize the structure of our business portfolio. The divestiture of assets improves capital allocation and unlocks funds to finance the execution of top priority projects. The preservation of our credit ratings is one of our basic commitments. Below are the highlights of our major business strategies.

Maintaining our competitiveness in the global iron ore market

          We are committed to maintaining our competitiveness in the global iron ore market, by focusing our product line to capture industry trends, improving quality and productivity, controlling costs, strengthening our logistics infrastructure of railroads, ports, shipping and distribution centers, and strengthening relationships with customers. Our diversified portfolio of high quality products, strong technical marketing strategy, efficient logistics and long-standing relationships with major customers will help us achieve this goal.

Enhancing our logistics capacity to support our iron ore and coal businesses

          We believe that the quality of our railway assets, our extensive experience as a railroad and port operator, and our stakes in MRS and VLI position us as a leader in the logistics business in Brazil. We have been expanding the capacity of our railroads and ports primarily to meet the needs of our iron ore business.

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          We continue to satisfy our transportation needs through a fleet of capesize vessels and very large ore carriers of 400,000 deadweight tons ("DWT"), primarily used to transport iron ore from Brazil to Asia, which is owned partly by us and partly by ship owners with which we have contracts of affreightment. To support our commercial strategy for our iron ore business, we operate two distribution centers in Malaysia and Oman, and two floating transfer stations ("FTS") in the Philippines.

          In order to position ourselves for the future expansion of our coal production in Mozambique and leverage our presence in Africa, we are currently ramping up the expansion of the local railroad capacity by rehabilitating the existing network and building new railroad tracks to develop the logistics corridor from our mine to the newly constructed port at Nacala-à-Velha, in Mozambique.

Maximizing value in the nickel and copper businesses

          We are the world's largest nickel producer, with large-scale, long-life and low-cost operations, a substantial resource base, diversified mining operations producing nickel from nickel sulfides and laterites and advanced technology. We have refineries in North America, Europe and Asia, which produce an array of products for use in most nickel applications. We are a leading producer of high-quality nickel products for non-stainless steel applications, such as plating, alloy steels, high nickel alloys and batteries, which represented 58% of our refined nickel sales in 2015. Our long-term goal is to strengthen our competitiveness in the nickel business. We continue to optimize our operations and to review our asset utilization aiming to increase productivity and improve returns.

          We produce copper concentrates from our Sossego and Salobo facilities located in the Carajás region. These copper mines benefit from our infrastructure facilities serving the Northern System. The gold we produce at Sossego and Salobo increases the total aggregated value of those operations. Our strategy for our copper assets in the Carajás region is to develop new mines in order to maintain supply for our existing processing facilities. We also have copper operations at Lubambe, in Zambia, through a joint venture. Copper is recovered as a co-product from our nickel operations, principally at Sudbury and Voisey's Bay, in Canada.

Optimizing the coal business

          We have coal operations in Moatize (Mozambique) and Australia, and we hold a minority interest in a joint venture in China. We intend to continue pursuing organic growth in the coal business mainly through the expansion of the Moatize operations in Mozambique, where we have entered into a strategic partnership with Mitsui.

Maintaining growth options in fertilizer nutrients business

          We have potash and phosphate rock operations as well as potential investments in greenfield and brownfield projects that we believe will allow us to benefit from certain demographic trends: the growing world population, an increase in per capita income in emerging economies and higher global consumption of proteins. We also take advantage of our strategic position to provide goods to the fertilizer-driven agricultural expansion in Brazil.

Developing our resource base

          We are taking advantage of our global presence to develop mineral exploration initiatives. We conduct brownfield exploration to maximize results from existing mining areas and to support both projects and operations. We conduct our greenfield exploration activities in six countries, which are Brazil, Peru, Chile, Canada, Australia and Indonesia. In particular, we seek to identify opportunities and develop deposits with the potential for large scale production at low cost. Our exploration activities include iron ore, nickel, copper, coal, potash and phosphates.

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Optimizing our energy matrix

          As a large consumer of electricity, we have invested in power generation projects to support our operations and to reduce our exposure to the volatility of energy prices and regulatory uncertainties. Accordingly, we have developed hydroelectric power generation plants in Brazil, Canada and Indonesia, and we currently generate 51% of our worldwide electricity needs from our own plants. We are seeking to develop a clean energy mix by investing to develop low carbon energy sources such as biofuels and focusing on reducing our carbon footprint.

Integrating sustainability into our business

          We are committed to sustainability, as we cannot grow without taking into account the physical limits of our planet or the well-being of communities in which we operate. Since 2013, we have incorporated environmental and social actions directly into our strategic planning, moving away from a stand-alone investment model. We practice sustainable mining by dedicating resources to education and researching the application of technologies to use natural resources efficiently. We are also committed to reducing the consumption of water in our activities and to use it more efficiently, especially through reuse and recirculation of water. We actively support an open dialogue with our main stakeholders (governments, communities, customers, suppliers, employees and others), because we recognize that only by acting together we can achieve sustainable growth and contribute to social welfare. We follow standards for social action and principles on business and human rights, which are based on the guidelines of the United Nations Human Rights Council. We are also committed to reducing greenhouse gas emissions.

Significant changes in our business

          We summarize below major events related to our organic growth, divestitures, acquisitions and other significant developments in our business since the beginning of 2015.

Organic growth

          We have an extensive program of investments in the organic growth of our businesses. Our main investment projects are summarized under —Capital expenditures. The most significant projects that have come on stream since the beginning of 2015 are summarized below:

·

Conceição Itabiritos II.  In the second quarter of 2015, we completed the adaptation of the existing plant to process lower grade itabirites from the Conceição mine, located in the Southeastern System in Minas Gerais, Brazil. The nominal capacity is 13 Mtpy of pellet feed and 6 Mtpy of sinter feed.



·

Cauê Itabiritos.  In the fourth quarter of 2015, we concluded the adaptation of the plant to process low-grade itabirites from the Itabira mining complex, located in the Southeastern System in Minas Gerais, Brazil. The nominal capacity is 16.5 Mtpy of pellet feed and 7.2 Mtpy of sinter feed.



·

Nacala Logistics Corridor.  In the fourth quarter of 2014, we began the upgrade of brownfield sections of the railway, which was completed in the fourth quarter of 2015. The project, which consists of a railway and port infrastructure connecting the Moatize site to the Nacala-à-Velha maritime terminal, located in Nacala, Mozambique, successfully transported and discharged 523,000 tons of thermal coal at the Nacala port, having completed four shipments of coal as of January 2016.

Dispositions and asset sales

          We are always seeking to optimize the structure of our portfolio of businesses in order to achieve the most efficient allocation of capital. We summarize below our most significant dispositions since the beginning of 2015.

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·

Sale of gold stream from Salobo copper mine—In March 2015, we sold to Silver Wheaton (Caymans) Ltd. ("Silver Wheaton") an additional 25% of the gold produced as a by-product at our Salobo copper mine, in Brazil, for the life of that mine. We had previously sold 25% of such gold in 2013. In consideration for the March 2015 sale, we received an initial cash payment of US$900 million and ongoing payments of the lesser of US$400 per ounce (subject to a 1% annual inflation adjustment after 2017) and the prevailing market price, for each ounce of gold that we deliver under the agreement. We may receive an additional cash payment, ranging from US$88 million to US$720 million, if we expand our capacity to process Salobo copper ores to more than 28 Mtpy before 2036.



·

Sale of minority interest in Minerações Brasileiras Reunidas S.A.—In September 2015, we sold preferred shares representing 36.4% of the total capital of our subsidiary Minerações Brasileiras Reunidas S.A. ("MBR") to an affiliate of Banco Bradesco S.A. for R$4.0 billion, or US$1.089 billion. After the sale, Vale holds 61.9% of the total capital and 98.3% of its voting capital. Vale has an option to repurchase the shares after an initial period.



·

Sale of Isaac Plains Coal mine—In November 2015, we completed the sale of our 50% stake in the Isaac Plains joint venture and all associated assets to Stanmore Coal Limited ("Stanmore"). Under this agreement, we will pay A$21.6 million in 12 installments to Stanmore, which will assume our liabilities under the joint venture agreement. Stanmore has agreed to pay us royalties of A$2.0 per ton on the coal produced and sold at the Isaac Plains coal mine for a period of ten years, subject to a certain price thresholds, up to an aggregate amount of A$21.6 million.



·

Sale of Integra coal operations—In December 2015, we completed the sale of our 68.4% stake in the Integra Coal Joint Venture ("ICJV") and all the associated assets to Glencore Plc ("Glencore"). As consideration, Glencore has agreed to pay us royalties of A$1.50 per ton on the coal produced and sold by ICJV, based on mineral rights currently held by ICJV, proportional to our stake in ICJV prior to the sale and limited to an annual volume of two million metric tons for ten years. As part of the transaction, Glencore has assumed some, but not all, ICJV liabilities, including certain "take or pay" logistics agreements.



·

Sale of very large ore carriers—In 2015, we concluded the sale of 12 very large ore carriers of 400,000 DWT for an aggregate amount of US$1.316 billion. See—Restructuring our investments in iron ore shipping.

Partnership in coal assets in Mozambique

          In December 2014, we entered into an investment agreement with Mitsui, pursuant to which Mitsui will acquire 15% of our stake in Vale Moçambique, which owns 95% of Moatize mine, and half of our equity stake in the companies holding the railroad and port concessions in the Nacala Corridor, in Mozambique and Malawi. The Mitsui investment is subject to conditions precedent, and is expected to close in 2016.

·

Moatize—Mitsui has agreed to acquire a 15% stake in Vale Moçambique, partly in a capital increase and partly from Vale. Mitsui has agreed to pay US$450 million, which may be increased by up to US$30 million or reduced by up to US$120 million, based on certain yield and production targets, through 2021. Mitsui will also provide additional funding, proportional to its 15% stake, to replace part of the funding of capital expenditures for the expansion of the Moatize mine provided by Vale since July 2014. Upon completion of the transaction, we will indirectly own 81% of the Moatize mine.



·

Nacala Corridor—Our equity stake in the companies holding the concessions in the Nacala Corridor will be transferred to a holding company jointly owned (50% each) and controlled by Vale and Mitsui. Mitsui will invest US$313 million in equity and quasi-equity instruments of this holding company. Vale and Mitsui are currently negotiating project financing that would meet one of the conditions to Mitsui's investment and replace part of the financing provided by Vale. See Lines of Business—Infrastructure—Railroads.

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Restructuring our investments in iron ore shipping

          Our strategy with respect to maritime shipping for our iron ore includes securing long-term access to shipping capacity for the transportation of our iron ore from Brazil to Asia and protecting against volatility in freight pricing, without incurring the costs relating to building and owning the ships. In 2014, we entered into framework agreements for strategic cooperation in iron ore transportation with three shipping companies and financial institutions based in China and Hong Kong. Pursuant to these framework agreements, we (i) sold a total of 12 of our very large ore carriers of 400,000 DWT for an aggregate amount of US$1.316 billion and (ii) entered into long-term contracts of affreightment with the Chinese ship owners, to secure the long-term transportation capacity to ship our iron ore from Brazil to Asia and to protect against volatility in freight costs. We also sold three of our capesize vessels for approximately US$23 million in 2015.

Obtaining environmental licenses for expansion of N5S ore body in Carajás

          In May 2015, we obtained the environmental license for the expansion of our N5S mine pit located in Carajás, Brazil. This license supports our iron ore production growth process, especially the production plan for 2016.

Restructuring our investments in power generation

          In 2015, we concluded transactions with CEMIG Geração e Transmissão S.A. ("CEMIG GT") to (i) sell 49% of our 9% stake in Norte Energia S.A. ("Norte Energia"), the company established to develop and operate the Belo Monte hydroelectric plant, in the Brazilian state of Pará, to CEMIG GT, for approximately R$310 million; and (ii) create two distinct joint ventures: Aliança Geração de Energia S.A. ("Aliança Geração"), which holds the participations previously held by us and CEMIG GT in power generation assets and projects, and Aliança Norte Energia Participações S.A. ("Aliança Norte"), which holds our and CEMIG GT's interests in Norte Energia. Our interests in these joint ventures are 55% and 51%, respectively.

Suspension of certain iron ore operations in the Southern System

          In July 2015, we temporarily suspended operations at certain iron ore processing plants with higher beneficiation costs and lower quality products in the Paraopeba mining complex and reduced production of lower quality products at certain mines at the Minas Itabiritos mining complex, both in the Southern System. We have resumed some of these operations, although at lower productivity. The decision is consistent with our strategy to improve product quality and increase profit margins.

Failure of Samarco's tailings dam in Minas Gerais

          On November 5, 2015, one of Samarco's tailings dams (Fundão) failed unexpectedly, releasing tailings downstream, reaching and flooding certain communities, including Bento Rodrigues, a small district of 600 people. The failure resulted in 18 fatalities, with one person still missing, and caused property and environmental damage to the affected areas, primarily in the state of Minas Gerais.

          Immediately after the dam failure, Samarco, together with the Civil Defense, Fire Department, Military Police and other authorities, provided first aid, food, water, housing, social assistance and financial aid to the affected families and individuals, and both Vale and BHPB, Samarco's shareholders, have been actively involved in supporting Samarco during this crisis.

          In addition to these emergency actions, Samarco has been monitoring the affected area, performing emergency work to contain any movement of tailings, reinforcing the structures of its dams and dikes to ensure the safety of the region and mitigating the environmental and social impacts of the event.

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          Samarco has been cooperating with the investigations being conducted by the Civil Police. Samarco, together with Vale and BHPB hired an external firm to conduct an independent investigation. In order to assess the environmental and socio-economic impacts of the dam failure and assist with the development of a remediation plan, Samarco has also engaged international consulting specialists in engineering, environment and environmental emergencies, health and safety, social and security services.

          The dam failure resulted in the immediate stoppage of Samarco's mining operations in the state of Minas Gerais pursuant to order of government authorities. With the exception of two of its dams (the Fundão tailings dam and the Santarém water dam, which was impacted by the overflow of tailings from the Fundão dam), all other Samarco production assets were undamaged.

          Vale's operation in the Mariana mining complex, near Samarco's mining area, was also negatively impacted by the failure of Samarco's tailings dam. A major conveyor belt connecting our Fábrica Nova mine to our Timbopeba beneficiation plant was damaged and the Alegria mine is operating with a dry beneficiation process, at lower productivity. These factors caused a decrease in production at the Mariana mining complex in Minas Gerais by 3.0 Mt in 2015, which was offset by increased production from our other mines. The expected impact in 2016 is a decrease of 9��Mt in production at the Mariana mining complex, which we expect to be partially offset by increased production at our other mines. In addition, we have interrupted the sale of run of mine (ROM) from our Fazendão mine to Samarco. We are still exploring alternatives for these mines.

          As a consequence of the Fundão dam failure, Samarco incurred expenses, wrote off assets and recognized provisions for remediation, which affected its balance sheet and income statement. Because Samarco is a joint venture, these impacts are reflected on Vale's financial statements under the equity method, limited to its interest in Samarco's capital. Vale's investment in Samarco was reduced to zero and no liability was recognized in Vale's financial statements.

          The dam failure had no effect on Vale's cash flow for the year ended December 31, 2015.

          Samarco and its shareholders, Vale and BHPB, entered into a settlement agreement on March 2, 2016 with the federal Attorney General of Brazil, the two Brazilian states affected by the failure (Espírito Santo and Minas Gerais) and certain other parties. The settlement agreement, which includes no admission of civil, criminal or administrative liability for the Fundão dam failure, is expected to resolve the lawsuit brought in Brazilian courts by several Brazilian governmental authorities. The settlement agreement is already effective, though the resolution of claims pursuant to the agreement remains subject to judicial approval. SeeAdditional information—Legal proceedings—Legal proceedings related to failure of Samarco's tailings dam in Minas Gerais—Public civil action by the Brazilian government and others. There is no assurance as to whether and when the court will approve the resolution of claims. The term of the agreement is 15 years, renewable for successive one-year periods until all obligations under the agreement have been performed.

          Under the settlement agreement, Samarco, Vale and BHPB will establish a foundation to develop and implement remediation programs to restore the environment, local communities and the social condition of the affected areas and compensation programs to provide compensation where remediation is not feasible and, in some cases, beyond strictly compensatory measures.

          Samarco has agreed to provide funding to the foundation in the amount of R$2.0 billion in 2016, R$1.2 billion in 2017 and R$1.2 billion in 2018. Amounts Samarco has already spent on remediation and compensation will be applied towards its funding obligations. From 2019 to 2021, Samarco has agreed to provide funding based on the amounts needed to complete remaining remediation and compensation projects, subject to an annual minimum of R$800 million and an annual maximum of R$1.6 billion. The foundation will allocate an annual amount of R$240 million over 15 years to the implementation of compensation programs, and these annual amounts are included in the annual contributions described above for the first six years. Through the end of 2018, the foundation will also set aside R$500 million for basic sanitation in the affected areas.

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          Samarco is currently unable to conduct ordinary mining and processing. Samarco's management is working on a plan that would permit it to resume operations, but the feasibility, timing and scope of restarting remain uncertain. If Samarco is able to resume operations, we expect that it will be able to generate all or a substantial part of the funding required under the agreement.

          To the extent Samarco does not meet its funding obligations, each of Vale and BHPB is obligated to provide funding to the foundation in proportion to its 50% interest in Samarco. Vale does not currently expect to record a provision in its financial statements in respect of these obligations, but if Samarco is eventually unable to resume operations or to meet its funding obligations, Vale could determine that it should recognize a provision.

          To comply with the settlement agreement, Samarco will continue to conduct and fund the humanitarian and environmental remediation and compensation works until the foundation is operational, which is likely to occur before the end of 2016.

          Vale is subject to a number of other legal and administrative proceedings in connection with the Fundão dam's failure. SeeAdditional information—Legal proceedings—Legal proceedings related to failure of Samarco's tailings dam in Minas Gerais.

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LINES OF BUSINESS

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

1.   Ferrous minerals     1.1   Iron ore and iron ore pellets             1.1.1   Iron ore operations             1.1.2   Iron ore production             1.1.3   Iron ore pellets operations             1.1.4   Iron ore pellets production             1.1.5   Customers, sales and marketing             1.1.6   Competition     1.2   Manganese ore and ferroalloys             1.2.1   Manganese ore operations and production             1.2.2   Ferroalloys operations and production             1.2.3   Manganese ore and ferroalloys: sales and  competition 2.   Base metals     2.1   Nickel             2.1.1   Operations             2.1.2   Production             2.1.3   Customers and sales             2.1.4   Competition     2.2   Copper             2.2.1   Operations             2.2.2   Production             2.2.3   Customers and sales             2.2.4   Competition     2.3   PGMs and other precious metals     2.4   Cobalt	​	3.   Coal     3.1   Operations     3.2   Production     3.3   Customers and sales     3.4   Competition 4.   Fertilizer nutrients     4.1   Phosphates and nitrogen     4.2   Potash     4.3   Customers and sales     4.4   Competition 5.   Infrastructure     5.14.1   Logistics             5.1.14.1.1   Railroads             5.1.24.1.2   Ports and maritime             terminals             5.1.34.1.3   Shipping     5.24.2   Energy 6.5.   Other investments

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1.    Ferrous minerals
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1.           FERROUS MINERALS

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

1.1         Iron ore and Ironiron ore pellets

1.1.1      Iron ore operations

We conduct our iron ore business in Brazil primarily at the parent-company level, and through our wholly-owned subsidiarysubsidiaries Mineração Corumbaense Reunida S.A. ("MCR") and through our subsidiary MBR.Minerações Brasileiras Reunidas S.A.—MBR ("MBR"). Our mines, all of which are open pit, and their related operations are mainly concentrated in three systems: the Southeastern, Southern and Northern Systems, each with its own transportation and shipping capabilities. We also conduct mining operations in the Midwestern System and we have a 50% stake in Samarco. Samarco's operations have been suspended following the failure of one of its tailings dams located in Minas Gerais in November 2015 (seeBusiness overview—Significant changes in our business—Failure of Samarco's tailings dam in Minas Gerais). We conduct each of our iron ore operations in Brazil under concessions from the federal government granted for an indefinite period. For more information about these concessions, seeRegulatory matters—Mining rights and regulationperiod, subject to the life of mining activities.the mines.

Company/Mining System	​	Location	​	Description/History	​	Mineralization	​	Operations	​	Power source	​	Access/Transportation
Vale	​		​		​		​		​			​
Northern System	​	Carajás, state of Pará	​	Open-pit mines and ore-processing plants. Divided into Serra Norte, Serra Sul and Serra Leste (northern, southern(Northern, Southern and easternEastern ranges). Since 1985,1984, we have been conducting mining activities in the northern range, which is divided into three main mining areas (N4W, N4E and N5) and two major beneficiation plants. In 2014, we started a new mine and beneficiation plant in Serra Leste. We expect ourOur operations in Serra Sul, where we are implementing our S11D project, to startmine is located, started in 2016.	​	High-grade hematite ore type (iron grade of more than 66%65% on average).	​	Open-pit mining operations. BeneficiationIn Serra Norte, one of the major plants applies the natural moisture beneficiation process, consisting of crushing and screening, and the other applies both the natural moisture and the wet beneficiation process in distinct lines. The wet beneficiation process consists simply of sizing operations, including screening, hydrocycloning, crushing and filtration. Output from the beneficiation processthis site consists of sinter feed, pellet feed and lump ore. Serra Leste and Serra Sul natural moisture beneficiation process consists of crushing and screening. Serra Sul produces only sinter feed and Serra Leste produces mainly sinter feed.	​	Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.	​	EFCCarajás railroad (EFC) transports the iron ore to the Ponta da Madeira maritime terminal in the Brazilian state of Maranhão. Serra Leste iron ore is transported by trucks from the mine site to EFC railroad. The Serra Sul ore is shipped via the new 101-kilometers long railroad spur to the EFC railroad.
Southeastern System	​	Iron Quadrangle, state of Minas Gerais	​	Three mining complexes: Itabira (two mines, with three major beneficiation plants), Minas Centrais (three(two mines, with threetwo major beneficiation plants and one secondary plant) and Mariana (three mines, with two major beneficiation plants).	​	Ore reserves with high ratios of itabirite ore relative to hematite ore type. Itabirite ore type has iron grade of 35-60% and requires concentration. Part of the ore is concentrated to achieve shipping grade.grade and part is shipped and blended in Asia with the high-grade ore from our Northern System.	​	Open-pit mining operations. We generally process the run-of-mine by means of standard crushing, classification and concentration steps, producing sinter feed, lump ore and pellet feed in the beneficiation plants located at the mining complexes. For status of halted operations seeBusiness overview—Failure of the tailings dam at the Córrego do Feijão mine.	​	Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.	​	EFVM railroad connects these mines to the Tubarão port.

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Company/Mining System	​	Location	​	Description/History	​	Mineralization	​	Operations	​	Power source	​	Access/Transportation
Southern System	​	Iron Quadrangle, state of Minas Gerais	​	Three major mining complexes: Minas Itabirito (four mines and three major beneficiation plants); Vargem Grande (three mines and two major beneficiation plants); and Paraopeba (four(five mines and two major beneficiation plants). Part of these operations is conducted through our subsidiary MBR.	​	Ore reserves with high ratios of itabirite ore type relative to hematite ore type. Itabirite ore has iron grade of 35-60% and requires concentration. Part of the ore is concentrated to achieve shipping grade.grade and part is shipped and blended in Asia with the high-grade ore from our Northern System.	​	Open-pit mining operations. We generally process the run-of-mine by means of standard crushing, classification and concentration steps, producing sinter feed, lump ore and pellet feed in the beneficiation plants located at the mining complexes. For status of halted operations seeBusiness overview—Failure of the tailings dam at the Córrego do Feijão mine.	​	Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.	​	MRS transports our iron ore products from the mines to our Guaíba Island and Itaguaí maritime terminals in the Brazilian state of Rio de Janeiro. EFVM railroad connects certain mines to the Tubarão port.
Midwestern System	​	State of Mato Grosso do Sul	​	Open-pit mining operations. Two mines and two plants located in the city of Corumbá.	​	Hematite ore type, which generates lump ore predominantly. Iron grade of 62% on average.	​	Open-pit mining operations. The beneficiation process for the run of minerun-of-mine consists of standard crushing and classification steps, producing lump ore and fines.sinter feed.	​	Supplied through the national electricity grid. Acquired from regional utility companies.through power purchase agreements.	​	Part of the sales are transported through Transported by barges traveling along the Paraguay riverand Paraná rivers to transhippers at the portsNueva Palmira port in Argentina, moving to Europe and Asia markets from there. Another part of the sales isUruguay, or delivered to customers in the ports ofat Corumbá.

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Samarco ​

Iron Quadrangle, state of Minas Gerais

Integrated system comprised of two mines, three beneficiation plants, three pipelines, four pellet plants and a port.

Itabirite ore type.

​ Open-pit mining operations. The three beneficiation plants, located at the site, process the run-of-mine by means of standard crushing, milling and concentration steps, producing pellet feed and sinter feed. Samarco's mining operations have been suspended following the failure of one of its tailings dams located in Minas Gerais in November 2015 (seeBusiness overview—Significant changes in our business—Failure of Samarco's tailings dam in Minas Gerais)​

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Supplied through the national electricity grid. Acquired from regional utility companies or produced directly by Samarco. ​ ​

Samarco mines supply Samarco pellet plants using three pipelines extending approximately 400 kilometers. These pipelines transport the iron ore from the beneficiation plants to the pelletizing plants, and from the pelletizing plants to the port in the Brazilian state of Espírito Santo. ​

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1.1.2      Iron ore production

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

	​		​	Production for the year ended December 31,					​		​		​	Production for the year ended December 31,					​
	​								​	2015 process recovery	​								​	2018 process recovery(2)
Mine/Plant	​	Type	​	2013	​	2014	​	2015			​	Type	​	2016	​	2017	​	2018(1)
	​		​	(million metric tons)					​	(%)	​		​	(million metric tons)					​	(%)
Southeastern System	​		​		​		​		​		​		​		​		​		​
Itabira	​	Open pit	​	34.0	​	35.5	​	35.5	​	55.2	​	Open pit	​	33.4	​	37.8	​	41.7	​	50
Minas Centrais(1)	​	Open pit	​	37.8	​	33.0	​	41.2	​	67.7	​	Open pit	​	40.9	​	37.6	​	36.0	​	64
Mariana	​	Open pit	​	37.6	​	38.9	​	35.9	​	81.8	​	Open pit	​	28.4	​	33.1	​	26.7	​	81
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Southeastern System	Total Southeastern System		​	109.4	​	107.4	​	112.6	​		​		​	102.7	​	108.6	​	104.4	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Southern System	​		​		​		​		​		​		​		​		​		​
Minas Itabirito	​	Open pit	​	31.0	​	33.0	​	31.6	​	72.3	​	Open pit	​	40.1	​	36.8	​	35.5	​	82
Vargem Grande	​	Open pit	​	22.0	​	25.0	​	29.3	​	70.7	​	Open pit	​	29.2	​	23.3	​	21.4	​	68
Paraopeba	​	Open pit	​	26.0	​	28.2	​	25.8	​	95.1	​	Open pit	​	26.4	​	26.3	​	27.3	​	98
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Southern System	Total Southern System		​	79.0	​	86.2	​	86.7	​		​		​	95.7	​	86.4	​	84.1	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Northern System	​		​		​		​		​		​		​		​		​		​
Serra Norte	​	Open pit	​	104.9	​	117.4	​	127.6	​	98.2	​	Open pit	​	143.6	​	142.7	​	131.5	​	95
Serra Leste	​	Open pit	​	–	​	2.2	​	2.0	​	98.7	​	Open pit	​	4.2	​	4.3	​	4.1	​	100
Serra Sul											​	Open pit	​	0.4	​	22.2	​	58.0	​	100
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Northern System	Total Northern System		​	104.9	​	119.6	​	129.6	​		​		​	148.1	​	169.2	​	193.6	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Midwestern System	​		​		​		​		​		​		​		​		​		​
Corumba	​	Open pit	​	4.5	​	3.8	​	2.8	​	64.1
Corumbà											​	Open pit	​	1.9	​	2.4	​	2.5	​	72
Urucum	​	Open pit	​	2.0	​	2.1	​	1.7	​	82.6	​	Open pit	​	0.4	​	0.0	​	0.0	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Midwestern System	Total Midwestern System		​	6.5	​	5.8	​	4.5	​		​		​	2.3	​	2.4	​	2.5	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Vale Systems(2)	​		​	299.8	​	319.0	​	333.4	​
​	​	​	​	​	​	​	​	​	​	​
Samarco(3)	​	Open pit	​	10.9	​	13.1	​	12.7	​	53.6
​	​	​	​	​	​	​	​	​	​	​
Total	Total		​	310.7	​	332.1	​	346.1	​		​		​	348.8	​	366.5	​	384.6	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

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(1)

Agua LimpaProduction figures include third-party ore purchases, run of mine and plants are partfeed for pelletizing plants.

(2)

Percentage of the Minas Centrais operations and are owned by Baovale Mineração S.A. ("Baovale"). We own 100% ofrun-of-mine recovered in the voting shares and 50% of the total shares of Baovale. Production figures for Água Limpa have not been adjusted to reflect our ownership interest.

(2)

Productionbeneficiation process. Process recovery figures do not include third-party ore purchasespurchases.

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Table of 12.5 Mt in 2015, 12.3 Mt in 2014 and 10.6 Mt in 2013.

(3)

Production figures for Samarco, in which we have a 50% interest, have been adjusted to reflect our ownership interest.

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1.1.3      Iron ore pelletspellet operations

We produce iron ore pellets in Brazil and Oman, directly and through joint ventures, as set forth in the following table.table below. We also have a 25% interest in two iron ore pelletizing plants in China,Zhuhai YPM Pellet Co., Ltd. ("Zhuhai YPM") andAnyang Yu Vale Yongtong Pellet Co., Ltd. ("Anyang"). Our total estimated nominal capacity is 64.7 Mtpy, including the full capacity of our pelletizing plants in Oman, but not including our joint ventures Samarco, Zhuhai YPM and Anyang. Of our total 2015 pellet production, including the production of our joint ventures, 68.6% was blast furnace pellets and 31.4% was direct reduction pellets, which are used in steel mills that employ the direct reduction process rather than blast furnace technology. We supply all of the iron ore requirements of our wholly-ownedwholly owned pellet plants and part of the iron ore requirements for Samarco and Zhuhai YPM. In 2015,2018, we sold 9.8 million metric tons of run of mine to Samarco and 0.9 million102 thousand metric tons of pellet feed to Zhuhai YPM. We suspended our sales of run of mine to Samarco following the failure of Samarco's tailings dam in November 2015.

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Table of Contents

Company/Plant		Description/History		Nominal capacity (Mtpy)		Power source		Other information		Vale's share (%)			Partners
Brazil:
Vale
Tubarão (state of Espírito Santo)		Three wholly owned pellet plants (Tubarão I, II and VIII) and five leased plants. Receives iron ore from our Southeastern System mines and distribution is made though our logistics infrastructure. Tubarão VIII plant started up in the first half of 2014.		36.7(1)		Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.		Operations at the Tubarão I and II pellet plants have been suspended since November 13, 2012 in response to changes in steel industry demand for raw materials, and replaced by Tubarão VIII, a newer and more efficient plant.			100.0		–
Fábrica (state of Minas Gerais)		Part of the Southern System. Receives iron ore from the João Pereira and Segredo mines. Production is mostly transported by MRS and EFVM.		4.5		Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.		–			100.0		–
Vargem Grande (state of Minas Gerais)		Part of the Southern System. Receives iron ore from the Sapecado, Galinheiro, Capitão do Mato and Tamanduá mines and the production is mostly transported by MRS.		7.0		Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.		–			100.0		–
São Luís (state of Maranhão)		Part of the Northern System. Receives iron ore from the Carajás mines and production is shipped to customers through our Ponta da Madeira maritime terminal.		7.5		Supplied through the national electricity grid. Produced directly by Vale.		On October 8, 2012, we suspended operations at the São Luís pellet plant for reasons similar to those supporting our suspension of operations at the Tubarão I and II plants.			100.0		–
Samarco		Four pellet plants with nominal capacity of 30.5 Mtpy. The pellet plants are located in the Ponta Ubu unit, in Anchieta, state of Espírito Santo. The fourth pellet plant started up in the first half of 2014.		30.5		Supplied through the national electricity grid. Acquired from regional utility companies or produced directly by Samarco.		In 2014, we started up the fourth pellet plant with a capacity of 8.3 Mtpy, increasing Samarco's total nominal pellet capacity to 30.5 Mtpy. In January 2016, Samarco suspended its pelletizing operations as pelletizing feed became unavailable as a result of the suspension of its mining operations in November 2015.			50.0		BHP Billiton Brasil Ltda.

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Company/Plant		Description/History		Nominal capacity (Mtpy)		Power source		Other information		Vale's share (%)			Partners		Description/History		Nominal capacity (Mtpy)		Power source		Other information		Vale's equity interest (%)		Partners
Brazil:
Vale
Tubarão (state of Espírito Santo)															Three wholly owned pellet plants (Tubarão I, II and VIII) and five leased plants (Itabrasco, Hispanobras, Kobrasco and two Nibrasco plants). These plants receive iron ore primarily from our Southeastern System mines and use our logistics infrastructure for distribution.		36.7(1)		Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.		Operations at the Tubarão I and Tubarão II pellet plants started up in the first half of 2018 in response to market conditions. Operations at these plants had been suspended since 2012.		100.0		–
Fábrica (state of Minas Gerais)															Part of the Southern System. Receives iron ore from the Minas Itabirito mining complex, more specifically from João Pereira and Segredo mines. Production is mostly transported by MRS and EFVM.		4.5		Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.		Operations at the Fábrica plant have been suspended since February 2019, following a determination of the ANM (seeBusiness overview—Failure of the tailings dam at the Córrego do Feijão mine).		100.0		–
Vargem Grande (state of Minas Gerais)															Part of the Southern System. Receives iron ore from the Minas Itabirito and Vargem Grande mining complexes, more specifically from Sapecado, Galinheiro, Capitão do Mato and Tamanduá mines. Production is mostly transported by MRS.		7.0		Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.		Operations at the Vargem Grande plant have been suspended since February 2019, following a determination of the ANM (seeBusiness overview—Failure of the tailings dam at the Córrego do Feijão mine).		100.0		–
São Luís (state of Maranhão)															Part of the Northern System. Receives iron ore from the Carajás mines. Production is shipped to customers through our Ponta da Madeira maritime terminal.		7.5		Supplied through the national electricity grid. Produced directly by Vale or acquired through power purchase agreements.		Operation at the São Luís plant restarted in the second half of 2018 in response to market conditions. Operations at this plant had been suspended since 2012.		100.0		–
Oman:
Vale Oman Pelletizing Company LLC		Vale's industrial complex. Two pellet plants with a total nominal capacity of 9.0 Mtpy. The pelletizing plants are integrated with our distribution center that has a nominal capacity to handle 40.0 Mtpy.		9.0		Supplied through the national electricity grid.		Oman plants are supplied by iron ore from the Iron Quadrangle, state of Minas Gerais through the Tubarão Port.			70.0		Oman Oil Company S.A.O.C.		Vale's industrial complex. Two pellet plants with a total nominal capacity of 9.0 Mtpy. The pelletizing plants are integrated with our distribution center that has a nominal capacity of 40.0 Mtpy.		9.0		Supplied through the national electricity grid.		Oman plants are supplied by iron ore from the Iron Quadrangle state of Minas Gerais through the Tubarão port and by iron ore from Carajás through the Ponta da Madeira maritime terminal.		70.0		Oman Oil Company S.A.O.C.

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(1)

Our environmental operating licenses for the Tubarão pellet plants provide for a capacity of 36.2 Mtpy.

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1.1.4      Iron ore pellets production

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

	​	Production for the year ended December 31,					​	Production for the year ended December 31,
Company	​	2013	​	2014	​	2015	​	2016	​	2017	​	2018
	​	(million metric tons)					​	(million metric tons)
Vale(1)	​	39.0	​	43.0	​	46.2	​	46.2	​	50.3	​	55.3
Samarco(2)	​	10.6	​	12.1	​	12.3
​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	49.6	​	55.1	​	58.5	​	46.2	​	50.3	​	55.3
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(1)

Figure indicates actual production, including full production from our pellet plants in Oman fromand the fourfive pellet plants we leasedlease in BrazilBrazil. The operating leases for the Itabrasco, Nibrasco and Hispanobras pellet plants expire in 20082019, and from the oneoperating leases for the Kobrasco pellet plant we leasedexpire in Brazil in 2012. We signed a 10-year operating lease contract for Itabrasco's pellet plant in October 2008. We signed a five-year operating lease contract for Kobrasco's pellet plant in June 2008, renewed for additional five years in 2013. We signed a 30-year operating lease contract for Nibrasco's two pellet plants in May 2008. On July 1, 2012, we signed a three-year operating lease for Hispanobras' pellet plant, which was renewed for three additional years in 2015, and started to consolidate its output with our production.

(2)

Production figures for Samarco have been adjusted to reflect our ownership interest.2033.

1.1.5      Customers, sales and marketing

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

In 20152018, China accounted for 54%56% of our iron ore and iron ore pellet shipments, and Asia as a whole accounted for 69%70%. Europe accounted for 15%22%, followed by Brazil with 11%8%. Our 10ten largest customers collectively purchased 126146 million metric tons of iron ore and iron ore pellets from us, representing 38%40% of our 20152018 iron ore and iron ore pellet sales volumes and 35%39% of our total iron ore and iron ore pellet revenues. In 2015,2018, no individual customer accounted for more than 10.0%7% of our iron ore and iron ore pellet shipments.

Of our 2018 pellet production, 54% was blast furnace pellets and 46% was direct reduction pellets. Blast furnace and direct reduction are different technologies employed by steel mills to produce steels, each using different types of pellets. In 2015,2018, the Asian market (mainly Japan, South Korea and Taiwan)Japan), the European market and the Brazilian market were the primary markets for our blast furnace pellets, while the Middle East North America and North AfricaAmerica were the primary markets for our direct reduction pellets.

We strongly emphasizeinvest in customer service in order to improve our competitiveness. We work with our customers to understand their objectives and to provide them with iron ore solutions to meet specific customer needs. Using our expertise in mining, agglomeration and iron-making processes, we search for technical solutions that will balance the best use of our world-class mining assets and the satisfaction of our customers. We believe that our ability to provide customers with a total iron ore solution and the quality of our products are both very important advantages helping us to improve our competitiveness in relation to competitors that may be more conveniently located geographically. In addition to offering technical assistance to our customers, we operate sales supporthave offices in St. Prex (Switzerland), Tokyo (Japan), Seoul (South Korea), Singapore, Dubai (UAE) and Shanghai (China), which support theglobal sales made by Vale International.International, and an office in Brazil, which supports sales to South America. These offices also allow us to stay in close contact with our customers, monitor their requirements and our contract performance, and ensure that our customers receive timely deliveries.

          In 2015, we launched a new iron ore fines blended product to better meet market needs. The Brazilian Blend Fines is a mix of fines from Carajás and the Southern System, and has good metallurgical and sintering performance. It is sold from our Teluk Rubiah Maritime Terminal in Malaysia, which reduces the time to reach Asian markets and increases our distribution capillarity by using smaller vessels.

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We sell iron ore and iron ore pellets under different arrangements, including long-term contracts with customers and on a spot basis through tenders and trading platforms. Our pricing is generally linked to market price indexes such as IODEX, and uses a variety of mechanisms, including current spot prices and average prices over specified

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periods. In cases where the products are deliveredpriced before the final price is determinable at delivery, we recognize the sale based on a provisional price with a subsequent adjustment reflecting the final price.

In 2015,2018, we hedged part of our total exposure to bunker oil prices relating to our owned fleet and long-term contracts of affreightment (used in connection with our CFR sales) under our hedge accounting program and relatingconnected to our FOB and domestic sales. Beginning in 2016, we are no longer entering in new bunker oil hedge transactions. Our bunker oil hedge transactions relating to our owned fleet and long-term contracts of affreightment were all settled in 2015, but we still have open hedge positions relating to our FOBCFR international and domestic sales. The 2018 hedge program was settled in 2018.

1.1.6      Competition

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

•

Asia - Our biggestmain competitors in the Asian market are located in Australia and include subsidiaries and affiliates of BHP, Billiton, Rio Tinto Ltd ("Rio Tinto") and Fortescue Metals Group Ltd ("FMG").Ltd. We are competitive in the Asian market for two main reasons. First, steel companies generally seek to obtain the types (or blends) of iron ore and iron ore pellets that can produce the intended final product in the most economic and efficient manner. Our iron ore has low impurity levels and other properties that generally lead to lower processing costs. For example, in addition to its high grade,high-grade, the alumina content of our iron ore is very low compared to Australian ores, reducing consumption of coke and increasing productivity in blast furnaces, which is particularly important during periods of high demand. When market demand is strong, our quality differential generally becomes more valuable to customers. Second, steel companies often develop sales relationships based on a reliable supply of a specific mix of iron ore and iron ore pellets.

Our ownership and operation of logistics facilities in the Northern and Southeastern Systems help us ensure that our products are delivered on time and at a relatively low cost. In addition, we continueWe rely on long-term contracts of affreightment to develop a low-cost freight portfolio aimed at enhancingsecure transport capacity and enhance our ability to offer our products in the Asian market at competitive prices on a CFR basis, despite higher transportationfreight costs compared to Australian producers. To support thisour commercial strategy for our iron ore business, we have builtoperate two distribution centers, one in Malaysia and one in Oman and anotherwe have long-term agreements with sixteen ports in China, which also serve as distribution centers. In 2015, we launched the Brazilian blend fines (BRBF), a product resulting from blending fines from Carajás, which contain a higher concentration of iron and a lower concentration of silica in the ore, with fines from the Southern and Southeastern Systems, which contain a lower concentration of iron in the ore. In August 2018, Metal Bulletin launched a new index, the 62% Fe low-alumina index, which is based on our BRBF. During the remainder of 2018, the 62% Fe low-alumina index traded with a premium of US$4.50 per dmt over the 62% Fe index. The resulting blend offers strong performance in any kind of sintering operation. It is produced in our Teluk Rubiah Maritime Terminal in Malaysia and operate two floating transshipment stations ("FTS") in the Philippines. We are party to medium- and long-term freight contracts, and we own or charter vessels, including very large ore carriers. They reduce energy consumption and greenhouse emissions by carrying an increased amount of cargosixteen distribution centers in a single trip, offering lower shipping costs. These investments improve speed and flexibility for customization, and they shortenChina, which reduces the time to market required forreach Asian markets and increases our products.

distribution capillarity by using smaller vessels.



•

Europe - Our principalmain competitors in the European market are Kumba Iron Ore Limited, Luossavaara Kiirunavaara AB ("LKAB"), Société Nationale Industrielle et Minière ("SNIM") andArcelorMittal Mines Canada Inc., Iron Ore Company of Canada, ("IOC"), a subsidiary of Rio Tinto., Kumba Iron Ore Limited and Société Nationale Industrielle et Miniére. We are competitive in the European market for the same reasons as in Asia, but also due to the proximity of our port facilities to European customers.





•

Brazil - The Brazilian iron ore market is also competitive and includes several small iron ore producers. Anglo American is ramping up the Minas-Rio project. Some steel companies, including Gerdau S.A. ("Gerdau"), Companhia Siderúrgica Nacional ("CSN"), Vallourec Tubos do Brasil S.A., Usiminas and Arcelor Mittal, also have iron ore mining operations. Although pricing is relevant, quality and reliability are important competitive factors as well. We believe that our integrated transportation systems, high-quality ore and technical services make us a strong competitor in the Brazilian market.

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With respect to pellets, our major competitors are LKAB, Iron Ore Company of Canada, Ferrexpo Plc, Arcelor Mittal Mines Canada (former Quebec Cartier Mining Co.), Iron Ore Company of Canada (IOC) and Bahrain Steel (former Gulf Industrial Investment Co)Co.).

1.2         Manganese ore and ferroalloys

1.2.1      Manganese ore operations and production

We conduct our manganese mining operations in Brazil through Vale S.A. and our wholly-ownedwholly owned subsidiaries Vale Manganês S.A. ("Vale Manganês") and MCR. Our mining operations are carried out under concessions from the federal government granted for an indefinite period. Our mines produce three types of manganese ore products:

·

metallurgical ore, used primarily for the production of manganese ferroalloys, a raw material used to produce carbon and stainless steel;



·

natural manganese dioxide, suitable for the manufacture of electrolytic batteries; and



·

chemical ore, used in several industries for the production of fertilizer, water treatment, pesticides and animal feed, and used as a pigment in the ceramics industry.

steel.

Mining complex		Company		Location		Description/History		Mineralization		Operations		Power source		Access/ Transportation
Azul		Vale S.A.		State of Pará		Open-pit mining operations and on-site beneficiation plant.		High-grade ores (at least 40%High- and medium-grade oxide-ores (24-46% manganese grade).		Crushing, scrubbing and classification steps, producing lumps and fines.		Supplied through the national electricity grid. Acquired from regional utility companies.Produced directly by Vale or acquired through power purchase agreements.		Manganese ore is transported by truck and EFC railroad to the Ponta da Madeira maritime terminal.
Morro da Mina		Vale Manganês		State of Minas Gerais		Open-pit mining operations and one major beneficiationconcentration plant. In January 2015, we suspended operations due to market conditions.		Low-gradeMedium- and low-grade silicocarbonate ores (24%(an average content of 30% manganese grade).		Crushing, screening and screening/densedense-heavy medium classification steps,separation DMS / HMS process producing lumps and fines to the Barbacena and Ouro Preto ferroalloy plants.		Supplied through the national electricity grid. Acquired from regional utility companies.		Manganese ore is transported by truckstruck to the Barbacena and Ouro Preto and Barbacena ferroalloy plants.
Urucum		MCR		State of Mato Grosso do Sul		Underground mining operations and on-site beneficiation plant.		High-gradeHigh-and medium-grade oxide ores (at least 40%(an average content of 46% manganese grade).		Crushing, scrubbing and classification steps, producing lumps and fines.		Supplied through the national electricity grid. Acquired from regional utility companies.through power purchase agreements.		Manganese ore is transported to the port of Rosario (Argentina) by bargesbarge traveling along the Paraguay and Paraná rivers.rivers to transhippers at the Nueva Palmira port in Uruguay.

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The following table sets forth information about our manganese ore production.production, obtained after beneficiation process, and mass recovery.

				Production for the year ended December 31,										Production for the year ended December 31,
										2015 process recovery										2018 process recovery(1)
Mine		Type		2013		2014		2015				Type		2016		2017		2018
				(million metric tons)						(%)				(million metric tons)						(%)
Azul		Open pit		1.9		1.7		1.7		54.0		Open pit		1.7		1.4		1.0		43
Morro da Mina(1)		Open pit		0.1		0.1		–		–		Open pit		0.0		0.1		0.1		82
Urucum		Underground		0.4		0.6		0.7		83.0		Underground		0.7		0.7		0.7		79
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Total	Total			2.4		2.4		2.4						2.4		2.2		1.8
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(1)

We suspended operations at Morro da Mina MinePercentage of the run-of-mine recovered in 2015 due to market conditions.the beneficiation process.

1.2.2      Manganese ferroalloys operations and production

We conduct our manganese ferroalloys business through our wholly-ownedwholly owned subsidiary Vale Manganês.

The production of manganese ferroalloys consumes significant amounts of electricity, representing 2.7% of our total consumption in Brazil in 2015. The electricity supply to our ferroalloy plantswhich is provided through power purchase agreements. For information on the risks associated with potential energy shortages, seeRisk factors.

We produce several types of manganese ferroalloys, such as high carbon and medium carbon ferro-manganese and ferro-silicon manganese.

Plant		Location		Description/History		Nominal capacity		Power source
Minas Gerais Plants		Cities of Barbacena and Ouro Preto		Barbacena has sixseven furnaces, two of which are refining stationsfurnaces and a briquetting plant. Ouro Preto has three furnaces.furnaces, two of which are currently not operating due to market conditions.		74,000Barbacena: 66,000 metric tons per year at Barbacena plant and 65,000(54,000 metric tons per year atof ferro-silicon manganese and 12,000 metric tons per year of ferro-manganese medium carbon). Ouro Preto plant.Preto: 64,000 metric tons per year of ferro-silicon manganese.		Supplied through the national electricity grid. Acquired from independent producerFurnas—Centrais Elétricas S.A. or through power purchase agreements.
Bahia Plant		City of Simões Filho		Four furnaces, two converters and a sintering plant.		150,000135,000 metric tons per year.year (42,000 metric tons per year of ferro-silicon manganese and 93,000 metric tons per year of high carbon ferro-manganese). The plant has a capacity to refine until 40,000 metric tons per year of ferro-manganese high carbon to produce ferro-manganese medium carbon alloy, according to market demand.		Supplied through the national electricity grid. Energy acquiredAcquired from CHESFCompanhia Hidrelétrica do São Francisco (CHESF) or through power purchase agreements.

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The following table sets forth information about our manganese ferroalloys production.

	​	Production for the year ended December 31,					​	Production for the year ended December 31(1),
Plant	​	2013	​	2014	​	2015	​	2016	​	2017	​	2018
	​	(thousand metric tons)					​	(thousand metric tons)
Barbacena	​	45	​	50	​	6	​	48	​	58	​	55
Ouro Preto	​	48	​	8	​	1	​	–	​	3	​	10
Simões Filho	​	82	​	113	​	92	​	77	​	88	​	103
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Total	​	175	​	171	​	99	​	124	​	149	​	168
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(1)

Production figures reflect hot metal, which is further processed by a crushing and screening facility. Average mass recovery in this process is 85%.

          We suspended operations at the Ouro Preto plant in February 2014, due to market conditions. In January 2015, the power purchase agreement pursuant to which we acquire energy for our Barbacena and Ouro Preto plants expired, and we also suspended operations in our Barbacena plant. We are considering alternatives for power supply to these plants, taking into consideration the energy prices and current market conditions for manganese ferroalloys.

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1.2.3      Manganese ore and ferroalloys: sales and competition

The markets for manganese ore and ferroalloys are highly competitive. Competition in the manganese ore market takes place in two segments. High-gradeHigh- and medium-grade manganese ore competes on a global seaborne basis, while low-grade ore competes on a regional basis. For some manganese ferroalloys, high-grade ore is mandatory, while for others high- and low-gradeespecially ferromanganese, higher-grade manganese ores are complementary.required to achieve competitive quality and cost, while medium- to lower-grade ores may be used in silicomanganese production. The main suppliers of high-grade ores are located in South Africa, Gabon, Australia and Brazil. The main producers of low-grade ores are located in the Ukraine, China, South Africa, Ghana, Kazakhstan, India and Mexico.

We compete in the seaborne market with both high- and medium-grade ores from the Azul and Urucum mines, where we benefit from extensive synergies with our iron ore operations, from mine to rail to port to vessel operations. Our main competitors in this segment are South32 (Australia and South Africa) and Eramet (Gabon). Our lower-grade ores, especially those from Morro da Mina, are consumed internally in our ferroalloy smelters.

The manganese ferroalloy market is characterized by a large number of participants who compete primarily on the basis of price. Our competitors are located principally in countries that produce manganese ore or carbon steel. Potential entrants and substitutes come from silicon or chrome ferroalloys, which can occasionally shift their furnaces to manganese alloys, and from electrolytic manganese producers. Competitors may be either integrated smelters like us, who feed manganese ore from their own mines, or non-integrated smelters. The principal competitive factors in this market are the costs of manganese ore, electricity, logistics and reductants such as coke, coal and charcoal. We compete with both stand-alone producers and integrated producers thatproducers.

Focusing mainly in the Brazilian, South and North American steelmaking customers, our ferroalloys operations also mine their own ore. Our competitorsbenefit from synergies with our iron ore sales, marketing, procurement and logistics activities. We buy our energy and coke supplies at reasonable market prices both though medium-and long-term contracts. Competitors in the Brazilian market are located principallyabout a dozen smelters with capacities from five to 90 thousand metric tons per year, most of which are not integrated and some of which are customers of our manganese ores. We have a distinctive advantage in countries that producecomparison to them in producing ferroalloys with higher manganese ore or carbon steel. For further information about demand and prices, seecontent.

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2.           BASE METALS

2.    Base metals
2.1         Nickel

2.1 Nickel2.1.1      Operations

2.1.1 Operations

We conduct our nickel operations primarily through our wholly-ownedwholly owned subsidiary Vale Canada Limited, which operates two nickel production systems, one in the North Atlantic region and the other in the Asia Pacific region. We also produce copper as a coproduct in our nickel operations in Canada and, through Vale S.A., operate a third nickel production system, Onça Puma, in the South Atlantic region. Our nickel operations are set forth in the following table.

Company/Mining System		Location		Description/History		Operations		Mining title		Power source		Access/ Transportation
North AtlanticAtlantic:
Vale Canada		Canada—Sudbury,Canada —Sudbury, Ontario		Integrated mining, milling, smelting and refining operations to process ore into finished nickel with a nominal capacity of 66,000 metric tons of refined nickel per year and additional nickel oxide feed for the refinery in Wales. Mining operations in Sudbury began in 1885. ValeWe acquired the Sudbury operations in 2006.		Nickel. Primarily underground mining operations with nickel sulfide ore bodies, which also contain some copper, cobalt, PGMs, gold and silver. We also smeltprocess external feeds from third parties and refine an intermediate product, nickel concentrate, from our Thompson operation. By the end of 2017, we ceased receiving Voisey's Bay operations.feed in Sudbury. In addition to producing finished nickel in Sudbury, we ship a nickel oxide intermediate product to our nickel refinery in Wales for processing to final products. We also have capabilities to ship nickel oxide to our Asian refineries. AsIn 2018, as part of our efforts to reduce sulfur dioxide and other air emissions to meet regulatory changes in Ontario and Manitoba, and to rationalize our smelting and refining assets across Canada, we will modifymodified our processes including switchingto capture SO2 emissions from the converters as the final major milestone of the emissions reduction project. Copper. We produce two intermediate copper products, copper concentrate and copper matte, and we also produce a finished electrowon copper cathode product. In September 2017, we switched to a single flash furnace in Sudbury, and as a result, we ceased copper anode production resulting in 2017.increased production of copper concentrate and copper matte.		Patented mineral rights with no expiration date; mineral leases expiring between 20162018 and 2035;2038; and mining licenselicenses of occupation with indefinite expiration date(1).		Supplied by Ontario's provincial electricity grid and produced directly by Vale.Vale via hydro generation.		Located by the Trans-Canada highway and the two major railways that pass through the Sudbury area. Finished products are delivered to the North American market by truck. For overseas customers, the products are loaded into containers and travel intermodally (truck/rail/containership) through both east and west coast Canadian ports.

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Vale Canada ​	​	Canada—Thompson, Manitoba ​	​	Integrated mining, milling, smelting and refining operations to process ore into finished nickel with a nominal capacity of 50,000 metric tons of refined nickel per year. Thompson mineralization was discovered in 1956 and Thompson operations were acquired by Vale in 2006. ​
​	​ ​	​ Primarily underground mining operations with nickel sulfide ore bodies, which also contain some copper and cobalt. Local concentrate is combined with nickel concentrate from our Voisey's Bay operations for smelting and refining to high quality nickel plate product. Smelting and refining are being49 considered for phase out in Thompson, due to federal sulfur dioxide emission standards that came into effect in 2015. Vale has secured an extension for implementation of its current Pollution Prevention Plan under the Canadian Environmental Protection Act with Environment Canada, which permits smelting and refining through 2018, subject to negotiated emission limits.	​ ​	Order in Council leases expiring between 2020 and 2025; mineral leases expiring in 2034.		Supplied by the Provincial utility company.		Finished products are delivered to market by truck in North America. For overseas customers, the products are loaded into containers and travel intermodally (truck/rail/containership) to final destination through both west coast and east coast Canadian ports. ​

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Company/Mining System		Location		Description/History		Operations		Mining title		Power source		Access/ Transportation
Vale Canada		Canada —Thompson, Manitoba		Mining and milling operations to process ore into nickel concentrate. We phased out smelting and refining activities in Thompson during 2018. Thompson mineralization was discovered in 1956, and Thompson operations were acquired by us in 2006.		Nickel. Primarily underground mining operations with nickel sulfide ore bodies, which also contain some copper and cobalt. In 2017, we permanently shut down one of the two furnaces in Thompson and the other was shut down in 2018, permanently shutting down smelting and refining operations. By the end of 2017, we had ceased processing Voisey's Bay feed in Thompson, and since the second half of 2018, we have started sending the majority of the nickel concentrate from Thompson to be refined in Sudbury.		Order in Council leases expiring between 2020 and 2025; mineral leases expiring in 2034.		Supplied by Manitoba's provincial utility company.		Intermediate concentrates are delivered in Ontario.
Vale Newfoundland & Labrador Limited		Canada—Voisey'sCanada —Voisey's Bay and Long Harbour, Newfoundland and Labrador		Integrated open-pit mining and milling operation at Voisey's Bay producing nickel and copper concentrates with refining of orenickel concentrate at Long Harbour into intermediate and finished nickelmetal products and copper concentrates with an expected nominal capacity of approximately 50,000 metric tons of refined nickel per year upon ramp-up of the Long Harbour facility.ramp-up. Voisey's Bay's operations started in 2005 and werewas purchased by Valeus in 2006.		Comprised of the Ovoid open pit mine, and deposits for underground operations at a later stage. We mine nickel sulfide ore bodies, which also contain copper and cobalt. Most nickel concentrates are currently shipped to our Sudbury and Thompson operations for final processing (smelting and refining) while copper concentrate is sold to the market. The Long Harbour facility continued to ramp up in 2015. During commissioning in 2015, Long Harbour processed a blend of2018 while processing feed from Voisey's Bay high-grade nickel concentrates with nickel in matteconcentrate exclusively. Copper concentrate from PTVI and will transitionthe open pit mine is sold directly to Voisey's Bay concentrates in 2016.the market.		Mining lease expiring in 2027, with a right of further renewals for ten year10-year periods.		Power at Voisey's Bay is 100% supplied through Vale owned diesel generators. Power at the Long Harbour refinery is supplied by the Newfoundland and Labrador provincial utility company.		The nickel and copper concentrates from Voisey's Bay are transported to the port by haulage trucks and then shipped by drybulkdry bulk vessels to either overseas markets or to our Long Harbour and other Canadian operations for further refining.
Vale Europe Limited		U.K.—Clydach, Wales		Stand-alone nickel refinery (producer of finished nickel), with nominal capacity of 40,000 metric tons per year. Clydach'sThe Clydach refinery commenced operations in 1902 and was acquired by Valeus in 2006.		Processes a nickel intermediate product, nickel oxide, supplied from either our Sudbury orand Matsuzaka operationoperations to produce finished nickel in the form of powders and pellets.		–		Supplied through the national electricity grid.		Transported to final customer in the UK and continental Europe by truck. ProductProducts for overseas customers are trucked to the ports of Southampton and Liverpool and shipped by ocean container.

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Company/Mining System		Location		Description/History		Operations		Mining title		Power source		Access/Transportation
Asia Asia/Pacific
PT Vale Indonesia Tbk ("PTVI")		Indonesia—Sorowako,Indonesia —Sorowako, Sulawesi		Open cast mining area and related processing facility (producer of nickel matte, an intermediate product) with a nominal capacity of approximately 80,000 metric tons of nickel in matte per year. PTVI's shares are traded on the Indonesia Stock Exchange. We indirectly hold 59.2%59.28% of PTVI's share capital, Sumitomo Metal Mining Co., Ltd ("Sumitomo") holds 20.2%20.09%, Sumitomo Corporation holds 0.1%0.14% and the public holds 20.5%20.49%.(2) PTVI was established in 1968, commenced its commercial operations in 1978, was listed on the Indonesian stock exchange in 1990 and was acquired by Valeus in 2006.		PTVI mines nickel laterite ore and produces nickel matte, which is shipped primarily to our nickel refineriesrefinery in Japan. Pursuant to life-of-mine off-take agreements, PTVI sells 80% of its production to our wholly-ownedwholly owned subsidiary Vale Canada and 20% of its production to Sumitomo.		Contract of work expiring in 2025, entitled to two consecutive ten-year extensions, in the form of a business license, subject to approval of the Indonesian government. SeeRegulatory matters—Mining rights and regulation of mining activities.(2)		Produced primarily by PTVI's low costlow-cost hydroelectric power plants on the Larona River (there are currently three facilities). PTVI has thermal generating facilities in order to supplement its hydroelectric power supply with a source of energy that is not subject to hydrological factors.		Trucked approximately 55 km to the river port at Malili and then loaded onto barges in order to load break-bulk vessels for onward shipment.

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Vale Nouvelle- Calédonie S.A.S ("VNC") ​	​	New Caledonia—Southern Province ​	​	Mining and processing operations (producer of nickel oxide, nickel hydroxide and cobalt carbonate). VNC's shares are held by Vale (80.5%), Sumic (14.5%) and Société de Participation Minière du Sud Caledonien SAS ("SPMSC") (5%).(2) ​
​	​ ​	We are currently ramping up our nickel operation in New Caledonia. VNC utilizes a High Pressure Acid Leach ("HPAL") process to treat limonitic laterite and saprolitic laterite ores. We expect to continue to ramp-up VNC over the next two years to reach nominal production capacity of 57,000 metric tons per year of nickel contained in nickel oxide, which will be further processed in our refineries in Asia, and hydroxide cake form (IPNM), and 4,500 metric tons of cobalt in carbonate form. ​ 50	​ ​	Mining concessions expiring between 2016 and 2051. VNC has requested a renewal of the only concession that was scheduled to expire in 2015.		Supplied through the national electricity grid and by independent producers.		Products are packed into containers and are trucked approximately 4 km to Prony port and shipped by ocean container. ​

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Company/Mining System		Location		Description/History		Operations		Mining title		Power source		Access/ Transportation
Vale Japan LimitedNouvelle-Calédonie S.A.S. ("VNC")		Japan—MatsuzakaNew Caledonia —Southern Province		Mining and processing operations (producer of nickel oxide, nickel hydroxide and cobalt carbonate). We hold 95% of VNC's shares and the remaining 5% is held by Société de Participation Minière du Sud Calédonien S.A.S. ("SPMSC"). SPMSC has an obligation to increase its stake in VNC to 10% within two years after the startup of commercial production.		The ongoing ramp-up of our nickel operation in New Caledonia is expected to continue in the coming years. VNC utilizes a high-pressure acid leach process to treat limonitic and saprolitic laterite ores. As part of the ramp-up, VNC is undertaking a review of the capacity of different units of the plant to identify and eliminate bottlenecks. We expect to continue to ramp up VNC over the next five to six years to reach nominal production capacity of 50,000 metric tons per year of nickel contained in nickel oxide, which is further processed in our refineries in Asia, and hydroxide in cake form (IPNM) and cobalt in carbonate form.		Mining concessions expiring between 2022 and 2051(3).		Supplied through the national electricity grid and by independent producers.		Products are packed into containers and are trucked approximately 4 km to Prony port and shipped by ocean container.
Vale Japan Limited		Japan —Matsuzaka		Stand-alone nickel refinery (producer of intermediate and finished nickel), with a nominal capacity of 60,000 metric tons per year. Vale ownsWe own 87.2% of the shares, and Sumitomo owns the remaining shares. The refinery was built in 1965 and was acquired by Valeus in 2006.		Produces intermediate products for further processing in our refineries in Asia and the UK, and finished nickel products using nickel matte sourced from PTVI.		–		Supplied through the national electricity grid. Acquired from regional utility companies.		Products trucked over public roads to customers in Japan. For overseas customers, the product is loaded into containers at the plant and shipped from the ports of Yokkaichi and Nagoya.
Vale Taiwan Limited		Taiwan—Kaoshiung Taiwan —Kaoshiung		Stand-alone nickel refinery (producer of finished nickel), with nominal capacity of 18,000 metric tons per year. The refinery commenced production in 1983 and was acquired by Valeus in 2006.		Produces Produced finished nickel primarily for the stainless steel industry, primarily using intermediate products from our Matsuzaka and New Caledonian operations. We suspended operations at this plant in 2017 due to market conditions and it currently remains under care and maintenance.		–		Supplied through the national electricity grid. Acquired from regional utility companies.		Trucked over public roads to customers in Taiwan. For overseas customers, the product is loaded into containers at the plant and shipped from the port of Kaoshiung.
Vale Nickel (Dalian) Co., Ltd		China—Dalian, China —Dalian, Liaoning		Stand-alone nickel refinery (producer of finished nickel), with nominal capacity of 32,000 metric tons per year. Vale ownsWe own 98.3% of the sharesequity interest and Ningbo Sunhu Chemical Products Co., Ltd. owns the remaining 1.7%. The refinery commenced production in 2008.		Produces finished nickel for the stainless steel industry, primarily using intermediate products from our Matsuzaka and New Caledonian operations.		–		Supplied through the national electricity grid. Acquired from regional utility companies.		Product transported over public roads by truck and by railway to customers in China. It is also shipped in ocean containers to overseas and some domestic customers.

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Company/Mining System		Location		Description/History		Operations		Mining title		Power source		Access/ Transportation
South Atlantic
Vale/Onça Puma		Brazil—OurilâBrazil —Ourilândia do Norte, Pará		Mining and smelting operation producing a high qualityhigh-quality ferronickel for application within the stainless steel industry.		The Onça Puma mine is built on lateriticto recover nickel deposits offrom saprolitic laterite ore.ore deposit. The operation produces ferronickel via the rotary kiln-electric furnace process. We are currently operating with a single line with one electric furnace and two lines of calcine and rotary kilns, with nominal capacity estimated at 25,00027,000 metric tons per year. We will evaluate opportunities to restart the second line operations in light of market outlookconditions and single line furnace performance considerations.the associated business case. Operations at Onça Puma have been suspended since September 2017 due a public civil action. SeeAdditional information—Legal proceedings—Onça Puma Litigation.		Mining concession for indefinite period.		Supplied through the national electricity grid. Produced directly by Vale or Aliança Geração, or acquired through power purchase agreements.		The ferro-nickel is transported by railroadtruck to the Vila do Conde maritime terminal in the Brazilian state of Pará. It is, and exported in ocean containers.

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(1)

In Sudbury, eight leases will expire in 2016. We have submitted applications for renewal of these leases butin Sudbury in 2017 and 2018 and the approval process will takeis ongoing. All conditions required for the renewal have been fulfilled. This process usually takes a number of years. Weyears, and we can continue to operate while the approval process is ongoing.

(2)

SumicThe contract of work between PTVI and the Indonesian government will expire in 2025, after which date PTVI will continue its operationin the form of a 10-year business license provided certain obligations are satisfied (and PTVI can apply for a further 10 year extension provided that PTVI is a joint venture between Sumitomo and Mitsui. Because VNC did not achieve a certain production target by December 2015, Vale Canada will purchase Sumic's entire equity interest in VNC pursuantcompliance with predefined requirements). The contract of work also provides that PTVI agrees to the provisionsfurther divest an additional 20% of its shares to Indonesian participants within five years of the issuance of a regulation dated October 2014 (approximately 20% of PTVI's shares are already publicly traded and listed on the Indonesian stock exchange).

(3)

VNC shareholders' agreement. The share purchase pricehas requested the renewal of some concessions that were scheduled to expire before 2018. All conditions required for the renewal have been fulfilled. This process usually takes a number of years and we can continue to operate while the approval process is US$135 million and Vale Canada will repay a total amount of US$218 million in debt funding provided by Sumic to VNC. The transaction will conclude in March 2016, but Vale Canada's payment of the share purchase price and repayment of Sumic's debt funding are due in March 2017. After conclusion of the transaction in March 2016, Vale will hold 95% of the shares of VNC. The other shareholder, SPMSC, has an obligation to increase its stake in VNC to 10% within two years after the startup of commercial production.ongoing.

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2.1.2      Production

The following table sets forth our annual mine production by operating mine (or, on an aggregate basis in the case of the Sulawesi operating areas operated by PTVI in Indonesia, because it is organized by mining areas rather than individual mines) and the average percentage grades of nickel and copper. The mine production at Sulawesi represents the product from PTVI's screening station delivered to PTVI's processing plant and does not include nickel losses due to drying and smelting. For our Sudbury, Thompson and Voisey's Bay operations, the production and average grades represent the mine product delivered to those operations' respective processing plants and do not include adjustments due to beneficiation, smelting or refining. For VNC'sour Onça Puma operation in Brazil and VNC operation in New Caledonia the production and average grade represents in-place ore production and does not include losses due to processing.

	​	2016(1)					​	2017(1)					​	2018(1)
	​		​	Grade			​		​	Grade			​		​	Grade
	​	Production	​	Copper	​	Nickel	​	Production	​	Copper	​	Nickel	​	Production	​	Copper	​	Nickel
Ontario operating mines	​		​		​		​		​		​		​		​		​
Copper Cliff North	​	979	​	1.44	​	1.26	​	814	​	1.40	​	1.30	​	746	​	1.30	​	1.29
Creighton	​	832	​	2.17	​	2.76	​	595	​	2.91	​	3.17	​	608	​	2.77	​	2.55
Stobie	​	1,373	​	0.57	​	0.64	​	448	​	0.53	​	0.62	​	–	​	–	​	–
Garson	​	711	​	1.34	​	1.91	​	635	​	1.48	​	1.93	​	655	​	1.35	​	2.00
Coleman	​	1,209	​	3.76	​	1.47	​	1,007	​	3.76	​	1.53	​	618	​	3.31	​	1.40
Ellen	​	75	​	0.42	​	0.88	​	–	​	–	​	–	​	–	​	–	​	–
Totten	​	671	​	1.86	​	1.43	​	710	​	1.90	​	1.33	​	710	​	2.02	​	1.39
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Ontario operations	​	5,850	​	1.84	​	1.47	​	4,210	​	2.18	​	1.65	​	3,337	​	2.10	​	1.70
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Manitoba operating mines	​		​		​		​		​		​		​		​		​
Thompson	​	1,140	​	–	​	1.97	​	1,229	​	–	​	1.94	​	1,034	​	–	​	2.05
Birchtree	​	503	​	–	​	1.36	​	329	​	–	​	1.30	​	–	​	–	​	–
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Manitoba operations	​	1,643	​	–	​	1.78	​	1,557	​	–	​	1.81	​	1,034	​	–	​	2.05
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Voisey's Bay operating mines	​		​		​		​		​		​		​		​		​
Ovoid	​	2,392	​	1.44	​	2.62	​	2,378	​	1.44	​	2.56	​	1,895	​	1.32	​	2.37
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Sulawesi operating mines	​		​		​		​		​		​		​		​		​
Sorowako	​	4,708	​	–	​	1.93	​	4,569	​	–	​	1.89	​	4,469	​	–	​	1.90
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
New Caledonia operating mines	​		​		​		​		​		​		​		​		​
VNC	​	2,919	​	–	​	1.53	​	3,030	​		​	1.47	​	2,620	​	–	​	1.46
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Brazil operating mines	​		​		​		​		​		​		​		​		​
Onça Puma(2)	​	1,710	​	–	​	2.04	​	964	​	–	​	2.05	​	–	​	–	​	–
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

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(1)

Production is stated in thousands of metric tons. Grade is % of copper or nickel, respectively.

(2)

Mining activities in Onça Puma have been suspended since September 2017, as a result of an injunction granted in a public civil action.

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	​	2013					​	2014					​	2015
	​	(thousands of metric tons, except percentages)
	​		​	Grade			​		​	Grade			​		​	Grade
	​	Production	​	% Copper	​	% Nickel	​	Production	​	% Copper	​	% Nickel	​	Production	​	% Copper	​	% Nickel
Ontario operating mines	​		​		​		​		​		​		​		​		​
Copper Cliff North	​	913	​	1.32	​	1.28	​	1,053	​	1.45	​	1.34	​	1,138	​	1.42	​	1.38
Creighton	​	915	​	2.01	​	2.19	​	903	​	1.81	​	2.47	​	774	​	2.00	​	2.33
Stobie	​	1,887	​	0.59	​	0.65	​	2,089	​	0.58	​	0.66	​	1,471	​	0.63	​	0.73
Garson	​	815	​	1.42	​	1.75	​	678	​	1.39	​	1.75	​	778	​	1.39	​	1.94
Coleman	​	1,515	​	3.15	​	1.52	​	1,385	​	3.10	​	1.52	​	1,309	​	2.95	​	1.56
Ellen	​	109	​	0.49	​	1.00	​	181	​	0.62	​	1.07	​	165	​	0.70	​	0.95
Totten	​	64	​	1.84	​	1.92	​	303	​	1.98	​	1.50	​	528	​	1.88	​	1.62
Gertrude	​	196	​	0.32	​	0.89	​	–	​	–	​	–	​	–	​	–	​	–
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Ontario operations	​	6,414	​	1.61%	​	1.3%	​	6,591	​	1.57%	​	1.36%	​	6,164	​	1.64%	​	1.46%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Manitoba operating mines	​		​		​		​		​		​		​		​		​
Thompson	​	1,175	​	–	​	2.07	​	1,184	​	–	​	1.95	​	1,163	​	–	​	1.82
Birchtree	​	613	​	–	​	1.39	​	545	​	–	​	1.39	​	564	​	–	​	1.47
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total Manitoba operations	​	1,788	​	–	​	1.84%	​	1,729	​	–	​	1.78%	​	1,727	​	–	​	1.71%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Voisey's Bay operating mines	​		​		​		​		​		​		​		​		​
Ovoid	​	2,318	​	1.68%	​	2.89%	​	2,243	​	1.54%	​	2.58%	​	2,328	​	1.51%	​	2.57%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Sulawesi operating mining areas	​		​		​		​		​		​		​		​		​
Sorowako	​	4,369	​	–	​	2.00%	​	4,391	​	–	​	1.99%	​	4,694	​	–	​	1.99%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
New Caledonia operating mines	​		​		​		​		​		​		​		​		​
VNC	​	1,860	​	–	​	1.36%	​	2,134	​	–	​	1.44%	​	2,561	​	–	​	1.41%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Brazil operating mines	​		​		​		​		​		​		​		​		​
Onça Puma	​	263	​	–	​	2.28%	​	1,358	​	–	​	2.19%	​	1,024	​	–	​	2.13%
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​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
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The following table sets forth information about our nickel production, including: nickel refined through our facilities and intermediates designated for sale. The numbers below are reported on ana contained nickel ore-source basis.

	​		​	Production for the year ended December 31,					​		​	Finished production by ore source for the year ended December 31,
Mine	​	Type	​	2013	​	2014	​	2015	​	Type	​	2016	​	2017	​	2018
	​		​	(thousand metric tons)					​		​	(thousand metric tons contained nickel)
Sudbury(1)	​	Underground	​	69.4	​	64.3	​	54.4	​	Underground	​	80.4	​	61.9	​	50.6
Thompson(1)	​	Underground	​	24.5	​	26.1	​	24.8	​	Underground	​	26.5	​	23.0	​	14.8
Voisey's Bay(2)(1)	​	Open pit	​	63.0	​	48.3	​	53.0	​	Open pit	​	49.0	​	51.8	​	38.6
Sorowako(3)(2)	​	Open cast	​	78.8	​	78.7	​	79.5	​	Open cast	​	81.1	​	73.1	​	72.1
Onça Puma(4)	​	Open pit	​	1.9	​	21.4	​	24.4	​	Open pit	​	24.1	​	24.7	​	22.9
New Caledonia(5)(3)	​	Open pit	​	16.3	​	18.7	​	26.9	​	Open pit	​	34.3	​	40.3	​	32.5
External(6)(4)	​	–	​	6.4	​	17.5	​	27.6	​	–	​	15.6	​	13.1	​	13.1
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total(7)(5)	Total(7)(5)		​	260.2	​	274.9	​	290.6	Total(7)(5)		​	311.0	​	288.2	​	244.6
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

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(1)

Primary nickel production only (i.e., does not include secondary nickel from unrelated parties).

(2)

Includes finished nickel produced at ourLong Harbour, Sudbury and Thompson operations but reported on an ore-source basis at Voisey's Bay.Thompson.

(2)

These figures have not been adjusted to reflect our ownership. We have a 59.27% interest in PTVI, which owns the Sorowako mines.

(3)

These figures have not been adjusted to reflect our ownership. We have a 59.2% interest in PTVI, which owns the Sorowako mines.

(4)

Primary production only. Nickel contained in ferro-nickel.

(5)

Nickel contained in nickel hydroxide ("NHC") and nickel oxide ("NiO"). These figures have not been adjusted to reflect our ownership. We have an 80.5%95.0% interest in VNC.

(6)(4)

Finished nickel processed at our facilities using feeds purchased from unrelated parties.

(7)(5)

These figures do not include tolling of feeds for unrelated parties.

2.1.3      Customers and sales

Our nickel customers are broadly distributed on a global basis. In 2015, 48%2018, 46% of our refined nickel sales were delivered to customers in Asia, 24% to Europe, 28% to North America 27% to Europe and 1%2% to other markets. We have short-term fixed-volume contracts with customers for the majority of our expected annual nickel sales. These contracts generally provide stable demand for a significant portion of our annual production.

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

·•

nickel content and purity level: (i) intermediates have various levels of nickel content, (ii) nickel pig iron has 1.5-6%1.5-15% nickel, (iii) ferro-nickel has 10-40%15-40% nickel, (iv) refined nickel with less than 99.8% nickel, including products such as Tonimet™ and Utility™ nickel, (v) standard LME gradeLME-grade nickel has a minimum of 99.8% nickel, and (vi) high purityhigh-purity nickel has a minimum of 99.9% nickel and does not contain specific elemental impurities;



·•

shape (such as discrete or filamentary powders, pellets, discs, squares and strips);



•

size (from micron powder particles to large full-sized cathodes); and



·•

size (which varies with the type of product and range from spherical products suchpackaging (such as sub-micron sized powders or 5mm in diameter granules to rectangular shapes such as cathode sheets that are 1,000mm by 750mm by 15 mm).bulk, 2 ton bags, 250 kg drums, 10 kg bags)

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In 2015,2018, the principal end-usefirst-use applications for primary nickel were:

·•

stainless steel (67%(68% of global nickel consumption);



·•

non-ferrous alloys, alloy steels and foundry applications (17%(19% of global nickel consumption);

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·•

nickel plating (7%(8% of global nickel consumption); and



·•

specialty applications, such as batteries chemicals and powder metallurgy (9%(5% of global nickel consumption).

In 2015, 58%2018, 67% of our refined nickel sales were made into non-stainless steel applications, compared to the industry average for primary nickel producers of 33%, which30%. This brings more diversification and sales volume stability to our sales volumes.nickel revenues. As a result of our focus on such higher-value segments, our average realized nickel prices for refined nickel have typically exceeded LME cash nickel prices.

We offer sales and technical support to our customers on a global basis.basis through an established marketing network headquartered at our head office in Toronto (Canada). We have a well-established global marketing network for finished nickel, based at our head office in Toronto Canada.(Canada). We also have sales and technical support distributed around the world with primary back offices in St. PrexSingapore and Toronto (Canada) and have sales managers located in St.Prex (Switzerland), Saddle Brook,Paramus, New Jersey (United States), Tokyo (Japan), Shanghai (China), Singapore and Kaohsiung (Taiwan).at several sites throughout Asia. For information about demand and prices, seeOperating and financial review and prospects—Major factors affecting prices.

2.1.4      Competition

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

Our nickel deliveries represented 15%11% of global consumption for primary nickel in 2015.2018. In addition to us, the largest mine-to-market integrated suppliers in the nickel industry (each with its own integrated facilities, including nickel mining, processing, refining and marketing operations) are Mining and Metallurgical Company Norilsk Nickel,Nornickel, Glencore, Jinchuan Nonferrous Metals Corporation Glencore and South 32.BHP Billiton. Together with us, these companies accounted for about 46%37% of global refined primary nickel production in 2015.2018.

The nickel market is based on the quality of the nickel products. Class I products, which have higher nickel content and lower levels of deleterious elements, are more suitable for high-end nickel applications, such as utilization in the specialties industries (e.g.: aircraft and spacecraft) and in batteries for electric vehicles. Class II products, which present lower nickel content and higher levels of deleterious elements, are mostly absorbed into the stainless steel market. The majority of the world nickel production is composed of Class II nickel products (57% of the global market in 2018), which include the increasingly relevant nickel pig iron (NPI, with nickel content under 15%). Most of our products are high quality nickel products, which makes Vale the producer of choice for specialty nickel applications. In 2018, 58% of our nickel products were Class I and 26% were battery-suitable Class II products, a product that does not fully satisfy the specifications of Class I, but has potential for use in electric vehicles. Looking forward, as a result of the worldwide lower availability of nickel sulfide reserves (the specific kind of orebodies that source Class I nickel) when compared to nickel laterite reserves (mainly producing Class II products), we expect the

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market for Class I nickel to be further tightened, creating more opportunities for our premium product portfolio.

While stainless steel production is a major driver of global nickel demand, stainless steel producers can useobtain nickel products with a wide range of nickel content, including secondary nickel (scrap). The choice between primary and secondary nickel is largely based on their relative prices and availability. Between 2012SeeOperating and 2015, secondary nickel has accounted for about 40-43% of total nickel used for stainless steels,Financial Review and primary nickel has accounted for about 57-60%Prospects—Major factors affecting prices—Nickel. Nickel pig iron, a low-grade nickel product made primarily in China from imported lateritic ores, is suitable for use in stainless steel production. In recent years, Chinese domestic production of nickel pig iron accounted for the majority of world nickel supply growth. From January 2014 onwards, Chinese nickel pig iron production was adversely affected by export restriction of unprocessed ores from Indonesia. As a result, nickel pig iron production is estimated to have declined 20% year-over-year to approximately 360,000 metric tons, representing 19% of world primary nickel supply. Significant stockpiles of Indonesian ores within China, as well as increased ore exports from the Philippines, mitigated the effect of this decrease in nickel pig iron production in 2015. We anticipate that Chinese nickel pig iron production will decline further in 2016 and 2017, with the depletion of high-grade ore stockpiles in China.

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

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2.2         CopperCOPPER

2.2.1      Operations

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

Mining complex/Location	​	Location	​	Description/History	​	Mineralization/Operations	​	Mining title	​	Power source	​	Access/Transportation
BrazilBrazil:	​		​		​		​		​		​
Vale/Sossego	​	Carajás, state of Pará.	​	Two main copper ore bodies, Sossego and Sequeirinho, and a processing facility to concentrate the ore. Sossego was developed by Vale,Vale. Production started production in 2004 and has a nominal capacity of 100,000approximately 93,000 tpy of copper in concentrates.	​	The copper ore is mined using the open-pit method, and the run-of-mine is processed by means of standard primary crushing and conveying, SAG milling (a semi-autogenous mill that uses a large rotating drum filled with ore, water and steel grinding balls to transform the ore into a fine slurry), ball milling, copper concentrate flotation, tailings disposal, concentrate thickening, filtration and load out.	​	Mining concession for an indefinite period.	​	Supplied through the national electricity grid. Produced directly by Vale or Aliança Geração, or acquired through power purchase agreements.	​	We truck the concentrate to a storage terminal in Parauapebas and then transport it via the EFC railroad to the Itaqui Port in São Luís, in the Brazilian state of Maranhão. We constructed an 85-kilometer road to link Sossego to Parauapebas.
Vale/Salobo	​	Carajás, state of Pará.	​	Salobo I processing plant started production in 2012 and has a total capacity of 100,000 tpy12 Mtpy of copper in concentrates.ore processed. The open pit mine and mill are concludingconcluded their ramp up in the fourth quarter of 2016 to a capacity of 200,000 tpy24 Mtpy of copper in concentratesore processed with the full implementation of Salobo II expansion. Salobo I and II have a total capacity of approximately 197,000 tpy of copper in concentrates.	​	Our Salobo copper and gold mine is mined using the open-pit method, and the run-of-mine is processed by means of standard primary and secondary crushing, conveying, roller press grinding, ball milling, copper concentrate flotation, tailings disposal, concentrate thickening, filtration and load out.	​	Mining concession for an indefinite period.	​	Supplied through the national electricity grid. Acquired through power purchase agreements.	​	We truck the concentrate to a storage terminal in Parauapebas and then transport it via the EFC railroad to the Itaqui Port in São Luís, in the Brazilian state of Maranhão. We constructed a 90-kilometer road to link Salobo to Parauapebas.

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Mining complex/Location	​	Location	​	Description/History	​	Mineralization/Operations	​	Mining title	​	Power source	​	Access/Transportation
CanadaCanada:	​		​		​		​		​		​
Vale Canada	​	Canada—Sudbury, Ontario	​		​	See —Base metals—Nickel—Operations			​	We produce two intermediate copper products, copper concentrates and copper anodes, and we also produce final copper product, electrowon copper cathode as a by-product of our nickel refining operations. As part of our efforts to reduce sulfur dioxide and other air emissions to meet regulatory changes in Ontario and Manitoba, and to rationalize our smelting and refining assets across Canada, we will modify our processes including switching to a single flash furnace in Sudbury in 2017. To prepare for this change, we will shut down our Sudbury copper anode production facility in 2016 resulting in increased production of copper concentrate and copper intermediate.	​	See —Base metals—Nickel—Operations
Vale Canada/ Voisey's Bay	​	Canada—Voisey's Bay, Newfoundland and Labrador	​	See —Base metals—Nickel—Operations	​	At Voisey's Bay, we produce copper concentrates.	​	See —Base metals—Nickel—Operations
Zambia	​		​		​		​		​		​

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Lubambe ​	​	Zambian Copperbelt ​	​	Lubambe copper mine, which includes an underground mine, plant and related infrastructure. Teal Minerals ("TEAL") (our 50/50 joint venture with African Rainbow Minerals ("ARM")) has an 80% indirect stake in Lubambe. ZCCM Investments Holdings PLC holds the remaining (20%) stake. ​
​	​ ​	Nominal production capacity of 45,000 metric tons per year of copper in concentrates. Production started in October 2012. ​ 57	​ ​	Mining concessions expiring in 2033.	​	Long-term energy supply contract with Zesco (Zambian state owned power supplier).	​	Copper concentrates are transported by truck to local smelters.

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2.2.2      Production

The following table sets forth our annual mine production in our Salobo and Sossego mines and the average percentage grades of copper. The production and average grade represents in-place ore production and does not include losses due to processing. For the annual production of copper as a coproduct in our nickel operations, see—Base metals—Nickel—Production.

	​	2016(1)			​	2017(1)			​	2018(1)
	​	Production	​	Grade	​	Production	​	Grade	​	Production	​	Grade
Brazil	​		​		​		​		​		​
Sossego	​	12,687	​	0.82	​	12,380	​	0.81	​	15,664	​	0.72
Salobo	​	57,279	​	0.62	​	61,573	​	0.63	​	50,963	​	0.69
​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	69,966	​	0.66	​	73,953	​	0.66	​	66,627	​	0.70
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(1)

Production is stated in thousands of metric tons. Grade is % of copper.

The following table sets forth information on our copper production.

	​		​	Production for the year ended December 31,					​		​	Finished production by ore source for the year ended December 31,
Mine	​	Type	​	2013	​	2014	​	2015	​	Type	​	2016	​	2017	​	2018
	​		​	(thousand metric tons)					​		​	(thousand metric tons)
Brazil:	​		​		​		​		​		​		​		​
Salobo	​	Open pit	​	65	​	98	​	155	​	Open pit	​	176	​	193	​	193
Sossego	​	Open pit	​	119	​	110	​	104	​	Open pit	​	93	​	100	​	92
Canada:	​		​		​		​
Canada: (as coproduct of nickel operations)									​		​		​		​
Sudbury	​	Underground	​	103	​	98	​	98	​	Underground	​	122	​	98	​	72
Voisey's Bay	​	Open pit	​	36	​	33	​	32	​	Open pit	​	32	​	34	​	26
Thompson	​	Underground	​	2	​	2	​	1	​	Underground	​	3	​	2	​	1
External(1)	​	–	​	24	​	29	​	23	​	–	​	21	​	12	​	11
Chile:	​		​		​		​
Tres Valles(2)	​	Open pit and underground	​	11	​	–	​	–
Zambia:	​		​		​		​		​		​		​		​
Lubambe(3)	​	Underground	​	9	​	10	​	10
Lubambe(2)									​	Underground	​	8	​	7	​	–
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​		​	370	​	380	​	424	​		​	453	​	446	​	395
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​
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(1)

We process copper at our facilities using feed purchased from unrelated parties.

(2)

For financial reporting purposes, Lubambe is accounted for under the equity method. We have included production numbers from Lubambe, adjusted to reflect our 40% equity interest, as the level of production and operating performance from entities accounted for under the equity method impacts our Adjusted EBITDA. Our use of Adjusted EBITDA is explained in—Results of operations—Results of operations by segment—Adjusted EBITDA by segment. Vale sold its stake in the Tres VallesLubambe mine in December 2013. The 2013 production level in the table is through the end of October.

(3)

Vale's attributable production capacity of 40%, which represents 80% of indirect interest through our 50% participation.2017.

2.2.3      Customers and sales

We sell copper concentrates from Sossego and Salobo under mediummedium- and long-term contracts to copper smelters in Europe, India and Asia. We have medium-term copper supply agreements with Glencore Canada Corporationdomestic customer for the sale of copper anodes and mostpart of the copper concentrates and copper matte produced in Sudbury.Sudbury, which are also sold under long-term contracts in Europe and Asia. We sell copper concentrates from Voisey's Bay under medium-termlong-term contracts to customers in Europe. We sellEurope and electrowon copper cathodes from Sudbury and Long Harbour in North America under short-term sales agreements.

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2.2.4      Competition

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

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

In the copper concentrate market, mining occurs on a worldglobal basis with a predominant share from South America, while consumers are custom smelters located mainly in Europe and Asia. Competition in the custom copper concentrate market occurs mainly on a global level and is based on production costs, quality, logistics costs and reliability of supply. The largest competitors in the copper concentrate market are Freeport McMoRan, Glencore, BHP Billiton, Glencore, Freeport McMoRan, Codelco, andAnglo American, Antofagasta plc, Rio Tinto and First Quantum; each operating at the parent-company level or through subsidiaries. Our market share in 20152018 was about 4%2% of the total custom copper concentrate market.

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          The copper anode/blister market is very limited; generally, anodes are produced to supply each company's integrated refinery. The trade in anodes/blister is limited to those facilities that have more smelting capacity than refining capacity or to those situations where logistics cost savings provide an incentive to source anodes from outside smelters. The largest competitors in the copper anode market in 2015 included Glencore, Codelco, and China Nonferrous Metals, operating at the parent-company level or through subsidiaries.

2.3         PGMs and other precious metals

As by-productsbyproducts of our Sudbury nickel operations in Canada, we recover significant quantities of PGMs, as well as small quantities of gold and silver. We operate a processing facility in Port Colborne, Ontario, which produces PGMs, gold and silver intermediate products using feed from our Sudbury operation. We have aThe refinery in Acton, England, where we process our intermediate products, as well asPGM intermediates and PGM feeds purchased from unrelatedthird parties were processed was closed in 2018 as part of business optimization, and toll-refined materials. In 2015,the PGM concentrates from our Canadian operations supplied about 60% of our PGM production, whichPort Colborne operation are being sold to third parties. Gold and silver intermediates are also includes metals purchased from unrelatedsold to third parties. Our base metals marketing department sells our own PGMs and other precious metals, as well as products from unrelated parties and toll-refined products, on a sales agency basis. Our copper concentrates from our Salobo and Sossego mines in Carajás, in the Brazilian state of Pará, also contain gold, the value of which we realize in the sale of those products.

In February 2013, we sold to Wheaton Precious Metals Corp. (formerly Silver WheatonWheaton) ("Wheaton") 25% of the gold produced as a by-productbyproduct at our Salobo copper mine, in Brazil, for the life of that mine, and 70% of the gold produced as a by-productbyproduct at our Sudbury nickel mines, in Canada, for 20 years. In each of March 2015 and August 2016, we sold to Silver Wheaton an additional 25% of the gold produced as a by-productbyproduct at our Salobo copper mine. In consideration for the August 2016 sale, we received an initial cash payment of US$800 million, an option value of approximately US$23 million from a reduction of the exercise price of the warrants of Wheaton held by Vale since 2013, and ongoing payments of the lesser of US$400 per ounce (subject to a 1% annual inflation adjustment starting January 1, 2019) and the prevailing market price, for each ounce of gold that we deliver under the agreement. We may receive an additional cash payment if we expand our capacity to process Salobo copper ores to more than 28 Mtpy before 2036. The additional cash payment may range from US$113 million to US$953 million, depending on ore grade, timing and size of the expansion. SeeBusiness overview—Significant changes in our business. Pursuant to the gold stream contract, Silver Wheaton received 141,879282,879 oz. of gold in 2015.2018.

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The following table sets forth information on ourthe contained volume of precious metals production.and platinum group metals (PGMs) as a byproduct of our production of nickel and copper concentrates.

Mine	​	Type	​	2013	​	2014	​	2015	​	Type	​	2016	​	2017	​	2018
	​		​	(thousand troy ounces)					​		​	(thousand troy ounces of contained metal)
Sudbury:	​		​		​		​
Sudbury(1):									​		​		​		​
Platinum	​	Underground	​	145	​	182	​	154	​	Underground	​	166	​	144	​	135
Palladium	​	Underground	​	352	​	398	​	341	​	Underground	​	322	​	214	​	218
Gold(1)	​	Underground	​	91	​	83	​	89
Gold(2)									​	Underground	​	98	​	74	​	57
Salobo:	​		​		​		​		​		​		​		​
Gold(1)	​	Open pit	​	117	​	160	​	251
Gold(2)									​	Open pit	​	317	​	346	​	361
Sossego:	​		​		​		​		​		​		​		​
Gold	​	Open pit	​	78	​	78	​	80	​	Open pit	​	67	​	65	​	59

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(1)

Includes metal produced from unrelated parties feed purchases. Includes production out of Ontario (Canada) and Acton (England) production. Excludes tolling from unrelated parties.

(2)

Figures represent 100% of Salobo and Sudbury contained volume of gold as a byproduct of our production of nickel and copper concentrates and do not deduct the portion of the gold sold to Silver Wheaton.

2.4         Cobalt

We recover significant quantities of cobalt as a by-productbyproduct of our nickel operations. In 2015,2018, we produced 1,4481,288 metric tons of refined cobalt metal (in the form of cobalt rounds) at our Port Colborne refinery, 2,9261,630 metric tons of cobalt rounds at our Long Harbour refinery, 2,105 metric tons of cobalt in a cobalt-based intermediate product at our nickel operations in Canada and New Caledonia, and our remaining cobalt production consisted of 15970 metric tons of cobalt contained in other intermediate products (such as nickel concentrates). As a result of the ramp-up of VNC operations in New Caledonia, our production of cobalt intermediate as a by-productbyproduct of our nickel production is increasing.will increase in the coming years. We sell cobalt on a global basis. OurThe cobalt metal isand the Long-Harbour cobalt rounds are electro-refined at our Port Colborne refinery and hashave very high purity levels (99.8%), which is superior tomeeting the LME contract specification. Cobalt metal is used in the production of various alloys, particularly for aerospace applications, as well as the manufacture of cobalt-based chemicals.

TableIn June 2018, we sold to Wheaton and Cobalt 27 Capital Corp. ("Cobalt 27") a combined 75% of Contentsthe cobalt produced as a byproduct at our Voisey's Bay mine from January 1, 2021, which includes the ramp-down of production from the existing mine and the life-of-mine production from our underground mine expansion project. In consideration, we received US$690 million in cash from Wheaton and Cobalt 27 upon closing of the transaction on June 28, 2018, and will receive additional payments of 20%, on average, of cobalt prices upon delivery. Vale remains exposed to approximately 40% of future cobalt production from Voisey's Bay, through Vale's retained interest in 25% of cobalt production and the additional payments upon delivery. See

Business overview—Significant changes in our business. The following table sets forth information on our cobalt production.

	​		​	Production for the year ended December 31,					​		​	Finished production by ore source for the year ended December 31,
Mine	​	Type	​	2013	​	2014	​	2015	​	Type	​	2016	​	2017	​	2018
	​		​	(metric tons)					​		​	(contained metric tons)
Sudbury	​	Underground	​	853	​	833	​	751	​	Underground	​	882	​	840	​	520
Thompson	​	Underground	​	292	​	489	​	365	​	Underground	​	700	​	138	​	198
Voisey's Bay	​	Open pit	​	1,256	​	952	​	849	​	Open pit	​	887	​	1,829	​	1,902
New Caledonia	​	Open pit	​	1,117	​	1,384	​	2,391	​	Open pit	​	3,188	​	2,780	​	2,104
External sources(1)	​	–	​	13	​	84	​	177
Others(1)									​	–	​	143	​	224	​	371
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​		​	3,532	​	3,743	​	4,533	​		​	5,799	​	5,811	​	5,093
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(1)

These figures do not include tolling of feeds for unrelated parties. Includes cobalt processed at our facilities using feeds purchased from unrelated parties and PTVI ore source 24 metric tons in 2016, 6 metric tons in 2017 and 173 metric tons in 2018.

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3.  CoalCOAL

3.1         Operations

We produce metallurgical and thermal coal through our subsidiariessubsidiary Vale Moçambique, which operates the Moatize mine, and Vale Australia, which operates the Carborough Downs mine. We also have a minority interest in a Chinese company, Henan Longyu Energy Resources Co., Ltd. ("Longyu").

          In December 2014, we entered into an investment agreement providing for Mitsui to acquire 15% of our stake in Vale Moçambique. Our equity stake in Vale Moçambique will be transferred to a holding company controlled by Vale (85%) and Mitsui (15%). The value attributed to Mitsui's 15% stake in Vale Moçambique is US$450 million, and Mitsui will be responsible for 15% of the capital expenditures incurred since the signing of the agreement. The transaction is subject to certain conditions precedent, and closing is expected for 2016.

Company/Mining complex	​	Location	​	Description/History	​	Mineralization/ Operations	​	Mining title	​	Power source	​	Access/ Transportation
Vale Moçambique	​		​		​		​		​		​
Moatize	​	Tete, Mozambique	​	Open-cut mine, which was developed directly by Vale. Operations started in August 2011 and are expected to reach a nominal production capacity of 22 Mtpy, considering the Moatize expansion, comprised of metallurgical and thermal coal and the Nacala Logistics Corridor ramp up.ramp-up. Vale has an indirect 95.0%80.75% stake, Mitsui has an indirect 14.25% stake and the remaining is owned by Empresa Moçambicana de Exploração Mineira, S.A. Upon conclusion of the agreement signed in December 2014, Mitsui will acquire 15% of Vale's stake in Vale Moçambique.	​	Produces metallurgical and thermal coal. Moatize's main branded product isproducts are the Chipanga premium hard coking coal and Moatize Low Vol Premium hard coking coal, but there is operational flexibility for multiple products. The optimal product portfolio will come as a result of market trials. Coal from the mines is currently processed at a coal handling and processing plant ("CHPP")CHPP with a capacity of 4,000 metric tons per hour. An additional CHPP is under construction,began production in August 2016, which will increaseincreased feed capacity by additional 4,000 metric tons per hour.	​	Mining concession expiring in 2032, renewable thereafter.	​	Supplied by local utility company. Back up supply on site.	​	The coal is transported from the mine to the Beira Port by the Linha do Sena railway and, starting in January 2016, to the port at Nacala-à-velha-Velha via the Nacala Logistics Corridor.

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Carborough Downs

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Bowen Basin, Queensland

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Acquired from AMCI in 2007. Carborough Downs mining leases overlie the Rangal Coal Measures of the Bowen Basin with the seams of Leichardt and Vermont. Both seams have coking properties and can be beneficiated to produce coking coal and pulverized coal injection ("PCI") products. Vale has a 90.0% stake and the remaining is owned by JFE and Posco.

​

Metallurgical coal mined by longwall methods. The Leichardt seam is currently our main target for development and constitutes 100% of the current reserve and resource base. Carborough Downs coal is processed at the Carborough Downs CHPP, which is capable of processing 1,000 metric tons per hour.

​

Mining tenements expiring in 2035 and 2039.

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Supplied through the national electricity grid. Acquired from local utility companies.

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The product is loaded onto trains at a rail loadout facility and transported 163 kilometers to the Dalrymple Bay Coal Terminal, Queensland, Australia.

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3.2         Production

The following table sets forth information on our marketable coal production.

	​		​	Production for the year ended December 31,
Operation	​	Mine type	​	2013	​	2014	​	2015
	​		​	(thousand metric tons)
Metallurgical coal:	​		​		​		​
Vale Australia	​		​		​		​
Integra Coal(1)(4)	​	Underground and open-cut	​	1,410	​	715	​	–
Isaac Plains(2)(4)	​	Open-cut	​	656	​	746	​	–
Carborough Downs(3)	​	Underground	​	2,447	​	1,857	​	2,383
Vale Moçambique	​		​		​		​
Moatize(5)	​	Open-cut	​	2,373	​	3,124	​	3,401
​	​	​	​	​	​	​	​	​
Total metallurgical coal			​	6,885	​	6,443	​	5,784
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​
Thermal coal:	​		​		​		​
Vale Australia	​		​		​		​
Integra Coal(1)	​	Open-cut	​	87	​	92	​	–
Isaac Plains(2)	​	Open-cut	​	347	​	326	​	–
Vale Moçambique	​		​		​		​
Moatize(5)	​	Open-cut	​	1,444	​	1,784	​	1,560
​	​	​	​	​	​	​	​	​
Total thermal coal			​	1,878	​	2,202	​	1,560
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​

	​		​	Production for the year ended December 31,
Operation	​	Mine type	​	2016	​	2017	​	2018
	​		​	(thousand metric tons)
Metallurgical coal:	​		​		​		​
Moatize(1)	​	Open-cut	​	3,480	​	6,953	​	6,161
​	​	​	​	​	​	​	​	​
Thermal coal:	​		​		​		​
Moatize(1)	​	Open-cut	​	2,012	​	4,307	​	5,444
​	​	​	​	​	​	​	​	​

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(1)

These figures correspond to our 64.8% equity interest in Integra Coal, as of the sale of our equity interest in December 2015.

(2)

These figures correspond to our 50.0% equity interest in Isaac Plains, as of the sale of our equity interest in November 2015.

(3)

The figures for 2013 and 2014 correspond to our 85.0% equity interest in Carborough Downs. Our equity interest in Carborough Downs increased to 90% in December 2014 ; the figures for 2015 correspond to our 90% equity interest in Carborough Downs.

(4)

Operations at Integra Coal and Isaac Plains have been suspended since May and November 2014, respectively, and our stake in each mine, as well as associated assets was sold in December and November 2015, respectively.

(5)

These figures correspond to 100% production at Moatize, and are not adjusted to reflect our ownership.

3.3         Customers and sales

          Coal sales from our Australian operations are primarily focused on Asia. Coal sales from our Moatize operations, in Mozambique, target global steel and energy markets, including Asia, Africa, Europe and the Americas. Our Chinese coal joint venture directs its sales into the Chinese domestic market.

3.4         Competition

The global coal industry comprises markets for black (metallurgicalmetallurgical and thermal) and brown (lignite)thermal coal and is highly competitive.

The demand for steel, especially in Asia, underpins demand for metallurgical coal, while demand for electricity underpins demand for thermal coal. We expect robust supply and low prices for metallurgical coal in the next few years, which will reduce investments in new greenfield projects and may result in supply imbalances in the long term. Port and rail constraints in certain supply regions, which cannot be solved without significant capital expenditures, could lead only to limited availability of incremental metallurgical coal production.

          CompetitionCompetitiveness in the coal industry is primarily based primarily on the economics of production costs, coal quality, transportation costs and transportation costs.proximity to the market. Our key competitive strengths are completion of a new and competitive transportation corridor the proximity to the Atlantic and Indian markets (as compared to our main competitors) and the size and quality of our reserves.

Table The logistics facilities in Mozambique help us ensure that our products are delivered on time and at a relatively low cost in comparison to lengthy waits at the ports in Queensland, Australia and on the east coast of Contentsthe United States.

          Major participantsOur main competitors in the seabornemetallurgical coal marketbusiness are located in Australia and Canada and include subsidiaries, affiliates and joint ventures of BHP Billiton, Glencore, Xstrata, Anglo American, Rio Tinto, Teck Cominco, Peabody, Walter Energy and the Shenhua Group,Jellinbah Resources, among others.

4. Fertilizer nutrients

4.1 Phosphates In the thermal coal business, our main competitors are located in Indonesia, South Africa, Australia, Colombia, USA, Russia and nitrogen

          We operate our phosphates business throughinclude subsidiaries affiliates and joint ventures as set forth in the following table.of Glencore, Anglo American, Drummond Co, Pt Bumi Resources and PT Adaro, among others.

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	​		​	Our share of capital									​
Company	​	Location	​	Voting				​	Total				​	Partners
	​		​	(%)									​
Vale Fertilizantes	​	Uberaba, Brazil	​	​	100.0		​	​	​	100.0		​	​	–
Compañia Minera Miski Mayo S.R.L., located in Bayóvar, Peru.	​	Bayóvar, Peru(1)	​	​	51.0		​	​	​	40.0		​	​	Mosaic, Mitsui

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(1)

Our participation in Compañia Minera Miski Mayo S.R.L is held through MVM Resources International, B.V.

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

          Since 2010 we have also operated the Bayóvar phosphate rock mine in Peru, with nominal capacity of 3.9 Mtpy, through a concession for indefinite period.

          The following table sets forth information about our phosphate rock production.

	​		​	Production for the year ended December 31,
Mine	​	Type	​	2013	​	2014	​	2015
	​		​	(thousand metric tons)
Bayóvar	​	Open pit	​	3,546	​	3,801	​	3,881
Catalão	​	Open pit	​	1,057	​	1,055	​	1,000
Tapira	​	Open pit	​	1,869	​	2,005	​	1,970
Patos de Minas(1)	​	Open pit	​	53	​	73	​	23
Araxá	​	Open pit	​	1,111	​	883	​	707
Cajati	​	Open pit	​	640	​	605	​	581
​	​	​	​	​	​	​	​	​
Total			​	8,277	​	8,421	​	8,163
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​
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(1)

Patos de Minas operation was suspended in the third quarter of 2015 due to market conditions.

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

	​	Production for the year ended December 31,
Product	​	2013	​	2014	​	2015
	​	(thousand metric tons)
Monoammonium phosphate (MAP)	​	1,128	​	1,065	​	1,097
Triple superphosphate (TSP)	​	905	​	910	​	866
Single superphosphate (SSP)	​	2,102	​	1,854	​	1,953
Dicalcium phosphate (DCP)	​	444	​	502	​	480
Ammonia(1)	​	347	​	178	​	138
Urea(2)	​	219	​	–	​	–
Nitric acid	​	416	​	469	​	475
Ammonium nitrate	​	419	​	485	​	515

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(1)

After the saleLines of Araucária in June 2013, we only produce ammonia in our Cubatão plant.

(2)

After the sale of Araucária in June 2013, we no longer produce urea.

4.2 PotashBusiness

          We conduct potash operations in Brazil at the parent-company level, with mining concessions of indefinite duration. We have leased Taquari-Vassouras, the only potash mine in Brazil (in Rosario do Catete, in the Brazilian state of Sergipe), from Petrobras since 1992. In April 2012, we extended the lease for 30 more years. The following table sets forth information on our potash production.

	​		​	Production for the year ended December 31,					​					​
	​								​	2015 process recovery				​
Mine	​	Type	​	2013	​	2014	​	2015						​
	​		​	(thousand metric tons)					​	(%)				​
Taquari-Vassouras	​	Underground	​	492	​	492	​	481	​	​	82.9		​	​

4.3 Customers and sales​

          All potash sales from the Taquari-Vassouras mine are to the Brazilian market. In 2015, our sales represented approximately 5% of total potash delivered in Brazil. We have a strong presence and long-standing relationships with the major market participants in Brazil, with more than 50% of our sales in 2015 generated from four long-term customers.

          Our phosphate products (MAP, TSP, SSP) are mainly sold to fertilizer blenders. In 2015, our sales represented approximately 31% of total phosphate delivered in Brazil. In the high-concentration segment, our production represented 86% of total Brazilian production. In the low-concentration phosphate nutrients segment our production represented 38% of total Brazilian production, with products like SSP.

          Our nitrogen segment produces 100% of the ammonium nitrate produced in Brazil. Additionally we are a leading supplier of explosive-grade ammonium nitrate in the Brazilian market.

4.4 Competition

          The industry is divided into three major nutrients: potash, phosphate and nitrogen. There are limited resources of potash around the world, with Canada, Russia and Belarus being the most important sources, each of them having only a few producers. The industry requires a high level of investment and a long time for a project to mature. In addition, the potash industry is highly concentrated, with the five major producers accounting for 69% of total world production capacity.

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          Phosphate rock is more available, but the major exporters are located in Morocco, Algeria, Jordan, Egypt and Peru. The top five phosphate rock producing countries (China, Morocco, United States, Russia and Jordan) accounted for 78% of global production in 2015, of which roughly 10% was exported. However, higher value-added products such as MAP and DAP are usually traded instead of phosphate rock due to cost efficiency.

          Brazil is one of the largest agribusiness markets in the world due to its high production, exports and consumption of grains and biofuels. It is the fourth-largest consumer of fertilizers in the world and one of the largest importers of potash, phosphates and nitrogen. Brazil imports 95% of its potash consumption, which amounted to approximately 5.1 Mtpy of equivalent K2O (potassium oxide) in 2015, 8% lower than in 2014, from Canadian, Belarusian, Russian, German, Chilean and Israeli producers, in descending order. In terms of global consumption, China, the United States, Brazil and India represented 58% of the total, with Brazil alone representing 14% of total global consumption. Our potash operation and projects are highly competitive in terms of cost and logistics to supply the Brazilian market.

          Most phosphate rock concentrate is consumed locally by downstream integrated producers, with the seaborne market corresponding to 14% of total phosphate rock production. Major phosphate rock exporters are concentrated in North Africa, mainly through state-owned companies, with Moroccan OCP Group holding 29% of the total seaborne market. The seaborne trade of phosphate rock supplies non-integrated producers of phosphate fertilizer products such as SSP, TSP and MAP. Brazil imports 54% of its phosphate consumption, which amounted to approximately 2.6 Mtpy of equivalent P2O5 (phosphorus pentoxide) in 2015, 17% lower than in 2014, being the main sources: Morocco, Russia, USA and China, in descending order. Our phosphate operations are highly competitive in terms of cost and logistics to supply the Brazilian market.

          Nitrogen-based fertilizers are derived primarily from ammonia (NH3), which, in turn, is made from nitrogen present in the air and natural gas, making this an energy-intensive nutrient. Ammonia is the main component of nitrogen-based fertilizers like ammonium nitrate and urea. Production of nitrogen-based fertilizers has a regional profile due to the high cost associated with transportation and storage of ammonia, which requires refrigerated and pressurized facilities. As a result, only 10% of the ammonia produced worldwide is traded in global markets. Asia receives the largest volume of imports, accounting for 34% of global trade. The main exporting countries are Russia, Trinidad and Canada. Our nitrogen operation is highly competitive in terms of cost and logistics to supply the Brazilian market.4.           INFRASTRUCTURE

5. Infrastructure
4.1         Logistics

5.1 Logistics

We have developed our logistics business based on the transportation needs of our mining operations and we also provide transportation services for other customers.

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We conduct our logistics businesses at the parent-company level and through subsidiaries and joint ventures, as set forth in the table below.

	​		​		​	Our share of capital							​		​		​		​	Our share of capital							​
Company	​	Business	​	Location	​	Voting			​	Total			​	Partners	​	Business	​	Location	​	Voting			​	Total			​	Partners
	​		​		​	(%)							​		​		​		​	(%)							​
Vale	​	Railroad (EFVM and EFC), port and maritime terminal operations	​	Brazil	​	​	–		​	​	–		​	–	​	Railroad (EFVM and EFC), port and maritime terminal operations	​	Brazil	​	​	–		​	​	–		​	–
VLI(1)	​	Railroad, port, inland terminal and maritime terminal operations. Holding of certain general cargo logistics assets	​	Brazil	​	​	37.6		​	​	37.6		​	FI-FGTS, Mitsui and Brookfield	​	Railroad, port, inland terminal and maritime terminal operations. Holding of certain general cargo logistics assets	​	Brazil	​	​	37.6		​	​	37.6		​	FI-FGTS, Mitsui and Brookfield
MRS	​	Railroad operations	​	Brazil	​	​	47.1		​	​	48.2		​	CSN, Usiminas Participações e Logísticas and Gerdau	​	Railroad operations	​	Brazil	​	​	47.1		​	​	48.2		​	CSN, Congonhas Minérios, Usiminas Participações e Logísticas, Gerdau, Railvest Investments and public investors.
CPBS	​	Port and maritime terminal operations	​	Brazil	​	​	100		​	​	100		​	–	​	Port and maritime terminal operations	​	Brazil	​	​	100		​	​	100		​	–
PTVI	​	Port and maritime terminal operations	​	Indonesia	​	​	59.2		​	​	59.2		​	Sumitomo, public investors	​	Port and maritime terminal operations	​	Indonesia	​	​	59.2		​	​	59.2		​	Sumitomo, public investors
Vale Logística Argentina(2)	​	Port operations	​	Argentina	​	​	100		​	​	100		​	–	​	Port operations	​	Argentina	​	​	100		​	​	100		​	–
CEAR(2)(4)	​	Railroad	​	Malawi	​	​	43.4		​	​	43.4		​	Portos e Caminhos de Ferro de Moçambique, E.P.
CDN(3)(4)	​	Railroad and maritime terminal operations	​	Mozambique	​	​	43.4		​	​	43.4		​	Portos e Caminhos de Ferro de Moçambique, E.P.
CLN(4)	​	Railroad and port operations	​	Mozambique	​	​	80.0		​	​	80.0		​	Portos e Caminhos de Ferro de Moçambique, E.P.
Vale Logistics Limited(4)	​	Railroad operations	​	Malawi	​	​	100		​	​	100		​	–
Vale Logística Uruguay															​	Port operations	​	Uruguay	​	​	100		​	​	100		​	–
Central East African Railways ("CEAR")(3)															​	Railroad	​	Malawi	​	​	46.2		​	​	46.2		​	Mitsui, investors
Corredor de Desenvolvimento do Norte ("CDN")(3)															​	Railroad	​	Mozambique	​	​	46.2		​	​	46.2		​	Mitsui, investors
Corredor de Desenvolvimento do Norte—Porto ("CDN Porto")(3)															​	Port and maritime terminal operations	​	Mozambique	​	​	46.2		​	​	46.2		​	Mitsui, investors
Corredor Logístico Integrado de Nacala S.A. ("CLN")(4)															​	Railroad and port operations	​	Mozambique	​	​	50.0		​	​	50.0		​	Mitsui
Vale Logistics Limited ("VLL")(4)															​	Railroad operations	​	Malawi	​	​	50.0		​	​	50.0		​	Mitsui
Transbarge Navegación	​	Paraná and Paraguay Waterway System (Convoys)	​	Paraguay	​	​	100		​	​	100		​	–	​	Paraná and Paraguay Waterway System (Convoys)	​	Paraguay	​	​	100		​	​	100		​	–
VNC(5)	​	Port and maritime terminal operations	​	New Caledonia	​	​	80.5		​	​	80.5		​	Sumic, SPMSC
VNC															​	Port and maritime terminal operations	​	New Caledonia	​	​	95.0		​	​	95.0		​	SPMSC
VMM	​	Port and maritime terminal operations	​	Malaysia	​	​	100		​	​	100		​	–	​	Port and maritime terminal operations	​	Malaysia	​	​	100		​	​	100		​	–
Vale Newfoundland & Labrador Limited	​	Port operations	​	Voisey's Bay and Long Harbour, in Newfoundland and Labrador	​	​	100		​	​	100		​	–	​	Port operations	​	Voisey's Bay and Long Harbour, in Newfoundland and Labrador	​	​	100		​	​	100		​	–
Vale Oman Distribution Center LLC	​	Port and maritime terminal operations	​	Oman	​	​	100		​	​	100		​	–	​	Port and maritime terminal operations	​	Oman	​	​	100		​	​	100		​	–

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(1)

BNDES holds debentures issued by Vale that are exchangeable into part of Vale's stake in VLI. Vale's equity interests in VLI may be reduced by up to 8%6.88% if BNDES exercises its rights under those debentures.

(2)

Vale controlsLogística Argentina is no longer operational.

(3)

Vale holds its interest in CEAR, CDN and CDN Porto through an 85%a 50.0% interest in SDCN,Nacala Corridor Holding Netherlands B.V., which indirectly owns 51%92.4% of CEAR.these operating companies that comprise the NLC.

(3)(4)

Vale controlsholds its interest in CDNCLN and VLL through an 85%a 50.0% interest in SDCN,Nacala Corridor Holding Netherlands B.V., which indirectly owns 51%100% of CDN.

(4)

Upon completion ofthese operating companies that comprise the transaction with Mitsui, we will hold indirectly 21.7% of the voting and total capital of CEAR, 21.7% of the voting and total capital of CDN, 40% of the voting and total capital of CLN and 50% of the voting and total capital of VLL.

(5)

After the conclusion of the sale of Sumic's 10.5% stake in VNC to Vale in March 2016, Vale will hold 95% of the shares of VNC.NLC.

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4.1.1      Railroads

5.1.1 Railroads

Brazil

Vitória a Minas railroad ("EFVM").    The EFVM railroad links our Southeastern System mines in the Iron Quadrangle region in the Brazilian state of Minas Gerais to the Tubarão Port,port, in Vitória, in the Brazilian state of Espírito Santo. We operate this 905-kilometer888-kilometer railroad under a 30-year renewable concession, which expires in 2027. The EFVM railroad consists of two lines of track extending for a distance of 601584 kilometers to permit continuous railroad travel in opposite directions, and single-track branches of 304 kilometers. Industrial manufacturers are located in this area and major agricultural regions are also accessible to it. VLI has rights to usepurchase railroad transportation capacity on our EFVM railroad. In 2015,2018, the EFVM railroad transported a daily average of 341.6334.5 thousand metric tons of iron ore or a totaland 60.2 thousand metric tons of 80.2 billion ntk of iron ore and other cargo. The EFVM railroad also carried 967 thousand1,135 million passengers in 2015.2018. In 2015,2018, we had a fleet of 333322 locomotives and 15,26319,413 wagons at EFVM.EFVM, which were operated by Vale and third parties.

Carajás railroad ("EFC").    The EFC railroad links our Northern System mines in the Carajás region in the Brazilian state of Pará to the Ponta da Madeira maritime terminal, in São Luis, in the Brazilian state of Maranhão. We operate the EFC railroad under a 30-year renewable concession, which expires in 2027. EFC extends for 892997 kilometers from our Carajás mines to our Ponta da Madeira maritime terminal complex facilities located near the Itaqui Port.facilities. Its main cargo is iron ore, principally carried for us. VLI has rights to usepurchase railroad transportation capacity on our EFC railroad. In 2015,2018, the EFC railroad transported a daily average of 357.9559.8 thousand metric tons of iron ore. In 2015, the EFC railroad carried a total of 120.3 billion ntk of iron ore and 31.1 thousand metric tons of other cargo. EFC also carried 301317.9 thousand passengers in 2015.2018. EFC supports the largest train, in terms of capacity, in Latin America, which measures 3.5 kilometers, weighs 42.0141.67 thousand gross metric tons when loaded and has 330 cars. In 2015,2018, EFC had a fleet of 284282 locomotives and 17,125 wagons.21,087 wagons, which were operated by Vale and third parties.

The principal items of cargo of the EFVM and EFC railroads are:

·•

iron ore and iron ore pellets and manganese ore, carried for us and customers;



·•

steel, coal, pig iron, limestone and other raw materials carried for customers with steel mills located along the railroad;



·•

agricultural products, such as soybeans, soybean meal and fertilizers; and



·•

other general cargo, such as pulp, fuel and chemical products.

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

VLI.    VLI provides integrated logistics solutions through 7,9207,940 kilometers of railroads in Brazil (FCA and FNS), eight inland terminals with a total storage capacity of 730,000795,000 metric tons and three maritime

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terminals and ports operations. We hold a 37.6% stake in VLI, and are party to a shareholders' agreement with FI-FGTS, Mitsui and Brookfield, which hold the remaining equity interests in VLI. VLI's main assets are:

·•

Ferrovia Centro-Atlântica ("FCA").  Central-east regional railway network of the Brazilian national railway system, held under a 30-year renewable concession, which expires in 2026. The central east network has 7,220 kilometers of track, extending into the states of Sergipe, Bahia, Espírito Santo, Minas Gerais, Rio de Janeiro, Goiás and the Federal District of Brazil;

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·•

Ferrovia Norte-Sul railroad ("FNS").  A 30-year renewable subconcession for the commercial operation of a 720-kilometer stretch of the North-South railroad in Brazil, between the cities Açailandia, in the Brazilian state of Maranhão, and Porto Nacional, in the Brazilian state of Tocantins. This railway is connected to EFC railroad, and creates a new corridor for the transportation of general cargo, mainly for the export of soybeans, rice and corn produced in the center-northern region of Brazil; and



·•

Right to usepurchase capacity of our EFVM and EFC railroads for general cargo.cargo; and



·•

Right to usepurchase capacity of our Tubarão eand Praia Mole terminals for general cargo.

In 2015,2018, VLI transported a total of 34.838.4 billion ntk of general cargo, including 21.318.4 billion ntk from FCA and FNS and 13.58.0 billion ntk through operational agreements with Vale.

MRS Logística S.A. ("MRS").    The MRS railroad, in which we have a 48.2% equity interest, is 1,643 kilometers long and links the Brazilian states of Rio de Janeiro, São Paulo and Minas Gerais. In 2015, theThe MRS railroad carriedtransports our iron ore products from the Southern System mines to our maritime terminals. In 2018, it transported a totaldaily average of 167 million metric tons of cargo, including 80.7 million317.4 thousand metric tons of iron ore and 160.0 thousand metric tons of other cargo from Vale.cargo.

Africa

          We are ramping up theThe Nacala Logistics Corridor which(NLC) connects the Moatize mine to the Nacala-à-velha-Velha maritime terminal, located in Nacala, Mozambique, and which crosses into the Republic of Malawi. The Nacala CorridorNLC consists of railway and port infrastructure, including greenfield and rehabilitation of existing railways in Mozambique and Malawi and a new coal port terminal in Mozambique. The Nacala Corridor will allow for the expansion ofNLC transports our coal products from the Moatize mine to our maritime terminal and supportsupports our operations in Southeastern Africa. In Mozambique, we are operating under two concession agreements, one related to the Mozambican greenfield railway and another related to the newly constructed coal port, both held by our subsidiary Corredor Logístico Integrado de Nacala S.A. ("CLN"), which will expire in 2042,2043, subject to renewal. We arehave also rehabilitatingrehabilitated existing railroads under a concession held by our subsidiary, Corredor de Desenvolvimento do Norte S.A. ("CDN"),CDN, which will expire in 2035. In Malawi, we are operating under a concession held by our subsidiary, Vale Logistics Limited ("VLL"),VLL, which will expire in 2044,2046, subject to renewal, and we are rehabilitatinghave also rehabilitated existing railroads under a concession held by our subsidiary, Central East African Railway Company Limited ("CEAR"),CEAR, which was extendedwill expire in 20132046. In 2018, the NLC transported a daily average of 32.42 thousand metric tons of coal and 1.48 thousand metric tons of other cargo. The NLC also carried 800,883 passengers in 2018. In 2018, we had a fleet of 101 locomotives and 2,677 wagons at NLC, which were operated by CLN.

In November 2017, the NLC companies obtained project financing in the total amount of US$2.730 billion. The transaction closed in March 2018. Vale received US$2.6 billion in proceeds, in repayment of certain shareholders loans provided for a 30-year periodconstruction of NLC, net of certain commissions paid by NLC. The project financing will be repaid in 14 years with the proceeds obtained from the commencementtariff charged by NLC in connection with the provision of rail services under VLL's greenfield railway concession.coal transportation.

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          In December 2014, we entered into an investment agreement providing for Mitsui to acquire half

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Table of our stake in the Nacala Corridor. Our equity stake in CLN, CDN, VLL and CEAR will be transferred to a holding company jointly owned (50% each) and controlled by Vale and Mitsui. Mitsui will invest US$313 million in this holding company, in equity and quasi-equity instruments. Vale and Mitsui are seeking project financing to replace partContents

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Lines of the financing provided by Vale. The transaction is subject to certain conditions precedent, and closing is expected for 2016.Business

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5.1.24.1.2      Ports and maritime terminals

Brazil

We operate a portports and maritime terminals principally as a means to complete the delivery of our iron ore and iron ore pellets to bulk carrier vessels serving the seaborne market. SeeFerrous minerals—Iron ore and iron ore pellets—Iron ore operations. We also use our portports and terminals to handle customers' cargo.




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Tubarão and Praia Mole Ports.    The Tubarão Port,port, which covers an area of 18 square kilometers, is located near the Vitória Port in the Brazilian state of Espírito Santo and contains the iron ore maritime terminal and the general cargo terminals (Terminal de Granéis Líquidos and theTerminal de Produtos Diversos). The Praia Mole port is also located in the Brazilian state of Espírito Santo.

·•

The iron ore maritime terminal has two piers. From this terminal in the Tubarão port, we export mostly iron ore produced from our Southeastern system. Pier I can accommodate two vessels at a time, one of up to 170,000 DWT on the southern side and one of up to 210,000 DWT on the northern side. Pier II can accommodate one vessel of up to 405,000 DWT at a time, limited at 23 meters draft. In Pier I there are two ship loaders, which can load up to 13,500 metric tons per hour each. In Pier II there are two ship loaders that work alternately and can each load up to 16,000 metric tons per hour continuously. The iron ore maritime terminal has a storage yard with a capacity of 3.1 million metric tons. In 2015, 105.42018, 96.8 million metric tons of iron ore and iron ore pellets were shipped through the terminal for us. The iron ore maritime terminal has a storage yard with a capacity of 3.4 million metric tons.



·•

TheTerminal de Produtos Diversos handled 8.16.7 million metric tons of grains and fertilizers in 2015.2018. VLI has the right to usepurchase the capacity of theTerminal de Produtos Diversos.



·•

TheTerminal de Granéis Líquidos handled 614.6582 thousand metric tons of fuel in 2015.2018. VLI has the right to usepurchase the capacity of theTerminal de Granéis Líquidos.



·•

The Praia Mole terminal is principally a coal terminal and handled 12.312.7 million metric tons of coal and other related cargo in 2015.2018. VLI has the right to usepurchase the capacity of the Praia Mole terminal.

Ponta da Madeira maritime terminal.    Our Ponta da Madeira maritime terminal is located near the Itaqui Port, in the Brazilian state of Maranhão. Pier I can accommodate vessels of up to 420,000 DWT and has a maximum loading rate of 16,000 metric tons per hour. Pier III, which has two berths and three shiploaders, can accommodate vessels of up to 200,000210,000 DWT at the south berth and 180,000 DWT at the north berth (or two vessels of 180,000 DWT simultaneously), subject to tide conditions, and has a maximum loading rate of 8,000 metric tons per hour in each shiploader. Pier IV (south berth) is able to accommodate vessels of up to 420,000 DWT and have two ship loaders that work alternately with a maximum loading rate of 16,000 metric tons per hour. Pier IV (north berth) is able to accommodate vessels of up to 420,000 DWT and have two ship loaders that work alternately with a maximum loading rate of 16,000 metric tons per hour. In 2018, Vale received from the Brazilian tax authorities, the customs authorization for the operations of Pier IV (north berth). Cargo shipped through our Ponta da Madeira maritime terminal consists of our ownthe Northern system production of iron ore, pellets and manganese production.manganese. In 2015, 124.72018, 198 million metric tons of iron ore were handledshipped through the terminal. The Ponta da Madeira maritime terminal has a storage yard with a static capacity of 8.97.2 million tons, which will be expanded to 10.7 millionmetric tons. VLI currently handles and stores fertilizers, grain, pig iron and manganese ore, which are then shipped through the Itaqui Port.

Itaguaí maritime terminal—Cia. Portuária Baía de Sepetiba ("CPBS").    From this terminal we mostly export iron ore from our Southern system. CPBS is a wholly-ownedwholly owned subsidiary that operates the Itaguaí

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terminal, at the Itaguaí Port, in Sepetiba in the Brazilian state of Rio de Janeiro, which is leased from Companhia Docas do Rio de Janeiro—CDRJ.Janeiro (CDRJ). The Itaguaí port terminal has a pier with one berth that allows the loading of ships up to 17.8 meters of draft and approximately 200,000 DWT of capacity. In 2015,2018, the terminal loaded 22.019.2 million metric tons of iron ore.

Guaíba Island maritime terminal.    From this terminal we export mostly iron ore from our Southern system. We operate a maritime terminal on Guaíba Island in the Sepetiba Bay, in the Brazilian state of Rio de Janeiro. The iron ore terminal has a pier with two berths that allows the loading of ships of up to 350,000 DWT. In 2015,2018, the terminal loaded 47.341.2 million metric tons of iron ore.

VLI also operates Inácio Barbosa maritime terminal (TMIB), owned by Petrobras, in the Brazilian state of Sergipe; Santos maritime terminal (TIPLAM), in the Brazilian state of São Paulo, which is jointly owned by VLI and Vale Fertilizantes; and Pier II in the Itaqui Port, which can accommodate vessels of up to 155,000 DWT and has a maximum loading rate of 8,0003,800 metric tons per hour.




Tablehour for pig iron and of Contents3,000 metric tons per hour for grains.

ArgentinaUruguay

Since October 2017, our subsidiary Vale Logística ArgentinaUruguay S.A. ("Vale Logística Argentina"VLU") operates acontracts third-party services to operate the Corporación Navios port terminal at the San Nicolas port located in the provinceNueva Palmira Free Zone in Uruguay. The port terminal provides facilities for the unloading, storing, weighing and loading of Buenos Aires, Argentina, where Vale Logística Argentina has a permitbulk materials from Corumbá, Brazil, by river barge for transshipment to use a storage yard covering 20,000 square meters until October 2016ocean-going vessels destined for Brazilian, Asian and an agreement with third parties for an extra storage yard of 15,000 square meters. WeEuropean markets. In 2018, we handled 2.7 million1.058 thousand metric tons of iron and manganese ore through this port in 2015, which came from Corumbá, Brazil, via the Paraguay and Paraná rivers, for shipment to Brazilian, Asian and European markets. The loading rate of this port is 24,000 tons per day and the unloading rate is 13,200 tons per day.Corporación Navios port.

Canada

Vale Newfoundland and& Labrador Limited operates a port as part of our mining operation at Voisey's Bay, Labrador and a port as part of our processing operation at Long Harbour, Newfoundland. The port at Voisey's Bay is used for shipping nickel, copper and re-supply. The port at Long Harbour is used to receivingreceive nickel concentrate from Voisey's Bay along with goods and materials required for the Long Harbour operation.

Oman

Vale Oman Distribution Center LLC operates a distribution center in Liwa, Sultanate of Oman. The maritime terminal has a large deep waterdeep-water jetty, a 600-meter long platform connected to the shore by means of a 700-meter long trestle, and is integrated with a storage yard that has a throughput capacity to handle 40 Mtpy of iron ore and iron ore pellets per year. The loading nominal capacity is 10,000 metric tons per hour and the nominal unloading capacity is 9,000 metric tons per hour.

Indonesia

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

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The Balantang Special Port is located in Balantang Village, South Sulawesi, and has two types of piers, with total capacity of 10,000 DWT, two barge slips for barges with capacity of up to 4,000 DWT each for dry bulk cargo, and a general cargo wharf for vessels of up to 2,000 DWT.

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The Tanjung Mangkasa Special Port is located in Lampia Village, South Sulawesi, with mooring buoys that can accommodate vessels with capacity of up to 20,000 DWT, and a terminal that can accommodate fuel tanker vessels with capacity of up to 2,0005,000 DWT, totaling capacity of 22,000 DWT. Recently the jetty terminal of 2,000 DWT has been expanded to increase its capacity by 5,000 DWT and the commissioning is expected to occur in June 2016. By July 2016, Tanjung Mangkasa is expected to have a total capacity of 25,000 DWT.

New Caledonia

We own and operate a port in Prony Bay, Province Sud, New Caledonia. This port has three terminals, including a passenger ferry terminal able to berth two ships up to 50m long, a dry bulk wharf where vessels of up to 55,00058,000 DWT can unload at a rate of 8,000 metric tons per day and a general cargo wharf where vessels up to 215m200m long can berth. The general cargo wharf can move containers at a rate of 10seven per hour and liquid fuels (LPG, HFO, Diesel)diesel) at a rate of 350 cubic meters per hour, and break-bulk. The port's container yard, covering an area of approximately 13,000 square meters, can receive up to 1,000 units. A bulk storage yard is linked to the port by a conveyor and has a storage capacity of 94,000 metric tons of limestone, 95,000 metric tons of sulfur, and 60,000 metric tons of coal.




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Malaysia

Teluk Rubiah Maritime Terminal ("TRMT"). TRMT is located in the Malaysian state of Perak and has a pier with two berths that allows the unloading of vessels of approximately 400,000 DWT of capacity and the loading of vessels up to 220,000 DWT of capacity. In 2015,2018, the terminal unloaded 15.224 million metric tons of iron ore and loaded 14.224 million metric tons of iron ore.

4.1.3      Shipping

5.1.3 ShippingMaritime shipping of iron ore and pellets

In 2018, we shipped approximately 248 million metric tons of iron ore and pellets in transactions in which we were responsible for transportation. We operateship a low-cost fleet of vessels, comprisedlarge amount of our own ships and ships chartered pursuant to medium and long-term contracts to transport our cargoesiron ore products from Brazil to our markets. We have 18 vessels in operation, including sevenAsia through long-term contracts of affreightment with owners of very large ore carriers with(VLOCs). These vessels reduce energy consumption and greenhouse emissions by carrying an increased amount of cargo in a capacitysingle trip, offering lower shipping costs. In 2018, approximately 64 million metric tons of iron ore products were transported under long term contracts of affreightment on vessels of 400,000 DWT each, and 11DWT.

We also own three capesize vessels with capacities ranging from 150,000 to 250,000180,000 DWT.

We have 27 very large ore carriers underchanged our strategy with respect to maritime shipping. In the past, we owned and operated a low-cost fleet of vessels to carry our cargoes from Brazil to our markets, especially in Asia. We now focus on securing long-term contracts. To support our iron ore delivery strategy, Vale ownsshipping capacity and operates two floating transfer stationsprotecting against volatility in Subic Bay, Philippines that transfer iron ore from very large ore carriersfreight pricing through long-term contracts of affreightment, without incurring the costs relating to smaller vessels that deliverbuilding, owning and operating the cargo to its destinations. We expect this service to enhance our ability to offer our iron ore products in the Asian market at competitive prices. In 2015, we shipped approximately 188 million metric tons of iron ore and pellets on a CFR and Cost, Insurance & Freight (CIF) basis.

          Invessels. Since 2014, we entered into framework agreements for strategic cooperation in iron ore transportation with shipping companies and financial institutions based in China and Hong Kong. Pursuant to these framework agreements, we (i)have sold 1219 of our very large ore carriersVLOCs of 400,000 DWT for an aggregate amount of US$1.316 billion in December 2015 and (ii) negotiated1.940 billion. In 2018, Vale concluded negotiations of long-term contracts of affreightment with Chinese ship ownersshipowners to secureemploy 47 new VLOCs of 325,000 DWT. These shipowners plan to build the long-term transportation capacitynew vessels in China, South Korea and Japan, with deliveries estimated to ship our iron ore from Braziltake place between 2019 and 2023. Vessels will be equipped with similar engines to Asiathe ones that are currently being used in the second generation of Valemax vessels, and to protect against volatility in freight costs. In addition, we sold threewhich are much more fuel-efficient.

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Paraná and —Paraguay waterway system

Through our subsidiary, Transbarge Navegación, and other chartered convoys, we transport iron ore and manganese ores through the Paraná and Paraguay waterway system. The barges are unloaded in our subsidiary Transbarge Navegación, whichlocal customers' terminals in Argentina or in a contracted terminal in the Nueva Palmira Free Zone in Uruguay, where we load the ore into ocean going vessels. We transported 3.862.1 million metric tons through the waterway system in 2015, and other chartered convoys. The barges are discharged in2018, including 1.046 thousand metric tons of ore through our local customers' terminals in contracted terminals in Argentina or in the facilities of our subsidiary Vale Logística Argentina, which load the ore into ocean-going vessels. Vale Logística Argentina loaded 2.1 millionand 1.058 thousand metric tons of ore ofthrough a total loading capacity of 3 million tons, at San Nicolas port into ocean-going vessels in 2015.Uruguay.

Tugboats

We manage a fleet of 25 tugboats in total, of which we own.15 owned tugboats. We directly operate nine tugboats which are operated in the ports of Vitória and Mangaratiba, in the Brazilian states of Espírito Santo and Rio de Janeiro, respectively. Four tug boats, operatedWe have a 50% stake in a consortium that operates five tugboats in the portsport of São Luís and Aracaju, in the Brazilian states of Maranhão and Sergipe respectively, are operated by consortium companies, in which we have a 50% stake. Twelve other tug boats are freightedo. One additional tugboat is hired to and operated by third parties, under their responsibility, in other ports in Brazil. We also own two tugboats in New Caledonia.

5.24.2         Energy

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




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Brazil

Energy management and efficient supply in Brazil are priorities for us, given the uncertainties associated with changes in the regulatory environment and the risk of rising electricity prices. In 2015,2018, our installed capacity in Brazil was 1.2 GW.1.6 GW, sourced from both directly and indirectly owned power plants. We use the electricity produced by these plants for our internal consumption needs. We currently own direct stakes in three hydroelectric power plants and fourthree small hydroelectric power plants in operation. The hydroelectric power plant of Candonga, the operations of which remain suspended since November 2015 as a result of the failure of the Samarco Dam, is located in the Southeastern region, Machadinho is located in the Southern region, and Estreito is located in the Northern region. The small hydroelectric power plants of Ituerê, Melo,Mello, Glória and Nova Maurício are located in the Southeastern region. WeIn 2018, we sold the Ituerê hydroelectric power plant, located in the Southeastern region, due to its high required investments, low capacity and high cash cost when compared to our other assets. Through our 55% participation in Aliança Geração de Energia S.A. ("Aliança Geração"), we also have indirect stakes in the hydroelectric power plants of Igarapava, Porto Estrela, Funil, Candonga, Aimorés, Capim Branco I, Capim Branco II, through our 55% participation in Aliança Geração. These hydroelectric power plants are, located in the Southeastern regionRegion and, partadditionally, we have indirect stake in Santo Inácio, a Wind Complex located in Ceará State, which started operations in December 2017. Part of itsthe electricity generated electricity are directedby these assets is supplied to Vale'sour operations through a power purchase agreementagreements with Aliança Geração. SeeBusiness overview—Significant changes

In order to achieve electricity self-sufficiency in our business.Brazil by 2030 and increase renewable energy sources, we signed a long-term energy supply contract for 20 years, which will be supplied by the Folha Larga Sul wind farm, a 151.2 MW project in Campo Formoso, Bahia, Brazil. This project is expected to begin commercial operation by the first half of 2020. The agreement also includes a future asset call option held by Vale.

We also have a 4.59% indirect stake in Norte Energia S.A. ("Norte Energia"), the company established to develop and operate the Belo Monte hydroelectric plant in the Brazilian state of Pará, which is expected to startstarted operations in the first quarter ofApril 2016. In April 2015, we sold 49% of our 9% stake in Norte Energia to CEMIG GT for approximately R$310 million, reducing our stake to 4.59%. Our participation in the Belo Monte project gives us the right to purchase 9% of

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the electricity generated by the plant, which has already been contracted through a long-term power purchase agreement entered into with Norte Energia. This power purchase agreement has not been affected by the transactions described inBusiness overview—Significant changes in our business—Restructuring our investments in power generation.

We also produce, through our subsidiary Biopalma da Amazônia S.A. ("Biopalma"), palm oil in the Brazilian state of Pará, with the main objective to produce biodiesel in the future through an extraction plant to be installed by Biopalma. The biodiesel will be blended with regular diesel to produce a fuel called B20 (containing 20% biodiesel), which will be used to power.

Canada

In 2018, our fleet of mining trucks, heavy machinery and locomotives in the Northern System operations.

Canada

          In 2015, our wholly-ownedwholly owned and operated hydroelectric power plants in Sudbury generated 17%19% of the electricity requirements of our Sudbury operations. The power plants consist of five separate generation stations with an installed generator nameplate capacity of 5655 MW. The output of the plants is limited by water availability, as well as by constraints imposed by a water management plan regulated by the provincial government of Ontario. Over the course of 2015,2018, average demand for electrical energy was 195162 MW to all surface plants and mines in the Sudbury area.

In 2015,2018, diesel generation provided 100% of the electric requirements of our Voisey's Bay operations. We also have six diesel generators on-site, with capacityoutput ranging from 12 to 14 MW, in order to meet seasonal demands.

Indonesia

Energy costs are a significant component of our nickel production costs for the processing of lateritic and saprolitic oresore at our PTVI operations in Indonesia. A major portion of PTVI's electric furnace power requirements is supplied at a low cost by its three hydroelectric power plants on the Larona River: (i) the Larona plant, which has an average generating capacity of 165 MW, (ii) the Balambano plant, which has an average capacity of 110 MW and (iii) the Karebbe plant, with 90 MW of average generating capacity. These plants help reduce production costs by substituting oil used for power generation with hydroelectric power, reduce CO2CO₂ emissions by replacing non-renewable power generation, and enable us to increase our current nickel production capacity in Indonesia.




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6.    5.Other investments


Below is a list of our main investments:

•

Pelletizing plants.  We have a 25% stake in two iron ore pelletizing plants in China, Zhuhai YPM and Anyang. The remaining stake in Zhuhai YPM is owned by Zhuhai Yueyufeng Iron and Steel Co. Ltd. and Halswell Enterprises Limited, and the remaining stake in Anyang is owned by Anyang Iron & Steel Co., Ltd.





•

Coal operations.  We have a 25% stake in Longyu (in the Henan province) coal operations in China. Longyu produces metallurgical and thermal coal and other related products, and the remaining interests are owned by Yongmei Group Co., Ltd. (former Yongcheng Coal & Electricity (Group) Co. Ltd.), Shanghai Baosteel International Economic & Trading Co., Ltd. and other minority shareholders. In April 2015, we concluded the divestment of our 25% ownership in Yankuang International Coking Company Limited ("Yankuang"), which we held since 2004, with no impact in our cash flow or indebtedness.





•

Nickel refinery.  We have a 25% indirect stake in Korea Nickel Corporation, which operates a nickel refinery in South Korea. The remaining stake is held by Korea Zinc Co., Ltd, Posteel Co., Ltd., Young Poong Co., Ltd., Pohang Technology College and a number of individual investors.others. Korea Nickel Corporation produces finished nickel for the stainless steel industry using intermediate products from our Matsuzaka and New Caledonia operations.

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Steel producers.  We own a 50% stake in California Steel Industries, Inc. ("CSI"), a producer of flat-rolled steel and pipe products located in California, United States. The remainder is owned by JFE Steel. CSI's annual production capacity is approximately 2.8 million metric tons of flat and pipe products. In addition, we haveWe also own a 26.9%50% stake in the ThyssenKrupp Companhia Siderúrgica do AtlânticoPecém ("TKCSA"CSP"), an integrated steel slab plant in the Brazilian state of Rio de Janeiro. The plant started operationsCeará in 2010,partnership with Dongkuk Steel Mill Co. and produced 4.0 Mt of slabsPosco, two major steel producers in 2015. TKCSASouth Korea. CSP's annual production capacity is 5.0 Mtpy of slabs and will consume 8.53.0 million metric tons of iron ore and iron ore pellets per year, when at full capacity, supplied exclusively by Vale. We are also involved in two other steel projects in Brazil: Companhia Siderúrgica do Pecém ("CSP"), which is currently under construction, and Aços Laminados do Pará ("Alpa"), which is under review pending discussions with the Brazilian government.

tons.



•

Bauxite.  We own minority interestsa 40% stake in two bauxite mining businesses that are both located in Brazil: Mineração Rio do Norte S.A. ("MRN"), a bauxite mining business located in Brazil.



•

Samarco.  We own a 50% stake in Samarco, an integrated system comprised of two mines, three beneficiation plants, three pipelines, four pellet plants and Mineração Paragominas S.A. ("Paragominas"a port. The mines and the beneficiation plants are located in the state of Minas Gerais and the pellet plants and port are located in the state of Espírito Santo. From Minas Gerais to Espírito Santo state production flows through the three pipelines which extend for approximately 400 Km. Samarco's mining and pelletizing operations have been suspended following the failure of one of its tailings dams located in Minas Gerais in November 2015 (seeBusiness overview—Failure of Samarco's tailings dam in Minas Gerais). We have agreed to transfer our interests in Paragominas to Norsk Hydro ASA ("Hydro"). In 2014, we sold part of our interest in Paragominas to Hydro, and we will sell the remaining 13.63% indirect interest to Hydro in 2016. We expect to conclude the sale in 2016. We are also currently negotiating a potential sale of our 40% interest in MRN to Hydro.

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          We have agreed to sell our onshore hydrocarbon exploration licenses in Peru, subject to regulatory approvals. We also have offshore exploration licenses in Brazil, which are being relinquished, subject to regulatory approvals.




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RESERVES


Presentation of information concerning reservesPRESENTATION OF INFORMATION CONCERNING RESERVES

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

·•

Reserves are the part of a mineral deposit that could be economically and legally extracted or produced at the time of the reserve determination.



·•

Proven (measured) reserves are reserves for which (a)(i) quantity is computed from dimensions revealed in outcrops, trenches, workingworkings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (b)(ii) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.



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Probable (indicated) reserves are reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.

We periodically revise our reserve estimates when we have new geological data, economic assumptions or mining plans. During 2015,2018, we performed an analysis of our reserve estimates for certain projects and operations, which is reflectedpresented in new estimates as of December 31, 2015.this report. Reserve estimates for each operation assume that we either have or expect to obtain all of the necessary rights and permits to mine, extract and process oremineral reserves at each mine. For some of our operations, the projected exhaustion date includes stockpile reclamation. Where we own less than 100% of the operation, reserve estimates have not been adjusted to reflect our proportional ownership interest. Certain figures in the tables, discussions and notes have been rounded. For a description of risks relating to reserves and reserve estimates, seeRisk factors.




TableAs a part of ContentsVale internal governance process, we have a Mineral Resources and Mineral Reserves Global Committee coordinated by our exploration and projects department and composed of representatives of all business units (Ferrous, Coal and Base Metals) and the accounting, investor relations and capital projects departments. The purpose of these committee is ensuring the transparency, consistency, professional competence and reliability of all information prepared for internal purposes and public reporting. It is also responsible for overseeing the governance of our estimation and reporting of mineral reserves, which include external audit when applicable.

We report our reserves in accordance with the SEC's Industry Guide 7, as summarized above. In 2018, the SEC adopted new rules governing disclosures on mining properties, including reporting of reserves and resources, which will take effect for our 2021 fiscal year (although earlier adoption is permitted). The new SEC rules will align SEC disclosure requirements more closely with global regulatory practices and standards, as embodied in standards developed by CRIRSCO (Committee for Mineral Reserves International Reporting Standards). We already estimate our reserves under CRIRSCO standards, therefore we do not expect material changes when the new SEC standards become effective.

Our reserve estimates are based on certain assumptions about future prices. We have determined that our reported reserves could be economically produced if prices for the products identified in the following

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table were equal to the three-year average historical prices through December 31, 2015.2018. For this purpose, we used the three-year historical average prices set forth in the following table.

Commodity	​	Three-year average historical price	​	Pricing source
Iron ore:	​		​
Vale(1)	​	US$96.166.4 per dry metric ton	​	Average Platts IODEX (62% Fe CFR China)
CoalCoal:(2):	​		​
Metallurgical—Metallurgical – Moatize	​	US$114.9179.4 per metric ton	​	Average hard metallurgical coal realized pricePlatts PHCC (PLV)
Metallurgical—Carborough DownsThermal – Moatize	​	US$108.5882.3 per metric ton	​	Average hard metallurgical coal realized price
PCI—Carborough Downs	​	US$94.27 per metric ton	​	Average PCI realized price
Thermal—Moatize	​	US$66.3 per metric ton	​	Average thermal realized priceRichards Bay FOB
Base metals:	​		​
Nickel(3)	​	US$6.6111,037 per lbmetric ton	​	LME Ni
Copper	​	US$2.985,850 per lbmetric ton	​	LME Cu
Nickel by-products:and copper byproducts:	​		​
Platinum	​	US$1,308938 per oz	​	Average realized price
Palladium	​	US$740838 per oz	​	Average realized price
Gold	​	US$1,2791,258 per oz	​	Average realized price
Cobalt(3)	​	US$12.8154,423 per lbmetric ton	​	99.3% low cobalt metal (source: Metal Bulletin)
Fertilizer nutrients:	​		​
Phosphate	​	US$125.14 per dry metric ton	​	Average benchmark price for phosphate concentrate, FOB Morocco (source: Fertilizer Week)
Potash	​	US$326.7 per dry metric ton	​	Average benchmark price for potash, FOB Vancouver (source: Fertilizer Week)
Manganese ore(4):	​		​
Manganese lump ore	​	US$158.65.81 per dry metric ton	​	Average realized price
Manganese sinter feed	​	US$122.8 per dry metric ton	​	Average realized priceCRU (44% Mn CFR China)

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(1)

The economic assessment of our iron ore reserves is based on the average Platts IODEXof 62% Fe iron ore prices, as adjusted to reflect the effects of freight, moisture and the quality premium for our iron ore.

(2)

As received basis (8% moisture).

(3)

Premiums (or discounts) are applied to the nickel and cobalt spot prices at certain operations to derive realized prices. These premiums (or discounts) are based on product form, long-term contracts, packaging and market conditions.

(4)

PricesThe economic assessment of our manganese ore reserves is based on the average CRU prices, adjusted to reflect the effects of freight, moisture and the quality premium for our manganese ore prices on a Delivery Duty Unpaid (DDU) and CIFCFR China basis.

Iron ore reservesIRON ORE RESERVES

The following tables below set forth our iron ore reserves and other information about our iron ore mines. We have changed the presentation of ourOur reserve table to better reflectreflects our production and operational plans, which are based on the facilities (consisting of both mines and processing plants) within each system, rather than the individual mines.

          The decrease in totalWe classify our iron ore reserves from 2014as proven reserves to 2015 is mainly duethe extent that they satisfy the requirements of the definition of proven (measured) reserves, as described above, and that we have obtained the environmental licenses for the corresponding pit operation and have at least a reasonable expectation of obtaining on a timely basis any additional licenses necessary to depletion by mine production. conduct the operations.

We periodically review the economic viability of our iron ore reserves in light of changes in the iron ore industry. In our most recent annual review, weWe have determined that our previously reported reserves atthe Urucum and CorumbaCorumbá mines, although at production stage, are no longernot economically viable based on expected long-term prices, andthree-year average historical prices. Accordingly, we are accordingly not reporting reserves at those facilities. We might further revisefacilities since 2015.

Variations in iron ore reserves from 2017 to 2018 reflect depletion resulting from mine production for all mines. Our reserves for Fazendão, Fábrica Nova and Capanema (located at the Mariana complex in our reportedSoutheastern System), João Pereira, Galinheiro and Sapecado (located at the Minas Itabirito complex in our Southern System) and Capitão do Mato (located at the Vargem Grande complex in our Southern System) have been positively affected by new geological information and estimates. Also, we are no longer reporting reserves for the Conta História project, located at the Mariana complex in the future asour Southeastern System, because we continue to reassess the effects of changing price expectations.are reviewing our long term plan for Mariana complex.

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Following the failure of the Fundão tailingsDam I tailing dam in November 2015January 2019 and the shutdown of itsthe Feijão and Jangada mines and related infrastructure, all located in the Paraopeba Complex (Southern System), we are reviewing these operations Samarco is reviewing the operation's reserves.and Capim Branco project. Under these circumstances, Vale iswe are currently not in a position to report these reserves. For more information about the failure of Feijão tailing dam, seeBusiness overview—Failure of the tailings dam at the Córrego do Feijão mine.

On January 29, 2019, we announced our decision to accelerate the decommissioning of our upstream tailings dams. In order to proceed with the accelerated decommissioning of these upstream tailings dams, we will temporarily halt production at the units where the structures are located, namely: Abóboras, Capitão do Mato and Tamanduá (located at the Vargem Grande complex); Segredo and João Pereira (located at the Fábrica sub-complex in the Minas Itabirito complex). We will also suspend production at Fábrica and Vargem Grande pelletizing plants. The temporary halt of these operations does not impact our mineral reserves, because the upstream dams being decommissioned were no longer in use and are not necessary for Samarco as of December 31, 2015.these operations. We expect to resume these operations once the decommissioning work is completed.

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Iron ore reserves(1)

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Iron ore reserves(1) (As of December 31, 2018)

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Proven – 2015

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Probable – 2015

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Total – 2014

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Probable – 2018

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Total – 2018

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Total – 2017

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​

Tonnage

​

Grade

​

Southeastern System(2)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Itabira(3)

​

605.5

​

47.0

​

141.2

​

48.3

​

746.7

​

47.2

​

800.3

​

47.3

​

​

687.5

​

45.7

​

173.9

​

45.8

​

861.4

​

45.7

​

920.2

​

45.6

​

Minas Centrais(4)

​

232.4

​

51.0

​

858.7

​

54.0

​

1,091.1

​

53.3

​

1,123.1

​

53.2

​

​

163.6

​

48.5

​

570.7

​

57.4

​

734.4

​

55.4

​

776.5

​

55.1

​

Mariana(5)

​

833.3

​

44.5

​

2,343.8

​

43.6

​

3,177.1

​

43.8

​

3,216.7

​

43.9

​

​

366.6

​

46.9

​

3,507.9

​

44.5

​

3,874.5

​

44.7

​

4,100.4

​

44.3

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

Total Southeastern System

​

1,671.3

​

46.3

​

3,343.6

​

46.5

​

5,014.9

​

46.4

​

5,140.1

​

46.5

​

​

1,217.7

​

46.4

​

4,252.6

​

46.3

​

5,470.4

​

46.3

​

5,797.1

​

45.9

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

Southern System(6)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Minas Itabirito(7)

​

1,315.6

​

43.7

​

1,571.4

​

42.8

​

2,887.0

​

43.2

​

2,931.2

​

43.2

​

​

436.9

​

54.8

​

3,243.7

​

43.7

​

3,680.5

​

45.0

​

3,658.2

​

45.0

​

Vargem Grande(8)

​

554.4

​

46.1

​

1,887.5

​

44.0

​

2,441.9

​

44.5

​

2,479.4

​

44.7

​

​

368.9

​

44.0

​

1,170.5

​

47.9

​

1,539.3

​

47.0

​

1,462.5

​

48.3

​

Paraopeba(9)

​

129.9

​

62.5

​

24.9

​

59.2

​

154.8

​

62.0

​

171.1

​

62.1

​

​

42.9

​

63.2

​

123.2

​

60.6

​

166.1

​

61.3

​

308.5

​

60.4

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

Total Southern System

​

1,999.9

​

45.6

​

3,483.8

​

43.5

​

5,483.7

​

44.3

​

5,581.7

​

44.5

​

​

848.6

​

50.5

​

4,537.3

​

45.3

​

5,385.9

​

46.1

​

5,429.2

​

46.7

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

Northern System(10)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Serra Norte(11)

​

1,408.4

​

66.6

​

1,018.0

​

66.9

​

2,426.4

​

66.7

​

2,535.4

​

66.7

​

​

576.2

​

66.3

​

1,443.6

​

65.7

​

2,019.9

​

65.9

​

2,169.2

​

66.0

​

Serra Sul (S11)(12)

​

3,045.8

​

66.8

​

1,193.7

​

66.7

​

4,239.6

​

66.7

​

4,239.6

​

66.7

​

Serra Sul(12)

​

1,969.0

​

66.1

​

2,319.1

​

66.4

​

4,288.1

​

66.3

​

4,195.3

​

65.5

​

Serra Leste

​

140.4

​

65.7

​

163.1

​

65.2

​

303.5

​

65.4

​

305.6

​

65.4

​

​

6.9

​

66.7

​

249.3

​

65.4

​

256.2

​

65.4

​

258.1

​

65.4

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

Total Northern System

​

4,594.6

​

66.7

​

2,374.8

​

66.6

​

6,969.4

​

66.7

​

7,080.6

​

66.6

​

​

2,552.1

​

66.2

​

4,012.0

​

66.1

​

6,564.1

​

66.1

​

6,622.6

​

65.6

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

Midwestern System(13)

​

​

​

​

​

​

​

​

​

Urucum

​

–

​

–

​

–

​

–

​

–

​

–

​

28.9

​

62.4

​

Corumba(MCR)

​

–

​

–

​

–

​

–

​

–

​

–

​

310.8

​

62.2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Midwestern System

​

–

​

–

​

–

​

–

​

–

​

–

​

339.7

​

62.2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Vale Systems

​

8,265.7

​

57.5

​

9,220.3

​

50.6

​

17,468.0

​

53.8

​

18,142.3

​

54.0

​

​

4,618.4

​

58.1

​

12,802.0

​

52.1

​

17,420.4

​

53.7

​

17,848.9

​

53.5

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Samarco(14)

​

​

​

​

​

​

​

​

​

Alegria(15)

​

–

​

–

​

–

​

–

​

–

​

–

​

2,829.4

​

39.6

​

Germano

​

–

​

–

​

–

​

–

​

–

​

–

​

80.2

​

39.8

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Samarco

​

–

​

–

​

–

​

–

​

–

​

–

​

2,909.7

​

39.6

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

8,265.7

​

57.5

​

9,220.3

​

50.6

​

17,468.0

​

53.8

​

21,052.0

​

52.0

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

---

(1)

Tonnage isIron Ore Reserve estimates stated in millions ofas metric tons of wet run-of-mine, based on themillion tonnes inclusive moisture and dry %Fe grade; following in-situ moisture contents: Itabira 1.5%1.66%; Minas Centrais 6.0%7,46%; Mariana 3.0%3.66%; Minas Itabirito 5.0%4.74%; Vargem Grande 3.0%5.17%; Paraopeba 5.0%; Corumbá and Urucum 8.0%6.29%; Serra Norte 8.3%6.39%; Serra Sul 4.6%4.47%; Serra Leste 4.3%; Samarco 6.50%3.18%.

(2)

Approximate drill hole spacing used to classify the reserves was:Reserves were: 100m × 100m for proven reservesto Proven Reserves and 200m × 200m for probable reserves.to Probable Reserves. Average product recovery (tonnage basis) is: 57%of the iron ore reserves are: 53% for Itabira, 71%78% for Minas Centrais and 54%62% for Mariana.

(3)

The Itabira mining complex includesIncludes reserves for Conceição and Minas do Meio mines.

(4)

The Minas Centrais mining complex includesIncludes reserves for Brucutu and Agua Limpa minesmine and Apolo project. Vale's equity interest in Agua Limpa is 50.0% andOur operations at the reserve figuresBrucutu mine have not been adjustedsuspended since February 4, 2019. On April 15, 2019, the court of appeals of the State of Minas Gerais reversed the last injunction that prevented us from operating the Brucutu mine. We expect to reflectresume operations at Brucutu soon, but the proceedings challenging our ownership interest.right to use the dams supporting our operations at Brucutu are still ongoing.

(5)

The Mariana mining complex includesIncludes reserves for Alegria, Fábrica Nova and Fazendão mines and Capanema andCapanema. For 2017, we also reported reserves for Conta História projects.rica project.

(6)

Approximate drill hole spacing used to classify the reserves was:Reserves were: 100m × 100m for proven reservesto Proven Reserves and 200m × 200m for probable reserves.to Probable Reserves. Average product recovery (tonnage basis) is: 48%of the iron ore reserves are: 59% for Minas Itabirito, 49%58% for Vargem Grande and 91%96% for Paraopeba.

(7)

The Minas Itabirito mining complex includesIncludes reserves for Sapecado, Galinheiro, João Pereira and Segredo mines.

(8)

The Vargem Grande mining complex includesIncludes reserves for Tamanduá, Capitão do Mato and Abóboras mines.

​
​	​	​	​	​
​	​ ​	​ 74	​ ​	​

​

---

Table of Contents

​

Reserves

​

(9)

The Paraopeba mining complexintegrated operation includes Jangada, Córrego do Feijão, Mar Azul and Capão Xavier mines and the Capim Branco project. For 2018, we only report reserves for Mar Azul and Capão Xavier mines. We are not in a position to report reserves for the Jangada mines.and Córrego do Feijão mines and the Capim Branco project, which are under review following the failure of Dam I at the Feijão mine.

(10)

Approximate drill hole spacing used to classify the reserves was:were: 150m × 100m forto proven reserves and 300m × 200m forto probable reserves, except Serra Leste which is 100m × 100m forto proven reserves and 200m × 200m forto probable reserves. Average product recovery (tonnage basis) of the iron ore reserves are: 100% for Serra Norte, Serra Sul and100% for Serra Leste isand 100% .for Serra Sul.

(11)

The Serra Norte mining complex includesIncludes reserves for N1, N2, N3, N4W, N4E and N5 mines.

(12)

The Serra Sul mining complex includes S11 CIncludes reserves for S11C and DS11D deposits.

(13)

Approximate drill hole spacing used to classify the 2014 reserves was: 70m × 70m for proven reserves and 140m × 140m for probable reserves. Average product recovery (tonnage basis) is 64.1% for Corumba and 82.6% for Urucum.

(14)

Approximate drill hole spacing used to classify the reserves was: Alegria Norte/Centro, 150m × 100m for proven reserves and 300m × 200m for probable reserves; Alegria Sul, 100m × 100m for proven reserves and 200m × 200m for probable reserves. Samarco recovery was 82% (metal basis). Vale's equity interest in Samarco mines is 50.0% and the reserve figures have not been adjusted to reflect our ownership interest.

(15)

The Alegria mining complex includes Alegria Norte/Centro and Alegria Sul mines.




Table of Contents

          The mine exhaustion schedule has been adjusted due to our new production plan and our revision of project capacity. As a result of the Fundão dam failure, the Alegria and Germano operations' projected exhaustion dates are currently being reevaluated as part of Samarco's general review of its iron ore resources and reserves.

	​	Iron ore integrated operations																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Southeastern System	​		​	​			​	​	​			​	​	​			​	​
Itabira	​	Open pit	​	​	1957		​	​	​	2025		​	​	​	100.0		​	​
Minas Centrais(1)	​	Open pit	​	​	1994		​	​	​	2051		​	​	​	100.0		​	​
Mariana	​	Open pit	​	​	1976		​	​	​	2083		​	​	​	100.0		​	​
Southern System	​		​	​			​	​	​			​	​	​			​	​
Minas Itabirito	​	Open pit	​	​	1942		​	​	​	2050		​	​	​	100.0		​	​
Vargem Grande	​	Open pit	​	​	1993		​	​	​	2079		​	​	​	100.0		​	​
Paraopeba	​	Open pit	​	​	2001		​	​	​	2027		​	​	​	100.0		​	​
Northern System	​		​	​			​	​	​			​	​	​			​	​
Serra Norte	​	Open pit	​	​	1984		​	​	​	2034		​	​	​	100.0		​	​
Serra Sul (S11CD)	​	Open pit	​	​	–		​	​	​	2065		​	​	​	100.0		​	​
Serra Leste (SL1)	​	Open pit	​	​	2014		​	​	​	2066		​	​	​	100.0		​	​
Midwestern System	​		​	​			​	​	​			​	​	​			​	​
Urucum	​	Open pit	​	​	1994		​	​	​	–		​	​	​	100.0		​	​
Corumba (MCR)	​	Open pit	​	​	1978		​	​	​	–		​	​	​	100.0		​	​
Samarco	​		​	​			​	​	​			​	​	​			​	​
Alegria	​	Open pit	​	​	2000		​	​	​	–		​	​	​	50.0		​	​
Germano	​	Open pit	​	​	2000		​	​	​	–		​	​	​	50.0		​	​

---

(1)

Agua Limpa mine and plants are part of the Minas Centrais operations and are owned by Baovale. We own 100% of the voting shares and 50% of the total shares of Baovale.




Table of Contents

Manganese ore reserves

          The following tables set forth manganese ore reserves and other information about our mines. In our most recent annual review, we determined that our previously reported manganese reserves at Urucum are no longer economically viable based on expected long-term prices, and we are accordingly not reporting reserves at this facility. Azul reserves decreased from 2014 to 2015 due to mine production depletion. Morro da Mina ore reserves decreased due to the revision of the mining design following new geotechnical studies.

​

Manganese ore reserves(1)(2)

​

​

Proven – 2015

​

Probable – 2015

​

Total – 2015

​

Total – 2014

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Azul

​

41.5

​

29.5

​

2.2

​

25.7

​

43.6

​

29.3

​

47.0

​

29.4

​

Urucum

​

–

​

–

​

–

​

–

​

–

​

–

​

11.2

​

46.4

​

Morro da Mina(3)

​

5.8

​

31.0

​

2.8

​

29.7

​

8.6

​

30.6

​

14.3

​

25.4

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

47.3

​

29.7

​

5.0

​

27.9

​

52.2

​

29.6

​

72.4

​

31.2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

---

(1)

Tonnage is stated in millions of metric tons of wet run-of-mine, based on the following moisture contents: Azul 16.2%, Urucum 4.2%, Morro da Mina 3.4%. Manganese grade is reported on a dry basis. Approximate drill hole spacing used to classify the reserves was: 100m × 100m for proven reserves and 200m × 200m for probable reserves.

(2)

The average recovery of the manganese ore reserves is: Azul 54%, Urucum 83%, Morro da Mina 58%.

(3)

Morro da Mina mine reserves decreased 40% due to new geotechnical studies developed in 2014.

	​	Manganese ore mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Azul	​	Open pit	​	​	1985		​	​	​	2029		​	​	​	100.0		​	​
Urucum	​	Underground	​	​	1976		​	​	​	–		​	​	​	100.0		​	​
Morro da Mina	​	Open pit	​	​	1902		​	​	​	2050		​	​	​	100.0		​	​

The mine exhaustion schedule has been adjusted due to our new production plan and our revision of project capacity.

	​	Iron ore integrated operations																​
	​	Type	​	Operating since				​	Projected exhaustion date(1)				​	Vale interest				​
	​		​					​					​	(%)				​
Southeastern System	​		​	​			​	​	​			​	​	​			​	​
Itabira	​	Open pit	​	​	1957		​	​	​	2028		​	​	​	100.0		​	​
Minas Centrais	​	Open pit	​	​	1994		​	​	​	2054		​	​	​	100.0		​	​
Mariana	​	Open pit	​	​	1976		​	​	​	2106		​	​	​	100.0		​	​
Southern System	​		​	​			​	​	​			​	​	​			​	​
Minas Itabirito	​	Open pit	​	​	1942		​	​	​	2120		​	​	​	100.0		​	​
Vargem Grande	​	Open pit	​	​	1993		​	​	​	2059		​	​	​	100.0		​	​
Paraopeba	​	Open pit	​	​	2001		​	​	​	2036		​	​	​	100.0		​	​
Northern System	​		​	​			​	​	​			​	​	​			​	​
Serra Norte	​	Open pit	​	​	1984		​	​	​	2042		​	​	​	100.0		​	​
Serra Sul	​	Open pit	​	​	2016		​	​	​	2062		​	​	​	100.0		​	​
Serra Leste	​	Open pit	​	​	2014		​	​	​	2062		​	​	​	100.0		​	​

---

(1)

Indicates the life-of-mine for the operating mine with the longest projected exhaustion date in the complex.

CoalManganese ore reserves

The following tables set forth manganese ore reserves and other information about our mines. The variation in the mine's ore reserves from 2017 to 2018 predominantly reflects depletion through mine production and update due to new geological information and estimates of ore reserves for Azul and Morro da Mina. Our manganese ore reserves information for Urucum are currently being reviewed to consider new economic assumptions and ongoing geotechnical studies, which are expected to be completed by 2020. Although the Urucum mine continues to operate, we are not in a position to report reserves for the Urucum mine until these studies are concluded.

​

Manganese ore reserves(1)(2) (As of December 31, 2018)

​

​

Proven – 2018

​

Probable – 2018

​

Total – 2018

​

Total – 2017

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

​

​

​

Tonnage

​

Grade

​

Azul

​

10.3

​

26.5

​

4.4

​

27.5

​

14.7

​

26.8

​

15.0

​

26.6

​

Urucum

​

–

​

–

​

–

​

–

​

–

​

–

​

9.3

​

46.5

​

Morro da Mina

​

4.8

​

28.4

​

3.7

​

24.5

​

8.5

​

26.7

​

8.5

​

30.4

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

Total

​

15.1

​

27.1

​

8.1

​

26.1

​

23.2

​

26.7

​

32.7

​

33.2

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​​

​

​

​

​

​

​

---

(1)

Manganese Ore Reserve estimates stated as metric million tonnes inclusive moisture and dry %Mn grade; following moisture contents: Morro da Mina (3.4%) and Mina do Azul (18.0%).

(2)

Approximate drill hole spacing used to classify the reserves was: 100m × 100m for Proven Reserves and 200m × 200m for Probable Reserves. Average product recovery (tonnage basis) of the iron ore reserves are: Azul (40%) and Morro da Mina (70%).

​
​	​	​	​	​
​	​ ​	​ 75	​ ​	​

​

---

Table of Contents

​

Reserves

The mine exhaustion schedule has been adjusted to reflect our new production plan.

	​	Manganese ore mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Azul	​	Open pit	​	​	1985		​	​	​	2026		​	​	​	100.0		​	​
Urucum	​	Underground	​	​	1976		​	​	​	–		​	​	​	100.0		​	​
Morro da Mina	​	Open pit	​	​	1902		​	​	​	2049		​	​	​	100.0		​	​

COAL RESERVES

Our coal reserve estimates have been provided on an in-place material basis after adjustments for depletion moisture content,through mine production, anticipated mining losses and dilution. Marketable reserves include adjustments for losses associated with beneficiation of raw coal mined to meet saleable product requirements.

We continue our exploration program in Moatize, targeting areas within the current mine plan and the extension of it, with the purpose of aggregating more reserves in the future. In 2018, we drilled 52% (approximately 92,000 meters) of the total 177,000 meter exploration drill campaign, which will continue in 2019. The results of this campaign are still under analysis and have not been reflected in our mineral reserve disclosure.

	​	Coal ore reserves(1)																									​
	​	ROM(2)															​					​					​
																	​	Marketable reserves(3)									​
	​		​	Proven – 2015	​	Probable – 2015	​			​		​			​												​
	​	Coal type					​	Total – 2015				​	Total – 2014				​	2015				​	2014				​
	​		​	(tonnage)			​	(tonnage)		​	(calorific value)	​	(tonnage)		​	(calorific value)	​	(tonnage)				​	(tonnage)				​
Carborough Downs—Underground(4)	​	Metallurgical & PCI	​	4.0	​	–	​	4.0		​	31.2 (PCI)	​	23.7		​	31.2 (PCI)	​	​	3.0		​	​	​	15.7		​	​
Moatize	​	Metallurgical & thermal l	​	264.3	​	1,148.2	​	1,412.5		​	28.3 (thermal)	​	1,424.5		​	28.3 (thermal)	​	​	505.6		​	​	​	510.5		​	​
​	​	​	​	​	​	​	​	​		​	​	​	​		​	​	​	​				​	​				​
Total	​		​	268.3	​	1,148.2	​	1,416.5		​		​	1,448.2		​		​	​	508.6		​	​	​	526.2		​	​
​	​	​	​	​	​	​	​	​		​	​	​	​		​	​	​	​				​	​				​
​	​	​	​	​	​	​	​	​		​	​	​	​		​	​	​	​	​		​	​	​	​		​	​
​	​	​	​	​	​	​	​	​		​	​	​	​		​	​	​	​				​	​				​

	​	Coal ore reserves(1) (As of December 31, 2018)
	​	ROM(2)																			​		​
																					​	Marketable reserves(3)
	​		​	Proven – 2018	​	Probable – 2018	​					​		​					​
	​	Coal type					​	Total – 2018						​	Total – 2017						​	2018	​	2017
	​	Tonnage					​	Tonnage				​	CV	​	Tonnage				​	CV	​	Tonnage	​	Tonnage
Moatize	​	Metallurgical & thermal	​	194.8	​	791.0	​	​	985.7		​	​	26.0	​	​	1,022.5		​	​	26.0 (thermal)	​	403.0	​	415.0

---

(1)

The reservesreserve stated above by deposit areis on a 100% shareholding basis. Vale's ownership interest in accordance with the table below should be used to calculate the portion of reserves directly attributable to Vale.

(2)

Tonnage is stated in millions of metric tons. Carborough Downs reserves were reported on air dry basis. Moatizetons and is reported on anin situ 6.5% 4.0% moisture basis. Calorific value of product coal derived from beneficiation of ROMValue (CV) for thermal coal is typically stated in MJ/kg.as the Gross Calorific value is used in marketing thermal (th) and PCI coals.Value (Mj/Kg) on air-dried basis.

(3)

Tonnage is stated in millions of metric tons.

(4)

In calculating reserves, gas drainage is assumed to have been completed in accordance with the mine plan.




	​	Coal mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Moatize	​	Open pit	​	​	2011		​	​	​	2039		​	​	​	80.75		​	​

​

​	​	​	​	​
​	​ ​	​ 76	​ ​	​

​

---

Table of Contents

          Reserves at Carborough Downs reduced based on updated economic price forecasts and Moatize decreased in 2015 due to production depletion.

	​	Coal mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Carborough Downs	​	Underground	​	​	2006		​	​	​	2017		​	​	​	90.0		​	​
Moatize(1)	​	Open pit	​	​	2011		​	​	​	2042		​	​	​	95.0		​	​

---

(1)

Vale's stake in Moatize will decrease to 81% upon completion of the transaction with Mitsui.

​

Nickel ore reservesReserves

​

NICKEL ORE RESERVES

Our nickel mineral reserve estimates are of in-place material after adjustments for depletion and mining losses (or screening and drying in the casescase of PTVI and VNC)PTVI) and recoveries, with no adjustments made for metal losses due to processing.

​

Nickel ore reserves(1) (As of December 31, 2018)

​

​

Nickel ore reserves(1)

​

​

Proven – 2018

​

Probable – 2018

​

Total – 2018

​

Total – 2017

​

Recovery

​

​

Proven – 2015

​

Probable – 2015

​

Total – 2015

​

Total – 2014

​

Recovery

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

range

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

range (%)

​

​

​

​

​

​

​

​

​

​

(%)

​

Canada

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Sudbury

​

41.4

​

1.32

​

35.0

​

1.21

​

76.4

​

1.27

​

85.2

​

1.26

​

75 – 85

​

​

20.9

​

1.65

​

40.8

​

1.27

​

61.7

​

1.40

​

64.9

​

1.43

​

75 – 85

​

Thompson

​

6.5

​

1.86

​

14.1

​

1.64

​

20.6

​

1.71

​

21.8

​

1.76

​

85 – 90

​

​

–

​

–

​

–

​

–

​

–

​

–

​

–

​

–

​

85 – 90

​

Voisey's Bay

​

17.9

​

2.66

​

18.2

​

1.82

​

36.1

​

2.24

​

14.7

​

2.37

​

80 – 90

​

​

15.5

​

2.24

​

15.5

​

2.00

​

31.0

​

2.12

​

32.4

​

2.13

​

80 – 90

​

Indonesia

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

PTVI

​

96.9

​

1.80

​

22.3

​

1.73

​

119.3

​

1.78

​

125.4

​

1.79

​

85 – 90

​

​

101.8

​

1.76

​

14.7

​

1.64

​

116.4

​

1.74

​

95.1

​

1.79

​

85 – 90

​

New Caledonia

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

VNC

​

–

​

–

​

–

​

–

​

–

​

–

​

122.3

​

1.42

​

80 – 90

​

​

–

​

–

​

–

​

–

​

–

​

–

​

–

​

–

​

–

​

Brazil

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Onça Puma

​

57.5

​

1.67

​

40.0

​

1.39

​

97.4

​

1.56

​

98.7

​

1.56

​

85 – 90

​

​

60.7

​

1.66

​

53.1

​

1.38

​

113.8

​

1.53

​

106.5

​

1.53

​

85 – 90

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

220.2

​

1.75

​

129.6

​

1.49

​

349.8

​

1.65

​

468.1

​

1.57

​

​

​

199.0

​

1.75

​

124.0

​

1.45

​

322.9

​

1.64

​

298.9

​

1.66

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

---

(1)

Tonnage is stated in millions of dry metric tons. Grade is % of nickel.




Table of Contents

In Canada, our Sudbury operation's mineral reserves decreased in 2018 due to depletion and minor adjustments due to re-evaluations of reserves at the Copper Cliff Mine. The Voisey's Bay operations mineral reserves decreased due to mining depletions,depletion. In Indonesia, the reclassification of mineral reserves to mineral resource at Garson, downgrading of mineral reserve to exploration target at Stobie and a decrease of mineral reserves at Copper Cliff due to re-interpretation and planning changes. Mineral reserves at Thompson decreased mainly due to mining depletion. The Voisey's Baythe PTVI operations mineral reserves increased due to the additionconversion of resource to reserve, considering an extension of the Underground Project mineral reserves.mining rights until 2045. The mineral reserves at PTVI decreasedOnça Puma, in Brazil, increased due to mining depletion, pit redesigns, reclassificationthe conversion of the Puma West resources to mineral resource, decreases at Petea to reflectreserves and an update of the production reconciliation data, and sterilization related to the establishment of waste disposal areas. Puma block model.

We are not reporting the mineral reserves of VNC and Thompson as of December 31, 2015,2018, because the mineral reserves for our operations in New Caledonia and Thompson would not be economically viable at the three-year historical average price, due to the decline in nickel prices in the past three years. However, based on our expectations about future prices, our operations in New Caledonia and Thompson continue to be economically viable. VNC continuesand Thompson continue to operate and isare currently conducting studies to identify measures to reduce itstheir costs of production.

	​	Nickel ore mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Canada	​		​	​			​	​	​			​	​	​			​	​
Sudbury	​	Underground	​	​	1885		​	​	​	2042		​	​	​	100.0		​	​
Thompson	​	Underground	​	​	1961		​	​	​	–		​	​	​	100.0		​	​
Voisey's Bay(1)	​	Open pit/Underground	​	​	2005		​	​	​	2033		​	​	​	100.0		​	​
Indonesia	​		​	​			​	​	​			​	​	​			​	​
PTVI	​	Open pit	​	​	1977		​	​	​	2040		​	​	​	59.27		​	​
New Caledonia	​		​	​			​	​	​			​	​	​			​	​
VNC	​	Open pit	​	​	2011		​	​	​	–		​	​	​	95.0		​	​
Brazil	​		​	​			​	​	​			​	​	​			​	​
Onça Puma	​	Open pit	​	​	2011		​	​	​	2071		​	​	​	100.0		​	​

---

(1)

Voisey's Bay will transition from an open pit mine to an underground mine.

​
​	​	​	​	​
​	​ ​	​ 77	​ ​	​

	​	Nickel ore mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Canada	​		​	​			​	​	​			​	​	​			​	​
Sudbury	​	Underground	​	​	1885		​	​	​	2039		​	​	​	100.0		​	​
Thompson	​	Underground	​	​	1961		​	​	​	2032		​	​	​	100.0		​	​
Voisey's Bay	​	Open pit	​	​	2005		​	​	​	2032		​	​	​	100.0		​	​
Indonesia	​		​	​			​	​	​			​	​	​			​	​
PTVI	​	Open pit	​	​	1977		​	​	​	2035		​	​	​	59.2		​	​
New Caledonia	​		​	​			​	​	​			​	​	​			​	​
VNC	​	Open pit	​	​	2011		​	​	​	–		​	​	​	80.5		​	​
Brazil	​		​	​			​	​	​			​	​	​			​	​
Onça Puma	​	Open pit	​	​	2011		​	​	​	2056		​	​	​	100.0		​	​

​

---

Copper ore reservesTable of Contents

​

Reserves

​

COPPER ORE RESERVES

Our copper mineral reserve estimates are of in-place material after adjustments for depletion and mining losses and recoveries, with no adjustments made for metal losses due to processing.

​

Copper ore reserves(1) (As of December 31, 2018)

​

​

Copper ore reserves(1)

​

​

Proven – 2018

​

Probable – 2018

​

Total – 2018

​

Total – 2017

​

Recovery

​

​

Proven – 2015

​

Probable – 2015

​

Total – 2015

​

Total – 2014

​

Recovery

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

(%)

​

Grade

​

Tonnage

​

Grade

​

range

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

range (%)

​

​

​

​

​

​

​

​

​

​

%

​

Canada

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Sudbury

​

41.4

​

1.83

​

35.0

​

1.36

​

76.4

​

1.61

​

85.2

​

1.61

​

90 – 95

​

​

20.9

​

2.43

​

40.8

​

1.44

​

61.7

​

1.78

​

64.9

​

1.80

​

90 – 95

​

Voisey's Bay

​

17.9

​

1.29

​

18.2

​

0.81

​

36.1

​

1.05

​

14.7

​

1.32

​

90 – 95

​

​

15.5

​

1.00

​

15.5

​

0.88

​

31.0

​

0.94

​

32.4

​

0.96

​

90 – 95

​

Brazil

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Sossego

​

103.9

​

0.66

​

13.9

​

0.70

​

117.8

​

0.67

​

126.6

​

0.70

​

90 – 95

​

​

103.1

​

0.66

​

5.9

​

0.69

​

109.0

​

0.66

​

120.1

​

0.68

​

90 – 95

​

Salobo

​

654.5

​

0.71

​

502.3

​

0.61

​

1,156.8

​

0.67

​

1,179.1

​

0.67

​

80 – 90

​

​

619.2

​

0.63

​

537.7

​

0.58

​

1,156.9

​

0.61

​

1,193.4

​

0.61

​

80 – 90

​

Zambia

​

​

​

​

​

​

​

​

​

​

Lubambe

​

5.1

​

2.27

​

43.5

​

2.25

​

48.6

​

2.25

​

43.1

​

2.24

​

85 – 90

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

822.8

​

0.78

​

612.9

​

0.78

​

1,435.7

​

0.78

​

1,448.7

​

0.78

​

​

​

758.7

​

0.69

​

599.9

​

0.65

​

1,358.5

​

0.67

​

1,410.8

​

0.68

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

---

(1)

Tonnage is stated in millions of dry metric tons. Grade is % of copper.




Table of Contents

In Canada, our Sudbury operationsoperation's mineral reserves decreased in 2018 due to depletion and minor adjustments due to re-evaluations of mineral reserves at Copper Cliff Mine, and our Voisey's Bay operation's mineral reserves decreased due to mining depletions, the reclassification of mineral reserves to mineral resource at Garson, downgrading of mineral reserve to exploration target at Stobie and a decrease of mineral reserves at Copper Cliff due to re-interpretation and planning changes. The Voisey's Bay operations mineral reserves increased due to the addition of the Underground Project mineral reserves.depletion. In Brazil, the Sossego operations mineral reserves decreased due to mining depletion partially offset by the addition of mineral reserves located in the bottom of the pits.and stockpile reclamation. The mineral reserve estimates at the Salobo operation decreased due to mining depletion. The Lubambe mineral reserves increaseddepletion and re-evaluation work, partially offset by medium- and low-grade stockpile additions.

	​	Copper ore mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Canada	​		​	​			​	​	​			​	​	​			​	​
Sudbury	​	Underground	​	​	1885		​	​	​	2042		​	​	​	100.0		​	​
Voisey's Bay	​	Open pit/Underground	​	​	2005		​	​	​	2033		​	​	​	100.0		​	​
Brazil	​		​	​			​	​	​			​	​	​			​	​
Sossego	​	Open pit	​	​	2004		​	​	​	2027		​	​	​	100.0		​	​
Salobo	​	Open pit	​	​	2012		​	​	​	2051		(1)	​	​	100.0		​	​

---

(1)

Reduction in the number of years due to re-interpretation and changes in certain factors relating to mining recovery and dilution.the approval of the Salobo III copper expansion project.

​
​	​	​	​	​
​	​ ​	​ 78	​ ​	​

	​	Copper ore mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Canada	​		​	​			​	​	​			​	​	​			​	​
Sudbury	​	Underground	​	​	1885		​	​	​	2039		​	​	​	100.0		​	​
Voisey's Bay	​	Open pit	​	​	2005		​	​	​	2032		​	​	​	100.0		​	​
Brazil	​		​	​			​	​	​			​	​	​			​	​
Sossego	​	Open pit	​	​	2004		​	​	​	2024		​	​	​	100.0		​	​
Salobo	​	Open pit	​	​	2012		​	​	​	2065		​	​	​	100.0		​	​
Zambia	​		​	​			​	​	​			​	​	​			​	​
Lubambe	​	Underground	​	​	2013		​	​	​	2038		​	​	​	40.0		​	​

​

---

PGMs and other precious metals reservesTable of Contents

​

Reserves

​

PGMS AND OTHER PRECIOUS METALS RESERVES

We expect to recover significant quantities of precious metals as by-productsbyproducts of our Sudbury, Sossego and Salobo operations. Our mineral reserve estimates are of in-place material after adjustments for mining depletion and mining losses and recoveries, with no adjustments made for metal losses due to processing.

​

Precious metals reserves(1) (As of December 31, 2018)

​

​

Precious metals reserves(1)

​

​

Proven – 2018

​

Probable – 2018

​

Total – 2018

​

Total – 2017

​

Recovery

​

​

Proven – 2015

​

Probable – 2015

​

Total – 2015

​

Total – 2014

​

Recovery

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

range

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

range (%)

​

​

​

​

​

​

​

​

​

​

(%)

​

Canada

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Sudbury

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Platinum

​

41.4

​

1.0

​

35.0

​

1.2

​

76.4

​

1.1

​

85.2

​

1.0

​

80 – 90

​

​

20.9

​

1.3

​

40.8

​

1.2

​

61.7

​

1.2

​

64.9

​

1.2

​

80 – 90

​

Palladium

​

41.4

​

1.1

​

35.0

​

1.1

​

76.4

​

1.1

​

85.2

​

1.2

​

80 – 90

​

​

20.9

​

1.5

​

40.8

​

1.5

​

61.7

​

1.5

​

64.9

​

1.4

​

80 – 90

​

Gold

​

41.4

​

0.4

​

35.0

​

0.4

​

76.4

​

0.4

​

85.2

​

0.4

​

80 – 90

​

​

20.9

​

0.6

​

40.8

​

0.4

​

61.7

​

0.5

​

64.9

​

0.5

​

80 – 90

​

Brazil

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Sossego

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gold

​

103.9

​

0.2

​

13.9

​

0.2

​

117.8

​

0.2

​

126.6

​

0.2

​

75 – 80

​

​

103.1

​

0.2

​

5.9

​

0.2

​

109.0

​

0.2

​

120.1

​

0.2

​

75 – 80

​

Salobo

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Gold

​

654.5

​

0.4

​

502.3

​

0.4

​

1,156.8

​

0.4

​

1,179.1

​

0.4

​

60 – 70

​

​

619.2

​

0.3

​

537.7

​

0.3

​

1,156.9

​

0.3

​

1,193.4

​

0.3

​

60 – 70

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Pt + Pd(2)

​

41.4

​

2.1

​

35.0

​

2.3

​

76.4

​

2.2

​

85.2

​

2.2

​

​

​

20.9

​

2.9

​

40.8

​

2.7

​

61.7

​

2.8

​

64.9

​

2.6

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Gold

​

799.8

​

0.4

​

551.2

​

0.4

​

1,351.0

​

0.4

​

1,390.9

​

0.4

​

​

​

743.2

​

0.3

​

584.4

​

0.3

​

1,327.6

​

0.3

​

1,378.4

​

0.3

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

---

(1)

Tonnage is stated in millions of dry metric tons. Grade is grams per dry metric ton.

(2)

Pt+Pd is the sum of Platinum and Palladium grades.




Table of Contents

In Sudbury our mineral reserve estimates for platinum, palladium and gold decreased for the same reasons discussed above in connection with the nickel mineral reserves. In Brazil, mineral reserve estimates for gold changed for the same reasons discussed above in connection with the copper mineral reserves.

	​	Precious metals mines																​	​	Precious metals mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​	​		​					​					​	(%)				​
Canada	​		​	​			​	​				​	​				​	​	​		​	​			​	​				​	​				​	​
Sudbury	​	Underground	​	​	1885		​	​		2039		​	​		100.0		​	​	​	Underground	​	​	1885		​	​		2042		​	​		100.0		​	​
Brazil	​		​	​			​	​				​	​				​	​	​		​	​			​	​				​	​				​	​
Sossego	​	Open pit	​	​	2004		​	​		2024		​	​		100.0		​	​	​	Open pit	​	​	2004		​	​		2027		​	​		100.0		​	​
Salobo	​	Open pit	​	​	2012		​	​		2065		​	​		100.0		​	​	​	Open pit	​	​	2012		​	​		2051		​	​		100.0		​	​

​
​	​	​	​	​
​	​ ​	​ 79	​ ​	​

Cobalt ore reserves​

---

Table of Contents

​

Reserves

​

COBALT ORE RESERVES

We expect to recover significant quantities of cobalt as a by-productbyproduct of our Sudbury and Voisey's Bay operations. Our cobalt reserve estimates are of in-place material after adjustments for depletion and mining losses, with no adjustments for metal losses due to processing.

​

Cobalt ore reserves(1) (As of December 31, 2018)

​

​

Cobalt ore reserves(1)

​

​

Proven – 2018

​

Probable – 2018

​

Total – 2018

​

Total – 2017

​

Recovery

​

​

Proven – 2015

​

Probable – 2015

​

Total – 2015

​

Total – 2014

​

Recovery

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

range

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

range (%)

​

​

​

​

​

​

​

​

​

​

%

​

Canada

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Sudbury

​

41.4

​

0.04

​

35.0

​

0.03

​

76.4

​

0.04

​

85.2

​

0.04

​

20 – 40

​

​

20.9

​

0.04

​

40.8

​

0.02

​

61.7

​

0.03

​

64.9

​

0.04

​

20 – 40

​

Voisey's Bay

​

17.9

​

0.15

​

18.2

​

0.11

​

36.1

​

0.13

​

14.7

​

0.11

​

70 – 80

​

​

15.5

​

0.13

​

15.5

​

0.12

​

31.0

​

0.13

​

32.4

​

0.13

​

70 – 80

​

New Caledonia

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

VNC

​

–

​

–

​

–

​

–

​

–

​

–

​

122.3

​

0.11

​

80 – 90

​

​

–

​

–

​

–

​

–

​

–

​

–

​

–

​

–

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

59.3

​

0.07

​

53.2

​

0.06

​

112.5

​

0.07

​

222.2

​

0.08

​

​

​

36.4

​

0.08

​

56.3

​

0.05

​

92.7

​

0.06

​

97.3

​

0.07

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

��

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

---

(1)

Tonnage is stated in millions of metric tons. Grade is % of cobalt.

Our cobalt reserve estimates decreased in 20152018 for the same reasons discussed above in connection with the nickel mineral reserves.

	​	Cobalt ore mines																​	​	Cobalt ore mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​	​		​					​					​	(%)				​
Canada	​		​	​			​	​				​	​				​	​	​		​	​			​	​				​	​				​	​
Sudbury	​	Underground	​	​	1885		​	​		2039		​	​		100.0		​	​	​	Underground	​	​	1885		​	​		2042		​	​		100.0		​	​
Voisey's Bay	​	Open pit	​	​	2005		​	​		2032		​	​		100.0		​	​	​	Open pit/ Underground	​	​	2005		​	​		2033		​	​		100.0		​	​
New Caledonia	​		​	​			​	​				​	​				​	​	​		​	​			​	​				​	​				​	​
VNC	​	Open pit	​	​	2011		​	​		–		​	​		80.5		​	​	​	Open pit	​	​	2011		​	​		–		​	​		95.0		​	​

​



Table of Contents

Phosphate reserves

          Our phosphate reserves estimates are of in-place material after adjustments for depletion and mining dilution. The total phosphate reserves have decreased due to production and the reclassification of 40.2 million dmt of mineral reserves of secondary ore to mineral resources at Araxá. The remaining phosphate reserves decreased due to mine production depletion.

​	​	​	​	​
​	​ ​	​ 80	​ ​	​

​

Phosphate reserves(1)(2)

​

​

Proven – 2015

​

Probable – 2015

​

Total – 2015

​

Total – 2014

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Bayóvar(3)

​

153.1

​

16.2

​

248.9

​

14.9

​

402.0

​

15.4

​

409.3

​

15.4

​

Catalão

​

63.3

​

10.5

​

30.3

​

10.6

​

93.5

​

10.5

​

97.9

​

10.5

​

Tapira

​

288.6

​

7.8

​

378.1

​

7.4

​

666.6

​

7.6

​

679.2

​

7.6

​

Araxá

​

84.5

​

11.9

​

2.1

​

8.4

​

86.6

​

11.9

​

130.6

​

11.6

​

Cajati

​

59.3

​

5.6

​

45.5

​

4.7

​

104.8

​

5.2

​

109.6

​

5.2

​

Patrocinio project(4)

​

183.8

​

13.7

​

302.3

​

11.1

​

486.1

​

12.1

​

486.1

​

12.1

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

832.5

​

11.1

​

1,007.2

​

10.3

​

1,893.6

​

10.7

​

1,912.5

​

10.7

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

---

(1)

Tonnage is stated in millions of dry metric tons. Grade is % of P₂O₅.

(2)

Average mass recoveries (tonnage basis) are: 14.7% for Araxá, 11.7% for Cajati, 14.0% for Catalão, 22.9% for Patrocínio, 14.6% for Tapira and 37.0% for Bayóvar.

(3)

Vale holds 51% of the voting capital and 40% of the total capital of MVM Resources International, B.V., the entity that controls Bayóvar. The reserves figures have not been adjusted to reflect our ownership interest.

(4)

Reserves reflect the original scope of the Patrocinio project. Due to the macroeconomic scenario, we recently modified the scope of this project in order to integrate it with the Araxá operation.

	​	Phosphate rock ore mine																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Bayóvar	​	Open pit	​	​	2010		​	​	​	2045		(1)	​	​	40.0		​	​
Catalão	​	Open pit	​	​	1982		​	​	​	2033		​	​	​	100.0		​	​
Tapira	​	Open pit	​	​	1979		​	​	​	2054		​	​	​	100.0		​	​
Araxá	​	Open pit	​	​	1977		​	​	​	2024		​	​	​	100.0		​	​
Cajati	​	Open pit	​	​	1970		​	​	​	2035		​	​	​	100.0		​	​
Patrocinio project	​	Open pit	​	​	–		​	​	​	2045		(1)	​	​	100.0		​	​

---

(1)

Projected exhaustion date limited to economic feasibility study. The expected mine life is longer than indicated above.

Potash ore reserves

          The total potash reserves of the Taquari-Vassouras mine have decreased mainly due to mine production depletion and as result of a mine planning revision. The reserve estimates are of in-place material after adjustments for depletion, mining losses and recoveries, with no adjustments made for metal losses due to processing.

​

Potash ore reserves(1)(2)

​

​

Proven – 2015

​

Probable – 2015

​

Total – 2015

​

Total – 2014

​

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Tonnage

​

Grade

​

Taquari-Vassouras(3)

​

3.2

​

25.6

​

4.5

​

22.4

​

7.7

​

23.7

​

10.6

​

24.2

​

Carnalita Project

​

247.1

​

12.2

​

54.5

​

12.2

​

301.6

​

12.2

​

301.6

​

12.2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total

​

250.3

​

12.4

​

59.0

​

13.0

​

309.3

​

12.5

​

312.2

​

12.6

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

---

(1)

Tonnage is stated in millions of dry metric tons. Grade is % of KCl.

(2)

Tonnage is before processing recovery.

(3)

Silvinite potash reserves.




Table of Contents

	​	Potash ore mines																​
	​	Type	​	Operating since				​	Projected exhaustion date				​	Vale interest				​
	​		​					​					​	(%)				​
Taquari-Vassouras(1)	​	Underground	​	​	1986		​	​	​	2018		​	​	​	100.0		​	​
Carnalita Project(2)	​	Solution mining	​	​	–		​	​	​	2042		​	​	​	100.0		​	​

---

(1)

We have a 30-year lease with Petrobras, which was signed in 2012.

(2)

The Carnalita project is subject to approval by our Board of Directors.




Table of Contents

​


CAPITAL EXPENDITURES


          We have an extensive program of investments in the organic growth of our businesses. The figures discussed in this section are for project execution and sustaining existing operations and replacement projects.

The 20162019 investment budget approved by our Board of Directors is US$3.172 billion703 million for project execution, reflecting a 50.1%27.7% decrease compared to the 20152018 investment budget, and US$2.9953.731 billion for sustaining existing operations and replacement projects, reflecting a 21.3% decrease30.2% increase compared to 2015. This is the fifth consecutive year of lower capital expenditures, maintaining capital discipline and focusing only on world class projects.

          In February 2016, our Board of Directors approved a contingency plan for 2016, pursuant to which we target reducing the investment budget for 2016 to US$5.561 billion, being US$3.130 billion for project execution and US$2.431 billion for sustaining existing operations and replacement projects.

2018. Most of the capital expenditures budget for project execution will be invested in Brazil (90%) and in Mozambique (10%(96%).

	​	2014 expenditures	​	2015 expenditures	​	2016 budget			​	​	2017 expenditures(1)				​	2018 expenditures(1)				​	2019 budget					​
	​	(US$ million)	​	(US$ million)	​	(US$ million)	​	(% of total)	​	​	(US$ million)									​	(US$ million)		​	(% of total)		​
Project execution	​	7,920	​	5,548	​	3,172	​	51%	​
Investments to sustain existing operations and replacement projects	​	4,059	​	2,853	​	2,995	​	49%	​
Project execution (construction in progress)										​	​	1,617		​	​		888		​	​	703		​	15.9		​
Investments to sustain existing operations and replacement projects (property, plant and equipment)										​	​	2,231		​	​		2,896		​	​	3.731		​	84.1		​
​	​	​	​	​	​	​	​	​	​	​	​				​	​				​	​		​	​		​
Total	​	US$11,979	​	US$8,401	​	US$6,167	​	100%	​	​	​	US$	3,848	​	​		US$	3,784	​	​	US$	4.434	​	100%		​
​	​	​	​	​	​	​	​	​	​	​	​				​	​				​	​		​	​		​
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(1)

Executed capital expenditures comprise the sum of cash outflows.

We are developing a focused organic growth portfolio with fewer projects, but higher expected rates of return. Our main initiative, the S11D, project, accounts for 72.3%44.2% of the US$3.172 billion703 million budgeted for project execution in 2016.




Table of Contents2019.

The following table sets forth total expenditures in 20152018 for our main investment projects and expenditures budgeted for those projects in 2016,2019, together with estimated total expenditures for each project and the actual or estimated start-up date of each project as of December 31, 2015.2018.

	​		​		​	Executed CAPEX			​	Expected CAPEX
Business area	​	Main projects(1)	​	Actual or estimated start-up	​	2015(2)	​	Total executed(3)	​	2016(4)	​	Total expected(5)
	​		​		​	(US$ million)
Iron ore	​	Carajás Serra Sul S11D(6)	​	2H16	​	1,163	​	4,655	​	921	​	6,405
	​	CLN S11D(7)	​	1H14 to 2H18	​	1,814	​	4,467	​	1,372	​	7,850
	​	Conceição Itabiritos II(8)	​	1H15	​	153	​	1,016	​	34	​	1,137
	​	Cauê Itabiritos(8)(9)	​	2H15	​	240	​	926	​	85	​	1,066
Coal mining and logistics	​	Moatize II	​	1H16	​	558	​	1,942	​	105	​	2,068
	​	Nacala Corridor(8)	​	2H14 to 2H15	​	902	​	3,795	​	225	​	4,444
Steelmaking	​	CSP(10)	​	1H16	​	–	​	1,055	​	188	​	1,224
Fertilizers	​	Phosphate ROM(11)	​	1H17	​	2	​	66	​	115	​	209
Base Metals	​	Voisey's Bay Underground(11)	​	1H20	​	–	​	–	​	74	​	1,904

	​		​		​	Executed CAPEX			​	Expected CAPEX
Business area	​	Main projects(1)	​	Actual or estimated start-up	​	2018(2)	​	Total executed(3)	​	2019(4)	​	Total expected(5)
	​		​		​	(US$ million)
Iron ore	​	CLN S11D(6)	​	1H14 to 2H19	​	578	​	7,146	​	209	​	7,679
Base Metals—North Atlantic	​	VBME	​	1H21	​	163	​	223	​	311	​	1,694
Iron ore	​	Gelado	​	2H21	​	5	​	5	​	87	​	428
Base Metals—South Atlantic	​	Salobo III	​	1H22	​	3	​	3	​	193	​	1,128

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(1)

Projects approved by our Board of Directors.

(2)

All figures are presented on aExecuted capital expenditures comprise the sum of cash basis.outflows.

(3)

Total executed CAPEX through December 31, 2015,2018, including capital expenditures in prior periods.

(4)

All figures areFigure presented on a cash basis and correspondcorresponds to the figuresamount approved in the US$6.1674.434 billion investment budget.

(5)

Estimated total capital expenditure cost for each project, including capital expenditures in prior periods. Total expected CAPEX includes expenses, in line with the budget approved by our Board of Directors, while these expenses are not included in the expected CAPEX for the year or in the total executed CAPEX figures.

(6)

Original expected CAPEX for S11D was US$8.089 billion.

(7)

Original expected CAPEX for CLN S11D was US$11.582 billion.

(8)

Projects delivered

Our key investment projects are described in 2015.

(9)
Original expected CAPEX for Cauê Itabiritos was US$1.317 billion.
(10)
Expected CAPEX and funding is relative to Vale's stake in the project.
(11)
Replacement projects.

          The paragraphs below describe the status of each project as of December 31, 2015 and have not been updated to reflect any developments after that date.

Ferrous minerals and logistics projects

          Iron ore mining and logistics projects:more detail below:

·•

Carajás Serra Sul S11D.  Development of a mine and processing plant, located in the southern range of Carajás, in the Brazilian state of Pará. The project has a nominal capacity of 90 Mtpy. Thelargest ongoing capital expenditure project is 80% complete, with total realized expenditures of US$4.655 billion. In 2015, we concluded the assembly and transportation of all modules in the plant, and the transmission line connecting Carajás to Cannã was energized. In the beginning of 2016, we started the commissioning and testing of the long-distance conveyor belt. The start-up is expected for the second half of 2016.



·

CLN S11D.  Increaseincrease in the logistics capacity of the Northern System to support the S11D project,mine, including the duplicationexpansion of approximately 570 km of railway, (106 km of which we have already built), construction of a railrailway spur of 101 km, acquisition of wagons and locomotives and port expansion (onshore and offshore expansions at Ponta da Madeira maritime terminal). This project is expected to increase EFC's nominal logistics capacity to approximately 230 Mtpy. RailwayThe duplication was 41% completeof the railway achieved 95% of physical progress and construction of the railway spur was 81% complete. Regardingtotally completed. The port offshore started up in the port expansion, physical progress was about 76%.last quarter

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of 2016. The project is 57%97% complete, with total realizedexecuted capital expenditures (total cash outflows) of US$4.4677.146 billion. The start-up is expected to continue through the second half of 2018.2019.




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Base metals projects

·•

The Voisey's Bay Underground.  We completed, in March 2015, the study to replace the depletion of the open pitunderground mine at Voisey's Bay with an underground mine. Theextension project was approved to commence execution in 2016, and the first ore("VBME") project is expected to be deliveredextend the mine life of Voisey's Bay and to increase Voisey's Bay production to an estimated annual production of around 45 kt of nickel, on average, about 20 kt of copper and about 2.6 kt of cobalt, in total. VBME will replace existing Voisey's Bay mine production, thus being recorded as a sustaining investment for the purpose of the dividend policy. The project is 17% complete, with executed capital expenditures (total cash outflows) of US$223 million. Start-up is expected in the first half of 2021. In June 2018, we announced a cobalt streaming transaction that enabled the development of VBME.



•

In September 2018, our Board of Directors approved a sustaining investment in the Gelado project, which will recover approximately 10 Mtpy of pellet feed with 64.3% Fe content, 2.0% silica and 1.65% alumina from tailings dams in the Reid Brook DepositCarajás Complex in 2020.order to feed the São Luís pellet plant. The totalproject is 3% complete, with executed capital expenditures (total cash outflows) of US$5 million. Start-up is expected in 2016 are expected to be US$74 million. When complete, the underground minesecond half of 2021.



•

In October 2018, our Board of Directors approved investment in the Salobo III copper project, a brownfield expansion increasing processing throughput capacity. The project encompasses a third concentrator line, and will use Salobo's existing infrastructure. Salobo III will produce an average copper volume of 46approximately 50 ktpy contained nickel and extend the operational life until 2032.

Fertilizers projects

·

Phosphate ROM.  Development of a mine to increase the production of phosphate ROM in the municipalityfirst 5 years, 42 ktpy in the first 10 years and 36 ktpy throughout the life of Patrocínio. The ore will be transported to the Araxá plant, whichmine. Start-up is located approximately 200 kilometers from Patrocínio, through an existing railroad operated by VLI. The project capacity is 6.5 Mtpy of ROM. The phosphate concentrate produced in Araxá will be used in chemical plants located in Araxá and Uberaba to produce phosphate fertilizers. The start-up is expectedscheduled for the first half of 2017.2022 with a ramp-up of 15 months.



Coal mining and logistics projects:

·•

Moatize II.  New pit and duplicationIn December 2018, we announced an expansion of the Moatize coal handling processing plant (CHPP), as well as all related infrastructure, located in Tete, Mozambique. The project will increase Moatize's total nominal capacityS11D mine production by 10 Mtpy (from 90 Mtpy to 22 Mtpy. Moatize II was 99% complete in the fourth quarter of 2015 with total realized expenditures of US$1.942 billion. The commissioning on the handling system100 Mtpy) and cargo testing on one line of the CPP (Coal Preparation Plant) has been initiated. TheNorthern System's logistics from 230 Mtpy to 240 Mtpy, with start-up isin 2022, given the expected increase in demand for the first half of 2016.high-grade ores.

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Steel projects​

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·

Companhia Siderúrgica do Pecém ("CSP").  Construction of an integrated steel slab plant in the Brazilian state of Ceará in partnership with Dongkuk Steel Mill Co. ("Dongkuk") and Posco, two major steel producers in South Korea. We own 50% of the joint venture, while Dongkuk owns 30% and Posco owns 20%. The project will have a nominal capacity of 3.0 Mtpy. Assembly of the steel structure reached 97% physical progress and civil works reached 99% physical progress. We have realized US$1.055 billion of expenditures, and the start-up is expected for the first half of 2016.




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REGULATORY MATTERS


We are subject to a wide range of governmental regulation in all the jurisdictions in which we operate worldwide. The following discussion summarizes the kinds of regulation that have the most significant impact on our operations.

Mining rights and regulation of mining activitiesMINING RIGHTS AND REGULATION OF MINING ACTIVITIES

Mining and mineral processing are subject to extensive regulation. In order to conduct these activities, we are generally required to obtain and maintain some form of governmental or private permits, which may include concessions, licenses, claims, tenements, leases or permits (all of which we refer to below as "concessions"). The legal and regulatory regime applicable to the mining industry and governing concessions differs among jurisdictions, often in important ways. In most jurisdictions, including Brazil, mineral resources belong to the State and may only be exploited pursuant to a governmental concession. In other jurisdictions, such as Ontario in Canada, a substantial part of our mining operations is conducted pursuant to mining rights we own (private permits). Government agencies are typically in charge of granting mining concessions and monitoring compliance with mining law and regulations.

The table below summarizes our principal concessions and other similar rights.rights for our continuing operations.

Location	​	Mining title	​	Approximate area covered (in hectares)	​	Expiration date
Brazil	​	Mining concessions (including under applications)	​	682,913	​	Indefinite
​	​	​	​	​	​	​
Canada(1)	​	Mining concessions (terminology varies among provinces)	​	330,560	​	2016 – 2036
​	​	​	​	​	​	​
Indonesia(2)	​	Contract of work	​	118,435	​	2025
​	​	​	​	​	​	​
Australia	​	Mining leases	​	11,135	​	2021 – 2041
​	​	​	​	​	​	​
New Caledonia	​	Mining concessions	​	21,269	​	2016 – 2051
​	​	​	​	​	​	​
Peru(3)	​	Mining concessions	​	199,398	​	Indefinite
​	​	​	​	​	​	​
Argentina(4)	​	Mining concessions	​	33,866	​	Indefinite
​	​	​	​	​	​	​
Mozambique(5)	​	Mining concessions	​	23,780	​	2032

Location	​	Mining title	​	Approximate area covered (in hectares)	​	Expiration date
Brazil	​	Mining concessions (including under applications)	​	595,523	​	Indefinite
Canada(1)	​	Mining concessions (terminology varies among provinces)	​	218,761	​	2018 – 2038
Indonesia(2)	​	Contract of work	​	118,017	​	2025
New Caledonia(3)	​	Mining concessions	​	21,077	​	2022 – 2051
Mozambique(4)	​	Mining concessions	​	23,780	​	2032

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(1)

The expiration date of our leases in Sudbury is subject to current renewal applications. The approval process for these applications submitted in 2018 is in progress, but may takeprogress. All conditions required for the renewal were fulfilled. This process usually takes a number of years.years and we can continue to operate while the approval process is ongoing.

(2)

EntitledThe contract entered into by PTVI and the Indonesian government will expire in 2025. PTVI is entitled to two 10-year extensions in the form of a business license, subject to approval of the Indonesian government.government approval.

(3)

Non-producingVNC has requested renewal of some concessions have expiration dates between 2023 and 2028.that were scheduled to expire before 2018. We may continue to operate while the approval process is ongoing.

(4)

We returned part of our mining rights in Argentina, due to market conditions. We have been and will keep honoring our commitments related to the Rio Colorado potash concession and reviewing alternatives to enhance the prospects for the project.

(5)

Entitled to 25-year extensions, subject to approval by the Government of Mozambique.Mozambique government.

In addition to the concessions listed above, we have exploration licenses and exploration applications covering 4.83.6 million hectares in Brazil and 1.71.5 million hectares in other countries.

There are several proposed or recently adopted changes in mining legislation and regulations in the jurisdictions where we have operations that could materially affect us. In 2013,For instance, on June 12, 2018, the Brazilian government sent to CongressPresident issued Decree 9,406 instituting a bill with proposed changes tonew legislative and regulatory framework for the mining industry. This decree provides for an overhaul of the Brazilian mining law. This bill providescode and the regulations of the ANM, the new national mining agency succeeding the DNPM, including the adoption of international standards of classification of mineral resources and reserves for the preservationpurpose of exploration reports and establishment of competitive proceedings for areas released from prior concessions. The ANM approved resolutions in 2018 confirming the main provisions applicable to the existingstability of mining rights as of the date of its enactment, a new royalties regime, a new regime fortitles, including mining concessions, and the creation of a mining agency. The bill is under discussion in Congress.which had no impact on our disclosed reserves.

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          Additionally, in New Caledonia, a mining law passed in 2009 requires mining projects to obtain authorization from governmental authorities, rather than a declaration, as required under the former statute. We submitted an updated application for this authorization in October 2015 and the official response is expected by December 2016. Our existing mining declaration will remain valid and effective until our application is approved. Although we believe it is unlikely that our application will be rejected, the authorities may impose new conditions in connection with the authorization. Also, in 2014, the local authorities of New Caledonia created a protected wetland area, which covers 27% of the surface area of the total VNC tenements and could affect potential mining activities. Part of this protected wetland area is adjacent to the location of VNC's next tailings storage facility, and may impact the design of the facility, which, in turn may result in additional capital costs.

​

Royalties and other taxes on mining activitiesRegulatory Matters

​

ROYALTIES AND OTHER TAXES ON MINING ACTIVITIES

We are required in many jurisdictions to pay royalties or taxes on our revenues or profits from mineral extractions and sales. These payments are an important element of the economic performance of a mining operation. The following royalties and taxes apply in some of the jurisdictions in which we have our largest operations:

·•

Brazil.Brazil. We are required to pay a royalty known as the CFEM (Compensação Financeira pela Exploração de Recursos Minerais) on the revenues from the sale of minerals we extract, net of taxes, insurance costs and costs of transportation. The calculation of the CFEM is done as follows: (i) for domestic sales, the basis for calculation of CFEM is the revenue from sales, net of sales taxes and contributions; (ii) for exports, the basis for calculation of CFEM is the amount equivalent to the transfer pricing in federal income tax legislation; and (iii) for a company's internal mineral consumption, the basis for calculation of CFEM is the value equivalent to the current price of the ore in the domestic market, the international markets or a reference value, as to be determined by the ANM. The current CFEM rates on our products are: 3.5% for iron ore; 2% for iron ore, copper, nickel, fertilizers and other materials; 3% for bauxite, potash and manganese ore; and 1%1.5% for gold. In 2013, the Brazilian government sent to Congress a bill with proposed changes to the Brazilian mining law that could affect royalty rates.



·•

Brazilian states.states. Several Brazilian states, including Minas Gerais, Pará and Mato Grosso do Sul, impose a tax on mineral production (Taxa de Fiscalização de Recursos Minerais—TFRM), which is assessed at rates ranging from R$0.50 to R$3.0253.593 per metric ton of minerals produced in or transferred from the state.



·•

Canada. The Canadian provinces in which we operate charge us a tax on profits from mining operations. Profit from mining operations is generally determined by reference to gross revenue from the sale of mine output and deducting certain costs, such as mining and processing costs and investment in processing assets. The statutory mining tax rates are 10% in Ontario; with graduated rates up to 17% in Manitoba; and a combined mining and royalty tax rate of 16% in Newfoundland and Labrador. The mining tax paid is deductible for corporate income tax purposes.



·•

Mozambique. The mining agreement signed in June 2007 with the Mozambican government requires that we pay a royalty known as IPM (Imposto sobre a Produção Mineira) on revenues from sales of extracted coal, net of insurance and transportation costs incurred before sales. The royalty rate on coal mining activity in Mozambique is currently 3%.



•

Indonesia. Our subsidiary PTVI pays mining royalties of 2% on its nickel matte revenues when LME nickel prices are below US$21,000 per metric ton and 3% of its nickel matte revenues when LME nickel prices are above or equal to US$21,000 per metric ton.



·•

Australia.New Caledonia. Royalties are payable on revenues fromThe mining code of New Caledonia requires us to pay royalties linked to the saleownership of minerals. Inmining concessions. The basis of calculation is (i) 800 Pacificfrancs per hectare when the state of Queensland,owned surface is less than 15,000 hectares and (ii) 1,000 Pacificfrancs per hectare when the applicable royalty for coalowned surface is 7% of the value (net of freight, late dispatch and other certain costs) up to A$100 per ton; 12.5% of the value between A$100 and A$150 per ton; and 15% thereafter.greater than 15,000 hectare.

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Zambia.Regulatory Matters

    In 2015, Zambia's government implemented a series of changes in the fiscal regime applicable to the mining industry. For the period from January 1, 2015 to June 30, 2015, the government eliminated the corporate income taxes applicable to mining operations (with the exception of taxes associated with mineral processing) and increased mineral royalties applicable to underground mining operations, like our joint venture's operations, from 6% to 9%. In July 2015, the government (i) decreased mineral royalties on underground operations back to 6%, (ii) re-introduced a previously abolished 15% variable profit tax on income, applicable when taxable earnings exceed 8% of gross sales, and (iii) re-introduced tax on income at a 30% rate for income earned from mining operations and at a 35% rate for income earned from mineral processing.​

Environmental regulationsENVIRONMENTAL REGULATIONS

We are also subject to environmental regulations that apply to the specific types of mining and processing activities we conduct. We are required to obtain approvals, licenses, permits or authorizations from governmental authorities to construct and operate. In most jurisdictions, the development of new facilities requires us to submit environmental impact statementsand social impacts assessments for approval and often to make investments to mitigate environmental and social impacts, and we must operate our facilities in compliance with the terms of the approvals, licenses, permits or authorizations.

We are taking several steps to improve the efficiency of the licensing process, including stronger integration of our environmental and project development teams, the implementationfunding research into new and alternative technologies to reduce environmental and social impacts, use and continuous improvement of a Best Practices Guide for Environmental Licensing and the Environment, the deployment of highly-skilled specialist teams and closer interaction with environmental regulators and the creation of an executive committee to expedite internal decisions regarding licensing.regulators.

Environmental regulations affecting our operations relate, among other matters, to emissions of pollutants into the air, soil and water;water, including greenhouse gas and climate change regulations; recycling and waste management; protection and preservation of forests, coastlines, caves, cultural heritage sites, watersheds and other features of the ecosystem; water use; and financial provisions and closure plans needed since therequired for mining license; climate change andlicenses, including decommissioning and reclamation.reclamation costs. Environmental legislation is becoming stricter worldwide, which could lead to greater costs for environmental compliance. In particular, we expect heightened attention from various governments to reducing greenhouse gas emissions as a result of concern over climate change, especially following the entry into force of the Paris Climate ConferenceAgreement in late 2015. 2016.

There are several examples of environmental regulation and compliance initiatives that could affect our operations.

·

Canada.    In Canada, more stringent water effluent and a greenhouse gas cap and trade regime regulations are being proposed, which may affect our operations. In Canada, we are making significant capital investments to ensure compliance with air emission regulations that address, among other things, sulfur dioxide, greenhouse gas emissions, particulates and metals.



·

Indonesia.    Under the 2014 Indonesia Government Regulation on B3 waste, PTVI's slag is classified as hazardous waste and PTVI is implementing plans to achieve compliance.



·

China.    An amendment to the environment protection law was approved in April 2014, imposing stricter pollution prevention and control obligations on companies and providing for more severe penalties. This amendment may adversely impact our coal exports from Mozambique to China.



·

New Caledonia.    A law enacted by the South Province of New Caledonia in February 2014 imposes stricter limits on emissions of nitrogen oxide and sulfur oxide and particulates from large combustion power stations, which will affect the power station that supplies electricity to VNC. To meet these standards, this 100 MW power station will need to be upgraded, which is expected to result in the increase in the price of power paid by VNC.




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Brazil.    Under For instance, under applicable Brazilian regulations for the protection of caves, we are required to conduct extensive technical studies and negotiate compensatory measures with Brazilian environmental regulators in order to continue to operate in certain sites. In certain of our iron ore mining operations or projects, we may be required to limit or modify our mining plans or to incur additional costs to preserve caves or to compensate for the impact on them, with potential consequences for production volumes, costs or reserves in our iron ore business. Also, a Brazilian regulation for the protection of indigenous people, which was enacted in 2011 and revised in 2015, requires us to conduct specific studies of impact and sponsor mitigation programs in connection with operations and projects close to indigenous people's lands. In 2017, the federal government created new rules for the payment of environmental compensation for activities subjected to environmental assessment. As a result, in 2018 we recognized a liability related to regulatory obligations stemming from the new rules.

BRAZILIAN REGULATION OF MINING DAMS

In May 2017, the DNPM (predecessor to the ANM) created new obligations for companies operating mining dams in Brazil, primarily:

•

Audit: Companies operating mining dams must conduct two annual stability audits for each dam and prepare a stability condition report and the corresponding Stability Condition Statement (DCE). One of these audit must be conducted by external auditors.



•

Dam Periodic Safety Reviews (RPSB—Revisão Periódica de Segurança de Barragem): The report must include detailed analysis of all dam's documentation, including projects and procedures, stability analysis of the structures and the impacts on surrounding communities, including hazards and failure impact studies. Companies operating mining dams classified as

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high associated potential damage (DPA) completed these studies in June 2018, while those for medium-DPA mining dams were completed in December 2018. Studies for low-DPA mining dams must be completed by June 2019. The RPSB reports must be renewed each 3, 5 and 7 years for high, medium and low DPA respectively, and whenever any structural modifications are made.

•

Emergency Action Plan of Mining Dams Training: Companies operating high-DPA mining dams must conduct two annual emergency action plan training sessions for their employees.



•

Monitoring: Additional video monitoring must be implemented for all high-DPA mining dams by June 2019.

RegulationIn February 2019, the ANM issued a resolution on dam safety requiring companies that own upstream tailings dams to submit a technical decommissioning project by August 2019 and to fully decommission any inactive upstream tailings dam by August 2021, and any active upstream tailings dam by August 2023. In addition, the resolution requires the decommissioning of our facilities within the Self-Rescue Zone of a tailings dam. This new resolution is already in effect, but is under public consultation for potential adjustments until May 1, 2019.

In February 2019, a new statute approved by the state of Minas Gerais prohibits the increase, modification or construction of any upstream dam. The statute also prohibits the increase, modification or construction of any dam if communities are established within its Self-Rescue Zone, an area which encompasses the portion of the valley downstream of the dam where timely evacuation and intervention by the competent authorities in emergency situations is not possible. In general, it imposes certain restrictions on the use of any other activitiestype of tailings dams and significant restrictions on our ability to increase any existing dam.

REGULATION OF OTHER ACTIVITIES

In addition to mining and environmental regulation, we are subject to comprehensive regulatory regimes for some of our other activities, including rail transport, port operations and electricity generation. We are also subject to more general legislation on workers' health and safety, safety and support of communities near mines, and other matters. The following descriptions relate to some of the other regulatory regimes applicable to our operations:

·•

Brazilian railway regulation. Our Brazilian railroad business operates pursuant to concession contracts granted by the federal government, and our railroad concessions are subject to regulation and supervision by the Brazilian Ministry of TransportationInfrastructure and the regulatory agency for ground transportation (ANTT). The concessions for EFC and EFVM expire in 2027 and may be renewed at the federal government's discretion. VLI has also been awarded a subconcession contract for commercial operation of a 720-kilometer segment of the FNS railroad in Brazil, which expires in 2037, and FCA and MRS concessions expire in 2026. Rail transportation prices can be negotiated directly with the users of such services, subject to tariff ceilings approved by ANTT for each of the concessionaires and each of the different products transported. ANTT regulations also require concessionaires to give trackage rights to other railway operators, to make investments in the railway network, and to meet certain productivity and safety requirements, among other obligations.

In 2016, we and other railroad concessionaries in Brazil initiated discussions with ANTT regarding the possibility of early renewal of railways concession contracts, which are ongoing. Approval would require a formal analysis of the economic and technical conditions by the federal government, federal court of auditors (TCU) and the approval of our Board of Directors. As part of the process, nine public hearings took place in 2018 and the ANTT technical analysis is now in its final

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phase. If we agree to an earlier renewal of our concessions, we may have to agree with additional performance indicators, new investments obligations and new service standards.

·•

Brazilian port regulation. Port operations in Brazil are subject to regulation and supervision by ANTAQ, the federal agency in charge of maritime transportation services, and by the Ministry of Infrastructure through the Secretary of Ports of the Federal Government (SEP). In 2014, we renewed the(SNP), whose purpose is to formulate policies and guidelines. The agreements pursuant to which the SEP grants us rights to operate our private terminals are valid until 2039, with the exception of the agreement with CPBS, which will expire in 2026. These renewed agreements will be effective until 2039.



·•

Regulation of chemicals. Some of our products are subject to regulations applicable to the marketing, distribution and use of chemical substances present in their composition. For example, the European Commission has adopted a European Chemicals Policy, known as REACH ("Registration, Evaluation and Authorization of Chemicals"). Under REACH, European manufacturers and importers are required to register substances prior to their entry into the European market and in some cases may be subject to an authorization process. A company that fails to comply with the REACH regulations could face fines and penalties. We are compliant with the requirements of the REACH regulations. In addition, South Korea is currently implementing a regulation similar to REACH, and we anticipate further expansion of REACH-like regulations in other Asian countries.



·•

Regulation of the seaborne transport on bulk materials.international maritime transportation. We are subject to health, safety and environmental rules issuedregulation by the International Maritime Organization ("IMO") governing(IMO). IMO rules apply not only to the international shipping categories, but also to the types of products,cargoes transported, including special rules for iron ore.ore, coal, nickel and copper. The IMO is currently discussing further technical and operational measures for enhancing the energy efficiency of international shipping and reducing its overall greenhouse gas emissions. In April 2018, reduction targets were defined as part of the IMO's initial strategy for curbing the sector's emissions. These targets include a 50% reduction in greenhouse gas emissions by 2050, based on 2008 levels. The organization will reach a final strategy, including developing a global monitoring, reporting and verification system, which will eventually enable market-basedthe measures to curb greenhouse gas emissions.be adopted, by 2023. These measures may increase our freight cost in the future. In 2016, the IMO also approved regulation establishing limits for sulfur oxides emission limits, which will become effective in 2020. This regulation may increase freight cost due to the need to use bunker with low sulfur content or to install additional pollutant control equipment to limit air emissions. Also, the International Convention for the Control and Management of Ships' Ballast Water and Sediments became effective in September 2017 for new ships (those with keels laid after that date). For existing ships, the convention will become effective in stages beginning in September 2019, following which date each vessel will have a specific deadline for compliance, with the global fleet required to be fully compliant by September 2024. Under this convention, all compliant ships during their international voyages are required to manage their ballast water and sediments in accordance with the defined requirements, which may also result in increases of freight and port operation costs.

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II.III.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS


OVERVIEW


Our financial performance in 20152018 was strongly affected by declining commodity prices. Despite this impact, we had record annual production of iron ore, nickel and copper, we succeeded in reducing costs and expenses, we advanced our major capital expenditure projects, we proceeded with planned asset dispositions, and we maintained a stable net debt position. We reduced our capital expenditures for the fifth consecutive year, from US$11.979 billion in 2014 to US$8.401 billion in 2015.

          We had a net loss of US$12.129 billion in 2015 in spite of these achievements. The result was significantly affected by two primarily non-cash impacts: (i) US$9.372 billion in impairment charges on non-current assets and investments and provisions for onerous contracts, driven primarily by the use of lower price assumptions in our impairment testing, and (ii) US$7.480 billion due to exchange rate loss and US$2.916 billion due to loss on derivatives, driven primarily by the effect of a 47% decline during the year in the value of the Brazilianreal against the U.S. dollar. These generally did not affect our short-term cash generation, and they could be reversed in part in the future if commodity prices recover or the Brazilianreal recovers against the U.S. dollar.

          Our cash proceeds from asset sales in 2015 consisted of US$1.316 billion from the sale of 12 very large ore carriers to Chinese shipowners, US$900 million from the gold stream transaction and US$97 million from the sale of energy assets. Additionally, we received US$1.089 billion from our sale of preferred shares representing a 36.4% stake of MBR. The aggregate proceeds from these transactions totaled US$3.402 billion.

          Our accomplishments in a very challenging macro-economic environment were overshadowed by the tragic event in Brumadinho in January 2019. For a discussion of the expected impact of the dam failure in early November 2015 of oneon our future results, seeBusiness overview—Failure of the tailings damsdam at Samarco, a 50-50 joint venture between Vale and BHPB. The failure resulted in 18 fatalities, with one person still missing, and caused property and environmental damage to the affected areas, primarily in the state of Minas Gerais. The full consequences of these events for the people of the region, and for Samarco and its shareholders, are not yet known for certain. SeeInformation on the Company—Business overview—Significant changes in our business—Failure of Samarco's tailings dam in Minas GeraisCórrego do Feijão mine.

MajorIn 2018, our net income from continuing operations in 2018 was US$6.988 billion, compared to US$6.334 billion in 2017, and our Adjusted EBITDA in 2018 was US$16.593 billion, 8.2% higher than in 2017, mainly as a result of higher realized prices (impact of US$977 million) and higher sales volumes (impact of US$975 million) for ferrous minerals, which were partially offset by higher costs and expenses for ferrous minerals (impact of US$616 million), driven by cost factors affecting pricesthat are directly linked to iron ore prices. Adjusted EBITDA is a non-GAAP measure, which is calculated using net income or loss and adding back (i) depreciation, depletion and amortization, (ii) income taxes, (iii) financial results, net, (iv) equity results and other results in associates and joint ventures, net of dividends received, and (v) special events. For more information on the reconciliation of our Adjusted EBITDA to our net income, see note 4 to our consolidated financial statements.

IMPACT OF THE FAILURE OF DAM I AT THE CÓRREGO DO FEIJÃO MINE

The failure of Dam I represents an event subsequent to the financial statements as of and for the year ended December 31, 2018. Accounting impacts of the dam failure will consequently be reflected in the financial statements for 2019, beginning with the financial statements as of and for the quarter ended March 31, 2019. We expect the failure of Dam I and its consequences to have extensive impact on our financial performance and results of operations. We have not yet determined the full scope and amount of all the consequences, but some major expected impacts are summarized below.

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Reduced revenues due to the suspension of operations. As of April 15, 2019, the estimated impact of the suspension of operations following the dam failure on our production is 92.8 million metric tons per year (including the estimated annual impact of the suspension of the Brucutu mine). The suspension of these operations may cause a decrease in our revenues for the year of 2019.



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Increased expenditures for assistance and remediation. We expect to incur significant expenses as a result of assistance and remediation actions following the dam failure. As of the date hereof, we cannot estimate the impact of these increased expenditures in our financial statements.



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Impairments of fixed assets. We expect to write off assets of the Córrego do Feijão mine and those related to the upstream dams in Brazil, resulting in a loss of US$124 million in 2019. Additional impairments, write-off or write-down of assets may be recognized in 2019.



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Provisions for costs of decommissioning and further remediation. We expect to recognize provisions for the costs for decommissioning of our existing upstream dams. We are evaluating the measures to be taken to decommission our tailings dams, but cannot estimate the timing and costs associated with this process. At this point we cannot estimate the amounts of provisions to be recognized.



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Provisions for legal proceedings. We are subject to a number of investigations and legal proceedings in connection with the failure of Dam I, which may result in significant liabilities. On February 15, 2019, we entered into a preliminary agreement with labor

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prosecutors in Minas Gerais pursuant to which we agreed to indemnify direct and indirect employees affected by the closure of our operations at Córrego do Feijão mine. We currently estimate that a provision of approximately US$220 million will be recognized in 2019 in connection with this proceeding. On February 20, 2019, we entered into a preliminary agreement with certain public authorities, pursuant to which we agreed to provide certain emergency indemnification payments to the residents of Brumadinho and the communities that are located in a certain region by the Paraopeba river. We estimate a provision ranging from US$260 million to US$520 million in connection with this settlement. Our potential liabilities resulting from the dam failure are significant, and additional provisions may be recognized during the year of 2019.

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Freeze of assets. Various Brazilian courts have ordered the freezing of an aggregate of R$17.6 billion (US$4.5 billion) of our financial assets to secure the payment of damages resulting from the dam failure, including balances in our bank accounts, judicial deposits and common shares that we hold in treasury.

MAJOR FACTORS AFFECTING PRICES

Iron ore and iron ore pellets

Iron ore and iron ore pellets are priced based on a wide array of quality levels and physical characteristics. VariousPrice differences derive from various factors, influence price differences among the several types of iron ore, such as the iron content of specific ore deposits, the various beneficiation processes required to produce the desired final product, particle size, moisture content and the type and concentration of contaminants (such as phosphorus, alumina, silica and manganese ore) in the ore. Fines,Also, fines, lump ore and pellets typically command different prices.

Demand for our iron ore and iron ore pellets is a function of global demand for carbon steel. Demand for carbon steel, in turn, is strongly influenced by real estate and infrastructure construction and global industrial production. Demand from China has been the principal driver of world demand and prices. We expect

In 2018, China's economic growth"supply-side reform" was broadened to slow down in 2016 principally due to lower fixed asset investment growth, especially in the real estate and manufacturing sectors, which will be partially offset by infrastructure investments.

          Prices are also influenced by the supply of iron oreinclude coke and iron ore pelletsoperations, in addition to steel operations. As a result, supply constraints were observed in both industries. During the year, iron ore price levels were mainly sustained by these constraints, combined with firm steel consumption and higher steel prices. As a result, steel mills increased their productivity in response to the increase in demand and price, which supported the premium for high-grade ores, such as our iron ore from Carajás, and pellets.

China's steel sector outperformed in 2018, mainly driven by machinery, manufacturing and real estate. The infrastructure sector underperformed during the year, mainly driven by deleveraging and tighter public—private partnership policies. Manufactured goods enjoyed healthy external demand driven by strong orders from the United States and developed countries, as well as robust internal demand driven by improvements in the international market. In 2015,industry's profit margins, all leading China to deliver a record-high steel production of 928.3 Mt in 2018, an excessincrease of 6.6% year-on-year as per the World Steel Association.

Global steel production excluding China also posted strong growth in 2018 with 880.3 Mt, an increase of 2.5% year-on-year, as the iron ore supply had a negative impact on prices. The expected conclusionworld enjoys its first synchronized growth since the global financial crisis of certain iron ore projects2008 and 2009 as consumption and job creation increased and investments resumed, reflecting in the coming year, especially in Australiasteel demand and in Brazil, may result in additional pressures on prices, posing additional challenges for higher cost producers of iron ore.production.

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          OurOverview

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As a results of the macroeconomic condition mentioned above, in 2018 there was an increase in the price spreads between high- and low-quality ores. Improved steel profitability, high coking coal price and the environmental restrictions imposed during 2018 led mills to source high-quality ores like the Carajás iron ore prices(IOCJ), with around 65% Fe, which provide higher productivity and lower emission levels. While the Metal Bulletin 58% average of US$40.5/dmt in 2018 was only 13% lower year-on-year, the Metal Bulletin 65% average of US$90.4/dmt in 2018 represented an increase of 3% year-on-year.

The price differentials between high- and low-grade iron ores are based on a variety of pricing options, which generally use spot price indices as a basis for determiningstructural change that should continue to impact the customer price. Our pricing is generally based on published indexes and uses a variety of mechanisms, including current spot prices and average prices over an agreed period (quarter-lagged) and future prices on delivery. In cases where the final price is only determinable on a future date after shipment, we recognize the sale based on a provisional price at the time of shipment with a subsequent adjustment reflecting the final price.

Coal

          Demand for metallurgical coal is driven by steel demand, and future growth continues to be expected in Asia. Asia, including India, accounts for more than half of the steel market and consumes approximately 70% of seaborne metallurgical coal. Chinese seaborne demand decreased by 22% to 48 million metric tons in 2015 compared to 62 million metric tons imported in 2014. This was partially offset by a 14% increase in Indian demand from 40 million metric tons in 2014 to approximately 46 million metric tons in 2015.

          A 4% drop in global metallurgical imports in 2015 resulted in oversupply and continuous price depression. Seaborne exports were steady, with Australian exports holding a 65% global market share. In 2015, there was little growth in volume from Indonesia and Mozambique, offset by decreases in the United States, Canada and Russia due to mine closures, supply problems and political instability in Ukraine. Due to market conditions, there is no incentive to expand metallurgical coal supply in the short term beyond existing projects. We expect that there will be further supply adjustments before prices begin to recover.

          Demand for thermal coal is closely related to electricity consumption, which continues to be driven by global economic growth and urbanization,coming years. The move towards a more efficient steel industry, with the highest levelsenforcement of growth found in Asia and emerging markets. Coal fired generation capacity growth in India drove thermal coal imports up in 2015, but did not offset the decline in China's imports. Preliminary data from China show a decrease of almost 33% in its imports by sea, while India's imports increased 10%. Improvement in the transmission infrastructure to coastal regionsstricter environmental policies in China, has contributed to a weaker thermal coalshould support the demand infor high-quality ores that enable productivity and lower emission levels like pellets and IOCJ.

While the country. Additionally, there is an increased pressure from international organizationsdemand for establishing a global carbon pricehigher grade ores should support the quality premiums, the relatively strong supply of ores with lower Fe and for companies and governments to adopt carbon pricing strategies. This increased pressure, as well as the mid-term rise in non-coal fired power generation sources, hashigh contaminant levels should also contributed to weaker import thermal coal demand in China. Global seaborne demand decreased by approximately 5% in 2015 for the first time since 2008. The depreciation of the Chinese yuan and domestic protectionist policies put further downwardmaintain pressure on the seaborne market.

          Various other factors influence coal prices. The depreciationdiscounts for such products. Iron ore Platts IODEX 62% averaged US$69.5/dmt in 2018, in line with the 2017 level of commodity currencies (such71.3/dmt, as the Australian dollar, Canadian dollar, Russian rublesteel sector outperformance led to higher steel prices and South African rand) againstiron ore premiums across the U.S. dollar throughout 2015 provided ongoing reliefworld.

In 2019, we expect China's economic growth to producersmoderate from 2018 with some downward risks from property, trade and sustainedcertain manufacturing sectors (e.g. auto and home appliances). However, since the low price environment.property stock level has been reduced, the investments and new starts should see only a small decrease. In addition, the Chinese government has showed clear signs to support infrastructure investment that should partly offset the headwinds from the property and trade sectors.

Nickel

Nickel is an exchange-traded metal, listed on the LME and, as ofstarting in 2015, on the Shanghai Futures Exchange.SHFE. Most nickel products are priced usingbased on a discount or premium to the LME price, depending on the nickel product's physical and technical characteristics. Demand for nickel is strongly affected by stainless steel production, which represents, on average, 67%70% of global primary nickel consumption.consumption in 2018.

We have short-term fixed-volume contracts with customers for the majority of our expected annual nickel sales. These contracts, together with our sales for non-stainless steel applications (alloy steels, high nickel alloys, plating and batteries), provide stable demand for a significant portion of our annual production. In 2015, 58%2018, 67% of our refined nickel sales were made for non-stainless steel applications, compared to the industry average for primary nickel producers of 33%30%, bringing more stability to our sales volumes. As a result of our focus on such higher-value segments, our average realized nickel prices for refined nickel have typically exceeded LME cash nickel prices.

Stainless steel is a significant driver of demand for nickel, particularly in China. In 2018, stainless steel production in China represented 41% of total nickel demand. As a consequence, changes in Chinese stainless steel production have a large impact on global nickel demand. In 2018, Chinese stainless steel production grew 2% compared to 7% in 2017. Also, the growth in stainless focused on 300-series grade steels, which contains relatively high amounts of nickel, due to superior physical characteristics compared to other austenitic stainless steel series. We anticipate that demand will continue growing in 2019.

While stainless steel production is a major driver of global nickel demand, stainless steel producers can obtain nickel with a wide range of nickel content, including secondary nickel (scrap). The choice between primary and secondary nickel is largely based on their relative prices and availability. On average between 2014 and 2018, secondary nickel accounted for approximately 40% of total nickel used for stainless steel. Regional availability and consumption of secondary nickel varies. In China, due to low availability of scrap,

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          Primary nickel (including ferro-nickel, nickel pig iron and nickel cathode) andOverview

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the use of secondary nickel (i.e., scrap) are competing nickel sources for stainless steel production. The choice between different typesrepresents 22% of primary and secondary nickel is largely driven by their relative price and availability. Between 2012 and 2015, secondary nickel has accounted for about 40-43% ofthe total nickel used for stainless steels, andsteel, while nickel pig iron, a relatively low grade nickel product made primarily in China from imported lateritic ores, accounts for approximately 36%.

In recent years, Chinese domestic production of nickel pig iron accounted for the majority of world nickel supply growth. In 2018, approximately 449kt thousand metric tons, representing 22% of world primary nickel has accounted for about 57-60%. In 2015,supply was produced as nickel pig iron in China using nickel ore from the Philippines and Indonesia. Chinese nickel pig iron production was estimated at approximately 360,000 metric tons, representing 19%adversely affected by export restriction of world primary nickel supply, compared to 23% and 25% ofunprocessed ores from Indonesia, beginning in 2014. In January 2017, the world's supply in 2014 and 2013, respectively. The implementation ofIndonesian government issued a ministerial decree changing the 2009 mining law in Indonesia that restrictsbanned the export of unprocessed and semi-processed ores from the country. The ministerial decree allows for the controlled recommencement of nickel ore exports from Indonesia giving broad availability of ores for the production of nickel pig iron in China. As a result, the bottleneck for production has adversely affected Chineseshifted away from ore availability to nickel pig iron capacity. Furthermore, Indonesia is emerging as a large producer of nickel pig iron. In 2018, 263kt of nickel as nickel pig iron was produced in Indonesia much of it integrated directly to produce stainless steel. We expect nickel pig iron production since 2014. We anticipate that Chinese nickel pig iron production will decline in 2016, as previously imported stockpiles of Indonesian ores within China are depleted. Development of processing plants, primarily smelters, in Indonesia and China to process ore is ongoing with a number of plants completedcontinue to grow.

The nickel market was in 2015.deficit in 2018 by approximately 146kt. Global exchange inventories (London Metals Exchange and Shanghai Future Exchange) declined 188,239 metric tons from January 1, 2018 to December 31, 2018, implying some off-exchange inventory holding. We expect this increased development in Indonesia to impact the supply of nickel to the market to remain in deficit in 2019, although less so than we estimated for 2018.

In the future.long term, the battery segment shows important upside potential as electric vehicle production continues to attract significant investments, which could positively affect nickel price and our nickel premiums. As currently foreseeable, commercially viable electric vehicle battery technologies utilize nickel; increasing nickel content in such batteries results in improved energy storage and lower cost. As a result, nickel demand is expected to surge, particularly given the expected increase in production of electric vehicles and the trends towards increased battery size and increased nickel content in batteries to improve performance and lower cost.

Copper

Copper demand in recent years has been driven primarily by China, given the important role copper plays in construction in addition to electrical and consumer applications. Copper prices are determined on the basis of (i) prices of copper metal on terminal markets, such as the LME, SHFE and the NYMEX,COMEX, and (ii) in the case of intermediate products, such as copper concentrate (which comprise most of our sales) and copper anode, treatment and refining charges negotiated with each customer. Under a pricing system referred to as MAMA ("month after month of arrival"), sales of copper concentrates and anodes are provisionally priced at the time of shipment, and final prices are settled on the basis of the LME price for a future period, generally one to three months after the shipment date.

Demand for refined copper grew by an estimated 2%approximately 3% in 2015, and2018, with China was responsible for an equivalent of 46%approximately 49% of worldwide consumption. ThePredominant use of copper in China was in construction and in the electrical grid. In 2018, supply disruptions due to labor negotiations were expected to continue in 2018, particularly from 2017. However, these disputes were averted, resulting in mine production increasing approximately 3% compared to 2017. In the first half of refined copper increased with a 3% growththe year, demand in global mine output in 2015,China as well as a resultpositive macroeconomic environment helped improve copper prices. Yet, this trend reversed during the second half of the ramp up of new projects. During the year of 2015, prices remained under pressure. For 2016, we expect to see continued ramping up of production at mines where recent capital investments have been made.

Fertilizers

          Demand for fertilizers is based on market fundamentals similar to those underlying global demand for minerals, metals and energy. Rapid per capita income growth in emerging economies generally causes dietary changes marked by an increase in the consumption of proteins, which ultimately contributes to increased demand for fertilizer nutrients, including potash and phosphates, as they help boost production of grains to feed more livestock. Demand is also driven by the demand for bio-fuels, which have emerged as an alternative source of energy to reduce world reliance on sources of climate-changing greenhouse gases, because key inputs for the production of biofuels—sugar cane, corn and palm—are intensive in the use of fertilizers.

          Sales of fertilizers are mainly on a spot basis using international benchmarks, although some large importers intrade war disputes between China and India often sign annual contracts. Seasonality is an important factor for price determination throughout the year, since agricultural productionUnited States put downward pressure on copper prices. We anticipate that the market will reach a balance in each region depends on climate conditions for crop production.

          In 2015, global fertilizer market conditions were weak due2019, as demand continues to lower agriculture commodities prices. Demand in Brazil was further undermined by the depreciation of the Brazilianreal against the U.S. dollar,grow and the shortage of credit to farmers.projects complete ramping up.

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Impairment chargesOverview

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Coal

Demand for metallurgical coal is fundamentally driven by steel demand, and future growth continues to be expected in Asia. Asia, including India, accounts for more than half of the steel market and consumes approximately 75% of seaborne metallurgical coal. Chinese total coking coal imports decreased by 7% to almost 65 million metric tons in 2018 compared to approximately 70 million metric tons imported in 2017, mainly due to increased domestic coal consumption. In recent years we2018, China accounted for approximately 20% of total metallurgical coal imports. Global demand excluding China has increased by approximately 2.1% in 2018, compared to 2017, mainly driven by India, and is expected to increase by 10% (to 55 million metric tons), mainly driven by South America and Southeast Asia.

The Chinese government has implemented a number of policies in order to conduct structural reforms and address oversupply capacity, while improving overall safety standards and the long-term competitiveness of its domestic coal industry. Between 2016 and 2018, total closures reached approximately 60Mt and the Chinese government set up plans to cut an additional 200Mt by 2020. In order to meet air quality rules implemented as part of new environmental measures, Chinese coal mines and coke makers have recognized significant impairmentsbeen inspected several times during 2018 and were shut down for not meeting safety and environmental standards in the Fenwei region. This has resulted in shortages of our assetscoke and investments, attributablepremium coking coal, leading to higher prices.

In the international market, price volatility continued in 2018. Premium coking coal average price climbed 10.1% year-on-year from US$187 per metric ton in 2017 to US$207 per metric ton. Seaborne coking coal prices were strong at US$262 per metric in early January amid severe weather conditions and logistics constraints. Prices reached a varietybottom of factors. In 2015,US$179 per metric ton, mainly driven by weaker currency related to the most important factortrade war, steel production cuts and weak demand from India with ongoing monsoons. However, prices rebounded in the second half of 2018, mainly due to an increase in demand from China after the end of the winter cuts, logistic constraints and supply tightness in Queensland due to port maintenance, and tightness in the U.S. industry related to hurricane Florence, reaching a price of US$220 per metric ton at year-end. The price of metallurgical coal on January 10, 2019 was US$199 per metric ton.

Demand for thermal coal is closely related to electricity consumption, which continues to be driven by global economic growth and urbanization, with the changing price environment, which affected our long-term pricing assumptions for iron ore, nickelhighest levels of growth found in Asia and coal. Asemerging markets. Global power demand increased 3.6% year on year and thermal coal demand increased 1.6% year on year. The Chinese seaborne thermal coal import posted a result, in 2015 we recognized impairments on assets and investments, and a provision for losses on onerous contracts,second year in a total amount of US$8.926 billion, plus impairments of investmentsrow increase, reaching approximately 220 million metric tons in associates and joint ventures of US$446 million.

          The main impairment charges we recognized in 2015 were:

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US$3.460 billion2018, up 9.7% year on assets of our nickel operations in Newfoundland and Labrador, in Canada, and US$1.462 billion on assets of our nickel operations in New Caledonia, due to lower nickel prices;



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US$2.403 billion on assets of our coal operations in Mozambique, due to lower coal prices and increased logistics costs;



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US$635 million charge on assets of our coal operations in Australia, due to lower coal prices and the revision of mining plans in the Australian coal mines;



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US$522 million on assets of our Midwestern iron ore system,year, as a result of increased power demand. Demand in Asian countries (excluding China) has been relatively stable, Coal consumption for power generation has fallen for the fifth consecutive year in Europe, and demand is estimated to drop by 6.5% year on year. The European seaborne import decrease was largely impacted by the decline in coal consumption in the UK and Germany, and continued competition against gas and renewables. However, short-term factors, such as low water levels in Europe reducing hydropower generation and nuclear and gas supply issues have kept demand volatile. In India, year-on-year thermal coal demand remained firm, and seaborne imports increased by 9% in 2018, compared to 2017, due to increased power generation and lower iron orethan expected domestic production. The power sector in India is expected to grow in the near term and domestic production plans set by the Indian government are unlikely to reach targets due to a number of land acquisition issues and infrastructure projects.

The Newcastle Index average in 2018 reached US$107.3 per metric ton, up 21% year on year, while the Richards Bay Coal Index increased by 21% to US$97.8 per metric ton. Thermal coal prices started the year on a strong note supported by healthy demand in India and in China. However, prices fell in the second half of 2018 due to weaker demand from China and improved renewables in Europe. Chinese import restrictions, improved Chinese domestic supply, and warmer winters have dented the high ash

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off-specification prices and related production plan revision; and athe discounts of Richards Bay widened from US$357 million provision for losses associated with long-term river freight agreements for iron ore produced in our Midwestern system; and



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US$548 million due to lower expectations on the recovery of amounts invested7 per metric ton in the Rio Colorado potashbeginning of 2018 to US$23 per metric ton by year-end.

Climate change policies may continue to adversely impact coal demand in Europe, North America and China. However, consumption in other developing Asian economies is expected to expand. On the supply side, current investments are low and the lack of new project in Argentina.

development is expected to impact supply and demand balance by 2020, at which point prices will be set by incentive prices.

          These amounts were partially offset by impairment reversals resulting from the recovery of Onça Puma's nickel production, in the amount of US$252 million, and from the devaluation of the Brazilianreal against the U.S. dollar, which benefited the Brazilian phosphate operations (US$391 million).FAILURE OF SAMARCO'S FUNDÃO TAILINGS DAM

          Impairments of investments in associates and joint ventures totaled US$446 million in 2015, of which US$132 million related to our investment in Samarco and US$314 million related to our investment in TEAL, the joint venture of Vale with ARM, which holds an 80% stake in the Lubambe copper operation in Zambia.

Failure of Samarco's Fundão tailings dam

          Vale ownsWe own a 50% interest in Samarco and accountsaccount for it under the equity method. AsBelow is a resultsummary of the November 2015impact of the failure of Samarco's Fundão tailings dam, Samarco incurred expenses, wrote off assets and recognized provisionswhich occurred in November 2015, in our financial statements:

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The carrying value for remediation. Because Samarco is a joint venture, these impacts were accounted for under the equity method by Vale, limited to its interest in Samarco's capital. Vale'sour investment in Samarco was reduced to zero and no liability was recognized in Vale's financial statements.

2015.          It is still possible, however, that



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In June 2016, pursuant to the consequences of the dam failure could have a direct financial impact on Vale.Framework Agreement, Samarco, and its shareholders, Vale S.A. and BHPB entered into a settlement agreement on March 2, 2016 with governmental authorities, includingcreated the federal Attorney General of Brazil and the two Brazilian states affected by the failure (Espírito Santo and Minas Gerais). Under the agreement, Samarco, Vale and BHPB will create a foundationFundação Renova to develop and implement remediation and compensation programs in substantial amounts over many years. SeeInformation onThe Framework Agreement provides that to the Company—Business overview—Significant changes in our business—Failure of Samarco's tailings dam in Minas Gerais.




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          Samarco is currently unable to conduct ordinary mining and processing. Samarco's management is working on a planextent that would permit it to resume operations, but the feasibility, timing and scope of restarting remain uncertain. If Samarco is able to resume operations, we expect that it will be able to generate all or a substantial part of the funding required under the agreement. If Samarco does not meet its funding obligations to the foundation, each of Vale S.A. and BHPB is obligatedmust provide funds to provide funding to the foundationFundação Renova in proportion to its 50% equity interest in Samarco.

          Vale does not currently expect As a result of uncertainty related to recordthe timing of Samarco's resumption of operations and expected cash flows, we recognized a provision in its financial statements in respect of these obligations, but if Samarco is eventually unable to resume operations or to meet its funding obligations, Vale could determine that it should recognize a provision.

Effect of lower oil prices

          Global freight rates declined in 2015, primarily because of lower fuel costs, but our freight cost is not perfectly correlated with the freight spot market. We have a portfolio of short-, medium- and long-term affreightment agreements, in addition to our own fleet, and our freight cost is impacted by changes in routes, resulting from sales to different geographical areas. Our freight cost is also impacted by the time lag between the date of the spot contract and the date of recognition of the expenditure, which is booked when the revenue from the sale of the iron ore cargo is recognized.

          The effect of lower prices for bunker oil, the fuel used in ships, on our performance in 2015 was partially offset by the results of our hedge positions. The impact is recognized in two ways.

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The hedge of bunker oil exposure associated with our CFR sales, which primarily use our owned fleet and long-term affreightment agreements, is designated as a cash flow hedge. The positions are marked to market, and a gain or loss is recorded under other comprehensive income, impacting our cost of goods sold when the hedge transaction is settled. In 2015, we recognized US$439 million in costs in connection with our cash flow hedge.estimated costs.



·•

The hedgeamount of bunker oil exposure associatedprovisions related to Samarco as of December 31, 2018 is US$1,121 million, 13% higher than in 2017, mainly due to the increase of the estimated costs driven by the revision of the plan to mitigate and compensate for the impacts of the disruption from Samarco's tailing dam, net of the contributions made to Fundação Renova. This provision represents the present value of our best estimate of the amounts we may incur to comply with our FOBobligations under the Framework Agreement, considering our 50% stake in Samarco. At each reporting period, we reassess the key assumptions used by Samarco in the preparation of its projected future cash flows and domestic sales is accountedadjust the provision, if required.



•

In 2018, we contributed R$1,379 million (US$374 million), which was allocated as follows: (i) R$1,065 million (US$290 million) contributed to Fundação Renova and Samarco to be used in the reparation programs in accordance with the Framework Agreement, and deducted from the provision, and (ii) R$315 million (US$84 million) was used by Samarco to fund its working capital. These contributions were made through the issuance by Samarco of non-convertible private debentures, which were equally subscribed by Vale and BHPB. We recognized an impairment in our statement of income for the year ended December 31, 2018 for the amount of these non-convertible private debentures.



•

We intend to make available short-term facilities up to US$88 million to support Samarco's operations during the first half of 2019, and for expenses related to the experts named pursuant to the preliminary agreements with the MPF, signed in January 2017. These funds will be released as needed, but we have not undertaken an economic hedge. The positions are markedobligation to marketSamarco. BHPB has stated that it will make available to Samarco short-term facilities with similar terms and gain or loss is recognizedconditions.



•

Upon creation of Fundação Renova, Samarco transferred to Fundação Renova most of the reparation and compensation programs. Therefore, we made contributions directly to Fundação Renova in financial results. In 2015, we had a US$742the total amounts of R$239 million fair value loss in connection with our hedge of bunker oil exposure accounted for as economic hedge.(US$71 million), R$941 million

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(US$294 million) and R$1,045 million (US$284 million) in 2016, 2017 and 2018, respectively, and we are no longer hedging our exposureexpect to bunker oil prices relatingcontribute R$1,160 million (US$309 million) in 2019, to our owned fleet and long-term affreightment agreements, but we still have open hedge positions relating to our FOB and domestic sales.be used in the programs in accordance with the Framework Agreement.

Effect of devaluation of Brazilian currencyEFFECT OF CURRENCY EXCHANGE VARIATION

Our results of operations are affected in several ways by changes in currencythe value of the Brazilianreal. Year-end exchange rates. rate variations impact our financial results, while the average exchange rate impacts our operational performance.

In 2015,2018, the Brazilianreal depreciated 47%17.1% against the U.S. dollar, from an exchange rate of R$2.663.31 to US$1.00 on December 31, 20142017 to R$3.903.87 to US$1.00 on December 31, 2015.2018. The most important effects arewere non-cash losses, as described below.

·•

Most of our revenuesWe have intercompany transactions between Vale S.A. and Vale International which are denominated in U.S. dollars, while most of our costs of goods sold are denominated in other currencies, including the Brazilianreal (49% in 2015) and the Canadian dollar (13% in 2015). In 2015, 34% of our costs of goods sold were denominated in U.S. dollars. As a result, changes in exchange rates, particularly with respectdollar. Due to the U.S. dollar, affect our operating costs and operating margins.




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·

Most of our long-term debt (US$22.977 billion at December 31, 2015, not including accrued charges) is denominated in currencies other than the Brazilianreal, principally the U.S. dollar. Because thedifferent functional currency of our parent company, for accounting purposes is the Brazilianreal, changes in the value of the U.S. dollar against the Brazilianreal result in exchange gain or loss. In 2018, our net foreign exchange loss of US$2,247 million mainly relates to exchange losses on our net liabilities.U.S. dollar-denominated liabilities, due to the depreciation of the Brazilianreal against the U.S. dollar



·•

We hadreal-denominated debt of US$5.2523.432 billion atas of December 31, 2015,2018, excluding accrued charges. Since most of our revenues are in U.S. dollars, we may useused swaps to convert part of our debt service from Brazilianreais to U.S. dollars. Changes in the value of the U.S. dollar against the Brazilianreal result in fair value variation on these derivatives, affecting our financial results. As a result of the depreciation of the Brazilianreal against the U.S. dollar in 2018, we had fair value losses on our currency derivatives of US$279 million. For more information on our use of derivatives, seeRisk management.

          An increase inIn 2018, the value ofannual average exchange rate for Brazilianreais against the U.S. dollar suchdepreciated by 13.0%, from an average exchange rate of R$3.19 to US$1.00 in 2017 to R$3.66 to US$1.00 in 2018. This had a positive impact on our operational result and cash flows. The most important effect is described below:

•

Most of our revenues are denominated in U.S. dollars, while our cost of goods sold are denominated in various currencies, including the Brazilianreal (50.8% in 2018), the U.S. dollar (35.7% in 2018) and the Canadian dollar (11.2% in 2018). As a result, the depreciation of the Brazilianreal and other currencies against the U.S. dollar decreased our costs and expenses by US$1.082 billion.

In January 2017, we implemented hedge accounting for the foreign currency risk arising from Vale S.A.'s net investments in Vale International and Vale Austria. Under the hedge accounting program, our debt denominated in U.S. dollars and Euros serves as occurreda hedge instrument for these investments. With the program, the impact of exchange rate variations on debt denominated in 2015, adversely affectsU.S. dollars and Euros has been partially recorded under other comprehensive income, reducing the volatility of our financial results dueperformance.

Starting on January 1, 2019, we will treat certain long-term intercompany loans payable by Vale S.A. to Vale International, for which settlement is neither planned nor likely to occur in the foreseeable future, as part of Vale S.A.'s net investment in Vale International. Until December 31, 2018, the impact of the exchange lossesvariation on these intercompany loans was reflected on our consolidated income statement. With the change in the accounting treatment, the foreign exchange differences associated with our net

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investment in Vale International will be recognized in other comprehensive income in in our stockholders' equity. This amount would be reclassified from stockholders' equity to income statement in case of disposal or partial disposal of the net U.S. dollar-denominatedinvestment in Vale International. Upon implementation of this change, the effect of net foreign exchange gains or losses in the financial results reported in our consolidated income statement is expected to reduce.

CHANGES IN ACCOUNTING POLICIES

Certain new accounting standards became effective for the accounting period beginning on or after January 1, 2018. The key changes to accounting policies are described below:

•

IFRS 9—Financial Instruments ("IFRS 9") is applicable for annual periods beginning on or after January 1, 2018. This standard addresses the classification and measurement of financial assets and liabilities, (US$7.166 billion in 2015) and fair value lossesprovides for new impairment model and new rules for hedge accounting. IFRS 9 did not cause a material impact on our currency derivatives (US$1.502financial statements for 2018.



•

IFRS 15—Revenue from Contracts with Customers ("IFRS 15") is applicable for annual periods beginning on or after January 1, 2018. IFRS 15 provides a single comprehensive accounting model for recognition of revenue arising from contracts with customers based on a core principle that revenue is recognized at the time the control of a good or service is transferred to a customer and in an amount that reflects the consideration expected to be received in exchange for the transfer of this good or service. IFRS 15 did not impact revenue recognition for most of our contracts, since usually the transfer of risks and rewards and the transfer of control are at the same point in time.

Under IFRS 15, for contracts in which we are responsible for providing shipping services after the date of transfer of control of goods to customers (sales under CFR or CIF Incoterms), the provision of shipping services is accounted for as a separate performance obligation, and a portion of the transaction price is allocated to such services and recognized over time. The impact on the timing of revenue recognition did not significantly impact our financial statements for 2018. Therefore, we did not present this revenue separately in our financial statements.

•

IFRS 16—Leases ("IFRS 16") is applicable for annual periods beginning on or after January 1, 2019. IFRS 16 eliminates the distinction between operating and finance leases for lessees, and requires that most leases be reflected on the lessee's balance sheet as a right-of-use asset and a lease liability.

As of December 31, 2018, we have non-cancellable operating lease commitments in the nominal amount of US$2.498 billion. We have reviewed these leasing commitments over the last year in light of the new lease accounting rules in IFRS 16. Of these commitments, we expect to recognize right-of-use assets and lease liabilities ranging from US$1.8 billion in 2015). It also generally has a positive effectto US$2 billion on January 1, 2019, which corresponds to the net present value of these non-cancellable operating lease commitments.

The actual impact of adopting the standard is subject to further changes because we have not finalized the testing and assessment of controls over our operating costs, as it did in 2015.new IT systems. Also, the new accounting policies are subject to change until we present our first financial statements from the date of initial application.

For more information, see note 2 to our consolidated financial statements.

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RESULTS OF OPERATIONS


Consolidated RevenuesCONSOLIDATED REVENUES

In 2015,2018, our net operating revenues decreased 31.8%from continuing operations increased by 7.7% to US$25.60936.575 billion, primarily resulting from lowerhigher realized prices for iron ore fines and pellets (an impact of US$8.614 billion980 million on our net revenues), iron ore pellets (US$2.030 billion), nickel (US$1.394 billion) and other commodities. This was partially offset by higher sales volume (an impact of US$2.239 billion on net revenues)volumes of iron ore fines iron oreand pellets and nickel, mainly due to increases in the capacity(an impact of US$1.848 billion on our facilities resulting from our capital expendituresnet revenues). Our net operating revenues were also positively impacted by higher prices for expansionbase metals (positive impact of mine life.US$685 million). Net operating results of each segment are discussed below under—Results of operations by segment.

Our revenue depends, among other factors, on the volume of production at our facilities and the prices for our products. We publish a quarterly production report that is availableFor more information on our website and furnished toproduction, seeInformation on the SEC on Form 6-K.Company—Lines of Business. Increases in the capacity of our facilities resulting from our capital expenditure program have an important effect on our performance. Our production is also affected by acquisitions and dispositions.

The following table summarizes, for the periods indicated, the distribution of our net operating revenues from continuing operations based on the geographical location of our customers.

	​	Net operating revenues by destination																				​
	​	2016						​	2017						​	2018						​
	​	(US$ million)		​	(% of total)			​	(US$ million)		​	(% of total)			​	(US$ million)		​	(% of total)			​
North America	​			​			​	​			​			​	​			​			​	​
Canada	​	1,172		​	4.3		%	​	1,008		​	3.0		%	​	656		​	1.8		%	​
United States	​	1,005		​	3.7		​	​	1,310		​	3.9		​	​	1,353		​	3.7		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
	​	2,177		​	7.9		​	​	2,318		​	6.8		​	​	2,009		​	5.5		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
South America	​			​			​	​			​			​	​			​			​	​
Brazil	​	2,064		​	7.5		​	​	3,475		​	10.2		​	​	3,248		​	8.9		​	​
Other	​	354		​	1.3		​	​	664		​	2.0		​	​	822		​	2.2		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
	​	2,418		​	8.8		​	​	4,139		​	12.2		​	​	4,070		​	11.1		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
Asia	​			​			​	​			​			​	​			​			​	​
China	​	12,747		​	46.4		​	​	14,018		​	41.3		​	​	15,242		​	41.7		​	​
Japan	​	1,741		​	6.3		​	​	2,456		​	7.2		​	​	2,743		​	7.5		​	​
South Korea	​	880		​	3.2		​	​	1,399		​	4.1		​	​	1,299		​	3.6		​	​
Taiwan	​	621		​	2.3		​	​	700		​	2.1		​	​	513		​	1.4		​	​
Other	​	889		​	3.2		​	​	1,483		​	4.4		​	​	1,854		​	5.1		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
	​	16,878		​	61.4		​	​	20,056		​	59.0		​	​	21,651		​	59.2		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
Europe	​			​			​	​			​			​	​			​			​	​
Germany	​	1,379		​	5.0		​	​	1,389		​	4.1		​	​	1,653		​	4.5		​	​
United Kingdom	​	326		​	1.2		​	​	346		​	1.0		​	​	327		​	0.9		​	​
Italy	​	435		​	1.6		​	​	521		​	1.5		​	​	553		​	1.5		​	​
France	​	429		​	1.6		​	​	551		​	1.6		​	​	655		​	1.8		​	​
Other	​	2,079		​	7.6		​	​	2,695		​	7.9		​	​	2,920		​	8.0		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
	​	4,648		​	16.9		​	​	5,502		​	16.2		​	​	6,107		​	16.7		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
Rest of the world	​	1,367		​	5.0		​	​	1,952		​	5.7		​	​	2,738		​	7.5		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
Total	​	27,488		​	100		%	​	33,967		​	100		%	​	36,575		​	100		%	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​
​	​	​		​	​		​	​	​		​	​		​	​	​		​	​		​	​
​	​	​		​	​			​	​		​	​			​	​		​	​			​

CONSOLIDATED OPERATING COSTS AND EXPENSES

Our cost of goods sold and services rendered from continuing operations totaled US$22.109 billion in 2018, increasing by 5.1%, or US$1.070 billion, from the US$21.039 billion recorded in 2017. Higher costs were mostly driven by higher freight costs (impact of US$589 million) and higher costs per metric ton on ferrous minerals (impact of US$997 million) due to external factors such as the increase in royalties' rate and raw material inflation. The increase in cost of goods sold was partially offset by the positive impact

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caused by the depreciation of the Brazilianreal against U.S. dollar and other currencies (impact of US$946 million).

Our selling, general, administrative and other expenses from continuing operations totaled US$968 million in 2018, in line with US$951 million recorded in 2017. We decreased our pre-operating and stoppage expenses by US$142 million, as S11D ramp-up matured and began to be accounted for as costs in 2018. This reduction was partially offset by the increase by 9.7% in our research and evaluation expenses, to US$373 million in 2018 from US$340 million in 2017.

RESULTS OF OPERATIONS BY SEGMENT

Net operating revenue by productsegment

The following table summarizes our net operating revenues by product for the periods indicated.

	​	Year ended December 31,												​	​	Year ended December 31,									​
	​	2013		​	% change	​	2014		​	% change	​	2015		​	​	2016	​	% change	​	2017	​	% change	​	2018	​
	​	(US$ million, except for %)												​	​	(US$ million, except for %)									​
Ferrous minerals:	​			​		​			​		​			​	​		​		​		​		​		​
Iron ore	​	US$27,844		​	(30.7)%	​	US$19,301		​	(36.1)%	​	US$12,330		​	​	15,784	​	17.4	%	18,524	​	9.9	%	20,354	​
Iron ore pellets	​	6,000		​	(12.3)	​	5,263		​	(31.6)	​	3,600		​
Pellets															​	3,827	​	47.7	​	5,653	​	17.7	​	6,651	​
Ferroalloys and manganese	​	523		​	(25.1)	​	392		​	(58.7)	​	162		​	​	302	​	55.3	​	469	​	(3.2)	​	454	​
Other ferrous products and services	​	425		​	74.4	​	741		​	(36.6)	​	470		​	​	438	​	10.3	​	483	​	(1.9)	​	474	​
​	​	​		​	​	​	​		​	​	​	​		​	​	​	​	​	​	​	​	​	​	​	​
Subtotal	​	34,792		​	(26.1)	​	25,697		​	(35.5)	​	16,562		​	​	20,351	​	23.5	​	25,129	​	11.2	​	27,933	​
​	​	​		​	​	​	​		​	​	​	​		​
Coal	​	1,010		​	(26.8)	​	739		​	(28.8)	​	526		​	​	839	​	86.8	​	1,567	​	4.9	​	1,643	​
​	​	​		​	​	​	​		​	​	​	​		​
Base metals:	​			​		​			​		​			​	​		​		​		​		​		​
Nickel and other products(1)	​	5,839		​	6.9	​	6,241		​	(24.8)	​	4,693		​	​	4,472	​	4.4	​	4,667	​	(1.2)	​	4,610	​
Copper concentrate(2)	​	1,447		​	0.3	​	1,451		​	1.3	​	1,470		​	​	1,667	​	32.2	​	2,204	​	(5.0)	​	2,093	​
​	​	​		​	​	​	​		​	​	​	​		​	​	​	​	​	​	​	​	​	​	​	​
Subtotal	​	7,286		​	5.6	​	7,692		​	(19.9)	​	6,163		​	​	6,139	​	11.9	​	6,871	​	(2.4)	​	6,703	​
​	​	​		​	​	​	​		​	​	​	​		​
Fertilizers:	​			​		​			​		​			​
Potash	​	201		​	(23.4)	​	154		​	(14.3)	​	132		​
Phosphates	​	2,065		​	(11.9)	​	1,820		​	(4.8)	​	1,733		​
Nitrogen	​	469		​	(25.6)	​	349		​	(13.2)	​	303		​
Other fertilizer products	​	79		​	16.5	​	92		​	(38.0)	​	57		​
​	​	​		​	​	​	​		​	​	​	​		​
Subtotal	​	2,814		​	(14.2)	​	2,415		​	(7.9)	​	2,225		​
​	​	​		​	​	​	​		​	​	​	​		​
Other products and services(3)	​	865		​	15.1	​	996		​	(86.6)	​	133		​	​	159	​	151.6	​	400	​	(26.0)	​	296	​
​	​	​		​	​	​	​		​	​	​	​		​	​	​	​	​	​	​	​	​	​	​	​
Net operating revenues	​	US$46,767		​	(19.7)%	​	US$37,539		​	(31.8)%	​	US$25,609		​	​	27,488	​	23.6	%	33,967	​	7.7	%	36,575	​
​	​	​		​	​	​	​		​	​	​	​		​	​	​	​	​	​	​	​	​	​	​	​
​
​	​	​		​	​	​	​		​	​	​	​		​	​	​	​	​	​	​	​	​	​	​	​

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(1)

Includes nickel co-productscoproducts (copper) and by-productsbyproducts (precious metals, cobalt and others).

(2)

Does not include copper produced as ain our nickel co-product.operations.

(3)

Includes pig iron (2013 and 2014) and energy.




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Sales volumes

The following table sets forth, for our principal products, the total volumes we sold in each of the periods indicated.

	​	Year ended December 31,								​
	​	2013		​	2014		​	2015		​
	​	(thousand metric tons)								​
Ferrous minerals:	​			​			​			​
Iron ore fines	​	251,029		​	255,877		​	276,393		​
Iron ore pellets	​	40,991		​	43,682		​	46,284		​
Manganese	​	2,115		​	1,879		​	1,764		​
Ferroalloys	​	183		​	150		​	69		​
Coal:	​			​			​			​
Thermal coal	​	726		​	1,152		​	892		​
Metallurgical coal	​	7,353		​	6,330		​	5,614		​
Base metals:	​			​			​			​
Nickel	​	261		​	272		​	292		​
Copper	​	352		​	353		​	397		​
PGMs (oz)	​	510		​	577		​	519		​
Gold (oz)	​	297		​	351		​	425		​
Silver (oz)	​	2,154		​	1,889		​	2,303		​
Cobalt	​	2,939		​	3,188		​	3,840		​
Fertilizers:	​			​			​			​
Potash	​	531		​	475		​	463		​
Phosphates:	​			​			​			​
MAP	​	1,133		​	1,040		​	1,081		​
TSP	​	681		​	749		​	744		​
SSP	​	1,969		​	2,091		​	1,847		​
DCP	​	461		​	493		​	459		​
Phosphate rock	​	3,154		​	3,259		​	3,193		​
Nitrogen	​	890		​	680		​	641		​

	​	Year ended December 31,
	​	2016	​	2017	​	2018
	​	(thousand metric tons, except where indicated)
Ferrous minerals:	​		​		​
Iron ore fines	​	289,940	​	288,692	​	307,433
Pellets	​	47,709	​	51,775	​	56,592
Manganese	​	1,851	​	1,826	​	1,572
Ferroalloys	​	127	​	132	​	141
ROM	​	3,496	​	2,637	​	1,548
Coal:	​		​		​
Thermal coal	​	5,457	​	4,602	​	5,393
Metallurgical coal	​	4,907	​	7,178	​	6,240
Base metals:	​		​		​
Nickel	​	311	​	295	​	236
Copper	​	430	​	424	​	379
PGMs (000' oz.)	​	507	​	350	​	374
Gold (000' oz.)	​	497	​	471	​	484
Silver (000' oz.)	​	2,578	​	2,179	​	2,169
Cobalt (metric tons)	​	4,734	​	5,013	​	4,974

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Average realized prices

The following table sets forth our average realized prices for our principal products for each of the periods indicated. We determine average realized prices based on our net operating revenues, which consist of the price charged to customers, excluding certain items that we deduct in arriving at net operating revenues, mainly value-added tax.

	​	Year ended December 31,								​	​	Year ended December 31,
	​	2013		​	2014		​	2015		​	​	2016	​	2017	​	2018
	​	(US$ per metric ton, except where indicated)								​	​	(US$ per metric ton, except where indicated)
Ferrous minerals:	​			​			​			​	​		​		​
Iron ore	​	112.05		​	75.43		​	44.61		​	​	54.44	​	64.17	​	66.21
Iron ore pellets	​	150.22		​	124.17		​	77.78		​
Pellets											​	80.26	​	109.18	​	117.52
Manganese	​	157.37		​	120.28		​	56.44		​	​	110.87	​	159.01	​	162.51
Ferroalloys	​	1,303.92		​	1,453.33		​	904.16		​	​	757.67	​	1,353.72	​	1,178.50
Coal:	​			​			​			​	​		​		​
Thermal coal	​	81.17		​	67.65		​	52.42		​	​	46.17	​	71.05	​	84.19
Metallurgical coal	​	129.34		​	104.37		​	85.55		​	​	119.54	​	172.69	​	190.60
Base metals:	​			​			​			​	​		​		​
Nickel	​	14,900.24		​	16,426.47		​	11,684.30		​	​	9,800.00	​	10,654.00	​	13,666.83
Copper	​	6,709.18		​	6,015.47		​	4,363		​	​	4,458.00	​	5,970.00	​	5,583.00
Platinum (US$/oz)	​	1,469.78		​	1,261.87		​	1,020.14		​	​	919.00	​	891.00	​	901.00
Gold (US$/oz)	​	1,339.37		​	1,192.51		​	1,123.07		​	​	1,260.49	​	1,247.00	​	1,254.15
Silver (US$/oz)	​	20.02		​	19.42		​	12.63		​	​	16.22	​	15.30	​	14.43
Cobalt (US$/lb)	​	10.95		​	10.67		​	9.95		​
Fertilizers:	​			​			​			​
Potash	​	417.32		​	355.79		​	318.32		​
Phosphates:	​			​			​			​
MAP	​	571.86		​	542.44		​	511.70		​
TSP	​	472.51		​	428.98		​	398.05		​
SSP	​	271.88		​	212.61		​	204.45		​
DCP	​	611.54		​	591.51		​	554.88		​
Phosphate rock	​	90.68		​	70.88		​	82.55		​
Nitrogen	​	610.27		​	604.41		​	554.32		​
Cobalt											​	24,273.00	​	51,513.00	​	62,910.72




Table of Contents

          The following table summarizes, for the periods indicated, the distribution of our net operating revenues based on the geographical location of our customers.

	​	Net operating revenues by destination
	​	2013				​	2014				​	2015
	​	(US$ million)		​	(% of total)	​	(US$ million)		​	(% of total)	​	(US$ million)		​	(% of total)
North America	​			​		​			​		​			​
Canada	​	US$1,043		​	2.2%	​	US$1,393		​	3.7%	​	US$1,122		​	4.4%
United States	​	1,311		​	2.8	​	1,368		​	3.6	​	855		​	3.3
​	​	​		​	​	​	​		​	​	​	​		​	​
	​	2,354		​	5.0	​	2,761		​	7.3	​	1,977		​	7.7
​	​	​		​	​	​	​		​	​	​	​		​	​
South America	​			​		​			​		​			​
Brazil	​	6,190		​	13.2	​	5,927		​	15.8	​	3,967		​	15.5
Other	​	776		​	1.7	​	685		​	1.8	​	298		​	1.1
​	​	​		​	​	​	​		​	​	​	​		​	​
	​	6,966		​	14.9	​	6,612		​	17.6	​	4,255		​	16.6
​	​	​		​	​	​	​		​	​	​	​		​	​
Asia	​			​		​			​		​			​
China	​	18,920		​	40.5	​	12,657		​	33.7	​	9,095		​	35.5
Japan	​	4,035		​	8.6	​	3,627		​	9.7	​	1,959		​	7.7
South Korea	​	1,795		​	3.8	​	1,555		​	4.1	​	790		​	3.1
Taiwan	​	982		​	2.1	​	721		​	1.9	​	620		​	2.4
Other	​	825		​	1.8	​	1,029		​	2.8	​	904		​	3.5
​	​	​		​	​	​	​		​	​	​	​		​	​
	​	26,558		​	56.8	​	19,589		​	52.2	​	13,368		​	52.2
​	​	​		​	​	​	​		​	​	​	​		​	​
Europe	​			​		​			​		​			​
Germany	​	3,285		​	7.0	​	2,111		​	5.6	​	1,433		​	5.6
United Kingdom	​	1,003		​	2.1	​	709		​	1.9	​	399		​	1.6
Italy	​	1,055		​	2.3	​	849		​	2.3	​	461		​	1.8
France	​	977		​	2.1	​	565		​	1.5	​	331		​	1.3
Other	​	2,442		​	5.2	​	2,463		​	6.5	​	2,032		​	7.9
​	​	​		​	​	​	​		​	​	​	​		​	​
	​	8,762		​	18.7	​	6,697		​	17.8	​	4,656		​	18.2
​	​	​		​	​	​	​		​	​	​	​		​	​
Rest of the world	​	2,128		​	4.6	​	1,880		​	5.1	​	1,353		​	5.3
​	​	​		​	​	​	​		​	​	​	​		​	​
Total	​	US$46,767		​	100.0%	​	US$37,539		​	100.0%	​	US$25,609		​	100.0%
​	​	​		​	​	​	​		​	​	​	​		​	​
​	​	​		​	​	​	​		​	​	​	​		​	​
​	​	​		​	​	​	​		​	​	​	​		​	​

Consolidated operating costs and expenses

          Our cost of goods sold declined by US$4.551 billion in 2015, reflecting an impact of US$4.152 billion due to the positive effect of exchange rate variation and other cost reductions of US$1.370 billion, including US$1.183 billion in lower freight expenses mainly due to lower fuel prices. In 2015, we successfully implemented measures that resulted in a reduction of our costs, including the ramp-up of the N4WS and N5S extension mines in Carajás, and Vargem Grande, Conceição I and II itabirites projects in Minas Gerais. These effects were partially offset by US$971 million of higher costs associated mainly with higher volume of iron ore sold and the recognition of bunker oil hedge costs totaling US$439 million.

          Our selling, general and administrative and other expenses (net of revenues) decreased by 33.9% in 2015, on a constant currency basis, mostly due to reduction in personnel expenses, conclusion of some IT projects (particularly the implementation of our SAP system) and other cost-cutting measures. We reduced our research and evaluation expenses by 35%, to US$477 million in 2015 from US$734 million in 2014. Our pre-operating and stoppage expenses reduced by US$61 million in 2015, primarily because the ramp-up of our nickel operation in New Caledonia is approaching the operational targets, partially offset by higher pre-operating expenses in Long Harbour and Nacala. Other operating expenses declined mainly due to a reversal of provisions for asset retirement obligations in the amount of US$331 million, as a result of mining plan revisions, which extended the life of some assets and the scope of work used to determine asset retirement costs.

          Impairment of non-current assets was US$8.926 billion in 2015 and US$1.152 billion in 2014. In 2015, we recognized impairment charges in connection with certain of our iron ore, nickel, coal and potash assets, primarily due to revised price assumptions, while in 2014 we recorded an impairment in connection with our iron ore project in Simandou, in Guinea. See—Impairment.




Table of Contents

Cost of goods sold by productsegment

The following table presents, for each indicated period, our cost of goods sold by productsegment and the percentage change from year to year. The percentage change is presented both as reportedBecause significant portions of changes in our financial statements and as adjusted to removecost of goods sold may derive from exchange rate variations, we also present in the effectstable below the effect of exchange rate variation (constantvariations and the changes on a constant currency basis).basis.

	​	Year ended December 31,																				​	​	Year ended December 31,															​
​																							​	​	​	​	​	​			​	​	​	​	​	​			​
	​	2013		​	Change					​	2014		​	Change					​	2015		​	​	2017	​	2018	​	2018											​
​																							​	​	​	​	​	​			​	​	​	​	​	​			​
																							​	Cost of goods sold	​	Cost of goods sold	​	Variation as reported			​	Exchange rate impact in 2018	​	Variation without exchange rate impact	​	Variation— constant currency basis			​
​																							​	​	​	​	​	​			​	​	​	​	​	​			​
	​	Cost of goods sold (US$ million)		​	As reported (%)		​	Constant currency (%)		​	Cost of goods sold (US$ million)		​	As reported (%)		​	Constant currency (%)		​	Cost of goods sold (US$ million)		​	​		​		​	(US$ million, except for %)											​
Ferrous minerals:	​			​			​			​			​			​			​			​	​		​		​			​	​		​		​			​	​
Iron ore	​	9,067		​	5.2		​	11.5		​	9,532		​	(20.2		)	(6.0		)	7,604		​	​	7,950	​	9,048	​	13.8		%	​	(534)	​	1,632	​	22.0		%	​
Iron ore pellets	​	2,299		​	17.7		​	26.6		​	2,705		​	(21.6		)	(2.0		)	2,121		​
Pellets																							​	2,876	​	3,393	​	18.0		​	​	(208)	​	725	​	27.2		​	​
Ferroalloys and manganese	​	317		​	(17.7		)	(10.6		)	261		​	(33.0		)	(6.9		)	175		​	​	278	​	290	​	4.3		​	​	(29)	​	41	​	16.5		​	​
Other ferrous products and services	​	166		​	240.4		​	279.2		​	565		​	(39.6		)	(11.4		)	341		​	​	306	​	313	​	2.3		​	​	(34)	​	41	​	15.1		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​		​	​	​	​	​	​	​		​	​
Subtotal	​	11,849		​	10.3		​	17.4		​	13,063		​	(21.6		)	(5.4		)	10,241		​	​	11,410	​	13,044	​	14.3		​	​	(805)	​	2,439	​	23.0		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Coal	​	1,147		​	(6.6		)	(3.0		)	1,071		​	(21.7		)	(15.3		)	839		​	​	1,354	​	1,575	​	16.3		​	​	–	​	221	​	16.3		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Base metals:	​			​			​			​			​			​			​			​	​		​		​			​	​		​		​			​	​
Nickel and other products(1)	​	3,657		​	1.4		​	4.6		​	3,710		​	(8.5		)	0.6		​	3,393		​	​	3,437	​	3,060	​	(11.0)		​	​	(14)	​	(363)	​	(10.6)		​	​
Copper (2)	​	1,008		​	(13.0		)	(5.4		)	877		​	3.0		​	45.9		​	903		​
Copper(2)																							​	979	​	960	​	(1.9)		​	​	(96)	​	77	​	8.7		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​		​	​	​	​	​	​	​		​	​
Subtotal	​	4,665		​	(1.7		)	2.5		​	4,587		​	(6.3		)	7.7		​	4,296		​	​	4,416	​	4,020	​	(9.0)		​	​	(110)	​	(286)	​	(6.6)		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Fertilizers:	​			​			​			​			​			​			​			​
Potash	​	127		​	4.7		​	13.7		​	133		​	(33.1		)	(5.3		)	89		​
Phosphates	​	1,681		​	(9.9		)	(5.7		)	1,514		​	(22.5		)	(5.6		)	1,173		​
Nitrogen	​	382		​	(37.7		)	(35.1		)	238		​	(13.0		)	–		​	207		​
Other fertilizer products	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Subtotal	​	2,190		​	(13.9		)	(9.8		)	1,885		​	(22.1		)	(4.8		)	1,469		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Other(3)	​	669		​	(10.2		)	(5.1		)	601		​	(76.9		)	(71.6		)	139		​
Other																							​	375	​	263	​	(29.9)		​	​	(31)	​	(81)	​	(23.5)		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​		​	​	​	​	​	​	​		​	​
Total (excluding depreciation)	​	20,520		​	3.3		​	9.2		​	21,207		​	(19.9		)	(4.8		)	16,984		​	​	17,555	​	18,902	​	7.7		​	​	(946)	​	2,293	​	13.8		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​		​	​	​	​	​	​	​		​	​
​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​		​	​	​	​	​	​	​		​	​​
Depreciation	​	3,724		​	3.5		​	5.3		​	3,856		​	(8.5		)	15.1		​	3,529		​	​	3,484	​	3,207	​	(8.0)		​	​	(191)	​	(86)	​	(2.6)		​	​
​																							​	​	​	​	​	​		​	​	​	​	​	​	​		​	​
Total (including depreciation)																							​	21,039	​	22,109	​	5.1		%	​	(1,137)	​	2,207	​	11.1		%	​
​																							​	​	​	​	​	​		​	​	​	​	​	​	​		​	​
​																							​	​	​	​	​	​		​	​	​	​	​	​	​		​	​
​																							​	​	​	​	​	​		​	​	​	​	​	​	​		​	​​

---

(1)

Includes nickel co-productscoproducts (copper) and by-productsbyproducts (precious metals, cobalt and others).

​

​	​	​	​	​
​	​ ​	​ 98	​ ​	​

​

---

Table of Contents

​

Results of Operations

​

(2)

Does not include copper produced in our nickel operations.




	​	Year ended December 31,															​
	​	2016	​	2017	​	2017											​
	​	Cost of goods sold	​	Cost of goods sold	​	Variation as reported		​	Exchange rate impact in 2017		​	Variation without exchange rate impact		​	Variation— constant currency basis		​
	​		​		​	(US$ million, except for %)											​
Ferrous minerals:	​		​		​		​	​			​			​		​	​
Iron ore	​	6,622	​	7,950	​	20.1	%	​	330		​	998		​	14.4	%	​
Pellets	​	2,002	​	2,876	​	43.7	​	​	110		​	764		​	36.2	​	​
Ferroalloys and manganese	​	231	​	278	​	20.3	​	​	14		​	33		​	13.5	​	​
Other ferrous products and services	​	269	​	306	​	13.8	​	​	36		​	1		​	0.3	​	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​
Subtotal	​	9,124	​	11,410	​	25.1	​	​	490		​	1,796		​	18.7	​	​
Coal	​	872	​	1,354	​	55.3	​	​	–		​	482		​	55.3	​	​
Base metals:	​		​		​		​	​			​			​		​	​
Nickel and other products(1)	​	3,204	​	3,437	​	7.3	​	​	64		​	169		​	5.2	​	​
Copper(2)	​	924	​	979	​	6.0	​	​	81		​	(26		)	(2.6	)	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​
Subtotal	​	4,128	​	4,416	​	7.0	​	​	145		​	143		​	3.3	​	​
Other	​	259	​	375	​	44.8	​	​	20		​	96		​	34.4	​	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​
Total (excluding depreciation)	​	14,383	​	17,555	​	22.1	​	​	655		​	2,517		​	16.7	​	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​​
Depreciation	​	3,267	​	3,484	​	6.6	​	​	159		​	58		​	1.7	​	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​
Total (including depreciation)	​	17,650	​	21,039	​	19.2	%	​	814		​	2,575		​	13.9	%	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​
​	​	​	​	​	​	​	​	​	​		​	​		​	​	​	​​

---

(1)

Includes nickel coproducts (copper) and byproducts (precious metals, cobalt and others).

(2)

Does not include copper produced as ain our nickel co-product.

(3)

Includes pig iron (2013 and 2014) and energy.operations.




Table of Contents

Expenses by productsegment (excluding impairment charges)depreciation)

The following table summarizes, for each indicated period, our expenses (including(consisting of selling, general and administrative, research and evaluation, pre-operating, stoppage and other expenses, net of other revenues) by productsegment and the percentage change from year to year. The percentage change is presented both as reportedBecause significant portions of

​

​	​	​	​	​
​	​ ​	​ 99	​ ​	​

​

---

Table of Contents

​

Results of Operations

​

changes in our financial statements and as adjusted to remove the effects ofexpenses may derive from exchange rate variation (constant currency basis). Thevariations, we also present in the table excludesbelow the effect of impairment charges.exchange variations and the changes on a constant currency basis. See—Impairment charges.

																							​	Year ended December 31,														​
	​	Year ended December 31,																				​	​	2017	​	2018	​	2018										​
	​	2013		​	Change					​	2014		​	Change					​	2015		​	​	Expenses	​	Expenses	​	Variation as reported	​	Exchange rate impact in 2018	​	Variation without exchange rate impact	​	Variation— constant currency basis				​
	​	Expenses (US$ million)		​	As reported (%)		​	Constant currency (%)		​	Expenses (US$ million)		​	As reported (%)		​	Constant currency (%)		​	Expenses (US$ million)		​	​		​		​	(US$ million, except for %)										​
Ferrous minerals:	​			​			​			​			​			​			​			​	​		​		​		​		​		​	​			​	​
Iron ore	​	1,819		​	(4.5		)	(11.6		)	1,737		​	(63.0		)	(46.3		)	643		​	​	258	​	301	​	16.7%	​	(34	)	77	​	​	34.4%		​	​
Iron ore pellets	​	252		​	(76.6		)	(77.7		)	59		​	(67.8		)	(60.4		)	19		​
Pellets																							​	35	​	56	​	60.0	​	(5	)	26	​	​	86.7		​	​
Ferroalloys and manganese	​	47		​	(23.4		)	(28.0		)	36		​	(50.0		)	(33.3		)	18		​	​	12	​	4	​	(66.7	)	(1	)	(7	)	​	(63.6		)	​
Other ferrous products and services	​	(3		)	–		​	–		​	7		​	–		​	–		​	(3		)	​	(9	)	6	​	(166.7	)	–	​	15	​	​	(166.7		)	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​		​	​
Subtotal	​	2,115		​	(13.0		)	(19.2		)	1,839		​	(63.2		)	(47.1		)	677		​	​	296	​	367	​	24.0	​	(40	)	111	​	​	43.4		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Coal	​	358		​	2.0		​	1.1		​	365		​	(38.9		)	(37.5		)	223		​	​	30	​	30	​	–	​	–	​	–	​	​	–		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Base metals:	​			​			​			​			​			​			​			​
Nickel and other products(2)	​	1,049		​	(47.5		)	(47.8		)	551		​	21.2		​	27.5		​	668		​
Copper (3)	​	177		​	(81.4		)	(81.9		)	33		​	24.2		​	70.8		​	41		​
Other base metal products	​	(244		)	–		​	–		​	–		​	–		​	–		​	(230		)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Nickel and other products(1)																							​	171	​	119	​	(30.4	)	2	​	(54	)	​	(31.2		)	​
Copper(2)																							​	28	​	22	​	(21.4	)	(2	)	(4	)	​	(15.4		)	​
Subtotal	​	982		​	(40.5		)	(41.2		)	584		​	(18.0		)	(12.6		)	479		​	​	199	​	141	​	(29.1	)	–	​	(58	)	​	(29.1		)	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Fertilizers:	​			​			​			​			​			​			​			​
Potash	​	439		​	(87.2		)	(87.4		)	56		​	26.8		​	31.5		​	71		​
Phosphates	​	205		​	(16.1		)	(22.9		)	172		​	(38.4		)	(19.7		)	106		​
Nitrogen	​	32		​	(25.0		)	(29.4		)	24		​	(50.0		)	(29.4		)	12		​
Other fertilizer products	​	2		​	–		​	–		​	–		​	–		​	–		​	–		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Subtotal	​	678		​	(62.8		)	(64.0		)	252		​	(25.0		)	(6.9		)	189		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Other(4)	​	388		​	30.7		​	23.1		​	507		​	(42.0		)	(16.9		)	294		​
Others																							​	955	​	930	​	(2.6	)	(96	)	71	​	​	8.3		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​		​	​
Total (excluding depreciation)	​	4,521		​	(21.5		)	(25.2		)	3,547		​	(47.5		)	(32.1		)	1,862		​	​	1,480	​	1,468	​	(0.8	)	(136	)	124	​	​	9.2		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​		​	​
Depreciation																							​	224	​	144	​	(35.7	)	(25	)	(55	)	​	(27.6		)	​
​																							​	​	​	​	​	​	​	​	​	​	​	​	​		​	​
Total (including depreciation)																							​	1,704	​	1,612	​	(5.4	)%	(161	)	69	​	​	4.5%		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​	​		​	​
Depreciation	​	425		​	1.4		​	(2.0		)	431		​	16.0		​	0.4		​	500		​
Total with depreciation	​	4,946		​	(19.6		)	(23.3		)	3,978		​	(40.6		)	(27.1		)	2,362		​
​																							​	​	​	​	​	​	​	​	​	​	​	​	​		​	​​

---

(1)

Excluding impairment charges.

(2)

Includes nickel co-productscoproducts (copper) and by-productsbyproducts (precious metals, cobalt and others).

(3)(2)

Does not include copper produced as ain our nickel co-product.operations.




	​	Year ended December 31,												​
	​	2016	​	2017	​	2017								​
	​	Expenses	​	Expenses	​	Variation as reported	​	Exchange rate impact in 2017	​	Variation without exchange rate impact	​	Variation— constant currency basis		​
	​		​		​	(US$ million, except for %)								​
Ferrous minerals:	​		​		​		​		​		​		​	​
Iron ore	​	489	​	258	​	(47.2	)%	38	​	(269	)	(51.0	)%	​
Pellets	​	70	​	35	​	(50.0	)	5	​	(40	)	(53.3	)	​
Ferroalloys and manganese	​	12	​	12	​	–	​	1	​	(1	)	(7.7	)	​
Other ferrous products and services	​	10	​	(9	)	(190.0	)	1	​	(20	)	(181.8	)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Subtotal	​	581	​	296	​	(49.0	)	45	​	(330	)	(52.7	)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Coal	​	(7	)	30	​	(528.6	)	1	​	36	​	(600.0	)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Base metals:	​		​		​		​		​		​		​	​
Nickel and other products(1)	​	191	​	171	​	(10.5	)	(2	)	(18	)	(9.5	)	​
Copper(2)	​	21	​	28	​	33.3	​	2	​	5	​	21.7	​	​
Other base metals	​	(150	)	–	​	(100.0	)	–	​	150	​	(100.0	)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Subtotal	​	62	​	199	​	221.0	​	–	​	137	​	220.9	​	​
Others	​	690	​	955	​	38.4	​	37	​	228	​	31.4	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total (excluding depreciation)	​	1,326	​	1,480	​	11.6	​	83	​	71	​	5.0	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Depreciation	​	220	​	224	​	1.8	​	10	​	(6	)	(2.6	)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total (including depreciation)	​	1,546	​	1,704	​	10.2%	​	93	​	65	​	4.0%	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​​

---

(4)(1)

Includes pig iron (2013nickel coproducts (copper) and 2014)byproducts (precious metals, cobalt and energy.others).

(2)

Does not include copper produced in our nickel operations.

​

​	​	​	​	​
​	​ ​	​ 100	​ ​	​

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Table of Contents

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Results of operationsOperations

​

Adjusted EBITDA by segment

Our management uses adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA to assess each segment's contribution to our performance and to support decisions about resource allocation. Adjusted EBITDA is a non-GAAP measure, which is calculated for each segment using operating income or loss for this segment plus dividends received and interest from associates and joint ventures, and associates, and adding back the amounts charged as (i) depreciation, depletion and amortization and (ii) impairment of non-current assets and onerous contracts and (iii) results on measurement or sale of non-current assets.special events. For more information, and a reconciliation of our operating income or loss to adjusted EBITDA, see Note 3note 4 to our consolidated financial statements.

The table below shows a reconciliation of our consolidated Adjusted EBITDA from continuing operations with our net income (loss) from continuing operations for the periods indicated.




	​	Year ended December 31,														​
	​	2016				​	2017				​	2018				​
	​	(US$ million)														​
Income from continuing operations attributable to Vale's stockholders	​	​	5,211		​	​	​	6,313		​	​	​	6,952		​	​
Income (loss) attributable to noncontrolling interests	​	​	(8		)	​	​	21		​	​	​	36		​	​
​	​	​				​	​				​	​				​
Income from continuing operations	​	​	5,203		​	​	​	6,334		​	​	​	6,988		​	​
Depreciation, depletion and amortization	​	​	3,487		​	​	​	3,708		​	​	​	3,351		​	​
Income taxes	​	​	2,781		​	​	​	1,495		​	​	​	(172		)	​
Financial results, net	​	​	(1,843		)	​	​	3,019		​	​	​	4,957		​	​
Equity results and other results in associates and joint ventures, net of dividends received	​	​	1,104		​	​	​	488		​	​	​	570		​	​
Special events	​	​	1,240		​	​	​	294		​	​	​	899		​	​
​	​	​				​	​				​	​				​
Adjusted EBITDA from continuing operations	​	​	11,972		​	​	​	15,338		​	​	​	16,593		​	​
​	​	​				​	​				​	​				​
Adjusted EBITDA from discontinued operations (Fertilizers)	​	​	209		​	​	​	4		​	​	​	(3		)	​
​	​	​				​	​				​	​				​
Total Adjusted EBITDA	​	​	12,181		​	​	​	15,342		​	​	​	16,590		​	​
​	​	​				​	​				​	​				​
​	​	​	​		​	​	​	​		​	​	​	​		​	​
​	​	​				​	​				​	​				​

Special events are gains or losses recognized in our operating results that are not related to the performance of the business segments. We exclude special events from adjusted EBITDA to keep the segment performance analysis comparable with prior periods. The special events we identified are as follows:

	​	Year ended December 31,														​
	​	2016				​	2017				​	2018				​
	​	(US$ million)														​
Result in disposal of assets	​	​	(66		)	​	​	(481		)	​	​	(322		)	​
Nacala Logistic Corridor	​	​	–		​	​	​	458		​	​	​	–		​	​
Impairment and onerous contracts	​	​	(1,174		)	​	​	(271		)	​	​	(577		)	​
​	​	​				​	​				​	​				​
Total	​	​	(1,240		)	​	​	(294		)	​	​	(899		)	​
​	​	​				​	​				​	​				​
​	​	​	​		​	​	​	​		​	​	​	​		​	​
​	​	​				​	​				​	​				​

​

​	​	​	​	​
​	​ ​	​ 101	​ ​	​

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Table of Contents

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Results of Operations

​

 The following table summarizes operating income or loss and Adjusted EBITDA for each of our segments.


	​	Year ended December 31,																										​	​	Year ended December 31,														​
	​	2013								​	2014								​	2015								​	​	2016				​	2017				​	2018				​
	​	Operating income (loss)		​	Adjustments (1)		​	Adjusted EBITDA		​	Operating income (loss)		​	Adjustments (1)		​	Adjusted EBITDA		​	Operating income (loss)		​	Adjustments (1)		​	Adjusted EBITDA		​	​	Adjusted EBITDA				​	Adjusted EBITDA				​	Adjusted EBITDA				​
	​	(US$ million)																										​	​	(US$ million)														​
Ferrous minerals:	​			​			​			​			​			​			​			​			​			​	​	​			​	​				​	​				​	​
Iron ore	​	15,565		​	1,456		​	17,021		​	5,383		​	2,693		​	8,076		​	1,794		​	2,311		​	4,105		​	​	​	8,683		​	​		10,346		​	​		11,033		​	​
Iron ore pellets	​	3,083		​	1,018		​	4,101		​	2,225		​	756		​	2,981		​	1,075		​	610		​	1,685		​
Pellets																													​	​	1,858		​	​		2,823		​	​		3,356		​	​
Ferroalloys and manganese	​	130		​	29		​	159		​	63		​	32		​	95		​	(54		)	23		​	(31		)	​	​	59		​	​		179		​	​		160		​	​
Other ferrous products and services	​	122		​	140		​	262		​	59		​	110		​	169		​	35		​	105		​	140		​	​	​	159		​	​		205		​	​		162		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​				​	​				​	​				​
Subtotal	​	18,900		​	2,643		​	21,543		​	7,730		​	3,591		​	11,321		​	2,850		​	3,049		​	5,899		​	​	​	10,759		​	​		13,553		​	​		14,711		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​				​	​				​	​				​
Coal	​	(668		)	213		​	(455		)	(1,160		)	491		​	(669		)	(3,766		)	3,258		​	(508		)	​	​	(26		)	​		362		​	​		181		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​				​	​				​	​				​
Base metals:	​			​			​			​			​			​			​			​			​			​	​	​			​	​				​	​				​	​
Nickel and other products(2)(1)	​	(459		)	1,592		​	1,133		​	1,575		​	405		​	1,980		​	(5,712		)	6,344		​	632		​	​	​	1,081		​	​		1,059		​	​		1,431		​	​
Copper(3)(2)	​	(127		)	389		​	262		​	367		​	174		​	541		​	297		​	229		​	526		​	​	​	722		​	​		1,197		​	​		1,111		​	​
Other	​	244		​	–		​	244		​	–		​	–		​	–		​	230		​	–		​	230		​	​	​	150		​	​		–		​	​		–		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​				​	​				​	​				​
Subtotal	​	(342		)	1,981		​	1,639		​	1,942		​	579		​	2,521		​	(5,185		)	6,573		​	1,388		​	​	​	1,953		​	​		2,256		​	​		2,542		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​				​	​				​	​				​
Fertilizers:	​			​			​			​			​			​			​			​			​			​
Potash	​	(2,525		)	2,160		​	(365		)	(61		)	26		​	(35		)	(607		)	579		​	(28		)
Phosphates	​	(133		)	312		​	179		​	(1,264		)	1,398		​	134		​	587		​	(133		)	454		​
Nitrogen	​	(20		)	75		​	55		​	39		​	48		​	87		​	63		​	21		​	84		​
Other fertilizer products	​	77		​	0		​	77		​	92		​	–		​	92		​	57		​	–		​	57		​
Other(3)																													​	​	(714		)	​		(833		)	​		(841		)	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​				​	​				​	​				​
Subtotal	​	(2,601		)	2,547		​	(54		)	(1,194		)	1,472		​	278		​	100		​	467		​	567		​
Total Adjusted EBITDA from continuing operations																													​	​	11,972		​	​		15,338		​	​		16,593		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​				​	​				​	​				​
Other(4)	​	(226		)	113		​	(113		)	(140		)	42		​	(98		)	(130		)	(135		)	(265		)
Adjusted EBITDA from discontinued operations (Fertilizers)																													​	​	209		​	​		4		​	​		(3		)	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​				​	​				​	​				​
Total	​	15,063		​	7,497		​	22,560		​	7,178		​	6,175		​	13,353		​	(6,131		)	13,212		​	7,081		​
Total Adjusted EBITDA																													​	​	12,181		​	​		15,342		​	​		16,590		​	​
​																													​	​				​	​				​	​				​
​																													​	​	​		​	​		​		​	​		​		​	​
​																													​	​				​	​				​	​				​

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(1)

Adding dividends received from associates and joint ventures and excluding (i) depreciation, depletion and amortization, (ii) impairment of non-current assets and onerous contracts and (iii) results on measurement or sale of non-current assets. See Note 3(a) to our consolidated financial statements.

(2)

Includes nickel co-productscoproducts (copper) and by-productsbyproducts (precious metals, cobalt and others).

(3)(2)

Does not include copper produced as ain our nickel co-product.operations.

(4)(3)

Includes pig iron and energy.

We discuss below, for each segment, the changes in our net operating revenues, cost of goods sold (excluding depreciation, depletion and amortization), expenses (excluding depreciation, depletion and amortization and excluding impairment charges), adjusted EBITDA and operating income.Adjusted EBITDA.

Ferrous minerals

20152018 compared to 2014.2017.

•

Our net operating revenues from sales of ferrous minerals decreased by 35.5%increased 11.2%, from US$25.69725.129 billion in 20142017 to US$16.56227.933 billion in 2015,2018, reflecting lowerhigher realized prices for iron ore and iron ore pellet prices, partially offset bypellets (US$980 million) and higher sale volumes of iron ore and iron ore pellets.(US$1.822 billion). Our average realized prices in 20152018 were 40.8%3.1% and 35.4% lower7.6% higher than our average realized prices in 20142017 for iron ore and iron ore pellets, respectively, reflecting the decline in the average reference price index Platt's IODEX 62% CFR China.respectively. Our iron ore sales volume increased by 8.0%was 6.5% higher than in 2015,2017, reaching 307.4 Mt in 2018 mainly due to the ramp-up of the Carajás plant 2, Vargem Grande and Conceição I and II Itabirites projects, and improvement of our distribution logistics, while the volume of our iron ore pellets sales increased by 6.0% due to the ramp-up of the Tubarão VIII pelletizing plant.S11D ramp-up.




Table of Contents


•

Our cost of goods sold from ferrous minerals, excluding depreciation, decreasedamortization and depletion, increased by 5.4%23.0% on a constant currency basis, mainly as a result of (i) a decrease in our freight costs, in the amount of US$1.246 billion, (ii) a reduction in the railroad transportation fees paid to MRS in the amount of US$104 million, (iii) US$233 million reduction in the cost of acquisition of iron ore, mainly due to lower prices, and (iv) a decrease in pellet plants leasing, in the amount of US$46 million mainly due to the decline in prices. These effects were partially offsetnegative effect of cost factors that are directly linked to iron ore prices, such as higher freight costs driven by increased costs associated with the increase in volume sold, in the amount of US$1.173 billion. In addition, we implemented general cost-cutting measures, including the renegotiationhigher bunker oil prices (US$589 million) and termination of contracts.royalties.





•

Our net expenses from ferrous minerals,, excluding depreciation, amortization and depletion, and excluding impairment charges, decreasedincreased by 47.1%US$111 million on a constant currency basis, from US$1.839 billion in 2014 to US$677 million in 2015, mainly due to a reversionthe recovery of provisions for asset retirement obligationsthe insurance associated with the destruction of the "Fábrica Nova—Timbopeba" long distance belt conveyor in 2017, which was partially

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​	​	​	​	​
​	​ ​	​ 102	​ ​	​

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Results of Operations

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offset by lower pre-operating expenses in S11D as there was an increase in the amount of US$322 million and a US$201 million reduction in research and evaluation expenses.production curve.

•

Our adjusted EBITDA from ferrous minerals was US$5.89914.711 billion in 2015, 47.9% lower2018, 8.5% higher than the US$13.553 billion we reported in 2014,2017. The increase was mainly as a result of (i) higher realized prices for the reasons described above, partially offset byiron ore and pellets (US$980 million), (ii) higher iron ore and pellets sales volumes (US$975 million) and (iii) the positive impact of exchange rate variation, in the amount of US$2.794 billion.BRL depreciation against USD and other currencies on costs and expenses (US$845 million), which were partially offset by higher costs and expenses (US$1.698 billion). Dividends received and interest from associates and joint ventures and associates operating in the ferrous minerals segment totaled US$255189 million in 20152018, in line with the US$130 million received in 2017.

2017 compared to US$525 million in 2014, reflecting lower dividends from Samarco.

Our operating income from ferrous minerals2016 was US$2.850 billion in 2015 and US$7.730 billion in 2014. This 63.1% decrease reflects, in addition to the effects discussed above, the effect of the US$992 million impairment charge on our Corumbá mines, provisions for losses associated with long-term river freight agreements in the Paraná and Paraguay waterway systems and stoppage of our pelletizing plants in the Northern System.

2014 compared to 2013.

•

Our net operating revenues from sales of ferrous minerals decreased 26.1%increased by 23.5%, from US$34.79220.351 billion in 20132016 to US$25.69725.129 billion in 2014,2017, reflecting higher realized prices, higher premiums and lower discounts. Our average realized prices partially offset byin 2017 were 17.9% and 36.0% higher sale volumes ofthan our average realized prices in 2016 for iron ore and iron ore pellets. In 2014, our average realized prices were 32.2% lower for iron ore and 17.3% lower for iron ore pellets, reflecting the decrease in the average reference price index of Platt's IODEX 62% CFR China in 2014. The volume of ourrespectively. Our iron ore sales volume reached 288.7 Mt in 2014 increased by 2.0%,2017, in line with 2016, mainly due to the S11D ramp-up, offset by the curtailment of Carajás plant 2 (formerly known as Carajás Additional 40 Mtpy), Serra Lestehigh silica products in the Southern and Conceição Itabiritos, while the volumeSoutheastern Systems and build-up of our iron ore pellets sales increased by 6.6% due to the start-up of Tubarão VIII pelletizing plant and the ramp-up of the Oman pellet plants.offshore inventories.





•

Our cost of goods sold from ferrous minerals, excluding depreciation, amortization and depletion, increased 17.4%by 18.7% on a constant currency basis, basicallymainly as a result of higher coststhe negative effect of maintenance materials incost factors that are directly linked to iron ore due to early incurrence of maintenance costs to prepare for additional increases in iron ore production volumes (particularly in connection with the N4WS mine pit in Carajás), increase in wages by 6%,prices, such as higher freight costs due to an increase of CFR volume sales and leasing fees related to our joint-venture pelletizing assets, in the amount of US$199 million.(US$642 million) driven by higher bunker oil prices.





•

Our net expenses from ferrous minerals,, excluding depreciation, amortization and depletion, and excluding impairment charges, decreased 19.2%by 52.7% on a constant currency basis, as a result of a reduction ofmainly due to lower pre-operating and stoppage expenses in the amount of US$166 million, as some of our projects were concluded during the year of 2014, such as Conceição Itabiritos. During 2014, we registered expenses related to pre-operating and stoppage expenses of our pellet plants in the amount of US$38 million, while in 2013 we registered US$130 million.S11D.





•

Our adjusted EBITDA from ferrous minerals was US$11.32113.192 billion in 2014, 47.4% lower2017, 25.9% higher than the US$10.476 billion we reported in 2013, for2016. The increase was mainly due to higher market prices, higher premiums and the reasons discussed above, partially offset by the depreciationinitiatives of the Brazilianreal against the U.S. dollar.supply discipline, portfolio mix management, global supply chain management and focus on cost savings. Dividends received and interest from associates and joint ventures and associates operating in the ferrous minerals segment totaled US$525130 million in 2014 compared to2017, in line with the US$715113 million received in 2013, reflecting lower dividends from Samarco.2016.




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Our operating income from ferrous minerals was US$7.730 billion in 2014 and US$18.900 billion in 2013. The 59.1% decrease reflects, in addition to the effects discussed above, the impairment of Vale's equity stake in VBG's operations in Guinea in the amount of US$1.135 billion.

Coal

20152018 compared to 2014.2017.

•

Our net operating revenues from sales of coal decreasedincreased by 4.8%, to US$526 million1.643 billion in 2015,2018 from US$739 million1.567 billion in 2014.2017. This 28.8% decreaseincrease primarily reflected lowerhigher realized prices, and sales volume for both thermal and metallurgical coal. Ourcoal, and higher sales volumes decreased dueof thermal coal. Sales volumes of metallurgical coal totaled 6.240 Mt in 2018, decreasing 938 Mt as compared to lower2017, while sales from our Isaac Plains and Integra Coal mines operations, which we suspendedvolumes of thermal coal totaled 5.393 Mt in May 2014, and eventually sold in the last quarter2018, increasing 791 Mt as compared to 2017.

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Our cost of goods sold from coal, excluding depreciation, decreased to US$839 million in 2015, or 15.3%amortization and depletion, increased by 16.3% on a constant currency basis, from US$1.354 billion in 2017 to US$1.575 billion in 2018, primarily due to the stoppageincrease of our Isaac Plains and Integra Coal mines, partially offsetUS$204 million in services costs driven by additional coststhe impact of the logistics tariff, which was in force for the full year in 2018, while in 2017 it was applied only after March, 2017, when we ceased to consolidate NLC in our operations in Mozambique driven by higher sales volumes.financial statements.





•

Our net expenses from coal, excluding depreciation, amortization and depletion, and excluding impairment charges, decreased by 37.5% on a constant currency basis, fromtotaled US$36530 million in 2014 to US$223 million2018, in 2015, due to (i) reduced selling, general and administrative expenses in Australia, (ii) the receipt of insurance proceeds of US$36 million in connectionline with a flood that occurred in Australia in 2010 and (iii) lower effects of inventory adjustments on thermal coal in Mozambique in 2015, as compared to 2014.2017.





•

Our adjusted EBITDA from coal was a loss of US$508181 million in 2015, while2018, 50.0% lower than the US$362 million we reported in 2014 we had a loss of US$669 million, reflecting2017, this decrease was impacted by higher costs (US$221 million), was primarily reflected the decline in coal prices and lower sales volume due to the suspensionimpact of the Isaac Plains and Integra Coal mines in Australia. Dividends received from joint ventures and associates operating in the coal segment amounted to US$28 million in 2015 and US$29 million in 2014.logistics tariff.

Our operating loss from coal increased from US$1.160 billion in 2014 to US$3.766 billion in 2015, reflecting, in addition to the negative effects discussed above, (i) a US$635 million impairment charge on our assets in Australia, based on lower expected coal prices, and (ii) a US$2.403 billion impairment charge on our coal assets in Mozambique, due to the decrease in the net recoverable amount as a result of lower expected coal prices and increased logistic costs. In 2014, we recorded an impairment of US$343 million related to our Isaac Plans and Integra Coal mines.

20142017 compared to 20132016.

•

Our net operating revenues from sales of coal decreasedincreased by 86.8%, to US$7391,567 million in 2014,2017 from US$1.010 billion839 million in 2013.2016. This 26.8% decreaseincrease primarily reflected lowerhigher realized prices, for both thermal and metallurgical coal, and lower volume sold forhigher sales volumes of metallurgical coal. Sales volumes of metallurgical coal partially offset by higher sales volumetotaled 7.178 Mt in 2017, increasing 2.271 Mt as compared to 2016, as a result of thermal coal.ramp-up of our new coal handling processing plant in Moatize and the Nacala Logistics Corridor.





•

Our cost of goods sold from coal, excluding depreciation, decreased to US$1.071 billion, or 3.0%amortization and depletion, increased by 55.3% on a constant currency basis, from US$872 million in 2016 to US$1.354 billion in 2017, primarily due to the increased participation from Mozambique sales and decreased participation from Australia sales.impact of the logistic tariff applied after we ceased to consolidate NLC in our financial statements.





•

Our net expenses from coal, excluding depreciation, amortization and depletion, and excluding impairment charges, increased by 1.1% on a constant currency basis, tototaled US$36530 million in 2014, due to expenses registered in 2014 related2017, increasing US$37 million as compared to the suspensiongain of certain operationsUS$7 million recorded in Australia and2016. This increase in net expenses in 2017 mainly derives from adjustments to the net realizable value of the thermal coal inventory adjustment in Mozambique.





•

Our adjusted EBITDA from coal was a gain of US$330 million in 2017, while in 2016 we had a loss of US$66954 million, in 2014, 47.0%reflecting the higher thanrealized prices (US$386 million) and higher sales volumes from Mozambique (US$129 million). These higher prices and sales volumes were partially offset by the US$455 million loss in 2013, reflecting mainly lower prices. Dividends received from joint ventureshigher costs and associates operating in the coal segment amounted to US$29 million in 2014 and US$40 million in 2013.




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Our operating loss from coal increased by 73.7%expenses (US$73 million), from US$668 million in 2013 to US$1.160 billion in 2014, reflecting, in additiondue to the negative effects discussed above, a US$343 million impairment charge on our assets in Australia.impact of the logistics tariff.

Base metals

20152018 compared to 2014.2017.

•

Our net operating revenues from sales of base metals totaled US$6.703 billion in 2018, a 2.5% decrease from US$6.871 billion in 2017. The decrease was mainly driven by lower sales volumes for copper (US$264 million) and nickel (US$620 million), following the strategy to reduce our low grade nickel sales volume, which were partially offset by higher nickel prices (US$712 million).

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•

Our cost of goods sold from base metals, excluding depreciation, amortization and depletion, decreased 6,6% on a constant currency basis. After adjusting for the effects of lower volumes (US$631 million), costs increased by US$346 million compared to 2017 due to a lower fixed cost dilution and as a result of the extended maintenance at Coleman mine and Voisey's Bay decreased mine production.



•

Our net expenses from base metals, excluding depreciation, amortization and depletion, and excluding impairment charges, decreased 29.1% on a constant currency basis, mainly due to Long Harbour ramp-up resulting in a lower pre operating expenses in 2018 (US$42 million).



•

Our adjusted EBITDA from base metals was US$2.542 billion in 2018, a 12.7% increase from the US$2.256 billion recorded in 2017. The increase was mainly due to higher realized prices (US$685 million), lower expenses (US$59 million) and favorable effect of exchange rate variations (US$110 million). These price effects were partially offset by higher costs (US$346 million) and lower volumes (US$222 million).

2017 compared to 2016

•

Our net operating revenues from sales of base metals decreased tototaled US$6.1636.871 billion in 20152017, a 11.9% increase from US$7.6926.139 billion in 2014.2016. The 19.9% decrease primarily reflected lowerincrease was mainly driven by higher sales prices for nickel (US$257 million), copper (US$642 million) and copper, partially offset by higher nickel sales volumes, resulting from ramp-up of our operations in New Caledonia and of Onça Puma, in Brazil, and higher copper sales volume, resulting from the ramp-up of Salobo operations.cobalt (US$138 million).





•

Our cost of goods sold from base metals,, excluding depreciation, amortization and depletion, increased 7.7%3.3% on a constant currency basis,basis. After adjusting for the effects of lower volumes (US$94 million), costs increased by US$237 million compared to 2016 mainly as a result of higher nickel costs (US$353 million) due to higher costs relatedthe transition to ramp-up of Onça Pumasimpler and Salobomore efficient nickel flowsheet in the North Atlantic operations and increased allocationthe increase of VNC pre-operating expenses tonickel unit costs because of goods sold.lower production volumes. The cost increase was partially offset by lower copper costs (US$116 million).





•

Our net expenses from base metals,, excluding depreciation, amortization and depletion, and excluding impairment charges, decreased 12.6%increased 220,9% on a constant currency basis, mainly due to lower pre-operating expenses and athe one-off positive effects from goldstream transactions totaling US$230 million gain on the gold stream transaction in 2015, partly offset by lower insurance proceeds in 2015 of US$212 million (US$64150 million in 2015 compared to US$276 million in 2014).2016.





•

Our adjusted EBITDA from base metals was US$1.3882.139 billion in 2015, 44.9% lower than2017, a 15.7% increase from the US$1.848 billion recorded in 2014. Despite the lower2016. The increase was mainly due to higher realized prices for copper, nickel and copper prices, certain non-recurring items contributed to our income generation, such as insurance proceeds received in 2014 and the proceeds received in the gold stream transaction in 2015.

Our operating loss from base metals was US$5.185 billion in 2015, while we generated an operating income of US$1.942 billion in 2014. In 2015, we had a US$4.984 billion impairment charge on our nickel assets in New Caledonia and in Newfoundland and Labrador, in Canada, as a result of the reduction of long term prices projections,cobalt. These price effects were partially offset by higher costs (US$237 million), lower volumes (US$203 million), higher expenses (US$148 million), and the unfavorable effect of exchange rate variations (US$150 million).

IMPAIRMENT OF NON-CURRENT ASSETS AND ONEROUS CONTRACTS

2018 compared to 2017.

In 2018, we recorded an additional reversalimpairment of the impairment on our Onça Puma nickelnon-current assets in the amountand onerous contracts of US$252 million. In 2014, we benefited from a reversal of the impairment on our Onça Puma nickel assets in the amount of US$1.617 billion.

2014577 million compared to 2013.

Our net operating revenues from salesUS$271 million in 2017. In 2018 we recorded an impairment of base metals increased to US$7.692 billion in 2014 from US$7.286 billion in 2013. The 5.6% increase primarily reflected higher nickel prices, resulting from market recovery after a cycle of decrease, and higher nickel sales volume184 million due to the ramp-upreview undertaken of Onça Puma operations.

Our cost of goods sold from base metals, excluding depreciation increased 2.5%, on a constant currency basis, duethe business plan related to higher sales volumes of nickel, cobalt, PGMs and gold.

Our net expenses from base metals, excluding depreciation and impairment charges, decreased 41.2% on a constant currency basis, dueour certain forestry assets, leading to a reduction of pre-operating expenses and higher insurance proceeds received.

Our adjusted EBITDA from base metals was US$2.521 billion in 2014, 53.8% higher than in 2013. In addition to the lower costs and expenses, adjusted by the increase in sales volume, certain non-recurring items, such as insurance proceeds received in 2014 and the proceeds in the amount of US$244 million received in the gold stream transaction in 2013, contributed to our income generation.

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Our operating income from base metals was US$1.942 billion in 2014, while we had an operating loss of US$342 million in 2013. The partial reversal of the impairment on our Onça Puma nickel assets positively affected our operating income in 2014.

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FertilizersResults of Operations

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expected operational capacity of these assets. We also recorded an additional provision of US$393 million in relation to onerous contracts in the Midwest system for fluvial transportation and port structure.

20152017 compared to 2014.2016.

Our net operating revenues from sales of fertilizers decreased 7.9%, to US$2.225 billion in 2015 from US$2.415 billion in 2014, due to reduction in prices and volumes of most of our fertilizer products, partially offset by an increase in phosphatic rock and sulfuric prices in the international market and better commercial performance.

Our cost of goods sold from fertilizers, excluding depreciation, decreased 4.8% on a constant currency basis, due to decrease in volume sold and cost saving initiatives, which were partly offset by inflation.

Our net expenses from fertilizers, excluding depreciation and impairment charges, decreased 6.9% on a constant currency basis, due to downsizing initiatives, which was partly offset by inflation. Also pre-operating and stoppage expenses decreased mainly as a result of a reduction in stoppage expenses in the amount of US$15 million.

Our adjusted EBITDA from fertilizers increased from US$278 million in 2014 to a US$567 million in 2015. The increase resulted from exchange rate impacts in the amount of US$246 million, costs saving initiatives and expense reductions, partly offset by inflation, lower volumes, higher research and evaluation expenses and lower sales prices.

Our operating result from fertilizers was an operating income of US$100 million in 2015 compared to an operating loss of US$1.194 billion in 2014. In 2015, we had a reversion of impairment on certain Brazilian phosphates operations of US$391 million due to depreciation of the Brazilianreal against U.S. dollar and we had an impairment of US$548 million related to the Rio Colorado project. In 2014,2017, we recorded an impairment of our Rio Colorado potash project in Argentinanon-current assets and onerous contracts of US$1.053 billion.

2014271 million compared to 2013.

Our net operating revenues from sales of fertilizers decreasedUS$1,174 million in 2016. The most significant single impairment in 2017 was for an underground mine in Sudbury that was affected by seismic activities, for which the cost to US$2.415 billion in 2014, from US$2.814 billion in 2013. The 14.2% decrease was a result of lower prices and lower sales volumes due torepair the sale of our Araucaria nitrogen operation in June 2013.

Our cost of goods sold from fertilizers, excluding depreciation, decreased 9.8%, on a constant currency basis, due to cost saving initiatives and lower ammonia/sulfur prices.

Our net expenses from fertilizers, excluding depreciation and impairment charges, decreased 64.0%, on a constant currency basis, primarily due to a reduction of stoppage expenses associated with our Rio Colorado projectasset is deemed not recoverable in the amountcurrent market conditions. We have placed this asset on care and maintenance and an impairment of US$376 million.

Our adjusted EBITDA from fertilizers133 was an income of US$278 million in 2014, against a loss of US$54 million in 2013. The increase resulted from the reduction of costs and expenses of US$355 million, the reduction of the stoppage expenses with the Rio Colorado projectrecognized in the amount of US$376 million, which were partially off-set by lower prices (US$276 million).income statement.

FINANCIAL RESULTS, NET

Our operating loss from fertilizers was US$1.194 billion in 2014 compared to an operating loss of US$2.601 billion in 2013. These losses primarily reflected the impairment of fertilizers assets in 2014, in the amount of US$1.053 billion, and the impairment of the Rio Colorado project in 2013, in the amount of US$2.116 billion. Lower costs and lower stoppage expenses in the Rio Colorado project contributed to mitigate these operating losses.

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Financial results

The following table details our net non-operating income (expenses)financial results, net, from continuing operations for the periods indicated.

	​	Year ended December 31,					​	Year ended December 31,					​
	​	2013	​	2014	​	2015	​	2016	​	2017	​	2018	​
	​	(US$ million)					​	(US$ million)					​
Financial income(1)	​	US$643	​	US$401	​	US$270	​	170	​	478	​	423	​
Financial expenses(2)	​	(5,002)	​	(2,936)	​	(1,112)	​	(2,677	)	(3,273	)	(2,345	)
Gains (losses) on derivatives, net	​	(1,033)	​	(1,334)	​	(2,478)	​	1,256	​	454	​	(266	)
Foreign exchange gains (losses), net	​	(2,765)	​	(2,115)	​	(7,166)	​	3,252	​	(467	)	(2,247	)
Indexation gains (losses), net	​	(175)	​	(85)	​	(315)
Indexation losses, net							​	(158	)	(211	)	(522	)
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Non-operating income (expenses)	​	US$(8,332)	​	US$(6,069)	​	US$(10,801)
Financial results, net							​	1,843	​	(3,019	)	(4,957	)
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(1)

Includes short-term investments and other financial income (see note 6 to our consolidated financial statements)

(2)

Includes loans and borrowings gross interest, capitalized loans and borrowing costs, financial expenses associated with labor, tax and civil lawsuits, participative stockholders' debentures, expenses of REFIS and others financial expenses (see note 6 to our consolidated financial statements).

          20152018 compared to 2014.2017.    Our non-operating expenses increased 78.0%,

In 2018, our financial results, net, were an expense of US$4,957 million compared to an expense of US$10.801 billion3,019 million in 2015 from US$6.069 billion in 2014.2017. This principallymainly resulted from:

·•

Net foreign exchange lossesloss of US$7.166 billion2,247 million in 20152018 compared to net foreign exchange lossesloss of US$2.115 billion467 million in 2014, principally2017, mainly due to the 17.1% depreciation of the Brazilianreal against the U.S. dollar.dollar in 2018, compared to a 1.5% depreciation of the Brazilianreal in 2017.



·•

The net effect of fair value changes in derivatives, which represented a loss of US$2.478 billion266 million in 20152018 compared to a lossgain of US$1.334 billion454 million in 2014.the same period in 2017. This reflected the following main categories of derivatives transactions:



◦

Currency and interest rate swaps. We recognized a net loss of US$1.502 billion279 million in 20152018 from currency and interest rate swaps, compared to a net lossgain of US$683313 million in 2014.2017. These swaps are primarily used to convert debt denominated in other currencies into U.S. dollars in order to protect our cash flow from exchange rate volatility.

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◦

Nickel derivatives. We recognized a loss of US$4925 million in 20152018 compared to a gain of US$930 million in 2014.2017. These derivatives are part of our nickel price protection program.



◦

Bunker oil derivatives. We recognized a netgain of US$6 million in 2018 compared to a loss of US$1.181 billion in 2015 compared to a net loss of US$61480 million in 2014.2017. These derivatives are structured to minimizegains or losses resulted from the volatilityfair value of the cost of maritime freight,hedge contracts and the variation is due to the sharp decreasevolatility in the spot price of bunker oil price.



◦

Warrants. We recognized a net loss of US$142 million in 2015 compared to a net loss of US$5 million in 2014. These derivatives were part of the consideration we received under the 2013 gold sale contract with Silver Wheaton.oil.



·•

A net indexation loss on inflation-indexed instruments of US$315522 million in 20152018 compared to a loss of US$84211 million in 2014, as2017.

2017 compared to 2016.

In 2017, our financial results, net, was a resultloss of higher inflationUS$3.019 billion, compared to an income of US$1.843 billion in Brazil.2016. This principally resulted from:

•

Net foreign exchange losses of US$463 million in 2017 compared to net foreign exchange gains of US$3.252 billion in 2016, principally due to the depreciation of the Brazilianreal against the U.S. dollar.



·

A decrease in financial income from US$401 million in 2014 to US$270 million in 2015, as a result of lower average cash position in 2015, as compared to 2014.



·

A decrease in financial expenses of US$1.824 billion, from US$2.936 billion in 2014 to US$1.112 billion in 2015, attributable primarily to the US$1.279 billion decrease in the amount of our participative debentures, which are marked-to-market, due to the decline in commodities price.

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          2014 compared to 2013.    Our non-operating expenses decreased 27.2%, to US$6.069 billion in 2014 from US$8.332 billion in 2013. This decrease principally resulted from:

·

A decrease in financial expenses of US$2.225 billion, from US$5.002 billion in 2013 to US$2.936 billion in 2014, attributable primarily to the US$2.637 billion net effect of fines and interest recognized under the REFIS in 2013, while the effect of interest on REFIS obligations in 2014 was US$683 million.



·•

The net effect of fair value changes in derivatives, which represented a lossgain of US$1.334 billion454 million in 20142017 compared to a lossgain of US$1.0331.256 billion in 2013.2016. This reflected the following main categories of derivatives transactions:



◦

Currency and interest rate swaps. We recognized a net lossgains of US$683313 million in 20142017 from currency and interest rate swaps, compared to net lossa gain of US$861959 million in 2013.2016. These swaps are primarily used to convert debt denominated in other currencies into U.S. dollars in order to protect our cash flow from exchange rate volatility.



◦

Nickel derivatives. We recognized a gain of US$930 million in 20142017 compared to a gainloss of US$1142 million in 2013.2016. These derivatives are part of our nickel price protection program.



◦

Bunker oil derivatives. We recognized a net loss of US$61480 million in 20142017 compared to a net lossgain of US$114268 million in 2013.2016. These derivatives are structured to minimizegains or losses resulted from the volatilityfair value of the cost of maritime freighthedge contracts and the variation is due to the sharp decreasevolatility in the spot price of bunker oil price.oil.



◦•

Warrants. We recognized aA net indexation loss of US$6211 million in 20142017 compared to a net loss of US$60158 million in 2013. These derivatives were part of the consideration we received under the 2013 gold sale contract with Silver Wheaton.



·
Net foreign exchange losses of US$2.115 billion in 2014 compared to net foreign exchange losses of US$2.765 billion in 2013, principally due to the depreciation of the Brazilianreal against the U.S. dollar in each year.


·
A net indexation loss of US$85 million in 2014 compared to a loss of US$175 million in 2013,2016, mainly due to changes in the amount of certain tax assets.discount rates on asset retirement obligation provisions

.
·
A decrease in financial income of US$242 million to US$401 million in 2014, mainly due to fair value gains of US$214 million as a result of the sale of Hydro shares in 2013, which was classified as held for sale.

Equity results in associates and joint venturesEQUITY RESULTS AND OTHER RESULTS IN ASSOCIATES AND JOINT VENTURES

          20152018 compared to 2014.2017.

Our equity results and other results in associates and joint ventures in 2015 decreased2018 were a loss of US$182 million, compared to a loss of US$439 million from an income of US$50582 million in 2014,2017, mostly due to the negative results from Companhia Siderúrgica do Pecém (US$307US$487 million loss related to our investment in 2015)Samarco, driven by the additional provision recognized in 2018 (SeeBusiness overview-Failure of Samarco's Fundão tailings dam and note 22 to our consolidated financial statements), partially

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offset by positive results in 2018 from Samarcoour equity positions in our joint venture pelletizing plants (US$167 million loss in 2015) while in 2014 we had a positive result from Samarco (US$392 million income)305 million).

          20142017 compared to 2013.2016.

Our equity results and other results in associates and joint ventures increased to a US$505 million income in 2014 from a US$469 million income in 2013, mostly related to a positive result from Samarco, while the results in 20132017 were affected by the negative results of Thyssenkrupp Companhia Siderúrgica do Atlântico Ltd.

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Results on sale or disposal of investments in associates and joint ventures

          2015 compared to 2014.    Our results on sale or disposal of investments in associates and joint ventures increased to an income of US$97 million in 2015 from loss of US$30 million in 2014. In 2015, we had positive results from coal asset sale in the amount of US$79 million and energy generation assets in the amount of US$18 million. In 2014, the US$30 million loss refers to Vale Florestar.

          2014 compared to 2013.    While in 2014 we registered a loss of US$3082 million, relatedcompared to a loss of US$911 million in 2016, mostly due to the sale of our interest at Vale Florestar, in 2013 the income of US$41180 million is related to a gain on the sale of Log-In and a gain related to disposal of Fosbrasil, resulting in an income of US$27 million.

Impairment of investments in associates and joint ventures

          Impairments of investments in associates and joint ventures totaled US$446 million in 2015, of which US$132 millionloss related to our investment in Samarco, and US$314 million relateddriven by the write-downs of the debts instruments used to fund its working capital, partially offset by positive results in 2017 from our investmentequity positions in TEAL.our joint ventures (US$98 million). In 2014,2016, we recognized an impairment of US$311.109 billion related to our investments in Samarco.

RESULTS OF DISCONTINUED OPERATIONS

2018 compared to 2017.

In 2018, we had a net loss from discontinued operations attributable to Vale's stockholders of US$92 million compared to a loss of US$806 million in 2017. In January 2018, we concluded the transaction with The Mosaic Company ("Mosaic"), and received US$1,080 million in cash and 34.2 million common shares, corresponding to 8.9% of Mosaic's outstanding common shares after the issuance of these shares (US$899 million, based on the Mosaic's quotation at closing date of the transaction) and recognized an additional loss of US$55 million in the income statement from discontinued operations. In May 2018, we concluded the transaction with Yara International ASA to sell our assets located in Cubatão and received US$255 million in cash and recognized a loss of US$69 million in the income statement from discontinued operations. For more information on our investmentdiscontinued operations, see note 14 to our consolidated financial statements.

2017 compared to 2016.

In 2017, we had a net loss from discontinued operations attributable to Vale's stockholders of USS$806 million, compared to a loss of US$1,229 million in Vale Soluções em Energia S.A.2016. In 2013,December 2016, we entered into an agreement with Mosaic to sell a significant part of our fertilizer business. In January 2018, we concluded the transaction with Mosaic, which was preceded by final adjustments under the original terms and conditions of the negotiation. As consequence of these adjustments, an impairment loss of US$729 million was recognized noin 2017. Additionally, in November 2017, we entered into an agreement with Yara International ASA to sell our nitrogen assets located in Cubatão, Brazil and an impairment loss of investmentsUS$156 million was recognized in associates and joint ventures.2017.

Income taxesINCOME TAXES

          For 2015,2018 compared to 2017.

In 2018, we recorded a net income tax gainbenefit of US$5.100 billion,172 million, compared to a net income tax expense of US$1.2001.495 billion in 2014.2017, principally because of a benefit related to the recognition of a tax loss carry forward from a foreign subsidiary. In 2015,2018, our effective tax rate was 28.8%. Tax legislation that became effective in 2015 provides that income of our foreign subsidiaries will be taxed in Brazil, on an accrual basis, applying the differential between the local rate and the Brazilian tax rates. Accordingly, the18.1%, excluding this benefit. The effective tax rate was different from the statutory rate mainly due to: (i) unrecognized tax on current year losses, and (ii) nondeductible impairment, partially offset by the constitutiontax benefit from interest on stockholders' equity and the tax incentives for our iron ore, copper and nickel operations in the North and Northeast regions of Brazil. The incentives are calculated based on the taxable income of the incentive activity (tax operating income), taking into account the allocation of tax loss forward relatedoperating income to losses at foreign subsidiaries that we were able to recognize due to changedifferent tranches of law. Underproduction during the legislation that became effective in 2015, the accumulated lossesperiods

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Results of Operations

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specified for each product. In 2018, this tax incentive structure reduced our foreign subsidiaries as of December 31, 2014 were available to offset their future profits. On September 30, 2015, we filed the required tax return and completed the review of thenet income tax loss carryforwards available in each foreign subsidiary as of December 31, 2014, which permitted usexpense by US$1.449 billion.

2017 compared to recognize a deferred tax asset of US$2.952 billion related to accumulated losses in certain of our foreign subsidiaries.2016.

          For 2014,In 2017, we recorded net income tax expense of US$1.2001.495 billion, compared to ana net income tax expense of US$6.8332.781 billion in 2013.2016. In 2014, we had a nondeductible impairment related to2017, our iron ore operations in Guinea and our nickel operations in New Caledonia. Excluding the effect of these impairment charges and the reversal for tax loss carryforwards, the effective tax rate would have been 35.5%was 19.1%.

          In 2013, we had a tax expense from continued operations of US$4.048 billion in connection with the REFIS, a federal tax settlement program for payment of amounts relating to Brazilian corporate income tax and social contribution, in order to settle the claims related to the net income of our non-Brazilian subsidiaries and associates from 2003 to 2012. Our participation in the REFIS resulted in a substantial reduction in the amounts in dispute. For more information, seeAdditional information—Legal proceedings—Litigation on Brazilian taxation of foreign subsidiaries and Notes 6, 20 and 21 to our consolidated financial statements. The effective tax rate on our pretax income, excluding the income tax expense and financial expenses in connection with the REFIS, as well as the impairment of fixed assets, was 23.3%, which is lower thandifferent from the statutory rate mainly becausedue to US$432 million of unrecognized tax on current year losses, partially offset by the tax benefit of shareholder distributions categorized asfrom interest on shareholders' equity.stockholders' equity and the tax incentives for our iron ore, copper and nickel operations in the North and Northeast regions of Brazil. The incentives are calculated based on the taxable income of the incentive activity (tax operating income), taking into account the allocation of tax operating income to different tranches of production during the periods specified for each product. In 2017, this tax incentive structure reduced our net income tax expense by US$1.100 billion.

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LIQUIDITY AND CAPITAL RESOURCES

Overview

In the ordinary course of business, our principal funding requirements are for capital expenditures, dividend payments and debt service. We have historically metwill also need funding for remediation and reparation measures in connection with the failure of Dam I at Córrego do Feijão mine. We expect to meet these requirements, in line with our historical practice, by using cash generated from operating activities and through borrowings, supplemented by dispositions of assets.

For 2016,2019, we have budgeted capital expenditures of US$6.1674.334 billion, including US$3.172 billion703 million for project execution and US$2.9953.731 billion for sustaining existing operations and replacement projects. Our Board of Directors approved a contingency plan for 2016, pursuant to which we target reducing the investment budget for 2016 to US$5.561 billion. Our Board of Executive Officers has proposed that we not make dividend payments in 2016, subject to approval by our Board of Directors. A principal amount of US$2.012 billion773 million of our debt matures in 2016, including US$951 million which matured in January 2016.2019.

          As a result of the decrease in global commodity prices, we expect our operating cash flow to decrease in 2016. We have taken measures to reduce our capital expenditures, and we are constantly evaluating opportunities for additional cash generation, in order to mitigate the effect of this expected decrease in our operating cash flow. In 2015, for example, we entered into transactions to recover part of our investments in our business in Mozambique, and we are seeking project financing for the Nacala project. Additionally, we received an upfront payment of US$900 million and ongoing payments in consideration of the sale to Silver Wheaton of 25% of the gold stream from our Salobo copper mine, and we sold 12 of our very large ore carriers for US$1.316 billion. We continue to consider the sale of certain assets and investments, and joint ventures for certain of our businesses.generation. Finally, we are committed to continue the reduction in our costs and expenses, to reduce our debt leverage and to maintain discipline in capital allocation.

          We also regularly review acquisition and investment opportunities and, when suitable opportunities arise, we make acquisitions and investments to implement our business strategy. We may fund these investments with borrowings.

Sources of fundsSOURCES OF FUNDS

Our principal sources of funds are operating cash flow and borrowings.borrowings, supplemented by disposition of assets. The amount of operating cash flow is strongly affected by global prices for our products. In 2015,2018, our operating activities generated cash flows from continuedcontinuing operations of US$4.491 billion, compared to US$12.80712.901 billion, in 2014, reflecting primarilyline with the lower prices of iron ore and pellets.US$12.450 billion generated in 2017.

In 2015,2018, we borrowed US$4.01.225 billion under our new and existing financing agreements. Our major new borrowing transactions in 2015 are summarized below.

·

In 2015, we entered into pre-export financing facilities that are linked to future receivables from export sales, in the total amount of US$1.2 billion. These facilities will mature inagreements with commercial banks.

In 2018, and 2020.



·

In November 2015, we issued R$1.5 billion, or US$384 million, in export credit notes to a Brazilian commercial bank, which will mature in 2022.



·

In August 2015, we issued R$1.35 billion, or US$346 million, in infrastructure debentures maturing in 2020 and 2022 to finance part of the CLN S11D project.



·

In April 2015, we issued a bank credit note to a Brazilian bank in the amount of R$700 million, or US$179 million, maturing in 2022.



·

In 2015, we borrowed approximately US$750 million from BNDES to finance a variety of our iron ore and logistics infrastructure projects.

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·

The remaining US$1.14 billion mostly relates to trade finance transactions to finance general corporate purposes.

          In 2015, we received approximately US$3.41.481 billion as a result of divestments and sales of interests in certain joint ventures and investments.investments and sales of assets. The main divestment transactions in 20152018 are described below:

·•

In March 2015,January 2018, we received an initial cash payment of US$900 million1.080 billion from Silver Wheaton, as part ofMosaic following the sale an additional 25% of the gold produced from the Salobo copper mine for the life of mine. As a consequence of this transaction, we recorded a deferred liability in the amount of US$532 million, which will be recognized in our income statement as the services are rendered and the gold is extracted.



·

In April 2015, we received a cash payment of R$306 million, equivalent to US$97 million, from Cemig CT, as part of the transaction pursuant to which we sold 49% of our 9% participation in the Belo Monte hydroelectric plant project.



·

As partconclusion of the sale of 12 very large ore carriersa substantial part of 400,000 tons DWT previously ownedour fertilizer business (SeeResults of Operations—Results of discontinued operations and operated by Vale,note 14 to our consolidated financial statements).



•

In May 2018, we received cash payments of (i) US$445255 million from China Ocean Shipping Company in June 2015; (ii) US$448 million from China Merchants Energy Shipping Co. Ltd. in September 2015; and (iii) US$423 million from a consortium led by ICBC Financial Leasing in December 2015. We used partYara International ASA upon completion of the proceeds to repay debt to the Export-Import Banksale of Chinaour wholly owned subsidiary, Vale Cubatão Fertilizantes Ltda., which operated nitrogen and the Bank of China Limited that was incurred to finance the construction of the very large ore carriers, reducing the total debt byphosphate assets in Cubatão, Brazil.



•

We also received US$284 million.

          In September 2015, we received a cash payment of R$42.572 billion (US$1.089 billion) from an affiliate of Banco Bradesco S.A., asin proceeds from the saleproject financing, in repayment of preferred shares representing 36.4% stakecertain shareholders loans provided for construction of MBR. SeeNLC (SeeInformation on the Company——Business overview—Overview—Significant changes in our business.business- Partnership in coal assets in Mozambique).

USES OF FUNDS

UsesIn the ordinary course of fundsbusiness, our principal funding requirements are for capital expenditures, dividend payments and debt service. We will also need funding for remediation and reparation measures in connection with the failure of Dam I at Córrego do Feijão mine.

Capital expenditures

          CapitalOur capital expenditures in 20152018 amounted to US$8.4013.807 billion, including US$5.548 billion911 million for project execution and US$2.8532.896 billion dedicated to sustaining existing operations. Our actual capital expenditures detailed in other part of these report may differ from those reported in our cash flow statements, because actual figures include some amounts that are treated as current expenses for accounting purposes, such as expenses for project development and maintenance of existing assets. There may also be differences due to the fact that some actual figures are converted into U.S. dollars at the exchange rate on the date of each cash disbursement, while figures reported in our cash flow statements are converted into U.S. dollars based on average exchange rates. For more information about

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the specific projects for which we have budgeted funds, seeInformation on the Company—Capital expenditures.

Distributions and repurchases

          WeOn March 15, 2018, we paid totala second tranche of dividends on the results of the 2017 fiscal year of US$1.5 billion in 2015 (including distributions664 million and dividends on the results of the 2018 fiscal year of US$773 million, both classified as interest on shareholders' equity)stockholders' equity. We also repurchased 71,173,683 of our common shares (including common shares represented by ADSs), consistingin the total amount of US$1 billion.

On September 20, 2018, we paid dividends on the results of the 2018 fiscal year of US$1.876 billion in April(US$1.659 billion and US$500217 million in October. Our Board of Executive Officers proposed that we not distributeas dividends, in 2016, subject to approval by our Board of Directors. We did not repurchase any of our shares in 2015.both classified as interest on stockholders' equity.

Tax payments

We paid US$527676 million in income tax in 2015,2018, excluding the payments in connection with REFIS, compared to US$504563 million in 2014.2017. In connection with our participation in the REFIS, our outstanding commitment totals US$4.4314.349 billion, which will be paid in 154118 monthly installments. In 2015,2018, we paid a total of US$384452 million in connection with the REFIS.

Table of ContentsLiability Management

In 2018, we repaid US$6.479 billion in debt. Our main liability management transactions in the year are summarized below.

•

DebtThe full redemption of US$499 million of Vale Overseas Limited's ("Vale Overseas") outstanding 4.625% guaranteed notes due 2020.



•

Cash repurchases of US$969 million of Vale Overseas' outstanding 5.875% guaranteed notes due 2021, US$1,181 million of Vale Overseas' outstanding 4.375% guaranteed notes due 2022, US$600 million of Vale Overseas' outstanding 6.875% guaranteed notes due 2036 and US$980 million of our outstanding 5.625% notes due 2042. Combined, the tender offers allowed us to repay an aggregate principal amount of US$3.730 billion in debt.



•

The repayment of US$1.100 billion in pre-export payments facilities and US$259 million in Export Notes with commercial banks.



•

The repayment of US$891 million in loans with development agencies.

DEBT

As of December 31, 2015,2018, our total outstanding debt was US$28.85315.466 billion (including US$28.22915.228 billion of principal and US$624238 million of accrued interest) compared with US$28.80722.489 billion at the end of 2014.2017. As of December 31, 2015,2018, US$495233 million of our debt was secured by liens on some of our assets. As of December 31, 2015,2018, the weighted average of the remaining term of our debt was 8.13 years, compared to 9.108.9 years, in 2014.line with 2017.

As of December 31, 2015,2018, the short termshort-term debt and the current portion of long-term debt was US$2.5061.003 billion, including charges.accrued interest.

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Our major categories of long-term indebtedness are as follows.described below. The principal amounts given below include the current portion of long-term debt and exclude accrued charges.interest.

·•

U.S. dollar-denominated loans and financing (US$7.0472.337 billion atas of December 31, 2015)2018).  This category includes export financing lines, loans from export credit agencies, and loans from commercial banks and multilateral organizations.



·•

U.S. dollar-denominated fixed rate notes (US$14.1148.219 billion atas of December 31, 2015)2018).  We have issued in public offerings several series of fixed-rate debt securities, directly by Vale and through our finance subsidiary Vale Overseas, Limited, guaranteed by Vale, totaling US$12.4627.819 billion. Our subsidiary Vale Canada has outstanding fixed ratefixed-rate debt in the amount of US$400 million.



·•

Euro-denominated loans and financing (US$229 million as of December 31, 2018).  This category includes loans from export credit agencies.



•

Euro-denominated fixed rate notes (US$1.633 billion at859 million as of December 31, 2015)2018).  We have issued in public offerings twooffering this series of fixed-ratefixed rate debt securities denominated in Euro totaling €1.500 billion.an amount of €750 million.



·•

Other debt (US$5.4353.584 billion atas of December 31, 20152018).).  We have outstanding debt, principally owed to BNDES, Brazilian commercial banks and holders of infrastructure debentures, denominated in Brazilianreais and other currencies.

We have a variety of credit lines available, including the following, as of December 31, 2015:2018:

·

Credit lines for R$7.3 billion, or US$1.9 billion, to finance our investment program. As of December 31, 2015, the total amount available under these facilities was R$1.4 billion, or US$365 million.



·•

A R$3.910.050 billion or US$1.0 billion, financing agreement with BNDES to finance part of the implementation of the CLN 150 Mtpy project, which will expand the logistics infrastructure in Vale's Northern System. As of December 31, 2015, this facility was almost fully drawn.



·

A R$6.2 billion, or US$1.6 billion,(US$3.3 billion) financing agreement with BNDES to finance part of the implementation of the S11D project and its infrastructure (CLN S11D). As of December 31, 2015,2018, the total amount available under this facility was R$2.9 billion, or US$730 million.834 million (US$215 million).



·•

We have two revolving credit facilities with syndicates of international banks, which will mature in 20182020 and 2020.2022. The revolving credit lines allow more efficient cash management, consistent with our strategic focus on cost of capital reduction. As of December 31, 2015,2018, we had not drawn any amounts under these facilities and the total amount available under these facilities was US$5.05.000 billion (with US$3.000 billion available until 2020), which can be drawn by Vale, Vale Canada and Vale International. In January 2016, we drew US$3.0 billion under these facilities.

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Some of our long-term debt instruments contain financial covenants. In particular, instruments representing approximately 21%18% of the aggregate principal amount of our total debt require that we maintain, as of the end of each quarter, (a)(i) a consolidated ratio of total debt to adjusted EBITDA for the past twelve12 months not exceeding 4.5 to one and (b)(ii) a consolidated interest coverage ratio of at least 2.0 to one. These covenants appear in our financing agreements with BNDES, with other export and development agencies, and with some other lenders. During the last quarter of 2015, we agreed with lenders under these agreements to amend the leverage ratio to require a ratio of 5.5 to one through the end of 2016, which will give us flexibility to finalize our investment cycle. On December 31, 2015, (i) our consolidated ratio of total debt to adjusted EBITDA for the past twelve months was 4.1 to one and (ii) our consolidated interest coverage ratio was 4.8 to one.

As of December 31, 2015,2018, the corporate guarantees we provided (corresponding to our direct or indirect interest) for the companies Norte Energia S.A. and Companhia Siderúrgica do Pecém S.A. totaled US$274331 million and US$1.1721.404 billion, respectively. As a result

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Table of the transfer of 49% of our 9% stake in Norte Energia S.A. to Cemig GT, the guarantee for Norte Energia S.A. is now shared with Cemig GT.Contents

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CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations as of December 31, 2015.2018. This table excludes other common non-contractual obligations that we may have, including pension obligations, deferred tax liabilities and contingent obligations arising from uncertain tax positions, all of which are discussed in the notes to our consolidated financial statements.

	​	Payments due by period																						​	​	Payments due by period																	​
	​	Total		​	Less than 1 year				​	2017 – 2018				​	2019 – 2020				​	Thereafter				​	​	Total		​	Less than 1 year		​	2020		​	2021		​	2022		​	Thereafter		​
	​	(US$ million)																						​	​	(US$ million)																	​
Debt less accrued interest	​	US$28,229		​	​	US$2,011		​	​		US$6,714		​	​		US$6,459		​	​		US$13,045		​	​	​	15,228		​	773		​	1,053		​	1,233		​	1,872		​	10,297		​
Interest payments(1)	​	17,393		​	​	1,477		​	​		3,064		​	​		2,669		​	​		10,183		​	​	​	8,950		​	831		​	799		​	732		​	662		​	5,926		​
Operating lease obligations(2)	​	286		​	​	56		​	​		121		​	​		109		​	​		–		​	​	​	2,497		​	250		​	201		​	189		​	165		​	1,692		​
Purchase obligations(3)	​	9,100		​	​	4,225		​	​		2,566		​	​		791		​	​		1,518		​	​	​	7,327		​	2,677		​	1,445		​	548		​	463		​	2,194		​
​	​	​		​	​				​	​				​	​				​	​				​	​	​		​	​		​	​		​	​		​	​		​	​		​
Total	​	US$55,008		​	​	US$7,769		​	​		US$12,465		​	​		US$10,028		​	​		US$24,746		​	​	​	34,002		​	4,531		​	3,498		​	2,702		​	3,162		​	20,109		​
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(1)

Consists of estimated future payments of interest on our loans, financings and debentures, calculated based on interest rates and foreign exchange rates applicable atas of December 31, 20152018 and assuming that (i) all amortization payments and payments at maturity on our loans, financings and debentures will be made on their scheduled payments dates, and (ii) our perpetual bonds are redeemed on the first permitted redemption date. Amounts do not include derivatives transactions.

(2)

Amounts include fixed payments related to the operating lease agreements in place with third parties for port structures and port operations, transportation services, energy plants and property leases for its operational facilities. We also have long-term agreements for the exploration and processing of iron ore with its joint ventures, such as the agreements to lease pelletizing plants in Brazil.

(3)

The purchase obligations derive mainly from take-or-pay contracts, contracts for the pellet plants.

(3)

Obligationsacquisition of fuel and energy and the acquisition of raw materials and services. For more information, see note 32 to purchase materials. Amounts are based on contracted prices, except for purchasesour consolidated financial statements.

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OFF-BALANCE SHEET ARRANGEMENTS

          AtAs of December 31, 2015,2018, we did not have any off-balance sheet arrangements as defined in the SEC's Form 20-F. For information on our contingent liabilities see Note 30 to our consolidated financial statements.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We believe that the following are our critical accounting policies. We consider an accounting policy to be critical if it is important to our financial condition and results of operations and if it requires significant judgments and estimates on the part of our management. For a summary of all of our significant accounting policies, see Note 32 to our consolidated financial statements.

Table of ContentsCONSOLIDATION

Mineral reservesIn some circumstances, our judgment is required to determine whether, after considering all relevant factors, we have either control, joint control or significant influence over an entity. Significant influence includes situations of collective control. We hold the majority of the voting capital in five joint arrangements (Aliança Geração de Energia S.A., Aliança Norte Energia Participações S.A., Companhia Hispano-Brasileira de Pelotização, Companhia Ítalo-Brasileira de Pelotização and useful lifeCompanhia Nipo-Brasileira de Pelotização), but our management has concluded that we do not have a sufficiently dominant voting interest to have the power to direct the activities of minesthe entity, as the power to make relevant decisions shared with other parties, pursuant to the terms of shareholders' agreements. As a result, these entities are accounted for under the equity method.

MINERAL RESERVES AND MINES USEFUL LIFE

We regularly evaluate and update our estimates of proven and probable mineral reserves. Our proven and probable mineralThese reserves are determined using generally accepted estimation techniques. Calculating our reserves requires us to make assumptions about future conditions that are uncertain, including future ore and metal prices, currency prices, inflation rates, mining technology, availability of permits, production and capital costs. Changes in some or all of these assumptions could have a significant impact on our recorded proven and probable reserves.

          OneThe estimated volume of mineral reserves is used as basis for the calculation of depletion of the ways we make our ore reserve estimatesmineral properties and also for the estimated useful life, which is a major factor to determinequantify the mine closure dates used in recording the fair value of ourprovision for asset retirement obligations forobligation, environmental recovery of mines and site reclamation costsimpairment of long-lived assets. Any changes to the estimates of the volume of mine reserves and the periods over which we amortize our mining assets. Any change in our estimatesuseful lives of total expected future mine or asset lives couldassets may have ana significant impact on the depreciation, depletion and amortization charges recorded in our consolidated financial statements under costand assessments of goods sold and impairment test. Changes in the estimated lives of our mines could also significantly impact our estimates of environmental and site reclamation costs, which are described in greater detail below.impairment.

Asset retirement obligationASSET RETIREMENT OBLIGATIONS

Expenditures relating to ongoing compliance with environmental regulations are charged against earnings or capitalized as appropriate. These ongoing programs are designed to minimize the environmental impact of our activities.

We recognize a liability for the fair value of our estimated asset retirement obligations in the period in which they are incurred, if a reasonable estimate can be made. We consider the accounting estimates related to reclamation and closure costs to be critical accounting estimates because:

·•

we will not incur most of these costs for a number of years, requiring us to make estimates over a long period;



·•

reclamation and closure laws and regulations could change in the future or circumstances affecting our operations could change, either of which could result in significant changes to our current plans;

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·•

calculating the fair value of our asset retirement obligations requires us to assign probabilities to projected cash flows, to make long-term assumptions about inflation rates, to determine our credit-adjusted risk-free interestthe applicable discount rates that reflect the current market assessments of the time value of the money and the risks specific to determine market risk premiums that are appropriate for our operations;the liability; and



·•

given the significance of these factors in the determination of our estimated environmental and site reclamation costs, changes in any or all of these estimates could have a material impact on net income. In particular, given the long periods over which many of these charges are discounted to present value, changes in our assumptions about credit-adjusted risk-free interest rates could have a significant impact on the size of our provision.

Our Environmental Department definesexecutive officers define the policies and procedures that should beare used to evaluate our asset retirement obligations. The future costs of retirement of our mines and processing assets at all our sites are reviewed annually, in each case considering the actual stage of exhaustion and the projected exhaustion date of each mine and site. The future estimated retirement costs are discounted using applicable discount rates that reflect current market assessments of the time value of money and of the risks specific to present value using a credit-adjusted risk-free interest rate.the liability.

As of December 31, 2015,2018, we estimated the fair value of our aggregate total asset retirement obligations to be US$2.4743.115 billion.

Table of ContentsIMPAIRMENT OF NON-CURRENT ASSETS AND ONEROUS CONTRACTS

Impairment of non-currentNon-financial assets

          We annually assess whether there is any objective evidence of are reviewed for impairment of our financial assets and long-lived, non-financial assets. For financial assets measured through amortized cost, we comparewhenever events or changes in circumstances indicate that the carrying amount withmight not be recoverable. An impairment loss is recognized for the expectedamount by which the asset's carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal ("FVLCD") and value in use ("VIU").

FVLCD is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset, adjusted to reflectincluding any expansion prospects, and its eventual disposal. VIU model is determined as the present value. For long-lived, non-financial assets (such as intangible assets or property plant and equipment), when there are indications of impairment, we conduct the test by comparing the recoverable value of thesethe estimated future cash flows expected to arise from the continued use of the asset in its present form. VIU is determined by applying assumptions specific to the company's continued use and cannot take into account future development. These assumptions are different to those used in calculating fair value and consequently the VIU calculation is likely to give a different result to a FVLCD calculation.

Assets that have an indefinite useful life and are not subject to amortization, such as goodwill, are tested annually for impairment.

For the purposes of assessing impairment, assets (which are grouped at the lowest levels for which there are separately identifiable cash flows of(Cash Generating Units ("CGUs")). Goodwill is allocated to CGUs or CGU groups that are expected to benefit from the corresponding cash-generating unit) to their carrying amount. If we identify the need for adjustment for a particular asset, we apply that adjustment consistently for the corresponding cash-generating unit. The recoverable amount for an asset is the higher of (i) its value in use and (ii) its fair value less the cost of selling it.

          We determine our discounted cash flows based on approved budgets, considering mineral reserves and mineral resources calculated by internal experts, costs and investments. These determinations also take into account our past performance, sales prices consistent with projections used in industry reports and information about market prices when available and appropriate. Cash flows used in our impairment testing are based on the life of each cash-generating unit, or on the consumption of reserve units in the case of minerals, and considering discount rates that reflect specific risks relating to the relevant assets in each cash-generating unit, depending on their composition and location.

          Goodwill balances arising from business combinations intangible assetsin which the goodwill arose and are identified in accordance with indefinite useful lives and lands are tested for impairment at least once a year, regardless of any indication of impairment of their carrying value.the operating segment.

Non-current assets (excluding goodwill) in which wethe company recognized as impairment in the past are reviewed whenever events or changes in circumstances indicate that the impairment may no longer be applicable. In such cases, an impairment reversal will be recognized.

Fair valuesFor onerous contracts, a provision is recognized for certain long-term contracts when the present value of derivativesthe unavoidable cost to meet our obligation exceeds the economic benefits that could be received from those contracts.

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Critical Accounting Policies and other financial instrumentsEstimates

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FAIR VALUES OF DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS

Derivatives transactions that are not qualified asfor hedge accounting are classified and presented as an economic hedge, as we use derivative instruments to manage our financial risks as a way of hedging against these risks. Derivative financial instruments are recognized as assets or liabilities in the balance sheet and are measured at their fair values. Changes in the fair values of derivatives are recorded in the statement of comprehensive income statement or in stockholders' equity when the transaction is eligible to be characterized asfor effective hedge accounting.

          We have entered into some cash flow hedges that qualify for hedge accounting. We use well-known market participants' valuation methodologies to compute the fair value of instruments. To evaluate the financial instruments, we use estimates and judgments related to present values, taking into account market curves, projected interest rates, exchange rates, counterparty (credit) risk adjustments, forward market prices and their respective volatilities, when applicable. We evaluate the impact of credit risk on financial instruments and derivative transactions, and we enter into transactions with financial institutions that we consider to have a high credit quality. The exposure limits to financial institutions are proposed annually by the Executive Risk Committee and approved by the Board of Executive Officers. The financial institution's credit risk tracking is performed making use of a credit risk valuation methodology that considers, among other information, published ratings provided by international rating agencies and other management judgments. During 2015, we implemented hedge accounting for foreign exchange hedge and bunker costs hedge. In 2015, we recorded net losses on our income statement of US$2.916 billion in relation to derivative instruments, including US$481 million of realized losses relating to derivatives instruments designated as cash flow hedge accounting.

Table of ContentsDEFERRED INCOME TAXES

Deferred income taxes

We recognize deferred tax effects of tax loss carryforwards and temporary differences in our consolidated financial statements. We recorddo not recognize a valuation allowancetax asset when we believe that it is probable that tax assetsit will not be fully recoverable in the future.

Deferred tax assets arising from tax losses, negative social contribution basis and temporary differences are registered taking into consideration the analysis of future performance, based on economic and financial projections, prepared based on internal assumptions and macroeconomic, trade and tax scenarios that may be subject to changes in future.

When we prepare our consolidated financial statements, the provision for income tax is calculated individually for each entity inof the groupCompany based on Brazilian tax rates, on an accrual basis, by applying the differential between the nominal local tax rates (based on rules in force in the location of the entity) and the Brazilian rate. This requires us to estimate our actual current tax exposure and to assess temporary differences that result from deferring treatment of certain items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which we show on our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income. To the extent we believe that recovery is not probable, we record a provision against a tax expense in our statement of income. When we reduce the provision, we record a tax benefit in our statement of income.

Determining our provision for income taxes and our deferred tax assets and liabilities and any valuation allowance to be recorded against our net deferred tax assets requires significant management judgment, estimates and assumptions about matters that are highly uncertain. For each income tax asset, we evaluate the likelihood of whether some portion or the entire asset will not be realized. The valuation allowance madeDeferred tax assets recognized in relation to accumulated tax loss carryforwards depends on our assessment of the probability of generation of future taxable profits within the legal entity in which the related deferred tax asset is recorded, based on our production and sales plans, commodity prices, operating costs, environmental costs, group restructuring plans for subsidiaries and site reclamation costs and planned capital costs.

LitigationLITIGATION

We disclose material contingent liabilities unless the possibility of any loss arising is considered remote, and we disclose material contingent assets where the inflow of economic benefits is probable. We discuss our material contingencies in Note 18note 28 to our consolidated financial statements.

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Critical Accounting Policies and Estimates

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We record an estimated loss from a loss contingency when information available prior to the issuance of our financial statements indicates that it is probable that an outflow of resources will be required to settle an obligation, and the amount of the loss can be reasonably estimated. In particular, given the nature of Brazilian tax legislation, the assessment of potential tax liabilities requires significant management judgment. By their nature, contingencies will only be resolved when one or more future events occurs or fails to occur, and typically those events will occur a number of years in the future. Assessing such liabilities, particularly in the Brazilian legal environment, inherently involves the exercise of significant management judgment and estimates of the outcome of future events.

The provision for litigation atas of December 31, 2015,2018, totaling US$822 million,1.357 billion, consists of provisions of US$454496 million for labor, US$79166 million for civil, US$269692 million for tax and US$203 million for otherenvironmental claims. Claims wherefor which the likelihood of loss, in our opinion and based on the advice of our legal counsel, the likelihood of loss is reasonably possible but not probable, and for which we have not made provisions, amounted to a total of US$9.90813.124 billion atas of December 31, 2015,2018, including claims of US$1.8661.475 billion for labor claims, US$1.3351.957 billion for civil claims, US$5.3268.641 billion for tax claims and US$1.3811.051 billion for otherenvironmental claims.

Table of ContentsEMPLOYEE POST-RETIREMENT BENEFITS

Employee post-retirement benefits

We sponsor defined benefit pension and other post-retirement benefit plans covering some of our employees. The determination of the amount of our obligations for these benefits depends on certain actuarial assumptions. These assumptions are described in Note 21note 29 to our consolidated financial statements and include, among others, the discount rate, the expected long-term rate of return on plan assets and increases in salaries.

PROVISION RELATED TO SAMARCO MINERAÇÃO S.A.

The provision requires the use of assumptions that may be mainly affected by: (i) changes in scope of work required under the Framework Agreement as result of further technical analysis, (ii) uncertainty regarding the timing of resumption of Samarco's operations; (iii) updates in the discount rate; and (iv) resolution of existing and potential legal claims. As a result, future expenditures may differ from the amounts currently provided and changes to key assumptions could result in a material impact to the amount of the provision in future reporting periods. For each reporting period, we will reassess the key assumptions used by Samarco in the preparation of the projected cash flows and will adjust the provision, if required.

DEFERRED REVENUE

Defining the gain on sale of mineral interest and the deferred revenue portion of the transaction requires the use of critical accounting estimates as follows: (i) discount rates used to measure the present value of future inflows and outflows; (ii) allocation of costs between nickel or copper and gold based on relative prices; and (iii) expected margin for the independent elements (sale of mineral rights and service for gold extraction) based on our best estimate.

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RISK MANAGEMENT

The aimpurpose of our risk management strategy is to promote enterprise-widecompany-wide risk management that supports the achievement of our growth strategy, strategic plan, corporate governance practicesobjectives, financial strength and financial flexibility to support maintenance of investment grade status. and business continuity.

We developed an integrated framework for managing risk, which considers the impact on our business of not only market risk factors (market risk), but also risks arising from third party obligations (credit risk), risks associated with inadequate or failed internal processes, people, systems or external events (operational risk), risks arising from third-party obligations (credit risk), risks from exposure to legal penalties, fines or reputational losses associated with failure to act in accordance with applicable laws and regulations, internal policies or best practices (compliance risk), and risks associated with our business model, governance and political and regulatory conditions in countries in which we operate (political(strategic risk).

          In order to achieve this objective and to further improve our corporate governance practices, our Board of Directors has established a company-wide risk management policy and an Executive Risk Management Committee. The risk management policy requires that we regularly evaluate and monitor the corporate risk on a consolidated basis in order to guarantee that our overall risk level remains in accordance with the acceptable corporate risk guidelines.

, among others. See Note 24note 33 to our consolidated financial statements for quantitative information about risks relating to financial instruments, including financial instruments entered into pursuant to our risk management policies.

MarketIn order to achieve this objective and to further improve our corporate governance practices, our Board of Directors created the Governance, Compliance and Risk Committee. SeeManagement—Advisory Committees to the Board of Directors. In 2018, we approved a new Risk Management Policy with the purposes described below.

•

Supporting the strategic planning, budget and sustainability of our business.



•

Strengthening the capital structure and asset management of our business.



•

Strengthening our governance practices, based on lines of defense model described below.



•

Managing risks considering the concepts of international norms, such as ISO 31000 and COSO-ERM.



•

Measuring and monitoring our risks, on a consolidated basis, considering the effect of diversification, when applicable, of our entire business.



•

Assessing the impact of new investments, acquisitions and divestitures on our risk map and risk approach.



•

Adapting our risk approach to the needs of its growth plan, our strategic planning and our business continuity.

RISK GOVERNANCE STRUCTURE

Our integrated risk governance practice is based on lines of defense model described below. We reevaluate our risk practices from time to time to ensure the alignment between strategic decisions, performance and the risk approach determined by our Board of Directors.

First line of defense.    Consists on the personnel in charge of addressing the specific risk and the process executors of business, project, support and administrative areas. This is the personnel directly responsible for identifying, evaluating, treating, monitoring and managing the risk events in an integrated way. This first line of defense must:

•

Take measures to maintain the risks under its responsibility within the defined levels, implement and execute effective preventive and mitigation controls, ensure appropriate

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definition and execution of action plans and establish corrective actions for the continuous improvement of risk management.

•

Continuously assess the applicability of risks in our integrated risk map to the activities and geographies under its responsibility.



•

Report to our Board of Executive Officers and the Board of Directors the potential impacts that are in the imminence to occur, following the existing governance mechanisms to address the treatment of mapped risks, as well as report on the risks under its responsibility to the Risk Executive Committee, Board of Executive Officers, Board of Directors or to one of our Advisory Committees, as applicable.



•

Establish and implement crisis management protocols and business continuity plans for the risk events under their responsibility, as applicable. For events with significant impacts, drills should be performed in order to verify the efficiency and effectiveness of the crisis management protocols. The frequency of the drills should be defined by the first line of defense according to the criticality, observing local rules and specific legislation.



•

Meet the guidelines defined by the second line of defense.

Second line of defense.    Corresponds to risk management, internal controls, policies management, legal compliance and other specialist areas. The second line of defense is in charge of supervising and supporting the work of first line of defense, providing training and instruments for risk management. The second line of defense must identify and monitor new and emerging risks, ensure compliance with laws, regulations, internal norms and promote continuous improvement in risk management.

Our Board of Executive Officers is responsible for defining the responsibilities of Governance, Risk and Compliance (GRC) area, which includes:

•

Developing and implementing policies, methodologies, processes and infrastructure for integrated risk management.



•

Reporting to our Risk Executive Committee, periodically, the main risks to which we are exposed, within the defined scope, and how those risks are being monitored, controlled and treated.



•

Ensuring a compliance environment, not only addressing legal issues, but also including the compliance with internal policies and standards.



•

Ensuring compliance with risk governance model.

Some areas, such as Environment, Health and Safety, Corporate Integrity and Information Security, act as a second line of defense with respect to specific risks, monitoring risks and controls, and ensuring the compliance with regulations, policies and standards. The definition of the areas that will be the second line of defense specialist has been delegated to the Risk Executive Committee.

Based on our risk matrix, the Board of Executive Officers will define the scope and the operating model of GRC area, considering the combination of severity with probability whose occurrence could jeopardize the achievement of organization's objectives.

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Third line of defense.    The third line of defense is composed of areas that are independent from our management. It includes the Internal Audit and the Ethics and Conduct Office, which perform, within their scopes of work, evaluations, inspections, control tests, risk analysis and investigations of complaints, providing independence assurance, including with respect to the effectiveness of risk management, internal controls and compliance.

MARKET RISK

We are exposed to various market risk factors that can impact our financial stability and cash flow. An assessment of the potential impact of the consolidated market risk exposure is performed periodically to support ourthe decision making processes and growthprocess regarding the risk management strategy, ensure financial flexibility and monitor future cash flow volatility.

          When necessary, market risk mitigation strategies are evaluated and implemented. Some of these strategieswhich may incorporate financial instruments, including derivatives. The financial instrument portfolios areportfolio is monitored on a monthly basis, enabling us to properly evaluate financial results and their impact on cash flow, and ensure correlation between the strategies implemented and the proposed objectives.

Considering the nature of our business and operations, the main market risk factors that we are exposed to are:

·•

Foreign exchange rates and interest rates:rates.  ourOur cash flows are exposed to the volatility of several currencies against the U.S. dollar.dollar and of interest rate on loans and financings. While most of our product prices are indexed to U.S. dollars, most of our costs, disbursements and investments are indexed to currencies other than the U.S. dollar, principally the Brazilianreal and the Canadian dollar. We may use derivative instruments, primarily forward transactions and swaps, in order to reduce our potential cash flow volatility arising from this currency mismatch. We also have debt instruments denominated in currencies other than U.S. dollars, mainly in Brazilianreais and euros. We may use swaps and forward transactions to convert into U.S. dollars a portion of the cash outflows fromof these debt instruments.



We are also exposed to interest rate risk on loans and financings. Our floating rate debt consists mainly of loans including export pre-payments, commercial bank loans and multilateral organization loans. In general, the U.S. dollar floating rate debt is subject to changes into LIBOR (London Interbank Offer Rate) in U.S. dollars. To mitigate the impact of interest rate volatility on our cash flows, we take advantage of natural hedges resulting from the correlation between commodity prices and U.S. dollar floating interest rates. If such natural hedges are not present, we may opt to obtain the same effect by using financial instruments.

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Product prices and input costs:costs.  weWe are also exposed to market risks associated with commodities price volatilities. In line with our risk management policy, weWe may also employenact risk mitigation strategiesprograms in situations such as the following: (i) where there is a risk of financial distress; (ii) to manage this risk that cansupport commercial activities and specific needs of our business segments; and (iii) to protect from the increase of certain cost items, such as bunker oil and freight chartering. These programs include predominantly forward transactions, futures contracts and zero-cost collars. In 2015, we entered into transactions to partially hedge our exposure to nickel, copper and bunker oil prices.options.

Credit riskOPERATIONAL AND CYBER RISK

Operational risk

Operational risk management is the structured approach we take to manage uncertainty related to internal and external events. Internal events consist of inadequate or failed internal processes, people and systems, while external events include natural and operational catastrophes caused by third parties.

We mitigate operational risk with new controls and improvement of existing ones, new mitigation plans and transfer of risk through insurance. We seek a clear view of the major risks we are exposed to, the cost-benefit on mitigation plans and the controls in place to closely monitor the impact of operational risks and to efficiently allocate capital to reduce it.

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Cyber risk

Cybernetic risk is the approach taken to manage information security risks such as theft and leakage of information, technology assets unavailability and compromising data integrity.

CREDIT RISK

We are exposed to credit risk arising from trade receivables, derivative transactions, guarantees, down payment for suppliers and cash investments. Our credit risk management process provides a framework for assessing and managing counterparties' credit risk and for maintaining our risk at an acceptable level.

Commercial credit risk management

We assign an internal credit rating and a credit limit to each counterparty using our own quantitative methodology for credit risk analysis, which is based on market prices, external credit ratings and financial information of the counterparty, as well as qualitative information regarding the counterparty's strategic position and history of commercial relations.

Based on the counterparty's credit risk, or based on our consolidated credit risk profile, risk mitigation strategies may be used to manage our credit risk. The main credit risk mitigation strategies include non-recourse discount of receivables, insurance instruments, letters of credit, corporate and bank guarantees, mortgages, among others.

From a geographic standpoint, we have a diversified accounts receivable portfolio, with China,Asia, Europe Brazil and JapanBrazil, the regions with the most significant exposure. According to each region, different guarantees can be used to enhance the credit quality of the receivables. We monitor the counterparty exposure in the portfolio periodically and we block additional salescommercial credit to customers in delinquency.

Treasury credit risk management

To manage the credit exposure arising from cash investments and derivative instruments, our Board of Executive Officers approves, on an annual basis, credit limits by counterparty. Furthermore,are approved to each counterparty to which we have credit exposure. We control the portfolio diversification the overall credit riskand monitor different indicators of the treasury portfoliosolvency and the riskliquidity of each counterparty by monitoring market credit risk.our different counterparties that were approved for trading.

Operational riskCOMPLIANCE RISK

          Operational risk management is the structured approachUnder our bylaws, we takeare prohibited from making, directly or indirectly through third parties, any contribution to manage uncertainty related to inadequatepolitical movements in Brazil or failed internal processes, people and systemsabroad, including those organized as political parties, and to their representatives or candidates.

STRATEGIC RISK

Strategic risk comprises governance, business model, external events.environment issues, regulatory, political, economic or social actions taken by governments or other stakeholders.

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          We mitigate operational risk with new controls and improvement of existing ones, new mitigation plans and transfer of risk through insurance. As a result, the Company seeks to have a clear view of its major risks, the cost-benefit on mitigation plans and the controls in place to monitor the impact of operational risk closely and to efficiently allocate capital to reduce it.

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III.IV.      SHARE OWNERSHIP AND TRADING

MAJOR SHAREHOLDERS

          ValeparOur corporate capital is Vale's controlling shareholder. Valepar is a special-purpose company organized under the lawscurrently composed of Brazil that was incorporated for the sole purpose of holding an interest in Vale. Valepar does not have any other business activity. Valepar acquired its controlling stake in Vale from the Brazilian government in 1997 as part of the first stage of Vale's privatization.

          The following table sets forth information regarding ownership of Vale shares by the shareholders we know beneficially own more than 5% of any class of our outstanding capital stock, and by our directors and executive officers as a group.

	​	Common shares owned(1)	​	% of class	​	Preferred shares owned(1)	​	% of class
Valepar(2)	​	1,716,435,045	​	53.9%	​	20,340,000	​	1.0%
BNDESPAR(3)	​	206,378,882	​	6.5%	​	66,185,272	​	3.4%
Capital Group International, Inc.(4)	​	n/a	​	n/a	​	205,280,842	​	10.13%
Capital Research Global Investors(4)	​	n/a	​	n/a	​	214,275,432	​	10.57%
Directors and executive officers as a group	​	9,300	​	Less than 1.0%	​	1,593,367	​	Less than 1.0%

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(1)

As of December 31, 2015.

(2)

See the tables below for information about Valepar's shareholders.

(3)

BNDESPAR is a wholly-owned subsidiary of BNDES. The figures do not include5,284,474,770 common shares beneficially (as opposed to directly) owned by BNDESPAR.

(4)

Based on notices provided to the Company pursuant to Brazilian law by Capital Group International, Inc. (CGII) and Capital Research Global Investors (CRGI). According to the notices, (a) CGII and CRGI are part of the same economic group, (b) the economic group also includes Capital World Investors (CWI), which together with CRGI is a division of Capital Research and Management Company, and (c) CWI holds 5,620,000 additional preferred shares, corresponding to 0.28% of Vale's preferred shares.

          The Brazilian government also owns 12 golden shares of Vale, which give itissued to the Brazilian government. The 12 golden shares have veto powers over certain actions, such as changes to our name, the location of our headquarters and our corporate purpose as it relates to mining activities. In July 2018, the Board of Directors approved a US$1 billion share buy-back program, which was concluded in November 2018.

The following table below sets forth information regarding ownership of Valepar commonVale shares by the shareholders we know beneficially own more than 5% of our outstanding capital stock, and by our directors and executive officers as a group, as of December 31, 2015.2018.

	​	Common shares owned	​	% of class		​
Valepar shareholders	​		​			​
Litel Participações S.A.(1)	​	637,443,857	​	49.00%		​
Eletron S.A.	​	380,708	​	0.03		​
Bradespar S.A.(2)	​	275,965,821	​	21.21		​
Mitsui	​	237,328,059	​	18.24		​
BNDESPAR	​	149,787,385	​	11.51		​
​	​	​	​	​		​
Total	​	1,300,905,830	​	100.00%		​
​	​	​	​	​		​
​	​	​	​	​		​
​	​	​	​	​		​

	​	Common shares owned	​	% of class
Litel Participações S.A.(1).	​	1,075,773,534	​	20.4%
Capital Research and Management Company(2)	​	485,848,934	​	9.2%
BNDESPAR(3)	​	342,484,176	​	6.5%
Bradespar S.A.(4)	​	296,009,366	​	5.6%
Mitsui	​	286,347,055	​	5.4%
BlackRock, Inc.(5)	​	272,763,231	​	5.2%
Directors and executive officers as a group	​	960,191	​	Less than 1%

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(1)

Litel also owns 200,864,272 preferred class AIncludes common shares of Valepar, which represents 71.41% of the preferred class A shares. LitelA, an affiliate of Litel, also owns 80,416,931 preferred class A shares of Valepar, which represents 28.59% of the preferred class A shares.owned by Litela Participações S.A.

(2)

Capital Research and Management Company administers, through its independent investment divisions Capital Research Global Investors, Capital International Investors and Capital World Investors, respectively, 265,599,956 common shares, 14,405,939 common shares and 205,843,039 common shares, corresponding to, respectively, 5.0%, 0.3% and 3.9% of our share capital.

(3)

BNDESPAR is a wholly owned subsidiary of BNDES. As reported in BNDESPAR's amended beneficial ownership report on Schedule 13D, filed with the SEC on September 25, 2018.

(4)

Bradespar is controlled by a control group consisting of Cidade de Deus—Cia. Comercial Participações, Fundação Bradesco, NCF Participações S.A. and Nova Cidade de Deus Participações S.A.

(5)

As reported in BlackRock, Inc.'s beneficial ownership report on Schedule 13G, filed with the SEC on February 4, 2019.

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The table below sets forth information regarding ownership of Litel Participações S.A., one of Valepar's shareholders, as of December 31, 2015.2018.

	​	Common shares owned	​	% of class				​	​	Common shares owned	​	% of class		​
Litel Participações S.A.shareholders(1)	​		​	​			​	​	​		​			​
BB Carteira Ativa	​	193,740,121	​	​	78.40		​	​	​	222,125,666	​	80.62%		​
Carteira Ativa II	​	31,688,443	​	​	12.82		​	​
Carteira Ativa III	​	19,115,620	​	​	7.74		​	​
Singular	​	2,583,919	​	​	1.05		​	​
Caixa de Previdência dos Funcionários do Banco do Brasil	​	22	​	​	–		​	​
Carteira Ativa II FIA									​	31,688,469	​	11.50%		​
PETROS									​	19,115,854	​	6.94%		​
Singular FIA									​	2,583,921	​	0.94%		​
Others	​	220	​	​	–		​	​	​	439	​	0.00%		​
​	​	​	​	​				​	​	​	​	​		​
Total	​	247,128,345	​	​	100.00		%	​	​	275,514,349	​	100.00%		​
​	​	​	​	​				​	​	​	​	​		​
​
​	​	​	​	​				​	​	​	​	​		​

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(1)

Each of BB Carteira Ativa, and Carteira Ativa II and Singular FIA is a Brazilian investment fund. BB Carteira Ativa is 100.00%100% owned by Previ—Caixa de Previdência dos Funcionários do Banco do Brasil ("Previ").Brasil. Carteira Ativa II is 100% owned by Funcef. Carteira Ativa III is 100% owned by Petros.Fundação dos Economiários Federais—FUNCEF. Singular FIA is 100% owned by Fundo de Investimentos em Cotas de Fundo de Investimento em Ações VRD, ("FIC de FI em Ações VRD"). FIC de FI em Ações VRDwhich in turn is 100% owned by Fundação Cesp.CESP—Funcesp. Each of Previ,PREVI, Funcef, Petros Funcef and Fundação CespFuncesp is a Brazilian pension fund.fund, managing pension plans of employees of Banco do Brasil, Caixa Econômica Federal, Petróleo Brasileiro S.A. and Cia. Energética do Estado de São Paulo, respectively.

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          The shareholders of Valepar are parties to a shareholders' agreement, which expires in 2017. The Valepar shareholders' agreement also:

·

grants rights of first refusal on any transfer of Valepar shares and preemptive rights on any new issue of Valepar shares;​



·

prohibits the direct acquisition of Vale shares by Valepar's shareholders unless authorized by the other shareholders party to the agreement;



·

prohibits encumbrances on Valepar shares (other than in connection with financing an acquisition of Vale shares);



·

requires each party generally to retain control of its special purpose company holding its interest in shares of Valepar, unless the rights of first refusal previously mentioned are observed;



·

allocates seats on Valepar's and Vale's boards among representatives of the parties;



·

commits the Valepar shareholders to support a Vale dividend policy of distributing 50% of Vale's net profit for each fiscal year, unless the Valepar shareholders commit to support a different dividend policy for a given year;



·

provides for the maintenance by Vale of a capital structure that does not exceed specified debt to equity thresholds;



·

requires the Valepar shareholders to vote their indirectly held Vale shares and to cause their representatives on Vale's Board of Directors to vote only in accordance with decisions made at Valepar meetings held prior to meetings of Vale's Board of Directors or shareholders; and



·

establishes supermajority voting requirements for certain significant actions relating to Valepar and to Vale.

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          Pursuant to the Valepar shareholders' agreement, Valepar cannot support any of the following actions with respect to Vale without the consent of at least 75% of the holders of Valepar's common shares:

·

any amendment of Vale's bylaws;

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CHANGES IN OUR SHAREHOLDING STRUCTURE

In 2017, we successfully completed a series of measures to simplify our shareholding structure and enhance our corporate governance. These measures are summarized below:

·•

In August and October 2017, we converted our preferred class A shares into common shares (and ADSs representing our preferred class A shares into ADSs representing our common shares). As a result, we removed our preferred class A shares from trading on the B3 and ADSs representing preferred class A shares from trading on the New York Stock Exchange ("NYSE").



•

In August and December 2017, we concluded a series of amendments to our bylaws in order to enhance our corporate governance and prepare the Company to join the Novo Mercado segment of the B3.



•

In August 2017, Valepar S.A. (Valepar), former controlling shareholders of Vale, merged into Vale at an exchange ratio that represented a dilution of approximately 3% of the shareholding interest held by the other shareholders of Vale. Consequently, the former shareholders of Valepar own 36.72% of our outstanding common stock after the merger of Valepar. See—Shareholders' Agreement for more information on the new agreement among the former shareholders of Valepar.



•

In December 2017, Vale was listed on the Novo Mercado segment of the B3, the special listing segment for companies committed to the highest standards of corporate governance;

SHAREHOLDERS' AGREEMENT

On August 14, 2017, Litel, Bradespar, Mitsui and BNDESPAR executed the Shareholders' Agreement, by means of which they undertook to vote jointly on certain issues. The following are key provisions of the Shareholders' Agreement:

•

Term:  The Shareholders' Agreement will be effective until November 9, 2020.



•

Shares subject to the agreement:  The Shareholders' Agreement will only apply to a portion of the common shares of Vale to be owned by the parties thereto, in a total amount of 20% of Vale's common shares (not including treasury shares). However, in any general shareholders' meeting, common shares owned by the parties to the Shareholders' Agreement but not subject to the agreement must be voted in accordance with the shares subject to the agreement.



•

Shareholders' prior meetings:  The Shareholders' Agreement does not require meetings thereunder prior to each meeting of the Vale Board of Directors or general shareholders' meeting, unless convened any of the parties to the proposed Vale shareholders' agreement.



•

Qualified quorum matters:  The Shareholders' Agreement requires approval, in a prior meeting, of shareholders holding at least 75% of the shares subject to the agreement owned by the parties in attendance for approval of the following matters, among others:



◦

any amendment of Vale's bylaws;



◦

any increase of Vale's capital stock by share subscription, creation of a new class of shares, change in the characteristics of the existing shares or any reduction of Vale's capital stock;

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·◦

any issuance of debentures of Vale, whether or not convertible into shares of Vale, participation certificates upon compensation (partes beneficiárias), call options (bônus de subscrição) or any other security of Vale;



·◦

any determination of issuance price for any new shares of capital stock or other security of Vale;



·

any amalgamation, spin-off or merger to which Vale is a party, as well as any change to Vale's corporate form;



·◦

any dissolution, receivership, bankruptcy or any other voluntary act for financial reorganization of Vale or the suspension of any suspension thereof;of these proceedings;



·◦

the election and replacementremoval of any member of Vale's Board of Directors, includingand the Chairmanelection and removal of the Board, and any executive officer of Vale;



·◦

the disposal or acquisition by Vale of an equity interest in any company, as well as the acquisition of any shares of capital stock of Vale or Valepar;



·

the participation by Vale in a group of companies or in a consortium of any kind;



·

the execution by Vale of agreements relating to distribution, investment, sales exportation, technology transfer, trademark license, patent exploration, license to use and leases;



·

the approval and amendment of Vale's business plan;



·

the determination of the aggregate and individual compensation of the executive officers and directors of Vale, as well as the duties of the Board of Directors and the Board of Executive Officers;



·

any profit sharing among the members of the Board of Directors, or Board of Executive Officers and advisory committees;



◦

creation of Vale;



·

any changecompanies by Vale, the conversion of currently existing companies into another types of legal entity, the direct or indirect acquisition or disposition of Vale's interests in the capital stock of other companies or entities, including through mergers and spin-offs, as well as the amendment of the corporate purposedocuments of Vale;these legal entities, whenever the amount involved is equal or greater than 1% of Vale's shareholders' equity, based on Vale's most recent quarterly financial information;



·◦

the distribution or non-distribution of any dividends (including distributions classified as interest on shareholders' equity) on any shares of capital stock of Vale other than as provided in Vale's bylaws;50% of the net income;



·◦

the appointment and replacement of Vale's independent auditor;



·

the creation of any "in rem"security interest or guarantee granting of guarantees including rendering of sureties by Vale to any third parties, including companies controlled by or affiliated with respectVale, except for subsidiaries of which Vale owns at least 99% of the capital stock;



◦

the approval of Vale's maximum limit of indebtedness;



◦

the approval of Vale's strategic guidelines and plan, as well as annual and pluriannual budgets and fundraising plan;



◦

any investments or divestments by Vale, as well as any investment agreements, in an amount equal to obligationsor greater than 1% of Vale's shareholders' equity, based on Vale's most recent quarterly financial information;



◦

the approval of any unrelated party, including any affiliatesrelated-party transactions policy;



◦

the disposal of fixed assets of Vale in an amount exceeding (i) separately, 0.15% of Vale's total assets, or subsidiaries;(ii) in the aggregate, in a twelve-month period, 0.5% of Vale's total assets, based on Vale's most recent quarterly financial information;



·◦

the passingcancellation of any resolutionVale's listing or the reduction of Vale's listing level on any matter which, pursuant to applicable law, entitles a shareholder to withdrawal rights;the B3; and



·◦

the appointment and replacementremoval by theVale's Board of DirectorsExecutive Officers of any representative of Valethe chief executive officer in subsidiaries, companies related toaffiliated with Vale or other companies in which Vale is entitled to appoint directors and officers; and



·

any change in the debt to equity threshold, as defined in the shareholders' agreement.chief executive officer.

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          In addition, the shareholders' agreement provides that any issuance of participation certificates by Vale and any disposition by Valepar of Vale shares requires the unanimous consent of all of Valepar's shareholders.

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RELATED PARTY TRANSACTIONS

We have a policy on related party transactions, which sets forth rules and principles to ensure transparency and arm's-length terms in our transactions with related parties and other situations of potential conflicts of interest. The definition of related party is based on applicable accounting standards and on this internal policy, which may be more restrictive than applicable laws and regulations under certain circumstances. Pursuant to that policy and our bylaws, our Governance, Compliance and Risk Committee is responsible for issuing reports about potential conflicts of interest between us and our shareholders or management and for reviewing the procedure and terms of related party transactions that are submitted to our Board of Directors for approval. Under the policy, if we identify a conflict of interest with a shareholder, then that shareholder or its representative may not participate in any discussions related to the transaction at any shareholders' meeting and will only have access to publicly available information about the matter. In addition, if we identify a conflict of interest with a member of the Board of Directors or an executive officer, then such member of the Board or executive officer may not participate in any discussions or have access to any information or document related to the matter. The policy also prohibits the extension of any loans to related parties other than our subsidiaries and affiliated companies. For information regarding investments in associate companies and joint ventures and for information regarding transactions with major related parties, see notes 16 and 31 to our consolidated financial statements.

We have engaged, and expect to continue to engage, in arm's-length transactions with certain entities controlled by, or affiliated with, our controlling shareholders, including the following:principal shareholders.

·

BradescoBRADESCO—

Bradespar a controlling shareholder of Valepar, is controlled by a group of entities that also control Banco Bradesco S.A. ("Bradesco"). Bradesco and its affiliates are full servicefull-service financial institutions that have performed, and may perform in the future, certain investment banking, advisory or general financing and banking services for us and our affiliates, from time to time, in the ordinary course of business. In September 2015, we soldAn affiliate of Bradesco owns preferred shares representing 36.4% of the total capital of our subsidiary MBR to an affiliate of Bradesco for R$4 billion (US$1.089 billion). SeeMBR.

BANCO DO BRASIL Information on the Company—Business overview—Significant changes in our business.



·

Banco do Brasil—

Previ, a pension fund of the employees of Banco do Brasil S.A. ("Banco do Brasil"), owns 100% of the investment fund BB Carteira Ativa, which holds the majority of the common equity of Litel Participações S.A., which in turn holds 49%20.4% of the common equityshares of Valepar.Vale. Banco do Brasil appoints three out of the six members of Previ's senior management. An affiliate of Banco do Brasil is the manager of BB Carteira Ativa. Banco do Brasil is also a full servicefull-service financial institution, and Banco do Brasil and its affiliates have performed, and may perform in the future, certain investment banking, advisory or general financing and banking services for us and our affiliates, from time to time, in the ordinary course of business.

MITSUI





·

Mitsui—We have commercial relationships in the ordinary course of our business with Mitsui, a large Japanese conglomerateconglomerate. Mitsui has direct investments in some of our subsidiaries, joint ventures and a shareholderassociated companies. Mitsui is also our joint venture partner at VLI. Mitsui has an indirect stake in Vale Mozambique and Nacala Corridor Holding, which controls the coal operations (mine, rail and port) in Mozambique (seeInformation on the Company—Business overview—Significant changes in our business).

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·

BNDESRelated Party Transactions

,​

BNDES

BNDES is the Brazilian state-owned development bank isand the parent company of one of our major shareholders, BNDESPAR.

Below is a description of our main transactions with BNDES:

We and BNDES are parties to a contract relating to authorizations for mining exploration. This contract, which we refer to as the Mineral Risk Contract, provides for the joint development of certain unexplored mineral deposits that form part of our Northern System, except for our iron ore and manganese ore deposits which were specifically excluded from the contract, as well as proportional participation in any profits earned from the development of such resources. In 2007, the Mineral Risk Contract was extended indefinitely, with specific rules for all exploration projects and exploration targets and mineral rights covered under the contract.


BNDES has provided us with credit lines of R$7.3 billion, or US$1.9 billion, to finance our investment program, facilities totaling R$985 million, or US$252 million, to finance the acquisition of equipment in Brazil, a R$3.9 billion or US$1.0 billion,(US$1.2 billion) financing for our CLN 150 Mtpy project and a R$6.2 billion or US$1.6 billion,(US$1.9 billion) financing for our S11D project and its infrastructure (CLN S11D).
For more information on our transactions with BNDES, seeOperating and financial review and prospects—Liquidity and capital resources.

BNDES holds a total of R$1.163 billion, or US$298937 million (US$242 million), in debentures of our subsidiary Salobo Metais S.A., with a right to subscribe for Salobo's preferred shares in exchange for part of the outstanding debentures, which right expires two years after Salobo reaches an accumulated revenue equivalent to 200,000 metric tons of copper.


BNDES holds debentures issued by Vale exchangeable into common shares of VLI.

BNDESPAR is in the control group of several Brazilian companies with which we have commercial relationships in the ordinary course of our business.


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For more information on our transactions with BNDES, see​Operating and financial review and prospects—Liquidity and capital resources.

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          Mitsui has direct investments in some of our subsidiaries, joint ventures and associated companies. Mitsui has a minority stake in our subsidiary MVM Resources International B.V., which controls the Bayóvar (Peru) phosphate operations, and is part of a joint venture that holds an equity stake in our subsidiary VNC. Mitsui is also our joint venture partner at VLI, and BNDES holds debentures issued by Vale exchangeable into common shares of VLI. In December 2014, we entered into an investment agreement with Mitsui in connection with our coal business in Mozambique (seeInformation on the Company—Business overview—Significant changes in our business).

          We have a policy on Related Party Transactions, which sets forth rules and principles to ensure transparency and arm's-length conditions in our transactions with related parties and other situations of potential conflicts of interest. Pursuant to that policy and our bylaws, our Governance and Sustainability Committee is responsible for issuing reports about potential conflicts of interest between us and our shareholders or management and for reviewing the procedure and terms of related party transactions that are submitted to our Board of Directors for approval. Under the policy, if we identify a conflict of interest with a shareholder, then that shareholder or its representative may not participate in any discussions related to the transaction at any shareholders' meeting and will only have access to publicly available information about the matter. The policy also prohibits the extension of any loans to related parties other than our subsidiaries and affiliated companies.

          For information regarding investments in associate companies and joint ventures and for information regarding transactions with major related parties, see Notes 11 and 30 to our consolidated financial statements.

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DISTRIBUTIONS

          Under our dividend policy, our BoardImmediately following the failure of Executive Officers announces, by no later than January 31 of each year, a proposal to be approved byDam I, our Board of Directors determined the suspension of a minimum amount, expressed in U.S. dollars, that will be distributed in that year to our shareholders. Distributions may be classified either asdividend policy, and therefore no payment of dividends or interest on shareholders' equity will be made pursuant to Vale's Distribution Policy, and referencesno decision with respect to "dividends" shouldshare buyback will be understood to include all distributions regardlessmade until further determination of their classification, unless stated otherwise. We determine the minimum dividend payment in U.S. dollars, considering our expected free cash flow generation in the year of distribution. The proposal establishes two installments, to be paid in April and October of each year. Each installment is submitted to the Board of Directors for approval at meetings in April and October. Once approved, dividends are converted into and paid inreais at the Brazilianreal/U.S. dollar exchange rates announced by the Central Bank of Brazil on the last business day before the Board meetings in April and October of each year. The Board of Executive Officers can also propose to the Board of Directors, depending on the evolution of our cash flow performance, an additional payment to shareholders of an amount over and above the minimum dividend initially established.

          For 2016, our Board of Executive Officers has proposed that we not make dividend payments in 2016, subject to approval by our Board of Directors. We pay the same amount per share on both common and preferred shares in accordance with our bylaws.

          Also, we will submit a proposal to modify our current dividend policy for approval of our shareholders at our next shareholders' meeting.

Under Brazilian law and our bylaws, we are required to distribute to our shareholders an annual amount equal to not less than 25% of the distributable amount, referred to as the mandatory dividend, unless the Board of Directors advises our shareholders at our shareholders' meeting that payment of the mandatory dividend for the preceding year is inadvisable in light of our financial condition. For a discussion of dividend distribution provisions under Brazilian corporate law and our bylaws, seeAdditional information. In September 2018, we paid dividends to our shareholders in the amount of US$1.876 billion, which exceeds the minimum dividends required by law for the year of 2018.

The tax regime applicable to distributions to ADR and HDR holders and to non-resident shareholders will depend on whether those distributions are classified as dividends or as interest on shareholders' equity. SeeAdditional information—Taxation—Taxation—Brazilian tax considerations.

By law, we are required to hold an annual shareholders' meeting by April 30 of each year at which an annual dividend may be declared. Additionally, our Board of Directors may declare interim dividends. Under Brazilian corporate law, dividends are generally required to be paid to the holder of record on a dividend declaration date within 60 days following the date the dividend was declared, unless a shareholders' resolution sets forth another date of payment, which, in either case, must occur prior to the end of the fiscal year in which the dividend was declared. A shareholder has a three-year period from the dividend payment date to claim dividends (or payments of interest on shareholders' equity) in respect of its shares, after which we will have no liability for such payments. From 1997 to 2003, all distributions took the form of interest on shareholders' equity. In many years, part of the distribution has been made in the form of interest on shareholders' equity and part as dividends. SeeAdditional information—Memorandum and articles of association—Common shares and preferred shares.

We make cash distributions on the common shares and preferred shares underlying the ADSs inreais to the custodian on behalf of the depositary. The custodian then converts such proceeds into U.S. dollars and transfers such U.S. dollars to be delivered to the depositary for distribution to holders of ADRs and HDRs, net of the depositary's fees. For information on taxation of dividend distributions, seeAdditional information—Taxation—Taxation—Brazilian tax considerations.

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The following table sets forth the cash distributions we paid to holders of common shares and preferred shares for the periods indicated. Amounts have been restated to give effect to stock splits that we carried out in subsequent periods. Amounts are stated before any applicable withholding tax.

	​		​	Reais per share					​		​
Year	​	Payment date	​	Dividends	​	Interest on equity	​	Total	​	U.S. dollars per share(1)	​	U.S. dollars total (US$ million)(1)
2010	​	April 30	​	–	​	0.42	​	0.42	​	0.24	​	1,250
	​	October 31	​	–	​	0.56	​	0.56	​	0.34	​	1,750
2011	​	January 31	​	–	​	0.32	​	0.32	​	0.19	​	1,000
	​	April 29	​	–	​	0.61	​	0.61	​	0.38	​	2,000
	​	August 26	​	0.93	​	–	​	0.93	​	0.58	​	3,000
	​	October 31	​	0.39	​	0.63	​	1.02	​	0.58	​	3,000
2012	​	April 30	​	–	​	1.08	​	1.08	​	0.59	​	3,000
	​	October 31	​	0.66	​	0.53	​	1.19	​	0.58	​	3,000
2013	​	April 30	​	0.15	​	0.71	​	0.86	​	0.44	​	2,250
	​	October 31	​	0.12	​	0.82	​	0.94	​	0.44	​	2,250
2014	​	April 30	​	–	​	0.90	​	0.90	​	0.41	​	2,100
	​	October 31	​	0.34	​	0.65	​	0.99	​	0.41	​	2,100
2015	​	April 30	​	–	​	0.60	​	0.60	​	0.19	​	1,000
	​	October 31	​	0.37	​	–	​	0.37	​	0.10	​	500

	​		​	Reais per share					​	U.S. dollars per share(1)	​
Year	​	Payment date	​	Dividends	​	Interest on equity	​	Total	​	Total	​	U.S. dollars total(1) (US$ million)
2014	​	April 30	​	–	​	0.90	​	0.90	​	0.41	​	2,100
	​	October 31	​	0.34	​	0.65	​	0.99	​	0.41	​	2,100
2015	​	April 30	​	–	​	0.60	​	0.60	​	0.19	​	1,000
	​	October 31	​	0.37	​	–	​	0.37	​	0.10	​	500
2016	​	December 16	​	–	​	0.17	​	0.17	​	0.05	​	250
2017	​	April 28	​	–	​	0.91	​	0.91	​	0.28(2)	​	1,470(2)
2018	​	March 15	​	–	​	0.91	​	0.91	​	0.28(2)	​	1,451(2)
	​	September 20	​	0.17	​	1.31	​	1.48	​	0.36(2)	​	1.861(2)

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(1)

As approved by the Board of Directors.

(2)

Calculated based on the exchange rate for the US dollar (Ptax-Option 5) published by the Central Bank of Brazil (BCB), on the day prior to payment.

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TRADING MARKETS

Our publicly traded share capital consists of common shares, and preferred shares, each without par value. Our common shares and our preferred shares are publicly traded in Brazil on the BM&FBOVESPA,B3, under the ticker symbols VALE3 and VALE5, respectively.symbol VALE3. Our common shares and preferred shares also trade on the LATIBEX, under the ticker symbols XVALO and XVALP, respectively.XVALO. The LATIBEX is a non-regulated electronic market created in 1999 by the Madrid stock exchange in order to enable trading of Latin American equity securities.

Our common ADSs, each representing one common share, and our preferred ADSs, each representing one preferred share, are traded on the New York Stock Exchange ("NYSE"),NYSE, under the ticker symbols VALE and VALE.P, respectively.symbol VALE. Our common ADSs and preferred ADSs are traded on Euronext Paris under the ticker symbols VALE3 and VALE5, respectively.symbol VALE3. Citibank N.A. serves as the depositary for both the common and the preferred ADSs, having replaced JPMorgan Chase Bank N.A. onADSs. On December 22, 2015. On February 29, 2016,31, 2018, there were 1,499,728,2151,211,272,764 common ADSs outstanding, 835,578,121 common ADSs and 664,150,094 preferred ADSs, representing 26.2% of our outstanding common shares and 33.8% of our outstanding preferred shares, or 29.1%22.92% of our total share capital.

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          Our common HDSs, each representing one common share, and our preferred HDSs, each representing one class A preferred share, are traded on the HKEx, under the stock codes 6210 and 6230, respectively. JPMorgan Chase Bank N.A. serves as the depositary for both the common and the preferred HDSs. On February 29, 2016, there were 2,019,850 HDSs outstanding, consisting of 1,813,300 common HDSs and 206,550 preferred HDSs.

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SHARE PRICE HISTORY

          The following table sets forth trading information for our ADSs, as reported by the New York Stock Exchange and our shares, as reported by the BM&FBOVESPA, for the periods indicated. Share prices in the table have been adjusted to reflect stock splits.

	​	BM&F BOVESPA (Reais per share)							​	NYSE (US$ per share)
	​	Common share			​	Preferred share			​	Common ADS			​	Preferred ADS
	​	High	​	Low	​	High	​	Low	​	High	​	Low	​	High	​	Low
2011	​	60.92	​	38.59	​	53.41	​	36.54	​	37.02	​	20.51	​	32.50	​	19.58
2012	​	45.87	​	32.45	​	53.41	​	32.12	​	37.08	​	15.88	​	32.50	​	15.67
2013	​	44.10	​	28.39	​	42.60	​	26.00	​	21.49	​	12.63	​	20.88	​	11.47
2014	​		​		​		​		​		​		​		​
1Q	​	35.71	​	29.26	​	32.73	​	25.90	​	15.25	​	12.42	​	14.01	​	10.93
2Q	​	33.34	​	28.40	​	30.12	​	25.47	​	15.07	​	12.62	​	13.61	​	11.19
3Q	​	32.92	​	26.54	​	29.36	​	23.30	​	14.83	​	10.87	​	13.23	​	9.49
4Q	​	28.31	​	18.69	​	24.80	​	16.00	​	11.80	​	6.86	​	10.31	​	5.89
2015	​		​		​		​		​		​		​		​
1Q	​	22.84	​	17.94	​	20.10	​	15.45	​	8.69	​	5.65	​	7.63	​	4.85
2Q	​	27.06	​	17.54	​	20.30	​	14.95	​	8.80	​	5.58	​	6.66	​	4.77
3Q	​	19.94	​	15.35	​	16.00	​	12.27	​	5.90	​	4.03	​	5.00	​	3.21
4Q	​	20.79	​	11.65	​	16.26	​	9.32	​	5.48	​	3.07	​	4.31	​	2.43
Last six months	​		​		​		​		​		​		​		​
September 2015	​	19.94	​	16.48	​	16.00	​	13.19	​	5.19	​	4.03	​	4.15	​	3.21
October 2015	​	20.79	​	16.14	​	16.26	​	13.33	​	5.48	​	4.19	​	4.31	​	3.46
November 2015	​	17.75	​	13.17	​	14.40	​	10.63	​	4.72	​	3.37	​	3.85	​	2.68
December 2015	​	13.25	​	11.65	​	10.52	​	9.32	​	3.45	​	3.07	​	2.73	​	2.43
January 2016	​	13.03	​	8.89	​	10.25	​	6.73	​	3.29	​	2.15	​	2.55	​	1.60
February 2016	​	13.14	​	8.60	​	9.40	​	6.57	​	3.34	​	2.16	​	2.37	​	1.63

DEPOSITARY SHARES

Citibank N.A. serves as the depositary for our ADSs, having replaced JPMorgan Chase Bank N.A. on December 22, 2015. JPMorgan Chase Bank N.A. serves as the depositary for our HDSs.ADSs. ADR holders and HDR holders are required to pay various fees to the depositary, and the depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid.

ADR holders and HDR holders are required to pay the depositary amounts in respect of expenses incurred by the depositary or its agents on behalf of ADR holders, and HDR holders, including expenses arising from compliance with applicable law, taxes or other governmental charges, facsimile transmission or conversion of foreign currency into U.S. or Hong Kong dollars. In this case, the depositary may decide in its sole discretion to seek payment by either billing holders or by deducting the fee from one or more cash dividends or other cash distributions. The depositary may recover any unpaid taxes or other governmental charges owed by an ADR holder or HDR holder by billing such holder, by deducting the fee from one or more cash dividends or other cash distributions, or by selling underlying shares after reasonable attempts to notify the holder, with the holder liable for any remaining deficiency.

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ADR holders are also required to pay additional fees for certain services provided by the depositary, as set forth in the table below.

Depositary service	​	Fee payable by ADR holders
Issuance of ADSs upon deposit of shares, excluding issuances as a result of distributions described in the following item	​	Up to US$5.00 or less per 100 ADSs (or fraction thereof) issued
Distribution of securities other than ADSs or rights to purchase additional ADSs (i.e., spin-off shares)	​	Up to US$5.00 or less per 100 ADSs (or fraction thereof) held
Distribution of cash dividends or other cash distributions (i.e., sale of rights and other entitlements)	​	Up to US$5.00 or less per 100 ADSs (or fraction thereof) held
Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) exercise of rights to purchase additional ADSs	​	Up to US$5.00 or less per 100 ADSs (or portion thereof) held
Delivery of deposited property against surrender of ADSs	​	Up to US$5.00 or less per 100 ADSs (or portion thereof) heldsurrendered
ADS services	​	Up to US$5.00 per 100 ADSs (or fraction thereof) held on the applicable record date(s) established by the depositary

The depositary may deduct applicable depositary fees and charges from the funds being distributed in the case of cash distributions. For distributions other than cash, the depositary will invoice the amount of the applicable depositary fees to the applicable holders.

Additional ChargesADDITIONAL CHARGES

The holders, beneficial owners, persons depositing shares and persons surrendering ADSs for cancellation and for the purpose of withdrawing deposited securities are also subject to the following charges: (i) taxes (including applicable interest and penalties) and other governmental charges; (ii) registration fees as may be applicable from time to time; (iii) reimbursement of certain expenses as provided in the deposit agreement; (iv) the expenses and charges incurred by the depositary in the conversion of foreign currency; (v) certain fees and expenses incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements; and (v)(vi) certain fees and expenses incurred in connection with the delivery or servicing of deposited shares, as provided for under the deposit agreement.

          HDR holders are also required to pay additional fees for certain services provided by the depositary, as set forth in the table below.

​

​	​	​
Depositary service	​	Fee payable by HDR holders
Issuance, cancellation and delivery of HDRs, including in connection with share distributions, stock splits​	​	HK$0.40 or less per HDS (or portion thereof)
Distribution of dividends and other cash distributions​	​ ​	HK$0.40 or less per HDS ​ 130
​ Transfer of certificated or direct registration HDRs​	​	HK$2.50 or less per HDS
Administration fee assessed annually	​	HK$0.40 or less per HDS (or portion thereof)

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Depositary Shares

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The depositary reimburses us for certain expenses we incur in connection with the ADR programs and HDR programs,other expenses, subject to a ceiling agreed between us and the depositary from time to time. These reimbursable expenses currently include legal and accounting fees, listing fees, investor relations expenses and fees payable to service providers for the distribution of material to ADR holdersholders. The depositary also agreed to make an additional reimbursement annually based on the issuance and HDRcancellation fees, dividend fees and depositary service fees charged by the depositary to our ADS holders. For the year ended December 31, 2015, the JPMorgan Chase Bank2018, Citibank N.A. reimbursed us US$12.167 million in connection with the ADR and HDR programs.4.673 million.

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PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

          Vale did not engage in anyOn December 11, 2018, we announced the completion of the US$1 billion share repurchase program during 2015.approved by the Board of Directors on July 25, 2018. We acquired 71,173,683 common shares at an average price of US$14.05 per share (including common shares represented by ADSs), for a total aggregate purchase price of US$1.0 billion. The repurchased shares represent 1.37% of the free float of common shares outstanding before the launching of the program. See note 30 to our consolidated financial statements for further information.

The results of our share repurchase program for 2018 are set forth below.

	​	Total number of common shares purchased(1)	​	Average price paid per common share	​	Total number of common shares purchased as part of publicly announced programs	​	Maximum number of shares that may yet be purchased under the program
	​		​	(US$)	​		​
August 2018	​	32,353,894	​	13.35	​	32,353,894	​	–
September 2018	​	6,802,524	​	13.80	​	6,802,524	​	–
October 2018	​	13,136,543	​	14.78	​	13,136,543	​	–
November 2018	​	18,880,722	​	14.83	​	18,880,722	​	–
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Total	​	71,173,683	​	14.05	​	71,173,683	​	–

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(1)

Includes common shares represented by ADSs.

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IV.V.  MANAGEMENT AND EMPLOYEES

MANAGEMENT

Board of DirectorsBOARD OF DIRECTORS

Our Board of Directors sets general guidelines and policies for our business and monitors the implementation of those guidelines and policies by our executive officers. Our bylaws provide for a Board of Directors consisting of 1112 members and 1112 alternates, each of whom serves on behalf of a particular director. All members (and their respective alternates) are elected for the same two-year term at a general shareholders' meeting, can be re-elected, and are subject to removal at any time. Our bylaws provide that the chief executive officer cannot serve as chairman of the Board of Directors. In the shareholders' meeting scheduled for April 30, 2019, our shareholders will vote a proposal to increase the number of members of our Board of Directors to 13 members.

The Board of Directors holds regularly scheduled meetings on a monthly basis and holds additional meetings when called by the chairman, vice-chairman or any two directors. Decisions of the Board of Directors require a quorum of a majority of the directors and are taken by majority vote. Alternate directors may attend and vote at meetings in the absence of the director for whom the alternate director is acting.

          TenAll members (and their respective alternates) are elected for the same two-year term at a general shareholders' meeting, can be re-elected, and are subject to removal at any time. The terms of all of our 11directors and alternate directors will expire at the Ordinary General Shareholder's meeting of 2019.

Eight of our eleven current directors (and nineseven of our 10eight alternate directors) were appointed by Valepar. This includes an additional director appointed by Valepar, because no individual or group of common and preferred shareholders met the thresholds described under our bylaws and Brazilian corporate law.parties to the Shareholders' Agreement. One director and his respective alternate are appointed by our employees, pursuant to our bylaws. Non-controlling shareholders holding common shares representing at least 15% of our voting capital and preferred shares representing at least 10% of our total share capital, have the right to appoint onemay elect a member and an alternate to our Board of Directors. Our employeesSeeMemorandum and Articles of Association—Voting Rights.

New listing rules applicable to independence requirements for the Novo Mercado came into force in January 2018. Pursuant to the Novo Mercado listing rules and our non-controlling shareholders each have the right, as a class, to appoint one director and an alternate. The terms of allbylaws, at least two directors or 20% of our directors, whichever number is higher, must be independent. We currently have two independent members. If the proposal to increase the number of board members to 13 is approved, we expect to have at least one additional independent member in our Board of Directors. To be considered independent under our bylaws and alternate directors will expirethe Novo Mercado listing rules in effect in 2018, a director may not (i) have current professional ties to Vale other than as a member of the Board of Directors or be a significant shareholder of Vale; (ii) have been an employee or executive of Vale or of any party to the Shareholders' Agreement for at least the Ordinary General Shareholder's meetingpast three years; (iii) sell goods or services to or purchase goods or services from Vale; (iv) be affiliated with any party to the Shareholders' Agreement; (v) be a relative, to the second degree, of 2017.any director or executive of Vale; (vi) have been a member of Vale's audit committee in the past three years; and (vii) be an affiliate of any non-profit organization receiving significant financial resources from Vale.

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The following table lists the current members of the Board of Directors and each director's alternate.

Director(1)	​	Year first elected	​	Alternate director(1)	​	Year first elected
Gueitiro Matsuo Genso (chairman)	​	2015	​	Gilberto Antonio Vieira	​	2015
Sérgio Alexandre Figueiredo Clemente (vice-chairman)	​	2014	​	Moacir Nachbar Junior	​	2015
Dan Antonio Marinho Conrado	​	2012	​	Arthur Prado Silva(4)	​	2015
Marcel Juviniano Barros	​	2012	​	Francisco Ferreira Alexandre	​	2013
Tarcísio José Massote de Godoy	​	2015	​	Robson Rocha	​	2011
Fernando Jorge Buso Gomes	​	2015	​	Luiz Mauricio Leuzinger	​	2012
Oscar Augusto de Camargo Filho	​	2003	​	Eduardo de Oliveira Rodrigues Filho	​	2011
Luciano Galvão Coutinho	​	2007	​	Victor Guilherme Tito	​	2015
Hiroyuki Kato	​	2014	​	Yoshitomo Nishimitsu	​	2015
Alberto Ribeiro Guth(2)	​	2015	​	Vacant	​	–
Lucio Azevedo(3)	​	2015	​	Carlos Roberto de Assis Ferreira	​	2015

Director	​	Year first elected	​	Alternate director	​	Year first elected
Gueitiro Matsuo Genso (chairman)	​	2015	​	Gilberto Antonio Vieira	​	2015
Fernando Jorge Buso Gomes (vice-chairman)	​	2015	​	Vacant	​	–
Oscar Augusto de Camargo Filho	​	2003	​	Eduardo de Oliveira Rodrigues Filho	​	2011
Dan Antônio Marinho Conrado	​	2012	​	Arthur Prado Silva	​	2015
Marcel Juviniano Barros	​	2012	​	Gilmar Dalilo Cezar Wanderley	​	2017
Lucio Azevedo(1)	​	2015	​	Raimundo Nonato Alves Amorim(1)	​	2017
Eduardo Refinetti Guardia	​	2016	​	Robson Rocha	​	2011
Toshiya Asahi	​	2017	​	Yoshitomo Nishimitsu	​	2015
Vacant	​	–	​	Luiz Mauricio Leuzinger	​	2012
Sandra Maria Guerra de Azevedo(2)(3)	​	2017	​	Vacant	​	–
Isabella Saboya de Albuquerque(3)	​	2017	​	Vacant	​	–
Ney Roberto Ottoni de Brito	​	2018	​	Vacant	​	–

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(1)

Appointed by Valepar and approved at the shareholders' meeting unless otherwise indicated.our employees.

(2)

AsMs. Guerra was elected in a result of the resignation of a member, Mr. Alberto Ribeiro Guth was appointedseparate election by the Board of Directors as effective Director on June 25, 2015.non-controlling shareholders.

(3)

Appointed by our employees.

(4)

As a result of the resignation of an alternate member, Mr. Arthur Prado Silva was appointed by the Board of Directors as alternative member of Mr. Dan Antonio Marinho Conrado on July 29, 2015.Independent directors.

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Below is a summary of the business experience, activities and areas of expertise of our current directors.

Gueitiro Matsuo Genso, 44:47: Chairman of Vale's Board of Directors since February 2016.

          Other current director or officer positions:    Member2016 (Member of Vale's Board of Directors since March 2015); Member of the Personnel Committee since November 2017.

Professional experience:    Coordinator of Vale's Finance Committee from May 2018 to December 2018; Chief Executive Officer of PREVI—Caixa de Previdência dos Funcionários do Banco do Brasil S.A. from 2015 to 2018; Member of Vale's Executive Development Committee from April 2017 to October 2017 and of Vale's Strategic Committee from 2015 to 2017; Chief Executive Officer of Valepar from 2015 to August 2017; Executive Officer of Private Customers of Banco do Brasil S.A. from 2014 to 2015; Member of the Strategic CommitteeBoard of Vale since April 2015; Chief executive officer and member of the board of directors of Valepar since April 2015; Chief executive officer of Previ since February 2015.

          Professional experience:    Executive officer of private customers of Banco do Brasil and member of the board of directorsDirectors of the Brazilian Interbank Payment Chamber from 2014 to 2015; Member of the fiscal councilFiscal Council of Grupo Segurador BB Mapfre from June 2011 to June 2015; Sector officerOfficer of the Brazilian Bank Federation (Febraban) from 2010 to 2015; Executive officerOfficer of home loansReal Estate Credit of Banco do Brasil S.A. from 2011 to 2014; Executive officerOfficer of loansHome Loans of Banco do Brasil S.A. from 2011 to 2014; Executive Officer of Loans of Banco do Brasil S.A. from 2010 to 2011; and Executive officerOfficer of productsProducts of Banco Nossa Caixa S.A. from 2009 to 2010.

Academic background:    Degree in business administration from Faculdade SPEI—Curitiba;SPEI; MBA from Fundação Getúlio Vargas in Cascavel;Vargas; and MBA in agribusiness from Escola Superior de Agricultura Luiz de Queiroz in Piracicaba.Queiroz.

Sérgio Alexandre Figueiredo ClementeFernando Jorge Buso Gomes, 56: Member62: Vice Chairman of Vale's Board of Directors since May 2014.January 2017 (Member of Vale's Board of Directors since April 2015); Member of the Finance Committee since April 2015, Coordinator of the Sustainability Committee and Member of the Personnel Committee since November 2017.

Other current director or officer positions:    Member of Valepar's board of directors since May 2015;Chief Executive officer of Millenium Security Holdings Corp, a subsidiary of Bradespar, since June 2014;Officer and Investor Relations Executive officer of Antares Holdings Ltda. and Brumado Holdings Ltda., both subsidiaries of Bradespar, since April 2014; Executive officer of NCF Participações Ltda., a holding company with investments in Bradespar, since December 2013; Member of the board of directors of BBD Participações S.A., a holding company with investments in Bradespar, since April 2012; Executive vice president of Banco Bradesco since January 2012; Vice president of Bradesco Leasing S.A.—Arrendamento Mercantil since April 2012; member of the (i) integrated risk management and capital allocation committee (since March 2012); (ii) sustainability committee (since September 2014); (iii) ethical conduct committee (since April 2015); and (iv) internal control and compliance committee (since June 2015), all from Banco Bradesco; Officer of Bradespar since 2015 and 2015, respectively; Executive Officer of Millennium Security Holdings Corp. since 2015; and Vice Chairman of Bradespar's Board of Directors since April 2018.

Professional experience:    Coordinator of Vale's Governance Sustainability Committee and Member of the Executive Development Committee from April 2015 to October 2017; Member of the Strategy Committee from April 2017 to October 2017; Executive Officer of Valepar from 2015 to 2017; Member of the Board of Directors of Valepar from 2015 to 2017 (and Vice-Chairman of Board of Directors from

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January to August 2017); Member of the Board of Directors of Sete Brasil S.A. from 2011 to 2015; Chairman of the Board of Directors of Smartia Corretora de Seguros S.A. from 2012 to 2015; Chairman of the Board of Directors of SMR Grupo de Investimentos e Participações S.A. from 2014 to 2015; Member of the Board of Directors of BCPAR S.A. from 2013 to 2015; Member of the Board of Directors of BR Towers S.A. from 2013 to 2014; Member of the boardBoard of directorsDirectors of Cidade de Deus—Companhia Comercial de Participações since AprilCPFL Energias Renováveis S.A. from 2011 to 2012; Officerand Member of Nova Cidade de Deus Participaçõesthe Board of Directors of LOG Commercial Properties S.A., a holding company with investments in Bradespar, since April 2012.

          Professional experience:    Department officer from 2013 to 2015; Executive Officer of Banco Bradesco from 2000 to 2006; Executive managing officer of Banco BradescoBBI S.A. from 2006 to 2012.2015; Member of the Board of Directors of 2b Capital S.A. from November 2014 to December 2018; Chief Executive Officer and Executive Officer of 2b Capital S.A. from May 2015 to June 2016 and from June 2016 to December 2018, respectively; Member of Vale's Board of Directors from April 2015 to January 2017; Chief Executive Officer of Antares Holding Ltda. from April 2015 to April 2017; Chief Executive Officer of Brumado Holdings Ltda from April 2015 to April 2017; and Member of the Investments Committee of Fundo de Investimento em Participações Sondas from May 2011 to April 2015.

Academic background:    Degree in mechanical engineeringeconomic sciences from Pontifícia Universidade CatólicaFaculdades Integradas Bennett.

Oscar Augusto de Minas Gerais; Executive MBA in finance from IBMEC; Advanced management programs from Fundação Dom Cabral and INSEAD.

Dan Antonio Marinho ConradoCamargo Filho, 51:81: Member of Vale's Board of Directors since October 2012.2003 and Coordinator of the Personnel Committee since November 2017.

Other current director or officer positions:    ChairmanManaging Partner of Valepar's boardCWH Consultoria Empresarial, since 2003.

Professional experience:    Member of directorsthe Board of Directors of Valepar from 2003 to 2014; Member of Vale's Strategy Committee from March 2006 to October 2017; Coordinator of Vale's Executive Development Committee from November 2003 to October 2017; Secretary to Board and Commercial Executive Officer of Motores Perkins from 1963 to 1973; Commercial Executive Officer of MBR and Caemi Group from 1973 to 1981; Chief Executive Officer of Caemi International and Commercial Vice President of Caemi Group from 1981 to 1988; Chief Executive Officer of Caemi Mineração e Siderurgia from 1988 to 1992; Chief Executive Officer of Caemi Mineração e Siderurgia and Member of the Board of Directors of MRS Ferrovias from 1996 to 2002.

Academic background:    Degree in law from Universidade de São Paulo; and Post-graduate degree in international marketing from Cambridge University.

Dan Antonio Marinho Conrado, 54: Member of Vale's Board of Directors since October 2012; Alternate memberMember of the board of directors of Mapfre BBSH2 Participações S.A., a publicly-held insurance company,Sustainability Committee since June 2011.

Table of ContentsNovember 2017.

Professional experience:    Member of Vale's Governance and Sustainability Committee from April 2017 to October 2017 and of Vale's Strategic Committee from October 2012 to April 2015; Chairman of Vale's Board of Directors from October 2012 to February 2016; Chairman of Valepar's Board of Directors from 2012 to 2017; Chief executive officerExecutive Officer of Valepar from October 2012 to April 2015; Chief Executive Officer of PREVI—Caixa de Previdência dos Funcionários do Banco do Brasil S.A. from 2012 to 2014, Alternate Member of the Strategic CommitteeBoard of ValeDirectors of Mapfre BB SH2 Participações S.A. from October 20122011 to April 2015;2017; and Alternate Member of the Strategic CommitteeBoard of Vale from June 2015 to February 2016; Alternate memberDirectors of Petróleo Brasileiro S.A.—Petrobrás and Member of the boardBoard of directorsDirectors of Petrobrasits wholly owned subsidiary, BR Distribuidora, from July 2015 to November 2015; Member of the board of directors of Petrobras Distribuidora S.A., a private company wholly-owned by Petrobras, from July 2015 to November 2015; Member of the board of directors of FRAS-LE S.A., a publicly-held friction materials manufacturer, from April 2010 to March 2013; Member of the board of directors of Aliança do Brasil S.A., a publicly-held insurance company, from June 2010 to June 2011; Member of the board of directors of BRASILPREV S.A. ("BRASILPREV"), a publicly-held pension fund, from January 2010 to March 2010; Member of the fiscal council of Centrais Elétricas de Santa Catarina S.A. ("CELESC"), a publicly-held electric utility company, from April 2000 to April 2002; Member of the fiscal council of WEG S.A., a publicly-held engines manufacturer and full industrial electrical systems provider, from April 2002 to April 2005.2015.

Academic background:    Degree in law from Universidade Dom Bosco, Mato Grosso do Sul;Bosco; MBA from COPPEAD/Universidade Federal do Rio de Janeiro, ("UFRJ");COPPEAD; and MBA from Instituto de Ensino e Pesquisa em Administração of Universidade Federal de Mato Grosso.Grosso, Inepad.

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Marcel Juviniano Barros, 53:56: Member of Vale's Board of Directors since October 2012; Member of the Executive DevelopmentPersonnel Committee of Vale since February 2013.November 2017.

Other current director or officer positions:    Officer of securitiesSecurities of Previ since 2012; Member of the board of directors of Valepar since 2012; Member of the board of PRI—Principles for Responsible Investment of the UNPREVI—Caixa de Previdência dos Funcionários do Banco do Brasil S.A. since 2012.

Professional experience:    Between 1987 andMember of the Executive Development Committee of Vale from February 2013 to October 2017; Member of the Board of Directors of Valepar from 2012 to August 2017; held several positions at Banco do Brasil a publicly-held financial institution,S.A., including the position of union auditor;Union Auditor, between 1987 and 2012; and General secretarySecretary of the National Confederation of Financial Branch Workers where he coordinated international networks from 2008 to 2011.

Academic background:    Degree in history from Fundação Municipal de Ensino Superior de Bragança Paulista.

Tarcísio José Massote de GodoyLucio Azevedo, 51: Member of Vale's Board of Directors since 2015.

          Professional experience:    Chairman of the board of directors of Banco do Brasil from February 2015 to January 2016; Executive treasury of the Brazilian ministry of finance from January 2015 to December 2015; General officer and executive officer of Bradesco Seguros S.A. ("Bradesco Seguros"), an insurance company, from March 2013 to January 2016; Vice president of Federação Nacional de Seguros Gerais, an insurance company, from 2013 to 2014; Member of the board of directors of IRB Brasil Resseguros ("IRB"), a Brazilian re-insurance company, from March to December 2014; Member of the fiscal council of CEABS—Instituto Brasileiro de Governança Corporativa from March to December 2014; Executive officer of Bradesco Seguros from November 2010 to March 2013; Vice president of Federação Nacional de Previdência Privada e Vida, a Brazilian private pension fund, from February to September 2010; Alternate Member of the Fiscal Council of Vale from 2003 to 2007.

          Academic background:    Degree in civil engineering from University of Brasília; post-graduate degree in geotechnical engineering; Master's degree in public economy from University of Brasília.

Fernando Jorge Buso Gomes, 59: Member of Vale's Board of Directors since 2015; Coordinator of the Governance Sustainability Committee of Vale since April 2015; Member of the Financial Committee of Vale since April 2015; Member of the Executive Development Committee of Vale since April 2015;

          Other current director or officer positions:    Executive officer and director of Valepar since April 2015; Chief executive officer and investor relations executive officer of Bradespar since April 2015; Chief executive officer and member of the board of directors of 2b Capital S.A., an investment management company, since 2014.

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          Professional experience:    Member of the board of directors of Sete Brasil S.A., a Brazilian company providing offshore oil and gas services, from 2011 to 2015; Chairman of the board of directors of Smartia Corretora de Seguros S.A., an insurance broker company, from 2012 to 2015; Chairman of the board of directors of SMR Grupo de Investimentos e Participações S.A., a holding company, from 2014 to 2015; Member of the board of directors of BCPAR S.A., a holding company, from 2013 to 2015; Member of the board of directors of BR Towers S.A. from 2013 to 2014; Member of the board of directors of CPFL Energias Renováveis S.A., a publicly-held utilities company, from 2011 to 2012; Member of the board of directors of LOG Commercial Properties S.A., a publicly-held company operating in the properties segment, from 2013 to 2015; Executive positions in the financial industry at Banco Chase Manhattan S.A. from 1978 to 1997, Banco BBV Brasil S.A. from 1999 to 2003, Banco Bradesco from 2003 to 2006, and Banco Bradesco BBI S.A. from 2006 to 2015.

          Academic background:    Bachelor's degree in economic sciences from Integrated College Bennett.

Oscar Augusto de Camargo Filho, 78: Member of Vale's Board of Directors since September 2003.

          Other current director or officer positions:    Member of the board of directors of Valepar since 2003; Member of Vale's Strategy and Executive Development Committees since 2003; managing partner of CWH Consultoria Empresarial, a business consulting firm, since 2003.

          Professional experience:    Chairman of the board of directors of MRS from 1996 to 2003 and chief executive officer and commercial director of Mineração e Metalurgia S.A. ("CAEMI"), a mining holding company that was acquired by Vale in 2006, where Mr. Camargo Filho also held various positions from 1973 to 2003.

          Academic background:    Degree in law from Universidade de São Paulo ("USP"); post-graduate degree in international marketing from Cambridge University.

Luciano Galvão Coutinho, 69: Member of Vale's Board of Directors since August 2007.

          Other current director or officer positions:    President of BNDES since 2007; Member of the board of directors of Petrobras since April 2013; and Member of Vale's Strategic Committee since May 2009; Member of the international advisory board of Fundação Dom Cabral since April 2009; Member of the board of trustees of Fundação Nacional de Qualidade since June 2013; Member of the board of directors of Fundo Nacional de Desenvolvimento Científico e Tecnológico since December 2007; Member of the international advisory board of Conselho Nacional de Desenvolvimento Industrial since 2011.

          Professional experience:    Mr. Coutinho is an invited professor at the Universidade Estadual de Campinas and has been a visiting professor at USP, the University of Paris XIII, the University of Texas and the Ortega y Gasset Institute.

          Academic background:    Degree in economics from USP; Master's degree in economics from the Economic Research Institute of USP; Ph.D. in economics from Cornell University.

Hiroyuki Kato, 59:60: Member of Vale's Board of Directors since April 2014.2015.

          Other current director or officer positions:    Representative director and senior executive managing officer of Mitsui.

Professional experience:    Executive managing officer and chief operating officer of the energy business unit I of Mitsui from April 2012 to March 2014; Managing officer and chief operating officer of energy business unit I of Mitsui from April 2010 to March 2012; General manager of the exploration and production division, energy business unit I, of Mitsui from May 2008 to March 2010; General manager of the coal division, energy business unit I, of Mitsui from April 2007 to April 2008; Member of the board of directors of Canada Oil Sands Co., Ltd., an oil and gas company, from June 2010 to October 2013; Member of the board of directors of Mitsui Oil Co., Ltd., a domestic and overseas sales of petroleum products company, from June 2010 to June 2012.

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          Academic background:    Degree in commercial science from Keio University; MBA from MIT Sloan School of Management.

Alberto Ribeiro Guth, 56: Member of Vale's Board of Directors since 2015.

          Other current director or officer positions:    Founding partner of Angra Partners Gestão de Recursos Ltda., a Brazilian consulting firm and investment fund, since February 2003; Director of Angra Infraestrutura Gestão de Informações Ltda., a Brazilian resource management company, since October 2006; Member of the board of directors of Via Varejo S.A., a household appliances retail company, since May 2012; Member of the board of directors of CELESC since January 2015; Member of the board of executive officers of Futuretel S.A., an investment company, since October 2012; Member of the board of executive officers of Zain Participações S.A., a research and investing information company, since October 2012; Member of the board of executive officers of Sul 116 Participações S.A., a holding and investment company, since October 2012; Member of the board of executive officers of Newtel Participações S.A., a holding and investment company, since October 2012; Member of the board of executive officers of Invitel Legacy S.A., a holding and investment company, since October 2012.

          Professional experience:    Managing partner of Angra Partners Participações Ltda., from November 2010 to December 2014, and of Angra Partners Assessoria Financeira Ltda., from November 2010 to April 2015; Member of the board of directors of Ediouro Participações S.A., a publishing company, from March 2013 to October 2014; Member of the board of directors of Companhia Providência Indústria e Comércio S.A., a manufacturing company, from February 2013 to May 2014; Member of the board of executive officers of Daleth Participações S.A., a holding and investment company, from October 2012 to February 2015.

          Academic background:    Degree in engineering from IME; MBA in finance from Wharton Business School.

Lucio Azevedo, 57: Member of Vale's Board of Directors since 2015.

          Professional experience:    Locomotive driver of Vale since 1985;    Chairman of Railway Labor Unions in the Brazilian states of Maranhão, Pará and Tocantins since 2013.

Academic background:    Incomplete secondary education.

Eduardo Refinetti Guardia, 53: Member of Vale's Board of Directors since July 2016; Member of the Finance Committee since April 2017 and Coordinator of the Finance Committee since December 2018.

Professional experience:    Coordinator of the Finance Committee from August 2017 to May 2018; Executive Officer of Products of BM&FBOVESPA (now B3) from 2013 to 2016; Executive Officer of Finance and Investor Relations of BM&FBOVESPA (now B3) from 2010 to 2013; Chairman of the Board of Directors of Banco do Brasil S.A. from June 2016 to April 2017; Executive Secretary of the Department of the Treasury from June 2016 to March 2018; Minister of the Department of Treasury from April 2018 to December 2018; and Manager of the Capital and Risk Committee of Banco do Brasil S.A. from September 2017 to December 2018.

Academic background:    Degree in economics from Pontifícia Universidade Católica; Master's Degree in economics from Universidade Estadual de Campinas; and PhD in economics from Universidade de São Paulo.

Ney Roberto Ottoni de Brito, 73: Member of Vale's Board of Directors since January 2018; Coordinator of the Governance, Compliance and Risk Committee and Member of the Finance Committee since January 2018.

Other current director or officer positions:    Chief Executive Officer of Ney O. Brito e Associados since 1978.

Academic background:    Graduate degree in mechanical engineering from Escola Politécnica of the Universidade Federal do Rio de Janeiro; Master's degree in production engineering from COPPE of the Universidade Federal do Rio de Janeiro; PhD in finance from Stanford University.

Toshiya Asahi, 52: Member of Vale's Board of Directors since October 2017.

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Other current director or officer positions:    Vice President of Mitsui & Co. (Brasil) S.A. since 2015; and Member of the Board of Directors of Gaspetro since October 2016.

Professional experience:    Deputy General Manager of New Metals and Aluminum of Mitsui & Co. Ltd. from 2014 to 2015; Deputy Executive Officer of Mitsui & Co. Ltd. from 2012 to 2014.

Academic background:    Graduate degree in metallurgical engineering from the University of Kyushu.

Sandra Maria Guerra de Azevedo, 63: Member of Vale's Board of Directors since October 2017 and Member of the Governance, Compliance and Risk Committee since November 2017.

Other current director or officer positions:    Founding Partner of Better Governance Consulting Services since 2005; and Member of the Board of Directors of Global Reporting Initiative since January 2017.

Professional experience:    Member of the Board of Directors of Companhia Paranaense de Energia from October 2016 to April 2017; Consulting counselor of Solvi Participações from 2011 to 2013; Consulting counselor of Solvi Valorização Energética from January 2013 to June 2013; Consulting counselor of Solvi Saneamento from June 2012 to December 2012; Consulting counselor of Grupo Itapemirim from 2009 to 2013; Co-founder of the Brazilian Institute of Corporate Governance (IBGC), serving as Chairman of its Board of Directors from 2012 to 2016; and Member of the Board of Directors of Vix Logística S.A. from April 2015 to April 2018.

Academic background:    Graduate degree in social communications-journalism from Universidade Paulista; MBA from Universidade de São Paulo.

Isabella Saboya de Albuquerque, 48: Member of Vale's Board of Directors since October 2017

Other current director or officer positions:    Member of the Board of Directors of Wiz Soluções e Corretagem de Seguros S.A. since April 2016; Vice-chairman of the Board of Directors of the Brazilian Institute of Corporate Governance (IBGC) since April 2017; Member of the State Governance Market Advisory Chamber of B3 since August 2017; Member of the Council of Autoregulation in Investment Governance Abrapp/Sindapp/ICSS since December 2016.

Professional experience:    Member of the Fiscal Council of Bradespar S.A. from April 2016 to July 2016; Member of the Fiscal Council of Mills S.A. from April 2016 to April 2017; Member of the Board of Directors of BR Malls S.A. from May 2016 to March 2017; Partner at Jardim Botânico Investimentos S.A. from 2009 to 2015.

Academic background:    Graduate degree in economics from Pontifícia Universidade Católica do Rio de Janeiro.

ADVISORY COMMITTEES TO THE BOARD OF DIRECTORS

Our bylaws provide for the following technical and advisory committees to the Board of Directors:Directors, each governed by its own internal rules.

•

TheExecutive DevelopmentPersonnel Committee, which is responsible for (i) reporting on general human resources policies as submitted byevaluating the adequacy of the compensation model for members of the Board of Executive Officers and the proposed annual, global budget for the compensation of executives, supporting the Board of Directors in the setting and monitoring of goals for performance evaluation of our executive officers

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and certain other key managers, supporting the Board of Directors in determining disciplinary treatment of confirmed allegations against members of the Board of Executive Officers or other managers who report directly to the Chief Executive Officer or to the Board of Directors, (ii) analyzing and issuing reports tosupporting the Board of Directors on proposals relating toin the annual, global budget forprocess of selecting and appointing the remuneration of administrators and members of the executive officers, (iii) proposing and updating methodologies and goals for evaluating the performance of our executive officers, and (iv)Chief Executive Officer, monitoring the development of the executive officer succession plan.




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          TheStrategy Committee, which is responsibleplan for reviewingthe Executive Board and making recommendationsother leaders who report directly to the BoardChief Executive Officer, evaluating and recommending adjustments to corporate governance best practices, identifying and recommending potential candidates to be directors and to be members of Directors concerning (i) the strategic guidelinesAdvisory Committees, among other matters. The current members of the Personnel Committee are Oscar Augusto de Camargo Filho, Gueitiro Matsuo Genso, Marcel Juviniano Barros, Fernando Jorge Buso Gomes and plan submitted annually to the Board of Directors by our executive officers, (ii) investment or divestiture opportunities submitted by executive officers and (iii) mergers and acquisitions and other reorganizations.Ana Silvia Matte.

•

TheFinance Committee, which is responsible for (i) reviewingevaluating the structure and making recommendations toconditions of investment and divestment transactions, including mergers, consolidations and spin-offs in which Vale is involved, evaluating the Board of Directors concerning our corporate riskscompatibility and financial policies and the internal financial control systems, compatibilityconsistency between the compensation level of distributions to shareholders and the parameters established in the annual budget and the consistency between ourfinancial scheduling, as well as Vale's general dividend policy on dividends and capital structure, (ii) evaluating ourVale's annual budget and annual investment plan, as well as ourevaluating Vale's annual funding plan and risk exposureindebtedness limits, , (iii) evaluating our risk management procedurescurrent and (iv)capital investments, monitoring the financial execution of our capital expenditure projects, ongoing budget and ongoing budget.cash flow, monitoring financial risks and controls, preparing and approving the Finance Committee's annual work plan, among other matters. The current members of the Finance Committee are Eduardo Refinetti Guardia, Ney Brito, Fernando Jorge Buso Gomes, Eduardo de Oliveira Rodrigues Filho and Gilmar Dalilo Cezar Wanderley.





•

TheAccountingGovernance, Compliance and Risk Committee, which is responsible for (i) issuing reports onmonitoring the Company's annual auditing planstructure, processes, practices and policies, (ii) trackingsystems in place to ensure compliance with all applicable legal and evaluatingregulatory requirements, monitoring the Company'ssuitability, strength and performance of all of Vale's internal auditing resultscontrol systems and procedures with respect to best practices, as requested byproposing improvements, , supporting the Board of Directors in setting risk exposure limits, monitoring Vale's integrated risk map, as well as proposing improvements in risk mitigation plans, ensuring the effectiveness of mechanisms to handle conflicts of interests in Vale's transactions, as well as opining on related-party transactions, evaluating proposals for modifying the corporate governance documents, such as the By-Laws, the Code of Ethical Conduct and (iii) assisting theInternal Rules of Vale's Advisory Committees and Board of Directors, as requested, in appointing and evaluating the annual performanceother Policies, among other matters. The current members of the designated employee responsible for overseeing the Company's internal auditing procedures.Governance, Compliance and Risk Committee are Ney Brito, Arthur Prado Silva, Yoshitomo Nishimitsu and Sandra Guerra.

•

TheGovernance and Sustainability Committee,, which is responsible for (i)evaluating Vale's sustainability strategy, and ensuring that it is considered when setting overall strategy, evaluating Vale's policies and conduct related to Safety, the Environment, Health, Social Actions, Communication and Institutional Relations, evaluating and recommendingproposing Vale's adherence to national or international initiatives or agreements related to socio-environmental responsibility matters, and monitoring the preparation and disclosure of the sustainability report, monitoring all operational risks and controls from the perspective of the integrated risk map, including risks to safety, the environment, health and social actions and reputational risks, as well as proposing improvements in risk mitigation plans, among other matters. The current members of the Sustainability Committee are Fernando Jorge Buso Gomes, Dan Antonio Marinho Conrado, Eduardo de Oliveira Rodrigues Filho and Clarissa Lins.

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INDEPENDENT AD HOC ADVISORY COMMITTEES TO THE BOARD OF DIRECTORS CREATED IN RESPONSE TO DAM I FAILURE

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Independent Ad Hoc Consulting Committee for Investigation (CIAEA), established to investigate the effectivenesscauses of the dam failure. The committee is chaired by Dr. Ellen Gracie, former Justice of the Brazilian Supreme Court, and also includes Manuel Martins and Jose Francisco Compagno.



•

Independent Ad Hoc Consulting Committee for Support and Recovery (CIAEAR), established to monitor our corporate governance practicesmeasures to support the affected community and to remediate the functioning of our Board of Directors, (ii) recommending improvements to the code of Ethics and Conductimpacted area, and our management system in order to avoid conflictsprovision of interests between Valeresources for this purpose. The committee is also responsible for examining the action plans and its shareholders or management, (iii) evaluating related party transactions submittedrecommending measures to our Board of Directors (iv) issuing reports on potential conflictsfor effectively performing the support actions related to the dam failure, following up the progress of interest between Valethe action plans. The committee is chaired by Leonardo Pereira, former chair of the Brazilian Securities Commission, and its shareholders or management involving related parties, (v) evaluating proposalsalso include Ana Cristina Barros and Márcio Gagliato.



•

Independent Ad Hoc Consulting Committee for modifying, analyzingDam Safety (CIAESB), established to evaluate safety conditions of our dams, prioritizing upstream structures, structures in alert zones, among others, with purpose of identifying and recommending improvementsmeasures to our sustainability report, (vi) evaluating Vale's performance with respect to sustainability and recommending improvementsstrengthen safety at these structures, based on national and international advanced methodologies. The committee is responsible for examining the action plans proposed by the our long-term strategic vision, (vii) assisting our Board of Directors, as requested, in appointing and evaluatingmanagement regarding the annual performance of our ombudsman (person in charge of receiving reports of violation of our Code of Ethics and Conduct), and (viii) assisting the Board of Directors, as requested, in evaluating our ombudsman in respect of matters involving the ombudsman channel and violationssafety of the code of Ethicsdams, governance related to security management plans and Conduct.to recommend measures for their improvement. The committee is chaired by Flávio Miguez de Mello, and also includes Willy Lacerda and Pedro Repetto.

EXECUTIVE OFFICERS

Executive officers

The executive officers are responsible for day-to-day operations and the implementation of the general policies and guidelines set forth by our Board of Directors. Our bylaws provide for a minimum of six and a maximum of 11 executive officers. The executive officers hold weekly meetings and hold additional meetings when called by any executive officer. Under Brazilian corporate law, executive officers must be Brazilian residents.

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The Board of Directors appoints executive officers for two-year terms and may remove them at any time. The following table lists our current executive officers.

Officer	​	Year of appointment		​	Position	​	Age		​
Murilo Pinto de Oliveira Ferreira	​	2011		​	Chief Executive Officer	​	62		​
Luciano Siani Pires	​	2012		​	Chief Financial Officer and Executive Officer for Investor Relations	​	46		​
Gerd Peter Poppinga(1)	​	2014		​	Executive Officer (Ferrous Minerals)	​	56		​
Jennifer Anne Maki	​	2015		​	Executive Officer (Base Metals Operations)	​	45		​
Galib Abrahão Chaim	​	2011		​	Executive Officer (Implementation of Capital Projects)	​	65		​
Humberto Ramos de Freitas	​	2011		​	Executive Officer (Logistics and Mineral Research)	​	62		​
Vânia Lucia Chaves Somavilla	​	2011		​	Executive Officer (Human Resources, Health and Safety, Sustainability and Energy)	​	56		​
Roger Allan Downey	​	2012		​	Executive Officer (Fertilizer, Coal and Strategy)	​	48		​

Officer	​	Year of appointment		​	Position	​	Age		​
Eduardo de Salles Bartolomeo(1)(2)	​	2017		​	Interim Chief Executive Officer	​	55		​
Luciano Siani Pires	​	2012		​	Chief Financial Officer and Executive Officer for Investor Relations	​	49		​
Claudio de Oliveira Alves(2)	​	2019		​	Interim Executive Officer (Ferrous Minerals and Coal)	​	51		​
Vacant(3)	​	2019		​	Executive Officer (Base Metals)	​	–		​
Luiz Eduardo Fróes do Amaral Osorio	​	2017		​	Executive Officer (Sustainability and Institutional Relations)	​	45		​
Alexandre Gomes Pereira	​	2017		​	Executive Officer (Business Support)	​	49		​
Fabio Schvartsman(2)	​	2017		​	Executive Officer (on leave)	​	65		​
Gerd Peter Poppinga(2)	​	2014		​	Executive Officer (on leave)	​	59		​

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(1)

Gerd Peter PoppingaEduardo de Salles Bartolomeo was Executive Officer for Base Metals Operationsfrom 2017 to March 2019, and Information Technologywas appointed Interim Chief Executive Officer in March 2019, during the temporary leave of ValeFabio Schvartsman.

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(2)

In March 2019, the Board of Directors approved the requests from November 2011Fabio Schvartsman and Gerd Peter Poppinga for temporary leave from their positions. SeeBusiness overview—Failure of the tailings dam at the Córrego do Feijão mine. Consequently, the Board approved the appointment of Eduardo de Salles Bartolomeo as Interim Chief Executive Officer and Claudio De Oliveira Alves as Interim Executive Officer of Ferrous Minerals and Coal.

(3)

In March 2019, our Board of Directors appointed Mr. Mark James Travers as Executive Officer for Base Metals, subject to November 2014.him obtaining a visa and relocating to Brazil, as required under Brazilian law.

Below is a summary of the business experience, activities and areas of expertise of our current executive officers.

Murilo PintoEduardo de Oliveira FerreiraSalles Bartolomeo, 62:55: Interim Chief Executive Officer of Vale and Participant of Vale's Strategy and Disclosure Committees since May 2011.March 2019.

Other current director or officer positions:    Chairman of the Board of Directors of Login Logística Intermodal since 2016.

Professional experience:    Executive Officer for Base Metals from 2017 to March 2019; Member of Vale's Board of Directors from September 2016 to December 2017; Coordinator of Vale's Governance, Compliance and Risk Committee from November 2017 to December 2017; Member of Vale's Financial Committee from April to December 2017; Chief Executive Officer of Nova Transportadora do Sudeste from April to December 2017; Member of Vale's Strategic Committee from September 2016 to October 2017; Executive Officer of Vale with responsibility over several different departmentsfor Integrated Operations from 20052010 to 2008, including business development, M&A, steel, energy, nickel and base metals; Chief executive officer2012; Executive Officer of Vale Canadafor Logistics, Projects & Sustainability from 2007 to 20082010; Member of the Board of Directors of Arteris S.A. from 2015 to 2017; Chief Executive Officer of BHG—Brazilian Hospitality Group from 2013 to 2015; Member of the Board of Directors of MRS Logística S.A. from 2007 to 2009; Head of Vale's logistical operations from 2004 to 2006; and memberChief Executive Officer of its board of directorsPetroflex from 2006 to 2007; Chairman of the board of directors of Petrobras from May to November 2015, Alunorte from 2005 to 2008, MRN from 2006 to 2008 and Valesul Alumíno S.A. ("Valesul"), a subsidiary of Vale involved in the production of aluminum, from 2006 to 2008; Member of the board of commissioners of PTVI, from 2007 to 2008. Mr. Ferreira has been a member of the board of directors of several companies, including Usiminas, a Brazilian steel company, from 2006 to 2008, and was a partner at Studio Investimentos, an asset management firm with a focus on the Brazilian stock market, from October 2009 to March 2011.2007.

Academic background:    Degree in business administration from Fundação Getúlio Vargas in São Paulo; post-graduateGraduate degree in business administrationmetallurgical engineering from Universidade Federal Fluminense; MBAs from Katholieke Universiteit Leuven and finance from Fundação Getúlio Vargas in Rio de Janeiro; senior executive education program at the IMD Business School in Lausanne, Switzerland.Massachusetts Institute of Technology.

Luciano Siani Pires, 46:49: Chief Financial Officer and Executive Officer for Investor Relations of Vale since August 2012 and Member of Vale'sthe Executive Risk Management and Disclosure CommitteesCommittee since August 2012.

Other current director or officer positions:    Member of the Board of Directors of The Mosaic Company since January 2018; and Chairman of the Board of Directors of VLI S.A since September 2017.

Professional experience:    Alternate Member of the Board of Directors of Vale, from 2005 to 2007; Member of Vale's Financial Committee from 2012 to 2015; Global Officer of Strategic Planning, from 2008 to 2009 and in 2011, and Global Officer of Human Resources and Governance from 2009 to 2011 of Vale; Member of the boardBoard of directorsDirectors of Valepar, from 2007 to 2008; Member of the boardBoard of directorsDirectors of Telemar Participações S.A., from 2005 to 2008; Member of the boardBoard of directorsDirectors of Suzano Papel e Celulose S.A., from 2005 to 2008; Several executive positions at BNDES, including executive secretary and chief of staff of the presidency, headHead of capital markets and head of export finance, from 1992 to 2008;1999 and from 2001 to 2008, respectively; and Consultant at McKinsey & Company from 2003 to 2005.

Academic background:    Degree in mechanical engineering from Pontifícia Universidade Católica do Rio de Janeiro; and MBA in finance from the Stern School of Business, New York University.

Claudio de Oliveira Alves, 51: Interim Executive Officer for Ferrous Minerals and Coal of Vale since March 2019.

Professional experience:    Chief Operating Officer of Pelletizing and Manganese Division of Vale from January 2017 to March 2019; Chief Global Officer of Iron Ore Marketing and Sales of Vale from August

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2013 to December 2016; Chief Marketing Officer from September 2011 to June 2013; and Chief Strategy Officer from July 2010 to September 2011.

Academic background:    Degree in production engineering from Federal University of Rio de Janeiro; Post Graduate degree in Management from Fundação Dom Cabral; Specialization in Strategic Marketing from Darden School of Business; MBA in Management from University of São Paulo; Specialization in Industrial Marketing from INSEAD; Specialization in Transforming Leadership from Massachusetts Institute of Technology (MIT); Specialization in Leadership from IMD; and participation on Innovation and Sustainability Program from MIT.

Luiz Eduardo Fróes do Amaral Osorio, 45: Executive Officer for Sustainability and Institutional Relations of Vale since July 2017.

Other current director or officer positions:    President of the Board of Directors of Instituto Brasileiro de Mineração—IBRAM.

Professional experience:    Executive Vice-President of Legal and Company Relations of CPFL Energia S.A. from 2014 to 2017; Member of the Board of Directors of CPFL Energias Renováveis S.A. from 2014 to 2017; Vice-Chairman of the Board of Directors of Instituto CPFL from 2015 to 2017; Executive Director of International Markets of Raízen from 2012 to 2014; Vice President, General Counsel and Chief Institutional Relations Officer of CPFL Energy Group from May 2014 to July 2017; Executive Director for International Markets, based in London, of Raízen from July 2012 to March 2014; Vice President for Sustainable Develompment and External Affairs of Raízen from March 2011 to June 2012.

Academic background:    Law degree from Pontifícia Universidade Católica do Rio de Janeiro; Master's degree in development management from American University's School of International Service; Participated in coursework in corporate social responsibility at Harvard Business School, general management skills at INSEAD, strategy and leadership at the University of Pennsylvania and leadership in corporate counsel from Harvard Law School.

Alexandre Gomes Pereira, 49: Executive Officer for Business Support since August 2017.

Professional experience:    Global Information Officer of Vale from 2011 to 2017; Head of Global IT Services of Vale from 2009 to 2011; Vice President and Chief Information Officer of Vale's global nickel business (Vale Canada) from 2007 to 2009; IT General Manager of Vale from 2002 to 2007.

Academic background:    Degree in mathematics/computer science from State University of Rio de Janeiro (UERJ); Post-graduate degrees in business management from Fundação Dom Cabral and in computer networks from the Federal University of Espírito Santo (UFES); and MBA from São Paulo University (USP).

Fabio Schvartsman, 65: Executive officer (on leave since March 2019). SeeBusiness overview—Failure of the tailings dam at the Córrego do Feijão mine.

Professional experience:    Chief Executive Officer of Vale from May 2017 to March 2019; Coordinator of Vale's Strategic Committee from May 2017 to October 2017; Chief Executive Officer of Klabin S.A. from 2011 to 2017; Chief Executive Officer of SanAntonio Internacional from April 2008 to April 2010; Chief Executive Officer of Telemar Participações S.A. from April 2007 to February 2008; several executive positions at Grupo Ultra from May 1985 to April 2007, including Planning and Control Officer and Investor Relations Officer, Chief Financial Officer of Ultrapar Holding and managing partner of Ultra S.A.; and General Manager of the Economic Studies, Development and Planning areas of Duratex S.A. from February 1976 to April 1985.

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Academic background:    Graduate and post-graduate degrees in production engineering from the University of São Paulo and a post-graduate degree in Business Administration from Fundação Getúlio Vargas.

Gerd Peter Poppinga, 56:59: Executive officer (on leave since March 2019). SeeBusiness overview—Failure of the tailings dam at the Córrego do Feijão mine.

Professional experience:    Executive Officer for Ferrous Minerals of Vale sincefrom November 2014.

          Other current director or officer positions:    Member of the board of commissioners of PTVI since April 2009.

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          Professional experience:2014 to March 2019; Executive Officer for Base Metals Operations and Information Technology of Vale from November 2011 to November 2014; Executive vice president for Asia Pacific of Vale Canada from November 2009 to November 2011; Director for strategy, business development, human resources and sustainability of Vale Canada from May 2008 to October 2009; Director for strategy and information technology of Vale Canada Limited from November 2007 to April 2008. From 20002008; Several memberships on boards of directors and executive boards from 2005 to 2007, Mr. Poppinga held several leadership positions at Vale's sales offices2010 in Belgium and Switzerland. In connection with his roles at Vale, Mr. Poppinga was also memberVale; Member of the boardBoard of directorsDirectors of Samarco Mineração S.A. from December 2014 to April 2016; and the executive board of several companies from 2005 to 2010. From 1985 until 1999, Mr. Poppinga also held several positions at Mineração da Trinidade S.A.—SAMITRI, a publicly held mining company that was acquired by Vale in 2001.2001, from 1985 to 1999.

Academic Background:    Degree in geology from Universität Clausthal—Zellerfeld, Germany; Participated in coursework in geostatistics extension course at Universidade Federal de Ouro Preto (UFOP); participated in the, executive MBA fromat Fundação Dom Cabral;Cabral, negotiation dynamics at INSEAD; Seniorsenior leadership program at M.I.T.; Leadership program atthe Massachusetts Institute of Technology and IMD Business School in Lausanne, Switzerland;Switzerland, and strategic megatrends with Asia Focus program(Asia-focused) at Kellogg Singapore.

Jennifer Anne Maki, 45: Executive Officer for Base Metals of Vale since November 2015.CONFLICTS OF INTEREST

          Other current director or officer positions:    President commissioner of PTVI; Member of the board of directors of Vale New Caledonia and Vale's Global Pension Committee; Chairwoman and member of the Canadian pension committee since 2009 and 2007, respectively.

          Professional experience:    Chief financial officer of Vale Canada from 2007 to 2013, prior to which Ms. Maki held positions in the base metals treasury and controllership areas. From 1993 to 2003, she worked at PricewaterhouseCoopers LLP in roles of increasing responsibility.

          Academic background:    Degree in business from Queens University; post-graduate degree in accounting from the Institute of Chartered Accountants of Ontario.

Galib Abrahão Chaim, 65: Executive Officer for Implementation of Capital Projects of Vale since November 2011.

          Professional experience:    Director of Vale's Department of Coal Projects in Australia, Mozambique, Zambia and Indonesia and Country Manager for Mozambique from 2005 to 2011; Industrial officer of Alunorte from 1994 to 2005; Industrial superintendent of Albras from 1984 to 1994; technical superintendent of MRN from 1979 to 1984.

          Academic Background:    Degree in engineering from Universidade Federal de Minas Gerais; MBA in business management from Fundação Getúlio Vargas.

Humberto Ramos de Freitas, 62: Executive Officer for Logistics and Mineral Research of Vale since November 2011.

          Other current director or officer positions:    Chairman of the board of the Brazilian Association of Port Terminals since May 2009.

          Professional experience:    Member of the board of directors of MRS from December 2010 to October 2012; Logistics Operations Officer of Vale from September 2009 to June 2010; Director for Ports and Navigation of Vale from March 2007 to August 2009; Chief executive officer of Valesul from August 2003 to February 2007; General superintendent of ports of CSN from December 1997 to November 1999.

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          Academic background:    Degree in metallurgical engineering from the Escola de Minas de Ouro Preto; Executive development program at the Kellogg School of Management at Northwestern University; Advanced management and business development partnership programs from Fundação Dom Cabral/INSEAD; Senior executive program at MIT; Strategic business planning from McKinsey Consulting; Management training course from the Association of Overseas Technical Scholarship in Tokyo, Japan.

Vânia Lucia Chaves Somavilla, 56: Executive Officer for Human Resources, Health and Safety, Sustainability and Energy of Vale since May 2011.

          Other current director or officer positions:    President of the board of trustees of Fundação Vale since January 2013; President of the board of directors of Vale Energia S.A. since August 2014; Officer of Vale Energia S.A. since May 2012.

          Professional experience:    Chief executive officer of Vale Energia S.A. from April 2009 to April 2010; Director of the Department of the Environment and Sustainability at Vale from April 2010 until May 2011; Director Vale's Energy Department from March 2004 until March 2010; Chief executive officer and member of the board of directors of Vale Óleo e Gás from May 2009 to August 2010; Member of the board of directors of Albras from 2009 to 2013; Chief executive officer of Vale Florestar S.A. from November 2010 to November 2012. In connection with her roles at Vale, Ms. Somavilla was also member of the board of directors and the executive board of several companies and consortia in the energy sector from 2004 until 2010. She was also head of new business development for energy generation and project development and implementation for large and small hydroelectric plant projects at Companhia Energética de Minas Gerais—CEMIG, a publicly held company involved in the generation, transmission, distribution and sale of electricity, from 1995 until 2001.

          Academic Background:    Degree in civil engineering from UFMG; post-graduate degree in dam engineering from Universidade de Ouro Preto; specialization in management of hydro power utilities from SIDA, Stockholm, Sweden; MBA in corporate finance from IBMEC, Belo Horizonte; Transformational leadership program from MIT and mastering leadership program from IMD, Lausanne, Switzerland.

Roger Allan Downey, 48: Executive Officer for Fertilizer, Coal and Strategy of Vale (Executive Officer for Fertilizer and Coal since May 2012 and for Strategy since 2015).

          Professional experience:    Managing partner of CWH Consultoria Empresarial SC Ltda., a privately-held consulting company, from January 2012 to April 2012; Alternate member of the board of directors of Valepar from February 2012 to April 2012; Chief executive officer of MMX Mineração e Metálicos S.A., a publicly-held mining company, from August 2009 to November 2011; Director of equity research of Banco de Investimentos Credit Suisse (Brasil) S.A., a privately-held brokerage and investment bank, from August 2005 to August 2009; Strategic Marketing Manager for Iron Ore at Vale from 2002 to 2005; Commercial and new business manager of Rio Tinto, a publicly-held mining company, from October 1996 to September 2002; Market coordinator of CAEMI from December 1991 to October 1996.

          Academic background:    Graduate certificate of management and MBA from the University of Western Australia; Graduate diploma in business administration from the Australian National Business School.

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Conflicts of interest

Under Brazilian corporate law, if a director or an executive officer has a conflict of interest with the company in connection with any proposed transaction, such director or executive officer may not vote in any decision of the board of directors or of the board of executive officers regarding such transaction and must disclose the nature and extent of the conflicting interest for transcription in the minutes of the meeting. Under our Policy on Related Party Transactions, any director or executive officer who has a conflict of interest cannot receive any relevant documentation or information and shouldmay not participate in any related discussions. None of our directors or executive officers can transact any business with us, except on reasonable or fair terms and conditions that are identical to the terms and conditions prevailing in the market or offered by unrelated parties. For more details about our Policy on Related Party Transactions seeShare ownership and trading—Related party transactions.

Fiscal CouncilFISCAL COUNCIL

We have a fiscal council established in accordance with Brazilian law. The primary responsibilities of the fiscal council under Brazilian corporate law are to monitor management's activities, review the Company'scompany's financial statements, and report its findings to the shareholders. Our management is required to obtain the Fiscal Council's pre-approval before engaging independent auditors to provide any audit or permitted non-audit services to Vale or its consolidated subsidiaries. Our Fiscal Council has pre-approved a detailed list of services based on detailed proposals from our auditors up to specified monetary limits. The list of pre-approved services is updated from time to time. Services that are included in this list, or that exceed the specified limits, or that relate to internal controls must be separately approved by the Fiscal Council. The policy also sets forth a list of prohibited services. The Fiscal Council is provided with reports on engagement and performance of the services included in the list on a periodic basis, and it also reviews and monitors the Company'scompany's external auditor's independence and objectivity. The Fiscal Council has the power to review and evaluate the performance of the Company'scompany's external auditors on an annual basis and make a recommendation to the Board of Directors on whether the Companycompany should remove and replace

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its existing external auditors. The Fiscal Council may also recommend withholding the payment of compensation to the independent auditors and has the power to mediate disagreements between management and the auditors regarding financial reporting.

Under our bylaws and internal regulations, our Fiscal Council is also responsible for evaluating the effectiveness of the procedures for the receipt, retention and treatment of any complaints related to accounting, controls and audit issues, as well as procedures for the confidential, anonymous submission of concerns regarding such matters.

Brazilian law requires the members of a fiscal council to meet certain eligibility requirements. A member of our Fiscal Council cannot (i) hold office as a member of the board of directors, fiscal council or advisory committee of any company that is a competitor of Vale or otherwise has a conflicting interest with Vale, unless compliance with this requirement is expressly waived by shareholder vote, (ii) be an employee or member of senior management or the Board of Directors of Vale or its subsidiaries or affiliates, or (iii) be a spouse or relative within the third degree by affinity or consanguinity of an officer or director of Vale.

We are subject to Rule 10A-3 under the Exchange Act, which requires, absent an exemption, that a listed company maintains a standing audit committee composed of members of the Board of Directors that meet specified requirements. In lieu of establishing an independent audit committee, we have given our Fiscal Council the necessary powers to qualify for the exemption set forth in Exchange Act Rule 10A-3(c)(3). We believe our Fiscal Council satisfies the independence and other requirements of Exchange Act Rule 10A-3 that would apply in the absence of our reliance on the exemption. Pursuant to our undertakings to the HKEx, the Fiscal Council must be comprised of at least three members who satisfy specified independence requirements set out in the HKEx Listing Rules. We have received a written confirmation of independence pursuant to Rule 3.13 of the HKEx Listing Rules from each of the members of our Fiscal Council appointed by Valepar and consider them able to satisfy these independence requirements.

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Our Board of Directors has determined that one of the members of our Fiscal Council, Mr. Aníbal Moreira dos Santos,Marcus Vinicius Dias Severini, is an audit committee financial expert. In addition, Mr. Moreira dos SantosMarcus Vinícius Dias Severini meets the applicable independence requirements for Fiscal Council membership under Brazilian law and the NYSE independence requirements that would apply to audit committee members in the absence of our reliance on the exemption set forth in Exchange Act Rule 10A-3(c)(3).

Members of the Fiscal Council are elected by our shareholders for one-year terms. The current members of the Fiscal Council and their respective alternates were elected on April 17, 2015.13, 2018. The terms of the members of the Fiscal Council expire at the next annual shareholders' meeting following election.

Two members of our Fiscal Council (and the respective alternates) may be elected by non-controlling shareholders: one member may be appointed by the holders of our preferred shareholdersgolden shares and one member may be appointed by minority holders of common shares pursuant to applicable CVM rules.

The following table lists the current and alternate members of the Fiscal Council.

Current member	​	Year first elected	​	Alternate	​	Year first elected
Marcelo Barbosa Saintive(1)	​	2015	​	Paulo Fontoura Valle(1)	​	2012
Raphael Manhães Martins(2)	​	2015	​	Pedro Paulo de Souza(2)	​	2015
Marcelo Amaral Moraes(4)	​	2004	​	Vacant(3)	​	–
Aníbal Moreira dos Santos(4)	​	2005	​	Oswaldo Mário Pêgo de Amorim Azevedo(4)	​	2004
Claudio José Zucco(4)	​	2015	​	Marcos Tadeu de Siqueira(4)	​	2015

Current member	​	Year first elected	​	Alternate	​	Year first elected
Marcelo Amaral Moraes	​	2004	​	Vacant(3)	​	–
Marcus Vinícius Dias Severini	​	2017	​	Vacant(4)	​	–
Eduardo Cesar Pasa	​	2017	​	Sergio Mamede Rosa do Nascimento	​	2016
Raphael Manhães Martins(1)	​	2015	​	Gaspar Carreira Junior(1)	​	2017
Daniel Rodrigues Alves(2)	​	2018	​	Rodrigo Toledo Cabral Cota(2)	​	2018

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(1)

Appointed by preferred shareholders.minority shareholders of common shares.

(2)

Appointed by minority shareholdersthe holder of commongolden shares.

(3)

Vacant since the General Ordinary Shareholders' meeting of 2014.

(4)

Appointed by Valepar.Vacant since the General Ordinary Shareholders' meeting of 2017.

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Below is a summary of the business experience, activities and areas of expertise of the members of our Fiscal Council.

Marcelo Barbosa SaintiveAmaral Moraes, 49:51: Member of Vale's Fiscal Council since 2015.April 2004.

Other current director or officer positions:    Treasury secretary of Brazil since 2015; General officer of Estruturadora Brasileira de Projetos ("EBP") since 2014; ChairmanPresident of the boardFiscal Council of directorsAceco TI S.A. since 2016; Member of IRB,the Board of Directors of Eternit S.A. since 2014.2016; and Member of the Board of Directors of CPFL Energia S.A. since April 2017.

Professional experience:    Project officerManaging Director of EBPCapital Dynamics Investimentos Ltda. from 20112012 to 2013.2015.

Academic background:    Degree in economics; Master'seconomics from Universidade Federal do Rio de Janeiro; MBA from COPPEAD at the Universidade Federal do Rio de Janeiro; and Post-graduate Degree in corporate law and arbitration from Fundação Getúlio Vargas.

Marcus Vinícius Dias Severini, 61: Member of Vale's Fiscal Council since April 2017.

Other current director or officer positions:    Member of the Fiscal Council of BRF S.A. since April 2015 and member of Valia's Audit Committee since January 2019.

Professional experience:    Controller of Vale from 1994 to 2015. Member of the Fiscal Council of Mills Estruturas e Serviços de Engenharia S.A. from April 2015 to April 2018.

Academic background:    Degree in accounting sciences from UniverCidade; Graduate degree in electrical engineering from Universidade Federal Fluminense; and a specialized degree in economic engineering from UniSUAW.

Eduardo Cesar Pasa, 48: Member of Vale's Fiscal Council since April 2017.

Other current director or officer positions:    Accounting Management Officer of Banco do Brasil S.A. since April 2015; Member of the Deliberations Council of PREVI since 2010; Member of the Fiscal Council of Petrobras S.A. since April 2017; and Alternate Member of the Fiscal Council of Brasilprev Seguros e Previdência since March 2018.

Professional experience:    Coordinator of Vale's Controlling Committee of Vale from 2014 to 2017; Member of the Fiscal Council of Centrais Elétricas Brasileiras S.A. (Eletrobras) from 2015 to 2017; Member of the Fiscal Council of Cateno Gestão de Contas de Pagamento S.A. from 2016 to 2017; General Accounting Manager of Banco do Brasil S.A. from 2009 to 2015; Member of the Fiscal Council of CASSI from 2010 to 2014; Alternate Member of the Fiscal Council of Banco Votorantim S.A. from 2009 to 2015; and Member of the Fiscal Council of BBTS-BB Tecnologia e Serviços from 2008 to 2015.

Academic background:    Graduate degree in accounting sciences from UFRJ.Centro Universitário de Brasília—UniCeub; Post-graduate degree in accounting sciences from the Post-Graduate School of Economics at Fundação Getúlio Vargas; Master's Degree in accounting sciences from the School of Economics, Administration and Accounting of the Universidade de São Paulo.

Raphael Manhães Martins, 33:36: Member of Vale's Fiscal Council since April 2015.

Other current director or officer positions:    Member of the boardBoard of directorsDirectors of Eternit S.A., a public-held company operating in the construction segment, since April 2015; Attorney for Faoro Advogados since April 2010; Member of the fiscal councilBoard of Directors of Condor S.A.

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Indústria Química since May 2017; Member of the Board of Directors of Welser Itage Participações e Comércio S.A. since May 2017; and Member of the Board of Directors of Light S.A. ("Light"), a publicly-held utilities company, since 2014.August 2018.

Professional experience:    Alternate member of the fiscal council of LightAttorney for Cr2 Empreendimentos from 20122007 to 2013;2009; and Member of the fiscal councilFiscal Council of Embratel ParticipaçõesLight S.A., a publicly-held telecommunications company, from September2014 to December 2014.2018.

Academic background:    Degree in law from Universidade Estadual do Rio de Janeiro State University.

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Marcelo Amaral MoraesDaniel Rodrigues Alves, 48:76: Member of Vale's Fiscal Council since April 2004.2018.

          Professional experience:Other current director or officer positions:    Managing director of Capital Dynamics Investimentos Ltda., an investment company, from 2012 to 2015; Member of the deliberative councilExecutive Assistant Secretary of the Brazilian Private EquityMinistry of Finance since 2016; and Venture Capital Association—ABVCAP from 2010 to 2011; Managing director and partner of Stratus Investimentos Ltda., a private equity and venture capital firm, from 2006 to 2010; Alternate member of the board of directors of Net Serviços de Telecomunicação S.A., a cable television operator, from 2004 to 2005; Alternate Member of the Board of Directors of Vale in 2003.BB MAPFRE SH1 Participações S.A. since 2017.

Professional experience:    Managing partner at Rodrigues Alves e Soares Duarte Advogados from 2011 to 2014; Legal consultant at Empresa Gestora de Ativos—EMGEA, a state-owned company connected to the Brazilian Ministry of Finance from 2015 to 2016.

Academic background:    Degree in economicslaw from UFRJ; MBA from UFRJ/COPPEAD; post-graduateAssociação de Ensino Unificado do Distrito Federal; and Specialized degree in corporateinternational law and arbitration from Fundação Getúlio Vargas in São Paulo.

Aníbal Moreira dos Santos, 77: Member of Vale's Fiscal Council since April 2005.

          Professional experience:    From 1998 until his retirement in 2003, Mr. Moreira dos Santos served as executive officer of several CAEMI subsidiaries, including Caemi Canada Inc., Caemi Canada Investments Inc., CMM Overseas, Ltd., Caemi International Holdings BV and Caemi International Investments NV, and as chief accounting Officer of CAEMI from 1983 to 2003. He also served as member of the fiscal councils of Log-in (from April 2009 to April 2014), CADAM (from 1999 to 2003), and as an alternate member of the board of directors of MBR and Empreedimentos Brasileiros de Mineração, an iron ore asset holding company, from 1998 to 2003.

          Academic background:    Degree in accounting from Fundação Getúlio Vargas in Rio de Janeiro.

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Cláudio José Zucco​, 63: Member of Vale's Fiscal Council since April 2015.

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          Professional experience:    Alternate member of the fiscal council of Tupy S.A., a public-held company operating in the cement business, from 2012 to 2013.

          Academic background:    Degree in law from Univali; post-graduate degree in tax law from the Federal University of Santa Catarina.

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MANAGEMENT COMPENSATION

Under our bylaws, our shareholders are responsible for establishing the aggregate compensation we pay to the members of our Board of Directors and our Board of Executive Officers, and the Board of Directors allocates the compensation among its members and the Board of Executive Officers.

          Our shareholders determine this The Personnel Committee, composed of four members of the Board of Directors and one independent non-director, advises the Board of Directors on the distribution of the annual aggregate compensation at the general shareholders' meeting each year. In order to establish aggregate director and officer compensation, our shareholders usually take into account various factors, which range from attributes, experience and skills of our directors and executive officers to the recent performance of our operations. Once aggregate compensation is established, our Board of Directors is then responsible for distributing such aggregate compensation in compliance with our bylaws among the directors and executive officers. Theofficers and in setting and monitoring goals for the performance evaluation of the Executive Development Committee makes recommendationsBoard. SeeManagement and employees—Management—Advisory committees to the Board concerningof Directors.

As a global company, we require management with a deep knowledge of our business and market and unlimited dedication. Attracting and retaining talent, and engaging and motivating the annualprofessionals holding strategic positions, especially our executive officers, is critical for our success.

The compensation submitted by our Board of Directors for approval of our shareholders, and the distribution of the aggregate compensation among the members of our Board of Directors and our Board of Executive Officers, are based on benchmarking against the compensation policies and practices of the top global mining companies and other large global companies in other similar industries, and various other factors, such as the directors' and officers' responsibilities, time devoted to their duties, professional competence and reputation, market practices in the places where we operate, and the alignment of short- and long-term strategies, shareholder returns and the sustainability of the business.

One of the core principles for designing the compensation proposal is the alignment with our performance and return to our shareholders. The compensation package offered to our Board of Executive Officers, assuming the achievement of target average performance, is composed as follows: 27% fixed compensation, 27% short-term (performance target-based) variable compensation and 46% long-term (share-based incentives) variable compensation. The short-term variable compensation component is based on our cash generation, taking into account economic and financial targets that reflect operating performance, as well as health and safety targets, sustainability and accomplishment of strategic initiatives. Of the long-term variable portion, 20% of aggregate compensation is to be awarded under our Matching Program and 26% is to be awarded as Performance Shares Units (PSUs) under our phantom stock plan, for which payment is a direct function of our Total Shareholder Return (TSR) indicator's performance compared to a preselected group of comparable companies. As such, 73% of the executive officers. compensation package is at risk, and the mix offered can vary according to the performance achieved and the return to our shareholders (pay-for-performance) in each year

In additionJanuary 27, 2019, our Board of Directors determined the suspension of payments of all variable compensation to fixed compensation, our executive officers, are also eligiblefrom that date until the Board of Directors decides to revert such determination based on the outcome of the investigations into the causes of the failure of Dam I. We made a payment under the PSU program on January 15, 2019, prior to the failure of Dam I, which represents approximately 24% of the variable compensation initially contemplated for bonuses2019.

EXECUTIVE OFFICERS

As of December 31, 2018, we had six executive officers and incentive payments.

Executive officers

all of them held their positions for the full year of 2018. For the year ended December 31, 2015,2018, the amountaverage annual compensation paid to theour executive officers was US$4.06 million, the highest annual compensation paid to an executive officer was US$6.20 million and the lowest annual compensation was US$1.44 million. The average annual compensation corresponds to the total aggregate compensation paid to executive officers in 2018, not including amounts paid in 2018 for executive officers who left in prior years, divided by the number of current officers. Including payments made in 2018 for executive officers who left in prior years, the average annual compensation accrued forpaid to our executive officers was US$7.58 million.

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For the year and payable at a later date,ended December 31, 2018, the total payments related to executive officers' compensation packages is set forth in the table below.

	​	For the year ended December 31, 20152018
	​	(US$ million)
FixedAnnual fixed compensation and in kind benefits	​	6.425.63
In-kind benefits and pension plans	​	1.93
Variable compensation(1)	​	7.2913.93
​	​	​
Pension, retirement or similar benefitsTotal amount paid in 2018 to current executive officers	​	1.2421.49
Severance	​	5.4118.73
​	​	​
Total amount paid in 2018 to current and former executive officers	​	40.22
Social security contributions	​	3.53
​	​	​
Total paid to the executive officers	​	23.895.29
​	​	​
​ Total expenditures related to executive officers' compensation packages	​	​
​	​	​ 45.51

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(1)

Variable compensation includes bonus payments and payments under Matching Program and PSU Program in 2018.

Fixed compensation and in kindin-kind benefits include a base salary in cash, paid on a monthly basis, reimbursement for certain investments in private pension plans, health care, relocation expenses, life insurance, driver and car expenses.

Variable compensation consists of (i) an annual cash bonus, based on specific targets for each executive officer and on Vale's global cash generation, both approved by our Board of Directors, and (ii) payments tied to the performance of our shares under two programs, the Matching Program and the Performance Shares UnitsShare Unit (PSU). Program.

Under our Matching Program, our executive officers receiveare permitted to purchase a cash payment, vested aftercertain number of common shares or ADRs in the market within a purchase window through the plan administrator. At the end of a three-year cycle, participants are entitled to receive a reward equivalent to the market valuesame number of the preferredcommon shares or ADRs owned by them that are subject toheld through the plan.end of the cycle. Participation in our Matching Program is mandatory for our Board of Executive Officers in the years in which we pay cash bonuses. AtParticipants may sell or transfers their common shares or ADRs at any time during the endvesting period, in which case they forfeit the right to receive any reward with respect to these common shares or ADRs. The Board of Executive Officers must observe the Securities Trading Policy in order to sell or transfer Matching Program shares. The 2019 cycle of our Matching Program to our executive officers is temporarily suspended since January 27, 2019, pending conclusion of investigations related to the failure of the three-year cycle, each executive officer receives a cash payment matching the market valueDam I and further resolution of the vested shares. Board of Directors.

Under our PSU program,Program, our executive officers receive payments in cash tied to Vale's performance, as compared to a selected group of peermining companies, based on the total shareholder return (dividend or interest on equity payments and share appreciation) of the common shares of those companies during the vesting period. Starting in a2019, the PSU Programs will have three-year cliff vesting (instead of four-year scaled vesting) for each cycle. The 2019 cycle of our PSU Program to our executive officers is temporarily suspended since January 27, 2019, pending conclusion of investigations related to the failure of the Dam I and further resolution of the Board of Directors.

Pension, retirement or similar benefits consist of our contribution to Valia, the manager of pension plans sponsored by Vale.

Our severance packages for qualified terminations may comprise: (i) a lump-sum severance payment, corresponding to one-half the annual fixed compensation for executive officers and equal to the annual fixed compensation for the Chief Executive Officer, paid shortly after the termination date; (ii) non-compete agreement compensation corresponding to twice the annual fixed compensation, to be paid in eight equal quarterly installments after termination; (iii) pro-rated payment of any outstanding

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long-term variable compensation grants (Matching and PSU Programs), paid shortly after the termination date; and (iv) pro-rated payment of any outstanding short-term incentive plan (bonus), to be paid in April following the termination date. Severance expenditures in 2018 were related to seven former executive officers who left the company in 2016, 2017 and 2018.

Social security contributions are mandatory contributions we are required to make to the Brazilian government for our executive officers.

Vale has also entered into indemnification agreements with its officers.

Table of ContentsBOARD OF DIRECTORS

As of December 31, 2018 our Board of Directors had 12 members and the monthly average number of members that received compensation during 2018 was 12.08. For the year ended December 31, 2018, the average annual compensation paid to the members of our Board of Directors was US$0.17 million, the highest annual compensation paid to a member of the Board of Directors was US$0.3 million and the lowest annual compensation was US$0.15 million.

In 2015,2018, we paid US$1.22.09 million in aggregate to the members of our Board of Directors for services in all capacities, all of which was fixed compensation. There are no pension, retirement or similar benefits for the members of our Board of Directors. On February 29, 201628, 2019, the total number of common shares owned by our directors and executive officers was 16,000, and the total number of preferred shares owned by our directors and executive officers was 1,609,147.1,009,690. None of our directors or executive officers beneficially owns 1% or more of any class of our shares. Vale has also entered into indemnification agreements with its directors.

FISCAL COUNCIL

As of December 31, 2018 our Fiscal Council had 5 members and the monthly average number of members that received compensation during 2018 was 5. For the year ended December 31, 2018, the average, the highest and the lowest annual compensation paid to a member of the Fiscal Council was US$ 0.11 million.

We paid an aggregate of US$0.380.56 million to members of the Fiscal Council in 2015.2018. In addition, the members of the Fiscal Council are reimbursed for travel expenses related to the performance of their functions.

Advisory committeesADVISORY COMMITTEES

We paid an aggregate of US$0.100.48 million to members of our permanent advisory committees in 2015. Under our bylaws,2018. Until May 2018, those members who arewere directors or officers of Vale arewere not entitled to additional compensation for participating on a committee. Since June 2018, directors who participate in advisory committees are entitled to receive, in addition to the compensation as a board member, compensation for participating in one or more committees limited to 50% of the amount of a directors' compensation. Members of our advisory committees are also reimbursed for travel expenses related to the performance of their duties.

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EMPLOYEES

The following tables set forth the number of our employees by business and by location as of the dates indicated.

	​	At December 31,(1)					​	As of December 31,
By business:	​	2013	​	2014	​	2015	​	2016	​	2017(1)	​	2018
Ferrous minerals	​	52,542	​	46,832	​	42,838	​	42,579	​	42,734	​	43,504
Coal	​	2,356	​	1,897	​	1,608	​	2,039	​	2,258	​	2,350
Base metals	​	15,772	​	15,564	​	15,554	​	15,239	​	15,243	​	14,349
Fertilizer nutrients(1)	​	6,772	​	6,773	​	9,181	​	8,935	​	8,055	​	12
Energy(2)							​	NA	​	NA	​	4,058
Corporate activities	​	5,844	​	5,465	​	4,917	​	4,270	​	5,306	​	5,997
​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	83,286	​	76,531	​	74,098	​	73,062	​	73,596	​	70,270
​	​	​	​	​	​	​	​	​	​	​	​	​
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(1)

The figures reported for 2013 include VLI's employees, which amounted to 5,442. For 2014 and 2015, we did not include VLI'sDiscontinued operations.

(2)

Consists of Biopalma employees.

	​	At December 31,					​	As of December 31,
By location:	​	2013	​	2014	​	2015	​	2016	​	2017(1)	​	2018(1)
South America	​	67,392	​	60,903	​	58,830	​	57,535	​	58,457	​	55,423
Brazil							​	56,576	​	57,513	​	55,230
North America	​	6,681	​	6,673	​	6,773	​	6,630	​	6,432	​	6,032
Europe	​	397	​	395	​	385	​	385	​	375	​	298
Asia	​	4,235	​	4,476	​	4,516	​	4,499	​	4,571	​	4,475
Oceania	​	2,279	​	1,706	​	1,654	​	1,521	​	1,364	​	1,378
Africa	​	2,302	​	2,378	​	1,940	​	2,492	​	2,397	​	2,664
​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	83,286	​	76,531	​	74,098	​	73,062	​	73,596	​	70,270
​	​	​	​	​	​	​	​	​	​	​	​	​
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Since January 2017, we include in our total workforce figures all fixed-term contract employees, trainees and employees hired through our affirmative action program for Persons with Disabilities.

We negotiate wages and benefits with a large number of unions worldwide that represent our employees. We have collective agreements with unionized employees at our operations in Australia, Brazil, Canada, Indonesia, Malawi, Mozambique, New Caledonia, PeruOman and the United Kingdom.

Wages and benefitsWAGES AND BENEFITS

Wages and benefits for Vale and its subsidiaries are generally established on a company-by-company basis. Our benefits policy is aligned with our attraction and retention strategy, in accordance with applicable laws and market practice in the countries where we operate. We provide an attractive and competitive benefits package ensuring health, well-being, protection and life quality. Among the main benefits offered are medical and dental assistance, life insurance, private pension plans and short-and long-term disability benefits.

We establish our wage and benefits programs for Vale S.A. and its subsidiaries, other than Vale Canada. In May 2015, Vale Canada reached a five-year agreement with the union representing the production and maintenance employees at the Sudbury and Port Colborne operations, providing for wage and pension enhancements. In December 2015,November 2018, we reached a one-year agreement with the Brazilian unions providing for the paymenta salary increase of a bonus to compensate for the absence of salary increases.6.0% beginning in November 2018. The provisions of our collective bargaining agreements with unions also apply to our non-unionized employees.

Vale Canada also establishes wages and benefits for its unionized employees through collective bargaining agreements. No collective bargaining took place in 2018, as no contracts expired within the year. On January 1, 2018, Vale Canada implemented a flexible benefits program for employees represented by the technical and administrative union at our Sudbury operation; this plan was negotiated

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during the collective bargaining process in 2017. For non-unionized employees, Vale Canada undertakes an annual review of salaries.salaries and benefits. We also provide our employees and their dependents with other benefits, including supplementary medical assistance.assistance, and in 2017 Vale Canada introduced a new flexible benefits plan for its non-union employees.

Pension plansPENSION PLANS

Brazilian employees of Vale and of most of its Brazilian subsidiaries are eligible to participate in pension plans managed by Valia.

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Most of the participants in plans held by Valia are participants in a plan named "Vale Mais",Mais," which Valia implemented in 2000. This plan is primarily a defined contribution plan with a defined benefit feature relating to service prior to 2000 and another defined benefit feature to cover temporary or permanent disability, pension and financial protection to dependents in case of death. Valia also operates a defined benefit plan, closed to new participants since May 2000, with benefits based on years of service, salary and social security benefits. This plan covers retired participants and their beneficiaries, as well as a relatively small number of employees that declined to transfer from the old plan to the "Vale Mais" plan when it was established in May 2000.

Employees within our Base Metals operations principally in Canada and the United Kingdom, participate in defined benefit pension plans and defined contribution pension plans. AllThe defined benefit plans have been closed to new participants since 2009, and all new employees within our Base Metals operations participate in defined contribution pension plans. Employees in Japan and Taiwan participate in a defined benefit pension plan. Employees in other jurisdictions, including China, Indonesia, Malawi, Switzerland, the United States and Zambia,are eligible to participate in defined contribution pension plans.

Performance-based compensationPERFORMANCE-BASED COMPENSATION

All Vale parent-company employees may receive incentive compensation each year in an amount based on the performance of Vale, which can range from 0 to 200% of a market-based reference amount, depending on certain targets set, and the cash generation in each period. Similar incentive compensation arrangements are in place at our subsidiaries.

Qualifying management personnel are eligible to participate in the PSU and Matching programs. See description of these programs underManagement compensation—Executive officers.

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V.VI.      ADDITIONAL INFORMATION

LEGAL PROCEEDINGS

We and our subsidiaries are defendants in numerous legal actions in the ordinary course of business, including civil, administrative, tax, social security and labor proceedings. The most significant proceedings are discussed below. Except as otherwise noted below, the amounts claimed, and the amounts of our provisions for possible losses, are stated as of December 31, 2015.2018. See Note 18note 28 to our consolidated financial statements for further information.

LEGAL PROCEEDINGS RELATED TO THE FAILURE OF DAM I

We are engaged in several investigations and legal proceedings relating to the failure of Dam I. These proceedings are all in early stages, and we cannot reasonably estimate the range of loss or the timing for decisions. Other proceedings or investigations relating to the failure of Dam I are expected. Our potential liabilities resulting from the dam failure are significant, and additional provisions are expected.

a) Public civil actions brought by the State of Minas Gerais and state public prosecutors for damages resulting from the failure of Dam I

We are party to public civil actions brought by the State of Minas Gerais and state prosecutors before various state courts in Minas Gerais claiming economic and environmental damages resulting from the dam failure and a broad range of injunctions ordering Vale to take specific remediation and reparation actions.

In January 2019, immediately after the failure of Dam I, state courts in Minas Gerais granted orders freezing R$11.0 billion in cash in our bank accounts and requesting us to take a number of emergency and reparation measures in connection with the failure of Dam I. These orders were granted in response to preliminary injunctions filed by the State of Minas Gerais and state prosecutors in preparation for these public civil actions.

In one of these proceedings, on February 20, 2019, we entered into a preliminary agreement with the State of Minas Gerais, and certain other authorities that joined this proceeding, in order to expedite payment of monetary damages resulting from the failure of Dam I. Under this preliminary agreement, we agreed to advance indemnification payments to the affected people and independent technical consulting services to affected individuals and to reimburse or direct payment of the expenses incurred by the State of Minas Gerais.

In one of these public civil actions, the state prosecutors have requested that Vale be ordered to contribute significant amounts to a fund, to be created and managed by state prosecutors with the purpose of funding remediation and reparation measures.

b) Public civil actions brought by state prosecutors and other authorities regarding safety requirements at other dams

We are party to more than ten public civil actions in which public prosecutors and other authorities seek the suspension of operations, the imposition of restrictions on operations, or injunctions compelling us to implement safety measures at other existing tailings dams.

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•

In various of these public civil actions, courts froze amounts in our bank accounts to secure payments of damages and costs in connection with the evacuation and relocation of communities. The aggregate amount frozen in these public civil actions is R$5 billion.



•

In March 2019, we suspended operations at our Timbopeba mine, following a decision of a state court in the city of Ouro Preto restraining us from using the Doutor dam and other structures at the Timbopeba mine.



•

In February 2019, a state court in Belo Horizonte ordered us to present emergency plans and documents certifying the stability and safety of dams and to suspend activities that may create risks to the Laranjeiras, Menezes II, Capitão do Mato, Dique B, Taquaras, Forquilha I, Forquilha II and Forquilha III dams. Of the dams named in the injunction, only the Forquilha I, Forquilha II and Forquilha III dams were built using the upstream method. Due to our inability to use the Laranjeiras dam for tailings disposal from our Brucutu mine in the Minas Centrais complex, we halted production at the Brucutu mine pending removal of the injunction. In March 2019, this court decision was reversed with respect to the Laranjeiras dam, and SEMAD reinstated our provisional license to use the Laranjeiras. On March 25, a state court in the city of Santa Barbara prohibited Vale from using the Sul dam, another tailings dam located at the Brucutu mine. This decision was reversed by the Court of Appeals of the State of Minas Gerais on April 15, 2019. The Laranjeiras dam receives tailings from Vale's mining operations at Brucutu mine, while the Sul dam receives discharges from Vale's concentration plant in emergency situations. These proceedings are still ongoing.



•

In October 2017, before the failure of Dam I, state prosecutors of the state of Minas Gerais had brought public civil actions challenging our environmental licenses for the construction of the Maravilhas III tailings dam, which is expected to support our operations in the Vargem Grande mining complex, in our Southern System. After the failure of Dam I, the prosecutors filed a request for preventive injunction seeking to discontinue the project, but the request was rejected by the court. This proceeding is still ongoing. If the construction of this dam is interrupted, our ability to resume operations in the mining complex of Vargem Grande could be adversely impacted.



•

In April 2018, state prosecutors brought a public civil action related to the Maravilhas II tailings dam, requesting injunctions ordering us to (i) refrain from disposing tailings, operating, constructing or making other interventions on the dam; (ii) refrain from increasing the risks of other structures in the mining complex where Maravilhas II is situated; (iii) review technical studies and other documents related to the dam, and conduct an external audit on the structure. The injunction requests were granted by the Court of Itabirito on April 11, 2019. The Maravilhas II tailings dam supports our operations in the Vargem Grande complex, which have been suspended since February 2019.

c) Public civil action brought by labor prosecutors

We are a party to a public civil action brought by labor prosecutors claiming, among other things, a pre-judgment attachment to secure the payment of monetary damages and costs including expert reports, wages, socio-economic relief, funeral expenses and other remediation measures to the workers affected by the failure of Samarco'sDam I. The labor court in Belo Horizonte, Minas Gerais, granted pre-judgment attachments in the amount of R$1.6 billion million in cash in our bank accounts to secure the payment of damages and severance claims of employees affected by the closure of our operations in the Córrego do Feijão mine.

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On February 15, 2019, we entered into a preliminary agreement with the labor prosecutors pursuant to which we agreed to indemnify our direct and indirect employees affected by the closure of Córrego do Feijão mine. Under the terms of the agreement, we agreed to maintain the jobs of our direct employees until December 31, 2019 and will assist third party employees with a replacement or pay their salaries until December 31, 2019. We also agreed to keep paying wages regularly to the missing people until the authorities have considered them as fatal victims of the event and will pay to the families of the fatal victims an amount equivalent to two thirds of their wages until December 31, 2019 or until we reach the final agreement with the labor prosecutors. We will also provide a lifelong medical insurance benefit to the spouses of the victims and a similar benefit to the dependents of the victims until they are 22 years old. Our initial estimate is that this agreement will result in a provision of approximately US$220 million in 2019.

d) Putative class actions in the United States

We and certain of our officers have been named defendants in civil class action suits, under U.S. federal securities laws, brought before federal courts in New York by holders of our securities. The plaintiffs allege that we made false and misleading statements or omitted to make disclosures concerning the risks of the operations of Dam I and the adequacy of the related programs and procedures. The plaintiffs have not specified an amount of alleged damages in these actions.

We believe that the claims have no merit, and we will contest them. However, given the preliminary status of the actions, it is not possible at this time to determine a range of outcomes or to make reliable estimates of the potential exposure.

e) Criminal investigations

The Minas Gerais state police, the Brazilian federal police and state and federal prosecutors are conducting criminal investigations in connection with the failure of Dam I. In connection with the investigation conducted by the state prosecutors, the 2^nd criminal court in Brumadinho ordered the temporary arrest of certain employees of Vale and of a company that had provided testing and certification services to us. These individuals have been released from detention and are still being investigated. We cannot estimate the timing for conclusion of the investigations and do not have precise information on the potential crimes being investigated. We do not have information on the names of all the individuals targeted by the investigation.

f) Investigation by Brazilian legislative bodies

In March 2019, the Brazilian Senate initiated an investigation (Comissão Parlamentar de Inquérito, or "CPI") to determine the causes of and responsibilities for the failure of Dam I and to propose changes to the existing legal and regulatory regime applicable to the mining industry and other related matters. ln February 2019, the Brazilian House of Representatives created a commission to monitor tailings dams across the country, and to oversee the work of various public authorities in charge of monitoring such dams. In April 2019, the Brazilian House of Representatives announced that it will initiate a CPI, similar to the one conducted by the Senate. State and local legislative bodies have initiated other CPIs in response to the failure of Dam I, and other similar investigations and inquiries. These investigations may result in the approval of more stringent rules applicable to our business.

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g) Other proceedings

We are a defendant in a number of private actions, before state and federal courts in the state of Minas Gerais, brought by individuals, business entities, associations, non-governmental organizations and other entities seeking remediation and compensation for environmental, property and personal damages resulting from the Dam I failure. These proceedings include requests for significant amounts in damages, injunctions, pre-judgment attachment of assets and seizure of our bank accounts. We are also engaged in several other investigations and proceedings claiming damages resulting from the dam failure. These actions and proceedings are in early stages, and we cannot reasonably estimate their impact. Other proceedings and investigations relating to the failure of the tailings dam in Minas GeraisBrumadinho are expected.

LEGAL PROCEEDINGS RELATED TO THE FAILURE OF SAMARCO'S TAILINGS DAM IN MINAS GERAIS

We are engaged in several legal proceedings in connection withrelating to the failure inof Samarco's tailings dam in the city of Mariana, in the state of Minas Gerais. Vale has notified its insurers of the dam failure event and related complaints. SeeInformation on the Company—Business overview—Significant changes in our business—Failure of Samarco's tailings dam in Minas Gerais. AllMost of these proceedings are in early stages, and we cannot reasonably estimate the possible loss or range of lossesloss or the timing for a decision.

a) Public civil action filed by the Brazilian government and others and public civil action filed by the Federal Prosecution Office

In November 2015, the Brazilian federal government, the states of Minas Gerais and Espírito Santo, certain federal and state authorities and certain public entities collectively filed a public civil action before the 12^th Federal Court in Belo Horizonte, state of Minas Gerais, against Samarco and its shareholders, Vale and BHPB. The plaintiffs claimed approximately R$20.2 billion in monetary damages and a number of measures to remediate the environmental damages caused by the Fundão dam failure.

In March 2016, we, together with Samarco and BHPB, entered into a framework agreement with the federal government, the state governments of Espírito Santo and Minas Gerais and certain other federal and state authorities. The Framework Agreement has a 15-year term, renewable for successive one-year periods until all the obligations under the Framework Agreement have been performed. The Framework Agreement does not provide for admission of civil, criminal or administrative liability for the Fundão dam failure. The Framework Agreement provides that, within three years of the date of the agreement, the parties would review its terms to assessing the effectiveness of the ongoing remediation and compensation activities.

In May 2016, the MPF filed a public civil action before the 12^th Federal Court in Belo Horizonte against Samarco, Vale, BHPB, BNDES and the governmental authorities that are parties to the Framework Agreement. In this action, the MPF requested that the court order a broad range of specific actions to be taken by the various parties. The MPF also stated in its complaint that the required remedial measures would have a total value of R$155 billion, based on a comparison with the costs of the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. The MPF also claimed other forms of relief, including injunctions (i) ordering the defendants to implement several measures to mitigate or remediate social, economic and environmental impacts arising from the failure of the Fundão dam, as well as other emergency measures; (ii) preventing the defendants from encumbering or disposing of their assets; (iii) preventing the defendants from paying dividends; (iv) ordering the defendants to deposit R$7.7 billion into a fund, managed by the defendants, for implementation of social, environmental and emergency programs; (v) ordering the defendants to provide collateral in the amount of R$155 billion to secure their compliance with the final court decision; (vi) ordering the defendants to maintain working capital in the amount of R$2 billion initially, and thereafter in an amount equal to 100% of the expenses of the

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a) Putative classLegal Proceedings

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remediation and compensation measures projected for the subsequent twelve months; and (vii) ordering BNDES to take actions under its credit agreements with the defendants, including cessation of further drawings and acceleration of outstanding principal.

In June 2018, Vale, Samarco, BHPB and the offices of the federal and state (Minas Gerais and Espírito Santo) prosecutors, public defenders and attorneys general, among other parties entered into a comprehensive agreement to improve the governance mechanism of Fundação Renova and establish a process for potential revisions to the remediation programs provided under the Framework Agreement based on the findings of experts hired by Samarco to advise the MPF over a two-year period (the June 2018 Agreement). The June 2018 Agreement terminated certain lawsuits, including public civil actions filed by the Brazilian federal government and the states of Minas Gerais and Espírito Santo. It also contemplates the future termination of other public civil actions upon agreement over the remediation programs under experts' review, and confirmed the collateral provided by the parties to secure the payment of remediation measures in the amount of R$2.2 billion.

We expect the Framework Agreement and the June 2018 Agreement to represent the first steps for the settlement of the public civil action brought by the MPF and other related proceedings.

b) Criminal proceeding

In October 2016, the MPF filed criminal charges before the federal court of Ponte Nova, state of Minas Gerais, against Samarco, Vale, BHPB and a number of individuals who were employees of Samarco or members of Samarco's governance bodies or advisory committees. The charges include murder, physical injury and various environmental crimes due to the failure of Samarco's Fundão dam.

The criminal charges were accepted by the judge in November 2016. The criminal proceedings is subject to challenge in separate proceedings in federal courts. We are not able to anticipate when a judgment will be issued or when the judge will correct the criminal process in accordance with the decision of the federal court.

c) Class actions in the United States

          Vale S.A.We and certain of itsour officers have been named as defendants in civil class action suits in federal courtcourts in New York brought by holders of Vale'sour securities and by holders of Samarco's bonds, each under U.S. federal securities laws. The lawsuitsplaintiffs allege that Valewe made false and misleading statements or omitted to make disclosures concerning the risks and dangers of the operations of Samarco's Fundão dam and the adequacy of the related programs and procedures. The plaintiffs have not specified an amount of alleged damages in these actions.

We intend to vigorously defend these actionsbelieve that the claims have no merit, and mount a full defense againstwe will continue contesting them. However, given the allegations. The litigation is at a very early stage. On March 7, 2016, the judge overseeing the securities class action issued an order consolidating these actions and designating lead plaintiffs and counsel. As a consequencepreliminary status of the preliminary nature of these suits,actions, it is not possible to determine a range of outcomes or reliable estimates of the potential exposure at this time, and no provision has been recognized.recognized so far.

c.1) Related to Vale's American Depositary Receipts

Vale and certain of its officers were named as defendants in a securities class action in the U.S. Federal Court for the Southern District of New York brought by holders of Vale's ADRs under U.S. federal securities laws.

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b) Public civil action byLegal Proceedings

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In March 2017, the Brazilian governmentjudge issued a ruling dismissing a significant part of the claims against us and others

          Inthe individual defendants, and allowing the case to continue based on more limited claims. The claims that were not dismissed relate to certain statements contained in our 2013 sustainability report concerning risk mitigation plans, policies and procedures, and certain statements made in a conference call in November 2015 concerning Samarco. This lawsuit is currently in the discovery phase.

c.2) Related to Samarco's bonds

Vale, together with Samarco and BHPB, was named as defendant in class action alleging violations of U.S. federal securities laws brought by holders of bonds issued by Samarco in the U.S. Federal Court for the Southern District of New York. The defendants filed a joint motion to dismiss the complaint, and a decision on this motion is still pending. Discovery will not commence until after the court rules on the defendants' pending motion to dismiss.

d) Tax proceeding

In September 2018, the federal tax authorities filed a request before the 27^th federal court in Belo Horizonte for an order seizing Vale's assets to secure the payment of federal tax debts of the joint venture, in the amount of approximately R$10 billion. The court initially granted an order to freeze assets of Vale, but this decision was reversed, in all material respects, because these tax debts are currently suspended under Brazilian federal government, the stateslaw. We were served in January 2019 and have submitted our defense immediately thereafter. We are vigorously contesting this action.

e) Other proceedings

Vale is a defendant in several public civil actions brought by state prosecutors of Minas Gerais and Espírito Santo, certain federal and stateother authorities and certain entities collectively filed a publicor civil action before a federal court in Minas Gerais against Samarco and its shareholders, Vale and BHPB. The plaintiffs claimed approximately R$20.2 billion (US$5.2 billion) in monetary damages and a number of measures to remediate theassociations claiming environmental damages caused byas a result of the Fundão dam failure. Certainfailure of Samarco's dam. The relief claimed in these proceedings are generally similar to the claims brought by the plaintiffs refer to specific defendants individually, while other claims are directed at all defendants.

          The federal court in Minas Gerais granted an injunction ordering Samarco to make a deposit of R$2.0 billion for use toward the remediation and compensation activities and preventing Vale from selling or otherwise transferring its mining rights in Brazil.

          In March 2016, Samarco and its shareholders, Vale and BHPB, entered into a settlement agreement (the "Settlement Agreement") with the federal Attorney General of Brazil, the state governments of Espírito Santo and Minas Gerais and certain other federal and state authorities for compensation for, and remediation of, the environmental and social impacts of the dam failure. Samarco, Vale and BHPB agreed to establish a foundation (the "Foundation") to develop and implement environmental and socio-economic programs to remediate and provide compensation, where remediation is not feasible, for damage caused by the Samarco dam failure.

          The Settlement Agreement has a term of 15 years, renewable for successive one-year periods until all the obligations under the Settlement Agreement have been performed. Samarco will fund the Foundation with contributions as follows:

•

R$2 billion in 2016, less the amount of funds already spent on, or allocated to, remediation and compensation activities (e.g. the amounts already paid by Samarco as well as the amounts in Samarco's accounts already seized or frozen by courts pursuant to this action);



•

R$1.2 billion in 2017; and



•

R$1.2 billion in 2018.

          From 2019 to 2021, annual contributions to the Foundation will be set based on an amount sufficient to complete remaining remediation and compensation projects, subject to an annual minimum amount of R$800 million and an annual maximum amount of R$1,600 million.

          Under the agreement, the Foundation will allocate an annual amount R$240 million over a period of 15 years to the compensation projects, and these amounts are included in the annual contributions described above for the first six years. Through the end of 2018, the foundation will also set aside R$500 million for basic sanitation in the affected areas. To the extent that Samarco does not meet its funding obligations, each of Vale and BHPB is obligated to provide funding to the Foundation in proportion to its 50% interest in Samarco. The Settlement Agreement, which does not include any admission of civil, criminal or administrative liability for the Fundão dam failure, is subject to court approval and, if approved, will settle the public civil action brought by the Brazilian government and others. The Settlement Agreement does not cover private civil claims, other public civil claims or criminal charges.

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c) Minas Geraisothers and Espírito Santo state prosecutor actions

          The state prosecutors in the city of Governador Valadares, in the state of Minas Gerais, commenced two lawsuits against Vale and Samarco, seeking (1) injunctions ordering (i) Samarco and Vale to conduct a series of monitoring and remediation interventions to secure water supply and management of solid waste in the city of Governador Valadares, located alongside the Doce River, (ii) the seizure of at least R$100 million in the defendants' bank accounts, in order to secure the implementation of the requested measures, and (2) an amount of at least R$5.0 billion (US$1.3 billion) in damages. The local court of Governador Valadares rejected the requests for injunctions against Vale, but ordered the local water agency, which is a co-defendant in one of the proceedings, to submit a plan for solid waste management and water supply. Both lawsuits are in preliminary stages.

          The state prosecutors in the city of Mariana, in the state of Minas Gerais, brought a public civil action against Samarco, Vale and BHPB, seeking damages and other measures for assistance of residents affectedbrought by the dam failure, including provisionMPF. In 2017, The Superior Court of healthcare and rescue of displaced people, goods and livestock. The localJustice (STJ) decided that the 12^th Federal Court in Belo Horizonte is the competent court of Mariana granted an injunction seizing R$300 million (US$77 million) in Samarco's bank accounts. This amount is still blocked, and has been applied to pay for settlement agreements between Samarco and people affected by the Fundão dam failure. The proceeding is in its preliminary stages.

          The state prosecutors in the city of Ponte Nova, in the state of Minas Gerais, and Colatina, in the state of Espírito Santo, have also commenced a lawsuits against Vale, BHPB and Samarco, seeking damages to compensate for the impact of the failure of Samarco's dam in each ofrule on all these cities, as well as the attachment of the defendants' assets to secure payment ofpublic civil actions. All these damages. The estimated amounts claimed in each of these proceedings is R$2.0 billion. Both lawsuits are in preliminary stages.

d) Civil associations proceedings

          Vale is also a defendant in certain public civil actions brought by civil associations seeking injunctive relief and damage payments in connectionhave been suspended while we negotiate an agreement with the Fundão dam failure.MPF, as discussed in item a) above.

          In December 2015, a civil association named Sohumana Sociedade Humanitária Nacional commenced a public civil action in a federal court in Rio de Janeiro against Samarco, Vale and BHPB, seeking R$20 billion (US$5.0 billion) in environmental and property damages allegedly caused by the dam failure. The judge ruled that the federal courts in Rio de Janeiro lacked jurisdiction to hear this action, and the process will be transferred to the federal district court in Belo Horizonte.

          Also in December 2015, a civil association named NACAB brought a similar public civil action against Samarco, Vale and BHPB, before the state courts in the city of Ponte Nova, in Minas Gerais, requesting at least R$100 million (US$26 million) in environmental damages and injunctive relief ordering the defendants to implement certain remediation and monitoring measures.

e) Other proceedings

Vale has been named as a defendant in a number of private actions, before different state and federal courts in the states of Minas Gerais and Espírito Santo, brought by individuals, business entities, municipalities and other actionsentities seeking remediation and compensation for environmental, property and personal damages resulting from the Fundão dam failure,failure. These proceedings include requests for significant amounts in the estimated amountdamages, injunctions, pre-judgment attachment of R$134.4 million (US$34.4 million). Other proceedingsassets and investigationsseizure of our bank accounts. Vale has settled part of these suits, and continues to defend itself in connection with the dam failure are expected.a number of these proceedings.

Samarco is engaged in several other investigations and proceedings claiming damages resulting from the dam failure. Immediately after the dam failure, the environmental authority of the state of Minas Gerais and the DNPM an agency of(currently, the Ministry of Mines and Energy of the Brazilian government,ANM) commenced an investigation into the causes of the dam failure, and determinedordered the suspension of Samarco's operations pending the conclusion of these investigations.

Table of ContentsTUBARÃO PORT LITIGATION

Tubarão port litigation

In January 2016, as part of an environmental investigation conducted by the Brazilian federal police, a federal court in the Brazilian state of Espírito Santo ordered the suspension of our activities in the Pier II and the coal

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pier of the Tubarão Port,port due to potential environmental damages resulting from the release of iron ore in the sea area around the Pier II and the coal pier.piers. Our operations in the Pier II and the coal pier of the Tubarão Portport were suspended for four days, until the Federal Court of Appeals ("TRF") of the Second Region (Tribunal Regional Federal da Segunda Região) suspended the effects of the injunction. The Federal CourtIn July 2016, the TRF confirmed the suspension of Appeals granted us 60 daysthe effects of the injunction and ordered an expert investigation to implement certainconfirm that we had properly implemented measures to monitor, control and mitigate the release of iron ore in the terminal. This 60-day period expired on March 25, 2016,expert investigation commenced in 2018 and we believe that we are in compliance with the requirements imposedexpert appointed by the Federal Court of Appeals.court submitted its report in March 2019. Vale and the federal prosecutors will submit their comments on the expert report in April 2019. As parta result of this proceeding, we may be required to comply with certainsuspend our activities in the Tubarão port or to implement additional requirementsmeasures to prevent or mitigate the release of iron ore in the sea.

          TheIn September 2017, the federal police concluded its environmental investigation is still ongoing. Depending onand recommended that the outcomeMPF press charges against us for environmental crimes resulting from the release of iron ore in the sea around the Tubarão port. In June 2018, the MPF requested that the federal police reopen and continued the investigation. In September 2018, we entered into a settlement agreement with the MPF, state prosecutors and the environmental and water authority of the state of Espírito Santo (IEMA), pursuant to which we agreed to take additional measures to control emissions and to implement certain measures recommended by the environmental agency of the state of Sao Paulo (CETESB). The estimated investments required to comply with these measures are approximately R$1.27 billion. As part of this settlement, the MPF requested the suspension of the police investigation and the preliminary injunction. The federal court requested an opinion from the Attorney General in order to confirm such request. In the event that the Attorney General does not approve the request to ratify our settlement agreement, the federal prosecutorprosecutors may bringseek other legal proceedingsactions against us, including requests for suspension of our activities in the future.

Onça Puma litigation

          In 2009,Tubarão port, or press charges for environmental crimes. We will vigorously contest any action against us resulting from the federal prosecutorpolice's investigation.

ONÇA PUMA LITIGATION

In 2012, the MPF brought a public civil action against Vale and the Brazilian state of Pará, seeking the suspension of our nickel operations in Onça Puma, in the state of Pará, due to the alleged impact on the Xikrin do Cateté and Kayapó indigenous communities located close to the mining site. The federal prosecutor contendsprosecutors contend that (i) that our operations would be contaminating the water of the Catete River, which crosses the communities, (ii) that we have failed to comply with certain conditions under our environmental licenses, and (iii) that the state of Pará should not have granted environmental license to this operation.

In 2015,November 2018, the TRF of the First Region (Tribunal Regional Federal da Primeira Região) affirmed the decision to suspend our nickel mining operations at Onça Puma until the conclusion of a number of expert evaluations of the impact of our activities in the Catete River and the surrounding communities. The court also ordered us to make a monthly payment to each member of the Xikrin and Kayapó tribes to compensate the affected indigenous communities. Our mining activities in Onça Puma have been suspended since September 2017, when the court first granted an injunction in favor of the federal prosecutor.

We have appealed this decision, but a decision on our appeal is still pending and we cannot anticipate when our mining activities in Onça Puma will resume. We believe that the MPF's claims have no merit. Three expert reports indicate that our activities do not cause harm to the Catete River and the surrounding indigenous communities, and two additional expert evaluations are pending. We will continue to vigorously contest this action.

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PUBLIC CIVIL ACTION SEEKING SUSPENSION OF S11D MINE

In May 2016, associations representing the indigenous community of Xikrin do Cateté brought a public civil action against Vale, the Federal Environmental Agency (IBAMA), the Federal Indigenous Agency (FUNAI) and the National Bank of Economic and Social Development (BNDES), seeking the suspension of the environmental permitting process of our S11D mine. The associations contend that FUNAI and IBAMA have failed to conduct the appropriate studies regarding the affected indigenous communities during the environmental permitting process, and consequently that the indigenous groups affected by this mine have not provided the required consent. The plaintiffs also requested a monthly payment of R$2 million for each association until the defendants conclude the studies.

Applicable law provides for mandatory consultation with the indigenous communities located within ten kilometers of the mine, and these indigenous communities are located more than 12 kilometers away from the mine. We have submitted our preliminary defense, and in January 2017 the court in the city of Redenção, in the state of Pará, granteddenied plaintiffs' request for an injunction suspending our nickel operations in Onça Puma and orderingS11D mine.

In July 2017, the paymentjudge of a cash compensation to the affected indigenous communities. We and the state attorneys representing the state of Pará filed separate appeals against this decision to the Federal Court of AppealsMarabá partially modified the previous decision and ordered that we prepare a study of the First Region,impacts of the Superior CourtS11D operation on the Xikrin tribe within 180 days. Vale submitted a work plan for the study to FUNAI and the plan was approved. The court then ordered us to present the work plan to the indigenous community and we are awaiting approval to continue with its preparation.

This decision does not affect our operations in S11D. We appealed this decision and will continue to vigorously contest this action.

PUBLIC CIVIL ACTION SEEKING SUSPENSION OF SALOBO MINE

In July 2018, associations representing the indigenous community of Justice (STJ)Xikrin do Cateté brought a public civil action against Vale, the Federal Environmental Agency (IBAMA) and finally the Supreme Court (STF). On December 16, 2015,Federal Indigenous Agency (FUNAI), seeking the Supreme Court suspendedsuspension of the injunction,environmental permitting process of Salobo Mine. The associations contend that FUNAI and granted us 120 daysIBAMA have failed to implement certain monitoringconduct the appropriate studies regarding the affected indigenous communities during the environmental permitting process and other mitigating measurescontends that our operations would be contaminating the water of the Itacaiúnas River and to comply with certain requirementsconsequently that the indigenous groups affected by this mine have not provided the required consent. The plaintiffs also requested a monthly payment of our environmental license. We have been working togetherR$2 million for each association until the defendants conclude the studies.

Applicable law provides for mandatory consultation with the stateindigenous communities located within ten kilometers of Paráthe mine, and these indigenous communities are located more than 22 kilometers away from the mine. In October 2017 the court denied plaintiffs' request for an injunction suspending our Salobo Mine.

In February 2019, Vale, IBAMA, and the environmental agency Instituto Chico Mendes de Conservação da Biodiversidade (ICMBio) filed a joint answer in court, rebutting the plaintiff's claims, and reaffirming the legality of the environmental permitting process of Salobo Mine and the fulfillment of all conditions imposed by relevant authorities. In March 2019, the MPF presented an opinion for the suspension of the activities in the Salobo Mine. A decision by the federal prosecutor to implement these measures. We are vigorously contesting this action, which we believe to be without merits.court is pending.

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ITABIRA SUITS

We are a defendant in two separate actions brought by the municipality of Itabira, in the Brazilian state of Minas Gerais. In the first action, filed in August 1996, the municipality of Itabira alleges that our Itabira iron ore mining operations have caused environmental and social harm, and claims damages with respect to the alleged environmental degradation of the site of one of our mines, as well as the immediate restoration of the affected ecological complex and the performance of compensatory environmental programs in the region. The damages sought, as adjusted from the date of the claim, amount to approximately R$4.060 billion (US$1.010 billion).6.379 billion. An expert report favorable to Vale has been issued, but the court granted the municipality's request for additional expert evidence. The elaborationpreparation of this additional expert evidence is pending. Both parties agreed to suspend the action until the presentation of an expert report, and to reconvene to discuss a potential settlement after such expert report is presented.

In the second action, filed in September 1996, the municipality of Itabira claims the right to be reimbursed for expenses it has incurred in connection with public services rendered as a consequence of our mining activities. The damages sought, as adjusted from the date of the claim, amount to approximately R$4.702 billion (US$1.169 billion).6.7 billion. This proceeding was suspended for a settlement negotiation, but has resumed its normal course as the parties have not reached an agreement, and the evidence production phase will follow. We believe these suits are without merits and will continue to vigorously contest them.

TableMINISTRY OF LABOR PROCEEDING

In February 2015, following an inspection in the facilities of Contentsa company that provided transportation services to us between our mines Mina do Pico and Mina de Fábrica in the state of Minas Gerais, the Ministry of Labor determined that this transportation company had failed to comply with certain obligations relating to health, safety, overtime and other labor matters. By adopting a broad interpretation of the law, the Ministry of Labor concluded that its employees were working in conditions similar to slavery. Upon learning of the findings, we promptly remediated the problems and we eventually terminated the agreement with the transportation company. Nevertheless, the Ministry of Labor commenced two administrative proceedings against us, one alleging illegal outsourcing and another alleging that the illegally outsourced employees were working in conditions similar to slavery. In December 2018, the regional labor court upheld Vale's annulment action and confirmed that the outsourcing of the transportation services in this case was lawful. However, in March 2019 the courts confirmed administrative decision that determined that we had employees in conditions similar to slavery. We appealed this decision and will continue to vigorously contest this action.

TAX PROCEEDINGS

a) CFEM-related proceedings

We are engaged in numerous administrative and judicial proceedings related to the mining royalty known as the CFEM. For more information about CFEM, seeInformation on the Company—Regulatory matters—Royalties and other taxes on mining activities. These proceedings arise out of a large number of assessments by the DNPM.DNPM (currently, the ANM). The proceedings concern different interpretations of DNPM'sthe agency's method of estimating sales, the statute of limitations, due process of law, payment of royalties on pellet sales and CFEM charges on the revenues generated by our subsidiaries abroad. The aggregate amount claimed in the pending assessments is approximately R$4.9547.6 billion, (US$1.269 million), including interest and penalties through December 31, 2015.2018.

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We are contesting DNPM'sthese claims using the available avenues under Brazilian law, beginning with challenges in administrative tribunals and proceeding with challenges in the judicial courts. We have received some favorable and unfavorable decisions, and we cannot predict the amount of time required before final judicial resolutions.

The DNPM'sagency's assessments coverinitially covered a period of up to 20 years before their issuances, underbased on the interpretation that the applicable statute of limitation for CFEM claims would be 20 years. We have challenged all the assessments contending that these claims are subject to a 5-year statute of limitation. In December 2015, the Attorney General's Office issued a legal opinion establishingconcluding that CFEM claims are subject to a 10-year statute of limitations. This legal opinionconclusion is consistent with recentthe decisions of the Superior Court of Justice (STJ). We("STJ"), and we expect that the DNPMANM and the courts will revise all the assessments to exclude charges that are time barred under this recent legal opinion.

          We have determined that we have a probable loss in connection with the dispute related to the deductibility of transportation expenditures in the calculation of CFEM. On December 31, 2015, we had a provision of approximately R$338 million (US$87 million) for this probable loss. We have paid the CFEM charges relating to the deductibility of transportation expenditures that were not time barred, assuming a five-year statute of limitation, and will supplement these payments to cover the charges that are not time barred under the recent interpretation of Attorney General's Office.

b) ICMS tax assessments and legal proceedings

We are engaged in several administrative and court proceedings relating to additional charges of value-added tax on services and circulation of goods (ICMS) by the tax authorities of different Brazilian states,states. In each of these proceedings, the tax authorities claim that (i) certain credits we have deducted from our payments of ICMS were not deductible; (ii) we have failed to comply with certain accessory obligations; (iii) we are required to pay the ICMS on electricity purchases and (iv) we are required to pay ICMS in connection with goods that we bring into the total estimated amountState of R$4.6 billion (US$1.2 billion)Pará. The most significantWe estimate our possible losses resulting from these proceedings are described below.in R$3.049 billion.

The tax authorities of the states of Pará and Minas Gerais have issued tax assessments (autos de infração) against us for additional payments of ICMS on the iron ore we transport from our mining complexes in the Brazilian states of Pará and Minas Gerais to our facilities in the states of Maranhão and Espírito Santo, respectively.

          The tax authorities of Pará assert that the calculation of ICMS should be based on the market value of the iron ore transported, as opposed to the cost of production of the ore, which we have used to calculate the ICMS owed in years past. We are engaged in two judicial proceedings challenging the tax assessments issued by the tax authorities of Pará, one of which covers the years 2007, 2008 and 2009, in an aggregate amount of R$777 million (US$199 million), and the other covering the years 2010, 2011 and 2012, in an aggregate amount of R$758 million (US$194 million), as of December 2015. We have provided a bank guarantee in the full amount in dispute to suspend the collection proceeding while our judicial challenge is pending, as required by Brazilian law.

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          The tax authoritiesState of Minas Gerais assertcontend that we should also payhave paid ICMS onin relation to the costs of transportation cost of the iron ore, but we understand that such taxationICMS is not applicable to this activity because the ore was transported directly by Vale. Withus. The judicial court has definitively decided in our favor with respect to the tax assessments covering (i) the yearsactivities in 2009 and 2010 in an aggregate amount of R$507 million (US$130 million) and (ii) the years632 million. With respect to activities in 2011, 2012 and 2013, the amount in an aggregate amount ofdispute is R$758959 million (US$194 million)(included in the possible losses mentioned above). We are challenging these tax assessmentsalso expect a favorable outcome in this case.

In connection with a legal proceeding relating to ICMS, prosecutors in the courts.state of Rio de Janeiro are seeking criminal charges against members of management of our subsidiary MBR, alleging tax fraud. The defense has presented its case in the criminal proceeding against these individuals and a decision is pending. The case has been extinguished for one of the members of management of our subsidiary MBR, but remains pending for the others. We believe that these allegations are without merit.

c) Litigation on Brazilian taxation of foreign subsidiaries

We are engaged in legal proceedings concerning the contention of the Brazilian federal tax authority (Receita Federal) that we should pay Brazilian corporate income tax and social security contributions on the net income of our non-Brazilian subsidiaries and affiliates. The position of the tax authority is based on Article 74 of Brazilian Provisional Measure 2,158-34/2001 ("Article 74"), a tax regulation issued in 2001.

In 2013, we significantly reduced the amount in dispute by participating in the REFIS, a federal tax settlement program for payment of amounts relating to Brazilian corporate income tax and social contribution. We settled the claims related to the net income of our non-Brazilian subsidiaries and affiliates from 2003 to 2012, and we continue to dispute the assessments with respect to 1996 to 2002. Under the REFIS, we paid US$2.6R$5.9 billion in 2013, and we agreed to pay the remaining US$7.0R$16.3 billion in monthly installments, bearing interest at the SELIC rate. SELIC is a variable interest rate, established by the Brazilian central bank, used to update federal tax obligations in Brazil. On December, 31, 2018, the SELIC rate was 6.5% per annum (as compared to 7.0% per annum on December 31, 2017). As of December 31, 2015,2018, the remaining balance was US$4.431R$16.4 billion, to be paid in 154118 further installments.

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We had initiated a direct legal proceeding (mandado de segurança) in 2003 challenging the tax authority's position. In December 2013, as required by the REFIS statute, we waived the legal arguments with respect to the period between 2003 and 2012.

We are continuing our direct legal proceeding with respect to the years not included in the REFIS. TheAt December 31, 2018, the total amount in dispute for the period between 1996 and 2002 iswas R$2.051 billion (US$525 million).2.3 billion. In 2014, the Superior Court of Justice (STJ) ruled in our favor on certain of our arguments against those assessments. In particular, the STJ ruled that: (a) Article 74 violates certain provisions under the international treaties against double taxation between Brazil and the countries where some of our subsidiaries are based, so profits realized by Vale's subsidiaries in those jurisdictions are not taxable in Brazil under Article 74; and (b) it is illegal to charge income tax and social contribution tax on our interest in the profits of affiliates that we account for under the equity method. The STJ also ruled that the profits realized by Vale's subsidiaries in the Bermuda are subject to taxation in Brazil under Article 74. The tax authorities filed an appeal before the Federal Supreme Court and a decision is pending.

d) Assessments and legal proceedings related to PIS/COFINS assessments

          Between 2011 and 2013, weWe have received several tax assessments from the Brazilian federal tax authority contending that we incorrectly claimed PIS and COFINS tax credits for the period between 2004 and 2010.credits. PIS and COFINS are taxes imposed by the Brazilian government on our gross revenues, which may be partially offset by credits resulting from PIS and COFINS payments made by our suppliers. The tax authorities claim that (i) some credits we have deducted from our payments of our PIS and COFINS were not deductible and (ii) we have not submitted adequate evidence of certain other credits. We are contesting these assessments in the administrative level.and judicial levels. The total amount of these tax assessmentsin dispute is R$1.84.2 billion (US$461 million).as of December 31, 2018, including disputes involving Vale's subsidiaries and divested companies for which we remain liable for taxes prior to divestment.

Table of Contentse) Income tax litigation

Income tax assessments

In 2005,2004, a decision of the Brazilian SupremeSuperior Court of Justice (STJ) granted us the right to deduct the amounts we pay as social security contributions on the net income (CSLL) from our taxable income. The total CSLL deducted from our taxable income between 2003 and 2018 was R$7.7 billion. In 2006, as a result of a change in the interpretation of the Brazilian Supreme Court on this matter, the Brazilian federal tax authorities commenced a rescission action (ação rescisória) against us, seeking the rescissionreversal of the 2004 decision. The rescission action was rejected by the federal court in Rio de Janeiro and by the Federal Court of Appeals (TRF) of the Second Region. The tax authorities have appealed to the Superior Court of Justice (STJ) and to the Supreme Court (STF), and athe STJ determined that the TRF had not properly considered one of the questions raised by the federal government, and remanded the case for further decision of the TRF. If the courts decide for rescission of the 2004 decision, we will no longer be able to deduct the CSLL from our future taxable income, and the decision will determine whether or not we will be required to supplement the income tax payments we made.

f) Fines on the undue deduction of tax credits

We have received multiple assessments from the Brazilian federal tax authority imposing fines due to allegedly undue deduction of tax credits from our payments of income tax and contributions on the net income (CSLL).

In these appeals are pending. The totalcases, the tax authority challenged our right to set off certain tax credits and issued assessments imposing fines in the amount involved, asof 50% of the amount that was unduly deducted. As of December 31, 2015, was2018, the total amount of fines imposed under these assessments were R$5.7751 billion, (US$1.479 billion).and new assessments are expected. We are challenging these assessments in administrative proceedings. These assessments cover only the fines resulting from the allegedly undue deductions, as the principal amount of unpaid taxes, interest and other penalties for late payment are being discussed in separate administrative proceedings. If we succeed in these separate administrative proceedings, the corresponding fines are expected to be cancelled. The legal grounds for these fines are currently being discussed by another company before the Federal Supreme Court (STF), and a favorable decision to this other company will applicable to other taxpayers, including us.

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UPDATES ON OTHER PROCEEDINGS

Railway litigation

          In 1994,As reported in our annual report on form 20-F for prior years, we were a party to our privatization, we entered into a contract withlegal proceedings against Rede Ferroviária Federal S.A. ("RFFSA"), the Brazilian federal rail network, relating to contracts to build two railway networks in the city of Belo Horizonte, Brazil, which were to be incorporated into an existing railway segment, in a project called "Transposição de Belo Horizonte." We subsequently entered into a related agreement with the Brazilian government to begin the construction of an alternative railway segment, because the initially agreed segments could not be built. In August 2006, RFFSA (now succeeded as defendant by the Brazilian government) filed a breach of contract claim against us stemming from the 1994 contract regarding the construction of two railway networks.

          Before the RFFSA lawsuit was filed, we filed a claim against RFFSA challenging the inflation adjustment provisions in the contract with RFFSA. We contend that the method of calculation employed by the Brazilian government is not lawful under Brazilian law. Pursuant to a partial settlement of the original RFFSA lawsuit, if the claim is decided in the Brazilian government's favor, then the construction costs of the new railway segment assumed by Vale will offset the damages due from Vale under such claim, representing a significant reduction in the amount we would be required to pay.

Horizonte. In June 2012, a federal court rejected both the federal judge rejected both RFFSA'sgovernment's (as successor to RFFSA) claims against us and our contractual claim against RFFSA. All the appeals against these decisions have been rejected, and in March 2019 the courts certified that decisions are final and unappealable.

We are a party to certain other proceedings reported on our annual report on form 20-F for reviewprior years, including (i) a proceeding in which the environmental authority of the inflation adjustment provisions. On February 24, 2016,Brazilian state of Minas Gerais seeks the Federal Courtsuspension of Appeals (Tribunal Regional Federal) affirmedpart of our Jangada and Córrego do Feijão mines in the June 2012 decision of the federal judge. The current amount claimed, including adjustments for inflation and interest, is approximately of R$4.1 billion (US$1.5 billion).

Praia Mole suit

          We are among the defendantsSouthern System, in order to protect caves located near these mines; (ii) a public civil action filed by the federal prosecutorMPF in November 1997 seeking to annul the concession agreements under which the defendants operatefor the Praia Mole maritime terminal interminal; and (iii) a citizen suit (ação popular) brought by certain officers of FUNCEF (Caixa Econômica Federal's pension fund) and oil sector workers challenging the Brazilian stateconversion of Espírito Santo. In July 2012, the Federal Court of Appeals affirmed the November 2007 decisionpreferred class A shares into common shares. These proceedings are still ongoing, but we no longer believe that rejected the prosecutor's claim and recognized the validity of those concession agreements. The prosecutor has appealed that ruling, and a final decision of the appeal is still pending.

Legal proceedings related to Simandou project in Guinea

          We owned a 51% interest in VBG, which held iron ore concession rights and exploration permits in Simandou in Guinea. Following a contract review process, in April 2014 the Government of Guinea cancelled VBG's mining rights. SeeInformationthey may have significant effects on the Company—Regulatory matters.our financial position or profitability.

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          On April 30, 2014, Rio Tinto filed a lawsuit against Vale, BSGR, and other defendants in the United States District Court for the Southern District of New York, alleging violations of the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO) in relation to Rio Tinto's loss of certain Simandou mining rights, the Government of Guinea's assignment of those rights to BSGR, and Vale's subsequent investment in VBG. On November 20, 2015, the District Court dismissed Rio Tinto's RICO claims with prejudice.

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MEMORANDUM AND ARTICLES OF ASSOCIATION

Company objectives and purposesCOMPANY OBJECTIVES AND PURPOSES

Our corporate purpose is defined by our bylaws to include:

·•

the exploration of mineral deposits in Brazil and abroad by means of research, extraction, processing, industrialization, transportation, shipment and commerce of mineral goods;



·•

the building and operation of railways and the provision of our own or unrelated-party rail traffic;



·•

the building and operation of our own or unrelated-party maritime terminals, and the provision of shipping activities and port services;



·•

the provision of logistics services integrated with cargo transport, including inflow management, storage, transshipment, distribution and delivery, all within a multimodal transport system;



·•

the production, processing, transport, industrialization and commercialization of any and all sources and forms of energy, including the production, generation, transmission, distribution and commercialization of our own products, derivatives and sub products;



·•

the engagement, in Brazil or abroad, ofin other activities that may be of direct or indirect consequence for the achievement of our corporate purposes, including research, industrialization, purchases and sales, importation and exportation, the development, industrialization and commercialization of forest resources and the provision of services of any kind whatsoever; and



·•

the establishment or participation, in any fashion, in other companies, consortia or associations directly or indirectly related to our business purpose.

Common shares and preferred sharesCOMMON SHARES AND GOLDEN SHARES

Set forth below is certain information concerning our authorized and issued share capital and a brief summary of certain significant provisions of our bylaws and Brazilian corporate law. This description does not purport to be complete and is qualified by reference to our bylaws (an English translation of which we have filed with the SEC) and to Brazilian corporate law.

Our bylaws authorize the issuance of up to 3.67 billion common shares and up to 7.2 billion preferred shares, in each case based solely on the approval of the Board of Directors without any additional shareholder approval.

          EachThe Brazilian government holds 12 golden shares of Vale. Our bylaws do not provide for the conversion of golden shares into common share entitles the holder thereof to one vote at meetings of our shareholders. Holders of common shares are not entitled to any preference relating to our dividends or other distributions.

          Holders of preferred shares andshares. In addition, the golden shares do not have any preference upon our liquidation and there are generally entitledno redemption provisions associated with the golden shares.

Voting Rights

Pursuant to the same voting rights as holders of common shares, except with respect to the election of members of the Board of Directors, and are entitled to a preferential dividend as described below. Non-controllingBrazilian corporate law, non-controlling shareholders holding common shares representing at least 15% of oura company's voting capital, and preferred shares representing at least 10% of our total share capital have the right to appoint each one member and an alternate to our Board of Directors. If no group of common or preferred shareholders meets the thresholds described above, shareholders holding preferred or common shares representing at least 10% of our total share capital are entitled to combine their holdings to appoint one member and an alternate to ourthe board of directors. If no group of common shareholders meets this threshold, holders of golden shares may combine their holdings with those of holders of common shares, to reach at least 10% of the total

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share capital in order to appoint one member and an alternate to the Board of Directors. Holders of preferred shares, including the golden shares, may elect one member of the permanent Fiscal Council and the respective alternate. Non-controlling holders of common shares may also elect one member of the Fiscal Council and an alternate, pursuant to applicable CVM rules.

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          The Brazilian government holds 12the golden shares may elect one member of Vale. the permanent Fiscal Council and the respective alternate.

The golden shares are preferred shares that entitle the holder to the same rights (including with respect to voting and dividend preference) as holders of preferred shares. In addition, the holder of the golden shares is entitled to veto any proposed action relating to the following matters:

·•

a change in our name;



·•

a change in the location of our head office;



·•

a change in our corporate purpose as regards mining activities;



·•

any liquidation of the Company;



·•

any disposal or winding up of activities in any of the following parts of our iron ore mining integrated systems:



(a)

mineral deposits, ore deposits, mines;



(b)

railways;mines, railways, or



(c)

ports and maritime terminals;



·•

any change in the bylaws relating to the rights afforded to the classes of capital stock issued by us; and



·•

any change in the bylaws relating to the rights afforded the golden shares.

Shareholders' meetings

Our Ordinary General Shareholders' Meeting is convened by April of each year for shareholders to resolve upon our financial statements, distribution of profits, election of Directors and Fiscal Council Members, if necessary, and compensation of senior management. Extraordinary General Shareholders' Meetings are convened by the Board of Directors as necessary in order to decide all other matters relating to our corporate purposes and to pass such other resolutions as may be necessary.

Pursuant to Brazilian corporate law, shareholders voting at a general shareholders' meeting have the power, among other powers, to:

•

amend the bylaws;



•

elect or dismiss members of the Board of Directors and members of the Fiscal Council at any time;



•

establish the remuneration of senior management and members of the Fiscal Council;



•

receive annual reports by management and accept or reject management's financial statements and recommendations including the allocation of net profits and the distributable amount for payment of the mandatory dividend and allocation to the various reserve accounts;



•

authorize the issuance of convertible and secured debentures;

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•

suspend the rights of a shareholder in default of obligations established by law or by the bylaws;



•

accept or reject the valuation of assets contributed by a shareholder in consideration for issuance of capital stock;



•

pass resolutions to reorganize our legal form, to merge, consolidate or split us, to dissolve and liquidate us, to elect and dismiss our liquidators and to examine their accounts; and



•

authorize management to file for bankruptcy or to request a judicial restructuring.

Pursuant to CVM recommendations, all general shareholders' meetings, including the annual shareholders' meeting, require no fewer than 30 days' notice to shareholders prior to the scheduled meeting date. Where any general shareholders' meeting is adjourned, 8 days' prior notice to shareholders of the reconvened meeting is required. Pursuant to Brazilian corporate law, this notice to shareholders is required to be published no fewer than three times, in theDiário Oficial do Estado do Rio de Janeiro and in a newspaper with general circulation in the city where we have our registered office, in Rio de Janeiro—Valor Econômico—Estado do Rio de Janeiro is the newspaper currently designated for this purpose. Such notice must contain the agenda for the meeting and, in the case of an amendment to our bylaws, an indication of the meeting's subject matter. In addition, under our bylaws, the holder of the golden shares is entitled to a minimum of 15 days' prior formal notice to its legal representative of any general shareholders' meeting to consider any proposed action subject to the veto rights accorded to the golden shares.

A shareholders' meeting may be held if shareholders representing at least one-quarter of the voting capital are present, except as otherwise provided, including for meetings convened to amend our bylaws, which require a quorum of at least two-thirds of the voting capital. If no such quorum is present, notice must again be given in the same manner as described above, and a meeting may then be convened without any specific quorum requirement, subject to the minimum quorum and voting requirements for certain matters, as discussed below.

Except as otherwise provided by law, resolutions of a shareholders' meeting are passed by a simple majority vote, abstentions not being taken into account. Under Brazilian corporate law, the approval of shareholders representing at least one-half of the issued and outstanding voting shares is required for the types of action described below, as well as, in the case of the first two items below, a majority of issued and outstanding shares of the affected class:

•

creating a new class of preferred shares with greater privileges than the golden shares or changing a priority, preference, right, privilege or condition of redemption or amortization of the golden shares;



•

reducing the mandatory dividend;



•

changing the corporate purposes;



•

merging us with another company or consolidating or splitting us;



•

participating in a centralized group of companies as defined under Brazilian corporate law;



•

dissolving or liquidating us; and



•

canceling any ongoing liquidation of us.

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Whenever the shares of any class of capital stock are entitled to vote, each share is entitled to one vote. Annual shareholders' meetings must be held by April 30 of each year. Shareholders' meetings are called, convened and presided over by the chairman or, in case of his absence, by the vice-chairman of our Board of Directors. In the case of temporary impediment or absence of the chairman or vice-chairman of the Board of Directors, the shareholders' meetings may be chaired by their respective alternates, or in the absence or impediment of such alternates, by a director or other person especially appointed by the chairman of the Board of Directors.

A shareholder may be represented at a general shareholders' meeting by a proxy appointed in accordance with applicable Brazilian law not more than one year before the meeting, who must be a shareholder, a company officer, a lawyer or a financial institution. If the proxy document is in a foreign language, it must be accompanied by corporate documents or a power of attorney, as applicable, each duly translated into Portuguese by a sworn translator. Notarization and consularization of proxies and supporting documents is not required. Proxies and supporting documents in English or Spanish do not require translation.

Redemption rights

Our common shares and golden shares are not redeemable, except that a dissenting shareholder is entitled under Brazilian corporate law to obtain redemption upon a decision made at a shareholders' meeting approving any of the items listed above, as well as:

•

any decision to transfer all of our shares to another company in order to make us a wholly owned subsidiary of such company, a stock merger;



•

any decision to approve the acquisition of control of another company at a price which exceeds certain limits set forth in Brazilian corporate law; or



•

in the event that the entity resulting from (i) a merger, (ii) a stock merger as described above or (iii) a spin-off that we conduct fails to become a listed company within 120 days of the general shareholders' meeting at which such decision was taken.

The right of redemption triggered by shareholder decisions to merge, consolidate or to participate in a centralized group of companies may only be exercised if our shares do not satisfy certain tests of liquidity, among others, at the time of the shareholder resolution. The right of redemption lapses 30 days after publication of the minutes of the relevant general shareholders' meeting, unless the resolution is subject to confirmation by the holder of golden shares (which must be made at a special meeting to be held within one year), in which case the 30-day term is counted from the publication of the minutes of the special meeting.

We would be entitled to reconsider any action giving rise to redemption rights within 10 days following the expiration of such rights if the redemption of shares of dissenting shareholders would jeopardize our financial stability. Any redemption pursuant to Brazilian corporate law would be made at no less than the book value per share, determined on the basis of the last balance sheet approved by the shareholders; provided that if the general shareholders' meeting giving rise to redemption rights occurred more than 60 days after the date of the last approved balance sheet, a shareholder would be entitled to demand that his or her shares be valued on the basis of a new balance sheet dated within 60 days of such general shareholders' meeting.

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Preemptive rights

Each of our shareholders has a general preemptive right to subscribe for shares in any capital increase, in proportion to his or her shareholding. A minimum period of 30 days following the publication of notice of a capital increase is assured for the exercise of the right, and the right is transferable. Under our bylaws and Brazilian corporate law, and subject to the requirement for shareholder approval of any necessary increase to our authorized share capital, our Board of Directors may decide not to extend preemptive rights to our shareholders, or to reduce the 30-day period for the exercise of preemptive rights, in each case with respect to any issuance of shares, debentures convertible into shares or warrants in the context of a public offering.

Tag-along rights and mandatory tender offers

In accordance with Novo Mercado listing rules and our bylaws:

•

in case of a transfer of control, the purchaser must conduct a tender offer to purchase any and all of our common shares for the same price paid for the voting shares representing control;



•

in case of a proposed delisting from the Novo Mercado segment of B3, the controlling shareholder must conduct a public offer to acquire any and all of our common shares for a price corresponding to the economic value of the shares, as determined in an independent appraisal valuation; and



•

any shareholder who acquires 25% of our outstanding capital stock must, within 30 days after the date in which such shareholder achieved the 25% stake, make a tender offer for any and all of our common shares (oferta pública para aquisição) for a price equal to the greatest of (i) the economic value of the shares, (ii) 120% of the weighted average price of our common shares in the 60 trading days preceding the announcement of the tender offer and (iii) 120% of the highest price paid by the purchaser in the 12 months before achieving the 25% stake.

Calculation of distributable amount

At each annual shareholders' meeting, the Board of Directors is required to recommend, based on the executive officers' proposal, how to allocate our earnings for the preceding fiscal year. For purposes of Brazilian corporate law, a company's net income after income taxes and social contribution taxes for such fiscal year, net of any accumulated losses from prior fiscal years and amounts allocated to employees' and management's participation in earnings represents its "net profits" for such fiscal year. In accordance with Brazilian corporate law, an amount equal to our net profits, as further reduced by amounts allocated to the legal reserve, to the fiscal incentive investment reserve, to the contingency reserve or to the unrealized income reserve established by us in compliance with applicable law (discussed below) and increased by reversals of reserves constituted in prior years, is available for distribution to shareholders in any given year. Such amount, the adjusted net profits, is referred to herein as the distributable amount. We may also establish discretionary reserves, such as reserves for investment projects.

The Brazilian corporate law provides that all discretionary allocations of net profits, including discretionary reserves, the contingency reserve, the unrealized income reserve and the reserve for investment projects, are subject to approval by the shareholders voting at the annual meeting and can be transferred to capital or used for the payment of dividends in subsequent years. The fiscal incentive

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investment reserve and legal reserve are also subject to approval by the shareholders voting at the annual meeting and may be transferred to capital but are not available for the payment of dividends in subsequent years.

The sum of certain discretionary reserves may not exceed the amount of our paid-in capital. When such limit is reached, our shareholders may vote to use the excess to pay in capital, increase capital or distribute dividends.

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Our calculation of net profits and allocations to reserves for any fiscal year are determined on the basis of the unconsolidated financial statements of our parent company, Vale S.A., inreais, prepared in accordance with Brazilian corporate law. Our consolidated financial statements have been prepared in accordance with IFRS using U.S. dollars as the reporting currency and, although our allocations to reserves and dividends will be reflected in these financial statements, investors will not be able to calculate such allocations or required dividend amounts from our consolidated financial statements in U.S. dollars.

Mandatory dividend

The Brazilian corporate law and our bylaws prescribe that we must distribute to our shareholders in the form of dividends or interest on shareholders' equity an annual amount equal to not less than 25% of the distributable amount, referred to as the mandatory dividend, unless the Board of Directors advises our shareholders at our general shareholders' meeting that payment of the mandatory dividend for the preceding year is inadvisable in light of our financial condition. To date, our Board of Directors has never determined that payment of the mandatory dividend was inadvisable. The Fiscal Council must review any such determination and report it to the shareholders. In addition to the mandatory dividend, our Board of Directors may recommend to the shareholders payment of dividends from other funds legally available therefore. Any payment of interim dividends will be netted against the amount of the mandatory dividend for that fiscal year. The shareholders must also approve the recommendation of the Board of Directors with respect to any required distribution. The amount of the mandatory dividend is subject to the size of the legal reserve, the contingency reserve, and the unrealized income reserve. The amount of the mandatory dividend is not subject to the size of the discretionary tax incentive reserve. See—Calculation of distributable amount.

Dividend preference of preferred shares

          Pursuant to our bylaws, holders of preferred shares and the golden shares are entitled to a minimum annual non-cumulative preferential dividend equal to (i) at least 3% of the book value per share, calculated in accordance with the financial statements which serve as reference for the payment of dividends, or (ii) 6% of their pro rata share of our paid-in capital, whichever is higher. To the extent that we declare dividends in any particular year in amounts which exceed the preferential dividends on preferred shares, and after holders of common shares have received distributions equivalent, on a per share basis, to the preferential dividends on preferred shares, holders of common shares and preferred shares shall receive the same additional dividend amount per share. We regularly have had sufficient distributable amounts to be able to distribute equal amounts to both common and preferred shareholders.

Other matters relating to our preferred shares

          Our bylaws do not provide for the conversion of preferred shares into common shares. In addition, the preferred shares do not have any preference upon our liquidation and there are no redemption provisions associated with the preferred shares.

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Distributions classified as shareholders' equity

Brazilian companies are permitted to pay limited amounts to shareholders and treat such payments as an expense for Brazilian income tax purposes. Our bylaws provide for the distribution of interest on shareholders' equity as an alternative form of payment to shareholders. The interest rate applied is limited to the Brazilian long-term interest rate, or TJLP, for the applicable period. The deduction of the amount of interest paid cannot exceed the greater of (1) 50% of net income (after the deduction of the provision of social contribution on net profits and before the deduction of the provision of the corporate income tax) before taking into account any such distribution for the period in respect of which the payment is made or (2) 50% of the sum of retained earnings and profit reserves. Any payment of interest on shareholders' equity is subject to Brazilian withholding income tax. SeeAdditional information—Taxation—Brazilian tax considerations. Under our bylaws, the amount paid to shareholders as interest on shareholders' equity (net of any withholding tax) may be included as part of any mandatory and minimum dividend. Under Brazilian corporate law, we are obligated to distribute to shareholders an amount sufficient to ensure that the net amount received, after payment by us of applicable Brazilian withholding taxes in respect of the distribution of interest on shareholders' equity, is at least equal to the mandatory dividend.

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Voting rights

          Each common share entitles the holder thereof to one vote at meetings of our shareholders. Holders of preferred shares are entitled to the same voting rights as holders of common shares except for the election of members of the Board of Directors, which will no longer apply in the event of any dividend arrearage, as described below. One of the members of the permanent Fiscal Council and his or her alternate are elected by majority vote of the holders of preferred shares. Holders of preferred shares and common shares may, in certain circumstances, combine their respective holdings to elect members of our Board of Directors, as described under—Common shares and preferred shares.

          The golden shares entitle the holder thereof to the same voting rights as holders of preferred shares. The golden shares also confer certain other significant veto rights in respect of particular actions, as described under—Common shares and preferred shares.

          The Brazilian corporate law provides that non-voting or restricted-voting shares, such as the preferred shares, acquire unrestricted voting rights beginning when a company has failed for three consecutive fiscal years (or for any shorter period set forth in a company's constituent documents) to pay any fixed or minimum dividend to which such shares are entitled and continuing until payment thereof is made. Our bylaws do not set forth any such shorter period.

          Any change in the preferences or advantages of our preferred shares, or the creation of a class of shares having priority over the preferred shares, would require the approval of the holder of the golden shares, who can veto such matters, as well as the approval of the holders of a majority of the outstanding preferred shares, voting as a class at a special meeting.

Shareholders' meetings

          Our Ordinary General Shareholders' Meeting is convened by April of each year for shareholders to resolve upon our financial statements, distribution of profits, election of Directors and Fiscal Council Members, if necessary, and compensation of senior management. Extraordinary General Shareholders' Meetings are convened by the Board of Directors as necessary in order to decide all other matters relating to our corporate purposes and to pass such other resolutions as may be necessary.

          Pursuant to Brazilian corporate law, shareholders voting at a general shareholders' meeting have the power, among other powers, to:

·

amend the bylaws;

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·

establish the remuneration of senior management and members of the Fiscal Council;



·

receive annual reports by management and accept or reject management's financial statements and recommendations including the allocation of net profits and the distributable amount for payment of the mandatory dividend and allocation to the various reserve accounts;



·

authorize the issuance of convertible and secured debentures;



·

suspend the rights of a shareholder in default of obligations established by law or by the bylaws;



·

accept or reject the valuation of assets contributed by a shareholder in consideration for issuance of capital stock;



·

pass resolutions to reorganize our legal form, to merge, consolidate or split us, to dissolve and liquidate us, to elect and dismiss our liquidators and to examine their accounts; and



·

authorize management to file for bankruptcy or to request a judicial restructuring.

          Pursuant to CVM recommendations and as stipulated in our undertakings to the HKEx, all general shareholders' meetings, including the annual shareholders' meeting, require no fewer than 30 days' notice to shareholders prior to the scheduled meeting date. Where any general shareholders' meeting is adjourned, 15 days' prior notice to shareholders of the reconvened meeting is required. Pursuant to Brazilian corporate law, this notice to shareholders is required to be published no fewer than three times, in theDiário Oficial do Estado do Rio de Janeiro and in a newspaper with general circulation in the city where we have our registered office, in Rio de Janeiro. Our shareholders have previously designatedJornal do Commercio for this purpose. Also, because our shares are traded on the BM&FBOVESPA, we must publish a notice in a São Paulo based newspaper. Such notice must contain the agenda for the meeting and, in the case of an amendment to our bylaws, an indication of the meeting's subject matter. In addition, under our bylaws, the holder of the golden shares is entitled to a minimum of 15 days' prior formal notice to its legal representative of any general shareholders' meeting to consider any proposed action subject to the veto rights accorded to the golden shares. See—Common shares and preferred shares.

          A shareholders' meeting may be held if shareholders representing at least one-quarter of the voting capital are present, except as otherwise provided, including for meetings convened to amend our bylaws, which require a quorum of at least two-thirds of the voting capital. If no such quorum is present, notice must again be given in the same manner as described above, and a meeting may then be convened without any specific quorum requirement, subject to the minimum quorum and voting requirements for certain matters, as discussed below. A shareholder without a right to vote may attend a general shareholders' meeting and take part in the discussion of matters submitted for consideration.

          Except as otherwise provided by law, resolutions of a shareholders' meeting are passed by a simple majority vote, abstentions not being taken into account. Under Brazilian corporate law, the approval of shareholders representing at least one-half of the issued and outstanding voting shares is required for the types of action described below, as well as, in the case of the first two items below, a majority of issued and outstanding shares of the affected class:

·

creating a new class of preferred shares or disproportionately increasing an existing class of preferred shares relative to the other classes of preferred shares, other than to the extent permitted by the bylaws;

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changing a priority, preference, right, privilege or condition of redemption or amortization of any class of preferred shares or creating a new class of shares with greater privileges than the existing classes of preferred shares;



·

reducing the mandatory dividend;



·

changing the corporate purposes;



·

merging us with another company or consolidating or splitting us;



·

participating in a centralized group of companies as defined under Brazilian corporate law;



·

dissolving or liquidating us; and



·

canceling any ongoing liquidation of us.

          Whenever the shares of any class of capital stock are entitled to vote, each share is entitled to one vote. Annual shareholders' meetings must be held by April 30 of each year. Shareholders' meetings are called, convened and presided over by the chairman or, in case of his absence, by the vice-chairman of our Board of Directors. In the case of temporary impediment or absence of the chairman or vice-chairman of the Board of Directors, the shareholders' meetings may be chaired by their respective alternates, or in the absence or impediment of such alternates, by a director especially appointed by the chairman of the Board of Directors. A shareholder may be represented at a general shareholders' meeting by a proxy appointed in accordance with applicable Brazilian law not more than one year before the meeting, who must be a shareholder, a company officer, a lawyer or a financial institution.

Redemption rights

          Our common shares and preferred shares are not redeemable, except that a dissenting shareholder is entitled under Brazilian corporate law to obtain redemption upon a decision made at a shareholders' meeting approving any of the items listed above, as well as:

·

any decision to transfer all of our shares to another company in order to make us a wholly-owned subsidiary of such company, a stock merger;



·

any decision to approve the acquisition of control of another company at a price which exceeds certain limits set forth in Brazilian corporate law; or



·

in the event that the entity resulting from (a) a merger, (b) a stock merger as described in clause (i) above or (c) a spin-off that we conduct fails to become a listed company within 120 days of the general shareholders' meeting at which such decision was taken.

          Only holders of shares adversely affected by shareholder decisions altering the rights, privileges or priority of a class of shares or creating a new class of shares may require us to redeem their shares. The right of redemption triggered by shareholder decisions to merge, consolidate or to participate in a centralized group of companies may only be exercised if our shares do not satisfy certain tests of liquidity, among others, at the time of the shareholder resolution. The right of redemption lapses 30 days after publication of the minutes of the relevant general shareholders' meeting, unless, as in the case of resolutions relating to the rights of preferred shares or the creation of a new class of preferred shares, the resolution is subject to confirmation by the preferred shareholders (which must be made at a special meeting to be held within one year), in which case the 30-day term is counted from the publication of the minutes of the special meeting.

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          We would be entitled to reconsider any action giving rise to redemption rights within 10 days following the expiration of such rights if the redemption of shares of dissenting shareholders would jeopardize our financial stability. Any redemption pursuant to Brazilian corporate law would be made at no less than the book value per share, determined on the basis of the last balance sheet approved by the shareholders; provided that if the general shareholders' meeting giving rise to redemption rights occurred more than 60 days after the date of the last approved balance sheet, a shareholder would be entitled to demand that his or her shares be valued on the basis of a new balance sheet dated within 60 days of such general shareholders' meeting.

Preemptive rights

          Each of our shareholders has a general preemptive right to subscribe for shares in any capital increase, in proportion to his or her shareholding. A minimum period of 30 days following the publication of notice of a capital increase is assured for the exercise of the right, and the right is transferable. Under our bylaws and Brazilian corporate law, and subject to the requirement for shareholder approval of any necessary increase to our authorized share capital, our Board of Directors may decide not to extend preemptive rights to our shareholders, or to reduce the 30-day period for the exercise of preemptive rights, in each case with respect to any issuance of shares, debentures convertible into shares or warrants in the context of a public offering. In the event of a capital increase that would maintain or increase the proportion of capital represented by preferred shares, holders of preferred shares will have preemptive rights to subscribe only to newly issued preferred shares. In the event of a capital increase that would reduce the proportion of capital represented by preferred shares, shareholders will have preemptive rights to subscribe for preferred shares, in proportion to their shareholdings, and for common shares only to the extent necessary to prevent dilution of their overall interest in us. In the event of a capital increase that would maintain or increase the proportion of capital represented by common shares, shareholders will have preemptive rights to subscribe only to newly issued common shares. In the event of a capital increase that would reduce the proportion of capital represented by common shares, holders of common shares will have preemptive rights to subscribe for preferred shares only to the extent necessary to prevent dilution of their overall interest in us.

Tag-along rights

          According to Brazilian corporate law, in the event of a sale of control of a company, the acquirer is obliged to offer to holders of voting shares the right to sell their shares for a price equal to at least 80% of the price paid for the voting shares representing control.

Form and transfer of shares

Our preferredcommon shares and commongolden shares are in book-entry form registered in the name of each shareholder. The transfer of such shares is made under Brazilian corporate law, which provides that a transfer of shares is effected by our transfer agent, Banco Bradesco, upon presentation of valid share transfer instructions to us by a transferor or its representative. When preferred shares or common shares are acquired or sold on a Brazilian stock exchange, the transfer is effected on the records of our transfer agent by a representative of a brokerage firm or the stock exchange's clearing system. Transfers of shares by a foreign investor are made in the same way and are executed by the investor's local agent, who is also responsible for updating the information relating to the foreign investment furnished to the Central Bank of Brazil.

The BM&FBOVESPAB3 operates a central clearing system throughCompanhia Brasileira de Liquidação e Custódia, or CBLC. A holder of our shares may participate in this system and all shares elected to be put into the system will be deposited in custody with CBLC (through a Brazilian institution that is duly authorized to operate by the Central Bank of Brazil and maintains a clearing account with CBLC). The fact that such shares are subject to custody with the relevant stock exchange will be reflected in our registry of shareholders. Each participating shareholder will, in turn, be registered in the register of our beneficial shareholders that is maintained by CBLC and will be treated in the same way as registered shareholders.

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SHAREHOLDER DEBENTURES

At the time of the first stage of our privatization in 1997, we issued shareholder revenue interests known in Brazil as "debêntures participativas" to our then-existing shareholders. The terms of the debentures were established to ensure that our pre-privatization shareholders, including the Brazilian government, would participate alongside us in potential future financial benefits that we derive from exploiting certain mineral resources that were not taken into account in determining the minimum purchase price of our shares in the privatization. In accordance with the debentures deed, holders have the right to receive semi-annual payments equal to an agreed percentage of our net revenues (revenues less value-added tax, transport fee and insurance expenses related to the trading of the products) from certain identified mineral resources that we owned at the time of the privatization, to the extent that we exceed defined thresholds of sales volume relating to certain mineral resources, and from the sale of mineral rights that we owned at that time. Our obligation to make payments to the holders will cease when all the relevant mineral resources are exhausted.exhausted, sold or otherwise disposed of by us.

We made available for withdrawal by holders of shareholder debentures the amounts of US$1184 million in 2013,2016, US$118147 million in 20142017 and US$65148 million in 2015. In October 2013, the accumulated sales volume of iron ore from the Northern System reached the relevant threshold established in the debentures deed, which triggered our obligation to make additional semi-annual payments of the premium on iron ore products, starting in 2014.2018. See Note 29note 13 to our consolidated financial statements for a description of the terms of the debentures.

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EXCHANGE CONTROLS AND OTHER LIMITATIONS
AFFECTING SECURITY HOLDERS

Under Brazilian corporate law, there are no restrictions on ownership of our capital stock by individuals or legal entities domiciled outside Brazil. However, the right to convert dividend payments and proceeds from the sale of preferred shares or common shares into foreign currency and to remit such amounts outside Brazil is subject to restrictions under foreign investment legislation, which generally requires, among other things, that the relevant investment be registered with the Central Bank of Brazil. These restrictions on the remittance of foreign capital abroad could hinder or prevent the depositary bank and its agents for the preferred shares or common shares represented by ADSs and HDSs from converting dividends, distributions or the proceeds from any sale of preferred shares, common shares or rights, as the case may be, into U.S. dollars or Hong Kong dollars and remitting such amounts abroad. Delays in, or refusal to grant any required government approval for conversions of Brazilian currency payments and remittances abroad of amounts owed to holders of ADSs and HDSs could adversely affect holders of ADRs and HDRs.ADRs.

Under Resolution No. 4,373/2014 of the CMN, which replaced the Central Bank Resolution No. 2,689/2000 and the CMN Resolution No. 1,927/1992,4,373 of 2014 ("Resolution 4,373"), foreign investors, defined to include individuals, legal entities, mutual funds and other collective investment entities, domiciled or headquartered outside Brazil, may invest in almost all financial assets and engage in almost all transactions available in the Brazilian financial and capital markets, provided that certain requirements are fulfilled. In accordance with Resolution No. 4,373/2014, the definition of foreign investor includes individuals, legal entities, mutual funds and other collective investment entities, domiciled or headquartered outside Brazil.they:

          Under Resolution No. 4,373/2014, a foreign investor must:

(1)i.

appoint at least one representative in Brazil, with powers to perform actions relating to its investment,



(2)ii.

complete the appropriate foreign investor registration form,



(3)iii.

register as a foreign investor with the CVM, and register its foreign investment with the Central Bank of Brazil, and



(4)iv.

appoint a custodian, duly licensed by the Central Bank of Brazil, if the Brazilian representative in item (1) is not a financial institution.

Resolution No. 4,373/20144,373 specifies the manner of custody and the permitted means for trading securities held by foreign investors under the resolution.

          Moreover, the The offshore transfer or assignment of securities or other financial assets held by foreign investors pursuant to Resolution No. 4,373/20144,373 is prohibited, except for transfers resulting from a corporate reorganization, or occurring upon the death of an investor by operation of law or will.

Resolution No. 4,373/20144,373 also provides for the issuance of depositary receipts in foreign markets in respect of shares of Brazilian issuers. It provides that the proceeds from the sale of ADSs by holders of ADRs outside Brazil are not subject to Brazilian foreign investment controls and holders of ADSs who are not residents of a low-tax jurisdiction (país com tributação favorecida), as defined by Brazilian law, will be entitled to favorable tax treatment.

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An electronic registration has been issued to the custodian in the name of the depositary with respect to the ADSs and HDSs.ADSs. Pursuant to this electronic registration, the custodian and the depositary are able to convert dividends and other distributions with respect to the underlying shares into foreign currency and to remit the proceeds outside Brazil. If a holder exchanges ADSs or HDSs for preferred shares or common shares, the holder must, within five business days, seek to obtain its own electronic registration with the Central Bank of Brazil under Law No. 4,131/4,131 of 1962 and Resolution No. 4,373/2014.4,373. Thereafter, unless the holder has registered its investment with the Central Bank of Brazil, such holder may not convert into foreign currency and remit outside Brazil the proceeds from the disposition of, or distributions with respect to, such preferred shares or common shares.

Under Brazilian law, whenever there is a serious imbalance in Brazil's balance of payments or reasons to foresee a serious imbalance, the Brazilian government may impose temporary restrictions on the

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Exchange Controls and Other Limitations Affecting Security Holders

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remittance to foreign investors of the proceeds of their investments in Brazil, and on the conversion of Brazilian currency into foreign currencies. Such restrictions may hinder or prevent the custodian or holders who have exchanged ADSs or HDSs for underlying preferred shares or common shares from converting distributions or the proceeds from any sale of such shares, as the case may be, into U.S. dollars or Hong Kong dollars and remitting such U.S. dollars or Hong Kong dollars abroad. In the event the custodian is prevented from converting and remitting amounts owed to foreign investors, the custodian will hold thereais it cannot convert for the account of the holders of ADRs or HDRs who have not been paid. The depositary will not invest thereais and will not be liable for interest on those amounts. Anyreais so held will be subject to devaluation risk against the U.S. dollar or Hong Kong dollar.

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TAXATION

The following summary contains a description of the principal Brazilian and U.S. federal income tax consequences of the ownership and disposition of preferred shares, common shares ADSs or HDSs.ADSs. You should know that this summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a holder of preferred shares, common shares ADSs or HDSs.ADSs.

Holders of preferred shares, common shares ADSs or HDSsADSs should consult their own tax advisors to discuss the tax consequences of the purchase, ownership and disposition of preferred shares, common shares ADSs or HDSs,ADSs, including, in particular, the effect of any state, local or other national tax laws.

Although there is at present no treaty to avoid double taxation between Brazil and the United States, but only a common understanding between the two countries according to which income taxes paid in one may be offset against taxes to be paid in the other, both countries' tax authorities have been having discussions that may result in the execution of such a treaty. In this regard, the two countries signed a Tax Information Exchange Agreement on March 20, 2007, which the Brazilian government approved in May 2013. We cannot predict whether or when such a treaty will enter into force or how, if entered into, such a treaty will affect the U.S. holders, as defined below, of preferred shares, common shares or ADSs.

Brazilian tax considerationsBRAZILIAN TAX CONSIDERATIONS

The following discussion summarizes the principal Brazilian tax consequences of the acquisition, ownership and disposition of preferred shares, common shares ADSs or HDSsADSs by a holder not deemed to be domiciled in Brazil for purposes of Brazilian taxation ("Non-Brazilian Holder"). It is based on the tax laws of Brazil and regulations thereunder in effect on the date hereof, which are subject to change (possibly with retroactive effect). This discussion does not specifically address all of the Brazilian tax considerations applicable to any particular Non-Brazilian Holder. Therefore, Non-Brazilian Holders should consult their own tax advisors concerning the Brazilian tax consequences of an investment in preferred shares, common shares ADSs or HDSs.ADSs.

Shareholder distributions

For Brazilian corporations, such as the Company,Vale, distributions to shareholders are classified as either dividend or interest on shareholders' equity.

Dividends

Amounts distributed as dividends will generally not be subject to Brazilian withholding income tax if the distribution is paid only from profits for the corresponding year, as determined under Brazilian tax principles. Dividends paid from profits generated before January 1, 1996 may be subject to Brazilian withholding income tax at varying rates depending on the year the profits were generated. Dividends paid from sources other than profits as determined under Brazilian tax principles may be subject to withholding tax.

Interest on shareholders' equity

Amounts distributed as interest on shareholders' equity are generally subject to withholding income tax at the rate of 15%, except where:

(1)i.

the beneficiary is exempt from tax in Brazil, in which case the distribution will not be subject to withholding income tax;






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(2)ii.

the beneficiary is located in a jurisdiction that does not impose income tax or where the maximum income tax rate is lower than 17% (a "Low Tax Jurisdiction") or where internal

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legislation imposes restrictions on the disclosure of the shareholding structure or the ownership of the investment, in which case the applicable withholding income tax rate is 25%; or



(3)iii.

the effective beneficiary is resident in Japan, in which case the applicable withholding income tax rate is 12.5%.

Interest on shareholders' equity is calculated as a percentageinterest rate on the sum of shareholders' equity, as stated in the statutory accounting records.following accounts: (i) share capital, (ii) capital reserves, (ii) profits reserves, (iv) treasury stocks and (v) accumulated losses. The interest rate applied may not exceed the TJLP, the benchmark Brazilian long-term interest rate. In addition, the amount of distributions classified as interest on shareholders' equity may not be more than the greater of (1) 50% of net income (after the deduction of social contribution on net profits but before taking into account such payment of interest and the provision for corporate income tax) for the period in respect of which the payment is made and (2) 50% of the sum of retained earnings and profit reserves.

Payments of interest on shareholders' equity are deductible for the purposes of corporate income tax and social contribution on net profit, to the extent of the limits described above. The tax benefit to the Company in the case of a distribution by way of interest on shareholders' equity is a reduction in the Company's corporate tax charge by an amount equivalent to 34% of such distribution.

Taxation of capital gains

Taxation of Non-Brazilian Holders on capital gains depends on the status of the holder as either:

·•

(i) a holder that is not resident or domiciled in a Low Tax Jurisdiction, or in a jurisdiction where internal legislation imposes restrictions on the disclosure of shareholding structure or the ownership of the investment, and that has registered its investment in Brazil in accordance with Resolution No. 4,373/20144,373 (a 4,373 Holder)"4,373 Holder"), or (ii) a holder of ADSs or HDSs;ADSs; or



·•

any other Non-Brazilian Holder.

Investors identified in items (i) or (ii) are subject to favorable tax treatment, as described below.

Capital gains realized by a Non-Brazilian Holder from the disposition of "assets located in Brazil" are subject to taxation in Brazil. Preferred shares and commonCommon shares qualify as assets located in Brazil, and the disposition of such assets by a Non-Brazilian Holder may be subject to income tax on the gains assessed, in accordance with the rules described below, regardless of whether the transaction is carried out with another non-Brazilian resident or with a Brazilian resident.

There is some uncertainty as to whether ADSs or HDSs qualify as "assets located in Brazil" for this purpose. Arguably, neitherthe ADSs nor HDSsdo not constitute assets located in Brazil and therefore the gains realized by a Non-Brazilian Holder on the disposition of ADSs or HDSs to another non-Brazilian resident should not be subject to income tax in Brazil. However, it is not certain that the Brazilian courts will uphold this interpretation of the definition of "assets located in Brazil" in connection with the taxation of gains realized by a Non-Brazilian Holder on the disposition of ADSs or HDSs.ADSs. Consequently, gains on a disposition of ADSs or HDSs by a Non-Brazilian Holder (whether in a transaction carried out with another Non-Brazilian Holder or a person domiciled in Brazil) may be subject to income tax in Brazil in accordance with the rules applicable to a disposition of shares.

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Although there are groundsarguments to sustain otherwise,the contrary, the deposit of preferred shares or common shares in exchange for ADSs or HDSs may be subject to Brazilian income tax if the acquisition cost of the shares being deposited is lower than the average price, determined as either:

·•

the average price per preferred share or common share on the Brazilian stock exchange in which the greatest number of such shares were sold on the day of deposit; or



·•

if no preferred shares or common shares were sold on that day, the average price on the Brazilian stock exchange in which the greatest number of preferred shares or common shares were sold in the 15 trading sessions immediately preceding such deposit.

The positive difference between the average price of the preferred shares or common shares calculated as described above and their acquisition cost will be considered to be a capital gain subject to income tax in Brazil. In some circumstances, there are grounds to sustainconclude that such taxation is not applicable with respect to any 4,373 Holder, provided hesuch holder is not located in a Low Tax Jurisdiction.

The withdrawal of preferred shares or common shares by holders in exchange for ADSs or HDSs is not subject to Brazilian income tax, subject to compliance with applicable regulations regarding the registration of the investment with the Central Bank of Brazil.

For the purpose of Brazilian taxation, the income tax rules on gains related to disposition of preferred shares or common shares vary depending on:

·•

the domicile of the Non-Brazilian Holder;



·•

the method by which such Non-Brazilian Holder has registered his investment with the Central Bank of Brazil; and



·•

how the disposition is carried out, as described below.

The gain realized as a result of a transaction on a Brazilian stock exchange is the difference between: (i) the amount in Brazilian currency realized on the sale or disposition and (ii) the acquisition cost, without any adjustment for inflation, of the securities that are the subject of the transaction.

          AnyThrough December 31, 2018, any gain realized by a Non-Brazilian Holder on a sale or disposition of preferred shares or common shares carried out on the Brazilian stock exchange is currently:was:

·•

exempt from income tax where the Non-Brazilian Holder (i) is a 4,373 Holder; and (ii) is not located in a Low Tax Jurisdiction;



·•

subject to income tax at a rate of 15% where the Non-Brazilian Holder either (A) (i) is not a 4,373 Holder and (ii) is not resident or domiciled in a Low Tax Jurisdiction or (B) (i) is a 4,373 Holder and (ii) is resident or domiciled in a Low Tax Jurisdiction; or



·•

subject to income tax at a rate of 25% where the Non-Brazilian Holder (i) is not a 4,373 Holder and (ii) is resident or domiciled in a Low Tax Jurisdiction.

The sale or disposition of common shares carried out on the Brazilian stock exchange is subject to withholding tax at the rate of 0.005% on the sale value. This withholding tax can be offset against the

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eventual income tax due on the capital gain. A 4,373 Holder that is not resident or domiciled in a Low Tax Jurisdiction is not subject to this withholding tax.

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          Any gain realized by a Non-Brazilian HolderBeginning on a sale or disposition of preferred shares or common shares that is not carried out on the Brazilian stock exchange is currently subject to income tax at a 15% rate, except for gain realized by a resident in a Low Tax Jurisdiction, which is currently subject to income tax at the rate of 25%.

          In September 2015, the Brazilian President issued a provisional measure, which was converted into Law in March 2016, significantly amendingJanuary 1, 2017, the taxation regime for capital gains in Brazil.Brazil was significantly amended. Under the new regime, capital gains earnedrealized by non-Brazilian residents and individuals residentsresident in Brazil will beare subject to income tax at progressive taxation, and the rates will rangeranging from 15% to 22.5%. We expect, where the new taxation regime to become applicableNon Brazilian Holder either (A)(i) is not a 4,373 Holder and (ii) is not resident or domiciled in January 2017, but ita Low Tax Jurisdiction, or (B)(i) is possible that the tax authorities will apply the new tax regime retroactively to January 2016. We expect that the Brazilian tax authorities will approve regulations to clarify, among other issues, the effective date of the new regime, whether the new regime applies toa 4,373 HoldersHolder and the method for calculation of the tax. You should consult your own tax advisors concerning the implications of these rules(ii) is resident or domiciled in light of your particular circumstances. The levels of taxation under the new regime are described below:a Low Tax Jurisdiction.

·

15% on the portion of gains up to R$5 million;



·

17.5% on the portion of gains above R$5 million and below R$10 million;



·

20% on the portion of gains above R$10 million and below R$30 million; and



·

22.5% on the portion of gains exceeding R$30 million.

With respect to transactions arranged by a broker that are conducted on the Brazilian non-organized over-the-counter market, a withholding income tax at a rate of 0.005% on the sale value is also levied on the transaction and can be offset against the eventual income tax due on the capital gain. There can be no assurance that the current favorable treatment of 4,373 Holders will continue in the future.

In the case of a redemption of preferred shares, common shares ADSs or HDSsADSs or a capital reduction by a Brazilian corporation, the positive difference between the amount received by any Non-Brazilian Holder and the acquisition cost of the preferred shares, common shares ADSs or HDSsADSs being redeemed is treated as capital gain and is therefore generally subject to income tax at the progressive rate offrom 15% to 22.5%, while the 25% rate applies to residents in a Low Tax Jurisdiction.

Any exercise of pre-emptive rights relating to our preferred shares or common shares will not be subject to Brazilian taxation. Any gain realized by a Non-Brazilian Holder on the disposition of pre-emptive rights relating to preferred shares or common shares in Brazil will be subject to Brazilian income taxation in accordance with the same rules applicable to the sale or disposition of preferred shares or common shares.

Tax on foreign exchange and financial transactions

Foreign exchange transactions

Brazilian law imposes a tax on foreign exchange transactions, or an IOF/Exchange Tax, due on the conversion ofreais into foreign currency and on the conversion of foreign currency intoreais. Currently, for most foreign currency exchange transactions, the rate of IOF/Exchange Tax is 0.38%.

The outflow of resources from Brazil related to investments held by a Non-Brazilian Holder in the Brazilian financial and capital markets is currently subject to IOF/Exchange Tax at a zero percent rate. In any case, the Brazilian government may increase such rates at any time, up to 25%, with no retroactive effect.

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Transactions involving securities

Brazilian law imposes a tax on transactions involving securities, or an IOF/Securities Tax, including those carried out on the Brazilian stock exchange. The rate of IOF/Securities Tax applicable to transactions involving publicly traded securities in Brazil is currently zero. The rate of IOF/Securities Tax applicable to a transfer of shares traded on the Brazilian stock exchange to back the issuance of depositary receipts has also been zero since December 24, 2013. However, the Brazilian Government may increase such rates at any time up to 1.5% of the transaction amount per day, but the tax cannot be applied retroactively.

Other Brazilian taxes

There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of preferred shares, common shares ADSs or HDSsADSs by a Non-Brazilian Holder, except for gift and inheritance taxes

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which are levied by some states of Brazil on gifts made or inheritances bestowed by a Non-Brazilian Holder to individuals or entities resident or domiciled within such states in Brazil. There are no Brazilian stamp, issue, registration, or similar taxes or duties payable by holders of preferred shares or common shares or ADSs or HDSs.ADS.

U.S. federal income tax considerationsFEDERAL INCOME TAX CONSIDERATIONS

This summary does not purport to be a comprehensive description of all the U.S. federal income tax consequences of the acquisition, holding or disposition of the preferred shares, common shares or ADSs. This summary applies to U.S. holders, as defined below, who hold their preferred shares, common shares or ADSs as capital assets and does not apply to special classes of holders, such as:

·•

certain financial institutions,



·•

insurance companies,



·•

dealers in securities or foreign currencies,



·•

tax-exempt organizations,



·•

securities traders who elect to account for their investment in preferred shares, common shares or ADSs on a mark-to-market basis,



·•

persons holding preferred shares, common shares or ADSs as part of hedge, straddle, conversion or other integrated financial transactions for tax purposes,



·•

holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar,



·•

partnerships or other holders treated as "pass-through entities" for U.S. federal income tax purposes, or



·•

persons owning, actually or constructively through attribution rules, 10% or more of our voting shares or the total value of all classes of shares.

This discussion is based on the Internal Revenue Code of 1986, as amended to the date hereof, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury Regulations, all as in effect on the date hereof. These authorities are subject to differing interpretations and may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those discussed below. There can be no assurance that the U.S. Internal Revenue Service (the "IRS") will not challenge one or more of the tax consequences discussed herein or that a court will not sustain such a challenge in the event of litigation. This summary does not address the Medicare tax on net investment income, the alternative minimum tax, or any aspect of state, local or non-U.S. tax law.

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YOU SHOULD CONSULT YOUR TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION.

This discussion is also based, in part, on representations of the depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

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For purposes of this discussion, you are a "U.S. holder" if you are a beneficial owner of preferred shares, common shares or ADSs that is, for U.S. federal income tax purposes:

·•

a citizen or resident alien individual of the United States,



·•

a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, or



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otherwise subject to U.S. federal income taxation on a net income basis with respect to the preferred shares, common shares or ADSs.

The term U.S. holder also includes certain former citizens of the United States.

In general, if you are the beneficial owner of American depositary receipts evidencing ADSs, you will be treated as the beneficial owner of the preferred shares or common shares represented by those ADSs for U.S. federal income tax purposes. Deposits and withdrawals of preferred shares or common shares by you in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes. Your tax basis in such preferred shares or common shares will be the same as your tax basis in such ADSs, and the holding period in such preferred shares or common shares will include the holding period in such ADSs.

Taxation of dividends

The gross amount of a distribution paid on ADSs preferred shares or common shares, including distributions paid in the form of payments of interest on capital for Brazilian tax purposes, out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) will be taxable to you as foreign source dividend income and generally will not be eligible for the dividends-received deduction allowed to corporate shareholders under U.S. federal income tax law. The amount of any such distribution will include the amount of Brazilian withholding taxes, if any, withheld on the amount distributed. To the extent that a distribution exceeds our current and accumulated earnings and profits, such distribution will be treated as a nontaxable return of capital to the extent of your basis in the ADSs preferred shares or common shares, as the case may be, with respect to which such distribution is made, and thereafter as a capital gain.

You will be required to include dividends paid inreais in income in an amount equal to their U.S. dollar value calculated by reference to an exchange rate in effect on the date such distribution is received by the depositary, in the case of ADSs, or by you, in the case of common shares or preferred shares. If the depositary or you do not convert suchreais into U.S. dollars on the date they are received, it is possible that you will recognize foreign currency loss or gain, which would be ordinary loss or gain, when thereais are converted into U.S. dollars. If you hold ADSs, you will be considered to receive a dividend when the dividend is received by the depositary.

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Subject to certain exceptions for short-term and hedged positions, the U.S. dollar amount of dividends received by certain non-corporate taxpayers, including individuals, will be subject to taxation at the preferential rates applicable to long-term capital gains if the dividends are "qualified dividends." Dividends paid on the ADSs will be treated as qualified dividends if (i) the ADSs are readily tradable on an established securities market in the United States and (ii) the Company was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid, a passive foreign investment company ("PFIC"). The ADSs are listed on the New York Stock Exchange and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. Based on Vale's audited financial statements and relevant market and shareholder data, Vale believes that it was not treated as a PFIC for U.S. federal income tax purposes with respect to its 20152018 taxable year. In addition, based on Vale's audited financial statements and its current expectations regarding the value

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and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, Vale does not anticipate becoming a PFIC for its 20162019 taxable year.

Based on existing guidance, it is not entirely clear whether dividends received with respect to the preferred shares and common shares will be treated as qualified dividends (and therefore whether such dividends will qualify for the preferential rates of taxation applicable to long-term capital gains), because the preferred shares and common shares are not themselves listed on a U.S. exchange. In addition, the U.S. Treasury has announced its intention to promulgate rules pursuant to which holders of ADSs preferred shares or common stockshares and intermediaries through whom such securities are held will be permitted to rely on certifications from issuers to establish that dividends are treated as qualified dividends. Because such procedures have not yet been issued, it is unclear whether we will be able to comply with them. You should consult your own tax advisors regarding the availability of the reduced dividend tax rate in light of your own particular circumstances.

Subject to generally applicable limitations and restrictions, you will be entitled to a credit against your U.S. federal income tax liability, or a deduction in computing your U.S. federal taxable income, for Brazilian income taxes withheld by us. You must satisfy minimum holding period requirements to be eligible to claim a foreign tax credit for Brazilian taxes withheld on dividends. The limitation on foreign taxes eligible for credit is calculated separately for specific classescategories of income. For this purpose dividends paid by us on our shares will generally constitute "passive income." Foreign tax credits may not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions in securities or in respect of arrangements in which a U.S. holder's expected economic profit is insubstantial. You should consult your own tax advisors concerning the implications of these rules in light of your particular circumstances.

Taxation of capital gains

Upon a sale or exchange of preferred shares, common shares or ADSs, you will recognize a capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the amount realized on the sale or exchange and your adjusted tax basis in the preferred shares, common shares or ADSs. This gain or loss will be long-term capital gain or loss if your holding period in the preferred shares, common shares or ADSs exceeds one year. The net amount of long-term capital gain recognized by individual U.S. holders generally is subject to taxation at preferential rates. Your ability to use capital losses to offset income is subject to limitations.

Any gain or loss will be U.S. source gain or loss for U.S. foreign tax credit purposes. Consequently, if a Brazilian withholding tax is imposed on the sale or disposition of ADSs preferred shares or common shares, and you do not receive significant foreign source income from other sources, you may not be able to derive effective U.S. foreign tax credit benefits in respect of such Brazilian withholding tax. You should consult your own tax advisor regarding the application of the foreign tax credit rules to your investment in, and disposition of, ADSs preferred shares or common shares.

If a Brazilian tax is withheld on the sale or disposition of shares, the amount realized by a U.S. holder will include the gross amount of the proceeds of such sale or disposition before deduction of the Brazilian tax. SeeBrazilian tax considerations above.

Foreign financial asset reporting

Certain U.S. holders that own "specified foreign financial assets" with an aggregate value in excess of US$50,000 are generally required to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to such assets. "Specified foreign financial assets" include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. The understatement of income attributable to

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"specified foreign financial assets" in excess of U.S.$5,000 extends the statute of limitations with respect to the tax return to six years after the return was filed. U.S. holders who fail to report the required information could be subject to substantial penalties. You are encouraged to consult with your own tax advisors regarding the possible application of these rules, including the application of the rules to your particular circumstances.

Information reporting and backup withholding

Information returns may be filed with the IRS in connection with distributions on the preferred shares, common shares or ADSs and the proceeds from their sale or other disposition. You may be subject to United States backup withholding tax on these payments if you fail to provide your taxpayer identification number or comply with certain certification procedures or otherwise establish an exemption from backup withholding. If you are required to make such a certification or to establish such an exemption, you generally must do so on IRS Form W-9.

Backup withholding is not an additional tax. The amount of any backup withholding from a payment to you will be allowed as a credit against your U.S. federal income tax liability and may entitle you to a refund, provided that the required information is timely furnished to the IRS.

A holder that is a foreign corporation or a non-resident alien individual may be required to comply with certification and identification procedures in order to establish its exemption from information reporting and backup withholding.

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EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2015.2018. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate and that the degree of compliance with the policies or procedures may deteriorate.

Our management has assessed the effectiveness of Vale's internal control over financial reporting as of December 31, 20152018 based on the criteria established in "Internal Control—Integrated Framework (2013)" issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").Commission. Based on such assessment and criteria, our management has concluded that our internal control over financial reporting was effective as of December 31, 2015.2018. The effectiveness of our internal control over financial reporting as of December 31, 20152018 has been audited by KPMG Auditores Independentes, an independent registered public accounting firm, as stated in their report which appears herein.

The adoption of IFRS 15 (Revenue from Contracts with Customers) required the implementation of new controls and the modification of certain accounting processes related to revenue recognition. The impact of these changes was not material to our internal control over financial reporting. Our management identified no changeother changes in our internal control over financial reporting that occurred during our fiscal year ended December 31, 20152018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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CORPORATE GOVERNANCE

Under NYSE rules, foreign private issuers are subject to more limited corporate governance requirements than U.S. domestic issuers. As a foreign private issuer, we must comply with four principal NYSE corporate governance rules: (1) we must satisfy the requirements of Exchange Act Rule 10A-3 relating to audit committees; (2) our chief executive officer must promptly notify the NYSE in writing after any executive officer becomes aware of any non-compliance with the applicable NYSE corporate governance rules; (3) we must provide the NYSE with annual and interim written affirmations as required under the NYSE corporate governance rules; and (4) we must provide a brief description of any significant differences between our corporate governance practices and those followed by U.S. companies under NYSE listing standards. The table below briefly describes the significant differences between our practices and the practices of U.S. domestic issuers under NYSE corporate governance rules.

Since 2018, we also report our compliance with the Code of Best Practices for Corporate Governance of the Brazilian Corporate Governance Institute (IBGC), as required by Brazilian regulations. The code is based on the "comply or explain" principle, and we currently fully comply with 80% of the practices recommended by the IBGC and partially comply with 17% of practices recommended by the code

Section	​	NYSE corporate governance rule for U.S. domestic issuers	​	Our approach
303A.01	​	A listed company must have a majority of independent directors. "Controlled companies" are not required to comply with this requirement.	​	We are a controlled company because more thando not have a majority of independent directors. At least 20% of our voting power for the appointmentboard of directors is controlled by Valepar. As a controlled company, we would not be required to comply with the majoritycomposed of independent director requirements if we were a U.S. domestic issuer. There is no legal provision or policy that requires us to have independent directors.directors, as required under Novo Mercado listing rules and our bylaws.
303A.03	​	The non-management directors of a listed company must meet at regularly scheduled executive sessions without management.	​	We do not have any management directors.
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303A.04	​	A listed company must have a nominating/corporate governance committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties. "Controlled companies" are not required to comply with this requirement.	​	We do not have a nominating committee. As a controlled company, we would not be required to comply with the nominating/corporate governance committee requirements if we were a U.S. domestic issuer.committee. However, we do have a Personnel Committee and a Governance, Compliance and SustainabilityRisk Committee, which is anare advisory committeecommittees to the Board of Directors and(which may include members who are not directors.directors) with written charters that cover similar specified duties.
	​		​	According to its charter, this committeethe Personnel Committee is responsible, among other matters, for:
	​		​	·    supporting the Board of Directors in the process of selecting and appointing the Chief Executive Officer, and evaluating the Chief Executive Officer's appointment of other executives;
	​		​	·    evaluating and recommending improvementsadjustments to the effectiveness of our corporate governance best practices concerning the structure, size and the functioningcomposition of the Board of Directors;Directors and the Advisory Committees, as well as the balance of experiences, knowledge and diversity of the profiles of their members;
	​		​	·    identifying and recommending improvementspotential candidates to our codebe directors and members of Ethics and Conduct and management system in order to avoid conflicts of interest between us and our shareholders or management;
	​		​	·    issuing reports on potential conflicts of interest between us and our shareholders or management;the Advisory Committees; and
	​		​	·    reporting on policies relating to corporate responsibility, such as environmental and social responsibility.
	​		​	The committee's charter requires at least one of its members to be independent. For this purpose, an independent member is a person who:
	​		​	·    does not have any current relationship with us other than being part of a committee, or being a shareholdersupporting the Chairman of the Company;
	​		​	·    does not participate, directly or indirectly,Board of Directors in organizing the sales efforts or provision of services by Vale;
	​		​	·    is not a representativeprocess for performance evaluation of the controlling shareholders;
	​		​	·    has not been an employeeBoard of the controlling shareholder or of entities affiliated with a controlling shareholder;Directors and
	​		​	·    has not been an executive officer of the controlling shareholder. Advisory Committees.

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Section	​	NYSE corporate governance rule for U.S. domestic issuers	​	Our approach
	​		​	According to its charter, the Governance, Compliance and Risk Committee is responsible, among other matters, for:
	​		​	·    ensuring the adoption and improvement of good practices of compliance and integrity, including evaluating events of potential conflicts of interest;
	​		​	·    monitoring the scope of activities and effectiveness of the departments in charge of our corporate governance, compliance, corporate integrity, risk management and controls and proposing improvements;
	​		​	·    evaluating proposals for modifying the corporate governance documents, such as the By-Laws, the Code of Ethical Conduct and written charters of our Advisory Committees and Board of Directors, in addition to other policies and documents which are not the responsibility of other committees;
	​		​	·    ensuring the effectiveness of mechanisms to handle conflicts of interests in our transactions, as well as opining on related party transactions submitted for resolution of the Board of Directors, pursuant to the Policy on Transactions with Related Parties;
	​		​	·    promoting, monitoring and ensuring the development and efficacy of the governance model, assuring that all initiatives are in line with the best practices and are in synergy; and
	​		​	·    annually reviewing and recommending changes necessary to improve Vale's corporate governance.
	​		​	These committees' charters allow for the inclusion of one independent member. For this purpose, an independent member is a person who:
	​		​	·    Has no current link to Vale, except for membership on an Advisory Committee or a non-material shareholding in our share capital or investment in our bonds, and is not financially dependent on compensation from us;
	​		​	·    Has not been an employee of the Company (or of its subsidiaries) or of a direct or indirect controlling shareholder, or a representative of any direct or indirect controlling shareholder for, at least, three years;
	​		​	·    Does not provide, purchase or offer (trade), directly or indirectly, services and/or products to us on a scale that is material to that person or to us;
	​		​	·    Is not linked to a controlling shareholder, member of the controlling group or of another group with material shareholding, the spouse or relative up to the second degree of the foregoing, or connected to entities related to a controlling shareholder;
	​		​	·    Is not a spouse or relative up to the second degree of any officer or manager of Vale;
	​		​	·    Has not been a partner, in the past three years, of an auditing firm that audits or has audited Vale in this same period; and

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Section	​	NYSE corporate governance rule for U.S. domestic issuers	​	Our approach
	​		​	·    Is not a member of a non-profit entity that receives significant financial funds from us or from our related parties.
303A.05	​	A listed company must have a compensation committee composed entirely of independent directors, with a written charter that covers certain minimum specified duties.	​	As a controlled company, we would not be required to comply with the compensation committee requirements if we were a U.S. domestic issuer.
	​	"Controlled companies" are We do not required to comply with this requirement.	​	have a compensation committee. However, we have an Executive Developmenta Personnel Committee, which is an advisory committee to the Board of Directors and(which may include membersan independent member who areis not directors.a director). This committee is responsible for:
	​		​	·    reporting onevaluating our general human resources policies;policies as submitted by the Executive Board to the Board of Directors;
	​		​	·    analyzingevaluating and reporting onadjusting the adequacycompensation model of compensation levels for our executive officers;members of the Executive Board;
	​		​	·    proposingaiding the Board of Directors in setting and updating guidelinesmonitoring goals for evaluating the performance evaluation of our executive officers;the Executive Board and
	​		​	·    reporting on policies relating other leaders who report directly to healththe Chief Executive Officer, and safety.of those in charge of Vale's Governance Office, Internal Auditing and Ethics and Conduct Office.
303A.06 303A.07	​	A listed company must have an audit committee with a minimum of three independent directors who satisfy the independence requirements of Rule 10A-3 under the Exchange Act, with a written charter that covers certain minimum specified duties.	​	In lieu of appointing an audit committee composed of independent members of the Board of Directors, we have established a permanentconselho fiscal, or fiscal council, in accordance with the applicable provisions of Brazilian corporate law, and provided the fiscal council with additional powers to permit it to meet the requirements of Exchange Act Rule 10A-3(c)(3).
	​		​	Under our bylaws, the Fiscal Council shall have between three and five members. Under Brazilian corporate law, which provides standards for the independence of the Fiscal Council from us and our management, none of the members of the Fiscal Council may be a member of the Board of Directors or an executive officer. Management does not elect any Fiscal Council member. Our Board of Directors has determined that one of the members of our Fiscal Council meets the New York Stock Exchange independence requirements that would apply to audit committee members in the absence of our reliance on Exchange Act Rule 10A-3(c)(3).
	​		​	The responsibilities of the Fiscal Council are set forth in its charter. Under our bylaws, the charter must give the Fiscal Council responsibility for the matters required under Brazilian corporate law, as well as responsibility for:
	​		​	·    establishing procedures for the receipt, retention and treatment of complaints related to accounting, controls and audit issues, as well as procedures for the confidential, anonymous submission of concerns regarding such matters;
	​		​	·    recommending and assisting the Board of Directors in the appointment, establishment of compensation and dismissal of independent auditors;
	​		​	·    pre-approving services to be rendered by the independent auditors;

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Section	​	NYSE corporate governance rule for U.S. domestic issuers	​	Our approach
	​		​	·    overseeing the work performed by the independent auditors, with powers to recommend withholding the payment of compensation to the independent auditors; and
	​		​	·    mediating disagreements between management and the independent auditors regarding financial reporting.
303A.08	​	Shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions thereto, with limited exemptions set forth in the NYSE rules.	​	Under Brazilian corporate law, shareholder pre-approval is required for the adoption of any equity compensation plans.
303A.09	​	A listed company must adopt and disclose corporate governance guidelines that cover certain minimum specified subjects.	​	We have not published formal corporate governance guidelines.

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Section	​	NYSE corporate governance rule for U.S. domestic issuers	​	Our approach
303A.10	​	A listed company must adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or executive officers.	​	We have adopted a formal code of ethical conduct, which applies to our directors, officers and employees. We report each year in our annual report on Form 20-F any waivers of the code of ethical conduct granted for directors or executive officers. Our code of ethical conduct has a scope that is similar, but not identical, to that required for a U.S. domestic company under the NYSE rules.
303A.12	​	a) Each listed company CEO must certify to the NYSE each year that he or she is not aware of any violation by the company of NYSE corporate governance listing standards.	​	We are subject to (b) and (c) of these requirements, but not (a).
	​	b) Each listed company CEO must promptly notify the NYSE in writing after any executive officer of the listed company becomes aware of any non-compliance with any applicable provisions of this Section 303A.	​
	​	c) Each listed company must submit an executed Written Affirmation annually to the NYSE. In addition, each listed company must submit an interim Written Affirmation as and when required by the interim Written Affirmation form specified by the NYSE.	​

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CODE OF ETHICS ANDETHICAL CONDUCT

We have a code of ethics andethical conduct that applies to our employees and to the members of our Board of Directors and our Board of Executive Officers, including the chief executive officer and the chief financial officer and the principal accounting officer. We have posted this Codecode of Ethics and Conductethical conduct on our website, at: http://www.vale.com (under English Version/Investors/The Company/Corporate Governance/Policies). Copies of our code of ethics andethical conduct may be obtained without charge by writing to us at the address set forth on the front cover of this Form 20-F. We have not granted any implicit or explicit waivers from any provision of our code of ethics andethical conduct since its adoption,adoption.

Ethics Channel

Any breaches of our policies and we did not grant any implicit or explicit waivers from any provisionstandards can be reported by anyone, including employees, contractors, suppliers, members of affected communities and other stakeholders, via our Ethics Channel.

Allegations presented to our Ethics Channel are communicated to Vale's Ethics and Conduct Office, an independent department reporting directly to the Board of Directors and responsible for handling complaints as well as disseminating Vale's Code of Ethical Conduct. In 2018, Vale's Board of Directors approved an updated version of the previous versionCode of Ethical Conduct, which is now available in 8 languages.

Allegations are investigated by the Ethics and Conduct Office, except in the event of (i) lack of information to initiate an examination, in which case the Office will request additional information to the person raising the concern and will proceed with the investigation provided it receives additional information within 15 days, and (ii) lack of pertinence to the Ethics and Conduct Office's scope of work. The Ethics and Conduct Office's scope of work includes not only alleged violation of Vale's Code of Ethics and Conduct, such as fraud and moral harassment cases, but also the resolution of issues that have not been properly addressed by other lines of reporting in the company, such as delay in payments to contractors.

In 2018, our codeEthics and Conduct Office Channel received 2,709 complaints, 91% of ethics.which were investigated. Investigations confirmed violations in 45% of these complaints. All confirmed violations triggered correction plans, which are presented by company's managers and approved by the Ethics and Conduct Office. As a general rule, these plans contain measures to promote process improvements, training initiatives and feedback to employees. Depending on the seriousness of the allegations, employees involved may be subject to administrative measures, such as warnings, suspensions or terminations. Suppliers involved in serious violations of the Code of Ethical Conduct are also subject to punitive measures, such as fines or contract termination.

Investigations by the Ethics and Conduct Office in 2018 resulted in 2,007 corrective actions, including the termination of 214 employees.

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PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table summarizes the fees billed to us by our independent auditors KPMG Auditores Independentes for professional services in 20152017 and 2014:2018:

	​	Year ended December 31,
	​	2014	​	2015
	​	(US$ thousand)
Audit fees	​	2,569	​	4,844
Audit-related fees	​	36	​	206
Other fees(1)	​	3	​	–
​	​	​	​	​
Total fees	​	2,608	​	5,050
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(1)

Other fees paid in 2014 consist of fees charged by KPMG Auditores Independentes in connection with tax compliance services performed in the fiscal year of 2013.

	​	Year ended December 31,
	​	2017	​	2018
	​	(US$ thousand)
Audit fees	​	6,159	​	4,490
Audit-related fees	​	90	​	15
Other fees	​	18	​	13
​	​	​	​	​
Total fees	​	6,267	​	4,518
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          "Audit"Audit fees" are the aggregate fees billed by KPMG Auditores Independentes for the audit of our annual financial statements, the audit of the statutory financial statements of our subsidiaries, and reviews of interim financial statements and attestation services that are provided in connection with statutory and regulatory filings or engagements. They also include fees for services that only the independent auditor reasonably can provide, including the provision of comfort letters and consents in connection with statutory and regulatory filings and the review of documents filed with the SEC and other capital markets or local financial reporting regulatory bodies. "Audit-related fees" are fees charged by KPMG Auditores Independentes for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under "Audit fees."

          KPMG Auditores Independentes,On September 27, 2018, our principal accountant forBoard of Directors approved the yearshiring of 2014 and 2015, was engaged in the second quarter of 2014. The amounts reported for the year of 2014 do not include amounts paid to PricewaterhouseCoopers Auditores Independentes, in connection with the reviewreplacement of our interim financial statementsKPMG Auditores Independentes, for the first quarterprovision of 2014.audit services for a period of five years. These services will begin in the fiscal year starting on January 1, 2019.

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CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT

PricewaterhouseCoopers Auditores Independentes ("PwC") replaced KPMG Auditores Independentes ("KPMG") as our independent public accountants and will audit our financial statements for the fiscal year starting on January 1, 2019. The change in auditors is being made pursuant independent auditor´s rotation regulation established by CVM that limits the consecutive terms of the engagement to five years. Because of the limitations set forth in this regulation, KPMG's contract was not renewed. The replacement of KPMG by PwC was approved by our Board of Directors on September 27, 2018. KPMG is engaged as our independent auditor for the fiscal years ended December 31, 2017 and 2018 until the filing of this Form 20-F with the SEC.

KPMG audited our financial statements for the fiscal years ended December 31, 2016, 2017 and 2018. None of the reports of KPMG on our financial statements for either of such fiscal years contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles. There were no disagreements with KPMG, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to KPMG's satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with any reports it would have issued, and there were no "reportable events" as that term is defined in Item 16F(a)(1)(v) of Form 20-F. KPMG did not audit any of our financial statements for any period subsequent to December 31, 2018.

We have provided KPMG with a copy of the foregoing disclosure, and have requested that it furnish us with a letter addressed to the SEC stating whether or not it agrees with such disclosure. We are including as Exhibit 15.2 to this Form 20-F a copy of the letter from KPMG as required by Item 16F(a)(3) of Form 20-F.

During the fiscal years ended December 31, 2016, 2017 and 2018, we did not consult with PwC regarding the application of accounting principles to a specific completed or contemplated transaction or regarding the type of audit opinion that might be rendered by PwC on our financial statements. Further, PwC did not provide any written or oral advice that was an important factor considered by us in reaching a decision as to any such accounting, auditing or financial reporting or any matter being the subject of disagreement or "reportable event" or any other matter as defined in Item 16F(a)(v) of Form 20-F.

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INFORMATION FILED WITH SECURITIES REGULATORS

We are subject to various information and disclosure requirements in those countries in which our securities are traded, and we file financial statements and other periodic reports with the CVM, BM&FBOVESPA,B3, the SEC and the French securities regulator Autorité des Marchés Financiers, and the HKEx.Financiers.

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Brazil. Vale's Common Shares and Class A Preferred Shares are listed on BM&FBOVESPAB3 in São Paulo, Brazil. As a result, we are subject to the information and disclosure requirements of Brazilian Corporate Law, as amended. We are also subject to the periodic disclosure requirements of CVM rules applicable to listed companies and to BM&FBOVESPA's "Level 1"B3's "Novo Mercado" Corporate Governance Requirements. Our CVM filings are available from the CVM at http://www.cvm.gov.br or from BM&FBOVESPAB3 at http://www.bmfbovespa.com.br.www.b3.com.br. In addition, as with all of our security filings, they may be accessed at our website, http://www.vale.com.



·•

United States.States. As a result of our ADSs being listed on the New York Stock Exchange, we are subject to the information requirements of the Securities Exchange Act of 1934, as amended, and accordingly file reports and other information with the SEC. Reports and other information filed by us with the SEC may be inspected and copied atavailable to the public reference facilities maintained byfrom the SEC at 100 F Street, N.E., Washington, D.C., 20549. You can obtain further information about the operationhttp://www.sec.gov. In addition, as with all of the Public Reference Room by calling the SECour security filings, they may be accessed at 1-800-SEC-0330.our website, http://www.vale.com. You may also inspect Vale's reports and other information at the offices of the New York Stock Exchange, 11 Wall Street, New York, New York 10005, on which Vale's ADSs are listed. Our SEC filings are also available to the public from the SEC at http://www.sec.gov. For further information on obtaining copies of Vale's public filings at the New York Stock Exchange, you should call (212) 656-5060.



·•

France.France. As a result of the admission of the ADSs to listing and trading on NYSE Euronext Paris, we must comply with certain French periodic and ongoing disclosure rules (for example, annual report with audited financial statements and interim financial statements). In general, the Company is deemed to comply with the French periodic and ongoing disclosure rules through its compliance with U.S. disclosure rules.



·

Hong Kong.  As a result of the listing and trading of our HDSs on the HKEx, we must comply with the HKEx Listing Rules, subject to certain waivers granted by the HKEx, including certain periodic and ongoing disclosure rules, such as annual reports with audited financial statements and interim financial statements. In accordance with the HKEx Listing Rules, we upload reports and other information to the website of the HKEx, which are available to the public from the HKEx at http://www.hkexnews.hk.disclosures.

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EXHIBITS

Exhibit Number	​
1	​	Bylaws of Vale S.A., as amended on MayApril 13, 20152018 incorporated by reference to the current report on Form 6 K furnished to the Securities and Exchange Commission on April 16, 2018 (File No. 001-15030, Accession No. 0001104659-18-024067)
4.1	​	Framework Agreement, dated March 2, 2016, by and among Vale S.A., BHP Billiton Brasil Ltda, Samarco Mineração S.A., the Federal Government of Brazil, the states of Espirito Santo and Minas Gerais and certain other public authorities in Brazil, incorporated by reference to Exhibit 4.12 to BHP Billiton Ltd.'s annual report on Form 20-F dated September 21, 2016 (File Nos. 001-09526 and 001-31714, Accession No. 0001193125-16-715037)
8	​	List of subsidiaries
10.24	​	Shareholders' Agreement, dated August 14, 2017, among Litel Participações S.A., Litela Participações S.A., Bradespar S.A., Mitsui & Co., Ltd. and BNDES Participações S.A.—BNDESPAR incorporated by reference to the current report on Form 6-K furnished to the Securities and Exchange Commission on May 14, 2015August 15, 2017 (File No.: 001-15030)
8	​	List of subsidiaries 001-15030, Accession No. 0001104659-17-051910)
12.1	​	Certification of Chief Executive Officer of Vale pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934
12.2	​	Certification of Chief Financial Officer of Vale pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934
13.1	​	Certification of Chief Executive Officer and Chief Financial Officer of Vale, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1	​	Consent of KPMG Auditores Independentes
15.2	​	Consent of PricewaterhouseCoopersLetter from KPMG Auditores Independentes required by Item 16F(a)(3)
101	​	Interactive Data File

The amount of long-term debt securities of Vale or its subsidiaries authorized under any individual outstanding agreement does not exceed 10% of Vale's total assets on a consolidated basis. Vale hereby agrees to furnish the SEC, upon its request, a copy of any instruments defining the rights of holders of its long-term debt or of its subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.

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GLOSSARY

Alumina	​	Aluminum oxide. It is the main component of bauxite, and extracted from bauxite ore in a chemical refining process. It is the principal raw material in the electro-chemical process from which aluminum is produced.
Aluminum	​	A white metal that is obtained in the electro-chemical process of reducing aluminum oxide.
Ammonium nitrate	​	Primarily the ammonium salt of nitric acid and contains no less than 33% nitrogen by weight. Predominantly used in agriculture as a high-nitrogen fertilizer. The compound is used as a component of explosives in mining and is the main component of ANFO, a popular explosive.
Anthracite	​	The hardest coal type, which contains a high percentage of fixed carbon and a low percentage of volatile matter. Anthracite is the highest ranked coal and it contains 90% fixed carbon, more than any other form of coal. Anthracite has a semi-metallic luster and is capable of burning with little smoke. Mainly used for metallurgical purposes.
Austenitic stainless steel	​	Steel that contains a significant amount of chromium and sufficient nickel to stabilize the austenite microstructure, giving to the steel good formability and ductility and improving its high temperature resistance. They are used in a wide variety of applications, ranging from consumer products to industrial process equipment, as well as for power generation and transportation equipment, kitchen appliances and many other applications where strength, corrosion and high temperature resistance are required.
A$B3	​	The Australian dollar.B3 S.A.—Brasil, Bolsa, Balcão (formerly BM&FBOVESPA), a stock exchange located in São Paulo, Brazil.
Bauxite	​	A rock composed primarily of hydrated aluminum oxides. It is the principal ore of alumina, the raw material from which aluminum is made.
Beneficiation	​	A variety of processes whereby extracted ore from mining is reduced to particles that can be separated into ore-mineral and waste, the former suitable for further processing or direct use.
CAD	​	The Canadian dollar.
CFR	​	Cost and freight. Indicates that all costs related to the transportation of goods up to a named port of destination will be paid by the seller of the goods.
Coal	​	Coal is a black or brownish-black solid combustible substance formed by the decomposition of vegetable matter without access to air. The rank of coal, which includes anthracite, bituminous coal (both are called hard coal), sub-bituminous coal, and lignite, is based on fixed carbon, volatile matter, and heating value.
Cobalt	​	Cobalt is a hard, lustrous, silver-gray metal found in ores, and used in the preparation of magnetic, wear-resistant, and high-strength alloys (particularly for jet engines and turbines). Its compounds are also used in the production of inks, paints, catalysts and battery materials.
Coke	​	Coal that has been processed in a coke oven, for use as a reduction agent in blast furnaces and in foundries for the purposes of transforming iron ore into pig iron.

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Coking Coalcoal	​	Hard coking coal is the highest value segment of the metallurgical coal market segments (see metallurgical coal) because of its high strength factors to form a strong coke.
Concentration	​	Physical, chemical or biological process to increase the grade of the metal or mineral of interest.
Copper	​	A reddish brown metallic element. Copper is highly conductive, both thermally and electrically. It is highly malleable and ductile and is easily rolled into sheet and drawn into wire.
Copper anode	​	Copper anode is a metallic product of the converting stage of smelting process that is cast into blocks and generally contains 99% copper grade, which requires further processing to produce refined copper cathodes.
Copper cathode	​	Copper plate with purity higher than or equal to 99.9% that is produced by an electrolytic process.
Copper concentrate	​	Material produced by concentration of copper minerals contained in the copper ore. It is the raw material used in smelters to produce copper metal.
CVM	​	TheComissão de Valores Mobiliários (Brazilian Securities and Exchange Commission).

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DRI​	​	Direct reduced iron. Iron ore lumps or pellets converted by the direct reduction process, used mainly as a scrap substitute in electric arc furnace steelmaking. ​	​	​
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Glossary

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DWT	​	Deadweight ton. The measurement unit of a vessel's capacity for cargo, fuel oil, stores and crew, measured in metric tons of 1,000 kg. A vessel's total deadweight is the total weight the vessel can carry when loaded to a particularits maximum permitted load line.
Electrowon copper cathode	​	Refined copper cathode is a metallic product produced by an electrochemical process in which copper is recovered from an electrolyte and plated onto an electrode. Electrowon copper cathodes generally contain 99.99% copper grade.
Embedded derivatives	​	A financial instrument within a contractual arrangement such as leases, purchase agreements and guarantees. Its function is to modify some or all of the cash flow that would otherwise be required by the contract, such as caps, floors or collars.
Emissions trading	​	Emissions trading is a market-based scheme for environmental improvement that allows parties to buy and sell permits for emissions or credits for reductions in emissions of certain pollutants.
Fe unit	​	A measure of the iron grade in the iron ore that is equivalent to 1% iron grade in one metric ton of iron ore.
Ferroalloys	​	Manganese ferroalloys are alloys of iron that contain one or more other chemical elements. These alloys are used to add these other elements into molten metal, usually in steelmaking. The principal ferroalloys are those of manganese, silicon and chromium.
FOB	​	Free on board. It indicates that the purchaser pays for shipping, insurance and all the other costs associated with transportation of the goods to their destination.

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Gold	​	A precious metal sometimes found free in nature, but usually found in conjunction with silver, quartz, calcite, lead, tellurium, zinc or copper. It is the most malleable and ductile metal, a good conductor of heat and electricity and unaffected by air and most reagents.
Grade	​	The proportion of metal or mineral present in ore or any other host material.
Hard metallurgical coal	​	Coal used in the production of steel, comprising multiple segments, including hard coking coal (see hard coking coal), semi-hard coking coal, semi-soft coking coal, all used to produce coke to feed a blast furnace; and, PCI (pulverized coal injection) coal used for direct injection fuel source into the blast furnace (see PCI).
Hematite Ore	​	Hematite is an iron oxide mineral, but also denotes the high-grade iron ore type within the iron deposits.
Iridium	​	A dense, hard, brittle, silvery-white transition metal of the platinum family that occurs in natural alloys with platinum or osmium. Iridium is used in high-strength alloys that can withstand high temperatures, primarily in high-temperature apparatus, electrical contacts, and as a hardening agent for platinum.
Iron ore pellets	​	Agglomerated ultra-fine iron ore particles of a size and quality suitable for particular iron making processes. Our iron ore pellets range in size from 8 mm to 18 mm.
Itabirite ore	​	Itabirite is a banded iron formation and denotes the low-grade iron ore type within the iron deposits.
Lump ore	​	Iron ore or manganese ore with the coarsest particle size in the range of 6.35 mm to 50 mm in diameter, but varying slightly between different mines and ores.
Manganese ore	​	A hard brittle metallic element found primarily in the minerals pyrolusite, hausmannite and manganite. Manganese ore is essential to the production of virtually all steels and is important in the production of cast iron.
Metallurgical coal	​	Coal used in the production of steel, comprising multiple segments, including hard coking coal (see hard coking coal), semi-hard coking coal, semi-soft coking coal, all used to produce coke to feed a blast furnace; and, PCI (pulverized coal injection) coal used for direct injection fuel source into the blast furnace (see PCI). A bituminous hard coal with a quality that allows the production of coke. Normally used in coke ovens for metallurgical purposes.
Methanol	​	An alcohol fuel largely used in the production of chemical and plastic compounds.
Mineral deposit(s)	​	A mineralized body that has been intersected by a sufficient number of closely spaced drill holes and/or underground/surface samples to support sufficient tonnage and grade of metal(s) or mineral(s) of interest to warrant further exploration-development work.

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Mineral resourceresource(s)	​	A concentration or occurrence of minerals of economic interest in such form and quantity that could justify an eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence through drill holes, trenches and/or outcrops. Mineral resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured Resources.
Mt	​	Million metric tons
Mtpy	​	Million metric tons per year.
Nickel	​	A silvery white metal that takes on a high polish. It is hard, malleable, ductile, somewhat ferromagnetic, and a fair conductor of heat and electricity. It belongs to the iron-cobalt group of metals and is chiefly valuable for the alloys it forms, such as stainless steel and other corrosion-resistant alloys.

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Glossary

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Nickel laterite	​	Deposits are formed by intensive weathering of olivine-rich ultramafic rocks such as dunite, peridotite and komatite.
Nickel limonitic laterite	​	Type of nickel laterite located at the top of the laterite profile. It consists largely of goethite and contains 1-2% nickel. Also contains concentrations on cobalt.
Nickel matte	​	An intermediate smelter product that must be further refined to obtain pure metal.
Nickel pig iron	​	A low-grade nickel product, made from lateritic ores, suitable primarily for use in stainless steel production. Nickel pig iron typically has a nickel grade of 1.5-6% produced from blast furnaces. Nickel pig iron can also contain chrome, manganese, and impurities such as phosphorus, sulfur and carbon. Low gradeLow-grade ferro-nickel (FeNi) produced in China through electric furnaces is often also referred to as nickel pig iron.
Nickel saprolitic laterite	​	Type of nickel laterite located at the bottom of the laterite profile and contains on average 1.5-2.5% nickel.
Nickel sulfide	​	Formed through magmatic processes where nickel combines with sulfur to form a sulfide phase. Pentlandite is the most common nickel sulfide ore mineral mined and often occurs with chalcopyrite, a common copper sulfide mineral.
Nitrogen-based fertilizers	​	Derived primarily from ammonia (NH3) which, in turn, is made from nitrogen present in the air and natural gas forming an energy-intensive nutrient. The main derived fertilizers from ammonia are ammonium nitrate and urea.
Nitric acid	​	Nitric acid is manufactured from ammonia and is a key chemical in the manufacture of fertilizers. The acid from the absorption towers typically contains 53-61% nitric acid by mass. Uses for diluted nitric acid other than fertilizer production include metallurgy, cleaning (in food industries) and nylon for the textile industry.
Nitric acid concentrate	​	Acid required for the manufacture of materials such as organic-nitro compounds for the explosive and dye industries.
Ntk	​	Net ton (the weight of the goods being transported excluding the weight of the wagon) kilometer.

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Open-pit mining	​	Method of extracting rock or minerals from the earth by their removal from an open pit. Open-pit mines for extraction of ore are used when deposits of commercially useful minerals or rock are found near the surface; that is, where the overburden (surface material covering the valuable deposit) is relatively thin or the material of interest is structurally unsuitable for underground mining.
Oxides	​	Compounds of oxygen with another element. For example, magnetite is an oxide mineral formed by the chemical union of iron with oxygen.
Ozpy	​	Troy ounces per year.
Palladium	​	A silver-white metal that is ductile and malleable, used primarily in automobile-emissions control devices, and electrical applications.
PCI	​	Pulverized coal injection. Type of coal with specific properties ideal for direct injection via the tuyeres of blast furnaces. This type of coal does not require any processing or coke making, and can be directly injected into the blast furnaces, replacing lump cokes to be charged from the top of the blast furnaces.
Pellet feed fines	​	Ultra-fine iron ore (less than 0.15 mm) generated by mining and grinding. This material is aggregated into iron ore pellets through an agglomeration process.
Pelletizing	​	Iron ore pelletizing is a process of agglomeration of ultra-fines produced in iron ore exploitation and concentration steps. The three basic stages of the process are: (i) ore preparation (to get the correct fineness); (ii) mixing and balling (additive mixing and ball formation); and (iii) firing (to get ceramic bonding and strength).
PGMs	​	Platinum group metals. Consist of platinum, palladium, rhodium, ruthenium, osmium and iridium.
Phosphate	​	A phosphorous compound, which occurs in natural ores and is used as a raw material for primary production of fertilizer nutrients, animal feeds and detergents.
Pig iron	​	Product of smelting iron ore usually with coke and limestone in a blast furnace.
Platinum	​	A dense, precious, grey-white transition metal that is ductile and malleable and occurs in some nickel and copper ores. Platinum is resistant to corrosion and is used primarily in jewelry, and automobile-emissions control devices.
Potash	​	A potassium chloride compound, chiefly KCl, used as simple fertilizer and in the production of mixture fertilizer.
Precious metals	​	Metals valued for their color, malleability, and rarity, with a high economic value driven not only by their practical industrial use, but also by their role as investments. The widely-traded precious metals are gold, silver, platinum and palladium.
Primary nickel	​	Nickel produced directly from mineral ores.

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Probable (indicated) reserves	​	Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.
Proven (measured) reserves	​	Reserves for which (a)(i) quantity is computed from dimensions revealed in outcrops, trenches, working or drill holes; grade and/or quality are computed from the results of detailed sampling and (b)(ii) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
Real,reais or R$	​	The official currency of Brazil is thereal (singular) (plural:(plural:reais).
Reserves (ore/mineral)	​	The part of a mineral deposit that could be economically and legally extracted or produced at the time of the reserve determination.
Rhodium	​	A hard, silvery-white, durable metal that has a high reflectance and is primarily used in combination with platinum for automobile-emission control devices and as an alloying agent for hardening platinum.
ROM	​	Run-of-mine. Ore in its natural (unprocessed) state, as mined, without having been crushed.
Ruthenium	​	A hard, white metal that can harden platinum and palladium used to make severe wear-resistant electrical contacts and in other applications in the electronics industry.
Secondary or scrap nickel	​	Stainless steel or other nickel-containing scrap.
Seaborne market	​	Comprises the total ore trade between countries using ocean bulk vessels.
Silver	​	A ductile and malleable metal used in photography, coins and medal fabrication, and in industrial applications.
Sinter feed (also known as fines)	​	Iron ore fines with particles in the range of 0.15 mm to 6.35 mm in diameter. Suitable for sintering.
Sintering	​	The agglomeration of sinter feed, binder and other materials, into a coherent mass by heating without melting, to be used as metallic charge into a blast furnace.
SlabsSlab	​	The most common type of semi-finished steel. Traditional slabs measure 10 inches thick and 30-85 inches wide (and average 20 feet long), while the output of the recently developed "thin slab" casters is two inches thick. Subsequent to casting, slabs are sent to the hot-strip mill to be rolled into coiled sheet and plate products.
Stainless steel	​	Alloy steel containing at least 10% chromium and with superior corrosion resistance. It may also contain other elements such as nickel, manganese, niobium, titanium, molybdenum, copper, in order to improve mechanical, thermal properties and service life. It is primarily classified as austenitic (200 and 300 series), ferritic (400 series), martensitic, duplex or precipitation hardening grades.

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Stainless steel scrap ratio	​	The ratio of secondary nickel units (either in the form of nickel-bearing, stainless steel scrap, or in alloy steel, foundry and nickel-based alloy scrap) relative to all nickel units consumed in the manufacture of new stainless steel.
Thermal coal	​	A type of coal that is suitable for energy generation in thermal power stations, cement plants and other coal fired ovens/kilns in general industry.
Tpy	​	Metric tons per year.
Troy ounce	​	One troy ounce equals 31.103 grams.
Underground mining	​	Mineral exploitation in which extraction is carried out beneath the earth's surface.
U.S. dollars or US$	​	The United States dollar.

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	​	VALE S.A.
	​	By:	​	/s/ MURILO PINTOEDUARDO DE OLIVEIRA FERREIRASALLES BARTOLOMEO Name: Murilo PintoEduardo de Oliveira FerreiraSalles Bartolomeo Title: Interim Chief Executive Officer
	​	By:	​	/s/ LUCIANO SIANI PIRES Name: Luciano Siani Pires Title: Chief Financial Officer

Date: March 31, 2016April 18, 2019

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Vale S.A. Financial Statements

Contents

	​		​	Page
Report of Independent Registered Public Accounting Firm KPMG			​	F-3
Report of Independent Registered Public Accounting Firm, PwC			​	F-5
Management's Report on Internal Control Overover Financial Reporting			​	F-6
Consolidated Income Statement			​	F-7
Consolidated Statement of Comprehensive Income			​	F-8
Consolidated Statement of Cash Flow StatementFlows			​	F-9
Consolidated Balance SheetStatement of Financial Position			​	F-11F-10
Consolidated Statement of Changes in Equity			​	F-13F-11
Notes to the Financial Statements			​	F-15F-13
1.	​	Corporate information	​	F-15F-13
2.	​	Basis for preparation of the financial statements	​	F-15F-13
3.	​	Brumadinho's dam failure	​	F-18
4.	​	Information by business segment and by geographic area	​	F-16
4.	​	Relevant event	​	F-24F-25
5.	​	Assets held for saleCosts and expenses by nature	​	F-26F-33
6.	​	Acquisitions and divestituresFinancial results	​	F-28F-34
7.	​	Cash and cash equivalentsStreaming transactions	​	F-30F-35
8.	​	Income taxes	​	F-36
9.	​	Basic and diluted earnings (loss) per share	​	F-40
10.	​	Accounts receivable	​	F-30F-40
9.11.	​	Inventories	​	F-30F-41
10.12.	​	Recoverable taxes	​	F-31F-42
11.13.	​	Other financial assets and liabilities	​	F-42
14.	​	Non-current assets and liabilities held for sale and discontinued operations	​	F-43
15.	​	Subsidiaries	​	F-46
16.	​	Investments in associates and joint ventures	​	F-31F-47
12.17.	​	Noncontrolling interest	​	F-33F-53
13.18.	​	Intangibles	​	F-34F-54
14.19.	​	Property, plant and equipment	​	F-34F-56
15.20.	​	Impairment and onerous contracts	​	F-36
16.	​	Loans and borrowings	​	F-39
17.	​	Asset retirement obligations	​	F-41
18.	​	Litigation	​	F-42
19.	​	Income taxes—Settlement program ("REFIS")	​	F-44F-58

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20.	​	Income taxes	​	F-44
21.	​	Employee benefits obligationsLoans, borrowings and cash and cash equivalents	​	F-46F-61
22.	​	Liabilities related to associates and joint ventures	​	F-64
23.	​	Financial instruments classification	​	F-57F-66
23.24.	​	Fair value estimate	​	F-59F-69
24.25.	​	Derivative financial instruments	​	F-61
25.	​	Stockholders' equity	​	F-73F-72
26.	​	Costs and expenses by natureProvisions	​	F-77F-75
27.	​	Financial resultsAsset retirement obligations	​	F-78F-76
28.	​	Deferred revenue—Gold streamLitigation	​	F-79F-77
29.	​	CommitmentsEmployee benefits	​	F-80
30.	​	Related partiesStockholders' equity	​	F-81F-91
31.	​	Summary of the main accounting policiesRelated parties	​	F-84F-96
32.	​	Critical accounting estimates and judgmentsCommitments	​	F-96F-99
33.	​	Risk management	​	F-98F-100
34.	​	Additional information about derivatives financial instruments	​	F-104

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KPMG Auditores Independentes
Rua do Passeio, 38 - Setor 2 - 17° andar - Centro
20021-290 - Rio de Janeiro/RJ - Brasil
Caixa Postal 2888 - CEP 20001-970 - Rio de Janeiro/RJ - Brasil
Telefone +55 (21) 2207-9400, Fax +55 (21) 2207-9000
www.kpmg.com.br

Report of Independent Registered Public Accounting Firm

TheTo the Stockholders and Board of Directors and Stockholders of
Vale S.A.
Rio de Janeiro – RJ

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheetstatements of financial position of Vale S.A. and subsidiaries ("Vale" or "the Company") as of December 31, 20152018 and 2014, and2017, the related consolidated statements of income, comprehensive income, stockholders'changes in equity and cash flows for each of the years then ended.in the three-year period ended December 31, 2018, and the related notes (collectively, the "consolidated financial statements"). We also have audited Vale'sthe Company's internal control over financial reporting as of December 31, 2015,2018, based on criteria established inInternal Control—Integrated Framework (2013) (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Vale'sCommission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2018, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established inInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International Cooperative ("KPMG International"), uma entidade suíça.	​	KPMG Auditores Independentes, a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

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Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on thesethe Company's consolidated financial statements and an opinion on the Vale'sCompany's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our auditaudits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, andas well as evaluating the overall presentation of the consolidated financial statement presentation.statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Emphasis of matter—Subsequent Event

We draw attention to Note 3 to the consolidated financial statements of the Company, which describes the Brumadinho dam failure occurred at the Company's operating facilities on January 25, 2019. The Company's management considered that the event is not a condition that existed at the end of the reporting period, and therefore does not require adjustments to the financial statements as of December 31, 2018. The amounts disclosed in the mentioned Note related to this event are based on management's best estimates, however, at the current stage of the investigations, assessments of causes and possible third parties lawsuits, it is not possible to reliably measure all potential costs that the Company may incur for the purposes of disclosure in the financial statements.

​

​	​	​	​	​
​	​ ​	​ F-4	​ ​	​

​

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Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

          In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Vale S.A. and subsidiaries as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, Vale maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established inInternal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

/s/ KPMG Auditores Independentes KPMG Auditores Independentes	​
Rio de Janeiro, Brazil February 24, 2016	​

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Report of Independent Registered Public Accounting Firm

To board of directors and shareholders of Vale S.A.:

          In our opinion, the consolidated statements of income and comprehensive income, of shareholders' equity and of cash flows for the year ended December 31, 2013 present fairly, in all material respects, the results of operations and cash flows of Vale S.A. and its subsidiaries for the year ended December 31, 2013 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopersKPMG AUDITORES INDEPENDENTES KPMG Auditores Independentes PricewaterhouseCoopers Auditores Independentes Rio de Janeiro, Brazil February 26, 2014	​
We have served as the Company's auditor since 2014 Rio de Janeiro, RJ April 18, 2019	​

​

​	​	​	​	​
​	​ ​	​ F-5	​ ​	​

​

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Management's Report on Internal Control over Financial Reporting

The management of Vale S.A (Vale) is responsible for establishing and maintaining adequate internal control over financial reporting.

The Vale's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, and that the degree of compliance with the policies or procedures may deteriorate.

Vale's management has assessed the effectiveness of the company's internal control over financial reporting as of December 31, 20152018 based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on such assessment and criteria, Vale's management has concluded that the company's internal control over financial reporting are effective as of December 31, 2015.2018.

The effectiveness of the company's internal control over financial reporting as of December 31, 20152018 has been audited by KPMG Auditores Independentes, an independent registered public accounting firm, as stated in their report which appears herein.

February 24, 2016

/s/ Murilo FerreiraApril 18th	​
Murilo Ferreira Chief Executive Officer, 2019.	​
/s/ Luciano SianiEDUARDO DE SALLES BARTOLOMEO Eduardo de Salles Bartolomeo Chief Executive Officer	​
/s/ LUCIANO SIANI PIRES Luciano Siani Pires Chief Financial Officer and Investors Relations	​

​

​	​	​	​	​
​	​ ​	​ F-6	​ ​	​

​

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Table of Contents

Consolidated Income Statement
In millions of United States dollars, except as otherwise statedearnings per share data

	​	Year ended December 31									​	Year ended December 31
	​	Notes	​	2015		​	2014		​	2013	​	Notes	​	2018		​	2017		​	2016
Continuing operations	​		​			​			​		​		​			​			​
Net operating revenue	​	3(c)	​	25,609		​	37,539		​	46,767	​	4(e)	​	36,575		​	33,967		​	27,488
Cost of goods sold and services rendered	​	26(a)	​	(20,513		)	(25,064		)	(24,245)	​	5(a)	​	(22,109		)	(21,039		)	(17,650)
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
Gross profit	​		​	5,096		​	12,475		​	22,522	​		​	14,466		​	12,928		​	9,838
​	​	​	​	​		​	​		​	​
Operating expenses	​		​			​			​		​		​			​			​
Selling and administrative expenses	​	26(b)	​	(652		)	(1,099		)	(1,302)	​	5(b)	​	(523		)	(531		)	(507)
Research and evaluation expenses	​		​	(477		)	(734		)	(801)	​		​	(373		)	(340		)	(319)
Pre operating and operational stoppage	​		​	(1,027		)	(1,088		)	(1,859)	​		​	(271		)	(413		)	(453)
Other operating expenses, net	​	26(c)	​	(206		)	(1,057		)	(984)	​	5(c)	​	(445		)	(420		)	(267)
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
	​		​	(2,362		)	(3,978		)	(4,946)	​		​	(1,612		)	(1,704		)	(1,546)
Impairment and disposal of non-current assets											​	16, 19 and 20	​	(899		)	(294		)	(1,240)
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
Impairment of non-current assets and onerous contracts	​	15	​	(8,926		)	(1,152		)	(2,298)
Results on measurement or sale of non-current assets	​	5-6	​	61		​	(167		)	(215)
​	​	​	​	​		​	​		​	​
Operating income (loss)	​		​	(6,131		)	7,178		​	15,063
​	​	​	​	​		​	​		​	​
Operating income											​		​	11,955		​	10,930		​	7,052
Financial income	​	27	​	7,850		​	3,770		​	2,699	​	6	​	423		​	478		​	170
Financial expenses	​	27	​	(18,651		)	(9,839		)	(11,031)	​	6	​	(2,345		)	(3,273		)	(2,677)
Equity results in associates and joint ventures	​	11	​	(439		)	505		​	469
Results on sale or disposal of investments in associates and joint ventures	​	5-6	​	97		​	(30		)	41
Impairment of investments in associates and joint ventures	​	15	​	(446		)	(31		)	–
Other financial items											​	6	​	(3,035		)	(224		)	4,350
Equity results and other results in associates and joint ventures											​	16 and 22	​	(182		)	(82		)	(911)
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
Net income (loss) before income taxes	​		​	(17,720		)	1,553		​	7,241
Income before income taxes											​		​	6,816		​	7,829		​	7,984
Income taxes	​	20	​			​			​		​	8	​			​			​
Current tax	​		​	(389		)	(1,051		)	(7,786)	​		​	(752		)	(849		)	(943)
Deferred tax	​		​	5,489		​	(149		)	953	​		​	924		​	(646		)	(1,838)
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
	​		​	5,100		​	(1,200		)	(6,833)	​		​	172		​	(1,495		)	(2,781)
Net income from continuing operations											​		​	6,988		​	6,334		​	5,203
Net income (loss) attributable to noncontrolling interests											​		​	36		​	21		​	(8)
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
Net income (loss) from continuing operations	​		​	(12,620		)	353		​	408
​	​	​	​	​		​	​		​	​
​	​	​	​	​		​	​		​	​
​	​	​	​	​		​	​		​	​
Loss attributable to noncontrolling interests	​	12	​	(491		)	(304		)	(178)
​	​	​	​	​		​	​		​	​
Net income (loss) from continuing operations attributable to Vale's stockholders	​		​	(12,129		)	657		​	586
Net income from continuing operations attributable to Vale's stockholders											​		​	6,952		​	6,313		​	5,211
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
​
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
Discontinued operations	​		​			​			​		​	14	​			​			​
Loss from discontinued operations	​		​	–		​	–		​	(2)	​		​	(92		)	(813		)	(1,227)
Net income (loss) attributable to noncontrolling interests											​		​	–		​	(7		)	2
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
Loss from discontinued operations attributable to Vale's stockholders	​		​	–		​	–		​	(2)	​		​	(92		)	(806		)	(1,229)
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
​
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
Net income (loss)	​		​	(12,620		)	353		​	406
Loss attributable to noncontrolling interests	​		​	(491		)	(304		)	(178)
Net income											​		​	6,896		​	5,521		​	3,976
Net income (loss) attributable to noncontrolling interests											​		​	36		​	14		​	(6)
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
Net income (loss) attributable to Vale's stockholders	​		​	(12,129		)	657		​	584
Net income attributable to Vale's stockholders											​		​	6,860		​	5,507		​	3,982
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
​
​	​	​	​	​		​	​		​	​	​	​	​	​		​	​		​	​
Earnings per share attributable to Vale's stockholders:	​		​			​			​		​		​			​			​
Basic and diluted earnings per share:	​	25(d)	​			​			​		​	9	​			​			​
Preferred share (US$)	​		​	(2.35		)	0.13		​	0.11
Common share (US$)	​		​	(2.35		)	0.13		​	0.11	​		​	1.32		​	1.05		​	0.77

   

The accompanying notes are an integral part of these financial statements.

​

​	​	​	​	​
​	​ ​	​ F-7	​ ​	​

​

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Consolidated Statement of Comprehensive Income
In millions of United States dollars

	​	Year ended December 31
	​	2015		​	2014		​	2013
Net income (loss)	​	(12,620		)	353		​	406
​	​	​		​	​		​	​
Other comprehensive income	​			​			​
Items that will not be reclassified subsequently to net income	​			​			​
Cumulative translation adjustments	​	(18,128		)	(7,436		)	(9,830)
Retirement benefit obligations	​			​			​
Gross balance for the year	​	66		​	(279		)	914
Effect of taxes	​	3		​	85		​	(284)
Equity results from associates and joint ventures, net taxes	​	–		​	2		​	–
​	​	​		​	​		​	​
	​	69		​	(192		)	630
​	​	​		​	​		​	​
Total items that will not be reclassified subsequently to net income	​	(18,059		)	(7,628		)	(9,200)
​	​	​		​	​		​	​
Items that may be reclassified subsequently to net income	​			​			​
Cumulative translation adjustments	​			​			​
Gross balance for the year	​	9,340		​	3,407		​	2,822
Effect of taxes	​	904		​	–		​	–
Transfer of realized results to net income	​	–		​	–		​	435
​	​	​		​	​		​	​
	​	10,244		​	3,407		​	3,257
Available-for-sale financial instruments	​			​			​
Gross balance for the year	​	1		​	(4		)	193
Transfer of realized results to net income, net of taxes	​	–		​	4		​	(194)
​	​	​		​	​		​	​
	​	1		​	–		​	(1)
Cash flow hedge	​			​			​
Gross balance for the year	​	828		​	(290		)	(23)
Effect of taxes	​	(7		)	(3		)	12
Equity results from associates and joint ventures, net taxes	​	(5		)	(1		)	–
Transfer of realized results to net income, net of taxes	​	(369		)	(122		)	(40)
​	​	​		​	​		​	​
	​	447		​	(416		)	(51)
​	​	​		​	​		​	​
Total of items that may be reclassified subsequently to net income	​	10,692		​	2,991		​	3,205
​	​	​		​	​		​	​
Total comprehensive income	​	(19,987		)	(4,284		)	(5,589)
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Comprehensive income attributable to noncontrolling interests	​	(543		)	(330		)	(175)
Comprehensive income attributable to Vale's stockholders	​	(19,444		)	(3,954		)	(5,414)
​	​	​		​	​		​	​
	​	(19,987		)	(4,284		)	(5,589)
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

	​	Year ended December 31
	​	2018		​	2017		​	2016
Net income	​	6,896		​	5,521		​	3,976
​	​	​		​	​		​	​
Other comprehensive income (loss):	​			​			​
Items that will not be reclassified subsequently to the income statement	​			​			​
Translation adjustments	​	(6,762		)	(717		)	6,460
Retirement benefit obligations	​	41		​	(46		)	(70)
Fair value adjustment to investment in equity securities	​	60		​	–		​	–
Transfer to reserve	​	(16		)	–		​	–
​	​	​		​	​		​	​
Total items that will not be reclassified subsequently to the income statement, net of tax	​	(6,677		)	(763		)	6,390
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Items that may be reclassified subsequently to the income statement	​			​			​
Translation adjustments	​	3,899		​	1,026		​	(3,677)
Fair value adjustment to debt instruments	​	–		​	–		​	1
Cash flow hedge	​	–		​	–		​	10
Net investments hedge	​	(543		)	(95		)	–
Transfer of realized results to net income	​	(78		)	(11		)	(78)
​	​	​		​	​		​	​
Total of items that may be reclassified subsequently to the income statement, net of tax	​	3,278		​	920		​	(3,744)
​	​	​		​	​		​	​
Total comprehensive income	​	3,497		​	5,678		​	6,622
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Comprehensive income (loss) attributable to noncontrolling interests	​	(84		)	13		​	111
​	​	​		​	​		​	​
Comprehensive income (loss) attributable to Vale's stockholders	​	3,581		​	5,665		​	6,511
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
From continuing operations	​	3,589		​	5,696		​	6,642
From discontinued operations	​	(8		)	(31		)	(131)
​	​	​		​	​		​	​
	​	3,581		​	5,665		​	6,511
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

Items above are stated net of tax and the related taxes are disclosed in note 8.

   

The accompanying notes are an integral part of these financial statements.

​

​	​	​	​	​
​	​ ​	​ F-8	​ ​	​

​

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Consolidated Statement of Cash FlowFlows
In millions of United States dollars

	​	Year ended December 31
	​	2015		​	2014		​	2013
Cash flow from continuing operating activities:	​			​			​
Net income (loss) from continuing operations	​	(12,620		)	353		​	408
Adjustments for:	​			​			​
Equity results from associates and joint ventures	​	439		​	(505		)	(469)
Results on measurement or sale of non-current assets	​	(61		)	167		​	215
Results on sale or disposal of investments in associates and joint ventures	​	(97		)	30		​	(41)
Results on disposal of property, plant and equipment and intangibles	​	(152		)	91		​	(146)
Impairment of non-current assets and onerous contracts	​	9,372		​	1,183		​	2,298
Depreciation, amortization and depletion	​	4,029		​	4,288		​	4,150
Deferred income taxes	​	(5,489		)	149		​	(953)
Foreign exchange and indexation, net	​	6,879		​	1,270		​	724
Unrealized derivative loss (gain), net	​	1,714		​	1,155		​	791
Participative stockholders' debentures	​	(965		)	315		​	381
Others	​	189		​	347		​	303
Changes in assets and liabilities:	​			​			​
Accounts receivable	​	1,671		​	2,546		​	608
Inventories	​	(304		)	(535		)	346
Suppliers and contractors	​	740		​	1,013		​	(124)
Payroll and related charges	​	(603		)	(77		)	59
Income taxes (includes settlement program)	​	(99		)	604		​	5,424
Net other taxes assets and liabilities	​	(258		)	(292		)	44
Deferred revenue—Gold stream (note 28)	​	532		​	–		​	1,319
Net other assets and liabilities	​	(426		)	705		​	(795)
​	​	​		​	​		​	​
Net cash provided by continuing operating activities	​	4,491		​	12,807		​	14,542
Net cash provided by discontinued operating activities	​	–		​	–		​	250
​	​	​		​	​		​	​
Net cash provided by operating activities	​	4,491		​	12,807		​	14,792
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Cash flow from continuing investing activities:	​			​			​
Financial investments redeemed (invested)	​	308		​	(148		)	357
Loans and advances received (granted)	​	(65		)	364		​	(17)
Guarantees and deposits received (granted)	​	(17		)	59		​	(147)
Additions to investments	​	(66		)	(244		)	(378)
Acquisition of subsidiary (note 6(f))	​	(90		)	–		​	–
Additions to property, plant and equipment and intangible (note 3(b))	​	(8,371		)	(11,813		)	(13,105)
Dividends and interest on capital received from associates and joint ventures (note 11)	​	318		​	568		​	834
Proceeds from disposal of assets and investments	​	1,456		​	1,246		​	2,030
Proceeds from gold stream transaction (note 28)	​	368		​	–		​	581
​	​	​		​	​		​	​
Net cash used in continuing investing activities	​	(6,159		)	(9,968		)	(9,845)
Net cash provided by discontinued investing activities	​	–		​	–		​	(763)
​	​	​		​	​		​	​
Net cash used in investing activities	​	(6,159		)	(9,968		)	(10,608)
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

	​	Year ended December 31
	​	2018		​	2017		​	2016
Cash flow from operating activities:	​			​			​
Income before income taxes from continuing operations	​	6,816		​	7,829		​	7,984
Adjusted for:	​			​			​
Equity results and other results in associates and joint ventures	​	182		​	82		​	911
Impairment and disposal of non-current assets	​	899		​	294		​	1,240
Depreciation, amortization and depletion	​	3,351		​	3,708		​	3,487
Financial results, net	​	4,957		​	3,019		​	(1,843)
Changes in assets and liabilities:	​			​			​
Accounts receivable	​	(156		)	1,277		​	(2,744)
Inventories	​	(817		)	(339		)	288
Suppliers and contractors	​	(376		)	232		​	243
Provision—Payroll, related charges and others remunerations	​	(11		)	372		​	133
Proceeds from cobalt and gold stream transactions	​	690		​	–		​	524
Other assets and liabilities, net	​	(205		)	(912		)	332
​	​	​		​	​		​	​
	​	15,330		​	15,562		​	10,555
Interest on loans and borrowings paid (note 21)	​	(1,121		)	(1,686		)	(1,663)
Derivatives paid, net	​	(67		)	(240		)	(1,602)
Interest on participative stockholders' debentures paid	​	(113		)	(135		)	(84)
Income taxes (including settlement program)	​	(1,128		)	(1,051		)	(805)
​	​	​		​	​		​	​
Net cash provided by operating activities from continuing operations	​	12,901		​	12,450		​	6,401
Cash flow from investing activities:	​			​			​
Capital expenditures	​	(3,784		)	(3,831		)	(4,951)
Additions to investments	​	(23		)	(93		)	(239)
Proceeds from disposal of assets and investments	​	1,481		​	922		​	543
Dividends and interest on capital received from associates and joint ventures	​	245		​	227		​	193
Others investments activities, net(1)	​	2,240		​	(583		)	(239)
Proceeds from gold stream transaction	​	–		​	–		​	276
​	​	​		​	​		​	​
Net cash provided by (used in) investing activities from continuing operations	​	159		​	(3,358		)	(4,417)
Cash flow from financing activities:	​			​			​
Loans and borrowings from third-parties (note 21)	​	1,225		​	1,976		​	6,994
Payments of loans and borrowings from third-parties (note 21)	​	(7,841		)	(8,998		)	(7,717)
Dividends and interest on capital paid to stockholders	​	(3,313		)	(1,456		)	(250)
Dividends and interest on capital paid to noncontrolling interest	​	(182		)	(126		)	(291)
Share buyback program (note 30)	​	(1,000		)	–		​	–
Transactions with noncontrolling stockholders	​	(17		)	(98		)	(17)
​	​	​		​	​		​	​
Net cash used in financing activities from continuing operations	​	(11,128		)	(8,702		)	(1,281)
Net cash used in discontinued operations (note 14)	​	(46		)	(252		)	(118)
Increase in cash and cash equivalents	​	1,886		​	138		​	585
Cash and cash equivalents in the beginning of the year	​	4,328		​	4,262		​	3,591
Effect of exchange rate changes on cash and cash equivalents	​	(313		)	(60		)	86
Effects of disposals of subsidiaries and merger, net of cash and cash equivalents	​	(117		)	(12		)	–
​	​	​		​	​		​	​
Cash and cash equivalents at end of the year	​	5,784		​	4,328		​	4,262
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Non-cash transactions:	​			​			​
Additions to property, plant and equipment—capitalized loans and borrowing costs	​	194		​	370		​	653

---

(1)

Includes loans and advances from/to related parties. For the year ended December 31, 2018, includes proceeds received from Nacala project finance (note 31b) in the amount of US$2,572.

   

The accompanying notes are an integral part of these financial statements.

​

​	​	​	​	​
​	​ ​	​ F-9	​ ​	​

​

---

Table of Contents

Consolidated Statement of Cash Flow (Continued)Financial Position
In millions of United States dollars

	​	Year ended December 31
	​	2015		​	2014		​	2013
Cash flow from continuing financing activities:	​			​			​
Loans and borrowings	​			​			​
Additions	​	4,995		​	2,341		​	3,310
Repayments	​	(2,826		)	(1,936		)	(3,347)
Transactions with stockholders:	​			​			​
Dividends and interest on capital paid to Vale's stockholders (note 25(e))	​	(1,500		)	(4,200		)	(4,500)
Dividends and interest on capital paid to noncontrolling interest	​	(15		)	(66		)	(20)
Transactions with noncontrolling stockholders(i)	​	1,049		​	–		​	–
​	​	​		​	​		​	​
Net cash provided (used) by continuing financing activities	​	1,703		​	(3,861		)	(4,557)
Net cash provided by discontinued financing activities	​	–		​	–		​	87
​	​	​		​	​		​	​
Net cash provided (used) in financing activities	​	1,703		​	(3,861		)	(4,470)
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Increase (decrease) in cash and cash equivalents	​	35		​	(1,022		)	(286)
Cash and cash equivalents in the beginning of the year	​	3,974		​	5,321		​	5,832
Effect of exchange rate changes on cash and cash equivalents	​	(418		)	(325		)	(225)
​	​	​		​	​		​	​
Cash and cash equivalents at end of the year	​	3,591		​	3,974		​	5,321
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Cash paid for(ii):	​			​			​
Interest on loans and borrowings	​	(1,462		)	(1,560		)	(1,535)
Derivatives received (paid), net	​	(1,202		)	(179		)	(242)
Income taxes	​	(527		)	(504		)	(2,405)
Income taxes—Settlement program	​	(384		)	(494		)	(2,594)
Non-cash transactions:	​			​			​
Additions to property, plant and equipment—capitalized loans and borrowing costs	​	761		​	588		​	235
Additions to property, plant and equipment—costs of assets retirement obligations	​	219		​	842		​	190

---

(i)

Comprises reduction of participation in MBR (note 6(a)) and other transactions.

(ii)

Amounts paid are classified as cash flows from operating activities.

	​	Notes	​	December 31, 2018	​	December 31, 2017
Assets	​		​		​
Current assets	​		​		​
Cash and cash equivalents	​		​	5,784	​	4,328
Accounts receivable	​	10	​	2,648	​	2,600
Other financial assets	​	13	​	435	​	2,022
Inventories	​	11	​	4,443	​	3,926
Prepaid income taxes	​		​	543	​	781
Recoverable taxes	​	12	​	883	​	1,172
Others	​		​	556	​	538
​	​	​	​	​	​	​
	​		​	15,292	​	15,367
Non-current assets held for sale	​	14	​	–	​	3,587
​	​	​	​	​	​	​
	​		​	15,292	​	18,954
Non-current assets	​		​		​
Judicial deposits	​	28(c)	​	1,716	​	1,986
Other financial assets	​	13	​	3,144	​	3,232
Prepaid income taxes	​		​	544	​	530
Recoverable taxes	​	12	​	751	​	638
Deferred income taxes	​	8(a)	​	6,908	​	6,638
Others	​		​	263	​	267
​	​	​	​	​	​	​
	​		​	13,326	​	13,291
Investments in associates and joint ventures	​	16	​	3,225	​	3,568
Intangibles	​	18	​	7,962	​	8,493
Property, plant and equipment	​	19	​	48,385	​	54,878
​	​	​	​	​	​	​
	​		​	72,898	​	80,230
​	​	​	​	​	​	​
Total assets	​		​	88,190	​	99,184
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​
Liabilities	​		​		​
Current liabilities	​		​		​
Suppliers and contractors	​		​	3,512	​	4,041
Loans and borrowings	​	21	​	1,003	​	1,703
Other financial liabilities	​	13	​	1,604	​	986
Taxes payable	​	8(d)	​	650	​	697
Provision for income taxes	​		​	210	​	355
Liabilities related to associates and joint ventures	​	22	​	289	​	326
Provisions	​	26	​	1,363	​	1,394
Dividends and interest on capital	​	30(d)	​	–	​	1,441
Others	​		​	480	​	992
​	​	​	​	​	​	​
	​		​	9,111	​	11,935
Liabilities associated with non-current assets held for sale	​	14	​	–	​	1,179
​	​	​	​	​	​	​
	​		​	9,111	​	13,114
Non-current liabilities	​		​		​
Loans and borrowings	​	21	​	14,463	​	20,786
Other financial liabilities	​	13	​	2,711	​	2,894
Taxes payable	​	8(d)	​	3,917	​	4,890
Deferred income taxes	​	8(a)	​	1,532	​	1,719
Provisions	​	26	​	7,095	​	7,027
Liabilities related to associates and joint ventures	​	22	​	832	​	670
Deferred revenue—Gold stream	​		​	1,603	​	1,849
Others	​		​	2,094	​	1,463
​	​	​	​	​	​	​
	​		​	34,247	​	41,298
​	​	​	​	​	​	​
Total liabilities	​		​	43,358	​	54,412
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​
Stockholders' equity	​	30	​		​
Equity attributable to Vale's stockholders	​		​	43,985	​	43,458
Equity attributable to noncontrolling interests	​		​	847	​	1,314
​	​	​	​	​	​	​
Total stockholders' equity	​		​	44,832	​	44,772
​	​	​	​	​	​	​
Total liabilities and stockholders' equity	​		​	88,190	​	99,184
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​

   

The accompanying notes are an integral part of these financial statements.

​

​	​	​	​	​
​	​ ​	​ F-10	​ ​	​ Table of Contents

​

---

Consolidated Balance Sheet
In millions of United States dollars

	​	Notes	​	December 31, 2015	​	December 31, 2014
Assets	​		​		​
Current assets	​		​		​
Cash and cash equivalents	​	7	​	3,591	​	3,974
Financial investments	​		​	28	​	148
Derivative financial instruments	​	24	​	121	​	166
Accounts receivable	​	8	​	1,476	​	3,275
Inventories	​	9	​	3,528	​	4,501
Prepaid income taxes	​		​	900	​	1,581
Recoverable taxes	​	10	​	1,404	​	1,700
Related parties	​	30	​	70	​	579
Others	​		​	311	​	670
​	​	​	​	​	​	​
	​		​	11,429	​	16,594
Assets held for sale	​	5	​	4,044	​	3,640
​	​	​	​	​	​	​
	​		​	15,473	​	20,234
​	​	​	​	​	​	​
Non-current assets	​		​		​
Derivative financial instruments	​	24	​	93	​	87
Loans	​		​	188	​	229
Prepaid income taxes	​		​	471	​	478
Recoverable taxes	​	10	​	501	​	401
Deferred income taxes	​	20	​	7,904	​	3,976
Judicial deposits	​	18(c)	​	882	​	1,269
Related parties	​	30	​	1	​	35
Others	​		​	613	​	705
​	​	​	​	​	​	​
	​		​	10,653	​	7,180
Investments in associates and joint ventures	​	11	​	2,940	​	4,133
Intangibles	​	13	​	5,324	​	6,820
Property, plant and equipment	​	14	​	54,102	​	78,122
​	​	​	​	​	​	​
	​		​	73,019	​	96,255
​	​	​	​	​	​	​
Total assets	​		​	88,492	​	116,489
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​

The accompanying notes are an integral part of these financial statements.

Table of Contents

Consolidated Balance Sheet (Continued)
In millions of United States dollars

	​	Notes	​	December 31, 2015	​	December 31, 2014
Liabilities	​		​		​
Current liabilities	​		​		​
Suppliers and contractors	​		​	3,365	​	4,354
Payroll and related charges	​		​	375	​	1,163
Derivative financial instruments	​	24	​	2,076	​	1,416
Loans and borrowings	​	16	​	2,506	​	1,419
Related parties	​	30	​	475	​	306
Income taxes—Settlement program	​	19	​	345	​	457
Taxes payable	​		​	250	​	550
Provision for income taxes	​		​	241	​	353
Employee postretirement obligations	​	21(a)	​	68	​	67
Asset retirement obligations	​	17	​	89	​	136
Others	​		​	648	​	405
​	​	​	​	​	​	​
	​		​	10,438	​	10,626
Liabilities associated with assets held for sale	​	5	​	107	​	111
​	​	​	​	​	​	​
	​		​	10,545	​	10,737
​	​	​	​	​	​	​
Non-current liabilities	​		​		​
Derivative financial instruments	​	24	​	1,429	​	1,610
Loans and borrowings	​	16	​	26,347	​	27,388
Related parties	​	30	​	213	​	109
Employee postretirement obligations	​	21(a)	​	1,750	​	2,236
Provisions for litigation	​	18(a)	​	822	​	1,282
Income taxes—Settlement program	​	19	​	4,085	​	5,863
Deferred income taxes	​	20	​	1,670	​	3,341
Asset retirement obligations	​	17	​	2,385	​	3,233
Participative stockholders' debentures	​	29(b)	​	342	​	1,726
Redeemable noncontrolling interest	​		​	–	​	243
Deferred revenue—Gold stream	​	28	​	1,749	​	1,323
Others	​		​	1,451	​	1,077
​	​	​	​	​	​	​
	​		​	42,243	​	49,431
​	​	​	​	​	​	​
Total liabilities	​		​	52,788	​	60,168
​	​	​	​	​	​	​
Stockholders' equity	​		​		​
Equity attributable to Vale's stockholders	​	25	​	33,589	​	55,122
Equity attributable to noncontrolling interests	​	12	​	2,115	​	1,199
​	​	​	​	​	​	​
Total stockholders' equity	​		​	35,704	​	56,321
​	​	​	​	​	​	​
Total liabilities and stockholders' equity	​		​	88,492	​	116,489
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​

The accompanying notes are an integral part of these financial statements.

Table of Contents

Consolidated Statement of Changes in Equity
In millions of United States dollars

	​	Share capital		​	Results on conversion of shares		​	Results from operation with noncontrolling interest		​	Profit reserves		​	Treasury stocks		​	Unrealized fair value gain (losses)		​	Cumulative translation adjustments		​	Retained earnings		​	Equity attributable to Vale's stockholders		​	Equity attributable to noncontrolling interests		​	Total stockholder's equity	​	Share capital		​	Results on conversion of shares		​	Capital reserve		​	Net ownership changes in subsidiaries		​	Profit reserves		​	Treasury stocks		​	Unrealized fair value gain (losses)		​	Cumulative translation adjustments		​	Retained earnings		​	Equity attributable to Vale's stockholders		​	Equity attributable to noncontrolling interests		​	Total stockholders' equity		​
Balance at December 31, 2012	​	60,578		​	(152		)	(400		)	38,389		​	(4,477		)	(2,044		)	(18,663		)	8		​	73,239		​	1,588		​	74,827
Balance at December 31, 2015																																	​	61,614		​	(152		)	–		​	(702		)	985		​	(1,477		)	(992		)	(25,687		)	–		​	33,589		​	2,115		​	35,704		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Net income (loss)	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	584		​	584		​	(178		)	406	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	3,982		​	3,982		​	(6		)	3,976		​
Other comprehensive income:	​			​			​			​			​			​			​			​			​			​			​		​			​			​			​			​			​			​			​			​			​			​			​			​
Retirement benefit obligations	​	–		​	–		​	–		​	–		​	–		​	630		​	–		​	–		​	630		​	–		​	630	​	–		​	–		​	–		​	–		​	–		​	–		​	(70		)	–		​	–		​	(70		)	–		​	(70		)
Cash flow hedge	​	–		​	–		​	–		​	–		​	–		​	(51		)	–		​	–		​	(51		)	–		​	(51)	​	–		​	–		​	–		​	–		​	–		​	–		​	7		​	–		​	–		​	7		​	–		​	7		​
Available-for-sale financial instruments	​	–		​	–		​	–		​	–		​	–		​	(1		)	–		​	–		​	(1		)	–		​	(1)	​	–		​	–		​	–		​	–		​	–		​	–		​	1		​	–		​	–		​	1		​	–		​	1		​
Translation adjustments	​	–		​	–		​	–		​	(4,901		)	–		​	264		​	(1,925		)	(14		)	(6,576		)	3		​	(6,573)	​	–		​	–		​	–		​	–		​	195		​	–		​	(93		)	2,387		​	102		​	2,591		​	117		​	2,708		​
Transactions with stockholders:	​			​			​			​			​			​			​			​			​			​			​		​			​			​			​			​			​			​			​			​			​			​			​			​
Dividends and interest on capital of Vale's stockholders	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(4,500		)	(4,500		)	–		​	(4,500)	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(1,061		)	(1,061		)	–		​	(1,061		)
Dividends of noncontrolling interest	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(91		)	(91)	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(268		)	(268		)
Redeemable noncontrolling interest	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	211		​	211
Acquisitions and disposal of noncontrolling interest																																	​	–		​	–		​	–		​	3		​	–		​	–		​	–		​	–		​	–		​	3		​	(1		)	2		​
Capitalization of noncontrolling interest advances	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	78		​	78	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	25		​	25		​
Realization of reserves	​	–		​	–		​	–		​	(3,936		)	–		​	–		​	–		​	3,936		​	–		​	–		​	–
Appropriation to undistributed retained earnings	​	–		​	–		​	–		​	14		​	–		​	–		​	–		​	(14		)	–		​	–		​	–	​	–		​	–		​	–		​	–		​	3,023		​	–		​	–		​	–		​	(3,023		)	–		​	–		​	–		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Balance at December 31, 2013	​	60,578		​	(152		)	(400		)	29,566		​	(4,477		)	(1,202		)	(20,588		)	–		​	63,325		​	1,611		​	64,936
Balance at December 31, 2016																																	​	61,614		​	(152		)	–		​	(699		)	4,203		​	(1,477		)	(1,147		)	(23,300		)	–		​	39,042		​	1,982		​	41,024		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Net income (loss)	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	657		​	657		​	(304		)	353
​																																	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​																																	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Net income																																	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	5,507		​	5,507		​	14		​	5,521		​
Other comprehensive income:	​			​			​			​			​			​			​			​			​			​			��		​			​			​			​			​			​			​			​			​			​			​			​			​
Retirement benefit obligations	​	–		​	–		​	–		​	–		​	–		​	(192		)	–		​	–		​	(192		)	–		​	(192)	​	–		​	–		​	–		​	–		​	–		​	–		​	(46		)	–		​	–		​	(46		)	–		​	(46		)
Cash flow hedge	​	–		​	–		​	–		​	–		​	–		​	(416		)	–		​	–		​	(416		)	–		​	(416)
Net investments hedge																																	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(95		)	–		​	(95		)	–		​	(95		)
Translation adjustments	​	–		​	–		​	–		​	(2,237		)	–		​	97		​	(2,098		)	235		​	(4,003		)	(26		)	(4,029)	​	–		​	–		​	–		​	–		​	(158		)	–		​	10		​	447		​	–		​	299		​	(1		)	298		​

The accompanying notes are an integral part of these financial statements.

​

​	​	​	​	​
​	​ ​	​ F-11	​ ​	​

​

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Table of Contents

Consolidated Statement of Changes in Equity (Continued)
In millions of United States dollars

	​	Share capital		​	Results on conversion of shares		​	Results from operation with noncontrolling interest		​	Profit reserves		​	Treasury stocks		​	Unrealized fair value gain (losses)		​	Cumulative translation adjustments		​	Retained earnings		​	Equity attributable to Vale's stockholders		​	Equity attributable to noncontrolling interests		​	Total stockholder's equity	​	Share capital		​	Results on conversion of shares		​	Capital reserve		​	Net ownership changes in subsidiaries		​	Profit reserves		​	Treasury stocks		​	Unrealized fair value gain (losses)		​	Cumulative translation adjustments		​	Retained earnings		​	Equity attributable to Vale's stockholders		​	Equity attributable to noncontrolling interests		​	Total stockholders' equity		​
Transactions with stockholders:	​			​			​			​			​			​			​			​			​			​			​		​			​			​			​			​			​			​			​			​			​			​			​			​
Dividends and interest on capital of Vale's stockholders	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(4,200		)	(4,200		)	–		​	(4,200)	​	–		​	–		​	–		​	–		​	(658		)	–		​	–		​	–		​	(1,475		)	(2,133		)	–		​	(2,133		)
Dividends of noncontrolling interest	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(8		)	(8)	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(202		)	(202		)
Acquisitions and disposal of participation of noncontrolling interest	​	–		​	–		​	(49		)	–		​	–		​	–		​	–		​	–		​	(49		)	(201		)	(250)
Acquisitions and disposal of noncontrolling interest																																	​	–		​	–		​	–		​	(255		)	–		​	–		​	–		​	–		​	–		​	(255		)	(512		)	(767		)
Capitalization of noncontrolling interest advances	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	127		​	127	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	33		​	33		​
Capitalization of reserves	​	1,036		​	–		​	–		​	(1,036		)	–		​	–		​	–		​	–		​	–		​	–		​	–
Cancellation of treasury stock	​	–		​	–		​	–		​	(3,000		)	3,000		​	–		​	–		​	–		​	–		​	–		​	–
Realization of reserves	​	–		​	–		​	–		​	(3,387		)	–		​	–		​	–		​	3,387		​	–		​	–		​	–
Appropriation to undistributed retained earnings	​	–		​	–		​	–		​	79		​	–		​	–		​	–		​	(79		)	–		​	–		​	–	​	–		​	–		​	–		​	–		​	4,032		​	–		​	–		​	–		​	(4,032		)	–		​	–		​	–		​
Merger of Valepar (note 30)																																	​	–		​	–		​	1,139		​	–		​	–		​	–		​	–		​	–		​	–		​	1,139		​	–		​	1,139		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Balance at December 31, 2014	​	61,614		​	(152		)	(449		)	19,985		​	(1,477		)	(1,713		)	(22,686		)	–		​	55,122		​	1,199		​	56,321
��	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Loss	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(12,129		)	(12,129		)	(491		)	(12,620)
Balance at December 31, 2017																																	​	61,614		​	(152		)	1,139		​	(954		)	7,419		​	(1,477		)	(1,183		)	(22,948		)	–		​	43,458		​	1,314		​	44,772		​
​																																	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​																																	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​																																	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Net income																																	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	6,860		​	6,860		​	36		​	6,896		​
Other comprehensive income:	​			​			​			​			​			​			​			​			​			​			​		​			​			​			​			​			​			​			​			​			​			​			​			​
Retirement benefit obligations	​	–		​	–		​	–		​	–		​	–		​	70		​	–		​	–		​	70		​	(1		)	69	​	–		​	–		​	–		​	(16		)	–		​	–		​	41		​	–		​	–		​	25		​	–		​	25		​
Cash flow hedge	​	–		​	–		​	–		​	–		​	–		​	447		​	–		​	–		​	447		​	–		​	447
Available-for-sale financial instruments	​	–		​	–		​	–		​	–		​	–		​	1		​	–		​	–		​	1		​	–		​	1
Fair value adjustment to investment in equity securities																																	​	–		​	–		​	–		​	–		​	–		​	–		​	60		​	–		​	–		​	60		​	–		​	60		​
Net investments hedge																																	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(543		)	–		​	(543		)	–		​	(543		)
Translation adjustments	​	–		​	–		​	–		​	(5,371		)	–		​	203		​	(2,665		)	–		​	(7,833		)	(51		)	(7,884)	​	–		​	–		​	–		​	–		​	(1,257		)	–		​	49		​	(1,613		)	–		​	(2,821		)	(120		)	(2,941		)
Transactions with stockholders:	​			​			​			​			​			​			​			​			​			​			​		​			​			​			​			​			​			​			​			​			​			​			​			​
Dividends and interest on capital of Vale's stockholders	​	–		​	–		​	–		​	(1,500		)	–		​	–		​	–		​	–		​	(1,500		)	–		​	(1,500)	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(2,054		)	(2,054		)	–		​	(2,054		)
Dividends of noncontrolling interest	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(32		)	(32)	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(166		)	(166		)
Acquisitions and disposal of participation of noncontrolling interest	​	–		​	–		​	(253		)	–		​	–		​	–		​	(336		)	–		​	(589		)	1,455		​	866
Acquisitions and disposal of noncontrolling interest																																	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	(229		)	(229		)
Capitalization of noncontrolling interest advances	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	36		​	36	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	12		​	12		​
Appropriation to undistributed retained earnings	​	–		​	–		​	–		​	(12,129		)	–		​	–		​	–		​	12,129		​	–		​	–		​	–	​	–		​	–		​	–		​	–		​	4,806		​	–		​			​			​	(4,806		)	–		​			​	–		​
Share buyback program																																	​	–		​	–		​	–		​	–		​	–		​	(1,000		)	–		​	–		​	–		​	(1,000		)	–		​	(1,000		)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Balance at December 31, 2015	​	61,614		​	(152		)	(702		)	985		​	(1,477		)	(992		)	(25,687		)	–		​	33,589		​	2,115		​	35,704
Balance at December 31, 2018																																	​	61,614		​	(152		)	1,139		​	(970		)	10,968		​	(2,477		)	(1,033		)	(25,104		)	–		​	43,985		​	847		​	44,832		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​

The accompanying notes are an integral part of these financial statements.

​

​	​	​	​	​
​	​ ​	​ F-12	​ ​	​

​

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Table of Contents

Notes to the Financial Statements

Expressed in millions of United States dollar, unless otherwise stated

1. Corporate information

Vale S.A. (the "Parent Company") is a public company headquartered at 700, Avenida das Américas, Rio de Janeiro, Brazil with securities traded on the stock exchanges of São Paulo—BM&F BOVESPA (Vale3 and Vale5), New York—NYSE (VALE and VALE.P), Paris—NYSE Euronext (Vale3 and Vale5) and Hong Kong—HKEx (codes 6210 and 6230).

          Vale and its direct and indirect subsidiaries ("Vale", "Group" or "Company") are global producers of iron ore and iron ore pellets, key raw materials for steelmaking, and producers of nickel, which is used to produce stainless steel and metal alloys employed in the production of several products. The GroupCompany also produces copper, metallurgical and thermal coal, potash, phosphates and other fertilizer nutrients, manganese ore, ferroalloys, platinum group metals, gold, silver and cobalt. The information by segment is presented in notes 3note 4.

Vale S.A. (the "Parent Company") is a public company headquartered in the city of Rio de Janeiro, Brazil with securities traded on the stock exchanges of São Paulo—B3 S.A. (VALE3), New York—NYSE (VALE), Paris—NYSE Euronext (VALE3) and 31(d)Madrid—LATIBEX (XVALO).

On December 22, 2017 after the conversion of the class "A" preferred shares into common shares, the Company migrated to the special listing segment of B3 S.A. ("Novo Mercado") (further details in note 30).

2. Basis for preparation of the financial statements

a)

Statement of compliance

The consolidated financial statements of the Company ("financial statements") present the accounts of the Group as described in note 31(b), and have been prepared and are being presented in accordance with the International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB").

b)

Basis of presentation

The financial statements have been prepared under the historical cost convention as adjusted to reflect: (i) the fair value of financial instruments measured at fair value through income statement or available-for-sale financial instruments measured at fair value through the statement of comprehensive income; and (ii) impairment of assets.

          Subsequent events were evaluated through February 24, 2016, which is the date theThe issue of these financial statements were approved by the Boardwas authorized on April 18, 2019.

c)

Functional currency and presentation currency

The financial statements of Directors.

c) Accounting standards issued but not yet effective

          IFRS 9 Financial instruments—In July 2014 the IASB issued IFRS 9, which sets out the requirements for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This Standard replaces IAS 39 Financial Instruments: Recognition and Measurement. The adoption will be required from January 1, 2018 and the Company does not expect significant impact from the adoption of this standard.

          IFRS 15 Revenue from contracts with customers—In May 2014 the IASB issued IFRS 15, which sets out the requirements for revenue recognition that apply to all contracts with customer to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services, and replaces IAS 18—revenue, IAS 11—Construction contracts and the related interpretations. The adoption will be required from January 1, 2018 and the Company is currently analyzing the potential impact regarding this pronouncement on the financial statements.

          IFRS 16 Leases—In January 2016 the IASB issued IFRS 16, which sets out the principles for the recognition, measurement, presentation and disclosure of leases. IFRS 16 replaces IAS 17—Leases and the related interpretation. The adoption will be required from January 1, 2019 and the Company is currently analyzing the potential impact regarding this pronouncement on the financial statements.

d) Summary of main accounting practices and critical accounting estimates and judgments

          The summary of main accounting practices and the critical accounting estimates and judgments are disclosed in note 31 and 32, respectively.

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

3.    Information by business segment and by geographic area

          The information presented to the Executive Board on the performance of each segment is derived from the accounting records, adjusted for reallocations between segments.

a) Operating income (loss) and adjusted EBITDA

          Adjusted EBITDA is used by management to support the decision making process for segments. The definition of adjusted EBITDA for the Company is the operating income or loss adding dividends received fromits associates and joint ventures and excludingare measured using the depreciation, depletion and amortization, impairment, onerous contracts and results on measurement or salescurrency of non-current assets.

	​	Year ended December 31, 2015
	​	Income statement																						​	Adjusted by											​
	​	Net operating revenue				​	Costs		​	Expenses, net		​	Research and evaluation expenses		​	Pre operating and operational stoppage		​	Depreciation and other results		​	Operating income (loss)		​	Impairment of non-current assets and onerous contracts		​	Results on measurement or sale of non-current assets		​	Dividends received from associates and joint ventures		​	Depreciation, depletion and amortization		​	Adjusted EBITDA
Ferrous minerals	​	​			​	​			​			​			​			​			​			​			​			​			​			​
Iron ore	​	​	12,330		​	​	(7,604		)	(398		)	(121		)	(124		)	(2,289		)	1,794		​	914		​	132		​	22		​	1,243		​	4,105
Pellets	​	​	3,600		​	​	(2,121		)	9		​	(4		)	(24		)	(385		)	1,075		​	58		​	–		​	225		​	327		​	1,685
Ferroalloys and manganese	​	​	162		​	​	(175		)	1		​	–		​	(19		)	(23		)	(54		)	–		​	–		​	–		​	23		​	(31)
Other ferrous products and services	​	​	470		​	​	(341		)	8		​	(3		)	(2		)	(97		)	35		​	21		​	–		​	8		​	76		​	140
​	​	​				​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	​	16,562		​	​	(10,241		)	(380		)	(128		)	(169		)	(2,794		)	2,850		​	993		​	132		​	255		​	1,669		​	5,899
Coal	​	​	526		​	​	(839		)	(140		)	(22		)	(61		)	(3,230		)	(3,766		)	3,038		​	–		​	28		​	192		​	(508)
Base metals	​	​			​	​			​			​			​			​			​			​			​			​			​			​
Nickel and other products	​	​	4,693		​	​	(3,393		)	(154		)	(103		)	(411		)	(6,344		)	(5,712		)	4,696		​	–		​	–		​	1,648		​	632
Copper	​	​	1,470		​	​	(903		)	(32		)	(8		)	(1		)	(229		)	297		​	36		​	–		​	–		​	193		​	526
Other base metals products	​	​	–		​	​	–		​	230		​	–		​	–		​	–		​	230		​	–		​	–		​	–		​	–		​	230
​	​	​				​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	​	6,163		​	​	(4,296		)	44		​	(111		)	(412		)	(6,573		)	(5,185		)	4,732		​	–		​	–		​	1,841		​	1,388
Fertilizers	​	​			​	​			​			​			​			​			​			​			​			​			​			​
Potash	​	​	132		​	​	(89		)	3		​	(50		)	(24		)	(579		)	(607		)	548		​	–		​	–		​	31		​	(28)
Phosphates	​	​	1,733		​	​	(1,173		)	(34		)	(29		)	(43		)	133		​	587		​	(391		)	–		​	–		​	258		​	454
Nitrogen	​	​	303		​	​	(207		)	(6		)	(3		)	(3		)	(21		)	63		​	–		​	–		​	–		​	21		​	84
Other fertilizers products	​	​	57		​	​	–		​	–		​	–		​	–		​	–		​	57		​	–		​	–		​	–		​	–		​	57
​	​	​				​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	​	2,225		​	​	(1,469		)	(37		)	(82		)	(70		)	(467		)	100		​	157		​	–		​	–		​	310		​	567
Others	​	​	133		​	​	(139		)	(160		)	(134		)	–		​	170		​	(130		)	6		​	(193		)	35		​	17		​	(265)
​	​	​				​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	​	25,609		​	​	(16,984		)	(673		)	(477		)	(712		)	(12,894		)	(6,131		)	8,926		​	(61		)	318		​	4,029		​	7,081
​	​	​				​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​	​		​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​				​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

Notes to the Financial Statements (Continued)

Expressedprimary economic environment in millionswhich the entity operates ("functional currency"), which in the case of the Parent Company is the Brazilian real ("R$"). For presentation purposes, these financial statements are presented in United States dollar unless otherwise stated("US$") as the Company believes that this is how international investors analyze the financial statements.

​

3.    Information by business segment and by geographic area (Continued)

​	​	​	​	​
​	​ ​	​ F-13	​ ​	​

	​	Year ended December 31, 2014
	​	Statement of income																				​	Adjusted by											​
	​	Net operating revenue		​	Costs		​	Expenses, net		​	Research and evaluation expenses		​	Pre operating and operational stoppage		​	Depreciation and other results		​	Operating income (loss)		​	Impairment of non-current assets and onerous contracts		​	Results on measurement or sale of non-current assets		​	Dividends received from associates and joint ventures		​	Depreciation, depletion and amortization		​	Adjusted EBITDA
Ferrous minerals	​			​			​			​			​			​			​			​			​			​			​			​
Iron ore	​	19,301		​	(9,532		)	(1,258		)	(319		)	(160		)	(2,649		)	5,383		​	1,135		​	–		​	44		​	1,514		​	8,076
Pellets	​	5,263		​	(2,705		)	(21		)	–		​	(38		)	(274		)	2,225		​	–		​	–		​	482		​	274		​	2,981
Ferroalloys and manganese	​	392		​	(261		)	(13		)	–		​	(23		)	(32		)	63		​	–		​	–		​	–		​	32		​	95
Other ferrous products and services	​	741		​	(565		)	3		​	(10		)	–		​	(110		)	59		​	–		​	–		​	–		​	110		​	169
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	25,697		​	(13,063		)	(1,289		)	(329		)	(221		)	(3,065		)	7,730		​	1,135		​	–		​	526		​	1,930		​	11,321
Coal	​	739		​	(1,071		)	(309		)	(18		)	(38		)	(463		)	(1,160		)	343		​	–		​	28		​	120		​	(669)
Base metals	​			​			​			​			​			​			​			​			​			​			​			​
Nickel and other products	​	6,241		​	(3,710		)	101		​	(138		)	(514		)	(405		)	1,575		​	(1,379		)	167		​	–		​	1,617		​	1,980
Copper	​	1,451		​	(877		)	(12		)	(5		)	(16		)	(174		)	367		​	–		​	–		​	–		​	174		​	541
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	7,692		​	(4,587		)	89		​	(143		)	(530		)	(579		)	1,942		​	(1,379		)	167		​	–		​	1,791		​	2,521
Fertilizers	​			​			​			​			​			​			​			​			​			​			​			​
Potash	​	154		​	(133		)	(15		)	(19		)	(22		)	(26		)	(61		)	–		​	–		​	–		​	26		​	(35)
Phosphates	​	1,820		​	(1,514		)	(70		)	(46		)	(56		)	(1,398		)	(1,264		)	1,053		​	–		​	–		​	345		​	134
Nitrogen	​	349		​	(238		)	(10		)	(7		)	(7		)	(48		)	39		​	–		​	–		​	–		​	48		​	87
Other fertilizers products	​	92		​	–		​	–		​	–		​	–		​	–		​	92		​	–		​	–		​	–		​	–		​	92
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	2,415		​	(1,885		)	(95		)	(72		)	(85		)	(1,472		)	(1,194		)	1,053		​	–		​	–		​	419		​	278
Others	​	996		​	(601		)	(329		)	(172		)	(6		)	(28		)	(140		)	–		​	–		​	14		​	28		​	(98)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	37,539		​	(21,207		)	(1,933		)	(734		)	(880		)	(5,607		)	7,178		​	1,152		​	167		​	568		​	4,288		​	13,353
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

​

---

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

3.    Information by business segment and by geographic area (Continued)

	​	Year ended December 31, 2013
	​	Statement of income																				​	Adjusted by											​
	​	Net operating revenue		​	Costs		​	Expenses, net		​	Research and evaluation expenses		​	Pre operating and operational stoppage		​	Depreciation and other results		​	Operating income (loss)		​	Impairment of non-current assets and onerous contracts		​	Results on measurement or sale of non-current assets		​	Dividends received from associates and joint ventures		​	Depreciation, depletion and amortization		​	Adjusted EBITDA
Ferrous minerals	​			​			​			​			​			​			​			​			​			​			​			​
Iron ore	​	27,844		​	(9,067		)	(1,261		)	(314		)	(244		)	(1,393		)	15,565		​	–		​	–		​	63		​	1,393		​	17,021
Pellets	​	6,000		​	(2,299		)	(110		)	(12		)	(130		)	(366		)	3,083		​	182		​			​	652		​	184		​	4,101
Ferroalloys and manganese	​	523		​	(317		)	(34		)	–		​	(13		)	(29		)	130		​	–		​	–		​	–		​	29		​	159
Other ferrous products and services	​	425		​	(166		)	3		​	–		​	–		​	(140		)	122		​	–		​	–		​	–		​	140		​	262
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	34,792		​	(11,849		)	(1,402		)	(326		)	(387		)	(1,928		)	18,900		​	182		​	–		​	715		​	1,746		​	21,543
Coal	​	1,010		​	(1,147		)	(262		)	(49		)	(47		)	(173		)	(668		)	–		​	–		​	40		​	173		​	(455)
Base metals	​			​			​			​			​			​			​			​			​			​			​			​
Nickel and other products	​	5,839		​	(3,657		)	(123		)	(173		)	(753		)	(1,592		)	(459		)	–		​	–		​	–		​	1,592		​	1,133
Copper	​	1,447		​	(1,008		)	(122		)	(45		)	(10		)	(389		)	(127		)	–		​	215		​	–		​	174		​	262
Other base metals products	​	–		​	–		​	244		​	–		​	–		​	–		​	244		​	–		​	–		​	–		​	–		​	244
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	7,286		​	(4,665		)	(1		)	(218		)	(763		)	(1,981		)	(342		)	–		​	215		​	–		​	1,766		​	1,639
Fertilizers	​			​			​			​			​			​			​			​			​			​			​			​
Potash	​	201		​	(127		)	(29		)	(16		)	(394		)	(2,160		)	(2,525		)	2,116		​			​	–		​	44		​	(365)
Phosphates	​	2,065		​	(1,681		)	(146		)	(30		)	(29		)	(312		)	(133		)	–		​	–		​	–		​	312		​	179
Nitrogen	​	469		​	(382		)	(22		)	(5		)	(5		)	(75		)	(20		)	–		​	–		​	–		​	75		​	55
Other fertilizers products	​	79		​	–		​	–		​	(2		)	–		​	–		​	77		​	–		​	–		​	–		​	–		​	77
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	2,814		​	(2,190		)	(197		)	(53		)	(428		)	(2,547		)	(2,601		)	2,116		​	–		​	–		​	431		​	(54)
Others	​	865		​	(669		)	(233		)	(155		)	–		​	(34		)	(226		)	–		​			​	79		​	34		​	(113)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of continued operations	​	46,767		​	(20,520		)	(2,095		)	(801		)	(1,625		)	(6,663		)	15,063		​	2,298		​	215		​	834		​	4,150		​	22,560
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Discontinued operations	​	1,283		​	(1,078		)	(72		)	(14		)	–		​	(367		)	(248		)	–		​	209		​	–		​	158		​	119
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	48,050		​	(21,598		)	(2,167		)	(815		)	(1,625		)	(7,030		)	14,815		​	2,298		​	424		​	834		​	4,308		​	22,679
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

3.    Information2. Basis for preparation of the financial statements (Continued)

The exchange rates used by the Company to translate its foreign operations are as follows:

	​	Closing rate								​	Average rate for the year ended
	​	2018		​	2017		​	2016		​	2018		​	2017		​	2016
US Dollar ("US$")	​	3.8748		​	3.3080		​	3.2591		​	3.6558		​	3.1925		​	3.4833
Canadian dollar ("CAD")	​	2.8451		​	2.6344		​	2.4258		​	2.8190		​	2.4618		​	2.6280
Euro ("EUR" or "€")	​	4.4390		​	3.9693		​	3.4384		​	4.3094		​	3.6088		​	3.8543

d)

Significant accounting policies

Significant and relevant accounting policies for the understanding of the recognition and measurement basis used in the preparation of these financial statements were included in the respective notes. The accounting polices applied in the preparations of these financial statements are consistent with those adopted and disclosed in the financial statements of prior years, except for new accounting policies related to the application of IFRS 9—Financial Instruments and IFRS 15—Revenue from Contracts with Customers, which were adopted by the Company from January 1, 2018.

The nature and effect of the changes as a result of adoption of these new accounting standards are described below:

IFRS 9 Financial Instrument—This standard addresses the classification and measurement of financial assets and liabilities, new impairment model and new rules for hedge accounting. The Company applied IFRS 9 prospectively, with an initial application date of January 1, 2018. The Company has not restated the comparative information, which continues to be reported under IAS 39—Financial Instruments. The main changes are described below:

Classification and measurement—Under IFRS 9, debt instruments are subsequently measured at fair value through profit or loss ("FVTPL"), through amortized cost, or fair value through other comprehensive income ("FVOCI"). The classification is based on the Company's business segmentmodel for managing the assets and whether the instruments' contractual cash flows represent 'solely payments of principal and interest' ("SPPI") on the principal amount outstanding.

On the date of initial application of IFRS 9, the Company has assessed which business models apply to the financial assets held by the Company and has classified its financial instruments into the appropriate

​

​	​	​	​	​
​	​ ​	​ F-14	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

2. Basis for preparation of the financial statements (Continued)

IFRS 9 categories. The reclassification of the financial instruments of the Company on January 1, 2018 were as follows:

	​	Measurement category			​	Carrying amount
	​	IAS 39	​	IFRS 9	​	IAS 39	​	IFRS 9	​	Difference
Financial assets	​		​		​		​		​
Current	​		​		​		​		​
Financial investments	​	Loans and receivables	​	FVTPL	​	18	​	18	​	–
Derivative financial instruments	​	FVTPL	​	FVTPL	​	106	​	106	​	–
Accounts receivable	​	Loans and receivables	​	Amortized cost	​	2,600	​	2,600	​	–
Related parties	​	Loans and receivables	​	Amortized cost	​	1,898	​	1,898	​	–
Non-current	​		​		​		​		​
Derivative financial instruments	​	FVTPL	​	FVTPL	​	453	​	453	​	–
Loans	​	Loans and receivables	​	Amortized cost	​	151	​	151	​	–
Related parties	​	Loans and receivables	​	Amortized cost	​	2,628	​	2,628	​	–
Financial liabilities	​		​		​		​		​
Current	​		​		​		​		​
Suppliers and contractors	​	Loans and receivables	​	Amortized cost	​	4,041	​	4,041	​	–
Derivative financial instruments	​	FVTPL	​	FVTPL	​	104	​	104	​	–
Loans and borrowings	​	Loans and receivables	​	Amortized cost	​	1,703	​	1,703	​	–
Related parties	​	Loans and receivables	​	Amortized cost	​	882	​	882	​	–
Non-current	​		​		​		​		​
Derivative financial instruments	​	FVTPL	​	FVTPL	​	686	​	686	​	–
Loans and borrowings	​	Loans and receivables	​	Amortized cost	​	20,786	​	20,786	​	–
Related parties	​	Loans and receivables	​	Amortized cost	​	975	​	975	​	–
Participative stockholders' debentures	​	Loans and receivables	​	Amortized cost	​	1,233	​	1,233	​	–

These reclassifications have no impact on the measurement categories. The financial instruments that were classified as "Loans and receivables" under IAS 39 did meet the IFRS 9 criteria for classification at amortized cost, because these financial instruments are held within a business model whose objective is to hold to collect the cash flows, which represent solely payments of principal and interest. The derivatives held for trading are required to be held as FVTPL under IFRS 9, therefore there were no changes in relation to these instruments from the adoption of IFRS 9.

Impairment—IFRS 9 has replaced the IAS 39's incurred loss approach with a forward-looking expected credit loss ("ECL") approach.

For accounts receivables, the Company has applied the standard's simplified approach and has calculated ECLs based on lifetime expected credit losses and the identified loss is deemed not significant. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the economic environment and by geographic areaany financial guarantees related to these accounts receivables.

At each reporting date, the Company assesses whether financial assets carried at amortized cost are credit-impaired. Information about the Company's exposure to credit risk is set out in note 33.

​

​	​	​	​	​
​	​ ​	​ F-15	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

b) AssetsExpressed in millions of United States dollar, unless otherwise stated

2. Basis for preparation of the financial statements (Continued)

The new impairment approach of IFRS 9 did not have a significant impact to the Company for the year ended December 31, 2018.

Hedge accounting—The Company has elected to adopt the new general hedge accounting model in IFRS 9. The changes introduced by segmentIFRS 9 relating to hedge accounting currently have no impact, as the Company does not currently apply cash flow or fair value hedge accounting. The Company currently applies the net investment hedge for which there are no changes introduced by this new standard (note 25).

IFRS 15 Revenue from Contracts with Customers—This standard establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. The Company has adopted the new standard using the modified retrospective method. Accordingly, the comparative information presented has not been restated.

The Company has assessed its revenue streams and the nature and effect of the changes as a result of adoption of IFRS 15 is described below:

•

Sales of products—Under IFRS 15, there is no significant impact on the timing of products revenue recognition since usually the transfer of risks and rewards and the transfer of control under the sales contracts are at the same point in time.



•

Shipping services—A proportion of Vale's sales are under Cost and Freight ("CFR") and Cost, Insurance and Freight ("CIF") Incoterms, in which the Company is responsible for providing shipping services after the date that Vale transfers control of the goods to the customers. According to the previous standard (IAS 18), the revenue from shipping services was recognized upon loading, as well as the related costs, and was not considered a separate service.

Under IFRS 15, the provision of shipping services for CFR and CIF contracts should be considered as a separate performance obligation in which a proportion of the transaction price would be allocated and recognized over time as the shipping services are provided. The impact on the timing of revenue recognition of the proportion that would have been allocated to the shipping service to the Company's income statement for the year ended December 31, 2018 is deemed not significant. Therefore, such revenue has not been presented separately in these financial statements.

•

Provisionally priced commodities sales—Under IFRS 9 and 15, the treatment of the provisional pricing mechanisms embedded within the provisionally priced commodities sales remains unmodified. Therefore, these revenues are recognized based on the estimated fair value of the total consideration receivable, and the provisionally priced sales mechanism embedded within these sale arrangements has the character of a derivative. The fair value of the sales price adjustment is recognized as operational revenue in the income statement.

​

​	​	​	​	​
​	​ ​	​ F-16	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

2. Basis for preparation of the financial statements (Continued)

Overall, there was no material impact on the Company's financial statement from the IFRS 15 adoption for the year ended December 31, 2018.

e)

Accounting standards issued but not yet effective

•

IFRS 16 Lease—IFRS 16 was issued in January 2016. It will result in vast majority of leases being recognized in the balance sheet by lessees, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. There are recognition exemptions for short-term leases and leases of low-value items.

The Company will apply the standard from its mandatory adoption date of January 1, 2019. Vale will apply the simplified transition approach and will not restate comparative amounts for the year prior to first adoption. Right-of-use assets will be measured at the amount of the lease liability on adoption.

As at December 31, 2018, the Company has non-cancellable operating lease commitments in the nominal amount of US$2,498 (note 32). The Company has set up a project team which has reviewed these leasing commitments over the last year in light of the new lease accounting rules in IFRS 16. Of these commitments, the Company expects to recognize right-of-use assets and lease liabilities an amount ranging from US$1.8 billion to US$2 billion at present value on January 1, 2019, an amount ranging from US$240 to US$260 on current liabilities and US$1,560 to US$1,740 on non-current liabilities.

The actual impacts of adopting the standard may be subject to further changes because the Company has not finalized the testing, assessment of controls over its new IT systems and the new accounting policies are subject to change until the Company presents its first financial statements from the date of initial application.

The Company has not early adopted any standards and interpretations that have been issued or amended but are not yet effective for the year ended December 31, 2018. Therefore, there are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods.

f)

Critical accounting estimates and judgments

The preparation of financial statements requires the use of critical accounting estimates and the application of judgment by management in applying the Company's accounting policies. These estimates are based on the experience, best knowledge, information available at the statement of financial position date and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Changes in facts and circumstances may lead to the revision of these estimates. Actual future results may differ from the estimates.

​

​	​	​	​	​
​	​ ​	​ F-17	​ ​	​

​

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Table of Contents

Notes to the Financial Statements

Expressed in millions of United States dollar, unless otherwise stated

2. Basis for preparation of the financial statements (Continued)

The significant estimates and judgments applied by Company in the preparation of these financial statements are as follows:

	​	Year ended December 31, 2015
	​	Trade receivables		​	Product inventory		​	Investments in associates and joint ventures		​	Property, plant and equipment and intangible assets		​	Additions to property, plant and equipment and intangible
Ferrous minerals	​			​			​			​			​
Iron ore	​	76		​	812		​	405		​	26,772		​	4,874
Pellets	​	715		​	159		​	296		​	1,079		​	39
Ferroalloys and manganese	​	52		​	63		​	–		​	140		​	13
Other ferrous products and services	​	77		​	2		​	778		​	211		​	15
​	​	​		​	​		​	​		​	​		​	​
	​	920		​	1,036		​	1,479		​	28,202		​	4,941
Coal	​	44		​	53		​	306		​	1,812		​	1,539
Base metals	​			​			​			​			​
Nickel and other products	​	411		​	1,142		​	17		​	21,286		​	1,315
Copper	​	17		​	24		​	–		​	2,236		​	240
​	​	​		​	​		​	​		​	​		​	​
	​	428		​	1,166		​	17		​	23,522		​	1,555
Fertilizers	​			​			​			​			​
Potash	​	–		​	13		​	–		​	146		​	��
Phosphates	​	101		​	272		​	–		​	3,720		​	257
Nitrogen	​	–		​	10		​	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​
	​	101		​	295		​	–		​	3,866		​	257
Others	​	41		​	3		​	1,138		​	2,024		​	79
​	​	​		​	​		​	​		​	​		​	​
Total	​	1,534		​	2,553		​	2,940		​	59,426		​	8,371
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

Note	​	Significant estimates and judgments
7	​	Deferred revenue
8	​	Deferred income taxes
16	​	Consolidation
19	​	Mineral reserves and mines useful life
20	​	Impairment of non-current assets
22	​	Liabilities related to associates and joint ventures
24	​	Fair values estimate
27	​	Asset retirement obligations
28	​	Litigation
29	​	Employee post-retirement obligations

3. Brumadinho's dam failure

On January 25, 2019 (subsequent event), a breach has been experienced in the Dam I of the Córrego do Feijão mine, which belongs to the Paraopebas Complex in the Southern System, located in Brumadinho, Minas Gerais, Brasil ("Brumadinho dam"). This dam was inactive since 2016 (without additional tailings disposal) and there was no other operational activity in this structure.

Due to the dam failure, 306 people lost their lives or are missing and ecosystems were affected. Around 11.7 million metric tons of iron ore waste were contained in the Brumadinho dam. It is not yet known the exact volume of iron ore waste that was released due to the dam failure. The tailings contained in the Dam I have caused an impact of around 270 km in extension, destroying some of Vale's facilities, affecting local communities and disturbing the environment. The Paraopeba river and its ecosystems have also been impacted by the event.

The Company has not been sparing efforts to support the victims and to mitigate and recover the social and environmental damages resulting from the breach of the dam. Vale has provided support in multiple ways, aiming to ensure the humanitarian assistance to those affected by the dam breach.

To determine the causes for the event, Vale has engaged a panel of independent experts. Furthermore, the Company established three Extraordinary Independent Consulting Committees to support the Board of Directors, which are composed by independent members that are unrelated to the management or to the Company's operations to ensure that the initiatives by the committees be unbiased. Following are the committees:

(i)

The Extraordinary Independent Consulting Committee for Investigation ("CIAEA"), dedicated to investigating the causes and responsibilities for the Brumadinho dam breach;

​

​	​	​	​	​
​	​ ​	​ F-18	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

3. InformationBrumadinho's dam failure (Continued)

(ii)

The Extraordinary Independent Consulting Committee for Support and Recovery ("CIAEAR"), dedicated to follow-up on the measures taken to support the victims and the recovery of the areas affected by business segmentthe breach of the Brumadinho dam, assuring that all necessary resources will be applied; and



(iii)

The Extraordinary Independent Consulting Committee for Dam Safety ("CIAESB"), which will provide support to the Board of Directors in questions related to the diagnosis of safety conditions, management and risk mitigation related to Vale's tailings dams, also providing recommendations of actions to strengthen safety conditions of those dams.

In addition, Vale has determined the suspension (i) of the variable remuneration of its executives; (ii) the Shareholder's Remuneration Policy and (iii) any other resolution related to shares buyback. The Company paid the shareholders in anticipation of the remuneration for the year, the amount of US$1,876 in September 2018, approved by geographic area (Continued)the Board of Directors on July 25, 2018. This payment was higher than the minimum mandatory remuneration for the year ended December 31, 2018 and consequently no additional dividends to shareholders is required (note 30).

a)

Financial impacts arising from the dam failure

The Company has concluded for the purpose of these financial statements that the dam breach and the following events are not a condition that existed at the end of the reporting period, and therefore does not require adjustments in the book values recognized in the financial statements prepared for the year ended December 31, 2018. Therefore, all accounting impacts will be recorded in 2019.

At the current stage of the investigations, assessments of the causes and possible third parties lawsuits, it is not possible to have a reliable measure of all cost that the Company may incur for the purpose of disclosure in the financial statements. The amounts that are being disclosed took into consideration the best estimates by the Company´s management.

i)

Operation stoppages and de-characterization of the upstream dams

On January 29, 2019 the Company has informed the market and Brazilian authorities its decision to speed up the plan to "de-characterize" all of its tailings dams built by the upstream method (same method as Brumadinho dam), located in Brazil. The "de-characterizing" means that the structure will be dismantled and will no longer have its original operational characteristics.

The Company is developing specific studies for the de-characterization of these dams which will be submitted for approval by the relevant authorities when concluded, in accordance with regulations and legal requirements. The estimate on January 29, 2019, based on a preliminary assessment, resulted in a total amount of US$1.3 billion (R$5 billion) assuming the removal and reprocessing of all tailings contained in the upstream dams, followed by the fully recovery of the sites in the "de-characterization" method.

​

​	​	​	​	​
​	​ ​	​ F-19	​ ​	​

	​	Year ended December 31, 2014
	​	Trade receivables		​	Product inventory		​	Investments in associates and joint ventures		​	Property, plant and equipment and intangible assets		​	Additions to property, plant and equipment and intangible
Ferrous minerals	​			​			​			​			​
Iron ore	​	1,520		​	1,110		​	546		​	35,294		​	6,946
Pellets	​	434		​	187		​	593		​	1,617		​	214
Ferroalloys and manganese	​	151		​	69		​	–		​	262		​	56
Other ferrous products and services	​	68		​	–		​	1,109		​	305		​	39
​	​	​		​	​		​	​		​	​		​	​
	​	2,173		​	1,366		​	2,248		​	37,478		​	7,255
Coal	​	122		​	155		​	355		​	4,429		​	2,099
Base metals	​			​			​			​			​
Nickel and other products	​	658		​	1,435		​	21		​	29,615		​	1,522
Copper	​	119		​	26		​	194		​	3,664		​	563
​	​	​		​	​		​	​		​	​		​	​
	​	777		​	1,461		​	215		​	33,279		​	2,085
Fertilizers	​			​			​			​			​
Potash	​	–		​	12		​	–		​	156		​	–
Phosphates	​	136		​	309		​	–		​	5,509		​	36
Nitrogen	​	–		​	23		​	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​
	​	136		​	344		​	–		​	5,665		​	36
Others	​	154		​	4		​	1,315		​	4,091		​	338
​	​	​		​	​		​	​		​	​		​	​
Total	​	3,362		​	3,330		​	4,133		​	84,942		​	11,813
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

3. Information by business segment and by geographic areaBrumadinho's dam failure (Continued)

c) ResultsBefore the event, the decommissioning plans of these dams were based on a method which aimed to ensure the physical and chemical stability of the structures, not necessarily, in all cases, removing and reprocessing the tailings contained in the dams. Since the event, the Company has been working on an individual detailed engineering plans to each of these dams to allow the total de-characterization of the structures. The Company is still developing the revised estimate for the costs to de-characterize the upstream dams and, therefore, the additional amount to the provision that will be recognized and disclosed in 2019 could not be reliably estimated.

In order to carry out safely the de-characterization of the dams, the Company has temporarily stopped the production of the units where the upstream dams are located, as already disclosed to the market. The stoppage results in a reduction in production of approximately 40 million tons of iron ore on annual basis.

In addition, the Company has other operations that are temporarily suspended due to judicial decisions or technical analysis performed by segmentthe Company on the dams, which represents a potential reduction in sales of 52.8 million tons of iron ore. The Company is working on legal and revenuestechnical measures to resume these operations.

For reference, the Company sold 365 million tons of iron ore and pellets in 2018.

Due to the dam failure and review undertaken on the safety requirements for other dams in the Minas Gerais region, when necessary people were placed in temporary accommodation.

ii)

Assets write-offs

Following the event and the decision to speed up the de-characterization of the upstream dams, the Company will write-off assets of the Córrego do Feijão mine and those related to the upstream dams in Brazil, resulting in a loss of US$124 (R$480 million) in 2019, which will impact the Company's balance sheet and income statement.

iii)

Framework Agreements

The Company has been working together with the authorities and society to remediate the environmental and social impacts of the event. As a result, the Company has started negotiations and entered into agreements with the relevant authorities and affected people.

Public Ministry of Labor

On February 15, 2019, Vale entered into a preliminary agreement with the Public Ministry of Labor to indemnify the direct and third-party employees of the Córrego do Feijão mine who were affected by geographic areathe termination of this operation. Under the terms of the agreement, Vale will maintain the jobs of its direct employees until December 31, 2019 and will either assist terminated third party employees with a replacement or pay their salaries until December 31, 2019.

​

​	​	​	​	​
​	​ ​	​ F-20	​ ​	​

	​	Year ended December 31, 2015
	​	Ferrous minerals		​	Coal		​	Base metals		​	Fertilizers		​	Others		​	Total
Results	​			​			​			​			​			​
Net operating revenue	​	16,562		​	526		​	6,163		​	2,225		​	133		​	25,609
Cost and expenses	​	(10,918		)	(1,062		)	(4,775		)	(1,658		)	(433		)	(18,846)
Impairment of non-current assets and onerous contracts	​	(993		)	(3,038		)	(4,732		)	(157		)	(6		)	(8,926)
Results on measurement or sale of non-current assets	​	(132		)	–		​	–		​	–		​	193		​	61
Depreciation, depletion and amortization	​	(1,669		)	(192		)	(1,841		)	(310		)	(17		)	(4,029)
​	​	​		​	​		​	​		​	​		​	​		​	​
Operating income (loss)	​	2,850		​	(3,766		)	(5,185		)	100		​	(130		)	(6,131)
Financial result	​	(10,482		)	151		​	(333		)	(147		)	10		​	(10,801)
Results on sale or disposal of investments in associates and joint ventures	​	–		​	–		​	–		​	–		​	97		​	97
Impairment of investment in associates and joint ventures	​	(132		)	–		​	(314		)	–		​	–		​	(446)
Equity results in associates and joint ventures	​	26		​	(3		)	(132		)	–		​	(330		)	(439)
Income taxes	​	5,007		​	(835		)	1,087		​	(149		)	(10		)	5,100
​	​	​		​	​		​	​		​	​		​	​		​	​
Loss	​	(2,731		)	(4,453		)	(4,877		)	(196		)	(363		)	(12,620)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
Income (loss) attributable to noncontrolling interests	​	69		​	(254		)	(295		)	10		​	(21		)	(491)
Loss attributable to Vale's stockholders	​	(2,800		)	(4,199		)	(4,582		)	(206		)	(342		)	(12,129)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
Sales classified by geographic area:	​			​			​			​			​			​
America, except United States and Brazil	​	359		​	18		​	1,122		​	65		​	–		​	1,564
United States of America	​	30		​	–		​	804		​	–		​	21		​	855
Europe	​	2,506		​	102		​	1,921		​	127		​	–		​	4,656
Middle East/Africa/Oceania	​	1,009		​	97		​	84		​	9		​	–		​	1,199
Japan	​	1,512		​	74		​	373		​	–		​	–		​	1,959
China	​	8,400		​	44		​	651		​	–		​	–		​	9,095
Asia, except Japan and China	​	1,081		​	169		​	990		​	74		​	–		​	2,314
Brazil	​	1,665		​	22		​	218		​	1,950		​	112		​	3,967
​	​	​		​	​		​	​		​	​		​	​		​	​
Net operating revenue	​	16,562		​	526		​	6,163		​	2,225		​	133		​	25,609
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

3. Information by business segment and by geographic areaBrumadinho's dam failure (Continued)

The Company will also keep paying wages regularly to the missing people until the authorities have considered them as fatal victims of the event and will pay to the families of the fatal victims an amount equivalent to two thirds of their wages until December 31, 2019 or until Vale reaches the final agreement with the Public Ministry of Labor.

Under the terms proposed by Vale and considering the uncertainties related to the necessary procedures to estimate the amount to be spent, including the number of individuals entitled to indemnification, the Company has estimated that this agreement will result in a provision of approximately US$220 (R$850 million) in 2019.

Moreover, the Company will provide a lifelong medical insurance benefit to the widows and widowers and a similar benefit to the dependents of the victims until they are 22 years old. Due to the preliminary stage of this agreement and considering the complexity of an actuarial estimate, it is not possible yet to determine a range of outcomes or reliable estimates and, therefore, the amount of the provision related to this obligation could not be estimated. The Company expects to have this information during the course of 2019.

Brazilian Federal Government, State of Minas Gerais, Public Prosecutors and Public Defendants

On a judicial hearing that took place on February 20, 2019, in the scope of the public civil action n° 5010709-36.2019.8.13.0024, in process of the 6th Public Treasury Lower Court of Belo Horizonte, Vale entered into a preliminary agreement with the State of Minas Gerais, Federal Government and representatives of Public Authorities in which the Company commits to make emergency indemnification payments to the residents of Brumadinho and the communities that are located up to one kilometer from the Paraopeba river bed, from Brumadinho to the city of Pompéu, subject to registration.

Due to this agreement, the Company will anticipate indemnification to each family member through monthly payments during a 12-month period, which changes based, among other factors, on the age of the beneficiary. The Company has initially estimated a provision ranging from US$260 (R$1 billion) to US$520 (R$2 billion) related to these payments, depending on the number of beneficiaries that will be registered.

The agreement also includes the following measures: (i) independent technical assistance to support on the individual indemnities of those affected, if requested; and (ii) reimbursement or direct funding of the extraordinary expenses of the State of Minas Gerais and its governmental bodies due to the dam failure, including transportation, accommodation and food expenses of the employees involved in the rescue and other emergency actions. The respective amounts are still being estimated by the State of Minas Gerais and will be presented in Court.

​

​	​	​	​	​
​	​ ​	​ F-21	​ ​	​

​

---

	​	Year ended December 31, 2014
	​	Ferrous minerals		​	Coal		​	Base metals		​	Fertilizers		​	Others		​	Total
Results	​			​			​			​			​			​
Net operating revenue	​	25,697		​	739		​	7,692		​	2,415		​	996		​	37,539
Cost and expenses	​	(14,902		)	(1,436		)	(5,171		)	(2,137		)	(1,108		)	(24,754)
Impairment of non-current assets and onerous contracts	​	(1,135		)	(343		)	1,379		​	(1,053		)	–		​	(1,152)
Results on measurement or sales of non-current assets	​	–		​	–		​	(167		)	–		​	–		​	(167)
Depreciation, depletion and amortization	​	(1,930		)	(120		)	(1,791		)	(419		)	(28		)	(4,288)
​	​	​		​	​		​	​		​	​		​	​		​	​
Operating income (loss)	​	7,730		​	(1,160		)	1,942		​	(1,194		)	(140		)	7,178
Financial result	​	(6,003		)	194		​	(198		)	(51		)	(11		)	(6,069)
Results on sale or disposal of investments in associates and joint ventures	​	–		​	–		​	–		​	–		​	(30		)	(30)
Impairment of investment in associates and joint ventures	​	–		​	–		​	–		​	–		​	(31		)	(31)
Equity results in associates and joint ventures	​	665		​	32		​	(35		)	–		​	(157		)	505
Income taxes	​	(1,451		)	81		​	(145		)	403		​	(88		)	(1,200)
​	​	​		​	​		​	​		​	​		​	​		​	​
Net income (loss)	​	941		​	(853		)	1,564		​	(842		)	(457		)	353
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
Income (loss) attributable to noncontrolling interests	​	59		​	(49		)	(284		)	4		​	(34		)	(304)
Income (loss) attributable to Vale's stockholders	​	882		​	(804		)	1,848		​	(846		)	(423		)	657
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
Sales classified by geographic area:	​			​			​			​			​			​
America, except United States and Brazil	​	652		​	3		​	1,373		​	39		​	21		​	2,088
United States of America	​	24		​	–		​	1,099		​	–		​	245		​	1,368
Europe	​	3,894		​	115		​	2,586		​	89		​	13		​	6,697
Middle East/Africa/Oceania	​	1,608		​	110		​	149		​	3		​	–		​	1,870
Japan	​	2,566		​	192		​	863		​	–		​	6		​	3,627
China	​	11,939		​	76		​	642		​	–		​	–		​	12,657
Asia, except Japan and China	​	2,189		​	235		​	828		​	53		​	–		​	3,305
Brazil	​	2,825		​	8		​	152		​	2,231		​	711		​	5,927
​	​	​		​	​		​	​		​	​		​	​		​	​
Net operating revenue	​	25,697		​	739		​	7,692		​	2,415		​	996		​	37,539
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

3. InformationBrumadinho's dam failure (Continued)

iv)

Donations and other incurred expenses

Donations

Vale has offered donations of US$26 thousand (R$100 thousand) to each of the families with missing members or affected by fatalities, US$13 thousand (R$50 thousand) to families that resided in the Self-Saving Zone ("ZAS") near to Brumadinho dam, US$4 thousand (R$15 thousand) to business segmentowners of the region and by geographic area (Continued)US$1 thousand (R$5 thousand) for each family that resided in the ZAS of Sul Superior dam, which belongs to the Gongo Soco mine, in Barão de Cocais. The estimated amount spent to date is around US$16 (R$62 million). These humanitarian donations will not be subject to any compensation with eventual indemnification obligations that the Company may have with its beneficiaries.

Vale also entered into an agreement with the Brumadinho city, in which the Company will donate to the city an amount of approximately US$21 (R$80 million) over the next 2 years.

Environment and fauna

The Company is building a retention dike for the tailings on the affected areas. The Company has also installed anti-turbidity barriers for sediment retention alongside the Paraopeba River. In addition, Vale has mobilized cleaning, de-sanding and dredging the Paraopeba river channel.

Daily collection points of water and barriers for sediment retention were installed alongside the Paraopeba River, Três Maias reservoir and São Francisco river.

Vale also has set up an exclusive structure for treatment of the rescued animals, enabling emergency care and recovery before the animals are authorized, after veterinarian assessment, to be returned to their tutors.

Furthermore, the Company has agreed to pay the administrative fines imposed by the State Secretary for Environment and Sustainable Development—SEMAD MG, in the total approximated amount of US$26 (R$99 million).

​

​	​	​	​	​
​	​ ​	​ F-22	​ ​	​

	​	Year ended December 31, 2013
	​	Ferrous minerals		​	Coal		​	Base metals		​	Fertilizers		​	Others		​	Total		​	Discontinued operations		​	Total
Results	​			​			​			​			​			​			​			​
Net operating revenue	​	34,792		​	1,010		​	7,286		​	2,814		​	865		​	46,767		​	1,283		​	48,050
Cost and expenses	​	(13,964		)	(1,505		)	(5,647		)	(2,868		)	(1,057		)	(25,041		)	(1,164		)	(26,205)
Impairment of non-current assets and onerous contracts	​	(182		)	–		​	–		​	(2,116		)	–		​	(2,298		)	–		​	(2,298)
Results on measurement or sale of non-current assets	​	–		​	–		​	(215		)	–		​	–		​	(215		)	(209		)	(424)
Depreciation, depletion and amortization	​	(1,746		)	(173		)	(1,766		)	(431		)	(34		)	(4,150		)	(158		)	(4,308)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Operating income (loss)	​	18,900		​	(668		)	(342		)	(2,601		)	(226		)	15,063		​	(248		)	14,815
Financial result	​	(8,559		)	44		​	(50		)	(18		)	251		​	(8,332		)	(2		)	(8,334)
Results on sale or disposal of investments in associates and joint ventures	​	–		​	–		​	–		​	27		​	14		​	41		​	–		​	41
Equity results in associates and joint ventures	​	627		​	28		​	(26		)	–		​	(160		)	469		​	–		​	469
Income taxes	​	(7,200		)	294		​	62		​	56		​	(45		)	(6,833		)	248		​	(6,585)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Net income (loss)	​	3,768		​	(302		)	(356		)	(2,536		)	(166		)	408		​	(2		)	406
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Income (loss) attributable to noncontrolling interests	​	(42		)	(35		)	(58		)	13		​	(56		)	(178		)	–		​	(178)
Income (loss) attributable to Vale's stockholders	​	3,810		​	(267		)	(298		)	(2,549		)	(110		)	586		​	(2		)	584
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Sales classified by geographic area:	​			​			​			​			​			​			​			​
America, except United States and Brazil	​	733		​	–		​	1,045		​	60		​	10		​	1,848		​	–		​	1,848
United States of America	​	30		​	–		​	1,070		​	–		​	212		​	1,312		​	–		​	1,312
Europe	​	5,917		​	79		​	2,647		​	120		​	–		​	8,763		​	–		​	8,763
Middle East/Africa/Oceania	​	1,844		​	137		​	93		​	17		​	7		​	2,098		​	–		​	2,098
Japan	​	3,113		​	304		​	618		​	–		​	–		​	4,035		​	–		​	4,035
China	​	17,913		​	157		​	851		​	–		​	–		​	18,921		​	–		​	18,921
Asia, except Japan and China	​	2,340		​	316		​	883		​	61		​	–		​	3,600		​	–		​	3,600
Brazil	​	2,902		​	17		​	79		​	2,556		​	636		​	6,190		​	1,283		���	7,473
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Net operating revenue	​	34,792		​	1,010		​	7,286		​	2,814		​	865		​	46,767		​	1,283		​	48,050
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

3. Information by business segment and by geographic areaBrumadinho's dam failure (Continued)

d) Investment in associatesThe Company has incurred the following expenses up to the present moment:

	​	2019
Incurred expenses	​
Administrative sanctions	​	26
Donations to the affected people and to the city	​	16
Drilling and infrastructure	​	5
Environmental recovery	​	4
Medical aid and other materials	​	2
Fuel and transportation	​	2
Others(*)	​	22
​	​	​
	​	78
​	​	​
​	​	​
​	​	​

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(*)

Includes expenses with communication, accommodation, humanitarian assistance, equipment, legal services, water, food aid, taxes, among others.

Off the events identified at this stage, a significant portion has not been disbursed or measured. The total costs incurred with Vale's employees dedicated to providing support with matters related to the event (including wages), equipment and joint ventures, intangiblematerials were not measured yet.

b)

Contingencies and property, plantother legal matters

Vale is subject to significant contingencies due to the Brumadinho dam failure. Vale has already been named on several judicial and equipmentadministrative proceedings brought by geographic area

	​	December 31, 2015											​	December 31, 2014
	​	Investments in associates and joint ventures		​	Intangible		​	Property, plant and equipment		​	Total		​	Investments in associates and joint ventures		​	Intangible		​	Property, plant and equipment		​	Total
Brazil	​	2,408		​	3,285		​	32,190		​	37,883		​	3,411		​	4,380		​	40,971		​	48,762
Canada	​	2		​	2,039		​	10,589		​	12,630		​	4		​	2,352		​	17,478		​	19,834
America, except Brazil and Canada	​	157		​	–		​	456		​	613		​	184		​	–		​	651		​	835
Europe	​	–		​	–		​	608		​	608		​	–		​	–		​	630		​	630
Asia	​	367		​	–		​	5,219		​	5,586		​	340		​	–		​	7,043		​	7,383
Australia	​	–		​	–		​	74		​	74		​	–		​	88		​	776		​	864
New Caledonia	​	–		​	–		​	3,521		​	3,521		​	–		​	–		​	4,140		​	4,140
Mozambique	​	–		​	–		​	442		​	442		​	–		​	–		​	5,376		​	5,376
Oman	​	–		​	–		​	1,003		​	1,003		​	–		​	–		​	1,057		​	1,057
Other regions	​	6		​	–		​	–		​	6		​	194		​	–		​	–		​	194
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	2,940		​	5,324		​	54,102		​	62,366		​	4,133		​	6,820		​	78,122		​	89,075
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

4.    Relevant event—Dam failure at Samarco Mineração S.A. ("Samarco")

          On November 5, 2015, Samarco experienced the failure of an iron ore tailings dam (Fundão)authorities and affected people and is currently under investigations. New contingencies are expected to come in the statefuture. Vale is still evaluating these contingencies and will recognize a provision based on the stage of Minas Gerais—Brazil, which affected communitiesthese claims. Due to the preliminary stage of the investigations and ecosystems, includingclaims, it is not possible to determine a range of reliable results or estimates of potential exposure related to dam breach at this point in time.

Lawsuits

On January 27, 2019, following the Rio Doce river.

          Followinginjunctions granted upon the dam failure,requests of the state governmentPublic Prosecutors of the State of Minas Gerais orderedand the suspensionState of Samarco's operations. Samarco has been working together withMinas Gerais, the authorities in orderCompany had restricted US$2.8 billion (R$11 billion) on its bank accounts to meettake the legal and social requirementsnecessary measures to mitigatereassure the environmental and social impactsstability of the event.other dams of the Córrego do Feijão Mine Complex, provide accommodation and assistance to the affected people, remediate environmental impacts, among other obligations.

a) Accounting effectsOn January 31, 2019, the Public Ministry of Labor filed a Public Civil Action and a couple of preliminary injunctions were granted determining the freezing of US$400 (R$1.6 billion) on the Company's bank accounts to secure the indemnification of direct and third-party employees that worked in the Córrego de Feijão mine at the investment due to the dam failure

          Samarco is a Brazilian entity jointly controlled by Vale and BHP Billiton Brasil Ltda. ("BHP"), in which each shareholder has a 50% ownership interest.

          As a consequencetime of the Brumadinho dam failure, Samarco incurred expenses, wrote off assets and recognized provisions for remediation, which affected its balance sheet and income statement. Because Samarco is a joint venture, the effects of the dam failure are accounted for under equity method by Vale, in which the balance sheet and income statement impact is limited to Vale's interest in Samarco's capital as per the Brazilian Corporation Law. The dam failure had no effect on Vale's cash flow for the year ended December 31, 2015.breach.

​

​	​	​	​	​
​	​ ​	​ F-23	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

4.    Relevant event—Dam3. Brumadinho's dam failure at Samarco Mineração S.A. ("Samarco") (Continued)

          The accounting impactOn March 18, 2019 the Public Prosecutor of the investment in Samarco in Vale's financial statements, including the effectsState of Minas Gerais filed a Public Civil Action and a preliminary injunction was granted to freeze US$258 (R$1 billion) of the dam failure, are as follows:

	​	Investments in associates and joint ventures		​	Accounts receivable		​	Related parties		​	Total
Balance on December 31, 2014	​	200		​	24		​	310		​	534
​	​	​		​	​		​	​		​	​
Equity results on income statement	​	(167		)	–		​	–		​	(167)
Dividends received	​	–		​	–		​	(146		)	(146)
Royalties declared	​	–		​	31		​	–		​	31
Royalties received	​	–		​	(12		)	–		​	(12)
Transfers	​	125		​	(38		)	(87		)	–
Impairment (note 15)	​	(132		)	–		​	–		​	(132)
Translation adjustment	​	(26		)	(5		)	(77		)	(108)
​	​	​		​	​		​	​		​	​
Balance on December 31, 2015	​	–		​	–		​	–		​	–
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​

          Under Brazilian legislation andCompany's assets, aiming to grant funds that could be required to indemnify for losses that may arise from the termsevacuation of the joint venture agreement,community of Sebastião de Águas Claras—Macacos community.

On March 25, 2019, the Public Prosecutor of the State of Minas Gerais filed a Public Civil Action and a preliminary injunction was granted to freeze US$761 (R$2.95 billion) of the Company's assets, to grant funds that might be required to indemnify for losses that may arise from evacuation of the communities in Gongo Soco, Barão de Cocais.

In total, approximately US$4.4 billion (R$16.9 billion) of the Company's assets were blocked, of which approximately US$121 (R$468 million) were freeze on the Company's bank accounts, US$3.3 billion (R$12.6 billion) were converted into judicial deposits and US$1 billion (R$3.75 billion) was guaranteed using 75,312,728 treasury shares out of the 158,216,372 treasury shares held by Vale does not have an obligationas at December 31, 2018.

Other collective and individual claims related to provide funding to Samarco. Additionally, Vale has not received any requests for financial assistance from Samarco. As a result, Vale's investment in Samarco was reduced to zero and no liability was recognized in Vale's financial statements. The accounting impact of any future request for funding will be determined when it occurs.the Brumadinho dam breach were filed. Some collective claims were extinguished by the applicable court.

          b) SocialAdministrative sanctions

In addition, the Company was notified of the imposition of administrative fines by Brazilian Institute of the Environment and environmental remediation—In 2015, Samarco recognized provisions for social and environmental remediation based on current available information. There is a high degree of uncertaintyRenewable Natural Resources ("IBAMA"), in these provisions since the impact of environmental and social economic assessment is at an early stage. Eventual unrecognized obligations, considered as contingent liabilities, and future possible exposures, including timing of payments cannot be reliably measured. The key assumptions used in the provision will be reviewed periodically considering the assessment of damage progress, which could results in a material change to the amount of Samarco's provision in future reporting periods.US$65 (R$250 million) and a daily fine of US$26 thousand (R$100 thousand), drawn up on February 7, 2019, which Vale has presented defenses against all of them. In addition, the remediation activities have been submitted to the regulators and other government authorities and are still subject to their approval.

          c) Contingencies—In December 2015, the Federal Government, the States of Minas Gerais and Espirito Santo and other entities jointly brought a public civil action against Samarco and its shareholders, Vale and BHP. The plaintiffs seek approximately R$20.2 billion in damages and a number of measures to remediate alleged damages caused by the Fundão dam failure. Due to the preliminary stageBrumadinho Municipal Department of the proceedings, it is not possible to provideEnvironment has also imposed fines totaling approximately US$28 (R$108 million), which the Company has also presented a range of possible outcomes or a reliable estimate of potential future exposure for Vale in relation to this claim. In addition, Samarco and its shareholders are named as a defendant in several other lawsuits brought by individuals, corporations and governmental entities seeking damages for personal injury, wrongful death, commercial or economic injury, breach of contract and violations of statutes. Because these pending lawsuits are at the very early stages, it is not possible to determine a range of outcomes or reliable estimates of the potential exposure at this time. Therefore, no provision has been recognized and no contingent liability has been quantified.defense.

Table of Contents

U.S. Securities class action suits

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

4.    Relevant event—Dam failure at Samarco Mineração S.A. ("Samarco") (Continued)

Vale S.A. and certain of its current officers have been named as defendants in civilsecurities class action suitscomplaints in federal courtFederal Courts in New York brought by holders of Vale's securities under U.S. federal securities laws. The lawsuitscomplaints allege that Vale made false and misleading statements or omitted to make disclosures concerning the risks and dangerspotential damage of a breach of the operations of Samarco's Fundãdam in the Córrego de Feijão dam and assert other causes of action against the defendants for the ownership in and supervision of the Fundão dam.mine. The plaintiffs have not specified an amount of alleged damages in these actions. Vale has notified its insurers of the dam failure event and related civil complaints. Vale intends to defend these actions and mount a full defense against the allegations. The litigation is at a very early stage. Service has not been completed on all defendants, no lead plaintiff or lead plaintiffs' attorney has been named, and no schedule has been established for the filing of any responses, motions or answers.these claims. As a consequence of the preliminary nature of these suits,proceedings, it is not possible to determine a range of outcomes or reliable estimates of the potential exposure at this time, and nothe amount of provision has been recognized.that will be recognized in 2019 could not be estimated.

          d) Insurance—SamarcoThe Company is negotiating with insurers under its operational risk, general liability and engineering risk policies, but these negotiations are still at a preliminary stage. Any payment of insurance proceeds will depend on the coverage definitions under these policies and assessment of the amount of loss. In light of the uncertainties, no indemnification to the Company was recognized in Samarco'sVale's financial statements.

​

​	​	​	​	​
​	​ ​	​ F-24	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

5.    Assets held for sale4.    Information by business segment and by geographic area

The Company operated the following reportable segments during this year: Ferrous Minerals, Coal, Base Metals and Fertilizers (presented as discontinued operations). The segments are aligned with products and reflect the structure used by Management to evaluate Company's performance. The responsible bodies for making operational decisions, allocating resources and evaluating performance are the Executive Boards and the Board of Directors. The performance of the operating segments is assessed based on a measure of adjusted EBITDA.

The information presented to the Executive Board on the performance of each segment is derived from the accounting records, adjusted for reallocations between segments.

The main activities of the operating segments are as follows:

Ferrous minerals—comprise of the production and extraction of iron ore, iron ore pellets, manganese, ferroalloys, other ferrous products and its logistic services.

Coal—comprise of the production and extraction of metallurgical and thermal coal and its logistic services.

Base metals—include the production and extraction of nickel and its by-products (copper, gold, silver, cobalt, precious metals and others) and copper, as well as their by-products (gold and silver).

Fertilizers (Discontinued operations)—include the production of potash, phosphate, nitrogen and other fertilizer products (note 14).

a) Adjusted EBITDA

The definition of adjusted EBITDA for the Company is the operating income or loss plus dividends received and interest from associates and joint ventures, and excluding the amounts charged as (i) depreciation, depletion and amortization and (ii) special events (note 4b).

The Company allocate in "Others" the sales and expenses of other products, services, research and development, investments in joint ventures and associates of other business and unallocated corporate expenses.

​

​	​	​	​	​
​	​ ​	​ F-25	​ ​	​

	​	December 31, 2015		​	December 31, 2014
	​	Nacala		​	Energy		​	Nacala		​	Total
Assets held for sale	​			​			​			​
Accounts receivable	​	3		​	–		​	8		​	8
Other current assets	​	134		​	–		​	157		​	157
Investments in associates and joint ventures	​	–		​	88		​	–		​	88
Intangible assets, net	​	21		​	–		​	–		​	–
Property, plant and equipment, net	​	3,886		​	477		​	2,910		​	3,387
​	​	​		​	​		​	​		​	​
Total assets	​	4,044		​	565		​	3,075		​	3,640
​	​	​		​	​		​	​		​	​
Liabilities associated with assets held for sale	​			​			​			​
Suppliers and contractors	​	93		​	–		​	54		​	54
Other current liabilities	​	14		​	–		​	57		​	57
​	​	​		​	​		​	​		​	​
Total liabilities	​	107		​	–		​	111		​	111
​	​	​		​	​		​	​		​	​
Net assets held for sale	​	3,937		​	565		​	2,964		​	3,529
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

5.    Assets held for sale4.    Information by business segment and by geographic area (Continued)

          a) Coal—Nacala logistic corridor ("Nacala")—In December 2014,2018, the Company signed an agreement with Mitsui & Co., Ltd. ("Mitsui")has allocated general and corporate expenses to sell 50%"Others" as these are not directly related to the performance of its stake of 70%each business segment. The comparative periods were restated to reflect this change in the Nacala corridor. Nacalaallocation criteria.

	​	Year ended December 31, 2018
	​	Net operating revenue		​	Cost of goods sold and services rendered		​	Selling, administrative and other operating expenses		​	Research and evaluation		​	Pre operating and operational stoppage		​	Dividends received and interest from associates and joint ventures		​	Adjusted EBITDA
Ferrous minerals	​			​			​			​			​			​			​
Iron ore	​	20,354		​	(9,048		)	(76		)	(110		)	(115		)	28		​	11,033
Iron ore Pellets	​	6,651		​	(3,393		)	(11		)	(26		)	(19		)	154		​	3,356
Ferroalloys and manganese	​	454		​	(290		)	(3		)	(1		)	–		​	–		​	160
Other ferrous products and services	​	474		​	(313		)	(4		)	(1		)	(1		)	7		​	162
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	27,933		​	(13,044		)	(94		)	(138		)	(135		)	189		​	14,711
Coal	​	1,643		​	(1,575		)	(9		)	(21		)	–		​	143		​	181
Base metals	​			​			​			​			​			​			​
Nickel and other products	​	4,610		​	(3,060		)	(47		)	(39		)	(33		)	–		​	1,431
Copper	​	2,093		​	(960		)	(4		)	(18		)	–		​	–		​	1,111
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	6,703		​	(4,020		)	(51		)	(57		)	(33		)	–		​	2,542
Others	​	296		​	(263		)	(752		)	(157		)	(21		)	56		​	(841)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of continuing operations	​	36,575		​	(18,902		)	(906		)	(373		)	(189		)	388		​	(16,593)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Discontinued operations (Fertilizers)	​	121		​	(120		)	(4		)	–		​	–		​	–		​	(3)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	36,696		​	(19,022		)	(910		)	(373		)	(189		)	388		​	(16,590)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​

​

​	​	​	​	​
​	​ ​	​ F-26	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

4.    Information by business segment and by geographic area (Continued)

	​	Year ended December 31, 2017																				​
	​	Net operating revenue		​	Cost of goods sold and services rendered		​	Selling, administrative and other operating expenses		​	Research and evaluation		​	Pre operating and operational stoppage		​	Dividends received and interest from associates and joint ventures		​	Adjusted EBITDA		​
Ferrous minerals	​			​			​			​			​			​			​			​
Iron ore	​	18,524		​	(7,950		)	11		​	(88		)	(181		)	30		​	10,346		​
Iron ore Pellets	​	5,653		​	(2,876		)	(9		)	(19		)	(7		)	81		​	2,823		​
Ferroalloys and manganese	​	469		​	(278		)	(8		)	–		​	(4		)	–		​	179		​
Other ferrous products and services	​	483		​	(306		)	11		​	(2		)	–		​	19		​	205		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
	​	25,129		​	(11,410		)	5		​	(109		)	(192		)	130		​	13,553		​
Coal	​	1,567		​	(1,354		)	(12		)	(14		)	(4		)	179		​	362		​
Base metals	​			​			​			​			​			​			​			​
Nickel and other products	​	4,667		​	(3,437		)	(47		)	(49		)	(75		)	–		​	1,059		​
Copper	​	2,204		​	(979		)	(15		)	(13		)	–		​	–		​	1,197		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
	​	6,871		​	(4,416		)	(62		)	(62		)	(75		)	–		​	2,256		​
Others	​	400		​	(375		)	(791		)	(155		)	(9		)	97		​	(833		)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Total of continuing operations	​	33,967		​	(17,555		)	(860		)	(340		)	(280		)	406		​	15,338		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Discontinued operations (Fertilizers)	​	1,746		​	(1,606		)	(102		)	(12		)	(25		)	3		​	4		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Total	​	35,713		​	(19,161		)	(962		)	(352		)	(305		)	409		​	15,342		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​

​

​	​	​	​	​
​	​ ​	​ F-27	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

4.    Information by business segment and by geographic area (Continued)

	​	Year ended December 31, 2016																				​
	​	Net operating revenue		​	Cost of goods sold and services rendered		​	Selling, administrative and other operating expenses		​	Research and evaluation		​	Pre operating and operational stoppage		​	Dividends received and interest from associates and joint ventures		​	Adjusted EBITDA		​
Ferrous minerals	​			​			​			​			​			​			​			​
Iron ore	​	15,784		​	(6,622		)	(248		)	(91		)	(150		)	10		​	8,683		​
Iron ore Pellets	​	3,827		​	(2,002		)	(35		)	(13		)	(22		)	103		​	1,858		​
Ferroalloys and manganese	​	302		​	(231		)	(1		)	–		​	(11		)	–		​	59		​
Other ferrous products and services	​	438		​	(269		)	(4		)	(2		)	(4		)	–		​	159		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
	​	20,351		​	(9,124		)	(288		)	(106		)	(187		)	113		​	10,759		​
Coal	​	839		​	(872		)	63		​	(15		)	(41		)	–		​	(26		)
Base metals	​			​			​			​			​			​			​			​
Nickel and other products	​	4,472		​	(3,204		)	1		​	(78		)	(114		)	4		​	1,081		​
Copper	​	1,667		​	(924		)	(16		)	(5		)	–		​	–		​	722		​
Other base metals products	​	–		​	–		​	150		​	–		​	–		​	–		​	150		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
	​	6,139		​	(4,128		)	135		​	(83		)	(114		)	4		​	1,953		​
Others	​	159		​	(259		)	(573		)	(116		)	(1		)	76		​	(714		)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Total of continuing operations	​	27,488		​	(14,383		)	(663		)	(320		)	(343		)	193		​	11,972		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Discontinued operations (Fertilizers)	​	1,875		​	(1,545		)	(87		)	(22		)	(16		)	4		​	209		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Total	​	29,363		​	(15,928		)	(750		)	(342		)	(359		)	197		​	12,181		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​

Adjusted EBITDA is a combinationreconciled to net income (loss) as follows:

From continuing operations

	​	Year ended December 31								​
	​	2018		​	2017		​	2016		​
Net income from continuing operations	​	6,988		​	6,334		​	5,203		​
Depreciation, depletion and amortization	​	3,351		​	3,708		​	3,487		​
Income taxes	​	(172		)	1,495		​	2,781		​
Financial results, net	​	4,957		​	3,019		​	(1,843		)
Equity results and other results in associates and joint ventures, net of dividends received	​	570		​	488		​	1,104		​
Special events (note 4b)	​	899		​	294		​	1,240		​
Adjusted EBITDA from continuing operations	​	16,593		​	15,338		​	11,972		​

​

​	​	​	​	​
​	​ ​	​ F-28	​ ​	​

​

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Table of railroadContents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

4.    Information by business segment and port concessions under construction locatedby geographic area (Continued)

From discontinued operations

	​	Year ended December 31										​
	​	2018		​	2017				​	2016		​
Loss from discontinued operations	​	(92		)	​	(813		)	​	(1,227		)
​	​	​		​	​				​	​		​
Depreciation, depletion and amortization	​	–		​	​	1		​	​	347		​
Income taxes	​	(40		)	​	(102		)	​	(630		)
Financial results, net	​	5		​	​	28		​	​	(20		)
Equity results in associates and joint ventures, net of dividends received	​	–		​	​	5		​	​	1		​
Impairment of non-current assets	​	124		​	​	885		​	​	1,738		​
​	​	​		​	​				​	​		​
Adjusted EBITDA from discontinued operations	​	(3		)	​	4		​	​	209		​
​	​	​		​	​				​	​		​
​	​	​		​	​	​		​	​	​		​
​	​	​		​	​				​	​		​

b) Special events occurred during the year

Special events are gains or losses recognized in Mozambique and Malawi. After completionthe Company's operating results that are not related to the performance of the transaction, Vale will share controlbusiness segments. The Company excludes special events from adjusted EBITDA to keep the segment performance analysis comparable with prior periods.

The special events identified by the Company are as follows:

	​	Year ended December 31										​
	​	2018		​	2017				​	2016		​
Result in disposal of assets (note 19)	​	(322		)	​	(481		)	​	(66		)
Nacala Logistic Corridor (note 16)	​	–		​	​	458		​	​	–		​
Impairment and onerous contracts (note 20)	​	(577		)	​	(271		)	​	(1,174		)
​	​	​		​	​				​	​		​
Total	​	(899		)	​	(294		)	​	(1,240		)
​	​	​		​	​				​	​		​
​	​	​		​	​	​		​	​	​		​
​	​	​		​	​				​	​		​

c) Assets by segment

	​	December 31, 2018								​	December 31, 2017								​
	​	Product inventory		​	Investments in associates and joint ventures		​	Property, plant and equipment and intangible(i)		​	Product inventory		​	Investments in associates and joint ventures		​	Property, plant and equipment and intangible(i)		​
Ferrous minerals	​	2,210		​	1,814		​	31,377		​	1,770		​	1,922		​	36,103		​
Coal	​	119		​	317		​	1,589		​	82		​	317		​	1,719		​
Base metals	​	1,147		​	14		​	21,295		​	1,009		​	13		​	23,603		​
Others	​	11		​	1,080		​	2,086		​	6		​	1,316		​	1,946		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Total	​	3,487		​	3,225		​	56,347		​	2,867		​	3,568		​	63,371		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​

​

​	​	​	​	​
​	​ ​	​ F-29	​ ​	​

​

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Table of Nacala with MitsuiContents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

4.    Information by business segment and therefore will not consolidate the assets, liabilitiesby geographic area (Continued)

	​	Year ended December 31																	​
	​	2018					​	2017					​	2016					​
	​	Capital expenditures(ii)			​		​	Capital expenditures(ii)			​		​	Capital expenditures(ii)			​		​
					​	Depreciation, depletion and amortization					​	Depreciation, depletion and amortization					​	Depreciation, depletion and amortization	​
	​	Sustaining capital	​	Project execution			​	Sustaining capital	​	Project execution			​	Sustaining capital	​	Project execution			​
Ferrous minerals	​	1,569	​	823	​	1,672	​	1,194	​	1,485	​	1,709	​	891	​	2,355	​	1,533	​
Coal	​	132	​	24	​	252	​	73	​	45	​	296	​	149	​	463	​	185	​
Base metals	​	1,189	​	34	​	1,351	​	960	​	50	​	1,590	​	1,045	​	12	​	1,636	​
Others	​	6	​	7	​	76	​	4	​	20	​	113	​	3	​	33	​	133	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	2,896	​	888	​	3,351	​	2,231	​	1,600	​	3,708	​	2,088	​	2,863	​	3,487	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

---

(i)

Goodwill is allocated mainly to ferrous minerals and results of those entities. The assets and liabilities were classified as assets held for sale with no impactbase metals segments in the income statement. As atamount of US$1,841 and US$1,812 in December 2015, completion of the transaction remains dependent upon certain conditions. The Company remains committed to its plan to sell its 50% interest.

31, 2018 and US$2,157 and US$1,953 in December 31, 2017, respectively.

(ii)

Cash outflows.

          b) Other—Energy generation assets—In December 2013, the Company signed agreements with CEMIG Geração e Transmissão S.A. ("CEMIG GT"), as follows:

(i) A new entity Aliança Norte Participações S.A., was incorporated and Vale contributed its 9% investment in Norte Energia S.A. ("Norte Energia"), which is the company in charge of construction and operation of the Belo Monte Hydroelectric facility. Vale committed to sell 49% and share control of the new entity to CEMIG GT. In the first quarter of 2015, after receiving all regulatory approvals and other customary precedent conditions the Company concluded the transaction and received cash proceeds of US$97, recognizing a gain of US$18 as result on sale or disposal of investmentd) Investment in associates and joint ventures, (note 6).intangible and property, plant and equipment by geographic area

	​	December 31, 2018							​	December 31, 2017							​
	​	Investments in associates and joint ventures	​	Intangible	​	Property, plant and equipment	​	Total	​	Investments in associates and joint ventures	​	Intangible	​	Property, plant and equipment	​	Total	​
Brazil	​	2,604	​	5,875	​	29,226	​	37,705	​	2,993	​	6,231	​	34,209	​	43,433	​
Canada	​	–	​	1,956	​	9,905	​	11,861	​	–	​	2,118	​	10,967	​	13,085	​
Americas, except Brazil and Canada	​	247	​	–	​	–	​	247	​	200	​	–	​	–	​	200	​
Europe	​	–	​	–	​	366	​	366	​	–	​	–	​	394	​	394	​
Indonesia	​	–	​	1	​	2,776	​	2,777	​	–	​	–	​	2,787	​	2,787	​
Asia, except Indonesia	​	374	​	–	​	1,025	​	1,399	​	375	​	–	​	1,100	​	1,475	​
Australia	​	–	​	–	​	–	​	–	​	–	​	–	​	45	​	45	​
New Caledonia	​	–	​	–	​	2,796	​	2,796	​	–	​	–	​	2,965	​	2,965	​
Mozambique	​	–	​	130	​	1,459	​	1,589	​	–	​	143	​	1,532	​	1,675	​
Oman	​	–	​	–	​	829	​	829	​	–	​	1	​	868	​	869	​
Other regions	​	–	​	–	​	3	​	3	​	–	​	–	​	11	​	11	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	3,225	​	7,962	​	48,385	​	59,572	​	3,568	​	8,493	​	54,878	​	66,939	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

​	​	​	​	​
​	​ ​	​ F-30	​ ​	​

​

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Table of Contents

(ii) A new entity Aliança Geração de Energia S.A.Notes to the Financial Statements (Continued)

("Aliança Geração") was incorporatedExpressed in millions of United States dollar, unless otherwise stated

4.    Information by business segment and by geographic area (Continued)

e) Net operating revenue by geographic area

	​	Year ended December 31, 2018
	​	Ferrous minerals		​	Coal		​	Base metals		​	Others		​	Total
Americas, except United States and Brazil	​	820		​	–		​	658		​	–		​	1,478
United States of America	​	388		​	–		​	952		​	13		​	1,353
Germany	​	1,130		​	–		​	523		​	–		​	1,653
Europe, except Germany	​	2,218		​	436		​	1,800		​	–		​	4,454
Middle East/Africa/Oceania	​	2,562		​	151		​	25		​	–		​	2,738
Japan	​	2,072		​	163		​	508		​	–		​	2,743
China	​	14,381		​	–		​	861		​	–		​	15,242
Asia, except Japan and China	​	1,798		​	767		​	1,101		​	–		​	3,666
Brazil	​	2,564		​	126		​	275		​	283		​	3,248
​	​	​		​	​		​	​		​	​		​	​
Net operating revenue	​	27,933		​	1,643		​	6,703		​	296		​	36,575
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

	​	Year ended December 31, 2017
	​	Ferrous minerals		​	Coal		​	Base metals		​	Others		​	Total
Americas, except United States and Brazil	​	593		​	–		​	1,009		​	70		​	1,672
United States of America	​	355		​	–		​	872		​	83		​	1,310
Germany	​	1,097		​	–		​	292		​	–		​	1,389
Europe, except Germany	​	1,721		​	396		​	1,985		​	11		​	4,113
Middle East/Africa/Oceania	​	1,768		​	171		​	13		​	–		​	1,952
Japan	​	1,927		​	130		​	399		​	–		​	2,456
China	​	13,442		​	–		​	576		​	–		​	14,018
Asia, except Japan and China	​	1,332		​	711		​	1,539		​	–		​	3,582
Brazil	​	2,894		​	159		​	186		​	236		​	3,475
​	​	​		​	​		​	​		​	​		​	​
Net operating revenue	​	25,129		​	1,567		​	6,871		​	400		​	33,967
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

	​	Year ended December 31, 2016
	​	Ferrous minerals		​	Coal		​	Base metals		​	Others		​	Total
Americas, except United States and Brazil	​	334		​	20		​	1,172		​	–		​	1,526
United States of America	​	232		​	–		​	749		​	24		​	1,005
Germany	​	1,077		​	–		​	302		​	–		​	1,379
Europe, except Germany	​	1,482		​	218		​	1,552		​	17		​	3,269
Middle East/Africa/Oceania	​	1,252		​	95		​	20		​	–		​	1,367
Japan	​	1,292		​	121		​	328		​	–		​	1,741
China	​	11,985		​	63		​	699		​	–		​	12,747
Asia, except Japan and China	​	912		​	305		​	1,173		​	–		​	2,390
Brazil	​	1,785		​	17		​	144		​	118		​	2,064
​	​	​		​	​		​	​		​	​		​	​
Net operating revenue	​	20,351		​	839		​	6,139		​	159		​	27,488
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

​

​	​	​	​	​
​	​ ​	​ F-31	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

4.    Information by business segment and by geographic area (Continued)

Accounting policy

Vale committed to contribute its shares over several power generation assets which use to supply energy forrecognizes revenue when the Company's operations. In exchange, CEMIG GT committed to contribute its stakes in some of its power generation assets. In the first quarter of 2015, after receiving all regulatory approvals and other customary precedent conditions, the exchange of assets was completed and Vale holds 55% and shares control of a good or service transfers to a customer of an amount that reflects the newconsideration to which the entity with CEMIG GT. A long termexpects to be entitled in exchange for those goods or services. Net revenue excludes any applicable sales taxes.

Depending on the contract, was signed between Valesales revenue can be recognized when the product is available at the loading port, loaded on the ship, at the port of discharge or at the customer's warehouse. Service revenues are recognized in the amount by which the services are rendered and Aliançaccepted by the customer.

Generally, the contract payment terms consider the upfront payments or the use of credit letters. The payment terms do not have a Geração forsignificant financing component and were not changed from previous years. In some cases, the energy supply. Duesale price is determined on a provisional basis at the date of sale and adjustments to the completion of this transaction, the Company (i) derecognized the assets held for sale related to this transaction; (ii) recognized as investment its shareprice subsequently occur based on movements in the joint venture Aliança Geração; and (iii)quoted market or contractual prices up to the date of final pricing. Revenue is recognized a gain of US$193 as results on measurement or sales of non-current assets (note 6) based on the estimated fair value of the total consideration receivable, and the provisionally priced sale mechanism embedded within these sale arrangements has the character of a derivative. Accordingly, the fair value of the assets transferredfinal sale price adjustment is re-estimated continuously and changes in fair value are recognized as operational revenue in the income statement.

Commodity price risk—The commodity price risk arises from volatility of iron ore, nickel, copper and coal prices. The Company is mostly exposed to the fluctuations in the iron ore and copper price. The selling price of these products can be measured reliably at each period, since the price is quoted in an active market.

As of December 31, 2018, the Company had 27 million tons (2017: 33 million tons) provisionally priced based on iron ore forward prices and 78 thousand tons (2017: 106 thousand tons) provisionally priced based on copper forward prices. The final price of these sales will be determined during the first quarter of 2019. A 10% change in the price of iron ore realized on the provisionally priced sales, with all other factors held constant, would increase or reduce net income by CEMIG GT. This transaction has no cash proceedsUS$185. A 10% change in the price of copper realized on the provisionally priced sales, with all other factors held constant, would increase or disbursements.reduce net income by US$56.

​

​	​	​	​	​
​	​ ​	​ F-32	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

5.    Costs and expenses by nature

a) Cost of goods sold and services rendered

	​	Year ended December 31
	​	2018	​	2017	​	2016
Personnel	​	2,278	​	2,295	​	2,087
Materials and services	​	3,957	​	3,814	​	3,108
Fuel oil and gas	​	1,538	​	1,313	​	1,233
Maintenance	​	2,807	​	3,096	​	2,747
Energy	​	906	​	963	​	694
Acquisition of products	​	513	​	543	​	511
Depreciation and depletion	​	3,207	​	3,484	​	3,267
Freight	​	4,306	​	3,346	​	2,509
Others	​	2,597	​	2,185	​	1,494
​	​	​	​	​	​	​
Total	​	22,109	​	21,039	​	17,650
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​
Cost of goods sold	​	21,526	​	20,426	​	17,148
Cost of services rendered	​	583	​	613	​	502
​	​	​	​	​	​	​
Total	​	22,109	​	21,039	​	17,650
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​

b) Selling and administrative expenses

	​	Year ended December 31
	​	2018	​	2017	​	2016
Personnel	​	212	​	234	​	209
Services	​	92	​	77	​	72
Depreciation and amortization	​	62	​	91	​	120
Others	​	157	​	129	​	106
​	​	​	​	​	​	​
Total	​	523	​	531	​	507
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​

c) Other operating expenses, net

	​	Year ended December 31
	​	2018	​	2017	​	2016
Provision for litigation	​	185	​	169	​	137
Profit sharing program	​	187	​	149	​	76
Others	​	73	​	102	​	54
​	​	​	​	​	​	​
Total	​	445	​	420	​	267
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​

​

​	​	​	​	​
​	​ ​	​ F-33	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

6.    Acquisitions and divestituresFinancial result

	​	Year ended December 31
	​	2018		​	2017		​	2016
Financial income	​			​			​
Short-term investments	​	177		​	176		​	92
Others	​	246		​	302		​	78
​	​	​		​	​		​	​
	​	423		​	478		​	170
Financial expenses	​			​			​
Loans and borrowings gross interest	​	(1,185		)	(1,697		)	(1,768)
Capitalized loans and borrowing costs	​	194		​	370		​	653
Participative stockholders' debentures	​	(550		)	(625		)	(417)
Interest on REFIS	​	(202		)	(397		)	(514)
Others	​	(602		)	(924		)	(631)
​	​	​		​	​		​	​
	​	(2,345		)	(3,273		)	(2,677)
Other financial items	​			​			​
Net foreign exchange gains (losses) on loans and borrowings	​	(2,666		)	(249		)	3,314
Derivative financial instruments	​	(266		)	454		​	1,256
Other net foreign exchange gains (losses)	​	419		​	(218		)	(62)
Net indexation losses	​	(522		)	(211		)	(158)
​	​	​		​	​		​	​
	​	(3,035		)	(224		)	4,350
​	​	​		​	​		​	​
Financial results, net	​	(4,957		)	(3,019		)	1,843
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

a) Hedge in foreign operations

As at January 1, 2017, Vale S.A., which the functional currency is Reais, designated its debts in US$ and Euro, as an instrument in a hedge of its investment in foreign operations (Vale International S.A. and Vale International Holding GmbH; hedging objects) to mitigate part of the foreign exchange risk on financial statements. Further details are disclosed in note 25.

b) Net investment in the foreign operation

From January 1, 2019 (subsequent event), the Company will consider certain long-term loans payable to Vale International S.A., for which settlement is neither planned nor likely to occur in the foreseeable future, as part of its net investment in the foreign operation. The effectsforeign exchange differences arising on the monetary item, forming part of divestituresthe net investment in the foreign operation, will be recognized in other comprehensive income and reclassified from stockholders' equity to income statement on disposal or partial disposal of the net investment. Therefore, upon adoption the effect of net foreign exchange gains or losses in the income statement are presented as follow:is expected to reduce.

	​	Year ended December 31
	​	2015		​	2014		​	2013
Results on measurement or sale of non-current assets	​			​			​
Shipping assets	​	(132		)	–		​	–
Energy generation assets (note 5)	​	193		​	–		​	–
Mineral rights—CoW Indonesia (note 29(a))	​	–		​	(167		)	–
Sociedad Contractual Minera Tres Valles	​	–		​	–		​	(215)
​	​	​		​	​		​	​
	​	61		​	(167		)	(215)
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Results on sale or disposal of investments in associates and joint ventures	​			​			​
Shandong Yankuang International Coking Co., Ltd.	​	79		​	–		​	–
Energy generation assets (note 5)	​	18		​	–		​	–
Vale Florestar Fundo de Investimento em Participações	​	–		​	(30		)	–
Log-in Logística Intermodal S.A.	​	–		​	–		​	14
Fosbrasil S.A.	​	–		​	–		​	27
​	​	​		​	​		​	​
	​	97		​	(30		)	41
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Financial income	​			​			​
Norsk Hydro ASA	​	–		​	–		​	214
​	​	​		​	​		​	​
	​	–		​	–		​	214
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

2015Accounting policy

          a) Divestiture of participationTransactions in Minerações Brasileiras Reunidas S.A. ("MBR")foreign currencies—Transactions in foreign currencies are translated into the functional currency using the exchange rate prevailing at the transaction date. The Companyforeign exchange gains and Fundo de Investimento em Participações Multisetorial Plus II, whose shares are held by Banco Bradesco BBI S.A. (related party), completedlosses resulting from the sale of class A preferred shares of MBR, representing 36.4% of its share capital. The Company received cash proceeds of R$4 billion (US$1,089) and will keep a stake of 62.5%translation at the exchange rates prevailing at the end of the total capital of MBR, maintaining its stakeyear are recognized in ordinary capital at 98.3%the income statement as "financial income or expense". The participation and rights of the new shareholder were recognized as noncontrolling interest in stockholders' equity.exceptions are transactions related to

​

​	​	​	​	​
​	​ ​	​ F-34	​ ​	​

          b) Divestiture of shipping assets​—The Company completed the sale of 12 very large ore carriers with capacity of 400,000 tons each. The Company received cash proceeds of US$1,316 and recognized a loss of US$132 as results on measurement or sale of non-current assets.

---

          c) Integra and Isaac Plains mining complexes—The Company signed agreements to sell its participation in the Integra and Isaac Plains mining complexes which were put into care and maintenance in 2014 (note 15). The transaction had no impact in cash flow.

          d) Divestiture of Shandong Yankuang International Coking Co., Ltd. ("Yankuang")—The Company completed the sale of its participation in Yankuang, a producer of coking coal, methanol and other products. In this transaction, Vale recognized a gain of US$79 as results on sale or disposal of investments in associates and joint ventures.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

6.    Acquisitions and divestituresFinancial result (Continued)

          e) Divestiturequalifying net investment hedges or items that are attributable to part of VBG-Vale BSGR Limitedthe net investment in a foreign operation, for which gains and losses are recognized in the statement of comprehensive income.

7.    Streaming transactions

Cobalt streaming

In June 2018, the Company entered into two different agreements, one with Wheaton Precious Metals Corp ("VBG"Wheaton")—VBG is and the holding company which heldother with Cobalt 27 Capital Corp. ("Cobalt 27"), to sell a stream equivalent to 75% of the Simandou mining rights located in Guinea. In April 2014, the Government of Guinea revoked VBG mining rights, without any finding of wrongdoing by Vale. During 2014,cobalt extracted as a by-product from the Voisey's Bay mine, in Canada, starting on January 1, 2021. Furthermore, the Company restarted the Voisey's Bay underground mine expansion project, which is going to increase the expected useful life of Voisey's Bay mine from 2023 to 2034. The first year of underground production is expected to be 2021, when the current operations on the open pit mine begin to ramp down.

Upon completion of the transaction, the Company received an upfront payment of US$690 in cash, US$390 from Wheaton and US$300 from Cobalt 27, which has been recorded as other non-current liabilities. Vale will receive additional payments of 20%, on average, of the market reference price for cobalt, for each pound of finished cobalt delivered.

Thus, from January 1, 2021 onwards, Wheaton and Cobalt 27 will be entitled to receive 42.4% and 32.6%, respectively, of cobalt equivalent to the production from the Voisey's Bay mine, while Vale remains exposed to approximately 40% of the cobalt economic exposure, as Vale retains the rights to 25% of the future cobalt production and will receive 20% additional payments for the cobalt stream. The estimated result of the losssale of the miningmineral rights Vale recognized full impairmentis not expected to be significant and it will be accounted for once certain production thresholds have been met at Voisey's Bay mine.

Gold streaming

In August 2016, the Company made an amended to the gold transaction entered into to 2013 with Wheaton Precious Metals Corp ("Wheaton") to include in each contract an additional 25% of the assets relatedgold extracted as by-product over a lifetime of the Salobo copper mine. Hence, Wheaton holds the rights to VBG (note 15). During75% of the first quarter of 2015, the Company sold its stake in VBG to its partnercontained gold in the project and kept the right to any recoverable amount it may derivecopper concentrated from the Simandou project. Salobo mine and 70% of the gold extracted as a by-product of the Sudbury nickel mines.

The transaction had no impact on cash or in the income statement.

          f) Acquisition of Facon Construção e Mineração S.A. ("Facon")—The Company acquired all shares of Facon, a wholly owned subsidiary of Fagundes Construção e Mineração S.A. ("FCM"). FCM is a logistic service provider for Vale Fertilizantes S.A. The Facon business was carved out from FCM with assets and liabilities directly related to the fertilizer business being transferred to Vale Fertilizantes S.A. The purchase price allocation based on the fair value of acquired assets and liabilities was calculated based on studies performed by the Company. Subsequently, Facon was mergedtransactions were bifurcated into Vale Fertilizantes S.A.

Purchase price	​	90
Book value of property, plant and equipment	​	77
Book value of other assets acquired and liabilities assumed, net	​	(69)
Adjustment to fair value of property, plant and equipment and mining rights	​	43
​	​	​
Goodwill	​	39
​	​	​
​	​	​
​	​	​

2014

          g) Divestiture of Vale Florestar Fundo de Investimento em Participações ("Vale Florestar")—The Company signed an agreement with a subsidiary of Suzano Papel e Celulose S.A. fortwo identifiable components (i) the sale of its entire stake in Vale Florestar. A loss on this transaction of US$30 was recorded as a result on sale or disposal of investments in associates and joint ventures in 2014.

2013

          h) Divestitures of Sociedad Contractual Minera Tres Valles ("Tres Valles")—The Company sold its total participation in Tres Valles for US$25. On this transaction, Valethe mineral rights recognized a loss of US$215 presented in the income statement under "Other operating income (expenses), net" and, (ii) the deferred revenue (liability) related to the services for gold extraction on the portion in which Vale operates as results on measurement or sale of non-current assets of the year ended as at December 31, 2013. an agent for Wheaton gold extraction.

The total loss includes an amount ofCompany recognized US$7 transferred from cumulative translation adjustments.

          i) Divestitures of Log-In Logística Intermodal S.A. ("Log-in")—Vale conducted an auction to sell its common shares of Log-in. All the shares were sold for US$94 and a gain of US$14 on this transaction was recorded150 in the income statement as result on sale or disposal of investments in associates and joint ventures for the year ended as at December 31, 2013.2016, related to the sale of mineral rights from the additional transaction in August 2016.

​

​	​	​	​	​
​	​ ​	​ F-35	​ ​	​

​

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Table of Contents

          j) DivestituresNotes to the Financial Statements (Continued)

Expressed in millions of Fosbrasil S.A. ("Fosbrasil")United States dollar, unless otherwise stated

7.    Streaming transactions (Continued)

Critical accounting estimates and judgments

Defining the gain on sale of mineral interest and the deferred revenue portion of the gold transaction requires the use of critical accounting estimates as follows:

•

Discount rates used to measure the present value of future inflows and outflows;—



•

Allocation of costs between nickel or copper and gold based on relative prices;



•

Expected margin for the independent elements (sale of mineral rights and service for gold extraction) based on Company's best estimate.

8.    Income taxes

a) Deferred income tax assets and liabilities

	​	December 31, 2018		​	December 31, 2017		​
Taxes losses carryforward	​	4,882		​	4,471		​
Temporary differences:	​			​			​
Employee post retirement obligations	​	674		​	684		​
Provision for litigation	​	409		​	457		​
Timing differences arising on assets	​	1,253		​	1,268		​
Fair value of financial instruments	​	538		​	549		​
Allocated goodwill	​	(2,328		)	(2,433		)
Others	​	(52		)	(77		)
​	​	​		​	​		​
	​	494		​	448		​
​	​	​		​	​		​
Total	​	5,376		​	4,919		​
​	​	​		​	​		​
​	​	​		​	​		​
​	​	​		​	​		​
Assets	​	6,908		​	6,638		​
Liabilities	​	(1,532		)	(1,719		)
​	​	​		​	​		​
	​	5,376		​	4,919		​
​	​	​		​	​		​
​	​	​		​	​		​
​	​	​		​	​		​

​

​	​	​	​	​
​	​ ​	​ F-36	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

8.    Income taxes (Continued)

Changes in deferred tax are as follows:

	​	Assets	​	Liabilities	​	Deferred taxes, net
Balance at December 31, 2016	​	7,343	​	1,700	​	5,643
​	​	​	​	​	​	​
Utilization of taxes losses carryforward	​	(2,143)	​	–	​	(2,143)
Timing differences arising on assets	​	103	​	–	​	103
Fair value of financial instruments	​	388	​	–	​	388
Allocated goodwill	​	–	​	(109)	​	109
Others	​	897	​		​	897
Effect in income statement	​	(755)	​	(109)	​	(646)
Transfers between asset and liabilities	​	40	​	40	​	–
Translation adjustment	​	(24)	​	75	​	(99)
Other comprehensive income	​	(68)	​	13	​	(81)
Effect of discontinued operations	​		​		​
Effect in income statement	​	102	​	–	​	102
​	​	​	​	​	​	​
Balance at December 31, 2017	​	6,638	​	1,719	​	4,919
​	​	​	​	​	​	​
Taxes losses carryforward	​	665	​		​	665
Timing differences arising on assets	​	152	​	–	​	152
Fair value of financial instruments	​	147	​	–	​	147
Allocated goodwill	​	–	​	(37)	​	37
Others	​	(77)	​		​	(77)
Effect in income statement	​	887	​	(37)	​	924
Transfers between asset and liabilities	​	(70)	​	(70)	​	–
Translation adjustment	​	(673)	​	(102)	​	(571)
Other comprehensive income	​	123	​	22	​	101
Effect of discontinued operations	​		​		​
Effect in income statement	​	14	​	–	​	14
Transfer to net assets held for sale	​	(11)	​	–	​	(11)
​	​	​	​	​	​	​
Balance at December 31, 2018	​	6,908	​	1,532	​	5,376
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​

The Company entered into an agreement to sale its minority participationtax loss carryforward does not expire in the associate Fosbrasil, producerBrazilian jurisdiction and their compensation is limited to 30% of purified phosphoric acid,the taxable income for US$45. On this transaction, Vale recognized a gainthe year. The local profits of US$27subsidiaries abroad are also taxed in Brazil and there is no restriction on their offset against tax losses generated previously by the foreign entity or by the Parent Company.

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​	​	​	​	​
​	​ ​	​ F-37	​ ​	​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

8.    Income taxes (Continued)

b) Income tax reconciliation—Income statement

The total amount presented as income taxes in the income statement is reconciled to the statutory rate, as resultfollows:

	​	Year ended December 31
	​	2018		​	2017		​	2016
Income before income taxes	​	6,816		​	7,829		​	7,984
Income taxes at statutory rates—34%	​	(2,317		)	(2,662		)	(2,715)
Adjustments that affect the basis of taxes:	​			​			​
Income tax benefit from interest on stockholders' equity	​	873		​	728		​	87
Tax incentives	​	576		​	372		​	344
Equity results	​	104		​	35		​	107
Additions (reversals) of tax loss carryforward(i)	​	1,510		​	99		​	(273)
Unrecognized tax losses of the year	​	(458		)	(432		)	(708)
Nondeductible effect of impairment	​	(24		)	(43		)	(97)
Others	​	(92		)	408		​	474
​	​	​		​	​		​	​
Income taxes	​	172		​	(1,495		)	(2,781)
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

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(i)

In 2018, the Company recognized tax loss carryforward from tax losses of subsidiary abroad.

c) Tax incentives

In Brazil, Vale has tax incentives to partially reduce the income tax generated by the operations conducted in the North and Northeast regions that includes iron ore, manganese, copper and nickel. The incentive is calculated based on sale the taxable income of the incentive activity (tax operating income) and takes into account the allocation of tax operating income into different incentives applicable to different tranches of production during the periods specified for each product, usually 10 years. Most of our incentives are expected to expire up to 2024 and the last recognized tax incentive will expire in 2027. An amount equal to that obtained with the tax saving must be appropriated in retained earnings reserve account in stockholders' equity, and cannot be distributed as dividends to stockholders.

In addition to those incentives, the amount equivalent to 30% of the income tax due, can be reinvested in the acquisition of new machinery and equipment, subject to subsequent approval by the regulatory agency responsible, Superintendência de Desenvolvimento da Amazônia ("SUDAM") and/or disposalthe Superintendência de Desenvolvimento do Nordeste ("SUDENE"). The reinvestment subsidy is accounted in retained earnings reserve account, which restricts the distribution as dividends to stockholders. This tax incentive will expire in 2023.

Vale is subject to the revision of investmentsincome tax by local tax authorities in associatesa range up to 10 years depending on jurisdiction where the Company operates.

d) Income taxes—Settlement program ("REFIS")

The balance mainly relates to REFIS to settle most of the claims related to the collection of income tax and joint venturessocial contribution on equity gains of foreign subsidiaries and affiliates from 2003 to 2012. As

​

​	​	​	​	​
​	​ ​	​ F-38	​ ​	​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

8.    Income taxes (Continued)

December 31, 2018, the balance of US$4,349 (US$432 as current and US$3,917 as non-current) is due in 118 remaining monthly installments, bearing interest at the SELIC rate (Special System for the year ended asSettlement and Custody), while at December 31, 2013.2017, the balance was US$5,375 (US$485 as current and US$4,890 as non-current).

As at December 31, 2018, the SELIC rate was 6.50% per annum (7.00% per annum at December 31, 2017).

Accounting policy

The recognition of income taxes as deferred taxes is based on temporary differences between carrying amount and the tax basis of assets and liabilities as well as tax losses carryforwards. The deferred income tax assets and liabilities are offset when there is a legally enforceable right on the same taxable entity.

The deferred tax assets arising from tax losses and temporary differences are not recognized when is not probable that future taxable profit will be available against which temporary differences and/or tax losses can be utilized.

Income taxes are recognized in the income statement, except for items recognized directly in stockholders' equity. The provision for income tax is calculated individually for each entity of the Company based on Brazilian tax rates, on an accrual basis, by applying the differential between the nominal local tax rates (based on rules enacted in the location of the entity) and the Brazilian tax rate.

Critical accounting estimates and judgments

Deferred tax assets arising from tax losses, negative social contribution basis and temporary differences are registered taking into account the analysis of future performance, considering economic and financial projections, prepared based on internal assumptions and macroeconomic environment, trade and tax scenarios that may be subject to changes in the future. The assumptions of future profits are based on production and sales planning, commodity prices, operational costs and planned capital costs.

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​	​	​	​	​
​	​ ​	​ F-39	​ ​	​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

9.    Basic and diluted earnings per share

The basic and diluted earnings per share are presented below:

	​	Year ended December 31
	​	2018		​	2017		​	2016
Net income (loss) attributable to Vale's stockholders:	​			​			​
Net income from continuing operations	​	6,952		​	6,313		​	5,211
Loss from discontinued operations	​	(92		)	(806		)	(1,229)
​	​	​		​	​		​	​
Net income	​	6,860		​	5,507		​	3,982
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Thousands of shares	​			​			​
Weighted average number of shares outstanding—common shares	​	5,182,445		​	5,197,432		​	5,197,432
Basic and diluted earnings per share from continuing operations:	​			​			​
Common share (US$)	​	1.34		​	1.21		​	1.00
Basic and diluted loss per share from discontinued operations:	​			​			​
Common share (US$)	​	(0.02		)	(0.16		)	(0.23)
Basic and diluted earnings per share:	​			​			​
Common share (US$)	​	1.32		​	1.05		​	0.77

The Company does not have potential outstanding shares or other instruments with dilutive effect on the earnings per share.

10.    Accounts receivable

	​	December 31, 2018		​	December 31, 2017		​
Accounts receivable	​	2,710		​	2,660		​
Expected credit loss	​	(62		)	(60		)
​	​	​		​	​		​
	​	2,648		​	2,600		​
​	​	​		​	​		​
​	​	​		​	​		​
​	​	​		​	​		​
Revenue related to the steel sector—%	​	85.50		%	82.90		%

	​	Year ended December 31
	​	2018		​	2017		​	2016
Impairment of accounts receivable recorded in the income statement	​	(7		)	(4		)	(5)

There is no customer that individually represents over 10% of accounts receivable or revenues.

Accounting policy

Accounts receivable is the total amount due from sale of products and services rendered by the Company. Accounts receivable consists of financial assets initially recognized at fair value and subsequently measured at amortized cost, except for component of provisionally priced commodities sales that are subsequently measured at fair value through profit or loss ("FVTPL").

The portion of accounts receivables measured at amortized cost is subsequently measured using the effective interest ("EIR") method and it is subject to impairment. The Company has established a provision

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​	​	​	​	​
​	​ ​	​ F-40	​ ​	​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

10.    Accounts receivable (Continued)

matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the economic environment and by any financial guarantees related to these accounts receivables.

Commercial credit risk management—For the commercial credit exposure, which arises from sales to final customers, the risk management area, in accordance with the current delegation level, approves or requests the approval of credit risk limits for each counterparty.

Vale attributes an internal credit risk rating for each counterparty using its own quantitative methodology for credit risk analysis, which is based on market prices, external credit ratings and financial information of the counterparty, as well as qualitative information regarding the counterparty's strategic position and history of commercial relations.

Based on the counterparty's credit risk, risk mitigation strategies may be used to manage the Company`s credit risk. The main credit risk mitigation strategies include non-recourse sale of receivables, insurance instruments, letters of credit, corporate and bank guarantees, mortgages, among others.

Vale has a diversified accounts receivable portfolio from a geographical standpoint, with Asia, Europe and Brazil the regions with more significant exposures. According to each region, different guarantees can be used to enhance the credit quality of the receivables.

11.    Inventories

	​	December 31, 2018		​	December 31, 2017		​
Finished products	​	2,797		​	2,219		​
Work in progress	​	690		​	648		​
Consumable inventory	​	956		​	1,059		​
​	​	​		​	​		​
Total	​	4,443		​	3,926		​
​	​	​		​	​		​
​	​	​		​	​		​
​	​	​		​	​		​

	​	Year ended December 31
	​	2018		​	2017		​	2016
Reversal (provision) for net realizable value	​	4		​	(86		)	(199)

Finished and work in progress product inventory by segments is presented in note 4(c).

Accounting policy

Inventories are stated at the lower of cost and the net realizable value. The inventory production cost is determined on the basis of variable and fixed costs, direct and indirect costs of production, using the average cost method. At each statement of financial position date, inventories are assessed for impairment and a provision for losses on obsolete or slow-moving inventory may be recognized. The write-downs and reversals are included in "Cost of goods sold and services rendered".

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​	​	​	​	​
​	​ ​	​ F-41	​ ​	​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

6.    Acquisitions 12.    Recoverable taxes

Recoverable taxes are presented net of provisions for losses on tax credits.

	​	December 31, 2018		​	December 31, 2017		​
Value-added tax	​	813		​	887		​
Brazilian federal contributions	​	808		​	880		​
Others	​	13		​	43		​
​	​	​		​	​		​
Total	​	1,634		​	1,810		​
​	​	​		​	​		​
​	​	​		​	​		​
​	​	​		​	​		​
Current	​	883		​	1,172		​
Non-current	​	751		​	638		​
​	​	​		​	​		​
Total	​	1,634		​	1,810		​
​	​	​		​	​		​
​	​	​		​	​		​
​	​	​		​	​		​

13.    Other financial assets and divestitures (Continued)liabilities

	​	Current					​	Non-Current					​
	​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2017		​
Other financial assets	​			​			​			​			​
Financial investments	​	32		​	18		​	–		​	–		​
Loans	​	–		​	–		​	153		​	151		​
Derivative financial instruments (note 25)	​	39		​	106		​	392		​	453		​
Investments in equity securities (note 14)	​	–		​	–		​	987		​	–		​
Related parties—Loans (note 31)	​	364		​	1,898		​	1,612		​	2,628		​
​	​	​		​	​		​	​		​	​		​
	​	435		​	2,022		​	3,144		​	3,232		​
​	​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​
Other financial liabilities	​			​			​			​			​
Derivative financial instruments (note 25)	​	470		​	104		​	344		​	686		​
Related parties (note 31)	​	1,134		​	882		​	960		​	975		​
Participative stockholders' debentures	​	–		​	–		​	1,407		​	1,233		​
​	​	​		​	​		​	​		​	​		​
	​	1,604		​	986		​	2,711		​	2,894		​
​	​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​

Participative stockholders' debentures

          k) DivestituresAt the time of Norsk Hydro ASAits privatization in 1997, the Company issued debentures to then-existing stockholders, including the Brazilian Government. The debentures' terms were set to ensure that pre-privatization stockholders would participate in potential future benefits that might be obtained from exploration of mineral resources.

A total of 388,559,056 debentures were issued with a par value of R$0.01 (one cent of Brazilian Real) and are inflation-indexed to the General Market Price Index ("Hydro"IGP-M")—, as set forth in the Issue Deed. The Company sold its Hydro common shares for US$1,811. As result of this operation,paid as remuneration the Company recognized a gainamount of US$214 in the income statement as financial income148 and US$147, respectively, for the year ended as at December 31, 2013, as below:2018 and 2017.

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

14.    Non-current assets and liabilities held for sale and discontinued operations

	​	December 31, 2017		​
	​	Fertilizers		​
Balance on the date of saleAssets	​	1,845		​
Cumulative translation adjustmentAccounts receivable	​	(442)90		​
Results on available for sale investmentInventories	​	194460		​
Other current assets	​	110		​
1,597Investments in associates and joint ventures	​	83		​
Property, plant and equipment and Intangible	​	2,149		​
Other non-current assets	​	695		​
​	​	​		​
Amount receivedTotal assets	​	1,8113,587		​
​	​	​		​
Gain on saleLiabilities	​			​
214Suppliers and contractors	​	324		​
Other current liabilities	​	215		​
Other non-current liabilities	​	640		​
​	​	​		​
Total liabilities	​	1,179		​
​	​	​		​
Net non-current assets held for sale	​	2,408		​
​	​	​		​
​	​	​		​
​	​	​		​

a) Fertilizers (discontinued operations)

In January 2018, the Company and The Mosaic Company ("Mosaic") concluded the transaction entered in December 2016, to sell (i) the phosphate assets located in Brazil, except for those located in Cubatão, Brazil; (ii) the control of Compañia Minera Miski Mayo S.A.C., in Peru; (iii) the potassium assets located in Brazil; and (iv) the potash projects in Canada. The Company received US$1,080 in cash and 34.2 million common shares, corresponding to 8.9% of Mosaic's outstanding common shares after the issuance of these shares totaling US$899, based on the Mosaic's quotation at closing date of the transaction and a loss of US$55 was recognized in the income statement from discontinued operations.

Mosaic's shares received were accounted for as a financial investment measured at fair value through other comprehensive income. The Company recognized a gain of US$90 (US$60, net of tax) for the year ended December 31, 2018, in other comprehensive income as "Fair value adjustment to investment in equity securities".

b) Cubatão (part of the fertilizer segment)

In November 2017, the Company entered into an agreement with Yara International ASA to sell its assets located in Cubatão, Brazil. In May 2018, the transaction was concluded and the Company received US$255 in cash and a loss of US$69 was recognized in the income statement from discontinued operations.

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

14.    Non-current assets and liabilities held for sale and discontinued operations (Continued)

The results for the years and the cash flows of discontinued operations are presented as follows:

Income statement

	​	Year ended December 31								​
	​	2018		​	2017		​	2016		​
Discontinued operations	​			​			​			​
Net operating revenue	​	121		​	1,746		​	1,875		​
Cost of goods sold and services rendered	​	(120		)	(1,605		)	(1,887		)
Operating expenses	​	(4		)	(141		)	(130		)
Impairment of non-current assets	​	(124		)	(885		)	(1,738		)
​	​	​		​	​		​	​		​
Operating loss	​	(127		)	(885		)	(1,880		)
Financial Results, net	​	(5		)	(28		)	20		​
Equity results in associates and joint ventures	​	–		​	(2		)	3		​
​	​	​		​	​		​	​		​
Loss before income taxes	​	(132		)	(915		)	(1,857		)
Income taxes	​	40		​	102		​	630		​
​	​	​		​	​		​	​		​
Loss from discontinued operations	​	(92		)	(813		)	(1,227		)
Net income (loss) attributable to noncontrolling interests	​	–		​	(7		)	2		​
​	​	​		​	​		​	​		​
Loss attributable to Vale's stockholders	​	(92		)	(806		)	(1,229		)
​	​	​		​	​		​	​		​
​	​	​		​	​		​	​		​
​	​	​		​	​		​	​		​

Statement of cash flow

	​	Year ended December 31								​
	​	2018		​	2017		​	2016		​
Discontinued operations	​			​			​			​
Cash flow from operating activities	​			​			​			​
Loss before income taxes	​	(132		)	(915		)	(1,857		)
Adjustments:	​			​			​			​
Equity results in associates and joint ventures	​	–		​	2		​	(3		)
Depreciation, amortization and depletion	​	–		​	1		​	347		​
Impairment of non-current assets	​	124		​	885		​	1,738		​
Others	​	5		​	–		​	(20		)
Increase (decrease) in assets and liabilities	​	(34		)	114		​	(25		)
​	​	​		​	​		​	​		​
Net cash provided by (used in) operating activities	​	(37		)	87		​	180		​
Cash flow from investing activities	​			​			​			​
Additions to property, plant and equipment	​	(9		)	(305		)	(292		)
Others	​	–		​	–		​	11		​
​	​	​		​	​		​	​		​
Net cash used in investing activities	​	(9		)	(305		)	(281		)
Cash flow from financing activities	​			​			​			​
Loans and borrowings	​			​			​			​
Repayments	​	–		​	(34		)	(17		)
​	​	​		​	​		​	​		​
Net cash used in financing activities	​	–		​	(34		)	(17		)
​	​	​		​	​		​	​		​
Net cash used in discontinued operations	​	(46		)	(252		)	(118		)
​	​	​		​	​		​	​		​
​	​	​		​	​		​	​		​
​	​	​		​	​		​	​		​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

14.    Non-current assets and liabilities held for sale and discontinued operations (Continued)

Accounting policy

A non-current asset is classified as held for sale if its carrying amount will be recovered principally through a sale transaction rather than through continuing use.

The criteria for recognition of the non-current assets as held for sale are only considered satisfied when the sale is highly probable and the asset (or group of assets) is available for immediate sale in its present condition.

The Company measures the assets held for sale (or group of assets) at the lower of its carrying amount and fair value less costs to sell. If the carrying amount exceeds the fair value less costs to sell an impairment loss is recognized against income statement. Any subsequent reversal of impairment is recognized only to the extent of the loss previously recognized.

The assets and liabilities classified as held for sale are presented separately in the statement of financial position.

The classification as a discontinued operation occurs through disposal, or when the operation meets the criteria to be classified as held for sale if this occurs earlier. A discontinued operation is a component of a Company business comprising cash flows and operations that may be clearly distinct from the rest of the Company and that represents an important separate line of business or geographical area of operations.

The result of discontinued operations is presented in a single amount in the income statement, including the results after income tax of these operations less any impairment loss. Cash flows attributable to operating, investing and financing activities of discontinued operations are disclosed in a separate note.

When an operation is classified as a discontinued operation, the income statements of the prior periods are restated as if the operation had been discontinued since the beginning of the comparative period.

Any noncontrolling interest relating to a group disposal held for sale is presented in the stockholders' equity and is not reclassified in the statement of financial position.

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

7.15.    Subsidiaries

The significant consolidated entities in each business segment are as follows:

	​	Location	​	Main activity/Business	​	% Ownership		​	% Voting capital		​	% Noncontrolling interest		​
Direct and indirect subsidiaries	​		​		​			​			​			​
Companhia Portuária da Baía de Sepetiba	​	Brazil	​	Iron ore	​	100.0		%	100.0		%	0.0		%
Mineração Corumbaense Reunida S.A.	​	Brazil	​	Iron ore and manganese	​	100.0		%	100.0		%	0.0		%
Minerações Brasileiras Reunidas S.A. ("MBR")	​	Brazil	​	Iron ore	​	62.5		%	98.3		%	37.5		%
Salobo Metais S.A.	​	Brazil	​	Copper	​	100.0		%	100.0		%	0.0		%
PT Vale Indonesia	​	Indonesia	​	Nickel	​	59.2		%	59.2		%	40.8		%
Vale International Holdings GmbH	​	Austria	​	Holding and research	​	100.0		%	100.0		%	0.0		%
Vale Canada Limited	​	Canada	​	Nickel	​	100.0		%	100.0		%	0.0		%
Vale International S.A.	​	Switzerland	​	Trading and holding	​	100.0		%	100.0		%	0.0		%
Vale Malaysia Minerals Sdn. Bhd.	​	Malaysia	​	Iron ore	​	100.0		%	100.0		%	0.0		%
Vale Manganês S.A.	​	Brazil	​	Manganese and ferroalloys	​	100.0		%	100.0		%	0.0		%
Vale Moçambique S.A.	​	Mozambique	​	Coal	​	80.7		%	80.7		%	19.3		%
Vale Nouvelle Caledonie S.A.S.	​	New Caledonia	​	Nickel	​	95.0		%	95.0		%	5.0		%
Vale Oman Distribution Center LLC	​	Oman	​	Iron ore and pelletizing	​	100.0		%	100.0		%	0.0		%
Vale Oman Pelletizing Company LLC	​	Oman	​	Pelletizing	​	70.0		%	70.0		%	30.0		%

As explained in note 14, the Fertilizer Segment is presented as discontinued operations, which includes the following subsidiaries:

	​	Location	​	Main activity/Business	​	% Ownership		​	% Voting capital		​	% Noncontrolling interest		​
Direct and indirect subsidiaries	​		​		​			​			​			​
Compañia Minera Miski Mayo S.A.C.	​	Peru	​	Fertilizers	​	40.0		%	51.0		%	60.0		%
Vale Fertilizantes S.A.	​	Brazil	​	Fertilizers	​	100.0		%	100.0		%	0.0		%
Vale Cubatão Fertilizantes Ltda.	​	Brazil	​	Fertilizers	​	100.0		%	100.0		%	0.0		%

Accounting policy

Consolidation and investments in associates and joint ventures—The financial statements reflect the assets, liabilities and transactions of the Parent Company and its direct and indirect controlled entities ("subsidiaries"). The subsidiaries are consolidated when the Company is exposed or has rights to variable returns from its involvement with the investee and has the ability to direct the significant activities of the investee. Intercompany balances and transactions, which include unrealized profits, are eliminated.

The entities over which the Company has joint control ("joint ventures") or significant influence, but not control ("associates") are presented in note 16. Those investments are accounted for using the equity method. For interests in joint arrangements not classified as joint ventures ("joint operations"), the Company recognizes its share of assets, liabilities and net income.

Unrealized gains on downstream or upstream transactions between the Company and its associates and joint ventures are eliminated proportionately to the Company's interest.

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

15.    Subsidiaries (Continued)

Investments held by other investors in Vale's subsidiaries are classified as noncontrolling interests ("NCI"). The Company treats transactions with noncontrolling interests as transactions with equity owners of the Company as described in note 17.

For purchases or disposals from noncontrolling interests, the difference between the consideration paid and the proportion acquired of the carrying value of net assets of the subsidiary is directly recorded in stockholders' equity in "Results from operation with noncontrolling interest".

Translation from the functional currency to the presentation currency—The income statement and statement of financial position of the subsidiaries for which the functional currency is different from the presentation currency are translated into the presentation currency as follows: (i) assets, liabilities and stockholders' equity, except for the components described in item (iii) are translated at the closing rate at the statement of financial position date; (ii) income and expenses are translated at the average exchange rates, except for specific significant transactions that are translated at the rate at the transaction date and; (iii) capital, capital reserves and treasury stock are translated at the rate at each transaction date. All resulting exchange differences are recognized directly in the comprehensive income as "translation adjustments". When a foreign operation is disposed of or sold, foreign exchange differences that were recognized in equity are recognized in the income of statement.

16.    Investments in associates and joint ventures

The significant non-consolidated entities of the Company are as follows:

	​	Location	​	Main activity/Business	​	% Ownership		​	% Voting capital		​	% Noncontrolling interest		​
Joint ventures	​		​		​			​			​			​
Aliança Geração de Energia S.A.	​	Brazil	​	Energy	​	55.0		%	55.0		%	45.0		%
Companhia Coreano-Brasileira de Pelotização	​	Brazil	​	Pelletizing	​	50.0		%	50.0		%	50.0		%
Companhia Hispano-Brasileira de Pelotização	​	Brazil	​	Pelletizing	​	50.9		%	51.0		%	49.1		%
Companhia Ítalo-Brasileira de Pelotização	​	Brazil	​	Pelletizing	​	50.9		%	51.0		%	49.1		%
Companhia Nipo-Brasileira de Pelotização	​	Brazil	​	Pelletizing	​	51.0		%	51.1		%	49.0		%
Companhia Siderúrgica do Pecém ("CSP")	​	Brazil	​	Steel	​	50.0		%	50.0		%	50.0		%
MRS Logística S.A.	​	Brazil	​	Logistics	​	48.2		%	46.8		%	51.8		%
Nacala Corridor Holding Netherlands B.V.	​	Netherlands	​	Coal	​	50.0		%	50.0		%	50.0		%
Samarco Mineração S.A.	​	Brazil	​	Pelletizing	​	50.0		%	50.0		%	50.0		%
Direct and indirect associates	​		​		​			​			​			​
Henan Longyu Energy Resources Co., Ltd.	​	China	​	Coal	​	25.0		%	25.0		%	75.0		%
VLI S.A.	​	Brazil	​	Logistics	​	37.6		%	37.6		%	62.4		%

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

16.    Investments in associates and joint ventures (Continued)

a) Changes during the year

Changes in investments in associates and joint ventures as follows:

	​	2018								​	2017
	​	Associates		​	Joint ventures		​	Total		​	Associates		​	Joint ventures		​	Total
Balance at January 1st,	​	1,441		​	2,127		​	3,568		​	1,437		​	2,259		​	3,696
​	​	​		​	​		​	​		​	​		​	​		​	​
Additions(i)	​	—		​	23		​	23		​	1		​	92		​	93
Translation adjustment	​	(184		)	(272		)	(456		)	(2		)	(28		)	(30)
Equity results in income statement	​	44		​	261		​	305		​	57		​	41		​	98
Equity results in statement of comprehensive income	​	—		​	—		​	—		​	—		​	(152		)	(152)
Dividends declared	​	—		​	(291		)	(291		)	(57		)	(226		)	(283)
Transfer from non-current assets held for sale(ii)	​	87		​	—		​	87		​	—		​	—		​	—
Others	​	4		​	(15		)	(11		)	5		​	141		​	146
​	​	​		​	​		​	​		​	​		​	​		​	​
Balance at December 31,	​	1,392		​	1,833		​	3,225		​	1,441		​	2,127		​	3,568
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​

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(i)

Refers to the Coal segment and others in the amounts of US$11 and US$12, respectively, on December 31, 2018 and US$75 and US$18, respectively, on December 31, 2017.

(ii)

Refers to 18% interest held by Vale Fertilizantes at Ultrafertil which was transferred to Vale as part of the settlement in January 2018 (note 14).

The investments by segments are presented in note 4(c).

b) Acquisitions and divestitures

2018

Ferrous Resources Limited—In December 2018, the Company entered into an agreement to purchase the control of Ferrous Resources Limited, a company that currently owns and operates iron ore mines closely located to Company's operations in Minas Gerais, Brazil. The purchase price is US$550 and the conclusion of transaction is expected to occur in 2019, subject to conditions precedent.

New Steel—In January 2019 (subsequent event), the Company acquired for the total consideration of US$500 the control of New Steel Global NV, a company that develops innovative iron ore beneficiation technologies and currently owns patents of dry processing concentration in 56 countries.

2017

Nacala Logistic Corridor—In March 2017, the Company concluded the transaction with Mitsui & Co., Ltd. ("Mitsui") to transfer 50% of its stake of 66.7% in Nacala Logistic Corridor, which comprises entities that holds railroads and port concessions located in Mozambique and Malawi, and sell 15% participation in the holding entity of Vale Moçambique, which holds the Moatize Coal Project, for the amount of US$690.

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

16.    Investments in associates and joint ventures (Continued)

After the completion of the transaction, the Company (i) holds 81% of Vale Moçambique and retains the control of the Moatize Coal Project and (ii) shares control of the Nacala Logistic Corridor structure (Nacala BV), with Mitsui.

As a consequence of sharing control of Nacala BV, the Company:

(i)    derecognized the assets and liabilities classified as held for sale in the total amount of US$4,144, from which US$4,063 refers to property, plant and equipment and intangibles;

(ii)   derecognized US$14 related to cash and cash equivalents;

(iii)  recognized a gain of US$447 in the income statement related to the sale and the re-measurement at fair value, of its remaining interest at Nacala BV based on the consideration received;

(iv)  reclassified the gain related to the cumulative translation adjustments on to income statements in the amount of US$11;

The result of the transaction regarding the assets from Nacala's logistic corridor was recognized in the income statement as "Impairment and disposal of non-current assets".

The results of the transaction with the coal holding entity was recognized in "Results from operation with noncontrolling interest" in the amount of US$105, directly in Stockholders' Equity.

The consideration received was recognized in the statement of cash flows in "Proceeds from disposal of assets and investments" in the amount of US$435 and "Transactions with noncontrolling stockholders" in the amount of US$255.

After the conclusion of the transaction, Vale has outstanding loan balances with the related parties Nacala BV and Pangea Emirates Ltd due to the deconsolidation of Nacala Logistic Corridor as disclosed in note 31.

2016

Thyssenkrupp Companhia Siderúrgica do Atlântico Ltd ("CSA")—In April 2016, the Company sold 100% of its interest at CSA (26.87%) for a non-significant amount. The transaction resulted in a loss of US$75 due to recycling the "Cumulative translation adjustments" recognized in the income statement as "Equity results and other results in associates and joint ventures".

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

16. Investments in associates and joint ventures (Continued)

	​			​			​	Investments in associates and joint ventures					​	Equity results in the income statement								​	Dividends received
	​			​			​			​			​	Year ended December 31								​	Year ended December 31
Associates and joint ventures	​	% ownership		​	% voting capital		​	December 31, 2018		​	December 31, 2017		​	2018		​	2017		​	2016		​	2018		​	2017		​	2016
Ferrous minerals	​			​			​			​			​			​			​			​			​			​
Baovale Mineração S.A.	​	50.00		​	50.00		​	23		​	26		​	5		​	7		​	9		​	1		​	1		​	–
Companhia Coreano-Brasileira de Pelotização	​	50.00		​	50.00		​	104		​	89		​	69		​	50		​	17		​	32		​	19		​	26
Companhia Hispano-Brasileira de Pelotização(i)	​	50.89		​	51.00		​	83		​	82		​	55		​	41		​	15		​	23		​	16		​	27
Companhia Ítalo-Brasileira de Pelotização(i)	​	50.90		​	51.00		​	81		​	80		​	60		​	40		​	16		​	32		​	17		​	9
Companhia Nipo-Brasileira de Pelotização(i)	​	51.00		​	51.11		​	148		​	137		​	126		​	93		​	29		​	67		​	29		​	41
MRS Logística S.A.	​	48.16		​	46.75		​	496		​	517		​	72		​	69		​	57		​	27		​	29		​	10
VLI S.A.	​	37.60		​	37.60		​	857		​	968		​	30		​	29		​	36		​	7		​	19		​	–
Zhuhai YPM Pellet Co.	​	25.00		​	25.00		​	22		​	23		​	–		​	–		​	–		​	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​			​			​	1,814		​	1,922		​	417		​	329		​	179		​	189		​	130		​	113
Coal	​			​			​			​			​			​			​			​			​			​
Henan Longyu Energy Resources Co., Ltd.	​	25.00		​	25.00		​	317		​	317		​	16		​	20		​	(4		)	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​			​			​	317		​	317		​	16		​	20		​	(4		)	–		​	–		​	–
Base metals	​			​			​			​			​			​			​			​			​			​
Korea Nickel Corp.	​	25.00		​	25.00		​	14		​	13		​	1		​	1		​	(1		)	–		​	–		​	4
Others	​			​			​	–		​	–		​	–		​	–		​	(3		)	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​			​			​	14		​	13		​	1		​	1		​	(4		)	–		​	–		​	4
Others	​			​			​			​			​			​			​			​			​			​
Aliança Geração de Energia S.A.(i)	​	55.00		​	55.00		​	486		​	571		​	25		​	27		​	46		​	25		​	29		​	39
Aliança Norte Energia Participações S.A.(i)	​	51.00		​	51.00		​	162		​	160		​	15		​	(2		)	(6		)	–		​	–		​	–
California Steel Industries, Inc.	​	50.00		​	50.00		​	247		​	200		​	77		​	42		​	33		​	31		​	27		​	4
Companhia Siderúrgica do Pecém	​	50.00		​	50.00		​	–		​	262		​	(243		)	(264		)	25		​	–		​	–		​	–
Mineração Rio do Norte S.A.	​	40.00		​	40.00		​	93		​	101		​	2		​	13		​	48		​	–		​	41		​	32
Others	​			​			​	92		​	22		​	(5		)	(68		)	(8		)	–		​	–		​	1
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​			​			​	1,080		​	1,316		​	(129		)	(252		)	138		​	56		​	97		​	76
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​			​			​	3,225		​	3,568		​	305		​	98		​	309		​	245		​	227		​	193
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

---

(i)

Although the Company held a majority of the voting capital, the entities are accounted under equity method due to the stockholders' agreement where relevant decisions are shared with other parties.

​

​	​	​	​	​
​	​ ​	​ F-50	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

16.    Investments in associates and joint ventures (Continued)

c) Summarized financial information

The summarized financial information about relevant associates and joint-ventures for the Company are as follows:

	​	December 31, 2018																	​
	​	Joint ventures											​	Associates					​
	​	Aliança Geração de Energia		​	CSP		​	Pelletizing(i)		​	MRS Logística		​	Henan Longyu		​	VLI S.A.		​
Current assets	​	186		​	693		​	964		​	263		​	1,104		​	679		​
Non-current assets	​	938		​	3,062		​	296		​	1,826		​	392		​	3,938		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Total assets	​	1,124		​	3,755		​	1,260		​	2,089		​	1,496		​	4,617		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Current liabilities	​	83		​	970		​	437		​	359		​	203		​	544		​
Non-current liabilities	​	158		​	2,785		​	2		​	699		​	26		​	1,795		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Total liabilities	​	241		​	3,755		​	439		​	1,058		​	229		​	2,339		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Stockholders'equity	​	883		​	–		​	821		​	1,030		​	1,267		​	2,278		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Net income (loss)	​	45		​	(486		)	609		​	150		​	65		​	79		​

	​	December 31, 2017																	​
	​	Joint ventures											​	Associates					​
	​	Aliança Geração de Energia		​	CSP		​	Pelletizing(i)		​	MRS Logística		​	Henan Longyu		​	VLI S.A.		​
Current assets	​	137		​	759		​	760		​	309		​	1,072		​	738		​
Non-current assets	​	1,200		​	3,712		​	310		​	2,063		​	422		​	4,172		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Total assets	​	1,337		​	4,471		​	1,070		​	2,372		​	1,494		​	4,910		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Current liabilities	​	86		​	1,060		​	301		​	454		​	226		​	537		​
Non-current liabilities	​	213		​	2,887		​	5		​	844		​	–		​	1,799		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Total liabilities	​	299		​	3,947		​	306		​	1,298		​	226		​	2,336		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Stockholders'equity	​	1,038		​	524		​	764		​	1,074		​	1,268		​	2,574		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​
Net income (loss)	​	49		​	(528		)	442		​	143		​	79		​	77		​

---

(i)

Aggregate entity information: Companhia Coreano-Brasileira de Pelotização, Companhia Hispano-Brasileira de Pelotização, Companhia Ítalo-Brasileira de Pelotização, Companhia Nipo-Brasileira de Pelotização.

The stand-alone financial statements of those entities may differ from the financial information reported herein, which is prepared considering Vale's accounting policies including eventual goodwill, provisional price adjustment and others.

Accounting policy

Joint arrangements investments—Joint arrangements are all entities over which the Company has shared control with one or more parties. Joint arrangement investments are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor.

​

​	​	​	​	​
​	​ ​	​ F-51	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

16.    Investments in associates and joint ventures (Continued)

The joint operations are recorded in the financial statements to represent the Company's contractual rights and obligations.

Interests in joint ventures are accounted for using the equity method, after initially being recognized at cost. The Company's investment in joint ventures includes the goodwill identified in the acquisition, net of any impairment loss.

The Company's interest in the profits or losses of its joint ventures is recognized in the income statement and participation in the changes in reserves is recognized in the Company's reserves. When the Company's interest in the losses of an associate or joint venture is equal to or greater than the carrying amount of the investment, including any other receivables, the Company does not recognize additional losses, unless it has incurred obligations or made payments on behalf of the joint venture.

Critical accounting estimates and judgments

Judgment is required in some circumstances to determine whether after considering all relevant factors, the Company has either control, joint control or significant influence over an entity. Significant influence includes situations of collective control.

The Company holds the majority of the voting capital in five joint arrangements (Aliança Geração de Energia S.A., Aliança Norte Energia Participações S.A., Companhia Hispano-Brasileira de Pelotização, Companhia Ítalo-Brasileira de Pelotização and Companhia Nipo-Brasileira de Pelotização), but management has concluded that the Company does not have a sufficiently dominant voting interest to have the power to direct the activities of the entity. As a result, these entities are accounted under equity method due to shareholder's agreements where relevant decisions are shared with other parties.

​

​	​	​	​	​
​	​ ​	​ F-52	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

17.    Noncontrolling interest

a) Summarized financial information

The summarized financial information, prior to the eliminations of the intercompany balances and transactions, about subsidiaries with material noncontrolling interest are as follows:

	​	December 31, 2018															​
	​	MBR	​	PTVI	​	VNC		​	Vale Moçambique S.A.		​	Others(i)		​	Total		​
Current assets	​	581	​	465	​	202		​	303		​	–		​			​
Non-current assets	​	2,499	​	1,567	​	1,922		​	1,709		​	–		​			​
Related parties—Stockholders	​	721	​	111	​	56		​	22		​	–		​			​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
Total assets	​	3,801	​	2,143	​	2,180		​	2,034		​	–		​			​
Current liabilities	​	187	​	165	​	141		​	313		​	–		​			​
Non-current liabilities	​	282	​	153	​	256		​	79		​	–		​			​
Related parties—Stockholders	​	197	​	–	​	766		​	8,731		​	–		​			​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
Total liabilities	​	666	​	318	​	1,163		​	9,123		​	–		​			​
Stockholders' equity	​	3,135	​	1,825	​	1,017		​	(7,089		)	–		​			​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
Equity attributable to noncontrolling interests	​	1,254	​	745	​	51		​	(1,290		)	87		​	847		​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
Net income (loss)	​	434	​	58	​	351		​	(985		)	–		​			​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
Net income (loss) attributable to noncontrolling interests	​	174	​	24	​	18		​	(190		)	10		​	36		​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
​	​	​	​	​	​	​		​	​		​	​		​	​		​
Dividends paid to noncontrolling interests	​	168	​	–	​	–		​	–		​	14		​	182		​

---

(i)

Dividends paid to noncontrolling interests relates to Vale Oman Pelletizing

	​	December 31, 2017																				​
	​	MBR		​	PTVI		​	VNC		​	Vale Moçambique S.A.		​	Compañia Mineradora Miski Mayo S.A.C.(i)		​	Others(ii)		​	Total		​
Current assets	​	408		​	394		​	251		​	381		​	78		​	–		​			​
Non-current assets	​	3,041		​	1,586		​	2,046		​	1,653		​	436		​	–		​			​
Related parties—Stockholders	​	591		​	147		​	115		​	253		​	6		​	–		​			​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Total assets	​	4,040		​	2,127		​	2,412		​	2,287		​	520		​	–		​			​
Current liabilities	​	170		​	128		​	142		​	128		​	36		​	–		​			​
Non-current liabilities	​	288		​	237		​	222		​	32		​	97		​	–		​			​
Related parties—Stockholders	​	226		​	3		​	1,318		​	8,232		​	9		​	–		​			​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Total liabilities	​	684		​	368		​	1,682		​	8,392		​	142		​	–		​			​
Stockholders' equity	​	3,356		​	1,759		​	730		​	(6,105		)	380		​	–		​			​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Equity attributable to noncontrolling interests	​	1,342		​	735		​	37		​	(1,101		)	228		​	73		​	1,314		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Net income (loss)	​	434		​	(15		)	(572		)	(659		)	(11		)	–		​			​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Net income (loss) attributable to noncontrolling interests	​	174		​	(6		)	(28		)	(104		)	(6		)	(16		)	14		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Dividends paid to noncontrolling interests	​	113		​	–		​	–		​	–		​	–		​	13		​	126		​

---

(i)

Discontinued operations

(ii)

Dividends paid to noncontrolling interests relates to Vale Oman Pelletizing

​

​	​	​	​	​
​	​ ​	​ F-53	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

17.    Noncontrolling interest (Continued)

	​	December 31, 2016																			​
	​	MBR	​	PTVI		​	VNC		​	Vale Moçambique S.A.		​	Compañia Mineradora Miski Mayo S.A.C.(i)		​	Others(ii)		​	Total		​
Net income (loss)	​	400	​	2		​	(807		)	(541		)	3		​	–		​	–		​
​	​	​	​	​		​	​		​	​		​	​		​	​		​	​		​
Net income (loss) attributable to noncontrolling interests	​	165	​	1		​	(40		)	(27		)	2		​	(107		)	(6		)
​	​	​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​	​	​		​	​		​	​		​	​		​	​		​	​		​
Dividends paid to noncontrolling interests	​	263	​	–		​	–		​	–		​	11		​	17		​	291		​

---

(i)

Discontinued operation

(ii)

Dividends paid to noncontrolling interests relates to Vale Oman Pelletizing

The stand-alone financial statements of those entities may differ from the financial information reported herein, which is prepared considering Vale's accounting policies including eventual goodwill, provisional price adjustment and others.

18.    Intangibles

Changes in intangibles are as follows:

	​	Goodwill		​	Concessions		​	Right of use		​	Software		​	Total		​
Balance at December 31, 2016	​	3,081		​	3,301		​	147		​	342		​	6,871		​
​	​	​		​	​		​	​		​	​		​	​		​
Additions	​	–		​	980		​	–		​	26		​	1,006		​
Disposals	​	–		​	(9		)	–		​	–		​	(9		)
Amortization	​	–		​	(209		)	(2		)	(142		)	(353		)
Translation adjustment	​	65		​	(61		)	7		​	3		​	14		​
Merger of Valepar (note 30)	​	964		​	–		​	–		​	–		​	964		​
​	​	​		​	​		​	​		​	​		​	​		​
Balance at December 31, 2017	​	4,110		​	4,002		​	152		​	229		​	8,493		​
​	​	​		​	​		​	​		​	​		​	​		​
Cost	​	4,110		​	5,075		​	241		​	1,554		​	10,980		​
Accumulated amortization	​	–		​	(1,073		)	(89		)	(1,325		)	(2,487		)
​	​	​		​	​		​	​		​	​		​	​		​
Balance at December 31, 2017	​	4,110		​	4,002		​	152		​	229		​	8,493		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
Additions	​	–		​	855		​	–		​	7		​	862		​
Disposals	​	–		​	(27		)	–		​	(2		)	(29		)
Amortization	​	–		​	(135		)	(2		)	(99		)	(236		)
Translation adjustment	​	(457		)	(634		)	(13		)	(24		)	(1,128		)
​	​	​		​	​		​	​		​	​		​	​		​
Balance at December 31, 2018	​	3,653		​	4,061		​	137		​	111		​	7,962		​
​	​	​		​	​		​	​		​	​		​	​		​
Cost	​	3,653		​	5,043		​	201		​	923		​	9,820		​
Accumulated amortization	​	–		​	(982		)	(64		)	(812		)	(1,858		)
​	​	​		​	​		​	​		​	​		​	​		​
Balance at December 31, 2018	​	3,653		​	4,061		​	137		​	111		​	7,962		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​	​		​

a)    Goodwill—The goodwill arose from the acquisition of iron ore and nickel businesses. In 2017, the goodwill was recognized on the acquisition of Vale controlling interest by Valepar, based on the expected future returns on the ferrous segment. As the fundamentals are still valid on the date of the merger of Valepar by Vale, the goodwill was fully recognized. The Company has not recognized the deferred taxes

​

​	​	​	​	​
​	​ ​	​ F-54	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

18.    Intangibles (Continued)

over the goodwill, since there are no differences between the tax basis and accounting basis. The Company assesses annually the recoverable amount of the goodwill.

b)    Concessions—The concessions refer to the agreements with governments for the exploration and the development of ports and railways. The Company holds railway concessions which are valid over a certain period of time. Those assets are classified as intangible assets and amortized over the shorter of their useful lives and the concession term at the end of which they will be returned to the government.

c)    Right of use—Refers to intangible identified in the business combination of Vale Canada Limited ("Vale Canada") and to the usufruct contract between the Company and noncontrolling stockholders to use the shares of Empreendimentos Brasileiros de Mineração S.A. (owner of Minerações Brasileiras Reunidas S.A. shares). The amortization of the right of use will expire in 2037 and Vale Canada's intangible will end in September of 2046.

Accounting policy

Intangibles are carried at the acquisition cost, net of accumulated amortization and impairment charges.

The estimated useful lives are as follows:

	​	Useful life
Concessions	​	3 to 50 years
Right of use	​	22 to 31 years
Software	​	5 years

​

​	​	​	​	​
​	​ ​	​ F-55	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

19.    Property, plant and equipment

Changes in property, plant and equipment are as follows:

	​	Land	​	Building		​	Facilities		​	Equipment		​	Mineral properties		​	Others	​	Constructions in progress		​	Total		​
Balance at December 31, 2016	​	724	​	10,674		​	9,471		​	6,794		​	8,380		​	7,515	​	11,861		​	55,419		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
Additions(i)	​	–	​	–		​	–		​	–		​	–		​	–	​	3,392		​	3,392		​
Disposals	​	–	​	(11		)	(57		)	(67		)	(138		)	(212	)	(151		)	(636		)
Assets retirement obligation	​	–	​	–		​	–		​	–		​	425		​	–	​	–		​	425		​
Depreciation, amortization and depletion	​	–	​	(587		)	(736		)	(814		)	(618		)	(754	)	–		​	(3,509		)
Impairment (note 20)	​	(20	)	–		​	–		​	(34		)	(131		)	–	​	(86		)	(271		)
Translation adjustment	​	79	​	(122		)	(105		)	(83		)	222		​	29	​	38		​	58		​
Transfers	​	(65	)	2,146		​	3,213		​	1,097		​	929		​	1,615	​	(8,935		)	–		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
Balance at December 31, 2017	​	718	​	12,100		​	11,786		​	6,893		​	9,069		​	8,193	​	6,119		​	54,878		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
Cost	​	718	​	19,163		​	18,292		​	12,840		​	17,471		​	12,461	​	6,119		​	87,064		​
Accumulated depreciation	​	–	​	(7,063		)	(6,506		)	(5,947		)	(8,402		)	(4,268	)	–		​	(32,186		)
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
Balance at December 31, 2017	​	718	​	12,100		​	11,786		​	6,893		​	9,069		​	8,193	​	6,119		​	54,878		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
Additions(i)	​	–	​	–		​	–		​	–		​	–		​	–	​	2,823		​	2,823		​
Disposals	​	(11	)	(53		)	(93		)	(234		)	(8		)	(79	)	(92		)	(570		)
Assets retirement obligation	​	–	​	–		​	–		​	–		​	446		​	–	​	–		​	446		​
Depreciation, amortization and depletion	​	–	​	(531		)	(655		)	(847		)	(525		)	(653	)	–		​	(3,211		)
Impairment (note 20)	​	–	​	(10		)	(18		)	(21		)	–		​	(31	)	(104		)	(184		)
Translation adjustment	​	(84	)	(1,360		)	(1,471		)	(560		)	(864		)	(990	)	(468		)	(5,797		)
Transfers	​	12	​	806		​	1,687		​	1,176		​	381		​	829	​	(4,891		)	–		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
Balance at December 31, 2018	​	635	​	10,952		​	11,236		​	6,407		​	8,499		​	7,269	​	3,387		​	48,385		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
Cost	​	635	​	18,267		​	17,611		​	12,424		​	16,717		​	11,697	​	3,387		​	80,738		​
Accumulated depreciation	​	–	​	(7,315		)	(6,375		)	(6,017		)	(8,218		)	(4,428	)	–		​	(32,353		)
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
Balance at December 31, 2018	​	635	​	10,952		​	11,236		​	6,407		​	8,499		​	7,269	​	3,387		​	48,385		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​
​	​	​	​	​		​	​		​	​		​	​		​	​	​	​		​	​		​

---

(i)

Includes capitalized borrowing costs.

Disposals of assets

The Company recognized a loss of US$322 and US$348 in the income statement as "Impairment and disposal of non-current assets" for the year ended December 31, 2018 and 2017, respectively, due to non-viable projects and operating assets written off through sale or obsolescence.

Additionally, in the year ended December 31, 2017, the Company concluded the sale of four VLOC's and two Floating Transfer Stations in the amount of US$391. The Company recognized a loss of US$133 in the income statement as "Impairment and disposal of non-current assets".

Accounting policy

Property, plant and equipment are recorded at the cost of acquisition or construction, net of accumulated depreciation and impairment charges.

​

​	​	​	​	​
​	​ ​	​ F-56	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

19.    Property, plant and equipment (Continued)

Mineral properties developed internally are determined by (i) direct and indirect costs attributed to build the mining facilities, (ii) financial charges incurred during the construction period, (iii) depreciation of other fixed assets used during construction, (iv) estimated decommissioning and site restoration expenses, and (v) other capitalized expenditures during the development phase (phase when the project demonstrates its economic benefit to the Company, and the Company has ability and intention to complete the project).

The depletion of mineral properties is determined based on the ratio between production and total proven and probable mineral reserves.

Property, plant and equipment, other than mineral properties are depreciated using the straight-line method based on the estimated useful lives, from the date on which the assets become available for their intended use and are capitalized, except for land which is not depreciated.

The estimated useful lives are as follows:

	​	Useful life
Buildings	​	15 to 50 years
Facilities	​	3 to 50 years
Equipment	​	3 to 40 years
Others:	​
Locomotives	​	12 to 25 years
Wagon	​	30 to 44 years
Railway equipment	​	5 to 33 years
Ships	​	20 years
Others	​	2 to 50 years

The residual values and useful lives of assets are reviewed at the end of each reporting period and adjusted if necessary.

Expenditures and stripping costs

(i)    Exploration and evaluation expenditures—Expenditures on mining research are accounted for as operating expenses until the effective proof of economic feasibility and commercial viability of a given field can be demonstrated. From then on, the expenditures incurred are capitalized as mineral properties.

(ii)   Expenditures on feasibility studies, new technologies and other researches—The Company also conducts feasibility studies for many businesses which it operates including researching new technologies to optimize the mining process. After these costs are proven to generate future benefits to the Company, the expenditures incurred are capitalized.

(iii)  Maintenance costs—Significant industrial maintenance costs, including spare parts, assembly services, and others, are recorded in property, plant and equipment and depreciated through the next programmed maintenance overhaul.

(iv)  Stripping Costs—The costs associated with the removal of overburden and other waste materials ("stripping costs") incurred during the development of mines, before production takes place, are capitalized as part of the depreciable cost of the mineral properties. These costs are subsequently amortized over the useful life of the mine.

​

​	​	​	​	​
​	​ ​	​ F-57	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

19.    Property, plant and equipment (Continued)

Post-production stripping costs are included in the cost of inventory, except when a new project is developed to permit access to a significant ore deposits. In such cases, the cost is capitalized as a non-current asset and is amortized during the extraction of the ore deposits, over the useful life of the ore deposits.

Critical accounting estimates and judgments

Mineral reserves—The estimates of proven and probable reserves are regularly evaluated and updated. These reserves are determined using generally accepted geological estimates. The calculation of reserves requires the Company to make assumptions about expected future conditions that are uncertain, including future ore prices, exchange rates, inflation rates, mining technology, availability of permits and production costs. Changes in assumptions could have a significant impact on the proven and probable reserves of the Company.

The estimated volume of mineral reserves is used as basis for the calculation of depletion of the mineral properties, and also for the estimated useful life which is a major factor to quantify the provision for asset retirement obligation, environmental recovery of mines and impairment of long lived asset. Any changes to the estimates of the volume of mine reserves and the useful lives of assets may have a significant impact on the depreciation, depletion and amortization charges and assessments of impairment.

20. Impairment and onerous contracts

The impairment losses (reversals) recognized in the year are presented below:

	​		​	Income statement														​
	​		​	Impairment (reversals)														​
Segments by class of assets	​	Assets or cash-generating unit	​	2018				​	2017				​	2016				​
Property, plant and equipment and intangible	​		​	​			​	​	​			​	​	​			​	​
Iron ore	​	North system	​	​	–		​	​	​	–		​	​	​	(160		)	​
Coal	​	Australia	​	​	–		​	​	​	–		​	​	​	27		​	​
Base metals—nickel	​	Stobie (VCL)	​	​	–		​	​	​	133		​	​	​	–		​	​
Base metals—nickel	​	Newfoundland (VNL)	​	​	–		​	​	​	–		​	​	​	631		​	​
Base metals—nickel	​	Nouvelle Caledonie (VNC)	​	​	–		​	​	​	–		​	​	​	284		​	​
Several segments	​	Other assets	​	​	184		​	​	​	138		​	​	​	135		​	​
​	​	​	​	​				​	​				​	​				​
Impairment of non-current assets	​		​	​	184		​	​	​	271		​	​	​	917		​	​
Onerous contracts	​		​	​	393		​	​	​	–		​	​	​	257		​	​
​	​	​	​	​				​	​				​	​				​
Impairment of non-current assets and onerous contracts	​		​	​	577		​	​	​	271		​	​	​	1,174		​	​
​	​	​	​	​				​	​				​	​				​
​	​	​	​	​	​		​	​	​	​		​	​	​	​		​	​
​	​	​	​	​				​	​				​	​				​

​

​	​	​	​	​
​	​ ​	​ F-58	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

20. Impairment and onerous contracts (Continued)

a) Impairment of non-financial assets

The Company has carried out an impairment test for the assets for which triggering event was identified. The recoverable amount is assessed by reference to the higher of value in use ("VIU") and fair value less costs of disposal ("FVLCD").

The recoverable amount of each Cash Generating Unit ("CGU") under the impairment testing was assessed using FVLCD model, through discounted cash flow techniques, which is classified as "level 3" in the fair value hierarchy.

The cash flows were discounted using a post-tax discount rate ranging from 6% to 10%, which represents an estimate of the rate that a market participant would apply having regard to the time value of money and the risks specific to the asset. The Company used its weighted average cost of capital ("WACC") as a starting point for determining the discount rates, with appropriate adjustments for the risk profile of the countries in which the individual CGU operates.

Iron ore and pellets—During 2018, the Company did not identify any changes in the circumstances or indicators that would require reassessment of the carrying amount of the iron ore and pellets CGUs. Of the total goodwill (note 18), US$1,841 is allocated to the group of ferrous mineral CGUs. The impairment analysis based on FVLCD model demonstrates that there was no impairment loss in relation to the individual CGUs or goodwill.

In 2016, based on the market circumstances, the Company decided to resume Nortés system pelletizing plant, based on the studies carried out by management that demonstrated its economic feasibility. Accordingly, the Company reversed the full impairments of US$160 recorded in 2013 and 2015.

Coal—Based on the 2018 impairment triggering assessment, the Company has identified trigger of impairment in the Mozambique CGU driven by the lower than planned production volumes during the year. The Company carried out an impairment test based on FVLCD model and concluded that there were no changes in the impairment recognized in 2015.

In 2016, the mining plans for the coal assets in Australia were revised and an impairment loss of US$27 was recognized in the income statement.

Nickel (Onça Puma)—In September 2017, the Federal Court granted an injunction suspending the nickel mining operations at Onça Puma (base metals segment). The Company has appealed this decision to seek a suspension of this injunction, but it is not possible to anticipate when Onça Puma activities will resume. On the assumption that the Company will be able to operate this asset in the future, the Company carried out an impairment test based on FVLCD model assuming different returning of operations scenarios and concluded that no impairment loss should be booked.

Nickel (Others)—In addition, the Company did not identify any changes in the circumstances or indicators during 2018 that would require reassessment of the carrying amount of the other Nickel CGUs. Of the

​

​	​	​	​	​
​	​ ​	​ F-59	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

20. Impairment and onerous contracts (Continued)

total goodwill (note 18), US$1,812 is allocated to the group of nickel CGUs. The impairment analysis based on FVLCD model demonstrates that there was no impairment loss in relation to the individual CGUs or goodwill.

In 2017, an underground mine in Sudbury (Stobie) was affected by seismic activities and the cost to repair the asset is deemed not recoverable in the current market conditions. Therefore, the Company has placed this asset on "care and maintenance" and an impairment of US$133 was recognized in the income statement.

In 2016, the decrease in long term nickel price projections, that significantly reduced the recoverable amounts of the VNL and VNC CGUs, associated with significant capital investments in new processing facilities in recent years, resulted in impairment losses of US$631 and US$284, respectively.

Other assets—The Company has undertaken a review on the business plan of its biological assets leading to a reduction in the expected operational capacity of these assets. The Company carried out an impairment test based on FVLCD model and an impairment loss of US$184 was recognized in the income statement.

b) Onerous contract

In 2018, the Company recognized a provision of US$393 (2016: US$257) for the costs in respect of certain long-term contracts in the Midwest system for fluvial transportation and port structure, with minimum guaranteed volume.

Accounting policy

Impairment of non-financial assets—Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount might not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs of disposal ("FVLCD") and value in use ("VIU").

FVLCD is generally determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset from a market participant's perspective, including any expansion prospects. VIU model is determined as the present value of the estimated future cash flows expected to arise from the continued use of the asset in its present form. Value in use is determined by applying assumptions specific to the Company's continued use and cannot take into account future development. These assumptions are different to those used in calculating fair value and consequently the VIU calculation is likely to give a different result to a FVLCD calculation.

Assets that have an indefinite useful life and are not subject to amortization, such as goodwill, are tested annually for impairment.

​

​	​	​	​	​
​	​ ​	​ F-60	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

20. Impairment and onerous contracts (Continued)

For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGU). Goodwill is allocated to Cash Generating Units or Cash Generating Units groups that are expected to benefit from the business combinations in which the goodwill arose and are identified in accordance with the operating segment.

Non-current assets (excluding goodwill) in which the Company recognized impairment in the past are reviewed whenever events or changes in circumstances indicate that the impairment may no longer be applicable. In such cases, an impairment reversal will be recognized.

Onerous Contracts—For certain long-term contracts, a provision is recognized when the present value of the unavoidable cost to meet the Company's obligation exceeds the economic benefits that could be received from those contracts.

Critical accounting estimates and judgments

The Company determines its cash flows based on the budgets approved by management, which require the use of the following assumptions: (i) mineral reserves and mineral resources measured by internal experts; (ii) costs and investments based on the best estimate of projects as supported by past performance; (iii) sale prices consistent with projections available in reports published by industry considering the market price when appropriate; (iv) the useful life of each cash-generating unit (ratio between production and mineral reserves); and (v) discount rates that reflect specific risks relating to the relevant assets in each cash-generating unit. These assumptions are subject to risk and uncertainty. Hence, there is a possibility that changes in circumstances will change these projections, which may affect the recoverable amount of the assets.

21. Loans, borrowings and cash and cash equivalents

a) Cash and cash equivalents

	​	December 31, 2015		​	December 31, 2014
Cash and bank deposits	​	2,018		​	2,109
Short-term investments	​	1,573		​	1,865
​	​	​		​	​
	​	3,591		​	3,974
​	​	​		​	​
​	​	​		​	​
​	​	​		​	​

Cash and cash equivalents includes cash, immediately redeemable deposits and short-term investments with an insignificant risk of change in value. They are readily convertible to cash, part in R$, indexed to the Brazilian Interbank Interest rate ("DI Rate"or"CDI") and part denominated in US$, mainly time deposits.

8.    Accounts receivable
b) Loans and borrowings

As at December 31, 2018 and 2017, loans and borrowings are secured by property, plant and equipment and receivables in the amount of US$221 and US$275, respectively.

The securities issued through Vale's wholly-owned finance subsidiary Vale Overseas Limited are fully and unconditionally guaranteed by Vale.

​

​	​	​	​	​
​	​ ​	​ F-61	​ ​	​

	​	December 31, 2015		​	December 31, 2014
Trade receivables	​	1,534		​	3,362
Provision for doubtful debts	​	(58		)	(87)
​	​	​		​	​
	​	1,476		​	3,275
​	​	​		​	​
​	​	​		​	​
​	​	​		​	​
Trade receivables related to the steel sector—%	​	75.32		%	77.79%
Reversal (provision) for doubtful debts recorded in the income statement	​	11		​	(36)
Trade receivables write-offs recorded in the income statement	​	(6		)	(5)

          Trade receivables by segments are presented in note 3(b). No individual customer represents over 10% of receivables or revenues.

​ 9.    Inventories

---

	​	December 31, 2015		​	December 31, 2014
Product inventory	​	2,553		​	3,330
Consumable inventory	​	975		​	1,171
​	​	​		​	​
Total	​	3,528		​	4,501
​	​	​		​	​
​	​	​		​	​
​	​	​		​	​

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

9.    Inventories21. Loans, borrowings and cash and cash equivalents (Continued)

          Product inventories by segmentsi) Total debt

	​	Current liabilities					​	Non-current liabilities					​
	​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2017		​
Principal in:	​			​			​			​			​
US$	​	256		​	649		​	10,300		​	16,060		​
EUR	​	–		​	–		​	1,088		​	1,140		​
R$	​	492		​	515		​	2,940		​	3,368		​
Other currencies	​	25		​	17		​	127		​	206		​
Accrued charges	​	230		​	522		​	8		​	12		​
​	​	​		​	​		​	​		​	​		​
Total	​	1,003		​	1,703		​	14,463		​	20,786		​
​	​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​		​	​		​

The future flows of debt payments principal and interest are presented in note 3(b).as follows:

          As at December 31, 2015 product inventory is stated net of provisions for nickel, coal, phosphate, manganese

	​	Principal		​	Estimated future interest payments(i)		​
2019	​	773		​	831		​
2020	​	1,053		​	799		​
2021	​	1,233		​	732		​
2022	​	1,872		​	662		​
Between 2023 and 2027	​	5,109		​	2,132		​
2028 onwards	​	5,188		​	3,794		​
​	​	​		​	​		​
Total	​	15,228		​	8,950		​
​	​	​		​	​		​
​	​	​		​	​		​
​	​	​		​	​		​

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(i)

Based on interest rate curves and iron ore in the amount of US$70 (US$19foreign exchange rates applicable as at December 31, 2014), US$423 (US$285 as at December 31, 2014), US$2 (US$0 as at December 31, 2014), US$4 (US$0 as at December 31, 2014)2018 and US$19 (US$0 as at December 31, 2014), respectively.

10.    Recoverable taxes

          Recoverable taxes are presented netconsidering that the payments of provisions for lossesprincipal will be made on tax credits.

	​	December 31, 2015		​	December 31, 2014
Value-added tax	​	755		​	1,057
Brazilian federal contributions	​	1,125		​	1,010
Others	​	25		​	34
​	​	​		​	​
Total	​	1,905		​	2,101
​	​	​		​	​
​	​	​		​	​
​	​	​		​	​
Current	​	1,404		​	1,700
Non-current	​	501		​	401
​	​	​		​	​
Total	​	1,905		​	2,101
​	​	​		​	​
​	​	​		​	​
​	​	​		​	​

11.    Investmentstheir contracted payments dates. The amount includes the estimated interest not yet accrued and the interest already recognized in associates and joint ventures

          Changes in investments in associates and joint ventures are as follows:

	​	2015		​	2014		​	2013
Balance at beginning of the year	​	4,133		​	3,584		​	6,384
​	​	​		​	​		​	​
Acquisitions(i)	​	584		​	–		​	–
Additions	​	30		​	220		​	378
Capitalizations	​	249		​	–		​	–
Disposals(ii)	​	79		​	–		​	(98)
Translation adjustment	​	(1,211		)	(536		)	(582)
Equity results on income statement	​	(439		)	505		​	469
Equity results on statement of comprehensive income and others	​	(6		)	(2		)	(204)
Dividends declared	​	(95		)	(831		)	(747)
Impairment (note 15)	​	(446		)	(31		)	–
Transfer to held for sale—Others(iii)	​	–		​	1,145		​	(2,016)
Others	​	62		​	79		​	–
​	​	​		​	​		​	​
Balance at end of the year	​	2,940		​	4,133		​	3,584
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

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(i)

Includes Aliança Geração transaction, see note 5.

(ii)

Refers to Yankuang, see note 6, for the year ended December 31, 2015.

(iii)

Refers to Vale Florestar and VLI for the year ended as at December 31, 2014 and Hydro for the year ended as at December 31, 2013.financial statements.

​

​	​	​	​	​
​	​ ​	​ F-62	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

11.    Investments in associates21. Loans, borrowings and joint venturescash and cash equivalents (Continued)

ii) Reconciliation of debt to cash flows arising from financing activities

	​			​			​	Investments in associates and joint ventures					​	Equity results in net income								​	Dividends received
	​			​			​	As at December 31					​	Year ended December 31								​	Year ended December 31
Associates and joint ventures	​	% ownership		​	% voting capital		​	2015		​	2014		​	2015		​	2014		​	2013		​	2015		​	2014		​	2013
Ferrous minerals	​			​			​			​			​			​			​			​			​			​
Baovale Mineração S.A.	​	50.00		​	50.00		​	24		​	16		​	–		​	4		​	(7		)	–		​	–		​	1
Companhia Coreano-Brasileira de Pelotização	​	50.00		​	50.00		​	62		​	86		​	25		​	30		​	18		​	19		​	16		​	22
Companhia Hispano-Brasileira de Pelotização (i)	​	50.89		​	51.00		​	57		​	80		​	14		​	24		​	1		​	16		​	11		​	10
Companhia Ítalo-Brasileira de Pelotização (i)	​	50.90		​	51.00		​	50		​	61		​	21		​	25		​	7		​	14		​	5		​	–
Companhia Nipo-Brasileira de Pelotização (i)	​	51.00		​	51.11		​	104		​	142		​	46		​	66		​	19		​	30		​	48		​	24
Minas da Serra Geral S.A. (v)	​	50.00		​	50.00		​	13		​	20		​	(2		)	1		​	–		​	–		​	–		​	–
MRS Logística S.A.	​	48.16		​	46.75		​	368		​	510		​	43		​	76		​	101		​	22		​	44		​	63
Samarco Mineração S.A. (iv)	​	50.00		​	50.00		​	–		​	200		​	(167		)	392		​	499		​	146		​	401		​	595
VLI S.A.	​	37.60		​	37.60		​	778		​	1,109		​	46		​	48		​	–		​	8		​	–		​	–
Zhuhai YPM Pellet Co.	​	25.00		​	25.00		​	23		​	24		​	–		​	–		​	–		​	–		​	–		​	–
Others	​			​			​	–		​	–		​	–		​	(1		)	(11		)	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​			​			​	1,479		​	2,248		​	26		​	665		​	627		​	255		​	525		​	715
Coal	​			​			​			​			​			​			​			​			​			​
Henan Longyu Energy Resources Co., Ltd.	​	25.00		​	25.00		​	306		​	355		​	(3		)	32		​	42		​	28		​	29		​	40
Base metals	​			​			​			​			​			​			​			​			​			​
Korea Nickel Corp.	​	25.00		​	25.00		​	17		​	21		​	(3		)	–		​	(2		)	–		​	–		​	–
Teal Minerals Inc.	​	50.00		​	50.00		​	–		​	194		​	(129		)	(35		)	(24		)	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​			​			​	17		​	215		​	(132		)	(35		)	(26		)	–		​	–		​	–
Others	​			​			​			​			​			​			​			​			​			​
Aliança Geração de Energia S.A. (i)	​	55.00		​	55.00		​	481		​	–		​	50		​	–		​	–		​	30		​	–		​	–
Aliança Norte Energia Participações S.A. (i)	​	51.00		​	51.00		​	81		​	–		​	1		​	–		​	–		​	–		​	–		​	–
California Steel Industries, Inc.	​	50.00		​	50.00		​	157		​	184		​	(27		)	12		​	20		​	–		​	6		​	6
Companhia Siderúrgica do Pecém (ii)	​	50.00		​	50.00		​	225		​	725		​	(307		)	(44		)	(10		)	–		​	–		​	–
Mineração Rio Grande do Norte S.A.	​	40.00		​	40.00		​	93		​	91		​	40		​	7		​	10		​	3		​	8		​	17
Norte Energia S.A. (ii) (iii)	​	–		​	–		​	–		​	91		​	–		​	(11		)	(2		)	–		​	–		​	–
Thyssenkrupp Companhia Siderúrgica do Atlântico Ltd.	​	26.87		​	26.87		​	–		​	205		​	(80		)	(60		)	(158		)	–		​	–		​	–
Others	​			​			​	101		​	19		​	(7		)	(61		)	(34		)	2		​	–		​	56
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​			​			​	1,138		​	1,315		​	(330		)	(157		)	(174		)	35		​	14		​	79
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​			​			​	2,940		​	4,133		​	(439		)	505		​	469		​	318		​	568		​	834
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

	​	Loans and borrowings		​
December 31, 2017	​	22,489		​
Additions	​	1,225		​
Repayments(i)	​	(7,841		)
Interest paid	​	(1,121		)
​	​	​		​
Cash flow from financing activities	​	(7,737		)
Effect of exchange rate	​	(407		)
Interest accretion	​	1,121		​
​	​	​		​
Non-cash changes	​	714		​
​	​	​		​
December 31, 2018	​	15,466		​
​	​	​		​
​	​	​		​
​	​	​		​

---

(i)

AlthoughIn 2018, the Company held majorityconducted a cash tender offer for Vale Overseas' 5.875% guaranteed notes due 2021, 6.875% guaranteed notes due 2036, 4.375% guaranteed notes due 2022 and a cash tender offer for Vale S.A.' 5.625% guaranteed notes due 2042 and repurchased a total of US$3,730. The Company also redeemed all of Vale Overseas' 4.625% guaranteed notes due 2020 totaling US$499.

Accounting policy

Loans and borrowings are initially measured at fair value, net of transaction costs incurred and are subsequently carried at amortized cost and updated using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the Income statement over the period of the votingloan, using the effective interest rate method. The fees paid in obtaining the loan are recognized as transaction costs.

Loans and borrowing costs are capitalized as part of property, plants and equipment if those costs are directly related to a qualified asset. The capitalization occurs until the qualified asset is ready for its intended use. The average capitalization rate is 17%. Borrowing costs that are not capitalized are recognized in the income statement in the period in which they are incurred.

Liquidity risk—The revolving credit facilities available today were provided by a syndicate of several global commercial banks. To mitigate liquidity risk, Vale has two revolving credit facilities, which will mature in 2020 and 2022, in the available amount of US$5,000 to assist the short term liquidity management and to enable more efficiency in cash management, being consistent with the strategic focus on cost of capital reduction. As of December 31, 2018 these lines are undrawn.

Some of the entities are accounted under equity method dueCompany's debt agreements with lenders contain financial covenants. The primary financial covenants in those agreements require maintaining certain ratios, such as debt to shareholders agreements.

(ii)

Pre-operational stage.

(iii)

The Company'sEBITDA and interest in Norte Energia S.A. is indirectly owned by Aliança Norte Energia Participações S.A. (note 5).

(iv)

Note 4.

(v)

coverage. The Company offered US$17 to acquire the additional 50% interest. The transaction is expected to be completed in 2016.

has not identified any instances of noncompliance as at December 31, 2018 and 2017.

​

​	​	​	​	​
​	​ ​	​ F-63	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

11.    Investments 22. Liabilities related to associates and joint ventures

In March 2016 Samarco and its shareholders, Vale S.A. and BHP Billiton Brasil Ltda. ("BHPB"), entered into an Agreement ("Framework Agreement") with the Brazilian federal government, the two Brazilian states (Espírito Santo and Minas Gerais) and other governmental authorities, in connection with the lawsuit related to the Samarco dam failure (note 28d), in order to implement the programs for remediation and compensation of the areas and communities affected.

The Framework Agreement has a 15-year term, renewable for successive one-year periods until all the obligations under the Framework Agreement have been satisfied.

Under the Framework Agreement, Samarco, Vale S.A. and BHPB have established a foundation ("Fundação Renova" or "Foundation") to develop and implement social and economic remediation and compensation, to be funded by Samarco. To the extent that Samarco does not meet its funding obligations to the foundation, each of Vale S.A. and BHPB will provide, under the terms of the Framework Agreement, funds to the Foundation in proportion to its 50% equity interest in Samarco.

As a consequence of the dam failure, governmental authorities ordered the suspension of Samarco's operations.

Due to the uncertainties regarding Samarco's future cash flow, Vale S.A. maintains a provision for the obligation to comply with the reparation and compensation programs under the Framework Agreement (pro rata to its proportional equity interest in Samarco).

The changes in the provisions are as follows:

	​	2018		​	2017		​
Balance at January 01,	​	996		​	1,077		​
​	​	​		​	​		​
Payments	​	(290		)	(294		)
Present value valuation	​	165		​	182		​
Provision increase	​	403		​	38		​
Translation adjustment	​	(153		)	(7		)
​	​	​		​	​		​
Balance at December 31,	​	1,121		​	996		​
Current liabilities	​	289		​	326		​
Non-current liabilities	​	832		​	670		​
​	​	​		​	​		​
Liabilities	​	1,121		​	996		​
​	​	​		​	​		​
​	​	​		​	​		​
​	​	​		​	​		​

In 2018, the Fundação Renova reviewed the estimates for the expenditures required to mitigate and compensate for the impacts of the disruption from Samarco's tailing dam. As a result of this revision, Vale S.A. recognized in 2018 an additional provision of US$403 (R$1,523 million), which amounts to the present value of Vale's new estimated secondary responsibility to support the Renova Foundation works and is equivalent to 50% of Samarco's additional obligations over the next 12 years.

In addition to the provision above, Vale S.A. made available in the year ended December 31, 2018 and 2017 the amount of US$84 and US$142, respectively, which was fully used to fund Samarco's working

​

​	​	​	​	​
​	​ ​	​ F-64	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

22. Liabilities related to associates and joint ventures (Continued)

          The information (100% basis) about relevant subsidiaries with noncontrolling interest (in whichcapital and was recognized in Vale's income statement as an expense in "Equity results and other investors have participationresults in the Group's activities), associates and joint-venturesjoint ventures". Vale S.A. intends to make available until June 30, 2019 short-term facilities up to US$88 to support Samarco's cash necessity, without any binding obligation to Samarco in this regard. Such support will be released simultaneously with BHPB, and pursuant to the same amounts, terms and conditions, subject to the fulfillment of certain milestones.

The summarized financial information of Samarco are as follows:

	​	December 31, 2015
	​	Assets					​	Liabilities					​			​			​
	​	Current		​	Non-current		​	Current		​	Non-current		​	Stockholders' equity		​	Dividends paid		​	Net income (loss)
Subsidiaries that have noncontrolling interest	​			​			​			​			​			​			​
Minerações Brasileiras Reunidas S.A.	​	743		​	2,912		​	188		​	155		​	3,312		​	116		​	250
Associates and joint ventures	​			​			​			​			​			​			​
Aliança Geração de Energia S.A.	​	65		​	915		​	35		​	71		​	874		​	55		​	91
Companhia Siderúrgica do Pecém	​	265		​	3,057		​	528		​	2,344		​	450		​	–		​	(615)
Henan Longyu Energy Resources Co., Ltd.	​	883		​	529		​	108		​	80		​	1,224		​	112		​	(11)
MRS Logística S.A.	​	323		​	1,709		​	392		​	877		​	764		​	37		​	90
VLI S.A.	​	502		​	2,970		​	511		​	893		​	2,069		​	23		​	121

	​	December 31, 2018		​	December 31, 2017		​
Current assets	​	54		​	66		​
Non-current assets	​	3,443		​	6,016		​
​	​	​		​	​		​
Total assets	​	3,497		​	6,082		​
Current liabilities	​	6,069		​	5,481		​
Non-current liabilities	​	3,934		​	3,636		​
​	​	​		​	​		​
Total liabilities	​	10,003		​	9,117		​
Negative reserves	​	(6,506		)	(3,035		)
Loss	​	(1,257		)	(930		)

Under Brazilian legislation and the terms of the joint venture agreement, Vale does not have an obligation to provide funding to Samarco. Therefore, Vale's investment in Samarco was impaired in full and no provision was recognized in relation to the Samarco's negative reserves.

Critical accounting estimates and judgments

The provision requires the use of assumptions that may be mainly affected by: (i) changes in scope of work required under the Framework Agreement as a result of further technical analysis and the ongoing negotiations with the Federal Prosecution Office, (ii) resolution of uncertainty in respect of the resumption of Samarco's operations; (iii) updates in the discount rate; and (iv) resolution of existing and potential legal claims. As a result, future expenditures may differ from the amounts currently provided and changes to key assumptions could result in a material impact to the amount of the provision in future reporting periods. At each reporting period, Vale S.A. will reassess the key assumptions used by Samarco in the preparation of the projected cash flows and will adjust the provision, if required.

​

​	​	​	​	​
​	​ ​	​ F-65	​ ​	​

	​	December 31, 2014
	​	Assets					​	Liabilities					​			​			​
	​	Current		​	Non-current		​	Current		​	Non-current		​	Stockholders' equity		​	Dividends paid		​	Net income (loss)
Subsidiaries that have noncontrolling interest	​			​			​			​			​			​			​
Minerações Brasileiras Reunidas S.A.	​	433		​	2,544		​	245		​	404		​	2,328		​	–		​	150
Associates and joint ventures	​			​			​			​			​			​			​
Henan Longyu Energy Resources Co., Ltd.	​	1,149		​	484		​	65		​	148		​	1,420		​	116		​	128
MRS Logística S.A.	​	305		​	2,397		​	415		​	1,215		​	1,072		​	61		​	160
VLI S.A.	​	733		​	3,383		​	643		​	523		​	2,950		​	–		​	128

​ 12.    Noncontrolling interest

---

	​	Stockholder's equity					​	Gain (loss) attributable to noncontrolling interest
	​	Balance on					​	Year ended December 31
	​	December 31, 2015		​	December 31, 2014		​	2015		​	2014		​	2013
Biopalma da Amazônia S.A.	​	6		​	34		​	(22		)	(35		)	(43)
Compañia Mineradora Miski Mayo S.A.C.	​	261		​	283		​	10		​	4		​	13
Minerações Brasileiras Reunidas S.A.	​	1,360		​	39		​	(66		)	(3		)	1
PT Vale Indonesia Tbk	​	741		​	736		​	6		​	65		​	18
Vale Nouvelle Caledonie S.A.S.	​	55		​	176		​	(301		)	(348		)	(68)
Vale Oman Pelletizing LLC	​	67		​	67		​	7		​	7		​	12
Outros	​	(375		)	(136		)	(125		)	6		​	(111)
​	​	​		​	​		​	​		​	​		​	​
	​	2,115		​	1,199		​	(491		)	(304		)	(178)
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

13.    Intangibles23. Financial instruments classification

          ChangesThe Company classifies its financial instruments in intangibles are as follows:

	​	Indefinite useful life		​	Finite useful life								​
	​	Goodwill(i)		​	Concessions		​	Right of use(ii)		​	Software		​	Total
Balance on December 31, 2013	​	4,140		​	1,907		​	253		​	571		​	6,871
​	​	​		​	​		​	​		​	​		​	​
Additions	​	–		​	835		​	102		​	252		​	1,189
Disposals	​	–		​	(6		)	–		​	–		​	(6)
Amortization	​	–		​	(202		)	(31		)	(174		)	(407)
Impairment (note 15)	​	(460		)	–		​	–		​	–		​	(460)
Translation adjustment	​	(411		)	(321		)	(27		)	(99		)	(858)
Others	​	491		​	–		​	–		​	–		​	491
​	​	​		​	​		​	​		​	​		​	​
Total	​	3,760		​	2,213		​	297		​	550		​	6,820
​	​	​		​	​		​	​		​	​		​	​
Cost	​	3,760		​	3,421		​	518		​	1,356		​	9,055
Accumulated amortization	​	–		​	(1,208		)	(221		)	(806		)	(2,235)
​	​	​		​	​		​	​		​	​		​	​
Balance on December 31, 2014	​	3,760		​	2,213		​	297		​	550		​	6,820
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
Additions	​	–		​	549		​	–		​	128		​	677
Disposals	​	–		​	(20		)	–		​	–		​	(20)
Amortization	​	–		​	(150		)	(42		)	(155		)	(347)
Impairment (note 15)	​	(81		)	–		​	–		​	–		​	(81)
Translation adjustment	​	(762		)	(778		)	(48		)	(176		)	(1,764)
Acquisition of subsidiary (note 6(f))	​	39		​	–		​	–		​	–		​	39
​	​	​		​	​		​	​		​	​		​	​
Total	​	2,956		​	1,814		​	207		​	347		​	5,324
​	​	​		​	​		​	​		​	​		​	​
Cost	​	2,956		​	2,588		​	464		​	1,025		​	7,033
Accumulated amortization	​	–		​	(774		)	(257		)	(678		)	(1,709)
​	​	​		​	​		​	​		​	​		​	​
Balance on December 31, 2015	​	2,956		​	1,814		​	207		​	347		​	5,324
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

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(i)

Goodwill is allocated mainly in iron oreaccordance with the purpose for which they were acquired, and nickel segments indetermines the amount of US$1,040 e US$1,863, respectively.

(ii)

Refersclassification and initial recognition according to the usufruct contract between the Company and noncontrolling stockholders to use the shares of Empreendimentos Brasileiros de Mineração S.A. (owner of Minerações Brasileiras Reunidas S.A. shares) and intangible assets identified in the business combination of Vale Canada Limited ("Vale Canada"). The amortization of the right of use will expire in 2037 and Vale Canada's intangible assets will end in September of 2046. The concessions refer to the agreements with the Brazilian government for the exploration and the development of ports and railways.

following categories:

	​	December 31, 2018							​	December 31, 2017
Financial assets	​	Amortized cost	​	At fair value through OCI	​	At fair value through profit or loss	​	Total	​	Loans and receivables or amortized cost	​	At fair value through profit or loss	​	Total
Current	​		​		​		​		​		​		​
Cash and cash equivalents	​	5,784	​	–	​	–	​	5,784	​	4,328	​	–	​	4,328
Financial investments	​	–	​	–	​	32	​	32	​	18	​	–	​	18
Derivative financial instruments	​	–	​	–	​	39	​	39	​	–	​	106	​	106
Accounts receivable	​	2,756	​	–	​	(108)	​	2,648	​	2,430	​	170	​	2,600
Related parties	​	364	​	–	​	–	​	364	​	1,898	​	–	​	1,898
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	8,904	​	–	​	(37)	​	8,867	​	8,674	​	276	​	8,950
Non-current	​		​		​		​		​		​		​
Derivative financial instruments	​	–	​	–	​	392	​	392	​	–	​	453	​	453
Investments in equity securities	​	–	​	987	​	–	​	987	​	–	​	–	​	–
Loans	​	153	​	–	​	–	​	153	​	151	​	–	​	151
Related parties	​	1,612	​	–	​	–	​	1,612	​	2,628	​	–	​	2,628
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	1,765	​	987	​	392	​	3,144	​	2,779	​	453	​	3,232
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total of financial assets	​	10,669	​	987	​	355	​	12,011	​	11,453	​	729	​	12,182
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Financial liabilities	​		​		​		​		​		​		​
Current	​		​		​		​		​		​		​
Suppliers and contractors	​	3,512	​	–	​	–	​	3,512	​	4,041	​	–	​	4,041
Derivative financial instruments	​	–	​	–	​	470	​	470	​	–	​	104	​	104
Loans and borrowings	​	1,003	​	–	​	–	​	1,003	​	1,703	​	–	​	1,703
Related parties	​	1,134	​	–	​	–	​	1,134	​	882	​	–	​	882
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	5,649	​	–	​	470	​	6,119	​	6,626	​	104	​	6,730
Non-current	​		​		​		​		​		​		​
Derivative financial instruments	​	–	​	–	​	344	​	344	​	–	​	686	​	686
Loans and borrowings	​	14,463	​	–	​	–	​	14,463	​	20,786	​	–	​	20,786
Related parties	​	960	​	–	​	–	​	960	​	975	​	–	​	975
Participative stockholders' debentures	​	–	​	–	​	1,407	​	1,407	​	–	​	1,233	​	1,233
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
	​	15,423	​	–	​	1,751	​	17,174	​	21,761	​	1,919	​	23,680
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total of financial liabilities	​	21,072	​	–	​	2,221	​	23,293	​	28,387	​	2,023	​	30,410
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

​	​	​	​	​
​	​ ​	​ F-66	​ ​	​

​ 14.    Property, plant and equipment

---

          The net book value of property, plant and equipment pledged to secure judicial claims on December 31, 2015 and 2014 were US$44 and US$68, respectively.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

14.    Property, plant and equipment23. Financial instruments classification (Continued)

          Changes in property, plantThe classification of financial assets and equipmentliabilities by currencies are as follows:

	​	December 31, 2018
Financial assets	​	R$	​	US$	​	CAD	​	EUR	​	Others currencies	​	Total
Current	​		​		​		​		​		​
Cash and cash equivalents	​	2,765	​	2,883	​	23	​	12	​	101	​	5,784
Financial investments	​	1	​	31	​	–	​	–	​	–	​	32
Derivative financial instruments	​	30	​	9	​	–	​	–	​	–	​	39
Accounts receivable	​	447	​	2,197	​	4	​	–	​	–	​	2,648
Related parties	​	–	​	364	​	–	​	–	​	–	​	364
​	​	​	​	​	​	​	​	​	​	​	​	​
	​	3,243	​	5,484	​	27	​	12	​	101	​	8,867
Non-current	​		​		​		​		​		​
Derivative financial instruments	​	380	​	12	​	–	​	–	​	–	​	392
Investments in equity securities	​	–	​	987	​	–	​	–	​	–	​	987
Loans	​	5	​	148	​	–	​	–	​	–	​	153
Related parties	​	–	​	1,612	​	–	​	–	​	–	​	1,612
​	​	​	​	​	​	​	​	​	​	​	​	​
	​	385	​	2,759	​	–	​	–	​	–	​	3,144
​	​	​	​	​	​	​	​	​	​	​	​	​
Total of financial assets	​	3,628	​	8,243	​	27	​	12	​	101	​	12,011
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
Financial liabilities	​		​		​		​		​		​
Current	​		​		​		​		​		​
Suppliers and contractors	​	1,791	​	1,182	​	292	​	141	​	106	​	3,512
Derivative financial instruments	​	389	​	81	​	–	​	–	​	–	​	470
Loans and borrowings	​	532	​	410	​	25	​	36	​	–	​	1,003
Related parties	​	769	​	365	​	–	​	–	​	–	​	1,134
​	​	​	​	​	​	​	​	​	​	​	​	​
	​	3,481	​	2,038	​	317	​	177	​	106	​	6,119
Non-current	​		​		​		​		​		​
Derivative financial instruments	​	321	​	23	​	–	​	–	​	–	​	344
Loans and borrowings	​	2,948	​	10,300	​	127	​	1,088	​	–	​	14,463
Related parties	​	65	​	895	​	–	​	–	​	–	​	960
Participative stockholders' debentures	​	1,407	​	–	​	–	​	–	​	–	​	1,407
​	​	​	​	​	​	​	​	​	​	​	​	​
	​	4,741	​	11,218	​	127	​	1,088	​	–	​	17,174
​	​	​	​	​	​	​	​	​	​	​	​	​
Total of financial liabilities	​	8,222	​	13,256	​	444	​	1,265	​	106	​	23,293
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​

​

​	​	​	​	​
​	​ ​	​ F-67	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

23. Financial instruments classification (Continued)

	​	Land		​	Building		​	Facilities		​	Equipment		​	Mineral properties		​	Others		​	Constructions in progress		​	Total
Balance on December 31, 2013	​	945		​	7,785		​	10,937		​	8,404		​	16,276		​	10,519		​	26,799		​	81,665
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Additions(i)	​	–		​	–		​	–		​	–		​	–		​	–		​	12,054		​	12,054
Disposals(ii)	​	(3		)	(50		)	(10		)	(9		)	(264		)	(28		)	(232		)	(596)
Depreciation and amortization	​	–		​	(454		)	(818		)	(1,025		)	(1,083		)	(723		)	–		​	(4,103)
Transfer to non-current assets held for sale	​	–		​	–		​	(10		)	(49		)	(85		)	(2		)	(2,764		)	(2,910)
Impairment (note 15)	​	–		​	533		​	(47		)	112		​	(1,255		)	(18		)	(17		)	(692)
Translation adjustment	​	(75		)	(1,412		)	(2,407		)	(992		)	(132		)	(1,238		)	(1,040		)	(7,296)
Transfers	​	202		​	5,252		​	3,168		​	2,846		​	1,472		​	2,444		​	(15,384		)	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	1,069		​	11,654		​	10,813		​	9,287		​	14,929		​	10,954		​	19,416		​	78,122
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Cost	​	1,069		​	14,144		​	15,749		​	14,381		​	20,965		​	14,888		​	19,416		​	100,612
Accumulated depreciation	​	–		​	(2,490		)	(4,936		)	(5,094		)	(6,036		)	(3,934		)	–		​	(22,490)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Balance on December 31, 2014	​	1,069		​	11,654		​	10,813		​	9,287		​	14,929		​	10,954		​	19,416		​	78,122
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Additions(i)	​	–		​	–		​	–		​	–		​	–		​	–		​	9,499		​	9,499
Disposals	​	(3		)	(8		)	(41		)	(81		)	(152		)	(1,554		)	(22		)	(1,861)
Disposal of asset retirement obligation	​	–		​	–		​	–		​	–		​	(334		)	–		​	–		​	(334)
Depreciation and amortization	​	–		​	(547		)	(713		)	(1,066		)	(864		)	(766		)	–		​	(3,956)
Transfer to non-current assets held for sale	​	–		​	–		​	–		​	–		​	(127		)	–		​	–		​	(127)
Impairment (note 15)	​	(13		)	(1,828		)	(838		)	(1,100		)	(982		)	(1,979		)	(1,748		)	(8,488)
Translation adjustment	​	(292		)	(3,383		)	(3,182		)	(1,846		)	(2,404		)	(2,439		)	(5,327		)	(18,873)
Transfers	​	5		​	3,213		​	2,253		​	2,112		​	238		​	2,871		​	(10,692		)	–
Acquisition of subsidiary (note 6(f))	​	–		​	–		​	–		​	1		​	–		​	119		​	–		​	120
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	766		​	9,101		​	8,292		​	7,307		​	10,304		​	7,206		​	11,126		​	54,102
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Cost	​	766		​	13,707		​	13,152		​	12,230		​	17,054		​	10,617		​	11,126		​	78,652
Accumulated depreciation	​	–		​	(4,606		)	(4,860		)	(4,923		)	(6,750		)	(3,411		)	–		​	(24,550)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Balance on December 31, 2015	​	766		​	9,101		​	8,292		​	7,307		​	10,304		​	7,206		​	11,126		​	54,102
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

---

(i)

Includes capitalized borrowing

	​	December 31, 2017
Financial assets	​	R$	​	US$	​	CAD	​	EUR	​	Others currencies	​	Total
Current	​		​		​		​		​		​
Cash and cash equivalents	​	1,790	​	2,395	​	48	​	11	​	84	​	4,328
Financial investments	​	1	​	17	​	–	​	–	​	–	​	18
Derivative financial instruments	​	60	​	46	​	–	​	–	​	–	​	106
Accounts receivable	​	246	​	2,334	​	6	​		​	14	​	2,600
Related parties	​	–	​	1,898	​	–	​	–	​	–	​	1,898
​	​	​	​	​	​	​	​	​	​	​	​	​
	​	2,097	​	6,690	​	54	​	11	​	98	​	8,950
Non-current	​		​		​		​		​		​
Derivative financial instruments	​	384	​	69	​	–	​	–	​	–	​	453
Loans	​	5	​	146	​	–	​	–	​	–	​	151
Related parties	​	–	​	2,628	​	–	​	–	​	–	​	2,628
​	​	​	​	​	​	​	​	​	​	​	​	​
	​	389	​	2,843	​	–	​	–	​	–	​	3,232
​	​	​	​	​	​	​	​	​	​	​	​	​
Total of financial assets	​	2,486	​	9,533	​	54	​	11	​	98	​	12,182
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
Financial liabilities	​		​		​		​		​		​
Current	​		​		​		​		​		​
Suppliers and contractors	​	2,464	​	1,108	​	386	​	49	​	34	​	4,041
Derivative financial instruments	​	95	​	9	​	–	​	–	​	–	​	104
Loans and borrowings	​	768	​	880	​	18	​	37	​	–	​	1,703
Related parties	​	–	​	882	​	–	​	–	​	–	​	882
​	​	​	​	​	​	​	​	​	​	​	​	​
	​	3,327	​	2,879	​	404	​	86	​	34	​	6,730
Non-current	​		​		​		​		​		​
Derivative financial instruments	​	638	​	48	​	–	​	–	​	–	​	686
Loans and borrowings	​	3,379	​	16,060	​	207	​	1,140	​	–	​	20,786
Related parties	​	78	​	897	​	–	​	–	​	–	​	975
Participative stockholders' debentures	​	1,233	​	–	​	–	​	–	​	–	​	1,233
​	​	​	​	​	​	​	​	​	​	​	​	​
	​	5,328	​	17,005	​	207	​	1,140	​	–	​	23,680
​	​	​	​	​	​	​	​	​	​	​	​	​
Total of financial liabilities	​	8,655	​	19,884	​	611	​	1,226	​	34	​	30,410
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​

Accounting policy

The Company classifies financial instruments based on its business model for managing the assets and the contractual cash flow characteristics of those assets. The business model test determines the classification based on the business purpose for holding the asset and whether the contractual cash flows represent only payments of principal and interest.

Financial instruments are measured at fair value through profit or loss unless certain conditions are met that permit measurement at fair value through other comprehensive income ("FVOCI") or amortized cost. Gains and losses recorded in other comprehensive income for debt instruments are recognized in profit or loss only on disposal.

​

​	​	​	​	​
​	​ ​	​ F-68	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

23. Financial instruments classification (Continued)

Investments in equity instruments are measured at fair value through profit or loss unless they are eligible to be measured at FVOCI. The Company recognizes equity instruments and gains and losses are never being recycled to profit or loss.

Information about the Company's exposure to credit risk is set out in note 33.

All financial liabilities are initially measured at fair value, net of transaction costs incurred and are subsequently carried at amortized cost and updated using the effective interest rate method. Participative stockholders' debentures and Derivative financial instruments are measured at fair value through profit or loss.

24. Fair value estimate

Due to the short-term cycle, it is assumed that the fair value of cash and cash equivalents balances, financial investments, accounts receivable and accounts payable approximate their book values. For the measurement and determination of fair value, the Company uses various methods including market, income or cost approaches, in order to estimate the value that market participants would use when pricing the asset retirement obligations, seeor liability. The financial assets and liabilities recorded at fair value are 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 unadjusted) for identical or similar assets or liabilities on active markets; and

Level 3—Assets and liabilities, for which quoted prices, do not exist, or where prices or valuation techniques are supported by little or no market activity, unobservable or illiquid.

a) Assets and liabilities measured and recognized at fair value:

	​	December 31, 2018							​	December 31, 2017
	​	Level 1	​	Level 2	​	Level 3	​	Total	​	Level 2	​	Level 3	​	Total
Financial assets	​		​		​		​		​		​		​
Financial investments	​	32	​	–	​	–	​	32	​	–	​	–	​	–
Derivative financial instruments	​	–	​	136	​	295	​	431	​	289	​	270	​	559
Accounts receivable	​	–	​	(108)	​	–	​	(108)	​	170	​	–	​	170
Investments in equity securities	​	987	​	–	​	–	​	987	​	–	​	–	​	–
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	1,019	​	28	​	295	​	1,342	​	459	​	270	​	729
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Financial liabilities	​		​		​		​		​		​		​
Derivative financial instruments	​	–	​	636	​	178	​	814	​	581	​	209	​	790
Participative stockholders' debentures	​	–	​	1,407	​	–	​	1,407	​	1,233	​	–	​	1,233
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	–	​	2,043	​	178	​	2,221	​	1,814	​	209	​	2,023
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

​

​	​	​	​	​
​	​ ​	​ F-69	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24. Fair value estimate (Continued)

The Company changed its accounting estimate on the calculation of the participative stockholders' debentures from January 1, 2018. The Company has replaced in the calculation the assumption of spot price at the reporting date to the weighted average price traded on the market within the last month of the quarter.

There were no transfers between Level 1 and Level 2, or between Level 2 and Level 3 in the year ended December 31, 2018.

The following table presents the changes in Level 3 assets and liabilities for the year ended December 31, 2018:

	​	Derivative financial instruments					​
	​	Financial assets		​	Financial liabilities		​
Balance at December 31, 2017	​	270		​	209		​
​	​	​		​	​		​
Gain and losses recognized in income statement	​	25		​	(31		)
​	​	​		​	​		​
Balance at December 31, 2018	​	295		​	178		​
​	​	​		​	​		​
​	​	​		​	​		​
​	​	​		​	​		​

Methods and valuation techniques

i) Derivative financial instruments

Derivative financial instruments are evaluated through the use of market curves and prices impacting each instrument at the closing dates, detailed in the item "market curves" (note 34).

For the pricing of options, the Company often uses the Black & Scholes model. In this model, the fair value of the derivative is determined basically as a function of the volatility and the price of the underlying asset, the strike price of the option, the risk free interest rate and the option maturity. In the case of options where payoff is a function of the average price of the underlying asset over a certain period during the life of the option, the Company uses Turnbull & Wakeman model. In this model, in addition to the factors that influence the option price in the Black-Scholes model, the formation period of the average price is also considered.

In the case of swaps, both the present value of the long and short positions are estimated by discounting their cash flow.

(ii)

Includesflows by the disposalinterest rate in the related currency. The fair value is determined by the difference between the present value of CoW Indonesiathe long and short positions of the swap in the reference currency.

For the swaps indexed to TJLP, the calculation of the fair value assumes that TJLP is constant, that is, the projections of future cash flows in Brazilian Reais are made considering the last TJLP disclosed.

Forward and future contracts are priced using the future curves of their corresponding underlying assets. Typically, these curves are obtained on the stock exchanges where these assets are traded, such as the London Metals Exchange ("LME"), the Commodity Exchange ("COMEX") or other providers of market prices. When there is no price for the desired maturity, Vale uses an interpolation between the available maturities.

​

​	​	​	​	​
​	​ ​	​ F-70	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24. Fair value estimate (Continued)

The fair value of derivatives within level 3 is estimated using discounted cash flows and option model valuation techniques with unobservable inputs of discount rates, stock prices and commodities prices.

ii) Participative stockholders' debentures—Consist of the debentures issued during the privatization process (note 29(a))13), for which fair values are measured based on the market approach. Reference prices are available on the secondary market.

Critical accounting estimates and judgments

The fair values of financial instruments that are not traded in active markets are determined using valuation techniques. Vale uses its own judgment to choose between the various methods. Assumptions are based on the market conditions, at the end of the year.

An analysis of the impact if actual results are different from management's estimates is present on note 34 (sensitivity analysis).

b) Fair value of financial instruments not measured at fair value

The fair value estimate for level 1 is based on market approach considering the secondary market contracts. For loans allocated to level 2, the income approach is adopted and the fair value for both fixed-indexed rate debt and floating rate debt is determined on a discounted cash flow basis using LIBOR future values and Vale's bonds curve.

The fair values and carrying amounts of loans and borrowings are as follows:

Financial liabilities	​	Balance		​	Fair value		​	Level 1		​	Level 2		​
December 31, 2018	​			​			​			​			​
Debt principal	​	15,228		​	16,262		​	10,686		​	5,576		​
December 31, 2017	​			​			​			​			​
Debt principal	​	21,955		​	23,088		​	14,935		​	8,153		​

​

​	​	​	​	​
​	​ ​	​ F-71	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

15.    Impairment and onerous contracts25.    Derivative financial instruments

          According to the accounting policy described in note 31(l), the Company identified evidencea) Derivatives effects on statement of impairment in relation to certain investments in associates and joint ventures, intangible and property, plant and equipment. The following impairment charges and reversals were recorded:financial position

	​		​			​	Impairment (reversals)
Segments by class of assets	​	Assets or cash-generating unit	​	Recoverable amount		​	2015		​	2014		​	2013
Property, plant and equipment	​		​			​			​			​
Iron ore	​	Midwest system	​	–		​	522		​	–		​	–
Iron ore	​	Simandou project	​	–		​	–		​	1,135		​	–
Iron ore	​	Others	​	–		​	34		​	–		​	–
Pellets	​	North system (stopped operations)	​	–		​	55		​	–		​	–
Pellets	​	Pelletizing asset	​	–		​	–		​	–		​	182
Pellets	​	Others	​	–		​	3		​	–		​	–
Other ferrous products and services	​	Others	​	–		​	21		​	–		​	–
Coal	​	Mozambique	​	1,729		​	2,403		​	–		​	–
Coal	​	Australia	​	74		​	554		​	343		​	–
Nickel	​	Newfoundland (VNL)	​	2,353		​	3,460		​	–		​	–
Nickel	​	New Caledonia (VNC)	​	3,725		​	1,462		​	238		​	–
Nickel	​	Onça Puma	​	2,331		​	(252		)	(1,617		)	–
Nickel	​	Others	​	–		​	26		​	–		​	–
Copper	​	Others	​	–		​	36		​	–		​	–
Potash	​	Potássio Rio Colorado	​	20		​	548		​	–		​	2,116
Phosphates	​	Phosphate	​	3,842		​	(391		)	593		​	–
Others	​	Others	​	–		​	7		​	–		​	–
​	​	​	​	​		​	​		​	​		​	​
	​		​			​	8,488		​	692		​	2,298
Intangible	​		​			​			​			​
Coal	​	Australia	​	–		​	81		​	–		​	–
Phosphates	​	Phosphate	​	–		​	–		​	460		​	–
​	​	​	​	​		​	​		​	​		​	​
Impairment of non-current assets	​		​			​	8,569		​	1,152		​	2,298
​	​	​	​	​		​	​		​	​		​	​
Onerous contracts	​		​			​			​			​
Iron ore	​	Midwest system	​			​	357		​	–		​	–
​	​	​	​	​		​	​		​	​		​	​
Impairment of non-current assets and onerous contracts	​		​			​	8,926		​	1,152		​	2,298
​	​	​	​	​		​	​		​	​		​	​
​	​	​	​	​		​	​		​	​		​	​
​	​	​	​	​		​	​		​	​		​	​
Investments in associates and joint ventures	​		​			​			​			​
Pellets	​	Samarco Mineração S.A.	​	–		​	132		​	–		​	–
Copper	​	Teal Minerals Inc.	​	–		​	314		​	–		​	–
Others	​	Vale Soluções em Energia S.A.	​	–		​	–		​	31		​	–
​	​	​	​	​		​	​		​	​		​	​
Impairment of investments in associates and joint ventures	​		​			​	446		​	31		​	–
​	​	​	​	​		​	​		​	​		​	​
​	​	​	​	​		​	​		​	​		​	​
​	​	​	​	​		​	​		​	​		​	​

	​	Assets
	​	December 31, 2018			​	December 31, 2017
	​	Current	​	Non-current	​	Current	​	Non-current
Derivatives not designated as hedge accounting	​		​		​		​
Foreign exchange and interest rate risk	​		​		​		​
CDI & TJLP vs. US$ fixed and floating rate swap	​	9	​	–	​	38	​	–
IPCA swap	​	7	​	84	​	9	​	82
Eurobonds swap	​	–	​	4	​	–	​	27
Pré-dolar swap	​	19	​	1	​	22	​	32
​	​	​	​	​	​	​	​	​
	​	35	​	89	​	69	​	141
Commodities price risk	​		​		​		​
Nickel	​	2	​	–	​	22	​	3
Bunker oil	​	1	​	–	​	15	​	–
​	​	​	​	​	​	​	​	​
	​	3	​	–	​	37	​	3
Others (note 34)	​	1	​	303	​	–	​	309
​	​	​	​	​	​	​	​	​
	​	1	​	303	​	–	​	309
​	​	​	​	​	​	​	​	​
Total	​	39	​	392	​	106	​	453
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​

a) Impairment of non-current assets

          In accordance with the Company's accounting policy, each CGU is evaluated at each reporting period to determine whether there are any indicators of impairment. If any such indicators of impairment exist, an estimate of the recoverable amount is performed.

	​	Liabilities
	​	December 31, 2018			​	December 31, 2017
	​	Current	​	Non-current	​	Current	​	Non-current
Derivatives not designated as hedge accounting	​		​		​		​
Foreign exchange and interest rate risk	​		​		​		​
CDI & TJLP vs. US$ fixed and floating rate swap	​	383	​	98	​	95	​	410
IPCA swap	​	35	​	47	​		​	41
Eurobonds swap	​	5	​	–	​	4	​	–
Pré-dolar swap	​	10	​	18	​	5	​	24
​	​	​	​	​	​	​	​	​
	​	433	​	163	​	104	​	475
Commodities price risk	​		​		​		​
Nickel	​	8	​	2	​	–	​	–
Bunker oil	​	29	​	–	​	–	​	–
​	​	​	​	​	​	​	​	​
	​	37	​	2	​	–	​	–
Others (note 34)	​	–	​	179	​	–	​	211
​	​	​	​	​	​	​	​	​
	​	–	​	179	​	–	​	211
​	​	​	​	​	​	​	​	​
Total	​	470	​	344	​	104	​	686
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​

​

​	​	​	​	​
​	​ ​	​ F-72	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

15.    Impairment and onerous contracts25.    Derivative financial instruments (Continued)

          In assessing whether an impairment is required, the carrying valueb) Effects of the asset or CGU is compared with its recoverable amount. The recoverable amount is the higher of the CGU's fair value less costs to sell ("FVLCS") and value in use ("ViU"). If an impairment was recognized in previous years and actual circumstances indicate that the impairment is no longer be applicable, an impairment reversal is recognized.

          The FVLCS is calculated in each CGU and is estimated based on discounted future estimated cash flows, considering market based commodity price, the CGU five-year plans and life of mine plans, mineral reserves and mineral resources, costs and investments basedderivatives on the best estimate of past performanceincome statement, cash flow and sale prices consistent with the projections used in reports published by industry considering the market price when available and appropriate.

          The determination of FVLCS for each CGU are considered to be Level 3 fair value measurements, as they are derived from valuation techniques that include inputs that are not based on observable market data. The most sensitive assumptions were the discount rate and prices. All assets were tested using FVLCS model, except for North system.

          These cash flows were discounted using a post-tax discount rate ranging from 6% to 10%. The discount rate was based on the weighted average cost of capital ("WACC") that reflected current market assessments of the time value of money and the risks specific to the CGU.

          The price assumptions for calculating the FVLCS were a range of (in US$ per ton) 48 to 65 for iron ore, 85 to 140 for coal, 13,000 to 20,000 for nickel and 105 to 125 for phosphate.

          Iron ore and pellets—The Midwest system is comprised of the Corumbá mines and Paraná and Paraguay Waterway Systems. In 2015, there was a significant restructuring of operations, which includes the reduction of production and the revision of the freight strategy. With this restructuring, the Midwest system is evaluated as an independent CGU from other iron ore operations. Until 2014, this CGU was part of the iron ore CGU. The reduction of iron ore prices and the logistics cost lead to an impairment of US$522. The impairment in the amount of US$55 relates to pelletizing plants that were stopped in North system.

          For the Simandou project, Vale recognized an impairment of US$1,135 in 2014 related to the revocation of Vale's former 51%-owned subsidiary VBG-Vale BSGR Limited ("VBG") mining concessions in Guinea. During the first quarter of 2015, the investment was sold (note 6(e)).

          For onerous contracts, provision is made for the present value of certain long term contracts where the unavoidable cost of meeting the Company's obligations is expected to exceed the benefits to be received. In 2015, the Company recognized provision for losses related to fluvial freight in the amount of US$357 in other liabilities in the balance sheet.

          Coal—The reduction in estimated future coal prices combined with the increase of logistics costs decreased the estimated net recoverable amount of Mozambique assets, causing an impairment of US$2,403. The Coal assets in Australia were also impacted by the prices and the revision to the future mining plans in 2015, recording an impairment of US$635. The impairment of US$343 registered in 2014 relates to Integra and Isaac Plans which were sold during the fourth quarter of 2015.comprehensive income

	​	Gain (loss) recognized in the income statement					​
	​	Year ended December 31					​
	​	2018	​	2017	​	2016	​
Derivatives not designated as hedge accounting	​		​		​		​
Foreign exchange and interest rate risk	​		​		​		​
CDI & TJLP vs. US$ fixed and floating rate swap	​	(206	)	152	​	869	​
IPCA swap	​	(23	)	43	​	78	​
Eurobonds swap	​	(27	)	36	​	(19	)
Euro forward	​	–	​	46	​	(46	)
Pré-dolar swap	​	(23	)	36	​	77	​
​	​	​	​	​	​	​	​
	​	(279	)	313	​	959	​
Commodities price risk	​		​		​		​
Nickel	​	(25	)	30	​	(42	)
Bunker oil	​	6	​	(80	)	268	​
​	​	​	​	​	​	​	​
	​	(19	)	(50	)	226	​
Others	​	32	​	191	​	74	​
Derivatives designated as cash flow hedge accounting	​		​		​		​
Foreign exchange	​	–	​	–	​	(3	)
​	​	​	​	​	​	​	​
	​	–	​	–	​	(3	)
​	​	​	​	​	​	​	​
Total	​	(266	)	454	​	1,256	​
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​

	​	Financial settlement inflows (outflows)					​
	​	Year ended December 31					​
	​	2018	​	2017	​	2016	​
Derivatives not designated as hedge accounting	​		​		​		​
Foreign exchange and interest rate risk	​		​		​		​
CDI & TJLP vs. US$ fixed and floating rate swap	​	(135	)	(181	)	(513	)
IPCA swap	​	7	​	(20	)	(25	)
Eurobonds swap	​	(3	)	(39	)	(142	)
Pré-dolar swap	​	10	​	(1	)	(90	)
​	​	​	​	​	​	​	​
	​	(121	)	(241	)	(770	)
Commodities price risk	​		​		​		​
Nickel	​	8	​	4	​	(30	)
Bunker oil	​	49	​	(3	)	(799	)
​	​	​	​	​	​	​	​
	​	57	​	1	​	(829	)
Others	​	(3	)	–	​	–	​
Derivatives designated as cash flow hedge accounting	​		​		​		​
Foreign exchange	​	–	​	–	​	(3	)
​	​	​	​	​	​	​	​
	​	–	​	–	​	(3	)
​	​	​	​	​	​	​	​
Total	​	(67	)	(240	)	(1,602	)
​	​	​	​	​	​	​	​

​

​	​	​	​	​
​	​ ​	​ F-73	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

15.    Impairment and onerous contracts25.    Derivative financial instruments (Continued)

          Nickel—During

	​	Gain (loss) recognized in other comprehensive income
	​	Year ended December 31
	​	2018	​	2017	​	2016
Derivatives designated as cash flow hedge accounting	​		​		​
Foreign exchange	​	–	​	–	​	2
​	​	​	​	​	​	​
Total	​	–	​	–	​	2
​	​	​	​	​	​	​
​	​	​	​	​	​	​
​	​	​	​	​	​	​

The maturity dates of the impairment testderivative financial instruments are as follows:

	​	Last maturity dates
Currencies and interest rates	​	December 2027
Bunker oil	​	June 2019
Nickel	​	December 2020
Others	​	December 2027

c)    Hedge in foreign operations

As at December 31, 2018 the carrying value of the debts designated as instrument hedge of the Company's investment in foreign operations (Vale International S.A. and Vale International Holding GmbH; hedging objects) are US$2,467 and EUR750, respectively. The foreign exchange losses of US$823 (US$543, net of taxes) and US$144 (US$95, net of taxes), were recognized for 2015,the year ended December 31, 2018 and 2017, respectively in the "Cumulative translation adjustments" in stockholders' equity. This hedge was highly effective throughout the year ended December 31, 2018.

Accounting policy

The Company uses financial instruments to hedge its exposure to certain market risks arising from operational, financing and investing activities. Derivatives are included within financial assets or liabilities at fair value through profit or loss unless they are designated as effective hedging instruments.

At the beginning of the hedge operations, the Company identifieddocuments the type of hedge, the relation between the hedging instrument and hedged items, its risk management objective and strategy for undertaking hedge operations. The Company also documents, both at hedge inception and on an ongoing basis that the indicators which caused an impairmenthedge is expected to continue to be highly effective. The Company adopts the hedge accounting procedure and designates certain derivatives as shows below:

Cash flow hedge—The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in previous years for Onçequity within "Unrealized fair value gain (losses)". The gain or loss relating to the ineffective portion is recognized immediately in the income statement. When a Puma werehedging instrument expires or is sold, or when a hedge no longer applicable. This was mainly duemeets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized in profit or loss when the transaction is recognized in the income statement.

​

​	​	​	​	​
​	​ ​	​ F-74	​ ​	​

​

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Table of Contents

Notes to the recoveryFinancial Statements (Continued)

Expressed in millions of Onça Puma's production returningUnited States dollar, unless otherwise stated

25.    Derivative financial instruments (Continued)

Net investment hedge—Hedges of net investments in foreign operations are accounted for similarly to normal operations for more than two years. Partcash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the impairmenthedge is recognized in equity within "Cumulative translation adjustments". The gain or loss relating to the ineffective portion is recognized immediately in the income statement. Gains and losses accumulated in equity are included in the statement of income when the foreign operation is partially or fully disposed of or sold.

Derivatives at fair value through profit or loss—Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any of these derivative instruments are recognized immediately in the income statement.

26.    Provisions

	​	Current liabilities			​	Non-current liabilities
	​	December 31, 2018	​	December 31, 2017	​	December 31, 2018	​	December 31, 2017
Payroll, related charges and other remunerations	​	1,046	​	1,101	​	–	​	–
Onerous contracts	​	60	​	102	​	642	​	364
Environmental obligations(i)	​	100	​	30	​	202	​	79
Asset retirement obligations (note 27)	​	85	​	87	​	3,030	​	3,081
Provisions for litigation (note 28)	​	–	​	–	​	1,357	​	1,473
Employee postretirement obligations (note 29)	​	72	​	74	​	1,864	​	2,030
​	​	​	​	​	​	​	​	​
Provisions	​	1,363	​	1,394	​	7,095	​	7,027
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​

---

(i)

In 2018, the Company recognized an obligation in the amount of US$1,617 registered in 2012 was reversed in 2014. The amount of US$252 was reversed in 2015.

          In 2015, VNL was identified as a separate CGU (previously part of the Canada Nickel CGU) as there was a change in location of processed ore (feed of nickel concentrate)229 related to certain environmental obligation that became effective from the VNL mine that is now expectedcurrent year due to be processed in Long harbor instead of Ontario's Sudbury operations.

          A reduction of long term nickel price projections, that significantly reduced the recoverable values of the VNC and VNL CGUs, combined with carrying values that reflect significant capital investments in new processing facilities in recent years, resulted in an impairment losschanges in the amount of US$4,922 for these CGU.

          Of the total goodwill (note 13), US$1,863 is allocated to the Nickel CGUs which was tested based on FVLCS determined using cash flows based on approved budgets and market assumptions, considering mineral reserves and resources and additional value calculated by experts, costs and investments based on the best estimate of past performance and sales nickel prices using a range from 13,000 to 20,000 (US$ per ton). Cash flows used are designed based on the life of each CGU and considering a discount rates range from 6% to 8%.

          Fertilizers—The scenario of depreciation of the R$ against the US$ had a favorable impact on the phosphate businessregulation in Brazil in 2015, reverting the total amount of the impairment that was previously recognized during 2014 in the amount of US$391.place.

​

​	​	​	​	​
​	​ ​	​ F-75	​ ​	​

​

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          The majority of the remaining balance of the assets in PRC were impaired in 2015 as the management does not expect to be able to recover the amounts invested in the project. An impairment charge of US$548 and US$2,116 was recognized in 2015 and 2013, respectively.

b) Impairment of investments in associates and joint ventures

          In 2015, the Company recognized an impairment of US$132 in its investment in Samarco (note 4) and US$314 in Teal Minerals Inc. ("Teal"). Teal recognized an impairment of property, plant and equipment due to the revision of future mining plans and the decrease of the price of copper.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

16.    Loans and borrowings27.    Asset retirement obligations

a) Total debt

	​	Current liabilities					​	Non-current liabilities
	​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2014
Debt contracts in the international markets	​			​			​			​
Floating rates in:	​			​			​			​
US$	​	241		​	358		​	5,174		​	5,095
Other currencies	​	–		​	–		​	–		​	2
Fixed rates in:	​			​			​			​
US$	​	1,191		​	69		​	12,923		​	13,239
EUR	​	–		​	–		​	1,633		​	1,822
Other currencies	​	14		​	–		​	169		​	–
Accrued charges	​	326		​	334		​	–		​	–
​	​	​		​	​		​	​		​	​
	​	1,772		​	761		​	19,899		​	20,158
​	​	​		​	​		​	​		​	​
Debt contracts in Brazil	​			​			​			​
Floating rates in:	​			​			​			​
R$, indexed to TJLP, TR, IPCA, IGP-M and CDI	​	212		​	296		​	4,709		​	5,503
Basket of currencies and US$ indexed to LIBOR	​	290		​	211		​	1,342		​	1,364
Fixed rates in:	​			​			​			​
R$	​	63		​	48		​	268		​	363
Accrued charges	​	169		​	103		​	129		​	–
​	​	​		​	​		​	​		​	​
	​	734		​	658		​	6,448		​	7,230
​	​	​		​	​		​	​		​	​
	​	2,506		​	1,419		​	26,347		​	27,388
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​

          The future flowsProvision is made for expected costs for the closure of debt payments (principalthe mines and interest) per naturedeactivation of fundingthe related mining assets. Changes in the provision for asset retirement obligations and long-term interest rates (per annum, used to discount these obligations to present value and to update the provisions) are as follows:

	​	Bank loans(i)		​	Capital market(i)		​	Development agencies(i)		​	Debt principal(i)		​	Estimated future payments of interest(ii)
2016	​	262		​	951		​	799		​	2,012		​	1,476
2017	​	991		​	1,212		​	918		​	3,121		​	1,512
2018	​	1,719		​	816		​	1,058		​	3,593		​	1,553
2019	​	578		​	1,000		​	1,239		​	2,817		​	1,446
2020	​	1,553		​	1,282		​	808		​	3,643		​	1,222
2021	​	289		​	77		​	822		​	1,188		​	1,089
Between 2022 and 2025	​	973		​	3,276		​	912		​	5,161		​	2,801
2026 onwards	​	88		​	6,482		​	124		​	6,694		​	6,294
​	​	​		​	​		​	​		​	​		​	​
	​	6,453		​	15,096		​	6,680		​	28,229		​	17,393
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

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(i)

Does not include accrued charges.

(ii)

Consists of estimated future payments of interest, calculated based on interest rate curves and foreign exchange rates applicable as at December 31, 2015 and considering that all amortization payments and payments at maturity on loans and borrowings will be made on their contracted payments dates. The amount includes the estimated values of future interest payments (not yet accrued), in addition to interest already recognized in the financial statements.

	​	December 31, 2018	​	December 31, 2017	​
Balance at beginning of the year	​	3,168	​	2,519	​
​	​	​	​	​	​
Present value valuation	​	15	​	70	​
Settlements	​	(259	)	(60	)
Revisions on cash flows estimates	​	461	​	620	​
Translation adjustment	​	(270	)	96	​
Effect of discontinued operations	​		​		​
Transfer to net assets held for sale	​	–	​	(77	)
​	​	​	​	​	​
Balance at end of the year	​	3,115	​	3,168	​
​	​	​	​	​	​
​	​	​	​	​	​
​	​	​	​	​	​
Current	​	85	​	87	​
Non-current	​	3,030	​	3,081	​
​	​	​	​	​	​
	​	3,115	​	3,168	​
​	​	​	​	​	​
​	​	​	​	​	​
​	​	​	​	​	​
Long-term interest rates (per annum)	​		​		​
Brazil	​	4.94	%	5.34	%
Canada	​	0.77	%	0.57	%
Other regions	​	1.33%–8.59	%	0.72%–6.13	%

Table of Contents

Accounting policy

Notes toWhen the Financial Statements (Continued)

Expressed in millionsprovision is recognized, the corresponding cost is capitalized as part of United States dollar, unless otherwise stated

16.    Loans and borrowings (Continued)

          At December 31, 2015, the average annual interest rates by currency are as follows:

	​	Average interest rate(i)		​	Total debt
Loans and borrowings in	​			​
US$	​	4.63		%	21,431
R$(ii)	​	10.78		%	5,541
EUR(iii)	​	4.06		%	1,698
Other currencies	​	5.94		%	183
​	​	​		​	​
	​			​	28,853
​	​	​		​	​
​	​	​		​	​
​	​	​		​	​

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(i)

In order to determine the average interest rate for debt contracts with floating rates, the Company used the last renegotiated rate at December 31, 2015.

(ii)

R$ denominated debt that bears interest at IPCA, CDI, TR or TJLP, plus spread. For a total of US$3,772, the Company entered into derivative transactions to mitigate the exposure to the cash flow variations of the floating rate debt denominated in R$, resulting in an average cost of 2.07% per year in US$.

(iii)

Eurobonds, for which the Company entered into derivatives to mitigate the exposure to the cash flow variations of the debt denominated in EUR, resulting in an average cost of 4.41% per year in US$.

b) Credit and financing lines

	​		​		​		​			​	Available amount
Type	​	Contractual currency	​	Date of agreement	​	Period of the agreement	​	Total amount		​	December 31, 2015
Credit lines	​		​		​		​			​
Revolving credit facility	​	US$	​	May 2015	​	5 years	​	3,000		​	3,000
Revolving credit facility	​	US$	​	July 2013	​	5 years	​	2,000		​	2,000
Financing lines	​		​		​		​			​
BNDES(i)	​	R$	​	April 2008	​	10 years	​	1,869		​	365
BNDES—CLN 150	​	R$	​	September 2012	​	10 years	​	994		​	5
BNDES—S11D e S11D Logística	​	R$	​	May 2014	​	10 years	​	1,578		​	384

---

(i)

Memorandum of understanding signature date, however term is considered from the signature date of each contract amendment. This credit line supported or supports the Usina VIII, Onça Puma, Salobo I and II and capital expenditure of Itabira projects.

          In January 2016 (subsequent event), the Company drew down on US$3,000 of its revolving credit facilities. The amount of US$1,800 was drew down on by Vale International S.A. and US$1,200 (R$4,686) by the Parent Company.

c) Funding

          In 2015, Vale issued infrastructure debentures in the amount of R$1,350 (US$346) and export credit notes in the amount of R$1,500 (US$384).

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

16.    Loans and borrowings (Continued)

d) Guarantees

          As at December 31, 2015 and 2014, loans and borrowings are secured by property, plant and equipment and receivablesit is depreciated over the useful life of the related mining asset, resulting in an expense recognized in the amountincome statement.

The long-term liability is discounted at presented value using a long-term risk free discount rate applicable to the liability and the unwinds are recorded in the income statement and is reduced by payments for mine closure and decommissioning of US$495 and US$1,312, respectively.mining assets.

          The securities issued through Vale's 100%-owned finance subsidiary Vale Overseas Limited are fully and unconditionally guaranteed by Vale.

e) Covenants

          Some of the Company's debt agreements with lenders contain financial covenants. The main covenants in those agreements require maintaining certain ratios, such as debt to EBITDA (Earnings before Interest Taxes, Depreciation and Amortization) and interest coverage. The Company has not identified any instances of noncompliance as at December 31, 2015 and 2014.

17.    Asset retirement obligations

          The Company applies judgment and assumptions when measuring its asset retirement obligation. The accrued amounts of these obligations are not deducted from the potential costs covered by insurance or indemnities.

          The long termCritical accounting estimates and judgments

Judgment is required to determine key assumptions used on the asset retirement obligation measurement such as, interest rates (per annum, used to discount these obligations to present value and to updaterate, cost of closure, useful life of the provisions)mining asset considering the current conditions of closure and the projected date of depletion of each mine. Any changes in these assumptions may significantly impact the provisionrecorded provision. Therefore, the estimated costs for closure of asset retirement obligationsthe mining assets are as follows:deemed to be a critical accounting estimate. These estimates are annually reviewed.

​

​	​	​	​	​
​	​ ​	​ F-76	​ ​	​

	​	December 31, 2015		​	December 31, 2014
Balance at beginning of the year	​	3,369		​	2,644
​	​	​		​	​
Interest expense	​	109		​	193
Settlements	​	(88		)	(41)
Revisions on cash flows estimates(i)	​	(135		)	842
Translation adjustment	​	(781		)	(269)
​	​	​		​	​
Balance at end of the year	​	2,474		​	3,369
​	​	​		​	​
​	​	​		​	​
​	​	​		​	​
Current	​	89		​	136
Non-current	​	2,385		​	3,233
​	​	​		​	​
	​	2,474		​	3,369
​	​	​		​	​
​	​	​		​	​
​	​	​		​	​
Brazil	​	7.28		%	5.51%
Canada	​	0.59		%	2.05%
Other regions	​	1.12%–5.91		%	1.61%–8.81%

​

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(i)

Includes only the impacts in operating expenses and property, plants and equipments.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

18.28.    Litigation

a) Provision for litigation

Vale is party to labor, civil, tax and other ongoing lawsuits, at administrative and court levels. Provisions for losses resulting from lawsuits are estimated and updated by the Company, based on analysis from the Company's legal consultants.

Changes in provision for litigation are as follows:

	​	Tax litigation		​	Civil litigation		​	Labor litigation		​	Environmental litigation		​	Total of litigation provision	​	Tax litigation	​	Civil litigation	​	Labor litigation	​	Environmental litigation	​	Total of litigation provision	​
Balance on December 31, 2013	​	330		​	209		​	709		​	28		​	1,276
Balance at December 31, 2016															​	214	​	84	​	534	​	7	​	839	​
​	​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​
Additions	​	103		​	54		​	237		​	32		​	426
Reversals	​	(2		)	(104		)	(133		)	(13		)	(252)
Additions and reversals, net															​	22	​	17	​	126	​	4	​	169	​
Payments	​	(37		)	(20		)	(48		)	–		​	(105)	​	(117	)	(3	)	(105	)	–	​	(225	)
Indexation and interest	​	136		​	(6		)	52		​	52		​	234	​	10	​	35	​	37	​	(1	)	81	​
Translation adjustment	​	(164		)	(15		)	(111		)	(7		)	(297)	​	(10	)	(2	)	(10	)	–	​	(22	)
Merger of Valepar (note 30)(i)															​	631	​	–	​	–	​	–	​	631	​
​	​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​
Balance on December 31, 2014	​	366		​	118		​	706		​	92		​	1,282
Balance at December 31, 2017															​	750	​	131	​	582	​	10	​	1,473	​
​	​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​
Additions	​	182		​	82		​	168		​	–		​	432
Reversals	​	(202		)	(56		)	(139		)	(4		)	(401)
Additions and reversals, net															​	17	​	65	​	106	​	(3	)	185	​
Payments	​	(50		)	(40		)	(65		)	(59		)	(214)	​	(5	)	(23	)	(116	)	(2	)	(146	)
Additions—discontinued operations															​	21	​	1	​	16	​	–	​	38	​
Indexation and interest	​	52		​	13		​	7		​	3		​	75	​	23	​	17	​	(7	)	(1	)	32	​
Translation adjustment	​	(79		)	(38		)	(223		)	(12		)	(352)	​	(114	)	(25	)	(85	)	(1	)	(225	)
​	​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​
Balance on December 31, 2015	​	269		​	79		​	454		​	20		​	822
Balance at December 31, 2018															​	692	​	166	​	496	​	3	​	1,357	​
​	​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​
​
​	​	​		​	​		​	​		​	​		​	​	​	​	​	​	​	​	​	​	​	​	​

---

(i)

refers to litigations of PIS/COFINS of interest on capital.

i. Provisions for labor litigationlitigation—

Consist of lawsuits filed by employees and service suppliers, related to employment relationships.relationships mainly in Brazil. The most recurringrelevant claims are related to payment offor overtime hours in itinerary,work, commuting time, and health and safety. Thesafety conditions. Also the Brazilian national social security institute ("INSS") contingencies are related to legal and administrative disputes between INSS and Vale due to applicability of compulsory social security charges.

b) Contingent liabilities

Contingent liabilities consist ofare administrative and judicial claims, whichwith expectation of loss is classified as possible, and for which the recognition of a provision is not considered necessary by the Company, based on legal support.advice. The contingent liabilities are as follows:

	​	December 31, 2015		​	December 31, 2014	​	December 31, 2018	​	December 31, 2017
Tax litigation	​	5,326		​	6,094	​	8,641	​	8,840
Civil litigation	​	1,335		​	1,406	​	1,957	​	1,623
Labor litigation	​	1,866		​	1,955	​	1,475	​	1,952
Environmental litigation	​	1,381		​	1,122	​	1,051	​	2,190
​	​	​		​	​	​	​	​	​
Total	​	9,908		​	10,577	​	13,124	​	14,605
​	​	​		​	​	​	​	​	​
​
​	​	​		​	​	​	​	​	​

​

​	​	​	​	​
​	​ ​	​ F-77	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

18.28.    Litigation (Continued)

i. i—Tax litigation—TheOur most significant claims relatetax-related contingent liabilities result from disputes related to pending challenges by the Brazilian federal tax authority concerning(i) the deductibility of Brazilian social contribution payments for income tax purposes and demands by Brazilian state tax authorities for additionalour payments of social security contributions on the net income ("CSLL") from our taxable income, (ii) challenges of certain tax credits we deducted from our PIS and COFINS payments, (iii) assessments of CFEM ("royalties"), and (iv) charges of value-added tax on services and circulation of goods ("ICMS"), especially relating to certain tax credits we claimed from the sale and transmission of energy, ICMS charges to anticipate the payment in relationthe entrance of goods to Pará State and ICMS/penalty charges on our own transportation. The changes reported in the period resulted, mainly, from the exclusion of the tax cases related to IPI, PIS and COFINS (isolated fine), IRPJ and ICMS (PRCT) and due to the use ofnew proceedings related to IRPJ, CSLL, ICMS, credits from salesISS and energy transmission.IPTU and the application interest and inflation adjustments to the disputed amounts.

ii. ii—Civil litigation—Most of these claimthose claims have been filed by suppliers for indemnification under construction contracts, primarily relating to certain alleged damages, payments and contractual penalties. A number of other claims involve disputedare related to contractual terms fordisputes regarding inflation indexation.index. The changes reported in the period resulted, mainly from reviewing the process related to commercial divergences of supply contracts.

iii. iii—Labor litigation—These claims represent a very large number ofRepresents individual claims by (i) employees and service providers, primarily involving demands for additional compensation for overtime work, commuting time spent commuting or health and safety conditions; and (ii) the Brazilian federalnational social security administrationinstitute ("INSS") regarding contributions on compensation programs based on profits.

iv. iv—Environmental litigation—The most significant claims concern alleged procedural deficiencies in licensing processes, non-compliance with existing environmental licenses or damage to the environment.

c) Judicial deposits

In addition to the provisions and contingent liabilities, the Company is required by law to make judicial deposits to secure a potential adverse outcome of certain lawsuits. These court-ordered deposits are monetarily adjusted and reported as non-current assets until a judicial decision to draw the deposit occurs.

	​	December 31, 2015		​	December 31, 2014	​	December 31, 2018	​	December 31, 2017
Tax litigations	​	211		​	354
Civil litigations	​	102		​	126
Labor litigations	​	553		​	789
Environmental litigations	​	16		​	–
Tax litigation						​	1,069	​	1,201
Civil litigation						​	60	​	60
Labor litigation						​	555	​	712
Environmental litigation						​	32	​	13
​	​	​		​	​	​	​	​	​
Total	​	882		​	1,269	​	1,716	​	1,986
​	​	​		​	​	​	​	​	​
​
​	​	​		​	​	​	​	​	​

Beside the deposits already made, the Company has bank guarantees for judicial deposits in the amount of US$1.5 billion. The annual cost of these guarantees is 1.5% and it is recognized as "financial expenses".

​

​	​	​	​	​
​	​ ​	​ F-78	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

28.    Litigation (Continued)

d) OthersContingencies related to Samarco accident

Given the status of the contingencies related to Samarco accident, it is not possible to provide a range of possible outcomes or a reliable estimate of potential losses for Vale S.A. Consequently, no contingent liability has been quantified and no provision was recognized.

(i) Public civil claim filed by the Federal Government and others and Public civil claim filed by Federal Prosecution Office ("MPF")

In 2016, the federal government, the Brazilian states of Espírito Santo and Minas Gerais and other governmental authorities have initiated a public civil lawsuit against Samarco and its shareholders, with an estimated value indicated by the plaintiffs of US$5.2 billion (R$20.2 billion). In the third quartersame year, MPF filed a public civil action against Samarco and its shareholders and presented several claims, including: (i) the adoption of measures for mitigating the social, economic and environmental impacts resulting from the dam failure and other emergency measures; (ii) the payment of compensation to the community; and (iii) payments for the collective moral damage. The action value indicated by MPF is US$40 billion (R$155 billion).

In 2018, the parties entered into an agreement ("Term of Adjustment of Conduct"), which was determined, in summary, (i) the complete extinction of the public civil claim of US$5.2 billion (R$20.2 billion) filed by the Federal Government and others; and (ii) the partial extinction of the public civil claim of US$40 billion (R$155 billion) filed by MPF. In relation to the public civil claim of US$40 billion (R$155 billion), the parties continue to negotiate for the termination of some of their requests, as well as other lawsuits whose objects have already been included in the Term of Adjustment of Conduct.

(ii) United States class action lawsuits

Samarco and its shareholders were named as defendants in securities class action lawsuits in the Federal Court in New York, related to disclosures of risks of the operations of Samarco and others. The plaintiffs have not specified an amount of alleged damages in these actions.

(iii) Criminal lawsuit

In 2016, the MPF brought a criminal lawsuit against Samarco and its shareholders, VogBr Recursos Hídricos e Geotecnia Ltda. and 22 individuals for the consequences related to Fundão dam failure. All prosecution witnesses residing in Brazil have been heard. Currently, the criminal lawsuit awaits for a position from Judiciary and all hearings related to this action are suspended.

e) Contingent assets

In 2015, the Company filed an enforceable action in the amount of R$US$135 (R$524 (US$132)million) referring to the final court decision in favor of the Company of the accrued interest of compulsory deposits from 1987 to 1993. Currently it is not possible to estimate the economic benefit inflow as the counterparty can appeal on the calculation.there is a pending judicial decision. Consequently, the asset was not recognized in the financial statements.

​

​	​	​	​	​
​	​ ​	​ F-79	​ ​	​

          On April 30, 2014, Rio Tinto plc ("Rio Tinto") filed a lawsuit against Vale, BSGR, and other defendants in the United States District Court for the Southern District of New York ("Court"), alleging violations of the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO) in relation to Rio Tinto's loss of certain Simandou mining rights, the Government of Guinea's assignment of those rights to BSGR, and Vale's subsequent investment in VBG. In November, 2015 Vale received the decision of the Court, which was for the dismissal of the lawsuit.

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

19.    Income taxes—Settlement program ("REFIS")
28.    Litigation (Continued)

In November 2013,March 2017, the Federal Supreme Court (STF) decided that the ICMS shall not be included in PIS and COFINS tax basis. The related decision is not final because is still pending the judgment of an appeal from the Federal Government. Vale has been discussing this issue in two judicial proceedings, which are covered by taxable events occurred since December 2001. In one of them, Vale reached a favorable final judicial decision on March 18, 2019. In the other case, the Company elected to participateis awaiting the application of the STF decision by Federal Regional Court of the 2nd Region. The asset was not recognized in the REFIS, a federal tax settlement program,financial statements and the effects of the favorable final judicial decision on March 18, 2019 will be evaluated by the Company.

Accounting policy

A provision is recognized when it is considered probable that an outflow of resources will be required to settle mostthe obligation and can be reliably estimated. The liability is accounted against an expense in the income statement. This obligation is updated based on the developments of the claims relatedjudicial process or interest accretion and can be reversed if the expectation of loss is not considered probable due to changes in circumstances or when the collection of income tax and social contribution on equity gains of foreign subsidiaries and affiliates from 2003 to 2012.obligation is settled.

          In December 31, 2015,Critical accounting estimates and judgments

By nature, litigations will be resolved when one or more future event occurs or fails to occur. Typically, the balanceoccurrence or not of US$4,430 (US$345 as currentsuch events is outside of the Company's control. Legal uncertainties involve the application of significant estimates and US$4,085 as non-current) is due in 154 remaining monthly installments, bearing interest atjudgments by management regarding the SELIC rate.potential outcomes of future events.

20.    Income taxes

a) Deferred income tax

	​	December 31, 2015		​	December 31, 2014
Taxes losses carryforwards	​	6,449		​	1,637
​	​	​		​	​
Temporary differences:	​			​
Pension plan	​	541		​	671
Provision for litigation	​	228		​	365
Provision for losses of assets	​	719		​	937
Fair value of financial instruments	​	823		​	1,341
Allocated goodwill	​	(2,578		)	(4,831)
Others	​	52		​	515
​	​	​		​	​
	​	(215		)	(1,002)
​	​	​		​	​
Total	​	6,234		​	635
​	​	​		​	​
Assets	​	7,904		​	3,976
Liabilities	​	(1,670		)	(3,341)
​	​	​		​	​
	​	6,234		​	635
​	​	​		​	​
​	​	​		​	​
​	​	​		​	​

          Changes in deferred tax are as follows:

	​	Assets		​	Liabilities		​	Total
Balance on December 31, 2013	​	4,523		​	3,228		​	1,295
​	​	​		​	​		​	​
Effect in income statement	​	(31		)	118		​	(149)
Transfers (including between assets and liabilities)	​	(102		)	331		​	(433)
Translation adjustment	​	(452		)	(292		)	(160)
Other comprehensive income	​	38		​	(44		)	82
​	​	​		​	​		​	​
Balance on December 31, 2014	​	3,976		​	3,341		​	635
​	​	​		​	​		​	​
Effect in income statement(i)	​	4,180		​	(1,309		)	5,489
Transfers (including between assets and liabilities)	​	141		​	141		​	–
Translation adjustment	​	(1,296		)	(517		)	(779)
Other comprehensive income	​	914		​	14		​	900
Acquisition of subsidiary	​	(11		)	–		​	(11)
​	​	​		​	​		​	​
Balance on December 31, 2015	​	7,904		​	1,670		​	6,234
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

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(i)

From the total effect in income statement, US$4,671 refers to tax losses carryforward.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

20.    Income taxes (Continued)

          Brazilian corporate tax law was amended at the end of 2014 by the Law 12,973 and became effective for the fiscal year 2015. The change was to provide that profits from foreign subsidiaries will be taxed in Brazil, on an accrual basis, applying the differential between the nominal local tax rate and the Brazilian tax rates (34%). Accordingly, from January 1st, 2015 the results from foreign subsidiaries are recognized in this systematic.

          In accordance with paragraph 77 of the referred law, the accumulated losses of those subsidiaries, as at December 31, 2014, will be available to offset their future profits. On September 30, 2015, the Company filed the tax return and completed the review of the income tax loss carry-forwards available in each foreign subsidiary as at December 31, 2014. Accordingly, a deferred tax asset related to accumulated losses in certain of those foreign subsidiaries of US$2,952 was recognized as deferred income tax in the income statement.

b) Income tax reconciliation

          The total amount presented as income taxes in the income statement is reconciled to the rate established by law, as follows:

	​	Year ended December 31
	​	2015		​	2014		​	2013
Net income (loss) before income taxes	​	(17,720		)	1,553		​	7,241
Income taxes at statutory rates—34%	​	6,024		​	(528		)	(2,462)
Adjustments that affect the basis of taxes:	​			​			​
Income tax benefit from interest on stockholders' equity	​	356		​	1,123		​	1,167
Tax incentives	​	61		​	95		​	–
Results of overseas companies taxed by different rates which differs from the parent company rate	​	–		​	(1,200		)	146
Equity results in income statement	​	(149		)	172		​	173
Income taxes statement program—REFIS	​	–		​	–		​	(4,954)
Additions (reversals) of tax loss carry forward	​	1,498		​	(178		)	180
Unrecognized tax losses of the year	​	(929		)	–		​	–
Nondeductible effect of impairment	​	(1,857		)	(450		)	(719)
Others	​	96		​	(234		)	(364)
​	​	​		​	​		​	​
Income taxes	​	5,100		​	(1,200		)	(6,833)
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

c) Tax incentives

          In Brazil, Vale has a tax incentive for the partial reduction of income tax due, in the amount equivalent to the portion allocated by tax law to transactions in the North and Northeast regions with iron ore, manganese, copper, and nickel. The incentive is calculated based on the tax profit of the activity (called operating income) and takes into consideration the allocation of operating net income by incentive production levels during the periods specified for each product, generally 10 years, and in the case of the Company, they are expected to expire in 2024. 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.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

20.    Income taxes (Continued)

          In addition to those incentives, 30% of the income tax due based on the regional profit needs to be reinvested on the purchase of machinery and equipment, subject to subsequent approval by the regulatory agency responsible, Superintendência do Desenvolvimento da Amazonia (SUDAM) and the Superintendência do Desenvolvimento do Nordeste (SUDENE). When the reinvestment is approved, it is retained in an earnings reserve account, which restricts the distribution as dividends to stockholders.

          Vale also has tax incentives related to the production of nickel and cobalt from Vale Nouvelle Caledonie SAS ("VNC"). These incentives include the exemption of 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 a 5-year 50% exemption of income tax. VNC is subject to a branch profit tax on its profits (after deducting available tax losses) starting in the first year that commercial production is reached. To date, there has been no net taxable income realized in VNC.

          In Mozambique, the tax incentives applicable to Vale Moçambique S.A. for the Moatize Coal Mine Project include a 25% reduction of rate for five years counting from the first year the company has taxable profits. Vale also received tax incentives for projects in Oman, Malaysia, Malawi and a logistic project in Mozambique.

          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.

21.29.    Employee benefits obligations

a) Employee postretirements obligations

In Brazil, the management of the pension plans of the Company is the responsibility of Fundação Vale do Rio Doce de Seguridade Social ("Valia") a nonprofit entity with administrative and financial autonomy. The Brazilian plans are as follows:

Benefit plan Vale Mais ("("Vale Mais") and benefit plan Valiaprev("Valiaprev")—Certain of the Company's employees are participants in a plan (Valeof Vale Mais e Valiaprev)and Valiaprev plans with components of defined benefitbenefits (specific coverage for death, pensions and disability allowances) and components of defined contributions (for programmable benefits). The defined benefitsbenefit plan is subject to actuarial evaluations. The defined contribution plan represents a fixed amount held on behalf of the participants. Both Vale Mais and Valiaprev were overfunded as at December 31, 20152018 and 2014.2017.

Defined benefit plan ("("Plano BD")—The Plano BD has been closed to new entrants since the year 2000, when the Vale Mais plan was implemented. It is a plan that has defined benefit characteristics, covering almost exclusively retirees and their beneficiaries. It was overfunded as atof December 31, 20152018 and 20142017 and the contributions made by the Company are not relevant.

​

​	​	​	​	​
​	​ ​	​ F-80	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.29.    Employee benefits obligations (Continued)

Complementary Allowance("Abono complementaçãoo") benefit plan—The Company sponsors a specific group of former employees entitled to receive additional benefits from Valia normalregular payments plus post-retirement benefitbenefits that covers medical, dental and pharmaceutical assistance. The contributions made by the Company finished in 2014. The abono complementaçãocomplementary allowance benefit was overfunded as at December 31, 20152018 and 2014.2017.

Other benefits—The Company sponsors medical plans for employees that meet specific criteria and for employees who use the abono complementaçãocomplementary allowance benefit. Although those benefits are not specific retirement plans, actuarial calculations are used to calculate future commitments. As those benefits are related to health care plans they have the nature of underfunded benefits, and are presented as underfunded plans as at December 31, 20152018 and 2014.2017.

The Foreign plans are managed in accordance with their region. They are divided between plans in Canada, United States of America, United Kingdom, Indonesia, New Caledonia, Japan and Taiwan. Pension plans in Canada are composed of a defined benefit and defined contribution component. Currently the defined benefit plans do not allow new entrants. The foreign defined benefit plans are underfunded as at December 31, 20152018 and 2014.2017.

Employers' disclosure about pensions and other post-retirement benefits on the status of the defined benefit elements of all plans is provided as follows.

i. Change in benefit obligation

	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Benefit obligation as at December 31, 2013	​	4,080		​	4,406		​	1,693
Benefit obligation as at December 31, 2016									​	3,343		​	4,045		​	1,296
​	​	​		​	​		​	​	​	​		​	​		​	​
Service costs	​	29		​	96		​	23	​	7		​	86		​	30
Interest costs	​	474		​	233		​	83	​	360		​	183		​	67
Benefits paid	​	(327		)	(321		)	(74)	​	(326		)	(275		)	(65)
Participant contributions	​	1		​	–		​	–	​	–		​	(12		)	–
Effect of changes in the financial assumptions	​	(32		)	454		​	(81)
Effect of changes in the actuarial assumptions									​	64		​	167		​	11
Translation adjustment	​	(497		)	(347		)	(146)	​	(51		)	276		​	71
​	​	​		​	​		​	​	​	​		​	​		​	​
Benefit obligation as at December 31, 2014	​	3,728		​	4,521		​	1,498
Benefit obligation as at December 31, 2017									​	3,397		​	4,470		​	1,410
​	​	​		​	​		​	​	​	​		​	​		​	​
Service costs	​	20		​	94		​	28	​	5		​	101		​	36
Interest costs	​	359		​	178		​	66	​	282		​	158		​	59
Benefits paid	​	(244		)	(258		)	(65)	​	(296		)	(272		)	(60)
Participant contributions	​	1		​			​	–	​	–		​	(11		)	–
Transfers	​	8		​	(8		)	–
Effect of changes in the actuarial assumptions	​	(184		)	(70		)	(31)	​	679		​	(164		)	(32)
Translation adjustment	​	(1,214		)	(768		)	(273)	​	(490		)	(353		)	(133)
​	​	​		​	​		​	​	​	​		​	​		​	​
Benefit obligation as at December 31, 2015	​	2,474		​	3,689		​	1,223
Benefit obligation as at December 31, 2018									​	3,577		​	3,929		​	1,280
​	​	​		​	​		​	​	​	​		​	​		​	​
​									​	​		​	​		​	​
​									​	​		​	​		​	​

​

​	​	​	​	​
​	​ ​	​ F-81	​ ​	​

​Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.    Employee benefits obligations (Continued)

ii. Evolution of assets fair value

---

	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Fair value of plan assets as at December 31, 2013	​	5,271		​	3,804		​	–
​	​	​		​	​		​	​
Interest income	​	625		​	201		​	–
Employer contributions	​	132		​	164		​	74
Participant contributions	​	1		​	–		​	–
Benefits paid	​	(327		)	(321		)	(74)
Plan settlements	​	–		​	(3		)	–
Return on plan assets (excluding interest income)	​	(2		)	169		​	–
Translation adjustment	​	(671		)	(298		)	–
​	​	​		​	​		​	​
Fair value of plan assets as at December 31, 2014	​	5,029		​	3,716		​	–
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Interest income	​	491		​	151		​	–
Employer contributions	​	63		​	132		​	65
Participant contributions	​	1		​	–		​	–
Benefits paid	​	(244		)	(258		)	(65)
Return on plan assets (excluding interest income)	​	(284		)	(8		)	–
Transfers	​	5		​	(5		)	–
Translation adjustment	​	(1,626		)	(634		)	–
​	​	​		​	​		​	​
Fair value of plan assets as at December 31, 2015	​	3,435		​	3,094		​	–
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

iii. Reconciliation of assets and liabilities recognized in the balance sheet

	​	Plans in Brazil
	​	December 31, 2015								​	December 31, 2014
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Balance at beginning of the year	​	1,301		​	–		​	–		​	1,191		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​
Interest income	​	130		​	–		​	–		​	142		​	–		​	–
Changes on asset ceiling and onerous liability	​	(54		)	–		​	–		​	140		​	–		​	–
Translation adjustment	​	(416		)	–		​	–		​	(172		)	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​
Balance at end of the year	​	961		​	–		​	–		​	1,301		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
Amount recognized in the balance sheet	​			​			​			​			​			​
Present value of actuarial liabilities	​	(2,474		)	(248		)	(160		)	(3,728		)	(387		)	(246)
Fair value of assets	​	3,435		​	214		​	–		​	5,029		​	349		​	–
Effect of the asset ceiling	​	(961		)	–		​	–		​	(1,301		)	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​
Liabilities provisioned	​	–		​	(34		)	(160		)	–		​	(38		)	(246)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
Current liabilities	​	–		​	–		​	(19		)	–		​	–		​	(25)
Non-current liabilities	​	–		​	(34		)	(141		)	–		​	(38		)	(221)
​	​	​		​	​		​	​		​	​		​	​		​	​
Liabilities provisioned	​	–		​	(34		)	(160		)	–		​	(38		)	(246)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.29.    Employee benefits obligations (Continued)

ii. Evolution of assets fair value

	​	Foreign plan																​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
	​	December 31, 2015								​	December 31, 2014
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Amount recognized in the balance sheet	​			​			​			​			​			​
Present value of actuarial liabilities	​	–		​	(3,441		)	(1,063		)	–		​	(4,134		)	(1,252)
Fair value of assets	​	–		​	2,880		​	–		​	–		​	3,367		​	–
Fair value of plan assets as at December 31, 2016																		​	4,694		​	3,419		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​
Liabilities provisioned	​	–		​	(561		)	(1,063		)	–		​	(767		)	(1,252)
Interest income																		​	513		​	151		​	–
Employer contributions																		​	45		​	65		​	65
Participant contributions																		​	–		​	(12		)	–
Benefits paid																		​	(326		)	(275		)	(65)
Return on plan assets (excluding interest income)																		​	(21		)	174		​	–
Translation adjustment																		​	(77		)	254		​	–
​																		​	​		​	​		​	​
Fair value of plan assets as at December 31, 2017																		​	4,828		​	3,776		​	–
​																		​	​		​	​		​	​
Interest income																		​	406		​	127		​	–
Employer contributions																		​	35		​	49		​	60
Participant contributions																		​	2		​	–		​	–
Benefits paid																		​	(296		)	(247		)	(60)
Return on plan assets (excluding interest income)																		​	479		​	(145		)	–
Translation adjustment																		​	(717		)	(287		)	–
​																		​	​		​	​		​	​
Fair value of plan assets as at December 31, 2018																		​	4,737		​	3,273		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​
​
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​
Current liabilities	​	–		​	(17		)	(32		)	–		​	(16		)	(26)
Non-current liabilities	​	–		​	(544		)	(1,031		)	–		​	(751		)	(1,226)
​	​	​		​	​		​	​		​	​		​	​		​	​
Liabilities provisioned	​	–		​	(561		)	(1,063		)	–		​	(767		)	(1,252)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​

iii. Reconciliation of assets and liabilities recognized in the statement of financial position

	​	Total																​	Plans in Brazil
	​	December 31, 2015								​	December 31, 2014							​	December 31, 2018								​	December 31, 2017
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Balance at beginning of the year	​	1,301		​	–		​	–		​	1,191		​	–		​	–	​	1,431		​	–		​	–		​	1,351		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
Interest income	​	130		​	–		​	–		​	142		​	–		​	–	​	124		​	–		​	–		​	152		​	–		​	–
Changes in asset ceiling / onerous liability	​	(54		)	–		​	–		​	140		​	–		​	–
Changes on asset ceiling																		​	(172		)	–		​	–		​	(45		)	–		​	–
Translation adjustment	​	(416		)	–		​	–		​	(172		)	–		​	–	​	(223		)	–		​	–		​	(27		)	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
Balance at end of the year	​	961		​	–		​	–		​	1,301		​	–		​	–	​	1,160		​	–		​	–		​	1,431		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
​
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
Amount recognized in the balance sheet	​			​			​			​			​			​
Amount recognized in the statement of financial position																		​			​			​			​			​			​
Present value of actuarial liabilities	​	(2,474		)	(3,689		)	(1,223		)	(3,728		)	(4,521		)	(1,498)	​	(3,577		)	(334		)	(249		)	(3,397		)	(401		)	(258)
Fair value of assets	​	3,435		​	3,094		​	–		​	5,029		​	3,716		​	–	​	4,737		​	162		​	–		​	4,828		​	239		​	–
Effect of the asset ceiling	​	(961		)	–		​	–		​	(1,301		)	–		​	–	​	(1,160		)	–		​	–		​	(1,431		)	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
Liabilities provisioned	​	–		​	(595		)	(1,223		)	–		​	(805		)	(1,498)
Liabilities																		​	–		​	(172		)	(249		)	–		​	(162		)	(258)
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
​
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
Current liabilities	​	–		​	(17		)	(51		)	–		​	(16		)	(51)	​	–		​	(4		)	(19		)	–		​	–		​	(22)
Non-current liabilities	​	–		​	(578		)	(1,172		)	–		​	(789		)	(1,447)	​	–		​	(168		)	(230		)	–		​	(162		)	(236)
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
Liabilities provisioned	​	–		​	(595		)	(1,223		)	–		​	(805		)	(1,498)
Liabilities																		​	–		​	(172		)	(249		)	–		​	(162		)	(258)
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
​
​	​	​		​	​		​	​		​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​

​

​	​	​	​	​
​	​ ​	​ F-82	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.29.    Employee benefits obligations (Continued)

iv. Costs recognized in the income statements

	​	Year ended December 31
	​	2015								​	2014								​	2013
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other underfunded pension plans		​	Overfunded pension plans		​	Underfunded pension plans		​	Other underfunded pension plans		​	Overfunded pension plans		​	Underfunded pension plans		​	Other underfunded pension plans
Current service cost	​	20		​	94		​	28		​	29		​	96		​	23		​	49		​	97		​	42
Interest on expense on liabilities	​	359		​	178		​	66		​	474		​	233		​	83		​	461		​	220		​	131
Interest income on plan assets	​	(491		)	(151		)	–		​	(625		)	(201		)	–		​	(523		)	(169		)	–
Interest expense on effect of (asset ceiling)/ onerous liability	​	132		​	–		​	–		​	142		​	–		​	–		​	13		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of cost, net	​	20		​	121		​	94		​	20		​	128		​	106		​	–		​	148		​	173
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

	​	Foreign plan
	​	December 31, 2018								​	December 31, 2017
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Amount recognized in the statement of financial position	​			​			​			​			​			​
Present value of actuarial liabilities	​	–		​	(3,595		)	(1,031		)	–		​	(4,069		)	(1,152)
Fair value of assets	​	–		​	3,111		​	–		​	–		​	3,537		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​
Liabilities	​	–		​	(484		)	(1,031		)	–		​	(532		)	(1,152)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
Current liabilities	​	–		​	(16		)	(33		)	–		​	(16		)	(36)
Non-current liabilities	​	–		​	(468		)	(998		)	–		​	(516		)	(1,116)
​	​	​		​	​		​	​		​	​		​	​		​	​
Liabilities	​	–		​	(484		)	(1,031		)	–		​	(532		)	(1,152)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​

v. Costs recognized in the statement of comprehensive income

	​	Year ended December 31
	​	2015								​	2014								​	2013
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Balance at beginning of the year	​	(143		)	(570		)	(132		)	(94		)	(395		)	(196		)	(3		)	(994		)	(381)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Effect of changes actuarial assumptions	​	184		​	70		​	31		​	32		​	(454		)	81		​	1,059		​	267		​	249
Return on plan assets (excluding interest income)	​	(284		)	(8		)	–		​	(2		)	169		​	–		​	(576		)	315		​	–
Change of asset ceiling / costly liabilities (excluding interest income)	​	70		​	–		​	–		​	(133		)	–		​	–		​	(423		)	–		​	–
Others	​	–		​	2		​	1		​	–		​	28		​	–		​	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	(30		)	64		​	32		​	(103		)	(257		)	81		​	60		​	582		​	249
Deferred income tax	​	10		​	2		​	(9		)	34		​	68		​	(17		)	(19		)	(167		)	(75)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Other comprehensive income	​	(20		)	66		​	23		​	(69		)	(189		)	64		​	41		​	415		​	174
Translation adjustments	​	49		​	10		​	14		​	20		​	2		​	6		​	10		​	11		​	12
Transfers/ disposal	​	1		​	(1		)	–		​	–		​	12		​	(6		)	(142		)	173		​	(1)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Accumulated other comprehensive income	​	(113		)	(495		)	(95		)	(143		)	(570		)	(132		)	(94		)	(395		)	(196)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

	​	Total
	​	December 31, 2018								​	December 31, 2017
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Balance at beginning of the year	​	1,431		​	–		​	–		​	1,351		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​
Interest income	​	124		​	–		​	–		​	152		​	–		​	–
Changes on asset ceiling	​	(172		)	–		​	–		​	(45		)	–		​	–
Translation adjustment	​	(223		)	–		​	–		​	(27		)	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​
Balance at end of the year	​	1,160		​	–		​	–		​	1,431		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
Amount recognized in the statement of financial position	​			​			​			​			​			​
Present value of actuarial liabilities	​	(3,577		)	(3,929		)	(1,280		)	(3,397		)	(4,470		)	(1,410)
Fair value of assets	​	4,737		​	3,273		​	–		​	4,828		​	3,776		​	–
Effect of the asset ceiling	​	(1,160		)	–		​	–		​	(1,431		)	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​
Liabilities	​	–		​	(656		)	(1,280		)	–		​	(694		)	(1,410)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
Current liabilities	​	–		​	(20		)	(52		)	–		​	(16		)	(58)
Non-current liabilities	​	–		​	(636		)	(1,228		)	–		​	(678		)	(1,352)
​	​	​		​	​		​	​		​	​		​	​		​	​
Liabilities	​	–		​	(656		)	(1,280		)	–		​	(694		)	(1,410)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​

​

​	​	​	​	​
​	​ ​	​ F-83	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.29.    Employee benefits obligations (Continued)

iv. Costs recognized in the income statement

	​	Year ended December 31
	​	2018								​	2017								​	2016
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Service cost	​	5		​	101		​	36		​	7		​	86		​	30		​	10		​	76		​	(16)
Interest on expense on liabilities	​	282		​	158		​	59		​	360		​	183		​	67		​	362		​	175		​	66
Interest income on plan assets	​	(406		)	(127		)	–		​	(513		)	(151		)	–		​	(512		)	(151		)	–
Interest expense on effect of (asset ceiling)/ onerous liability	​	124		​	–		​	–		​	152		​	–		​	–		​	156		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of cost, net	​	5		​	132		​	95		​	6		​	118		​	97		​	16		​	100		​	50
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

v. Costs recognized in the statement of comprehensive income

	​	Year ended December 31
	​	2018								​	2017								​	2016
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Balance at beginning of the year	​	(163		)	(496		)	(189		)	(153		)	(496		)	(160		)	(113		)	(495		)	(95)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Effect of changes actuarial assumptions	​	(679		)	172		​	32		​	(65		)	(167		)	(27		)	(271		)	(117		)	(75)
Return on plan assets (excluding interest income)	​	479		​	(144		)	–		​	–		​	167		​	–		​	281		​	71		​	–
Change of asset ceiling	​	172		​	–		​	–		​	47		​	–		​	–		​	(36		)	–		​	–
Others	​	(1		)	–		​	(1		)	(3		)	–		​	(14		)	–		​	35		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	(29		)	28		​	31		​	(21		)	–		​	(41		)	(26		)	(11		)	(75)
Deferred income tax	​	10		​	(7		)	(8		)	7		​	(3		)	12		​	9		​	16		​	17
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Others comprehensive income	​	(19		)	21		​	23		​	(14		)	(3		)	(29		)	(17		)	5		​	(58)
Translation adjustments	​	23		​	11		​	10		​	4		​	4		​	1		​	(23		)	(6		)	(7)
Transfers/ disposal	​	(7		)	(4		)	28		​	–		​	(1		)	(1		)	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Accumulated other comprehensive income	​	(166		)	(468		)	(128		)	(163		)	(496		)	(189		)	(153		)	(496		)	(160)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

vi. Risks related to plans

The Administrators of the plans have committed to strategic planning to strengthen internal controls and risk management. This commitment is archiveachieved by conducting audits and assessments of internal controls, which aim to mitigate operational risks in routine management of market risk and credit activities.risks. Risks are presented as follow:

Legal—lawsuits: issuing periodic reports to internal audit and directors contemplating the analysis of lawyers about the possibility of loss (remote, probable or possible), aiming to support the administrative

​

​	​	​	​	​
​	​ ​	​ F-84	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

29.    Employee benefits (Continued)

decision regarding provisioning. Contracts, tax and decision-making process: previous legal analysis through technical advice.provisions. Analysis and ongoing monitoring of developments in the legal scenario and its dissemination within the institution in order to subsidize the administrative plans, consideredconsidering the impact of regulatory changes.

Actuarial—the annual actuarial valuation of the benefit plans comprises the assessment of costs, revenues and adequacy of plan funding. It also consideredconsiders the monitoring of biometric, economic and financial assumptions (asset volatility, changes in interest rates, inflation, life expectancy, salaries and other).

Market—profitability projections are performed for the various plans and profiles of investments for 10 years in the management study of assets and liabilities. These projections include the risks of investments in various market segments. Furthermore, the risks for short-term market of the plans are monitored monthly through metrics of VaR (Value at Risk) and stress testing. For exclusive investment funds of Valia, the market risk is measured daily by the custodian asset bank.

Credit—assessment of the credit quality of issuers by hiring expert consultants to evaluate financial institutions and internal assessment of payment ability of non-financial companies. For assets of non-financial companies, the assessment is conducted aby monitoring of the company until the maturity of the security.

vii. Actuarial and economic assumptions and sensitivity analysis

All calculations involve future actuarial projections about some parameters, such as: salaries, interest, and inflation, the behaviortrend of INSSsocial security in Brazil ("INSS") benefits, mortality and disability.

The economic and actuarial assumptions adopted have been formulatedtaken considering the long-term period for maturity dates and should therefore, be examined accordingly. Inin the short term they maywould not necessarily be realized.realize.

The following assumptions were adopted in the assessment:

	​	Brazil
	​	December 31, 2018						​	December 31, 2017
	​	Overfunded pension plans	​	Underfunded pension plans		​	Other benefits	​	Overfunded pension plans	​	Underfunded pension plans	​	Other benefits
Discount rate to determine benefit obligation	​	8.86% - 9.10%	​	9.10		%	9.05% - 9.29%	​	9.74% - 9.85%	​	9.84%	​	9.74% - 9.91%
Nominal average rate to determine expense/ income	​	8.86% - 9.10%	​	9.10		%	N/A	​	9.74% - 9.85%	​	9.84%	​	N/A
Nominal average rate of salary increase	​	4.00% - 6.08%	​	6.08		%	N/A	​	4.25% - 6.34%	​	4.25% - 6.34%	​	N/A
Nominal average rate of benefit increase	​	4.00%	​	6.08		%	N/A	​	4.85%	​	4.85%	​	N/A
Immediate health care cost trend rate	​	N/A	​	N/A		​	7.12%	​	N/A	​	N/A	​	7.38%
Ultimate health care cost trend rate	​	N/A	​	N/A		​	7.12%	​	N/A	​	N/A	​	7.38%
Nominal average rate of price inflation	​	4.00%	​	4.00		%	4.00%	​	4.25%	​	4.25%	​	4.25%

​

​	​	​	​	​
​	​ ​	​ F-85	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.29.    Employee benefits obligations (Continued)

          In the evaluations were adopted the following assumptions:

	​	Brazil																​	Foreign
	​	December 31, 2015								​	December 31, 2014							​	December 31, 2018					​	December 31, 2017
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits		​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits	​	Underfunded pension plans		​	Other benefits		​	Underfunded pension plans		​	Other benefits
Discount rate to determine benefit obligation	​	13.63		%	13.71		%	13.63		%	12.70		%	12.54		%	12.39%	​	3.56		%	3.66		%	3.26		%	3.44%
Nominal average rate to determine expense/ (income)	​	12.36		%	13.71		%	N/A		​	12.37		%	12.46		%	N/A
Nominal average rate to determine expense/ income																		​	3.26		%	N/A		​	3.84		%	N/A
Nominal average rate of salary increase	​	8.12		%	8.12		%	N/A		​	6.94		%	8.12		%	N/A	​	3.20		%	N/A		​	3.27		%	N/A
Nominal average rate of benefit increase	​	6.00		%	6.00		%	6.00		%	6.00		%	6.00		%	6.00%	​	N/A		​	3.00		%	N/A		​	3.00%
Immediate health care cost trend rate	​	N/A		​	N/A		​	9.18		%	N/A		​	N/A		​	9.18%	​	N/A		​	5.90		%	N/A		​	5.99%
Ultimate health care cost trend rate	​	N/A		​	N/A		​	9.18		%	N/A		​	N/A		​	9.18%	​	N/A		​	4.56		%	N/A		​	4.56%
Nominal average rate of price inflation	​	6.00		%	6.00		%	6.00		%	6.00		%	6.00		%	6.00%	​	2.10		%	2.10		%	2.10		%	2.10%

	​	Foreign
	​	December 31, 2015					​	December 31, 2014
	​	Underfunded pension plans		​	Other benefits		​	Underfunded pension plans		​	Other benefits
Discount rate to determine benefit obligation	​	4.00		%	3.90		%	3.89		%	4.1%
Nominal average rate to determine expense/ (income)	​	4.80		%	N/A		​	4.80		%	N/A
Nominal average rate of salary increase	​	3.90		%	N/A		​	3.90		%	N/A
Nominal average rate of benefit increase	​	3.90		%	3.00		%	3.90		%	3.00%
Immediate health care cost trend rate	​	N/A		​	6.30		%	N/A		​	7.22%
Ultimate health care cost trend rate	​	N/A		​	4.50		%	N/A		​	4.49%
Nominal average rate of price inflation	​	2.00		%	2.00		%	2.00		%	2.00%

For the sensitivity analysis, the Company considers the effect of 1% in nominal discount rate to determine the actuarial liability. The effects of this change invariation on the actuarial liabilities in premise andliability, the assumption adopted the average duration of the plan are as follows:

	​	December 31, 2015							​	December 31, 2018
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
Nominal discount rate—1% increase	​			​			​		​			​			​
Actuarial liability balance	​	2,263		​	3,024		​	1,065	​	3,310		​	3,459		​	1,114
Assumptions made	​	8.33		%	5.01		%	5.35%	​	9.98		%	5.03		%	5.42%
Average duration of the obligation—(years)	​	8.70		​	11.76		​	15.29
Nominal discount rate—1% reduction	​			​			​		​			​			​
Actuarial liability balance	​	2,715		​	3,909		​	1,043	​	3,891		​	4,471		​	1,488
Assumptions made	​	10.01		%	3.01		%	3.90%	​	7.98		%	3.03		%	3.42%
Average duration of the obligation—(years)	​	9.53		​	11.76		​	15.22

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.    Employee benefits obligations (Continued)

viii. Assets of pension plans

Brazilian plan assets as at December 31, 20152018 and 2014 includes2017 include respectively (i) investments in a portfolio of Vale's stock and other instruments in the amount of US$413 and US$94;37 and (ii) equity investments from related parties in the amount of US$0 and US$1; and (iii) Brazilian Federal Government securities in the amount of US$2,9764,199 and US$3,581.4,617.

Foreign plan assets as at December 31, 20152018 and 20142017 include Canadian Government securities in the amount of US$675674 and US$852,864, respectively.

ix. Overfunded pension plans​

          Assets by category are as follows:

	​	December 31, 2015											​	December 31, 2014
	​	Level 1		​	Level 2		​	Level 3		​	Total		​	Level 1		​	Level 2		​	Level 3		​	Total
Cash and cash equivalents	​	1		​	–		​	–		​	1		​	–		​	–		​	–		​	–
Accounts Receivable	​	–		​	–		​	–		​	–		​	5		​	–		​	–		​	5
Equity securities	​	–		​	–		​	–		​	–		​	475		​	–		​	–		​	475
Debt securities—Corporate bonds	​	–		​	94		​	–		​	94		​	–		​	157		​	–		​	157
Debt securities—Government bonds	​	1,659		​	–		​	–		​	1,659		​	2,106		​	–		​	–		​	2,106
Investments funds—Fixed Income	​	1,799		​	–		​	–		​	1,799		​	2,272		​	–		​	–		​	2,272
Investments funds—Equity	​	44		​	–		​	–		​	44		​	333		​	–		​	–		​	333
International investments	​	29		​	–		​	–		​	29		​	–		​	–		​	–		​	–
Structured investments—Private Equity funds	​	138		​	–		​	136		​	274		​	–		​	–		​	253		​	253
Structured investments—Real estate funds	​	–		​	–		​	6		​	6		​	–		​	–		​	7		​	7
Real estate	​	–		​	–		​	319		​	319		​	–		​	–		​	497		​	497
Loans to participants	​	–		​	–		​	249		​	249		​	–		​	–		​	404		​	404
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	3,670		​	94		​	710		​	4,474		​	5,191		​	157		​	1,161		​	6,509
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Funds not related to risk plans	​			​			​			​	(1,039		)			​			​			​	(1,480)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Fair value of plan assets at end of year	​			​			​			​	3,435		​			​			​			​	5,029
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.    Employee benefits obligations (Continued)

          Measurement of overfunded plan assets at fair value with no observable market variables (level 3) are as follows:

	​	Private equity funds		​	Real estate funds		​	Real estate		​	Loans to participants		​	Total
Balance as at December 31, 2013	​	227		​	8		​	547		​	431		​	1,213
​	​	​		​	​		​	​		​	​		​	​
Return on plan assets	​	(12		)	–		​	56		​	52		​	96
Assets purchases, sales and settlements	​	88		​	–		​	3		​	186		​	277
Assets sold during the year	​	(17		)	–		​	(42		)	(211		)	(270)
Translation adjustment	​	(33		)	(1		)	(67		)	(54		)	(155)
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2014	​	253		​	7		​	497		​	404		​	1,161
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
Return on plan assets	​	(84		)	1		​	4		​	47		​	(32)
Assets purchases, sales and settlements	​	49		​	1		​	1		​	40		​	91
Assets sold during the year	​	(7		)	–		​	(28		)	(118		)	(153)
Translation adjustment	​	(75		)	(3		)	(156		)	(124		)	(358)
Transfers in and/ out of Level 3	​	–		​	–		​	1		​	–		​	1
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2015	​	136		​	6		​	319		​	249		​	710
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

x. Underfunded pension plans

          Assets by category are as follows:

	​	December 31, 2015											​	December 31, 2014
	​	Level 1		​	Level 2		​	Level 3		​	Total		​	Level 1		​	Level 2		​	Level 3		​	Total
Cash and cash equivalents	​	–		​	49		​	–		​	49		​	1		​	29		​	–		​	30
Equity securities	​	1,106		​	–		​	–		​	1,106		​	1,615		​	9		​	–		​	1,624
Debt securities—Corporate bonds	​	–		​	12		​	–		​	12		​	–		​	402		​	–		​	402
Debt securities—Government bonds	​	56		​	684		​	–		​	740		​	77		​	853		​	–		​	930
Investments funds—Fixed Income	​	150		​	281		​	–		​	431		​	189		​	–		​	–		​	189
Investments funds—Equity	​	86		​	356		​	–		​	442		​	95		​	397		​	–		​	492
International investments	​	2		​	30		​	–		​	32		​	–		​	–		​	–		​	–
Structured investments—Private Equity funds	​	��		​	–		​	98		​	98		​	–		​	–		​	18		​	18
Real estate	​	–		​	–		​	20		​	20		​	–		​	–		​	24		​	24
Loans to participants	​	–		​	–		​	5		​	5		​	–		​	–		​	7		​	7
Others	​	–		​	–		​	159		​	159		​	–		​	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	1,400		​	1,412		​	282		​	3,094		​	1,977		​	1,690		​	49		​	3,716
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Funds not related to risk plans	​			​			​			​	–		​			​			​			​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Fair value of plan assets at end of year	​			​			​			​	3,094		​			​			​			​	3,716
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.    Employee benefits obligations (Continued)

          Measurement of underfunded plan assets at fair value with no observable market variables (level 3) are as follows:

	​	Private equity funds		​	Real estate		​	Loans to participants		​	Others		​	Total
Balance as at December 31, 2013	​	–		​	24		​	–		​	–		​	24
Return on plan assets	​	–		​	4		​	–		​	–		​	4
Assets purchases, sales and settlements	​	20		​	–		​	7		​	–		​	27
Translation adjustment	​	(2		)	(4		)	–		​	–		​	(6)
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2014	​	18		​	24		​	7		​	–		​	49
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
Return on plan assets	​	–		​	5		​	1		​	–		​	6
Assets purchases, sales and settlements	​	102		​	–		​	–		​	186		​	288
Assets sold during the year	​	(1		)	–		​	–		​	–		​	(1)
Translation adjustment	​	(21		)	(8		)	(3		)	(27		)	(59)
Transfers in and/ out of Level 3	​	–		​	(1		)	–		​	–		​	(1)
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2015	​	98		​	20		​	5		​	159		​	282
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

xi. Disbursement of future cash flow

          Vale expects to disburse US$183 in 2016 in relation to pension plans and other benefits.

xii. Expected benefit payments

          The expected benefit payments, which reflect future services, are as follows:

	​	December 31, 2015
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
2016	​	228		​	205		​	57
2017	​	241		​	202		​	60
2018	​	255		​	200		​	62
2019	​	269		​	198		​	65
2020	​	283		​	196		​	67
2021 and thereafter	​	1,624		​	1,106		​	325

b) Profit sharing program ("PLR")

          The Company recorded as cost of goods sold and services rendered and other operating expenses related to the PLR US$68 and US$502 for the year ended on December 31, 2015 and 2014, respectively.

c) Long-term compensation plan

          Vale has long-term incentive programs such as Matching and Virtual Shares Programs ("PAV") for some executives of the Company, covering 3 to 4 year cycles, respectively.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

21.    Employee benefits obligations (Continued)

          For the Matching program, the participants may acquire preferred share of Vale to participate on the plan, through a prescribed financial institution under market conditions and without any benefit being provided by Vale. Since 2014, the participation on the program has been mandatory for the executive officers.

          Except for the executive officers, the shares purchased by executive have no restrictions and can be sold at any time. If the shares are held for a period of three years, and the participants maintains it employment relationship with Vale during this period, the participant is entitled to receive from Vale a payment in cash equivalent to the market value of their stock holdings under this program.

          For PAV program, certain eligible executives have the right to receive, during a four year cycle, a monetary value equivalent to market value of a determined number of stocks based on an the Company's performance measured as an indicator of total return to the Stockholders.

          Liabilities of the plans are measured at fair value on the date of each issuance of the report, based on market rates. Compensation costs incurred are recognized by the defined vesting period of three years. At December 31, 2015, 2014 and 2013 the Company recognized in the income statement the amounts of US$29, US$61 and US$84, respectively, related to long term compensation plan.

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

22.    Financial instruments classification

	​	December 31, 2015											​	December 31, 2014
Financial assets	​	Loans and receivables or amortized cost		​	At fair value through net income		​	Derivatives designated as hedge accounting		​	Total		​	Loans and receivables or amortized cost		​	At fair value through net income		​	Derivatives designated as hedge accounting		​	Total
Current	​			​			​			​			​			​			​			​
Cash and cash equivalents	​	3,591		​	–		​	–		​	3,591		​	3,974		​	–		​	–		​	3,974
Financial investments	​	28		​	–		​	–		​	28		​	148		​	–		​	–		​	148
Derivative financial instruments	​	–		​	121		​	–		​	121		​	–		​	166		​	–		​	166
Accounts receivable	​	1,476		​	–		​	–		​	1,476		​	3,275		​	–		​	–		​	3,275
Related parties	​	70		​	–		​	–		​	70		​	579		​	–		​	–		​	579
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	5,165		​	121		​	–		​	5,286		​	7,976		​	166		​	–		​	8,142
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Non-current	​			​			​			​			​			​			​			​
Derivative financial instruments	​	–		​	93		​	–		​	93		​	–		​	87		​	–		​	87
Loans	​	188		​	–		​	–		​	188		​	229		​	–		​	–		​	229
Related parties	​	1		​	–		​	–		​	1		​	35		​	–		​	–		​	35
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	189		​	93		​	–		​	282		​	264		​	87		​	–		​	351
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of financial assets	​	5,354		​	214		​	–		​	5,568		​	8,240		​	253		​	–		​	8,493
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Financial liabilities	​			​			​			​			​			​			​			​
Current	​			​			​			​			​			​			​			​
Suppliers and contractors	​	3,365		​	–		​	–		​	3,365		​	4,354		​	–		​	–		​	4,354
Derivative financial instruments	​	–		​	2,023		​	53		​	2,076		​	–		​	956		​	460		​	1,416
Loans and borrowings	​	2,506		​	–		​	–		​	2,506		​	1,419		​	–		​	–		​	1,419
Related parties	​	475		​	–		​	–		​	475		​	306		​	–		​	–		​	306
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	6,346		​	2,023		​	53		​	8,422		​	6,079		​	956		​	460		​	7,495
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Non-current	​			​			​			​			​			​			​			​
Derivative financial instruments	​	–		​	1,429		​	–		​	1,429		​	–		​	1,609		​	1		​	1,610
Loans and borrowings	​	26,347		​	–		​	–		​	26,347		​	27,388		​	–		​	–		​	27,388
Related parties	​	213		​	–		​	–		​	213		​	109		​	–		​	–		​	109
Participative stockholders' debentures	​	–		​	342		​	–		​	342		​	–		​	1,726		​	–		​	1,726
Others(i)	​	–		​	141		​	–		​	141		​	–		​	115		​	–		​	115
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	26,560		​	1,912		​	–		​	28,472		​	27,497		​	3,450		​	1		​	30,948
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of financial liabilities	​	32,906		​	3,935		​	53		​	36,894		​	33,576		​	4,406		​	461		​	38,443
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

---

(i)

See note 23(a).

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

22.    Financial instruments classification (Continued)

          The classification of financial assets and liabilities by currencies are as follows:

	​	December 31, 2015
Financial assets	​	R$		​	US$		​	CAD		​	AUD		​	EUR		​	Other currencies		​	Total
Current	​			​			​			​			​			​			​
Cash and cash equivalents	​	816		​	2,528		​	12		​	54		​	11		​	170		​	3,591
Financial investments	​	–		​	28		​	–		​	–		​	–		​	–		​	28
Derivative financial instruments	​	50		​	71		​	–		​	–		​	–		​	–		​	121
Accounts receivable	​	251		​	1,084		​	125		​	10		​	4		​	2		​	1,476
Related parties	​	70		​	–		​	–		​	–		​	–		​	–		​	70
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	1,187		​	3,711		​	137		​	64		​	15		​	172		​	5,286
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Non-current	​			​			​			​			​			​			​
Derivative financial instruments	​	75		​	18		​	–		​	–		​	–		​	–		​	93
Loans	​	27		​	103		​	58		​	–		​	–		​	–		​	188
Related parties	​	1		​	–		​	–		​	–		​	–		​	–		​	1
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	103		​	121		​	58		​	–		​	–		​	–		​	282
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of assets	​	1,290		​	3,832		​	195		​	64		​	15		​	172		​	5,568
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Financial liabilities	​			​			​			​			​			​			���
Current	​			​			​			​			​			​			​
Suppliers and contractors	​	1,499		​	1,389		​	335		​	9		​	115		​	18		​	3,365
Derivative financial instruments	​	911		​	1,165		​	–		​	–		​	–		​	–		​	2,076
Loans and borrowings	​	434		​	1,992		​	15		​	–		​	65		​	–		​	2,506
Related parties	​	255		​	–		​	220		​	–		​	–		​	–		​	475
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	3,099		​	4,546		​	570		​	9		​	180		​	18		​	8,422
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Non-current	​			​			​			​			​			​			​
Derivative financial instruments	​	1,215		​	214		​	–		​	–		​	–		​	–		​	1,429
Loans and borrowings	​	5,107		​	19,439		​	165		​	3		​	1,633		​	–		​	26,347
Related parties	​	73		​	140		​	–		​	–		​	–		​	–		​	213
Participative stockholders' debentures	​	342		​	–		​	–		​	–		​	–		​	–		​	342
Others	​	141		​	–		​	–		​	–		​	–		​	–		​	141
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	6,878		​	19,793		​	165		​	3		​	1,633		​	–		​	28,472
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of liabilities	​	9,977		​	24,339		​	735		​	12		​	1,813		​	18		​	36,894
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

22.    Financial instruments classification (Continued)

	​	December 31, 2014
Financial assets	​	R$		​	US$		​	CAD		​	AUD		​	EUR		​	Other currencies		​	Total
Current	​			​			​			​			​			​			​
Cash and cash equivalents	​	977		​	2,778		​	22		​	38		​	61		​	98		​	3,974
Financial investments	​	148		​	–		​	–		​	–		​	–		​	–		​	148
Derivative financial instruments	​	139		​	27		​	–		​	–		​	–		​	–		​	166
Accounts receivable	​	740		​	2,514		​	12		​	–		​	8		​	1		​	3,275
Related parties	​	397		​	182		​	–		​	–		​	–		​	–		​	579
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	2,401		​	5,501		​	34		​	38		​	69		​	99		​	8,142
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Non-current	​			​			​			​			​			​			​
Related parties	​	4		​	31		​	–		​	–		​	–		​	–		​	35
Loans	​	39		​	190		​	–		​	–		​	–		​	–		​	229
Derivative financial instruments	​	11		​	76		​	–		​	–		​	–		​	–		​	87
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	54		​	297		​	–		​	–		​	–		​	–		​	351
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of assets	​	2,455		​	5,798		​	34		​	38		​	69		​	99		​	8,493
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Financial liabilities	​			​			​			​			​			​			​
Current	​			​			​			​			​			​			​
Suppliers and contractors	​	2,183		​	2,142		​	1		​	1		​	27		​	–		​	4,354
Derivative financial instruments	​	357		​	1,059		​	–		​	–		​	–		​	–		​	1,416
Loans and borrowings	​	440		​	887		​	19		​	–		​	73		​	–		​	1,419
Related parties	​	305		​	1		​	–		​	–		​	–		​	–		​	306
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	3,285		​	4,089		​	20		​	1		​	100		​	–		​	7,495
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Non-current	​			​			​			​			​			​			​
Derivative financial instruments	​	1,456		​	154		​	–		​	–		​	–		​	–		​	1,610
Loans and borrowings	​	5,866		​	19,488		​	210		​	2		​	1,822		​	–		​	27,388
Related parties	​	109		​	–		​	–		​	–		​	–		​	–		​	109
Participative stockholders' debentures	​	1,726		​	–		​	–		​	–		​	–		​	–		​	1,726
Others	​	115		​	–		​	–		​	–		​	–		​	–		​	115
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	9,272		​	19,642		​	210		​	2		​	1,822		​	–		​	30,948
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total of liabilities	​	12,557		​	23,731		​	230		​	3		​	1,922		​	–		​	38,443
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​

23.    Fair value estimate

          Due to the short-term cycle, it is assumed that the fair value of cash and cash equivalents balances, financial investments, accounts receivable and accounts payable approximate their book values. For the measurement and determination of fair value, the Company uses various methods including market, income or cost approaches, in order to estimate the value that market participants would use when pricing the asset or liability. The financial assets and liabilities recorded at fair value 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 unadjusted) for identical or similar assets or liabilities on active markets; and

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

23.    Fair value estimate (Continued)

          Level 3—assets and liabilities, for which quoted prices, do not exist, or where prices or valuation techniques are supported by little or no market activity, unobservable or illiquid.

a) Assets and liabilities measured and recognized at fair value:

	​	December 31, 2015					​	December 31, 2014
	​	Level 2	​	Level 3	​	Total	​	Level 2	​	Level 3	​	Total
Financial assets	​		​		​		​		​		​
Derivative financial instruments	​	214	​	–	​	214	​	253	​	–	​	253
​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	214	​	–	​	214	​	253	​	–	​	253
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
Financial liabilities	​		​		​		​		​		​
Derivative financial instruments	​	3,505	​	–	​	3,505	​	3,026	​	–	​	3,026
Participative stockholders' debentures	​	342	​	–	​	342	​	1,726	​	–	​	1,726
Others (minimum return instrument)	​	–	​	141	​	141	​	–	​	115	​	115
​	​	​	​	​	​	​	​	​	​	​	​	​
Total	​	3,847	​	141	​	3,988	​	4,752	​	115	​	4,867
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​

Methods and techniques of evaluation

i) Derivative financial instruments

          Financial instruments are evaluated by calculating their present value through the use of instrument yield curves at the closing dates. The curves and prices used in the calculation for each group of instruments are detailed in the "market curves".

          The pricing method used for European options is the Black & Scholes model. In this model, the fair value of the derivative is a function of the volatility in the price of the underlying asset, the exercise price of the option, the interest rate and period to maturity. In the case of options which income is a function of the average price of the underlying asset over the period of the option, the Company uses Turnbull & Wakeman model. In this model, in addition to the factors that influence the option price in the Black-Scholes model, the formation period of the average price is also considered.

          In the case of swaps, both the present value of the assets and liability are estimated by discounting the cash flow by the interest rate of the currency in which the swap is denominated. The difference between the present value of assets and liability of the swap generates its fair value.

          For to the TJLP swaps, the calculation of the fair value assumes that TJLP is constant, that is the projections of future cash flow in Brazilian Reais are made on the basis of 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 yield curves for each product. Typically, these curves are obtained on the stock exchanges where the products are traded, such as the London Metals Exchange ("LME"), the Commodity Exchange ("COMEX") or other providers of market prices. When there is no price for the desired maturity, Vale uses an interpolation between the available maturities.

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

23.    Fair value estimate (Continued)

ii)    Participative stockholders' debentures—Consist of the debentures issued during the privatization process (note 29(b)), whose fair values are measured based on the market approach. Reference prices are available on the secondary market.

iii)   Minimum return instrument—Refers to a minimum return instrument held by Brookfield which under certain conditions can generate a disbursement obligation to Vale at the end of the sixth year of the completion of the acquisition of interest in VLI (note 6(b)). The Company used internal assumptions in a probability model to calculate the fair value of this instrument.

b) Fair value of financial instruments not measured at fair value

          The fair value estimate for level 1 is based on market approach considering the secondary market contracts. For loans allocated to level 2, the income approach is adopted and the fair value for both fixed-indexed rate debt and floating rate debt is determined on a discounted cash flows basis using LIBOR future values and Vale's bonds curve.

          The fair values and carrying amounts of non-current loans (net of interest) are as follows:

Financial liabilities	​	Balance	​	Fair value	​	Level 1	​	Level 2
December 31, 2015	​		​		​		​
Debt principal	​	28,229	​	26,233	​	12,297	​	13,936
December 31, 2014	​		​		​		​
Debt principal	​	28,370	​	29,479	​	15,841	​	13,638

24. Derivative financial instruments

a) Derivatives effects on balance sheet

	​	Assets
	​	December 31, 2015			​	December 31, 2014
	​	Current	​	Non-current	​	Current	​	Non-current
Derivatives designated as economic hedge	​		​		​		​
Foreign exchange and interest rate risk	​		​		​		​
CDI & TJLP vs. US$ fixed and floating rate swap	​	69	​	–	​	137	​	11
IPCA swap	​	2	​	16	​	7	​	–
Eurobonds swap	​	–	​	–	​	–	​	41
Pre dollar swap	​	–	​	–	​	2	​	–
​	​	​	​	​	​	​	​	​
	​	71	​	16	​	146	​	52
Commodities price risk	​		​		​		​
Nickel	​	50	​	11	​	20	​	3
​	​	​	​	​	​	​	​	​
	​	50	​	11	​	20	​	3
Others	​	–	​	66	​	–	​	32
​	​	​	​	​	​	​	​	​
	​	–	​	66	​	–	​	32
​	​	​	​	​	​	​	​	​
Total	​	121	​	93	​	166	​	87
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24. Derivative financial instruments (Continued)

	​	Liabilities
	​	December 31, 2015			​	December 31, 2014
	​	Current	​	Non-current	​	Current	​	Non-current
Derivatives designated as economic hedge	​		​		​		​
Foreign exchange and interest rate risk	​		​		​		​
CDI & TJLP vs. US$ fixed and floating rate swap	​	799	​	1,131	​	442	​	1,355
IPCA swap	​	21	​	101	​	–	​	63
Eurobonds swap	​	146	​	29	​	9	​	90
Pre dollar swap	​	93	​	72	​	30	​	98
​	​	​	​	​	​	​	​	​
	​	1,059	​	1,333	​	481	​	1,606
Commodities price risk	​		​		​		​
Nickel	​	40	​	10	​	23	​	3
Bunker oil(i)	​	924	​	–	​	452	​	–
​	​	​	​	​	​	​	​	​
	​	964	​	10	​	475	​	3
Others	​	–	​	86	​	–	​	–
​	​	​	​	​	​	​	​	​
	​	–	​	86	​	–	​	–
Derivatives designated as cash flow hedge accounting	​		​		​		​
Bunker oil(i)	​	50	​	–	​	434	​	–
Foreign exchange	​	3	​	–	​	26	​	1
​	​	​	​	​	​	​	​	​
	​	53	​	–	​	460	​	1
​	​	​	​	​	​	​	​	​
Total	​	2,076	​	1,429	​	1,416	​	1,610
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​

---

(i)

As at December 31, 2015 and 2014, includes US$102 and US$152, respectively, of transactions in which the financial settlement occurs subsequently of the closing month.

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24. Derivative financial instruments (Continued)

b) Effects of derivatives on the income statement, cash flow and other comprehensive income

	​	Year ended December 31
	​	Gain (loss) recognized in the income statement								​	Financial settlement inflows (outflows)								​	Gain (loss) recognized in other comprehensive income
	​	2015		​	2014		​	2013		​	2015		​	2014		​	2013		​	2015		​	2014		​	2013
Derivatives designated as economic hedge	​			​			​			​			​			​			​			​			​
Foreign exchange and interest rate risk	​			​			​			​			​			​			​			​			​
CDI & TJLP vs. US$ fixed and floating rate swap	​	(1,172		)	(437		)	(897		)	(330		)	4		​	(146		)	–		​	–		​	–
IPCA swap	​	(61		)	(58		)	–		​	7		​	–		​	–		​	–		​	–		​	–
Eurobonds swap	​	(130		)	(160		)	91		​	(13		)	10		​	(5		)	–		​	–		​	–
Pre dollar swap	​	(139		)	(28		)	(55		)	(42		)	7		​	16		​	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	(1,502		)	(683		)	(861		)	(378		)	21		​	(135		)	–		​	–		​	–
Commodities price risk	​			​			​			​			​			​			​			​			​
Nickel	​	(49		)	9		​	(2		)	(62		)	12		​	(5		)	–		​	–		​	–
Bunker oil	​	(742		)	(533		)	(72		)	(270		)	(90		)	(62		)	–		​	–		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	(791		)	(524		)	(74		)	(332		)	(78		)	(67		)	–		​	–		​	–
Others	​	(142		)	(5		)	(58		)	–		​	–		​	–		​	–		​	–		​	–
Derivatives designated as cash flow hedge accounting	​			​			​			​			​			​			​			​			​
Bunker oil	​	(439		)	(81		)	(42		)	(450		)	(81		)	(42		)	435		​	(423		)	(10)
Nickel	​	–		​	–		​	13		​	–		​	–		​	13		​	–		​	–		​	(13)
Foreign exchange	​	(42		)	(41		)	(11		)	(42		)	(41		)	(11		)	17		​	8		​	(28)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
	​	(481		)	(122		)	(40		)	(492		)	(122		)	(40		)	452		​	(415		)	(51)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	(2,916		)	(1,334		)	(1,033		)	(1,202		)	(179		)	(242		)	452		​	(415		)	(51)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

          Related to the effects of derivatives in the income statement, the Company recognized as cost of goods sold and services rendered and financial expense the amounts of US$439 and US$2,477, respectively, for the year ended December 2015.

          The maturities dates of the derivative financial instruments are as follows:

​	​
	​	Maturity dates
Currencies and interest rates	​	July 2023 ​
Bunker oil ​	​ ​	December 2016
Nickel ​ F-86	​ ​	February 2018
Others	​	December 2027

​Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments (Continued)

Additional information about derivatives financial instruments

          The risk of the derivatives portfolio is measured using the delta-Normal parametric approach, and 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 estimate considers a 95% confidence level for a one-business day time horizon.

          There was no cash amount deposited as margin call regarding derivative positions on December 31, 2015. The derivative positions described in this document did not have initial costs associated.

          The following tables detail the derivatives positions for Vale and its controlled companies as of December 31, 2015, with the following information: notional amount, fair value (including credit risk), gains or losses in the period, value at risk and the fair value breakdown by year of maturity.

a) Foreign exchange and interest rates derivative positions

(i) Protection programs for the R$ denominated debt instruments

          In order to reduce cash flow volatility, swap transactions were implemented to convert into US$ the cash flows from certain debt instruments denominated in R$ with interest rates linked mainly to CDI, TJLP and IPCA. In those swaps, Vale pays fixed or floating rates in US$ and receives payments in R$ linked to the interest rates of the protected debt instruments.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments (Continued)

          The swap transactions were negotiated over-the-counter and the protected items are the cash flows from debt instruments linked to R$. These programs transform into US$ the obligations linked to R$ to achieve a currency offset in the Company's cash flows, by matching its receivables—mainly linked to US$—with its payables.

---

	​	Notional									​		​			​	Fair value					​	Financial Settlement Inflows (Outflows)		​	Value at Risk		​	Fair value by year
Flow	​	December 31, 2015				​	December 31, 2014				​	Index	​	Average rate		​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2015		​	2016		​	2017		​	2018		​	2019+
CDI vs. US$ fixed rate swap																​	(783		)	(547		)	(164		)	40		​	(492		)	(51		)	(241		)	–
Receivable	​	​	R$	5,239	​	​	​	R$	4,511	​	​	CDI	​	108.33		%			​			​			​			​			​			​			​
Payable	​	​	US$	2,288	​	​	​	US$	2,284	​	​	Fix	​	3.39		%			​			​			​			​			​			​			​
CDI vs. US$ floating rate swap																​	–		​	(83		)	(77		)	–		​	–		​	–		​	–		​	–
Receivable	​	​	–		​	​	​	R$	428	​	​	CDI	​	0.00		%			​			​			​			​			​			​			​
Payable	​	​	–		​	​	​	US$	250	​	​	Libor +	​	0.00		%			​			​			​			​			​			​			​
TJLP vs. US$ fixed rate swap																​	(1,015		)	(953		)	(102		)	67		​	(234		)	(285		)	(141		)	(355)
Receivable	​	​	R$	5,484	​	​	​	R$	6,247	​	​	TJLP +	​	1.32		%			​			​			​			​			​			​			​
Payable	​	​	US$	2,611	​	​	​	US$	3,051	​	​	Fix	​	1.69		%			​			​			​			​			​			​			​
TJLP vs. US$ floating rate swap																​	(63		)	(66		)	(1		)	4		​	(4		)	(6		)	(7		)	(46)
Receivable	​	​	R$	267	​	​	​	R$	295	​	​	TJLP +	​	0.93		%			​			​			​			​			​			​			​
Payable	​	​	US$	156	​	​	​	US$	173	​	​	Libor +	​	–1.21		%			​			​			​			​			​			​			​
R$ fixed rate vs. US$ fixed rate swap																​	(165		)	(127		)	(41		)	19		​	(93		)	(9		)	3		​	(65)
Receivable	​	​	R$	1,356	​	​	​	R$	735	​	​	Fix	​	6.82		%			​			​			​			​			​			​			​
Payable	​	​	US$	528	​	​	​	US$	395	​	​	Fix	​	–0.74		%			​			​			​			​			​			​			​
IPCA vs. US$ fixed rate swap																​	(105		)	(56		)	7		​	10		​	2		​	1		​	0.2		​	(108)
Receivable	​	​	R$	1,000	​	​	​	R$	1,000	​	​	IPCA +	​	6.55		%			​			​			​			​			​			​			​
Payable	​	​	US$	434	​	​	​	US$	434	​	​	Fix	​	3.98		%			​			​			​			​			​			​			​
IPCA vs. CDI swap																​	2		​	–		​	–		​	0.3		​	(21		)	(21		)	(15		)	59
Receivable	​	​	R$	1,350	​	​	​	R$	0	​	​	IPCA +	​	6.62		%			​			​			​			​			​			​			​
Payable	​	​	R$	1,350	​	​	​	US$	0	​	​	CDI	​	98.58		%			​			​			​			​			​			​			​

(ii) Protection program for EUR denominated debt instruments

          In order to reduce the cash flow volatility, swap transactions were implemented to convert into US$ the cash flows from certain debt instruments issued in Euros by Vale. In those swaps, Vale receives fixed rates in EUR and pays fixed rates in US$.

          The swap transactions were negotiated over-the-counter and the protected items are the cash flows from debt instruments linked to EUR. The financial settlement inflows/outflows are offset by the protected items' losses/gains due to EUR/US$ exchange rate.

	​	Notional									​		​			​	Fair value					​	Financial Settlement Inflows (Outflows)		​	Value at Risk		​	Fair value by year
Flow	​	December 31, 2015				​	December 31, 2014				​	Index	​	Average rate		​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2015		​	2016		​	2017		​	2018		​	2019+
EUR fixed rate vs. US$ fixed rate swap																​	(175		)	(58		)	(13		)	14		​	(146		)	(5		)	(4		)	(19)
Receivable	​	​	€	1,000	​	​	​	€	1,000	​	​	Fix	​	4.06		%			​			​			​			​			​			​			​
Payable	​	​	US$	1,302	​	​	​	US$	1,302	​	​	Fix	​	4.51		%			​			​			​			​			​			​			​

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments (Continued)

(iii) Foreign exchange hedging program for disbursements in CAD

          In order to reduce the cash flow volatility, forward transactions were implemented to mitigate the foreign exchange exposure that arises from the currency mismatch between revenues denominated in US$ and disbursements denominated in CAD.

          The forward transactions were negotiated over-the-counter and the protected item is part of the CAD denominated disbursements. The financial settlement inflows/outflows are offset by the protected items' losses/gains due to CAD/US$ exchange rate. This program is classified under the hedge accounting requirements.

	​		​		​		​			​			​			​	Financial Settlement Inflows (Outflows)		​			​
	​	Notional			​		​			​	Fair value								​	Value at Risk		​	Fair value by year
					​	Bought / Sold	​	Average rate (CAD / USD)
Flow	​	December 31, 2015	​	December 31, 2014						​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2015		​	2016
Forwards	​	CAD 10	​	CAD 230	​	B	​	1.028		​	(2		)	(27		)	–		​	0.1		​	(2)

b) Commodities derivative positions

(i) Bunker Oil purchase cash flows protection program

          In order to reduce the impact of bunker oil price fluctuation on maritime freight hiring/supply and, consequently, reducing the company's cash flow volatility, bunker oil derivatives were implemented. These transactions are usually executed through forward purchases and zero cost-collars.

          The derivative transactions were negotiated over-the-counter and the protected item is part of the Vale's costs linked to bunker oil prices. The financial settlement inflows/outflows are offset by the protected items' losses/gains due to bunker oil prices changes. Part of this program is classified under the hedge accounting requirements.

	​					​					​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​
	​					​					​		​			​			​						​			​	Fair value by year
	​	Notional (ton)									​		​			​	Fair value								​	Value at Risk
											​	Bought / Sold	​	Average strike (US$/ton)
Flow	​	December 31, 2015				​	December 31, 2014									​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2015		​	2016
Bunker Oil protection																​			​			​			​			​
Forwards	​	​	1,867,500		​	​	​	2,205,000		​	​	B	​	508		​	(577		)	(363		)	(172		)	11		​	(577)
Call options	​	​	2,041,500		​	​	​	–		​	​	B	​	385		​	0.02		​	–		​	–		​	0.01		​	0.02
Put options	​	​	2,041,500		​	​	​	–		​	​	S	​	314		​	(297		)	–		​	(60		)	10		​	(297)
​	​	​	​		​	​	​	​		​	​	​	​	​		​	​		​	​		​	​		​	​		​	​
Total	​	​			​	​	​			​	​		​			​	(873		)	(363		)			​			​	(873)
​	​	​	​		​	​	​	​		​	​	​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​	​		​	​	​	​		​	​	​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​	​		​	​	​	​		​	​	​	​	​		​	​		​	​		​	​		​	​		​	​
Bunker Oil hedge													​			​			​			​			​			​
Forward	​	​	0		​	​	​	1,950,000		​	​	B	​	0		​	–		​	(371		)	(439		)	–		​	–

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments (Continued)

(ii) Protection programs for base metals raw materials and products

          In the operational protection program for nickel sales at fixed prices, derivatives transactions were implemented to convert into floating prices the contracts with clients that required a fixed price, in order to keep nickel revenues exposed to nickel price fluctuations. Those operations are usually implemented through the purchase of nickel forwards, which are unwind before the original maturity in order to match the settlement dates of the commercial contracts in which the prices were fixed.

          In the operational protection program for the purchase of raw materials and products, derivatives transactions were implemented, usually through the sale of nickel and copper forward or futures, in order to reduce the mismatch between the pricing period of purchases (concentrate, cathode, sinter, scrap and others) and the pricing period of the final product sales to the clients.

          The derivative transactions are negotiated at London Metal Exchange or over-the-counter and the protected item is part of Vale's revenues and costs linked to nickel and copper prices. The financial settlement inflows/outflows are offset by the protected items' losses/gains due to nickel and copper prices changes.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​			​			​
	​	Notional (ton)					​		​			​	Fair value								​	Value at Risk		​	Fair value by year
							​	Bought / Sold	​	Average strike (US$/ton)
Flow	​	December 31, 2015		​	December 31, 2014							​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2015		​	2016		​	2017		​	2018
Fixed price sales protection												​			​			​			​			​			​			​
Nickel forwards	​	16,917		​	11,264		​	B	​	11,821		​	(46		)	(24		)	(63		)	5		​	(37		)	(9		)	0
Raw material purchase protection												​			​			​			​			​			​			​
Nickel forwards	​	118		​	140		​	S	​	9,603		​	0.1		​	0.2		​	0.9		​	0.0		​	0.1		​	–		​	–
Copper forwards	​	385		​	360		​	S	​	4,938		​	0.1		​	0.1		​	0.6		​	0.0		​	0.1		​	–		​	–
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​			​			​		​			​	0.2		​	0.3		​			​			​	0.2		​	–		​	–
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

c) Silver Wheaton Corp. warrants

          The company owns warrants of Silver Wheaton Corp. (SLW), a Canadian company with stocks negotiated in Toronto Stock Exchange and New York Stock Exchange. Such warrants configure American call options and were received as part of the payment regarding the sale of 25% of gold payable flows produced as a sub product from Salobo copper mine during its life and 70% of gold payable flows produced as a sub product from some nickel mines in Sudbury during 20 years.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​
	​			​			​		​			​			​						​			​	Fair value by year
	​	Notional (quantity)					​		​			​	Fair value								​	Value at Risk
							​	Bought / Sold	​	Average strike (US$/share)
Flow	​	December 31, 2015		​	December 31, 2014							​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2015		​	2023
Call options	​	10,000,000		​	10,000,000		​	B	​	65		​	7		​	33		​	–		​	1		​	7

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments (Continued)

d) Call options from debentures

          The company has debentures in which lenders have call options of a specified quantity of Ferrovia Norte Sul ordinary shares, later changed to VLI SA shares. The call option's strike price is given by the debentures' remaining notional in each exercise date.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​
	​			​			​		​			​			​						​			​	Fair value by year
	​	Notional (quantity)					​		​			​	Fair value								​	Value at Risk
							​	Bought / Sold	​	Average strike (R$/share)
Flow	​	December 31, 2015		​	December 31, 2014							​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2015		​	2027
Call options	​	140,239		​	–		​	S	​	8,570		​	(39		)	–		​	–		​	2		​	(39)

e) Options related to Minerações Brasileiras Reunidas S.A. ("MBR") shares

          The Company entered into a contract that has options related to MBR shares. Under certain restrict and contingent conditions, which are beyond the buyer's control, such as illegality due to changes in the law, the contract has a clause that gives the buyer the right to sell back its stake to the Company. It this case, the Company could settle through cash or shares. On the other hand, the Company has the right to buy back this non-controlling interest in the subsidiary.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​
	​			​			​		​			​			​						​			​	Fair value by year
	​	Notional (quantity, in millions)					​		​			​	Fair value								​	Value at Risk
							​	Bought / Sold	​	Average strike (R$/share)
Flow	​	December 31, 2015		​	December 31, 2014							​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2015		​	2016+
Options	​	2,139		​	–		​	B/S	​	1.8		​	15		​	–		​	–		​	9		​	15

f) Embedded derivatives in commercial contracts

          The Company has some nickel concentrate and raw materials purchase agreements in which there are provisions based on nickel and copper future prices behavior. These provisions are considered as embedded derivatives.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​
	​			​			​		​			​			​						​			​	Fair value by year
	​	Notional (ton)					​		​			​	Fair value								​	Value at Risk
							​	Bought / Sold	​	Average strike (US$/ton)
Flow	​	December 31, 2015		​	December 31, 2014							​	December 31, 2015		​	December 31, 2014		​	December 31, 2015		​	December 31, 2015		​	2016
Nickel forwards	​	3,877		​	4,491		​	S	​	9,468		​	3.0		​	(0.6		)			​			​	2.3
Copper forwards	​	5,939		​	6,310		​	S	​	4,961		​	2.0		​	1.1		​			​			​	0.3
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​
Total	​			​			​		​			​	5.0		​	0.6		​	–		​	1.7		​	2.6
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​

          The Company has also a natural gas purchase agreement in which there's a clause that defines that a premium can be charged if the Company's pellet sales prices trade above a pre-defined level. This clause is considered an embedded derivative and both his fair value and value at risk were not material as of December 31, 2015.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments (Continued)

g) Sensitivity analysis of derivative financial instruments

          The following tables present the potential value of the instruments given hypothetical stress scenarios for the main market risk factors that impact the derivatives positions. The scenarios were defined as follows:

•

Scenario I: fair value calculation considering market prices as of December 31, 2015



•

Scenario II: fair value estimated considering a 25% deterioration in the associated risk variables



•

Scenario III: fair value estimated considering a 50% deterioration in the associated risk variables

Instrument	​	Instrument's main risk events	​	Scenario I		​	Scenario II		​	Scenario III
CDI vs. US$ fixed rate swap	​	R$ depreciation	​	(783		)	(1,369		)	(1,954)
	​	US$ interest rate inside Brazil decrease	​	(783		)	(798		)	(813)
	​	Brazilian interest rate increase	​	(783		)	(787		)	(792)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–
TJLP vs. US$ fixed rate swap	​	R$ depreciation	​	(1,015		)	(1,647		)	(2,279)
	​	US$ interest rate inside Brazil decrease	​	(1,015		)	(1,057		)	(1,100)
	​	Brazilian interest rate increase	​	(1,015		)	(1,094		)	(1,163)
	​	TJLP interest rate decrease	​	(1,015		)	(1,057		)	(1,101)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–
TJLP vs. US$ floating rate swap	​	R$ depreciation	​	(63		)	(98		)	(134)
	​	US$ interest rate inside Brazil decrease	​	(63		)	(66		)	(70)
	​	Brazilian interest rate increase	​	(63		)	(68		)	(72)
	​	TJLP interest rate decrease	​	(63		)	(65		)	(68)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–
R$ fixed rate vs. US$ fixed rate swap	​	R$ depreciation	​	(165		)	(298		)	(432)
	​	US$ interest rate inside Brazil decrease	​	(165		)	(180		)	(196)
	​	Brazilian interest rate increase	​	(165		)	(195		)	(219)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–
IPCA vs. US$ fixed rate swap	​	R$ depreciation	​	(105		)	(223		)	(341)
	​	US$ interest rate inside Brazil decrease	​	(105		)	(115		)	(125)
	​	Brazilian interest rate increase	​	(105		)	(133		)	(157)
	​	IPCA index decrease	​	(105		)	(120		)	(134)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–
IPCA vs. CDI swap	​	Brazilian interest rate increase	​	2		​	(39		)	(73)
	​	IPCA index decrease	​	2		​	(20		)	(40)
Protected item: R$ denominated debt linked to IPCA	​	IPCA index decrease	​	n.a.		​	20		​	40
EUR fixed rate vs. US$ fixed rate swap	​	EUR depreciation	​	(175		)	(489		)	(803)
	​	Euribor increase	​	(175		)	(215		)	(187)
	​	US$ Libor decrease	​	(175		)	(196		)	(218)
Protected item: EUR denominated debt	​	EUR depreciation	​	n.a.		​	489		​	803
CAD Forward	​	CAD depreciation	​	(2		)	(5		)	(8)
Protected item: Disbursement in CAD	​	CAD depreciation	​	n.a.		​	5		​	8
Bunker Oil protection	​		​			​			​
Forwards and options	​	Bunker Oil price decrease	​	(873		)	(1,038		)	(1,202)
Protected item: Part of costs linked to bunker oil prices	​	Bunker Oil price decrease	​	n.a.		​	1,038		​	1,202
Bunker Oilhedge	​		​			​			​
Forwards	​	Bunker Oil price decrease	​	–		​	–		​	–
Protected item: Part of costs linked to bunker oil prices	​	Bunker Oil price decrease	​	n.a.		​	–		​	–

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments (Continued)

Instrument	​	Instrument's main risk events	​	Scenario I		​	Scenario II		​	Scenario III
Nickel sales fixed price protection	​		​			​			​
Forwards	​	Nickel price decrease	​	(46		)	(83		)	(121)
Protected item: Part of nickel revenues with fixed prices	​	Nickel price fluctuation	​	n.a.		​	83		​	121
Purchase protection program	​		​			​			​
Nickel forwards	​	Nickel price increase	​	0.1		​	(0.2		)	(0.4)
Protected item: Part of costs linked to nickel prices	​	Nickel price increase	​	n.a.		​	0.2		​	0.4
Copper forwards	​	Copper price increase	​	0.1		​	(0.4		)	(0.8)
Protected item: Part of costs linked to copper prices	​	Copper price increase	​	n.a.		​	0.4		​	0.8
SLW warrants	​	SLW stock price decrease	​	7		​	3		​	0
VLI call options	​	VLI stock value increase	​	(39		)	(62		)	(86)
Options regarding non-controlling interest in subsidiary	​	Subsidiary stock value increase	​	15		​	(28		)	(59)

Instrument	​	Main risks	​	Scenario I		​	Scenario II		​	Scenario III
Embedded derivatives—Raw material purchase (nickel)	​	Nickel price increase	​	3		​	(5		)	(14)
Embedded derivatives—Raw material purchase (copper)	​	Copper price increase	​	2.0		​	(4.9		)	(11.8)

h) Financial counterparties' ratings

          The transactions of derivative instruments, cash and cash equivalents as well as investments are held with financial institutions whose exposure limits are periodically reviewed and approved by the delegated authority. The financial institutions credit risk is performed through a methodology that considers, among other information, ratings provided by international rating agencies.

          The table below presents the ratings in foreign currency published by agencies Moody's and S&P regarding the main financial institutions that we had outstanding positions as of December 31, 2015.

Long term ratings by counterparty	​	Moody's	​	S&P	​	Long term ratings by counterparty	​	Moody's	​	S&P
ANZ Australia and New Zealand Banking	​	Aa2	​	AA-	​	Caixa Economica Federal	​	Baa3	​	BB+
Banco Bradesco	​	Baa3	​	BB+	​	Citigroup	​	Baa1	​	BBB+
Banco de Credito del Peru	​	Baa1	​	BBB	​	Credit Agricole	​	A2	​	A
Banco do Brasil	​	Baa3	​	BB+	​	Deutsche Bank	​	A3	​	BBB+
Banco do Nordeste	​	Ba1	​	BB+	​	Goldman Sachs	​	A3	​	BBB+
Banco Safra	​	Baa3	​	BB+	​	HSBC	​	A1	​	A
Banco Santander	​	Baa3	​	BB+	​	Intesa Sanpaolo Spa	​	Baa1	​	BBB-
Banco Votorantim	​	Ba1	​	BB+	​	Itau Unibanco	​	Ba1	​	BB+
Bank of America	​	Baa1	​	BBB+	​	JP Morgan Chase & Co	​	A3	​	A–
Bank of Nova Scotia	​	Aa2	​	A+	​	Macquarie Group Ltd	​	A3	​	BBB
Bank of Tokyo Mitsubishi UFJ	​	A2	​	A	​	Morgan Stanley	​	A3	​	BBB+
Banpara	​	Ba3	​	BB	​	National Australia Bank NAB	​	Aa2	​	AA–
Barclays	​	Baa3	​	BBB	​	Royal Bank of Canada	​	Aa3	​	AA–
BBVA	​	A3	​	BBB+	​	Societe Generale	​	A2	​	A
BNP Paribas	​	A1	​	A+	​	Standard Bank Group	​	Baa3	​	–
BTG Pactual	​	Ba2	​	BB-	​	Standard Chartered	​	Aa3	​	A–

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments29.    Employee benefits (Continued)

i) Market curvesix. Overfunded pension plans

          The curves used on the pricing of derivatives instruments were developed based on data from BM&F, Central Bank of Brazil, London Metals Exchange and Bloomberg.

(i) Products

Nickel
Maturity	​	Price (US$/ton)	​	Maturity	​	Price (US$/ton)	​	Maturity	​	Price (US$/ton)
SPOT	​	8,665	​	JUN16	​	8,857	​	DEC16	​	8,907
JAN16	​	8,793	​	JUL16	​	8,868	​	DEC17	​	9,007
FEB16	​	8,807	​	AUG16	​	8,878	​	DEC18	​	9,106
MAR16	​	8,820	​	SEP16	​	8,885	​	DEC19	​	9,166
APR16	​	8,831	​	OCT16	​	8,892	​		​
MAY16	​	8,846	​	NOV16	​	8,900	​		​

Copper
Maturity	​	Price (US$/lb)	​	Maturity	​	Price (US$/lb)	​	Maturity	​	Price (US$/lb)
SPOT	​	2.14	​	JUN16	​	2.13	​	DEC16	​	2.13
JAN16	​	2.14	​	JUL16	​	2.13	​	DEC17	​	2.14
FEB16	​	2.14	​	AUG16	​	2.13	​	DEC18	​	2.15
MAR16	​	2.14	​	SEP16	​	2.13	​	DEC19	​	2.16
APR16	​	2.13	​	OCT16	​	2.13	​		​
MAY16	​	2.13	​	NOV16	​	2.13	​		​

Bunker Oil
Maturity	​	Price (US$/ton)	​	Maturity	​	Price (US$/ton)	​	Maturity	​	Price (US$/ton)
SPOT	​	160	​	JUN16	​	181	​	DEC16	​	209
JAN16	​	162	​	JUL16	​	186	​	DEC17	​	249
FEB16	​	164	​	AUG16	​	191	​	DEC18	​	301
MAR16	​	167	​	SEP16	​	196	​	DEC19	​	374
APR16	​	171	​	OCT16	​	201	​		​
MAY16	​	176	​	NOV16	​	205	​		​

(ii) Foreign exchange and interest rates

US$—Brazil Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
02/01/16	​	2.03	​	12/01/16	​	4.07	​	10/01/18	​	4.27
03/01/16	​	2.28	​	01/02/17	​	4.15	​	01/02/19	​	4.28
04/01/16	​	2.63	​	02/01/17	​	4.13	​	04/01/19	​	4.19
05/02/16	​	2.79	​	03/01/17	​	4.16	​	07/01/19	​	4.18
06/01/16	​	3.00	​	04/03/17	​	4.26	​	10/01/19	​	4.23
07/01/16	​	3.24	​	07/03/17	​	4.26	​	01/02/20	​	4.31
08/01/16	​	3.55	​	10/02/17	​	4.22	​	04/01/20	​	4.26
09/01/16	​	3.80	​	01/02/18	​	4.35	​	07/01/20	​	4.25
10/03/16	​	3.96	​	04/02/18	​	4.18	​	10/01/20	​	4.17
11/01/16	​	4.05	​	07/02/18	​	4.36	​	01/04/21	​	4.43

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments (Continued)

US$ Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
1M	​	0.43	​	6M	​	0.78	​	11M	​	0.86
2M	​	0.51	​	7M	​	0.80	​	12M	​	0.86
3M	​	0.61	​	8M	​	0.82	​	2Y	​	1.19
4M	​	0.69	​	9M	​	0.84	​	3Y	​	1.45
5M	​	0.75	​	10M	​	0.85	​	4Y	​	1.64

TJLP
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
02/01/16	​	7.00	​	12/01/16	​	7.00	​	10/01/18	​	7.00
03/01/16	​	7.00	​	01/02/17	​	7.00	​	01/02/19	​	7.00
04/01/16	​	7.00	​	02/01/17	​	7.00	​	04/01/19	​	7.00
05/02/16	​	7.00	​	03/01/17	​	7.00	​	07/01/19	​	7.00
06/01/16	​	7.00	​	04/03/17	​	7.00	​	10/01/19	​	7.00
07/01/16	​	7.00	​	07/03/17	​	7.00	​	01/02/20	​	7.00
08/01/16	​	7.00	​	10/02/17	​	7.00	​	04/01/20	​	7.00
09/01/16	​	7.00	​	01/02/18	​	7.00	​	07/01/20	​	7.00
10/03/16	​	7.00	​	04/02/18	​	7.00	​	10/01/20	​	7.00
11/01/16	​	7.00	​	07/02/18	​	7.00	​	01/04/21	​	7.00

BRL Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
02/01/16	​	14.34	​	12/01/16	​	15.82	​	10/01/18	​	16.70
03/01/16	​	14.48	​	01/02/17	​	15.88	​	01/02/19	​	16.71
04/01/16	​	14.75	​	02/01/17	​	15.98	​	04/01/19	​	16.71
05/02/16	​	15.01	​	03/01/17	​	16.05	​	07/01/19	​	16.71
06/01/16	​	15.14	​	04/03/17	​	16.14	​	10/01/19	​	16.70
07/01/16	​	15.19	​	07/03/17	​	16.33	​	01/02/20	​	16.68
08/01/16	​	15.39	​	10/02/17	​	16.48	​	04/01/20	​	16.67
09/01/16	​	15.55	​	01/02/18	​	16.53	​	07/01/20	​	16.65
10/03/16	​	15.67	​	04/02/18	​	16.63	​	10/01/20	​	16.64
11/01/16	​	15.75	​	07/02/18	​	16.69	​	01/04/21	​	16.62

Implicit Inflation (IPCA)
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
02/01/16	​	7.70	​	12/01/16	​	9.08	​	10/01/18	​	9.06
03/01/16	​	7.83	​	01/02/17	​	9.14	​	01/02/19	​	9.01
04/01/16	​	8.08	​	02/01/17	​	9.15	​	04/01/19	​	8.96
05/02/16	​	8.32	​	03/01/17	​	9.16	​	07/01/19	​	8.92
06/01/16	​	8.45	​	04/03/17	​	9.17	​	10/01/19	​	8.87
07/01/16	​	8.50	​	07/03/17	​	9.20	​	01/02/20	​	8.83
08/01/16	​	8.69	​	10/02/17	​	9.19	​	04/01/20	​	8.78
09/01/16	​	8.84	​	01/02/18	​	9.14	​	07/01/20	​	8.75
10/03/16	​	8.95	​	04/02/18	​	9.14	​	10/01/20	​	8.71
11/01/16	​	9.02	​	07/02/18	​	9.12	​	01/04/21	​	8.68

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

24.    Derivative financial instruments (Continued)

EUR Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
1M	​	–0.21	​	6M	​	–0.08	​	11M	​	–0.06
2M	​	–0.16	​	7M	​	–0.07	​	12M	​	–0.06
3M	​	–0.13	​	8M	​	–0.07	​	2Y	​	0.03
4M	​	–0.11	​	9M	​	–0.06	​	3Y	​	0.06
5M	​	–0.09	​	10M	​	–0.06	​	4Y	​	0.19

CAD Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
1M	​	0.88	​	6M	​	0.96	​	11M	​	0.81
2M	​	0.87	​	7M	​	0.92	​	12M	​	0.79
3M	​	0.87	​	8M	​	0.88	​	2Y	​	0.83
4M	​	0.92	​	9M	​	0.85	​	3Y	​	0.95
5M	​	0.95	​	10M	​	0.83	​	4Y	​	1.08

Currencies—Ending rates
CAD/US$	​	0.7212	​	US$/BRL	​	3.9048	​	EUR/US$	​	1.0934

25.    Stockholders' equity

a) Share capital

          Stockholders' equity is representedAssets by common shares ("ON") and preferred non-redeemable shares ("PNA") without par value. Preferred shares have the same rights as common shares, with the exception of voting rights to elect members of the Board of Directors. The Board of Directors may, regardless of changes to bylaws, issue new shares (authorized capital), including the capitalization of profits and reserves to the extent authorized.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

25.    Stockholders' equity (Continued)

          At December 31, 2015 and 2014, share capital was US$61,614 corresponding to 5,244,316,120 shares issued and fully paid without par value.

	​	December 31, 2015
Stockholders	​	ON		​	PNA		​	Total
Valepar S.A.	​	1,716,435,045		​	20,340,000		​	1,736,775,045
Brazilian Government (Golden Share)	​	–		​	12		​	12
Foreign investors—ADRs	​	814,888,084		​	664,356,644		​	1,479,244,728
FMP—FGTS	​	80,275,389		​	–		​	80,275,389
PIBB—BNDES	​	1,391,867		​	1,546,759		​	2,938,626
BNDESPar	​	206,378,882		​	66,185,272		​	272,564,154
Foreign institutional investors in local market	​	250,366,203		​	659,351,871		​	909,718,074
Institutional investors	​	77,393,251		​	146,982,509		​	224,375,760
Retail investors in Brazil	​	38,524,279		​	408,958,859		​	447,483,138
​	​	​		​	​		​	​
Shares outstanding	​	3,185,653,000		​	1,967,721,926		​	5,153,374,926
Shares in treasury	​	31,535,402		​	59,405,792		​	90,941,194
​	​	​		​	​		​	​
Total issued shares	​	3,217,188,402		​	2,027,127,718		​	5,244,316,120
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Amounts per class of shares (in millions)	​	38,525		​	23,089		​	61,614
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Total authorized shares	​	7,200,000,000		​	3,600,000,000		​	10,800,000,000
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

b) Profit reserves

          The amount of profit reserves are distributed as follow:

	​	Investments reserve		​	Legal reserve		​	Tax incentive reserve		​	Total of profit reserves
Balance on December 31, 2013	​	25,068		​	3,451		​	1,047		​	29,566
​	​	​		​	​		​	​		​	​
Capitalization of reserves	​	(13		)	–		​	(1,023		)	(1,036)
Cancellation of treasury stock	​	(3,000		)	–		​	–		​	(3,000)
Realization of reserves	​	(3,387		)	–		​	–		​	(3,387)
Allocation of income	​	–		​	18		​	61		​	79
Translation adjustment	​	(1,874		)	(408		)	45		​	(2,237)
​	​	​		​	​		​	​		​	​
Balance on December 31, 2014	​	16,794		​	3,061		​	130		​	19,985
​	​	​		​	​		​	​		​	​
Dividends and interest on capital of Vale's stockholders	​	(1,500		)	–		​	–		​	(1,500)
Allocation of loss	​	(10,859		)	(1,176		)	(94		)	(12,129)
Translation adjustment	​	(4,435		)	(900		)	(36		)	(5,371)
​	​	​		​	​		​	​		​	​
Balance on December 31, 2015	​	–		​	985		​	–		​	985
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​

          Investment reserve—aims to ensure the maintenance and development of activities that comprise the Company's operations in an amount not exceeding 50% of distributable annual net income, limited to the total capital.

          Legal reserve—is a requirement for all Brazilian public companies and represents the appropriation of 5% of annual net income based on Brazilian law, up to 20% of the capital.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

25.    Stockholders' equity (Continued)

          Tax incentive reserve—results from the option to designate a portion of the income tax for investments in projects approved by the Brazilian Government as well as tax incentives (note 20).

c) Unrealized fair value gain (losses)

	​	Retirement benefit obligations		​	Cash flow hedge		​	Available-for-sale financial instruments		​	Conversion shares		​	Total gain (losses)
Balance December 31, 2013	​	(685		)	(46		)	(2		)	(469		)	(1,202)
​	​	​		​	​		​	​		​	​		​	​
Other comprehensive income	​	(192		)	(416		)	–		​	–		​	(608)
Translation adjustment	​	32		​	9		​	–		​	56		​	97
​	​	​		​	​		​	​		​	​		​	​
Balance December 31, 2014	​	(845		)	(453		)	(2		)	(413		)	(1,713)
​	​	​		​	​		​	​		​	​		​	​
Other comprehensive income	​	70		​	447		​	1		​	–		​	518
Translation adjustment	​	72		​	–		​	–		​	131		​	203
​	​	​		​	​		​	​		​	​		​	​
Balance December 31, 2015	​	(703		)	(6		)	(1		)	(282		)	(992)
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

d) Basic and diluted earnings per share

          Basic and diluted earnings per sharecategory are as follows:

	​	Year ended December 31
	​	2015		​	2014		​	2013
Net income (loss) attributable to the Company's stockholders	​	(12,129		)	657		​	584
Basic and diluted earnings per share:	​			​			​
Income (loss) available to preferred stockholders	​	(4,631		)	251		​	223
Income (loss) available to common stockholders	​	(7,498		)	406		​	361
​	​	​		​	​		​	​
Total	​	(12,129		)	657		​	584
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Weighted average number of shares outstanding (thousands of shares)—preferred shares	​	1,967,722		​	1,967,722		​	1,967,722
Weighted average number of shares outstanding (thousands of shares)—common shares	​	3,185,653		​	3,185,653		​	3,185,653
​	​	​		​	​		​	​
Total	​	5,153,375		​	5,153,375		​	5,153,375
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Basic and diluted earnings per share	​			​			​
Preferred share	​	(2.35		)	0.13		​	0.11
Common share	​	(2.35		)	0.13		​	0.11

e) Remuneration to the Company's stockholders

          Vale's by-laws determine the minimum remuneration to stockholders of 25% of net income, after adjustments from Brazil's legal requirements. The minimum remuneration includes the rights of stockholders Class "A" of preferred shares which provides priority to receive of 3% of the equity or 6% on the portion of capital formed by these classes of shares, whichever higher.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

25.    Stockholders' equity (Continued)

          The proposal of stockholders' remuneration was calculated in R$. The equivalent amount in US$ are as follows:

	​	2015
Loss	​	(12,129)
Realization of reserves	​	1,500
Allocation of loss	​	12,129
​	​	​
	​	1,500
​	​	​
​	​	​
​	​	​
Remuneration:	​
Mandatory minimum (includes the rights of the preferred shares)	​	–
Additional remuneration	​	1,500
​	​	​
	​	1,500
​	​	​
​	​	​
​	​	​
Remuneration by nature:	​
Interest on capital	​	1,000
Dividends	​	500
​	​	​
	​	1,500
​	​	​
​	​	​
​	​	​
Total remuneration per share	​	0.291071389
​	​	​
​	​	​
​	​	​

          The amounts paid to stockholders, by nature of remuneration, are as follows:

	​	Dividends		​	Interest on capital		​	Total		​	Amount per share
Amounts paid in 2013	​			​			​			​
First installment—April	​	400		​	1,850		​	2,250		​	0.436607084
Second installment—October	​	287		​	1,963		​	2,250		​	0.436607084
​	​	​		​	​		​	​		​	​
Total	​	687		​	3,813		​	4,500		​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
Amounts paid in 2014	​			​			​			​
First installment—April	​	–		​	2,100		​	2,100		​	0.407499945
Second installment—October	​	717		​	1,383		​	2,100		​	0.407499945
​	​	​		​	​		​	​		​	​
Total	​	717		​	3,483		​	4,200		​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
Amounts paid in 2015	​			​			​			​
First installment—April	​	–		​	1,000		​	1,000		​	0.194047593
Second installment—October	​	500		​	–		​	500		​	0.097023796
​	​	​		​	​		​	​		​	​
Total	​	500		​	1,000		​	1,500		​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​

          In January, 2016 (subsequent event), Vale announced that, in compliance with its dividend policy and due to price volatility in mineral commodities, the Executive Board has approved and will submit to the Board of Directors a proposal for a minimum dividend equal to zero for 2016. As the scenario is clearly defined and there is sufficient cash flow, the Board of Directors may decide on the distribution of remuneration to shareholders.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

26.    Costs and expenses by nature

a) Cost of goods sold and services rendered

	​	Year ended December 31
	​	2015		​	2014		​	2013
Personnel	​	2,313		​	3,051		​	3,265
Material and service	​	3,859		​	5,389		​	6,128
Fuel oil and gas	​	1,299		​	1,639		​	1,804
Maintenance	​	2,587		​	2,434		​	1,868
Energy	​	569		​	602		​	663
Acquisition of products	​	829		​	1,615		​	1,412
Depreciation and depletion	​	3,529		​	3,856		​	3,724
Freight	​	3,496		​	3,592		​	3,189
Others	​	2,032		​	2,886		​	2,192
​	​	​		​	​		​	​
Total	​	20,513		​	25,064		​	24,245
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Cost of goods sold	​	19,990		​	24,100		​	22,359
Cost of services rendered	​	523		​	964		​	1,886
​	​	​		​	​		​	​
Total	​	20,513		​	25,064		​	24,245
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

b) Selling and administrative expenses

	​	Year ended December 31
	​	2015		​	2014		​	2013
Personnel	​	267		​	436		​	495
Services (consulting, infrastructure and others)	​	113		​	196		​	331
Advertising and publicity	​	12		​	40		​	44
Depreciation and amortization	​	133		​	223		​	192
Travel expenses	​	12		​	24		​	19
Taxes and rents	​	16		​	28		​	26
Others	​	99		​	152		​	195
​	​	​		​	​		​	​
Total	​	652		​	1,099		​	1,302
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

26.    Costs and expenses by nature (Continued)

c) Other operational expenses (incomes), net

	​	Year ended December 31
	​	2015		​	2014		​	2013
Provision for litigation	​	31		​	174		​	(88)
Provision for loss with VAT credits (ICMS)	​	194		​	117		​	120
Provision for profit sharing program	​	22		​	130		​	215
Provision for disposal of materials and inventories(i)	​	194		​	187		​	171
Gold stream transaction	​	(230		)	–		​	(244)
VAT—settlement program	​	–		​	–		​	166
Results on sale or disposal of property, plant and equipment and intangible	​	78		​	91		​	98
Others(ii)	​	(83		)	358		​	546
​	​	​		​	​		​	​
Total	​	206		​	1,057		​	984
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

	​	December 31, 2018											​	December 31, 2017
	​	Level 1		​	Level 2		​	Level 3		​	Total		​	Level 1		​	Level 2		​	Level 3		​	Total
Debt securities—Corporate	​	–		​	47		​	–		​	47		​	–		​	72		​	–		​	72
Debt securities—Government	​	2,447		​	–		​	–		​	2,447		​	2,757		​	–		​	–		​	2,757
Investments funds—Fixed Income	​	2,441		​	–		​	–		​	2,441		​	2,515		​	–		​	–		​	2,515
Investments funds—Equity	​	450		​	–		​	–		​	450		​	531		​	–		​	–		​	531
International investments	​	25		​	–		​	–		​	25		​	24		​	–		​	–		​	24
Structured investments—Private Equity funds	​	–		​	–		​	159		​	159		​	–		​	–		​	196		​	196
Structured investments—Real estate funds	​	–		​	–		​	15		​	15		​	–		​	–		​	15		​	15
Real estate	​	–		​	–		​	339		​	339		​	–		​	–		​	365		​	365
Loans to participants	​	–		​	–		​	160		​	160		​	–		​	–		​	224		​	224
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	5,363		​	47		​	673		​	6,083		​	5,827		​	72		​	800		​	6,699
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Funds not related to risk plans(i)	​			​			​			​	(1,346		)			​	��		​			​	(1,871)
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Fair value of plan assets at end of year	​			​			​			​	4,737		​			​			​			​	4,828
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

---

(i)

Includes depreciation in the amountFinancial investments not related to coverage of US$54 for the year ended December 31, 2015.

(ii)

The Company reviewed its miningoverfunded pension plans extending the life of some of its assets and the scope of work, and the excess of US$331 between the difference of the liability reduction and the related asset retirement obligation in property, plant and equipment was recognized as other expenses.

27.    Financial result
Measurement of overfunded plan assets at fair value with no observable market variables (level 3) are as follows:

	​	Year ended December 31
	​	2015		​	2014		​	2013
Financial expenses	​			​			​
Loans and borrowings gross interest	​	(1,652		)	(1,736		)	(1,570)
Capitalized loans and borrowing costs	​	761		​	588		​	235
Labor, tax and civil lawsuits	​	(59		)	(91		)	(109)
Derivative financial instruments	​	(3,553		)	(1,974		)	(1,443)
Indexation and exchange rate variation (a)	​	(13,986		)	(4,929		)	(4,586)
Participative stockholders' debentures	​	965		​	(315		)	(381)
Expenses of REFIS	​	(547		)	(683		)	(2,637)
Others	​	(580		)	(699		)	(540)
​	​	​		​	​		​	​
	​	(18,651		)	(9,839		)	(11,031)
​	​	​		​	​		​	​
Financial income	​			​			​
Short-term investments	​	157		​	193		​	101
Derivative financial instruments	​	1,076		​	640		​	410
Indexation and exchange rate variation (b)	​	6,506		​	2,729		​	1,646
Others	​	111		​	208		​	542
​	​	​		​	​		​	​
	​	7,850		​	3,770		​	2,699
​	​	​		​	​		​	​
Financial results, net	​	(10,801		)	(6,069		)	(8,332)
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Summary of indexation and exchange rate variation	​			​			​
Loans and borrowings	​	(10,462		)	(3,251		)	(3,335)
Others	​	2,982		​	1,051		​	395
​	​	​		​	​		​	​
Net (a) + (b)	​	(7,480		)	(2,200		)	(2,940)
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

	​	Private equity funds		​	Real estate funds		​	Real estate		​	Loans to participants		​	Total
Balance as at December 31, 2016	​	140		​	10		​	370		​	260		​	780
​	​	​		​	​		​	​		​	​		​	​
Return on plan assets	​	37		​	(2		)	4		​	29		​	68
Assets purchases	​	31		​	8		​	13		​	75		​	127
Assets sold during the year	​	(8		)	–		​	(17		)	(137		)	(162)
Translation adjustment	​	(4		)	(1		)	(5		)	(3		)	(13)
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2017	​	196		​	15		​	365		​	224		​	800
​	​	​		​	​		​	​		​	​		​	​
Return on plan assets	​	15		​	–		​	39		​	25		​	79
Assets purchases	​	2		​	2		​	7		​	233		​	–
Assets sold during the year	​	(26		)	–		​	(16		)	(292		)	(334)
Translation adjustment	​	(28		)	(2		)	(56		)	(30		)	(116)
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2018	​	159		​	15		​	339		​	160		​	673
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

​

​	​	​	​	​
​	​ ​	​ F-87	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

28. Deferred revenue—Gold stream

          In 2013, the Company entered into a gold stream transaction ("original transaction") with Silver Wheaton Corp. ("SLW") to sell 25% of the gold extracted during the life of the mine as a by-product of Salobo copper mine ("Salobo transaction") and 70% of the gold extracted during the next 20 years as a by-product of the Sudbury nickel mines ("Sudbury transaction"). The Company received up-front cash proceeds of US$1,900.

          The original transaction was amended in March, 2015 to include an additional 25% of gold extracted during the life of the mine as a by-product of Salobo copper mine ("amended transaction"). The Company received up-front cash proceeds of US$900. The Company may also receive an additional cash payment contingent on its decision to expand the capacity to process Salobo copper ores until 2036. The additional amount could range from US$88 to US$720 depending on timing and size of the expansion.

          As the gold is delivered to SLW, Vale receives a payment equal to the lesser of: (i) US$400 per ounce of refined gold delivered (which payment will be subject to an annual increase of 1% per year commencing on January 1, 2017 for the original and amended transactions and each January 1 thereafter) and (ii) the reference market price on the date of delivery.

          This transaction was bifurcated into two identifiable components: (i) the sale of the mineral rights and, (ii) the services for gold extraction on the portion in which Vale operates as an agent for SLW gold extraction.

          The result of the sale of the mineral rights of US$230 was recognized in the income statement under other operating expenses, net. The portion related to the provision of future services for gold extraction was recorded as deferred revenue (liability) in the amount of US$532 and will be recognized in the income statement as the service is rendered and the gold extracted. During the year ended December 31, 2015 and 2014, the Company recognized in income statement US$106 and US$64, respectively, related to rendered services of the original and amended transactions.

          The deferred revenue is recognized based on the units of gold extracted compared to the total of proven and probable gold reserves negotiated with SLW. Defining the gain on sale of mineral interest and the deferred revenue portion of the transaction requires the use of critical accounting estimates as follow:

•

Discount rates used to measure the present value of future inflows and outflows;



•

Allocation of costs between copper and gold based on relative prices;



•

Expected margin for the independent elements (sale of mineral rights and service for gold extraction) based on Company's best estimate.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

29. Commitments

a) Base metals operations

i) Nickel Operations—New Caledonia

          In regards to the construction and installation of the nickel plant in New Caledonia, Vale Canada Limited ("Vale Canada") provided guarantees in respect of a special financing arrangement, structured under French tax law, to BNP Paribas (agent for the benefit of certain French institutional tax investors). The guarantees relate to lease finance payments due from Vale Nouvelle-Calédonie S.A.S. ("VNC") to a special purpose company held by the French tax investors in respect of certain assets of the plant. Consistent with VNC's commitments under the financing structure, these assets were substantially complete as at December 31, 2012. Vale Canada has committed that these assets will operate for a five year period following substantial completion. Vale Canada believes the likelihood of the guarantees being called upon is remote.

          In October 2012, Vale Canada entered into an agreement with Sumic Nickel Netherland B.V. ("Sumic"), a shareholder in VNC, to amend the shareholders' agreement to reflect Sumic's agreement to the dilution of their interest in VNC from 21% to 14.5%. Sumic originally held a put option to sell to Vale Canada the shares they own in VNC if the defined cost of the initial project exceeded a certain limit and an agreement could not be reached on how to proceed with the project. In October 2012, the trigger for the put option changed from a cost threshold to a production test and later the put option date was extended to December 31, 2015. VNC did not achieve the production test by December 31, 2015 and Sumic's put option was automatically triggered. Consequently, Sumic will sell its shares in VNC to Vale Canada in 2016. As the put option was automatically triggered in December 2015, Vale recognized in its equity the amount related to 14.5% of VNC and the liabilities for Sumic as related parties (note 30).

ii) Nickel Operations—Indonesia

          In October 2014, Vale subsidiary PT Vale Indonesia Tbk ("PTVI"), a public company in Indonesia, renegotiated its agreement with the Government to operate (known as the Contract of Work ("CoW")). The renegotiation included an undertaking by PTVI to further divest 20% of its shares to Indonesian participants (approximately 20% of PTVI's shares already being registered on the Indonesian stock exchange) within five years. This undertaking will be fulfilled by PTVI's existing major shareholders, being Vale Canada and Sumitomo Metal Mining, Co., Ltd., on a pro rata basis. The renegotiated CoW impacted 2014 income statement, recorded as a loss of US$167 as results on measurement or sales of non-current assets.

iii) Nickel Operations—Canada

          The subsidiaries Vale Canada, Vale Newfoundland & Labrador Limited ("VNLL") and the Province of Newfoundland and Labrador (the "Province") signed a Development Agreement under rights and obligations with respect to the development and operation of the Voisey's Bay mine along with certain other obligations with respect to processing in the Province and the export of nickel and copper concentrate. On December 19, 2014, the Sixth Amendment to the Development Agreement was executed. The Sixth Amendment includes operational and other key commitments in the Development Agreement. As such, under the Development Agreement, as amended, VNLL has a potential obligation secured by letters of credit and other security, which may become due and payable in the event that certain commitments in relation to the construction of the underground mine are delayed or not met.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

29.    CommitmentsEmployee benefits (Continued)

          In the course of the operations the Company has provided other letters of credit and guarantees in the amount of US$1 billion that are associated with items such as environment reclamation, asset retirement obligation commitments, insurance, electricity commitments, post-retirement benefits, community service commitments and import and export duties.

b) Participative stockholders' debenturesx. Underfunded pension plans

          At the time of its privatization in 1997, Vale issued debentures to then-existing stockholders, including the Brazilian Government. The debentures' terms were set to ensure that pre-privatization stockholders would participate in potential future benefits that might be obtained from exploiting mineral resources.

          A total of 388,559,056 debentures were issued with a par value of R$0.01 (one cent of Brazilian Real), whose value will be inflation-indexed the General Market Price Index ("IGP-M"), as set out in the Issue Deed. The Company paid as semiannual remuneration the amount of R$207 (US$65) and R$285 (US$112), respectively, for the year ended December 31, 2015 and 2014.

c) Operating lease obligations

          The future payment commitments for operating leaseAssets by category are as follows:

2016	​	56
2017	​	59
2018	​	62
2019	​	53
2020 and thereafter	​	56
​	​	​
Total minimum payments required	​	286
​	​	​
​	​	​
​	​	​

	​	December 31, 2018											​	December 31, 2017
	​	Level 1		​	Level 2		​	Level 3		​	Total		​	Level 1		​	Level 2		​	Level 3		​	Total
Cash and cash equivalents	​	3		​	18		​	–		​	21		​	4		​	28		​	–		​	32
Equity securities	​	1,186		​	2		​	–		​	1,188		​	1,364		​	3		​	–		​	1,367
Debt securities—Corporate	​	–		​	374		​	–		​	374		​	–		​	338		​	–		​	338
Debt securities—Government	​	116		​	680		​	–		​	796		​	141		​	801		​	–		​	942
Investments funds—Fixed Income	​	42		​	296		​	–		​	338		​	159		​	–		​	–		​	159
Investments funds—Equity	​	–		​	124		​	–		​	124		​	8		​	392		​	–		​	400
Structured investments—Private Equity funds	​	–		​	–		​	213		​	213		​	97		​	–		​	197		​	294
Real estate	​	–		​	–		​	51		​	51		​	–		​	–		​	44		​	44
Loans to participants	​	–		​	–		​	3		​	3		​	–		​	–		​	5		​	5
Others	​	–		​	–		​	165		​	165		​	–		​	–		​	195		​	195
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	1,347		​	1,494		​	432		​	3,273		​	1,773		​	1,562		​	441		​	3,776
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

Measurement of underfunded plan assets at fair value with no observable market variables (level 3) are as follows:

	​	Private equity funds		​	Real estate		​	Loans to participants		​	Others		​	Total
Balance as at December 31, 2016	​	187		​	24		​	6		​	173		​	390
​	​	​		​	​		​	​		​	​		​	​
Return on plan assets	​	8		​	1		​	–		​	10		​	19
Assets purchases	​	13		​	17		​	–		​	–		​	30
Assets sold during the year	​	(18		)	(1		)	–		​	–		​	(19)
Translation adjustment	​	7		​	3		​	(1		)	12		​	21
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2017	​	197		​	44		​	5		​	195		​	441
​	​	​		​	​		​	​		​	​		​	​
Return on plan assets	​	32		​	3		​	–		​	(15		)	20
Assets purchases	​	22		​	18		​	–		​	–		​	40
Assets sold during the year	​	(22		)	(10		)	(1		)	–		​	(33)
Translation adjustment	​	(16		)	(4		)	(1		)	(15		)	(36)
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2018	​	213		​	51		​	3		​	165		​	432
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

d) Guarantees providedxi. Disbursement of future cash flow

          At December 31, 2015, corporate guarantees provided by Vale (within the limit of its direct or indirect interest) for the companies Norte Energia S.A.expects to disburse US$125 in 2019 in relation to pension plans and Companhia Siderúrgica do Pecém S.A. totaled US$274 and US$1,172, respectively. Due to the conclusion of the energy generation assets transaction (note 5), the guarantee of Norte Energia S.A. is shared with Cemig GT.other benefits.

​

​	​	​	​	​
​	​ ​	​ F-88	​ ​	​

​

---

30. Related parties

  ��       Transactions with related parties are made by the Company at arm's-length, observing the price and usual market conditions and therefore do not generate any undue benefit to their counterparties or loss to the Company.

          In the normal course of operations, Vale enters into contracts with related parties (subsidiaries, associates, joint ventures and stockholders), related to the sale and purchase of products and services, loans, leasing of assets, sale of raw material and railway transportation services.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

30. Related parties29.    Employee benefits (Continued)

xii. Expected benefit payments

The balances of these related party transactions and their effects on the financial statementsexpected benefit payments, which reflect future services, are as follows:

	​	Assets
	​	December 31, 2015											​	December 31, 2014
	​	Cash and cash equivalents		​	Derivative financial instruments		​	Accounts receivable		​	Related parties		​	Cash and cash equivalents		​	Derivative financial instruments		​	Accounts receivable		​	Related parties
Banco Bradesco S.A.	​	37		​	66		​	–		​	–		​	60		​	24		​	–		​	–
Banco do Brasil S.A.	​	395		​	16		​	–		​	–		​	427		​	35		​	–		​	–
Baovale Mineração S.A.	​	–		​	–		​	–		​	–		​	–		​	–		​	4		​	9
Companhia Coreano-Brasileira de Pelotização	​	–		​	–		​	–		​	6		​	–		​	–		​	–		​	–
Companhia Hispano-Brasileira de Pelotização	​	–		​	–		​	1		​	4		​	–		​	–		​	–		​	–
Companhia Italo-Brasileira de Pelotização	​	–		​	–		​	–		​	8		​	–		​	–		​	–		​	–
Companhia Nipo-Brasileira de Pelotização	​	–		​	–		​	–		​	9		​	–		​	–		​	–		​	–
Consórcio de Rebocadores da Baía de São Marcos	​	–		​	–		​	15		​	–		​	–		​	–		​	–		​	–
Ferrovia Norte Sul S.A.	​	–		​	–		​	3		​	–		​	–		​	–		​	9		​	–
Mitsui & Co., Ltd.	​	–		​	–		​	1		​	–		​	–		​	–		​	9		​	–
MRS Logística S.A.	​	–		​	–		​	–		​	17		​	–		​	–		​	3		​	24
Samarco Mineração S.A.	​	–		​	–		​	–		​	–		​	–		​	–		​	24		​	310
Teal Minerals Inc.	​	–		​	–		​	–		​	–		​	–		​	–		​	–		​	216
VLI Multimodal S.A.	​	–		​	–		​	9		​	–		​	–		​	–		​	25		​	–
VLI Operações Portuárias S.A.	​	–		​	–		​	25		​	–		​	–		​	–		​	26		​	–
VLI S.A.	​	–		​	–		​	–		​	10		​	–		​	–		​	9		​	–
Others	​	–		​	–		​	24		​	17		​	–		​	–		​	56		​	55
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	432		​	82		​	78		​	71		​	487		​	59		​	165		​	614
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

	​	December 31, 2018
	​	Overfunded pension plans		​	Underfunded pension plans		​	Other benefits
2019	​	259		​	222		​	61
2020	​	268		​	223		​	63
2021	​	276		​	223		​	65
2022	​	284		​	223		​	67
2023	​	291		​	224		​	69
2024 and thereafter	​	1,543		​	1,116		​	369

b) Profit sharing program ("PLR")

The Company recorded as cost of goods sold and services rendered and other operating expenses related to the profit sharing program US$503, US$780 and US$331 for the years ended December 31, 2018, 2017 and 2016, respectively.

c) Long-term compensation plan

For the long-term awarding of eligible executives, the Company compensation plans include Matching Program and Performance Share Unit Program—PSU, with three to four years-vesting cycles, respectively, with the aim of encouraging employee's retention and stimulating their performance.

For the Matching program, the participants can acquire Vale's common shares in the market without any benefits being provided by Vale. If the shares acquired are held for a period of three years and the participants keep employment relationship with Vale, the participant is entitled to receive from Vale an award in shares, equivalent to the number of shares originally acquired by the executive. It should be noted that, although a specific custodian of the shares is defined by Vale, the shares initially purchased by the executives have no restriction and can be sold at any time. However, if it's done before the end of the three-year-vesting period, they lose the entitlement of receiving the related award paid by Vale.

For PSU program, the eligible executives have the opportunity to receive during a four year-vesting cycle, an award equivalent to the market value of a determined number of common shares and conditioned to Vale's performance factor measured as an indicator of total return to the shareholders (TSR). This award is paid in cash and can occur in cumulative installments of 20% (at the end of 2nd year), 30% (at the end of 3rd year) and 50% (at the end of 4th year), conditioned to the performance factor of each year.

Liabilities of the plans are measured at fair value at every reporting period, based on market rates. Compensation costs incurred are recognized by the defined vesting period of three or four years. For the years ended December 31, 2018, 2017 and 2016 the Company recognized in the income statement the amounts of US$95, US$65 and US$37, respectively, related to long-term compensation plan.

​

​	​	​	​	​
​	​ ​	​ F-89	​ ​	​

​

---

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

30. Related parties (Continued)

	​	Liabilities
	​	December 31, 2015											​	December 31, 2014
	​	Derivative financial instruments		​	Suppliers and contractors		​	Related parties		​	Loans and borrowings		​	Derivative financial instruments		​	Suppliers and contractors		​	Related parties		​	Loans and borrowings
Aliança Geração de Energia S.A.	​	–		​	11		​	–		​	–		​	–		​	–		​	–		​	–
Baovale Mineração S.A.	​	–		​	8		​	–		​	–		​	–		​	4		​	–		​	–
Banco do Brasil S.A.	​	250		​	–		​	–		​	2,625		​	134		​	–		​	–		​	2,520
Banco Bradesco S.A.	​	205		​	–		​	–		​	370		​	154		​	–		​	–		​	10
Banco Nacional de Desenvolvimento Econômico e Social ("BNDES")	​	39		​	–		​	–		​	4,066		​	–		​	–		​	–		​	4,716
BNDES Participações S.A.	​	–		​	–		​	–		​	371		​	–		​	–		​	–		​	589
Companhia Coreano-Brasileira de Pelotização	​	–		​	4		​	70		​	–		​	–		​	1		​	86		​	–
Companhia Hispano-Brasileira de Pelotização	​	–		​	37		​	7		​	–		​	–		​	32		​	–		​	–
Companhia Ítalo-Brasileira de Pelotização	​	–		​	3		​	64		​	–		​	–		​	1		​	47		​	–
Companhia Nipo-Brasileira de Pelotização	​	–		​	9		​	112		​	–		​	–		​	2		​	147		​	–
Consórcio de Rebocadores da Baía de São Marcos	​	–		​	8		​	–		​	–		​	–		​	–		​	–		​	–
Ferrovia Centro-Atlântica S.A.	​	–		​	–		​	68		​	–		​	–		​	–		​	98		​	–
Mitsui & Co., Ltd.	​	–		​	11		​	–		​	–		​	–		​	11		​	–		​	–
MRS Logística S.A.	​	–		​	23		​	–		​	–		​	–		​	25		​	–		​	–
Sumic Nickel Netherland B.V.	​	–		​	–		​	352		​	–		​	–		​	–		​	–		​	–
Others	​	–		​	22		​	15		​	–		​	–		​	32		​	37		​	–
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
Total	​	494		​	136		​	688		​	7,432		​	288		​	108		​	415		​	7,835
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​	​

	​	Year ended December 31
	​	2015								​	2014
	​	Net operating revenue		​	Costs and expenses		​	Financial result		​	Net operating revenue		​	Costs and expenses		​	Financial result
Aliança Geração de Energia S.A.	​	12		​	–		​	–		​	–		​	–		​	–
Banco Bradesco S.A.	​	–		​	–		​	(75		)	–		​	–		​	(24)
Banco do Brasil S.A.	​	–		​	–		​	(374		)	–		​	–		​	(110)
Banco Nacional de Desenvolvimento Econômico e Social ("BNDES")	​	–		​	–		​	(372		)	–		​	–		​	(199)
Baovale Mineração S.A.	​	–		​	(24		)			​	–		​	–		​	–
BNDES Participações S.A.	​	–		​	–		​	(50		)	–		​	–		​	(41)
California Steel Industries, Inc.	​	–		​	–		​	–		​	183		​	(215		)	–
Companhia Coreano-Brasileira de Pelotização	​	–		​	(80		)	–		​	–		​	(97		)	–
Companhia Hispano-Brasileira de Pelotização	​	–		​	(50		)	–		​	–		​	(47		)	–
Companhia Ítalo-Brasileira de Pelotização	​	–		​	(66		)	–		​	–		​	(49		)	–
Companhia Nipo-Brasileira de Pelotização	​	–		​	(106		)	–		​	–		​	(155		)	–
Ferrovia Centro Atlântica S.A.	​	47		​	(39		)	(1		)	59		​	(61		)	–
Mitsui & Co., Ltd.	​	187		​	–		​	–		​	111		​	(35		)	–
MRS Logística S.A.	​	–		​	(489		)	–		​	–		​	(593		)	–
Samarco Mineração S.A.	​	127		​	–		​	–		​	210		​	–		​	–
Teal Minerals Inc.	​	–		​	–		​	12		​	–		​	–		​	10
VLI Operações Portuárias S.A.	​	53		​	–		​	–		​	202		​	–		​	–
VLI S.A.	​	198		​	–		​	–		​	148		​	–		​	8
Others	​	55		​	(44		)	(4		)	102		​	(42		)	9
​	​	​		​	​		​	​		​	​		​	​		​	​
Total	​	679		​	(898		)	(864		)	1,015		​	(1,294		)	(347)
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​

Table of Contents

Notes to the Financial Statements29.    Employee benefits (Continued)

Expressed in millions of United States dollar, unless otherwise statedAccounting policy

30. Related parties (Continued)

          The key management personnel remuneration is as follows:

	​	Year ended December 31
	​	2015		​	2014		​	2013
Short-term benefits	​			​			​
Wages or pro-labor	​	8		​	11		​	11
Direct and indirect benefits	​	6		​	7		​	7
Bonus	​	8		​	12		​	9
​	​	​		​	​		​	​
	​	22		​	30		​	27
Long-term benefits	​			​			​
Shares based	​	1		​	1		​	1
Termination of position	​	6		​	–		​	1
​	​	​		​	​		​	​
	​	29		​	31		​	29
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

31. Summary of the main accounting policies

a) Functional currency and presentation currency

          The financial statements of the Group and its associates and joint ventures are measured using the currency of the primary economic environment in which the entity operates ("functional currency"), which in the case of the Parent Company is the Brazilian real ("BRL" or "R$"). For presentation purposes, these financial statements are presented in United States dollar ("USD" or "US$") as the Company believes that this is how international investors analyze the financial statements.

          Operations in other currencies are translated into the functional currency using the actual exchange rates in force on the respective transactions dates. The foreign exchange gains and losses resulting from the translation at the exchange rates in force at the end of the year are recognized in the income statement as financial expense or income.

          The income statement and balance sheet of the Group's entities which functional currency is different from the presentation currency are translated into the presentation currency as follows: (i) assets, liabilities and stockholders' equity (except components described in item (iii)) are translated at the closing rate at the balance sheet date; (ii) income and expenses are translated at the average exchange rates, except for specific transactions that, considering their significance, are translated at the rate at the transaction date and; (iii) capital, capital reserves and treasury stock are translated at the rate at the date of each transaction. All resulting exchange differences are recognized in the comprehensive income as cumulative translation adjustment, and transferred to the income statement when the operations are realized.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies (Continued)

          The exchange rates used by the Group for major currencies to translate its operations are as follows:

	​	Exchange rates used for conversions into R$
	​	Closing rate								​	Average rate for the year ended
	​	2015		​	2014		​	2013		​	2015		​	2014		​	2013
US dollar ("US$")	​	3.9048		​	2.6562		​	2.3426		​	3.3387		​	2.3547		​	2.1605
Canadian dollar ("CAD")	​	2.8171		​	2.2920		​	2.2031		​	2.6020		​	2.1308		​	2.0954
Australian dollar ("AUD")	​	2.8532		​	2.1765		​	2.0941		​	2.4979		​	2.1205		​	2.0821
Euro ("EUR" or "€")	​	4.2504		​	3.2270		​	3.2265		​	3.6999		​	3.1205		​	2.8716

b) Consolidation and investments in associates and joint ventures

          The financial statements reflect the assets, liabilities and transactions of the Parent Company and its direct and indirect controlled entities ("subsidiaries"). Intercompany balances and transactions, which include unrealized profits, are eliminated. Subsidiaries over which control is achieved through other means, such as stockholders agreement, are also consolidated even if the Company does not own a majority of the voting capital.

          For entities over which the Company has joint control ("joint ventures") or significant influence, but not control ("associates"), the investments are accounted for using the equity method. For interests in joint arrangements operations ("joint operations"), the Company recognizes its share of assets, liabilities and net income.

          Unrealized gains on downstream or upstream transactions between the Company and its associates and joint ventures are eliminated fully or proportionately to the extent of the Company.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies (Continued)

          The composition of the Group (relevant entities based on its operations for the Group) and its non-consolidated entities are as follows:

	​	Location	​	Principal activity	​	% ownership				​	% Voting capital				​	% Noncontrolling interest or other investors
Direct and indirect subsidiaries	​		​		​	​			​	​	​			​	​
Companhia Portuária da Baía de Sepetiba	​	Brazil	​	Iron ore	​	​	100.0		%	​	​	100.0		%	​	0.0%
Compañia Minera Miski Mayo S.A.C.	​	Peru	​	Fertilizers	​	​	40.0		%	​	​	51.0		%	​	60.0%
Mineração Corumbaense Reunida S.A.	​	Brazil	​	Iron ore and manganese	​	​	100.0		%	​	​	100.0		%	​	0.0%
Minerações Brasileiras Reunidas S.A.	​	Brazil	​	Iron ore	​	​	62.5		%	​	​	98.3		%	​	37.5%
Salobo Metais S.A.	​	Brazil	​	Copper	​	​	100.0		%	​	​	100.0		%	​	0.0%
Vale International Holdings GmbH	​	Austria	​	Holding and research	​	​	100.0		%	​	​	100.0		%	​	0.0%
Vale Canada Holdings Inc.	​	Canada	​	Holding	​	​	100.0		%	​	​	100.0		%	​	0.0%
Vale Canada Limited	​	Canada	​	Nickel	​	​	100.0		%	​	​	100.0		%	​	0.0%
Vale Fertilizantes S.A.	​	Brazil	​	Fertilizers	​	​	100.0		%	​	​	100.0		%	​	0.0%
Vale International S.A.	​	Switzerland	​	Trading and holding	​	​	100.0		%	​	​	100.0		%	​	0.0%
Vale Malaysia Minerals Sdn. Bhd.	​	Malaysia	​	Iron ore	​	​	100.0		%	​	​	100.0		%	​	0.0%
Vale Manganês S.A.	​	Brazil	​	Manganese and ferroalloys	​	​	100.0		%	​	​	100.0		%	​	0.0%
Vale Moçambique S.A.	​	Mozambique	​	Coal	​	​	95.0		%	​	​	95.0		%	​	5.0%
Vale Nouvelle Caledonie S.A.S.	​	New Caledonia	​	Nickel	​	​	80.5		%	​	​	80.5		%	​	19.5%
Vale Shipping Holding Pte. Ltd.	​	Singapore	​	Iron ore	​	​	100.0		%	​	​	100.0		%	​	0.0%
Direct and indirect associates and joint ventures	​		​		​	​			​	​	​			​	​
Aliança Geração de Energia S.A.	​	Brazil	​	Energy	​	​	55.0		%	​	​	55.0		%	​	45.0%
Companhia Coreano-Brasileira de Pelotização	​	Brazil	​	Pellets	​	​	50.0		%	​	​	50.0		%	​	50.0%
Companhia Hispano-Brasileira de Pelotização	​	Brazil	​	Pellets	​	​	50.9		%	​	​	51.0		%	​	49.1%
Companhia Ítalo-Brasileira de Pelotização	​	Brazil	​	Pellets	​	​	50.9		%	​	​	51.0		%	​	49.1%
Companhia Nipo-Brasileira de Pelotização	​	Brazil	​	Pellets	​	​	51.0		%	​	​	51.1		%	​	49.0%
Companhia Siderúrgica do Pecém	​	Brazil	​	Steel	​	​	50.0		%	​	​	50.0		%	​	50.0%
Henan Longyu Energy Resources Co., Ltd.	​	China	​	Coal	​	​	25.0		%	​	​	25.0		%	​	75.0%
MRS Logística S.A.	​	Brazil	​	Iron ore	​	​	40.0		%	​	​	40.0		%	​	60.0%
Samarco Mineração S.A.	​	Brazil	​	Pellets	​	​	50.0		%	​	​	50.0		%	​	50.0%
VLI S.A.	​	Brazil	​	Logistics	​	​	37.6		%	​	​	37.6		%	​	62.4%

          The accounting practices of subsidiaries, associates and joint ventures are consistent with the policies adopted by the Parent Company.

c) Noncontrolling interests

          Investments held by investors in Vale's subsidiaries are classified as noncontrolling interests. The Company treats transactions with noncontrolling interests as transactions with equity owners of the Group.

          For purchases of noncontrolling interests, the difference between any amount 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 noncontrolling interest are also recorded in stockholders' equity.

d) Segment information

          The Company discloses in note 3, segment information in accordance with the principles and concepts used by the chief operating decision makers in evaluating performance and allocating resources. The information is analyzed by operating segment as follows:

i. Ferrous minerals

          Ferrous minerals comprises the production and extraction of ferrous minerals, as iron ore, pellets and its logistic services (railroads, ports and terminals), manganese and ferroalloys, and other ferrous products and services.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies (Continued)

ii. Coal

          Coal comprises the extraction of coal and its logistic services (railroads, ports and terminals).

iii. Base metals

          Base metals include the production and extraction of non-ferrous minerals, and are presented as nickel and its by-products (ferro-nickel, copper, precious metals and others) and copper (copper concentrated).

iv. Fertilizers

          Fertilizers include the production of the three major groups of nutrients (potash, phosphate and nitrogen) and other fertilizers products.

v. Others

          The segments of others comprise sales and expenses of other products, services and investments in joint ventures and associate in other businesses.

e) Accounts receivables

          Account receivables are financial instruments classified in the category loan and receivables and represent the total amount due from sale of products and services rendered by the Company. The receivables are initially recognized at fair value and subsequently measured at amortized cost, net of impairment losses, when applicable.

f) Inventories

          Inventories are stated at the lower of cost or the net realizable value. The inventory production cost is determined on the basis of variable and fixed costs, direct and indirect costs of production, using the average cost method. An allowance for losses on obsolete or slow-moving inventory is recognized.

g) Assets and liabilities held for sale

          When the Company is committed to sale assets which (i) are available for immediate disposal; (ii) the sale is highly probable; and (iii) the carrying amount of these assets will be recovered through the sale rather than the continuing use, these assets and related liabilities are classified as assets and liabilities held for sale. The assets and related liabilities which are classified as held for sale are described in note 5.

          The non-current assets and related liabilities held for sale are recognized as current assets and are measured at the lower of carrying amount or fair value less costs to sell.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies (Continued)

h) Stripping Costs

          The cost associated with the removal of overburden and other waste materials ("stripping costs") incurred during the development of mines, before production takes place, are capitalized as part of the depreciable cost of developing the mining property. These costs are subsequently amortized over the useful life of the mine.

          Post-production stripping costs are included in the cost of inventory, except when a new project is developed to permit access to a significant body of ore. In such cases, the cost is capitalized as a non-current asset and is amortized during the extraction of the body of ore, over the useful life of the body of ore.

          Stripping costs are measured at fixed and variable costs directly and indirectly attributable to its removal and, when applicable, net of any impairment losses measured in same basis adopted for the cash generating unit of which it is part.

i) Intangibles

          Intangibles are carried at the acquisition cost, net of amortization and impairment.

          Intangibles with finite useful lives are amortized over their effective use and are tested for impairment whenever there is an indication that the asset may be impaired. Assets with indefinite useful lives are not amortized and are tested for impairment at least annually.

          The Company holds railway concessions which are valid over a certain period of time. Those assets are classified as intangible assets and amortized over the shorter of their useful lives and the concession term at the end of which they will be returned to the government.

          Intangibles acquired in a business combination are recognized separately from goodwill.

          The estimated useful lives are as follows:

	​	Useful life
Concessions	​	3 to 12 years
Right of use	​	22 to 31 years
Software	​	3 to 5 years

j) Property, plant and equipment

          Property, plant and equipment are evaluated at the cost of acquisition or construction, net of amortization and impairment.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies (Continued)

          Mining assets developed internally are determined by (i) direct and indirect costs attributed to build the mine site and plant, (ii) financial charges incurred during the construction period, (iii) depreciation of other fixed assets used into building, (iv) estimated decommissioning and site restoration expenses, and (iv) other capitalized expenditures occurred during the development phase (phase when the project demonstrates its economic benefit to the Company, and the Company has ability and intention to complete the project).

          The depletion of mining assets is determined based on the ratio between production and total proven and probable mineral reserves. Property, plant and equipment are depreciated using the straight-line method based on the estimated useful lives, from the date on which the assets become available for their intended use, except for land which is not depreciated.

          The estimated useful lives are as follows:

	​	Useful life
Buildings	​	15 to 50 years
Facilities	​	8 to 50 years
Equipment	​	3 to 33 years
Mining assets	​	Production
Others:	​
Locomotives	​	12.5 to 25 years
Wagon	​	33 to 44 years
Railway equipment	​	5 to 50 years
Ships	​	5 to 20 years
Others	​	2 to 50 years

          The residual values and useful lives of assets are reviewed at the end of each fiscal year and adjusted if necessary.

          Significant industrial maintenance costs, including spare parts, assembly services, and others, are recorded in property, plant and equipment and depreciated through the next programmed maintenance overhaul.

k) Research and evaluation

i. Exploration and evaluation expenditures

          Expenditures on mining research are accounted for as operating expenses until the effective proof of economic feasibility and commercial viability of a given field can be demonstrated. From then on, the expenditures incurred are capitalized as mine development costs.

ii. Expenditures on feasibility studies, new technologies and other research

          The Company also conducts feasibility studies for many businesses which it operates including researching new technologies to optimize the mining process. After these costs are proven to generate future benefits to the Company, the expenditures incurred are capitalized.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies (Continued)

l) Impairment of assets

          The Company assesses, at each reporting date, whether there is evidence that the carrying amount of financial assets measured through amortized cost and long-live non-financial asset should be impaired.

          For financial assets measured through amortized cost, Vale compares the carrying amount with the expected cash flows of the asset, and when appropriate, the carrying value is adjusted to reflect the present value of future cash flows.

          For long-lived non-financial assets (such as intangible or property plant and equipment), when impairment indication are identified, a test is conducted by comparing the recoverable value of these assets grouped at the lowest levels for which there are separately identifiable cash flows of the cash-generating unit ("CGU") to which the asset belongs to their carrying amount. If the Company identifies the need for impairment, it is applied to each asset's cash-generating unit. The recoverable amount is the higher of value in use and fair value less costs to sell.

          The Company determines its cash flows based on approved budgets, considering mineral reserves and mineral resources calculated by internal experts, costs and investments based on the best estimate of past performance and approved budgets, sale prices consistent with the projections used in reports published by industry considering the market price when available and appropriate. Cash flows used are based on the life of each cash-generating unit (consumption of reserve units in the case of minerals) and considering discount rates that reflect specific risks relating to the relevant assets in each cash-generating unit, depending on their composition and location.

          Regardless the indication of impairment of its carrying value, goodwill balances arising from business combinations, intangible assets with indefinite useful lives and land are tested for impairment at least once a year.

          Non-current assets (excluding goodwill) which the Company recognized impairment are reviewed whenever events or changes in circumstances indicate that the impairment may no longer be applicable. In such cases, an impairment reversal will be recognized.

m) 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. They are initially recognized at fair value and subsequently measured at amortized cost using the effective interest rate method.

          The Company has transactions with payment terms up to 360 days. Under these circumstances, some suppliers discounts their receivables with financial institutions to a range of Libor+0.4% p.a. to Libor+1.3% p.a. These operations amount to US$270 and US$282 at December 31, 2015 and 2014, respectively, and are adjusted to present value, which the accrued interest is recognized as interest expense in the income statement.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies (Continued)

n) Loans and borrowings

          Loans and borrowings are initially measured at fair value, net of transaction costs incurred and are subsequently carried at amortized cost and updated using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the Income statement over the period of the loan, using the effective interest rate method. The fees paid in obtaining the loan are recognized as transaction costs.

          Loans and borrowing costs are capitalized as part of property, plants and equipment if those costs are directly related to a qualified asset. The capitalization occurs until the qualified asset is ready for its intended use. The average capitalization rate is 46%. Borrowing costs that are not capitalized are recognized in the income statement in the period in which they are incurred.

o) Leases

          The Company classifies its contracts as a finance leases or operating leases based on the substance of the contract as to whether it is linked to the transfer of substantially all risks and benefits of the assets ownership to the Company during their useful life.

          For finance 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 and the corresponding obligation recorded in liabilities. For operating leases, payments are recognized on a straight line basis during the term of the contract as a cost or expense in the income statement.

p) Provisions

          Provisions are recognized only when there is a present obligation (legal or constructive) resulting from a past event, and it is probable that the settlement of this obligation will result in an outflow of resources, and the amount of the obligation can 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 pre-tax rate, which reflects current market assessments of the 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.

i. Provision for asset retirement obligations

          The provision made by the Company refers to costs related to mine closure and reclamation, with the completion of mining activities and decommissioning of assets related to mine. When the provision is recognized, the corresponding cost is capitalized as part of property plant and equipment and is depreciated on the same basis over the related asset and recorded in the income statement.

          The long-term liability is subsequently measured using a long-term risk free discount rate applicable to the liability and recorded in the income statement as financial expenses until the Company makes payments related to mine closure and decommissioning of assets mining.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies (Continued)

ii. Provision for litigation

          The provision refers to litigation and fines incurred by the Company. A provision is recognized when the obligation is considered probable and can be measured. The accounting counterpart for the obligation is an expense in income statement. This obligation is updated according to the evolution of the judicial process or interest incurred and can be reversed if the estimate of loss is not considered probable or settled when the obligation is paid.

q) Employee benefits

i. Current benefits—wages, vacations and related taxes

Payments of benefits such as wages or accrued vacation, as well as the related social security taxes over those benefits are recognized monthly in income, on an accruals basis.

ii. Current benefits—profit sharing program

The Company has a profit sharing programthe Annual Incentive Program (AIP) based on theTeam and business unit's contribution and Company-wide performance goals achievement of the Company and its employees.through operational cash generation. The Company recognizes the provisionmakes an accrual based on the recurring measurementevaluation periodic of the compliance with goals achieved and results,Company result, using the accrual basis and recognition of present obligation arising from past events in the estimated outflow of resources in the future. The provisionaccrual is recorded as cost of goods sold and services rendered or operating expenses in accordance with the activity of each employee.

iii. Non-current benefits—long-term incentive programs

The Company has established a procedure for awarding certain eligible executives (Matching and Virtual Shares Programs) with the goal of encouraging employee retention and optimum performance. Plan liabilities are measured at each reporting date, at their fair values, based on market prices. Obligations are measured at each reporting date, at fair values based on market prices. The compensation costs incurred are recognized in income during the vesting period as defined.

iv. Non-current benefits—pension costs and other post-retirement benefits

The Company has several retirement plans for its employees.

For defined contribution plans, the Company's obligations are limited to a monthly contribution linked to a pre-defined percentage of the remuneration of employees enrolled in to these plans.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies (Continued)

For defined benefit plans, actuarial calculations are periodically obtained for liabilities determined in accordance with the Projected Unit Credit Method in order to estimate the Company's obligation. The liability recognized in the balance sheetstatement of financial position represents the present value of the defined benefit obligation as at that date, less the fair value of plan assets. The Company recognized in the income statement the costs of services, the interest expense of the obligations and the interest income of the plan assets. The remeasurement of gains and losses, return on plan assets (excluding the amount of interest on return of assets, which is recognized in income for the year) and changes in the effect of the ceiling of the active and onerous liabilities are recognized in comprehensive income for the year.

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

29.    Employee benefits (Continued)

For overfunded plans, the Company does not recognize any assets or benefits in the balance sheetstatement of financial position or income statement until such time as the use of the surplus is clearly defined. For underfunded plans, the Company recognizes actuarial liabilities and results arising from the actuarial valuation.

r) Derivative financial instrumentsCritical accounting estimates and hedge operationsjudgments

          Derivatives transactionsPost-retirement benefits for employees—The amounts recognized and disclosed depend on a number of factors that are determined based on actuarial calculations using various assumptions in which are not qualified as hedge accounting are classifiedorder to determine costs and presented as economic hedge, asliabilities. One of these assumptions is selection and use of the discount rate. Any changes to these assumptions will affect the amount recognized.

At the end of each year the Company uses derivative instruments to manage its financial risks as a way of hedging against these risks. Derivative financial instrumentsand external actuaries review the assumptions that will be used for the following year. These assumptions are recognized as assets or liabilitiesused in the balance sheet and are measured at their fair values. Changes indetermining the fair values of derivativesassets and liabilities, costs and expenses and the future values of estimated cash outflows, which are recorded in income statement or in stockholders'the plan obligations.

30.    Stockholders' equity when

a) Share capital

As at December 31, 2018, the transaction is eligibleshare capital was US$61,614 corresponding to be characterized as effective hedge accounting.5,284,474,782 shares issued and fully paid without par value.

	​	December 31, 2018
Stockholders	​	ON		​	PNE		​	Total
Litel Participações S.A. and Litela Participações S.A.	​	1,075,773,534		​	–		​	1,075,773,534
BNDES Participações S.A.	​	342,484,176		​	–		​	342,484,176
Bradespar S.A.	​	296,009,366		​	–		​	296,009,366
Mitsui & Co., Ltd	​	286,347,055		​	–		​	286,347,055
Foreign investors—ADRs	​	1,211,272,764		​	–		​	1,211,272,764
Foreign institutional investors in local market	​	1,235,808,225		​	–		​	1,235,808,225
FMP—FGTS	​	54,638,358		​	–		​	54,638,358
PIBB—Fund	​	2,300,038		​	–		​	2,300,038
Institutional investors	​	332,021,902		​	–		​	332,021,902
Retail investors in Brazil	​	289,602,980		​	–		​	289,602,980
Brazilian Government (Golden Share)	​	–		​	12		​	12
​	​	​		​	​		​	​
Outstanding shares	​	5,126,258,398		​	12		​	5,126,258,410
Shares in treasury	​	158,216,372		​	–		​	158,216,372
​	​	​		​	​		​	​
Total issued shares	​	5,284,474,770		​	12		​	5,284,474,782
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​
Share capital per class of shares (in millions)	​	61,614		​	–		​	61,614
Total authorized shares	​	7,000,000,000		​	–		​	7,000,000,000

          On the beginningThe Board of the hedge accounting operations, the Company documents the relationship between hedging instruments and hedged items with the objective of risk management and strategy for carrying out hedging operations. The Company also documents, both initially and on a continuously basis, that its assessment of whether the derivatives used in hedging transactions are highly effective.

          The effective componentsDirectors may, regardless of changes in the fair values of derivative financial instruments designated as cash flow hedges are recorded as unrealized fair value gain or losses and recognized in stockholders' equity; and their non-effective components recorded in income statement. The amounts recorded in the statement of comprehensive income, will only be transferred to income statement (costs, operating expenses or financial expenses) when the hedged item is actually realized.

s) Financial instruments classification

          The Company classifies its financial instruments in accordance with the purpose for which they were acquired, and determines the classification and initial recognition accordingby-laws, issue new common shares (up to the following categories:

i. Financial assets

          Measured at fair value through net income—Financial assets held for trading acquired fortotal authorized shares), including the purposecapitalization of selling inprofits and reserves to the short-term. These instruments are measured at fair value, except for derivative financial instruments not classified as hedge accounting, considering the inclusion of the credit risk of counterparties on the calculation of the instruments.extent authorized.

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary of the main accounting policies30.    Stockholders' equity (Continued)

          Loans and receivables—Non-derivative financial instruments with fixed or defined payments, which are not quoted in an active market, are initially measured at fair value and subsequently at amortized cost using the effective interest method.

          Held to maturity—Non-derivative financial assets with fixed or determinable payments and fixed maturities for which the Company has the intent and ability to hold them to maturity, are initially measured at fair value and subsequently at amortized cost.

          Available for sale—Non-derivative financial assets not classified in another category of financial instrument. Financial instruments in this category are measured at fair value, with changes in fair value until the moment of realization then recorded in the stockholders' equity. On realization of the financial asset, its fair value is reclassified to income statement.

ii. Financial liabilities

          Measured at fair value through net income—Financial liabilities with the purpose of trading (repurchase) or which are initially measured at fair value by the Company, being irreversibly this method of classification.

          Measured at amortized cost—Non-derivative financial liabilities with fixed and determinable payments and fixed maturities, which were not classified as measured at fair value through the income statement.

t) Share capital

The Company repurchases its shares to hold in treasury for future sale or cancellation. These shares are recorded in a specific account as a reduction of stockholders'stockholders´ equity at their acquisition value and carried at cost. These programs are approved by the Board of Directors with a determined terms and numbers of typenumber of shares.

Incremental costs directly attributable to the issue of new shares or options are recognized in stockholders' equity as a deduction from the amount raised, net of taxes.

u) Government grantsb) Share buyback program

The Company concluded in November 2018, share buyback program for Vale's common shares and support

          Government grants and support are accounted for when Company has reasonably complied with conditions settheir respective ADSs approved by the governmentBoard of Directors on July 25, 2018, and repurchased a total of 71,173,683 common shares, at an average price of US$14.05 per share, for a total aggregate purchase price of US$1,000. The shares were acquired in relationthe stock market based on regular trading conditions. The shares acquired are held in treasury for future sale or cancellation.

c) Remuneration to the grants. Company's stockholders

The Company's by-laws determine the minimum remuneration to stockholders of 25% of net income, after appropriations to legal reserve and tax incentive reserve, as follows:

	​	2018
Net income of the year	​	6,860
Appropriation to legal reserve	​	(343)
Appropriation to tax incentive reserve	​	(401)
​	​	​
Net income after appropriations to legal reserve and tax incentive reserve	​	6,116
Minimum mandatory remuneration(i)	​	1,529
Stockholders' remuneration paid in September, 2018	​	(2,054)
Appropriation to investments reserve	​	(4,062)

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(i)

Due to the Brazilian legislation, the Company must retain and collect the amount of withholding tax (15%) and cannot be considered when charging the interest on capital to the mandatory dividend, the minimum mandatory remuneration before tax is US$1,799 based on the interest on capital.

The Company recognizesapproved in March, 2018, the grantsnew policy of stockholders' remuneration of the Company, approved in March 2018, which provides for a semi-annual payment of 30% of Adjusted EBITDA less sustaining capital. In September, 2018, the Company paid stockholders' remuneration in the income statement as a reduction in tax expense according toamount of US$1,876 (US$0.360951164 per share), US$1,659 based on the natureinterest on capital and US$217 based on dividends, for the first half of 2018 approved by Board of Directors on July 25, 2018. This payment comprises the minimum mandatory remuneration for the year ended December 31, 2018.

Following the Brumadinho dam failure (as described on note 3), Vale has determined the suspension of the item,Shareholder Remuneration Policy and classified through retained earnings in stockholders' equity during allocation of net income.

v) Revenue recognition

          Revenue is recognized when Vale transfers to its customers all of the significant risks and rewards of ownership of the product sold or when services are rendered. Net revenue excludes any applicable sales taxes and is recognized at the fair value of the consideration received or receivable to the extent that it is probable that economic benefits will flow to Vale and the revenues and costs can be reliably measured.other deliberation on shares buyback.

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary30.    Stockholders' equity (Continued)

The remuneration paid to stockholders based on the on interest on capital and dividends during 2018 and 2017 amounted US$3,313 (US$0.636637439 per share) and US$1,456 (US$0.282400343 per share), respectively.

d) Profit reserves

The amount of profit reserves is distributed as follows:

	​	Legal reserve		​	Tax incentive reserve		​	Investments reserve		​	Additional remuneration reserve		​	Total of profit reserves
Balance as at December 31, 2016	​	1,384		​	377		​	1,808		​	634		​	4,203
​	​	​		​	​		​	​		​	​		​	​
Allocation of Income	​	275		​	216		​	3,541		​	–		​	4,032
Dividends and interest on capital of Vale's stockholders	​	–		​	–		​	–		​	(658		)	(658)
Translation adjustment	​	(29		)	(13		)	(140		)	24		​	(158)
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2017	​	1,630		​	580		​	5,209		​	–		​	7,419
​	​	​		​	​		​	​		​	​		​	​
Allocation of Income	​	343		​	401		​	4,062		​	–		​	4,806
Translation adjustment	​	(251		)	(99		)	(907		)	–		​	(1,257)
​	​	​		​	​		​	​		​	​		​	​
Balance as at December 31, 2018	​	1,722		​	882		​	8,364		​	–		​	10,968
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​

Legal reserve—Is a legal requirement for Brazilian public companies to retain 5% of the annual net income up to 20% of the capital. The reserve can only be used to compensate losses or to increase capital.

Tax incentive reserve—Results from the option to designate a portion of the income tax for investments in projects approved by the Brazilian Government as well as tax incentives.

Investment reserve—Aims to ensure the maintenance and development of the main accounting policies (Continued)

          Dependingactivities that comprise the Company's operations and to retain budgeted capital for investments. Based on the contract, sales can be recognized whenCompany's by-laws, this reserve is capped to 50% of the product is available at the loading port, loaded on the ship or deliveredannual distributable net income, up to the destination. Service revenues are recognized in the amount by which the services are rendered and accepted by the customer.

          In some cases, the sale price is determined on a provisional basis at the date of sale and the final selling price is subject to escalation clauses through date of final pricing. Revenue from the sale of provisionally priced products is recognized when the risks and rewards of ownership are transferred to the customer and the revenue can be measured reliably. At this date, the amount of revenue to be recognizedthe share capital. The remaining balance over 50% of the annual distributable net income is estimatedretained based on the forward pricecapital investments budget submitted for approval in the Stockholders' Meeting, pursuant to article 196 of the product sold and later adjusted to reflectLaw 6,404.

Additional remuneration reserve—Arises from the final price.

          Amounts billed to customers for shipping related to products soldremuneration proposed by Management that exceeds the Company are recognized as revenue when the Company is responsible for shipping. Shipping costs are recognized as operating costs.

w) Current and deferred income taxes

          Income taxes are recognized in the income statement, except for items recognized directly in stockholders' equity.

          The provision for income tax is calculated individually for each entity in the Group based on Brazilian tax rates, on an accrual basis, by applying the differential between the nominal local tax rates (based on rules in force in the locationmandatory minimum remuneration of 25% of the entity) and the Brazilian rate. The recognition of deferred taxes are based on temporary differences between carrying value and the tax basis of assets and liabilities as well as taxes losses carry forwards. The deferred income taxes assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against fiscal current liabilities and when the deferred income taxes assets and liabilities are related to income taxes recorded by the same taxation authority on the same taxable entity.

          Deferred tax assets arising from tax losses, negative social contribution basis and temporary differences are registered taking into consideration the analysis of future performance, based on economic and financial projections, prepared based on internal assumptions and macroeconomic, trade and tax scenarios that may be subject to changes in future.

x) Basic and diluted earnings per shareadjusted net income.

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          Basic earnings per share are calculated by dividing the income attributable to the stockholders of the Company, after accounting for the remuneration to the holders of equity securities, by the weighted average number of shares outstanding (total shares less treasury shares).

          Diluted earnings per share are calculated by adjusting the weighted average number of shares outstanding for the conversion of all dilutive potential shares. The Company does not have mandatory convertible securities that could result in the dilution of the earning per share.

Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31. Summary30.    Stockholders' equity (Continued)

e) Unrealized fair value gain (losses)

	​	Retirement benefit obligations		​	Fair value adjustment to investment in equity securities		​	Conversion shares		​	Total gain (losses)
Balance as at December 31, 2016	​	(809		)	–		​	(338		)	(1,147)
​	​	​		​	​		​	​		​	​
Other comprehensive income	​	(46		)	–		​	–		​	(46)
Translation adjustment	​	10		​	–		​	–		​	10
​	​	​		​	​		​	​		​	​
Balance as at December 31, 2017	​	(845		)	–		​	(338		)	(1,183)
​	​	​		​	​		​	​		​	​
Other comprehensive income	​	41		​	60		​	–		​	101
Translation adjustment	​	49		​	–		​	–		​	49
​	​	​		​	​		​	​		​	​
Balance as at December 31, 2018	​	(755		)	60		​	(338		)	(1,033)
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​

f) Vale's corporate governance restructuring in 2017

At the General Extraordinary Stockholders' Meeting, held on June 27, 2017, stockholders approved the corporate restructuring of the mainCompany proposed by Valepar S.A. (former controlling stockholder). The corporate restructuring was based on (i) conversion of Vale class "A" preferred shares into common shares; (ii) amendment of Vale's by-laws, so as to adjust to Novo Mercado rules; and (iii) the merger of Valepar S.A. into Vale.

(i) Conversion of preferred shares and merger of Valepar S.A.

At the General Extraordinary Stockholders' Meeting, held on June 27, 2017, stockholders approved the voluntary conversion of Vale class "A" preferred shares into common shares ("ON"), based on the conversion rate of 0.9342 common shares for each Vale class "A" preferred share.

On August 11, 2017, the voluntary conversion period expired and an aggregate of 1,660,581,830 preferred shares (excluding treasury shares), corresponding to 84.4% of the total outstanding preferred shares, were converted into common shares.

At the Extraordinary Stockholders' Meeting of Valepar S.A, held on August 14, 2017, stockholders approved the merger of Valepar with and into Vale. Thereafter, Valepar ceases to exist and, as consequence, its stockholders hold direct interests in Vale, through the 1.2065 Vale common shares received for each Valepar share held by them. As a result, Vale issued 173,543,667 new common shares to Valepar's stockholders, all registered and without par value.

On August 14, 2017, the merger was accounted in Vale's stockholders' equity as capital reserve, based on the accounting policiesappraisal report of Valepar's net assets, amounting to US$1,158.

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Notes to the Financial Statements (Continued)

y) Expressed in millions of United States dollar, unless otherwise stated

30.    Stockholders' equity (Continued)

The impacts arising from the merger in the Company's assets and liabilities are as follows:

	​	August 14, 2017
Current assets	​	24
Judicial deposits	​	951
Intangible	​	964
Current liabilities	​	20
Provisions for litigation	​	631
Taxes payable	​	130
​	​	​
Net assets	​	1,158
​	​	​
​	​	​
​	​	​

At the Extraordinary Stockholders' Meeting and at the Special Stockholders' Meeting, held on October 18, 2017, preferred stockholders approved the conversion of all Class "A" preferred shares into common shares of the Company, in the proportion of 0.9342 common share for each class "A" preferred share. During the period from October 20, 2017 until November 21, 2017, inclusive, the stockholders holding Vale's Class "A" preferred shares dissenting with regard to the resolution of the Special Meeting, had the right to withdraw from the Company, receiving R$24.26 per share which is the equivalent of Vale stockholders' equity per share at December 31, 2016. At the end of this period, 10,397 common shares were converted into treasury shares (corresponding to 11,130 preferred shares).

At the Extraordinary Stockholders' Meeting held on December 21, 2017 stockholders' approved the migration of the Company to the special listing segment of B3 S.A. ("Novo Mercado"), following the conversion of the class "A" preferred shares into common shares.

The stockholders' equity corresponds to 5,284,474,770 common shares and 12 preferred shares special class ("PNE" or "Golden shares"), and there were no changes in the amount of share capital.

	​	Share position before conversion		​	Conversion of the preferred shares		​	Issue of new shares		​	Share position after conversion
Shares outstanding	​			​			​			​
ON	​	3,185,653,000		​	1,838,235,414		​	173,543,667		​	5,197,432,081
PNA/PNE	​	1,967,721,926		​	(1,967,721,914		)	–		​	12
​	​	​		​	​		​	​		​	​
	​	5,153,374,926		​	(129,486,500		)	173,543,667		​	5,197,432,093
Shares in treasury	​			​			​			​
ON	​	31,535,402		​	55,507,287		​	–		​	87,042,689
PNA	​	59,405,792		​	(59,405,792		)	–		​	–
​	​	​		​	​		​	​		​	​
Total issued shares	​	5,244,316,120		​	(133,385,005		)	173,543,667		​	5,284,474,782
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​

g) Shareholders Agreement

On the date of the merger of Valepar into Vale, August 14, 2017, the former Controlling Shareholders of Valepar executed a new shareholders' agreement ("Vale Agreement") that binds only 20% of the totality

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

30.    Stockholders' equity (Continued)

of Vale's common shares issued by Vale, and will be in force until November 9, 2020, with no provision for renewal.

For 6 months from the date of entry into force of the Vale Agreement, the Shareholders will be obligated not to transfer, by any means, either directly or indirectly, Vale shares they receive as a result of the implementation of the Proposal ("Lock-Up"), except for (i) the transfer of Vale's shares by the Shareholders to their affiliates and their current shareholders, provided that such transferred shares shall remain subject to the Lock-Up, and (ii) the transfer of shares held by the Shareholders prior to the merger of Valepar.

Accounting policy

Stockholder's remuneration

—The stockholder's remuneration is paid on dividends and interest on capital. This remuneration is recognized as a liability in the financial statements of the Company based on bylaws. Any amount above the minimum compulsorymandatory remuneration approved by the bylawsby-laws shall only be recognized in current liabilities on the date that is approved by stockholders.

The Company is permitted to distribute interest attributable to stockholders' equity. The calculation is based on the stockholders' equity amounts as stated in the statutory accounting records and the interest rate applied may not exceed the Brazilian Government Long-term Interest Rate ("TJLP") determined by the Central Bank of Brazil. Also, such interest may not exceed 50% of the net income for the year or 50% of retained earnings plus profit reserves as determined by Brazilian corporate law.

The benefit to the Company, as opposed to making a dividend payment, is a reduction in the income tax burden because this interest charge is tax deductible in Brazil. Income tax of 15% is withheld on behalf of the stockholders relative to the interest distribution. Under Brazilian law, interest attributed to stockholders' equity is considered as part of the annual minimum mandatory dividend (note 25 (e)).dividend. This notional interest distribution is treated for accounting purposes as a deduction from stockholders' equity in a manner similar to a dividend and the tax creditdeductibility recorded in income.the income statement.

32. Critical accounting estimates and judgments31.    Related parties

The preparation of financial statements requires the use of certain critical accounting estimatesCompany's related parties are subsidiaries, joint ventures, associates, stockholders and judgments by theits related entities and key management personnel of the Company. These estimatesTransactions between the parent company and its subsidiaries are basedeliminated on the best knowledgeconsolidation and information existing at the balance sheet date. Changesare not disclosed in facts and circumstances may lead to the revision of these estimates. Actual future results may differ from the estimates.this note.

          The significant estimates and assumptions usedRelated party transactions were made by Company in these financial statements are as follow:

a) Mineral reserves and mine useful life

          The estimates of proven and probable reserves are regularly evaluated and updated. These reserves are determined using generally accepted geological estimates. The calculation of reserves requires the Company on terms equivalent to take positions on expected futurethose that prevail in arm´s-length transactions, with respect to price and market conditions that are uncertain, including future ore prices, exchange rates, inflation rates, mining technology, availability of permitsno less favorable to the Company than those arranged with third parties.

Purchases, accounts receivable and production costs. Changes in some of these assumptions could have a significant impact onother assets, and accounts payable and other liabilities relate largely to amounts charged by joint ventures and associates related to the provenpelletizing plants operational lease and probable reserves of the Company.railway transportation services.

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

32. Critical accounting estimates and judgments31.    Related parties (Continued)

          The estimated volumeInformation about related party transactions and effects on the financial statements is set out below:

a) Transactions with related parties

	​	Year ended December 31
	​	2018
	​	Joint Ventures		​	Associates		​	Major stockholders		​	Total
Net operating revenue	​	352		​	309		​	207		​	868
Cost and operating expenses	​	(2,269		)	(39		)	–		​	(2,308)
Financial result	​	115		​	–		​	(115		)	–

	​	Year ended December 31
	​	2017
	​	Joint Ventures		​	Associates		​	Major stockholders		​	Total
Net operating revenue	​	399		​	337		​	146		​	882
Cost and operating expenses	​	(1,943		)	(29		)	(29		)	(2,001)
Financial result	​	118		​	(14		)	(819		)	(715)

	​	Year ended December 31
	​	2016
	​	Joint Ventures		​	Associates		​	Major stockholders		​	Total
Net operating revenue	​	166		​	345		​	141		​	652
Cost and operating expenses	​	(916		)	(51		)	(37		)	(1,004)
Financial result	​	(29		)	1		​	(882		)	(910)

Net operating revenue relates to sale of mineral reserves is used as basis foriron ore to the calculation of depletionsteelmakers and right to use capacity on railroads. Cost and operating expenses mostly relate to the operational leases of the mines, and also for the estimated useful life which is a major factor to quantify the provision for asset retirement obligation and environmental recoverypelletizing plants.

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Table of mines. Any changesContents

Notes to the estimatesFinancial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

31.    Related parties (Continued)

b) Outstanding balances with related parties

	​	December 31, 2018											​	December 31, 2017
	​	Joint Ventures		​	Associates		​	Major stockholders		​	Total		​	Joint Ventures		​	Associates		​	Major stockholders		​	Total
Assets	​			​			​			​			​			​			​			​
Cash and cash equivalents	​	–		​	–		​	1,256		​	1,256		​	–		​	–		​	817		​	817
Accounts receivable	​	110		​	42		​	3		​	155		​	73		​	55		​	3		​	131
Dividends receivable	​	132		​	–		​	–		​	132		​	112		​	14		​	–		​	126
Loans	​	1,976		​	–		​	–		​	1,976		​	4,526		​	–		​	–		​	4,526
Derivatives financial instruments	​	–		​	–		​	297		​	297		​	–		​	–		​	284		​	284
Other assets	​	25		​	–		​	–		​	25		​	17		​	–		​	–		​	17
Liabilities	​			​			​			​			​			​			​			​
Supplier and contractors	​	221		​	21		​	24		​	266		​	192		​	35		​	201		​	428
Loans	​	–		​	1,325		​	2,650		​	3,975		​	–		​	1,245		​	4,508		​	5,753
Derivatives financial instruments	​	–		​	–		​	112		​	112		​	–		​	–		​	109		​	109
Other liabilities	​	769		​	–		​	–		​	769		​	612		​	–		​	16		​	628

Major stockholders

Refers to regular financial instruments with large financial institutions of which the stockholders are part of the volume of mine reservescontrolling "shareholders' agreement".

Coal segment transactions

In March 2018, Nacala BV, a joint venture between Vale and the useful lives of assets may have a significant impactMitsui on the depreciation, depletionNacala's logistic corridor, closed the project financing and amortization charges included in cost of goods sold and calculation of impairment test. Changes in the estimated useful liferepaid a portion of the mine have a significant impact on the estimates of environmental provision and impairment analysis.

b) Asset retirement obligation

          The Company recognizes an obligation under the fair value for asset retirement obligationsshareholders' loans from Vale, in the period in which they occur. The Company considers the accounting estimates related to closure costs of a mine as a critical accounting policy because they involve significant values for the provision and are estimated using several assumptions, such as interest rate, useful life of the asset considering the current state of closure and the projected date of depletion of each mine. The estimates are reviewed annually.

c) Impairment

          The Company tests impairment of tangible (whether there is evidence of impairment) and intangible (annually) assets segregated by cash-generating units using discounted cash flow models that depends on several estimates, which are influenced by market conditions prevailing at the time the impairment test is performed.

d) Litigation losses

          Provisions are recorded when the possibility of loss relating to legal proceedings or contingent liabilities is considered probable by the Company's legal department and its legal advisors.

          The provisions are recorded when the amount of loss can be reasonably estimated. By their nature, litigations will be resolved when one or more future event occurs or failsUS$2,572. The outstanding receivable of US$1,976 carries interest at 7.44% p.a.

The loan from associates mainly relates to occur. Typically, the occurrence or not of such events is outside the Company's control. Legal uncertainties involve the exercise of significant estimates and judgments of management regarding the results of future events.

e) Post-retirement benefits for employees

          The amount recognized and disclosed depend on a number of factors that are determined based on actuarial calculations using various assumptions in order to determine costs and liabilities. One of these assumptions is selection and useloan from Pangea Emirates Ltd, part of the discount rate. Any changesgroup of shareholders which owns 15% interest on Vale Moçambique which carries interest at 6.54% p.a.

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Notes to these assumptions will affect the amount recognized.Financial Statements (Continued)

          AtExpressed in millions of United States dollar, unless otherwise stated

31.    Related parties (Continued)

c) The key management personnel remuneration

	​	Year ended December 31
	​	2018		​	2017		​	2016
Short-term benefits	​			​			​
Wages	​	8		​	10		​	8
Direct and indirect benefits	​	11		​	10		​	4
Profit sharing program ("PLR")	​	10		​	8		​	–
​	​	​		​	​		​	​
	​	29		​	28		​	12
Long-term benefits	​			​			​
Shares based	​	3		​	5		​	1
Severance	​	20		​	19		​	5
​	​	​		​	​		​	​
	​	52		​	52		​	18
​	​	​		​	​		​	​
​	​	​		​	​		​	​
​	​	​		​	​		​	​

The amounts described above include the endBoard of each yearDirectors and the Executive Officers.

32.    Commitments

a) Contractual obligations

The table below presents the annual minimum future payments, which are required and non-cancelable, related to contractual obligations of the Company as of December 31.

	​	2019		​	2020		​	2021		​	2022		​	2023 and thereafter		​	Total
Operating lease	​	250		​	201		​	189		​	166		​	1,692		​	2,498
Purchase obligations	​	2,677		​	1,445		​	548		​	463		​	2,194		​	7,327
​	​	​		​	​		​	​		​	​		​	​		​	​
Total minimum payments required	​	2,927		​	1,646		​	737		​	629		​	3,886		​	9,825
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​
​	​	​		​	​		​	​		​	​		​	​		​	​

Operating lease—The Company has operating lease agreements in place with third parties related to port structures and external actuaries review the assumptions that will be usedport operations, transportation services, energy plants and property leases for its operational facilities.

Vale also has long-term agreements for the following year. These assumptionsexploration and processing of iron ore with its joint ventures, such as the agreements to lease pelletizing plants in Brazil. The leases have varying terms and on renewal, the terms of the leases are used in determiningrenegotiated. The minimum future payments have been calculated considering the fair valuesnon-cancellable period of assetsthe lease agreements.

The total amount of operational leasing expenses for the year ended on December 31, 2018, 2017 and liabilities, costs2016 were US$1,044, US$805 and expenses and the future values of estimated cash outflows, which are recorded in the plan obligations.US$532, respectively.

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

32.    Critical accounting estimates and judgmentsCommitments (Continued)

f) Fair valuesPurchase obligations—Mainly relate to agreements for the acquisition of derivativesfuel, energy and other financial instrumentsthe acquisition of raw materials and services.

b) Guarantees provided

As of December 31, 2018, corporate guarantees provided by Vale (within the limit of its direct or indirect interest) for the companies Norte Energia S.A. and Companhia Siderúrgica do Pecém S.A. were US$331 and US$1,404, respectively.

The fair valuesnet book value of financial instruments thatproperty, plant and equipment pledged to secure judicial claims on December 31, 2018 and 2017 were US$6 and US$15, respectively.

c) Nickel Operations—Indonesia

The Company´s subsidiary PT Vale Indonesia Tbk ("PTVI"), a public company in Indonesia, has an agreement in place with the Government of Indonesia to operate its mining licenses which includes a commitment to divest an additional 20% of PTVI's shares to Indonesian participants by October 2019 (approximately 20% of PTVI's shares are not traded in active markets are determined using valuation techniques. Vale uses its own judgment to choose between the various methods. Assumptions are basedalready registered on the market conditions, atIndonesian Stock Exchange). The existing major shareholders, Vale Canada and Sumitomo Metal Mining, Co., Ltd., will comply with the end of the year.

          An analysis of the impact if actual results are different from management's estimates is presentdivestment obligation on note 24 (sensibility analysis).

g) Deferred income taxes

          The Company recognizes the effects of deferred taxes arising from tax losses and temporary differences and derecognizes when believes that tax credits recoverable are not probable. Deferred tax liabilities are fully recognized.

          The determination of the recognition of income tax or deferred income tax, assets and liabilities, and any derecognition of tax credits requires the use of estimates. For each tax asset, the Company assesses the probability that some or all of the tax assets may not be recoverable. The impairment recorded in relation to the accumulated tax losses depends on the assessment of the probability of the generation of future taxable profits based on production and sales planning, commodity prices, operational costs, restructuring plans, reclamation costs and planned capital costs.a pro rata basis.

33.    Risk management

Vale considers that an effective risk management is a key objective to supportachieve the Company's objectives and to ensure people and environmental safety, financial stability and flexibility of the Company as well as the going concern of its growth plan, strategic planning and financial flexibility. business.

Therefore, Vale has developed its risk management strategy in order to provide an integrated approach of the risks that the company is exposed to. To do that, Vale evaluatesto, considering not only the impact in the results of the business causedrisks generated by variables traded in financial markets (market risk) and those arising from liquidity risk, but also the risk from counterparties obligations (credit risk),; those that are related to governance, business model and external environment (strategic risks); risks relating to inadequate or failed internal processes, people, systems orhealth, safety, environmental and social (operational risk); information security (cybernetic risk) and internal and external events (operationalcompliance (compliance risk), among others..

a) RiskCorporate risk management policy

The Board of Directors established a risk management policy in order to support the Company's growth plan, strategic planning and Company's business continuity, besides to improve its capital structure and management of the Group, ensure adequate degree of flexibility in financial management while maintaining the level of robustness required for investment grade and to strengthen its corporate governance practices.

          The corporate risk management policy determines that Vale should measuredefining principles and monitor regularly its corporate risk on a consolidated approachguidelines applicable to this process in order to guarantee that the overall risk level of the Company remains aligned with the guidelines defined by the Board of Directorscompany and the Executive Board.corresponding governance structure based on the lines of defense model.

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Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

33.    Risk management (Continued)

This policy determines that the first line of defense, that is, the owners of the control activities related to the identified risks and testing assignees of the business units, projects, administrative and support are direct responsible for identifying, assessing, remediating, monitoring and managing risk events under an integrated approach.

The Executive Risk Management Committee created byis the Boardmain body of Directors,the risk management structure, and is responsible for supportingto provide recommendations regarding Vale's Risk Management System and to support the Executive Board inon the risk assessmentsmonitoring activities and for issuing opinion regardingwith the Company's risk management. It's also responsible for the supervision and revision of the principles and instruments ofrelated deliberations needed on its corporate risks management.

The Executive Board is responsiblein-charge for the approval of the policy deployment into norms, rules and responsibilities directed to management and for reporting to the Boardcontrol of Directors about such procedures.risks through issuing of internal normative documents.

          TheInternal normative documents related risk management norms and instructions complement the corporate risk management policy and define practices, processes, controls, roles and responsibilities in the Company risk management function.

          The Company may, when necessary, allocate specific risk limits to management activities, including but not limited to, market risk limit, corporate and sovereign credit limit, in accordance with the acceptable corporate risk limit.assignments.

b) Liquidity risk management

The liquidity risk arises from the possibility that Vale might not perform on its obligations at theon due dates, as well as face difficulties to meet its cash requirements due to market liquidity constraints.

          To mitigate such risk, Vale has a revolving credit facility to assistSee note 21 "Loans, borrowings and cash and cash equivalents" for details on the short termCompany's liquidity management and to enable more efficiency in cash management, being consistent with the strategic focus on cost of capital reduction. The revolving credit facilities available today were acquired from a syndicate of several global commercial banks.risk.

c) Credit risk management

Vale's exposure to credit risk arises from trade receivables, derivative transactions, guarantees, down payment tofor suppliers and cash investments. Vale'sOur credit risk management process provides a framework for assessing and managing counterparties' credit risk and for maintaining Vale'sour risk at an acceptable level.

(i) Commercial credit risk management

          For theSee note 10 "Accounts receivable" for details on commercial credit exposure, which arises from sales to final customers, therisk.

(ii) Treasury credit risk management area, in accordance with

To manage the current delegation level, approves or request the approval of credit riskexposure arising from cash investments and derivative instruments, credit limits for each counterparty.

          Vale attributes an internal credit risk rating forare approved to each counterparty using its own quantitative methodology forwith whom the Company has credit risk analysis, which is based on market prices, external credit ratingsexposure.

Furthermore, the Company controls the portfolio diversification and financial informationmonitors different indicators of solvency and liquidity of the counterparty, as well as qualitative information regarding the counterparties' strategic position and history of commercial relations.different counterparties that were approved for trading.

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          As at 31 December 2015, 56% of accounts receivable due to Vale commercial sales had insignificant or low risk, 35% had moderate risk and 9% high risk.

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Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

33.    Risk management (Continued)

          Based on the counterparty's credit risk or based on Vale's consolidated credit risk profile, risk mitigation strategies may be used to manage the Company`s credit risk. The main credit risk mitigation strategies include non-recourse discount of receivables, insurance instruments, letters of credit, corporate and bank guarantees, mortgages, among others.

          Vale has a diversified accounts receivable portfolio from a geographical standpoint, with China, Europe, Brazil and Japan the regions with more significant exposures. According to each region, different guarantees can be used to enhance the credit quality of the receivables.

          Vale controls its account receivables portfolio through Credit and Cash Collection committees, in which representatives from risk management, cash collection and commercial departments monitor periodically each counterparty`s exposure. Finally, Vale has an automatic control that blocks additional sales to customers in default with Vale.

(ii) Treasury credit risk management

          To manage the credit exposure arising from cash investments and derivative instruments, Vale's Board of Executive Officers approves, on an annual basis, credit limits by counterparty. Furthermore, Vale controls the portfolio diversification, the overall credit risk of the treasury portfolio and the each counterparty risk by monitoring market credit risk information.

d) Market risk management

Vale is exposed to the behavior of several market risk factors that can impact its cash flow. The assessment of this potential impact arising from the volatility of risk factors and their correlations is performed periodically to support the decision making process andregarding the growthrisk management strategy, of the Company, ensure its financial flexibility and monitor the volatility of future cash flows.

          When necessary, market risk mitigation strategies are evaluated and implemented in line with these objectives. Some strategiesthat may incorporate financial instruments, including derivatives.

The portfoliosportfolio of thethese financial instruments areis monitored on a monthly basis, enabling financial results surveillance and its impact on cash flow.

Considering the nature of Vale's business and operations, the main market risk factors which the Company is exposed to are:

•

Foreign exchange and Interestinterest rates;



•

Product prices and input costs.

e) Foreign exchange and interest rate risk

          Vale'sThe company's cash flow is subjected to volatility of several currencies, onceas its product prices are predominantly indexed topriced in US dollar, while most of the costs, disbursements and investments are indexed todenominated in other currencies, mainly Brazilian real and Canadian dollar.

In order to reduce the potential impact that arises from this currency mismatch, derivatives instruments may be used as a risk mitigation strategy.

Vale implements hedge transactions to protect its cash flow against the market risks that arises from its debt obligations—mainly currency volatility. The hedges cover most of the debt denominated in Brazilian reais and Euros. The Company uses swap and forward transactions to convert debt linked to Brazilian real and Euros into US dollar, with volumes, flows and settlement dates similar to those of the debt instruments—or sometimes lower, subject to market liquidity conditions.

Hedging instruments with shorter settlement dates are renegotiated through time so that their final maturity matches—or becomes closer—to the debts` final maturity. At each settlement date, the results of the swap and forward transactions partially offset the impact of the foreign exchange rate in Vale's obligations, contributing to stabilize the cash disbursements in US dollar.

Vale has also exposure to interest rate risks over loans and financings. The US Dollar floating rate debt in the portfolio consists mainly of loans including export pre-payments, commercial banks and multilateral organizations loans. In general, such debt instruments are indexed to the LIBOR (London Interbank Offer Rate) in US dollar.

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

33.    Risk management (Continued)

          In order to reduce the potential impact that arises from this currency mismatch, derivatives instruments may be used as a risk mitigation strategy.

          Vale implemented hedge transactions to protect its cash flow against the market risks that arises from its debt obligations—mainly currency volatility. The hedges cover most of the debts in Brazilian reais and Euros. Vale uses swap transactions to convert debt linked to Brazilian real and Euros into US dollar that have similar—or sometimes shorter—settlement dates than the final maturity of the debt instruments. Their notional amounts are similar to the principal and interest payments, subject to liquidity market conditions.

          Swaps with shorter settlement dates are renegotiated through time so that their final maturity matches—or becomes closer—to the debts` final maturity. At each settlement date, the results of the swap transactions partially offset the impact of the foreign exchange rate in Vale's obligations, contributing to stabilize the cash disbursements in US dollar.

          In the case of debt instruments denominated in Brazilian real, in the event of an appreciation (or depreciation) of the Brazilian Real against the US Dollar, the negative (or positive) impact on Vale`s debt service (interest and/or principal payment) measured in US dollars will be partially offset by the positive (or negative) effect from the swaps, regardless of the US$/R$ exchange rate on the payment date. The same rationale is applicable to debts denominated in other currencies and their respective swaps.

          Vale has also exposure to interest rates risks over loans and borrowings. The US Dollar floating rate debt in the portfolio consists mainly of loans including export pre-payments, commercial banks and multilateral organizations loans. In general, such debt instruments are indexed to the LIBOR (London Interbank Offer Rate in US dollar). Vale has part of its debt in Brazilian reais floating rates, but use swap transactions to convert most of it to US Dollar fixed rates. After considering the interest rate swaps, the great majority of its debt is fixed rate.

f) Risk of product and input prices

Vale is also exposed to market risks including commodities pricerelated to volatility in commodity and input price volatilities.prices. In accordance with risk management policy, risk mitigation strategies involving commodities canmay be used to adjust the cash flow risk profile and reduce Vale's cash flow volatility. For this kind ofThe risk mitigation strategy Vale usesmay incorporate derivative instruments, predominantly forwards, futures or zero-cost collars.and options.

g)e) Strategic risk management

Vale addresses the risks related to the execution of established business strategies considering the internal and external environment, as well as risks related to internal procedures and conduct consistent with the Company's values, mission and strategic objectives.

f) Operational risk management

          TheVale acts managing operational risks primarily guaranteeing the satisfactory management of health, safety and the environment, but also acts preventing material losses, maintenance of its productive capacity and good relationship with communities.

g) Cybernetic risk management is

Vale invests in information security technology to mitigate risks of theft, breach or violation of information privacy, availability of its technology assets and data integrity on the structured approach that Company's systems.

h) Compliance risk management

Vale uses to manage uncertaintyrisks associated with the ongoing compliance with legal requirements, standards and other regulations related to possible inadequate or failure in internal processes, people, systemsthe Company's business, including the standards required on reporting and external events, in accordance with the principles and guidelines of ISO 31000.

          The main operational risks are periodically monitored, ensuring the effectiveness of preventive and mitigating key controls in place and the execution of the risk treatment strategy (implementation of new or improved controls, changes in the risk environment, risk sharing by contracting insurance, provisioning of resources, etc.).

Table of Contents

Notesdisclosing information to the Financial Statements (Continued)market.

Expressed in millions of United States dollar, unless otherwise stated

33. Risk management (Continued)

          Therefore, the Company seeks to have a clear view of its major risks, the best cost-benefit mitigation plans and the effectiveness of the controls in place, monitoring the potential impact of operational risk and allocating capital efficiently.

h)i) Capital management

          Vale'sThe Company's policy aims at establishing a capital structure that will ensure the continuity of yourthe business in the long term. Within this perspective, the Company has been able to deliver value to stockholders through dividend payments and capital gain, and at the same time maintain a debt profile suitable for its activities, with an amortization well distributed over the years, thus avoiding a concentration in one specific period.

i)j) Insurance

Vale issuescontracts several types of insurance policies, such as operational risk policy, engineering risks insurance (projects), civil responsibility, life insurance policy for their employees, among others. The coverage of these policies is similar to the ones used in general by the mining industry and is issued in line with the objectives defined by the Company, with the corporate risk management policy and the limitation imposed by the insurance and reinsurance global market. In general,

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Table of Contents

Notes to the company's assets directly related with its operations are includedFinancial Statements (Continued)

Expressed in the coveragemillions of insurance policies.United States dollar, unless otherwise stated

33.    Risk management (Continued)

Insurance management is performed with the support of existing insurance committeesfocal points in the various operational areas of the Company. Among the management instruments, Vale uses captive reinsurance to balance the price on reinsurance contracts with the market, as well as, enable direct access to key international markets of insurance and reinsurance.

34.    Additional information about derivatives financial instruments

The risk of the derivatives portfolio is measured using the delta-Normal parametric approach, and 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 estimate considers a 95% confidence level for a one-business day time horizon.

The following tables detail the derivatives positions for Vale and its controlled companies as of December 31, 2018, with the following information: notional amount, fair value including credit risk, gains or losses in the period, value at risk and the fair value breakdown by year of maturity.

a) Foreign exchange and interest rates derivative positions

(i) Protection programs for the R$ denominated debt instruments

In order to reduce cash flow volatility, swap transactions were implemented to convert into US$ the cash flows from certain debt instruments denominated in R$ with interest rates linked mainly to CDI, TJLP and IPCA. In those swaps, Vale pays fixed or floating rates in US$ and receives payments in R$ linked to the interest rates of the protected debt instruments.

The swap transactions were negotiated over-the-counter and the protected items are the cash flows from debt instruments linked to R$. These programs transform into US$ the obligations linked to R$ to achieve

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

a currency offset in the company's cash flows, by matching its receivables—mainly linked to US$—with its payables.

	​	Notional									​		​			​	Fair value					​	Financial Settlement Inflows (Outflows)		​	Value at Risk		​	Fair value by year								​
Flow	​	December 31, 2018				​	December 31, 2017				​	Index	​	Average rate		​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2019		​	2020		​	2021+		​
CDI vs. US$ fixed rate swap																​	(46		)	(33		)	(28		)	6		​	(13		)	(21		)	(12		)
Receivable	​	​	R$	1,581	​	​	​	R$	3,540	​	​	CDI	​	98.70		%			​			​			​			​			​			​			​
Payable	​	​	US$	456	​	​	​	US$	1.104	​	​	Fix	​	3.12		%			​			​			​			​			​			​			​
TJLP vs. US$ fixed rate swap																​	(370		)	(381		)	(102		)	20		​	(306		)	(21		)	(43		)
Receivable	​	​	R$	2,303	​	​	​	R$	2,982	​	​	TJLP +	​	1.20		%			​			​			​			​			​			​			​
Payable	​	​	US$	994	​	​	​	US$	1.323	​	​	Fix	​	1.54		%			​			​			​			​			​			​			​
TJLP vs. US$ floating rate swap																​	(56		)	(53		)	(5		)	2		​	(56		)	–		​	–		​
Receivable	​	​	R$	181	​	​	​	R$	216	​	​	TJLP +	​	0.84		%			​			​			​			​			​			​			​
Payable	​	​	US$	107	​	​	​	US$	123	​	​	Libor +	​	–1.24		%			​			​			​			​			​			​			​
R$ fixed rate vs. US$ fixed rate swap																​	(8		)	24		​	10		​	19		​	9		​	46		​	(63		)
Receivable	​	​	R$	1,078	​	​	​	R$	1,158	​	​	Fix	​	7.05		%			​			​			​			​			​			​			​
Payable	​	​	US$	351	​	​	​	US$	385	​	​	Fix	​	–0.62		%			​			​			​			​			​			​			​
IPCA vs. US$ fixed rate swap																​	(80		)	(34		)	6		​	7		​	(33		)	(10		)	(37		)
Receivable	​	​	R$	1,315	​	​	​	R$	1,000	​	​	IPCA +	​	6.55		%			​			​			​			​			​			​			​
Payable	​	​	US$	434	​	​	​	US$	434	​	​	Fix	​	3.98		%			​			​			​			​			​			​			​
IPCA vs. CDI swap																​	89		​	85		​	1		​	–		​	5		​	48		​	36		​
Receivable	​	​	R$	1,350	​	​	​	R$	1,350	​	​	IPCA +	​	6.62		%			​			​			​			​			​			​			​
Payable	​	​	R$	1,350	​	​	​	R$	1,350	​	​	CDI	​	98.59		%			​			​			​			​			​			​			​

(ii) Protection program for EUR denominated debt instruments

In order to reduce the cash flow volatility, swap transactions were implemented to convert into US$ the cash flows from certain debt instruments issued in Euros by Vale. In those swaps, Vale receives fixed rates in EUR and pays fixed rates in US$.

The swap transactions were negotiated over-the-counter and the protected items are the cash flows from debt instruments linked to EUR. The financial settlement inflows/outflows are offset by the protected items' losses/gains due to EUR/US$ exchange rate.

	​	Notional									​		​			​	Fair value					​	Financial Settlement Inflows (Outflows)		​	Value at Risk		​	Fair value by year								​
Flow	​	December 31, 2018				​	December 31, 2017				​	Index	​	Average rate		​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2019		​	2020		​	2021+		​
EUR fixed rate vs. US$ fixed rate swap	​	​			​	​	​			​	​		​			​	(1		)	23		​	(3		)	8		​	(7		)	(5		)	9		​
Receivable	​	​	€	500	​	​	​	€	500	​	​	Fix	​	3.75		%			​			​			​			​			​			​			​
Payable	​	​	US$	613	​	​	​	US$	613	​	​	Fix	​	4.29		%			​			​			​			​			​			​			​

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​	​ ​	​ F-105	​ ​	​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

b) Commodities derivative positions

(i) Bunker Oil purchase cash flows protection program

In order to reduce the impact of bunker oil price fluctuation on maritime freight hiring/supply and, consequently, reducing the company's cash flow volatility, bunker oil hedging transactions were implemented, through options contracts.

The derivative transactions were negotiated over-the-counter and the protected item is part of Vale's costs linked to bunker oil prices. The financial settlement inflows/outflows are offset by the protected items' losses/gains due to bunker oil price changes.

	​					​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​			​
	​					​			​		​			​			​						​			​	Fair value by year		​
	​	Notional (ton)							​		​			​	Fair value								​	Value at Risk					​
									​	Bought / Sold	​	Average strike (US$/ton)																	​
Flow	​	December 31, 2018				​	December 31, 2017							​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2019		​
Call options	​	​	2,100,000		​	​	–		​	B	​	520		​	1		​	–		​	40		​	1		​	1		​
Put options	​	​	2,100,000		​	​	–		​	S	​	297		​	(29		)	–		​	9		​	9		​	(29		)
​	​	​	​		​	​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​
Total	​	​			​	​			​		​			​	28		​	–		​	49		​	10		​	28		​
​	​	​	​		​	​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​	​		​	​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​	​		​	​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​

(ii) Protection programs for base metals raw materials and products

In the operational protection program for nickel sales at fixed prices, derivative transactions were implemented to convert into floating prices the contracts with clients that required a fixed price, in order to keep nickel revenues exposed to nickel price fluctuations. Those operations are usually implemented through the purchase of nickel forwards.

In the operational protection program for the purchase of raw materials and products, derivative transactions were implemented, usually through the sale of nickel and copper forward or futures, in order to reduce the mismatch between the pricing period of purchases (concentrate, cathode, sinter, scrap and others) and the pricing period of the final product sales to the clients.

The derivative transactions are negotiated at London Metal Exchange or over-the-counter and the protected item is part of Vale's revenues and costs linked to nickel and copper prices. The financial

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

settlement inflows/outflows are offset by the protected items' losses/gains due to nickel and copper prices changes.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​			​			​
	​	Notional (ton)					​		​			​	Fair value								​	Value at Risk		​	Fair value by year					​
							​	Bought / Sold	​	Average strike (US$/ton)																				​
Flow	​	December 31, 2018		​	December 31, 2017							​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2019		​	2020+		​
Fixed price sales protection												​			​			​			​			​			​			​
Nickel forwards	​	7,244		​	9,621		​	B	​	12,166		​	(10		)	24		​	7		​	2		​	(8		)	(2		)
Raw material purchase protection												​			​			​			​			​			​			​
Nickel forwards	​	120		​	292		​	S	​	12,242		​	–		​	–		​	1		​	–		​	–		​	–		​
Copper forwards	​	81		​	79		​	S	​	6,142		​	–		​	–		​	–		​	–		​	–		​	–		​
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
Total	​			​			​		​			​	(10		)	24		​	8		​	2		​	(8		)	(2		)
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​	​		​	​		​

c) Freight derivative positions

In order to reduce the impact of maritime freight price volatility on the company's cash flow, freight hedging transactions were implemented, through Forward Freight Agreements (FFAs). The protected item is part of Vale's costs linked to maritime freight spot prices. The financial settlement inflows/outflows of the FFAs are offset by the protected items' losses/gains due to freight price changes.

The FFAs are contracts traded over the counter and can be cleared through a Clearing House, in this case subject to margin requirements.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​			​
	​			​			​		​			​			​						​			​	Fair value by year		​
	​	Notional (days)					​		​			​	Fair value								​	Value at Risk					​
							​	Bought / Sold	​	Average strike (US$/day)																	​
Flow	​	December 31, 2018		​	December 31, 2017							​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2019		​
Freight forwards	​	480		​	–		​	B	​	14,509		​	1		​	–		​	(3		)	–		​	1		​

d) Wheaton Precious Metals Corp. warrants

The company owns warrants of Wheaton Precious Metals Corp. ("Wheaton"), a Canadian company with stocks negotiated in Toronto Stock Exchange and New York Stock Exchange. Such warrants configure American call options and were received as part of the payment regarding the sale of part of gold payable flows produced as a sub product from Salobo copper mine and some nickel mines in Sudbury.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​			​
	​			​			​		​			​			​						​			​	Fair value by year		​
	​	Notional (quantity)					​		​			​	Fair value								​	Value at Risk					​
							​	Bought / Sold	​	Average strike (US$/share)																	​
Flow	​	December 31, 2018		​	December 31, 2017							​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2023		​
Call options	​	10,000,000		​	10,000,000		​	B	​	44		​	8		​	39		​	–		​	1		​	8		​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

e) Debentures convertible into shares of Valor da Logística Integrada ("VLI")

The company has debentures in which lenders have the option to convert the outstanding debt into a specified quantity of shares of VLI owned by the company.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​			​
	​			​			​		​			​			​						​			​	Fair value by year		​
	​	Notional (quantity)					​		​			​	Fair value								​	Value at Risk					​
							​	Bought / Sold	​	Average strike (R$/share)																	​
Flow	​	December 31, 2018		​	December 31, 2017							​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2027		​
Conversion options	​	140,239		​	140,239		​	S	​	8,006		​	(59		)	(57		)	–		​	4		​	(59		)

f) Options related to Minerações Brasileiras Reunidas S.A. ("MBR") shares

The Company entered into a stock sale and purchase agreement that has options related to MBR shares. Mainly, the Company has the right to buy back this non-controlling interest in the subsidiary. Moreover, under certain restrict and contingent conditions, which are beyond the buyer's control, such as illegality due to changes in the law, the contract has a clause that gives the buyer the right to sell back its stake to the Company. It this case, the Company could settle through cash or shares.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​			​
	​			​			​		​			​			​						​			​	Fair value by year		​
	​	Notional (quantity, in millions)					​		​			​	Fair value								​	Value at Risk					​
							​	Bought / Sold	​	Average strike (R$/share)																	​
Flow	​	December 31, 2018		​	December 31, 2017							​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2019+		​
Options	​	2,139		​	2,139		​	B/S	​	1.7		​	279		​	251		​	–		​	15		​	279		​

g) Embedded derivatives in contracts

The Company has some nickel concentrate and raw material purchase agreements in which there are provisions based on nickel and copper future prices behaviour. These provisions are considered as embedded derivatives.

	​			​			​		​			​			​			​			​	Fair value by year		​
	​	Notional (ton)					​		​			​	Fair value					​	Value at Risk					​
							​	Bought / Sold	​	Average strike (US$/ton)														​
Flow	​	December 31, 2018		​	December 31, 2017							​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	2019		​
Nickel forwards	​	3,763		​	2,627		​	S	​	11,289		​	2		​	1		​	1		​	2		​
Copper forwards	​	2,035		​	2,718		​	S	​	6,172		​	–		​	–		​	–		​	–		​
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​
Total	​			​			​		​			​	2		​	1		​	1		​	2		​
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​
​	​	​		​	​		​	​	​	​		​	​		​	​		​	​		​	​		​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

The Company has also a natural gas purchase agreement in which there´s a clause that defines that a premium can be charged if the Company's pellet sales prices trade above a pre-defined level. This clause is considered an embedded derivative.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​			​			​
	​	Notional (volume/month)					​		​			​	Fair value								​	Value at Risk		​	Fair value by year					​
							​	Bought / Sold	​	Average strike (US$/ton)																				​
Flow	​	December 31, 2018		​	December 31, 2017							​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2019		​	2020+		​
Call options	​	746,667		​	746,667		​	S	​	233		​	(1		)	(2		)	–		​	1		​	–		​	(1		)

In August 2014 the Company sold part of its stake in Valor da Logística Integrada ("VLI") to an investment fund managed by Brookfield Asset Management ("Brookfield"). The sales contract includes a clause that establishes, under certain conditions, a minimum return guarantee on Brookfield's investment. This clause is considered an embedded derivative, with payoff equivalent to that of a put option.

	​			​			​		​			​			​			​	Financial settlement Inflows (Outflows)		​			​			​
	​			​			​		​			​			​						​			​	Fair value by year		​
	​	Notional (quantity)					​		​			​	Fair value								​	Value at Risk					​
							​	Bought / Sold	​	Average strike (R$/share)																	​
Flow	​	December 31, 2018		​	December 31, 2017							​	December 31, 2018		​	December 31, 2017		​	December 31, 2018		​	December 31, 2018		​	2019+		​
Put option	​	1,105,070,863		​	1,105,070,863		​	S	​	3.88		​	(103		)	(133		)	–		​	10		​	(103		)

h) Sensitivity analysis of derivative financial instruments

The following tables present the potential value of the instruments given hypothetical stress scenarios for the main market risk factors that impact the derivative positions. The scenarios were defined as follows:

•

Probable:  the probable scenario was based on the risks listed below and instruments were developed based on data from B3, Central Bank of Brazil, London Metals Exchange and Bloomberg



•

Scenario I:  fair value estimated considering a 25% deterioration in the associated risk variables



•

Scenario II:  fair value estimated considering a 50% deterioration in the associated risk variables

Instrument	​	Instrument's main risk events	​	Probable		​	Scenario I		​	Scenario II
CDI vs. US$ fixed rate swap	​	R$ depreciation	​	(46		)	(154		)	(262)
	​	US$ interest rate inside Brazil decrease	​	(46		)	(50		)	(53)
	​	Brazilian interest rate increase	​	(46		)	(46		)	(46)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–

​

​	​	​	​	​
​	​ ​	​ F-109	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

Instrument	​	Instrument's main risk events	​	Probable		​	Scenario I		​	Scenario II
TJLP vs. US$ fixed rate swap	​	R$ depreciation	​	(370		)	(614		)	(858)
	​	US$ interest rate inside Brazil decrease	​	(370		)	(378		)	(386)
	​	Brazilian interest rate increase	​	(370		)	(379		)	(388)
	​	TJLP interest rate decrease	​	(370		)	(379		)	(388)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–
TJLP vs. US$ floating rate swap	​	R$ depreciation	​	(56		)	(82		)	(108)
	​	US$ interest rate inside Brazil decrease	​	(56		)	(56		)	(57)
	​	Brazilian interest rate increase	​	(56		)	(56		)	(57)
	​	TJLP interest rate decrease	​	(56		)	(56		)	(57)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–
R$ fixed rate vs. US$ fixed rate swap	​	R$ depreciation	​	(8		)	(85		)	(161)
	​	US$ interest rate inside Brazil decrease	​	(8		)	(18		)	(28)
	​	Brazilian interest rate increase	​	(8		)	(25		)	(40)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–
IPCA vs. US$ fixed rate swap	​	R$ depreciation	​	(80		)	(194		)	(308)
	​	US$ interest rate inside Brazil decrease	​	(80		)	(83		)	(87)
	​	Brazilian interest rate increase	​	(80		)	(87		)	(93)
	​	IPCA index decrease	​	(80		)	(84		)	(87)
Protected item: R$ denominated debt	​	R$ depreciation	​	n.a.		​	–		​	–
IPCA vs. CDI swap	​	Brazilian interest rate increase	​	89		​	71		​	55
	​	IPCA index decrease	​	89		​	79		​	70
Protected item: R$ denominated debt linked to IPCA	​	IPCA index decrease	​	n.a.		​	(79		)	(70)
EUR fixed rate vs. US$ fixed rate swap	​	EUR depreciation	​	(1		)	(170		)	(340)
	​	Euribor increase	​	(1		)	(6		)	(11)
	​	US$ Libor decrease	​	(1		)	(16		)	(33)
Protected item: EUR denominated debt	​	EUR depreciation	​	n.a.		​	170		​	340
Bunker Oil protection	​		​			​			​
Options	​	Bunker Oil price decrease	​	(28		)	(126		)	(283)
Protected item: Part of costs linked to bunker oil prices	​	Bunker Oil price decrease	​	n.a.		​	126		​	283
Maritime Freight protection	​		​			​			​
Forwards	​	Freight price decrease	​	1		​	(1		)	(3)
Protected item: Part of costs linked to maritime freight prices	​	Freight price decrease	​	n.a.		​	1		​	3
Nickel sales fixed price protection	​		​			​			​
Forwards	​	Nickel price decrease	​	(10		)	(29		)	(48)
Protected item: Part of nickel revenues with fixed prices	​	Nickel price fluctuation	​	n.a.		​	29		​	48
Purchase protection program	​		​			​			​
Nickel forwards	​	Nickel price increase	​	–		​	–		​	–
Protected item: Part of costs linked to nickel prices	​	Nickel price increase	​	n.a.		​	–		​	–
Copper forwards	​	Copper price increase	​	–		​	–		​	–
Protected item: Part of costs linked to copper prices	​	Copper price increase	​	n.a.		​	–		​	–
Wheaton Precious Metals Corp. warrants	​	WPM stock price decrease	​	8		​	2		​	–
Conversion options—VLI	​	VLI stock value increase	​	(59		)	(94		)	(138)
Options—MBR	​	Iron ore price decrease	​	279		​	186		​	105

​

​	​	​	​	​
​	​ ​	​ F-110	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

Instrument	​	Main risks	​	Probable		​	Scenario I		​	Scenario II
Embedded derivatives—Raw material purchase (nickel)	​	Nickel price increase	​	2		​	(8		)	(19)
Embedded derivatives—Raw material purchase (copper)	​	Copper price increase	​	–		​	(3		)	(6)
Embedded derivatives—Gas purchase	​	Pellet price increase	​	(1		)	(2		)	(5)
Embedded derivatives—Guaranteed minimum return (VLI)	​	VLI stock value decrease	​	(103		)	(229		)	(442)

i) Financial counterparties' ratings

The transactions of derivative instruments, cash and cash equivalents as well as investments are held with financial institutions whose exposure limits are periodically reviewed and approved by the delegated authority. The financial institutions' credit risk is performed through a methodology that considers, among other information, ratings provided by international rating agencies.

​

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​	​ ​	​ F-111	​ ​	​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

The table below presents the ratings published by agencies Moody's and S&P regarding the main financial institutions that we had outstanding positions as of December 31, 2018.

Long term ratings by counterparty	​	Moody's	​	S&P
ANZ Australia and New Zealand Banking	​	Aa3	​	AA–
Banco ABC	​	Ba3	​	BB–
Banco Bradesco	​	Ba3	​	BB–
Banco do Brasil	​	Ba3	​	BB–
Banco de Credito del Peru	​	Baa1	​	BBB+
Banco do Nordeste	​	Ba3	​	BB–
Banco Safra	​	Ba3	​	BB–
Banco Santander	​	A2	​	A
Banco Votorantim	​	Ba3	​	BB–
Bank of America	​	A3	​	A–
Bank of China	​	A1	​	A
Bank of Mandiri	​	Baa2	​	BB+
Bank of Nova Scotia	​	Aa2	​	A+
Bank Rakyat	​	Baa2	​	BB+
Bank of Tokyo Mitsubishi UFJ	​	A1	​	A–
Banpará	​	–	​	BB–
Barclays	​	Baa3	​	BBB
BBVA	​	A3	​	A–
BNP Paribas	​	Aa3	​	A
BTG Pactual	​	Ba3	​	BB–
Caixa Economica Federal	​	Ba3	​	BB–
Canadian Imperial Bank	​	Aa2	​	A+
China Construction Bank	​	A1	​	A
CIMB Bank	​	A3	​	A–
Citigroup	​	Baa1	​	BBB+
Credit Agricole	​	A1	​	A+
Credit Suisse	​	Baa2	​	BBB+
Deutsche Bank	​	A3	​	BBB+
Goldman Sachs	​	A3	​	BBB+
HSBC	​	A2	​	A
Intesa Sanpaolo Spa	​	Baa1	​	BBB
Itaú Unibanco	​	Ba3	​	BB–
JP Morgan Chase & Co	​	A2	​	A–
Macquarie Group Ltd	​	A3	​	BBB
Mega Int. Commercial Bank	​	A1	​	A
Mizuho Financial	​	A1	​	A–
Morgan Stanley	​	A3	​	BBB+
National Australia Bank NAB	​	Aa3	​	AA–
National Bank of Canada	​	Aa3	​	A
National Bank of Oman	​	Baa3	​	–
Natixis	​	A1	​	A+
Rabobank	​	Aa3	​	A+
Royal Bank of Canada	​	Aa2	​	AA–
Societe Generale	​	A1	​	A
Standard Bank Group	​	Ba1	​	–
Standard Chartered	​	A2	​	BBB+
Sumitomo Mitsui Financial	​	A1	​	A–
UBS	​	Aa3	​	A–
Unicredit	​	Baa1	​	BBB

​

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​	​ ​	​ F-112	​ ​	​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

j) Market curves

(i) Products

Nickel
Maturity	​	Price (US$/ton)	​	Maturity	​	Price (US$/ton)	​	Maturity	​	Price (US$/ton)
SPOT	​	10,595	​	JUN19	​	10,777	​	DEC19	​	10,943
JAN19	​	10,637	​	JUL19	​	10,809	​	DEC20	​	11,231
FEB19	​	10,663	​	AUG19	​	10,838	​	DEC21	​	11,516
MAR19	​	10,692	​	SEP19	​	10,865	​	DEC22	​	11,799
APR19	​	10,720	​	OCT19	​	10,891	​		​
MAY19	​	10,749	​	NOV19	​	10,916	​		​

Copper
Maturity	​	Price (US$/lb)	​	Maturity	​	Price (US$/lb)	​	Maturity	​	Price (US$/lb)
SPOT	​	2.63	​	JUN19	​	2.71	​	DEC19	​	2.70
JAN19	​	2.71	​	JUL19	​	2.70	​	DEC20	​	2.70
FEB19	​	2.71	​	AUG19	​	2.70	​	DEC21	​	2.69
MAR19	​	2.71	​	SEP19	​	2.70	​	DEC22	​	2.70
APR19	​	2.71	​	OCT19	​	2.70	​		​
MAY19	​	2.71	​	NOV19	​	2.70	​		​

Bunker Oil
Maturity	​	Price (US$/ton)	​	Maturity	​	Price (US$/ton)	​	Maturity	​	Price (US$/ton)
SPOT	​	334	​	JUN19	​	307	​	DEC19	​	270
JAN19	​	327	​	JUL19	​	302	​	DEC20	​	267
FEB19	​	322	​	AUG19	​	297	​	DEC21	​	238
MAR19	​	319	​	SEP19	​	291	​	DEC22	​	213
APR19	​	315	​	OCT19	​	283	​		​
MAY19	​	311	​	NOV19	​	276	​		​

Maritime Freight (Capesize 5TC)
Maturity	​	Price (US$/day)	​	Maturity	​	Price (US$/day)	​	Maturity	​	Price (US$/day)
SPOT	​	14,797	​	JUN19	​	15,096	​	DEC19	​	20,350
JAN19	​	16,175	​	JUL19	​	16,817	​	Cal 2020	​	15,613
FEB19	​	12,225	​	AUG19	​	16,817	​	Cal 2021	​	13,350
MAR19	​	13,233	​	SEP19	​	16,817	​	Cal 2022	​	13,433
APR19	​	13,521	​	OCT19	​	20,350	​		​
MAY19	​	13,896	​	NOV19	​	20,350	​		​

​

​	​	​	​	​
​	​ ​	​ F-113	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

(ii) Foreign exchange and interest rates

US$—Brazil Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
02/01/19	​	4.24	​	12/02/19	​	3.61	​	04/01/22	​	3.68
03/01/19	​	3.83	​	01/02/20	​	3.60	​	07/01/22	​	3.73
04/01/19	​	3.55	​	04/01/20	​	3.63	​	10/03/22	​	3.69
05/02/19	​	3.50	​	07/01/20	​	3.64	​	01/02/23	​	3.73
06/03/19	​	3.47	​	10/01/20	​	3.64	​	04/03/23	​	3.74
07/01/19	​	3.48	​	01/04/21	​	3.67	​	07/03/23	​	3.72
08/01/19	​	3.52	​	04/01/21	​	3.66	​	10/02/23	​	3.74
09/02/19	​	3.47	​	07/01/21	​	3.65	​	01/02/24	​	3.82
10/01/19	​	3.53	​	10/01/21	​	3.67	​	07/01/24	​	3.73
11/01/19	​	3.60	​	01/03/22	​	3.67	​	01/02/25	​	3.85

US$ Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
1M	​	2.52	​	6M	​	2.78	​	11M	​	2.78
2M	​	2.62	​	7M	​	2.78	​	12M	​	2.78
3M	​	2.79	​	8M	​	2.78	​	2Y	​	2.71
4M	​	2.79	​	9M	​	2.78	​	3Y	​	2.67
5M	​	2.79	​	10M	​	2.78	​	4Y	​	2.69

TJLP
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
02/01/19	​	6.98	​	12/02/19	​	6.98	​	04/01/22	​	6.98
03/01/19	​	6.98	​	01/02/20	​	6.98	​	07/01/22	​	6.98
04/01/19	​	6.98	​	04/01/20	​	6.98	​	10/03/22	​	6.98
05/02/19	​	6.98	​	07/01/20	​	6.98	​	01/02/23	​	6.98
06/03/19	​	6.98	​	10/01/20	​	6.98	​	04/03/23	​	6.98
07/01/19	​	6.98	​	01/04/21	​	6.98	​	07/03/23	​	6.98
08/01/19	​	6.98	​	04/01/21	​	6.98	​	10/02/23	​	6.98
09/02/19	​	6.98	​	07/01/21	​	6.98	​	01/02/24	​	6.98
10/01/19	​	6.98	​	10/01/21	​	6.98	​	07/01/24	​	6.98
11/01/19	​	6.98	​	01/03/22	​	6.98	​	01/02/25	​	6.98

BRL Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
02/01/19	​	6.41	​	12/02/19	​	6.53	​	04/01/22	​	8.17
03/01/19	​	6.42	​	01/02/20	​	6.55	​	07/01/22	​	8.35
04/01/19	​	6.43	​	04/01/20	​	6.70	​	10/03/22	​	8.43
05/02/19	​	6.44	​	07/01/20	​	6.91	​	01/02/23	​	8.53
06/03/19	​	6.44	​	10/01/20	​	7.16	​	04/03/23	​	8.64
07/01/19	​	6.45	​	01/04/21	​	7.36	​	07/03/23	​	8.70
08/01/19	​	6.46	​	04/01/21	​	7.59	​	10/02/23	​	8.79
09/02/19	​	6.46	​	07/01/21	​	7.77	​	01/02/24	​	8.86
10/01/19	​	6.49	​	10/01/21	​	7.95	​	07/01/24	​	8.98
11/01/19	​	6.52	​	01/03/22	​	8.08	​	01/02/25	​	9.1

​

​	​	​	​	​
​	​ ​	​ F-114	​ ​	​

​

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Table of Contents

Notes to the Financial Statements (Continued)

Expressed in millions of United States dollar, unless otherwise stated

34.    Additional information about derivatives financial instruments (Continued)

Implicit Inflation (IPCA)
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
02/01/19	​	3.74	​	12/02/19	​	3.87	​	04/01/22	​	4.03
03/01/19	​	3.75	​	01/02/20	​	3.88	​	07/01/22	​	4.12
04/01/19	​	3.77	​	04/01/20	​	3.81	​	10/03/22	​	4.11
05/02/19	​	3.78	​	07/01/20	​	3.88	​	01/02/23	​	4.14
06/03/19	​	3.78	​	10/01/20	​	3.90	​	04/03/23	​	4.18
07/01/19	​	3.79	​	01/04/21	​	3.93	​	07/03/23	​	4.19
08/01/19	​	3.79	​	04/01/21	​	3.98	​	10/02/23	​	4.22
09/02/19	​	3.79	​	07/01/21	​	4.01	​	01/02/24	​	4.25
10/01/19	​	3.83	​	10/01/21	​	4.04	​	07/01/24	​	4.30
11/01/19	​	3.85	​	01/03/22	​	4.05	​	01/02/25	​	4.35

EUR Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
1M	​	(0.41)	​	6M	​	(0.28)	​	11M	​	(0.24)
2M	​	(0.38)	​	7M	​	(0.26)	​	12M	​	(0.23)
3M	​	(0.36)	​	8M	​	(0.25)	​	2Y	​	(0.17)
4M	​	(0.32)	​	9M	​	(0.25)	​	3Y	​	(0.08)
5M	​	(0.29)	​	10M	​	(0.24)	​	4Y	​	0.05

CAD Interest Rate
Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)	​	Maturity	​	Rate (% p.a.)
1M	​	2.30	​	6M	​	2.34	​	11M	​	1.24
2M	​	2.29	​	7M	​	2.00	​	12M	​	1.13
3M	​	2.31	​	8M	​	1.74	​	2Y	​	2.29
4M	​	2.32	​	9M	​	1.54	​	3Y	​	2.31
5M	​	2.33	​	10M	​	1.37	​	4Y	​	2.35

Currencies—Ending rates
CAD/US$	​	0.7341	​	US$/BRL	​	3.8748	​	EUR/US$	​	1.1452

​

​	​	​	​	​
​	​ ​	​ F-115	​ ​	​

​

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