Vale S.A. : Vale S.A. : VALE'S PERFORMANCE IN 2Q13

              Vale S.A. : Vale S.A. : VALE'S PERFORMANCE IN 2Q13

DELIVERING ON THE PROMISES: SUSTAINING COST REDUCTION

Rio de Janeiro,  August 07,  2013 -  Vale S.A.  (Vale) had  a solid  financial 
performance in the  second quarter  of 2013  (2Q13) amidst  an environment  of 
below-trend global economic growth and  declining minerals and metals  prices. 
Operating revenues were  US$ 11.3  billion, operating income,  as measured  by 
adjusted EBIT, reached US$ 3.6 billion,  adjusted EBITDA US$ 5.0 billion,  and 
underlying earnings US$ 3.3 billion, US$ 0.64 per share.

Copper, gold and coal production achieved all-time high figures, at 91,300  t, 
63,000 oz and 2.4 Mt, respectively, while nickel output remained at 65,000  t, 
its best  second  quarter  since  2Q08. Salobo  is  ramping  up  successfully, 
beginning to generate cash in June.

We are  executing  our business  plan,  which  provides exposure  to  a  large 
world-class natural resource base  and multiple opportunities for  shareholder 
value creation, underpinned by a greater focus on cost and capital  management 
discipline, financial strength and  an efficient logistics infrastructure.  In 
this context, we are concluding important base metals projects, such as Salobo
II copper, executing some world-class bulk materials projects, such as Carajás
S11D iron ore  and Moatize II  coal, expanding the  logistics network -  Teluk 
Rubiah, CLNS 11D and the Nacala  Corridor - to support our global  operations. 
Simultaneously,  we  are  divesting  non-core  assets,  cutting  research  and 
development (R&D)  expenditures, operating  costs and  corporate expenses  and 
maintaining a strong balance sheet.

We have continued to  deliver on our promises.  The several initiatives  under 
way are producing  sequential improvements: total  costs and expensesfell  by 
US$ 736  million in  2Q13 versus  2Q12, accumulating  a reduction  of US$  1.6 
billion in  the  first half  of  2013 (1H13)  compared  to 1H12  -  driven  by 
decreases in costs by US$ 845 million (8%), sales, general and  administrative 
(SG&A) expenses by US$ 435 million (42%) and R&D by US$ 324 million (49%).

Supported by the cost cutting efforts, adjusted EBITDA remained steady at  US$ 
10.2 billion in the first half of this year, declining only US$ 304 million on
a year-on-year basis,  notwithstanding the  US$ 2.1 billion  fall in  revenues 
determined mostly by price decreases.

We are strongly  committed to persist  in our relentless  efforts to pursue  a 
cost structure consistent with continuous  value creation through the  cycles. 
In addition to our own efforts, the cost performance of 2Q13 was reached  with 
an average Brazilian real  (BRL) / US  dollar (USD) exchange  rate of 2.07  in 
2Q13, thus  highlighting potential  opportunities for  further savings,  given 
that the BRL/USD stood at 2.23 at the end of 2Q13.

Iron ore sales were slightly  above planned, 61.9 Mt in  2Q13 and 117.6 Mt  in 
1H13, and in  line with 1H12.  The average  price for our  iron ore  shipments 
changed to US$ 99.20  from US$ 111.70  in 1Q13, as we  managed to cushion  the 
effect of the fall of the IODEX 62% Fe to US$ 125.95 in 2Q13 from US$  148.40, 
given the mix of different pricing mechanisms in our sales portfolio. Revenues
were sustained at  US$ 6.1 billion  and adjusted EBITDA  for ferrous  minerals 
kept steady at US$ 4.7 billion, the same level as 1Q13.

Our total debt came to  US$ 29.9 billion from US$  30.2 billion at the end  of 
1Q13, despite  paying US$  2.25 billion  in dividends  and investing  US$  3.6 
billion in 2Q13, thus  contributing to sustain our  financial leverage at  1.6 
times the adjusted EBITDA  for the last twelve-month  period, a low level  for 
this stage of the cycle.

Cash position  was shored  up  by important  improvements in  working  capital 
resulting from a  series of  initiatives to increase  efficiency and  optimize 
capital management. The number of days of receivables was shortened to 40.1 in
2Q13 against 50.6 in 1Q13. This has contributed to free cash in the amount  of 
US$ 1.3 billion when compared to March 2013. Inventories also fell by US$  378 
million in 2Q13 versus 1Q13.

One important  milestone  was  attained  in July  with  the  granting  by  the 
Brazilian environmental protection agency (IBAMA) of the installation  license 
(LI)  for  Carajás  S11D,  the  largest,  highest  quality  and  lowest   cost 
world-class iron ore project in the global industry. Given the combination  of 
high quality  and low  operating costs,  S11D has  the potential  to  generate 
sizable shareholder value  even in  the face  of a  scenario of  low iron  ore 
prices.

We also reached completion of work on several projects to increase the railway
capacity on the  Carajás railroad  (EFC), an important  enabler of  production 
growth for the Additional 40 Mtpy project.

The license to implement S11D,  the improving operational performance of  base 
metals on  the  back of  the  successful ramp-up  of  Salobo, and  the  strong 
financial performance  supported by  lower costs  and expenses  will  uniquely 
position Vale  to  be amongst  the  clear  winners in  the  natural  resources 
industry in the years to come.

Financial highlights in 2Q13:

  oOperating revenues totaled US$ 11.3 billion, in line with 1Q13. The
    increase in sales volumes was partially offset by lower prices.
  oIncome from existing operations, as measured by adjusted EBIT (earnings
    before interest and taxes), was US$ 3.6 billion, versus US$ 4.2 billion in
    1Q13.
  oOperating income margin of 32.7%, as measured by adjusted EBIT margin.
  oUnderlying earnings were US$ 3.3 billion, equal to US$ 0.64 per share on a
    fully diluted basis, against US$ 3.1 billion in 1Q13, net of the
    accounting effects of non-cash and/or non-recurring items.
  oCash generation, as measured by adjusted EBITDA (earnings before interest,
    taxes, depreciation and amortization) of US$ 5.0 billion in 2Q13, against
    US$ 5.2 billion in the previous quarter.
  oCapex - excluding acquisitions - in 2Q13 equal to US$ 3.6 billion, 9.8%
    and 16.1% lower than 1Q13 and 2Q12, respectively. R&D expenditures were
    reduced by US$113 million quarter-on-quarter and US$ 241 million
    year-on-year.
  oInvestments in corporate social responsibility reached US$ 262 million,
    US$ 214 million of which was for environmental protection and conservation
    and US$ 48 million for social projects.
  oThe first tranche of the US$ 4.0 billion minimum dividend for 2013, US$
    2.25 billion, was paid to shareholders on April 30, 2013.
  oMaintenance of a strong balance sheet, with low debt leverage, measured by
    the ratio of total debt to LTM adjusted EBITDA excluding non-recurring
    items, equal to 1.6x, long average maturity, at 9.9 years, and low average
    cost, 4.5% per year as of June 30, 2013.

For further information, please contact:

+55-21-3814-4540

Roberto Castello Branco: roberto.castello.branco@vale.com
Viktor Moszkowicz: viktor.moszkowicz@vale.com
Carla Albano Miller: carla.albano@vale.com
Andrea Gutman: andrea.gutman@vale.com
Christian Perlingiere: christian.perlingiere@vale.com
Marcelo Bonanca: marcelo.bonanca@vale.com
Marcio Loures Penna: marcio.penna@vale.com
Samantha Pons: samantha.pons@vale.com

This press release  may include  statements that  present Vale's  expectations 
about future events or results.  All statements, when based upon  expectations 
about the  future and  not  on historical  facts,  involve various  risks  and 
uncertainties. Vale cannot guarantee that such statements will prove  correct. 
These risks and uncertainties  include factors related  to the following:  (a) 
the countries where we operate, especially  Brazil and Canada; (b) the  global 
economy; (c) the capital markets; (d)  the mining and metals prices and  their 
dependence on global industrial production,  which is cyclical by nature;  and 
(e) global  competition in  the  markets in  which  Vale operates.  To  obtain 
further information on factors that may  lead to results different from  those 
forecast by  Vale,  please  consult  the reports  Vale  files  with  the  U.S. 
Securities and Exchange  Commission (SEC), the  Brazilian Comissão de  Valores 
Mobiliários (CVM), the French Autorité  des Marchés Financiers (AMF), and  The 
Stock Exchange of Hong Kong Limited,  and in particular the factors  discussed 
under "Forward-Looking Statements" and "Risk Factors" in Vale's annual  report 
on Form 20-F.

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VALE'S PERFORMANCE IN 2Q13

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Source: Vale S.A. via Thomson Reuters ONE
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