Edgar Filing: Vale S.A.

(Registrant)

Date: July 29, 2009

/s/ Roberto Castello Branco

Roberto Castello Branco

Director of Investor Relations

Form 6-K

United States
Securities and Exchange Commission

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the
Securities Exchange Act of 1934

For the month of

July 2009

Vale S.A.

Avenida Graça Aranha, No. 26
20030-900 Rio de Janeiro, RJ, Brazil
(Address of principal executive office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

(Check One) Form 20-F þ Form 40-F o

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1))

(Check One) Yes o No þ

(Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7))

(Check One) Yes o No þ

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

(Check One) Yes o No þ

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82- .)

TABLE OF CONTENTS


PRESS RELEASE
SIGNATURES

Vale S.A.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION


	Page

Report of Independent Registered Public Accounting Firm		2

Condensed Consolidated Balance Sheets as of June 30, 2009 and December 31, 2008		4

Condensed Consolidated Statements of Income for the three-month periods ended June 30, 2009, March 31, 2009 and June 30, 2008 and for six-month periods ended June 30, 2009 and 2008		6

Condensed Consolidated Statements of Cash Flows for the three-month periods ended June 30, 2009, March 31, 2009 and June 30, 2008 and for six-month periods ended June 30, 2009 and 2008		7

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended June 30, 2009, March 31, 2009 and June 30, 2008 and six-month periods ended June 30, 2009 and 2008		8

Notes to the Condensed Consolidated Financial Information		9

Supplemental Financial Information (unaudited)		40



		PricewaterhouseCoopers Rua da Candelária, 65 11°, 14°, 15° e 16° cjs. 1302 a 1304 20091-020 Rio de Janeiro, RJ - Brasil Caixa Postal 949 Telefone (21) 3232 - 6112 Fax (21) 2516 - 6319 pwc.com/br

Report of Independent Registered
Public Accounting Firm

To the Board of Directors and Stockholders
Vale S.A.

We have reviewed the accompanying condensed consolidated balance sheet of Vale S.A. (formerly Companhia Vale do Rio Doce) and its subsidiaries as of June 30, 2009, and the related condensed consolidated statements of income, of cash flows and of stockholders’ equity for each of the three-month periods ended June 30, 2009, and March 31, 2009 and June 30, 2008 and for the six-month periods ended June 30, 2009 and June 30, 2008. This interim financial information is the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of iterim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2008, and the related consolidated statements of income, of cash flows and of stockholders’, equity for the year then ended (not presented herein), and in our report dated February 19, 2009, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2008, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

Vale S.A.

As discussed in Note 4(b) to the condensed consolidated interim financial information, the Company changed the manner in which it reports non-controlling interest in 2009. The accompanying December 31, 2008 condensed consolidated financial information reflects this change.

PricewaterhouseCoopers
Auditores Independentes

Rio de Janeiro, Brazil
July 29, 2009

Condensed Consolidated Balance Sheets

Expressed in millions of United States Dollars



	June 30, 2009		December 31,2008
	(unaudited)

Assets
Current assets
Cash and cash equivalents		8,192		10,331
Short-term investments		3,000		2,308
Accounts receivable
Related parties		75		137
Unrelated parties		2,674		3,067
Loans and advances to related parties		65		53
Inventories		4,035		3,896
Deferred income tax		587		583
Advances to suppliers		423		405
Recoverable taxes		838		1,993
Other		639		465

		20,528		23,238


Property, plant and equipment, net, and intangible assets		59,296		49,329
Investments in affiliated companies, joint ventures and other investments		2,968		2,408
Other assets
Goodwill on acquisition of subsidiaries		2,095		1,898
Loans and advances
Related parties		26		—
Unrelated parties		95		77
Prepaid pension cost		1,064		622
Prepaid expenses		187		223
Judicial deposits		1,363		1,141
Advances to suppliers — energy		472		408
Recoverable taxes		610		394
Unrealized gains on derivative instruments		246		32
Other		106		161

		6,264		4,956

TOTAL		89,056		79,931

Condensed Consolidated Balance Sheets
Expressed in millions of United States Dollars
(Except number of shares)


	(Continued)
	June 30, 2009			December 31, 2008
	(unaudited)
Liabilities and stockholders’ equity
Current liabilities
Suppliers		2,142			2,261
Payroll and related charges		604			591
Current portion of long-term debt		610			633
Short-term debt		38			—
Loans from related parties		19			77
Provision for income taxes		220			502
Taxes payable and royalties		115			55
Employees postretirement benefits		116			102
Railway sub-concession agreement payable		243			400
Unrealized losses on derivative instruments		60			—
Provisions for asset retirement obligations		31			48
Minimum mandatory dividends payable		1,080			2,068
Other		510			500

		5,788			7,237


Long-term liabilities
Employees postretirement benefits		1,608			1,485
Long-term debt		18,826			17,535
Provisions for contingencies (Note 17 (c))		1,938			1,685
Unrealized losses on derivative instruments		11			573
Deferred income tax		5,234			4,005
Provisions for asset retirement obligations		968			839
Other		1,681			1,525

		30,266			27,647


Redeemable noncontrolling interest (Note 4 (b))		648			599

Commitments and contingencies (Note 17)

Stockholders’ equity
Preferred class A stock — 7,200,000,000 no-par-value shares authorized and 2,108,590,250 (2008 — 2,108,579,618) issued		9,727			9,727
Common stock — 3,600,000,000 no-par-value shares authorized and 3,256,724,482 (2008 — 3,256,724,482) issued		15,262			15,262
Treasury stock — 77,625,704 (2008 — 76,854,304) preferred and 74,997,899 (2008 — 74,937,899) common shares		(1,151	)		(1,141	)
Additional paid-in capital		393			393
Mandatorily convertible notes — common shares		1,288			1,288
Mandatorily convertible notes — preferred shares		581			581
Other cumulative comprehensive loss		(6,260	)		(11,510	)
Undistributed retained earnings		21,930			18,340
Unappropriated retained earnings		8,107			9,616

Total Company stockholders’ equity		49,877			42,556
Noncontrolling interests		2,477			1,892

Total stockholders’ equity		52,354			44,448

TOTAL		89,056			79,931

The accompanying notes are an integral part of this condensed consolidated financial information.

Condensed Consolidated Statements of Income

Expressed in millions of United States Dollars

(Except per share amounts)


	Three-month period ended									Six-month period ended
	(unaudited)									(unaudited)
	June 30, 2009			March 31, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Operating revenues, net of discounts, freight, returns and allowances
Sales of ores and metals		4,156			4,569			9,445			8,725			16,302
Aluminum products		468			442			728			910			1,374
Revenues from logistic services		281			199			462			480			824
Other products and services		179			211			262			390			445

		5,084			5,421			10,897			10,505			18,945
Taxes on revenues		(136	)		(97	)		(297	)		(233	)		(513	)

Net operating revenues		4,948			5,324			10,600			10,272			18,432

Operating costs and expenses
Cost of ores and metals sold		(2,295	)		(2,169	)		(3,834	)		(4,464	)		(7,274	)
Cost of aluminum products		(529	)		(452	)		(561	)		(981	)		(1,054	)
Cost of logistic services		(178	)		(165	)		(256	)		(343	)		(468	)
Other		(133	)		(114	)		(112	)		(247	)		(209	)

		(3,135	)		(2,900	)		(4,763	)		(6,035	)		(9,005	)
Selling, general and administrative expenses		(230	)		(233	)		(344	)		(463	)		(666	)
Research and development expenses		(265	)		(189	)		(269	)		(454	)		(459	)
Other		(342	)		(317	)		11			(659	)		(152	)

		(3,972	)		(3,639	)		(5,365	)		(7,611	)		(10,282	)

Operating income		976			1,685			5,235			2,661			8,150
Non-operating income (expenses)
Financial income		93			125			23			218			78
Financial expenses		(293	)		(287	)		(349	)		(580	)		(909	)
Gains (losses) on derivatives, net		873			18			655			891			361
Foreign exchange and indexation gains (losses), net		523			16			838			539			926
Gain on sale of investments		157			—			—			157			80

		1,353			(128	)		1,167			1,225			536

Income before income taxes and equity results		2,329			1,557			6,402			3,886			8,686

Income taxes
Current		(1,494	)		(477	)		(1,173	)		(1,971	)		(1,827	)
Deferred		(130	)		171			(333	)		41			(37	)

		(1,624	)		(306	)		(1,506	)		(1,930	)		(1,864	)

Equity in results of affiliates, joint ventures and other investments		135			72			260			207			379

Net income		840			1,323			5,156			2,163			7,201

Net income (loss) attributable to noncontrolling interests		50			(40	)		147			10			171

Net income attributable to Company’s stockholders		790			1,363			5,009			2,153			7,030

Basic and diluted earnings per share attributable to Company’s stockholders
Earnings per preferred share		0.14			0.25			1.01			0.39			1.41
Earnings per common share		0.14			0.25			1.01			0.39			1.41
Earnings per prefered share linked to convertible mandatorily notes (*)		0.63			0.53			1.52			1.16			2.18
Earnings per common share linked to convertible mandatorily notes (*)		0.69			0.57			1.54			1.25			2.28


(*)		Basic earnings per share only, as dilution assumes conversion.

The accompanying notes are an integral part of this condensed consolidated financial information.

Condensed Consolidated Statements of Cash Flows

Expressed in millions of United States Dollars


										Six-month period ended
	Three-month period ended (unaudited)									(unaudited)
	June 30, 2009			March 31, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Cash flows from operating activities:
Net income		840			1,323			5,156			2,163			7,201
Adjustments to reconcile net income to cash from operations:
Depreciation, depletion and amortization		643			559			760			1,202			1,526
Dividends received		106			37			223			143			271
Equity in results of affiliates, joint ventures and other investments		(135	)		(72	)		(260	)		(207	)		(379	)
Deferred income taxes		130			(171	)		333			(41	)		37
Loss on disposal of property, plant and equipment		46			41			86			87			123
Gain on sale of investments		(157	)		—			—			(157	)		(80	)
Foreign exchange and indexation losses (gains), net		(817	)		(57	)		(1,300	)		(874	)		(1,422	)
Unrealized derivative losses (gains), net		(873	)		(18	)		(655	)		(891	)		(361	)
Unrealized interest (income) expense, net		(54	)		3			(45	)		(51	)		36
Others		(18	)		(16	)		(3	)		(34	)		(21	)
Decrease (increase) in assets:
Accounts receivable		271			391			(802	)		662			(600	)
Inventories		98			119			(283	)		217			(347	)
Recoverable taxes		1,275			(104	)		32			1,171			(119	)
Others		(8	)		(77	)		47			(85	)		43
Increase (decrease) in liabilities:
Suppliers		(227	)		(103	)		320			(330	)		266
Payroll and related charges		62			(139	)		177			(77	)		(71	)
Income taxes		(276	)		216			750			(60	)		32
Others		160			233			(455	)		393			(646	)

Net cash provided by operating activities		1,066			2,165			4,081			3,231			5,489

Cash flows from investing activities:
Short-term investments		217			(909	)		—			(692	)		—
Loans and advances receivable
Related parties
Loan proceeds		(38	)		(23	)		(34	)		(61	)		(34	)
Repayments		—			7			—			7			25
Others		(14	)		4			1			(10	)		1
Judicial deposits		(34	)		(19	)		(2	)		(53	)		(36	)
Investments		(291	)		(138	)		(11	)		(429	)		(24	)
Additions to, property, plant and equipment		(2,008	)		(1,688	)		(2,105	)		(3,696	)		(3,730	)
Proceeds from disposal of investments		277			—			—			277			134
Acquisition of subsidiaries, net of cash acquired		(300	)		(850	)		—			(1,150	)		—

Net cash used in investing activities		(2,191	)		(3,616	)		(2,151	)		(5,807	)		(3,664	)

Cash flows from financing activities:
Short-term debt, additions		351			103			209			454			1,010
Short-term debt, repayments		(342	)		(74	)		(449	)		(416	)		(1,121	)
Loans
Related parties
Loan proceeds		—			—			3			—			21
Repayments		(155	)		(68	)		(2	)		(223	)		(4	)
Issuances of long-term debt
Third parties		296			185			236			481			1,566
Repayments of long-term debt
Third parties		(52	)		(110	)		(647	)		(162	)		(752	)
Treasury stock		—			(10	)		—			—			—
Dividends and interest attributed to Company’s stockholders		(1,255	)		—			(1,250	)		(1,255	)		(1,250	)
Dividends and interest attributed to noncontrolling interest		—			—			(87	)		(10	)		(87	)

Net cash provided by (used in) financing activities		(1,157	)		26			(1,987	)		(1,131	)		(617	)

Increase (decrease) in cash and cash equivalents		(2,282	)		(1,425	)		(57	)		(3,707	)		1,208
Effect of exchange rate changes on cash and cash equivalents		1,477			91			(53	)		1,568			(100	)
Cash and cash equivalents, beginning of period		8,997			10,331			2,264			10,331			1,046

Cash and cash equivalents, end of period		8,192			8,997			2,154			8,192			2,154

Cash paid during the period for:
Interest on short-term debt		—			—			(5	)		—			(10	)
Interest on long-term debt		(311	)		(277	)		(357	)		(588	)		(636	)
Income tax		(85	)		(143	)		(320	)		(228	)		(1,992	)

Non-cash transactions
Interest capitalized		50			65			14			115			31

The accompanying notes are an integral part of this condensed consolidated financial information.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Expressed in millions of United States Dollars

(Except number of shares and per-share amounts)


	Three-month period ended (unaudited)									Six-month period ended (unaudited)
	June 30, 2009			March 31, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Preferred class A stock (including twelve special shares)
Beginning and end of the period		9,727			9,727			4,953			9,727			4,953

Common stock
Beginning and end of the period		15,262			15,262			7,742			15,262			7,742

Treasury stock
Beginning of the period		(1,151	)		(1,141	)		(389	)		(1,141	)		(389	)
Acquisitions		—			(10	)		—			(10	)		—

End of the period		(1,151	)		(1,151	)		(389	)		(1,151	)		(389	)

Additional paid-in capital
Beginning and end of the period		393			393			498			393			498

Mandatorily convertible notes — common shares
Beginning and end of the period		1,288			1,288			1,288			1,288			1,288

Mandatorily convertible notes — preferred shares
Beginning and end of the period		581			581			581			581			581

Other cumulative comprehensive (deficit) income
Cumulative translation adjustments
Beginning of the period		(11,597	)		(11,493	)		1,135			(11,493	)		1,340
Change in the period		5,212			(104	)		1,707			5,108			1,502

End of the period		(6,385	)		(11,597	)		2,842			(6,385	)		2,842

Unrealized gain (loss) — available-for-sale securities, net of tax
Beginning of the period		113			17			205			17			211
Change in the period		(64	)		96			(94	)		32			(100	)

End of the period		49			113			111			49			111

Surplus (deficit) accrued pension plan
Beginning of the period		(82	)		(34	)		60			(34	)		75
Change in the period		157			(48	)		104			109			89

End of the period		75			(82	)		164			75			164

Cash flow hedge
Beginning of the period		—			—			2			—			29
Change in the period		1			—			6			1			(21	)

End of the period		1			—			8			1			8

Total other cumulative comprehensive (deficit) income		(6,260	)		(11,566	)		3,125			(6,260	)		3,125

Undistributed retained earnings
Beginning of the period		18,513			18,340			15,508			18,340			15,317
Transfer from unappropriated retained earnings		3,417			173			1,513			3,590			1,704

End of the period		21,930			18,513			17,021			21,930			17,021

Unappropriated retained earnings
Beginning of the period		10,780			9,616			3,435			9,616			1,631
Net income attributable to Company’s stockholders		790			1,363			5,009			2,153			7,030
Interest on mandatorily convertible debt
Preferred class A stock		(15	)		(8	)		(15	)		(23	)		(23	)
Common stock		(31	)		(18	)		(30	)		(49	)		(48	)
Appropriation to undistributed retained earnings		(3,417	)		(173	)		(1,513	)		(3,590	)		(1,704	)

End of the period		8,107			10,780			6,886			8,107			6,886

Total Company stockholders’ equity		49,877			43,827			41,705			49,877			41,705

Noncontrolling interests
Beginning of the period		2,085			1,892			2,140			1,892			2,180
Disposals and (acquisitions) of noncontrolling interests		29			—			—			29			—
Cumulative translation adjustments		313			222			286			535			235
Cash flow hedge		—			—			6			—			(16	)
Net income (loss) attributable to noncontrolling interests		50			(40	)		147			10			171
Dividends and interest attributable to noncontrolling interests		—			(1	)		(110	)		(1	)		(110	)
Capitalization of stockholders advances		—			12			23			12			32

End of the period		2,477			2,085			2,492			2,477			2,492

Total stockholders’ equity		52,354			45,912			44,197			52,354			44,197


Number of shares:
Preferred class A stock (including twelve special shares)		2,108,590,250			2,108,579,618			1,919,516,400			2,108,590,250			1,919,516,400
Common stock		3,256,724,482			3,256,724,482			2,999,797,716			3,256,724,482			2,999,797,716
Buy-backs
Beginning of the period		(152,623,603	)		(151,792,203	)		(86,923,052	)		(151,792,203	)		(86,923,184	)
Acquisitions		—			(831,400	)					(831,400	)		—
Sales		—			—			—			—			132

End of the period		(152,623,603	)		(152,623,603	)		(86,923,052	)		(152,623,603	)		(86,923,052	)

		5,212,691,129			5,212,680,497			4,832,391,064			5,212,691,129			4,832,391,064

The accompanying notes are an integral part of this condensed consolidated financial information.

Notes to the Condensed Consolidated Financial Information

Expressed in millions of United States Dollars, unless otherwise stated

1		The Company and its operation

		Vale S.A. formerly Companhia Vale do Rio Doce, (“Vale”, the “Company” or “we”) is a limited liability company incorporated in Brazil. Operations are carried out through Vale and our subsidiary companies, joint ventures and affiliates, and mainly consist of mining, non-ferrous metal production, logistics and steel activities.

		At June 30, 2009, our principal consolidated operating subsidiaries are the following:

% voting

Head office

Subsidiary

% ownership

capital

location

Principal activity

Alumina do Norte do Brasil S.A. — Alunorte (“Alunorte”)

57.03

59.02

Brazil

Alumina

Alumínio Brasileiro S.A. — Albras (“Albras”)

51.00

Brazil

Aluminum

CADAM S.A (CADAM)

61.48

100.00

Brazil

Kaolin

CVRD Overseas Ltd.

100.00

Cayman Islands

Trading

Diamond Coal Ltd.

100.00

Colombia

Coal

Ferrovia Centro-Atlântica S. A.

100.00

Brazil

Logistics

Pará Pigmentos S.A. (“PPSA”)

86.17

85.57

Brazil

Kaolin

PT International Nickel Indonesia Tbk (“PT Inco”)

61.16

Indonesia

Nickel

Rio Doce Manganése Norway — RDMN

100.00

Norway

Ferroalloys

Vale Manganês S.A. (formely Rio Doce Manganês S.A.)

100.00

Brazil

Manganese and Ferroalloys

Vale Manganèse France (formely Rio Doce Manganèse Europe — RDME)

100.00

France

Ferroalloys

Vale Australia Pty Ltd.

100.00

Australia

Coal

Vale Inco Limited

100.00

Canada

Nickel

Vale International S.A (formerly CVRD International S.A)

100.00

Switzerland

Trading

2		Basis of consolidation

		All majority-owned subsidiaries in which we have both share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. Our variable interest entities in which we are the primary beneficiary are consolidated. Investments in unconsolidated affiliates and joint ventures are accounted for under the equity method (Note 10).

		We evaluate the carrying value of some of our investments in relation to publicly quoted market prices when available. If the quoted market price is below book value, and such decline is considered other than temporary, we write-down our equity investments to quoted market value.

		We define joint ventures as businesses in which we and a small group of other partners each participate actively in the overall entity management, based on a shareholders agreement. We define affiliates as businesses in which we participate as a noncontrolling stockholder but with significant influence over the operating and financial policies of the investee.

		Our participation in hydroelectric projects are made via consortium contracts under which we have undivided interests in the assets and are liable for our proportionate share of liabilities and expenses, which are based on our proportionate share of power output. We do not have joint liability for any obligations. No separate legal or tax status is granted to consortia under Brazilian law. Accordingly, we recognize our proportionate share of costs and our undivided interest in assets relating to hydroelectric projects.

3		Basis of presentation

		Our condensed consolidated interim financial information for the three-month periods ended June 30, 2009, March 31, 2009 and June 30, 2008 and for the six-month periods ended June 30, 2009 and 2008, prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), are unaudited. However, in our opinion, such condensed consolidated financial information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for interim periods. The results of operations for the three-month and six-month periods ended June 30, 2009, are not necessarily indicative of the actual results expected for the full fiscal year ending December 31, 2009.

		This condensed consolidated financial information should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2008, prepared in accordance with U.S. GAAP.

		In preparing the condensed consolidated financial information, we are required to use estimates to account for certain assets, liabilities, revenues and expenses. Our condensed consolidated financial statements therefore include various estimates concerning the selection of useful lives of property, plant and equipment, impairment, provisions necessary for contingent liabilities, fair values assigned to assets and liabilities acquired and assumed in business combinations, income tax uncertainties, employee post-retirement benefits and other similar evaluations. Actual results may vary from our estimates.

		The Brazilian Real is the parent Company’s functional currency. We have selected the U.S. Dollar as our reporting currency. The financial statements have been translated in accordance with the criteria set forth in Statement of Financial Accounting Standards (“SFAS”) 52 – “Foreign Currency Translation”.

		All assets and liabilities have been translated to U.S. Dollars at the closing rate of exchange at each balance sheet date (or, if unavailable, the first available exchange rate). All statement of income accounts have been translated to U.S. Dollars at the average exchange rates prevailing during the respective periods. Capital accounts are recorded at historical exchange rates. Translation gains and losses are recorded in the Cumulative Translation Adjustments account (“CTA”) in stockholders’ equity. The results of operations and financial position of our entities that have a functional currency other than the U.S. Dollar have been translated in accordance with SFAS 52.

		The exchange rates used to translate the assets and liabilities of the Brazilian operations at June 30, 2009 and December 31, 2008, were R$1.9516 and R$2.3370, respectively.

		The Company has performed an evaluation of subsequent events through July 29, 2009 which is the date the financial statements were issued.

4		Accounting pronouncements

(a)		New accounting standards

		In June 2009, the FASB issued SFAS 167, “Amendments to FASB Interpretation No. 46(R)” (SFAS 167). SFAS 167 changes how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2009. Early application is not permitted. We are currently studying the effects of this pronouncement.

		In June 2009, the FASB issued SFAS 166, “Accounting for Transfers of Financial Assets”, the Board’s objective in issuing this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets. This Statement shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Earlier application is prohibited. We are currently assessing the potential impact, if any, on our condensed financial statements.

(b)		Accounting standards recently adopted

		From 2009, we fully adopted the accounting standards addressed by the following pronouncements:

		SFAS 165, “Subsequent Events” (SFAS 165). This statement establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this statement sets forth (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. SFAS 165 is effective for interim or annual periods ending after June 15, 2009. The Company already adopts this statement.

		FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. This FSP shall be effective for interim reporting periods ending after June 15, 2009, we have not early adopted this pronouncement for the three-month period ended March 31, 2009. The application of FSP FAS 107 – 1 and APB 28 – 1 will expand the Company’s disclosures regarding the use of fair value in interim periods. The required information is disclosed in Note 18 (d).

		SFAS 161, Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement 133 (“SFAS 161”). SFAS 161 expands the current disclosure requirements of SFAS 133, Accounting for Derivative Instruments and Hedging Activities, such that entities must now provide qualitative disclosure about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gain and losses on derivative instruments and disclosures about credit-risk related contingent features in derivative agreements on a quarterly basis regarding how and why the entity uses derivatives, how derivatives and related hedged items are accounted for under SFAS 133 and how derivatives and related hedged items affect the entity’s financial position, performance and cash flow. The required information is disclosed in Note 20.

		SFAS 160, which clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements, as showed on Note 14 and condensed consolidated statements of changes in stockholders’ equity. Noncontrolling interests that could be redeemed upon the occurrence of certain events outside the Company’s control have been classified as redeemable noncontrolling interest using the mezzanine presentation on the balance sheet between liabilities and stockholders’ equity, retroactive to all periods presented.

		SFAS 141(R), that applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.

5		Major acquisitions and disposals

(a)		Diamond Coal Ltd

		In March 2009, we acquired 100% of the company Diamond Coal Ltd that owns coal assets in Colombia for US$300, from Cement Argos. Cash payment was made during the quarter ending June 30, 2009.

		The primary reason for the acquisition was that the coal assets are an important part of our growth strategy. Therefore, Vale is seeking to build a coal asset platform in Colombia, as it is the world’s third largest exporter of high-quality thermal coal, given its low level of sulfur and high calorific value.

		Due to the recent conclusion of the transaction, we are still in the process of identifying assets acquired and liabilities assumed.

As a result, the condensed information presented below reflects our preliminary analysis of the expected purchase price allocation:


	Preliminary
	Valuation

Purchase price		300
Book value of assets acquired		(112	)


Adjustment to fair value of property, plant and equipment		188

		The final accounting is pending conclusion of all identified assets and liabilities which is being internally carried out by us.

		Such purchase price allocation will be finalized during next periods, and accordingly the preliminary information presented above is subject to revisions, which may be material.

(b)		Green Mineral Resources

		In February 2009, we concluded the acquisition of Green Mineral Resources that owns Regina Project (Canada) and Colorado Project (Argentina), from Rio Tinto, for US$850.

		The acquisition of potash assets is aligned with Vale’s strategy to become a large producer of fertilizers to benefit from the exposure to rising global consumption.

		Also due to the recent closing of this transaction, information about the purchase price allocation presented below based on the fair values of identified assets acquired and liabilities assumed is preliminary. Such allocation, currently being performed internally by the Company, will be finalized during next periods, and accordingly, the preliminary purchase price allocation information set forth below are subject to revision, which may be material.

		The condensed preliminary purchase price allocation information for Green Mineral Resources is as follows:


	Preliminary
	Valuation

Total disbursements		857
Cash acquired		(7	)

Purchase price		850

Book value of assets acquired, net of cash acquired		(105	)

Book value of liabilities assumed		8


Adjustment to fair value of property, plant and equipment		753

		The final accounting is pending conclusion of all identified assets and liabilities which is being internally carried out by us.

(c)		Other transactions

		In April 2009, we concluded the sale of all common shares we held in, Usiminas Siderúrgicas de Minas Gerais S.A. — Usiminas, for US$273 generating a gain of US$153.

		In March 2009, we acquired 50% of the joint venture with African Rainbow Minerals Limited of Teal Minerals Incorporated for US$60.

		In January 2009, we entered into a purchase and sale agreement with Rio Tinto Plc to acquire iron ore (in Brazil) assets, for an amount of US$750, this acquisition has not been finalized yet, and it subject to the approval of Administrative Council for Economic Defense.

		In February 2008, we sold our interest in Jubilee Mines N.L. (held through Vale Inco), representing 4.83% of its common shares, for US$134 generating a gain of US$80.

6		Income taxes

		Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal tax. The statutory composite enacted tax rate applicable in the periods presented is 34%. In other countries where we have operations, the applicable tax rates vary from 1.67% to 40%.

		The amount reported as income tax expense in our consolidated financial statements is reconciled to the statutory rates as follows:


	Three-month period ended (unaudited)
	June 30, 2009									March 31, 2009									June 30, 2008
	Brazil			Foreign			Total			Brazil			Foreign			Total			Brazil			Foreign			Total
Income before income taxes, equity results and noncontrolling interests		5,302			(2,973	)		2,329			1,409			148			1,557			4,067			2,335			6,402


Tax at Brazilian composite rate		(1,803	)		1,011			(792	)		(479	)		(50	)		(529	)		(1,383	)		(794	)		(2,177	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		—			—			—			—			—			—			7			—			7
Difference on tax rates of foreign income		—			338			338			—			154			154			—			602			602
Exchange gains/losses — not taxable		—			(1,279	)		(1,279	)		—			(9	)		(9	)		—			(287	)		(287	)
Tax incentives		59			—			59			18			—			18			72			—			72
Tax deductible amortization of goodwill		23			—			23			20			—			20			—			—			—
Other non-taxable, income/non deductible expenses		62			(35	)		27			(3	)		43			40			358			(81	)		277


Income taxes per consolidated statements of income		(1,659	)		35			(1,624	)		(444	)		138			(306	)		(946	)		(560	)		(1,506	)


	Six-month period ended (unaudited)
	June 30, 2009									June 30, 2008
	Brazil			Foreign			Total			Brazil			Foreign			Total
Income before income taxes, equity results and noncontrolling interests		6,711			(2,825	)		3,886			4,589			4,097			8,686


Tax at Brazilian composite rate		(2,282	)		961			(1,321	)		(1,560	)		(1,393	)		(2,953	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		—			—			—			176			—			176
Difference on tax rates of foreign income		—			492			492			—			860			860
Exchange gains/losses — not taxable		—			(1,288	)		(1,288	)		—			(307	)		(307	)
Tax incentives		77			—			77			87			—			87
Tax deductible amortization of goodwill		43			—			43			53			—			53
Other non-taxable, income/non deductible expenses		59			8			67			246			(26	)		220


Income taxes per consolidated statements of income		(2,103	)		173			(1,930	)		(998	)		(866	)		(1,864	)

		We have certain Brazilian income tax incentives relating to our manganese operations in Carajás, our potash operations in Rosario do Catete, our alumina and aluminum operations in Barcarena and our kaolin operations in Ipixuna and Mazagão. The incentives relating to manganese, aluminum and kaolin comprise partial exemption up to 2013. The incentive relating to alumina and potash comprise full income tax exemption on defined production levels, which expires in 2009 and 2013, respectively. An amount equal to the tax saving is appropriated from retained earnings to a reserve account within stockholders’ equity and may not be distributed in the form of cash dividends.

		We also have income tax incentives related to our Goro project under development in New Caledonia (“The Goro Project”). These incentives include an income tax holiday during the construction phase of the project and throughout a 15-year period commencing in the first year in which commercial production, as defined by the applicable legislation, is achieved followed by a five-year, 50 per cent income tax holiday. The Goro Project also qualifies for certain exemptions from indirect taxes such as import duties during the construction phase and throughout the commercial life of the project. Certain of these tax benefits, including the income tax holiday, are subject to an earlier phase out should the project achieve a specified cumulative rate of return. We are subject to a branch profit tax commencing in the first year in which commercial production is achieved, as defined by the applicable legislation. To date, we have not recorded any taxable income for New Caledonian tax purposes. The benefits of this legislation are expected to apply with respect to taxes payable once The Goro Project is in operation.

		We are subject to examination by the tax authorities for up to five years regarding our operations in Brazil, ten years for Indonesia, and five and six years for Canada, except for Newfoundland which has no limit.

		Brazilian tax loss carryforwards have no expiration date though offset is restricted to 30% of annual taxable income.

		Effective January 1, 2007, the Company adopted the provisions of FASB Interpretation 48, “Accounting for Uncertainty in Income Taxes”.

		The reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


	June 30, 2009			December 31, 2008
	(unaudited)
Beginning of the period		657			1,046

Increase resulting from tax positions taken		21			103
Decrease resulting from tax positions taken		(1	)		(261	)
Changes in tax legislation		—			2
Cumulative translation adjustments		84			(233	)

End of the period		761			657

Cash and cash equivalents


	June 30, 2009		December 31, 2008
	(unaudited)
Cash		503		767
Short-term investments		7,689		9,564

		8,192		10,331

		All the above mentioned short term investments are done through the use of low risk fixed income securities, in a way that: the ones denominated in Brazilian Reais are concentrated on investments indexed to CDI, and the ones denominated in US dollars are mainly time deposits.

8		Short-term investments


	June 30, 2009		December 31, 2008
	(unaudited)
Time deposit (*)		3,000		2,308


(*)		Also represent low risk investments with original due date over 90 days.

Inventories


	June 30, 2009		December 31, 2008
	(unaudited)
Finished products
Nickel (co-products and by-products)		1,448		1,514
Iron ore and pellets		838		728
Manganese and ferroalloys		158		199
Aluminum products		129		150
Kaolin		35		40
Copper concentrate		18		26
Coal		57		43
Others		146		80
Spare parts and maintenance supplies		1,206		1,116


		4,035		3,896

At June 30, 2009, no adjustments were required, to reduce inventories to its market values (US$77 were adjusted in December 31, 2008).

Investments in affiliated companies and joint ventures


	June 30, 2009										Investments					Equity in earnings (losses) of investee adjustments															Dividends received
																Three-month period ended									Six-month period ended						Three-month period ended						Six-month period ended
																(unaudited)									(unaudited)						(unaudited)						(unaudited)
								Net income
	Participation in				Net			(loss) for the						December 31,		June 30,			March 31,			June 30,			June 30,			June 30,			June 30,		March 31,		June 30,		June 30,		June 30,
	capital (%)				equity			period			June 30, 2009			2008		2009			2009			2008			2009			2008			2009		2009		2008		2009		2008
	Voting		Total								(unaudited)
Ferrous
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (1)		51.11		51.00		273			15			139			110		3			5			34			8			30			—		20		—		20		—
Companhia Hispano—Brasileira de Pelotização — HISPANOBRÁS (1)		51.00		50.89		104			(15	)		53			73		(5	)		(3	)		33			(8	)		35			—		—		—		—		—
Companhia Coreano-Brasileira de Pelotização — KOBRASCO (1)		50.00		50.00		162			29			81			55		3			11			19			14			21			—		—		—		—		—
Companhia ítalo—Brasileira de Pelotização — ITABRASCO (1)		51.00		50.90		143			6			73			58		—			3			1			3			2			—		—		—		—		—
Minas da Serra Geral S.A. — MSG		50.00		50.00		53			2			26			21		1			—			—			1			1			—		—		—		—		—
SAMARCO Mineração S.A. — SAMARCO (2)		50.00		50.00		1,076			264			593			412		90			42			148			132			196			50		—		138		50		138
Baovale Mineração S.A. — BAOVALE		50.00		50.00		53			—			26			26		(1	)		(3	)		1			(4	)		3			—		—		—		—		—
Zhuhai YPM Pellet e Co.,Ltd. — ZHUHAI		25.00		25.00		42			(6	)		11			13		2			(4	)		—			(2	)		—			—		—		—		—		—


												1,002			768		93			51			236			144			288			50		20		138		70		138
Logistics
LOG-IN Logística Intermodal S.A.		31.33		31.33		333			5			112			94		—			2			6			2			11			3		—		3		3		3
MRS Logística S.A.		37.86		41.50		898			104			372			326		24			19			(47	)		43			(18	)		33		—		34		33		34

												484			420		24			21			(41	)		45			(7	)		36		—		37		36		37

Holdings

Steel
California Steel Industries Inc. — CSI		50.00		50.00		296			(24	)		148			160		(1	)		(11	)		22			(12	)		28			—		—		—		—		—
THYSSENKRUPP CSA Companhia Siderúrgica (Cost $595) (5)		10.53		10.53		—			—			682			443		—			—			—			—			—			—		—		—		—		—
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS (4)		—		—		—			—			—			164		7			—			10			7			10			7		—		10		7		10

												830			767		6			(11	)		32			(5	)		38			7		—		10		7		10

Bauxite
Mineração Rio do Norte S.A. — MRN		40.00		40.00		362			31			146			140		13			(1	)		8			12			22			13		17		38		30		86

												146			140		13			(1	)		8			12			22			13		17		38		30		86

Coal
Henan Longyu Resources Co. Ltd		25.00		25.00		829			125			207			176		13			18			19			31			36			—		—		—		—		—
Shandong Yankuang International Company Ltd		25.00		25.00		(2	)		(46	)		(1	)		11		(5	)		(7	)		1			(12	)		—			—		—		—		—		—

												206			187		8			11			20			19			36			—		—		—		—		—

Copper
Teal Minerals Incorpored (3)		50.00		50.00		177			(18	)		88			—		(9	)		—			—			(9	)		—			—		—		—		—		—

												88			—		(9	)		—			—			(9	)		—			—		—		—		—		—
Nickel
Heron Resources Inc (cost $24) — available-for-sale		—		—		—			—			3			2		—			—			—			—			—			—		—		—		—		—
Mirabela Nickel Ltd (cost $25) — available-for-sale		—		—		—			—			24			8		—			—			—			—			—			—		—		—		—		—
Hudbay Minerals (cost $17) available for sale		—		—		—			—			23			9		—			—			—			—			—			—		—		—		—		—
Korea Nickel Corp		—		—		—			—			21			21		—			1			—			1			—			—		—		—		—		—
Others — avaiable-for-sale		—		—		—			—			17			13		—			—			—			—			—			—		—		—		—		—

												88			53		—			1			—			1			—			—		—		—		—		—

Other affiliates and joint ventures
Others		—		—		—			—			124			73		—			—			5			—			2			—		—		—		—		—

												124			73		—			—			5			—			2			—		—		—		—		—

												1,482			1,220		18			—			65			18			98			20		17		48		37		96

Total												2,968			2,408		135			72			260			207			379			106		37		223		143		271


(1)		Although Vale held a majority of the voting interest of investees accounted for under the equity method, existing veto rights held by noncontrolling shareholders under shareholder agreements preclude consolidation;

(2)		Investment includes goodwill of US$55 in June, 2009 and US$46 in December, 2008;

(3)		Acquired in March, 2009 (Note 5);

(4)		Sold in April, 2009, equity refers to dividends received;

(5)		See Note 21

11		Short-term debt

		Short-term borrowings outstanding on June 30, 2009 are from commercial banks for export financing denominated in U.S. Dollars, with average annual interest rates of 0.81%.

Long-term debt


	Current liabilities				Long-term liabilities
	June 30,		December 31,		June 30,		December 31,
	2009		2008		2009		2008
Foreign debt	(unaudited)				(unaudited)
Loans and financing denominated in the following currencies:
U.S. Dollars		204		210		5,809		5,905
Others		25		23		185		167

Fixed Rate Notes — U.S. Dollar denominated		—		—		6,501		6,510
Debt securities — export sales (*) — U.S. Dollar denominated		56		55		122		149
Perpetual notes		—		—		83		83
Accrued charges		180		217		—		—

		465		505		12,700		12,814


Brazilian debt
Brazilian Reais indexed to Long-Term Interest Rate — TJLP/CDI and General Price Index-Market (IGPM)		52		33		2,653		1,990
Basket of currencies		2		1		4		4
Non-convertible debentures		—		—		3,075		2,562
U.S. Dollars Denominated		—		—		394		165
Accrued charges		91		94		—		—

		145		128		6,126		4,721

Total		610		633		18,826		17,535


(*)		Secured by receivables from future export sales.

The long-term portion at June 30, 2009 falls due as follows:



2010			2,280
2011			2,636
2012			1,175
2013			2,957
2014 and thereafter			9,438
No due date (Perpetual notes and non-convertible debentures)			340

			18,826


At June 30, 2009 annual interest rates on long-term debt were as follows:

Up to 3%			6,125
3.1% to 5%			353
5.1% to 7% (*)			5,816
7.1% to 9% (*)			2,520
9.1% to 11%			3,466
Over 11% (*)			1,072
Variable (Perpetual notes)			84

			19,436


(*)		Includes non-convertible debentures and other Brazilian Real-denominated debt that bear interest at CDI (Brazilian interbank certificate of deposit) and TJLP (Brazilian government long-term interest) rates plus a spread. For these operations we have entered into derivative transactions to mitigate our exposure to the floating rate debt denominated in Brazilian Real, totaling US$5,406 of which US$4,363 has original interest rate above 9%. The average cost after taking into account the derivative transactions is 4.72%.

The indexation indices/ rates applied to our debt were as follows (unaudited):


	Three-month period ended
	June 30,			March 31,			June 30,
	2009			2009			2008

TJLP — Long-Term Interest Rate (effective rate)		1.6			1.5			1.5
IGP-M — General Price Index — Market		(0.3	)		(0.9	)		4.3
Appreciation (Devaluation) of Real against U.S. Dollar		18.6			0.9			9.9

		In January 2008 we entered into a trade finance agreement with a Brazilian bank in the amount of US$1,024 with final maturity in 2018.

		During 2008, we entered into agreements with Banco Nacional de Desenvolvimento Econômico e Social — BNDES, (the Brazilian National Development Bank) and with long-term Japanese financing agencies, Japan Bank for International Cooperation — JBIC and Nippon Export and Investment Insurance — NEXI related to future lines of credit to finance mining, logistics and power generation projects as part of our investment program for 2008-2012. Through June 30, 2009, Vale had drawn down US$587 of the committed credit facility with BNDES.

		Additionally, we have revolving credit lines available under which amounts can be drawn down and repaid at the option of the borrower. At June 30, 2009, the total amount available under revolving credit lines was US$1,900, of which US$1,150 was granted to Vale International and the balance to Vale Inco. As of June 30, 2009, neither Vale International nor Vale Inco had drawn any amounts under these facilities.

		Through June 30, 2009, Vale Inco had drawn down US$91 of letters of credit.

		At June 30, 2009 the U.S. Dollar denominated fixed rate notes of US$6,501 (December 31, 2008 — US$6,510) and other debt of US$12,436 (December 31, 2008 — US$11,102) are unsecured. The export securitization of US$180 (December 31, 2008 — US$204) represents debt securities collateralized by receivables from future export sales of CVRD Overseas Ltd. Loans from international lenders of US$46 (December 31, 2008 — US$57) are guaranteed by the Brazilian Federal Government, to which we have provided like counter guarantees. The remaining long-term debt of US$273 (December 31, 2008 — US$295) is collateralized mainly by receivables.

		Our principal covenants require us to maintain certain ratios, such as debt to EBITDA and interest coverage. We were in full compliance with our financial covenants as of June 30, 2009 and December 31, 2008.

13		Stockholders’ equity

		Each holder of common and preferred class A stock is entitled to one vote for each share on all matters brought before stockholders’ meetings, except for the election of the Board of Directors, which is restricted to the holders of common stock. The Brazilian Government holds twelve preferred special shares which confer permanent veto rights over certain matters.

		Both common and preferred stockholders are entitled to receive a mandatory minimum dividend of 25% of annual adjusted net income under Brazilian GAAP, once declared at the annual stockholders’ meeting. In the case of preferred stockholders, this dividend cannot be less than 6% of the preferred capital as stated in the statutory accounting records or, if greater, 3% of the Brazilian GAAP equity value per share. For the year ended December 31, 2008, this dividend corresponds to US$2,068, provided against stockholders’ equity.

		In April 2009, we paid US$1,250 as a first installment of the dividend to stockholders. The distribution was made in the form of dividends.

		In July 2008, we issued 80,079,223 common ADS, 176,847,543 common shares, 63,506,751 preferred ADS and 100,896,048 preferred shares through a Global equity offering. Our capital increased by US$11,666, upon subscription of preferred stock of US$4,146 corresponding to 164,402,799 shares and common stock of US$7,520 corresponding to 256,926,766 shares. In August, 2008, we issued an additional 24,660,419 preferred shares, representing an increase of US$628. After the closing of the operation, our capital stock increased by US$12,294 in 2008; the transaction costs of US$105 were recorded as a reduction of the additional paid-in capital account.

		In June 2007, we issued US$1,880 Mandatorily Convertible Notes due June 15, 2010 for total proceeds of US$1,869, net of commissions. The Notes bear interest at 5.50% per year payable quarterly and additional interest which will be payable based on the net amount of cash distribution paid to ADS holders. A tranche of US$1,296 Notes are mandatorily convertible into an aggregate maximum of 56,582,040 common shares and a tranche of US$584 Notes are mandatorily convertible into an aggregate maximum of 30,295,456 preferred class A shares. On the maturity date (whether at stated maturity or upon acceleration following an event of default), the Series RIO Notes will automatically convert into ADSs, each ADS representing one common share of Vale, and the Series RIO P Notes will automatically convert into ADSs, each ADS representing one preferred class A share of Vale. We currently hold the shares to be issued on conversion in treasury. The Notes are not repayable in cash. Holders of notes will have no voting rights. We will pay to the holders of our Series RIO Notes or RIO P Notes additional interest in the event that Vale makes cash distributions to all holders of RIO ADSs or RIO P ADSs, respectively. We determined, using a statistical model, that the potential variability in the number of shares to be converted is not a predominant feature of this hybrid financial instrument and thus classified it as an equity instrument within stockholders’ equity. Other than during the cash acquisition conversion period, holders of the notes have the right to convert their notes, in whole or in part, at any time prior to maturity in the case of the Series RIO Notes, into RIO ADSs at the minimum conversion rate of 0.8664 RIO ADSs per Series RIO Note, and in the case of Series RIO P Notes, into RIO P ADSs at the minimum conversion rate of 1.0283 RIO P ADSs per Series RIO P Note.

		In April 2009, we announced that the ticker symbols of its ADR will change from Rio and Rio PR to Vale and Vale P. The new ticker symbols were effective at the starting of trading on Monday, May 4, 2009.

		In April 2009 we paid to holders of the mandatorily convertible notes of series Vale (formely RIO) and of series Vale (formely RIO P), the U.S. Dollar equivalent of US$0.490922 and US$0.582658, respectively.

		Basic and diluted earnings per share

		Basic and diluted earnings per share amounts have been calculated as follows:


	Three-month period ended (unaudited)									Six-month period ended (unaudited)
	June 30,			March 31,			June 30,			June 30,			June 30,
	2009			2009			2008			2009			2008
Net income attributable to Company’s stockholders		790			1,363			5,009			2,153			7,030


Interest attributed to preferred convertible notes		(15	)		(8	)		(15	)		(23	)		(23	)
Interest attributed to common convertible notes		(31	)		(18	)		(30	)		(49	)		(48	)

Net income for the period adjusted		744			1,337			4,964			2,081			6,959

Basic and diluted earnings per share

Income available to preferred stockholders		285			512			1,906			797			2,672
Income available to common stockholders		447			803			2,970			1,250			4,163
Income available to convertible notes linked to preferred shares		4			8			31			12			43
Income available to convertible notes linked to common shares		8			14			57			22			81
Weighted average number of shares outstanding (thousands of shares) — preferred shares		2,030,954			2,031,027			1,889,175			2,030,805			1,889,173
Weighted average number of shares outstanding (thousands of shares) — common shares		3,181,727			3,181,732			2,943,216			3,181,715			2,943,216
Treasury preferred shares linked to mandatorily convertible notes		30,295			30,295			30,295			30,295			30,295
Treasury common shares linked to mandatorily convertible notes		56,582			56,582			56,582			56,582			56,582

Total		5,299,558			5,299,636			4,919,268			5,299,397			4,919,266


Earnings per preferred share		0.14			0.25			1.01			0.39			1.41
Earnings per common share		0.14			0.25			1.01			0.39			1.41
Earnings per convertible notes linked to preferred share (*)		0.63			0.53			1.52			1.16			2.18
Earnings per convertible notes linked to common share (*)		0.69			0.57			1.54			1.25			2.28


(*)		Basic earnings per share only, as dilution assumes conversion.

Had the conversion of the convertible notes been included in the calculation of diluted earnings per share they would have generated the following dilutive effect as shown below:


	Three-month period ended (unaudited)						Six-month period ended (unaudited)
	June 30,		March 31,		June 30,		June 30,		June 30,
	2009		2009		2008		2009		2008

Income available to preferred stockholders		304		528		1,952		832		2,738
Income available to common stockholders		486		835		3,057		1,321		4,292
Weighted average number of shares outstanding (thousands of shares) — preferred shares		2,061,249		2,061,322		1,919,470		2,061,100		1,919,468
Weighted average number of shares outstanding (thousands of shares) — common shares		3,238,309		3,238,314		2,999,798		3,238,297		2,999,798
Earnings per preferred share		0.15		0.26		1.02		0.40		1.43
Earnings per common share		0.15		0.26		1.02		0.40		1.43

Other cumulative comprehensive income (deficit)


	Three-month period ended (unaudited)									Six-month period ended (unaudited)
	June 30,			March 31,			June 30,			June 30,			June 30,
	2009			2009			2008			2009			2008

Comprehensive income (deficit) is comprised as follows:
Net income attributable to Company’s stockholders		790			1,363			5,009			2,153			7,030
Cumulative translation adjustments		5,212			(104	)		1,707			5,108			1,502
Unrealized gain (loss) — available-for-sale securities, net of tax		(64	)		96			(94	)		32			(100	)
Surplus (deficit) accrued pension plan		157			(48	)		104			109			89
Cash flow hedge		1			—			6			1			(21	)
Noncontrolling interests:
Disposals and (acquisitions) of noncontrolling interests		29			—			—			29			—
Cumulative translation adjustments		313			222			286			535			235
Cash flow hedge		—			—			6			—			(16	)
Net income (loss) attributable to noncontrolling interests		50			(40	)		147			10			171
Dividends and interest attributable to noncontrolling interests		—			(1	)		(110	)		(1	)		(110	)
Capitalization of stockholders advances		—			12			23			12			32

Total comprehensive income (deficit)		6,488			1,500			7,084			7,988			8,812


Tax effect on other comprehensive income allocated to each component

Unrealized gain (loss) — available-for-sale securities, net of tax Gross balance as of the period end		64			173			152			64			152
Tax (expense) benefit		(15	)		(60	)		(41	)		(15	)		(41	)

Net balance as of the period end		49			113			111			49			111

Surplus accrued pension plan
Gross balance as of the period end		143			(93	)		289			143			289
Tax (expense) benefit		(68	)		11			(125	)		(68	)		(125	)


Net balance as of the period end		75			(82	)		164			75			164

15		Pension cost

		We previously disclosed in our consolidated financial statements for the year ended December 31, 2008, that we expected to contribute US$338 to our defined benefit pension plan in 2009. As of June 30, 2009, total contributions of US$153 had been made. We do not expect any significant change in our previous estimate.


	Three-month period ended (unaudited)
	June 30, 2009
	Overfunded			Underfunded			Underfunded other
	pension plans			pension plans			benefits
Service cost — benefits earned during the period		3			11			4
Interest cost on projected benefit obligation		71			60			20
Expected return on assets		(98	)		(49	)		—
Amortization of initial transition obligation		3			—			—
Net deferral		—			1			(6	)

Net periodic pension cost		(21	)		23			18


	Three-month period ended (unaudited)
	March 31, 2009
	Overfunded			Underfunded			Underfunded other
	pension plans			pension plans			benefits
Service cost — benefits earned during the period		1			11			4
Interest cost on projected benefit obligation		44			54			18
Expected return on assets		(60	)		(43	)		—
Amortization of initial transition obligation		2			7			—
Net deferral		—			1			(7	)

Net periodic pension cost		(13	)		30			15


	Three-month period ended (unaudited)
	June 30, 2008
	Overfunded			Underfunded			Underfunded other
	pension plans			pension plans			benefits
Service cost — benefits earned during the period		3			16			8
Interest cost on projected benefit obligation		82			66			20
Expected return on assets		(137	)		(68	)		—
Amortization of initial transition obligation		4			—			(3	)
Net deferral		(1	)		—			—

Net periodic pension cost		(49	)		14			25


	Six-month period ended (unaudited)
	June 30, 2009									June 30, 2008
	Overfunded			Underfunded			Underfunded			Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits			pension plans			pension plans			other benefits
Service cost — benefits earned during the period		4			22			8			5			32			14
Interest cost on projected benefit obligation		115			114			38			136			128			43
Expected return on assets		(158	)		(92	)		—			(227	)		(133	)		—
Amortization of initial transition obligation		5			1			—			7			—			(4	)
Net deferral		—			8			(13	)		(2	)		—			—

Net periodic pension cost		(34	)		53			33			(81	)		27			53

16		Long-term incentive compensation plan

		In 2008, the Board of Directors approved a long-term incentive compensation plan, which was implemented in April 2008, over a three-year cycle (2008 to 2010).

		Under the terms of the plan, the participants, restricted to certain executives, may elect to allocate part of their annual bonus to the plan. The allocation is applied to purchase preferred shares of Vale, through a predefined financial institution, at market conditions and with no benefit provided by Vale.

		The shares purchased by each executive are unrestricted and may, at the participant’s discretion, be sold at any time. However, the shares must be held for a three-year period and the executive must be continually employed by Vale during that period. The participant then becomes entitled to receive from Vale a cash payment equivalent to the total amount of shares held, based on the their market rates. The total shares linked to the plan at June 30, 2009 and December 31, 2008, is 1,809,117 and 711,005, respectively.

		Additionally, as long term incentive certain eligible executives have the opportunity to receive at the end of the triennial cycle a certain number of shares at market rates, based on an evaluation of their career and performance factors measured as an indicator of total return to stockholders.

		We account for the compensation cost provided to our executives under this long-term incentive compensation plan, following the requirements of FAS 123(R) “Accounting for Stock-Based Compensation”. Liabilities are measured at each reporting date at fair value, based on market rates. Compensation costs incurred are recognized, over the defined three-year vesting period. At June 30, 2009 and December 31, 2008, we recognized a liability of US$35 and US$7, respectively, through the Statement of Income.

17		Commitments and contingencies

(a)		We provided guarantees related to revolving agreement to our affiliate TEAL, in the amount of US$43, the denominated currency U.S. Dollar with final maturity at August 31, 2009.

(b)		We provided certain guarantees on behalf of The Goro Project (Goro) pursuant to which we guaranteed payments due from Goro of up to a maximum amount of US$100 (“Maximum Amount”) in connection with an indemnity. We also provided additional guarantees covering the amounts payable by Goro regarding (a) amounts exceeding the Maximum Amount in connection with the indemnity and (b) certain other amounts under lease agreements.

		Sumic Nickel Netherlands B.V. — Sumic, a 21% shareholder of Goro, has a put option to sell to Vale Inco 25%, 50%, or 100% of its share in Goro. The put option can be exercised if the defined cost of the initial Goro project exceeds US$4,200 at project rates and an agreement cannot be reached on how to proceed with the project.

		We provided guarantees covering certain termination payments by Goro to a supplier under an electricity supply agreement (“ESA”) entered into in October 2004 for the Goro nickel-cobalt project. The amount of the termination payments guaranteed depends upon a number of factors, including whether any termination of the ESA occurs as a result of a default by Goro and the date of such early termination. If Goro defaults under the ESA prior to the anticipated start date for electricity supply, the termination payment, which currently is at its maximum amount, would be €$145 million. Once the supply of electricity under the ESA to the project begins, the guaranteed amounts will decrease over the life of the ESA.

(c)		We and our subsidiaries are defendants in numerous legal actions in the normal course of business. Based on the advice of our legal counsel, management believes that the amounts recognized are sufficient to cover probable losses in connection with such actions.

		The provision for contingencies and the related judicial deposits are composed as follows:


	June 30, 2009 (unaudited)				December 31, 2008
	Provision for				Provision for
	contingencies		Judicial deposits		contingencies		Judicial deposits
Labor and social security claims		558		500		458		378
Civil claims		474		279		386		242
Tax — related actions		888		580		828		518
Others		18		4		13		3

		1,938		1,363		1,685		1,141

		Labor and social security — related actions principally comprise claims by Brazilian employees and former employees for (i) payment of time spent traveling from their residences to the work-place, (ii) additional health and safety related payments and (iii) various other matters, often in connection with disputes about the amount of indemnities paid upon dismissal and the one-third extra holiday pay.

		Civil — actions principally related to claims made against us by contractors in Brazil in connection with losses alleged to have been incurred by them as a result of various past Government economic plans during which full inflation indexation of contracts was not permitted, as well, as for accidents and land appropriations disputes.

		Tax — tax-related actions principally comprise challenges initiated by us, on certain taxes on revenues and value added taxes and uncertain tax positions. We continue to vigorously pursue our interests in all the above actions but recognize that we probably will incur some losses in the final instance, for which we have made provisions.

		Judicial deposits are made by us following the court requirements, in order to be entitled to either initiate or continue a legal action. These amounts are released to us, upon receipt of a final favorable outcome from the legal action; in the case of an unfavorable outcome, the deposits are transferred to the prevailing party.

		Contingencies settled during the three-month periods ended June 30, 2009, March 31, 2009 and June 30, 2008 totaled US$39, US$18, US$569, respectively. Provisions recognized in the three-month periods ended June 30, 2009, March 31, 2009 and June 30, 2008, totaled US$73, US$49, US$73, respectively, classified as other operating expenses.

		In addition to the contingencies for which we have made provisions we are defendants in claims where in our opinion, and based on the advice of our legal counsel, the likelihood of loss is possible but not probable, in the total amount of US$3,241 at June 30, 2009, and for which no provision has been made (December 31, 2008 — US$2,476).

(d)		At the time of our privatization in 1997, we issued shareholder revenue interest instruments known in Brazil as “debentures participativas” (debentures) to our then-existing shareholders, including the Brazilian Government. The terms of the debentures, were set to ensure that our pre-privatization shareholders, including the Brazilian Government, would participate alongside us in potential future financial benefits that we could be able to derive from exploiting our mineral resources.

		In April 2009 we paid remuneration on these debentures of US$3.

(e)		Asset retirement obligations

		We use various judgments and assumptions when measuring our asset retirement obligations.

		Changes in circumstances, law or technology may affect our estimates and we periodically review the amounts accrued and adjust them as necessary. Our accruals do not reflect unasserted claims because we are currently not aware of any such issues. Also the amounts provided are not reduced by any potential recoveries under cost sharing, insurance or indemnification arrangements because such recoveries are considered uncertain.

		The changes in the provisions for asset retirement obligations are as follows:


	Three-month period ended (unaudited)									Six-month period ended (unaudited)
	June 30, 2009			March 31, 2009			June 30, 2008			June 30, 2009			June 30, 2008

Beginning of period		877			887			975			887			975

Accretion expense		15			6			53			21			69

Liabilities settled in the current period		(15	)		(3	)		(2	)		(18	)		(5	)

Revisions in estimated cash flows		—			(9	)		9			(9	)		(2	)

Cumulative translation adjustment		122			(4	)		66			118			64


End of period		999			877			1,101			999			1,101


Current liabilities		31			38			68			31			68

Long-term liabilities		968			839			1,033			968			1,033


Total		999			877			1,101			999			1,101

18		Fair value disclosure of financial assets and liabilities

		In September 2006, the Financial Accounting Standards Board (“FASB”), issued SFAS 157, Fair Value Measurements, which changes the current practice used to measure the fair value, establishing a framework for measuring according to the generally accepted accounting principles, and expands disclosures about fair value measurements.

		SFAS 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.

		In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115. SFAS 159 permits the choice of measuring financial instruments and certain other items at fair value.

		SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007. On January 1, 2008, the Company adopted SFAS 159 and elected not to apply the provisions of SFAS 159 to its eligible financial assets and financial liabilities on the date of adoption. As of June 30, 2009, the Company has not made any fair value elections with respect to that statement.

(a)		Measurements

		SFAS 157 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique.

		These inputs can be readily observable, market corroborated, or generally unobservable inputs. The Company utilizes techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Under SFAS 157, those inputs used to measure the fair value are required to be classified on three levels. Based on the characteristics of the inputs used in valuation techniques the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed as follows:

		Level 1 — Unadjusted quoted prices in an active, liquid and visible market for identical assets or liabilities that are accessible at the measurement date;

		Level 2 — Quoted prices for identical or similar assets or liabilities in active markets, inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability;

		Level 3 — Assets and liabilities, whose quoted prices do not exist, or those prices or valuation techniques are supported by little or no market activity, unobservable or illiquid. At this point fair market valuation becomes highly subjective.

(b)		Measurements on a recurring basis

		The description of the valuation methodologies used for recurring assets and liabilities measured at fair value in the Company’s Consolidated Balance Sheet at June 30, 2009 and December 31, 2008 are summarized below:

	•		Available-for-sale securities

			They are securities neither classified as held-for-trading nor held-to-maturity for strategic reasons and have a readily available market price. We evaluate the carrying value of some of our investments in relation to publicly quoted market prices when available. When there is no market value, we use inputs other than quoted prices.

	•		Derivatives

			The market approach is used for the swaps to estimate the fair value discounting their cash flows using the interest rate of the currency they are denominated. Also for the commodities contracts, since the fair value is computed by using forward curves for each commodities.

	•		Other Financial Liabilities

			Comprise shareholder’s debentures, which have their fair value measured by the market approach method, and their reference price is available on the secondary market.

The tables below present the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2009 and December 31, 2008.


	As of June 30, 2009
	Carrying amount			Fair value			Level 1		Level 2
Available-for-sale securities		749			749			67		682
Unrealized losses on derivatives		213			213			—		213
Other financial liabilities		(417	)		(417	)		—		(417	)


	As of December 31, 2008
	Carrying amount			Fair value			Level 1		Level 2
Available-for-sale securities		639			639			196		443
Unrealized losses on derivatives		(539	)		(539	)		—		(539	)
Other financial liabilities		(380	)		(380	)		—		(380	)

(c)		Measurements on a non-recurring basis

		The company also has assets under certain conditions are subject to measurement at fair value on a non-recurring basis. These assets include goodwill and intangible assets. As of June 30, 2009 we have no impairment for those items.

(d) Financial Instruments (SFAS 107 Disclosures)

Issued in December 1991, the SFAS 107, Disclosures about Fair Value Measurements (“SFAS 107”), requires quantitative and qualitative disclosures which comprise the valuation techniques, methods, changes in methods and significant assumptions used to estimate the fair value of financial instruments for which is practicable to estimate that value.

	•		Long-term debt

			The valuation method used to estimate the fair value of our debt is the market approach for the contracts that are quoted in the secondary market, such as bonds and debentures. The fair value of both fixed and floating rate debt is determined by discounting future cash flows of Libor and Vale’s bonds curves (income approach).

	•		Time deposits

			The method used is the income approach, through the prices available on the active market. The fair value is close to the carrying amount due to the short-term maturities of the instruments.

Our long-term debt are reported at amortized cost, and the income of time deposits are accrued monthly according to the contract rate, however its estimated fair value measurement at June 30, 2009 and December 31, 2008 are disclosed as follows:


	As of June 30, 2009
	Carrying
	amount			Fair value			Level 1			Level 2

Time deposits		3,000			3,022			—			3,022
Long-term debt (less interests) (*)		(19,165	)		(18,477	)		(9,088	)		(9,389	)


(*)		Less accrued charges US$271


	As of December 31, 2008
	Carrying
	amount			Fair value			Level 1			Level 2

Time deposits		2,308			2,308			—			2,308
Long-term debt (less interests) (*)		(17,857	)		(16,635	)		(7,833	)		(8,802	)


(*)		Less accrued charges US$311

Segment and geographical information

We adopt SFAS 131 “Disclosures about Segments of an Enterprise and Related Information” with respect to the information we present about our operating segments. SFAS 131 introduced a “management approach” concept for reporting segment information, whereby such information is required to be reported on the basis that the chief decision-maker uses internally for evaluating segment performance and deciding how to allocate resources to segments. We analyze our segment information on aggregated and disaggregated basis as follows:

Results by segment — before eliminations (aggregated)


	Three-month period ended (unaudited)
	June 30, 2009																					March 31, 2009																					June 30, 2008
				*()Non**																					*() Non**																					*() Non**
	Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Foreign		5,096			1,424			664			11			115			(3,028	)		4,282			5,988			1,051			599			5			154			(2,987	)		4,810			8,674			2,939			934			10			101			(3,652	)		9,006
Gross revenues — Domestic		344			146			141			278			45			(152	)		802			252			107			129			201			58			(136	)		611			1,176			196			217			481			59			(238	)		1,891
Cost and expenses		(4,065	)		(1,130	)		(844	)		(201	)		(140	)		3,180			(3,200	)		(4,048	)		(1,028	)		(720	)		(177	)		(138	)		3,123			(2,988	)		(5,677	)		(1,454	)		(951	)		(308	)		(133	)		3,890			(4,633	)
Research and development		(51	)		(67	)		—			(11	)		(136	)		—			(265	)		(42	)		(68	)		—			(16	)		(63	)		—			(189	)		(89	)		(76	)		—			(33	)		(71	)		—			(269	)
Depreciation, depletion and amortization		(264	)		(279	)		(59	)		(29	)		(12	)		—			(643	)		(197	)		(280	)		(49	)		(24	)		(9	)		—			(559	)		(292	)		(382	)		(44	)		(38	)		(4	)		—			(760	)

Operating income		1,060			94			(98	)		48			(128	)		—			976			1,953			(218	)		(41	)		(11	)		2			—			1,685			3,792			1,223			156			112			(48	)		—			5,235
Financial income		601			167			1			1			3			(680	)		93			660			163			3			1			1			(703	)		125			577			196			5			2			—			(757	)		23
Financial expenses		(643	)		(314	)		(8	)		6			(14	)		680			(293	)		(664	)		(298	)		(14	)		(6	)		(8	)		703			(287	)		(712	)		(383	)		(10	)		(1	)		—			757			(349	)
Gains (losses) on derivatives, net					(66	)		—			—			—			—			873			34			(16	)		—			—			—			—			18			600			51			4			—			—			—			655
Foreign exchange and indexation gains (losses), net		208			43			210			(9	)		71			—			523			29			(16	)		10			(1	)		(6	)		—			16			723			9			97			(1	)		10			—			838
Gain on sale of investments		157			—			—			—			—			—			157			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		90			—			13			23			9			—			135			54			—			(1	)		21			(2	)		—			72			236			—			8			(41	)		57			—			260
Income taxes		(1,615	)		55			(49	)		(10	)		(5	)		—			(1,624	)		(466	)		154			19			(4	)		(9	)		—			(306	)		(1,007	)		(424	)		(75	)		—			—			—			(1,506	)
Net income (loss) attributable to noncontrolling interests		12			(13	)		(43	)		—			(6	)		—			(50	)		10			18			15			—			(3	)		—			40			10			(61	)		(85	)		—			(11	)		—			(147	)

Net income attributable to Company’s stockholders		809			(34	)		26			59			(70	)		—			790			1,610			(213	)		(9	)		—			(25	)		—			1,363			4,219			611			100			71			8			—			5,009


Sales classified by geographic destination:
Foreign market
America, except United States		65			194			237			—			5			(149	)		352			44			120			159			—			9			(84	)		248			546			378			302			—			—			(295	)		931
United States		13			166			32			—			11			(24	)		198			11			182			37			—			8			(18	)		220			211			541			107			—			—			(92	)		767
Europe		1,369			321			258			—			8			(1,291	)		665			1,169			246			279			—			4			(884	)		814			2,903			710			330			—			—			(1,294	)		2,649
Middle East/Africa/Oceania		201			6			47			—			14			(153	)		115			281			38			34			—			—			(229	)		124			516			91			22			—			39			(215	)		453
Japan		344			89			77			—			30			(162	)		378			511			73			77			—			81			(258	)		484			985			399			164			—			34			(382	)		1,200
China		2,734			254			13			11			15			(1,009	)		2,018			3,483			186			13			5			4			(1,268	)		2,423			2,703			218			—			10			—			(1,047	)		1,884

Asia, other than Japan and China		370			394			—			—			32			(240	)		556			489			206			—			—			48			(246	)		497			810			602			9			—			28			(327	)		1,122
		5,096			1,424			664			11			115			(3,028	)		4,282			5,988			1,051			599			5			154			(2,987	)		4,810			8,674			2,939			934			10			101			(3,652	)		9,006
Domestic market		344			146			141			278			45			(152	)		802			252			107			129			201			58			(136	)		611			1,176			196			217			481			59			(238	)		1,891

		5,440			1,570			805			289			160			(3,180	)		5,084			6,240			1,158			728			206			212			(3,123	)		5,421			9,850			3,135			1,151			491			160			(3,890	)		10,897


(*)		Other than Aluminum.

Operating segment — after eliminations (disaggregated)


	As of and for the three-month period ended (unaudited)
	June 30, 2009
																								Property,		Addition to
																								plant and		property,
																								equipment,		plant and
																		Depreciation,						net and		equipment
	Revenues						Value					Cost and						depletion and			Operating			intangible		and
	Foreign		Domestic		Total		added tax			Net revenues		expenses			Net			amortization			income			assets		intangible		Investments
Ferrous
Iron ore		2,261		161		2,422		(30	)		2,392		(1,014	)		1,378			(243	)		1,135			18,466		597		62
Pellets		112		67		179		(21	)		158		(213	)		(55	)		(19	)		(74	)		645		57		940
Manganese		39		4		43		(1	)		42		(23	)		19			(2	)		17			21		1		—
Ferroalloys		38		32		70		(8	)		62		(82	)		(20	)		(2	)		(22	)		231		17		—
Pig iron		—		—		—		—			—		—			—			—			—			144		32		—

		2,450		264		2,714		(60	)		2,654		(1,332	)		1,322			(266	)		1,056			19,507		704		1,002

Non ferrous
Nickel and other products (*)		1,106		3		1,109		—			1,109		(884	)		225			(243	)		(18	)		22,504		279		88
Potash		—		121		121		(2	)		119		(37	)		82			(7	)		75			159		—		—
Kaolin		32		10		42		(2	)		40		(36	)		4			(13	)		(9	)		188		27		—
Copper concentrate		161		9		170		—			170		(105	)		65			(17	)		48			3,831		185		—
Aluminum products		414		54		468		(9	)		459		(494	)		(35	)		(58	)		(93	)		4,356		58		146

		1,713		197		1,910		(13	)		1,897		(1,556	)		341			(338	)		3			31,038		549		234

Logistics
Railroads		—		224		224		(38	)		186		(136	)		50			(22	)		28			1,733		20		372
Ports		—		57		57		(8	)		49		(36	)		13			(5	)		8			1,441		69		—
Ships		—		—		—		—			—		—			—			—			—			638		267		112

		—		281		281		(46	)		235		(172	)		63			(27	)		36			3,812		356		484
Others		119		60		179		(17	)		162		(269	)		(107	)		(12	)		(119	)		4,939		399		1,248

		4,282		802		5,084		(136	)		4,948		(3,329	)		1,619			(643	)		976			59,296		2,008		2,968


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

Operating segment — after eliminations (disaggregated)


	As of and for the three-month period ended (unaudited)
	March 31, 2009
																								Property,		Addition to
																								plant and		property,
																								equipment,		plant and
																		Depreciation,						net and		equipment
	Revenues						Value					Cost and						depletion and			Operating			intangible		and
	Foreign		Domestic		Total		added tax			Net revenues		expenses			Net			amortization			income			assets		intangible		Investments
Ferrous
Iron ore		2,964		165		3,129		(32	)		3,097		(998	)		2,099			(181	)		1,918			15,044		736		44
Pellets		241		32		273		(8	)		265		(219	)		46			(10	)		36			645		27		756
Manganese		13		2		15		—			15		(18	)		(3	)		(2	)		(5	)		18		1		—
Ferroalloys		51		27		78		(7	)		71		(60	)		11			(2	)		9			189		18		—
Pig iron		11		—		11		—			11		(13	)		(2	)		—			(2	)		144		16		—

		3,280		226		3,506		(47	)		3,459		(1,308	)		2,151			(195	)		1,956			16,040		798		800

Non ferrous
Nickel and other products (*)		860		3		863		—			863		(833	)		30			(253	)		(223	)		21,420		425		71
Potash		—		65		65		(2	)		63		(28	)		35			(3	)		32			159		—		—
Kaolin		30		9		39		(2	)		37		(34	)		3			(6	)		(3	)		209		—		—
Copper concentrate		79		28		107		(6	)		101		(106	)		(5	)		(17	)		(22	)		3,609		189		—
Aluminum products		408		34		442		(8	)		434		(426	)		8			(50	)		(42	)		3,837		41		110

		1,377		139		1,516		(18	)		1,498		(1,427	)		71			(329	)		(258	)		29,234		655		181

Logistics
Railroads		—		157		157		(22	)		135		(125	)		10			(21	)		(11	)		1,457		21		347
Ports		—		42		42		(6	)		36		(34	)		2			(5	)		(3	)		1,441		37		—
Ships		—		—		—		—			—		—			—			—			—			373		—		97

		—		199		199		(28	)		171		(159	)		12			(26	)		(14	)		3,271		58		444
Others		153		47		200		(4	)		196		(186	)		10			(9	)		1			3,229		177		1,309

		4,810		611		5,421		(97	)		5,324		(3,080	)		2,244			(559	)		1,685			51,774		1,688		2,734


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

Operating segment — after eliminations (disaggregated)


	As of and for the three-month period ended (unaudited)
	June 30, 2008
																								Property,		Addition to
																								plant and		property,
																								equipment,		plant and
																		Depreciation,						net and		equipment
	Revenues						Value					Cost and						depletion and			Operating			intangible		and
	Foreign		Domestic		Total		added tax			Net revenues		expenses			Net			amortization			income			assets		intangible		Investments
Ferrous
Iron ore		4,242		706		4,948		(85	)		4,863		(1,508	)		3,355			(245	)		3,110			18,825		913		69
Pellets		966		216		1,182		(49	)		1,133		(656	)		477			(39	)		438			1,455		41		982
Manganese		70		13		83		(3	)		80		(20	)		60			(3	)		57			84		—		—
Ferroalloys		223		159		382		(40	)		342		(123	)		219			(9	)		210			171		1		—
Pig iron		57		—		57		—			57		(32	)		25			(1	)		24			209		1		—

		5,558		1,094		6,652		(177	)		6,475		(2,339	)		4,136			(297	)		3,839			20,744		956		1,051

Non ferrous
Nickel and other products (*)		2,363		12		2,375		—			2,375		(1,040	)		1,335			(342	)		993			23,733		544		151
Potash		—		105		105		(5	)		100		(40	)		60			(6	)		54			162		3		—
Kaolin		44		10		54		(3	)		51		(61	)		(10	)		(9	)		(19	)		286		2		—
Copper concentrate		248		69		317		(15	)		302		(139	)		163			(21	)		142			2,204		69		—
Aluminum products		640		88		728		(21	)		707		(560	)		147			(43	)		104			5,294		197		107

		3,295		284		3,579		(44	)		3,535		(1,840	)		1,695			(421	)		1,274			31,679		815		258

Logistics
Railroads		—		381		381		(64	)		317		(218	)		99			(30	)		69			2,012		23		297
Ports		—		81		81		(10	)		71		(47	)		24			(7	)		17			1,912		41		—
Ships		—		—		—		—			—		—			—			—			—			33		—		127

		—		462		462		(74	)		388		(265	)		123			(37	)		86			3,957		64		424
Others		153		51		204		(2	)		202		(161	)		41			(5	)		36			3,602		270		1,391

		9,006		1,891		10,897		(297	)		10,600		(4,605	)		5,995			(760	)		5,235			59,982		2,105		3,124


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

Results by segment — before eliminations (aggregated)


	Six-month period ended (unaudited)
	June 30, 2009																					June 30, 2008
				() Non*																					() Non*
	Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated			Ferrous			ferrous			Aluminum			Logistics			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Foreign		11,084			2,475			1,263			16			269			(6,015	)		9,092			14,252			5,800			1,793			31			173			(6,379	)		15,670
Gross revenues — Domestic		596			253			270			479			103			(288	)		1,413			2,056			287			410			846			115			(439	)		3,275
Cost and expenses		(8,113	)		(2,158	)		(1,564	)		(378	)		(278	)		6,303			(6,188	)		(10,177	)		(2,756	)		(1,876	)		(552	)		(267	)		6,818			(8,810	)
Research and development		(93	)		(135	)		—			(27	)		(199	)		—			(454	)		(139	)		(146	)		—			(53	)		(121	)		—			(459	)
Depreciation, depletion and amortization		(461	)		(559	)		(108	)		(53	)		(21	)		—			(1,202	)		(580	)		(781	)		(86	)		(68	)		(11	)		—			(1,526	)

Operating income		3,013			(124	)		(139	)		37			(126	)		—			2,661			5,412			2,404			241			204			(111	)		—			8,150
Financial income		1,261			330			4			2			4			(1,383	)		218			1,242			413			8			4			—			(1,589	)		78
Financial expenses		(1,307	)		(612	)		(22	)		—			(22	)		1,383			(580	)		(1,700	)		(762	)		(30	)		(4	)		(2	)		1,589			(909	)
Gains (losses) on derivatives, net		973			(82	)		—			—			—			—			891			554			(72	)		(121	)		—			—			—			361
Foreign exchange and indexation gains (losses), net		237			27			220			(10	)		65			—			539			835			(19	)		115			(3	)		(2	)		—			926
Gain on sale of investments		157			—			—			—			—			—			157			—			80			—			—			—			—			80
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		144			—			12			44			7			—			207			288			—			22			(7	)		76			—			379
Income taxes		(2,081	)		209			(30	)		(14	)		(14	)		—			(1,930	)		(1,028	)		(755	)		(92	)		—			11			—			(1,864	)
Net income (loss) attributable to noncontrolling interests		22			5			(28	)		—			(9	)		—			(10	)		12			(107	)		(65	)		—			(11	)		—			(171	)

Net income attributable to Company’s stockholders		2,419			(247	)		17			59			(95	)		—			2,153			5,615			1,182			78			194			(39	)		—			7,030


Sales classified by geographic destination:
Foreign market
America, except United States		109			314			396			—			14			(233	)		600			869			719			494			1			—			(498	)		1,585
United States		24			348			69			—			19			(42	)		418			291			1,124			211			1			—			(167	)		1,460
Europe		2,538			567			537			—			12			(2,175	)		1,479			4,786			1,399			703			16			1			(2,361	)		4,544
Middle East/Africa/Oceania		482			44			81			—			14			(382	)		239			756			149			66			—			39			(345	)		665
Japan		855			162			154			—			111			(420	)		862			1,603			740			300			1			73			(642	)		2,075
China		6,217			440			26			16			19			(2,277	)		4,441			4,577			514			10			11			—			(1,843	)		3,269
Asia, other than Japan and China		859			600			—			—			80			(486	)		1,053			1,370			1,155			9			1			60			(523	)		2,072

		11,084			2,475			1,263			16			269			(6,015	)		9,092			14,252			5,800			1,793			31			173			(6,379	)		15,670
Domestic market		596			253			270			479			103			(288	)		1,413			2,056			287			410			846			115			(439	)		3,275

		11,680			2,728			1,533			495			372			(6,303	)		10,505			16,308			6,087			2,203			877			288			(6,818	)		18,945

Operating segment — after eliminations (disaggregated)


	Six-month period ended (unaudited)
	June 30, 2009
																								Property,		Addition to
																								plant and		property,
																								equipment,		plant and
																		Depreciation,						net and		equipment
	Revenues						Value					Cost and						depletion and			Operating			intangible		and
	Foreign		Domestic		Total		added tax			Net revenues		expenses			Net			amortization			income			assets		intangible		Investments
Ferrous
Iron ore		5,225		326		5,551		(62	)		5,489		(2,012	)		3,477			(424	)		3,053			18,466		1,333		62
Pellets		353		99		452		(29	)		423		(432	)		(9	)		(29	)		(38	)		645		84		940
Manganese		52		6		58		(1	)		57		(41	)		16			(4	)		12			21		2		—
Ferroalloys		89		59		148		(15	)		133		(142	)		(9	)		(4	)		(13	)		231		35		—
Pig iron		11		—		11		—			11		(13	)		(2	)		—			(2	)		144		48		—

		5,730		490		6,220		(107	)		6,113		(2,640	)		3,473			(461	)		3,012			19,507		1,502		1,002

Non ferrous
Nickel and other products (*)		1,966		6		1,972		—			1,972		(1,717	)		255			(496	)		(241	)		22,504		704		88
Potash		—		186		186		(5	)		181		(65	)		116			(10	)		106			159		—		—
Kaolin		62		19		81		(4	)		77		(70	)		7			(19	)		(12	)		188		27		—
Copper concentrate		240		37		277		(5	)		272		(211	)		61			(34	)		27			3,831		374		—
Aluminum products		822		88		910		(17	)		893		(920	)		(27	)		(108	)		(135	)		4,356		99		146

		3,090		336		3,426		(31	)		3,395		(2,983	)		412			(667	)		(255	)		31,038		1,204		234

Logistics
Railroads		—		381		381		(60	)		321		(261	)		60			(43	)		17			1,733		41		372
Ports		—		99		99		(14	)		85		(70	)		15			(10	)		5			1,441		106		—
Ships		—		—		—		—			—		—			—			—			—			638		267		112

		—		480		480		(74	)		406		(331	)		75			(53	)		22			3,812		414		484
Others		272		107		379		(21	)		358		(455	)		(97	)		(21	)		(118	)		4,939		576		1,248

		9,092		1,413		10,505		(233	)		10,272		(6,409	)		3,863			(1,202	)		2,661			59,296		3,696		2,968


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

Operating segment — after eliminations (disaggregated)


	Six-month period ended (unaudited)
	June 30, 2008
																								Property,		Addition to
																								plant and		property,
																								equipment,		plant and
																		Depreciation,						net and		equipment
	Revenues						Value					Cost and						depletion and			Operating			intangible		and
	Foreign		Domestic		Total		added tax			Net revenues		expenses			Net			amortization			income			assets		intangible		Investments
Ferrous
Iron ore		6,848		1,216		8,064		(158	)		7,906		(2,975	)		4,931			(490	)		4,441			18,825		1,577		69
Pellets		1,472		389		1,861		(89	)		1,772		(1,126	)		646			(68	)		578			1,455		53		982
Manganese		101		22		123		(5	)		118		(40	)		78			(4	)		74			84		1		—
Ferroalloys		400		272		672		(68	)		604		(247	)		357			(15	)		342			171		3		—
Pig iron		86		—		86		—			86		(46	)		40			(3	)		37			209		1		—

		8,907		1,899		10,806		(320	)		10,486		(4,434	)		6,052			(580	)		5,472			20,744		1,635		1,051

Non ferrous
Nickel and other products (*)		4,741		25		4,766		—			4,766		(2,020	)		2,746			(714	)		2,032			23,733		1,025		151
Potash		—		169		169		(9	)		160		(69	)		91			(13	)		78			162		6		—
Kaolin		86		21		107		(5	)		102		(117	)		(15	)		(16	)		(31	)		286		9		—
Copper concentrate		470		70		540		(15	)		525		(245	)		280			(38	)		242			2,204		121		—
Aluminum products		1,201		173		1,374		(38	)		1,336		(1,070	)		266			(85	)		181			5,294		301		107

		6,498		458		6,956		(67	)		6,889		(3,521	)		3,368			(866	)		2,502			31,679		1,462		258

Logistics
Railroads		—		677		677		(101	)		576		(390	)		186			(55	)		131			2,012		36		297
Ports		11		136		147		(15	)		132		(92	)		40			(13	)		27			1,912		85		—
Ships		—		—		—		—			—		—			—			—			—			33		—		127

		11		813		824		(116	)		708		(482	)		226			(68	)		158			3,957		121		424
Others		254		105		359		(10	)		349		(319	)		30			(12	)		18			3,602		512		1,391

		15,670		3,275		18,945		(513	)		18,432		(8,756	)		9,676			(1,526	)		8,150			59,982		3,730		3,124


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

20		Derivative financial instruments

		Risk management policy

Vale risk management strategy encompasses an enterprise risk management approach where we evaluate not only market risk impacts on the business, but also the impacts arising from credit and operating risks.

An enterprise wide risk management approach is considered by us to be mandatory for Vale as traditional market risk measures, such as VaR (Value at Risk), are not sufficient to evaluate the group exposures once our main goal is to avoid a possible lack of cash to fulfill our future obligations and needs.

We also consider the correlations between different market risk factors when evaluating our exposures. By doing so, we are able to evaluate the net impact in our cash flows from all main market variables. Using this framework we also identified a natural diversification of products and currencies in our portfolio. This diversification benefit implies in a natural reduction of the overall risk of the Company. Additionally, we are constantly working to implement risk mitigation strategies that significantly contribute to reduce the volatility in our cash flows beyond the levels initially observed and to acceptable levels of risk.

Vale considers that the effective management of risk is a key objective to support its growth strategy and financial flexibility. The risk reduction on Vale’s future cash flow contributes to a better perception of the Company’s credit quality, improving its ability to access different markets. As a commitment to the risk management strategy, the Board of Directors has established an enterprise-wide risk management policy and a risk management committee.

The risk management policy determines that Vale should evaluate regularly its cash flow risks and potential risk mitigation strategies. Whenever considered necessary, mitigation strategies should be put in place to reduce cash flow volatility. The executive board is responsible for the evaluation and approval of long term risk mitigation strategies recommended by the risk management committee.

The risk management committee assists our executive officers in overseeing and reviewing our enterprise risk management activities including the principles, policies, process, procedures and instruments employed to manage risk. The risk management committee reports periodically to the executive board on how risks have been monitored, what are the most important risks we are exposed to and their impact in cash flows.

The risk management policy and the risk management procedures, that complement the normative of risk management governance model, explicitly prohibit speculative transactions with derivatives and require the diversification of operations and counterparties.

Besides the risk management governance model, Vale has put in place a well defined corporate governance structure. The Recommendation and execution of the derivative transactions are implemented by different and independent areas. It is responsibility of the risk management department to define and propose to the risk management committee market risk mitigation strategies consistent with Vale’s and it’s wholly owned subsidiaries corporate strategy. It is the responsibility of the finance department the execution of the risk mitigation strategies through the use of derivatives. The independence of the areas guarantees an effective control on these operations.

The consolidated market risk exposure and the portfolio of derivatives are monthly measured and monitored in order to evaluate the financial results and market risk impacts in our cash flow, as well as to guarantee that the initial goals will be achieved. The mark-to-market of the derivatives portfolio is reported weekly to management.

Considering the nature of Vale’s business and operations, the main market risk factors which the Company is exposed are:

	•		Interest rates;

	•		Foreign exchange;

	•		Products prices and input costs

Foreign exchange and interest rate risk

Vale’s cash flows are exposed to volatility of several different currencies. 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, mainly Brazilian Real and Canadian Dollars.

Derivative instruments may be used in order to reduce Vale’s potential cash flow volatility arising from the currency mismatch between our debt and our revenues. Vale’s foreign exchange and interest rate derivative portfolio consists, basically, of interest rate swaps to convert floating cash flows in Brazilian Real to fixed or floating U.S. Dollar cash flows, without any leverage.

Vale is also exposed to interest rate risks on loans and financings. Our floating rate debt consists mainly of loans including export pre-payments, commercial banks and multilateral organizations loans. In general, our U.S. Dollars floating rate debt is subject to changes in the LIBOR (London Interbank Offer Rate in U.S. Dollars). To mitigate the impact of the interest rate volatility on its cash flows, Vale takes advantage of natural hedges resulting from the correlation of metal prices and U.S. Dollar floating rates. When natural hedges are not present, we may opt to realize the same effect by using financial instruments.

Our Brazilian Real denominated debt subject to floating interest rates are debentures, loans obtained from Banco Nacional de Desenvolvimento Econômico e Social (BNDES) and property and services acquisition financing in the Brazilian market. These debts are mainly linked to CDI and TJLP.

The swap transactions have similar settlement dates to the debt interests and principal payment dates, taking into account the liquidity restrictions of the market. At each settlement date, the results on the swap transactions partially offset the impact of the U.S. Dollar / Brazilian Real exchange rate in our obligations, contributing to a stable flow of cash disbursements in U.S. Dollars for interest and/or principal payment of our Brazilian Real denominated debt.

In the event of an appreciation (depreciation) of the Brazilian Real against U.S. Dollar, the negative (positive) impact on our Brazilian Real denominated debt obligations (interest and/or principal payment) measured in U.S. Dollars will be partially offset by a positive (negative) effect from any existing swap transaction, regardless of the U.S. Dollar / Brazilian Real exchange rate on the payment date.

We have other exposures associated with our outstanding debt portfolio. In order to reduce cash flow volatility associated with a financing from KFW (Kreditanstalt Für Wiederaufbau) indexed to Euribor, Vale entered into a swap contract where the cash flows in Euros are converted into cash flows in U.S. Dollars.

In order to reduce the cash-flow volatility associated with the foreign exchange exposure from coal fixed price sales, Vale purchased forward Australian Dollars.

Product price risk

Vale is also exposed to several market risks associated with global commodities prices volatilities.

Currently, our derivative transactions include nickel, copper, natural gas, bunker oil and maritime freight (FFA) derivatives and all have the same purpose of mitigating Vale’s cash flow volatility.

Nickel — The Company has the following derivatives instruments in this category:

	•		Strategic derivative program — in order to protect our cash flow in 2009, we entered into derivatives transactions where we fixed the prices of some of our revenues during the year.

	•		Fixed price sales program — we use to enter into nickel future contracts in the London Metal Exchange (LME) with the purpose of maintaining our exposure to nickel price variation, regarding the fact that, in some cases, the commodity is sold at a fixed price to some customers. This program was interrupted for the year 2009 after the decision of the strategic derivative program for the year.

	•		Nickel purchase program — Vale has also sold nickel futures in the LME, in order to minimize the risk of mismatch between the pricing on the costs of intermediate products and finished goods.

Copper — Vale Inco Ltd., Vale’s wholly-owned subsidiary, makes use of derivatives to reduce the cash flow volatility due to the quotation period mismatch between the pricing period of copper scrap purchase and the pricing period of final products sale to the clients.

Natural gas — Vale uses natural gas swap contracts to minimize the impact of price fluctuation of this input cost in the cash flow.

Bunker Oil — In order to reduce the impact of bunker oil price fluctuation on Vale’s freight hiring and consequently on Vale’s cash flow, Vale implemented a derivative program that consists of forward purchases and swaps.

Maritime Freight — In order to reduce the impact of freight price fluctuation on the Company’s cash flow, Vale implemented a derivative program that consists of purchasing Forward Freight Agreements (FFA).

Embedded derivatives — In addition to the contracts mentioned above, Vale Inco Ltd., Vale’s wholly-owned subsidiary, has nickel concentrate and raw materials purchase agreements, where there are provisions based on nickel and copper prices behavior. These provisions are considered embedded derivatives. There is also an embedded derivative related to energy in our subsidiary Albras on which we have no unrealized gain or loss as of June 30, 2009 and December 31, 2008.

The assets and liabilities balances of derivatives measured at fair value and the effects of their recognition are shown on the following tables:


	June 30, 2009 (unaudited)			December 31, 2008
	Balance Sheet			Balance Sheet
Outstanding Balances — Assets	Location	Fair Value		Location	Fair Value
Derivatives not designated as hedge under SFAS 133

Foreign exchange and interest rate risk
CDI vs. USD fixed rate swap	long-term		153	—		—
CDI vs. USD floating rate swap	long-term		15	—		—
TJLP vs. USD fixed rate swap	long-term		39	—		—
TJLP vs. USD floating rate swap	long-term		12	—		—
EURO floating rate vs. USD floating rate swap	long-term		2	long-term		2
AUD floating rate vs. fixed USD rate swap	long-term		8	—		—

			229			2

Commodities price risk
Nickel
Fixed price program	short-term		2	—		—
Fixed price program	long-term		2	—		—
Bunker Oil Hedge	long-term		12	—		—
Maritime Freight Hiring Protection Program	short-term		30	—		—

			46			—

Embedded derivatives:
For nickel concentrate costumer sales	short-term		5	long-term		69
Customer raw material contracts			—	long-term		22

			5			91

Derivatives designated as hedge under SFAS 133
Foreign cash flow hedge	long-term		3	—		—

			3			—


Total Assets			283			93


	June 30, 2009 (unaudited)				December 31, 2008
	Balance Sheet				Balance Sheet
Outstanding Balances — Liabilities	Location	Fair Value			Location	Fair Value
Derivatives not designated as hedge under SFAS 133

Foreign exchange and interest rate risk
CDI vs. USD fixed rate swap	—		—		long-term		(373	)
CDI vs. USD floating rate swap	—		—		long-term		(95	)
TJLP vs. USD fixed rate swap	—		—		long-term		(62	)
TJLP vs. USD floating rate swap	—		—		long-term		(30	)
USD floating rate vs. USD fixed rate swap	long-term		(11	)	long-term		(14	)

			(11	)			(574	)

Commodities price risk
Nickel
Fixed price program	—		—		long-term		(50	)
Purchase program	short-term		(4	)	long-term		(7	)
Strategic program	short-term		(42	)	—		—

			(46	)			(57	)

Embedded derivatives:
Customer raw material contracts	short-term		(12	)	—		—
Natural gas hedge	short-term		(2	)	long-term		(2	)

			(14	)			(2	)


Total Liabilities			(71	)			(633	)

The following table presents the unaudited effects of derivatives for the three-month and six-month periods ended:


		Amount of gain or (loss) recognized in financial income (expense)																Financial Settlement															Amount of gain or (loss) recognized in OCI
		Three-month period ended									Six-month period ended							Three-month period ended									Six-month period ended						Three-month period ended				Six-month period ended
	(unaudited)										(unaudited)						(unaudited)										(unaudited)						(unaudited)				(unaudited)
		June 30, 2009			March 31, 2009			June 30, 2008			June 30, 2009			June 30, 2008				June 30, 2009			March 31, 2009			June 30, 2008			June 30, 2009			June 30, 2008			June 30, 2009		June 30, 2008		June 30, 2009		June 30, 2008
Derivatives not designated as hedge under SFAS 133

Foreign exchange and interest rate risk
Swap BRL denominated Brazilian payrol into USD			—			—			50			—			64				—			—			(34	)		—			(62	)		—		—		—		—
CDI & TJLP vs. USD fixed and floating rate swap			927			32			591			959			563				(101	)		(20	)		(102	)		(121	)		(102	)		—		—		—		—
EURO floating rate vs. USD floating rate swap			—			(1	)		(1	)		(1	)		—				(1	)		—			—			(1	)		—			—		—		—		—
USD floating rate vs. USD fixed rate swap			—			(1	)		5			(1	)		(2	)			2			—			—			2			—			—		—		—		—
AUD floating rate vs. fixed USD rate swap			7			3			—			10			—				(1	)		—			—			(1	)		—			—		—		—		—

			934			33			645			967			625				(101	)		(20	)		(136	)		(121	)		(164	)		—		—		—		—

Commodities price risk
Nickel
Fixed price program			42			(18	)		(50	)		24			(24	)			9			21			12			30			20			—		—		—		—
Purchase program			(32	)		10			22			(22	)		12				27			(2	)		(20	)		25			(24	)		—		—		—		—
Strategic program			(42	)		—			—			(42	)		—				—			—			—			—			—			—		—		—		—
Copper
Purchased scrap protection program			—			—			6			—			(66	)			—			—			69			—			130			—		—		—		—
Strategic hedging program			—			—			—			—			(45	)			—			—			7			—			7			—		—		—		—
Platinum			—			—			(1	)		—			(17	)			—			—			11			—			20			—		—		—		—
Gold			—			—			4			—			(4	)			—			—			10			—			21			—		—		—		—
Natural gas			(1	)		(3	)		9			(4	)		19				2			2			(1	)		4			—			—		—		—		—
Aluminum			—			—			(68	)		—			(147	)			—			—			63			—			88			—		—		—		—
Maritime Freight Hiring Protection Program			34			—			—			34			—				(5	)		—			—			(5	)		—			—		—		—		—

			1			(11	)		(78	)		(10	)		(272	)			33			21			151			54			262			—		—		—		—

Embedded derivatives:
For nickel concentrate costumer sales			(18	)		2			36			(16	)		—				5			(23	)		—			(18	)		—			—		—		—		—
Customer raw material contracts			(57	)		(6	)		37			(63	)		21				—			—			(7	)		—			(11	)		—		—		—		—
Energy — Aluminum options			—			—			15			—			(13	)			—			—			—			—			—			—		—		—		—

			(75	)		(4	)		88			(79	)		8				5			(23	)		(7	)		(18	)		(11	)		—		—		—		—

Derivatives designated as hedge under SFAS 133
Aluminum			—			—			—			—			—				—			—			—			—			—			—		6		—		(21	)
Bunker Oil Hedge			13			—			—			13			—				(1	)		—			—			(1	)		—			—		—		—		—
Foreign exchange cash flow hedge			—			—			—			—			—				—			—			—			—			—			1		—		1		—

			13			—			—			13			—				(1	)		—			—			(1	)		—			1		6		1		(21	)


			873			18			655			891			361				(64	)		(22	)		8			(86	)		87			1		6		1		(21	)

Unrealized gains (losses) in the period are included in our income statement under the caption of gains (losses) on derivatives, net.

Final maturity dates for the above instruments are as follows:


Interest rates/ Currencies		December 2019
Bunker Oil		April 2010
Natural Gas		October 2009
Freight		September 2009
Copper		July 2009
Nickel		May 2011

Under SFAS 133 “Accounting for Derivative Financial Instruments and Hedging Activities”, all derivatives, whether designated in hedging relationships or not, are required to be recorded in the balance sheet at fair value and the gain or loss in fair value is included in current earnings, unless if qualified as hedge accounting. A derivative must be designated in a hedging relationship in order to qualify for hedge accounting. These requirements include a determination of what portions of hedges are deemed to be effective versus ineffective. In general, a hedging relationship is effective when a change in the fair value of the derivative is offset by an equal and opposite change in the fair value of the underlying hedged item. In accordance with these requirements, effectiveness tests are performed in order to assess effectiveness and quantify ineffectiveness for all designated hedges.

At June 30, 2009, we had outstanding cash flow hedges. A cash flow hedge is a hedge of the exposure to variability in expected future cash flows that is attributable to a particular risk such as a forecasted purchase or sale. If a derivative is designated as a cash flow hedge, the effective portions of the changes in the fair value of the derivative are recorded in other comprehensive income and are recognized in earnings when the hedged item affects earnings. Ineffective portions of changes in the fair value of the derivatives designated as hedges are recognized in earnings. If a portion of a derivative contract is excluded for purposes of effectiveness testing, such as time value, the value of such excluded portion is included in earnings. On the three-month period ended at June 30, 2009, March 31, 2009 and June 30, 2008 and on the six-month period ended at June 30, 2009 and 2008, the unrealized net gains in respect of derivative instruments which were not qualified for hedge accounting amounted to US$860, US$18, US$655, US$878 and US$361 respectively.

Subsequent events

On July 07, 2009, we issued US$942 Mandatorily Convertible Notes due 2012 for total proceeds of US$936, net of commissions. The Notes bear interest at 6.75% per year payable quarterly and additional interest which will be payable based on the net amount of cash distribution paid to ADS holders.

In July, 2009 we signed a definitive agreement with Suzano Papel e Celulose to sale part of our forest assets to Suzano, a total area of 84.7 thousand hectares, including preservation areas and eucalyptus plantation in Maranhão (Brazil), for approximately US$120.

In July 2009, we signed an agreement with ThyssenKrupp Steel AG to increase its stake in ThyssenKrupp CSA Siderúrgica do Atlântico Ltda. (CSA) to 26.87%, from its current 10% interest, through a capital infusion of EUR$965 (approximately US$1.4 billion). This investment decision is still subject to, among other conditions, the approval of the Board of Directors of both Vale and ThyssenKrupp.

Supplemental Financial Information (unaudited)

The following unaudited information provides additional details in relation to certain financial ratios.

EBITDA — Earnings Before Financial Income (Expenses), Noncontrolling Interests, Gain on Sale of Investments, Foreign Exchange and Indexation Gains (Losses), Equity in Results of Affiliates and Joint Ventures and Change in Provision for Losses on Equity Investments, Income Taxes, Depreciation and Amortization

(a)

EBITDA represents operating income plus depreciation, amortization and depletion plus impairment plus dividends received from equity investees.

(b)

EBITDA is not a U.S. GAAP measure and does not represent cash flow for the periods presented and should not be considered as an alternative to net income (loss), as an indicator of our operating performance or as an alternative to cash flow as a source of liquidity.

(c)

Our definition of EBITDA may not be comparable with EBITDA as defined by other companies.

(d)

Although EBITDA, as defined above, does not provide a U.S. GAAP measure of operating cash flows, our management uses it to measure our operating performance and financial analysts in evaluating our business commonly use it.

Selected financial indicators for the main affiliates and joint ventures are available on our website, www.vale.com, under “investor relations”

Indexes on Vale’s Consolidated Debt (Supplemental information — unaudited)


	Three-month period ended									Six-month period ended
	June 30, 2009			March 31, 2009			June 30, 2008			June 30, 2009			June 30, 2008
Current debt
Current portion of long-term debt — unrelated parties		610			650			730			610			730
Short-term debt		38			48			46			38			46
Loans from related parties		19			68			36			19			36

		667			766			812			667			812

Long-term debt
Long-term debt — unrelated parties		18,826			17,648			19,560			18,826			19,560

Gross debt (current plus long-term debt)		19,493			18,414			20,372			19,493			20,372


Interest paid over:
Short-term debt		—			—			(5	)		—			(10	)
Long-term debt		(311	)		(277	)		(357	)		(588	)		(636	)
Interest paid		(311	)		(277	)		(362	)		(588	)		(646	)
EBITDA		1,725			2,281			6,218			4,006			9,947
Company stockholders’ equity		49,877			43,827			41,705			49,877			41,705
LTM (1) EBITDA / LTM (1) Interest paid		10.83			13.96			13.04			10.83			13.04
Gross Debt / LTM (1) EBITDA		1.49			1.05			1.17			1.49			1.17
Gross debt / Equity Capitalization (%)		28			30			33			28			33

Financial expenses
Interest expense		(213	)		(239	)		(254	)		(452	)		(567	)
Labor and civil claims and tax-related actions		(14	)		(16	)		(8	)		(30	)		(53	)
Tax on financial transactions — CPMF		—			—			—			—			(3	)
Others		(66	)		(32	)		(87	)		(98	)		(286	)

		(293	)		(287	)		(349	)		(580	)		(909	)


Financial income
Cash and cash equivalents		91			114			22			205			51
Others		2			11			1			13			27

		93			125			23			218			78


Derivatives		873			18			655			891			361


Financial income (expenses), net		673			(144	)		329			529			(470	)

Foreign exchange and indexation gain (losses), net
Cash and cash equivalents		(1,026	)		(69	)		(67	)		(1,095	)		(74	)
Loans		2,105			113			1,169			2,218			1,333
Others		(556	)		(28	)		(264	)		(584	)		(333	)

		523			16			838			539			926

Financial result, net		1,196			(128	)		1,167			1,068			456


(1)		Last twelve months

Calculation of EBITDA (Supplemental information — unaudited)


	Three-month period ended									Six-month period ended
	June 30, 2009			March 31, 2009			June 30, 2008			June 30, 2009			June 30, 2008

Operating income		976			1,685			5,235			2,661			8,150
Depreciation		643			559			760			1,202			1,526

		1,619			2,244			5,995			3,863			9,676
Dividends received		106			37			223			143			271

EBITDA		1,725			2,281			6,218			4,006			9,947


Net operating revenues		4,948			5,324			10,600			10,272			18,432
Margin EBITDA		34.9	%		42.8	%		58.7	%		39.0	%		54.0	%

Adjusted EBITDA x Operating Cash Flows (Supplemental information — unaudited)


	Three-month period ended
	June 30, 2009						March 31, 2009						June 30, 2008
				Operating						Operating						Operating
	EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows

Net income attributable to Company’s stockholders		790			790			1,363			1,363			5,009			5,009
Income tax — deferred		130			130			(171	)		(171	)		333			333
Income tax — current		1,494			—			477			—			1,173			—
Equity in results of affiliates and joint ventures and other investments		(135	)		(135	)		(72	)		(72	)		(260	)		(260	)
Foreign exchange and indexation gains, net		(523	)		(817	)		(16	)		(57	)		(838	)		(1,300	)
Financial expenses, net		(673	)		(54	)		144			3			(329	)		(45	)
Noncontrolling interests		50			50			(40	)		(40	)		147			147
Gain on sale of investments		(157	)		(157	)		—			—			—			—
Net working capital		—			1,355			—			536			—			(214	)
Others		—			(845	)		—			7			—			(572	)


Operating income		976			317			1,685			1,569			5,235			3,098

Depreciation, depletion and amortization		643			643			559			559			760			760
Dividends received		106			106			37			37			223			223

		1,725			1,066			2,281			2,165			6,218			4,081


Operating cash flows					1,066						2,165						4,081
Income tax					1,494						477						1,173
Foreign exchange and indexation gains (losses)					294						41						462
Financial expenses					(619	)					141						(284	)
Net working capital					(1,355	)					(536	)					214
Others					845						(7	)					572

EBITDA					1,725						2,281						6,218


	Six-month period ended
	June 30, 2009						June 30, 2008
				Operating						Operating
	EBITDA			cash flows			EBITDA			cash flows
Net income attributable to Company’s stockholders		2,153			2,153			7,030			7,030
Income tax — deferred		(41	)		(41	)		37			37
Income tax — current		1,971			—			1,827			—
Equity in results of affiliates and joint ventures and other investments		(207	)		(207	)		(379	)		(379	)
Foreign exchange and indexation gains, net		(539	)		(874	)		(881	)		(1,377	)
Financial expenses, net		(529	)		(51	)		425			36
Noncontrolling interests		10			10			171			171
Gain on sale of investments		(157	)		(157	)		(80	)		(80	)
Net working capital		—			1,891			—			(1,442	)
Others		—			(838	)		—			(304	)

Operating income		2,661			1,886			8,150			3,692
Depreciation, depletion and amortization		1,202			1,202			1,526			1,526
Dividends received		143			143			271			271

		4,006			3,231			9,947			5,489

Operating cash flows					3,231						5,489
Income tax					1,971						1,827
Foreign exchange and indexation gains (losses)					335						496
Financial expenses					(478	)					389
Net working capital					(1,891	)					1,442
Others					838						304

EBITDA					4,006						9,947

Board of Directors, Fiscal Council, Advisory committees and Executive Officers



Board of Directors Sérgio Ricardo Silva Rosa Chairman Mário da Silveira Teixeira Júnior Vice-President Eduardo Fernando Jardim Pinto Francisco Augusto da Costa e Silva Jorge Luiz Pacheco José Ricardo Sasseron Ken Abe Luciano Galvão Coutinho Oscar Augusto de Camargo Filho Renato da Cruz Gomes Sandro Kohler Marcondes Alternate Deli Soares Pereira Hidehiro Takahashi João Moisés de Oliveira Luiz Augusto Ckless Silva Luiz Carlos de Freitas Luiz Felix Freitas Paulo Sérgio Moreira da Fonseca Raimundo Nonato Alves Amorim Rita de Cássia Paz Andrade Robles Wanderlei Viçoso Fagundes Advisory Committees of the Board of Directors Controlling Committee Luiz Carlos de Freitas Paulo Ricardo Ultra Soares Paulo Roberto Ferreira de Medeiros Executive Development Committee João Moisés de Oliveira José Ricardo Sasseron Oscar Augusto de Camargo Filho Strategic Committee Roger Agnelli Luciano Galvão Coutinho Mário da Silveira Teixeira Júnior Oscar Augusto de Camargo Filho Sérgio Ricardo Silva Rosa Finance Committee Fabio de Oliveira Barbosa Ivan Luiz Modesto Schara Luiz Maurício Leuzinger Wanderlei Viçoso Fagundes		Governance and Sustainability Committee Jorge Luiz Pacheco Renato da Cruz Gomes Ricardo Simonsen Fiscal Council Marcelo Amaral Moraes Chairman Aníbal Moreira dos Santos Antônio José de Figueiredo Ferreira Bernard Appy Alternate Cícero da Silva Marcus Pereira Aucélio Oswaldo Mário Pêgo de Amorim Azevedo Executive Officers Roger Agnelli Chief Executive Officer Carla Grasso Executive Officer for Human Resources and Corporate Services Eduardo de Salles Bartolomeo Executive Officer for Logistics, Project Management and Sustainability Fabio de Oliveira Barbosa Chief Financial Officer and Investor Relations José Carlos Martins Executive Officer for Ferrous Minerals Tito Botelho Martins Executive Officer for Non Ferrous Marcus Vinícius Dias Severini Chief Officer of Accounting and Control Department Vera Lúcia de Almeida Pereira Elias Chief Accountant CRC-RJ — 043059/O-8

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.