Edgar Filing: Vale S.A.

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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

May 2011

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-___.)

Vale S.A.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Nr.
Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010		4

Condensed Consolidated Statements of Income for the three-month periods ended March 31, 2011, December 31, 2010 and March 31, 2010		6

Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2011, December 31, 2010 and March 31, 2010		7

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended March 31, 2011, December 31, 2010 and March 31, 2010		8

Condensed Consolidated Statements of Comprehensive Income (deficit) for the three-month periods ended March 31, 2011, December 31, 2010 and March 31, 2010		9

Notes to the Condensed Consolidated Financial Statements		10

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. and its subsidiaries as of March 31, 2011, and the related condensed consolidated statements of income, of cash flows, of comprehensive income and of stockholders’ equity for the three-month periods ended March 31, 2011, December 31, 2010 and March 31, 2010. 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 interim 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, 2010, and the related consolidated statements of income, of cash flows, of comprehensive income and of stockholders’ equity for the year then ended (not presented herein), and in our report dated February 24, 2011, 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, 2010, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

Rio de Janeiro, May 5, 2011

PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5 “F” RJ

Marcos Donizete Panassol
Contador CRC 1SP155975/O-8 “S” RJ

Condensed Consolidated Balance Sheets
Expressed in millions of United States dollars


	March 31, 2011		December 31, 2010
	(unaudited)
Assets
Current assets
Cash and cash equivalents		11,271		7,584
Short-term investments		540		1,793
Accounts receivable
Related parties		325		435
Unrelated parties		7,182		7,776
Loans and advances to related parties		194		96
Inventories		4,810		4,298
Deferred income tax		300		386
Unrealized gains on derivative instruments		103		52
Advances to suppliers		386		188
Recoverable taxes		1,700		1,603
Assets held for sale		210		6,987
Others		857		593

		27,878		31,791


Non-current assets
Property, plant and equipment, net		86,498		83,096
Intangible assets		1,297		1,274
Investments in affiliated companies, joint ventures and others investments		8,326		4,497
Other assets:
Goodwill on acquisition of subsidiaries		3,371		3,317
Loans and advances
Related parties		36		29
Unrelated parties		307		165
Prepaid pension cost		2,102		1,962
Prepaid expenses		333		222
Judicial deposits		1,814		1,731
Recoverable taxes		445		361
Deferred income tax		428		—
Unrealized gains on derivative instruments		468		301
Tax Incentive / reinvestiment		332		144
Account receivable of sale of aluminum		400		—
Others		160		249

		10,196		8,481

TOTAL		134,195		129,139

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


	(Continued)
	March 31, 2011			December 31, 2010
	(unaudited)
Liabilities and stockholders’ equity
Current liabilities
Suppliers		4,137			3,558
Payroll and related charges		779			1,134
Minimum annual remuneration attributed to stockholders		3,964			4,842
Current portion of long-term debt		1,558			2,823
Short-term debt		149			139
Loans from related parties		10			9
Provision for income taxes		685			751
Taxes payable and royalties		267			257
Employees postretirement benefits		216			168
Unrealized losses on derivative instruments		6			35
Provisions for asset retirement obligations		71			75
Liabilities associated with assets held for sale		75			3,152
Others		740			969

		12,657			17,912


Non-current liabilities
Employees postretirement benefits		2,466			2,442
Long-term debt		22,027			21,591
Provisions for contingencies (Note 16 (b))		2,102			2,043
Unrealized losses on derivative instruments		61			61
Deferred income tax		9,203			8,085
Provisions for asset retirement obligations		1,297			1,293
Debentures		1,387			1,284
Others		2,433			1,987

		40,976			38,786


Redeemable noncontrolling interest		648			712

Commitments and contingencies (Note 16)

Stockholders’ equity
Preferred class A stock — 7,200,000,000 no-par-value shares authorized and 2,108,579,618 (2010 — 2,108,579,618) issued		10,370			10,370
Common stock — 3,600,000,000 no-par-value shares authorized and 3,256,724,482 (2010 — 3,256,724,482) issued		16,016			16,016
Treasury stock — 99,649,562 (2010 — 99,649,571) preferred and 47,375,394 (2010 — 47,375,394) common shares		(2,660	)		(2,660	)
Additional paid-in capital		2,188			2,188
Mandatorily convertible notes — common shares		290			290
Mandatorily convertible notes — preferred shares		644			644
Other cumulative comprehensive loss		978			(333	)
Undistributed retained earnings		43,189			42,218
Unappropriated retained earnings		5,995			166

Total Company stockholders’ equity		77,010			68,899
Noncontrolling interests		2,904			2,830

Total stockholders’ equity		79,914			71,729

TOTAL		134,195			129,139

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Income
Expressed in millions of United States dollars
(Except per share amounts)


	Three-month period ended (unaudited)
	March 31, 2011			December 31, 2010			March 31, 2010
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals		11,743			13,021			5,693
Aluminum products		383			691			599
Revenues from logistic services		328			334			314
Fertilizer products		787			768			65
Others		307			393			177

		13,548			15,207			6,848
Taxes on revenues		(335	)		(278	)		(244	)

Net operating revenues		13,213			14,929			6,604

Operating costs and expenses
Cost of ores and metals sold		(4,101	)		(4,258	)		(2,600	)
Cost of aluminum products		(289	)		(565	)		(507	)
Cost of logistic services		(289	)		(285	)		(230	)
Cost of fertilizer products		(645	)		(674	)		(38	)
Others		(252	)		(258	)		(164	)

		(5,576	)		(6,040	)		(3,539	)
Selling, general and administrative expenses		(419	)		(647	)		(293	)
Research and development expenses		(342	)		(301	)		(172	)
Gain on sale of assets		1,513			—			—
Others		(420	)		(774	)		(538	)

		(5,244	)		(7,762	)		(4,542	)


Operating income		7,969			7,167			2,062


Non-operating income (expenses)
Financial income		165			117			48
Financial expenses		(582	)		(926	)		(465	)
Gains (losses) on derivatives, net		239			473			(230	)
Foreign exchange and indexation gains, net		80			51			(30	)

		(98	)		(285	)		(677	)


Income before discontinued operations, income taxes and equity results		7,871			6,882			1,385


Income taxes
Current		(1,593	)		(1,549	)		(249	)
Deferred		216			412			488

		(1,377	)		(1,137	)		239


Equity in results of affiliates, joint ventures and other investments		280			303			96


Net income from continuing operations		6,774			6,048			1,720
Discontinued operations, net of tax		—			—			(145	)


Net income		6,774			6,048			1,575


Net income (loss) attributable to noncontrolling interests		(52	)		131			(29	)
Net income attributable to the Company’s stockholders		6,826			5,917			1,604


Basic and diluted earnings per share attributable to Company’s stockholders
Earnings per preferred share		1.29			1.12			0.29
Earnings per common share		1.29			1.12			0.29
Earnings per preferred share linked to mandatorily convertible notes (*)		1.67			1.61			0.54
Earnings per common share linked to mandatorily convertible notes (*)		1.74			1.68			0.60


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

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows
Expressed in millions of United States dollars


	Three-month period ended (unaudited)
	March 31, 2011			December 31, 2010			March 31, 2010
Cash flows from operating activities:
Net income		6,774			6,048			1,575
Adjustments to reconcile net income to cash from operations:
Depreciation, depletion and amortization		957			1,073			743
Dividends received		250			629			50
Equity in results of affiliates, joint ventures and other investments		(280	)		(303	)		(96	)
Deferred income taxes		(216	)		(412	)		(488	)
Loss on disposal of property, plant and equipment		172			248			98
Gain on sale of assets available for sale		(1,513	)		—			—
Discontinued operations, net of tax		—			—			145
Foreign exchange and indexation gains, net		(104	)		(72	)		(59	)
Unrealized derivative losses (gains), net		(212	)		532			243
Unrealized interest (income) expense, net		7			(43	)		18
Others		(37	)		(27	)		118
Decrease (increase) in assets:
Accounts receivable		111			(639	)		(777	)
Inventories		(743	)		404			(258	)
Recoverable taxes		(112	)		(70	)		48
Others		200			709			125
Increase (decrease) in liabilities:
Suppliers		157			(445	)		112
Payroll and related charges		(356	)		204			(277	)
Income taxes		476			(93	)		(46	)
Others		477			(35	)		132

Net cash provided by operating activities		6,008			7,708			1,406

Cash flows from investing activities:
Short term investments		1,253			(1,793	)		3,735
Loans and advances receivable
Related parties
Loan proceeds		—			—			(28	)
Others		(143	)		(17	)		(5	)
Judicial deposits		(29	)		96			(116	)
Investments		(115	)		(36	)		(28	)
Additions to property, plant and equipment		(2,813	)		(4,742	)		(1,817	)
Proceeds from disposal of investments available for sale		1,081

Net cash provided by (used in) investing activities		(766	)		(6,492	)		1,741

Cash flows from financing activities:
Short-term debt
Additions		767			229			1,632
Repayments		(760	)		(147	)		(1,649	)
Loans
Related parties
Proceeds		19			2			10
Repayments		(1	)		(22	)		(1	)
Issuances of long-term debt
Third parties
Proceeds		603			891			1,059
Repayments		(1,351	)		(958	)		(250	)
Treasury stock		—			(1,655	)		—
Dividends and interest attributed to Company’s stockholders		(1,000	)		(1,750	)		—
Dividends and interest attributed to noncontrolling interest		—			(81	)		(1	)

Net cash provided by (used in) financing activities		(1,723	)		(3,491	)		800

Increase (decrease) in cash and cash equivalents		3,519			(2,275	)		3,947
Effect of exchange rate changes on cash and cash equivalents		168			136			(116	)
Cash and cash equivalents, beginning of period		7,584			9,723			7,293

Cash and cash equivalents, end of period		11,271			7,584			11,124

Cash paid during the period for:
Interest on short-term debt		(1	)		(2	)		(1	)
Interest on long-term debt		(337	)		(314	)		(243	)
Income tax		(965	)		(1,100	)		(127	)
Non-cash transactions
Interest capitalized		33			38			46

Conversion of mandatorily convertible notes using 75,435,238 treasury stock (see note 13).

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Changes in Stockholders’ Equity
Expressed in millions of United States dollars
(Except number of shares)


	Three-month period ended (unaudited)
	March 31, 2011			December 31, 2010			March 31, 2010
Preferred class A stock (including twelve golden shares)
Beginning and end of the period		10,370			10,370			9,727

Common stock
Beginning and end of the period		16,016			16,016			15,262

Treasury stock
Beginning of the period		(2,660	)		(1,528	)		(1,150	)
Sales (acquisitions)		—			(1,132	)		—

End of the period		(2,660	)		(2,660	)		(1,150	)

Additional paid-in capital
Beginning and end of the period		2,188			2,188			411

Mandatorily convertible notes — common shares
Beginning and end of the period		290			290			1,578

Mandatorily convertible notes — preferred shares
Beginning and end of the period		644			644			1,225

Other cumulative comprehensive income (deficit)
Cumulative translation adjustments
Beginning of the period		(253	)		(265	)		(1,772	)
Change in the period		1,187			12			(390	)

End of the period		934			(253	)		(2,162	)

Unrealized gain (loss) — available-for-sale securities, net of tax
Beginning of the period		3			1			—
Change in the period		(1	)		2			2

End of the period		2			3			2

Surplus (deficit) accrued pension plan
Beginning of the period		(59	)		154			(38	)
Change in the period		120			(213	)		138

End of the period		61			(59	)		100

Cash flow hedge
Beginning of the period		(24	)		109			2
Change in the period		5			(133	)		(23	)

End of the period		(19	)		(24	)		(21	)

Total other cumulative comprehensive income (deficit)		978			(333	)		(2,081	)

Undistributed retained earnings
Beginning of the period		42,218			27,730			28,508
Transfer from/to unappropriated retained earnings		971			14,488			(633	)
Transfer to capitalized earnings		—			—			—

End of the period		43,189			42,218			27,875

Unappropriated retained earnings
Beginning of the period		166			13,612			3,182
Net income attributable to the stockholders’ Company		6,826			5,917			1,604
Interest on mandatorily convertible debt
Preferred class A stock		(18	)		(23	)		(19	)
Common stock		(8	)		(10	)		(23	)
Dividends and interest attributed to stockholders’ equity
Preferred class A stock		—			(1,863	)		—
Common stock		—			(2,979	)		—
Appropriation from/to undistributed retained earnings		(971	)		(14,488	)		633

End of the period		5,995			166			5,377

Total Company stockholders’ equity		77,010			68,899			58,224

Noncontrolling interests
Beginning of the period		2,830			2,826			2,831
Disposals (acquisitions) of noncontrolling interests		117			27			—
Cumulative translation adjustments		14			(85	)		(11	)
Cash flow hedge		1			5			4
Net income (loss) attributable to noncontrolling interests		(52	)		131			(29	)
Dividends and interest attributable to noncontrolling interests		(6	)		(18	)		(11	)
Capitalization of stockholders advances		—			—			—
Assets and liabilities held for sale		—			(56	)		—

End of the period		2,904			2,830			2,784

Total stockholders’ equity		79,914			71,729			61,008


Number of shares issued and outstanding:
Preferred class A stock (including twelve golden shares)		2,108,579,618			2,108,579,618			2,108,579,618
Common stock		3,256,724,482			3,256,724,482			3,256,724,482
Buy-backs
Beginning of the period		(147,024,965	)		(108,299,565	)		(152,579,803	)
Acquisitions		—			(38,725,400	)		—
Conversions		9			—

End of the period		(147,024,956	)		(147,024,965	)		(152,579,803	)

		5,218,279,144			5,218,279,135			5,212,724,297

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Comprehensive Income (deficit)
Expressed in millions of United States dollars


	Three-month period ended (unaudited)
	March 31, 2011			December 31, 2010			March 31, 2010
Comprehensive income is comprised as follows:
Company’s stockholders:
Net income attributable to Company’s stockholders		6,826			5,917			1,604
Cumulative translation adjustments		1,187			12			(390	)

Available-for-sale securities
Gross balance as of the period/year end		(1)			7			6
Tax (expense) benefit		—			(5	)		(4	)

		(1	)		2			2
Surplus (deficit) accrued pension plan
Gross balance as of the period/year end		183			(306	)		206
Tax (expense) benefit		(63	)		93			(68	)

		120			(213	)		138
Cash flow hedge
Gross balance as of the period		14			(190	)		3
Tax (expense) benefit		(9	)		57			(26	)

		5			(133	)		(23	)

Total comprehensive income attributable to Company’s stockholders		8,137			5,585			1,331

Noncontrolling interests:
Net income (loss) attributable to noncontrolling interests		(52	)		131			(29	)
Cumulative translation adjustments		14			(85	)		(11	)
Cash flow hedge		1			5			4

Total comprehensive income (deficit) attributable to Noncontrolling interests		(37	)		51			(36	)

Total comprehensive income		8,100			5,636			1,295

The accompanying notes are an integral part of these condensed consolidated financial statements.

Notes to the Condensed Consolidated Financial Statements
Expressed in millions of United States dollars, unless otherwise stated

1		The Company and its operations

		Vale S.A., (“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, basic metals production, fertilizers, logistics and steel activities.


		At March 31, 2011, our principal consolidated operating subsidiaries are the following:

Subsidiary

% ownership

% voting
capital

Location

Principal activity

Compañia Minera Misky Mayo S.A.C.

40.00

51.00

Peru

Fertilizer

Ferrovia Centro-Atlântica S. A.

99.99

Brazil

Logistics

Ferrovia Norte Sul S.A.

100.00

Brazil

Logistics

Mineração Corumbá Reunidas S.A.

100.00

Brazil

Iron ore

PT International Nickel Indonesia Tbk

59.14

Indonesia

Nickel

Sociedad Contractual Minera Tres Valles

90.00

Chile

Copper

Urucum Mineração S.A.

100.00

Brazil

Iron Ore and Manganese

Vale Australia Pty Ltd.

100.00

Australia

Coal

Vale Austria Holdings GMBH

100.00

Austria

Holding and Exploration

Vale Canada Limited

100.00

Canada

Nickel

Vale Colombia Ltd.

100.00

Colombia

Coal

Vale Fertilizantes S.A

84.27

99.90

Brazil

Fertilizer

Vale International S.A

100.00

Switzerland

Trading

Vale Manganês S.A.

100.00

Brazil

Manganese and Ferroalloys

Vale Nouvelle Caledonie SAS

74.00

New Caledonia

Nickel

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. Subsidiaries over which control is achieved through other means, such as stockholders agreement, are also consolidated even if we hold less than 51% of voting capital. 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 our equity 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 stockholders agreement. We define affiliates as businesses in which we participate as a noncontrolling interest but with significant influence over the operating and financial policies of the investee.

		Our participation in hydroelectric projects in Brazil is 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 statements for the three-month periods ended March 31, 2011, December 31, 2010 and March 31, 2010, prepared in accordance with accounting principles generally accepted in the United States of America (“US 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 periods ended March 31, 2011, are not necessarily indicative of the actual results expected for the full fiscal year ending December 31, 2011.

		This condensed consolidated interim financial statement should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2010, prepared in accordance with US GAAP.

		In preparing the condensed consolidated financial statements, 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.

		Since December 2007, significant modifications have been made to (“Brazilian GAAP”) as part of a convergence project with International Financial Reporting Standards (“IFRS”) and as from December 31, 2010, the convergence was completed and therefore the (“IFRS”) is the accounting practice adopted in Brazil. The Company does not expect to discontinue the (“US GAAP”) reporting during 2011.

		The Brazilian real is the parent Company’s functional currency. We have selected the US dollar as our reporting currency.

		All assets and liabilities have been translated to US 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 US 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 US dollar have been translated into US dollars and adjustments to translate those statements into US dollars are recorded in the CTA in stockholders’ equity.

		The exchange rates used to translate the assets and liabilities of the Brazilian operations at March 31, 2011 and December 31, 2010, were R$1.6287 and R$1.6662, respectively.

		The Company has assessed subsequent events through May 5, 2011 which is the date the financial statements were issued.

4		Accounting pronouncements

		a) Newly issued accounting pronouncements

		The Company understands that the recently issued accounting pronouncements that are not effective as of and for the year ending December 31, 2011, are not expected to be relevant for its consolidated financial statements.

		b) Accounting standards adopted in 2011

		Accounting Standards Update (ASU) number 2010-29 Disclosure of Supplementary Pro Forma Information for Business Combinations a consensus of the FASB Emerging Issues Task Force. The objective of this Update is to address diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. The amendments in this Update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The Company fully adopted this standard in 2011. This codification does not impact our financial position, results of operations or liquidity.

5		Major acquisitions and disposals

		a) Sale of aluminum assets

		In February 2011, we concluded the transaction announced in May, 2010 with Norsk Hydro ASA (Hydro), to transfer all of our stakes in Albras-Alumínio Brasileiro S.A. (Albras), Alunorte Alumina do Norte do Brasil S.A. (Alunorte) and Companhia de Alumina do Pará (CAP), along with its respective off-take rights and outstanding commercial contracts, and 60% of Mineração Paragominas S.A. and all our other Brazilian bauxite mineral rights.

		For this transactions we received US$1,081 in cash and 22% equivalent to 447,834,465 shares of Hydro’s common shares outstanding (approximately US$3.5 billion according to Hydro’s closing share price at the date of the transaction). Three and five years after the closing of the transaction, we will receive two equal tranches of US$200 each in cash, related to the remaining payment of 40% of Mineração Paragominas S.A. From the date of the transaction, Hydro will be accounted for by the equity method.

		The gain on this transaction, of US$1,513 was recorded in the income statement in the line Gain on sale of assets.

		b) Fertilizers Businesses

		In 2010, we acquired 78.92% of the total capital and 99.83% of the voting do capital of Vale Fertilizantes and 100% of the total capital of Vale Fosfatados. In 2011, after the incorporation of Vale Fosfatados by Vale Fertilizantes, our total participation reaches 84.27%.

		The purchase price allocation based on the fair values of acquired assets and liabilities, was based on studies performed by us with the assistance of external valuation specialists.


Purchase price	5,795
Noncontrolling consideration	767
Book value of property, plant and equipment and mining rights	(1,987	)
Book value of other assets acquired and liabilities assumed, net	(395	)
Adjustment to fair value of property, plant and equipment and mining rights	(5,146	)
Adjustment to fair value of inventories	(98	)
Deferred taxes on the above adjustments	1,783

Goodwill	719

The goodwill balance arises primarily due to the synergies between the acquired assets and the potash operations in Taquari-Vassouras, Carnalita, Rio Colorado and Neuquém and phosphates in Bayóvar I and II, in Peru, and Evate, in Mozambique. The future development of our projects combined with the acquisition of the portfolio of fertilizer assets will allow Vale to be one of the top players in the world’s fertilizer business.

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, we are subject to various taxes rates depending on the jurisdiction.

We analyze the potential tax impact associated with undistributed earnings by each of our subsidiaries. For those subsidiaries in which the undistributed earnings would be taxable when remitted to the parent company, no deferred tax is recognized, based on generally accepted accounting principles.

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


	Three-month period ended (unaudited)
	March 31, 2011									December 31, 2010									March 31, 2010
	Brazil			Foreign			Total			Brazil			Foreign			Total			Brazil			Foreign			Total
Income before discontinued operations, income taxes, equity results and noncontrolling interests		4,518			3,353			7,871			5,581			1,301			6,882			220			1,165			1,385
Exchange variation (not taxable) or not deductible		—			47			47			—			114			114			—			(416	)		(416	)


		4,518			3,400			7,918			5,581			1,415			6,996			220			749			969


Tax at Brazilian composite rate		(1,536	)		(1,156	)		(2,692	)		(1,898	)		(481	)		(2,379	)		(75	)		(254	)		(329	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		436			—			436			369			—			369			209			—			209
Difference on tax rates of foreign income		—			748			748			—			699			699			—			324			324
Tax incentives		171			—			171			198			—			198			17			—			17
Valuation allowance reversal (provision)
Other non-taxable, income/non deductible expenses		13			(53	)		(40	)		82			(106	)		(24	)		(4	)		22			18


Income tax per consolidated statements of income		(916	)		(461	)		(1,377	)		(1,249	)		112			(1,137	)		147			92			239

Vale and some subsidiaries in Brazil were granted with tax incentives that provide for a partial reduction of the income tax due related to certain regional operations of iron ore, railroad, manganese, copper, bauxite, alumina, aluminum, kaolin and potash. The tax benefit is calculated based on taxable profit adjusted by the tax incentive (so-called “exploration profit”) taking into consideration the operational profit of the projects that benefit from the tax incentive during a fixed period. In general, such tax incentives expire in 2018. Part of the northern railroad and iron ore operations have been granted with tax incentives for a period of 10 years starting from 2009. The tax savings must be registered in a special capital (profit) reserve in the net equity of the entity that benefits from the tax incentive and cannot be distributed as dividends to the stockholders.

We are also allowed to reinvest part of the tax savings in the acquisition of new equipment to be used in the operations that enjoy the tax benefit subject to subsequent approval from the Brazilian regulatory agencies Superintendência de Desenvolvimento da Amazônia — SUDAM and Superintendência de Desenvolvimento do Nordeste — SUDENE. When the reinvestment is approved, the corresponding tax benefit must also be accounted for in a special profit reserve and is also subject to the same restrictions with respect to future dividend distributions to the stockholders.

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 achieves 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 obtained tax incentives for our projects in Mozambique, Oman and Malaysia, that will take effects when those projects start their commercial operation.

We are subject to an examination by the tax authorities for up to five years regarding our operations in Brazil, up to ten years for Indonesia, and up to seven years for Canada for income taxes.

Tax loss carry forwards in Brazil and in most of the jurisdictions where we have tax loss carry forwards have no expiration date, though in Brazil, offset is restricted to 30% of annual taxable income.

On January 1, 2007, Company adopted the provision accounting for Uncertainty in Income Taxes.

The reconciliation of the beginning and ending amounts is as follows: (see note 16(b)) tax — related actions)

Three-month period ended (unaudited)

March 31,

December 31,

March,

2011

2010

Beginning of the period

2,555

392

396

Increase resulting from tax positions taken

2,121

Decrease resulting from tax positions taken

)

—

Cumulative translation adjustments

End of the period

2,623

2,555

409

Cash and cash equivalents


	March 31, 2011		December 31, 2010
	(unaudited)
Cash		923		560
Short-term investments		10,348		7,024

		11,271		7,584

All the above mentioned short-term investments are made through the use of low risk fixed income securities, in a way that: those denominated in Brazilian Reais are concentrated in investments indexed to the CDI, and those denominated in US dollars are mainly time deposits, with the original due date less than three months.

Short-term investments


	March 31, 2011		December 31, 2010
	(Unaudited)
Time deposit		540		1,793

Represent low risk investments with original due date over three months.

Inventories


	March 31, 2011		December 31, 2010
	(Unaudited)
Products

Nickel (co-products and by-products)		2,161		1,310
Iron ore and pellets		794		825
Manganese and ferroalloys		204		203
Fertilizer		237		171
Copper concentrate		93		28
Coal		61		74
Others		116		143
Spare parts and maintenance supplies		1,144		1,544

		4,810		4,298

In March 31, 2011 and December 31, 2010, there were no adjustments to reduce inventories to market values.

Investments in affiliated companies and joint ventures


	March 31, 2011 ( Unaudited )										Investments						Equity in earnings (losses) of investee adjustments									Dividends Received
								Net Income									Three-month period ended (unaudited)									Three-month period ended (unaudited)
								(loss) of the			March			December			March			December			March			March		December		March
	Participation in capital (%)				Net equity			period			31, 2011			31, 2010			31, 2011			31, 2010			31, 2010			31, 2011		31, 2010		31, 2010
	Voting		Total								(Unaudited)						(Unaudited)						(Unaudited)			(Unaudited)				(Unaudited)
Bulk Material
Iron ore and pellets
Companhia Nipo-Brasileira de Pelotização - NIBRASCO (1)		51.11		51.00		336			16			171			171			8			12			5			—		—		—
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (1)		51.00		50.89		243			6			124			128			3			35			8			—		—		—
Companhia Coreano-Brasileira de Pelotização — KOBRASCO (1)		50.00		50.00		177			20			89			87			10			9			6			—		—		—
Companhia Ítalo-Brasileira de Pelotização - ITABRASCO (1)		51.00		50.90		184			19			94			86			10			14			2			—		—		—
Minas da Serra Geral SA — MSG		50.00		50.00		73			2			38			36			1			4			(1	)		—		—		—
SAMARCO Mineração SA — SAMARCO (2)		50.00		50.00		932			413			531			561			207			261			44			250		575		50
Baovale Mineração SA — BAOVALE		50.00		50.00		62			4			33			31			2			2			1			—		—		—
Zhuhai YPM Pellet e Co,Ltd — ZHUHAI		25.00		25.00		103			(3	)		26			25			(1	)		4			3			—		—		—
Tecnored Desenvolvimento Tecnológico SA		37.40		37.40		139			(2	)		54			40			(1	)		—			(10	)		—		—		—

												1,160			1,165			239			341			58			250		575		50
Coal
Henan Longyu Resources Co Ltd		25.00		25.00		1,104			94			276			250			24			64			20			—		—		—
Shandong Yankuang International Company Ltd		25.00		25.00		(127	)		(20	)		(32	)		(27	)		(5	)		(7	)		(2	)		—		—		—

												244			223			19			57			18			—		—		—
Base Metals
Bauxite
Mineração Rio do Norte SA — MRN		40.00		40.00		393			5			158			152			2			(8	)		1			—		10		—

Copper
Teal Minerals Incorporated		50.00		50.00		219			(9	)		110			90			(5	)		3			5			—		—		—

Nickel
Heron Resources Inc (3)		—		—		—			—			7			7			—			—			—			—		—		—
Korea Nickel Corp		25.00		25.00		24			—			6			11			—			2			—			—		—		—
Others (3)		—		—		—			—			3			5			—			—			—			—		—		—

												16			23			—			2			—			—		—		—
Aluminium
Norsk Hydro ASA		22.00		22.00		—			—			3,531			—			—			—			—			—		—		—

Logistic
LOG-IN Logística Intermodal SA		31.33		31.33		407			—			137			135			—			4			(1	)		—		—		—
MRS Logística SA		37.86		41.50		1,284			88			534			511			36			28			13			—		37		—

												671			646			36			32			12			—		37		—
Others
Steel
California Steel Industries Inc — CSI		50.00		50.00		321			11			160			155			6			(1	)		6			—		7		—
THYSSENKRUPP CSA Companhia Siderúrgica		26.87		26.87		7,037			(32	)		1,891			1,840			(8	)		(75	)		(4	)		—		—		—

												2,051			1,995			(2	)		(76	)		2			—		7		—
Other affiliates and joint ventures
Vale Soluções em Energia (1)		51.00		51.00		276			(17	)		146			115			(9	)		(33	)		—			—		—		—
Others		—		—		—			—			239			88			—			(15	)		—			—		—		—

												385			203			(9	)		(48	)		—			—		—		—


Total												8,326			4,497			280			303			96			250		629		50


(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$66 in March, 2011 and US$64 in December, 2010.

(3)		Available for sale.

Short-term debt

Short-term borrowings outstanding on March 31, 2011 are from commercial banks for import financing denominated in US dollars with average annual interest rates of 1.99%.

Long-term debt


	Current liabilities				Non-current liabilities
	March 31,		December 31,		March 31,		December 31,
	2011		2010		2011		2010
	(unaudited)				(unaudited)
Foreign debt
Loans and financing denominated in the following currencies:
US dollars		1,078		2,384		2,580		2,530
Others		22		18		278		217
Fixed Rate Notes
US dollars		—		—		10,236		10,242
EUR		—		—		1,055		1,003
Perpetual notes		—		—		78		78
Accrued charges		189		233		—		—

		1,289		2,635		14,227		14,070

Brazilian debt
Brazilian reais indexed to Long-term Interest Rate — TJLP/CDI		86				3,991
Brazilian reais indexed to General Price Index-Market (IGP-M)		—		76		—		3,891
Basket of currencies		5		1		142		125
Non-convertible debentures		—		—		2,844		2,767
US dollars denominated		3		1		823		738
Accrued charges		175		110		—		—

		269		188		7,800		7,521

Total		1,558		2,823		22,027		21,591

The long-term portion at March 31, 2011 was as follows (Unaudited):


2012			1,023
2013			3,382
2014			1,085
2015			771
2016			15,299
No due date			467


			22,027

At March 31, 2011 annual interest rates on long-term debt were as follows (Unaudited):


Up to 3%			4,514
3.1% to 5% (*)			2,213
5.1% to 7%			8,697
7.1% to 9% (**)			3,484
9.1% to 11% (**)			151
Over 11% (**)			4,446
Variable			80


			23,585


(*)		Includes Eurobonds. For this operation we have entered into derivative transactions at a cost of 4.71% per year in US dollars.

(**)		Includes non-convertible debentures and other Brazilian Real denominated debt that bear interest at the Brazilian Interbank Certificate of Deposit (CDI) and Brazilian Government Long-term Interest Rates (TJLP) 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$ 6,596 of which US$ 5,756 has an original interest rate above 7.1% per year. The average cost after taking into account the derivative transactions is 3.04% per year in US dollars.

The average cost of all derivative transactions is 3.27% per year in US dollars.

Vale has non-convertible debentures at Brazilian Real denominated as follows:

Balance

March 31,

Quantity as of March 31, 2011

2011

December 31,

Non Convertible Debentures

Issued

Outstanding

Maturity

Interest

(Unaudited)

2010

2nd Series

150,000

November 20, 2010

101.75% CDI

2,553

2,429

Tranche “B”

400,000

November 20, 2013

100% CDI + 0.25%

388

367

2,941

2,796

Long-term portion

2,844

2,767

Accrued chages

2,941

2,796

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


	Three-month period ended (unaudited)
	March			December		March
	31, 2011			31, 2010		31, 2010
TJLP — Long-Term Interest Rate (effective rate)		(4.5	)		1.5		1.5
IGP-M — General Price Index — Market		2.4			3.2		2.8
Appreciation (devaluation) of Real against US dollar		2.3			1.7		(2.2	)

In September 2010, Vale also entered into agreements with The Export-Import Bank of China and the Bank of China Limited for the financing to build 12 very large ore carriers with 400,000 dwt, comprising a facility in an amount up to US$ 1,229. The financing has a 13-year total term to be repaid, and the funds will be disbursed during the next 3 years according to the construction schedule. As of March 31, 2011, we had drawn US$ 291 under the facility.

In September 2010, we issued US$ 1 billion notes due 2020 and US$ 750 notes due 2039. The 2020 notes were sold at a price of 99.030% of the principal amount and will bear a coupon of 4.625% per year, payable semi-annually. The 2039 notes that were sold at a price of 110.872% of the principal amount will be consolidated with and form a single series with Vale Overseas US$ 1 billion 6.875% Guaranteed Notes due 2039 issued on November 10, 2009.

In June 2010, Vale established some facilities in the total amount of R$774 or US$ 430 with Banco Nacional de Desenvolvimento Economico Social — BNDES to finance the acquisition of certain equipment. In March 2011, Vale increased this kind of facility through a new agreement with BNDES in an amount of R$103 (US$ 62). As of March 31, 2011, we had drawn the equivalent of US$ 155 under these facilities.

In June 2010, we entered into a bilateral pre-export finance agreement in the amount of US$ 500 and final tenor of 10 years.

Credit Lines

We have revolving credit lines available under which amounts can be drawn down and repaid at the option of the borrower. At March 31, 2011, the total amount available under revolving credit lines was US$ 1,600, of which US$ 850 was granted to Vale International and the balance to Vale Canada Limited. As of March 31, 2011, neither Vale International nor Vale Canada Limited had drawn any amounts under these facilities, but US$ 118 of letters of credit were issued and remained outstanding pursuant Vale Canada Limited’s facility. In April 2011 we entered into a new revolving credit agreement with a syndicate of banks that will add US$ 3 billion to the total amount available under those facilities.

In January 2011, we entered into an agreement with some commercial banks with the guarantee of the Italian credit agency, Servizi Assicurativi Del Commercio Estero S.p.A (SACE), to provide us with a US$ 300 facility with a final tenor of 10 years. As of March 31, 2011 we had drawn US$ 300 under this facility.

In October 2010, we entered into agreement with Export Development Canada (EDC), for the financing of our capital expenditure program. Pursuant to the agreement, EDC will provide a facility in an amount up to US$ 1 billion. US$ 500 will be available for investments in Canada and the remaining US$ 500 will be related to existing and future Canadian purchases of goods and services. As of March 2011, Vale had drawn US$ 250 under the facility.

In May 2008, we entered into framework agreements with the Japan Bank for International Cooperation in the amount of US$3 billion and Nippon Export and Investment Insurance in the amount of US$2 billion for the financing of mining, logistics and power generation projects. In November, 2009, Vale signed a US$300 export facility agreement, through its subsidiary, PT International Nickel Indonesia Tbk (PTI), with Japanese financial institutions using credit insurance provided by Nippon Export and Investment Insurance — NEXI, to finance the construction of the Karebbe hydroelectric power plant on the Larona river, island of Sulawesi, Indonesia. Through March 31, 2011, PT International had drawn down US$300 on this facility.

In 2008, we established a credit line for R$7,300, or US$4 billion, with Banco Nacional de Desenvolvimento Econômico e Social — BNDES (the Brazilian National Development Bank) to support our investment program. As of March 31, 2011, we had drawn the equivalent of US$1,212 under this facility.

Guarantee

On March 31, 2011, US$2 (December 31, 2010 — US$2) of the total aggregate outstanding debt were secured by receivables. The remaining outstanding debt in the amount of US$23,583 (December 31, 2010 — US$24,412) were unsecured.

Our principal covenants require us to maintain certain ratios, such as debt to EBITDA and interest coverage. We have not identified any events of noncompliance as of March 31, 2011.

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.

In April 2011 (subsequent event), the Board of Directors approved the extraordinary payment on April 29, 2011, regarding the first installment of interest on capital, in the amount of US$ 2 billion, corresponding to US$ 0.383268113 per outstanding share, common or preferred shares, of Vale issuance.

In January 2011, the Board of Directors approved the extraordinary payment which was paid on January 31, 2011, through interest attributed to Company Stockholders capital, in the total gross amount of US$ 1 billion, which corresponds to approximately US$0.191634056 per outstanding share, common or preferred, of Vale issuance. This value is subject to the incidence of income tax withheld at the rate in force.

On October 14, 2010, the Board of Directors approved the following proposals: (i) payment of the second tranche of the minimum dividend of US$1,250 billion and (ii) payment of an additional dividend of US$500. The payments were made on October 29, 2010.

On September 23, 2010, the Board of Directors approved a share buy-back program. The shares are to be held in treasury for subsequent sale or cancellation, amounting up to US$2 billion and involving up to 64,810,513 common shares and up to 98,367,748 preferred shares. As of December 31, 2010 we had acquired 21,682,700 common shares and 48,197,700 preferred shares. The share buy-back program was completely executed in October 2010.

In April 2010, we paid US$1,250 as a first installment of the dividend to stockholders. The distribution was made in the form of interest on stockholders’ equity.

In June 2010, the notes series Rio and Rio P were converted into ADS and represent an aggregate of 49,305,205 common shares and 26,130,033 preferred class A shares respectively. The conversion was made using 75,435,238 treasury stocks held by the Company. The difference between the conversion amount and the book value of the treasury stocks of US$ 1,379 was accounted for in additional paid-in capital in the stockholder’s equity.

The outstanding issued mandatory convertible notes as of March 31, 2011, are as follows:

Date

Value

Headings

Emission

Expiration

Gross

Net of charges

Coupon

Tranches Vale and Vale P - 2012

July/2009

June/2012

942

934

6,75% p.a.

The notes pay a coupon quarterly and are entitled to an additional remuneration equivalent to the cash distribution paid to ADS holders. These notes were classified as a capital instrument, mainly due to the fact that neither the Company nor the holders have the option to settle the operation, whether fully or partially, with cash, and the conversion is mandatory, consequently, they were recognized as a specific component of shareholders’ equity, net of financial charges.

The funds linked to future mandatory conversion, net of charges are equivalent to the maximum of common shares and preferred shares, as follows. All the shares are currently held in treasury.

Maximum amount of action

Value

Headings

Common

Preferred

Common

Preferred

Tranches Vale and Vale P - 2012

18,415,859

47,284,800

293

649

In April 2011 (subsequent event), Vale will pay additional remuneration to holders of mandatorily convertible notes, series VALE-2012 and VALE P-2012, in the amount of R$ 1.627851 e R$ 1.882788 per note, respectively. These amounts in reais will be converted in US$ by the exchange rate prevaling in April 29, 2011.

In January 2011, Vale paid additional remuneration to holders of mandatorily convertible notes, series VALE-2012 and VAPE P-2012, R$0.7776700 and R$0.8994610, respectively, and in October 2010, VALE-2012 and VAPE P-2012, R$1.381517 and R$1.597876 per note, respectively.

In April, 2010, we paid additional interest to holders of mandatorily convertible notes: series RIO and RIO P, US$0.417690 and US$0.495742 per note, respectively, and series VALE-2012 and VALE P-2012, US$0.602336 and US$0.696668 per note, respectively.

Basic and diluted earnings per share

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


	Three-month period ended (unaudited)
	March 31,			December 31,			March 31,
	2011			2010			2010
Net income from continuing operations attributable to Company’s stockholders		6,826			5,917			1,749
Discontinued operations, net of tax		—			—			(145	)

Net income attributable to Company’s stockholders		6,826			5,917			1,604

Interest attributed to preferred convertible notes		(18	)		(23	)		(19	)
Interest attributed to common convertible notes		(8	)		(10	)		(23	)

Net income for the period adjusted		6,800			5,884			1,562


Basic and diluted earnings per share

Income available to preferred stockholders		2,585			2,231			591
Income available to common stockholders		4,130			3,579			926
Income available to convertible notes linked to preferred shares		61			53			23
Income available to convertible notes linked to common shares		24			21			22

Weighted average number of shares outstanding (thousands of shares) — preferred shares		2,008,930			1,997,276			2,030,998
Weighted average number of shares outstanding (thousands of shares) — common shares		3,209,349			3,204,203			3,181,727
Treasury preferred shares linked to mandatorily convertible notes		47,285			47,285			77,580
Treasury common shares linked to mandatorily convertible notes		18,416			18,416			74,998

Total		5,283,980			5,267,180			5,365,303


Earnings per preferred share		1.29			1.12			0.29
Earnings per common share		1.29			1.12			0.29
Earnings per convertible notes linked to preferred share (*)		1.67			1.61			0.54
Earnings per convertible notes linked to common share (*)		1.74			1.68			0.60

Continuous operations
Earnings per preferred share		1.29			1.12			0.32
Earnings per common share		1.29			1.12			0.32
Earnings per convertible notes linked to preferred share (*)		1.67			1.61			0.57
Earnings per convertible notes linked to common share (*)		1.74			1.68			0.63

Discontinued operations
Earnings per preferred share		—			—			(0.03	)
Earnings per common share		—			—			(0.03	)
Earnings per convertible notes linked to preferred share (*)		—			—			(0.03	)
Earnings per convertible notes linked to common share (*)		—			—			(0.03	)


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

If the conversion of the convertible notes had 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)
	March 31,		December 31,		March 31,
	2011		2010		2010
Income available to preferred stockholders		2,664		2,307		633
Income available to common stockholders		4,162		3,610		971
Weighted average number of shares outstanding (thousands of shares) — preferred shares		2,056,215		2,044,561		2,108,578
Weighted average number of shares outstanding (thousands of shares) — common shares		3,227,765		3,222,619		3,256,725

Earnings per preferred share		1.29		1.13		0.30
Earnings per common share		1.29		1.12		0.30

Continuous operations
Earnings per preferred share		1.29		1.13		(0.33	)
Earnings per common share		1.29		1.12		(0.33	)

Discontinued operations
Earnings per preferred share		—		—		(0.03	)
Earnings per common share		—		—		(0.03	)

Pension plans

We previously disclosed in our consolidated financial statements for the year ended December 31, 2010, that we expected to contribute US$310 to our defined benefit pension plan in 2011. As of March 31, 2011, total contributions of US$90 had been made. We do not expect any significant change in our previous estimate.


	Three-month period ended (unaudited)
	March 31, 2011
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost — benefits earned during the period		—			20			8
Interest cost on projected benefit obligation		98			104			25
Expected return on assets		(166	)		(93	)		—
Amortizations and (gain) / loss		—			9			(2	)

Net periodic pension cost (credit)		(68	)		40			31


	Three-month period ended (unaudited)
	December 31, 2010
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost — benefits earned during the period		1			8			7
Interest cost on projected benefit obligation		85			91			23
Expected return on assets		(139	)		(76	)		—
Amortizations and (gain) / loss		—			6			(7	)

Net periodic pension cost (credit)		(53	)		29			23


	Three-month period ended (unaudited)
	March 31, 2010
	Overfunded			Underfunded			Underfunded
	pension plans			pension plans			other benefits
Service cost — benefits earned during the period		—			17			6
Interest cost on projected benefit obligation		69			88			24
Expected return on assets		(115	)		(81	)		—

Net periodic pension cost (credit)		(46	)		24			30

Long-term incentive compensation plan

		Under the terms of the long-term incentive compensation 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 market rates. The total shares linked to the plan at March 31, 2011 and December 31, 2010, are 2,458,627 and 2,458,627, respectively.

		Additionally, as a 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 for 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 March 31, 2011, December 31, 2010, we recognized a liability of US$127, US$120, respectively, through the Statement of Income.

Commitments and contingencies

		a) In connection with a tax-advantaged lease financing arrangement sponsored by the French Government, we provided certain guarantees on December 30, 2004 on behalf of Vale New Caledonia S.A.S. (VNC) pursuant to which we guaranteed payments due from VNC of up to a maximum amount of US$100 (“Maximum Amount”) in connection with an indemnity. This guarantee was provided to BNP Paribas for the benefit of the tax investors of GniFi, the special purpose vehicle which owns a portion of the assets in our nickel cobalt processing plant in New Caledonia (“Girardin Assets”). We also provided an additional guarantee covering the payments due from VNC of (i) amounts exceeding the Maximum Amount in connection with the indemnity, and (ii) certain other amounts payable by VNC under a lease agreement covering the Girardin Assets. This guarantee was provided to BNP Paribas for the benefit of GniFi.

		Another commitment incorporated in the tax—advantaged lease financing arrangement was that the Girardin Assets would be substantially complete by December 31, 2010. In light of the delay in the start up of VNC processing facilities, the December 31, 2010 substantially complete date was not met. Management proposed an extension to the substantially complete date from December 31, 2010 to December 31, 2011. Both the French government authorities and the tax investors have formally agreed to this extension. Both the French tax authorities and the tax investors issued their signed extension in March 2011. Accordingly the benefits of the financing structure are fully expected to be maintained and we anticipate that there will be no recapture of the tax advantages provided under this financing structure.

		There are two bank guarantees totaling US$61 (€43 million) as at March 31, 2011 that were established by us on behalf of VNC in favor of the South Province of New Caledonia in order to guarantee the performance of VNC with respect to certain environmental obligations in relation to the metallurgical plant and the Kwe West residue storage facility.

		Sumic Nickel Netherlands B.V. (“Sumic”), a 21% stockholder of VNC, has a put option to sell to us 25%, 50%, or 100% of the shares they own of VNC. The put option can be exercised if the defined cost of the initial nickel-cobalt development project, as measured by funding provided to VNC, in natural currencies and converted to U.S. dollars at specified rates of exchange, in the form of Girardin funding, shareholder loans and equity contributions by stockholders to VNC, exceeded US$4.2 billion and an agreement cannot be reached on how to proceed with the project. On February 15, 2010, we formally amended our agreement with Sumic to increase the threshold to approximately US$4.6 billion at specified rates of exchange. On May 27, 2010 the threshold was reached and on October 22, 2010, we have signed an agreement to extend the put option date into the first half of 2011. On January 25, 2011 a further extension to the agreement was signed extending the put option date into the second half of 2011. In April 2011, we, along with Sumic, have verbally agreed to a further extension of the put option into 2012 and are currently formalizing this agreement.

		We provided a guarantee covering certain termination payments due from VNC to the supplier under an electricity supply agreement (“ESA”) entered into in October 2004 for the VNC project. The amount of the termination payments guaranteed depends upon a number of factors, including whether any termination of the ESA is a result of a default by VNC and the date on which an early termination of the ESA were to occur. During the first quarter of 2010, the supply of electricity under the ESA to the project began and the guaranteed amount now decreases over the life of the ESA from its maximum amount. As at March 31, 2011 the guarantee was US$177 (€ 125 million).

		In February 2009, we and our subsidiary, Vale Newfoundland and Labrador Limited (“VNL”), entered into a fourth amendment to the Voisey’s Bay Development agreement with the Government of Newfoundland and Labrador, Canada, that permitted VNL to ship up to 55,000 metric tonnes of nickel concentrate from the Voisey’s Bay area mines. As part of the agreement, VNL agreed to provide the Government of Newfoundland and Labrador financial assurance in the form of letters of credit, each in the amount of US$16 (CAD$16 million) for each shipment of nickel concentrate shipped out of the province from January 1, 2009 to August 31, 2009. The amount of this financial assurance was US$110 (CAD$112 million) based on seven shipments of nickel concentrate and as of March 31, 2011, US$12 (CAD$11 million) remains outstanding.

		As at March 31, 2011, there was an additional US$118 in letters of credit issued and outstanding pursuant to our syndicate revolving credit facility, as well as an additional US$84 of letters of credit and US$68 in bank guarantees that were issued and outstanding. These are associated with environmental reclamation and other operating associated items such as insurance, electricity commitments and import and export duties.

		b) 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:


	March 31, 2011 ( unaudited )				December 31, 2010
	Provision for		Judicial		Provision for		Judicial
	contingencies		deposits		contingencies		deposits
Labor and social security claims		790		931		748		874
Civil claims		488		425		510		410
Tax — related actions		785		452		746		442
Others		39		6		39		5

		2,102		1,814		2,043		1,731

		Labor and social security related actions principally comprise of claims by Brazilian current 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 relate 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 appropriation disputes.

		Tax related actions principally comprise of challenges initiated by us, on certain taxes on revenues and uncertain tax positions. We continue to vigorously pursue our interests in all the 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 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, and in the case of an unfavorable outcome, the deposits are transferred to the prevailing party.

		Contingencies settled during the three-month periods ended March 31, 2011, December 31, 2010 and March 31, 2010, totaled US$431, US$224 and US$55, respectively. Provisions recognized in the three-month periods ended March 31, 2011, December 31, 2010 and March 31, 2010, totaled US$54, US$41 and US$70, 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 reasonably possible but not probable, in the total amount of US$5,110 at March 31, 2011, and for which no provision has been made (December 31, 2010 — US$4,787).

		c) At the time of our privatization in 1997, the Company issued debentures to its then-existing stockholders, including the Brazilian Government. The terms of the debentures, were set to ensure that the pre-privatization stockholders, including the Brazilian Government would participate in possible future financial benefits that could be obtained from exploiting certain mineral resources.

		A total of 388,559,056 Debentures were issued at a par value of R$ 0.01 (one cent), whose value will be restated in accordance with the variation in the General Market Price Index (IGP-M), as set forth in the Issue Deed.

		The debentures holders have the right to receive premiums, paid semiannually, equivalent to a percentage of net revenues from specific mine resources as set forth in the indenture.

		In April 2011 (subsequent period) we paid remuneration on these debentures of US$8.

		d) 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)
	March 31,			December 31,			March 31,
	2011			2010			2010
Beginning of period		1,368			1,230			1,116
Accretion expense		41			34			27
Liabilities settled in the current period		(10	)		(33	)		(8	)
Revisions in estimated cash flows (*)		(63	)		110			(2	)
Cumulative translation adjustment		32			27			(4	)

End of period		1,368			1,368			1,129


Current liabilities		71			75			79
Non-current liabilities		1,297			1,293			1,050

Total		1,368			1,368			1,129

Other expenses

The line “Other operating expenses” totaled US$ 420 in March 31, 2011 (US$ 774 in December 31, 2010 and US$ 538 in March 31, 2010) most due to pre operational expenses, idle capacity and stoppage operations US$ 132 (US$ 471 in December 31, 2010 and US$ 228 in March 31, 2010).

Fair value disclosure of financial assets and liabilities

		The Financial Accounting Standards Board, through Accounting Standards Codification and Accounting Standards Updates, defines fair value and set out a framework for measuring fair value, which refers to valuation concepts and practices and requires certain disclosures about fair value measurements.

		a) Measurements

		The pronouncements define 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 this standard, 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 on 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 on 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, which 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 March 31, 2011 and December 31, 2010 are summarized below:

• Available-for-sale securities

They are securities that are not classified either as held-for-trading or as held-to-maturity for strategic reasons and have readily available market prices. 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 to estimate the fair value of the swaps discounting their cash flows using the interest rate of the currency they are denominated and, also for the commodities contracts, since the fair value is computed by using forward curves for each commodity.

• Debentures

The fair value is measured by the market approach method, and the 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 follows:


	As of March 31, 2011 (Unaudited)
	Carrying amount			Fair value			Level 1		Level 2
Available for sale		10			10			10		—
Unrealized gain on derivatives		504			504			16		488
Debentures		(1,387	)		(1,387	)		—		(1,387	)


	As of December 31
	Carrying amount			Fair value			Level 1		Level 2
Available for sale		12			12			12		—
Unrealized gains on derivatives		257			257			1		256
Debentures		(1,284	)		(1,284	)		—		(1,284	)

		c) Measurements on a non-recurring basis

		The Company also has assets under certain conditions that are subject to measurement at fair value on a non-recurring basis. These assets include goodwill and assets acquired and liabilities assumed in business combinations. During the year ended March 31, 2011, we have not recognized any additional impairment for those items.

		d) Financial Instruments

		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 on 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 is reported at amortized cost, and the income of time deposits is accrued monthly according to the contract rate. The estimated fair value measurement is disclosed as follows:


	As of March 31, 2011 (Unaudited)
	Carrying amount			Fair value			Level 1			Level 2
Time deposits		540			540			—			540
Long-term debt (*)		(23,221	)		(23,967	)		(17,211	)		(6,756	)


	As of December 31, 2010
	Carrying amount			Fair value			Level 1			Level 2
Time deposits		1,793			1,793			—			1,793
Long-term debt (*)		(24,071	)		(25,264	)		(19,730	)		(5,534	)


(*)		Less accrued charges of US$364 and US$343 as of March 31, 2011 and December 31, 2010, respectively.

Segment and geographical information

		We adopt disclosures about segments of an enterprise and related information with respect to the information we present about our operating segments. The relevant standard requiring such disclosures 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. In line with our strategy to become a leading global player in the fertilizer business, on May 27, 2010 we acquired 58.6% of the equity capital of Fertilizantes Fosfatados S.A. — Fosfertil (Fosfertil) and the Brazilian fertilizer assets of Bunge Participações e Investimentos S.A. (BPI), currently renamed Vale Fosfatados S.A. Considering this new segment acquisition, fertilizers, and the related reorganization that occurred for the operating segments are:

		Bulk Material — comprised of iron ore mining and pellet production, as well as our Brazilian Northern and Southern transportation systems, including railroads, ports and terminals, as they pertain to mining operations. Manganese mining and ferroalloys are also included in this segment.

		Base Metals — comprised of the production of non-ferrous minerals, including nickel (co-products and by-products), copper and investments in joint ventures and affiliates engaged in aluminum.

		Fertilizers — comprised of the three important groups of nutrients: potash, phosphates and nitrogen. This business is being formed through a combination of acquisitions and organic growth.

		Logistic Services — comprised of our transportation systems as they pertain to the operation of our ships, ports and railroads for third-party cargos.

		Others — comprised of our investments in joint ventures and affiliates engaged in other businesses.

		Information presented to senior management with respect to the performance of each segment is generally derived directly from the accounting records maintained in accordance with accounting practices adopted in Brazil together with certain minor inter-segment allocations.

Consolidated net income and principal assets are reconciled as follows:

Results by segment — before eliminations (aggregated)


	Three-month period ended (unaudited)
	March 31, 2011																					December 31, 2010																					March 31, 2010
	Bulk			Base																		Bulk			Base																		Bulk			Base
	Material			Metals			Fertilizers			Logistic			Others			Elimination			Consolidated			Material			Metals			Fertilizers			Logistic			Others			Elimination			Consolidated			Material			Metals			Fertilizers			Logistic			Others			Elimination			Consolidated
RESULTS
Gross revenues		16,488			3,088			831			389			185			(7,433	)		13,548			18,687			3,760			862			456			333			(8,891	)		15,207			7,703			2,133			65			352			77			(3,482	)		6,848
Cost and expenses		(10,003	)		(1,873	)		(688	)		(351	)		(311	)		7,433			(5,793	)		(11,334	)		(2,792	)		(776	)		(400	)		(255	)		8,891			(6,666	)		(5,093	)		(1,860	)		(39	)		(292	)		(69	)		3,482			(3,871	)
Research and development		(112	)		(74	)		(18	)		(21	)		(117	)		—			(342	)		(103	)		(109	)		(39	)		(30	)		(20	)		—			(301	)		(44	)		(42	)		(7	)		(11	)		(68	)		—			(172	)
Gain on sale of assets		—			1,513			—			—			—			—			1,513			—			—			—			—			—			—			—			—			—			—			—			—			—			—
Depreciation, depletion and amortization		(434	)		(357	)		(117	)		(44	)		(5	)		—			(957	)		(424	)		(480	)		(128	)		(41	)		—			—			(1,073	)		(376	)		(325	)		(7	)		(35	)		—			—			(743	)

Operating income (loss)		5,939			2,297			8			(27	)		(248	)		—			7,969			6,826			379			(81	)		(15	)		58			—			7,167			2,190			(94	)		12			14			(60	)		—			2,062
Financial income		838			2			16			3			2			(696	)		165			696			198			17			3			9			(806	)		117			566			(2	)		—			1			188			(705	)		48
Financial expenses		(1,022	)		(230	)		(9	)		(15	)		(2	)		696			(582	)		(1,160	)		(503	)		(7	)		(2	)		(60	)		806			(926	)		(757	)		(199	)		—			(7	)		(207	)		705			(465	)
Gains (losses) on derivatives, net		251			(12	)		—			—			—			—			239			486			(13	)		—			—			—			—			473			(199	)		(31	)		—			—			—			—			(230	)
Foreign exchange and monetary gains (losses), net		18			13			56			(7	)		—			—			80			(46	)		80			45			(21	)		(7	)		—			51			(53	)		26			—			(2	)		(1	)		—			(30	)
Discontinued operations, net of tax		—			—			—			—			—			—			—			—			—			—			—			—			—			—			—			(145	)		—			—			—			—			(145	)
change in provision for losses on equity investments		258			(3	)		—			36			(11	)		—			280			403			9			—			32			(141	)		—			303			58			6			—			12			20			—			96
Income taxes		(981	)		(401	)		3			2			—			—			(1,377	)		(1,268	)		125			(9	)		9			6			—			(1,137	)		147			67			—			4			21			—			239
Noncontrolling interests		2			14			4			—			32			—			52			(2	)		(144	)		19			—			(4	)		—			(131	)		—			29			—			—			—			—			29

Net income attributable to the Company’s stockholders		5,303			1,680			78			(8	)		(227	)		—			6,826			5,935			131			(16	)		6			(139	)		—			5,917			1,952			(343	)		12			22			(39	)		—			1,604

Sales classified by geographic destination:
Foreign market
America, except United States		472			540			19			2			2			(308	)		727			459			550			28			—			—			(263	)		774			193			271			—			12			2			(145	)		333
United States		6			479			—			—			2			(12	)		475			53			294			—			—			—			(14	)		333			1			148			—			—			2			(16	)		135
Europe		3,680			677			32			2			12			(1,767	)		2,636			3,555			1,152			6			—			14			(2,046	)		2,681			2,151			665			—			—			2			(1,461	)		1,357
Middle East/Africa/Oceania		853			16			—			—			—			(413	)		456			739			120			18			—			—			(247	)		630			193			49			—			—			—			(13	)		229
Japan		1,979			377			—			—			—			(847	)		1,509			2,113			453			—			—			8			(912	)		1,662			1,206			272			—			—			—			(646	)		832
China		6,825			397			—			—			41			(3,239	)		4,024			8,939			380			—			—			22			(4,074	)		5,267			2,675			201			—			—			—			(716	)		2,160
Asia, other than Japan and China		1,365			406			14			—			—			(601	)		1,184			1,604			603			13			—			—			(856	)		1,364			451			326			—			—			—			(233	)		544
Brazil		1,308			196			766			385			128			(246	)		2,537			1,225			208			797			456			289			(479	)		2,496			833			201			65			340			71			(252	)		1,258

		16,488			3,088			831			389			185			(7,433	)		13,548			18,687			3,760			862			456			333			(8,891	)		15,207			7,703			2,133			65			352			77			(3,482	)		6,848

Operating segment — after eliminations (disaggregated)


	Three-month period ended (unaudited)
	March 31, 2011
														Depreciation,						Property, plant		Addition to
			Value added					Cost and			Operating			depletion and			Operating			and equipment,		property, plant
	Revenue		tax			Net revenues		expenses			profit			amortization			income			net		and equipment		Investments
Bulk Material
Iron ore		7,287		(110	)		7,177		(1,736	)		5,441			(357	)		5,084			29,377		1,177		125
Pellets		1,878		(61	)		1,817		(840	)		977			(36	)		941			2,551		353		1,035
Manganese		43		(2	)		41		(21	)		20			(5	)		15			20		—		—
Ferroalloys		157		(12	)		145		(111	)		34			(11	)		23			308		11		—
Coal		154		—			154		(253	)		(99	)		(25	)		(124	)		3,409		388		244

		9,519		(185	)		9,334		(2,961	)		6,373			(434	)		5,939			35,665		1,929		1,404
Base Metals
Nickel and other products (*)		2,115		—			2,115		(1,150	)		965			(338	)		627			29,409		371		16
Copper concentrate		251		(17	)		234		(132	)		102			(18	)		84			3,519		170		110
Aluminum products		383		(5	)		378		(304	)		74			(1	)		73			—		16		3,689

		2,749		(22	)		2,727		(1,586	)		1,141			(357	)		784			32,928		557		3,815
Fertilizers
Potash		62		(4	)		58		(69	)		(11	)		(7	)		(18	)		1,764		7		—
Phosphates		536		(28	)		508		(408	)		100			(87	)		13			7,811		127		—
Nitrogen		172		(23	)		149		(127	)		22			(23	)		(1	)		839		—		—
Others fertilizers products		17		(3	)		14		—			14			—			14			—		—		—

		787		(58	)		729		(604	)		125			(117	)		8			10,414		134		—
Logistics
Railroads		250		(45	)		205		(197	)		8			(37	)		(29	)		1,383		36		534
Ports		78		(9	)		69		(60	)		9			(7	)		2			469		37		—
Ships		—		—			—		—			—			—			—			770		23		137

		328		(54	)		274		(257	)		17			(44	)		(27	)		2,622		96		671
Others		165		(16	)		149		(392	)		(243	)		(5	)		(248	)		4,869		97		2,436
Gain on sale of assets		—		—			—		1,513			1,513			—			1,513			—		—		—

		13,548		(335	)		13,213		(4,287	)		8,926			(957	)		7,969			86,498		2,813		8,326


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

Operating segment — after eliminations (disaggregated)


	Three-month period ended (unaudited)
	December 31, 2010
														Depreciation,						Property, plant		Addition to
			Value added					Cost and			Operating			depletion and			Operating			and equipment,		property, plant
	Revenue		tax			Net revenues		expenses			profit			amortization			income			net		and equipment			Investments
Bulk Material
Iron ore		8,477		(101	)		8,376		(2,275	)		6,101			(360	)		5,741			30,412		831			107
Pellets		1,927		(55	)		1,872		(785	)		1,087			(29	)		1,058			1,445		87			1,058
Manganese		44		(2	)		42		(33	)		9			(4	)		5			24		2			—
Ferroalloys		186		(14	)		172		(81	)		91			(7	)		84			292		16			—
Coal		241		—			241		(279	)		(38	)		(24	)		(62	)		3,020		289			223

		10,875		(172)			10,703		(3,453	)		7,250			(424)			6,826			35,193		1,225			1,388

Base Metals
Nickel and other products (*)		2,017		—			2,017		(1,346	)		671			(454	)		217			28,623		724			23
Copper concentrate		311		(11	)		300		(201	)		99			(25	)		74			3,579		(25	)		90
Aluminum products		691		(4	)		687		(598	)		89			(1	)		88			395		216			152

		3,019		(15	)		3,004		(2,145	)		859			(480	)		379			32,597		915			265
Fertilizers
Potash		73		—			73		(131	)		(58	)		(7	)		(65	)		474		348			—
Phosphates		541		(12	)		529		(443	)		86			(79	)		7			7,560		188			—
Nitrogen		151		(19	)		132		(115	)		17			(42	)		(25	)		809		1			—
Others fertilizers products		4		(2	)		2		—			2			—			2			146		3			—

		769		(33	)		736		(689	)		47			(128	)		(81	)		8,989		540			—
Logistics
Railroads		262		(39	)		223		(190	)		33			(37	)		(4	)		1,278		71			511
Ports		72		(8	)		64		(71	)		(7	)		(7	)		(14	)		297		22			—
Ships		—		—			—		—			—			3			3			747		747			135

		334		(47	)		287		(261	)		26			(41	)		(15	)		2,322		840			646
Others		210		(11	)		199		(141	)		58			—			58			3,995		1,222			2,198

		15,207		(278	)		14,929		(6,689	)		8,240			(1,073	)		7,167			83,096		4,742			4,497


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

Operating segment — after eliminations (disaggregated)


	Three-month period ended (unaudited)
	March 31, 2010
																				Property,		Addition to
														Depreciation,						plant and		property,
			Value added			Net		Cost and			Operating			depletion and			Operating			equipment,		plant and
	Revenue		tax			revenues		expenses			profit			amortization			income			net		equipment		Investments
Bulk Material
Iron ore		3,747		(70	)		3,677		(1,449	)		2,228			(325	)		1,903			24,664		554		98
Pellets		775		(68	)		707		(432	)		275			(24	)		251			1,581		52		1,033
Manganese		58		—			58		(15	)		43			(1	)		42			24		—		—
Ferroalloys		142		(16	)		126		(72	)		54			(11	)		43			251		5		—
Coal		127		—			127		(161	)		(34	)		(15	)		(49	)		1,735		29		219
Pig iron		—		—			—		—			—			—			—			—		—		—

		4,849		(154	)		4,695		(2,129	)		2,566			(376	)		2,190			28,255		640		1,350
Base Metals
Nickel and other products (*)		747		—			747		(658	)		89			(239	)		(150	)		27,801		322		27
Kaolin		—		—			—		—			—			—			—			—		—		—
Copper concentrate		180		(7	)		173		(123	)		50			(18	)		32			2,483		224		85
Aluminum products		599		(10	)		589		(497	)		92			(60	)		32			4,536		61		141

		1,526		(17	)		1,509		(1,278	)		231			(317	)		(86	)		34,820		607		253
Fertilizers
Potash		65		(3	)		62		(43	)		19			(7	)		12			1,792		5		—

		65		(3	)		62		(43	)		19			(7	)		12			1,792		5		—
Logistics
Railroads		236		(42	)		194		(152	)		42			(27	)		15			1,044		21		470
Ports		75		(10	)		65		(55	)		10			(6	)		4			239		2		—
Ships		3		—			3		(6	)		(3	)		(2	)		(5	)		—		—		122

		314		(52	)		262		(213	)		49			(35	)		14			1,283		23		592
Others		94		(18	)		76		(136	)		(60	)		(8	)		(68	)		1,940		542		2,321

		6,848		(244	)		6,604		(3,799	)		2,805			(743	)		2,062			68,090		1,817		4,516


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

Derivative financial instruments

Risk management policy

Vale has developed its risk management strategy in order to provide an integrated approach of the risks the Company is exposed to. To do that, Vale evaluate not only the impact of market risk factors in the business results (market risk), but also the risk arising from third party obligations with Vale (credit risk) and those risks inherent in Vale’s operational processes (operational 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 flows 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 on cash flows.

The risk management policy and 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 independent areas. The strategy and risk management department is responsible for defining and proposing to the risk management committee market risk mitigation strategies consistent with Vale’s and its wholly owned subsidiaries corporate strategy. The finance department is responsible for the execution of the risk mitigation strategies through the use of derivatives. The independence of the areas guarantees an effective control on these operations.

When measuring our exposures, the correlations between market risk factors are taken into consideration once we must be able to evaluate the net impact on our cash flows from all main market variables. We are also able to identify a natural diversification of products and currencies in our portfolio and therefore a natural reduction of the overall risk of the Company.

The consolidated market risk exposure and the portfolio of derivatives are measured monthly and monitored in order to evaluate the financial results and market risk impacts on 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;

	•		Product 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 the US dollars, most of our costs, disbursements and investments are indexed to currencies other than the US dollar, mainly the Brazilian real and Canadian dollar.

Derivative instruments may be used to reduce Vale’s potential cash flow volatility arising from its currency mismatch.

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 US 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 US dollars floating rate debt is subject to changes in the LIBOR (London Interbank Offer Rate in US 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 US dollar floating rates. When natural hedges are not present, we may opt to look for the same effect by using financial instruments.

Our Brazilian real denominated debt subject to floating interest rates refers to 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 used to convert debt linked to Brazilian reais into U.S. Dollars have similar — and sometimes shorter — settlement dates than the final maturity of the debt instruments. Their amounts are similar to the principal and interest payments, subjected to liquidity market conditions. The swaps with shorter settlement date than the debts’ final maturity are renegotiated through time so that their final maturity match — or become closer — to the debt final maturity. At each settlement date, the results on the swap transactions partially offset the impact of the foreign exchange rate in our obligations, contributing to stabilize the cash disbursements in U.S. Dollars for the interest and/or principal payment of our Brazilian Real denominated debt.

In the event of an appreciation (depreciation) of the Brazilian real against the US dollar, the negative (positive) impact on our Brazilian real denominated debt obligations (interest and/or principal payment) measured in US dollars will be partially offset by a positive (negative) effect from a swap transaction, regardless of the US 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 US dollars. We have also entered into a swap to convert the cash flow from a debt instrument issued originally in Euro into US dollars. In this derivative transaction, we receive fixed interest rates in Euros and pay fixed interest rates in US dollars.

In order to reduce the cash flows volatility associated with the foreign exchange exposure from some coal fixed price sales, Vale purchased forward Australian dollars. These trades matured in January 2011.

Product price risk

Vale is also exposed to several market risks associated with commodities price volatilities. Currently, our derivative transactions include nickel, , copper and bunker oil derivatives and all have the same purpose of mitigating Vale’s cash flow volatility.

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

	•		Sales Hedging Program — in order to protect our cash flows in 2011 and 2012, we entered into derivative transactions where we fixed the prices of some of our nickel sales during the period.

	•		Fixed price sales program — we use to enter into nickel future contracts on 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. Whenever the ‘Strategic derivative program’ is executed, the ‘Fixed price sales program’ is interrupted.

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

Copper — We entered into derivatives transactions in order 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.

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

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 the movement of nickel and copper prices. These provisions are considered embedded derivatives.

Under the Standard 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 March 31, 2011, we have outstanding positions designated as cash flow hedge. 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 cash flow hedge, the effective portion of the changes in the fair value of the derivative is recorded in other comprehensive income and recognized in earnings when the hedged item affects earnings. However, the ineffective portion of changes in the fair value of the derivatives designated as hedges is 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.


	Assets								Liabilities
	As of March 31 (Unaudited)				As of December 31				As of March 31 (Unaudited)				As of December 31
	2011				2010				2011				2010
	Short-term		Long-term		Short-term		Long-term		Short-term		Long-term		Short-term		Long-term
Derivatives not designated as hedge
Foreign exchange and interest rate risk
CDI & TJLP vs. floating & fixed swap		—		431		—		300		—		—		—		—
EURO floating rate vs. USD floating rate swap		1		—		1		—		—		—		—		—
USD floating rate vs. fixed USD rate swap		—		—		—		—		3		—		4		—
EuroBond Swap		—		34		—		—		—		—		—		8
Pre Dollar Swap		—		3		—		1		—		—		—		—
AUD floating rate vs. fixed USD rate swap		—		—		2		—		—		—		—		—

		1		468		3		301		3		—		4		8

Commodities price risk
Fixed price program		16		—		13		—		3		—		12		—
Strategic program		—		—		—		—		—		—		15		—
Bunker Oil Hedge		40		—		16		—		—		—		—		—
Coal		—		—		—		—		—		—		2		—
Maritime Freight Hiring Protection Program		—		—		—		—		—		—		2		—

		56		—		29		—		3		—		31		—

Derivatives designated as hedge
Foreign exchange cash flow hedge		46		—		20		—		—		—		—		—
Strategic Nickel		—		—		—		—		—		61		—		53

		46		—		20		—		—		61		—		53

Total		103		468		52		301		6		61		35		61

The following table presents the effects of derivatives for the periods ended:


	Amount of gain or (loss) recognized as financial income (expense)									Financial settlement									Amount of gain or (loss) recognized in OCI
	Three-month period ended (unaudited)									Three-month period ended (unaudited)									Three-month period ended (unaudited)
	March 31, 2011			December 31, 2010			March 31, 2010			March 31, 2011			December 31, 2010			March 31, 2010			March 31, 2011			December 31, 2010			March 31, 2010
Derivatives not designated as hedge

Foreign exchange and interest rate risk
CDI & TJLP vs. USD fixed and floating rate swap		175			259			(50	)		(48	)		(819	)		(29	)		—			—			—
EURO floating rate vs. USD floating rate swap		—			—			—			—			1			—			—			—			—
USD floating rate vs. USD fixed rate swap		—			—			(1	)		1			(2	)		2			—			—			—
Swap Convertibles		—			—			—			—			—			—			—			—			—
Swap NDF		—			—			—			—			—			—			—			—			—
EuroBond Swap		42			1			—			—			—			—			—			—			—
Pre Dollar Swap		2			—			—			—			—			—			—			—			—
AUD floating rate vs. fixed USD rate swap		—			1			2			(2	)		(1	)		(1	)		—			—			—

		219			261			(49	)		(49	)		(821	)		(28	)		—			—			—

Commodities price risk
Nickel
Fixed price program		13			—			(9	)		(1	)		—			(1	)		—			—			—
Purchase program		—			—			—			—			—			—			—			—			—
Strategic program		15			(2	)		(139	)		—			39			14			—			—			—
Natural gas		—			—			—			—			—			—			—			—			—
Aluminum		—			—			—			7			—			16			—			—			—
Maritime Freight Hiring Protection Program		—			5			(3	)		2			(11	)		(10	)		—			—			—
Coal		—			(2	)		(1	)		2			2			—			—			—			—
Bunker Oil Hedge		32			13			(6	)		(8	)		(7	)		(13	)		—			—			—

		60			14			(158	)		2			23			6			—			—			—

Embedded derivatives:
For nickel concentrate costumer sales		—			—			—			—			—			—			—			—			—
Customer raw material contracts		—			—			—			—			—			—			—			—			—
Energy — Aluminum options		(7	)		(7	)		(23	)		—			—			—			—			—			—

		(7	)		(7	)		(23	)		—			—			—			—			—			—

Derivatives designated as hedge
Bunker Oil Hedge		—			—			—			—			—			—			—			—			—
Aluminum		—			—			—			—			18			13			—			7			2
Strategic Nickel		(33	)		1			—			33			—			—			(9	)		(25	)		(53	)
Foreign exchange cash flow hedge		—			204			—			(13	)		(225	)		(4	)		14			(115	)		28

		(33	)		205			—			20			(207	)		9			5			(133	)		(23	)

Total		239			473			(230	)		(27	)		(1,005	)		(13	)		5			(133	)		(23	)

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		December 2011
Nickel		December 2012

Subsequent Event

In April 29, 2011, the Board of Directors has approved Samarco’s fourth pellet plant project. The project encompasses the construction of a fourth pellet plant with capacity of 8.3 Million ton per year - Mtpy. The start-up is scheduled for the first half of 2014 and the total investment is estimated at US$3.0 billion (Vale has a 50% interest in Samarco), which is not part of Vale’s own capital expenditures program.

On April 28, 2011, the Board of Directors has approved the acquisition of up to 9% of Northern Energy S.A. (NESA), which is currently held by Gaia Energia e Participações S.A. (Gaia), subject to certain conditions. NESA was established with the sole purpose of implementing, operating and exploring of the Belo Monte hydroelectric plant. Vale estimated an investment of US$1.4 billion to repay Gaia by capital contributions made in NESA and commitments of future capital contributions arising from the acquired stake.

In April 8, 2011, we announced that we had agreed the terms of an offer to acquire, through a wholly-owned subsidiary, the total share capital of Metorex Limited (Metorex) a copper and cobalt producer, with operations in the African copperbelt, listed on the Johannesburg Stock Exchange (JSE), for the amount of 7.35 South African rands (ZAR) per share totaling ZAR 7,524 million on a fully diluted basis, and equivalent to US$-1,125 at lost closing’s US$/ZAR exchange rate, to be paid in cash. The acquisition is conditional on the applicable government and regulatory approvals, consents and waivers in South Africa, Zambia and the DRC, and approval by minority holders in the subsidiary companies, as well as to customary closing conditions. In addition, the sale or transfer of Sable Zinc Kabwe Limited, a processing operation in Zambia that produces copper cathodes and cobalt, by Metorex to a third party is also a condition.

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

Board of Directors

Ricardo José da Costa Flores

Chairman

Mário da Silveira Teixeira Júnior

Vice-President

Fuminobu Kawashima
José Mauro Mettrau Carneiro da Cunha
José Ricardo Sasseron
Luciano Galvão Coutinho
Nelson Henrique Barbosa Filho
Oscar Augusto de Camargo Filho
Paulo Soares de Souza
Robson Rocha
Renato da Cruz Gomes

Alternate

Deli Soares Pereira
Eustáquio Wagner Guimarães Gomes
Eduardo de Oliveira Rodrigues Filho
Hajime Tonoki

João Moisés de Oliveira

Luiz Carlos de Freitas
Marco Geovanne Tobias da Silva
Paulo Sergio Moreira da Fonseca
Raimundo Nonato Alves Amorim
Sandro Kohler Marcondes

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
Ricardo José da Costa Flores

Finance Committee
Guilherme Perboyre Cavalcanti
Eduardo de Oliveira Rodrigues Filho
Luiz Maurício Leuzinger
Luciana Freitas Rodrigues

Governance and Sustainability Committee
Gilmar Dalilo Cezar Wanderley
Renato da Cruz Gomes
Ricardo Simonsen

Fiscal Council

Marcelo Amaral Moraes

Chairman

Aníbal Moreira dos Santos
Antônio Henrique Pinheiro Silveira
Arnaldo José Vollet

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
Eduardo de Salles Bartolomeo
Executive Officer for Integrated Bulk Operations
Eduardo Jorge Ledsham
Executive Office for Exploration, Energy and Projects

Guilherme Perboyre Cavalcanti
Chief Financial Officer and Investor Relations

José Carlos Martins
Executive Officer for Marketing, Sales and Strategy

Mario Alves Barbosa Neto
Executive Officer for Fertilizers

Tito Botelho Martins
Executive Officer for Base Metals Operations

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.


	Vale S.A. (Registrant)
	By:	/s/ Roberto Castello Branco
Date: May 5, 2011		Roberto Castello Branco
		Director of Investor Relations

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