DBRS Assigns BBB (high) Rating with Stable Trend to Vale’s New Euro Notes

DBRS has today assigned a provisional rating of BBB (high), with a Stable trend, to the proposed long-term notes (the Notes) to be issued by Vale S.A. (Vale or the Company) in the European capital markets. Vale intends to use the proceeds for general corporate purposes, including funding capital expenditures, managing the currency and maturity profile of its liabilities and potentially making acquisitions.

Vale will offer the Notes under a supplemental prospectus to the Company’s prospectus dated November 3, 2009, a preliminary version of which was filed March 11, 2010.

The Notes will be general obligations of Vale and are not secured by any collateral. The rights of holders of the Notes to payments under the Notes will be (1) junior to the rights of secured creditors of Vale to the extent of their interest in Vale’s assets; (2) equal with the rights of creditors under all of Vale’s other unsecured and unsubordinated debt; and (3) effectively subordinated to the rights of any creditor of a subsidiary of Vale over the assets of that subsidiary.

Vale may redeem the Notes, in whole at any time or in part from time to time, at a redemption price equal to the greater of 100% of the principal amount of the Notes to be redeemed and a “make whole” amount plus, in each case, accrued and unpaid interest on such Notes to the date of redemption. Vale has made application to list the Notes on the Luxembourg Stock Exchange.

Vale is one of the largest diversified mining companies in the world, the world’s largest producer of iron ore and the second largest producer of nickel. Vale’s large reserve base and low production costs underpin a strong business profile. The Company has committed an aggressive capital budget for 2010 of $12.9 billion. It also continues to be active on the acquisition front, recently announcing its plans to acquire fertilizer assets of Bunge Ltd., including its interests in Fertilizantes Fosfatados S.A. – Fosfertil (Fosfertil), and the bulk of the minority interest in Fosfertil for a total cost of approximately $5.7 billion. Fosfertil continues to have approximately $1 billion (at the price Vale paid) in preferred shares outstanding in public hands. DBRS believes that Vale’s strong business profile and solid financial metrics have allowed it to withstand the 2008–2009 downturn in commodity prices while maintaining a number of growth projects and will allow the Company to continue to pursue its growth and diversification efforts going forward. Over the long term, DBRS believes that Vale should benefit from the economic recovery and a growing demand for minerals as growth in lesser developed countries continues.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Mining, which can be found on our website under Methodologies.

This is a Corporate (Natural Resources) rating.