1 Vale Technology Institute

DEPARTAMENTO DO INSTITUTOTECNOLÓGICO VALE - DITV

Luiz Mello luiz.mello@vale.com

Vale Technological Institute:A Mining Company Strategy for the 21st Century

Technology and Innovation at Vale Vale's technology centersVale Base Metals Technology Development (VBMTD, Canada)

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When Vale acquired Canadian mining company Inco in 2006, it also gained an important technology center, now called the Vale Bse Metals Technology Development center, in Mississauga in the Toronto region. Having operated for more than 100 years, the facility is a global center of reference in nickel technology and is staffed by 130 employees.

The main aim of this technology center is to increase Vale’s competitive advantages in the nickel business, supporting the company’s growth strategies through the responsible, safe and environmentally friendly use of technology, particularly in the fields of nickel and copper processing, hydrometallurgy and pyrometallurgy.

Opened in September 2008, following a R$15 million investment.

It has first-class facilities for simulating the entire iron production process, including the processing stage and the behavior of ore in steelworks. The center’s main objective is to evaluate iron ore’s characteristics and its suitability for use in steelworks.

Located in Nova Lima in the metropolitan region of Belo Horizonte (Minas Gerais), the center’s laboratories are equipped with modern scientific and technological resources and staffed by 30 researchers and 50 technical and administrative professionals.

Technology and Innovation at Vale Vale's technology centersFerrous Metals Technology Center (CTF)

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Since the 1960s, when the Mineral Development Center was established in Minas Gerais, Vale has been investing in technological development. Since Vale entered the global mining market in 2002, this center has been developing the technologies used in its greenfield projects.

• Bayovar Project in Peru: phosphates• Moatize Project in Mozambique: coal• Tres Valles Project in Chile: copper• Evate Project in Mozambique: phosphates• Neuquem Project in Argentina: potash• Las Cuevas Project in Colombia: coal• Antofalla Project in Argentina: potash

Technology and Innovation at Vale Vale's technology centers

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Reduction in water consumption:

At Carajás Mine in Pará, where Vale currently produces around one third of its iron ore, a new technology has enabled water savings equivalent to the amount consumed by a city of 430,000 inhabitants (19.7 million m3 per year) and has also cut power consumption by over 18,000 megawatts per year, by eliminating the use of water to process ore.

Reduction in CO2 emissions:

In the “truckless” system developed by Vale, mining is carried out using mobile crushing units and conveyor belts to replace off-highway trucks. This new approach cuts CO2 emissions by around 77%, reduces diesel consumption by 76% and lessens workers’ risk exposure.

Reduction in dust emissions:

To prevent particulates in ore heaps from being dispersed by the wind, Vale used “wind fence” technology for the first time in Latin America, at Tubarão Port in Vitória. The first wind fence installed cut dust emissions by approximately 77%.

Technology and Innovation at Vale Leveraging value

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Using lower-grade iron ore:

At the oldest mines of Minas Gerais, modern processing technologies will allow ore of 40% iron content or less to be enriched to around 62% to 65%, in line with market specifications. This process represents the third technological wave in making use of mineral resources in the Iron Quadrangle region, starting in the 1940s with rich hematite ore, evolving through technological advances to use friable low-grade itabirite, and now using compact, even lower-grade itabirite.

Using lower-grade potash ore:

In Sergipe, Vale operates a pilot plant and uses the solution mining technique rather than convention underground methods. The project entails extracting carnallite rock, with much lower concentrations of KCl (12%) than the sylvinite rock currently mined at Vale’s industrial unit in Sergipe (26%).

Technology and Innovation at Vale Ever-more complex mineral deposits – containing contaminants and at great depths – require new technologies

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Technology and Innovation at Vale Investment in technological innovation

Innovative technologies for copper:

Vale is studying alternative ways of developing copper resources in the Carajás region. A demonstration plant is currently operating in the copper mine’s industrial area to test a cutting-edge technology for treating copper concentrates. This plant, which is capable of producing 10,000 tons of copper cathode per year, is testing the technical and economic feasibility of the hydrometallurgical process.

Limitations to conventional processes are primarily economic (low intrinsic value, high processing cost, etc) or technical (such as the presence of contaminants). Technological innovation is essential to the sustainability of mining.

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Innovative technologies for coal:

In association with Portuguese company SGC Energia, Vale is developing a technology to produce liquid fuels as an alternative to petroleum. The technology enables coal deposits to be harnessed to a greater extent by using their smaller fractions. It will be tested on a pilot scale at the industrial area of Vale’s coal mine in Mozambique.

Innovative technologies for nickel:

Lateritic nickel ores account for around 70% of global reserves of this metal. Various technological challenges involved in processing these ores must be overcome in order for new projects to become economically attractive in current market conditions. Vale is studying, evaluating and developing a range of innovative hydrometallurgical processing technologies to make using lateritic nickel ores economically feasible.

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Technology and Innovation at Vale Investment in technological innovation

Operating ModelDITV’s operations are centered in H3 research

Source: Christian Terwieschand Karl Urich (2009) Innovation Tournaments: Creating and Selecting Exceptional Opportunities

Situation 1:Application of new technologies to current technological challenges

Situation 2:Application of new technologies to new markets

Situation 3:

Use of technologies mastered by Vale in new applications

What is an “H3” problem?

Mar

ket

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New market

Existing market in which the company does not operate

Existing market in which the company operates

Existing technology mastered by the company

Existing technology not mastered by company

New technology

Knowledge of technology

Exploration of new markets

Growth into adjacent markets

Improvements and cost reduction variations

New business categories

New generation of products

Exploration of new categories

Horizon 3

Horizon 2

Horizon 1

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Vale Technology Committee is the first initiative towards strategic coordination of Vale’s technology and R&D activities and investments.

Vale Technology Committee – VTCStrategic Technology Management

VSE

Technology Committee

VEL

Tecnored

Fertilizers

Strategy

Biopalma

Technology Services R&D

BioEnergy

EnergyEnviron. &

SustainableDevelop.

Innovation andDevelopment

Integrated Plan. & Tech.

Develop.

Ferrous Planning and

Develop.

Vale Technological

Institute

Process Technology -

Canada

Science goals

Technological ResearchDITV has taken an important step forward in shifting Vale’s technology and innovation management towards an “open-innovation” approach

History of R&D at Vale

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1965 1997 2003 2006 2009

2 3 4 5

Revenues

Expenses

Closed Model

Revenue in the market itself

Internal development center

Closed Innovation Model

Open Innovation Model

New revenues

New markets

Present market

Spin-offs

Revenue in the market itself

Internal development center

Licensing

New markets

Open Innovation Model

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SUTEC created

Business units decentralized

Technology Committee created

R&D structure and ITV’s vision evaluated

DITV institutionally formalized

Vale Technology InstituteAspiration

Architectural modelITV Sustainable Development – Belém, Pará

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Architect: Fernando Peixoto

Vale Technology Institute Architectural DesignITV Mining – Ouro Preto

Europe

Canadá

China

Brazil

Australia

USA

ITV DSPará

ITV MinMinas Gerais

ÁfricaNetwork

ITV

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Operating Model A collaborative network connecting not only ITV centers, but also domestic and international institutions

Vale Technology InstituteLegal FrameworkBy-laws approved on April 29, 2010

Purpose of institutionTo promote the development and dissemination of research and technologies of technical and scientific nature, and other related activities.

Form of organizationThe Vale Technology Institute Association (ITV) is a non-profit private institution of indefinite duration.

ITV will be created as a single legal entity, headquartered in Rio de Janeiro and with operations in Belém and Ouro Preto.

Distribution of surplusesIt will not distribute any operational and financial surpluses that may arise, dividends, bonuses, stakes or parts of its assets.

RemunerationIt will not remunerate the positions of its Management Council, Executive Board and Audit Council, nor the activities of its members.

GeneralAssembly

AuditCouncil

ManagementCouncil

ScientificCouncil

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Executive Board

ITV Sustainable Development

ITV Mining

Vale Business Units (BU) Facilitate access to partnerships, financial resources, and

specialized knowledge (researchers) Use of synergies among the BU Human resources training Access to technological solutions generated outside the company

Corporate Strategic options for future business Strengthen Vale's image with regard to technology and innovation

InternalInternal

ExternalExternal

S&T Community Strengthen the S&T system Specialized human resources (MSc, PhD, etc)

Government and Regions

Regional development associated with research, innovation,

and technology

Regional increase of the S&T community

Value propositionsDITV offers to its stakeholders:

• MSc and PhD programs

• Extension and training courses

• Visiting professors and pos-docs

• Scientific endeavor and

technological development

• Sustainable Development, Mining

and Energy.RESEARCH

TEACHING

Operational model- ITV Units

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Core researchers

Postgraduate students Visiting researchers

Full-time researchers from ITV staff

Fixed-term contract researchers

Intensive international linkages

Postgraduate students ITV research team

Researchers with management-

oriented training

Entrepreneurial researchers

Operational model: Research teams: - Strong collaboration logic nationally and internationally - Potential transfer of technologies to operation and spin-offs

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• Bloqueado Cetem

Vale Oman

Cooperation involving SQU (Oman) and UFV (Brazil)

Mode spontaneous

• Research scholarships• Insumes• Permanent materials (computers, software, books, and etc.)

• Field research (travel and accommodation)

• Participation in conferences

Geographic spontaneous

DITV searched a Brazilian institution suitable to cooperate with the Sultan Qaboos University.

Theme induced

• Mango wilt disease caused by Ceratocystis fimbriata in Oman

• Etiology, tolerance and management of diseases in lime crops

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Ações de cooperação e fomento

Desenvolvimento da comunidade de CT&I

Logistics (railways)

Cooperation project involving EPFL (Switzerland) and USP (Brazil)

Mode spontaneous

There were no restrictions.

Geographic induced

EPFL - École Polytechnique de LausanneUSP – University of São Paulo

• Structural assessment of bridges: Structural assessment of bridges of Vitoria a Minas railway (EFVM)

• Assessment of railway infrastructure elements: railroad assessment, including analysis of the actual infrastructure and the elements using different materials

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CT

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Pro

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CT

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Ações de cooperação e fomento

Desenvolvimento da comunidade de CT&I

Theme induced

DITV search for demand within Vale for research to be conducted by the EPFL.

DEPARTAMENTO DO INSTITUTOTECNOLÓGICO VALE - DITVTechnological Innovation

Luiz Mello luiz.mello@vale.com