VALE - 2007 Production Report



    
    RIDING THE WINDS OF GROWTH
    

    RIO DE JANEIRO, Brazil, Feb. 15 /CNW/ -- Companhia Vale do Rio Doce
(VALE) maintained its growth path, with another year of outstanding
operational performance, with record production of iron ore (296 million
metric tons), pellets (17.6 million metric tons), finished nickel (247,900
metric tons), copper (284,000 metric tons), bauxite (9.1 million metric tons),
alumina (4.3 million metric tons), aluminum (551,000 metric tons), kaolin (1.3
million metric tons), and cobalt (2,500 metric tons)(1).
    This performance derives from the growth process set in motion since the
beginning of this decade, through the development and conclusion of twenty
large greenfield and brownfield projects in several segments of the mining
industry, successful acquisitions and productivity gains. As a consequence,
our total aggregate production enjoyed growth of 11.6%(2) per annum between
2003-2007.
    Carajas, a wealthy mineral province in North of Brazil with the largest
and the best iron ore deposits in the world, reached a historic level of one
billion mt of iron ore production accumulated since the start-up in 1985. In
its first year, Carajas produced was just 4.5 Mt, and only achieved the level
of 100 Mt of accumulated production in 1990. In 1994, the accumulated
production reached 250 Mt, hitting the 500 Mt mark in 2000. The first 1
billion mt was achieved on October 25, 2007 and by year-end it had accumulated
1.019 billion mt.
    The initial nameplate production capacity, of 35 Mt, was reached in 1993,
and in 1997 annual output was 43.8 Mt. Therefore, with the 91.7 Mt reached in
2007, Carajas iron ore production more than doubled over the last ten years,
increasing by 109.4%.
    
    FERROUS MINERALS
    Iron ore - 296 million metric tons
    
    VALE iron ore production reached a new record in 2007, namely 295.9 Mt.
This was an increase of 12.0% on 2006, when we produced 264.1 Mt. This volume
was below the programmed level of 300 Mt due to the challenges at the
beginning of the year  - the rainy season in Brazil and a lack of equipment -
besides some interruptions in our operations due to invasions by militant
groups in November, a problem that was solved by the action of government
authorities.
    Between 2001 and 2007, the Company's annual production increased at an
average annual rate of 14.1%, rising by 162 million metric tons over six
years, which has contributed to consolidating our leadership in the global
iron ore market.
    The Southeastern System, which encompasses the Itabira, Mariana and Minas
Centrais iron ore mines, performed very well and was responsible for the
production of 113.8 Mt, representing 38.4% of the total produced by VALE in
2007. Brucutu produced 22 Mt, a performance consistent with the planned ramp-
up. Brucutu is expected to achieve full capacity in 2008, producing 30 Mt.
    The Southern System - MBR and Minas do Oeste - produced 89.3 Mt in 2007,
5.9% higher than in 2006. The 4Q07 production decreased relative to 3Q07 due
to the heavy rainfall.
    Production at Carajas in 4Q07, at 24.6 Mt versus 24.2 Mt in 3Q07, broke
another record. In 2007, Carajas output reached 91.7 Mt, a new annual record,
up 12.1% on the previous year's production.
    Production at Urucum, located in the state of Mato Grosso do Sul, Brazil,
suffered a reduction in comparison with 4Q06. This was due to the shutdown of
a plant, as a result of lack of a sufficient number of barges in the Paraguay
River.
    
    Pellets - quarterly and annual record
    
    Pellet production totaled 17.6 Mt in 2007, as against 14.2 Mt in 2006, in
response to the strong global demand. Sao Luis restarted production in August
2006, and began operating at its new nominal capacity of 7 Mtpy, which was in
fact exceeded in the last quarter of 2007. Production of pellets in 4Q07
reached an all-time high of 4.7 Mt, with an increase of 6.4% compared with the
same period a year earlier.
    In 2007, 11.2 Mt of blast furnace pellets were produced, and 6.4 Mt of
direct reduction pellets. In 4Q07 production of blast furnace pellets amounted
to 3.0 Mt, and direct reduction pellets, 1.7 Mt.
    Adding the attributable production of non-consolidated joint ventures -
Samarco, Nibrasco, Hispanobras, Itabrasco and Kobrasco - to the output figure
for our wholly owned plants, according to the rules of consolidation required
by BR GAAP (generally accepted accounting principles in Brazil)(3), pellet
production in 4Q07 amounted to 9.4 Mt, an increase of 4.1% compared with 4Q06.
The production was 36.0 Mt in 2007 as against 33.2 Mt in 2006, setting another
all-time high level.
    The aggregate production of the pellet plant group where VALE has stakes
totaled 54.0 Mt, up 4.3% against 2006.
    
    Manganese ore and ferroalloys - Azul resumes operations
    
    Production of manganese ore totaled 1.3 Mt in 2007, down 40.5% compared
with 2006. The Azul mine produced 945,000 mt in 2007 versus 1.692 million mt
in 2006. The operations at the Azul mine were suspended from July until mid-
December of this year in order to give total priority to the transport of iron
ore on the Carajas railroad (EFC).
    In 4Q07, manganese ore production was 118,000 mt, compared with 100,000
mt in 3Q07 and 576,000 mt in 4Q06.
    Alloy production in 2007 amounted to 542,000 mt, higher than the level
achieved in 2006, of 534,000 mt. One of the furnaces of our Dunkerque plant
was shut down for maintenance in August and resumed operations by the end of
October, implying a small reduction of the production.
    In 2007, ferroalloy production was made of 226,400 mt of high-carbon
manganese alloys (FeMnAc), 220,700 of ferrosilicon manganese alloys (FeSiMn),
58,100 mt of medium-carbon manganese alloys (FeMnMC) and 28,900 mt of other
types of alloys (CaSi).  Production of cored wire (specialty alloys) was 8,000
mt. On June 5th, 2007, Vale sold CaSi, located in Minas Gerais, Brazil, and
the cored wire plant, located in Dunkerque, France.
    
    NON-FERROUS MINERALS
    Nickel - a successful integration
    
    Our finished nickel production reached an all-time high in 2007, at
247,900 metric tons (mt), rising 5.6% relatively to 2006(4). This performance
highlights the successful integration of the former Inco Ltd., acquired by
VALE in October 2006.
    Volume produced in 4Q07 - 69,000 mt - increased 25.3% compared to 3Q07,
being 5.8% higher than the previous record reached in 4Q06, of 65,200 mt. All
the operations, with the exception of Sudbury, showed a strong increase in
production in 4Q07, compared to the previous quarter.
    Nickel output in the third quarter of the year uses to be negatively
affected by the seasonality derived from the summer vacations in the Northern
Hemisphere, where most of VALE's production is originated. By the same token,
global stainless steel production, responsible for 64% of world nickel
consumption, is weaker at that time of the year.
    In addition to the seasonal recovery, a number of operational challenges
were overcome, which had contributed to a much better performance in the last
quarter of 2007.
    Finished nickel originated from the Sudbury Basin, in the province of
Ontario, was 82,700 mt in 2007, 11,000 mt lower than the level reached in
2006, as a result of maintenance shutdowns, adjustments to equipment and
problems with kiln No. 1 at the Clydach refinery, located in Wales, United
Kingdom. Clydach is responsible for 30% of the production of finished nickel
at Sudbury.
    The Sudbury production in 4Q07 remained flat, at 19,300 mt. However, it
was lower than the figure in 4Q06, when production amounted to 24,600 mt. The
decrease is partially explained by the lower feed grade, below the programmed
levels, which contributes to reduce finished nickel output. We are investing
and working to eliminate this problem at the Copper Cliff Smelter in 2008.
    Production at Thompson, province of Manitoba, was 30,000 mt in 2007. In
4Q07, it grew significantly, 49.1% over the last quarter, totaling 8,500 mt.
    Voisey's Bay, located in the province of Newfoundland and Labrador,
completed its ramp-up, producing 20,500 mt in 4Q07, coming to a total of
58,900 mt in 2007 as a whole. The nickel concentrate produced at Voisey's Bay
is processed at Sudbury and Thompson.
    VALE produces nickel matte at Sorowako, in the island of Sulawesi in
Indonesia, where we have the largest lateritic nickel operation in the world.
Matte is an intermediate product, with 78% of nickel content, and it is
processed into refined nickel at our refinery in Tokyo, Japan. Production of
nickel-in-matte was 75,800 mt in 2007, compared to 70,000 mt the previous
year.  Despite the labor strike occurred in the Indonesian operations in
November 2007, it managed to achieve a new quarterly production record of
20,600 mt.
    Given our global leadership in nickel proven and probable reserves, with
11.3 Mt of contained nickel distributed in four countries (Brazil, Canada,
Indonesia and New Caledonia), VALE enjoys a significant growth potential. At
the moment, we are developing three projects: Goro, in New Caledonia, Onca
Puma, in Brazil, and Totten, in Canada. Goro, with an estimated nominal
capacity of 60,000 mt and 4,700 mt of cobalt per year, is the largest nickel
project being developed in the globe and is expected to come on stream late
this year.
    
    Copper - another record
    
    VALE's copper concentrate production totaled to 284,200 mt in 2007
setting a new record. It increased by 6.6% relatively to 2006.
    Sossego copper output reached  32,000 mt in 4Q07 and 118,000 mt in 2007,
the largest volume since its start-up in mid-2004.
    Canadian operations added an additional 166,200 mt to our total copper
production in 2007, rising 20.6% relatively to last year, when it was 137,800
mt.  In the 4Q07, production in Canada was down compared to 4Q06 as a result
of the maintenance shutdown of the Copper Cliff Smelter in November.
    It is important to notice that VALE produces copper concentrates at
Sossego, Carajas, Brazil, and copper concentrates, anodes and cathodes at its
operations in Canada, where copper is extracted as a byproduct of nickel. The
figures shown in this report refer to the volumes of copper contained in these
products.
    
    Nickel by-products - cobalt hits a new record
    
    In 2007, cobalt production, driven by the good performance of Voisey's
Bay - Ovoid mine -  reached a record of 2,524 mt, with a 27.6% increase
relatively to last year.
    Cobalt price is in a upward trend, reaching all-time high levels. This
has been determined by supply restrictions and a strong demand growth, driven
by batteries, including those used in hybrid electric vehicles, and
super-alloys, used in the aerospace industry.  Thus, the record production
achieved is allowing VALE to benefit from the larger exposure to the cobalt
cycle.
    By contrast, the production of platinum group metals (PGMs) saw a drop in
production. Platinum and palladium output decreased by 8.7% and 8.0%,
respectively in 2007, as a consequence of the operational performance at our
Sudbury operations.
    
    Potash - 671,000 metric tons
    
    Annual production at Taquari-Vassouras reached 671,000 mt in 2007. The
performance of the Company's potash operations was adversely affected by
problems with mining equipment in 1H07. Furthermore, since 2006, we have been
mining a section that has lower grades. The geological condition of the
deposits, in contrast with the case of ferrous minerals, does not allow for a
rapid change in grades.
    Potash production in the final quarter of 2007 amounted to 173,000 mt,
down 4.1% on the volume produced in 3Q07.
    
    Kaolin - good performance
    
    In 2007, VALE's production of Kaolin reached 1.4 Mt, in line with the
levels of 2006.
    At PPSA, 639,000 mt were produced in 2007, an all time-high, increasing
7.1% against 2006, while at CADAM the production was 714,000 mt, down 5.4%.
    Production for 4Q07 amounted to a record of 379,000 mt, up 14.1% versus
4Q06
    
    ALUMINUM
    Bauxite - Paragominas ramping up
    
    In 2007, bauxite production hit an all-time high of 9.1 Mt, 28.4% above
the previous record of 7.1 Mt in 2006.
    In accordance with US GAAP (US generally accepted accounting principles),
only production from Paragominas is considered, a wholly owned VALE asset.
    The new Paragominas bauxite mine, in the state of Para, which began
operations in April and is still in the ramp-up phase, produced 1.9 Mt in
2007. Mining at Paragominas, which should become one of the largest bauxite
operations in the world, is setting a new standard for the upstream aluminum
productive chain.
    In 4Q07 our bauxite production totaled a record 2.7 Mt, 3.2% above 3Q07
levels (2.6 Mt).  Production at Trombetas attributable to VALE reached 1.9 Mt.
    
    Alumina - a record year
    
    The Paragominas ramp-up and production increase in bauxite at Trombetas
allowed the Barcarena refinery to produce 4.3 Mt of alumina in 2007, 8.0%
higher than the previous year, setting another record. Thus Barcarena attained
its full production capacity, which had been increased by the construction of
stages 4 and 5 to 4.3 Mt per year.
    The volume produced in 4Q07 reached 1.158 Mt as against 1.127 Mt in the
same period in 2006.
    
    Aluminum - full capacity
    
    The production of primary aluminum in 2007 was 551 kt, in line with the
previous year, given that there has been no increase in production capacity.
    In 4Q07 production reached 139 kt, as planned. Production at Albras, in
Barcarena, amounted to 114 kt in 4Q07, and at Valesul, in Santa Cruz, in the
state of Rio de Janeiro, 25 kt.
    
    COAL
    Coal  - our new growth platform
    
    Vale Australia, our wholly owned subsidiary, owns four coal assets:
Integra Coal (61.2%), Carborough Downs (80%), Isaac Plains (50%) and Broadlea
(100%). These assets are classified as unincorporated joint ventures,
characterized by a structure of shared results.  Thus we have revised our coal
production figures, according to FASB, which determines that the consolidation
in this case must be proportional to Vale's equity stake in each joint
venture, for the conversion to USGAAP (US Generally Accepted Accounting
Principles).
    Coal production was 2.2 Mt in 2007, 1,764,000 mt of metallurgical coal
and 440,000 mt of thermal coal. The problems caused by flooding on the Hunter
River in Australia, in June, which adversely affected production at Integra
Coal, were only eliminated in September.
    Most of the production of metallurgic coal - 66.7% of the Company's total
production - comes from Integra Coal, in the Hunter Valley, in the state of
New South Wales, which has both open pit and underground mines.
    Carborough Downs (underground mine), Isaac Plains (open pit mine) and
Broadlea (open pit mine) are located in Central Queensland, Australia.
Carborough Downs and Broadlea, being located very close to each other, share
the same coal handling and preparation plant (CHPP).
    Due to the congestion at the coal ports in Australia, operations at
Broadlea were shut down since July and are expected to restart in 1Q08.
Production from Broadlea, Carborough Downs and Isaac Plains is transported
along the Goonyella logistics corridor. It links the mines of the Central
Queensland Bowen Basin to the Dalrymple Bay maritime terminal, while coal
produced by Integra is transported along the Hunter Valley and shipped from
the port of Newcastle, Australia's largest coal port.
    
    POWER GENERATION
    
    Vale invests in power generation to meet its own consumption, in order to
mitigate the risks of price and supply volatility and to reduce costs. In
Brazil, it owns stakes in several consortia that own and operate eight
hydroelectric power plants: Igarapava, Porto Estrela, Funil, Candonga,
Aimores, Capim Branco I, Capim Branco II and Machadinho . All of them are
located in the state of Minas Gerais, with the exception of Machadinho, in the
state of Rio Grande do Sul.
    In Indonesia, we own and operate two hydroelectric power plants, Larona
and Balambano, in the Larona River, at Sulawesi.
    In addition to those plants, we have some small hydropower plants in
Brazil and Canada and in-site power generation facilities.
    In 2007, our plants generated 5.714 million MWh, meeting 24.5% of the
Company's total consumption of electricity.
    We own 30% of a consortium that is building the Estreito hydropower
plant, in state of Tocantins, Brazil. Estreito will have a capacity of 1,087
MW. In Indonesia, Vale is building a third hydroelectric plant at the Larona
River, Karebbe, with 130 MW. Simultaneously, we are building a coal fired 600
MW power plant, Barcarena, in the state of Para, Brazil.
    
    LOGISTICS
    
    Our railroads (EFC, EFVM and FCA) carried 27.5 billion net ton kilometers
of general cargo for clients, with a 3% increase over 2006.

    
     (1) mt=metric tons, Mt=million metric tons,
         kt=thousand metric tons
     (2) Index encompassing the production of all products produced by Vale,
         expressed in equivalent iron ore production unit basis
     (3) According to the BR GAAP rules, production of non-consolidated
         affiliates and joint ventures is computed proportionally to Vale's
         equity stake in each of these non-consolidated companies.
     (4) The figures shown for finished nickel production do not include the
         quantities produced from nickel concentrates purchased from other
         companies and processed externally under tolling arrangements. These
         volumes were 14.2 Kt in 2007 and 17.0 Kt in 2006
    




For further information:

For further information: Roberto Castello Branco, 
roberto.castello.branco@vale.com, or Alessandra Gadelha, 
alessandra.gadelha@vale.com, or Patricia Calazans, 
patricia.calazans@vale.com, or Theo Penedo, theo.penedo@vale.com, or  Marcus
Thieme, marcus.thieme@vale.com, or Tacio Neto, tacio.neto@vale.com, all of
Vale, +011-55-21-3814-4540 Web Site: http://www.cvrd.com.br,
http://www.vale.com/

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