Brazilian mining company

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1 April /12/2010 Select an image that relates to the presentation subject. Do not use more than one image! Changing or moving a photo/fill in the image area Select the white or color filled area, right click and select Order > Send to back Select the image and move/scale as desired (or delete to place a new photo) Once the new image placement is finalized, select Order > Send to back Delete these instructions before final use. Vale s Sustainable Programs development for Meeting at the Vale, Skills a Gap Brazilian mining company

2 We are Vale A global mining company headquartered in Brazil The global leader in iron ore and pellet production and the second largest nickel producer Vale employees in Minas Gerais Renato Stockler das Neves Filho / Agência Vale We also produce copper, coal, fertilizers, manganese, ferroalloys, cobalt and platinum group metals We also invest in logistics and energy

3 2015 Headquartered in Rio de Janeiro, we have operations, research laboratories, projects and offices on five continents.

4 Local Content Development Inove

5 Inove is a supplier development program that aims to contribute to the sustainable development of our suppliers and to build a positive legacy in the regions where Vale operates. Activities are developed in partnership with national, regional and local institutions such as Federation of Industries, financial and educational institutions, among others. We also have an internal partnership with Valer (Vale s education and training department) to help us in all actions that we undertake on the training matter. Since its creation in 2010 Inove has trained about 700 companies and users, and there has been more than U$ 186 millions in transactions of materials and supplier kit services. The program has financed more than US$ 800 million through its partners. Inove Training Business Fostering Competitiveness Support to SMEs Federation of industries Trade associations Large suppliers Financial institutions

6 Objectives Foster and develop local markets, in a competitive and sustainable way to meet the needs of the company s procurement department Support Vale on its growth challenges Raise the local content of the regions where Vale operates, leaving a legacy in each one of them

7 Solutions Online training platform: around 100 courses on issues related to sustainability, finance management, innivation and project management. Capacitação Training Classroom training: developed in partnership with Industry Federations. Vale-Sebrae partnership: program to support Vale s small suppliers developed in partnership with the Brazilian Service to Support SMEs (Sebrae). Business fostering Events to promote the interaction between different suppliers with the aim of promoting the business in Vale s production chain. Supplier Kit: offers advantages to buy goods and services. Competitiveness Financing: Funding for our suppliers as prepayment of receivables and financing for equipment purchases.

8 Overall challenges Making suppliers competitive Vale has a number of requirements (quality, health & safety, social, environment) that any supplier needs to meet. The first challenge for the Inove program is to make local suppliers competitive enough so that the buyers consider them as an option. Articulating the value of local content strategies since the meaning of local content may vary across internal and external stakeholders, another challenge is to demonstrate that local content is related to creating shared value in terms of results and benefits for the company complemented by a positive legacy for the region where the company operates. Measuring the impact of the training program this is key to demonstrate the financial and social benefits to the company, the suppliers, and the surrounding communities.

9 Success in Brazil >90% of purchases from local Brazilian suppliers Local content increased in the main Brazilian opera7ons 54% Brazil (MA/ PA/ MG/ ES) % 63% YTD Vale s 2014 purchase amount exceeded 2013, mainly because its strategic projects CLN and S11D.

10 Valer Educational Strategy

11 Valer - Vale s Training Program Skills gap: Facing a lack of high-skilled workforce in some states in the North of Brazil, Vale partnered with educational institutions to educate engineers, managers and logistics specialists as well as operational technical level employees among the local population. Benefits: The program benefits both the company, as it enables it to hire well-trained people locally, as well as Brazil s state educational Partners which can attract more talented students, whilst improving livelihoods in local communities. 820 engineers and geologists, in 5 years; 11,700 young students trained.

12 Valer Programs Two types of curricula University Level - Specialization Educate engineers and geologists. In partnership with universities, courses are created with real knowledge of business needs. Technical apprentice level It targets young people finishing school, and aims to provide them with technical education. The curriculum is a mix of theory and professional practice.

13 Overall challenges Large territory and remote regions - Vale s main operations are located in the states of Minas Gerais, Pará, Espírito Santo and Maranhão, which all together cover the same area as the Democratic Republic of Congo. Ø Pará state: Inove has the challenge of supporting S11D largest iron ore project in the world with an investment close to US$20 billion. The Northern states of Pará and Maranhão are among the poorest states in Brazil. Retaining talents The main challenge that Vale faces is that once it has trained and employed good professionals transferred from the south to the north, it struggles to retain them. Recruiting talents Due to some deficiencies in the Brazilian education system, Vale often finds that recruiting good candidates can be challenging. The company has determined that there are certain basic courses that have to be included in the training program to bring all students to a common level, such as Portuguese and mathematics

14 Key success factors Innovative training The success lies with the innovation that Vale brings to local education and the pioneering courses that have never been on the curriculum before. Educational partners have the opportunity to offer the courses in the future Improving livelihoods The professional qualification program also has a large impact on local communities, as education and better incomes improve the quality of life of whole families Partnering Structuring and implementing Vale s educational actions is possible thanks to the strategic engagement of partners in view of stimulating relationships and sharing Valer s benefits with the scholarly community, private entities in the education sector, and society at large Valer 14

15 Thank you!