Good morning, ladies and gentlemen. Welcome to Vale’s Conference Call to discuss the Second Quarter 2014 Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded and the recording will be available on the Company’s Web site at vale.com, at the Investors link. The replay of this conference call will be available by phone until August 6, 2014 on, 5511-3193-1012, access code 9285610#. This conference call and the slide presentation are being transmitted via Internet as well also through the Company’s Web site. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Actual performance could differ materially from that anticipated in any forward-looking comments as a result of macroeconomic conditions, market risks and other factors. With us today are Mr. Murilo Ferreira, Chief Executive Officer, CEO; Mr. Luciano Siani, Executive Officer of Finance and Investor Relations, CFO; Mr. José Carlos Martins, Executive Officer of Ferrous and Strategy; Ms. Vânia Somavilla, Executive Officer of Human Resources, Health & Safety, Sustainability and Energy; Mr. Galib Chaim, Executive Officer of Capital Projects Implementation; Mr. Peter Poppinga, Executive Officer of Base Metals and Information Technology; and Mr. Carl DeLuca General Counsel. First, Mr. Murilo Ferreira will proceed to the presentation and after that, we will open for questions and answers. It is now my pleasure to turn the call over to Mr. Murilo Ferreira. Sir, you may now begin.

Good morning good afternoon ladies and gentlemen. Welcome to our webcast and conference call. Thank you all for joining us to discuss our second quarter results. First of all, I am pleased to report that Vale delivered a strong operational performance in the second quarter with the best results ever for iron ore production in the second quarter despite of lower participation. We have big projects ramping up we have also had consistent cash flows in our base metal business and also group operational results in the fertilizer business. This first half of the year, we continued to achieve savings in parts and extent amounting to close to $250 million compared with the first half last year. Despite lower iron ore price, we generated strong cash flows and we’re able to pay $2.1 billion in dividends and maintaining our gross debt and cash position at similar levels to first quarter 2014. This quarter we suffered a drop in net income of some $1 billion reflecting the impairment of assets related to the Simandou project and Integra coalmines. Discussion with the government of Guinea are advancing and we are diligent in developing alternatives to recover value from our investment in Guinea. Overall, we are continued to focus on productivity and continue to ramping up important operations and reduce costs expenses and capital expenditures in order to achieve our goal of sustainable shareholder value. Now, I would like to talk about our financial performance and then I will talk about our business segment. In terms of the financial results, our EBITDA remained at just over $4 billion similar to the first quarter with the continuation of our strong base metal performance with an adjusted EBITDA of $609 million in the second quarter despite major maintenance work in Sudbury. As mentioned earlier, in…

Sorry, Leonardo. Then let’s go to the question-and-answer.

Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions). Our first question comes from Mr. Rodolfo de Angele, JP Morgan.

I just wanted to follow up with two things related to CapEx. First one, I guess with these numbers, we are starting -- I think it's pretty clear that you are delivering on growth on various aspects. We're seeing NOL volumes going up. But I wanted to ask you to detail, if possible, how the big project -- how S11D is going on? If you could give us some more detail on the works that are being done. And my second question is still on CapEx. We saw Salobo being delivered under budget; it's something in the past we were used to see the other way around. So I wanted to ask exactly what drove the potential -- the savings that were achieved, the 12% savings there, just to kind of use it as a case study for us here to kind of check for potential savings on the rest of your CapEx budget still in place. That's all for me.

Rodolfo, thank you very much. Luciano and Murilo please.

Luciano will address the second one first and before handing to, the major two levers for the savings on Salobo are twofold. The first one the companies in which we did not use because of good project execution. And the second one the exchange rate for the depreciation of the real in comparison to the original budget was not translated into cost inflation we were able to keep the cost and reals at the same level that we’ve budgeted so we fully took advantage of the depreciation of the real.

Well about S11D the project is going well no problem so far. We have contracted up to now something around 50% of the project. We stand around $5 billion considering mine plant and the entire logistic. The physical progress which is something around 32% in line with the planned work that is very important to see. We have some important good achievements in this period of time the civil construction is progressing very well the mine and plant sites and that’s why season is very important now we remembering that we have been working now in right season the production is much higher. And the 100 we have already assembled 58 completed modules among 109 to be completed to be finished up to the end of this year. And the expansion in the railway is also progressing well. We delivered two expansion -- expanded segments that is very important increased the railway capacity. In the port side the onshore and offshore, everything is going well and we don’t have any problem with the contractors they are performing in a very good way. And we have up to now 28,000 workers on the site that means that that’s a huge amount of people working in the project. And so I believe that we don’t have any surprise everything is running according our plan.

Our next question comes from Mr. Wilfredo Ortiz with Deutsche Bank.

I just wanted to ask you first on the SG&A front, we have seen some interesting reductions compared to last year, and I just wanted to get a sense as to whether these are levels that should remain going forward, given that preoperating and stoppage expenses should continue to trend down as the year progresses. Secondly, on the realizations in iron ore, could you give us a sense perhaps as to the differences that you're gathering from the northern system versus the southern system, and whether you are seeing or expecting an improvement from the discounts, perhaps, that you are realizing on the southern system with the investments that you've done so far? Thank you.

Starting by SG&A I am happy to say that not only we believe that those levels are sustainable but we are actually already building plans for further reductions in the future. Thanks for the productivity improvements that we expect from the implementation of new computer systems across the company. On the pre-operating expenditures, we believe that if you see the numbers we believe that you’re right it should trend down as the ramp up of VNC resumes and progresses because that’s the major contributor for the pre-operating expenditures today. So if we can eliminate that those pre-operating expenditures we should get to the 50% target we’ve announced.

Regarding price; yes, Wilfredo as far as average price of our products similar to commence the better price and we’ll spend dollars above the southern system price. And I think this situation we will be reduced as time goes by because we intend to blend more northern systems or with the southern systems. So by doing that we believe that we can get a net improvement in our price because part of the Carajás development is not fully recognized by the market. So by mixing this with the southern systems, we can have a much better price for southern system material and not lose too much price from the northern system. So going forward I believe our price for barter in the southern systems [indiscernible] because of the blending processes that we are implementing. And in the future when we have all those Itabiritos projects under production we are not going to need it to blend so much off and then we can have a better pricing to Southern System and also keep the premium that we have in the Northern System. Then speaking, it’s what we intended to do and that’s what the development we expect to our blending strategy going forward.

Our next question comes from Mr. Carlos De Alba with Morgan Stanley.

My first question is on cost. If I looked at the outsourced services, again, excluding the impact of volume and the exchange rate, I see an increase year on year in the second quarter and also an increase year on year in the first quarter. So I know that the Company is putting a lot of effort in reducing costs; expenses clearly have been trending down. But I wanted to hear your comments, maybe Luciano, on what is happening with this outsourced service line, which is the most important component of the Company's COGS. And then my second question is: coming back to Carajas, I see the Company is still expecting to see receive the global license to expand the mining operations of the current Carajas unit. And when we are getting -- we're going to get into second half of the year, when is the limit by when you need to get these license so that you can still hit your production target next year, given that maybe December through March you have the rainy season in Carajas, and that could affect the operation of the mine and the expansion of the mine? Thank you very much.

Carlos, thank you for your question. The first two quarters of this year were unusually high in terms of maintenance services and that explains most of the outsourced services increase. So, we had as already mentioned the shut down in Sudbury. We had also a safety shut down also in Sudbury in the second quarter. We had some fertilizer maintenance and in the first quarter we also have a correction that we have to make on the projects Onça Puma, Salobo and even in Plant 2. So, I would say part of it has to do with the adjustments on the operations which are ramping up which are generating cash, so they don’t go into pre-operational expenditures because the cash generation took part, so they go into cost. So, they are recorded as outsourced services so we should expect as the operations normalize to have this line also trending down. Vânia Somavilla: Regarding the license, we really don’t expect problems and this should be coming soon and it all depends on what will be a reason in the license if you have a bigger license for the whole area or if you have a smaller license, and then if you small license so you have to adjust our production plan to this area. And then we have to adjust but we are going to produce it and more licensing in a separate way but it’s okay we can manage. Discipline can handle all the situation; I guess Martins should add something to this. José Carlos Martins: Yes, complementing what Ms. Vânia had said. We have everything on place to produce 160 million tons by next year in Carajás. Even if you restricted license, we don’t see any problems to reach at this number. I am sure if you get complete license for the whole area that will solve our problem for many years otherwise we needed to keep licensing year-after-year. But we expect to have a full license and then we have our free hands to produce as much as possible to do what we do better which is to produce in larger scale and larger volumes.

Our next question comes from Mr. Thiago Lofiego with Merrill Lynch.

Martins, if you could comment on your expectations of new supply for 2015 in the market. You mentioned in the Portuguese call you expect additional 140 million tons of new supply in the market this year. But if you could share with us your expectations for next year? And also if you could comment on or give us some more color on capacity closures in China. Do you think they will be significant going forward, or do you think that Chinese annual protection is being more resilient than you expected? José Carlos Martins: Talking about your first question, I believe that the market is really in good condition and the additional supply this year came mainly from Australia and reach something like as I told you before 140 million tons but 93 million to be more precise was already absorbed by the market. So I think in the second half the additional volume that would come to the market against the same last half year of 2013 will be on around 50 million tons. So I think in the second half the pressure of the additional supply will be lower. And as you know steel production continue to grow in China and everywhere not so much but continues growing. For next year, we believe that our estimation at this point in time is that additional 100 million tons will come to the market. But next year the main source of this additional volume will be Brazil and specifically Vale. I think normally people force too much on price of iron ore and also in China I think there are the reasons for this in the last six or five years the present Vale has not increasing production too much and also because Vale had a lot of projects under correction…

Our next question comes from Mr. Alex Hacking with Citigroup.

Congratulations on the improved operating performance. I have two questions on CapEx, if it's okay. I think in the first half, the CapEx standing was only $5 billion. I understand there's seasonality there, but have you revised lower your annual guidance for CapEx? Because $14 billion seems high at this point. And then I guess the second question, more high a level, just looking out a little bit: you guys are done with Salobo II now. Congratulations. Mozambique is the only non-iron ore project left. Should be finished next year. So at what point do you start thinking about what else should be going in the pipeline? Are you planning to wait to see how iron ore prices shake out over the next couple of years? Or are you sort of willing to move sooner than that in terms of pushing some other non-iron ore projects into the pipeline? Thanks.

Thank you for your question I think that you are right. We are almost finalizing any projects like Salobo, Mozambique right in process to implementation of S11D in south range of Carajás, the Tubarão project we have so many projects that we tend to finalize and to into ’16 and to into ’17. And as we have shared with you we are looking for the best return but not looking at the highest volume to be the number one in volume. We wanted to have our assets in the first quartile -- maximum in the beginning of second quartile, we wanted to have the chance to expand through, call it, the brownfields and we must have just world-class project. In this regard in case of not having a new project based on these assumptions, for sure we prefer to pay dividends and to reduce our debt. Again it’s our priority to give the best return to our shareholders. And Luciano please about the CapEx.

Alex, so let’s discuss first capital projects. We have seasonality and specially because the weather conditions favor in Brazil, a construction works on the second half, so we should expect acceleration of the CapEx spending on the second half. We are not sure at this moment if we are already able to announce a reduction in CapEx for the year because we still, not only we expect this uptick. We are still working to realize more savings on procurement and on not spending the contingencies on the projects which are on the final stages, which are finishing and also on scope optimization but perhaps too early to give you an expectation of reduction. On maintenance CapEx, I believe we can already talk about the 5% to 10% reduction in what we have planned for the year and that has nothing to do with deferral of important investments of less sustain to preserve the integrity of the assets but rather again with better planning, better engineering even of the sustaining projects which can lower the budget. We are analyzing the trade-offs and those are investments which have a shorter construction period. So, you can make decisions within the year that impacted the year itself. So, I would say that so far we are happy to see maintenance CapEx trending downwards and 5% to 10% reduction is something that we believe is achievable.

Our next question comes from Mr. Andreas Bokkenheuser with UBS.

Just a quick question on cost. So you have been guiding that, obviously, costs are going to come down as you ramp up production at Carajas. And, of course, there's always the chance of a favorable FX movement as well. Are you seeing any other options for costs to come down? Can you see any efficiencies being gained now? Or had most of the stuff been done, and it's now down to Carajas at this point? Thank you. José Carlos Martins: Martins speaking, as I told you before we will have a lot of opportunity for cost reduction not only by managing cost but also by managing volume, okay. We have different minds with different cost structure and we are bringing additional capacity with much lower cost. So, there we can manage our internal mix because we have a cost curve before the market but also you have cost curve internally that you can manage to find the better mix between volumes and margin. And also ensure that we try to operate as much as possible with our lower cost mine. On top of it you have also a strategy to reduce our cost by better negotiating with the suppliers and by improving our operations and our plant. And also I think there is a lot of space for innovations on what we are working now. We have also possibility to reduce cost on the ship side as long as we put our sea operations. We have a lot of areas that we can reduce our cost and I think as I told you before more and more our focus is in managing volume and managing cost and managing quality. I stated these three points are very important in our strategy and as long as we are bringing new mines to the market, it’s clear that you are going to see very positive impact on our cost structure and also in our practice structure. New mines also bring better quality, also bring lower cost. In the last seven years, we are very much pressured by the depletion of existing mines that come deeper and the distance come longer and so that’s now being factored in our results. But from our own, we are bringing new production with the much lower cost. So, I think, we are in a very bad situation to reduce our cost and I am sure that you are going to see as time goes by the lower cost to be in our results. Thank you.

Our next question comes from Mr. Alan Glezer, Bradesco.

I have two quick questions here. The first one is regarding the corporate business. I was looking at Vale's average sales price. It was 5% higher Q-on-Q. But meanwhile we saw that the reference price of LME was down around 3% Q-on-Q. I was wondering if you guys could explain why we have this difference. Maybe if it was regarding the distribution of sales along the quarter? The second question is regarding iron ore. I was wondering if you guys could give color regarding the iron ore inventory level at the Chinese news at the moment. We know that the inventory at the port remains elevated above 112 million tons, but I was wondering if you guys could give color regarding the inventory at the Chinese mills themselves. Thanks for taking my questions.

Please Peter explain the part of the copper.

Okay, thanks for your question. It’s like you said it’s very normal adjustments. In copper, we have some intermediate products in our mix like copper concentrate and iron ores so this explain some difference in the price regarding to LME we also have our pricing system mix month after month of arrival. So sometimes you have a provisionally priced ton of shipment with the final prices then settled on the table of the LME price for future periods. So generally one to three months after shipment to customers. So it is a quarterly -- its between the timing of sales and should be normalized in the next quarter. Thank you.

Well, as far as iron ore plants in China, the number for the product is [indiscernible] but the number what’s the inventories under customer hand is not that easy in average we believe today these inventories are around $20 to 20 day and reducing as the market is becoming more liquid as the customer know that there is a huge inventory in the ports and around ships coming to China it’s quite understandable that they are reducing the inventories that they need in their plant. So our last evaluation was around the 20 days and we don’t believe that they can go too much below that. Also to remember that this ramp this was more than 30 days some years ago and have to be reducing slowly as customers become more confident that there will be always some ships arriving and there will be always some inventories on the ports. So that’s the situation today. But I don’t believe that they have expected to reducing more than 20 days they are there inventories in the plants and there is two plants. Thank you.

Our next question comes from Mr. Amos Fletcher with Barclays.

I just had a couple of questions, firstly on the nickel business, and particularly the VNC asset. I was just wondering -- it's running well below the guidance that you gave for 40,000 tons of production for this year. What do you think is a realistic number for this year's production, given what's been happening in the first half? And then, secondly, do you think that it's realistic for it to produce at full capacity over the medium-term, or do you think it's more realistic that only having two out of the three lines operating at any one time is sensible? And then my second question was just relating to the joint venture with -- potential joint venture with Glencore that was discussed about a year ago in the Sudbury basin. There was a number put out there of synergies of up to $550 million back in 2006 in the original Xstrata/Falconbridge proposed merger. And I was just wondering where those discussions have got to and what the potential could be there in your view?

So on VNC, we had that we had achieved; we are on a good track we had achieved two months at March 60% of the capacity of the plant and by the way when you say three autoclaves versus two because we have three lines, but for us to achieve 100% of the capacity you don’t need to operate the three lines actually because there is always an frequently a scheduled maintenance. So actually you have to only to operate 2.5 of the clips in average along the year that’s the right number to have in mind. But then we have these assets still and there was by the way, no damage in the ocean. Then afterwards some social unrest, being this the catalyst of that. So now we are back to the operation but you are right this is of course not achievable anymore our target of 40,000 tons we wanted to achieve this year. So we are probably going to revise that. And for now it looks that 30,000 tons would be achievable which by the way is not very close from the breakeven price which, on the current price levels, so at the end of this year if we get good pace and good momentum, we would then reach a breakeven at the end of this year. In terms of Glencore, what we are doing is because we realized we did a strategic break in our bigger discussions and what we are doing for now is trying to perform some of the smaller projects individually incrementally and we are doing some progress there. And by doing that sort of a top-down approach we are going more bottom-up approach and having little projects, little synergies being realized that’s where we are today. Thank you.

Our next question comes from Mr. Renato Antunes with Brasil Plural.

First, Murilo, if you could talk a little bit about the market outside China? Are you guys seeing demand in other rival markets -- Europe, Japan? Also on that context, today iron ore prices seem cheap on a relative basis when compared to scrap. And if you think that this lower price could increase competitiveness of blast furnace producers? And the second one, on the projects in Minas Gerais, the Itabiritos projects. If you could talk a little bit about project implementation there -- how is that going on? If I'm not mistaken, I think Conceicao Itabiritos II saw a minor delay of the startup. I just wanted to get your views on how that is moving forward. Thanks. José Carlos Martins: You raised a very interesting question about scrap because not only the prices of iron ore now are closer; the price of coking coal is now very convenient. So, I think few makers based on scrap, are having tough time to complete based on blast furnace. But I believe that scrap don’t have to go to the market at given price, okay, scrap is a price taker and so I believe that the there are many possibilities for scrap price to reduce going forward as long as I don’t know in coking coal, stay with price, the level are today. Blast furnace operators will have a near $100 cost of advantage against the scrap on the present level. We are seeing in China for instance big steel makers that were used to use scrap blending in the blast furnace, they are avoiding it because now if they put scrap in their blast furnace that will increase their cost. So I think the moment is not for scrap to grow and I believe that this situation is already going…

Your question was related to the Conceição Itabiritos II, the second plant. It’s very important to explain that the completion of plant will be or will be achieved at the end of this year. So, there is not delay on the completion of the plant. The problem that is being let’s say a brownfield project we have to do a lot of timings to connect the existing plant to this new expansion. Those kinds of times usually there is something took something around take something around two or three months so that’s the fusion together with operations instead of affecting the current year plant production that means we can imagine of two months of shooting down our huge plant like that. The decision was to do the times and next year in taking in the most that create or the most let’s say the time for to do it during the rain fields and where the production usually it’s lower. That’s was the decision. So everything is going well. There is no problem regarding the CapEx and pay schedule and no surprise up to now. Adding another point is that we are now finishing the Pico Fabrica that we will link South systems with Southeast system. This Pico Fabrica will allow us to move near 20 million tons per year from one system to the other system giving us a lot of flexibility and also allowing us to ship some iron ore that is now trapped in the south system because it don’t have enough force capacity. So Pico Fabrica is very important and also part of the margin grant is stabilized project is a terminal for loading iron ore that is now being completed and also you add much more flexibility for us as far as loading ore and…

Our next question comes from Leonardo Correa with BTG Pactual.

My question is regarding Mozambique and potential asset sales. I know that you already spoke about this in the previous call, but just looking at what happened with Rio Tinto -- I mean, the company announced a sale of $50 million of the Riversdale asset, which they acquired in the past for $3 billion or $4 billion. So I just wanted to get a sense of if anything changes with respect to the growth coming out of the Company and CapEx also committed to the business throughout the next couple of years. And the second question, to Luciano -- Luciano, this is a smaller detail, but anyways -- you have a funding line of BRL6 billion with the BNDES; also, infrastructure bonds of BRL1 billion. Just wanted to -- when you sum all that up, considering the Vale's current net financial expenses, what is the level of decline that we can see going forward, given these very attractive rates of funding? Those are the two questions. Thank you very much.

Leonardo let me swap into U.S. dollars the infrastructure bonds we get to a dollar based rate close to 4% and when you do it with the BMDS loans you get to depending on the credit line, you get to 1.5% to 2%. So as your mix shift was those source you tend to lower the average borrowing cost for Vale. However, we believe that even because of the size of the exposure to BMDS I mean there is some order of export credit agencies that the opportunities are more limited now to significantly borrow from those sources. However, if you look at the balance sheet if you look at the income statement when you go into the financial expenses you see an increase in interest expenses and this is an accounting effect why is that because what goes into interest expenses is the nominal interest rate which is higher in reals but in U.S. dollars. When you swap into U.S. dollars you get the derivatives I forgot exactly what is the name to like but there is a line that tells you the effect of these swap rates in which your swap not only the currency but also the interest rate. So there you get both effect both the effect translating from reals into dollars and the effect of lowering the nominal rate also from reals to dollars. So therefore is to focus only on the interest expense line you won’t see the decline in the borrowing cost. You have to look at the aggregate of the financial expenditures, including the swap rates as well.

Leonardo regarding the Mozambique project what we can tell you that as you know in both material like coal and iron ore it’s really very important to have a distribution regarding the logistic, the railway and the fourth facilities. And if you are considering to analyze each project, many project in Mozambique you much take care of these even. As far as I know they were trying to have and specifically ruled by ever with years and years in our view for knowing very well Mozambique is to what some think that could be almost impossible to them to be implemented. Then we know that it’s very premature to analyze the terms and conditions of the transaction and namely knowing that they have some issues not solve it and they can’t rest well is what we have to say is very premature to analyze is in the price. Thank you very much. I will appreciate to have an opportunity for so many questions. I apologize because we know that we have some further questions that we are not able to answer. We have already finalized our session. Thank you very much to be with us. Bye-bye.

This concludes Vale’s conference call for today. Thank you very much for your participation you may now disconnect.