December 02, 2008

Vale enters into a leasing contract for a pellet plant

Companhia Vale do Rio Doce announced that it has signed a five year leasing contract involving a pellet plant located in the port of Tubarão at Vitória in the Brazilian state of Espírito Santo of its affiliated company Companhia Coreano Brasileira de Pelotização Kobrasco to be effective from June 1st 2008.

Under the lease contract Vale has agreed to make an annual payment to guarantee POSCO the same level of the current profitability. Vale will consolidate 100% of Kobrasco’s pelletizing operations in its financial statements, which will contribute to simplify and to increase transparency of our operational and financial reporting.

This transaction follows the announcement made in April 30th 2008, related to the leasing of the two pellet plants of Nibrasco. Both transactions are consistent with Vale’s continuous search for opportunities to maximizing shareholder value creation. In these cases we are increasing our exposure to the iron ore business and capturing synergies in the port of Tubarão, which includes the resulting improvement of efficiency of operational assets and processes.

Kobrasco is a joint venture between Vale and POSCO. Both companies hold a 50% stake in Kobrasco which main activity is the production and sale of iron ore pellets. In 2007, Kobrasco produced 4.9 million tonnes of iron ore pellets and had net earnings of USD 38 million.