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Vale S.A. Regulatory Filings 2017

Jul 27, 2017

30050_ffr_2017-07-27_03607357-2e0f-4f47-8c77-4167ba2cd0d9.zip

Regulatory Filings

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Table of Contents

*United States Securities and Exchange Commission*

*Washington, D.C. 20549*

*FORM 6-K*

*Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934*

*For the month of*

*July, 2017*

*Vale S.A.*

*Avenida das Américas, No. 700 22640-100 Rio de Janeiro, RJ, Brazil*

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

(Check One) Form 20-F x Form 40-F o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)

(Check One) Yes o No x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)

(Check One) Yes o No x

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

(Check One) Yes o No x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b). 82- .

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Table of Contents

*Interim Financial Statements*

*June 30, 2017*

BRGAAP in R$ (English)

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*Vale S.A. Interim Financial Statements*

*Contents*

Report on the review of the quarterly information - ITR Page — 3
Consolidated and Parent Company Income Statement 5
Consolidated and Parent Company Statement of Comprehensive Income 7
Consolidated and Parent Company Statement of Cash Flows 8
Consolidated and Parent Company Statement of Financial Position 10
Consolidated Statement of Changes in Equity 11
Consolidated and Parent Company Value Added Statement 12
Selected Notes to the Interim Financial Statements 13
1. Corporate information 13
2. Basis for preparation of the interim financial statements 13
3. Information by business segment and by geographic area 14
4. Costs and expenses by nature 18
5. Financial result 19
6. Income taxes 19
7. Basic and diluted earnings per share 21
8. Accounts receivable 21
9. Inventories 22
10. Other financial assets and liabilities 22
11. Non-current assets and liabilities held for sale and discontinued operations 22
12. Acquisitions and divestitures 24
13. Investments in associates and joint ventures 25
14. Intangibles 27
15. Property, plant and equipment 28
16. Loans, borrowings, cash and cash equivalents and financial investments 29
17. Liabilities related to associates and joint ventures 31
18. Financial instruments classification 35
19. Fair value estimate 35
20. Derivative financial instruments 36
21. Provisions 42
22. Litigation 42
23. Employee postretirement obligations 44
24. Stockholders’ equity 45
25. Related parties 46
26. Commitments 48
27. Parent Company information (individual interim information) 48
28. Additional information about derivatives financial instruments 53
Members of the Board of Directors, Fiscal Council, Advisory Committees and Executive Officers 58

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KPMG Auditores Independentes Rua do Passeio, 38 Setor 2 17º andar 20021-290 - Rio de Janeiro, RJ - Brasil Central Tel Fax Internet 55 (21) 2207-9400 55 (21) 2207-9000 www.kpmg.com.br

*Report on the review of quarterly information - ITR*

(A free translation of the original report in Portuguese, as filed with the Brazilian Securities and Exchange Commission (CVM), prepared in accordance with the accounting practices adopted in Brazil, rules of the CVM and of the International Financial Reporting Standards - IFRS)

To

The Board of Directors and Stockholders of

Vale S.A.

Rio de Janeiro - RJ

*Introduction*

*1.* We have reviewed the interim accounting information, individual and consolidated, of Vale S.A. (“the Company”), identified as Parent Company and Consolidated, respectively, included in the quarterly information form - ITR for the quarter ended June 30, 2017, which comprises the individual and consolidated balance sheet as of June 30, 2017 and the respective statements of income and comprehensive income for three and six months periods ended on June 30, 2017, the individual and consolidated statements of changes in equity for the six-month period and the individual statment of cash flows for the six-month period and the consolidated statement of cash flows for the three and six month periods then ended, including the explanatory notes.

*2. The Company`s Management is responsible for the preparation of these interim accounting information in accordance with the CPC 21(R1) — Demonstração Intermediária* and the IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board — IASB, as well as the presentation of these information in accordance with the standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of quarterly information - ITR. Our responsibility is to express our conclusion on this interim accounting information based on our review.

*Scope of the review*

*3. We conducted our review in accordance with Brazilian and International Interim Information Review Standards ( NBC TR 2410 - Revisão de Informações Intermediárias Executada pelo Auditor da Entidade* and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries primarily of the management responsible for financial and accounting matters and applying analytical procedures and other review procedures. The scope of a review is significantly less than an audit conducted in accordance with auditing standards and, accordingly, it did not enable us to obtain assurance that we were aware of all the material matters that would have been identified in an audit. Therefore, we do not express an audit opinion.

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*Conclusion on the interim accounting information*

*4.* Based on our review, we are not aware of any fact that might lead us to believe that the individual and consolidated interim accounting information included in the aforementioned quarterly information was not prepared, in all material respects, in accordance with CPC 21(R1) and IAS 34, issued by the IASB, applicable to the preparation of the quarterly review - ITR, and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.

*Other matters*

**Statements of added value****

*5.* The individual and consolidated statements of value added for the quarter ended June 30, 2017, prepared under the responsibility of the Company’s management, and presented as supplementary information for the purposes of IAS 34, were submitted to the same review procedures followed together with the review of the Company’s interim financial information. In order to form our conclusion, we evaluated whether these statements were reconciliated to the interim financial information and to the accounting records, as applicable, and whether their form and content are in accordance with the criteria set on Technical Pronouncement CPC 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added were not prepared, in all material respects, in accordance with the individual and consolidated interim financial information taken as a whole.

Rio de Janeiro, July 26, 2017

KPMG Auditores Independentes

CRC SP-014428/O-6 F-RJ

(Original report in Portuguese signed by)

Manuel Fernandes Rodrigues de Sousa

Accountant CRC RJ-052428/O-2

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*Income Statement*

*In millions of Brazilian Reais, except earnings per share data*

Consolidated
Three month period ended June 30, Six month period ended June 30,
Notes 2017 2016 2017 2016
(i) (i)
Continuing operations
Net operating revenue 3(c) 23,363 21,576 50,105 42,150
Cost of goods sold and services rendered 4(a) (16,462 ) (15,102 ) (31,327 ) (30,171 )
Gross profit 6,901 6,474 18,778 11,979
Operating expenses
Selling and administrative expenses 4(b) (426 ) (449 ) (814 ) (865 )
Research and evaluation expenses (257 ) (257 ) (463 ) (468 )
Pre operating and operational stoppage (286 ) (385 ) (650 ) (767 )
Other operating expenses, net 4(c) (271 ) (503 ) (518 ) (644 )
(1,240 ) (1,594 ) (2,445 ) (2,744 )
Impairment and other results on non-current assets 12 and 15 (726 ) (228 ) 877 (228 )
Operating income 4,935 4,652 17,210 9,007
Financial income 5 1,482 13,300 4,489 24,926
Financial expenses 5 (5,823 ) (6,280 ) (10,724 ) (13,185 )
Equity results in associates and joint ventures 13 (83 ) 656 142 1,242
Impairment and other results in associates and joint ventures 17 (110 ) (3,999 ) (301 ) (3,999 )
Income before income taxes 401 8,329 10,816 17,991
Income taxes 6
Current tax (222 ) (1,415 ) (1,807 ) (2,692 )
Deferred tax 378 (3,203 ) (253 ) (5,305 )
156 (4,618 ) (2,060 ) (7,997 )
Net income from continuing operations 557 3,711 8,756 9,994
Net income attributable to noncontrolling interests 99 54 147 51
Net income from continuing operations attributable to Vale’s stockholders 458 3,657 8,609 9,943
Discontinued operations 11
Loss from discontinued operations (388 ) (72 ) (645 ) (27 )
Net income attributable to noncontrolling interests 10 — 13 20
Loss from discontinued operations attributable to Vale’s stockholders (398 ) (72 ) (658 ) (47 )
Net income 169 3,639 8,111 9,967
Net income attributable to noncontrolling interests 109 54 160 71
Net income attributable to Vale’s stockholders 60 3,585 7,951 9,896
Earnings per share attributable to Vale’s stockholders:
Basic and diluted earnings per share: 7
Preferred share (R$) 0.01 0.70 1.54 1.92
Common share (R$) 0.01 0.70 1.54 1.92

(i) Period restated according to Note 11.

The accompanying notes are an integral part of these interim financial statements.

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*Income Statement*

*In millions of Brazilian Reais, except earnings per share data*

Parent company
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Continuing operations
Net operating revenue 15,502 12,210 32,664 20,374
Cost of goods sold and services rendered (8,338 ) (7,085 ) (16,089 ) (14,047 )
Gross profit 7,164 5,125 16,575 6,327
Operating expenses
Selling and administrative expenses (235 ) (249 ) (461 ) (489 )
Research and evaluation expenses (152 ) (136 ) (273 ) (255 )
Pre operating and operational stoppage (212 ) (175 ) (404 ) (339 )
Equity results from subsidiaries (1,449 ) 580 1,616 3,457
Other operating expenses, net (257 ) (91 ) (85 ) (518 )
(2,305 ) (71 ) 393 1,856
Impairment and other results on non-current assets (27 ) — (68 ) —
Operating income 4,832 5,054 16,900 8,183
Financial income 1,029 12,348 3,515 23,710
Financial expenses (5,285 ) (5,938 ) (9,679 ) (12,658 )
Equity results in associates and joint ventures (83 ) 656 142 1,242
Impairment and other results in associates and joint ventures (101 ) (3,999 ) (292 ) (3,999 )
Income before income taxes 392 8,121 10,586 16,478
Income taxes
Current tax 166 (1,281 ) (1,066 ) (2,298 )
Deferred tax (100 ) (3,183 ) (911 ) (4,237 )
66 (4,464 ) (1,977 ) (6,535 )
Net income from continuing operations 458 3,657 8,609 9,943
Loss from discontinued operations (398 ) (72 ) (658 ) (47 )
Net income 60 3,585 7,951 9,896
Earnings per share attributable to Vale’s stockholders:
Basic and diluted earnings per share:
Preferred share (R$) 0.01 0.70 1.54 1.92
Common share (R$) 0.01 0.70 1.54 1.92

The accompanying notes are an integral part of these interim financial statements.

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*Statement of Comprehensive Income*

*In millions of Brazilian Reais*

Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Net income 169 3,639 8,111 9,967
Other comprehensive income:
Items that will not be reclassified subsequently to the income statement
Retirement benefit obligations (933 ) (641 ) (1,026 ) (972 )
Tax recognized within other comprehensive income 289 193 311 297
Total items that will not be reclassified subsequently to the income statement (644 ) (448 ) (715 ) (675 )
Items that may be reclassified subsequently to the income statement
Cumulative translation adjustments 4,532 (7,793 ) 2,356 (14,222 )
Cash flow hedge — 2 — 23
Net investments hedge (1,267 ) — (420 ) —
Equity results in associates and joint ventures, net of taxes — 16 — 16
Transfer of realized results to net income, net of taxes — (266 ) — (276 )
Tax recognized within other comprehensive income 244 27 (104 ) (525 )
Total of items that may be reclassified subsequently to the income statement 3,509 (8,014 ) 1,832 (14,984 )
Total comprehensive income (loss) 3,034 (4,823 ) 9,228 (5,692 )
Comprehensive income attributable to noncontrolling interests 275 (434 ) 192 (901 )
Comprehensive income (loss) attributable to Vale’s stockholders 2,759 (4,389 ) 9,036 (4,791 )
Parent company
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Net income 60 3,585 7,951 9,896
Other comprehensive income:
Items that will not be reclassified subsequently to the income statement
Retirement benefit obligations (20 ) (19 ) (40 ) (40 )
Tax recognized within other comprehensive income 6 6 13 13
Equity results in subsidiaries, associates and joint ventures, net of taxes (630 ) (435 ) (688 ) (648 )
Total items that will not be reclassified subsequently to the income statement (644 ) (448 ) (715 ) (675 )
Items that may be reclassified subsequently to the income statement
Cumulative translation adjustments 4,179 (7,278 ) 2,077 (13,772 )
Net investments hedge (1,267 ) — (420 ) —
Equity results in associates and joint ventures, net of taxes — 18 26
Transfer of realized results to net income, net of taxes — (266 ) — (266 )
Tax recognized within other comprehensive income 431 — 143 —
Total of items that may be reclassified subsequently to the income statement 3,343 (7,526 ) 1,800 (14,012 )
Total comprehensive income (loss) 2,759 (4,389 ) 9,036 (4,791 )

The accompanying notes are an integral part of these interim financial statements.

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*Statement of Cash Flows*

*In millions of Brazilian Reais*

Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
(i) (i)
Cash flow from operating activities:
Income before income taxes from continuing operations 401 8,329 10,816 17,991
Continuing operations adjustments for:
Equity results in associates and joint ventures 83 (656 ) (142 ) (1,242 )
Impairment and other results on non-current assets 726 228 (877 ) 228
Impairment and other results in associates and joint ventures 110 3,999 301 3,999
Depreciation, amortization and depletion 2,907 2,945 5,758 5,998
Financial results, net 4,341 (7,020 ) 6,235 (11,741 )
Changes in assets and liabilities:
Accounts receivable 4,377 256 5,347 (3,546 )
Inventories (787 ) 81 (1,495 ) (239 )
Suppliers and contractors 791 1,305 1,101 139
Payroll and related charges 568 133 (153 ) 136
Other assets and liabilities, net (360 ) 916 (964 ) 1,485
13,157 10,516 25,927 13,208
Interest on loans and borrowings paid (1,351 ) (1,276 ) (2,946 ) (3,134 )
Derivatives paid, net (note 20) (15 ) (1,236 ) (353 ) (3,212 )
Interest on participative stockholders’ debentures paid (221 ) (117 ) (221 ) (117 )
Income taxes (101 ) (250 ) (1,257 ) (858 )
Income taxes - Settlement program (387 ) (351 ) (766 ) (694 )
Net cash provided by operating activities from continuing operations 11,082 7,286 20,384 5,193
Net cash provided by operating activities from discontinued operations 4 121 294 132
Net cash provided by operating activities 11,086 7,407 20,678 5,325
Cash flow from investing activities:
Financial investments redeemed (invested) 115 (384 ) (52 ) (6 )
Loans and advances - Net receipts (payments) (314 ) — (769 ) (15 )
Additions to investments (1,081 ) (476 ) (1,110 ) (838 )
Additions to property, plant and equipment and intangible (note 3(b)) (2,852 ) (4,078 ) (6,339 ) (9,279 )
Proceeds from disposal of assets and investments (note 12) 28 40 1,642 87
Dividends and interest on capital received from associates and joint ventures 266 403 266 405
Others investments activities (64 ) (75 ) (68 ) (163 )
Net cash used in investing activities from continuing operations (3,902 ) (4,570 ) (6,430 ) (9,809 )
Net cash used in investing activities from discontinued operations (263 ) (209 ) (460 ) (393 )
Net cash used in investing activities (4,165 ) (4,779 ) (6,890 ) (10,202 )
Cash flow from financing activities:
Loans and borrowings
Additions 963 5,005 4,539 17,955
Repayments (5,899 ) (6,215 ) (9,432 ) (10,934 )
Transactions with stockholders:
Dividends attributed to stockholders (4,660 ) — (4,660 ) —
Dividends and interest on capital paid to noncontrolling interest (14 ) (252 ) (23 ) (269 )
Transactions with noncontrolling stockholders (note 12) — — 799 (69 )
Net cash provided by (used in) financing activities from continuing operations (9,610 ) (1,462 ) (8,777 ) 6,683
Net cash provided by (used in) financing activities from discontinued operations 107 (12 ) (1 ) (16 )
Net cash provided by (used in) financing activities (9,503 ) (1,474 ) (8,778 ) 6,667
Increase (decrease) in cash and cash equivalents (2,582 ) 1,154 5,010 1,790
Cash and cash equivalents in the beginning of the period 21,279 13,461 13,891 14,022
Effect of exchange rate changes on cash and cash equivalents 225 (1,238 ) 65 (2,435 )
Cash and cash equivalents from disposals subsidiaries — — (44 ) —
Cash and cash equivalents at end of the period 18,922 13,377 18,922 13,377
Non-cash transactions:
Additions to property, plant and equipment - capitalized loans and borrowing costs 265 749 587 1,439

(i) Period restated according to Note 11.

The accompanying notes are an integral part of these interim financial statements.

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*Statement of Cash Flows*

*In millions of Brazilian Reais*

Parent company
Six month period ended June 30,
2017 2016
Cash flow from operating activities:
Income before income taxes from continuing operations 10,586 16,478
Continuing operations adjustments for:
Equity results in associates, subsidiaries and joint ventures (1,758 ) (4,699 )
Results on measurement or sale of non-current assets 68 —
Impairment and other results in associates and joint ventures 292 3,999
Depreciation, amortization and depletion 2,693 2,398
Financial results, net 6,164 (11,052 )
Changes in assets and liabilities:
Accounts receivable 12,695 2,896
Inventories (373 ) 19
Suppliers and contractors 28 925
Payroll and related charges (54 ) 106
Other assets and liabilities, net (779 ) 442
29,562 11,512
Interest on loans and borrowings paid (2,978 ) (2,847 )
Derivatives paid, net (132 ) (672 )
Interest on participative stockholders’ debentures paid (221 ) (117 )
Dividends received from interest on capital and associates — 59
Income taxes (678 ) (81 )
Income taxes - Settlement program (750 ) (681 )
Net cash provided by operating activities 24,803 7,173
Cash flow from investing activities:
Financial investments redeemed (invested) (97 ) 6
Loans and advances - Net receipts (payments) (432 ) 85
Additions to investments (913 ) (1,282 )
Additions to property, plant and equipment and intangible (note 27) (3,737 ) (6,276 )
Proceeds from disposal of assets and investments 15 13
Dividends and interest on capital received from associates and joint ventures 424 403
Others investments activities (54 ) (188 )
Net cash used in investing activities (4,794 ) (7,239 )
Cash flow from financing activities:
Loans and borrowings
Additions 6,742 6,315
Repayments (19,414 ) (6,750 )
Transactions with stockholders:
Dividends and interest on capital paid to noncontrolling interest (4,660 ) —
Transactions with noncontrolling stockholders — 447
Net cash provided by (used in) financing activities (17,332 ) 12
Increase (decrease) in cash and cash equivalents 2,677 (54 )
Cash and cash equivalents in the beginning of the period 1,203 518
Cash and cash equivalents at end of the period 3,880 464
Non-cash transactions:
Additions to property, plant and equipment - capitalized loans and borrowing costs 585 827

The accompanying notes are an integral part of these interim financial statements.

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*Statement of Financial Position*

*In millions of Brazilian Reais*

Notes Consolidated — June 30, 2017 December 31, 2016 Parent company — June 30, 2017 December 31, 2016
Assets
Current assets
Cash and cash equivalents 16 18,922 13,891 3,880 1,203
Accounts receivable 8 5,654 11,937 13,761 26,223
Other financial assets 10 7,255 1,184 2,409 1,231
Inventories 9 12,783 10,913 4,420 3,982
Prepaid income taxes 718 518 634 312
Recoverable taxes 4,306 5,296 2,895 3,962
Others 1,412 1,814 461 406
51,050 45,553 28,460 37,319
Non-current assets held for sale 11 14,654 27,994 8,808 8,936
65,704 73,547 37,268 46,255
Non-current assets
Judicial deposits 22(c) 3,107 3,135 2,676 2,681
Other financial assets 10 11,032 2,046 2,281 2,178
Prepaid income taxes 1,815 1,718 — —
Recoverable taxes 2,424 2,368 2,300 2,223
Deferred income taxes 6(a) 23,473 23,931 14,545 15,299
Others 1,053 894 722 618
42,904 34,092 22,524 22,999
Investments 13 11,926 12,046 109,893 107,539
Intangibles 14 23,856 22,395 12,566 11,314
Property, plant and equipment 15 180,821 180,616 102,318 102,056
259,507 249,149 247,301 243,908
Total assets 325,211 322,696 284,569 290,163
Liabilities
Current liabilities
Suppliers and contractors 12,393 11,830 7,179 7,116
Loans and borrowings 16 6,823 5,410 5,470 4,171
Other financial liabilities 10 2,900 3,539 6,304 10,845
Taxes payable 2,122 2,144 1,895 1,883
Provision for income taxes 850 556 — —
Liabilities related to associates and joint ventures 17 975 951 975 951
Provisions 21 2,761 3,103 1,589 1,792
Dividends and interest on capital — 2,602 — 2,602
Others 2,581 2,921 1,231 353
31,405 33,056 24,643 29,713
Liabilities associated with non-current assets held for sale 11 3,604 3,554 — —
35,009 36,610 24,643 29,713
Non-current liabilities
Loans and borrowings 16 85,318 90,154 38,332 47,877
Other financial liabilities 10 10,400 6,932 62,225 59,681
Taxes payable 16,083 16,170 15,753 15,838
Deferred income taxes 6(a) 5,179 5,540 — —
Provisions 21 20,021 18,730 4,388 4,396
Liabilities related to associates and joint ventures 17 2,394 2,560 2,394 2,560
Deferred revenue - Gold stream 6,563 6,811 — —
Others 5,632 5,487 2,951 2,857
151,590 152,384 126,043 133,209
Total liabilities 186,599 188,994 150,686 162,922
Stockholders’ equity 24
Equity attributable to Vale’s stockholders 133,883 127,241 133,883 127,241
Equity attributable to noncontrolling interests 4,729 6,461 — —
Total stockholders’ equity 138,612 133,702 133,883 127,241
Total liabilities and stockholders’ equity 325,211 322,696 284,569 290,163

The accompanying notes are an integral part of these interim financial statements.

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*Statement of Changes in Equity*

*In millions of Brazilian Reais*

Share capital Results on conversion of shares Results from operation with noncontrolling interest Profit reserves Treasury stocks Unrealized fair value gain (losses) Cumulative translation adjustments Retained earnings Equity attributable to Vale’s stockholders Equity attributable to noncontrolling interests Total stockholders’ equity
Balance at December 31, 2016 77,300 50 (1,870 ) 13,698 (2,746 ) (3,739 ) 44,548 — 127,241 6,461 133,702
Net income — — — — — — — 7,951 7,951 160 8,111
Other comprehensive income:
Retirement benefit obligations — — — — — (715 ) — — (715 ) — (715 )
Net investments hedge — — — — — — (277 ) — (277 ) — (277 )
Translation adjustments — — — — — (30 ) 2,107 — 2,077 32 2,109
Transactions with stockholders:
Dividends and interest on capital of Vale’s stockholders — — — (2,065 ) — — — — (2,065 ) — (2,065 )
Dividends of noncontrolling interest — — — — — — — — — (336 ) (336 )
Acquisitions and disposal of participation of noncontrolling interest (note 12) — — (329 ) — — — — — (329 ) (1,672 ) (2,001 )
Capitalization of noncontrolling interest advances — — — — — — — — — 84 84
Balance at June 30, 2017 77,300 50 (2,199 ) 11,633 (2,746 ) (4,484 ) 46,378 7,951 133,883 4,729 138,612
Share capital Results on conversion of shares Results from operation with noncontrolling interest Profit reserves Treasury stocks Unrealized fair value gain (losses) Cumulative translation adjustments Retained earnings Equity attributable to Vale’s stockholders Equity attributable to noncontrolling interests Total stockholders’ equity
Balance at December 31, 2015 77,300 50 (1,881 ) 3,846 (2,746 ) (3,873 ) 58,464 — 131,160 8,259 139,419
Net income — — — — — — — 9,896 9,896 71 9,967
Other comprehensive income:
Retirement benefit obligations — — — — — (675 ) — — (675 ) — (675 )
Cash flow hedge — — — — — 26 — — 26 — 26
Translation adjustments — — — — — 453 (14,491 ) — (14,038 ) (972 ) (15,010 )
Transactions with stockholders:
Dividends of noncontrolling interest — — — — — — — — — (641 ) (641 )
Acquisitions and disposal of participation of noncontrolling interest (note 12) — — 4 — — — — — 4 — 4
Capitalization of noncontrolling interest advances — — — — — — — — — 61 61
Balance at June 30, 2016 77,300 50 (1,877 ) 3,846 (2,746 ) (4,069 ) 43,973 9,896 126,373 6,778 133,151

The accompanying notes are an integral part of these interim financial statements.

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*Value Added Statement*

*In millions of Brazilian Reais*

Consolidated Parent company
Six month period ended June 30,
Generation of value added from continuing operations 2017 2016 2017 2016
(i)
Gross revenue
Revenue from products and services 50,800 42,771 33,172 20,715
Results on measurement or sale of non-current assets 868 (228 ) (68 ) —
Revenue from the construction of own assets 3,144 6,829 2,875 5,275
Allowance for doubtful accounts (14 ) (4 ) 6 —
Other revenues 264 264 195 125
Less:
Acquisition of products (1,027 ) (835 ) (343 ) (347 )
Material, service and maintenance (12,423 ) (15,157 ) (8,165 ) (9,650 )
Oil and gas (1,967 ) (2,144 ) (1,348 ) (1,337 )
Energy (1,434 ) (1,147 ) (674 ) (489 )
Freight (4,566 ) (4,052 ) (42 ) (24 )
Impairment of non-current assets and other results (292 ) (3,999 ) (292 ) (3,999 )
Impairment of descontinued operations — — (658 ) —
Other costs and expenses (3,051 ) (2,727 ) (427 ) (478 )
Gross value added 30,302 19,571 24,231 9,791
Depreciation, amortization and depletion (5,758 ) (5,998 ) (2,693 ) (2,398 )
Net value added 24,544 13,573 21,538 7,393
Received from third parties:
Equity results from entities 142 1,242 1,758 4,699
Equity results from descontinued operations — — — (47 )
Financial income 571 329 212 169
Monetary and exchange variation of assets 156 (7,037 ) 18 (7,181 )
Total value added from continuing operations to be distributed 25,413 8,107 23,526 5,033
Value added from discontinued operations to be distributed 251 843 — —
Total value added to be distributed 25,664 8,950 23,526 5,033
Personnel 3,651 3,628 1,720 1,377
Taxes and contributions 4,247 3,665 3,045 3,232
Current income tax 1,807 2,692 1,066 2,298
Deferred income tax 253 5,305 911 4,237
Financial expense (excludes capitalized interest) 5,138 1,045 6,165 2,004
Monetary and exchange variation of liabilities 1,346 (18,959 ) 1,009 (19,547 )
Other remunerations of third party funds 873 784 1,659 1,536
Reinvested net income 7,951 9,896 7,951 9,896
Net income attributable to noncontrolling interest 147 51 — —
Distributed value added from continuing operations 25,413 8,107 23,526 5,033
Distributed value added from discontinued operations 251 843 — —
Distributed value added 25,664 8,950 23,526 5,033

(i) Period restated according to Note 11.

The accompanying notes are an integral part of these interim financial statements.

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*Selected Notes to the Interim Financial Statements*

*Expressed in millions of Brazilian Reais, unless otherwise stated*

*1. Corporate information*

Vale S.A. (the “Parent Company”) is a public company headquartered in the city of Rio de Janeiro, Brazil with securities traded on the stock exchanges of São Paulo - BM&F BOVESPA (Vale3 and Vale5), New York - NYSE (VALE and VALE.P), Paris - NYSE Euronext (Vale3 and Vale5) and Madrid — LATIBEX (XVALO and XVALP).

Vale and its direct and indirect subsidiaries (“Vale” or “Company”) are global producers of iron ore and iron ore pellets, key raw materials for steelmaking, and producers of nickel, which is used to produce stainless steel and metal alloys employed in the production of several products. The Company also produces copper, metallurgical and thermal coal, manganese ore, ferroalloys, platinum group metals, gold, silver and cobalt. The information by segment is presented in note 3.

*2. Basis for preparation of the interim financial statements*

*a) Statement of compliance*

The condensed consolidated and individual interim financial statements of the Company (“interim financial statements”) have been prepared in accordance with the International Financial Reporting Standards (“IFRS”) as implemented in Brazil by the Brazilian Accountant Pronouncements Committee (“CPC”), approved by the Brazilian Securities Exchange Commission (“CVM”) and by the Brazilian Federal Accounting Council (“CFC”). All relevant information from its own interim financial statements, and only this information, are being presented and correspond to those used by the Company’s Management. The consolidated interim financial statements present the accounts of the Company.

The selected notes of the Parent Company are presented in a summarized form in note 27.

*b) Basis of presentation*

The interim financial statements have been prepared under the historical cost convention as adjusted to reflect: (i) the fair value of financial instruments measured at fair value through the income statement or available-for-sale financial instruments measured at fair value through the statement of comprehensive income; and (ii) impairment of assets.

The accounting practices, accounting estimates and judgments, risk management and measurement methods are the same as those adopted when preparing the financial statements for the year ended December 31, 2016. The accounting policy for recognizing and measuring income taxes in the interim period is described in note 6. These interim financial statements were prepared to update users about relevant information presented in the period and should be read in conjunction with the financial statements for the year ended December 31, 2016.

The comparative information for the period ended June 30, 2016 was restated for the purposes of applying IFRS 5 “Non-current assets held for sale and discontinued operations” after approval by the Board of Directors of the sale of the fertilizers assets, as presented in Note 11.

The interim financial statements of the Company and its associates and joint ventures are measured using the currency of the primary economic environment in which the entity operates (“functional currency”), which in the case of the Parent Company is the Brazilian real (“BRL” or “R$”). For presentation purposes, these interim financial statements are presented in R$.

The exchange rates used by the Company for major currencies to translate its operations for R$ are as follows :

Closing rate Average rate for the — Three month period ended Six month period ended
June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016
US Dollar (“US$”) 3.3082 3.2591 3.2174 3.5076 3.1807 3.7017
Canadian dollar (“CAD”) 2.5485 2.4258 2.3937 2.7217 2.3847 2.7809
Australian dollar (“AUD”) 2.5394 2.3560 2.4154 2.6153 2.3986 2.7142
Euro (“EUR” or “€”) 3.7750 3.4384 3.5480 3.9624 3.4479 4.1288

Subsequent events were evaluated through July 26, 2017, which is the date the interim financial statements were approved by the Board of Directors.

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*c) Accounting standards issued but not yet effective*

The standards and interpretations issued by IASB relevant to the Company but not yet effective are the same as those adopted when preparing the financial statements for the year ended December 31, 2016.

*3. Information by business segment and by geographic area*

The information presented to the Executive Board on the performance of each segment is derived from the accounting records, adjusted for reallocations between segments.

*a) Adjusted LAJIDA* (EBITDA)**

Adjusted LAJIDA (EBITDA) is used by management to support the decision making process for segments. The definition of adjusted LAJIDA (EBITDA) for the Company is the operating income or loss excluding (i) the depreciation, depletion and amortization, (ii) results on measurement or sales of non-current assets, (iii) impairment, (iv) onerous contracts and plus (v) dividends received from associates and joint ventures.

Consolidated
Three month period ended June 30, 2017
Net operating revenue Cost of goods sold and services rendered Sales, administrative and other operating expenses Research and evaluation Pre operating and operational stoppage Dividends received from associates and joint ventures Adjusted LAJIDA (EBITDA)
Ferrous minerals
Iron ore 11,484 (6,104 ) (299 ) (72 ) (130 ) — 4,879
Iron ore Pellets 4,285 (2,293 ) (33 ) (16 ) (4 ) 119 2,058
Ferroalloys and manganese 373 (258 ) (8 ) — (3 ) — 104
Other ferrous products and services 394 (246 ) 41 (2 ) (1 ) — 186
16,536 (8,901 ) (299 ) (90 ) (138 ) 119 7,227
Coal 1,544 (980 ) (35 ) (11 ) (15 ) — 503
Base metals
Nickel and other products 3,251 (2,640 ) (102 ) (36 ) (36 ) — 437
Copper 1,622 (794 ) (13 ) (7 ) — — 808
4,873 (3,434 ) (115 ) (43 ) (36 ) — 1,245
Others 410 (407 ) (177 ) (111 ) (3 ) 147 (141 )
Total of continuing operations 23,363 (13,722 ) (626 ) (255 ) (192 ) 266 8,834
Discontinued operations (Fertilizers) 1,291 (1,194 ) (62 ) (11 ) (34 ) — (10 )
Total 24,654 (14,916 ) (688 ) (266 ) (226 ) 266 8,824

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Consolidated
Three month period ended June 30, 2016
Net operating revenue Cost of goods sold and services rendered Sales, administrative and other operating expenses Research and evaluation Pre operating and operational stoppage Dividends received from associates and joint ventures Adjusted LAJIDA (EBITDA)
Ferrous minerals
Iron ore 12,263 (5,767 ) (525 ) (58 ) (120 ) — 5,793
Iron ore Pellets 3,049 (1,614 ) (65 ) (13 ) (30 ) 213 1,540
Ferroalloys and manganese 214 (184 ) 2 — (11 ) — 21
Other ferrous products and services 364 (224 ) (8 ) (1 ) (4 ) — 127
15,890 (7,789 ) (596 ) (72 ) (165 ) 213 7,481
Coal 511 (831 ) (29 ) (10 ) (30 ) — (389 )
Base metals
Nickel and other products 3,682 (2,719 ) (18 ) (76 ) (89 ) — 780
Copper 1,393 (832 ) (32 ) (3 ) — — 526
5,075 (3,551 ) (50 ) (79 ) (89 ) — 1,306
Others 100 (197 ) (166 ) (96 ) (1 ) 190 (170 )
Total of continuing operations 21,576 (12,368 ) (841 ) (257 ) (285 ) 403 8,228
Discontinued operations (Fertilizers) 1,627 (1,388 ) (102 ) (19 ) (15 ) 10 113
Total 23,203 (13,756 ) (943 ) (276 ) (300 ) 413 8,341
Consolidated
Six month period ended June 30, 2017
Net operating revenue Cost of goods sold and services rendered Sales, administrative and other operating expenses Research and evaluation Pre operating and operational stoppage Dividends received from associates and joint ventures Adjusted LAJIDA (EBITDA)
Ferrous minerals
Iron ore 26,629 (11,361 ) (296 ) (123 ) (257 ) 14,592
Iron ore Pellets 8,870 (4,343 ) (69 ) (26 ) (8 ) 119 4,543
Ferroalloys and manganese 646 (397 ) (14 ) — (12 ) 223
Other ferrous products and services 789 (485 ) 27 (3 ) (1 ) 327
36,934 (16,586 ) (352 ) (152 ) (278 ) 119 19,685
Coal 2,564 (1,759 ) (72 ) (21 ) (15 ) — 697
Base metals
Nickel and other products 6,809 (5,352 ) (234 ) (65 ) (157 ) — 1,001
Copper 3,086 (1,515 ) (24 ) (12 ) — — 1,535
9,895 (6,867 ) (258 ) (77 ) (157 ) — 2,536
Others 712 (714 ) (489 ) (211 ) (6 ) 147 (561 )
Total of continuing operations 50,105 (25,926 ) (1,171 ) (461 ) (456 ) 266 22,357
Discontinued operations (Fertilizers) 2,453 (2,260 ) (111 ) (16 ) (67 ) — (1 )
Total 52,558 (28,186 ) (1,282 ) (477 ) (523 ) 266 22,356

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Consolidated
Six month period ended June 30, 2016
Net operating revenue Cost of goods sold and services rendered Sales, administrative and other operating expenses Research and evaluation Pre operating and operational stoppage Dividends received from associates and joint ventures Adjusted LAJIDA (EBITDA)
Ferrous minerals
Iron ore 23,451 (10,805 ) (1,123 ) (100 ) (246 ) — 11,177
Iron ore Pellets 5,967 (3,309 ) (124 ) (15 ) (45 ) 213 2,687
Ferroalloys and manganese 396 (359 ) 8 — (21 ) — 24
Other ferrous products and services 703 (454 ) 10 (2 ) (7 ) — 250
30,517 (14,927 ) (1,229 ) (117 ) (319 ) 213 14,138
Coal 1,110 (1,964 ) 162 (18 ) (37 ) — (747 )
Base metals
Nickel and other products 7,565 (5,692 ) (107 ) (132 ) (213 ) 1 1,422
Copper 2,764 (1,579 ) (27 ) (5 ) — — 1,153
10,329 (7,271 ) (134 ) (137 ) (213 ) 1 2,575
Others 194 (372 ) (144 ) (196 ) (1 ) 191 (328 )
Total of continuing operations 42,150 (24,534 ) (1,345 ) (468 ) (570 ) 405 15,638
Discontinued operations (Fertilizers) 3,120 (2,530 ) (142 ) (40 ) (30 ) 10 388
Total 45,270 (27,064 ) (1,487 ) (508 ) (600 ) 415 16,026

Adjusted LAJIDA (EBITDA) is reconciled to net income (loss) as follows:

*From Continuing operations*

Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Net income from continuing operations 557 3,711 8,756 9,994
Depreciation, depletion and amortization 2,907 2,945 5,758 5,998
Income taxes (156 ) 4,618 2,060 7,997
Financial results, net 4,341 (7,020 ) 6,235 (11,741 )
LAJIDA (EBITDA) 7,649 4,254 22,809 12,248
Items to reconciled LAJIDA (EBITDA) adjusted
Impairment and other results on non-current assets 726 228 (877 ) 228
Equity results in associates and joint ventures 83 (656 ) (142 ) (1,242 )
Impairment and other results in associates and joint ventures 110 3,999 301 3,999
Dividends received from associates and joint ventures 266 403 266 405
Adjusted LAJIDA (EBITDA) from continuing operations 8,834 8,228 22,357 15,638

*From Discontinued operations*

Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Loss from discontinued operations (388 ) (72 ) (645 ) (27 )
Depreciation, depletion and amortization 3 308 3 569
Income taxes (493 ) (78 ) (588 ) (54 )
Financial results, net 12 (53 ) 26 (105 )
LAJIDA (EBITDA) (866 ) 105 (1,204 ) 383
Items to reconciled LAJIDA (EBITDA) adjusted
Equity results in associates and joint ventures (1 ) (2 ) (2 ) (5 )
Impairment of non-current assets (note 11a) 857 — 1,205 —
Dividends received from associates and joint ventures — 10 — 10
Adjusted LAJIDA (EBITDA) from discontinued operations (10 ) 113 (1 ) 388

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*b) Assets by segment*

Consolidated
Three month period ended Six month period ended
June 30, 2017 June 30, 2017
Product inventory Investments in associates and joint ventures Property, plant and equipment and intangible (i) Additions to property, plant and equipment and intangible (ii) Depreciation, depletion and amortization (iii) Additions to property, plant and equipment and intangible (ii) Depreciation, depletion and amortization (iii)
Ferrous minerals 5,430 6,185 114,934 1,978 1,376 4,593 2,684
Coal 312 995 5,931 47 238 224 567
Base metals 3,667 42 76,715 812 1,279 1,476 2,477
Others 86 4,704 7,097 15 14 46 30
Total 9,495 11,926 204,677 2,852 2,907 6,339 5,758
Consolidated
Three month period ended Six month period ended
December 31, 2016 June 30, 2016
Product inventory Investments in associates and joint ventures Property, plant and equipment and intangible (i) Additions to property, plant and equipment and intangible (ii) Depreciation, depletion and amortization (iii) Additions to property, plant and equipment and intangible (ii) Depreciation, depletion and amortization (iii)
Ferrous minerals 3,697 5,894 113,526 2,676 1,337 6,269 2,678
Coal 412 929 6,216 559 54 1,080 150
Base metals 3,617 40 76,173 815 1,537 1,870 3,131
Others 7 5,183 7,096 28 17 60 39
Total 7,733 12,046 203,011 4,078 2,945 9,279 5,998

(i) Goodwill is allocated mainly in iron ore and nickel segments in the amount of R$4,060 and R$6,265 in June 30, 2017 and R$4,060 and R$5,981 in December 31, 2016, respectively.

(ii) Includes only cash effect.

(iii) Refers to amounts recognized in the income statement.

*c) Net operating revenue by geographic area*

Consolidated
Three month period ended June 30, 2017
Ferrous minerals Coal Base metals Others Total
Americas, except United States and Brazil 445 — 609 174 1,228
United States of America 392 — 609 42 1,043
Europe 2,203 360 1,671 45 4,279
Middle East/Africa/Oceania 1,142 118 9 — 1,269
Japan 1,412 142 289 — 1,843
China 8,044 — 278 — 8,322
Asia, except Japan and China 960 790 1,265 — 3,015
Brazil 1,938 134 143 149 2,364
Net operating revenue 16,536 1,544 4,873 410 23,363
Consolidated
Three month period ended June 30, 2016
Ferrous minerals Coal Base metals Others Total
Americas, except United States and Brazil 260 35 988 — 1,283
United States of America 185 — 619 — 804
Europe 2,086 77 1,733 — 3,896
Middle East/Africa/Oceania 1,003 81 13 — 1,097
Japan 1,059 110 258 — 1,427
China 9,009 24 396 — 9,429
Asia, except Japan and China 798 184 918 — 1,900
Brazil 1,490 — 150 100 1,740
Net operating revenue 15,890 511 5,075 100 21,576

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Consolidated
Six month period ended June 30, 2017
Ferrous minerals Coal Base metals Others Total
Americas, except United States and Brazil 887 — 1,565 174 2,626
United States of America 558 — 1,193 182 1,933
Europe 4,998 642 3,261 96 8,997
Middle East/Africa/Oceania 2,486 280 18 — 2,784
Japan 2,639 246 566 — 3,451
China 19,526 — 781 — 20,307
Asia, except Japan and China 1,759 1,106 2,242 — 5,107
Brazil 4,081 290 269 260 4,900
Net operating revenue 36,934 2,564 9,895 712 50,105
Consolidated
Six month period ended June 30, 2016
Ferrous minerals Coal Base metals Others Total
Americas, except United States and Brazil 615 50 2,068 — 2,733
United States of America 316 — 1,290 14 1,620
Europe 3,968 103 3,370 — 7,441
Middle East/Africa/Oceania 1,637 152 48 — 1,837
Japan 2,053 247 460 — 2,760
China 17,687 119 1,009 — 18,815
Asia, except Japan and China 1,404 439 1,865 — 3,708
Brazil 2,837 — 219 180 3,236
Net operating revenue 30,517 1,110 10,329 194 42,150

*4. Costs and expenses by nature*

*a) Cost of goods sold and services rendered*

Consolidated — Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Personnel 1,791 1,850 3,512 3,611
Materials and services 2,894 3,279 5,350 5,702
Fuel oil and gas 997 1,020 1,966 2,142
Maintenance 2,430 2,187 4,700 4,550
Energy 747 579 1,423 1,143
Acquisition of products 512 511 1,027 837
Depreciation and depletion 2,740 2,734 5,401 5,637
Freight 2,500 2,132 4,566 4,052
Others 1,851 810 3,382 2,497
Total 16,462 15,102 31,327 30,171
Cost of goods sold 15,960 14,691 30,387 29,344
Cost of services rendered 502 411 940 827
Total 16,462 15,102 31,327 30,171

*b) Selling and administrative expenses*

Consolidated — Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Personnel 199 189 367 373
Services 60 57 99 110
Depreciation and amortization 72 113 162 199
Taxes and rents 6 9 27 24
Selling expenses 64 34 106 64
Others 25 47 53 95
Total 426 449 814 865

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*c) Others operational expenses (incomes), net*

Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Provision for litigation 55 203 93 318
Profit sharing program 98 19 221 34
Disposals (reversals) of materials and inventories 12 (3 ) 20 (32 )
Others 106 284 184 324
Total 271 503 518 644

*5. Financial result*

Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Financial expenses
Loans and borrowings gross interest (1,447 ) (1,583 ) (3,026 ) (3,191 )
Capitalized loans and borrowing costs 265 749 587 1,439
Derivative financial instruments (513 ) (575 ) (852 ) (803 )
Indexation and exchange rate variation (a) (2,814 ) (3,610 ) (3,876 ) (7,873 )
Participative stockholders’ debentures (285 ) (312 ) (1,581 ) (763 )
Expenses of REFIS (347 ) (454 ) (742 ) (902 )
Others (682 ) (495 ) (1,234 ) (1,092 )
(5,823 ) (6,280 ) (10,724 ) (13,185 )
Financial income
Short-term investments 166 83 277 234
Derivative financial instruments 229 3,148 1,232 4,802
Indexation and exchange rate variation (b) 882 10,044 2,686 19,795
Others 205 25 294 95
1,482 13,300 4,489 24,926
Financial results, net (4,341 ) 7,020 (6,235 ) 11,741
Summary of indexation and exchange rate variation
Loans and borrowings (2,356 ) 9,509 (754 ) 19,101
Others 424 (3,075 ) (436 ) (7,179 )
Net (a) + (b) (1,932 ) 6,434 (1,190 ) 11,922

As from January 1, 2017, the Company started to apply net investment hedge accounting in foreign operation, for more information see note 16.

*6. Income taxes*

*a) Deferred income tax assets and liabilities*

Changes in deferred tax are as follows:

Consolidated — Assets Liabilities Total
Balance at March 31, 2017 22,582 5,314 17,268
Effect in income statement 202 (176 ) 378
Translation adjustment 438 323 115
Other comprehensive income 251 (282 ) 533
Balance at June 30, 2017 23,473 5,179 18,294
Consolidated — Assets Liabilities Total
Balance at March 31, 2016 27,317 6,467 20,850
Effect in income statement (3,239 ) (36 ) (3,203 )
Transfers between asset and liabilities 225 225 —
Translation adjustment (944 ) (892 ) (52 )
Other comprehensive income 37 (183 ) 220
Balance at June 30, 2016 23,396 5,581 17,815

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Consolidated — Assets Liabilities Total
Balance at December 31, 2016 23,931 5,540 18,391
Effect in income statement (517 ) (264 ) (253 )
Translation adjustment 145 196 (51 )
Other comprehensive income (86 ) (293 ) 207
Balance at June 30, 2017 23,473 5,179 18,294
Consolidated — Assets Liabilities Total
Balance at December 31, 2015 30,867 6,520 24,347
Effect in income statement (5,518 ) (213 ) (5,305 )
Transfers between asset and liabilities 575 575 —
Translation adjustment (2,045 ) (1,046 ) (999 )
Other comprehensive income (483 ) (255 ) (228 )
Balance at June 30, 2016 23,396 5,581 17,815

*b) Income tax reconciliation — Income statement*

The total amount presented as income taxes in the income statement is reconciled to the rate established by law, as follows:

Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Income before income taxes 401 8,329 10,816 17,991
Income taxes at statutory rates - 34% (136 ) (2,832 ) (3,677 ) (6,117 )
Adjustments that affect the basis of taxes:
Income tax benefit from interest on stockholders’ equity 396 — 793 —
Tax incentives 3 336 561 347
Equity results (28 ) 217 49 431
Unrecognized tax losses of the period (297 ) (568 ) (852 ) (1,291 )
Gain on sale of subsidiaries (note 12) — — 548 —
Other results in associates and joint ventures — (1,269 ) — (1,269 )
Others 218 (502 ) 518 (98 )
Income taxes 156 (4,618 ) (2,060 ) (7,997 )

Income tax expense is recognized at an amount determined by the estimated tax rate, adjusted for the tax effect of certain items recognized in full in the interim period. Therefore, the effective tax rate in the interim financial statement may differ from management’s estimate of the effective tax rate for the annual financial statement.

*c) Income taxes - Settlement program (“REFIS”)*

In 2013, the Company elected to participate in the REFIS, a federal tax settlement program, to settle most of the claims related to the collection of income tax and social contribution on equity gains of foreign subsidiaries and associates from 2003 to 2012.

At June 30, 2017, the balance of R$17,639 (R$1,556 as current and R$16,083 as non-current) is due in 136 remaining monthly installments, bearing interest at the SELIC rate of 10.25% per year.

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*7. Basic and diluted earnings per share*

The values of basic and diluted earnings per share are as follows:

Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Basic and diluted earnings per share from continuing operations:
Income available to preferred stockholders 175 1,396 3,287 3,797
Income available to common stockholders 283 2,261 5,322 6,146
Total 458 3,657 8,609 9,943
Basic and diluted loss per share from discontinued operations:
Loss available to preferred stockholders (152 ) (27 ) (251 ) (18 )
Loss available to common stockholders (246 ) (45 ) (407 ) (29 )
Total (398 ) (72 ) (658 ) (47 )
Basic and diluted earnings per share:
Income available to preferred stockholders 23 1,369 3,036 3,779
Income available to common stockholders 37 2,216 4,915 6,117
Total 60 3,585 7,951 9,896
Thousands of shares
Weighted average number of shares outstanding - preferred shares 1,967,722 1,967,722 1,967,722 1,967,722
Weighted average number of shares outstanding - common shares 3,185,653 3,185,653 3,185,653 3,185,653
Total 5,153,375 5,153,375 5,153,375 5,153,375
Basic and diluted earnings per share from continuing operations:
Preferred share (R$) 0.09 0.71 1.67 1.93
Common share (R$) 0.09 0.71 1.67 1.93
Basic and diluted loss per share from discontinued operations:
Preferred share (R$) (0.08 ) (0.01 ) (0.13 ) (0.01 )
Common share (R$) (0.08 ) (0.01 ) (0.13 ) (0.01 )
Basic and diluted earnings per share:
Preferred share (R$) 0.01 0.70 1.54 1.92
Common share (R$) 0.01 0.70 1.54 1.92

The Company does not hold dilutive potential ordinary shares outstanding that could result in dilution of earnings (loss) per share.

*8. Accounts receivable*

Consolidated — June 30, 2017 December 31, 2016
Trade receivables 5,856 12,131
Impairment of trade receivables (202 ) (194 )
5,654 11,937
Trade receivables related to the steel sector - % 77.17 % 83.44 %
Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Impairment of trade receivables recorded in the income statement (14 ) — (14 ) (8 )

No individual customer represents over 10% of receivables or revenues.

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*9. Inventories*

Consolidated — June 30, 2017 December 31, 2016
Product inventory 9,495 7,733
Consumable inventory 3,288 3,180
Total 12,783 10,913

Product inventories by segments are presented in note 3(b).

*10. Other financial assets and liabilities*

Consolidated — Current Non-Current
June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016
Other financial assets
Financial investments 35 59 — —
Loans — — 597 587
Derivative financial instruments (note 20) 526 892 1,639 1,454
Related parties (note 25) 6,694 233 8,796 5
7,255 1,184 11,032 2,046
Other financial liabilities
Derivative financial instruments (note 20) 1,199 1,349 3,225 3,991
Related parties (note 25) 1,701 2,190 3,289 415
Participative stockholders’ debentures — — 3,886 2,526
2,900 3,539 10,400 6,932

*11. Non-current assets and liabilities held for sale and discontinued operations*

Consolidated
June 30, 2017 December 31, 2016
Fertilizers assets Shipping assets Total Fertilizers assets Nacala Shipping assets Total
Assets
Accounts receivable 277 — 277 279 21 — 300
Inventories 1,497 — 1,497 1,261 7 — 1,268
Other current assets 339 — 339 348 370 — 718
Investments in associates and joint ventures 295 — 295 295 — — 295
Property, plant and equipment and Intangible 8,161 1,181 9,342 8,779 13,246 1,164 23,189
Other non-current assets 2,904 — 2,904 2,216 8 — 2,224
Total assets 13,473 1,181 14,654 13,178 13,652 1,164 27,994
Liabilities
Suppliers and contractors 791 — 791 913 134 — 1,047
Other current liabilities 756 — 756 626 44 — 670
Other non-current liabilities 2,057 — 2,057 1,821 16 — 1,837
Total liabilities 3,604 — 3,604 3,360 194 — 3,554
Net non-current assets held for sale 9,869 1,181 11,050 9,818 13,458 1,164 24,440

*a) Discontinued operations (Fertilizers assets)*

In December 2016, the Company entered into an agreement with The Mosaic Company (“Mosaic”) to sell (i) the phosphate assets located in Brazil, except those mainly related to nitrogen assets located in Cubatão (Brazil); (ii) the control of Compañia Minera Miski Mayo S.A.C., in Peru; (iii) the potassium assets located in Brazil; and (iv) the potash projects in Canada.

In December 2016, the agreed transaction price was R$8,270 (US$2.5 billion), of which R$4,135 (US$1.25 billion) will be paid in cash and R$4,135 (US$1.25 billion) with 42.3 million common shares to be issued by Mosaic, which at the agreement signature date represented around 11% of Mosaic’s total outstanding common shares.

The spin-off of the nitrogen assets located in Cubatão from the remaining Vale Fertilizantes S.A.’s assets was concluded in July 2017 (subsequent event). The completion of this milestone was one of the requirement for the conclusion of the transaction which is expected to be completed until the end of 2017 and, still, is subject to the fulfillment of usual precedent conditions, including the approval of the Administrative Council of Economic Defense (CADE) and other antitrust authorities; and other operational and regulatory matters.

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The fertilizer segment, including Cubatão, is presented as a discontinued operation and the related assets and liabilities were classified as assets and liabilities held for sale.

On June 30, 2017, the net assets of the fertilizers segment were adjusted to reflect the fair value less cost to sell and a loss of R$1,205 was recognized in the income statement as “Impairment of non-current assets” from discontinued operations for the six-month period ended June 30, 2017. The loss derived basically from the variation of the market value of Mosaic shares that will be received on the closing.

The results for the period and the cash flows of discontinued operations of the Fertilizer segment for the period ended June 30, 2017 are presented as follows, and includes the corresponding restated period ended June 30, 2016, as described in note 2(b) .

Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Discontinued operations
Net operating revenue 1,291 1,627 2,453 3,120
Cost of goods sold and services rendered (1,194 ) (1,689 ) (2,260 ) (3,087 )
Operating expenses (110 ) (143 ) (197 ) (224 )
Impairment of non-current assets (857 ) — (1,205 ) —
Operating loss (870 ) (205 ) (1,209 ) (191 )
Financial Results, net (12 ) 53 (26 ) 105
Equity results in associates and joint ventures 1 2 2 5
Loss before income taxes (881 ) (150 ) (1,233 ) (81 )
Income taxes 493 78 588 54
Loss from discontinued operations (388 ) (72 ) (645 ) (27 )
Net income attributable to noncontrolling interests 10 — 13 20
Loss attributable to Vale’s stockholders (398 ) (72 ) (658 ) (47 )
Consolidated
Three month period ended June 30, Six month period ended June 30,
2017 2016 2017 2016
Discontinued operations
Cash flow from operating activities
Loss before income taxes (881 ) (150 ) (1,233 ) (81 )
Adjustments:
Equity results in associates and joint ventures (1 ) (2 ) (2 ) (5 )
Depreciation, amortization and depletion 3 308 3 569
Impairment of non-current assets 857 — 1,205 —
Increase (decrease) in assets and liabilities 26 (35 ) 321 (351 )
Net cash provided by operating activities 4 121 294 132
Cash flow from investing activities
Additions to property, plant and equipment (263 ) (246 ) (460 ) (399 )
Others — 37 — 6
Net cash used in investing activities (263 ) (209 ) (460 ) (393 )
Cash flow from financing activities
Loans and borrowings
Additions (Repayments) 107 (12 ) (1 ) (16 )
Net cash provided by (used in) financing activities 107 (12 ) (1 ) (16 )
Net cash used in discontinued operations (152 ) (100 ) (167 ) (277 )

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*12. Acquisitions and divestitures*

*a) Coal - Nacala Logistic Corridor*

In December 2014 and as amended in November 2016, the Company signed an agreement with Mitsui & Co., Ltd. (“Mitsui”) to transfer 50% of its stake of 66.7% in Nacala Logistic Corridor, which comprises entities that holds railroads and port concessions located in Mozambique and Malawi. Also, Mitsui committed to acquire 15% participation in the entity that owns Vale Moçambique, which hold the Moatize Coal Project.

In March 2017, the transaction was concluded, and consideration of R$2,186 (US$690) was received by Vale. After the completion of the transaction, the Company (i) holds 81% of Vale Moçambique and retains the control of the Moatize Coal Project and (ii) shares control of the Nacala Logistic Corridor structure (Nacala BV), with Mitsui.

Nacala Logistic Corridor is in negotiations for a project finance, which the completion is expected to occur during the course of 2017. Upon the completion an additional amount of R$189 (US$57) will be paid by Mitsui. Mitsui has certain rights, based on the execution of the project finance, to sell their participation in the Moatize Coal Project and Nacala BV, back to Vale, based on the original amounts and the same number of shares. The fair value of these put options is non-significant.

As a consequence of sharing control of Nacala BV, the Company:

(i) derecognized the assets and liabilities classified as held for sale in the total amount of R$13,130 (US$4,144), from which R$12,874 (US$4,063) refers to property, plant and equipment and intangibles;

(ii) derecognized R$44 (US$14) related to cash and cash equivalents;

(iii) recognized a gain of R$1,576 (US$504) in the income statement related to the sale and the re-measurement at fair value, of its remaining interest at Nacala BV based on the consideration received;

(iv) reclassified the gain related to cumulative translation adjustments to income statements in the amount of R$34 (US$11);

The result of the transaction regarding the assets from Nacala’s corridor was recognized in the income statement as “Impairment and other results on non-current assets”.

The results of the transaction with the Moatize Coal Project was recognized in “Results from operation with noncontrolling interest” in the amount of R$329 (US$105), directly in Stockholders’ Equity.

The consideration received was recognized in the statement of cash flows in “Proceeds from disposal of assets and investments” in the amount of R$1,387 (US$435) and “Transactions with noncontrolling stockholders” in the amount of R$799 (US$255).

Due to deconsolidation of Nacala Logistic Corridor, Vale has after the transaction, outstanding loan balances with Nacala BV and Pangea Emirates Ltd stated as Related parties, as described in note 25. The use of proceeds of the project finance is expected to settle part of this debt.

*b) Floating Transfer Stations (“FTS”)*

In June 2017, the Company completed the sale of one of its Floating Transfer Stations in Philippines in the amount of R$49. In this transaction, Vale recognized a loss of R$180 as “Impairment and other results on non-current assets”.

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*13. Investments in associates and joint ventures*

*a) Changes during the period*

Changes in investments in associates and joint ventures are as follows:

Consolidated
2017 2016
Associates Joint ventures Total Associates Joint ventures Total
Balance at March 31, 4,619 7,684 12,303 4,978 7,113 12,091
Additions — 7 7 — 490 490
Translation adjustment 40 30 70 (151 ) (55 ) (206 )
Equity results in income statement 79 (162 ) (83 ) 126 530 656
Equity results from discontinued operations — — — 2 — 2
Dividends declared (109 ) (265 ) (374 ) (15 ) (296 ) (311 )
Others 3 — 3 1 (2 ) (1 )
Balance at June 30, 4,632 7,294 11,926 4,941 7,780 12,721
Consolidated
2017 2016
Associates Joint ventures Total Associates Joint ventures Total
Balance at January 1st, 4,683 7,363 12,046 5,166 6,315 11,481
Additions — 103 103 — 825 825
Translation adjustment 17 14 31 (258 ) (109 ) (367 )
Equity results in income statement 63 79 142 121 1,121 1,242
Equity results from discontinued operations — — — 5 — 5
Dividends declared (134 ) (265 ) (399 ) (92 ) (327 ) (419 )
Others 3 — 3 (1 ) (45 ) (46 )
Balance at June 30, 4,632 7,294 11,926 4,941 7,780 12,721

The investments by segments are presented in note 3(b).

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*Investments in associates and joint ventures (continued)*

Consolidated
Investments in associates and joint ventures Equity results in the income statement Dividends received
Three month period ended June 30, Six month period ended June 30, Three month period ended June 30, Six month period ended June 30,
Associates and joint ventures % ownership % voting capital June 30, 2017 December 31, 2016 2017 2016 2017 2016 2017 2016 2017 2016
Ferrous minerals
Baovale Mineração S.A. 50.00 50.00 99 86 6 — 12 (3 ) — — — —
Companhia Coreano-Brasileira de Pelotização 50.00 50.00 252 221 41 13 78 34 — 45 — 43
Companhia Hispano-Brasileira de Pelotização (i) 50.89 51.00 241 191 35 8 68 23 18 66 18 66
Companhia Ítalo-Brasileira de Pelotização (i) 50.90 51.00 260 223 42 6 63 22 54 33 54 33
Companhia Nipo-Brasileira de Pelotização (i) 51.00 51.11 451 353 76 (14 ) 145 32 47 71 47 71
MRS Logística S.A. 48.16 46.75 1,662 1,592 70 41 118 119 — — — —
VLI S.A. 37.60 37.60 3,154 3,158 61 72 21 55 — — — —
Zhuhai YPM Pellet Co. 25.00 25.00 66 70 — — — — — — — —
6,185 5,894 331 126 505 282 119 215 119 213
Coal
Henan Longyu Energy Resources Co., Ltd. 25.00 25.00 995 929 20 1 51 (34 ) — — — —
995 929 20 1 51 (34 ) — — — —
Base metals
Korea Nickel Corp. 25.00 25.00 42 40 (1 ) 1 1 (6 ) — — — —
42 40 (1 ) 1 1 (6 ) — — — —
Others
Aliança Geração de Energia S.A. (i) 55.00 55.00 1,907 1,896 26 66 47 79 36 77 36 79
Aliança Norte Energia Participações S.A. (i) 51.00 51.00 529 483 1 (6 ) 11 (12 ) — — — —
California Steel Industries, Inc. 50.00 50.00 651 604 52 19 79 13 43 — 43 —
Companhia Siderúrgica do Pecém 50.00 50.00 1,260 1,716 (423 ) 397 (456 ) 817 — — — —
Mineração Rio Grande do Norte S.A. 40.00 40.00 314 421 4 52 2 124 68 111 68 113
Others 43 63 (93 ) — (98 ) (21 ) — — — —
4,704 5,183 (433 ) 528 (415 ) 1,000 147 188 147 192
Total 11,926 12,046 (83 ) 656 142 1,242 266 403 266 405

(i) Although the Company held majority of the voting capital, the entities are accounted under equity method due to the stockholders’ agreement where relevant decisions are shared with other parties.

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*14. Intangibles*

Changes in intangibles are as follows:

Consolidated — Goodwill Concessions Right of use Software Total
Balance at March 31, 2017 9,920 11,735 472 1,021 23,148
Additions — 467 — 32 499
Disposals — (5 ) — — (5 )
Amortization — (129 ) (2 ) (116 ) (247 )
Translation adjustment 407 17 25 12 461
Balance at June 30, 2017 10,327 12,085 495 949 23,856
Cost 10,327 16,110 762 5,119 32,318
Accumulated amortization — (4,025 ) (267 ) (4,170 ) (8,462 )
Balance at June 30, 2017 10,327 12,085 495 949 23,856
Consolidated — Goodwill Concessions Right of use Software Total
Balance at March 31, 2016 11,014 8,378 532 1,492 21,416
Additions — 1,556 — 14 1,570
Disposals — (16 ) — — (16 )
Amortization — (146 ) (1 ) (141 ) (288 )
Translation adjustment (681 ) (16 ) (83 ) 18 (762 )
Transfers — 270 — — 270
Balance at June 30, 2016 10,333 10,026 448 1,383 22,190
Cost 10,333 13,578 711 5,071 29,693
Accumulated amortization — (3,552 ) (263 ) (3,688 ) (7,503 )
Balance at June 30, 2016 10,333 10,026 448 1,383 22,190
Consolidated — Goodwill Concessions Right of use Software Total
Balance at December 31, 2016 10,041 10,759 480 1,115 22,395
Additions — 1,614 — 58 1,672
Disposals — (7 ) — — (7 )
Amortization — (284 ) (3 ) (233 ) (520 )
Translation adjustment 286 3 18 9 316
Balance at June 30, 2017 10,327 12,085 495 949 23,856
Cost 10,327 16,110 762 5,119 32,318
Accumulated amortization — (4,025 ) (267 ) (4,170 ) (8,462 )
Balance at June 30, 2017 10,327 12,085 495 949 23,856
Consolidated — Goodwill Concessions Right of use Software Total
Balance at December 31, 2015 11,544 7,084 811 1,350 20,789
Additions — 2,976 3 20 2,999
Disposals — (18 ) — (1 ) (19 )
Amortization — (270 ) (5 ) (286 ) (561 )
Translation adjustment (1,211 ) (16 ) (98 ) 12 (1,313 )
Transfers — 270 (263 ) 288 295
Balance at June 30, 2016 10,333 10,026 448 1,383 22,190
Cost 10,333 13,578 711 5,071 29,693
Accumulated amortization — (3,552 ) (263 ) (3,688 ) (7,503 )
Balance at June 30, 2016 10,333 10,026 448 1,383 22,190

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*15. Property, plant and equipment*

Changes in property, plant and equipment are as follows:

Consolidated — Land Building Facilities Equipment Mineral properties Others Constructions in progress Total
Balance at March 31, 2017 2,391 36,714 34,611 22,075 28,553 26,317 27,635 178,296
Additions (i) — — — — — — 2,517 2,517
Disposals (1 ) (2 ) (93 ) (12 ) (401 ) (242 ) (33 ) (784 )
Assets retirement obligation — — — — (109 ) — — (109 )
Depreciation, amortization and depletion — (384 ) (573 ) (653 ) (508 ) (560 ) — (2,678 )
Translation adjustment 26 586 483 547 1,330 458 149 3,579
Transfers 9 1,173 766 1,399 65 985 (4,397 ) —
Balance at June 30, 2017 2,425 38,087 35,194 23,356 28,930 26,958 25,871 180,821
Cost 2,425 59,442 56,072 41,700 55,342 40,159 25,871 281,011
Accumulated depreciation — (21,355 ) (20,878 ) (18,344 ) (26,412 ) (13,201 ) — (100,190 )
Balance at June 30, 2017 2,425 38,087 35,194 23,356 28,930 26,958 25,871 180,821
Consolidated — Land Building Facilities Equipment Mineral properties Others Constructions in progress Total
Balance at March 31, 2016 2,922 35,026 31,007 27,348 38,926 27,206 43,713 206,148
Additions (i) — — — — — — 3,845 3,845
Disposals — — (1 ) (8 ) — (1,175 ) (69 ) (1,253 )
Assets retirement obligation — — — — 60 — — 60
Depreciation, amortization and depletion — (405 ) (522 ) (829 ) (799 ) (594 ) — (3,149 )
Translation adjustment (84 ) (2,685 ) (1,202 ) (1,577 ) (2,757 ) (944 ) 1,128 (8,121 )
Transfers to non-current assets held for sale — — — — — (1,595 ) — (1,595 )
Transfers 22 1,190 348 689 413 (920 ) (2,012 ) (270 )
Balance at June 30, 2016 2,860 33,126 29,630 25,623 35,843 21,978 46,605 195,665
Cost 2,860 51,619 48,187 45,097 60,590 33,541 46,605 288,499
Accumulated depreciation — (18,493 ) (18,557 ) (19,474 ) (24,747 ) (11,563 ) — (92,834 )
Balance at June 30, 2016 2,860 33,126 29,630 25,623 35,843 21,978 46,605 195,665
Consolidated — Land Building Facilities Equipment Mineral properties Others Constructions in progress Total
Balance at December 31, 2016 2,360 34,790 30,866 22,141 27,312 24,494 38,653 180,616
Additions (i) — — — — — — 4,098 4,098
Disposals (1 ) (2 ) (112 ) (22 ) (401 ) (247 ) (50 ) (835 )
Assets retirement obligation — — — — 4 — — 4
Depreciation, amortization and depletion — (846 ) (1,099 ) (1,259 ) (990 ) (1,104 ) — (5,298 )
Translation adjustment 12 357 270 238 931 405 23 2,236
Transfers 54 3,788 5,269 2,258 2,074 3,410 (16,853 ) —
Balance at June 30, 2017 2,425 38,087 35,194 23,356 28,930 26,958 25,871 180,821
Cost 2,425 59,442 56,072 41,700 55,342 40,159 25,871 281,011
Accumulated depreciation — (21,355 ) (20,878 ) (18,344 ) (26,412 ) (13,201 ) — (100,190 )
Balance at June 30, 2017 2,425 38,087 35,194 23,356 28,930 26,958 25,871 180,821
Consolidated — Land Building Facilities Equipment Mineral properties Others Constructions in progress Total
Balance at December 31, 2015 2,989 35,538 32,378 28,532 40,234 28,135 43,453 211,259
Additions (i) — — — — — — 6,964 6,964
Disposals — (2 ) (2 ) (48 ) (11 ) (1,208 ) (74 ) (1,345 )
Assets retirement obligation — — — — 207 — — 207
Depreciation, amortization and depletion — (848 ) (1,068 ) (1,663 ) (1,489 ) (1,141 ) — (6,209 )
Transfers to non-current assets held for sale — — — — — (1,595 ) — (1,595 )
Translation adjustment (137 ) (3,640 ) (2,213 ) (2,782 ) (3,878 ) (1,419 ) 747 (13,322 )
Transfers 8 2,077 535 1,584 780 (794 ) (4,485 ) (295 )
Acquisition of subsidiary — 1 — — — — — 1
Balance at June 30, 2016 2,860 33,126 29,630 25,623 35,843 21,978 46,605 195,665
Cost 2,860 51,619 48,187 45,097 60,590 33,541 46,605 288,499
Accumulated depreciation — (18,493 ) (18,557 ) (19,474 ) (24,747 ) (11,563 ) — (92,834 )
Balance at June 30, 2016 2,860 33,126 29,630 25,623 35,843 21,978 46,605 195,665

(i) Includes capitalized borrowing costs, see cash flow.

There are no material changes to the net book value of consolidated property, plant and equipment pledged to secure judicial claims and loans and borrowings (note 16(c)) compared to those disclosed in the financial statements as at December 31, 2016.

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*a) Impairment of non-financial assets*

During the quarter Vale placed an underground mine, which is part of Sudbury operations, in Canada, on care and maintenance. Parts of the mine, affected by seismic activity, for which repairs would be uneconomical, are not expected to resume operations in the future, was derecognized from property, plant and equipment. As a result, the Company recognized a loss of R$438 in the income statement as “Impairment and other results on non-current assets”. As other parts of the mine are subject to resume operation in the future, a net book value in the amount of R$768 remains as part of the cost of the mine.

*16. Loans, borrowings, cash and cash equivalents and financial investments*

*a) Net debt*

The Company evaluates the net debt with the objective of ensuring the continuity of its business in the long term, being able to generate value to its stockholders, through the payment of dividends and capital gain.

Consolidated — June 30, 2017 December 31, 2016
Debt contracts in the international markets 67,734 68,863
Debt contracts in Brazil 24,407 26,701
Total of loans and borrowings 92,141 95,564
(-) Cash and cash equivalents 18,922 13,891
(-) Financial investments 35 59
Net debt 73,184 81,614

*b) Cash and cash equivalents*

Cash and cash equivalents includes cash, immediately redeemable deposits and short-term investments with an insignificant risk of change in value. They are readily convertible to cash, part in R$, indexed to the Brazilian Interbank Interest rate (“DI Rate”or”CDI”) and part denominated in US$, mainly time deposits.

*c) Loans and borrowings*

*i) Total debt*

Consolidated — Current liabilities Non-current liabilities
June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016
Debt contracts in the international markets
Floating rates in:
US$ 975 762 14,871 17,889
EUR — — 755 688
Fixed rates in:
US$ — — 46,593 42,643
EUR — — 2,831 5,157
Other currencies 52 55 677 679
Accrued charges 980 990 — —
2,007 1,807 65,727 67,056
Debt contracts in Brazil
Floating rates in:
R$, indexed to TJLP, TR, IPCA, IGP-M and CDI 2,471 1,313 15,473 18,326
Basket of currencies and US$ indexed to LIBOR 1,190 1,117 3,422 3,962
Fixed rates in:
R$ 229 214 684 703
Accrued charges 926 959 12 107
4,816 3,603 19,591 23,098
6,823 5,410 85,318 90,154

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The future flows of debt payments principal, per nature of funding and interest are as follows:

Consolidated
Principal
Bank loans Capital markets Development agencies Total Estimated future interest payments (i)
2017 119 — 1,657 1,776 5,478
2018 1,743 — 3,593 5,336 5,055
2019 5,048 3,308 3,077 11,433 4,658
2020 6,153 4,410 2,630 13,193 4,162
2021 3,073 4,436 2,455 9,964 3,500
Between 2022 and 2025 4,301 11,092 3,910 19,303 9,375
2026 onwards 337 28,083 798 29,218 19,614
20,774 51,329 18,120 90,223 51,842

(i) Estimated future payments of interest, calculated based on interest rate curves and foreign exchange rates applicable as at June 30, 2017 and considering that all amortization payments and payments at maturity on loans and borrowings will be made on their contracted payments dates. The amount includes the estimated values of future interest payments (not yet accrued), in addition to interest already recognized in the financial statements.

At June 30, 2017, the average annual interest rates by currency are as follows:

Loans and borrowings Consolidated — Average interest rate (i) Total debt
US$ 5.20 % 67,999
R$ (ii) 8.81 % 19,762
EUR (iii) 3.35 % 3,642
Other currencies 3.12 % 738
92,141

(i) In order to determine the average interest rate for debt contracts with floating rates, the Company used the rate applicable at June 30, 2017.

(ii) R$ denominated debt that bears interest at IPCA, CDI, TR or TJLP, plus spread. For a total of R$13,544 the Company entered into derivative transactions to mitigate the exposure to the cash flow variations of the floating rate debt denominated in R$, resulting in an average cost of 2.44% per year in US$.

(iii) Eurobonds, for which the Company entered into derivatives to mitigate the exposure to the cash flow variations of the debt denominated in EUR, resulting in an average cost of 4.29% per year in US$.

*ii) Credit and financing lines*

Consolidated
Available amount
Type Contractual currency Date of agreement Period of the agreement Total amount June 30, 2017
Credit lines
Revolving credit facilities US$ May 2015 5 years 9,925 9,925
Revolving credit facilities US$ June 2017 5 years 6,616 6,616
Financing lines
BNDES (i) R$ April 2008 10 years 7,300 294
BNDES - CLN 150 R$ September 2012 10 years 3,883 20
BNDES - S11D e S11D Logística R$ May 2014 10 years 6,163 2,140

(i) Memorandum of understanding signature date, however term is considered from the signature date of each contract amendment. This credit line supported or supports the pelletizing plant VIII, Onça Puma, Salobo I and II and capital expenditure of Itabira projects.

In June 2017, the Company signed a R$6,616 (US$2,000) revolving credit facility, which will be available for five years, to replace the R$6,616 (US$2,000) line that was signed in 2013, which was cancelled. In June, 2017, the total available amount in revolving credit facilities remains at R$16,541 (US$5,000).

*iii) Funding*

In February 2017, the Company issued through Vale Overseas Limited guaranteed notes due August 2026 totaling R$3,308 (US$1,000). The notes bears 6.250% coupon per year, payable semi-annually, and were sold at a price of 107.793% of the principal amount. The notes were consolidated with, and formed a single series with, Vale Overseas’s R$3,308 (US$1,000) 6.250% notes due 2026 issued on August, 2016.

*iv) Guarantees*

As at June 30, 2017 and December 31, 2016, loans and borrowings are secured by property, plant and equipment and receivables in the amount of R$1,221 and R$1,538, respectively.

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The securities issued through Vale’s 100%-owned finance subsidiary Vale Overseas Limited are fully and unconditionally guaranteed by Vale.

*v) Covenants*

Some of the Company’s debt agreements with lenders contain financial covenants. The primary financial covenants in those agreements require maintaining certain ratios, such as debt to EBITDA and interest coverage. The Company has not identified any instances of noncompliance as at June 30, 2017 and December 31, 2016.

*vi) Hedge in foreign operations*

*Implementation of net investment hedge*

As at January 1, 2017, Vale S.A., the functional currency of which is Reais, designated its debts in US$ and Euro, as an instrument in a hedge of its investment in foreign operations (Vale International S.A. and Vale International Holding GmbH; hedging objects) for mitigating the foreign exchange risk on financial statements.

At June 30, 2017 the carrying value of the designated debts are R$22,059 (US$6,668) and R$2,831 (EUR750). The foreign exchange losses of R$1,267 and R$420 (R$836 and R$277, net taxes), was recognized in the “Cumulative translation adjustments” in stockholders’ equity for the three and six month periods ended June 30, 2017, respectively. This hedge was highly effective throughout the period ended on June 30, 2017.

*Accounting policy*

Foreign currency differences arising on the translation of a financial liability designated as a hedge of a net investment in a foreign operation are recognized in other comprehensive income to the extent that the hedge is effective and regardless of whether the net investment is held directly or through an intermediate parent.

The hedging instrument is accounted for in the same way as a cash flow hedge, i.e. translated at the closing rate with the gain or loss on the effective hedge being recognized in equity. Gains or losses in the reserves will only be realized when the foreign operation is disposed of.

*17. Liabilities related to associates and joint ventures*

Refers to the provision to comply with the obligations under the agreement related to the dam failure of Samarco Mineração S.A. (“Samarco”), which is a Brazilian joint venture between Vale S.A. and BHP Billiton Brasil Ltda. (“BHPB”), as follows:

*a) Framework agreement*

On November 5, 2015, Samarco experienced the failure of an iron ore tailings dam (“Fundão”) in the state of Minas Gerais.

Samarco and its shareholders, Vale S.A. and BHPB, entered into an Agreement (“Framework Agreement”) on March 2, 2016 with the Brazilian federal government, the two Brazilian states affected by the failure (Espírito Santo and Minas Gerais) and other governmental authorities in order to implement the programs for remediation and compensation of the areas and communities affected by Samarco’s dam failure.

The Framework Agreement does not contemplate admission of civil, criminal or administrative liability for the Fundão dam failure.

The Framework Agreement has a 15-year term, renewable for successive one-year periods until all the obligations under the Framework Agreement have been performed.

On June 24, 2016, the Renova Foundation (“Foundation”) was established, under the Framework Agreement, to develop and implement the socio-economic restoration and compensation programs. The Foundation began its operations in August of 2016.

To the extent that Samarco does not meet its funding obligations to the foundation, each of Vale S.A. and BHPB will provide, under the terms of the Framework Agreement, funds to the Foundation in proportion to its 50% equity interest in Samarco.

As the consequence of the dam failure, governmental authorities ordered the suspension of Samarco’s operations.

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*b) Estimates used for the provision*

In light of the uncertainties related to the Samarco’s future cash flow, Vale S.A. recognized a provision on its interim financial statements as of June 30, 2016, for estimated costs in the amount of R$3,733 provision, which represents Vale S.A.’s best estimate of the obligation to comply with the reparation and compensation programs under the Framework Agreement, equivalent to its 50% equity interest in Samarco.

In August 2016 and January 2017, Samarco issued non-convertible private debentures, which were subscribed equally by Vale S.A., and BHPB, being the resources contributed by Vale S.A., in the first semester of 2017, allocated as follows:

(i) R$224, being R$37 in the second quarter of 2017, used in the reparation programs in accordance with the Framework Agreement, and therefore, applied against the provision mentioned above;

(ii) R$292, being R$101 in the second quarter of 2017, applied by Samarco to fund its working capital, and recognized in Vale´s income statement as “Impairment and other results in associates and joint ventures”.

Vale S.A intends to provide short term credit line of up to R$251 to support Samarco operations in the second half of 2017, without undertaking an obligation to Samarco. Funds for working capital requirements will be released as needed by the shareholders subject to achieving certain milestone, on the same basis.

As a result of the establishment of the Foundation, most of the reparation and compensation programs were transferred from Samarco. Therefore, Vale S.A. made contributions to the Foundation totaling R$217 in 2017, being R$142 in the second quarter of 2017, to be used in the programs in accordance with the Framework Agreement.

As a result of the above mentioned, the movements of the provision in the three and six month periods ended in June 30, 2017 are as follows:

Balance at March 31, 2017 — 3,396
Payments (179 )
Interests 152
Balance at June 30, 3,369
Balance at January 1st, 2017 — 3,511
Payments (441 )
Interests 299
Balance at June 30, 3,369
Current liabilities 975
Non-current liabilities 2,394
Liabilities 3,369

At each reporting period, Vale S.A. will reassess the key assumptions used by Samarco in the preparation of the projected future cash flows and will adjust the provision, if required.

*c) Contingencies related to Samarco accident*

(i) Public civil lawsuit filed by the Federal Government and others

The federal government, the two Brazilian states affected by the failure (Espirito Santo and Minas Gerais) and other governmental authorities have initiated a public civil lawsuit against Samarco and its shareholders, Vale S.A. and BHPB, with an estimated value indicated by the plaintiffs of R$20.2 billion.

On May 5, 2016, the Framework Agreement, which was signed on March 2, 2016, was ratified by the Federal Regional Court (“TRF”), 1st Region. In June 2016 the Superior Court of Justice (“STJ”) in Brazil issued an interim order, suspending the decision of TRF, which ratified the Framework Agreement until the final judgments of the claim.

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On August 17, 2016, the TRF of the 1st Region rejected the appeal presented by Samarco, Vale S.A. and BHPB against the interim order, and overruled the judicial decision that ratified the Framework Agreement. This decision of the TRF of the 1st Region, among other measures, confirmed a prior injunction that prohibited the defendants from transferring or conveying any of their interest in its Brazilian iron ore concessions, without, however, limiting their production and commercial activities and ordered a deposit with the court of R$1.2 billion by January 2017. This R$1.2 billion cash deposit was provisionally replaced by the guarantees provided for under the agreements with MPF, as detailed in the item (ii) below.

(ii) Public civil lawsuit filed by Federal Prosecution Office

On May 3, 2016, the Federal Prosecution Office (MPF) filed a public civil lawsuit against Samarco and its shareholders and presented several demands, including: (i) the adoption of measures for mitigating the social, economic and environmental impacts resulting from the Fundão dam failure and other emergency measures; (ii) the payment of compensation to the community; and (iii) payments for the collective moral damage. The estimated action value indicated by the Federal Prosecution Office (MPF) is R$155 billion. The first conciliatory hearing was held on September 13, 2016. On November 21, 2016, the court ordered that the defendants be served, and the defendants submitted their defense.

In January 2017 Samarco, Vale S.A. and BHPB entered into two preliminary agreements with the Federal Prosecutor’s Office in Brazil (MPF).

The first agreement (“First Agreement”) aims to outline the process and timeline for negotiations of a Final Agreement (“Final Agreement”), initially expected to occur by June 30th, 2017 and now expected to occur by October 30, 2017. This First Agreement establishes a timeline and actions to set the ground for conciliation of two public civil lawsuits which aim to establish socio-economic and socio-environmental remediation and compensation programs for the impacts of the Fundão dam failure, respectively: claim nº 023863-07.2016.4.01.3800, filed by the Federal Prosecutors, as mentioned in this item, and claim nº 0069758-61.2015.4.01.3400, filed by the Federal Government, the states of Minas Gerais and Espírito Santo and other governmental authorities, as mentioned in the item (i) above. Both claims were filed with the 12th Judicial Federal Court of Belo Horizonte and are suspended as requested by the parties.

In addition, the First Agreement provides for: (i) the appointment of experts to give support the Federal Prosecutors and paid for by the companies to conduct a diagnosis and monitor the progress of the 41 programs under the Framework Agreement signed on March 2nd, 2016 by the companies and the Federal Government and the states of Minas Gerais and Espírito Santo and other governmental authorities and (ii) holding at least eleven public hearings, five of which are to be held in Minas Gerais, three in Espírito Santo and the remainder in the indigenous territories of the Krenak, Comboios and Caieiras Velhas, in order to allow these communities to take part in the definition of the content of the Final Agreement.

Samarco, Vale S.A. and BHPB has agreed to provide the 12th Judicial Federal Court of Belo Horizonte with a guarantee for fulfillment of the obligations regarding the financing and payment of the socio-environmental and socio-economic remediation programs resulting from the Fundão dam failure, pursuant to the two public civil actions, until the signing of the Final Agreement, amounting to R$2.2 billion, of which (i) R$100 in financial investments; (ii) R$1.3 billion in insurance bonds; and (iii) R$800 in assets of Samarco. In order to implement the First Agreement, it has been requested that the 12th Judicial Federal Court of Belo Horizonte accept such guarantees until the completion of the negotiations and the signing of the Final Agreement, or until October 30, 2017, whichever comes first; or until the parties reach a new agreement regarding the guarantees. If, by October 30th, the negotiations have not been completed, the Federal Prosecutor’s Office may require that the 12th Judicial Federal Court of Belo Horizonte re-institute the order for the deposit of R$1.2 billion in relation to the R$20.2 billion public civil action, which is currently suspended. The parties requested the partially ratification of the First Agreement, excluding only the engagement of the socio-economic expert condition.

On March 16, 2017, the 12th Judicial Federal Court of Belo Horizonte partially ratified the First Agreement, being that this decision includes: (i) ratification of the engagement of experts to perform a socio-environmental impact assessment and assessment of programs under the Framework Agreement signed on March 2nd, 2016 and a period for the companies to engage an expert to perform the socio-economic impact assessment; (ii) the consolidation and suspension of related claims aiming to avoid contradictory or conflicting decisions and to establish a unified judicial procedure in order for the parties to be able to reach a final agreement; (iii) accepted the guarantees proposed by Samarco and its shareholders under the Preliminary Agreement on a temporary basis. Parties are still negotiating an agreement regarding the choice of the expert to perform the socio-economic impact assessment.

In addition, the Second Agreement (Second Agreement) was signed, which establishes a timetable to make funds available to remediate the social, economic and environmental damages caused by the Fundão dam failure in the municipalities of Barra Longa, Rio Doce, Santa Cruz do Escalvado and Ponte Nova, amounting to R$200. The 12th Judicial Federal Court of Belo Horizonte ratified this Second Agreement.

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(iii) U.S. Securities class action suits

Related to the Vale´s American Depositary Receipts

On May 2, 2016, Vale S.A. and certain of its officers were named as defendants in securities class action suits in the Federal Court in New York brought by holders of Vale’s American Depositary Receipts under U.S. federal securities laws. The lawsuits allege that Vale S.A. made false and misleading statements or did not make disclosures concerning the risks and dangers of the operations of Samarco’s Fundão dam and the adequacy of related programs and procedures. The plaintiffs have not specified an amount of alleged damages or indemnities in these actions.

In July 2016, Vale S.A. and the individual defendants filed a motion to dismiss the Amended Complaint.

On March 23, 2017 the judge issued a decision rejecting a significant portion of the claims against Vale S.A. and the individual defendants, and determining the prosecution of the action with respect to more limited claims. The portion of plaintiffs’ case that remains is related to certain statements about procedures, policies and risk mitigation plans contained in Vale S.A.’s sustainability reports in 2013 and 2014, and certain statements regarding to the responsibility of Vale S.A. for the Fundão dam failure made in a conference call in November 2015.

Vale S.A. continues to contest the lawsuit and the outstanding points.

Related to the Samarco bonds

In March 2017, holders of bonds issued by Samarco, filed a class action suit in the Federal Court in New York against Samarco, Vale S.A. and BHPB under U.S. federal securities laws demanding for indemnification for alleged violation of U.S. federal securities laws. The plaintiffs allege that false and misleading statements were made or disclosures omitted concerning the risks and dangers of the operations of Samarco’s Fundão dam and the adequacy of related programs and procedures.

It is alleged that with the Fundão dam collapse, the securities have dramatically decreased, in order that the investors who have purchased such securities in a misleading way should be compensated, without, however, specifying an amount for the alleged damages or indemnities in this action.

In June 2017, Vale S.A. and the other defendants have jointly filed a Motion to Dismiss the Complaint.

Vale S.A. continues to contest this lawsuit.

(iv) Criminal lawsuit

On October 20, 2016, the MPF brought a criminal lawsuit in the Brazilian Federal Justice Court against Vale S.A., BHPB, Samarco, VogBr Recursos Hídricos e Geotecnia Ltda. and 22 individuals for alleged crimes against the environment, urban planning and cultural heritage, flooding, landslide, as well as for alleged crimes against the victims of the Fundão dam failure.

On November 16, 2016, the judge received the Federal Prosecutors Office criminal lawsuit and determined the summons of all defendants, granting 30 days each to file their defenses, to count from the day they receive the summon. Vale has already been served and its defense was presented in March 3, 2017.

On May 8th, 2017, Vale presented its manifestation against the Federal Prosecutors Office dismemberment requests and on June 6th, 2017, the Federal Prosecutors Office presented its reply to the defenses, where it requested for the action to be regularly processed.

Currently, the case awaits the judge’s decision.

(v) Other lawsuits

In addition, Samarco and its shareholders were named as a defendant in several other lawsuits brought by individuals, corporations, governmental entities or public prosecutor seeking personal and property damages.

These lawsuits and petitions are at early stages, so it is not possible to determine a range of outcomes or reliable estimates of the potential exposure at this time. No contingent liability has been quantified and no provision was recognized for lawsuits related to Samarco´s dam failure.

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*18. Financial instruments classification*

Consolidated
June 30, 2017 December 31, 2016
Financial assets Loans and receivables or amortized cost At fair value through profit or loss Total Loans and receivables or amortized cost At fair value through profit or loss Total
Current
Cash and cash equivalents 18,922 — 18,922 13,891 — 13,891
Financial investments 35 — 35 59 — 59
Derivative financial instruments — 526 526 — 892 892
Accounts receivable 5,654 — 5,654 11,937 — 11,937
Related parties 6,694 — 6,694 233 — 233
31,305 526 31,831 26,120 892 27,012
Non-current
Derivative financial instruments — 1,639 1,639 — 1,454 1,454
Loans 597 — 597 587 — 587
Related parties 8,796 — 8,796 5 — 5
9,393 1,639 11,032 592 1,454 2,046
Total of financial assets 40,698 2,165 42,863 26,712 2,346 29,058
Financial liabilities
Current
Suppliers and contractors 12,393 — 12,393 11,830 — 11,830
Derivative financial instruments — 1,199 1,199 — 1,349 1,349
Loans and borrowings 6,823 — 6,823 5,410 — 5,410
Related parties 1,701 — 1,701 2,190 — 2,190
20,917 1,199 22,116 19,430 1,349 20,779
Non-current
Derivative financial instruments — 3,225 3,225 — 3,991 3,991
Loans and borrowings 85,318 — 85,318 90,154 — 90,154
Related parties 3,289 — 3,289 415 — 415
Participative stockholders’ debentures — 3,886 3,886 — 2,526 2,526
88,607 7,111 95,718 90,569 6,517 97,086
Total of financial liabilities 109,524 8,310 117,834 109,999 7,866 117,865

*19. Fair value estimate*

*a) Assets and liabilities measured and recognized at fair value:*

Consolidated
June 30, 2017 December 31, 2016
Level 2 Level 3 Total Level 2 Level 3 Total
Financial assets
Derivative financial instruments 935 1,230 2,165 1,319 1,027 2,346
Total 935 1,230 2,165 1,319 1,027 2,346
Financial liabilities
Derivative financial instruments 2,957 1,467 4,424 3,877 1,463 5,340
Participative stockholders’ debentures 3,886 — 3,886 2,526 — 2,526
Total 6,843 1,467 8,310 6,403 1,463 7,866

In June 2017, the Company recognized in the financial results the amount of R$203 and R$(4) related to the measurement of the fair value of derivative financial instruments assets and liabilities classified as level 3, respectively.

There were no transfers between Level 1 and Level 2, or between Level 2 and Level 3 in the period ended June 30, 2017.

*Methods and techniques of evaluation*

*i) Derivative financial instruments*

Financial instruments are evaluated by calculating their present value through the use of instrument yield curves at the closing dates. The curves and prices used in the calculation for each group of instruments are detailed in the “market curves”.

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The pricing method used for European options is the Black & Scholes model. In this model, the fair value of the derivative is a function of the volatility in the price of the underlying asset, the exercise price of the option, the interest rate and period to maturity. In the case of options which income is a function of the average price of the underlying asset over the period of the option, the Company uses Turnbull & Wakeman model. In this model, in addition to the factors that influence the option price in the Black-Scholes model, the formation period of the average price is also considered.

In the case of swaps, both the present value of the assets and liability are estimated by discounting the cash flow by the interest rate of the currency in which the swap is denominated. The difference between the present value of assets and liability of the swap generates its fair value.

For the TJLP swaps, the calculation of the fair value assumes that TJLP is constant, that is the projections of future cash flow in Brazilian Reais are made on the basis of the last TJLP disclosed.

Contracts for the purchase or sale of products, inputs and costs of selling with future settlement are priced using the forward yield curves for each product. Typically, these curves are obtained on the stock exchanges where the products are traded, such as the London Metals Exchange (“LME”), the Commodity Exchange (“COMEX”) or other providers of market prices. When there is no price for the desired maturity, Vale uses an interpolation between the available maturities.

*b) Fair value of financial instruments not measured at fair value*

The fair values and carrying amounts of loans and borrowings (net of interest) are as follows:

Financial liabilities Consolidated — Balance Fair value Level 1 Level 2
June 30, 2017
Debt principal 90,223 90,309 50,607 39,702
December 31, 2016
Debt principal 93,508 89,218 45,216 44,002

Due to the short-term cycle, the fair value of cash and cash equivalents balances, financial investments, accounts receivable and accounts payable approximate their book values.

*20. Derivative financial instruments*

*a) Derivatives effects on statement of financial position*

Consolidated
Assets
June 30, 2017 December 31, 2016
Current Non-current Current Non-current
Derivatives not designated as hedge accounting
Foreign exchange and interest rate risk
CDI & TJLP vs. US$ fixed and floating rate swap 318 4 429 3
IPCA swap 20 221 22 199
Pré-dolar swap 73 33 3 75
411 258 454 277
Commodities price risk
Nickel 3 — 13 7
Bunker oil 112 — 425 —
115 — 438 7
Others — 1,381 — 1,170
— 1,381 — 1,170
Total 526 1,639 892 1,454

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Consolidated
Liabilities
June 30, 2017 December 31, 2016
Current Non-current Current Non-current
Derivatives not designated as hedge accounting
Foreign exchange and interest rate risk
CDI & TJLP vs. US$ fixed and floating rate swap 1,075 1,440 955 2,078
IPCA swap 65 191 65 186
Eurobonds swap 16 19 24 147
Euro Forward — — 149 —
Pré-dolar swap 14 97 16 104
1,170 1,747 1,209 2,515
Commodities price risk
Nickel — — 16 7
Bunker oil 29 — 124 —
29 — 140 7
Others — 1,478 — 1,469
— 1,478 — 1,469
Total 1,199 3,225 1,349 3,991

*b) Effects of derivatives on the income statement, cash flow and other comprehensive income*

Consolidated
Three month period ended June 30,
Gain (loss) recognized in the income statement Financial settlement inflows (outflows) Gain (loss) recognized in other comprehensive income
2017 2016 2017 2016 2017 2016
Derivatives not designated as hedge accounting
Foreign exchange and interest rate risk
CDI & TJLP vs. US$ fixed and floating rate swap (303 ) 1,491 5 (163 ) — —
IPCA swap (60 ) 101 — — — —
Eurobonds swap 97 (70 ) — — —
Euro forward — (51 ) — — — —
Pré-dolar swap (42 ) 137 (4 ) (6 ) — —
(308 ) 1,608 1 (169 ) — —
Commodities price risk
Nickel (11 ) (49 ) (16 ) (35 ) — —
Bunker oil (53 ) 526 — (1,032 ) — —
(64 ) 477 (16 ) (1,067 ) — —
Others 88 488 — — — —
Derivatives designated as cash flow hedge accounting
Foreign exchange — — — — — 2
— — — — — 2
Total (284 ) 2,573 (15 ) (1,236 ) — 2

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Consolidated
Six month period ended June 30,
Gain (loss) recognized in the income statement Financial settlement inflows (outflows) Gain (loss) recognized in other comprehensive income
2017 2016 2017 2016 2017 2016
Derivatives not designated as hedge accounting
Foreign exchange and interest rate risk
CDI & TJLP vs. US$ fixed and floating rate swap 277 2,803 (133 ) (338 ) — —
IPCA swap 16 241 — 5 — —
Eurobonds swap 14 (30 ) (121 ) (524 ) — —
Euro forward 144 (42 ) — — — —
Pré-dolar swap 33 244 (4 ) (301 ) — —
484 3,216 (258 ) (1,158 ) — —
Commodities price risk
Nickel (11 ) (143 ) (20 ) (104 ) — —
Bunker oil (290 ) 466 (75 ) (1,737 ) — —
(301 ) 323 (95 ) (1,841 ) — —
Others 197 470 — — — —
Derivatives designated as cash flow hedge accounting
Bunker oil — — — (203 ) — —
Foreign exchange — (10 ) — (10 ) — 10
— (10 ) — (213 ) — 10
Total 380 3,999 (353 ) (3,212 ) — 10

The maturity dates of the derivative financial instruments are as follows:

Last maturity dates
Currencies and interest rates July 2023
Bunker oil December 2017
Nickel August 2019
Others December 2027

*Additional information about derivatives financial instruments*

*In millions of Brazilian Reais, except as otherwise stated*

The risk of the derivatives portfolio is measured using the delta-Normal parametric approach, and considers that the future distribution of the risk factors and its correlations tends to present the same statistical properties verified in the historical data. The value at risk estimate considers a 95% confidence level for a one-business day time horizon.

There was no cash amount deposited as margin call regarding derivative positions on June 30, 2017. The derivative positions described in this document did not have initial costs associated.

The following tables detail the derivatives positions for Vale and its controlled companies as of June 30, 2017, with the following information: notional amount, fair value including credit risk, gains or losses in the period, value at risk and the fair value breakdown by year of maturity.

*a) Foreign exchange and interest rates derivative positions*

*(i) Derivative instrument s for the R$ denominated debt instruments*

In order to reduce cash flow volatility, swap transactions were implemented to convert into US$ the cash flows from certain debt instruments denominated in R$ with interest rates linked mainly to CDI, TJLP and IPCA. In those swaps, Vale pays fixed or floating rates in US$ and receives payments in R$ linked to the interest rates of the protected debt instruments.

The swap transactions were negotiated over-the-counter and the protected items are the cash flows from debt instruments linked to R$. These programs transform into US$ the obligations linked to R$ to achieve a currency offset in the Company’s cash flows, by matching its receivables - mainly linked to US$ - with its payables.

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Financial settlement
Notional Fair value Inflows (Outflows) Value at Risk Fair value by year
Flow June 30, 2017 December 31, 2016 Index Average rate June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2017 2018 2019+
CDI vs. US$ fixed rate swap (330 ) (396 ) 214 85 126 (338 ) (118 )
Receivable R$ 5,783 R$ 6,289 CDI 107.29 %
Payable US$ 1,858 US$ 2,105 Fix 3.95 %
TJLP vs. US$ fixed rate swap (1,678 ) (2,027 ) (343 ) 188 (318 ) (297 ) (1,064 )
Receivable R$ 3,585 R$ 4,360 TJLP + 1.27 %
Payable US$ 1,623 US$ 2,030 Fix 1.62 %
TJLP vs. US$ floating rate swap (185 ) (179 ) (4 ) 15 (6 ) (15 ) (164 )
Receivable R$ 230 R$ 242 TJLP + 0.89 %
Payable US$ 131 US$ 140 Libor + -1.22 %
R$ fixed rate vs. US$ fixed rate swap (5 ) (42 ) (4 ) 89 (5 ) 52 (52 )
Receivable R$ 1,198 R$ 1,031 Fix 7.04 %
Payable US$ 402 US$ 343 Fix -1.02 %
IPCA vs. US$ fixed rate swap (173 ) (167 ) — 35 — 21 (194 )
Receivable R$ 1,000 R$ 1,000 IPCA + 6.55 %
Payable US$ 434 US$ 434 Fix 3.98 %
IPCA vs. CDI swap 158 136 — 1 (63 ) (10 ) 231
Receivable R$ 1,350 R$ 1,350 IPCA + 6.62 %
Payable R$ 1,350 R$ 1,350 CDI 98.59 %

*(ii) Derivative instruments for EUR denominated debt instruments*

In order to reduce the cash flow volatility, swap and forward transactions were implemented to convert into US$ the cash flows from certain debt instruments issued in Euros by Vale. In those swaps, Vale receives fixed rates in EUR and pays fixed rates in US$. In those forwards only the principal amount of the debt is converted from EUR to US$.

The swap and forward transactions were negotiated over-the-counter and the protected items are the cash flows from debt instruments linked to EUR. The financial settlement inflows/outflows are offset by the protected items’ losses/gains due to EUR/US$ exchange rate.

Financial settlement
Notional Fair value Inflows (Outflows) Value at Risk Fair value by year
Flow June 30, 2017 December 31, 2016 Index Average rate June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2017 2018 2019+
EUR fixed rate vs. US$ fixed rate swap (35 ) (170 ) (22 ) 21 — (16 ) (19 )
Receivable € 500 € 500 Fix 3.75 %
Payable US$ 613 US$ 613 Fix 4.29 %
Notional Bought / Average rate Fair value Financial settlement — Inflows (Outflows) Value at Risk Fair value — by year
Flow June 30, 2017 December 31, 2016 Sold (USD/EUR) June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2017
Forward € 0 € 500 B 1.143 — (149 ) (99 ) — —

*b) Commodities derivative positions*

*(i) Bunker Oil purchase cash flows derivatives*

In order to reduce the impact of bunker oil price fluctuation on maritime freight hiring/supply and, consequently, reducing the company’s cash flow volatility, bunker oil derivatives were implemented. These transactions are usually executed through forward purchases and zero cost-collars.

The derivative transactions were negotiated over-the-counter and the protected item is part of the Vale’s costs linked to bunker oil prices. The financial settlement inflows/outflows are offset by the protected items’ losses/gains due to bunker oil prices changes.

Notional (ton) Bought / Average strike Fair value Financial Settlement — Inflows (Outflows) Value at Risk Fair value — by year
Flow June 30, 2017 December 31, 2016 Sold (US$/ton) June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2017
Bunker Oil protection
Call options 2,499,996 2,856,000 B 327 113 424 3 36 113
Put options 2,499,996 2,856,000 S 220 (30 ) (45 ) — 9 (30 )
Total 83 379 83

As at December 31, 2016, excludes R$78, of transactions in which the financial settlement occurs subsequently of the closing month.

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*(ii) Derivative instruments for base metals raw materials and products*

Derivative instruments for nickel sales at fixed prices, derivatives transactions were implemented to convert into floating prices the contracts with clients that required a fixed price, in order to keep nickel revenues exposed to nickel price fluctuations. Those operations are usually implemented through the purchase of nickel forwards.

In the operational protection program for the purchase of raw materials and products, derivatives transactions were implemented, usually through the sale of nickel and copper forward or futures, in order to reduce the mismatch between the pricing period of purchases (concentrate, cathode, sinter, scrap and others) and the pricing period of the final product sales to the clients.

The derivative transactions are negotiated at London Metal Exchange or over-the-counter and the protected item is part of Vale’s revenues and costs linked to nickel and copper prices. The financial settlement inflows/outflows are offset by the protected items’ losses/gains due to nickel and copper prices changes.

Notional (ton) Bought / Average strike Fair value Financial Settlement — Inflows (Outflows) Value at Risk Fair value by year
Flow June 30, 2017 December 31, 2016 Sold (US$/ton) June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2017 2018
Fixed prices sales protection
Nickel forwards 11,941 11,615 B 9,463 1 (2 ) (21 ) 11 (3 ) 4
Raw materials purchase protection
Nickel forwards 814 134 S 9,020 (0.9 ) 0.4 2.1 0.8 (0.9 ) —
Copper forwards 419 441 S 5,885 (0.1 ) (0.5 ) (0.7 ) 0.1 (0.1 ) —
Total (1.0 ) (0.1 ) (1.0 ) —

*c) Silver Wheaton Corp. warrants*

The company owns warrants of Silver Wheaton Corp. (SLW), a Canadian company with stocks negotiated in Toronto Stock Exchange and New York Stock Exchange. Such warrants configure American call options and were received as part of the payment regarding the sale of part of gold payable flows produced as a sub product from Salobo copper mine and some nickel mines in Sudbury.

Notional (quantity) Bought / Average strike Fair value Financial Settlement — Inflows (Outflows) Value at Risk Fair value — by year
Flow June 30, 2017 December 31, 2016 Sold (US$/share) June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2023
Call options 10,000,000 10,000,000 B 44 151 144 — 15 151

*d) Debentures convertible into shares of Valor da Logística Integrada (“VLI”)*

The company has debentures in which lenders have the option to convert the outstanding debt into a specified quantity of shares of VLI owned by the company.

Notional (quantity) Bought / Average strike Fair value Financial Settlement — Inflows (Outflows) Value at Risk Fair value — by year
Flow June 30, 2017 December 31, 2016 Sold (R$/share) June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2027
Conversion options 140,239 140,239 S 8,469 (224 ) (236 ) — 15 (224 )

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*e) Options related to Minerações Brasileiras Reunidas S.A. (“MBR”) shares*

The Company entered into a contract that has options related to MBR shares. Under certain restrict and contingent conditions, which are beyond the buyer’s control, such as illegality due to changes in the law, the contract has a clause that gives the buyer the right to sell back its stake to the Company. It this case, the Company could settle through cash or shares. On the other hand, the Company has the right to buy back this non-controlling interest in the subsidiary.

Notional (quantity, in millions) Bought / Average strike Fair value Financial Settlement — Inflows (Outflows) Value at Risk Fair value — by year
Flow June 30, 2017 December 31, 2016 Sold (R$/ação) June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2017+
Options 2,139 2,139 B/S 1.7 570 393 — 38 570

*f) Embedded derivatives in contracts*

The Company has some nickel concentrate and raw materials purchase agreements in which there are provisions based on nickel and copper future prices behavior. These provisions are considered as embedded derivatives.

Notional (ton) Bought / Average strike Fair value Financial Settlement — Inflows (Outflows) Value at Risk Fair value — by year
Flow June 30, 2017 December 31, 2016 Sold (US$/ton) June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2017
Nickel Forward 3,062 5,626 S 9,312 (3.9 ) 1.1 (3.9 )
Copper Forward 2,718 3,684 S 5,652 0.4 5.0 0.4
Total (3.5 ) 6.1 — 3.9 (3.5 )

The Company has also a natural gas purchase agreement in which there´s a clause that defines that a premium can be charged if the Company’s pellet sales prices trade above a pre-defined level. This clause is considered an embedded derivative.

Notional (volume/month) Bought / Average strike Fair value Financial Settlement — Inflows (Outflows) Value at Risk Fair value — by year
Flow June 30, 2017 December 31, 2016 Sold (US$/ton) June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2017 2018+
Call options 746,667 746,667 S 233 (11 ) (7 ) — 7 (0 ) (11 )

In August 2014 the Company sold part of its stake in Valor da Logística Integrada (“VLI”) to an investment fund managed by Brookfield Asset Management (“Brookfield”). The sales contract includes a clause that establishes, under certain conditions, a minimum return guarantee on Brookfield’s investment. This clause is considered an embedded derivative, with payoff equivalent to that of a put option.

Notional (quantity) Bought / Average strike Fair value Financial Settlement — Inflows (Outflows) Value at Risk Fair value — by year
Flow June 30, 2017 December 31, 2016 Sold (R$/share) June 30, 2017 December 31, 2016 June 30, 2017 June 30, 2017 2018+
Put option 1,105,070,863 1,105,070,863 S 3.07 (583 ) (593 ) — 54 (583 )

For sensitivity analysis of derivative financial instruments, Financial counterparties’ ratings and market curves, see note 28.

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*21. Provisions*

Consolidated — Current liabilities Non-current liabilities
June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016
Payroll and related charges 2,147 2,362 — —
Onerous contracts 185 329 1,466 1,541
Environment Restoration 66 33 298 362
Asset retirement obligations 124 154 8,485 8,055
Provisions for litigation (note 22 (a)) — — 2,457 2,734
Employee postretirement obligations (note 23) 239 225 7,315 6,038
Provisions 2,761 3,103 20,021 18,730

*22. Litigation*

*a) Provision for litigation*

Vale is party to labor, civil, tax and other ongoing lawsuits, at administrative and court levels. Provisions for losses resulting from lawsuits are estimated and updated by the Company, based on analysis from the Company’s legal consultants.

Changes in provision for litigation are as follows:

Consolidated — Tax litigation Civil litigation Labor litigation Environmental litigation Total of litigation provision
Balance at March 31, 2017 711 256 1,774 23 2,764
Additions 7 21 183 2 213
Reversals (41 ) (21 ) (96 ) — (158 )
Payments (282 ) (3 ) (90 ) — (375 )
Indexation and interest (25 ) 7 6 — (12 )
Translation adjustment 25 — — — 25
Balance at June 30, 2017 395 260 1,777 25 2,457
Consolidated — Tax litigation Civil litigation Labor litigation Environmental litigation Total of litigation provision
Balance at March 31, 2016 776 365 1,806 82 3,029
Additions 39 157 199 10 405
Reversals (31 ) (66 ) (100 ) (5 ) (202 )
Payments (88 ) (92 ) (155 ) — (335 )
Indexation and interest 10 (5 ) 13 (3 ) 15
Translation adjustment 34 — — — 34
Additions and reversals of discontinued operations — — 21 — 21
Balance at June 30, 2016 740 359 1,784 84 2,967
Consolidated — Tax litigation Civil litigation Labor litigation Environmental litigation Total of litigation provision
Balance at December 31, 2016 695 272 1,742 25 2,734
Additions 11 64 321 10 406
Reversals (46 ) (86 ) (176 ) (5 ) (313 )
Payments (277 ) (21 ) (150 ) — (448 )
Indexation and interest (3 ) 31 40 (5 ) 63
Translation adjustment 15 — — — 15
Balance at June 30, 2017 395 260 1,777 25 2,457
Consolidated — Tax litigation Civil litigation Labor litigation Environmental litigation Total of litigation provision
Balance at December 31, 2015 1,052 309 1,771 78 3,210
Additions 50 203 364 17 634
Reversals (61 ) (80 ) (163 ) (12 ) (316 )
Payments (356 ) (162 ) (244 ) — (762 )
Indexation and interest 33 89 26 1 149
Translation adjustment 21 — 2 1 24
Additions and reversals of discontinued operations 1 — 28 (1 ) 28
Balance at June 30, 2016 740 359 1,784 84 2,967

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*b) Contingent liabilities*

Contingent liabilities of administrative and judicial claims, with expectation of loss classified as possible, and for which the recognition of a provision is not considered necessary by the Company, based on legal advice are as follows:

Consolidated — June 30, 2017 December 31, 2016
Tax litigation 28,054 26,995
Civil litigation 7,770 7,484
Labor litigation 7,257 7,933
Environmental litigation 6,432 6,134
Total 49,513 48,546

*i - Tax litigation -* Our most significant tax-related contingent liabilities result from disputes related to (i) the deductibility of our payments of social security contributions on the net income (CSLL) from our taxable income, (ii) challenges of certain tax credits we deducted from our PIS and COFINS payments, (iii) assessments of CFEM (royalties), and (iv) charges of value-added tax on services and circulation of goods (ICMS), especially relating to certain tax credits we claimed from the sale and transmission of energy, ICMS charges to anticipate the payment in the entrance of goods to Pará State, ICMS charges on our own transportation costs and challenges to other tax credits we claimed. The changes reported in the period resulted, mainly, from new proceedings related to PIS, COFINS, ICMS, CFEM; interest and inflation adjustments in the amounts in dispute.

*ii - Civil litigation -* Most of those claims have been filed by suppliers for indemnification under construction contracts, primarily relating to certain alleged damages, payments and contractual penalties. A number of other claims related to contractual disputes regarding inflation index.

*iii - Labor litigation -* Represents individual claims by employees and service providers, primarily involving demands for additional compensation for overtime work, time spent commuting or health and safety conditions; and the Brazilian federal social security administration (“INSS”) regarding contributions on compensation programs based on profits.

*iv - Environmental litigation -* The most significant claims concern alleged procedural deficiencies in licensing processes, non-compliance with existing environmental licenses or damage to the environment.

*c) Judicial deposits*

In addition to the provisions and contingent liabilities, the Company is required by law to make judicial deposits to secure a potential adverse outcome of certain lawsuits. These court-ordered deposits are monetarily adjusted and reported as non-current assets until a judicial decision to draw the deposit occurs.

Consolidated — June 30, 2017 December 31, 2016
Tax litigation 628 630
Civil litigation 189 202
Labor litigation 2,248 2,251
Environmental litigation 42 52
Total 3,107 3,135

*d) Others*

For contingencies related to Samarco Mineração S.A., see note 17.

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*23. Employee postretirement obligations*

*Reconciliation of net liabilities recognized in the statement of financial position*

Consolidated
2017 2016
Overfunded pension plans Underfunded pension plans Other benefits Overfunded pension plans Underfunded pension plans Other benefits
Movements of assets ceiling
Balance at March 31, 5,269 — — 4,764 — —
Interest income 118 — — 138 — —
Changes on asset ceiling and onerous liability (599 ) — — 541 — —
Balance at June 30, 4,788 — — 5,443 — —
Amount recognized in the statement of financial position
Present value of actuarial liabilities (10,902 ) (14,898 ) (4,789 ) (9,873 ) (13,045 ) (4,487 )
Fair value of assets 15,690 12,133 — 15,316 10,384 —
Effect of the asset ceiling (4,788 ) — — (5,443 ) — —
Liabilities — (2,765 ) (4,789 ) — (2,661 ) (4,487 )
Current liabilities — (64 ) (175 ) — (65 ) (183 )
Non-current liabilities — (2,701 ) (4,614 ) — (2,596 ) (4,304 )
Liabilities — (2,765 ) (4,789 ) — (2,661 ) (4,487 )
Consolidated
2017 2016
Overfunded pension plans Underfunded pension plans Other benefits Overfunded pension plans Underfunded pension plans Other benefits
Movements of assets ceiling
Balance at January 1st, 4,402 — — 3,754 — —
Interest income 244 — — 266 — —
Changes on asset ceiling and onerous liability 142 — — 1,423 — —
Balance at June 30, 4,788 — — 5,443 — —
Amount recognized in the statement of financial position
Present value of actuarial liabilities (10,902 ) (14,898 ) (4,789 ) (9,873 ) (13,045 ) (4,487 )
Fair value of assets 15,690 12,133 — 15,316 10,384 —
Effect of the asset ceiling (4,788 ) — — (5,443 ) — —
Liabilities — (2,765 ) (4,789 ) — (2,661 ) (4,487 )
Current liabilities — (64 ) (175 ) — (65 ) (183 )
Non-current liabilities — (2,701 ) (4,614 ) — (2,596 ) (4,304 )
Liabilities — (2,765 ) (4,789 ) — (2,661 ) (4,487 )

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*24. Stockholders’ equity*

*a) Share capital*

At June 30, 2017 and December 31, 2016, the share capital was R$77,300 corresponding to 5,244,316,120 shares issued and fully paid without par value.

Stockholders June 30, 2017 — ON PNA Total
Valepar S.A. 1,716,435,045 20,340,000 1,736,775,045
Brazilian Government (Golden Share) — 12 12
Foreign investors - ADRs 769,357,504 584,202,865 1,353,560,369
FMP - FGTS 65,855,336 — 65,855,336
PIBB - Fund 785,064 1,627,176 2,412,240
BNDESPar 206,378,882 66,185,272 272,564,154
Foreign institutional investors in local market 273,887,689 829,336,231 1,103,223,920
Institutional investors 111,858,158 156,477,855 268,336,013
Retail investors in Brazil 41,095,322 309,552,515 350,647,837
Shares outstanding 3,185,653,000 1,967,721,926 5,153,374,926
Shares in treasury 31,535,402 59,405,792 90,941,194
Total issued shares 3,217,188,402 2,027,127,718 5,244,316,120
Share capital - Amounts per class of shares (in millions) 47,421 29,879 77,300
Total authorized shares 3,600,000,000 7,200,000,000 10,800,000,000

PNA - Preferred shares

ON - Common shares

*b) New stockholders’ agreement*

On February 20, 2017 the Company announced that a new shareholders’ agreement was filed at the Company’s headquarters, executed by Litel Participações S.A., Litela Participações S.A., Bradespar S.A., Mitsui & Co., Ltd. and BNDES Participações S.A. — BNDESPAR, as shareholders of Valepar S.A. (“Valepar”), jointly referred to as “Shareholders”, which entered into force after the expiration of Valepar’s Shareholders’ Agreement on May 10, 2017.

The Valepar Agreement, along with the standard provisions in connection with voting rights and right of first refusal for the acquisition of the Shareholders’ shares, provides for the submission to the Company of a proposal for the purpose of enabling the listing of Vale on B3 S.A. New Market segment (Brazil) and making Vale a company without defined control (“Proposal”).

The transaction envisaged by the Proposal is composed of a series of indivisible and interdependent steps, whose effectiveness is subject to the successful performance of the other steps. The Proposal comprises, beyond the performance of all acts and procedures imposed by the applicable legal provisions and rules:

(i) Voluntary conversion of Vale class A preferred shares into common shares, based on the conversion rate of 0.9342 common shares for each Vale class A preferred share, based on the average closing price of the common shares and preferred shares over the last 30 trading sessions on the B3 S.A. prior to February 17, 2017 (inclusive), weighted by the volume of shares traded in such trading sessions;

(ii) Amendment of Vale’s bylaws, so as to adjust it, as much as possible, to B3 S.A. New Market segment rules so Vale may be effectively listed on such special segment;

(iii) The merger of Valepar into Vale at an exchange ratio that contemplates a 10% increase in the number of shares held by the shareholders of Valepar compared to Valepar’s current shareholding interest, and represents a dilution of approximately 3% of the shareholding interest held by the other shareholders in Vale.

In line with the provisions of item “iii” above, Valepar’s shareholders will receive 1.2065 Vale common shares for each Valepar share held by them. As a result, Vale will issue 173,543,667 new common shares, all registered and without par value, in favor of Valepar’s shareholders. Consequently, Valepar’s shareholders will own a total of 1,908,980,340 Vale common shares after the merger of Valepar.

At the General Extraordinary Shareholders’ Meeting, held on June 27, 2017, all resolutions related to the proposal for corporate restructuring of the Company listed above were approved.

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The completion of the Voluntary Conversion and, consequently, of the other stages of the transaction which are the object of the Proposal is now subject to the voluntary conversion by at least 54.09% of class A preferred shares, as mentioned in item “i” above. The conversion period commenced on June 28, 2017 and ends on August 11, 2017, during which the holders may, if they so wish, join the Voluntary Conversion.

On the date of effectiveness of the merger of Valepar into Vale, if the merger is completed, the Shareholders will execute a new shareholders’ agreement (“Vale Agreement”) that will bind only 20% of the totality of Vale’s common shares, and will be in force until November 9, 2020, with no provision for renewal.

For 6 months from the date of entry into force of the Vale Agreement, the Shareholders will be obligated not to transfer, by any means, either directly or indirectly, Vale shares they receive as a result of the implementation of the Proposal (“Lock-Up”), except for (i) the transfer of Vale’s shares by the Shareholders to their affiliates and their current shareholders, provided that such transferred shares shall remain subject to the Lock-Up, and (ii) the transfer of shares held by the Shareholders prior to the merger of Valepar.

*c) Remuneration to the Company’s stockholders*

In April 2017, the Annual General Meeting approved the payment of shareholder remuneration for the year of 2016, in the amount of R$4,667. Accordingly, the amount of R$2,065 related to the Profit Reserve “Additional Remuneration Reserve”, that was recorded in December 31, 2016, was used to the payment of dividends in the form of interest on shareholders’ equity, in addition to the amount of R$2,602, already recorded in the current liabilities.

*25. Related parties*

Transactions with related parties are made by the Company at arm´s-length, observing the price and usual market conditions and therefore do not generate any undue benefit to their counterparties or loss to the Company. The definition of related party is based on applicable accounting standards and our internal policies, which may be more restrictive than applicable laws and regulations under certain circumstances.

In the normal course of operations, Vale enters into contracts with related parties (associates, joint ventures and stockholders), related to the sale and purchase of products and services, loans, derivatives, leasing of assets, sale of raw material and railway transportation services.

The balances of these related party transactions and their effects on the interim financial statements are as follows:

Consolidated
Assets
June 30, 2017 December 31, 2016
Cash and cash equivalents Derivative financial instruments Accounts receivable Related parties Cash and cash equivalents Derivative financial instruments Accounts receivable Related parties
Banco Bradesco S.A. 691 1,263 — — 1,701 1,056 — —
Banco do Brasil S.A. 3,166 79 — — 186 111 — —
Companhia Coreano-Brasileira de Pelotização — — — 62 — — — 15
Companhia Hispano-Brasileira de Pelotização — — — — — — 2 —
Companhia Ítalo-Brasileira de Pelotização — — — — — — — 27
Companhia Nipo-Brasileira de Pelotização — — — 47 — — — 48
Companhia Siderúrgica do Pecém — — 157 — — — 122 —
Consórcio de Rebocadores da Baia de São Marcos — — 26 — — — 32 —
Mitsui & Co., Ltd. — — 9 — — — 11 —
MRS Logística S.A. — — — 126 — — — 78
Nacala BV (i) — — — 15,117 — — — —
VLI — — 26 64 — — 27 38
Others — — 124 74 — — 155 32
Total 3,857 1,342 342 15,490 1,887 1,167 349 238

(i) Refers to the balances after the sale of Nacala Corridor business (note 11).

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Consolidated
Liabilities
June 30, 2017 December 31, 2016
Derivative financial instruments Others liabilities Related parties Loans and borrowings Derivative financial instruments Others liabilities Related parties Loans and borrowings
Aliança Geração de Energia S.A. — 205 — — — 51 125 —
Banco Bradesco S.A. 796 — — — 815 — — 20
Banco do Brasil S.A. 122 — — 7,035 147 — — 8,369
BNDES 224 — — 13,620 236 — — 14,444
BNDES Participações S.A. — — — 1,294 — — — 1,348
Companhia Coreano-Brasileira de Pelotização — 248 127 — — 10 192 —
Companhia Hispano-Brasileira de Pelotização — 202 132 — — 126 47 —
Companhia Ítalo-Brasileira de Pelotização — 163 162 — — — 323 —
Companhia Nipo-Brasileira de Pelotização — 437 260 — — 10 477 —
Ferrovia Centro-Atlântica S.A. — 3 271 — — — 270 —
Mitsui & Co., Ltd. — 125 — — — 56 — —
MRS Logística S.A. — 80 — — — 82 — —
Nacala BV (i) — 355 — — — — — —
Pangea Emirates Ltd Mitsui (i) — — 3,748 — — — — —
Sumic Nickel Netherland B.V — — — — — — 1,149 —
VLI — 8 232 — — 8 — —
Others — 175 58 — — 130 22 —
Total 1,142 2,001 4,990 21,949 1,198 473 2,605 24,181

(i) Refers to the balances after the sale of Nacala Corridor business (note 11).

Consolidated
Three month period ended June 30,
2017 2016
Net operating revenue Costs and expenses Financial result Net operating revenue Costs and expenses Financial result
Aliança Geração de Energia S.A. 27 (124 ) — — — —
Banco Bradesco S.A. (i) — — 102 — — 486
Banco do Brasil S.A. (i) — — (437 ) — — (166 )
Baovale Mineração S.A. — (15 ) — — (18 ) —
BNDES (i) — — (370 ) — — (358 )
BNDES Participações S.A. (i) — — (45 ) — — (49 )
Companhia Coreano-Brasileira de Pelotização — (126 ) (4 ) — (62 ) —
Companhia Hispano-Brasileira de Pelotização — (96 ) (4 ) — (30 ) —
Companhia Ítalo-Brasileira de Pelotização — (115 ) (6 ) — (44 ) —
Companhia Nipo-Brasileira de Pelotização — (215 ) (8 ) — (70 ) —
Companhia Siderúrgica do Atlântico — — — — (21 ) —
Companhia Siderúrgica do Pecém 165 (130 ) — 53 — —
Ferrovia Centro-Atlântica S.A. 38 (22 ) (1 ) 40 (25 ) —
Ferrovia Norte Sul S.A. 24 — — 22 — —
Mitsui & Co., Ltd. 113 (21 ) — 147 — —
MRS Logística S.A. — (471 ) — — (489 ) —
Nacala BV (i) — (304 ) 214 — — —
Pangea Emirates Ltd Mitsui (i) — — (156 ) — — —
Samarco Mineração S.A. — — 46 — — —
VLI 199 — — 246 (11 ) —
Others 22 (3 ) (5 ) 3 (30 ) —
Total 588 (1,642 ) (674 ) 511 (800 ) (87 )

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Consolidated
Six month period ended June 30,
2017 2016
Net operating revenue Costs and expenses Financial result Net operating revenue Costs and expenses Financial result
Aliança Geração de Energia S.A. 36 (196 ) — — — —
Banco Bradesco S.A. (i) — — 225 — — 428
Banco do Brasil S.A. (i) — — (644 ) — — (298 )
Baovale Mineração S.A. — (26 ) — — (30 ) —
BNDES (i) — — (531 ) — — (528 )
BNDES Participações S.A. (i) — — (67 ) — — (73 )
California Steel Industries, Inc. 113 — — — — —
Companhia Coreano-Brasileira de Pelotização — (234 ) (9 ) — (131 ) —
Companhia Hispano-Brasileira de Pelotização — (188 ) (8 ) — (71 ) —
Companhia Ítalo-Brasileira de Pelotização — (172 ) (15 ) — (81 ) —
Companhia Nipo-Brasileira de Pelotização — (408 ) (22 ) — (197 ) —
Companhia Siderúrgica do Atlântico — — — — (21 ) —
Companhia Siderúrgica do Pecem 405 (279 ) — 116 — —
Ferrovia Centro-Atlântica S.A. 63 (49 ) (1 ) 69 (44 ) (2 )
Ferrovia Norte Sul S.A. 37 — — 39 — —
Mitsui & Co., Ltd. 206 (38 ) — 226 — —
MRS Logística S.A. — (824 ) — — (729 ) —
Nacala BV (i) — (304 ) 214 — — —
Pangea Emirates Ltd Mitsui (i) — — (156 ) — — —
Samarco Mineração S.A. 45 — 39 1 — —
VLI 417 — — 467 (11 ) —
Others 44 (8 ) (31 ) 40 (65 ) —
Total 1,366 (2,726 ) (1,006 ) 958 (1,380 ) (473 )

(i) Does not include exchange rate variation.

*26. Commitments*

*a) Participative stockholders’ debentures*

In April, 2017, the Company approved the semiannual remuneration to stockholders’ debentures the amount of R$241.

*b) Guarantees provided*

As of June 30, 2017, corporate guarantees provided by Vale (within the limit of its direct or indirect interest) for the companies Norte Energia S.A. and Companhia Siderúrgica do Pecém S.A. totaled R$1.217 and R$4,896, respectively and in December 31, 2016 totaled R$1,176 and R$4,725, respectively.

*27. Select notes to Parent Company information (individual interim information)*

*a) Investments*

Parent company — 2017 2016
Balance at January 1st, 107,539 127,517
Additions/Capitalizations 966 1,282
Translation adjustment 2,326 (14,304 )
Equity results in income statement 1,758 4,699
Equity results in statement of comprehensive income (936 ) (618 )
Results from operations with noncontroling interest (329 ) —
Equity results from discontinued operations (658 ) (47 )
Dividends declared (1,586 ) (1,157 )
Others 813 (21 )
Balance at June 30, 109,893 117,351

Dividends received by the Parent Company during the period ended at June 30, 2017 were R$424.

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*b) Intangible*

Parent company — Concessions Right of use Software Total
Balance at December 31, 2016 10,278 118 918 11,314
Additions 1,585 — 57 1,642
Disposals (7 ) — — (7 )
Amortization (175 ) (4 ) (204 ) (383 )
Balance at June 30, 2017 11,681 114 771 12,566
Cost 15,178 223 4,098 19,499
Accumulated amortization (3,497 ) (109 ) (3,327 ) (6,933 )
Balance at June 30, 2017 11,681 114 771 12,566
Parent company — Concessions Right of use Software Total
Balance at December 31, 2015 7,084 123 1,350 8,557
Additions 2,973 — 18 2,991
Disposals (18 ) — — (18 )
Amortization (258 ) (3 ) (253 ) (514 )
Balance at June 30, 2016 9,781 120 1,115 11,016
Cost 13,151 223 4,015 17,389
Accumulated amortization (3,370 ) (103 ) (2,900 ) (6,373 )
Balance at June 30, 2016 9,781 120 1,115 11,016

*c) Property, plant and equipment*

Parent company — Land Building Facilities Equipment Mineral properties Others Constructions in progress Total
Balance at December 31, 2016 1,684 20,945 20,416 8,479 4,122 16,499 29,911 102,056
Additions (i) — — — — — — 2,692 2,692
Disposals (1 ) — (21 ) (16 ) — (6 ) (31 ) (75 )
Assets retirement obligation — — — — 14 — — 14
Depreciation, amortization and depletion — (364 ) (531 ) (572 ) (135 ) (767 ) — (2,369 )
Transfers 49 3,188 4,390 1,313 1,483 2,011 (12,434 ) —
Balance at June 30, 2017 1,732 23,769 24,254 9,204 5,484 17,737 20,138 102,318
Cost 1,732 27,977 31,063 15,478 7,073 26,617 20,138 130,078
Accumulated depreciation — (4,208 ) (6,809 ) (6,274 ) (1,589 ) (8,880 ) — (27,760 )
Balance at June 30, 2017 1,732 23,769 24,254 9,204 5,484 17,737 20,138 102,318
Parent company — Land Building Facilities Equipment Mineral properties Others Constructions in progress Total
Balance at December 31, 2015 1,672 19,546 19,379 8,371 4,215 14,203 29,501 96,887
Additions (i) — — — — — — 3,776 3,776
Disposals — — (1 ) (8 ) — (22 ) (60 ) (91 )
Assets retirement obligation — — — — 144 — — 144
Depreciation, amortization and depletion — (307 ) (468 ) (535 ) (102 ) (654 ) — (2,066 )
Transfers 8 1,281 (60 ) 503 (68 ) (171 ) (1,493 ) —
Balance at June 30, 2016 1,680 20,520 18,850 8,331 4,189 13,356 31,724 98,650
Cost 1,680 23,719 25,090 13,780 5,538 20,671 31,724 122,202
Accumulated depreciation — (3,199 ) (6,240 ) (5,449 ) (1,349 ) (7,315 ) — (23,552 )
Balance at June 30, 2016 1,680 20,520 18,850 8,331 4,189 13,356 31,724 98,650

(i) Includes capitalized borrowing costs, see cash flow.

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*d) Loans and borrowings*

Parent company — Current liabilities Non-current liabilities
June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016
Debt contracts in the international markets
Floating rates in:
US$ 656 448 11,829 15,876
Fixed rates in:
US$ — — 4,963 4,889
EUR — — 2,831 5,158
Accrued charges 300 425 — —
956 873 19,623 25,923
Debt contracts in Brazil
Floating rates in:
R$, indexed to TJLP, TR, IPCA, IGP-M and CDI 2,213 1,059 14,697 17,307
Basket of currencies and US$ indexed to LIBOR 1,190 1,117 3,422 3,962
Fixed rates in:
R$ 190 190 590 685
Accrued charges 921 932 — —
4,514 3,298 18,709 21,954
5,470 4,171 38,332 47,877

The future flows of debt payments (principal) are as follows:

Parent company
Debt principal
2017 1,546
2018 4,656
2019 7,002
2020 7,899
2021 4,934
Between 2022 and 2025 10,952
2026 onwards 5,592
42,581

*e) Provisions*

Parent company — Current liabilities Non-current liabilities
June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016
Payroll and related charges 1,424 1,649 — —
Environment Restoration 47 14 140 200
Asset retirement obligations 56 71 1,615 1,571
Provisions for litigation — — 1,951 1,944
Employee postretirement obligations 62 58 682 681
Provisions 1,589 1,792 4,388 4,396

*f) Provisions for litigation*

Parent company — Tax litigation Civil litigation Labor litigation Environmental litigation Total of litigation provision
Balance at December 31, 2016 53 247 1,621 23 1,944
Additions 1 55 306 8 370
Reversals — (83 ) (167 ) (3 ) (253 )
Payments (6 ) (19 ) (148 ) (1 ) (174 )
Indexation and interest 3 31 35 (5 ) 64
Balance at June 30, 2017 51 231 1,647 22 1,951
Parent company — Tax litigation Civil litigation Labor litigation Environmental litigation Total of litigation provision
Balance at December 31, 2015 332 241 1,562 55 2,190
Additions 17 201 353 7 578
Reversals (41 ) (67 ) (160 ) (11 ) (279 )
Payments (275 ) (161 ) (233 ) — (669 )
Indexation and interest 12 92 9 — 113
Balance at June 30, 2016 45 306 1,531 51 1,933

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*g) Income taxes*

The total amount presented as income taxes in the income statement is reconciled to the rate established by law, as follows:

Parent company
Six month period ended June 30,
2017 2016
Income before income taxes 10,586 16,478
Income taxes at statutory rates - 34% (3,599 ) (5,603 )
Adjustments that affect the basis of taxes:
Income tax benefit from interest on stockholders’ equity 793 —
Tax incentives 524 319
Equity results 598 1,598
Others results in associates and joint ventures — (1,269 )
Others (292 ) (1,580 )
Income taxes (1,977 ) (6,535 )

*h) Related parties*

Parent company
Assets
June 30, 2017 December 31, 2016
Cash and cash equivalents Derivative financial instruments Accounts receivable Related parties Cash and cash equivalents Derivative financial instruments Accounts receivable Related parties
Banco Bradesco S.A. 110 1,263 — — 67 1,056 — —
Banco do Brasil S.A. 2,032 79 — — 8 111 — —
Biopalma da Amazônia S.A. — — 1 882 — — 1 965
Companhia Coreano-Brasileira de Pelotização — — — 62 — — — 15
Companhia Hispano-Brasileira de Pelotização — — — — — — 2 —
Companhia Ítalo-Brasileira de Pelotização — — — — — — — 27
Companhia Nipo-Brasileira de Pelotização — — — 47 — — — 48
Companhia Portuária Baía de Sepetiba — — 3 117 — — 1 80
Companhia Siderúrgica do Pecém — — 118 — — — 115 —
Consórcio de Rebocadores da Baia de São Marcos — — 26 — — — 32 —
Empreendimentos Brasileiros de Mineração S.A. — — — 1,226 — — — 292
Mineração Brasileiras Reunidas S.A. — — 4 107 — — 1 14
Mineração Corumbaense Reunidas S.A. — — 53 — — — 52 —
MRS Logística S.A. — — — 41 — — — 30
Salobo Metais S.A. — — 31 104 — — 16 104
Vale International S.A. — — 13,938 — — — 27,387 —
VLI — — 26 64 — — 27 38
Others — — 93 77 — — 172 36
Total 2,142 1,342 14,293 2,727 75 1,167 27,806 1,649

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Parent company
Liabilities
June 30, 2017 December 31, 2016
Derivative financial instruments Others liabilities Related parties Loans and borrowings Derivative financial instruments Others liabilities Related parties Loans and borrowings
Aliança Geração de Energia S.A. — 205 — — — 51 125 —
Banco Bradesco S.A. 796 — — — 815 — — 20
Banco do Brasil S.A. 122 — — 7,035 147 — — 8,369
BNDES 224 — — 12,465 236 — — 13,039
BNDES Participações S.A. — — — 1,294 — — — 1,348
Companhia Coreano-Brasileira de Pelotização — 248 — — — 10 — —
Companhia Hispano-Brasileira de Pelotização — 202 — — — 126 — —
Companhia Ítalo-Brasileira de Pelotização — 163 — — — — — —
Companhia Nipo-Brasileira de Pelotização — 437 — — — 10 — —
Companhia Portuária Baía de Sepetiba — 49 — — — 285 — —
Empreendimentos Brasileiros de Mineração S.A. — — 7 — — — 7 —
Ferrovia Centro-Atlântica S.A. — 3 271 — — — 270 —
Mineração Brasileiras Reunidas S.A. — 523 3,310 — — 505 3,131 —
MRS Logística S.A. — 80 — — — 82 — —
Vale International S.A. — — 56,465 — — 4 59,715 —
VLI — 8 232 — — 8 — —
Others — 313 293 — — 163 292 —
Total 1,142 2,231 60,578 20,794 1,198 1,244 63,540 22,776
Parent company
Six month period ended June 30,
2017 2016
Net operating revenue Costs and expenses Financial result Net operating revenue Costs and expenses Financial result
Aliança Geração de Energia S.A. — (181 ) — — — —
Banco Bradesco S.A. (i) — — 225 — — 424
Banco do Brasil S.A. (i) — — (644 ) — — (299 )
Baovale Mineração S.A. — (26 ) — — (31 ) —
Biopalma da Amazônia S.A. — — 32 — — (203 )
BNDES (i) — — (528 ) — — (516 )
BNDES Participações S.A. (i) — — (68 ) — — (73 )
Companhia Coreano-Brasileira de Pelotização — (234 ) — — (131 ) —
Companhia Hispano-Brasileira de Pelotização — (188 ) — — (71 ) —
Companhia Ítalo-Brasileira de Pelotização — (172 ) — — (82 ) —
Companhia Nipo-Brasileira de Pelotização — (408 ) — — (197 ) —
Companhia Portuária Baía de Sepetiba — (206 ) — — (395 ) —
Companhia Siderúrgica do Atlântico — — — — (21 ) —
Companhia Siderúrgica do Pecem 415 — — 116 — —
Ferrovia Centro-Atlântica S.A. 63 (49 ) (1 ) 69 (44 ) (2 )
Ferrovia Norte Sul S.A. 37 — — — — —
Mineração Brasileiras Reunidas S.A. — (995 ) (179 ) — (761 ) (246 )
MRS Logística S.A. — (824 ) — — (729 ) —
Samarco Mineração S.A. 45 — 39 1 — —
Vale International S.A. 28,636 — (2,261 ) 17,811 — 3,464
VLI 417 — — 467 (11 ) —
Others 137 (80 ) (105 ) 76 (5 ) 2
Total 29,750 (3,363 ) (3,490 ) 18,540 (2,478 ) 2,551

(i) Does not include exchange rate variation.

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*28. Additional information about derivatives financial instruments*

*a) Sensitivity analysis of derivative financial instruments .*

The following tables present the potential value of the instruments given hypothetical stress scenarios for the main market risk factors that impact the derivatives positions. The scenarios were defined as follows:

· Scenario I : fair value calculation considering market prices as of June 30, 2017

· Scenario II : fair value estimated considering a 25% deterioration in the associated risk variables

· Scenario III : fair value estimated considering a 50% deterioration in the associated risk variables

Instrument Instrument’s main risk events Scenario I Scenario II Scenario III
CDI vs. US$ fixed rate swap R$depreciation (329 ) (1,665 ) (3,000 )
US$interest rate inside Brazil decrease (329 ) (374 ) (421 )
Brazilian interest rate increase (329 ) (328 ) (347 )
Protected item: R$ denominated debt R$depreciation n.a. — —
TJLP vs. US$ fixed rate swap R$depreciation (1,679 ) (3,013 ) (4,348 )
US$interest rate inside Brazil decrease (1,679 ) (1,736 ) (1,796 )
Brazilian interest rate increase (1,679 ) (1,795 ) (1,904 )
TJLP interest rate decrease (1,679 ) (1,772 ) (1,867 )
Protected item: R$ denominated debt R$depreciation n.a. — —
TJLP vs. US$ floating rate swap R$depreciation (185 ) (289 ) (392 )
US$interest rate inside Brazil decrease (185 ) (191 ) (197 )
Brazilian interest rate increase (185 ) (194 ) (203 )
TJLP interest rate decrease (185 ) (192 ) (200 )
Protected item: R$ denominated debt R$depreciation n.a. — —
R$ fixed rate vs. US$ fixed rate swap R$depreciation (5 ) (292 ) (578 )
US$interest rate inside Brazil decrease (5 ) (37 ) (72 )
Brazilian interest rate increase (5 ) (84 ) (154 )
Protected item: R$ denominated debt R$depreciation n.a. — —
IPCA vs. US$ fixed rate swap R$depreciation (174 ) (553 ) (933 )
US$interest rate inside Brazil decrease (174 ) (193 ) (213 )
Brazilian interest rate increase (174 ) (242 ) (305 )
IPCA index decrease (174 ) (207 ) (240 )
Protected item: R$ denominated debt R$depreciation n.a. — —
IPCA vs. CDI swap Brazilian interest rate increase 158 37 (72 )
IPCA index decrease 158 99 42
Protected item: R$ denominated debt linked to IPCA IPCA index decrease n.a. (99 ) (42 )
EUR fixed rate vs. US$ fixed rate swap EUR depreciation (35 ) (604 ) (1,173 )
Euribor increase (35 ) (62 ) (89 )
US$Libor decrease (35 ) (91 ) (151 )
Protected item: EUR denominated debt EUR depreciation n.a. 604 1,173

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Instrument Instrument’s main risk events Scenario I Scenario II Scenario III
Bunker Oil protection
Forwards and options Bunker Oil price decrease 83 (150 ) (614 )
Protected item: Part of costs linked to bunker oil prices Bunker Oil price decrease n.a. 150 614
Nickel sales fixed price protection
Forwards Nickel price decrease 1 (86 ) (172 )
Protected item: Part of nickel revenues with fixed prices Nickel price fluctuation n.a. 86 172
Purchase protection program
Nickel forwards Nickel price increase (0.9 ) (7.2 ) (13.4 )
Protected item: Part of costs linked to nickel prices Nickel price increase n.a. 7.2 13.4
Copper forwards Copper price increase (0.1 ) (1.0 ) (2.0 )
Protected item: Part of costs linked to copper prices Copper price increase n.a. 1.0 2.0
SLW warrants SLW stock price decrease 151 83 31
Conversion options - VLI VLI stock value increase (224 ) (340 ) (478 )
Options - MBR MBR stock value decrease 570 351 187
Instrument Main risks Scenario I Scenario II Scenario III
Embedded derivatives - Raw material purchase (nickel) Nickel price increase (4 ) (26 ) (49 )
Embedded derivatives - Raw material purchase (copper) Copper price increase 0 (12 ) (25 )
Embedded derivatives - Gas purchase Pellet price increase (11 ) (23 ) (39 )
Embedded derivatives - Guaranteed minimum return (VLI) VLI stock value decrease (583 ) (1,040 ) (1,655 )

*b) Financial counterparties’ ratings*

The transactions of derivative instruments, cash and cash equivalents as well as investments are held with financial institutions whose exposure limits are periodically reviewed and approved by the delegated authority. The financial institutions credit risk is performed through a methodology that considers, among other information, ratings provided by international rating agencies.

The table below presents the ratings in foreign currency published by agencies Moody’s and S&P regarding the main financial institutions that we had outstanding positions as of June 30, 2017.

Long term ratings by counterparty Moody’s S&P
ANZ Australia and New Zealand Banking Aa3 AA-
Banco Bradesco Ba3 BB
Banco de Credito del Peru Baa1 BBB
Banco do Brasil Ba3 BB
Banco do Nordeste Ba3 BB
Banco Safra Ba3 BB
Banco Santander A3 A-
Banco Votorantim Ba3 BB
Bank of America Baa1 BBB+
Bank of China A1 A
Bank of Nova Scotia A1 A+
Bank of Tokyo Mitsubishi UFJ A1 A
Banpara — BB-
Barclays Baa2 BBB
BNP Paribas A1 A
Long term ratings by counterparty Moody’s S&P
BTG Pactual Ba3 BB-
Caixa Economica Federal Ba3 BB
Citigroup Baa1 BBB+
Deutsche Bank A3 A-
Goldman Sachs A3 BBB+
HSBC A1 A
Intesa Sanpaolo Spa A3 BBB-
Itau Unibanco Ba3 BB
JP Morgan Chase & Co A3 A-
Macquarie Group Ltd A3 BBB
Morgan Stanley A3 BBB+
National Australia Bank NAB Aa3 AA-
Societe Generale A2 A
Standard Bank Group Ba1 —
Standard Chartered A2 BBB+

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*c) Market curves*

The curves used on the pricing of derivatives instruments were developed based on data from BM&F, Central Bank of Brazil, London Metals Exchange and Bloomberg.

*(i) Products*

*Nickel*

Maturity Price (US$/ton) Maturity Price (US$/ton) Maturity Price (US$/ton)
SPOT 9,280 DEC17 9,449 JUN18 9,554
JUL17 9,363 JAN18 9,468 JUN19 9,750
AUG17 9,379 FEB18 9,485 JUN20 9,911
SEP17 9,393 MAR18 9,504 JUN21 10,043
OCT17 9,412 APR18 9,522
NOV17 9,431 MAY18 9,539

*Copper*

Maturity Price (US$/lb) Maturity Price (US$/lb) Maturity Price (US$/lb)
SPOT 2.70 DEC17 2.70 JUN18 2.71
JUL17 2.69 JAN18 2.71 JUN19 2.72
AUG17 2.69 FEB18 2.71 JUN20 2.72
SEP17 2.70 MAR18 2.71 JUN21 2.72
OCT17 2.70 APR18 2.71
NOV17 2.70 MAY18 2.71

*Bunker Oil*

Maturity Price (US$/ton) Maturity Price (US$/ton) Maturity Price (US$/ton)
SPOT 294 DEC17 291 JUN18 290
JUL17 295 JAN18 290 JUN19 292
AUG17 296 FEB18 290 JUN20 280
SEP17 294 MAR18 289 JUN21 276
OCT17 292 APR18 290
NOV17 291 MAY18 290

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*(ii) Foreign exchange and interest rates*

*US$-Brazil Interest Rate*

Maturity Rate (% p.a.) Maturity Rate (% p.a.) Maturity Rate (% p.a.)
08/01/17 2.58 06/01/18 2.37 10/01/20 3.18
09/01/17 2.17 07/02/18 2.38 01/04/21 3.29
10/02/17 2.20 10/01/18 2.48 04/01/21 3.36
11/01/17 2.19 01/02/19 2.59 07/01/21 3.45
12/01/17 2.19 04/01/19 2.65 10/01/21 3.51
01/02/18 2.25 07/01/19 2.72 01/03/22 3.65
02/01/18 2.22 10/01/19 2.80 04/01/22 3.73
03/01/18 2.27 01/02/20 2.91 07/01/22 3.86
04/02/18 2.30 04/01/20 2.99 01/02/23 4.09
05/02/18 2.32 07/01/20 3.09 01/02/24 4.49

*US$ Interest Rate*

Maturity Rate (% p.a.) Maturity Rate (% p.a.) Maturity Rate (% p.a.)
1M 1.23 6M 1.40 11M 1.45
2M 1.26 7M 1.42 12M 1.45
3M 1.30 8M 1.43 2Y 1.64
4M 1.35 9M 1.44 3Y 1.79
5M 1.38 10M 1.44 4Y 1.93

*TJLP*

Maturity Rate (% p.a.) Maturity Rate (% p.a.) Maturity Rate (% p.a.)
08/01/17 7.00 06/01/18 7.00 10/01/20 7.00
09/01/17 7.00 07/02/18 7.00 01/04/21 7.00
10/02/17 7.00 10/01/18 7.00 04/01/21 7.00
11/01/17 7.00 01/02/19 7.00 07/01/21 7.00
12/01/17 7.00 04/01/19 7.00 10/01/21 7.00
01/02/18 7.00 07/01/19 7.00 01/03/22 7.00
02/01/18 7.00 10/01/19 7.00 04/01/22 7.00
03/01/18 7.00 01/02/20 7.00 07/01/22 7.00
04/02/18 7.00 04/01/20 7.00 01/02/23 7.00
05/02/18 7.00 07/01/20 7.00 01/02/24 7.00

*BRL Interest Rate*

Maturity Rate (% p.a.) Maturity Rate (% p.a.) Maturity Rate (% p.a.)
08/01/17 10.03 06/01/18 8.75 10/01/20 9.98
09/01/17 9.65 07/02/18 8.77 01/04/21 10.08
10/02/17 9.38 10/01/18 8.84 04/01/21 10.17
11/01/17 9.22 01/02/19 8.91 07/01/21 10.26
12/01/17 9.07 04/01/19 9.06 10/01/21 10.32
01/02/18 8.94 07/01/19 9.23 01/03/22 10.36
02/01/18 8.87 10/01/19 9.41 04/01/22 10.41
03/01/18 8.84 01/02/20 9.56 07/01/22 10.45
04/02/18 8.79 04/01/20 9.70 01/02/23 10.54
05/02/18 8.77 07/01/20 9.85 01/02/24 10.64

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*Implicit Inflation (IPCA)*

Maturity Rate (% p.a.) Maturity Rate (% p.a.) Maturity Rate (% p.a.)
08/01/17 4.88 06/01/18 3.66 10/01/20 4.43
09/01/17 4.52 07/02/18 3.68 01/04/21 4.45
10/02/17 4.26 10/01/18 3.94 04/01/21 4.49
11/01/17 4.11 01/02/19 4.14 07/01/21 4.52
12/01/17 3.96 04/01/19 4.19 10/01/21 4.54
01/02/18 3.84 07/01/19 4.28 01/03/22 4.54
02/01/18 3.78 10/01/19 4.30 04/01/22 4.57
03/01/18 3.75 01/02/20 4.33 07/01/22 4.59
04/02/18 3.70 04/01/20 4.34 01/02/23 4.65
05/02/18 3.68 07/01/20 4.39 01/02/24 4.72

*EUR Interest Rate*

Maturity Rate (% p.a.) Maturity Rate (% p.a.) Maturity Rate (% p.a.)
1M -0.40 6M -0.28 11M -0.24
2M -0.39 7M -0.27 12M -0.23
3M -0.37 8M -0.26 2Y -0.12
4M -0.33 9M -0.25 3Y 0.01
5M -0.30 10M -0.24 4Y 0.14

*CAD Interest Rate*

Maturity Rate (% p.a.) Maturity Rate (% p.a.) Maturity Rate (% p.a.)
1M 0.98 6M 1.25 11M 0.69
2M 1.03 7M 1.08 12M 0.64
3M 1.07 8M 0.96 2Y 1.44
4M 1.16 9M 0.85 3Y 1.59
5M 1.22 10M 0.76 4Y 1.71

*Currencies - Ending rates*

CAD/US$ 0.7701 US$/BRL 3.3082 EUR/US$ 1.1430

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*Members of the Board of Directors, Fiscal Council, Advisory Committees and Executive Officers*

Board of Directors Governance and Sustainability Committee
Fernando Jorge Buso Gomes
Gueitiro Matsuo Genso Dan Antonio Marinho Conrado
Chairman Eduardo de Oliveira Rodrigues Filho
Denise Pauli Pavarina
Fernando Jorge Buso Gomes Clarissa Lins
Vice-President
Fiscal Council
Dan Antonio Marinho Conrado
Marcel Juviniano Barros Marcelo Amaral Moraes
Eduardo Refinetti Guardia Chairman
Denise Pauli Pavarina
Shinichiro Omachi Eduardo Cesar Pasa
Oscar Augusto de Camargo Filho Raphael Manhães Martins
Eduardo de Salles Bartolomeo Robert Juenemann
Lucio Azevedo Marcus Vinícius Dias Severini
Alternate Alternate
Gilberto Antonio Vieira Sergio Mamede Rosa do Nascimento
Moacir Nachbar Junior Bernardo Zito Porto
Arthur Prado Silva Gaspar Carreira Júnior
Francisco Ferreira Alexandre
Robson Rocha Executive Officers
Luiz Mauricio Leuzinger
Yoshitomo Nishimitsu Fabio Schvartsman
Eduardo de Oliveira Rodrigues Filho Chief Executive Officer
Raimundo Nonato Alves Amorim
Luiz Eduardo Fróes do Amaral Osorio
Advisory Committees of the Board of Directors Executive Officer (Sustainability and Institutional Relations)
Controlling Committee Luciano Siani Pires
Moacir Nachbar Junior Executive Officer (Finance and Investors Relations)
Arthur Prado Silva
Oswaldo Mário Pego de Amorim Azevedo Gerd Peter Poppinga
Jorge Roberto Manoel Executive Officer (Ferrous and Coal)
Executive Development Committee Jennifer Anne Maki
Oscar Augusto de Camargo Filho Executive Officer (Base Metals)
Marcel Juviniano Barros
Fernando Jorge Buso Gomes Clovis Torres Junior
Gueitiro Matsuo Genso Executive Officer and General Counsel
Ana Silvia Matte
Strategic Committee
Fabio Schvartsman
Gueitiro Matsuo Genso Rogerio Nogueira
Fernando Jorge Buso Gomes Global Controller Director
Oscar Augusto de Camargo Filho
Murilo Muller
Finance Committee Controllership Director
Gilmar Dalilo Cezar Wanderley
Fernando Jorge Buso Gomes Dioni Brasil
Eduardo de Oliveira Rodrigues Filho Accounting Manager
Eduardo de Salles Bartolomeo TC-CRC-RJ 083305/O-8
Eduardo Refinetti Guardia

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*Signatures*

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant)
By: /s/ Andre Figueiredo
Date: July 27, 2017 Andre Figueiredo
Director of Investor Relations

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