The Rising Influence of Rising Affluence

[Democritus_of_Abdera]

Re: Coking Coal...

Dew, as you mentioned in #msg-64738025 coking coal demand is growing. And, as you noted in #msg-64762346 VALE is developing Mozambique coking coal resources, taking advantage of the cargo space available in iron-ore ships returning to Brazil from China.

So, I was interested in CLF's plans in this regard. The following quote from the Q&A in CLF's Jun 28 2011 investor day presentation was informative. I have highlighted the reference to Columbia coal since it might be of interest to VALE.

Sal Tharani, Goldman Sachs:
Obviously you had some unfortunate accident at the coal mine but in many of the presentations it appears that Cliffs is very bullish on the coking coal for a long period of time, but when I looked at Cliffs’ presentation on exploration, there was very little coking coal mentioned in there, it’s mostly nickel, there’s copper, iron ore. Is it very difficult to find, is that the reason that or is it strategically you’re not exploring into the coking coal area and I have one more?

Clifford Smith – Senior Vice President-Global Business Development:
We still are bullish on coking coal, but there is really only five basins throughout the world. And we’ve been targeting the basins in which we feel more comfortable. And I mentioned the drilling ongoing in Queensland, we continue to drill there. We have a number of leases that are under our control. We choose not to go into Indonesia or into the South African basins, Mozambique at this time. We’ve done country risk reviews but we’re going to run things to ground in Queensland first. We choose not to go into Columbia for met coal at the high elevations and the extremely folded deposits that are there they don’t lend themselves to mechanization, low volumes and a lack of railroad. So, we’re focusing on the Queensland area first for our met coal exploration.

Sal Tharani – Goldman Sachs:
You have a JV or partner in Mongolia...

Joseph Carrabba – Chairman, President & Chief Executive Officer:
They have a tremendous amount of met coal in Mongolia and that’s the one overheated commodity where everybody is fighting for. And we’ve chosen to stay out of the fray because the valuations are so high at this point in time. And the infrastructure is not there. Right now most everything is trucked South to China. Perhaps in another year we’ll change our mind, but right now we’re on the sidelines there.