Vale S A : 0224 Resumo relatório do COAUD_i.pdf

Audit Committee Summarized Annual Report - fiscal year 2020

Contextualization

As part of Vale's corporate governance evolution process, alignment with international best practices and compliance with Novo Mercado regulations, on March 11, 2020, the Board of Directors approved the installation of the Audit Committee (COAUD).

The coordination model by one independent director and two external members was not provided for in the SEC rules and, so, the company officially consulted the regulatory body of that country, which issued a formal waiver for the adopted structure. Accordingly, Vale's Audit Committee is in compliance with regulatory bodies B3, CVM and SEC.

Committee Composition

According to its Internal Regulation, the Audit Committee must be comprised of three (03) to five (05) members. Since its creation, the Committee has been coordinated by an independent member of the Board of Directors and composed by two external members, one of whom has acknowledged experience in corporate accounting matters. The selection of external members was conducted by the People and Governance Committee (CPG) with the support of a specialized consulting firm.

Name	Role	Independent	Member since	Participation¹
Isabella Saboya de Albuquerque	Coordinator	Yes	April 2020	27/28
Luciana Pires Dias	External member	Yes	April 2020	28/28
Sérgio Ricardo Romani	External member and specialist in corporate accounting	Yes	April 2020	28/28
¹ Period from March 2020 to December 2020. ² As a result of the Covid-19 pandemic, the ordinary and extraordinary meetings of the Committee from March 2020 were held virtually and, for the same reason, face-to-face visits to the operations were suspended and transformed into virtual presentations or postponed to the post-pandemic period.

Committee Duties

Vale's Audit Committee is a statutory advisory body to the Board of Directors, with the purpose of supervising the quality and integrity of financial reports, adherence to legal, statutory and regulatory standards, the adequacy of processes related to risk management and the activities of internal and independent auditors.

The Committee's functions and responsibilities are performed in compliance with the applicable legal, statutory attributions defined in its Internal Regulations. The Committee's assessments are based on information received from management, independent auditors, internal auditors, those responsible for risk management and internal controls and on their own analyzes resulting from their supervisory and monitoring activities.

Transition of attributions

Previously, in the absence of an Audit Committee, the Fiscal Council ("Conselho Fiscal", CF)

assumed this responsibility as extra or "boosted" duties.

COAUD had routine interactions with the Supervisory Board to assume, in an organized manner, the duties that were the CF's when it acted on the "boosted" Supervisory Board model. COAUD maintains quarterly interactions with the CF in order to update common issues and allow a channel for its communication with the Board of Directors (BoD). In addition, in the second quarter of 2020, COAUD met with the Operational Excellence and Risk Committee (CEOR) to deal with the transition of the work plan and outstanding issues of the former Risk and Compliance Committee (CCR).

Main themes of Committee meetings in 2020

COAUD has a Work Plan defined on an annually basis and topics of greater relevance and recurrence occuring at a certain time of the year (such as quarterly financial statements and financial statements for fiscal year) and requests from the Board of Directors. The following chart shows, in percentage terms, the main themes discussed at the 2020 meetings:

7%

Risk management

Internal controls/SOX certification 10%

Restructuring of the Compliance area

Supervision of the quality and integrity of financial reportsRecommendations of the Independent Special Advisory Committee on

Investigation (CIAE-A)

Provisions and contingencies related to Brumadinho, Fundação Renova and Samarco

Monitoring of CIAE-A recommendations

The COAUD was appointed by the Board to monitor the 25 recommendations of the Independent Committee for Extraordinary Assessment (CIAE-A). The Audit Committee, as well as CEOR, followed the evolution of the action plans, which include 106 actions (split from the 25 recommendations) of which:

25 recommendations

involving geotechnical risks, emergency plans, improvement of risk methodologies and functional structure of related areas, cultural aspects and governance of inspection and controls, among other topics.

80 governance actions

26 technical actions

55% of the actions audited in 2020

33% will be audited in 2021

12% in planning

During the constant meetings promoted by COUAD with the technicians responsible for the proposed actions, with the assistance of the other BoD committees, the status of the actions and their effectiveness in addressing the problems and failures raised by the CIAE-A in its report were questioned. Some actions, by their nature, are of a continuous nature for a longer period, such as those that must comply with recommendation number 16 ("Improvement of cultural aspects").

In general, COAUD concluded that the 106 proposed actions are in line with the 25 recommendations of the CIAE-A, with approximately 90% having already been fully implemented by December 2020.

It is worth mentioning that three CIAE-A recommendations were made by COAUD itself, regarding the improvement of the ethics and compliance structure, improving the procedures for handling complaints, increasing the scope of the work and improving the way of communicating the results of the internal audit. These recommendations, taken together, correspond to 7 governance actions, already properly addressed. The Report of Accounts to the Recommendations of the CIAE-A should be released by the company in 1Q21.

Restructuring of the Compliance area

One of COAUD's main tasks in 2020 was to oversee the creation and implementation of the Compliance Board. After conducting benchmarking with companies with comparable structures and complexities, it is concluded that the model that best met the priority of ensuring independence in the performance of its members is the one with the figure of the Compliance Officer reporting directly to the Board, through the COAUD.

With support from the recruiting company and extensive training evaluation, experience and executive intelligence, Mr. Denis Cuenca was selected for the position of Chief Compliance Officer and, from July 2020, he started to supervise the areas of integrity, internal audit and reporting channel.

As a first step in this reorganization, the new Board, under the supervision and guidance of the Audit Committee, presented the following initial results in 2020:

• • Reorganization and implementation of the new functional structure of the subordinate areas, which today has 91 professionals and will be expanded to 116 in 2021;

• • Structuring of Vale's Ethics and Compliance Program, with approval of Vale's new Code of Ethics, connected with Vale's purpose and values, the revision of the Anti-Corruption Policy and the elaboration of the Consequence Policy (in progress);

• • Reorganization of the complaints channel protocols and methodology;

• • Initial reorganization of the dynamics of the Conduct and Integrity Committee;

• • Preparation of a pilot diagnosis of compliance culture using the Hearts and Minds Matrix;

• • Evolution of the alignment of the internal audit with the Risk Matrix - Bwise;

• • Monitoring of the CIAE-A recommendations report through internal audit;

• • Beginning of technical internal audit work, focused on operational security issues

The Committee expresses its satisfaction with the new compliance structure set up during 2020. The first results and effects have been positive in terms of strengthening Vale's compliance effectiveness.

Committee's 2020 work plan

In the planning and execution of its work, COAUD proposed to fulfill the most relevant points for the company of the competencies provided for in the internal regulations, divided into 4 macro themes, summarized below:

1) Supervise the quality and integrity of financial reports

PricewaterhouseCoopers ("PwC") is the auditing company responsible for examining the financial statements and issuing an opinion on their preparation in accordance with