Edgar Filing: Companhia Vale do Rio Doce

FORM 6-K

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

March 2006

Companhia Vale do Rio Doce

Avenida Graça Aranha, No. 26
20005-900 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

(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 No X

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

Table of Contents


USGAAP Press Release

USGAAP Financial Pages

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2005 and 2004

Consolidated Statements of Income for the three-month periods ended December 31, 2005, September 30, 2005 and December 31, 2004 and for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Cash Flows for the three-month periods ended December 31, 2005, September 30, 2005 and December 31, 2004 and for the years ended December 31, 2005, 2004 and 2003

Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended December 31, 2005, September 30, 2005 and December 31, 2004 and for the years ended December 31, 2005, 2004 and 2003

Notes to the Consolidated Financial Statements

Supplemental Financial Information

Equity Investee Information as of December 31, 2005

Signature Page

US GAAP

BOVESPA: VALE3, VALE5
NYSE: RIO, RIOPR
LATIBEX: XVALO, XVALP

www.cvrd.com.br
rio@cvrd.com.br

Departamento de Relações
com Investidores

Roberto Castello Branco
Alessandra Gadelha
Barbara Geluda
Daniela Tinoco
Fábio Lima
Pedro Gibbon

Tel: (5521) 3814-4540

CRUISING AT HIGH SPEED
Performance of CVRD in 2005

Rio de Janeiro, March 6, 2006 — 2005 was CVRD’s third consecutive year of multiple operational and financial records. In spite of strong cost pressures – due to the cyclical rise in prices of raw materials, and the appreciation of the Brazilian Real against the US dollar – CVRD’s performance continued on its path of growth, as planned in its long-term strategy. Excellent results were made possible by maximized production levels supported by new projects coming on stream, operation at full capacity in most of its units, productivity gains, and the higher prices arising from the strong global demand for mining and metals.

CVRD’s records in 2005

	•		Shipments of iron ore and pellets, 255,171 million tons.

	•		Shipments of primary aluminum, 447,000 tons.

	•		Shipments of kaolin, 1.218 million tons.

	•		Railroad haulage of general cargo for clients, 26.9 billion net ton kilometer (ntk).

	•		Cargo handling in ports for clients, 30.7 million tons.

	•		Gross revenue, US$13.4 billion.

	•		Operational profit as measured by adjusted EBIT^a (earnings before interest and taxes), US$ 5.4 billion.

	•		Adjusted EBIT margin, 42.5%.

	•		Cash flow as measured by adjusted EBITDA^b (earnings before interest, taxes, depreciation and amortization), US$ 6.5 billion.

	•		Net earnings, US$4.8 billion, or US$4.20 per share.

	•		Return on equity (ROE), 40.4%.

	•		Capex, US$ 4.2 billion composed by US$ 2.6 billion of organic growth, US$ 757 million of stay in business, and US$ 800 million of acquisitions.

CVRD has been executing its long-term strategy successfully, taking advantage of the opportunities offered by the economic cycle to invest with the discipline required to grow in a profitable manner and generate considerable value for its shareholders.

Except where otherwise indicated the operational and financial information in this release is based on the consolidated figures in accordance with USGAAP and, with the exception of information on investments and behaviour of markets, quarterly financial statements reviewed by the company’s independent auditors. The main subsidiaries that are consolidated are the following: Caemi, Alunorte, Albras, RDM, RDME, RDMN, Urucum Mineração, Docenave, Ferrovia Centro-Atlântica (FCA), Itaco, CVRD Overseas e Rio Doce International Finance.

4Q05

US GAAP

CVRD’s capital expenditure in the last five years has totaled US$ 10.5 billion¹. It has commissioned 14 large projects in iron ore, pellets, ferro alloys, bauxite, alumina, copper, potash, electricity and logistics.

In 2006, CVRD plans to invest US$ 4.626 billion, of which 77% will be dedicated to promote organic growth.

Currently we have 24 projects being implemented and several others under study.

Return on capital invested (ROIC) in 2005 was 41.5%, higher than the average obtained in the last five years, 33.0%, and well above the estimates for CVRD’s weighted average cost of capital.

As a reflection of the process of investment with higher profitability, the total shareholder return of CVRD over the period 2001-2005 reached an annual average of 41.7%.

One of the most serious challenges for a growing company is to reconcile its capital expenditure financing, satisfaction of shareholders’ aspirations for dividends, and the preservation of a healthy balance sheet. CVRD has succeeded in meeting these objectives simultaneously.

Along with significant capital expenditure, CVRD has distributed US$ 4.4 billion in dividends to its shareholders between 2001 and 2005. The amount distributed in 2005, US$ 1.3 billion, equivalent to US$ 1.13 per share, was another record broken this year.

Debt leverage, measured as total debt/adjusted EBITDA^c, reached its lowest level in recent years, 0.77, at the end of 2005. CVRD’s financial soundness was recognized by the award of an investment grade rating by three of the world’s largest rating agencies.

SELECTED FINANCIAL INDICATORS


US$ million
	4Q04		3Q05		4Q05		2004		2005

Gross revenues		2,428		3,610		3,746		8,479		13,405
Adjusted EBIT		822		1,405		1,461		3,123		5,432
Adjusted EBIT margin (%)		35.5		40.8		40.6		38.7		42.5
Adjusted EBITDA		1,001		1,734		1,780		3,722		6,540
Net earnings		721		1,317		1,196		2,573		4,841
Earnings per share (US$ )		0.63		1.14		1.04		2.23		4.20
Annualized ROE (%)		34.8		35.8		40.4		34.8		40.4
Total debt/ adjusted LTM EBITDA (x)		1.10		0.68		0.77		1.10		0.77
Capex *		685.7		917.0		1,851.8		1,956.0		4,160.5


*		including acquisitions


		BUSINESS OUTLOOK

With a solid outlook, the global economy is expanding at slightly more than 4% per year, with the developed countries – the US, the 15 of Europe, and Japan – growing at 3%, and the emerging market economies of Asia, Latin America and Eastern Europe at 6%.

The expansion is becoming more balanced between the different regions of the world, which until recently was believed to be possible only through considerable depreciation of the US dollar. However, this has been made possible by the


¹		The figures given for capital expenditure represent cash actually spent, and include spending on acquisitions.

4Q05

US GAAP

restructuring of some important economies without requiring expansion of exchange rates volatility. The main implication of this re-balancing is reduction of the risk of a significant slowdown in the global economy as a result of an eventual recession the US economy.

The Japanese economy is returning to normality with the end of deflation and widespread over-capacity, and the significant decrease in non-performing bank loans. For the first time since 1996 bank credit is showing positive growth rates. Prices of commercial property have begun to rise after 14 years of decline, and industrial production is expanding firmly.

The behavior of GDP is becoming less dependent on exports, and the strong rise in the Nikkei-225, of 40% in 2005, translates investors’ optimism on the future of Japanese economy. The long restructuring process has enabled companies to capitalize, investing and hiring again, giving a new dynamic to domestic demand.

In Germany, the largest economy in Europe, corporate restructuring has contributed to an increase in productivity, profits and investments. In the short term this generates a negative impact on consumer spending, which tends to reverse as expansion of investments continues. The IFO business climate indicator rose to its highest level since 1994, with positive expectation on the part of both industry and retailers, the latter already anticipating future improvement in consumer spending.

As in Japan, the German economy is beginning to show less dependence on external demand, and, in 2006, for the first time in many years, domestic demand is likely to be the main source of growth of real GDP.

In the US, the low growth of the economy in the fourth quarter of 2005, the weakest since the last quarter of 2002, was due to the effect of several shocks suffered over the July-September period of last year, which have now been absorbed, thus seen as a temporary volatility.

China grew 9.9% in 2005 and is expected to maintain the same rate of expansion this year. Domestic demand is strengthening with the expansion of public investments in infrastructure, which are being accelerated in the first year of the execution of the new five-year plan, and with the return of significant spending on real estate construction in medium-sized cities, characterizing a new cycle of investments.

In Brazil, the obtainment of several primary fiscal surpluses and the austerity in monetary policy contributed to promote a more stable environment, favoring economic growth. Besides that, higher exports and the good liquidity in the global financial markets contributed to generate significant improvement in the balance of payments, reducing its vulnerability. Consequently, a better performance of the economy is expected for 2006.

The world’s industrial production indicators point to a solid and more balanced expansion in the coming quarters. In particular, the performance of orders and the relation between this variable and inventories are behaving in a very stable manner.

Thus the global scenario provides grounds for continuation of strong demand for mining and metals.

Reasonably large imbalances persist between global demand and supply for iron ore and alumina which, in spite of the additional capacity being put into operation in the coming months and the projects currently in progress, are not likely to be eliminated in the short-term.

4Q05

US GAAP

It is estimated that the seaborne iron ore market reached 675 million tons in 2005, with China importing 275 million tons, representing an increase of 32% over 2004. In January 2006 China’s seasonally adjusted imports were another all time record, which demonstrates continuity of the demand pressure in the iron ore market.

In one more production record, CVRD produced 233.9 million tons of iron ore in 2005, 100 million tons more than in 2001. In 2006 the Company expects to increase its iron ore production to 264 million tons, to meet expansion in demand from its clients.

The spot iron ore market continues to be highly active and with prices higher than those for long-term contracts, reflecting the global excess of demand. Purchasers in this market have to face difficulties such as lower quality, price volatility and uncertain shipment frequencies, which harm their competitiveness and make their cash flows unstable.

The growth of the global fleet of capesize vessels, and the expansion of capacity of ports in countries such as Brazil, Australia and China, have caused a decline in the prices of freight in the spot market. This reduction, which – comparing the April 2005 peak with today’s prices – is as much as US$ 15 per ton for the Brazil-China route, results in an important fall in the cost of iron ore for the steelmakers who contract maritime freight in this market.

In the alumina spot market, prices are now over US$ 600/ton, about 25% of the prices quoted for aluminum on the London Metal Exchange, reflecting increase in global scarcity. Stage 4 of Alunorte, CVRD’s alumina refinery, started up at the end of January this year, and Stage 5 will begin operating in March, thus adding 1.9 million tons/year to present capacity. In 2005, CVRD produced 2.6 million tons.

Simultaneously to the expansion of demand there are several types of limitations – much higher costs and supply restrictions of equipment and engineering services, greater relative scarcity of mineral reserves of good quality and substantial size, the need for logistics infrastructure, and the delay in obtaining environmental licenses – all these raise difficulties and a more lagged response of supply to increases in prices of ores and metals.

Systematic operation at full capacity increases the probability of production downtime. Given the restrictions on the supply of replacement parts and inventories at a historically low level, the impact of production problems on prices tends to be magnified. This has been important, for example, in the copper market, imposing an upward bias on prices.

Particularly for metals, the growing flow of financial resources into investment funds in commodities, resulting from the allocation of part of the pension funds money to this class of assets, has now begun to constitute a new source of demand, pressuring prices.

Influenced by profound cuts in global production in the second half of 2005, the manganese alloys prices are now recovering slightly, especially high carbon manganese ferro alloys (FeHcMn), in which we saw relatively higher cuts in production between 2004 and 2005. CVRD has kept about one-third of its alloys production capacity idle.

The Brazilian agricultural crop is forecast to be 9.3% larger this year than last year, when it was harmed by drought in the southern region of the country. This reversal will have a positive impact on the performance of CVRD’s sales of potash and logistics services.

4Q05

US GAAP


		RELEVANT EVENTS

•

Absorption of the shares of Caemi

On January 26, 2006, the Board of Directors of CVRD approved the merger of all the preferred shares of Caemi Mineração e Metalurgia S.A. (Caemi) outstanding into CVRD. Non-controlling shareholders of Caemi will receive 0.04115 preferred PNA shares issued by CVRD for each preferred share they hold in Caemi. The exchange ratio reflects the performance of the prices of the preferred shares of CVRD and Caemi on the São Paulo Stock Exchange (Bovespa) during the 90 days period ending on January 23, 2006.

The necessary steps for carrying out the merger are being taken, and expected to be concluded at the end of March.

CVRD is owner of 100% of the common shares and 40.06% of the preferred shares of Caemi, or 60.23% of its total capital. After the conclusion of the transaction CVRD will own all the shares of Caemi.

With the merger, CVRD’s shareholders will benefit from full exposure to the assets of Caemi and from the advantages of the synergies between the two companies. The shareholders of Caemi will start to enjoy these synergies, and the benefits arising from CVRD’s high potential for profitable growth, a highly diversified portfolio of world-class assets, a very well-structured dividend policy, and shares with voting right and abundant liquidity on the Bovespa and on the New York Stock Exchange.

•

Maintaining the focus on organic growth

On January 26, 2006 CVRD’s Board of Directors approved a capital expenditure budget in the amount of US$ 4.626 billion, the highest in its history. In 2006, US$ 3.558 billion will be invested in organic growth, made up of US$ 3.067 billion in greenfield and brownfield projects, and US$ 491 million in research and development. The remaining US$ 1.068 billion will be allocated to stay in business expenditures.

The ferrous minerals business will receive 46% of the total capital expenditure; 17% will be allocated to the aluminum business, 17% to the logistics services area, and 9% to non-ferrous minerals.

More details can be obtained on www.cvrd.com.br, Investor Relations section, under press releases.

•

Minimum dividend for 2006 of US$ 1.3 billion

The Executive Board of CVRD will submit to the Board of Directors a proposal for payment of minimum dividend to shareholders of US$ 1.3 billion in 2006. Taking into account the issue of new CVRD preferred (PNA) shares to be carried out upon completion of the merger of the shares of Caemi, if this is approved by the Company’s shareholders, the dividend per outstanding share, common or preferred, will be US$ 1.069367781.

•

Issue and repurchase of debt securities

In January 2006 CVRD issued US$ 1 billion in 10-year bonds with 6.25% annual coupon and yield to investors of 6.254% per year (CVRD 2016). The spread over US treasuries with similar maturity was 190 basis points (bp), contrasting with the

4Q05

US GAAP

spread of 288 bp on the issue of CVRD 2013, with 10-year tenor and coupon of 9.0% per year, in August 2003.

The CVRD 2016 bond received rating BBB from Standard & Poor’s and Baa3 from Moody’s.

In parallel to this issue, CVRD repurchased approximately US$ 176 million of the principal of the CVRD 2013.

The basis of these transactions was the focus of CVRD’s financial policy on minimization of cost of capital.

•

Conclusion of the acquisition of Canico

In the last quarter of 2005 CVRD acquired 99.2% of Canico Resources Corp., for approximately US$ 800 million. In February 2006 the acquisition of all the shares of Canico was completed, and they were withdrawn from trading on the Toronto Stock Exchange.

Canico was the owner of the Onça Puma laterite nickel project in the Brazilian state of Pará, which will be developed by CVRD, simultaneously with the Vermelho nickel project.

•

Ceará Steel project

In December 2005 CVRD announced that it will have a 9% stake in Ceará Steel, a steel project in the state of Ceará, Brazil, whose nominal capacity will be 1.5 million tons per year of steel slabs.

CVRD’s investment will be US$ 25 million, and the project has start-up planned for 2009. CVRD will supply 2.5 million tons of pellets annually to Ceará Steel, which will use it as raw material for 100% of the mill’s needs.

The investment in the Ceará Steel project is part of CVRD’s strategy of promoting the consumption of iron ore through minority stakes in steel projects located in Brazil.

•

First shipment of coal

In January the first shipment of Yongcheng anthracite coal, of 40,000 tons, arrived in Brazil from Henan Longyu Energy Resources Co. Ltd., joint venture between CVRD and Chinese companies, located in China.

This event is an important milestone in CVRD’s strategy to become a player in the global coal market.

•

Sale of stake in Nova Era Silicon

In February, CVRD sold its entire stake in Nova Era Silicon (NES), 49% of the total capital, to JFE Steel Corporation, for US$ 14 million.

This divestment is consistent with CVRD’s strategic guideline for the manganese business, of focusing on manganese ore and manganese ferro alloys production through wholly owned subsidiaries.

•

Sale of stake in the Foz do Chapecó hydroelectric power plant

4Q05

US GAAP

Also in February, CVRD sold its 40% stake in the consortium formed to build and operate the Foz do Chapecó hydroelectric power plant for R$ 9 million.


		A NEW PLATEAU OF REVENUES

CVRD’s gross revenue in 2005 was US$ 13.405 billion, an increase of 58.1% over 2004, when gross revenue was US$ 8.479 billion, and 141.7% greater than in 2003, when it was US$ 5.545 billion. The 2005 figure not only is a new record, but indicates a change in the overall scale of the Company, with its revenue exceeding the US$ 10 billion mark for the first time.

The increase of US$ 4.926 billion in 2005 in relation to the previous year was mainly due to the evolution of the metals and mining cycle, with price variations responsible for 81% of the increase.

Gross revenue for 4Q05, also a quarterly record, was US$ 3.746 billion, 54.3% more than in 4Q04.

In 2005 ferrous minerals provided 75.0% of gross revenue, products of the aluminum chain – bauxite, alumina and primary aluminum – 10.5%, logistics services 9.1%, and non-ferrous minerals 5.3%.

Revenues from sales to China more than doubled in 2005, from US$ 996 million in 2004 to US$ 2.016 billion. However, CVRD continues to have good geographical diversification of its sales.

The Americas were the primary destination of CVRD’s sales in 2005, with 36.5% of total revenue. The Brazilian market was responsible for 26.6% of total revenue, and the US 3.1%. Asia, which in 2005 for the first time produced more steel than all the other regions of the world, followed absorbing 29.2% of CVRD sales, overtaking Europe, now with 28.4%.

If we include sales form the Tubarão palletizing joint ventures, which are not consolidated under US GAAP, the share of Americas in total CVRD revenue decreases to 31.4%, with Brazil having a 21.1% share.

GROSS REVENUE BY DESTINATION


US$ million
	4Q04		3Q05		4Q05		2004		%		2005		%

Americas		997		1,294		1,252		3,352		39.5		4,898		36.5
Brazil		678		1,006		894		2,367		27.9		3,565		26.6
USA		134		85		115		389		4.6		417		3.1
Others		185		203		243		596		7.0		916		6.8
Asia		699		1,093		1,282		2,189		25.8		3,917		29.2
China		345		568		738		996		11.7		2,016		15.0
Japan		220		342		349		788		9.3		1,231		9.2
Others		134		183		195		405		4.8		670		5.0
Europe		625		1,015		996		2,552		30.1		3,813		28.4
Rest of the World		107		208		216		386		4.6		777		5.8
Total		2,428		3,610		3,746		8,479		100.0		13,405		100.0

4Q05

US GAAP


		COST PRESSURES AND THE EFFORTS TO OVERCOME THEM

Cost of goods sold (COGS) totaled US$ 6.229 billion in 2005, 52.6% more than in 2004. COGS in 4Q05 was US$ 1.829 billion, US$ 621 million, or 51.4% more than in 4Q04.

CVRD, like the other mining and metals companies, is suffering generalized cost pressures derived from the economic cycle, represented by increases in prices of equipment, replacement parts, steel, energy, raw materials and services. The strong appreciation of the Real against the US dollar has increased the scale of these pressures, since approximately 70% of the company’s costs are denominated in Brazilian currency.

The increase in prices of products and services was responsible for 55.7% of the growth in COGS in 2005, while volatility of the exchange rate was responsible for 29.6%, and the higher level of production, 14.7%.

Outsourced services, the main item in COGS, representing 23.8% of it and an increment of US$ 670 million in 2005, contributing for 31.2% of the increase in costs. Changes in the exchange rate and expansion of sales volume respectively contributed US$ 195 million and US$ 124 million to the increase in COGS, respectively. There were also increases of US$ 72 million in expenses on waste removal in the mines, US$ 57 million in rail freight expenses and US$ 43 million in maintenance services – all reflecting the higher prices of contracted services.

In the comparison between 4Q05 and 4Q04, outsourced services added US$ 257 million to the increment of COGS.

In 2005 materials costs increased by US$ 462 million, accounting for 21.5% of the growth in COGS. This increase was influenced by higher prices of replacement parts, such as conveyor belts and tires. In 4Q05 this item totaled US$ 305 million, 50.2% more than in 4Q04.

Expenses on energy totaled US$ 1.086 billion in 2005, or 17.4% of COGS. This was an increase of US$ 325 million compared to 2004, accounting for 15.1% of the enlargement of COGS in 2005. The growth of this item reflected expansion of the Company’s activities and the increases in prices of fuel and electricity.

CVRD’s consumption of electricity grew by 5.3% in 2005, to 17.619 GWh, of which 38% was spent in the production of aluminum and 8.9% on the ferro-alloys operation.

Expenses on electricity in the aluminum smelter Albras, which for technological reasons is CVRD’s most electricity consumption intensive operational unit, increased by 41% from 2004. Higher prices of electricity were responsible for 91% of this increment. The increase of consumption as a result of higher output – from 435,000 tons in 2004 to 446,000 tons – added the remaining 9%.

The average price of fuel oil for CVRD were 21.2% higher yoy, leading to additional expenses on fuels and gases of US$ 184 million.

In 4Q05 the cost of energy was US$ 321 million, 31.6% more than in 4Q04.

Higher prices of iron ore and pellets had an important impact on COGS, since expenditures on acquisition of these products increased by US$ 287 million, 60.5%, in the year. This variation represented 13.4% of the growth in COGS in 2005.

4Q05

US GAAP

The volume of iron ore that CVRD bought from other mining companies was 16.430 million tons, 3.1% more than in 2004. The company also bought, for resale to its clients, 9.655 million tons of pellets from the Tubarão joint ventures (Nibrasco, Itabrasco, Kobrasco and Hispanobras), compared to 9.347 million in 2004.

In 4Q05, the total value of purchases of iron ore and pellets was US$ 215 million, 72.0% more than in 4Q04.

Due to the increase in the value of the Company’s asset base and the appreciation of the Real against the US dollar, the cost of depreciation and amortization grew by US$ 199 million, 53.1%, from 2004, contributing 9.3% to the increase in COGS. Over the period 2002 to 2005, in which US$ 8.9 billion was invested, the Real strengthened by 50.9% against the US dollar, increasing the value of CVRD’s fixed assets from US$ 3.3 billion to US$ 14.1 billion at the end of 2005. As a result, depreciation changed from US$ 205 million in 2002 to US$ 375 million in 2004, and US$ 574 million in 2005.

Personnel expenses, at US$ 514 million in the year, or 8.3% of COGS, were US$ 128 million higher than in the previous year, and responsible for 6.0% of the total increase in costs. The annual raise of 6.5% in employees’ salaries, valid for the period July 2005-June 2006, together with the appreciation of the Real, generated a significant part of this growth.

In 4Q05 personnel expenses totaled US$ 160 million, 48.1% more than in 4Q04.

Sales, general and administrative expenses (SG&A), at US$ 583 million in 2005, were US$ 131 million, 29.0% higher than 2004. This was the result of increases in personnel administrative expenses (US$ 48 million), maintenance expenses (US$ 35 million) and depreciation (US$ 20 million).

SG&A in 4Q05 was US$ 175 million, 31.6% higher than in 4Q04.

Research and development (R&D) expenses reached a record US$ 277 million in 2005², compared to US$ 153 million in 2004 and US$ 82 million in 2003. This increase is derived from execution of the strategy of focus on organic growth, which necessarily means expansion of investments in mineral exploration and feasibility studies on development of mineral deposits in several countries.

The investments in R&D are essential for sustaining the Company’s profitable growth in the long term. In the context of a global and multicommodity program, these investments have been carried out in 11 countries, in all the continents, and through a diversified portfolio of minerals: coal, copper, nickel, manganese, potash, phosphate, bauxite and iron ore.

CVRD has undertaken a number of initiatives for reducing operational costs and capital expenditures combined with the obtaining of efficiency gains.

In energy, CVRD has stakes in five hydroelectric power plants that are in operation, and the take from these — 1,278 GWh in 2005 — makes a reduction in its costs possible. In 2005 the economy reached via energy self production as opposed to acquiring energy through long term contracts is estimated at US$ 45 million. Purchases of electricity have been made in auctions, obtaining in 2005 prices per MWh in average US$ 12 lower than those on long-term contracts. Such alternatives clearly has limitations, but contributes to reduction of the average cost of this input.


²		The amount stated for capex on research and development in 2005 in CVRD’s January 26, 2006 press release on its capex program was US$ 290 million. This amount refers to the actual cash disbursements in 2006.

4Q05

US GAAP

In the refining of bauxite into alumina, a cogeneration plant of gas and steam will start operating this year, directly reducing the cost of alumina production by US$ 27 million from 2007 onwards through reduction of energy consumption.

Further, several studies are under way aiming to restructure the energy matrix and adopt energy conservation measures to minimize costs.

Expenses on demurrage – the penalty payments paid for delay in loading of ships at the Company’s port terminals – were US$ 21 million in 4Q05, and US$ 76 million in the whole of 2005, respectively 51.2% and 8.4% lower than in 4Q04 and the whole of 2004, in spite of the growth in volume of shipments.

The procedures put in place to optimize the logistics of iron ore shipment loading have begun to show their first positive effects. For example, in December CVRD achieved dispatch, a premium for loading of vessels before the agreed deadline, at the Ponta da Madeira port terminal.

Demurrage costs are tending to a level considerably lower than those of the last two years. For 2006 we expect demurrage costs per ton shipped in the Company’s maritime terminal to be US$ 0.22, what will represent last than half of the penalties paid in 2004, of US$ 0.45 per ton.

Our excellence programs, which include maintenance, mine operation and execution of capital expenditure projects, will also result in reduction of costs and productivity gains over the coming years.

COST OF GOODS SOLD – BREAKDOWN


US$ million
	4Q04		3Q05		4Q05		2004		%		2005		%

Personnel		108		139		160		386		9.5		514		8.3
Material		203		310		305		664		16.3		1,126		18.1
Fuels		128		164		188		446		10.9		630		10.1
Electric energy		116		109		133		315		7.7		456		7.3
Outsourced services		217		377		474		813		19.9		1,483		23.8
Acquisition of iron ore and pellets		125		216		215		474		11.6		761		12.2
Acquisition of other products		98		83		82		355		8.7		332		5.3
Depreciation and exhaustion		100		161		164		375		9.2		574		9.2
Others		113		86		108		253		6.2		353		5.7
Total		1,208		1,645		1,829		4,081		100.0		6,229		100.0


		OPERATIONAL PERFORMANCE IS A RECORD

CVRD’s operational profit, measured by adjusted EBIT, was US$ 5.432 billion in 2005, the highest in the Company’s history. Adjusted EBIT was 73.9% higher than in 2004, led by the US$ 4.726 billion increase in net revenue, partially offset by the US$ 2.148 billion increase in COGS.

Adjusted EBIT in 4Q05 was US$ 1.461 billion, almost double of that of 4Q04, US$ 822 million.

Adjusted EBIT margin was 42.5%, another record, 380 bp more than in the previous year.

In 4Q05 adjusted EBIT margin was 40.6%, 510 bp above that of 4Q04, and 400 bp higher than the average for the last 16 quarters.

4Q05

US GAAP


		NEW CASH FLOW RECORD: US$ 6.5 BILLION

CVRD’s cash flow generation in 2005, measured by adjusted EBITDA, at US$ 6.540 billion, was a new record, 75.7% higher than the adjusted EBITDA of US$ 3.722 billion in 2004, and 3.7 times the 2002 adjusted EBITDA of US$ 1.780 billion. This evolution provides a clear view of the change in the dimension of the Company’s activities.

4Q05 was the fifteenth consecutive quarter of growth in last-12-months (LTM) adjusted EBITDA, 13.5% higher than the LTM adjusted EBITDA of 3Q05.

The main factors in the US$ 2.818 billion increase in adjusted EBITDA in 2005 are US$ 2.309 billion growth in adjusted EBIT, US$ 220 million increase in depreciation and US$ 289 million increase in dividends paid by non-consolidated companies.

Dividends received in 2005 totaled US$ 489 million, compared to US$ 200 million in the previous year. The highest payment came from Samarco, which distributed US$ 225 million to CVRD, vs. US$ 100 million in 2004. The Company also received the following dividends: US$ 62 million from Usiminas; US$ 58 million from MRN; US$ 51 million from GIIC; US$ 28 million from CSI; US$ 20 million from Hispanobras; US$ 16 million from Nibrasco; US$ 10 million from Itabrasco; US$ 8 million from Valesul, and US$ 11 million from MRS.

In 2005 the business areas made the following contributions to cash flow: ferrous minerals 84.1%, aluminum 8.4%, logistics 6.3%, and non-ferrous minerals 3.1%. R&D expenditure, not allocated to the business areas, reduced adjusted EBITDA by US$ 277 million.

QUARTERLY ADJUSTED EBITDA


US$ million
	4Q04			3Q05			4Q05			2004			2005

Net operating revenues		2,317			3,445			3,598			8,066			12,792
COGS		(1,208	)		(1,645	)		(1,829	)		(4,081	)		(6,229	)
SG&A		(133	)		(160	)		(175	)		(452	)		(583	)
Research and development		(67	)		(104	)		(85	)		(153	)		(277	)
Other operational expenses		(87	)		(131	)		(48	)		(257	)		(271	)
Adjusted EBIT		822			1,405			1,461			3,123			5,432

Depreciation, amortization & exhaustion		119			171			183			399			619
Dividends received		60			158			136			200			489

Adjusted EBITDA		1,001			1,734			1,780			3,722			6,540


		FINANCIAL RESULT

CVRD posted net financial expenses of US$ 138 million in 2005, an improvement of US$ 386 million from 2004.

The change resulted from favorable movements in the three components of this account: financial revenues, financial expenses and monetary variations.

Financial revenue increased from US$ 82 million in 2004 to US$ 123 million in 2005, reflecting higher interest rates and higher annual average cash balance.

Financial expenses decreased by US$ 111 million, down from US$ 671 million in 2004 to US$ 560 million in 2005. The main driver for this decline was lower

4Q05

US GAAP

average debt, reduced from US$ 4.372 billion in 2004 to US$ 4.095 billion in 2005, reducing interest expenses by US$ 57 million, and the reduction in losses on derivatives hedging against volatility of aluminum prices, of US$ 23 million.

Monetary variations contributed for an improvement in the financial result, adding US$ 234 million, due to the 20.2% appreciation of the Real against the US dollar from 2004 to 2005.

Comparing 4Q05 with 4Q04, there was a negative variation of US$ 394 million, from revenue of US$ 58 million in 4Q04 to expense of US$ 336 million in 4Q05.

Monetary variations had a negative effect of US$ 441 million on the result, since the Real was in fact weaker in the end of the 4Q05 than in the end of 4Q04. A US$ 57 million reduction in financial expenses compensated the decline of financial revenues by US$ 10 million.


		EQUITY INCOME

Equity income from subsidiaries totaled US$ 760 million, 40.2% or US$ 218 million higher than in 2004.

In 4Q05 equity income was US$ 213 million, vs. US$ 79 million in 4Q04.

Of total equity income in 2005, companies in the ferrous minerals business contributed with 57.2%, steel companies 25.9%, companies in the aluminum production chain 8.5%, and logistics operations 7.1%.

Among the pelletizing joint ventures, Samarco considerably increased its contribution, from US$ 117 million in 2004 to US$ 257 million in 2005. The total of equity income from the investments in these companies – Nibrasco, Hispanobras, Kobrasco, Itabrasco, GIIC and Samarco – was US$ 438 million, 155% more than in 2004.

Equity income from the aluminum business declined to US$ 65 million in 2005 from US$ 71 million in 2004. While the contribution of MRN increased from US$ 57 million to US$ 64 million, that of Valesul fell from US$ 14 million to US$ 1 million, reflecting the strong negative impact of the growth of electricity cost.

CVRD’s investment in Henan Longyu Energy Resources Ltd., the Chinese producer of anthracite coal, produced equity income of US$ 9 million in 2005.

The investments in logistics companies returned US$ 54 million in 2005, vs. US$ 33 million in 2004.

Equity income from holdings in the steel industry was US$ 197 million in 2005, vs. US$ 271 million in 2004.

RESULT FROM SHAREHOLDINGS


R$ million
	4Q04			3Q05		4Q05		2004			%			2005		%

Iron Ore and Pellets		55			127		128		170			31.4			435		57.2
Aluminum, Alumina and Bauxite		19			15		14		71			13.1			65		8.6
Logistics		11			17		15		33			6.1			54		7.1
Steel		95			35		47		271			50.0			197		25.9
Coal		—			—		9		—			0.0			9		1.2
Others		(1	)		—		—		(3	)		(0.6	)		—		0.0
Total		179			194		213		542			100.0			760		100.0

4Q05

US GAAP


		RECORD NET EARNINGS: US$ 4.8 BILLION

CVRD’s 2005 net earnings, of US$ 4.841 billion, was 88.1% higher than the 2004 net earnings of US$ 2.573 billion.

As well as its scale – this is the largest net earnings in CVRD’s history – the highly positive qualitative aspect of this result should also be emphasized: CVRD is simultaneously investing record amounts in its own growth, laying down the basis for future profitability.

Main components of the net earnings figure were: (a) an increase of US$ 2.309 billion in operational profit; (b) an improvement of US$ 386 million in financial result; and (c) an increase of US$ 218 million in equity income.

Gains on sales of assets were US$ 278 million lower in the year. In 2004, the divestment of CST contributed US$ 404 million to profit, while in 2005 QCM was sold for US$ 126 million.

The 4Q05 net earnings of US$ 1.196 billion suffered the effect of a perverse combination of oscillations of the BRL/USD exchange rate. The Real was 5% weaker at the end of 4Q05 than at the end of 3Q05, resulting in the accounting of negative monetary variations. On the other hand, on the basis of the average exchange rates in the two quarters, the Real was 4.1% stronger against the dollar, also reducing profit in 4Q05 – in this case, through higher costs.


		CONCILIATING CAPEX, DIVIDENDS AND FINANCIAL STRENGTH

One of the greatest challenges for a company that is growing is to conciliate financing of capital expenditure, distribution of dividends and maintenance of a level of financial health that will ensure good risk perception by the capital markets.

CVRD’s strong cash generation has enabled it to finance its growth initiatives, allowing the projects to be assessed and approved in accordance with their merit. At the same time, it has been possible to make a good distribution of dividends to shareholders. In the last five years investments and dividends paid totaled approximately US$ 15 billion. Simultaneously there was a strengthening of the balance sheet.

Breaking paradigms, CVRD obtained the Investment Grade rating in 2005 from three of the most respected rating agencies in the world: Standard & Poor’s (BBB), Moody’s (Baa3) and Dominion (BBB low).

Leverage and interest coverage indicators improved considerably in 2005, evidencing CVRD’s financial strength.

Gross debt/adjusted EBITDA fell from 1.10x on December 31, 2004 to 0.77x on December 31, 2005. Total debt/enterprise value^d fell from 11.8% to 10.1%. Interest coverage, measured by adjusted EBITDA/interest paid^e, increased, from 12.41x at the end of 2004 to 25.95x at the end of 2005.

Total debt on December 31, 2005 was US$ 5.010 billion, an increase of US$ 922 million from the debt of US$ 4.088 billion at December 31, 2004.

4Q05

US GAAP

Net debt^f at the end of 2005 was US$ 3.969 billion, with a cash position of US$ 1.041 billion. Besides its cash holding, CVRD has the potential for additional liquidity provided by committed bank credit lines in the amount of US$ 750 million.

The average debt maturity on December 31, 2005 was 7.89 years, compared to 6.83 years at the end of 2004. 60% of the debt was at floating rates and 40% at fixed rates. Because prices of aluminum and copper both vary in the same direction as the Libor rate, there is a natural hedge against oscillations in floating interest rates.

The Company’s debt management policy aims to reduce its refinancing costs and risks. In this context, the development of liquid markets for its bonds and maintaining of a dynamic posture in relation to management of liabilities are very important.

In October 2005 CVRD again issued bonds, due in 2034 and 8.25% annual coupon, totaling US$ 300 million. This increased the amount maturing in that year to US$ 800 million, providing good liquidity conditions for investors, helping to increase the bonds’ attractiveness.

In January 2006 the CVRD 2016 bond was issued, with 10-year tenor, 6.250% annual coupon and yield to investors of 6.254% per year, for a total of US$ 1.0 billion, its cost already reflecting the improvement of risk perception expressed by the award of Investment Grade rating. Since its issuance, CVRD 2016 has risen in value, with the yield to maturity converging gradually towards 6.0%.

Over the period from 4Q04 to the beginning of 2006, CVRD repurchased debt with higher interest rates and lower duration in the amount of US$ 600 million. For example, more recently, and simultaneously with the issue of CVRD 2016, the Company bought US$ 176 million of the CVRD 2013 bond, with coupon of 9.000% per year.

FINANCIAL EXPENSES


US$ million
	4Q04			3Q05			4Q05			2004			2005

Financial expenses on:
Debt with third parties		(63	)		(69	)		(32	)		(259	)		(206	)
Debt with related parties		—			2			(2	)		(10	)		(6	)
Total debt-related financial expenses		(63	)		(67	)		(34	)		(269	)		(212	)


	4Q04			3Q05			4Q05			2004			2005

Gross interest on:
Tax and labour contingencies		(11	)		(27	)		(12	)		(37	)		(62	)
Tax on financial transactions (CPMF)		(11	)		(15	)		(19	)		(38	)		(59	)
Derivatives		(67	)		(64	)		(113	)		(134	)		(116	)
Others		(106	)		(43	)		(23	)		(193	)		(111	)
Total gross interest		(195	)		(149	)		(167	)		(402	)		(348	)

Total		(258	)		(216	)		(201	)		(671	)		(560	)

DEBT INDICATORS


US$ million
	4Q04		3Q05		4Q05

Gross debt		4,088		3,942		5,010
Net debt		2,839		2,707		3,969
Gross debt / adjusted LTM EBITDA (x)		1.10		0.68		0.77
Adjusted LTM EBITDA / LTM interest expenses (x)		12.41		21.03		25.95
Gross debt / EV (x)		0.12		0.08		0.10

Enterprise Value = market capitalization + net debt

4Q05

US GAAP


		PERFORMANCE OF THE BUSINESS SEGMENTS

•

Ferrous minerals

The vigorous growth in global demand for iron ore and pellets and the expansion of CVRD’s production, resulting from the conclusion of projects and productivity gains, has enabled it to return successive record sales volumes. The volume of ferrous minerals shipped in 2005, at 255.171 million tons, was the highest in the Company’s history, and 10.4% more than in the previous year.

CVRD’s 4Q05 sales of iron ore and pellets, 67.729 million tons, were a quarterly record.

2005 sales of iron ore totaled 226.679 million tons, and sales of pellets 28.492 million tons, respectively 11.4% and 3.6% more than in 2004.

CVRD’s purchases of iron ore from small mining companies operating in the “Iron Quadrilateral” in the state of Minas Gerais, to complement its own production and meet the growing demand from clients, increased by 3.2%, to 16.430 million tons in 2005. CVRD regularly buys pellets from its joint ventures at Tubarão to re-sell to clients, and this volume increased from 9.347 million tons in 2004 to 9.655 million in 2005.

In 2005 China bought 54.157 million tons of iron ore from CVRD, 21.2% of CVRD’s total sales volume. This compares with 17.8% in 2004. Japan bought 24.814 million tons, 9.7% of total sales; Germany 24.164 million tons, 9.5%; France 4.4%, South Korea 3.9% and Italy 3.5%.

Sales to Brazilian producers of steel and pig iron totaled 36.023 million tons, 14.1% of total shipments. Sales to the pelletizing joint ventures of Tubarão were 21.576 million tons, 8.5% of the total, which after transformation into pellets are mainly sold to other countries.

The average sale price of iron ore in 2005, US$ 32.63 per ton, was 66.2% higher than in 2004. For pellets the average price was US$ 70.79 per ton, 77.8% higher than in 2004.

Note that as a general rule, price increases take effect in January only for Western clients. For the Asian market, price renewal follows the Japanese fiscal year, running from April through March of the following year.

Total shipments in 4Q05 were a quarterly record, at 67.729 million tons, made up of 59.190 million tons of iron ore and 8.579 million ton of pellets. The volume of pellets sold in 4Q05 was 34.4% higher than in 3Q05, when, due to factors associated with Hurricane Katrina and the reprogramming of shipments, only 6.381 million tons were shipped.

In 4Q05 the average sale price of iron ore, US$ 35.08 was 69.6% higher than in 4Q04. In pellets, the average price in 4Q05 was US$ 72.62, 79.0% higher than in 4Q04.

In contrast with the other mineral products, there was an excess of supply in the manganese alloys market, due to producers’ over response to the stimulus given by price increases, which resulted in growth of 18.6% in production in 2004. As a result there was a reduction in the price of alloys in 2005, beginning in the last quarter, and production cuts, starting in the second quarter. Manganese ore, mainly

4Q05

US GAAP

used in producing alloys, suffered the negative effect of the price movements after a lag of approximately six months.

CVRD’s shipments of manganese ore totaled 907,000 tons in 2005, 9.5% less than in 2004, for average sale price of US$ 84.90, still 11.9% higher than in 2004.

In the last quarter of 2005, 244,000 tons were sold 24.5% less than in 4Q04, which posted a quarterly sales record of 323,000 tons. At the end of 2004 the demand for manganese benefited from the strong expansion of production of alloys.

The average price of manganese ore in 4Q05, US$ 73.77 per ton, was in line with that of 3Q05, but 33.8% lower than in 4Q04, US$ 111.46 per ton.

Sales of ferro-alloys totaled 529,000 tons in 2005, 14.1% less than in 2004, and average price, at US$ 846.88, was 11.5% less than in 2004, but 54.6% more than in 2003.

Sales in 4Q05, at 119,000 tons, were 4.0% lower than in 4Q04 by volume.

After three quarters of declining prices, the average price of ferro-alloys computed by CVRD in 4Q05 recovered, to US$ 731.09, or 18.2% more than 3Q05. This reflected the improvement in market prices, caused by the reduction in global output – of 7% in 3Q05 and 8.2% in 4Q05 – and the change in the mix of products sold, with more FeMcMn and FeSiMn, alloys for which prices are higher than FeHcMn.

Revenues from ferrous minerals – iron ore, pellets, manganese and ferro-alloys – in 2005 totaled US$ 10.050 billion, 72.0% more than in 2004, when they were US$ 5,844 billion. Price increases accounted for 81.0% of the increase in revenue, and the increment in quantity shipped accounted for the remaining 19%.

Sales revenue from iron ore was US$ 7.396 billion, revenue from pellets US$ 2.017 billion, from operation of the Tubarão pelletizing plants US$ 66 million, from manganese ore US$ 77 million and ferro-alloys US$ 448 million.

Adjusted EBIT margin was 49.7%, 740 bp more than the 42.3% adjusted EBIT margin of 2004.

2005 adjusted EBITDA was US$ 5.497 billion, 107.9% more than in 2004.

FERROUS MINERALS


	4Q04			3Q05			4Q05			2004			2005

Adjusted EBIT margin (%)		40.5	%		50.7	%		48.0	%		42.3	%		49.7	%
Adjusted EBITDA (US$ million)		738			1,541			1,595			2,644			5,497

•

Aluminum

The strong growth in Chinese consumption of alumina, resulting in imports of 7 million tons in 2005, helped to increase the mismatch between global supply and demand, keeping spot prices high. The prices of primary aluminum, which have not accompanied with the same intensity the rise in metal prices, varied widely during the year, falling to US$ 1,700 per ton in July, but finally reaching their highest level in the last 16 years, in December, at around US$ 2,300 per ton.

CVRD sold 1.904 million tons of bauxite in 2005, 8.3% less than in 2004, with average sale price of US$ 28.36 per ton, 11.1% more than in 2004.

4Q05 shipments totaled 700,000 tons, with average price of US$ 30.00 per ton.

4Q05

US GAAP

The volume of alumina sold in 2005 was 1.828 million tons, 2.2% more than the 1.788 million tons sold in 2004. Average price, of US$ 290.48/ton, was 13.4% higher than in 2004, US$ 256.15 per ton.

Since the greater part of CVRD’s sales are associated to long-term contracts, the increase of market prices is not entirely reflected in its average realizaed prices. However, as new contracts are signed, the higher alumina price levels are transmitted to its pricing in the form of higher percentages of the LME aluminum price.

Sales of primary aluminum, of 447,000 tons in 2005, were a record, 17,000 tons more than the previous record of 2004. This achievement was possible due to operational improvements made at the Barcarena plant which enabled the increase in production capacity.

CVRD’s average sale price for aluminum in 2005, US$ 1,841.16/ton, was 9.2% higher than in 2004.

Revenue from sales of bauxite, alumina and aluminum in 2005 totaled US$ 1.408 billion vs. US$ 1.250 billion in 2004.

In spite of the increase in net revenue, the increase in operational costs and depreciation caused a reduction in adjusted EBIT margin, from 41.7% in 2004 to 31.7%. The appreciation of the Real against the US dollar and the increase in prices of electricity, caustic soda, coke and calcining oil all worked against the profitability of the operations in the aluminum production chain.

2005 adjusted EBITDA was US$ 551 million, US$ 55 million less than in the previous year.

ALUMINUM


	4Q04			3Q05			4Q05			2004			2005

Adjusted EBIT margin (%)		35.3	%		25.3	%		30.7	%		41.6	%		31.7	%
Adjusted EBITDA (US$ million)		149			111			122			606			551

•

Non-ferrous minerals

The rate of growth in global demand for potash decreased in the second half of 2005, reflecting reduction of consumption in some countries of Asia and in Brazil, due to problems with farm crops. A strong recovery in the harvest is expected in Brazil in 2006, especially of soy, which should reactivate expansion of demand for CVRD’s product.

Conclusion of the project to expand capacity of production at the Taquari-Vassouras mine to 850,000 tons will enable sales to be increased in 2006.

CVRD’s sales of potash in 2005 totaled 640,000 tons, an annual record, 1.6% more than in 2004.

The average selling price was US$ 232.81 per ton, 18.3% more than in 2004, and US$ 232.95 per ton in 4Q05, 9.82% more than in 4Q04.

In 4Q05 CVRD sold 176,000 tons of potash, 6.7% more than in 4Q04, with an average price of US$ 232.95 per ton.

Revenue from potash in 2005 was US$ 149 million, 20.2% more than in 2004, US$ 124 million.

4Q05

US GAAP

The volume of kaolin sold in 2005, 1.218 million tons, was almost the same as in 2004, 1.208 million tons. The average price of kaolin was 7.0% higher, up from US$ 135.76 per ton in 2004, to US$ 145.32 per ton. As a result revenue increased to 7.9%, at US$ 177 million, in 2005.

In the first full year of operation of the Sossego mine, CVRD sold 398,000 tons of copper concentrate, for an average price of US$ 982 per ton, producing revenue of US$ 391 million in 2005.

The relatively small size of CVRD’s non-ferrous minerals operations creates a certain volatility in their operational results, due to the sensitivity to fluctuations in the prices of products and inputs, and in the BRL/USD exchange rate.

The increase in revenue, resulting from higher price levels and growth in volume of sales of copper concentrate, was fully offset by the increase in costs and depreciation, causing a reduction in the EBIT margin of the non-ferrous area, from 41.7% in 2004 to 23.7% in 2005.

Adjusted EBITDA of the non-ferrous minerals division was US$ 200 million, vs. US$ 176 million in 2004.

NON FERROUS MINERALS


	4Q04			3Q05			4Q05			2004			2005

Adjusted EBIT margin (%)		46.2	%		8.0	%		26.4	%		41.7	%		23.7	%
Adjusted EBITDA (US$ million)		107			36			79			176			200

•

Logistics

The CVRD railroads – Carajás, Vitória a Minas and Centro-Atlântica – transported 26.885 billion ntk of general cargo for clients in 2005, in line with 2004 leves of 26.734 billion ntk. The main cargos transported were inputs and products for the steel industry, 44.2%, agricultural products, mainly soy, sugar and fertilizers, 37.8%; and construction industry inputs and forest products, 8.0%.

The halt in the rapid growth of railroad transportation in recent years – averaging 8% per year over the period 2001 to 2004 – was the result of a 3.9% reduction in Brazilian steel output, the partial failure of the farm crop, and the new decision on the profile of cargo transported, with less haulage of petrochemicals. Even so, CVRD increased its share in the transport of soy for export from 16% to 18%, of fertilizers from 7% to 9%. The transportation of petrochemicals is being replaced by containers, including, for example, transport of electronics.

At the CVRD’s ports and maritime terminals were handled 30.681 million tons of general cargo, vs. 28.741 million in 2004. The ninth grain storage facility at the TPD (Sundry Products Terminal) in Tubarão, and the fourth silo in the Ponta da Madeira maritime terminal, started operating in 2005.

Logistics services generated revenue of US$ 1,216 billion in 2005, 38.7% more than in 2004.

Railroad haulage of general cargo produced revenue of US$ 881 million, 72.5% of the division’s total. Port services added US$ 204 million, and coastal shipping and port support services US$ 131 million.

Adjusted EBIT margin was 22.4%, slightly higher than the 21.9% obtained in 2004.

4Q05

US GAAP

2005 adjusted EBITDA was US$ 414 million in 2005, 21.1% more than the 2004 adjusted EBITDA of US$ 342 million.

LOGISTICS


	4Q04			3Q05			4Q05			2004			2005

Adjusted EBIT margin (%)		8.2	%		27.6	%		8.6	%		21.9	%		22.4	%
Adjusted EBITDA (US$ million)		68			114			80			342			414

VOLUME SOLD, PRICES AND REVENUES

VOLUME SOLD: IRON ORE AND PELLETS


thousands of tons
	4Q04		3Q05		4Q05		2004		%		2005		%

Iron ore		54,748		58,879		59,150		203,536		88.1		226,679		88.8
Pellets		7,076		6,381		8,579		27,507		11.9		28,492		11.2
Total		61,824		65,260		67,729		231,043		100.0		255,171		100.0

VOLUME SOLD: MINERALS AND METALS


thousands of tons
	4Q04		3Q05		4Q05		2004		2005

Manganese ore		323		271		244		1,002		907
Ferro-alloys		124		131		119		616		529
Alumina		462		507		441		1,788		1,828
Primary aluminum		113		112		116		430		447
Bauxite		514		368		700		2,076		1,904
Potash		165		197		176		630		640
Kaolin		311		280		355		1,208		1,218
Copper concentrates		139		96		112		269		398

IRON ORE AND PELLET SALES BY DESTINATION

thousands of tons

4Q04

3Q05

4Q05

2004

2005

18,356

18,884

16,856

69,558

30.1

73,159

28.7

Germany

7,022

6,124

5,758

24,512

10.6

24,164

9.5

France

2,806

2,977

3,034

11,364

4.9

11,285

4.4

Belgium

2,021

1,961

2,005

8,022

3.5

7,652

3.0

Italy

2,091

2,915

832

8,151

3.5

8,815

3.5

Others

4,416

4,907

5,227

17,509

7.6

21,243

8.3

China

12,673

14,301

17,252

41,045

17.8

54,157

21.2

Japan

2,515

6,330

6,542

20,773

9.0

24,814

9.7

South Korea

2,477

2,647

3,726

9,614

4.2

10,065

3.9

Middle East

2,155

2,244

2,030

7,073

3.1

7,651

3.0

USA

1,384

878

1,710

5,467

2.4

4,947

1.9

Brazil

14,371

14,749

14,243

55,676

24.1

57,599

22.6

Steel mills and pig iron producers

9,232

8,975

9,190

35,892

15.5

36,023

14.1

Pelletizing joint ventures

5,139

5,774

5,053

19,784

8.6

21,576

8.5

RoW

7,894

5,227

5,370

21,837

9.5

22,779

8.9

Total

61,824

65,260

67,729

231,043

100.0

255,171

100.0

LOGISTICS SERVICES – GENERAL CARGO


	4Q04		3Q05		4Q05		2004		2005

Railroads (million ntk)		6,306		7,789		5,999		26,734		26,885
Ports (thousand tons)		7,097		8,349		7,641		28,741		30,681

4Q05

US GAAP

AVERAGE PRICES REALIZED


US$/ton
	4Q04		3Q05		4Q05		2004		2005

Iron ore		20.69		35.07		35.08		19.63		32.63
Pellets		40.56		79.92		72.62		39.81		70.79
Manganese		111.46		73.80		73.77		75.85		84.90
Ferro alloys		1,346.77		618.32		731.09		956.49		846.88
Alumina		305.19		287.97		315.19		256.15		290.48
Aluminum		1,725.66		1,803.57		1,870.69		1,686.05		1,841.16
Bauxite		25.29		27.17		30.00		25.53		28.36
Potash		212.12		238.58		232.95		196.83		232.81
Kaolin		144.69		150.00		143.66		135.76		145.32
Copper concentrates		769.78		958.33		1,169.64		747.21		982.41

GROSS REVENUE BY PRODUCT


US$ million
	4Q04		3Q05		4Q05		2004		%		2005		%

Ferrous-minerals		1,647		2,706		2,832		5,844		68.9		10,050		75.0
Iron ore		1,133		2,065		2,075		3,995		47.1		7,396		55.2
Pellet plant operation services		14		19		21		53		0.6		66		0.5
Pellets		287		510		623		1,095		12.9		2,017		15.0
Manganese ore		36		20		18		76		0.9		77		0.6
Ferro-alloys		167		81		87		589		6.9		448		3.3
Others		10		11		8		36		0.4		46		0.3
Non ferrous minerals		187		181		223		489		5.8		717		5.3
Potash		35		47		41		124		1.5		149		1.1
Kaolin		45		42		51		164		1.9		177		1.3
Copper concentrates		107		92		131		201		2.4		391		2.9
Aluminum products		354		358		377		1,250		14.7		1,408		10.5
Primary aluminum		195		202		217		725		8.6		823		6.1
Alumina		141		146		139		458		5.4		531		4.0
Bauxite		13		10		21		53		0.6		54		0.4
Others		5		0		0		14		0.2		—		—
Logistics services		234		359		309		877		10.3		1,216		9.1
Railroads		162		267		223		613		7.2		881		6.6
Ports		43		60		50		151		2.0		204		1.5
Shipping		29		32		36		114		1.1		131		1.0
Others		6		6		5		19		0.2		14		0.1
Total		2,428		3,610		3,746		8,479		100.0		13,405		100.0

RENTABILIDADE E GERAÇÃO DE CAIXA

ADJUSTED EBIT MARGIN BY BUSINESS AREA


	4Q04			3Q05			4Q05			2004			2005

Ferrous minerals		40.5	%		50.7	%		48.0	%		42.3	%		49.7	%
Non ferrous minerals		46.2	%		8.0	%		26.4	%		41.7	%		23.7	%
Aluminum		35.3	%		25.3	%		30.7	%		41.6	%		31.7	%
Logistics		8.2	%		27.6	%		8.6	%		21.9	%		22.4	%
Total		35.5	%		40.8	%		40.6	%		38.7	%		42.5	%

4Q05

US GAAP

ADJUSTED EBITDA BY BUSINESS AREA


US$ million
	4Q04			3Q05			4Q05			2004			%		2005			%

Ferrous minerals		738			1,541			1,595			2,644			71.0		5,497			84.1
Non-ferrous minerals		107			36			79			176			4.7		200			3.1
Logistics		68			114			80			342			9.2		414			6.3
Aluminum		149			111			122			606			16.3		551			8.4
Others		(61	)		(68	)		(96	)		(46	)		-1.2		(122	)		-1.9
Total		1,001			1,734			1,780			3,722			100.0		6,540			100.0


		CONFERENCE CALL AND WEBCAST

CVRD will hold its conference call and webcast on Wednesday, March 08, at 12:00 pm Rio de Janeiro time, 10:00 am Eastern Standard Time and 3:00 pm UK time. Instructions for participation are on the website www.cvrd.com.br, Investor Relations section. A recording of the call and webcast will be available on the website for 90 days following March 08.


		SELECTED FINANCIAL INDICATORS FOR THE MAIN NON-CONSOLIDATED COMPANIES

Selected financial indicators for the principal non-consolidated companies are available in CVRD’s quarterly financial statements, on its website www.cvrd.com.br, in the Investor Relations section.

4Q05

US GAAP

FINANCIAL STATEMENTS


US$ million
	4Q04			3Q05			4Q05			2004			2005

Gross operating revenues		2,428			3,610			3,746			8,479			13,405
Taxes		(111	)		(165	)		(148	)		(413	)		(613	)
Net operating revenue		2,317			3,445			3,598			8,066			12,792
Cost of goods sold		(1,208	)		(1,645	)		(1,829	)		(4,081	)		(6,229	)
Gross profit		1,109			1,800			1,769			3,985			6,563
Gross margin (%)		47.9			52.2			49.2			49.4			51.3
Selling, general and administrative expenses		(133	)		(160	)		(175	)		(452	)		(583	)
Research and development expenses		(67	)		(104	)		(85	)		(153	)		(277	)
Employee profit-sharing		(22	)		(24	)		(32	)		(69	)		(97	)
Others		(65	)		(107	)		(16	)		(188	)		(174	)
Operating profit		822			1,405			1,461			3,123			5,432
Financial revenues		41			36			31			82			123
Financial expenses		(258	)		(216	)		(201	)		(671	)		(560	)
Monetary variation		275			163			(166	)		65			299
Gains on sale of affiliates		90			126			—			404			126
Tax and social contribution (Current)		(10	)		(172	)		(92	)		(433	)		(754	)
Tax and social contribution (Deferred)		(386	)		(102	)		36			(316	)		(126	)
Equity income and provision for losses		179			194			213			542			760
Minority shareholding participation		(32	)		(117	)		(86	)		(223	)		(459	)
Net earnings		721			1,317			1,196			2,573			4,841
Earnings per share		0.63			1.14			1.04			2.23			4.20

BALANCE SHEET


US$ million
	12/31/04		09/30/05		12/31/05

Assets
Current		3,890		5,006		4,775
Long-term		1,603		2,078		2,031
Fixed		10,222		15,019		15,838
Total		15,715		22,103		22,644
Liabilities
Current		2,455		2,964		3,325
Long term		5,869		6,934		7,342
Shareholders’ equity		7,391		12,205		11,977
Paid-up capital		3,707		6,366		6,366
Reserves		3,684		5,839		5,611
Total		15,715		22,103		22,644

4Q05

US GAAP

CASH FLOW STATEMENT


US$ million
	4Q04			3Q05			4Q05			2004			2005

Cash flows from operating activities:
Net income		721			1.317			1.196			2.573			4.841
Adjustments to reconcile net income with cash provided by operating activities:
Depreciation, depletion and amortization		119			171			183			399			619
Dividends received		60			158			136			200			489
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		(179	)		(194	)		(213	)		(542	)		(760	)
Deferred income taxes		386			102			(36	)		316			126
Provisions for contingencies		42			10			18			137			27
Impairment of property, plant and equipment		4			18			0			34			26
Gain on sale of investment		(90	)		(126	)		—			(404	)		(126	)
Foreign exchange and monetary losses		(106	)		(201	)		235			112			(237	)
Net unrealized derivative losses		66			65			126			134			101
Minority interest		32			117			86			223			459
Net interest payable		38			12			14			93			62
Others		(70	)		(15	)		(62	)		(123	)		(159	)
Decrease (increase) in assets:
Accounts receivable		57			281			(133	)		(98	)		(416	)
Inventories		(95	)		(44	)		(24	)		(216	)		(138	)
Others		(76	)		(441	)		63			(78	)		(639	)
Increase (decrease) in liabilities:
Suppliers		288			(21	)		113			230			279
Payroll and related charges		22			22			40			28			40
Income Tax		(22	)		396			(229	)		348			413
Others		(126	)		161			3			105			154
Net cash provided by operating activities		1.071			1.788			1.516			3.471			5.161
Cash flows from investing activities:
Loans and advances receivable		(14	)		26			63			36			88
Guarantees and deposits		(21	)		(32	)		(7	)		(111	)		(59	)
Additions to investments		(15	)		0			(12	)		(34	)		(103	)
Additions to property, plant and equipment		(877	)		(1.302	)		(1.237	)		(2.022	)		(3.977	)
Proceeds from disposals of investment		164			126			—			579			126
Proceeds from disposals of property, plant and equipment		7			1			12			11			16
Net cash used to acquire subsidiaries		—			0			(737	)		0			(737	)
Net cash used in investing activities		(756	)		(1.181	)		(1.918	)		(1.541	)		(4.646	)
Cash flows from financing activities:
Short-term debt, net issuances (repayments)		(100	)		(194	)		(129	)		(60	)		(86	)
Loans		(18	)		(17	)		3			(6	)		(33	)
Long-term debt		116			22			1.386			1.051			1.772
Repayments of long-term debt		(390	)		(156	)		(140	)		(1.286	)		(884	)
Interest attributed to stockholders		(518	)		0			(800	)		(787	)		(1.300	)
Net cash used in financing activities		(910	)		(345	)		320			(1.088	)		(531	)
Increase (decrease) in cash and cash equivalents		(595	)		262			(82	)		842			(16	)
Effect of exchange rate changes on cash and cash equivalents		(95	)		17			(112	)		(204	)		(192	)
Initial cash in new consolidated subsidiaries		0			0			—			26			0
Cash and cash equivalents, beginning of period		1.939			956			1.235			585			1.249
Cash and cash equivalents, end of period		1.249			1.235			1.041			1.249			1.041
Cash paid during the period for:
Interest on short-term debt		(3	)		(1	)		(8	)		(5	)		(9	)
Interest on long-term debt		(82	)		(71	)		(55	)		(295	)		(243	)
Income tax		(108	)		(202	)		(29	)		(108	)		(481	)
Non-cash transactions
Income tax paid with credits		0			(16	)		(65	)		(100	)		(161	)
Interest capitalized		(9	)		(10	)		(52	)		(31	)		(86	)

4Q05

US GAAP


		APPENDIX

Reconciliation of “non-GAAP” information with corresponding US GAAP figures

(a) Adjusted EBIT


US$ million
	4Q04			3Q05			4Q05			2004			2005

Net operating revenues		2,317			3,445			3,598			8,066			12,792
COGS		(1,208	)		(1,645	)		(1,829	)		(4,081	)		(6,229	)
SG&A		(133	)		(160	)		(175	)		(452	)		(583	)
Research & development		(67	)		(104	)		(85	)		(153	)		(277	)
Other operating expenses		(87	)		(131	)		(48	)		(257	)		(271	)
Adjusted EBIT		822			1,405			1,461			3,123			5,432

(b) Adjusted EBITDA

The term “EBITDA” refers to a financial measure that is defined as earnings (losses) before interest, taxes, depreciation and amortisation; we use the term “Adjusted EBITDA” to reflect that our financial measure also excludes monetary gains/losses, equity in results of affiliates and joint ventures less dividends received from those companies, changes in provision for losses on equity investments, adjustments for changes in accounting practices, minority interests and non-recurring expenses. However, Adjusted EBITDA is not a measure determined under GAAP in the United States of America and may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA should not be construed as a substitute for operating income or as a better measure of liquidity than cash flow from operating activities, which are determined in accordance with GAAP. We have presented Adjusted EBITDA to provide additional information with respect to our ability to meet future debt service, capital expenditure and working capital requirements. The following schedule reconciles Adjusted EBITDA to net cash provided by (used in) operating activities reported on our Consolidated Statements of Cash Flows, which we believe is the most directly comparable GAAP measure:

RECONCILIATION BETWEEN ADJUSTED EBITDA VS. OPERATING CASH FLOW


US$ million
	4Q04			3Q05			4Q05

Operating cash flow		1,071			1,788			1,528
Income tax		10			172			92
Monetary and foreign exchange losses		(169	)		38			(8	)
Financial expenses		179			103			30
Net working capital		(48	)		(354	)		94
Others		(42	)		(13	)		44
Adjusted EBITDA		1,001			1,734			1,780

4Q05

US GAAP

(c) Gross debt / last 12 months adjusted EBITDA


	4Q04		3Q05		4Q05

Total debt / adjusted LTM EBITDA (x)		1.10		0.68		0.77
Total debt / LTM operating cash flow (x)		1.18		0.83		0.61

(d) Total debt / enterprise value


	4Q04		3Q05		4Q05

Total debt / EV (x)		0.12		0.08		0.10
Total debt / total assets (x)		26.01		17.83		22.14

Entreprise value = net debt + market capitalization

(e) Adjusted LTM EBITDA / LTM interest expenses


	4Q04		3Q05		4Q05

Adjusted LTM EBITDA / LTM interest expenses (x)		12.41		21.03		25.95
LTM operating income / LTM interest expenses (x)		10.41		17.49		21.56

(f) Net debt

RECONCILIATION BETWEEN GROSS DEBT VS, NET DEBT


US$ million
	4Q04		3Q05		4Q05

Gross debt		4,088		3,942		5,010
Cash and cash equivalents		1,249		1,235		1,041
Net debt		2,839		2,707		3,969

This release may include statements that present the company’s management’s expectations on future events or future results. All statements based on future expectations and not on historical facts involve various risks and uncertainties. The company cannot guarantee that such statements will be realized in fact. Such risks and uncertainties include factors in relation to: the Brazilian economy and the capital markets, which are volatile and may be affected by developments in other countries; the iron ore business and its dependence on the steel industry, which is cyclical by nature; and the highly competitive nature of the industries in which CVRD operates. To obtain additional information on factors which could give rise to results different from those indicated by the company, please consult the reports filed with the Brazilian Securities Commission (CVM – Comissão de Valores Mobiliários) and the US Securities and Exchange Commission (SEC), including CVRD’s most recent Form 20F Annual Report.

4Q05

COMPANHIA VALE DO RIO DOCE

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


	Page





Report of Independent Registered Public Accounting Firm		F-2




Consolidated Balance Sheets as of December 31, 2005 and 2004		F-3




Consolidated Statements of Income for the three-month periods ended December 31, 2005, September 30, 2005 and December 31, 2004 and for the years ended December 31, 2005, 2004 and 2003		F-5




Consolidated Statements of Cash Flows for the three-month periods ended December 31, 2005, September 30, 2005 and December 31, 2004 and for the years ended December 31, 2005, 2004 and 2003		F-6




Consolidated Statements of Changes in Stockholders’ Equity for the three-month periods ended December 31, 2005, September 30, 2005 and December 31, 2004 and for the years ended December 31, 2005, 2004 and 2003		F-7




Notes to the Consolidated Financial Statements		F-8




Supplemental Financial Information		S-1

F-1

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Companhia Vale do Rio Doce

In our opinion, based upon our audits and the reports of other auditors, the accompanying consolidated balance sheets and the related consolidated statements of income, of cash flows and of changes in stockholders’ equity, present fairly, in all material respects, the financial position of Companhia Vale do Rio Doce and its subsidiaries at December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the 2003 financial statements of certain affiliates, the investments in which generated equity in earnings of US$157 million. Also, we did not audit the 2003 financial statements of certain majority-owned subsidiaries which presented total revenues of US$839 million. The financial statements of these affiliates and subsidiaries were audited by other auditors whose reports there on have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts for these affiliates and subsidiaries, is based solely on the reports of the other auditors. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for the opinion expressed above. We have not audited the financial information relating to quarterly consolidated statements of income, of cash flows, of changes in stockholders’ equity and related explanatory notes included in the consolidated financial statements.

As discussed in Note 4 to the financial statements, the Company changed its method of accounting for asset retirement obligations, as from January 1, 2003.

PricewaterhouseCoopers
Auditores Independentes

Rio de Janeiro, Brazil
March 6, 2006

F-2

Consolidated Balance Sheets
Expressed in millions of United States dollars


	As of December 31,
	2005		2004
Assets
Current assets
Cash and cash equivalents		1,041		1,249
Accounts receivable
Related parties		159		124
Unrelated parties		1,490		905
Loans and advances to related parties		22		56
Inventories		1,142		849
Deferred income tax		186		203
Recoverable taxes		362		285
Others		373		219

		4,775		3,890


Property, plant and equipment, net		14,166		9,063
Investments in affiliated companies and joint ventures and other investments, net of provision for losses on equity investments		1,672		1,159
Other assets
Goodwill on acquisition of subsidiaries		548		486
Loans and advances
Related parties		4		55
Unrelated parties		61		56
Prepaid pension cost		308		170
Deferred income tax		—		70
Judicial deposits		568		531
Unrealized gain on derivative instruments		1		4
Advances to suppliers — energy		311		98
Others		230		133

		2,031		1,603

TOTAL		22,644		15,715

F-3

Consolidated Balance Sheets
Expressed in millions of United States dollars
(Except number of shares)

(Continued)


	As of December 31,
	2005			2004
Liabilities and stockholders’ equity
Current liabilities
Suppliers		1.110			689
Payroll and related charges		229			141
Current portion of long-term debt — unrelated parties		1.218			730
Short-term debt		15			74
Loans from related parties		62			52
Provision for income taxes		297			459
Others		394			310

		3.325			2.455


Long-term liabilities
Employees post-retirement benefits		241			215
Long-term debt — unrelated parties		3.714			3.214
Loans from related parties		1			18
Provisions for contingencies (Note 18 (b))		1.286			914
Unrealized loss on derivative instruments		260			236
Deferred income tax		2			—
Provisions for environmental liabilities		225			134
Others		395			350

		6.124			5.081

Minority interests		1.218			788


Stockholders’ equity
Preferred class A stock — 1,800,000,000 no-par-value shares authorized and 415,727,739 issued		2.150			1.176
Common stock — 900,000,000 no-par-value shares authorized and 749,949,429 issued		3.806			2.121
Treasury stock — 11,458 (2004 - 11,951) preferred and 14,145,510 common shares		(88	)		(88	)
Additional paid-in capital		498			498
Other cumulative comprehensive deficit		(2.729	)		(3.774	)
Appropriated retained earnings		4.357			4.143
Unappropriated retained earnings		3.983			3.315

		11.977			7.391

TOTAL		22.644			15.715

See notes to consolidated financial statements.

F-4

Consolidated Statements of Income
Expressed in millions of United States dollars
(except number of shares and per-share amounts)


	Three months ended (unaudited)									Year ended December 31,
	December			September			December
	31, 2005			30, 2005			31, 2004			2005			2004			2003
Operating revenues, net of discounts, returns and allowances
Sales of ores and metals		3,055			2,887			1,834			10,767			6,333			4,060
Revenues from logistic services		309			359			234			1,216			877			604
Aluminum products		377			358			354			1,408			1,250			852
Other products and services		5			6			6			14			19			29

		3,746			3,610			2,428			13,405			8,479			5,545
Taxes on revenues		(148	)		(165	)		(111	)		(613	)		(413	)		(195	)

Net operating revenues		3,598			3,445			2,317			12,792			8,066			5,350

Operating costs and expenses
Cost of ores and metals sold		(1,372	)		(1,202	)		(840	)		(4,620	)		(2,881	)		(2,066	)
Cost of logistic services		(205	)		(188	)		(155	)		(705	)		(513	)		(370	)
Cost of aluminum products		(250	)		(249	)		(210	)		(893	)		(674	)		(678	)
Others		(2	)		(6	)		(3	)		(11	)		(13	)		(14	)

		(1,829	)		(1,645	)		(1,208	)		(6,229	)		(4,081	)		(3,128	)
Selling, general and administrative expenses		(175	)		(160	)		(133	)		(583	)		(452	)		(265	)
Research and development		(85	)		(104	)		(67	)		(277	)		(153	)		(82	)
Employee profit sharing plan		(32	)		(24	)		(22	)		(97	)		(69	)		(32	)
Others		(16	)		(107	)		(65	)		(174	)		(188	)		(199	)

		(2,137	)		(2,040	)		(1,495	)		(7,360	)		(4,943	)		(3,706	)

Operating income		1,461			1,405			822			5,432			3,123			1,644

Non-operating income (expenses)
Financial income		31			36			41			123			82			102
Financial expenses		(201	)		(216	)		(258	)		(560	)		(671	)		(351	)
Foreign exchange and monetary gains (losses), net		(166	)		163			275			299			65			242
Gain on sale of investments		—			126			90			126			404			17

		(336	)		109			148			(12	)		(120	)		10

Income before income taxes, equity results and minority interests		1,125			1,514			970			5,420			3,003			1,654

Income taxes
Current		(92	)		(172	)		(10	)		(754	)		(433	)		(90	)
Deferred		36			(102	)		(386	)		(126	)		(316	)		(207	)

		(56	)		(274	)		(396	)		(880	)		(749	)		(297	)

Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		213			194			179			760			542			306
Minority interests		(86	)		(117	)		(32	)		(459	)		(223	)		(105	)

Income from continuing operations		1,196			1,317			721			4,841			2,573			1,558

Change in accounting pratice for asset retirement obligations (Note 4(a))		—			—			—			—			—			(10	)

Net income		1,196			1,317			721			4,841			2,573			1,548

Basic and diluted earnings per Preferred Class A Share		1.04			1.14			0.63			4.20			2.23			1.34

Basic and diluted earnings per Common Share		1.04			1.14			0.63			4.20			2.23			1.34

Weighted average number of shares outstanding (thousands of shares)
Common shares		735,804			735,804			735,804			735,804			735,804			735,804
Preferred Class A shares		415,716			415,716			415,716			415,716			415,716			415,714

See notes to consolidated financial statements.

F-5

Consolidated Statements of Cash Flows
Expressed in millions of United States dollars


	Three months ended (unaudited)									Year ended December 31,
	December			September			December
	31, 2005			30, 2005			31, 2004			2005			2004			2003
Cash flows from operating activities:
Net income		1,196			1,317			721			4,841			2,573			1,548
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, depletion and amortization		183			171			119			619			399			238
Dividends received		136			158			60			489			200			197
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		(213	)		(194	)		(179	)		(760	)		(542	)		(306	)
Deferred income taxes		(36	)		102			386			126			316			207
Provisions for contingencies		18			10			42			27			137			9
Impairment of property, plant and equipment		—			18			4			26			34			51
Gain on sale of investments		—			(126	)		(90	)		(126	)		(404	)		(17	)
Change in accounting pratice for asset retirement obligations (Note 4(a))		—			—			—			—			—			10
Foreign exchange and monetary losses (gains)		235			(201	)		(106	)		(237	)		112			(382	)
Unrealized derivative losses, net		126			65			66			101			134			43
Minority interests		86			117			32			459			223			105
Interest payable, net		14			12			38			62			93			24
Others		(62	)		(15	)		(70	)		(159	)		(123	)		(27	)
Decrease (increase) in assets:
Accounts receivable		(133	)		281			57			(416	)		(98	)		37
Inventories		(24	)		(44	)		(95	)		(138	)		(216	)		(22	)
Others		63			(441	)		(76	)		(639	)		(78	)		(9	)
Increase (decrease) in liabilities:
Suppliers		113			(21	)		288			279			230			(18	)
Payroll and related charges		40			22			22			40			28			(25	)
Income taxes		(229	)		396			(22	)		413			348			—
Others		3			161			(126	)		154			105			94

Net cash provided by operating activities		1,516			1,788			1,071			5,161			3,471			1,757

Cash flows from investing activities:
Loans and advances receivable
Related parties
Additions		1			(1	)		(21	)		(27	)		(33	)		(157	)
Repayments		62			28			5			115			51			71
Others		—			(1	)		2			—			18			35
Guarantees and deposits		(7	)		(32	)		(21	)		(59	)		(111	)		(99	)
Additions to investments		(12	)		—			(15	)		(103	)		(34	)		(68	)
Additions to property, plant and equipment		(1,237	)		(1,302	)		(877	)		(3,977	)		(2,022	)		(1,543	)
Proceeds from disposal of investments		—			126			164			126			579			83
Proceeds from disposals of property, plant and equipment		12			1			7			16			11			58
Cash used to acquire subsidiaries, net of cash acquired		(737	)		—			—			(737	)		—			(380	)

Net cash used in investing activities		(1,918	)		(1,181	)		(756	)		(4,646	)		(1,541	)		(2,000	)

Cash flows from financing activities:
Short-term debt, net issuances (repayments)		(129	)		(194	)		(100	)		(86	)		(60	)		(38	)
Loans
Related parties
Additions		3			—			—			10			21			72
Repayments		—			(17	)		(18	)		(43	)		(27	)		(26	)
Issuances of long-term debt
Related parties		—			—			20			15			20			14
Others		1,386			22			96			1,757			1,031			1,025
Repayments of long-term debt
Related parties		—			—			—			—			(3	)		(4	)
Others		(140	)		(156	)		(390	)		(884	)		(1,283	)		(766	)
Interest attributed to stockholders		(800	)		—			(518	)		(1,300	)		(787	)		(675	)

Net cash provided by (used in) financing activities		320			(345	)		(910	)		(531	)		(1,088	)		(398	)

Increase (decrease) in cash and cash equivalents		(82	)		262			(595	)		(16	)		842			(641	)
Effect of exchange rate changes on cash and cash equivalents		(112	)		17			(95	)		(192	)		(204	)		135
Initial cash in new consolidated subsidiary		—			—			—			—			26			—
Cash and cash equivalents, beginning of period		1,235			956			1,939			1,249			585			1,091

Cash and cash equivalents, end of period		1,041			1,235			1,249			1,041			1,249			585

Cash paid during the period for:
Interest on short-term debt		(8	)		(1	)		(3	)		(9	)		(5	)		(7	)
Interest on long-term debt		(55	)		(71	)		(82	)		(243	)		(295	)		(178	)
Income tax		(29	)		(202	)		(108	)		(481	)		(108	)		(55	)
Non-cash transactions
Conversion of loans to investments		—			—			—			—			—			(187	)
Income tax paid with credits		(65	)		(16	)		—			(161	)		(100	)		(81	)
Interest capitalized		(52	)		(10	)		(9	)		(86	)		(31	)		(19	)

See notes to consolidated financial statements.

F-6

Consolidated Statements of Changes in Stockholders’ Equity
Expressed in millions of United States dollars
(except number of shares and per-share amounts)


	Three months ended (unaudited)									Year ended December 31,
	December 31,			September 30,			December 31,
	2005			2005			2004			2005			2004			2003
Preferred class A stock (including three special share)
Beginning of the period		2.150			2.150			1.176			1.176			1.055			904
Transfer from appropriated retained earnings		—			—			—			974			121			151

End of the period		2.150			2.150			1.176			2.150			1.176			1.055

Common stock
Beginning of the period		3.806			3.806			2.121			2.121			1.902			1.630
Transfer from appropriated retained earnings		—			—			—			1.685			219			272

End of the period		3.806			3.806			2.121			3.806			2.121			1.902

Treasury stock

Beginning and end of the period		(88	)		(88	)		(88	)		(88	)		(88	)		(88	)

Additional paid-in capital
Beginning and end of the period		498			498			498			498			498			498

Other cumulative comprehensive deficit
Cumulative translation adjustments
Beginning of the period		(2.269	)		(2.859	)		(4.296	)		(3.869	)		(4.449	)		(5.185	)
Change in the period		(587	)		590			427			1.013			580			736

End of the period		(2.856	)		(2.269	)		(3.869	)		(2.856	)		(3.869	)		(4.449	)

Adjustments relating to investments in affiliates
Beginning of the period		—			—			—			—			—			10
Transfer to retained earnings		—			—			—			—			—			(10	)

End of the period		—			—			—			—			—			-

Unrealized gain on available-for-sale securities
Beginning of the period		164			115			82			95			74			—
Change in the period		(37	)		49			13			32			21			74

End of the period		127			164			95			127			95			74

Total other cumulative comprehensive deficit		(2.729	)		(2.105	)		(3.774	)		(2.729	)		(3.774	)		(4.375	)

Appropriated retained earnings
Beginning of the period		1.936			1.829			2.719			4.143			3.035			2.230
Transfer from retained earnings		2.421			107			1.424			2.873			1.448			1.228
Transfer to capital stock		—			—			—			(2.659	)		(340	)		(423	)

End of the period		4.357			1.936			4.143			4.357			4.143			3.035

Unappropriated retained earnings
Beginning of the period		6.008			4.798			4.268			3.315			2.857			3.288
Net income		1.196			1.317			721			4.841			2.573			1.548
Dividends and interest attributed to stockholders Preferred class A stock		(289	)		—			(90	)		(469	)		(241	)		(275	)
Common stock		(511	)		—			(160	)		(831	)		(426	)		(486	)
Appropriation to reserves		(2.421	)		(107	)		(1.424	)		(2.873	)		(1.448	)		(1.218	)

End of the period		3.983			6.008			3.315			3.983			3.315			2.857

Total stockholders’ equity		11.977			12.205			7.391			11.977			7.391			4.884

Comprehensive income is comprised as follows:
Net income		1.196			1.317			721			4.841			2.573			1.548
Cumulative translation adjustments		(587	)		590			427			1.013			580			736
Unrealized gain (loss) on available-for-sale securities		(37	)		49			13			32			21			74

Total comprehensive income		572			1.956			1.161			5.886			3.174			2.358


Shares
Preferred class A stock (including three special share)		415.727.739			415.727.739			415.727.739			415.727.739			415.727.739			415.727.739
Common stock		749.949.429			749.949.429			749.949.429			749.949.429			749.949.429			749.949.429
Treasury stock (1)
Beginning of the period		(14.157.313	)		(14.157.313	)		(14.157.477	)		(14.157.461	)		(14.158.059	)		(14.158.953	)
Sales		345			—			16			493			598			894

End of the period		(14.156.968	)		(14.157.313	)		(14.157.461	)		(14.156.968	)		(14.157.461	)		(14.158.059	)

		1.151.520.200			1.151.519.855			1.151.519.707			1.151.520.200			1.151.519.707			1.151.519.109

Dividends and interest attributed to stockholders (per share)
Preferred class A stock (including three special share)		0,70			—			0,22			1,13			0,58			0,66
Common stock		0,70			—			0,22			1,13			0,58			0,66

(1)

As of December 31, 2005, 14,145,510 common shares and 11,458 preferred shares were held in treasury in the amount of US$ 88. The 14,145,510 common shares are provided as collateral to secure a loan of our subsidiary Alunorte.

F-7

Notes to the Consolidated Financial Statements
Expressed in millions of United States dollars, unless otherwise stated


1		The Company and its operation


		Companhia Vale do Rio Doce (CVRD) is a limited liability company, duly organized and existing under the laws of the Federative Republic of Brazil. Our operations are carried out through CVRD and its subsidiary companies, joint ventures and affiliates, and mainly consist of mining, non-ferrous metal production and logistics, as well as energy, aluminum and steel activities. Further details of our operations and those of our joint ventures and affiliates are described in Note 13.

		The main operating subsidiaries we consolidate are as follows:


		% voting
Subsidiary	% ownership	capital	Head office location	Principal activity
Alumina do Norte do Brasil S.A. — Alunorte (“Alunorte”)	57	61	Brazil	Alumina
Alumínio Brasileiro S.A. — Albras (“Albras”)	51	51	Brazil	Aluminum
CADAM S.A (CADAM) (1)	37	100	Brazil	Kaolin
CVRD Overseas Ltd.	100	100	Cayman Islands	Trading
Ferrovia Centro-Atlântica S. A.	100	100	Brazil	Logistics
Itabira Rio Doce Company Ltd. — ITACO	100	100	Cayman Islands	Trading
Minerações Brasileiras Reunidas S.A. — MBR (2)	56	90	Brazil	Iron ore
Mineração Onça Puma Ltda	99	99	Brazil	Nickel
Navegação Vale do Rio Doce S.A. — DOCENAVE	100	100	Brazil	Shipping
Pará Pigmentos S.A. (1)	76	86	Brazil	Kaolin
Rio Doce International Finance Ltd. — RDIF	100	100	Bahamas	International finance
Rio Doce Manganês S.A.	100	100	Brazil	Manganese and Ferroalloys
Rio Doce Manganèse Europe — RDME	100	100	France	Ferroalloys
Rio Doce Manganese Norway — RDMN	100	100	Norway	Ferroalloys
Salobo Metais S.A.	100	100	Brazil	Copper
Urucum Mineração S.A.	100	100	Brazil	Iron ore, Ferroalloys and Manganese


(1)		Through Caemi Mineração e Metalurgia S.A.. CVRD holds 60.2% of the total capital and 100% of the voting capital.

(2)		Through Caemi Mineração e Metalurgia S.A. and Belém Administrações e Participações Ltda.


2		Basis of consolidation

		All majority-owned subsidiaries in which we have both share and management control are consolidated. All significant intercompany accounts and transactions are eliminated. As from January 1, 2004, our variable interest entities in which we are the primary beneficiary (Note 4(b)) are consolidated. Investments in unconsolidated affiliates and joint ventures are reported at cost plus our equity in undistributed earnings or losses. Included in this category are certain joint ventures in which we have majority ownership but, by force of shareholders’ agreements, do not have effective management control. We provide for losses on equity investments with negative stockholders’ equity where applicable (Note 13).

		We evaluate the carrying value of our listed investments relative to publicly available quoted market prices. If the quoted market price is below book value, and such decline is considered other than temporary, we write-down our equity investments to quoted market value.

		We define joint ventures as businesses in which we and a small group of other partners each participate actively in the overall entity management, based on a shareholders agreement. We define affiliates as businesses in which we participate as a minority stockholder but with significant influence over the operating and financial policies of the investee.

		Our condensed consolidated interim financial information for the three-month periods ended December 31, 2005, September 30, 2005, and December 31, 2004 is unaudited. However, in our opinion, such condensed consolidated financial information includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for interim periods.

		Investments in unincorporated joint ventures, formed for the purpose of investing in hydroelectric power projects, are proportionately consolidated.

F-8


3		Summary of significant accounting policies

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates are used for, but not limited to the selection of useful lives of property, plant and equipment, provisions necessary for contingent liabilities, fair values assigned to assets and liabilities acquired in business combinations, income tax valuation allowances, employee post-retirement benefits and other similar evaluations. Actual results could differ from those estimates.


(a)		Basis of presentation

		We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), which differ in certain respects from the accounting practices adopted in Brazil that we use in preparing our statutory financial statements.

		The U.S. dollar amounts for the years presented have been remeasured (translated) from the Brazilian currency amounts in accordance with the criteria set forth in Statement of Financial Accounting Standards 52 — “Foreign Currency Translation” (SFAS 52).

		Prior to July 1, 1997, Brazil was considered under SFAS 52 to have a highly inflationary economy and accordingly, up to June 30, 1997, we adopted the U.S. dollar as both our functional currency and reporting currency.

		As from July 1, 1997, we concluded that the Brazilian economy had ceased to be highly inflationary and changed our functional currency from the reporting currency (U.S. dollars) to the local currency (Brazilian Reais), for Brazilian operations and extensions thereof. Accordingly, we translated the U.S. dollar amounts of non-monetary assets and liabilities into Reais at the current exchange rate, and those amounts became the new accounting bases for such assets and liabilities.

		We have remeasured all assets and liabilities into U.S. dollars at the current exchange rate at each balance sheet date (R$2.3370 and R$2.6544 to US$1.00 or the first available exchange rate if exchange on December 31, was not available), and all accounts in the statements of income (including amounts relative to local currency indexation and exchange variances on assets and liabilities denominated in foreign currency) at the average rates prevailing during the period. The translation gain or loss resulting from this remeasurement process is included in the cumulative translation adjustments account in stockholders’ equity.

		The net exchange transaction gain (loss) included in our statement of income was US$227, US$79 and US$222 in 2005, 2004 and 2003, respectively, included within the line “Foreign exchange and monetary gains (losses), net”.


(b)		Business combinations

		We adopt the procedures determined by SFAS 141 — “Business Combinations” to recognize acquisitions of interests in other companies. The method of accounting used in our business combination transactions is the “purchase method”, which requires that acquirers reasonably determine the fair value of the identifiable assets and liabilities of acquired companies, individually, in order to determine the goodwill paid in the purchase to be recognized as an intangible asset. On the acquisition of assets, which include the rights to mine reserves of natural resources, the establishment of values for these assets includes the placing of fair values on purchased reserves, which are classified in the balance sheet as property, plant and equipment.

		Goodwill was amortized in a systematic manner over the periods estimated to be benefited through December 31, 2001. As required by SFAS 142 — “Goodwill and Other Intangible Assets” from January 1, 2002 goodwill resulting from the acquisitions is no longer amortized, but is tested for impairment at least annually and reduced to fair value to the extent any such impairment is identified.


(c)		Inventories

F-9

		Inventories are stated at the average cost of purchase or production, lower than replacement or realizable values. We record allowances for slow moving or obsolete inventories when considered appropriate, reflecting our periodic assessment of recoverability. A write-down of inventory utilizing the allowance establishes a new cost basis for the related inventory.

		Finished goods inventories include all related materials, labor and direct production expenditures, and exclude general and administrative expenses.


(d)		Property, plant and equipment

		Property, plant and equipment are recorded at cost, including interest cost incurred during the construction of major new facilities. We compute depreciation on the straight-line basis at annual rates which take into consideration the useful lives of the items, such as: from 2% to 20% for the railroads, 5% for ships, 3% for buildings, from 2% to 5% for installations and from 5% to 20% for mining and other equipment. Expenditures for maintenance and repairs are charged to operating costs and expenses as incurred.

		We capitalize the costs of developing major new ore bodies or expanding the capacity of operating mines and amortize these to operations on the unit-of-production method based on the total probable and proven quantity of ore to be recovered. Exploration costs are expensed until economic viability of mining activities is established; subsequently such costs are capitalized together with further exploration costs. We capitalize mine development costs as from the time we actually begin such development.


(e)		Available-for-sale equity securities

Equity securities classified as “available-for-sale” are recorded in accordance with SFAS 115 “Accounting for Certain Investments in Debt and Equity Securities”. Accordingly, we exclude unrealized holding gains and losses, net of taxes, if applicable, from income and recognize them, net of tax effects, as a separate component of stockholders’ equity until realized.


(f)		Revenues and expenses

Revenues are recognized when title has transferred to the customer or services are rendered. Revenue from exported products is recognized when such products are loaded on board the ship. Revenue from products sold in the domestic market is recognized when delivery is made to the customer. Revenue from transportation services, other than shipping operations, is recognized when the service order has been fulfilled. Shipping operations are recorded on the completed voyage basis and net revenue, costs and expenses of voyages not completed at period-end are deferred. Anticipated losses on voyages are provided when probable and can be reasonably estimated. Expenses and costs are recognized on the accrual basis.


(g)		Environmental and site reclamation and restoration costs

Expenditures relating to ongoing compliance with environmental regulations are charged against earnings or capitalized as appropriate. These ongoing programs are designed to minimize the environmental impact of our activities.


(h)		Compensated absences

We fully accrue the employees’ compensation liability for vacations vested during the year.


(i)		Income taxes

In accordance with SFAS 109 — “Accounting for Income Taxes”, the deferred tax effects of tax loss carryforwards and temporary differences have been recognized in the consolidated financial statements. A valuation allowance is made when we believe that it is more likely than not that tax assets will not be fully recoverable in the future.


(j)		Statement of cash flows

F-10

Cash flows relating to overnight financing and investment are reported net. Short-term investments that have a ready market and maturity to us, when purchased, of 90 days or less are considered cash equivalents.


(k)		Earnings per share

Earnings per share are computed by dividing net income by the weighted average number of common and preferred shares outstanding during the period.


(l)		Interest attributed to stockholders

		As from January 1, 1996 Brazilian corporations are permitted to distribute interest attributable to stockholders’ equity. The calculation is based on the stockholders’ equity amounts as stated in the statutory accounting records and the interest rate applied may not exceed the long-term interest rate (TJLP) determined by the Brazilian Central Bank. Also, such interest may not exceed 50% of net income for the year nor 50% of retained earnings plus revenue reserves.

		The amount of interest attributed to stockholders is deductible for purposes of taxes on income. Accordingly, the benefit to us, as opposed to making a dividend payment, is a reduction in our income tax charge. Income tax is withheld from the stockholders relative to interest at the rate of 15%.

		Under Brazilian law, interest attributable to stockholders is considered as part of the annual minimum dividend (Note 16). Accordingly such distributions are treated as dividends for accounting purposes.

		We have opted to pay such tax-deductible interest to our stockholders and have therefore accrued the amounts due as of December 31, 2005, 2004 and 2003, with a direct charge to stockholders’ equity.


(m)		Derivatives and hedging activities

As of January 1, 2001 we adopted SFAS 133 — “Accounting for Derivative Financial Instruments and Hedging Activities”, as amended by SFAS 137, SFAS 138 and SFAS 149. Those standards require that we recognize all derivative financial instruments as either assets or liabilities on our balance sheet and measure such instruments at fair value. Changes in the fair value of derivatives are recorded in each period in current earnings or in other comprehensive income, in the latter case depending on whether a transaction is designated as an effective hedge. No contracts have been designed as an effective hedge in the years presented.


(n)		Comprehensive income

We have disclosed comprehensive income as part of the Statement of Changes in Stockholders’ Equity, in compliance with SFAS 130 — “Reporting Comprehensive Income”.


(o)		Stockpiled inventory

We classify proven and probable reserve quantities attributable to stockpiled inventory as inventory and account for them as processed when they are removed from the mine. These reserve quantities are not included in the total proven and probable reserve quantities used in the units of production, depreciation, depletion and amortization calculations.


(p)		Removal of waste materials to access mineral deposits

		During the development of a mine, before production commences, stripping costs (i.e., the costs associated with the removal of overburden and other waste materials) are capitalized as part of the depreciable cost of developing the property. Such costs are subsequently amortized over the useful life of the mine based on proven and probable reserves.

		Post-production stripping costs are recorded as cost of production when incurred.

F-11


4		Change in accounting practice

		(a) 2003 – SFAS 143

		In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS 143 — “Accounting for Asset Retirement Obligations”. We adopted SFAS 143 as from January 1, 2003, and as a consequence an additional US$26 for asset retirement obligations was recorded as “Others — long-term liabilities”, a net increase of US$11 in mine development costs was registered within “Property, plant and equipment” and a resulting charge of US$10 was registered as “Change in Accounting Practice for Asset Retirement Obligations” on the Statement of Income, net of income tax (US$15 gross of deferred income tax). The liabilities will be accreted in the future for the change in their present value and initial capitalized costs will be amortized over the useful lives of the related assets.

		(b) 2004 — FIN 46R

		As from January 1, 2004 we have consolidated Albras based on our 51% interest in that entity under FASB Interpretation (FIN) “Consolidation of Variable Interest Entities (revised December 2003)”. Albras is an aluminum company with revenues of US$803, US$707 and US$805 in 2005, 2004 and 2003, respectively and total assets of US$1,144 for the year ended December 31, 2005 (US$805 in 2004) which sells all of its output to its shareholders based on their respective participations.

		Had Albras been consolidated at and for the year ended December 31, 2003 CVRD’s consolidated statement of income would have been is follows:


	2003
							Pro Forma
	CVRD			Albras			(unaudited)
Net revenues		5,350			165			5,515
Cost of sales		(3,128	)		58			(3,070	)
Operating costs		(578	)		(16	)		(594	)
Non-operating income (expense)		10			34			44
Income taxes		(297	)		(36	)		(333	)
Equity in results of affiliates and joint ventures		306			(105	)		201
Change in accountig pratice		(10	)		—			(10	)
Minority interests		(105	)		(100	)		(205	)

Net income		1,548			—			1,548


5		Recently-issued accounting pronouncements

		In February 2006, the FASB issued FAS 155, “Accounting for certain hybrid financial instruments”, which amends FASB Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement resolves issues addressed in Statement 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets.” We will apply this statement in the event it occurs in fiscal periods beginning after September 15, 2006.

		In November 2005, the FASB issued PSP Nos. FAS 115-1 e FAS 124-1, “The meaning of other-than-temporary impairment and its application to certain investments” which sets the determination as to when an investment is considered impaired, whether that impairment is temporary, and the measurement of an impairment loss. We will apply this statement, if applicable, from fiscal periods beginning after December 15, 2005.

F-12

		In October 2005, the FASB issued FAS No. 13-1, “Accounting for rental costs incurred during a construction period” which addresses the accounting for rental costs associated with operating leases that are incurred during a construction period. We will apply this statement, if applicable, from fiscal periods beginning after December 15, 2005.

		In October 2005, the FASB issued FAS No. 123(R)-2, “Practical accommodation to the application of grant date as defined in FASB Statement Nº 123(R)” which recent inquiries from constituents to provide guidance on the application of grant date as defined in FASB Statement Nº 123 (revised 2005), Share-Based Payment. We will apply this statement, if applicable, from fiscal periods beginning after December 15, 2005.

		In July 2005, the FASB issued FSP No. APB 18-1, “Accounting by an investor for its proportionate share of accumulated other comprehensive income of an investee accounted for under the equity method in accordance with APB Opinion nº 18 upon a loss of significant influence” which sets reporting on how an investor should account for its proportionate share of an investee’s equity adjustments for other comprehensive income upon a loss of significant influence. We will apply this statement, if applicable, from fiscal periods beginning after July 2005.

		In June 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections” which sets reporting of a change in accounting principles or errors. We do not expect FASB No. 154 to have a significant impact on our financial position, results of operations or cash flows.

		In March 2005, the FASB issued FSP FIN 46(R)-5, “Consolidation of Variable Interests Entities” to address whether a reporting enterprise should consider whether it holds an implicit variable interest in a variable interest entity (VIE) or potential VIE when specific conditions exist. We adopted FSP FIN 46(R)-5 it which had no impact on our financial position, results of operations or cash flows.

		In March 2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” which refers to legal obligations to perform an asset retirement activities. We do not expect FASB Interpretation No. 47 to have a significant impact on our financial position, results of operations or cash flows .


6		Our privatization

In May 1997, we were privatized by the Brazilian Government, which transferred voting control to Valepar S.A. (“Valepar”). The Brazilian Government has retained certain rights with respect to our future decisions and those of Valepar and has also caused us to enter into agreements which may affect our activities and results of operations in the future. These rights and agreements are:

	•		Preferred Special Share. The Brazilian Government holds three preferred special shares of CVRD which confers upon it permanent veto rights over changes in our (i) name, (ii) location of our headquarters (iii) corporate purpose with respect to mineral exploration, (iv) continued operation of our integrated iron ore mining systems and (v) certain other matters.

	•		Shareholder revenue interests. On July 7, 1997, we issued to shareholders of record on April 18, 1997 (including the Brazilian Government) revenue interests providing holders thereof with the right to receive semi-annual payments based on a percentage of our net revenues above threshold production volumes from identified mining resources. These instruments are not secured by the corresponding mineral reserves and deposits (Note 18(f)).


7		Major acquisitions and disposals during the years presented

We made the following acquisitions during the periods presented. Pro forma information with respect to our acquisition of the control of Caemi in September 2003 is shown in item (a) below:


(a)		In December 2001, acting through our wholly-owned foreign subsidiary Itabira Rio Doce Company Ltd. — ITACO, we acquired common shares of Caemi Mineração e Metalurgia S.A. (Caemi), corresponding to 16.82% of its total capital and 50% of its voting capital from a wholly-owned subsidiary of Mitsui & Co., Ltd. ( “Mitsui” ) for US$279. Caemi is a Brazilian company headquartered in Rio de Janeiro, which operates in the iron ore, kaolin, refractory bauxite and railroad sectors and was accounted for as an equity investee up to September 2, 2003 (see below).

F-13

		This acquisition was approved by the European Commission subject to the commitment by Caemi to sell its equity investment in Quebec Cartier Mining Company (QCM), a Canadian producer of iron ore and pellets. On December 31, 2003 Caemi sold its holding of QCM’s common shares to the Quebec Provincial Government for the symbolic amount of 100 Canadian dollars and converted loans to QCM totaling 20 million Canadian dollars into preferred stock with no voting rights other than on matters required by law. In July 2005, we sold our remaining QCM preferred shares to Dofasco Inc. (Dofasco) for US$126. The accounting value of the investment had previously been completely written-off and therefore all proceeds were recorded as gain.

		On September 2, 2003, CVRD and Mitsui, each of which held 50% of Caemi’s common shares, entered into a shareholder agreement requiring both shareholders to approve all major decisions affecting Caemi.

		At that time, we acquired a further 43.37% of the capital of Caemi for US$426, increasing our total participation to 60.23%. Caemi has been consolidated as from this date.

		The acquisition cost of the 43.37% of Caemi, net of cash acquired, was as follows:


	September 2, 2003
Estimated fair value of assets		1,699
Estimated fair value of liabilities		(716	)

Net assets at fair value		983
Interest in total capital acquired		43.37	%
Estimated fair value of net assets acquired		426

Purchase price		426
Less cash acquired		(46	)

Acquisition cost of Caemi, net of cash acquired		380



		Caemi Pro forma

		The unaudited condensed pro forma statement of income below shows the impact of the acquisition of Caemi on the consolidated statements of income as if the current 60.23% participation in Caemi had been acquired on January 1, 2003.


	2003
				Pre-
	CVRD			acquisition
	Consolidated			CAEMI (1)			Pro Forma
							(unaudited)
Net operating revenues		5,350			424			5,774
Operating costs and expenses		(3,706	)		(343	)		(4,049	)

Operating income		1,644			81			1,725
Non-operating income		10			16			26

Income before income taxes, equity results and minority interests		1,654			97			1,751
Income taxes		(297	)		(41	)		(338	)
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		306			(20	)		286
Minority interests		(105	)		18			(87	)

Income from continuing operations		1,558			54			1,612
Change in accounting pratice for asset retirement obligations		(10	)		—			(10	)

Net income		1,548			54			1,602

F-14

		(1) Period from January to August 2003 (consolidated as from September 2003).

		In January 2006 The Board of Directors approved a proposal to exchange all remaining minority interest preferred shares of Caemi Mineração e Metalurgia S.A. (Caemi) for CVRD preferred shares (PNA) to be issued. Under Brazilian corporate law this procedure which is called “incorporação de ações”, or stock merger, is expected to result in Caemi becoming a wholly-owned subsidiary of CVRD.


(b)		On October 10, 2003, our subsidiary Companhia Paulista de Ferro Ligas (CPFL) finalized the sale of its shares in Fertilizantes Fosfatados S.A. (Fosfértil) to Bunge Fertilizantes S.A. for US$84 realizing a gain of US$61.


(c)		On November 7, 2003 we sold our investment in Companhia Ferroviária do Nordeste (CFN) to Companhia Siderurgica Nacional (CSN) for a symbolic amount, recording a loss on this transaction of US$44.


(d)		On July 2004 we sold part of our stake in Companhia Siderúrgica de Tubarão (CST) representing 4.42% of the voting capital and 29.96% of the non-voting capital for US$415. In December 2004 we concluded the sale of our remaining 20.51% voting capital interest for US$165. The gains on these transactions were US$314 and US$90, respectively.


(e)		In November 2005, we acquired 93.0% of the voting capital of Canico Resource Corp. (Canico) a Canadian-based junior resource company focused on the development of the Onça-Puma nickel laterite, for US$750. In December 2005, we acquired an additional 6.20% of the voting capital of Canico for US$50. Canico’s only significant asset other than US$63 of cash and cash equivalents was US$794 of mining rights.

On February 10, 2006, we concluded the acquisition of the outstanding common shares of Canico, acquiring the remaining voting capital of Canico, 0.8% of its total capital for US$6, which is now a wholly-owned subsidiary.


8		Income taxes

		Income taxes in Brazil comprise federal income tax and social contribution, which is an additional federal tax. The statutory composite enacted tax rate applicable in the periods presented is 34% represented by a 25% federal income tax rate plus a 9% social contribution rate.

		The amount reported as income tax expense in our consolidated financial statements is reconciled to the statutory rates as follows:


	Three months ended (unaudited)									Year ended December 31,
	December			September			December
	31, 2005			30, 2005			31, 2004			2005			2004			2003
Income before income taxes, equity results and minority interests		1,125			1,514			970			5,420			3,003			1,654

Federal income tax and social contribution expense at statutory enacted rates		(383	)		(515	)		(330	)		(1,843	)		(1,021	)		(562	)
Adjustments to derive effective tax rate:
Tax benefit on interest attributed to stockholders		72			50			65			307			214			271
Exempt foreign income (loss)		346			143			69			617			247			(59	)
Difference on tax basis of equity investees		(28	)		(9	)		(135	)		(58	)		(240	)		(56	)
Tax incentives		(26	)		54			9			109			53			60
Valuation allowance reversal (provision)		—			—			6			3			77			53
Non-taxable losses on derivative		—			—			(57	)		—			(57	)		—
Other non-taxable gains (losses)		(37	)		3			(23	)		(15	)		(22	)		(4	)

Federal income tax and social contribution expense in consolidated statements of income		(56	)		(274	)		(396	)		(880	)		(749	)		(297	)

F-15

		We have certain tax incentives relative to our iron ore and manganese operations in Carajás, our potash operations in Rosario do Catete, our alumina and aluminum operations in Barcarena and our kaolin operations in Ipixuna and Mazagão. The incentives relative to iron ore comprise full income tax exemption on defined production levels up to 2005 and for manganese partial exemption up to 2013. The incentive relating to alumina and potash comprise full income tax exemption on defined production levels which expires in 2009 and 2013, respectively, while the partial exemption incentives relative to aluminum and kaolin expire in 2013. An amount equal to the tax saving must be appropriated to a reserve account within stockholders’ equity and may not be distributed in the form of cash dividends.

		The major components of the deferred tax accounts in the balance sheet are as follows:


	As of December 31
	2005			2004
Current deferred tax assets
Accrued expenses deductible only when disbursed		186			110
Interest attributed to stockholders		—			93

		186			203


Long-term deferred tax assets and liabilities
Assets
Tax deductible goodwill in business combinations		—			10
Related to provision for losses and write-downs of investments		53			51
Employees post retirement benefits provision		82			83
Tax loss carryforwards		275			235
Other temporary differences		3			19

		413			398


Liabilities
Inflationary income		(30	)		(23	)
Relative to equity investments acquired		(144	)		(115	)
Prepaid retirement benefit		(105	)		(58	)
Fair value adjustments in business combinations		(52	)		(55	)

		(331	)		(251	)


Valuation allowance
Beginning balance		(77	)		(112	)
Translation adjustments		(10	)		(42	)
Change in allowance		3			77

Ending balance		(84	)		(77	)

Net long-term deferred tax assets		(2	)		70


9		Cash and cash equivalents


	As of December 31
	2005		2004
Cash		177		123
Deposits denominated in local currency		297		385
Deposits denominated in United States dollars		567		741

		1,041		1,249

F-16


10		Accounts receivable


	As of December 31
	2005			2004
Customers
Domestic		349			236
Export, all denominated in United States dollars		1,355			847

		1,704			1,083
Allowance for doubtful accounts		(42	)		(37	)
Allowance for ore weight credits		(13	)		(17	)

Total		1,649			1,029

		Accounts receivable from customers in the steel industry represent 48.7% of domestic receivables and 70.8% of export receivables at December 31, 2005.

		No single customer accounted for more than 10% of total revenues in any of the years presented.


11		Inventories


	As of December 31
	2005		2004
Finished products
Iron ore and pellets		271		205
Manganese and ferroalloys		151		156
Alumina		22		20
Aluminum		52		54
Kaolin		18		17
Others		28		11
Spare parts and maintenance supplies		600		386

		1,142		849

F-17


12		Property, plant and equipment


a)		By business area:


	As of December 31, 2005						As of December 31, 2004
			Accumulated						Accumulated
	Cost		depreciation		Net		Cost		depreciation		Net
Ferrous
Iron ore		8,488		3,190		5,298		5,916		2,427		3,489
Pelletizing		565		197		368		430		160		270
Ferroalloys		359		191		168		362		197		165
Energy		383		29		354		198		18		180
Construction in progress		2,049		—		2,049		1,546		—		1,546

		11,844		3,607		8,237		8,452		2,802		5,650

Non-Ferrous
Copper		748		114		634		578		71		507
Potash		175		45		130		65		30		35
Gold		6		2		4		6		2		4
Kaolin		329		130		199		254		97		157
Research and projects		33		10		23		33		19		14
Construction in progress		1,281		—		1,281		731		—		731

		2,572		301		2,271		1,667		219		1,448

Logistics
General cargo		1,222		306		916		769		232		537
Maritime transportation		14		5		9		31		8		23
Construction in progress		74		—		74		114		—		114

		1,310		311		999		914		240		674

Holdings
Aluminum		1,495		552		943		1,317		445		872
Others		72		5		67		1		—		1
Construction in progress		1,148		—		1,148		230		—		230

		2,715		557		2,158		1,548		445		1,103

Corporate Center
Corporate		322		82		240		68		43		25
Construction in progress		261		—		261		163		—		163

		583		82		501		231		43		188

Total		19,024		4,858		14,166		12,812		3,749		9,063


b)		By type of assets:


	As of December 31, 2005						As of December 31, 2004
			Accumulated						Accumulated
	Cost		depreciation		Net		Cost		depreciation		Net
Land and buildings		1,205		447		758		991		396		595
Installations		4,917		1,596		3,321		3,600		1,262		2,338
Equipment		1,855		711		1,144		1,218		574		644
Railroads		2,846		987		1,859		2,091		884		1,207
Mine development costs		1,945		281		1,664		1,345		150		1,195
Others		1,443		836		607		783		483		300

		14,211		4,858		9,353		10,028		3,749		6,279
Construction in progress		4,813		—		4,813		2,784		—		2,784

Total		19,024		4,858		14,166		12,812		3,749		9,063

Losses on disposals and impairments of property, plant and equipment totaled US$26, US$34 and US$51 in 2005, 2004 and 2003, respectively. Disposals and impairments mainly relate to impairment of gold mines, sales of ships and trucks, locomotives and other equipment which were replaced in the normal course of business.

F-18


(c)		Hydroelectric projects

		We participate in several jointly-owned hydroelectric plants, already in operation or under construction. We have an undivided interest in these plants and are responsible for our proportionate share of the costs of construction and operation and are entitled to our proportionate share of the energy produced. We record our proportion of these assets as property, plant and equipment.

		The situation of these projects at December 31, 2005 is as follows:


	Date of						Our share		Our share of					Our share of
	completion /		Our		Plant in		of plant in		accumulated			Plant under		plant under
	expected		interest		service		service		depreciation			construction		construction
Project	completion		%		$		$		$			$		$
Igarapava	September, 1999			38.1		168		64		(15	)		—		—
Porto Estrela	November, 2001			33.3		72		24		(3	)		—		—
Funil	January, 2003			51.0		155		79		(7	)		—		—
Candonga	September, 2004			50.0		122		61		(2	)		—		—
Aimorés	August, 2005			51.0		304		155		(2	)		—		—
Capim Branco I	February, 2006			48.4		—		—		—			194		94
Capim Branco II	January, 2007			48.4		—		—		—			140		68
Estreito		2009		30.0		—		—		—			20		6
Foz do Chapecó (a)		—		40.0		—		—		—			5		2

		Income and expenses relating to operating plants are not material.

		(a) On February 10, 2006 we sold our interest to Furnas Centrais Elétricas S.A. for US$4.

F-19

Investments in affiliated companies and joint ventures


	2005									Investments				Equity Adjustments																		Dividends received
																																												Quoted market
														Three-month periods ended									Year ended December 31,									Three-month periods ended						Year ended December 31,						value
							Net income
	Participation in				Net		(loss) for the							December			September			December												December		September		December								December
	capital (%)				equity		period			2005		2004		31, 2005			30, 2005			31, 2004			2005			2004			2003			31, 2005		30, 2005		31, 2004		2005		2004		2003		31, 2005
	voting		total
Ferrous
Caemi Mineração e Metalurgia (5)		—		—		—		—			—		—		—			—			—			—			—			23			—		—		—		—		—		—		—
Companhia Nipo-Brasileira de Pelotização — NIBRASCO (2)		51.11		51.00		118		77			60		30		13			13			4			39			13			3			16		—		—		16		—		—		—
Companhia Hispano-Brasileira de Pelotização — HISPANOBRÁS (2)		51.00		50.89		73		55			37		26		4			8			3			28			9			3			—		16		1		20		1		2		—
Companhia Coreano-Brasileira de Pelotização — KOBRASCO		50.00		50.00		82		53			41		13		6			3			4			26			11			18			—		—		—		—		—		—		—
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO (2)		51.00		50.90		65		42			33		18		2			5			2			21			6			3			—		10		—		10		—		1		—
Gulf Industrial Investment Company — GIIC		50.00		50.00		123		134			62		45		18			14			6			67			16			12			20		20		4		51		11		9		—
SAMARCO Mineração S.A. — SAMARCO (3)		50.00		50.00		576		514			335		261		85			82			37			257			117			70			95		75		32		225		100		78		—
Minas da Serra Geral S.A. — MSG		50.00		50.00		42		(3	)		21		18		—			2			(1	)		(2	)		(3	)		2			—		—		—		—		—		1		—
Others		—		—		—		—			25		24		—			—			—			(1	)		1			(1	)		—		—		—		—		—		—		—

											614		435		128			127			55			435			170			133			131		121		37		322		112		91		—

Logistics
Ferrovia Centro-Atlântica S.A. — FCA — change in provision for losses (5)		—		—		—		—			—				—			—			—			—			—			(93	)		—		—		—		—		—		—		—
MRS Logística S.A		37.23		29.35		352		167			109		78		15			17			11			54			33			45			5		—		—		11		—		—		—
Sepetiba Tecon S.A. — change in provision for losses		—		—		—		—			—				—			—			—			—			—			(1	)		—		—		—		—		—		—		—
Others		—		—		—		—			—		1		—			—			—			—			—			(3	)		—		—		—		—		—		—		—

											109		79		15			17			11			54			33			(52	)		5		—		—		11		—		—		—

Holdings
Steel
Usinas Siderúrgicas de Minas Gerais S.A. — USIMINAS		22.99		11.46		2,441		1,533			281		140		41			36			62			176			114			34			—		29		—		62		13		3		566
Companhia Siderúrgica de Tubarão — CST (1)						—		—			—		—		—			—			15			—			102			45			—		—		—		—		—		52		—
California Steel Industries Inc. — CSI		50.00		50.00		320		43			161		149		6			(1	)		18			21			55			2			—		8		7		28		9		5		—
SIDERAR (cost $15) — available for sale investments		4.85		4.85		—		—			142		110		—			—			—			—			—			—			—		—		—		—		—		—		142

											584		399		47			35			95			197			271			81			—		37		7		90		22		60		708

Aluminum and bauxite
Mineração Rio do Norte S.A. — MRN		40.00		40.00		442		160			178		171		15			17			16			64			57			33			—		—		13		58		54		27		—
Valesul Alumínio S.A. — VALESUL		54.51		54.51		107		—			58		55		(1	)		(2	)		3			1			14			10			—		—		3		8		12		9		—
Alumínio Brasileiro S.A. — ALBRAS		—		—		—		—			—		—		—			—			—			—			—			104			—		—		—		—		—		—		—

											236		226		14			15			19			65			71			147			—		—		16		66		66		36		—

Coal
Henan Longyu Resources Co. Ltd		—		—		—		—			96		—		9			—			—			9			—			—			—		—		—		—		—		—		—
Shandong Yankuang International Company Ltd(4)		—		—		—		—			22		10		—			—			—			—			—			—			—		—		—		—		—		—		—

											118		10		9			—			—			9			—			—			—		—		—		—		—		—		—

Other affiliates and joint ventures
Others		—		—		—		—			11		10		—			—			(1	)		—			(3	)		(3	)		—		—		—		—		—		10		—

											11		10		—			—			(1	)		—			(3	)		(3	)		—		—		—		—		—		10		—

											949		645		70			50			113			271			339			225			—		37		23		156		88		106		708

Total		—		—		—		—			1,672		1,159		213			194			179			760			542			306			136		158		60		489		200		197		708


(1)		During 2004 CVRD sold its interest in CST (Note 7(d));

(2)		CVRD held a majority of the voting power of several entities that were accounted for under the equity method, in accordance with EITF 96-16, due to veto rights held by minority shareholders under shareholders agreements;

(3)		Investment includes goodwill of US$46 and US$40 in 2005 and 2004, respectively;

(4)		Preoperating investiment;

(5)		Consolidatd as from September 2003 after acquisition of control.

F-20

14		Short-term debt

		Our short-term borrowings are from commercial banks and relate to export financing denominated in United States dollars.

		Average annual interest rates on short-term borrowings were 4.25%, 2.33% and 3.19% at December 31, 2005, 2004 and 2003, respectively.

15		Long-term debt


	As of December 31
	Current liabilities				Long-Term liabilities
	2005		2004		2005		2004
Foreign debt
Loans and financing denominated in the following currencies:
United States dollars		848		376		1,617		1,179
Others		4		4		15		25
Fixed Rate Notes — US$ denominated		43		—		1,213		913
Securitization of export receivables — US$ denominated		82		55		345		425
Perpetual notes		—		—		75		65
Accrued charges		31		61		—		—

		1,008		496		3,265		2,607


Local debt
Denominated in Long-Term Interest Rate — TJLP		23		22		79		89
Denominated in General Price Index-Market (IGPM)		29		21		3		14
Basket of currencies		2		7		9		17
Non-convertible debentures		—		—		141		117
Denomunated by U.S. dollars		132		166		216		368
Accrued charges		24		18		1		2

		210		234		449		607

Total		1,218		730		3,714		3,214

The long-term portion at December 31, 2005 falls due in the following years:


2007			333
2008			471
2009			358
2010 thereafter			2,335
No due date (Perpetual notes and non-convertible debentures)			217

			3,714

At December 31, 2005 annual interest rates on long-term debt were as follows:


3.1% to 5%			1,841
5.1% to 7%			1,174
7.1% to 9%			1,740
9.1% to 11%			24
Over 11%			69
Variable (Perpetual notes)			84

			4,932

F-21

The indices applied to debt and respective percentage variations in each year were as follows (unaudited):


	%
	2005			2004			2003
TJLP — Long-Term Interest Rate (effective rate)		9.8			9.8			11.5
IGP-M — General Price Index — Market		1.2			12.4			8.7
Devaluation of United States Dollar against Real		(11.8	)		(8.1	)		(18.2	)

		On October 26, 2005, we issued US$300 notes due 2034, bearing interest of 7.65% per year in the same form as the US$500, 8.25% guaranteed notes issued on January 15, 2004.

		On December 31, 2005 the US dollar denominated Fixed Rate Notes of US$1,256 (2004 — US$913) and other debt of US$2,661 (2004 — US$1,834) are unsecured. The export securitization of US$427 (2004 — US$480) is secured by existing and future accounts receivable of our subsidiary CVRD Overseas Ltd. Loans from international lenders of US$135 (2004- US$170) are guaranteed by the Braszilian Federal Government, to which we have given counter-guarantees in the same amounts secured by our own shares and accounts receivable of a subsidiary. We also have loans from local and international institutions secured by property, plant and equipment in the amount of US$123 (2004 — US$251). The remaining long-term debt of US$330 (2004 — US$296) is secured mainly by assets of subsidiaries.

16		Stockholders’ equity

		Each holder of common and preferred class A stock is entitled to one vote for each share on all matters that come before a stockholders’ meeting, except for the election of the Board of Directors, which is restricted to the holders of common stock. As described in Note 6, the Brazilian Government holds three preferred special share which confers to it permanent veto rights over certain matters.

		A three for one stock split proposal was approved by the Extraordinary General Shareholders ´ Meeting on August 18, 2004. Therefore, CVRD ´s capital is composed of 1,165,677,168 shares, with 749,949,429 common shares and 415,727,739 preferred class “A” shares. All numbers of share and per share amounts included herein reflect retroactive application of the stock split.

		As of December 31, 2005, we had acquired 14,156,968 shares to be held in treasury for subsequent disposal or cancellation at an average weighted unit cost of US$6.17 (minimum cost of US$2.67 and maximum of US$7.84).

		Both common and preferred stockholders are entitled to receive a dividend of at least 25% of annual adjusted net income based on the statutory accounting records, upon approval at the annual stockholders’ meeting. In the case of preferred stockholders, this dividend cannot be less than 6% of the preferred capital as stated in the statutory accounting records or, if greater, 3% of the statutory book equity value per share. For each of the years 2005, 2004 and 2003 we distributed dividends to preferred stockholders in excess of this limit. Interest attributed to stockholders equity as from January 1, 1996 is considered part of the minimum dividend.

		Brazilian law permits the payment of cash dividends only from retained earnings as stated in the statutory accounting records and such payments are made in Reais. At December 31, 2005 , we had no undistributed retained earnings. In addition, appropriated retained earnings

F-22

		at December 31, 2005 includes US$3,722, related to the unrealized income and expansion reserves, which could be freely transferred to retained earnings and paid as dividends, if approved by the stockholders.

		No withholding tax is payable on distribution of profits earned except for distributions in the form of interest attributed to stockholders (Note 3 (l)).

		Brazilian laws and our By-laws require that certain appropriations be made from retained earnings to reserve accounts on an annual basis, all determined in accordance with amounts stated in the statutory accounting records, as detailed below:


	Three months ended (unaudited)								Year ended December 31
	December			September		December
	31, 2005			30, 2005		31, 2004			2005			2004			2003
Appropriated retained earnings
Unrealized income reserve
Beginning of the period		156			147		195			130			193			211
Transfer (to) from retained earnings		(55	)		9		(65	)		(29	)		(63	)		(18	)

End of the period		101			156		130			101			130			193
Expansion reserve
Beginning of the period		1.385			1.309		1.795			3.091			2.090			1.494
Transfer to capital stock		—			—		—			(2.036	)		(309	)		(423	)
Transfer from retained earnings		2.236			76		1.296			2.566			1.310			1.019

End of the period		3.621			1.385		3.091			3.621			3.091			2.090
Legal reserve
Beginning of the period		395			373		378			529			374			241
Transfer to capital stock		—			—		—			(209	)		—			—
Transfer from retained earnings		204			22		151			279			155			133

End of the period		599			395		529			599			529			374
Fiscal incentive depletion reserve
Beginning of the period		—			—		351			378			347			284
Transfer to capital stock		—			—		—			(398	)		—			—
Transfer from retained earnings		—			—		27			20			31			63

End of the period		—			—		378			—			378			347
Fiscal incentive investment reserve
Beginning of the period		—			—		—			15			31			—
Transfer to capital stock		—			—		—			(16	)		(31	)		—
Transfer from retained earnings		36			—		15			37			15			31

End of the period		36			—		15			36			15			31

Total appropriated retained earnings		4.357			1.936		4.143			4.357			4.143			3.035

The purpose and basis of appropriation to such reserves is described below:

	•		Unrealized income reserve — this represents principally our share of the earnings of affiliates and joint ventures, not yet received in the form of cash dividends.

	•		Expansion reserve — this is a general reserve for expansion of our activities.

	•		Legal reserve — this reserve is a requirement for all Brazilian corporations and represents the appropriation of 5% of annual net income under Brazilian GAAP up to a limit of 20% of capital stock under Brazilian GAAP.

	•		Fiscal incentive depletion reserve — this represents an additional amount relative to mineral reserve depletion equivalent to 20% of the sales price of mining production, which is deductible for tax purposes providing an equivalent amount is transferred from retained earnings to the reserve account. This fiscal incentive expired in 1996.

F-23

•

Fiscal incentive investment reserve — this reserve results from an option to designate a portion of income tax otherwise payable for investment in government approved projects and is recorded in the year following that in which the taxable income was earned. As from 2000, this reserve basically contemplates income tax incentives (Note 8).

		Basic and diluted earnings per share

		Basic and diluted earnings per share amounts have been calculated as follows:


					Basic and
					diluted per
			Weighted		share
	Income		average		amount
	(Numerator)		(Thousands)		(US$ per
	(US$ million)		(Denominator)		share)
Net income for the year ended December 31, 2005		4,841

Income available to preferred stockholders		1,748		415,716		4.20
Income available to common stockholders		3,093		735,804		4.20

Net income for the year ended December 31, 2004		2,573

Income available to preferred stockholders		929		415,716		2.23
Income available to common stockholders		1,644		735,804		2.23

Net income for the year ended December 31, 2003		1,548

Income available to preferred stockholders		559		415,714		1.34
Income available to common stockholders		989		735,804		1.34

17		Pension plans

		Since 1973 we have sponsored a defined benefit pension plan (the “Old Plan”) covering substantially all employees, with benefits based on years of service, salary and social security benefits. This plan is administered by Fundação Vale do Rio Doce de Seguridade Social — VALIA and was funded by monthly contributions made by us and our employees, calculated based on periodic actuarial appraisals.

		In May 2000, we implemented a new pension plan, which is primarily a defined contribution plan with a defined benefit feature relative to service prior to May 2000 (the “New Plan”), and offered our active employees the opportunity of transferring to the New Plan. Over 98% of our active employees opted to transfer to the New Plan. The Old Plan will continue in existence, covering almost exclusively retired participants and their beneficiaries.

		Additionally we provide employees with supplementary pension payments through the “Abono Complementação” or supplemented pension plan (SPP).

		The following information details the status of the defined benefit elements of the Old Plan and SPP in accordance with SFAS 132 — “Employers’ Disclosure about Pensions and Other Post-retirement Benefits”, as amended.

F-24

(a)

Change in benefit obligation


	As of December 31
	2005			2004
Benefit obligation at beginning of year		1,719			1,485
Service cost		2			2
Interest cost		240			188
Benefits paid		(169	)		(133	)
Effect of exchange rate changes		234			137
Actuarial loss		7			40

Benefit obligation at end of year		2,033			1,719

We use a measurement date of December 31 for our pension and post-retirement benefit plans.

(b) Change in plan assets


	As of December 31
	2005			2004
Fair value of plan assets at beginning of year		2,108			1,657
Actual return on plan assets		562			410
Employer contributions		64			37
Benefits paid		(169	)		(133	)
Effect of exchange rate changes		279			137

Fair value of plan assets at end of year		2,844			2,108

Old plan assets at December 31, 2005 include US$409 of portfolio investments in our own shares (US$274 at December 31, 2004) and US$42 of shares of related parties (US$37 at December 31, 2004), as well as US$455 of Federal Government Securities (US$303 at December 31, 2004).

(c)

Accrued pension cost liability (prepaid pension cost)


	As of December 31
	2005			2004
Funded status, excess of benefit obligation over plan assets		(811	)		(389	)
Unrecognized net transitory obligation		(46	)		(51	)
Unrecognized net actuarial loss		726			459

Accrued pension cost liability (prepaid pension cost)		(131	)		19

(d)

Assumptions used in each year (expressed in nominal terms)


	2005		2004
Discount rate		13.40% p.a		13.40% p.a
Expected return on plan assets		13.40% p.a		13.40% p.a
Rate of compensation increase — up to 47 years		8.15% p.a		6.91% p.a
Inflation		5.00% p.a		5.00% p.a

F-25

(e)		Investment targets and composition of plan assets

		The fair value of Old Plan assets for these plans is US$2,781 and US$2,079 at the end of 2005 and 2004, respectively. The asset allocation for the Company’s Old Plan at the end of 2005 and 2004, and the target allocation for 2006, by asset category, follows:


	Target			Percentage of plan assets at
	allocation			December 31,
	for 2006			2005			2004
	(unaudited)
Equity securities		27	%		30	%		29	%
Real estate		6	%		5	%		6	%
Loans		4	%		4	%		3	%
Fixed Income		63	%		61	%		62	%

Total		100	%		100	%		100	%

		The fixed income allocation target of 63% was established in order to match the asset with the benefit payments. The proposal for 2006 is to re-establish the investments in inflation-indexed funds up to 35%. The remaining investments in fixed income will be used for the payment of short-term plan benefits.

		The target of 27% for equity securities reflects the expected appreciation of the Brazilian stock markets as well as the Brazilian interest rates.

(f)

Pension costs


	Year ended December 31
	2005			2004			2003
Service cost		2			2			2
Interest cost		240			188			151
Estimated return on plan assets		(299	)		(213	)		(158	)
Amortization of initial transitory obligation		11			9			9
Amortization of actuarial gain/loss		(16	)		(24	)		—

Net periodic pension cost		(62	)		(38	)		4

		In addition to benefits provided under the SPP and Old Plan, accruals have been made relative to supplementary health care benefits extended in previous periods as part of early-retirement programs. Such accruals included in long-term liabilities totaled US$68 and US$59, at December 31, 2005 and 2004, respectively, in addition to US$5 and US$5, respectively, in current liabilities.

		The cost recognized 2005, 2004 and 2003 relative to the defined contribution element of the New Plan was US$10, US$7 and US$5, respectively.

(g)		Expected contributions and benefits

		Employer contributions expected for 2006 are US$59 (unaudited).

		The benefit payments, which reflect future service, as appropriate, are expected to be paid as follows (unaudited):


	Old Plan		SPP		Total
2006		166		30		196
2007		166		29		195
2008		165		28		193
2009		164		27		191
2010		164		26		190
2011 to 2015		805		118		923

F-26

18		Commitments and contingencies

(a)		At December 31, 2005, we had extended guarantees for borrowings obtained by affiliates and joint ventures in the amount of US$5, as follows:

Amount of

Denominated

Final

Counter

Affiliate or Joint Venture

guarantee

currency

Purpose

maturity

guarantees

SAMARCO

US$

Debt guarantee

2008

None

VALESUL

Debt guarantee

2007

None

		We expect no losses to arise as a result of the above guarantees. We charge commission for extending these guarantees in the case of Samarco.

		We have not provided any significant guarantees since January 1, 2003 which would require fair value adjustments under FIN 45 — “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others”.

(b)		CVRD and its subsidiaries are defendants in numerous legal actions in the normal course of business. Based on the advice of our legal counsel, management believes that the provision for contingent losses is sufficient to cover probable losses in connection with such actions.

		The provision for contingencies and the related judicial deposits are composed as follows:


	December 31, 2005				December 31, 2004
	Provision for		Judicial		Provision for		Judicial
	contingencies		deposits		contingencies		deposits
Labor claims		229		138		221		109
Civil claims		210		98		185		72
Tax — related actions		816		329		502		344
Others		31		3		6		6

		1.286		568		914		531

		Labor — related actions principally comprise employee claims for (i) payment of time spent traveling from their residences to the work-place, (ii) additional health and safety related payments and (iii) various other matters, often in connection with disputes about the amount of indemnities paid upon dismissal.

		Civil actions principally relate to claims made against us by contractors in connection with losses alleged to have been incurred by them as a result of various past government economic plans during which full indexation of contracts for inflation was not permitted.

		Tax — related actions principally comprise our challenges of certain revenue taxes, value added tax and income tax.

		We continue to vigorously pursue our interests in all the above actions but recognize that we probably will incur some losses in the final instance, for which we have made provisions.

		Our judicial deposits are made as required by the courts for us to be able to enter or continue a legal action. When judgment is favorable to us, we receive the deposits back; when unfavorable, the deposits are delivered to the prevailing party.

		Contingencies settled in 2005, 2004 and 2003 aggregated US$114, US$67 and US$182, respectively, and additional provisions aggregated US$141, US$157 and US$146, respectively.

F-27

		In addition to the contingencies for which we have made provisions we are defending claims which in our opinion, and based on the advice of our legal counsel, the likelihood of loss is possible losses which total US$1,033 at December 31, 2005, for which no provision has been made.

(c)		We are defendants in two actions seeking substantial compensatory damages brought by the Municipality of Itabira, State of Minas Gerais, which we believe are without merit. Due to the remote likelihood that any loss will arise therefrom no provision has been made in the financial statements with respect to these two actions.

(d)		We are committed under a take-or-pay agreement to purchase approximately 33,733 thousand metric tons of bauxite from Mineração Rio do Norte S.A. — MRN at a formula price, calculated based on the current London Metal Exchange (LME) quotation for aluminum. Based on a market price of US$23.01 per metric ton as of December 31, 2005, this arrangement represents the following total commitment:


2006			145
2007			145
2008			145
2009			145
2010			145
2011 and thereafter			51

			776

(e)		We and Banco Nacional de Desenvolvimento Econômico e Social — BNDES entered into a contract, known as the Mineral Risk Contract, in March 1997, relating to prospecting authorizations for mining regions where drilling and exploration are still in their early stages. The Mineral Risk Contract provides for the joint development of certain unexplored mineral deposits in approximately two million identified hectares of land in the Carajás region, as well as proportional participation in any financial benefits earned from the development of such resources. Iron ore and manganese deposits already identified and subject to development are specifically excluded from the Mineral Risk Contract.

		Pursuant to the Mineral Risk Contract, we and BNDES each agreed to provide US$205 million, which represents half of the US$410 million in expenditures estimated as necessary to complete geological exploration and mineral resource development projects in the region. We will oversee these projects and BNDES will advance us half of our costs on a quarterly basis. Under the Mineral Risk Contract, as of December 31, 2005, the remaining contributions towards exploration and development activities totaled US$17 million. In the event that either of us wishes to conduct further exploration and development after having spent such US$205 million, the contract provides that each party may either choose to match the other party’s contributions, or may choose to have its financial interest proportionally diluted. If a party’s participation in the project is diluted to an amount lower than 40% of the amount invested in connection with exploration and development projects, then the Mineral Risk Contract provides that the diluted party will lose all the rights and benefits provided for in the Mineral Risk Contract and any amounts previously contributed to the project.

		Under the Mineral Risk Contract, BNDES has agreed to compensate us through a finder’s fee production royalty on their share of mineral resources that are discovered and placed into production. This finder’s fee is equal to 3.5% of the revenues derived from the sale of gold, silver and platinum group metals and 1.5% of the revenues derived from the sale of other minerals, including copper, except for gold and other minerals discovered at Serra Leste, for which the finder’s fee is equal to 6.5% of revenues.

F-28

(f)		At the time of our privatization in 1997, we issued shareholder revenue interests known in Brazil as “debentures” to our then-existing shareholders, including the Brazilian Government. The terms of the “debentures”, were set to ensure that our pre-privatization shareholders, including the Brazilian Government, would participate alongside us in potential future financial benefits that we are able to derive from exploiting our mineral resources.

		In preparation for the issuance of the debentures, we issued series B preferred shares on a one-for-one basis to all holders of our common shares and series A preferred shares. We then exchanged all of the series B shares for the debentures at par value. The debentures are not redeemable or convertible, and do not trade on a stapled basis or otherwise with our common or preferred shares. During 2002 we registered the debentures with the Securities Commissions (CVM) in order to permit trading.

		Under Brazilian Central Bank regulations, pre-privatization shareholders that held their shares through our preferred share American Depositary Receipt, or ADR, program and institutional investors that held their shares through rule 1,298/87 of Brazilian Central Bank were not permitted to receive the debentures or any financial benefits relating to the debentures. We sought approval from the Central Bank to distribute the debentures to these investors, but the Central Bank rejected our request. We renewed our request to the Central Bank, but we cannot be sure that we will succeed. Therefore, unless the Central Bank approves our request, the debentures will not have any value for ADR holders and foreign investors through Annex V of Brazilian Central Bank.

		Under the terms of the debentures, holders will have the right to receive semi-annual payments equal to an agreed percentage of our net revenues (revenues less value added tax) from certain identified mineral resources that we owned as of May 1997, to the extent that we exceed defined threshold production volumes of these resources, and from the sale of mineral rights that we owned as of May 1997. Our obligation to make payments to the holders will cease when the relevant mineral resources are exhausted at which time we are required to repay the original par value plus accrued interest. Based on current production levels, and estimates for new projects, we began payments relating to copper resources in 2004 and expect to start payments relating to iron ore resources from approximately 2020 for the Northern System and 2030 for the Southern System, and payments related to other mineral resources at the end of the current decade.

		The table below summarizes the amounts we will be required to pay under the debentures based on the net revenues we earn from the identified mineral resources and the sale of mineral rights.

F-29


Area	Mineral	Required Payments by CVRD

Southern System	Iron ore	1.8% of net revenue, after total sales from May 1997 exceeds 1.7 billion tons.

Northern System	Iron ore	1.8% of net revenue, after total sales from May 1997 exceeds 1.2 billion tons.

Pojuca, Andorinhas, Liberdade and Sossego	Gold and copper	2.5% of net revenue from the beginning of commercialization.

Igarapé Bahia and Alemão	Gold and copper	2.5% of net revenue, after total sales from May 1997 exceeds 70 tons of gold.

Fazenda Brasileiro (*)	Gold	2.5% of net revenue after total sales from May 1997 exceeds 26 tons.

Other areas, excluding Carajás/ Serra Leste	Gold	2.5% of net revenue.

Other areas owned as of May 1997	Other minerals	1% of net revenue, 4 years after the beginning of the commercialization.

All areas	Sale of mineral rights owned as of May 1997	1% of the sales price.

		On March 22 and September 27, 2005 we declared a distribution on these “debentures” in the amount of US$3 and US$2, paid as from April 1 and October 3, 2005, respectively.

(g)		We use various judgments and assumptions when measuring our environmental liabilities and asset retirement obligations. Changes in circumstances, law or technology may affect our estimates and we periodically review the amounts accrued and adjust them as necessary. Our accruals do not reflect unasserted claims because we are currently not aware of any such issues. Also the amounts provided are not reduced by any potential recoveries under cost sharing, insurance or indemnification arrangements because such recoveries are considered uncertain. The changes are demonstrated as follows:


	Three months ended (unaudited)								Year ended December 31
	December			September			December
	31, 2005			30, 2005			31, 2004		2005			2004			2003

Environmental liabilities beginning of period		166			159			91		134			81			15
Initial recognition of SFAS 143 as at January 1, 2003		—			—			—		—			—			26
Increase due to new subsidiaries acquired		—			—			—		—			—			11
Accretion expense		4			—			5		14			13			6
Liabilities settled in the current period		(3	)		(2	)		—		(9	)		(3	)		—
Revisions in estimated cash flows		67			—			31		67			31			15
Cumulative translation adjustment		(9	)		9			7		19			12			8


Environmental liabilities end of period		225			166			134		225			134			81

(h)		Description of Leasing Arrangements

		We conduct part of our railroad operation from leased facilities. The lease, which is for 30 years expiring in August, 2026, is classified as an operating lease and can be renewable for a further 30 years. At the end of the lease term, we are required to return the concession and the lease assets. In most cases, management expects that in the normal course of business, leases will be renewed.

		Operating Leases

F-30

		The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of December 31, 2005:

		Year ending December 31:


2006			42
2007			42
2008			42
2009			42
Later years			775

Total minimum payments required			943

		The total expenses of operating leases in 2005, 2004 and 2003 was US$42, US$37 and US$39, respectively.

19		Segment and geographical information

		We adopted SFAS 131 “Disclosures about Segments of an Enterprise and Related Information” with respect to the information we present about our operating segments. SFAS 131 introduced a “management approach” concept for reporting segment information, whereby such information is required to be reported on the basis that the chief decision-maker uses internally for evaluating segment performance and deciding how to allocate resources to segments. Our business segments are currently organized as follows:

		Ferrous products — comprises iron ore mining and pellet production, as well as the Northern and Southern transportation systems, including railroads, ports and terminals, as they pertain to mining operations. Manganese mining and ferroalloys are also included in this segment.

		Non-ferrous products — comprises the production of non-ferrous minerals.

		Logistics — comprises our transportation systems as they pertain to the operation of our ships, ports and railroads for third-party cargos.

		Holdings — divided into the following sub-groups:

	•		Aluminum — comprises aluminum trading activities, alumina refining and investments in joint ventures and affiliates engaged in bauxite mining and aluminum metal smelting.

	•		Others — comprises our investments in joint ventures and affiliates engaged in other businesses.

		Information presented to senior management with respect to the performance of each segment is generally derived directly from the accounting records maintained in accordance with accounting practices adopted in Brazil together with certain minor inter-segment allocations.

		Consolidated net income and principal assets in accordance with US GAAP are reconciled as follows:

F-31

Results by segment — before eliminations


	As of and for the three months ended (unaudited)
	December 31, 2005																					September 30, 2005																					December 31, 2004
				Non						Holdings															Non						Holdings															Non						Holdings
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Export		3,670			262			21			485			—			(1,586	)		2,852			3,387			166			17			432			—			(1,398	)		2,604			2,111			256			27			455			—			(1,099	)		1,750
Gross revenues — Domestic		546			52			316			84			—			(104	)		894			586			70			353			87			—			(90	)		1,006			397			45			234			68			—			(66	)		678
Cost and expenses		(2,751	)		(235	)		(263	)		(447	)		(11	)		1,690			(2,017	)		(2,554	)		(200	)		(256	)		(408	)		—			1,488			(1,930	)		(1,807	)		(194	)		(193	)		(390	)		(1	)		1,165			(1,420	)
Research and development		(38	)		(16	)		(3	)		—			(28	)		—			(85	)		(18	)		(19	)		—			—			(67	)		—			(104	)		(18	)		(48	)		(1	)		—			—			—			(67	)
Depreciation, depletion and amortization		(134	)		(21	)		(17	)		(11	)		—			—			(183	)		(130	)		(14	)		(9	)		(18	)		—			—			(171	)		(94	)		(11	)		(5	)		(9	)		—			—			(119	)

Operating income		1,293			42			54			111			(39	)		—			1,461			1,271			3			105			93			(67	)		—			1,405			589			48			62			124			(1	)		—			822
Financial income		133			—			8			2			(6	)		(106	)		31			159			—			7			2			7			(139	)		36			105			2			4			7			1			(78	)		41
Financial expenses		(195	)		(2	)		2			(119	)		7			106			(201	)		(268	)		1			(14	)		(75	)		1			139			(216	)		(232	)		(3	)		(2	)		(99	)		—			78			(258	)
Foreign exchange and monetary gains (losses), net		(63	)		(51	)		3			(55	)		—			—			(166	)		126			1			(9	)		46			(1	)		—			163			232			4			(1	)		41			(1	)		—			275
Gain on sale of investments		—			—			—			—			—			—			—			—			—			—			—			126			—			126			—			—			8			—			82			—			90
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		128			—			15			14			56			—			213			127			—			17			15			35			—			194			55			—			11			19			94			—			179
Income taxes		(103	)		—			(2	)		46			3			—			(56	)		(248	)		2			(5	)		(22	)		(1	)		—			(274	)		(388	)		(3	)		(3	)		(3	)		1			—			(396	)
Minority interests		(104	)		—			—			18			—			—			(86	)		(104	)		—			(1	)		(12	)		—			—			(117	)		(17	)		—			—			(15	)		—			—			(32	)

Net income		1,089			(11	)		80			17			21			—			1,196			1,063			7			100			47			100			—			1,317			344			48			79			74			176			—			721


Sales classified by geographic destination:
Export market
America, except United States		350			—			13			67			—			(187	)		243			413			—			10			66			—			(286	)		203			207			1			19			81			—			(123	)		185
United States		116			4			—			48			—			(53	)		115			56			3			—			43			—			(17	)		85			173			—			6			77			—			(122	)		134
Europe		1,202			192			4			228			—			(630	)		996			1,303			82			7			205			—			(582	)		1,015			836			24			2			164			—			(401	)		625
Middle East/Africa/Oceania		219			16			—			27			—			(46	)		216			155			20			—			9			—			24			208			104			43			—			8			—			(48	)		107
Japan		371			12			—			103			—			(137	)		349			345			20			—			97			—			(120	)		342			182			17			—			95			—			(74	)		220
China		1,120			24			4			12			—			(422	)		738			858			17			—			12			—			(319	)		568			453			72			—			30			—			(210	)		345
Asia, other than Japan and China		292			14			—			—			—			(111	)		195			257			24			—			—			—			(98	)		183			156			99			—			—			—			(121	)		134

		3,670			262			21			485			—			(1,586	)		2,852			3,387			166			17			432			—			(1,398	)		2,604			2,111			256			27			455			—			(1,099	)		1,750
Domestic market		546			52			316			84			—			(104	)		894			586			70			353			87			—			(90	)		1,006			397			45			234			68			—			(66	)		678

		4,216			314			337			569			—			(1,690	)		3,746			3,973			236			370			519			—			(1,488	)		3,610			2,508			301			261			523			—			(1,165	)		2,428

Assets:
Property, plant and equipment, net		8,738			2,271			999			1,930			228			—			14,166			8,857			1,595			947			1,862			114			—			13,375			5,838			1,448			674			1,102			1			—			9,063
Additions to Property, plant and equipment		918			65			98			161			(5	)		—			1,237			953			35			79			202			33			—			1,302			406			208			180			82			1			—			877
Investments in affiliated companies and joint ventures and other investments, net of provision for losses		614			—			109			236			713			—			1,672			629			—			97			226			692			—			1,644			435			—			79			226			419			—			1,159

Capital employed		7,582			1,118			990			1,039			85			—			10,814			7,441			1,167			989			1,117			16			—			10,730			4,544			1,099			680			976			27			—			7,326

F-32

Operating income by product — after eliminations


			As of and for the three months ended (unaudited)
			December 31, 2005																					September 30, 2005																							December 31, 2004
							Value											Depreciation,												Value											Depreciation,												Value											Depreciation,
	Revenues						added			Net		Cost and						depletion and			Operating			Revenues						added			Net		Cost and						depletion and			Operating			Revenues						added			Net		Cost and						depletion and			Operating
	Export		Domestic		Total		tax			revenues		expenses			Net			amortization			income			Export		Domestic		Total		tax			revenues		expenses			Net			amortization			income			Export		Domestic		Total		tax			revenues		expenses			Net			amortization			income
Ferrous
Iron ore		1,682		393		2,075		(57	)		2,018		(768	)		1,250			(128	)		1,122			1,649		416		2,065		(66	)		1,999		(693	)		1,306			(120	)		1,186			882		251		1,133		(33	)		1,100		(519	)		581			(78	)		503
Pellets		555		89		644		(18	)		626		(404	)		222			(9	)		213			438		91		529		(22	)		507		(347	)		160			(7	)		153			230		71		301		(13	)		288		(206	)		82			(7	)		75
Manganese		12		6		18		(1	)		17		(33	)		(16	)		—			(16	)		14		6		20		(2	)		18		(25	)		(7	)		(1	)		(8	)		31		5		36		1			37		(15	)		22			—			22
Ferroalloys		57		38		95		(10	)		85		(79	)		6			(7	)		(1	)		61		31		92		(9	)		83		(87	)		(4	)		(5	)		(9	)		116		61		177		(16	)		161		(114	)		47			(5	)		42

		2,306		526		2,832		(86	)		2,746		(1,284	)		1,462			(144	)		1,318			2,162		544		2,706		(99	)		2,607		(1,152	)		1,455			(133	)		1,322			1,259		388		1,647		(61	)		1,586		(854	)		732			(90	)		642
Non ferrous
Gold		—		—		—		—			—		—			—			—			—			—		—		—		—			—		—			—			—			—			—		—		—		—			—		(2	)		(2	)		—			(2	)
Potash		—		41		41		(2	)		39		(25	)		14			(3	)		11			—		47		47		(4	)		43		(32	)		11			(1	)		10			—		35		35		(1	)		34		(13	)		21			(1	)		20
Kaolin		42		9		51		(2	)		49		(62	)		(13	)		(1	)		(14	)		36		6		42		(2	)		40		(56	)		(16	)		(3	)		(19	)		38		7		45		(2	)		43		(27	)		16			(3	)		13
Copper		129		2		131		(3	)		128		(60	)		68			(8	)		60			75		17		92		(1	)		91		(59	)		32			(9	)		23			104		3		107		—			107		(46	)		61			(7	)		54

		171		52		223		(7	)		216		(147	)		69			(12	)		57			111		70		181		(7	)		174		(147	)		27			(13	)		14			142		45		187		(3	)		184		(88	)		96			(11	)		85
Aluminum
Alumina		131		8		139		(1	)		138		(122	)		16			(6	)		10			116		30		146		(4	)		142		(130	)		12			(7	)		5			131		10		141		(5	)		136		(92	)		44			(5	)		39
Aluminum		208		9		217		(1	)		216		(109	)		107			(5	)		102			191		11		202		(2	)		200		(105	)		95			(11	)		84			191		9		200		(1	)		199		(111	)		88			(4	)		84
Bauxite		21		—		21		—			21		(18	)		3			—			3			10		—		10		—			10		(10	)		—			—			—			13		—		13		—			13		(13	)		—			—			—

		360		17		377		(2	)		375		(249	)		126			(11	)		115			317		41		358		(6	)		352		(245	)		107			(18	)		89			335		19		354		(6	)		348		(216	)		132			(9	)		123
Logistics
Railroads		—		223		223		(43	)		180		(152	)		28			(13	)		15			—		267		267		(38	)		229		(161	)		68			(5	)		63			—		162		162		(29	)		133		(99	)		34			(7	)		27
Ports		—		57		57		(9	)		48		(35	)		13			(2	)		11			—		67		67		(6	)		61		(32	)		29			(2	)		27			—		47		47		(8	)		39		(25	)		14			(1	)		13
Ships		15		14		29		(1	)		28		(31	)		(3	)		(1	)		(4	)		14		11		25		(3	)		22		(26	)		(4	)		—			(4	)		15		10		25		(2	)		23		(46	)		(23	)		(1	)		(24	)

		15		294		309		(53	)		256		(218	)		38			(16	)		22			14		345		359		(47	)		312		(219	)		93			(7	)		86			15		219		234		(39	)		195		(170	)		25			(9	)		16
Others		—		5		5		—			5		(56	)		(51	)		—			(51	)		—		6		6		(6	)		—		(106	)		(106	)		—			(106	)		—		6		6		(2	)		4		(48	)		(44	)		—			(44	)

		2,852		894		3,746		(148	)		3,598		(1,954	)		1,644			(183	)		1,461			2,604		1,006		3,610		(165	)		3,445		(1,869	)		1,576			(171	)		1,405			1,751		677		2,428		(111	)		2,317		(1,376	)		941			(119	)		822

F-33

Results by segment — before eliminations


	As of and for the year ended December 31,
	2005																					2004																					2003
				Non						Holdings															Non						Holdings															Non						Holdings
	Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated			Ferrous			ferrous			Logistics			Aluminum			Others			Eliminations			Consolidated
RESULTS
Gross revenues — Export		12,655			787			75			1,784			—			(5,461	)		9,840			7,589			521			92			1,635			—			(3,725	)		6,112			5,256			105			75			758			—			(2,354	)		3,840
Gross revenues — Domestic		2,197			213			1,215			345			—			(405	)		3,565			1,424			163			871			227			—			(318	)		2,367			1,142			107			472			165			—			(181	)		1,705
Cost and expenses		(9,646	)		(762	)		(886	)		(1,639	)		(10	)		5,866			(7,077	)		(6,459	)		(443	)		(622	)		(1,322	)		(1	)		4,043			(4,804	)		(4,862	)		(130	)		(367	)		(760	)		3			2,535			(3,581	)
Research and development		(87	)		(73	)		(4	)		(5	)		(108	)					(277	)		(40	)		(113	)		—			—			—			—			(153	)		(20	)		(62	)		—			—			—			—			(82	)
Depreciation, depletion and amortization		(458	)		(65	)		(45	)		(51	)		—			—			(619	)		(301	)		(35	)		(29	)		(34	)		—			—			(399	)		(191	)		(18	)		(14	)		(15	)		—			—			(238	)

Operating income		4,661			100			355			434			(118	)		—			5,432			2,213			93			312			506			(1	)		—			3,123			1,325			2			166			148			3			—			1,644
Financial income		439			1			34			9			2			(362	)		123			251			2			15			16			3			(205	)		82			195			1			14			10			4			(122	)		102
Financial expenses		(751	)		(6	)		(19	)		(154	)		8			362			(560	)		(637	)		(6	)		(15	)		(218	)		—			205			(671	)		(406	)		(4	)		(9	)		(49	)		(5	)		122			(351	)
Foreign exchange and monetary gains (losses), net		259			(44	)		(13	)		98			(1	)		—			299			20			5			(1	)		39			2			—			65			150			16			(14	)		93			(3	)		—			242
Gain on sale of investments		—			—			—			—			126			—			126			—			—			8			—			396			—			404			17			—			—			—			—			—			17
Equity in results of affiliates and joint ventures and change in provision for losses on equity investments		435			—			54			65			206			—			760			170			—			33			71			268			—			542			133			—			(52	)		147			78			—			306
Income taxes		(808	)		(1	)		(17	)		(55	)		1			—			(880	)		(726	)		(7	)		(9	)		(4	)		(3	)		—			(749	)		(266	)		(3	)		(2	)		(27	)		1			—			(297	)
Minority interests		(337	)		—			(1	)		(121	)		—			—			(459	)		(101	)		(2	)		—			(120	)		—			—			(223	)		(44	)		(3	)		—			(58	)		—			—			(105	)

Income from continuing operations		3,898			50			393			276			224			—			4,841			1,190			85			343			290			665			—			2,573			1,104			9			103			264			78			—			1,558

Change in accounting pratice for asset retirement obligations (note 4)		—			—			—			—			—			—			—			—			—			—			—			—			—			—			(10	)		—			—			—			—			—			(10	)

Net income		3,898			50			393			276			224			—			4,841			1,190			85			343			290			665			—			2,573			1,094			9			103			264			78			—			1,548


Sales classified by geographic destination:
Export market America, except United States		1,313			—			45			320			—			(762	)		916			735			1			65			221			—			(426	)		596			526			—			38			156			—			(329	)		391
United States		464			7			3			211			—			(268	)		417			533			—			15			186			—			(345	)		389			337			8			—			32			—			(188	)		189
Europe		4,847			449			23			750			—			(2,256	)		3,813			3,223			194			12			730			—			(1,607	)		2,552			2,213			76			30			378			—			(913	)		1,784
Middle East/Africa/Oceania		775			108			—			42			—			(148	)		777			412			107			—			8			—			(141	)		386			292			—			4			—			—			(70	)		226
Japan		1,261			44			—			395			—			(469	)		1,231			683			31			—			361			—			(287	)		788			569			13			—			96			—			(259	)		419
China		3,018			79			4			50			—			(1,135	)		2,016			1,392			81			—			129			—			(606	)		996			897			7			—			77			—			(401	)		580
Asia, other than Japan and China		977			100			—			16			—			(423	)		670			611			107			—			—			—			(313	)		405			422			1			3			19			—			(194	)		251

		12,655			787			75			1,784			—			(5,461	)		9,840			7,589			521			92			1,635			—			(3,725	)		6,112			5,256			105			75			758			—			(2,354	)		3,840
Domestic market		2,197			213			1,215			345			—			(405	)		3,565			1,424			163			871			227			—			(318	)		2,367			1,142			107			472			165			—			(181	)		1,705

		14,852			1,000			1,290			2,129			—			(5,866	)		13,405			9,013			684			963			1,862			—			(4,043	)		8,479			6,398			212			547			923			—			(2,535	)		5,545

Assets:
Property, plant and equipment, net		8,738			2,271			999			1,930			228			—			14,166			5,838			1,448			674			1,102			1			—			9,063			4,495			1,000			424			564			1			—			6,484
Additions to Property, plant and equipment		2,877			175			271			625			29			—			3,977			860			381			579			202			—			—			2,022			822			440			186			95			—			—			1,543
Investments in affiliated companies and joint ventures and other investments, net of provision for losses		614			—			109			236			713			—			1,672			435			—			79			226			419			—			1,159			344			—			44			329			317			—			1,034

Capital employed		7,582			1,118			990			1,039			85			—			10,814			4,544			1,099			680			976			27			—			7,326			4,137			266			429			498			20			—			5,350

F-34

Operating income by product — after eliminations


	Year ended December 31,
	2005																							2004																							2003
							Value											Depreciation,												Value											Depreciation,												Value											Impairment/			Depreciation,
	Revenues						added			Net		Cost and						depletion and			Operating			Revenues						added			Net		Cost and						depletion and			Operating			Revenues						added			Net		Cost and						Gain on sale			depletion and			Operating
	Export		Domestic		Total		tax			revenues		expenses			Net			amortization			income			Export		Domestic		Total		tax			revenues		expenses			Net			amortization			income			Export		Domestic		Total		tax			revenues		expenses			Net			of property,			amortization			income
Ferrous
Iron ore		5,890		1,506		7,396		(234	)		7,162		(2,658	)		4,504			(419	)		4,085			3,146		849		3,995		(128	)		3,867		(1,761	)		2,106			(270	)		1,836			2,108		554		2,662		(65	)		2,597		(1,318	)		1,279			(10	)		(166	)		1,103
Pellets		1,722		361		2,083		(78	)		2,005		(1,321	)		684			(23	)		661			893		255		1,148		(44	)		1,104		(824	)		280			(12	)		268			627		211		838		(19	)		819		(627	)		192			(12	)		(11	)		169
Manganese		56		21		77		(6	)		71		(81	)		(10	)		(1	)		(11	)		61		15		76		(4	)		72		(46	)		26			—			26			38		11		49		(5	)		44		(35	)		9			—			(2	)		7
Ferroalloys		318		176		494		(47	)		447		(344	)		103			(20	)		83			423		202		625		(52	)		573		(315	)		258			(15	)		243			201		99		300		(21	)		279		(218	)		61			(17	)		(10	)		34

		7,986		2,064		10,050		(365	)		9,685		(4,404	)		5,281			(463	)		4,818			4,523		1,321		5,844		(228	)		5,616		(2,946	)		2,670			(297	)		2,373			2,974		875		3,849		(110	)		3,739		(2,198	)		1,541			(39	)		(189	)		1,313
Non ferrous
Gold		—		—		—		—			—		—			—			—			—			—		—		—		—			—		(2	)		(2	)		—			(2	)		21		—		21		—			21		(2	)		19			—			(2	)		17
Potash		—		149		149		(11	)		138		(86	)		52			(8	)		44			—		124		124		(15	)		109		(51	)		58			(5	)		53			—		94		94		(12	)		82		(40	)		42			—			(7	)		35
Kaolin		150		27		177		(7	)		170		(176	)		(6	)		(20	)		(26	)		142		22		164		(6	)		158		(93	)		65			(14	)		51			83		13		96		(3	)		93		(70	)		23			(12	)		(7	)		4
Copper		354		37		391		(8	)		383		(203	)		180			(34	)		146			184		17		201		(3	)		198		(90	)		108			(16	)		92			—		—		—		—			—		—			—			—			—			—

		504		213		717		(26	)		691		(465	)		226			(62	)		164			326		163		489		(24	)		465		(236	)		229			(35	)		194			104		107		211		(15	)		196		(112	)		84			(12	)		(16	)		56
Aluminum
Alumina		455		76		531		(24	)		507		(445	)		62			(25	)		37			439		19		458		(18	)		440		(350	)		90			(19	)		71			342		153		495		(8	)		487		(363	)		124			—			(15	)		109
Aluminum		784		39		823		(5	)		818		(397	)		421			(26	)		395			710		29		739		(3	)		736		(286	)		450			(15	)		435			312		8		320		—			320		(295	)		25			—			—			25
Bauxite		54		—		54		—			54		(49	)		5			—			5			53		—		53		—			53		(48	)		5			—			5			34		3		37		(1	)		36		(33	)		3			—			—			3

		1,293		115		1,408		(29	)		1,379		(891	)		488			(51	)		437			1,202		48		1,250		(21	)		1,229		(684	)		545			(34	)		511			688		164		852		(9	)		843		(691	)		152			—			(15	)		137
Logistics
Railroads		—		881		881		(145	)		736		(528	)		208			(35	)		173			—		612		612		(100	)		512		(334	)		178			(28	)		150			—		373		373		(39	)		334		(153	)		181			—			(9	)		172
Ports		—		230		230		(34	)		196		(126	)		70			(5	)		65			—		173		173		(29	)		144		(89	)		55			(4	)		51			1		143		144		(14	)		130		(75	)		55			—			(9	)		46
Ships		56		49		105		(8	)		97		(101	)		(4	)		(3	)		(7	)		52		40		92		(7	)		85		(123	)		(38	)		(1	)		(39	)		54		33		87		(3	)		84		(122	)		(38	)		—			—			(38	)

		56		1,160		1,216		(187	)		1,029		(755	)		274			(43	)		231			52		825		877		(136	)		741		(546	)		195			(33	)		162			55		549		604		(56	)		548		(350	)		198			—			(18	)		180
Others		1		13		14		(6	)		8		(226	)		(218	)		—			(218	)		10		9		19		(4	)		15		(132	)		(117	)		—			(117	)		19		10		29		(5	)		24		(66	)		(42	)		—			—			(42	)

		9,840		3,565		13,405		(613	)		12,792		(6,741	)		6,051			(619	)		5,432			6,113		2,366		8,479		(413	)		8,066		(4,544	)		3,522			(399	)		3,123			3,840		1,705		5,545		(195	)		5,350		(3,417	)		1,933			(51	)		(238	)		1,644

F-35

20		Related party transactions

		Transactions with major related parties resulted in the following balances:


	As of December 31
	2005				2004
	Assets		Liabilities		Assets		Liabilities
AFFILIATED COMPANIES AND JOINT VENTURES
HISPANOBRAS		24		42		25		39
ITABRASCO		24		17		24		28
NIBRASCO		47		83		32		29
KOBRASCO		34		26		43		18
BAOVALE		—		18		—		13
USIMINAS		14		—		7		—
MSG		3		9		—		—
MRS		15		11		13		19
FERROBAN		—		—		39		8
MRN		—		34		1		20
SAMARCO		2		—		22		—
Others		22		13		29		18

		185		253		235		192

Current		181		252		180		174

Long-term		4		1		55		18

These balances are included in the following balance sheet classifications:


	As of December 31
	2005				2004
	Assets		Liabilities		Assets		Liabilities
Current assets
Accounts receivable		159		—		124		—
Loans and advances to related parties		22		—		56		—
Other assets
Loans and advances to related parties		4		—		55		—
Current liabilities
Suppliers		—		190		—		122
Loans from related parties		—		62		—		52
Long-term liabilities
Long-term debt		—		1		—		18

		185		253		235		192

F-36

The principal amounts of business and financial operations carried out with major related parties are as follows:


	Year ended December 31
	2005				2004				2003
	Income		Expense		Income		Expense		Income		Expense
AFFILIATED COMPANIES AND JOINT VENTURES
CST		—		—		251		—		136		—
NIBRASCO		280		310		147		80		116		133
SAMARCO		25		1		16		—		—		—
SIDERAR		11		—		86		—		53		—
ITABRASCO		158		65		84		1		61		20
HISPANOBRAS		170		185		97		—		66		69
KOBRASCO		170		113		92		2		62		57
USIMINAS		24		—		109		—		79		—
ALBRAS (to December 2003)		—		—		—		—		149		286
VALESUL		66		—		16		—		10		—
MRN		—		136		—		154		—		133
GIIC		157		—		74		—		—		—
MRS		4		385		—		80		—		—
Others		19		60		15		56		55		43

		1,084		1,255		987		373		787		741

These amounts are included in the following statement of income line items:


	Year ended December 31
	2005				2004				2003
	Income		Expense		Income		Expense		Income		Expense

Sales / Cost of iron ore and pellets		964		694		842		108		608		317
Revenues / expense from logistic services		4		387		95		80		13		—
Sales / Cost of aluminum products		66		136		16		144		153		421
Financial income/expenses		26		36		6		10		10		2
Others		24		2		28		31		3		1

		1,084		1,255		987		373		787		741

21		Fair value of financial instruments

		The carrying amount of our current financial instruments generally approximates fair market value because of the short-term maturity or frequent repricing of these instruments.

		The market value of our listed long-term investments, where available, is disclosed in Note 13 to these financial statements.

		Based on borrowing rates currently available to us for bank loans with similar terms and average maturities, the fair market value of long-term debt (current portion not included) at December 31, 2005 and 2004 is estimated as follows:


	As of December 31
	2005		2004
Fair market value		4,076		3,355
Carrying value		3,714		3,214

Fair market value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. Changes in assumptions could significantly affect the estimates.

F-37

22		Derivative financial instruments

		Volatility of interest rates, exchange rates and commodity prices are the main market risks to which we are exposed — all three are managed through derivative operations. These have the exclusive aim of reducing exposure to risk. We do not contract derivatives for speculative purposes.

		We monitor and evaluate our derivative positions on a regular basis and adjust our strategy in response to market conditions. We also periodically review the credit limits and credit worthiness of our counter-parties in these transactions. In view of the policies and practices established for operations with derivatives, management considers the occurrence of non-measurable risk situations as unlikely.

		The asset (liability) balances and the change in fair value of derivative financial instruments are as follows (the quarterly information is unaudited):

F-38


	Interest
	rates			Currencies			Gold			Alumina			Aluminum			Total
	(LIBOR)
Unrealized gains (losses) at October 1, 2005		(7	)		1			(37	)		(30	)		(99	)		(172	)
Financial settlement		1			—			4			11			10			26
Unrealized gains (losses) in the period		2			—			(16	)		(36	)		(76	)		(126	)
Effect of exchange rate changes		—			—			3			2			8			13


Unrealized gains (losses) at December 31, 2005		(4	)		1			(46	)		(53	)		(157	)		(259	)


Unrealized gains (losses) at July 1, 2005		(9	)		2			(30	)		(22	)		(54	)		(113	)
Financial settlement		—			(1	)		3			7			7			16
Unrealized gains (losses) in the period		2			—			(8	)		(13	)		(47	)		(66	)
Effect of exchange rate changes		—			—			(2	)		(2	)		(5	)		(9	)


Unrealized gains (losses) at September 30, 2005		(7	)		1			(37	)		(30	)		(99	)		(172	)


Unrealized gains (losses) at October 1, 2004		(31	)		1			(32	)		(37	)		(65	)		(164	)
Financial settlement		12			—			4			—			—			16
Unrealized gains (losses) in the period		3			3			(5	)		(14	)		(54	)		(67	)
Effect of exchange rate changes		(1	)		—			(4	)		(4	)		(8	)		(17	)


Unrealized gains (losses) at December 31, 2004		(17	)		4			(37	)		(55	)		(127	)		(232	)


Unrealized gains (losses) at January 1, 2005		(17	)		4			(37	)		(55	)		(127	)		(232	)
Financial settlement		9			(1	)		11			34			36			89
Unrealized gains (losses) in the period		6			(2	)		(17	)		(28	)		(60	)		(101	)
Effect of exchange rate changes		(2	)		—			(3	)		(4	)		(6	)		(15	)


Unrealized gains (losses) at December 31, 2005		(4	)		1			(46	)		(53	)		(157	)		(259	)


Unrealized gains (losses) at January 1, 2004		(46	)		5			(32	)		(18	)		—			(91	)
Loss recognized upon consolidation of Albras		—			—			—			—			(20	)		(20	)
Financial settlement		29			(2	)		4			—			—			31
Unrealized gains (losses) in the period		1			1			(5	)		(33	)		(98	)		(134	)
Effect of exchange rate changes		(1	)		—			(4	)		(4	)		(9	)		(18	)


Unrealized gains (losses) at December 31, 2004		(17	)		4			(37	)		(55	)		(127	)		(232	)


Unrealized gains (losses) at January 1, 2003		(60	)		(1	)		(15	)		3			—			(73	)
Financial settlement		30			—			8			—			—			38
Unrealized gains (losses) in the period		(3	)		6			(24	)		(22	)		—			(43	)
Effect of exchange rate changes		(13	)		—			(1	)		1			—			(13	)


Unrealized gains (losses) at December 31, 2003		(46	)		5			(32	)		(18	)		—			(91	)

		Changes for the three month periods ended December 31, 2005, September 30, 2005 and December 31, 2004 are unaudited.

		Unrealized gains (losses) in the period are included in our income statement financial expenses and foreign exchange and monetary gains (losses), net:

		Final maturity dates for the above instruments are as follows:


Interest rates (LIBOR)		Oct 2007
Gold		Dec 2008
Currencies		Dec 2011
Alumina		Dec 2008
Aluminum		Dec 2008

F-39

(a)		Interest Rate and Exchange Rate Risk

		Interest rate risks mainly relate to that part of the foreign debt borrowed at floating rates. The foreign currency debt is largely subject to fluctuations in the London Interbank Offered Rate — LIBOR. That portion of local currency denominated debt that is subject to floating rates is linked to the Long Term Interest Rate — TJLP, fixed quarterly by the Brazilian Central Bank. We have used derivative instruments to mitigate the volatility in the LIBOR rate.

		There is an exchange rate risk associated with our foreign currency denominated debt. On the other hand, the majority of our revenues is denominated in, or automatically indexed to, the U.S. dollar, while the majority of our costs is denominated in Reais. This provides a natural hedge against any devaluation of the Brazilian real against the U.S. dollar. When events of this nature occur, the immediate negative impact on foreign currency denominated debt is offset over time by the positive effect of devaluation on future cash flows.

		With the floating exchange rate regime in Brazil, we adopt a strategy of monitoring market fluctuations, using derivatives to mitigate the volatility of exchange rate.

		From time to time we enter into cross-currency interest rate swap transactions seeking to change the characteristics of our real-denominated cash investments for US dollar-indexed instruments. The extent of such transactions depends on our perception of market and currency risk, but is never speculative in nature. All such operations are marked-to-market at each balance sheet date and the effect included in financial income or expense. During the periods presented our use of such instruments was not significant.

*(b)*		*Commodity Price Risk*

		We also use derivative instruments to manage exposure to changing gold prices and to ensure an average minimum profit level for future gold and alumina production. However, these may also have the effect of eliminating potential gains on certain price increases in the spot market. We manage our contract positions actively, and the results are reviewed at least monthly, allowing adjustments to targets and strategy to be made in response to changing market conditions.

		In the case of gold and alumina derivatives, our policy has been to settle all contracts through cash payments or receipts, without physical delivery of product.

23		Information about independent auditors

		Our consolidated financial statements are audited by PricewaterhouseCoopers Auditores Independentes, Brazil. The 2003 financial statements of certain of our subsidiaries and affiliates have been audited by independent auditors other than PricewaterhouseCoopers Auditores Independentes as described below, and, as mentioned in their report, PricewaterhouseCoopers Auditores Independentes has relied on such audits when expressing their opinion on our consolidated financial statements.

		The following entities prepare financial statements accordance with US GAAP which are audited in accordance with the standards of the Public Company Accounting Oversight Board (United States):

F-40


	Auditors	City	State	Country
Alumina do Norte do Brasil S.A. — ALUNORTE	Trevisan	RJ	RJ	Brazil
Alumínio Brasileiro S.A. — ALBRAS	Trevisan	RJ	RJ	Brazil
Companhia Nipo-Brasileira de Pelotização — NIBRASCO	Deloitte	RJ	RJ	Brazil
Companhia Coreano Brasileira de Pelotização — KOBRASCO	Deloitte	Vitória	ES	Brazil
Companhia Hispano-Brasileira de Pelotização — HISPANOBRAS	Deloitte	Vitória	ES	Brazil
Companhia Ítalo-Brasileira de Pelotização — ITABRASCO	Deloitte	Vitória	ES	Brazil
Mineração Rio do Norte S.A.	Deloitte	RJ	RJ	Brazil
Navegação Vale do Rio Doce S.A. — DOCENAVE	Deloitte	RJ	RJ	Brazil
Rio Doce Manganês S.A.	Deloitte	Salvador	BA	Brazil
Urucum Mineração S.A.	Deloitte	Salvador	BA	Brazil
Valesul Alumínio S.A.	Deloitte	RJ	RJ	Brazil

		Deloitte — Deloitte Touche Tohmatsu Auditores Independentes RJ — Rio de Janeiro ES — Espírito Santo BA — Bahia Trevisan — Trevisan Auditores Independentes

24		Subsequent events

	1.		On January 05, 2006 CVRD’s wholly owned Finance subsidiary Vale Overseas Limited concluded a tender offer US$300 million 9.000% Guaranteed Notes due 2013.

	2.		In January 2006, CVRD’s wholly owned Finance subsidiary Vale Overseas Limited issued US$1 billion 10-year 6.250% notes, payable semi-annually due 2016, at a price of 99.97% of the principal amount.

F-41

Supplemental Financial Information (Unaudited)

The following unaudited information provides additional details in relation to certain financial ratios.

EBITDA — Earnings Before Interest, Income Tax, Depreciation and Amortization

	(a)		EBITDA represents operating income plus depreciation, amortization and depletion plus impairment/gain on sale of property, plant and equipment plus dividends received from equity investees.

	(b)		EBITDA is not a US GAAP measure and does not represent cash flow for the periods presented and should not be considered as an alternative to net income (loss), as an indicator of our operating performance or as an alternative to cash flow as a source of liquidity.

	(c)		Our definition of EBITDA may not be comparable with EBITDA as defined by other companies.

	(d)		Although EBITDA, as defined above, does not provide a US GAAP measure of operating cash flows, our management uses it to measure our operating performance and it is commonly used by financial analysts in evaluating our business.

Selected financial indicators for the main affiliates and joint ventures are available on the Company’s website, www.cvrd.com.br, under “investor relations”

S-1

Indexes on CVRD’s Consolidated Debt (Supplemental information — Unaudited)


	As of and for the three month									As of and for the
	periods ended									year ended
	December			September			December			December			December
	31, 2005			30, 2005			31, 2004			31, 2005			31, 2004
Current debt
Current portion of long-term debt — unrelated parties		1,218			688			730			1,218			730
Short-term debt		15			171			74			15			74
Loans from related parties		62			51			52			62			52

		1,295			910			856			1,295			856

Long-term debt
Long-term debt — unrelated parties		3,714			3,031			3,214			3,714			3,214
Loans from related parties		1			1			18			1			18

		3,715			3,032			3,232			3,715			3,232

Gross debt (current plus long-term debt)		5,010			3,942			4,088			5,010			4,088

Interest paid over:
Short-term debt		(8	)		(1	)		(3	)		(9	)		(5	)
Long-term debt		(55	)		(71	)		(82	)		(243	)		(295	)


Interest paid		(63	)		(72	)		(85	)		(252	)		(300	)
EBITDA		1,780			1,734			1,001			6,540			3,722
Stockholders’ equity		11,977			12,205			7,391			11,977			7,391
LTM EBITDA / LTM Interest paid		25.95			21.03			12.41			25.95			12.41
Gross Debt / LTM EBITDA		0.77			0.68			1.10			0.77			1.10
Gross debt / Equity Capitalization (%)		29			24			36			29			36

Financial expenses
Third party — local debt		(14	)		(17	)		(11	)		(56	)		(48	)
Third party — foreign debt		(18	)		(52	)		(52	)		(150	)		(211	)
Related party debt		(2	)		2			—			(6	)		(10	)

Gross interest		(34	)		(67	)		(63	)		(212	)		(269	)
Labor and civil claims and tax-related actions		(12	)		(27	)		(11	)		(62	)		(37	)
Tax on financial transactions — CPMF		(19	)		(15	)		(11	)		(59	)		(38	)
Derivatives (Interest rate / Currencies)		2			2			6			3			2
Derivatives (Gold / Alumina / Aluminium / Energy)		(115	)		(66	)		(73	)		(119	)		(136	)
Others		(23	)		(43	)		(106	)		(111	)		(193	)

		(201	)		(216	)		(258	)		(560	)		(671	)


Financial income
Cash and cash equivalents		27			27			20			87			48
Others		4			9			21			36			34

		31			36			41			123			82


Financial expenses, net		(170	)		(180	)		(217	)		(437	)		(589	)

Foreign exchange and monetary gain (losses) on liabilities(1)		(306	)		319			370			519			184
Foreign exchange and monetary gain (losses) on assets		140			(156	)		(95	)		(220	)		(119	)

Foreign exchange and monetary gain (losses), net		(166	)		163			275			299			65

Financial result, net		(336	)		(17	)		58			(138	)		(524	)


(1)		Includes foreign exchange gain(loss) on derivatives in the amount of US$ (13), US$ (2) , US$ 0 , US$ 14 and US$ 0 for the three-month periods ended December 31, 2005, September 30,2005 and December 31 2004 and for the year ended December 31, 2005 and December 31, 2004, respectively.

S-2

Calculation of EBITDA (Supplemental information — Unaudited)


										As of and for the
	As of and for the three months ended									year ended
	December			September			December			December			December
	31, 2005			30, 2005			31, 2004			31, 2005			31, 2004

Operating income		1,461			1,405			822			5,432			3,123
Depreciation		183			171			119			619			399

		1,644			1,576			941			6,051			3,522
Dividends received		136			158			60			489			200

EBITDA		1,780			1,734			1,001			6,540			3,722


Net operating revenues		3,598			3,445			2,317			12,792			8,066
Margin EBITDA		49.5	%		50.3	%		43.2	%		51.1	%		46.1	%

Adjusted EBITDA x Operating Cash Flows (Supplemental information — Unaudited)


	As of and for the three months ended																		As of and for the year ended
	December 31, 2005						September 30, 2005						December 31, 2004						December 31, 2005						December 31, 2004
				Operating						Operating						Operating						Operating						Operating
	EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows			EBITDA			cash flows
Net income		1,196			1,196			1,317			1,317			721			721			4,841			4,841			2,573			2,573
Income tax		(36	)		(36	)		102			102			386			386			126			126			316			316
Income tax cash		92			—			172			—			10			—			754			—			433			—
Equity in results of affiliates and joint ventures and								—			—
change in
provision
for losses
on equity
investments		(213	)		(213	)		(194	)		(194	)		(179	)		(179	)		(760	)		(760	)		(542	)		(542	)
Foreign exchange and monetary losses		166			235			(163	)		(201	)		(275	)		(106	)		(299	)		(237	)		(65	)		112
Financial expenses		170			140			180			77			217			38			437			163			589			93
Minority interests		86			86			117			117			32			32			459			459			223			223
Gain on sale of investments		—			—			(126	)		(126	)		(90	)		(90	)		(126	)		(126	)		(404	)		(404	)
Net working capital		—			(167	)		—			354			—			48			—			(307	)		—			319
Others		—			(44	)		—			13			—			42			—			(106	)		—			182

Operating income		1,461			1,197			1,405			1,459			822			892			5,432			4,053			3,123			2,872
Depreciation, depletion and amortization		183			183			171			171			119			119			619			619			399			399
Dividends received		136			136			158			158			60			60			489			489			200			200

		1,780			1,516			1,734			1,788			1,001			1,071			6,540			5,161			3,722			3,471


Operating cash flows					1,516						1,788						1,071						5,161						3,471

Income tax					92						172						10						754						433
Foreign exchange and monetary losses					(69	)					38						(169	)					(62	)					(177	)
Financial expenses					30						103						179						274						496
Net working capital					167						(354	)					(48	)					307						(319	)
Others					44						(13	)					(42	)					106						(182	)

EBITDA					1,780						1,734						1,001						6,540						3,722

S-3

Board of Directors, Fiscal Council and Executive Officers

Board of Directors

Sérgio Ricardo Silva Rosa
Chairman

Arlindo Magno de Oliveira

Eduardo Fernando Jardim Pinto

Erik Persson

Jorge Luiz Pacheco

Jaques Wagner

Hiroshi Tada

Mário da Silveira Teixeira Júnior

Oscar Augusto de Camargo Filho

Renato da Cruz Gomes

Francisco Augusto da Costa e Silva

Advisory Committees of the Board of Directors

Accounting Committee
Antonio José de Figueiredo Ferreira
Inácio Clemente da Silva
Paulo Roberto Ferreira de Medeiros

Executive Development Committee

Arlindo Magno de Oliveira
João Moisés de Oliveira
Olga Nietta Loffredi
Oscar Augusto de Camargo Filho

Strategic Committee

Roger Agnelli
Gabriel Stoliar
Cézar Manoel de Medeiros
José Roberto Mendonça de Barros
Luciano Coutinho

Finance Committee

Roger Agnelli
Fábio de Oliveira Barbosa
Rômulo de Mello Dias
Wanderlei Viçoso Fagundes
Ivan Luiz Modesto Schara

Governance and Ethics Committee

Renato da Cruz Gomes
Ricardo Simonsen
Ricardo Carvalho Giambroni

Fiscal Council

Marcelo Amaral Moraes
Chairman

Anibal Moreira dos Santos

Joaquim Vieira Ferreira Levy

Jose Bernardo de Medeiros Neto

Executive Officers

Roger Agnelli
Chief Executive Officer

Murilo de Oliveira Ferreira
Executive Officer for Equity Holdings and
Business Development

Jose Carlos Martins
Executive Officer for Ferrous Minerals

Carla Grasso
Executive Officer for Human Resources and
Corporate Services

José Lancaster
Executive Officer for Non-Ferrous Minerals

Fábio de Oliveira Barbosa
Chief Financial Officer and Investor Relation

Gabriel Stoliar
Executive Officer for Planning

Guilherme Rodolfo Laager
Executive Officer for Logistics

Otto de Souza Marques Junior
Chief Officer of Control Department

Marcus Vinícius Dias Severini
Chief Accountant
CRC-RJ 093982/O-3

S-4

Equity Investee Information — 12/31/2005

EQUITY INVESTEE INFORMATION — 12/31/2005

Aluminum Area — Valesul (Additional information — Unaudited)


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — external market	MT (thousand)		12			12			8			11			43			15			15			12			12			54
Quantity sold — internal market	MT (thousand)		11			12			12			16			51			10			10			12			12			44

Quantity sold — total	MT (thousand)		23			24			20			27			94			25			25			24			24			98

Average sales price — external market	US$		1,927.69			2,030.87			1,999.47			2,119.86			2,019.00			1,676.30			1,802.97			1,782.17			1,846.29			1,772.79
Average sales price — internal market	US$		2,578.41			2,674.31			2,565.35			2,833.68			2,677.99			2,240.26			2,214.30			2,330.97			2,435.48			2,312.34
Average sales price — total	US$		2,494.08			2,216.68			2,339.00			2,542.86			2,404.27			1,903.80			1,969.71			2,063.19			2,137.55			2,016.89
Long-term indebtedness, gross	US$		—			—			—			—			—			1			—			—			—			—
Short-term indebtedness, gross	US$		1			—			—			—			—			1			1			1			—			—

Total indebtedness, gross	US$		1			—			—			—			—			2			1			1			—			—

Stockholders’ equity	US$		106			114			117			107			107			92			80			94			101			101

Net operating revenues	US$		48			50			46			59			203			44			48			46			47			185
Cost of products	US$		(41	)		(46	)		(47	)		(55	)		(189	)		(35	)		(37	)		(38	)		(37	)		(147	)
Other expenses / revenues	US$		—			1			—			(6	)		(5	)		(1	)		(2	)		(1	)		(1	)		(5	)
Depreciation, amortization and depletion	US$		1			1			(1	)		4			5			1			1			2			1			5

EBITDA ———————————>	US$		8			6			(2	)		2			14			9			10			9			10			38
Depreciation, amortization and depletion	US$		(1	)		(1	)		1			(4	)		(5	)		(1	)		(1	)		(2	)		(1	)		(5	)

EBIT —————————————>	US$		7			5			(1	)		(2	)		9			8			9			7			9			33
Net financial result	US$		1			(1	)		—			—			—			—			—			1			1			2

Income before income tax and social contribution	US$		8			4			(1	)		(2	)		9			8			9			8			10			35
Income tax and social contribution	US$		(3	)		(2	)		(2	)		(2	)		(9	)		(2	)		(2	)		(2	)		(3	)		(9	)

Net income —————————>	US$		5			2			(3	)		(4	)		—			6			7			6			7			26

Aluminum Area — MRN (Additional information — Unaudited)


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — external market	MT (thousand)		1,426			1,461			1,433			1,509			5,829			1,106			1,157			1,699			1,715			5,677
Quantity sold — internal market	MT (thousand)		2,431			2,972			3,165			3,398			11,966			2,198			2,834			2,728			3,016			10,776

Quantity sold — total	MT (thousand)		3,857			4,433			4,598			4,907			17,795			3,304			3,991			4,427			4,731			16,453

Average sales price — external market	US$		26.01			26.61			27.23			27.67			26.89			22.00			22.70			23.89			25.10			23.64
Average sales price — internal market	US$		22.27			22.78			23.31			23.69			23.07			18.84			19.43			20.45			21.49			20.14
Average sales price — total	US$		24.14			24.70			25.27			24.91			24.78			19.90			20.38			21.77			22.80			21.35
Long-term indebtedness, gross	US$		26			17			7			5			5			40			60			53			40			40
Short-term indebtedness, gross	US$		189			238			216			170			170			192			171			149			150			150

Total indebtedness, gross	US$		215			255			223			175			175			232			231			202			190			190

Stockholders’ equity	US$		396			362			405			442			442			394			380			419			427			427

Net operating revenues	US$		84			99			104			114			401			62			78			89			96			325
Cost of products	US$		(40	)		(49	)		(52	)		(63	)		(204	)		(29	)		(38	)		(39	)		(46	)		(152	)
Other expenses/revenues	US$		(1	)		(1	)		(6	)		(5	)		(13	)		(1	)		1			(4	)		—			(4	)
Depreciation, amortization and depletion	US$		13			13			14			13			53			13			14			7			20			54

EBITDA ——————————>	US$		56			62			60			59			237			45			55			53			70			223
Depreciation, amortization and depletion	US$		(13	)		(13	)		(14	)		(13	)		(53	)		(13	)		(14	)		(7	)		(20	)		(54	)

EBIT ———————————>	US$		43			49			46			46			184			32			41			46			50			169
Net financial result	US$		(1	)		(2	)		3			(2	)		(2	)		(2	)		(1	)		(2	)		(5	)		(10	)

Income before income tax and social contribution	US$		42			47			49			44			182			30			40			44			45			159
Income tax and social contribution	US$		(4	)		(5	)		(6	)		(7	)		(22	)		(4	)		(4	)		(4	)		(5	)		(17	)

Net income	US$		38			42			43			37			160			26			36			40			40			142

Aluminum Area — Albras (Additional information — Unaudited) — Consolidated Subsidiary


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — external market	MT (thousand)		104			106			106			110			426			94			115			96			108			413
Quantity sold — internal market	MT (thousand)		5			4			6			6			21			3			4			5			5			17

Quantity sold — total	MT (thousand)		109			110			112			116			447			97			119			101			113			430

Average sales price — external market	US$		1,787.71			1,819.42			1,754.44			1,844.43			1,801.97			1,565.46			1,626.62			1,644.42			1,728.79			1,643.55
Average sales price — internal market	US$		1,860.15			1,874.87			1,588.67			1,310.50			1,628.35			1,618.11			1,660.01			1,700.23			1,787.36			1,701.90
Average sales price — total	US$		1,790.92			1,821.74			1,745.56			1,816.81			1,793.81			1,567.28			1,627.72			1,647.09			1,731.32			1,645.86
Long-term indebtedness, gross	US$		172			152			132			237			237			319			264			244			202			202
Short-term indebtedness, gross	US$		23			142			190			172			172			—			—									—

Total indebtedness, gross	US$		195			294			322			409			409			319			264			244			202			202

Stockholders’ equity	US$		379			474			494			455			455			226			273			327			381			381

Net operating revenues	US$		195			199			196			213			803			153			193			166			195			707
Cost of products	US$		(131	)		(139	)		(139	)		(152	)		(561	)		(88	)		(112	)		(97	)		(138	)		(435	)
Other expenses/revenues	US$		(10	)		(8	)		(10	)		(14	)		(42	)		(11	)		(7	)		(5	)		(13	)		(36	)
Depreciation, amortization and depletion	US$		4			5			12			5			26			4			3			3			4			14

EBITDA ————————————>	US$		58			57			59			52			226			58			77			67			48			250
Depreciation, amortization and depletion	US$		(4	)		(5	)		(12	)		(5	)		(26	)		(4	)		(3	)		(3	)		(4	)		(14	)

EBIT ————————————>	US$		54			52			47			47			200			54			74			64			44			236
Impairment	US$		—						—						—			(1	)		—			—			—			(1	)
Net financial result	US$		(2	)		86			(42	)		(102	)		(60	)		(35	)		(18	)		(18	)		(56	)		(127	)

Income (loss) before income tax and social contribution	US$		52			138			5			(55	)		140			18			56			46			(12	)		108
Income tax and social contribution	US$		(32	)		(17	)		(12	)		38			(23	)		(11	)		8			(11	)		40			26

Net income (loss)	US$		20			121			(7	)		(17	)		117			7			64			35			28			134

Aluminum Area — Alunorte (Additional information — Unaudited) — Consolidated Subsidiary


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — external market	MT (thousand)		395			366			404			393			1,558			439			343			487			414			1,683
Quantity sold — internal market	MT (thousand)		263			249			271			246			1,029			231			212			216			218			877

Quantity sold — total	MT (thousand)		658			615			675			639			2,587			670			555			703			632			2,560

Average sales price — external market	US$		244.47			249.98			239.25			261.44			248.69			204.29			234.99			225.85			230.49			223.23
Average sales price — internal market	US$		231.66			234.08			204.17			219.59			222.12			207.14			210.68			206.77			221.70			211.52
Average sales price — total	US$		239.35			241.38			225.17			245.33			237.61			205.30			225.71			222.76			227.46			219.99
Long-term indebtedness, gross	US$		464			454			546			582			582			361			351			334			402			402
Short-term indebtedness, gross	US$		33			—			34			1			1			90			64			58			9			9

Total indebtedness, gross	US$		497			454			580			583			583			451			415			392			411			411

Stockholders’ equity	US$		592			810			890			855			855			278			346			439			551			551

Net operating revenues	US$		152			142			152			157			603			133			122			150			140			545
Cost of products	US$		(91	)		(99	)		(117	)		(119	)		(426	)		(83	)		(71	)		(96	)		(86	)		(336	)
Other expenses/revenues	US$		(5	)		(3	)		(2	)		2			(8	)		(2	)		(2	)		(2	)		(5	)		(11	)
Depreciation, amortization and depletion	US$		6			6			7			6			25			4			5			5			5			19

EBITDA ————————————>	US$		62			46			40			46			194			52			54			57			54			217
Depreciation, amortization and depletion	US$		(6	)		(6	)		(7	)		(6	)		(25	)		(4	)		(5	)		(5	)		(5	)		(19	)

EBIT ————————————>	US$		56			40			33			40			169			48			49			52			49			198
Net financial result	US$		(7	)		75			13			(71	)		10			(29	)		(30	)		20			2			(37	)

Income (loss) before income tax and social contribution	US$		49			115			46			(31	)		179			19			19			72			51			161
Income tax and social contribution	US$		(6	)		(23	)		(12	)		9			(32	)		2			20			(10	)		(7	)		5

Net income (loss)	US$		43			92			34			(22	)		147			21			39			62			44			166

Pelletizing Affiliates — Kobrasco (Additional information — Unaudited)


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total


Quantity sold — external market	MT (thousand)		597			980			782			829			3,188			617			437			852			549			2,455
Quantity sold — internal market	MT (thousand)		662			329			400			310			1,701			623			460			320			544			1,947

Quantity sold — total	MT (thousand)		1,259			1,309			1,182			1,139			4,889			1,240			897			1,172			1,093			4,402


Average sales price — external market	US$		38.08			71.48			75.54			73.27			66.69			34.27			38.04			37.94			38.20			37.09
Average sales price — internal market	US$		39.32			73.80			71.98			72.85			59.78			33.26			39.59			38.96			39.36			37.40
Average sales price — total	US$		38.73			72.26			74.34			73.16			64.34			33.76			38.84			38.22			38.77			37.24

Long-term indebtedness, gross	US$		87			70			49			27			27			97			92			87			83			83

Total indebtedness, gross	US$		87			70			49			27			27			97			92			87			83			83

Stockholders’ equity	US$		31			62			74			82			82			4			4			15			25			25


Net operating revenues	US$		48			95			88			83			314			42			35			45			42			164
Cost of products	US$		(36	)		(61	)		(61	)		(60	)		(218	)		(37	)		(30	)		(36	)		(34	)		(137	)
Other expenses/revenues	US$		(1	)		(3	)		(12	)		—			(16	)		1			3			(2	)		(1	)		1
Depreciation, amortization and depletion	US$		1			1			1			1			4			1			1			1			1			4

EBITDA ——————>	US$		12			32			16			24			84			7			9			8			8			32
Depreciation, amortization and depletion	US$		(1	)		(1	)		(1	)		(1	)		(4	)		(1	)		(1	)		(1	)		(1	)		(4	)

EBIT ——————>	US$		11			31			15			23			80			6			8			7			7			28
Net financial result	US$		(2	)		10			2			(3	)		7			(1	)		(7	)		7			6			5

Income (loss) before income tax and social contribution	US$		9			41			17			20			87			5			1			14			13			33
Income tax and social contribution	US$		(3	)		(14	)		(10	)		(7	)		(34	)		(2	)		—			(5	)		(5	)		(12	)

Net income (loss)	US$		6			27			7			13			53			3			1			9			8			21

Pelletizing Affiliates — Hispanobras (Additional information — Unaudited)


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total


Quantity sold — external market	MT (thousand)		500			459			320			331			1,610			425			99			246			442			1,212
Quantity sold — internal market	MT (thousand)		620			550			730			685			2,585			460			790			795			675			2,720

Quantity sold — total	MT (thousand)		1,120			1,009			1,050			1,016			4,195			885			889			1,041			1,117			3,932


Average sales price — external market	US$		38.46			69.35			72.19			71.87			60.84			32.48			57.40			38.57			39.18			38.20
Average sales price — internal market	US$		38.43			50.85			74.00			73.14			60.32			31.18			42.37			37.67			38.62			38.17
Average sales price — total	US$		38.45			59.27			73.45			72.73			60.52			31.83			44.04			37.88			38.84			38.18


Stockholders’ equity	US$		51			82			68			73			73			33			37			43			50			50


Net operating revenues	US$		43			108			76			75			302			28			40			40			43			151
Cost of products	US$		(34	)		(62	)		(51	)		(59	)		(206	)		(27	)		(31	)		(32	)		(38	)		(128	)
Other expenses/revenues	US$		(2	)		—			(1	)		(3	)		(6	)		1			1			—			3			5
Depreciation, amortization and depletion	US$		1			1			—			—			2			1			—			—			2			3

EBITDA ————————————>	US$		8			47			24			13			92			3			10			8			10			31
Depreciation, amortization and depletion	US$		(1	)		(1	)		—						(2	)		(1	)		—			—			(2	)		(3	)

EBIT —————————————>	US$		7			46			24			13			90			2			10			8			8			28
Net financial result	US$		—			(3	)		(1	)		—			(4	)		—			—			(2	)		(1	)		(3	)

Income (loss) before income tax and social contribution	US$		7			43			23			13			86			2			10			6			7			25
Income tax and social contribution	US$		(3	)		(15	)		(8	)		(5	)		(31	)		(1	)		(3	)		(2	)		(2	)		(8	)

Net income	US$		4			28			15			8			55			1			7			4			5			17

Pelletizing Affiliates — Itabrasco (Additional information — Unaudited)


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total


Quantity sold — external market	MT (thousand)		769			730			670			688			2,857			762			903			486			674			2,825
Quantity sold — internal market	MT (thousand)		176			230			340			189			935			—			105			260			407			772

Quantity sold — total	MT (thousand)		945			960			1,010			877			3,792			762			1,008			746			1,081			3,597


Average sales price — external market	US$		39.14			71.97			73.16			73.70			63.83			32.84			43.39			39.02			39.15			38.78
Average sales price — internal market	US$		39.40			73.27			73.78			73.57			67.14			—			38.29			39.33			39.28			39.16
Average sales price — total	US$		39.18			72.29			73.37			73.67			64.65			32.84			42.86			39.13			39.20			38.86

Short-term indebtedness, gross	US$		4			9			—			—			—			1			8			1			—			—

Total indebtedness, gross	US$		4			9			—			—			—			1			8			1			—			—


Stockholders’ equity	US$		37			69			63			65			65			23			26			30			36			36


Net operating revenues	US$		37			101			65			59			262			25			43			29			43			140
Cost of products	US$		(31	)		(59	)		(45	)		(50	)		(185	)		(24	)		(35	)		(25	)		(36	)		(120	)
Other expenses/revenues	US$		(2	)		(1	)		(3	)		(1	)		(7	)		—			—			—			(3	)		(3	)
Depreciation, amortization and depletion	US$		—			(1	)					—			(1	)		—			—			—			—			—

EBITDA ——————————>	US$		4			40			17			8			69			1			8			4			4			17
Depreciation, amortization and depletion	US$		—			1						—			1			—			—			—			—			—

EBIT ———————————>	US$		4			41			17			8			70			1			8			4			4			17
Net financial result	US$		—						(3	)		—			(3	)		—						—						—

Income before income tax and social contribution	US$		4			41			14			8			67			1			8			4			4			17
Income tax and social contribution	US$		(3	)		(13	)		(6	)		(3	)		(25	)		—			(3	)		(1	)		(1	)		(5	)

Net income	US$		1			28			8			5			42			1			5			3			3			12

Pelletizing Affiliates — Nibrasco (Additional information — Unaudited)


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total


Quantity sold — external market	MT (thousand)		675			627			827			807			2,936			563			803			776			833			2,975
Quantity sold — internal market — CVRD	MT (thousand)		996			1,149			1,000			1,289			4,434			1,327			903			899			779			3,908
Quantity sold — internal market — Others	MT (thousand)		35			34			35			34			138			33			33			31			30			127

Quantity sold — total	MT (thousand)		1,706			1,810			1,862			2,130			7,508			1,923			1,739			1,706			1,642			7,010


Average sales price — external market	US$		37.13			64.94			86.42			80.36			68.84			31.45			34.49			40.37			36.40			35.98
Average sales price — internal market	US$		37.77			68.70			106.16			70.54			70.74			31.51			35.96			37.51			37.40			35.09
Average sales price — total	US$		37.51			67.39			97.22			73.13			69.63			31.49			33.23			38.84			36.90			34.98

Long-term indebtedness, gross	US$		4			4			4			3			3			—			—			3			4			4
Short-term indebtedness, gross	US$		—						—			—			—			1			—			—			—			—

Total indebtedness, gross	US$		4			4			4			3			3			1			—			3			4			4


Stockholders’ equity	US$		65			67			94			118			118			40			41			50			60			60


Net operating revenues	US$		69			134			132			169			504			65			66			73			67			271
Cost of products	US$		(59	)		(96	)		(88	)		(121	)		(364	)		(59	)		(57	)		(62	)		(51	)		(229	)
Other expenses/revenues	US$		(1	)		(2	)		(6	)		(5	)		(14	)		2			4			(2	)		(9	)		(5	)
Depreciation, amortization and depletion	US$		1			1			—			1			3			1			1			—			1			3

EBITDA ———————————>	US$		10			37			38			44			129			9			14			9			8			40
Depreciation, amortization and depletion	US$		(1	)		(1	)		—			(1	)		(3	)		(1	)		(1	)		—			(1	)		(3	)

EBIT ————————————>	US$		9			36			38			43			126			8			13			9			7			37
Impairment	US$		—												—			—			—			—			—			—
Net financial result	US$		—			(1	)		(4	)		—			(5	)		—			—			(1	)		3			2

Income (loss) before income tax and social contribution	US$		9			35			34			43			121			8			13			8			10			39
Income tax and social contribution	US$		(4	)		(12	)		(12	)		(16	)		(44	)		(3	)		(4	)		(3	)		(4	)		(14	)

Net income (loss)	US$		5			23			22			27			77			5			9			5			6			25

Pelletizing Affiliates — Samarco (Additional information — Unaudited)


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total


Quantity sold — Pellets	MT (thousand)		3,297			3,024			3,666			4,089			14,076			3,462			3,177			3,264			3,918			13,821
Quantity sold — Iron ore	MT (thousand)		239			431			407			330			1,407			497			471			688			367			2,023
Average sales price — Pellets	US$		43.88			76.50			80.98			79.60			70.93			39.31			39.11			38.89			40.62			39.54
Average sales price — Iron ore	US$		31.04			32.18			38.68			37.23			35.05			16.88			19.66			21.78			21.28			19.99

Long-term indebtedness, gross	US$		52			42			41			39			39			21			46			42			58			58
Short-term indebtedness, gross	US$		156			140			156			299			299			174			153			139			141			141

Total indebtedness, gross	US$		208			182			197			338			338			195			199			181			199			199


Stockholders’ equity	US$		468			588			632			576			576			379			331			394			441			441


Net operating revenues	US$		154			226			319			333			1,032			129			132			142			162			565
Cost of products	US$		(65	)		(68	)		(98	)		(113	)		(344	)		(59	)		(53	)		(60	)		(71	)		(243	)
Other expenses/revenues	US$		(7	)		(29	)		(21	)		(8	)		(65	)		(11	)		(15	)		(14	)		(19	)		(59	)
Depreciation, amortization and depletion	US$		7			7			8			8			30			6			6			7			7			26

EBITDA ————————————>	US$		89			136			208			220			653			65			70			75			79			289
Depreciation, amortization and depletion	US$		(7	)		(7	)		(8	)		(8	)		(30	)		(6	)		(6	)		(7	)		(7	)		(26	)

EBIT —————————————>	US$		82			129			200			212			623			59			64			68			72			263
Impairment			—									—			—			—			—			—						—
Gain on investments accounted for by the equity method	US$		2			3			4			—			9			4			(2	)		7			2			11
Net financial result	US$		(2	)		3			(9	)		(6	)		(14	)		(2	)		(17	)		13			—			(6	)

Income (loss) before income tax and social contribution	US$		82			135			195			206			618			61			45			88			74			268
Income tax and social contribution	US$		(13	)		(22	)		(33	)		(36	)		(104	)		(10	)		(6	)		(19	)		—			(35	)

Net income (loss)	US$		69			113			162			170			514			51			39			69			74			233

Pelletizing Affiliates — GIIC (Additional information — Unaudited)


		2005															2004
		As of and for the three-months ended															As of and for the three-months ended
Information		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total


Quantity sold — external market	MT (thousand)		710			1,058			893			932			3,593			906			683			1,003			1,092			3,684

Average sales price — external market	US$		88.06			118.15			109.34			108.11			107.41			52.68			58.27			55.78			54.82			55.19

Long-term indebtedness, gross	US$		10			10			5			5			5			20			20			25			25			25

Total indebtedness, gross	US$		10			10			5			5			5			20			20			25			25			25


Stockholders’ equity	US$		114			139			127			123			123			76			77			86			90			90


Net operating revenues	US$		62			125			98			101			386			48			40			55			67			210
Cost of products	US$		(38	)		(65	)		(55	)		(58	)		(216	)		(36	)		(33	)		(44	)		(49	)		(162	)
Other expenses/revenues	US$		(1	)		(13	)		(15	)		(8	)		(37	)		(4	)		(3	)		(3	)		(6	)		(16	)
Depreciation, amortization and depletion	US$		1			1						1			3			1			1			—			1			3

EBITDA ————————————>	US$		24			48			28			36			136			9			5			8			13			35
Depreciation, amortization and depletion	US$		(1	)		(1	)					(1	)		(3	)		(1	)		(1	)		—			(1	)		(3	)

EBIT —————————————>	US$		23			47			28			35			133			8			4			8			12			32
Net financial result	US$											1			1			—			—			—			—			—

Net income	US$		23			47			28			36			134			8			4			8			12			32

Manganese and Ferroalloys Area — RDM (Additional information — Unaudited) — Consolidated Subsidiary


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total


Quantity sold — external market — Ferroalloys	MT (thousand)		34			57			50			32			173			37			31			39			38			145
Quantity sold — internal market — Ferroalloys	MT (thousand)		36			41			33			35			145			45			47			40			42			174

Quantity sold — total	MT (thousand)		70			98			83			67			318			82			78			79			80			319


Quantity sold — external market — Manganese	MT (thousand)		355			312			419			334			1,420			213			350			465			421			1,449
Quantity sold — internal market — Manganese	MT (thousand)		69			68			76			46			259			72			72			61			78			283

Quantity sold — total	MT (thousand)		424			380			495			380			1,679			285			422			526			499			1,732


Average sales price — external market — Ferroalloys	US$		1,477.75			799.63			599.86			586.00			835.65			713.01			1,006.84			1,151.05			1,229.41			1,028.98
Average sales price — internal market — Ferroalloys	US$		1,010.90			1,385.38			717.24			738.97			984.32			700.76			1,038.88			1,484.10			1,496.32			1,164.20
Average sales price — total	US$		1,237.52			1,049.97			646.53			665.91			905.04			706.34			1,026.72			1,316.89			1,366.98			1,101.56

Average sales price — external market — Manganese	US$		71.67			79.40			78.23			75.24			76.14			44.98			48.51			56.12			72.01			57.26
Average sales price — internal market — Manganese	US$		72.19			72.64			76.16			82.54			75.31			45.15			55.80			54.94			53.41			52.25
Average sales price — total	US$		72.10			73.80			77.91			76.12			75.11			45.02			49.76			55.98			69.10			56.44

Long-term indebtedness, gross	US$		8			48			50			90			90			12			11			12			11			11
Short-term indebtedness, gross	US$		34															40			34			33			31			31

Total indebtedness, gross	US$		42			48			50			90			90			52			45			45			42			42

Stockholders’ equity	US$		362			295			310			270			270			218			234			302			349			349


Net operating revenues	US$		105			110			92			61			368			62			87			118			128			395
Cost of products	US$		(54	)		(73	)		(67	)		(57	)		(251	)		(38	)		(37	)		(46	)		(59	)		(180	)
Other expenses/revenues	US$		(5	)		(14	)		(25	)		(31	)		(75	)		(10	)		(7	)		(11	)		(28	)		(56	)
Depreciation, amortization and depletion	US$		2			3			2			2			9			2			2			1			2			7

EBITDA ——————————>	US$		48			26			2			(25	)		51			16			45			62			43			166
Depreciation, amortization and depletion	US$		(2	)		(3	)		(2	)		(2	)		(9	)		(2	)		(2	)		(1	)		(2	)		(7	)

EBIT ———————————>	US$		46			23						(27	)		42			14			43			61			41			159
Impairment	US$		1												1			—			—			—			(2	)		(2	)
Net financial result	US$					(11	)		(2	)		3			(10	)		1			1			(4	)		(5	)		(7	)

Income before income tax and social contribution	US$		47			12			(2	)		(24	)		33			15			44			57			34			150
Income tax and social contribution	US$		(12	)		(2	)					(2	)		(16	)		(2	)		(14	)		(11	)		(12	)		(39	)

Net income	US$		35			10			(2	)		(26	)		17			13			30			46			22			111

Manganese and Ferroalloys Area — Urucum (Additional information — Unaudited) — Consolidated Subsidiary


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total


Quantity sold — external market — Iron ore	MT (thousand)		222			263			279			198			962			127			106			254			172			659
Quantity sold — internal market — Iron ore	MT (thousand)		1			—			4			17			22			—			3			—			46			49

Quantity sold — total	MT (thousand)		223			263			283			215			984			127			109			254			218			708


Quantity sold — external market — Manganese	MT (thousand)		26			50			7			38			121			22			4			39			56			121
Quantity sold — internal market — Manganese	MT (thousand)		64			48			48			36			196			50			62			52			50			214

Quantity sold — total	MT (thousand)		90			98			55			74			317			72			66			91			106			335


Quantity sold — external market — Ferroalloys	MT (thousand)		5			4			2			2			13			4			4			4			3			15
Quantity sold — internal market — Ferroalloys	MT (thousand)		—			—			2			4			6			1			—			—			—			1

Quantity sold — total	MT (thousand)		5			4			4			6			19			5			4			4			3			16


Average sales price — external market — Iron ore	US$		17.89			32.72			34.19			32.09			29.59			15.05			19.09			19.18			18.45			18.18
Average sales price — internal market — Iron ore	US$		2.63			—			23.25			22.53			21.76			—			2.28			—			37.13			35.00
Average sales price — total	US$		17.85			32.72			34.04			31.33			29.43			15.05			18.63			19.18			22.39			19.34

Average sales price — external market — Manganese	US$		115.85			98.34			124.86			67.37			93.91			49.84			54.87			45.72			45.33			46.59
Average sales price — internal market — Manganese	US$		72.57			114.52			107.81			111.19			98.57			44.19			47.69			55.82			68.27			53.66
Average sales price — total	US$		85.16			106.27			109.98			88.69			96.82			45.92			48.10			51.53			56.10			51.09

Average sales price — external market — Ferroalloys	US$		918.43			775.24			942.00			798.00			859.47			564.53			863.73			1,285.47			1,227.89			969.24
Average sales price — internal market — Ferroalloys	US$		—			—			210.00			622.86			485.24			394.48			—			—			—			394.48
Average sales price — total	US$		918.43			775.24			576.00			681.24			741.29			546.44			863.73			1,285.47			1,227.89			938.29

Long-term indebtedness, gross	US$		12			17			19			23			23			—			3			1			8			8
Short-term indebtedness, gross	US$		—															4			1			1			—			—

Total indebtedness, gross	US$		12			17			19			23			23			4			4			2			8			8

Stockholders’ equity	US$		18			17			21			17			17			15			9			14			13			13

Net operating revenues	US$		15			20			19			17			71			7			8			13			15			43
Cost of products	US$		(7	)		(7	)		(7	)		(12	)		(33	)		(3	)		(4	)		(5	)		(7	)		(19	)
Other expenses/revenues	US$		(2	)		(5	)		(4	)		(7	)		(18	)		(2	)		(1	)		(2	)		(8	)		(13	)
Depreciation, amortization and depletion	US$								1						1			—			—			—			(1	)		(1	)

EBITDA —>	US$		6			8			8			(2	)		21			2			3			6			(1	)		10
Depreciation, amortization and depletion	US$								(1	)					(1	)		—			—			—			1			1

EBIT —>	US$		6			8			8			(2	)		20			2			3			6			—			11
Net financial result	US$					(3	)		(3	)		1			(5	)		—			—			—			(1	)		(1	)

Income before income tax and social contribution	US$		6			5			5			(1	)		15			2			3			6			(1	)		10
Income tax and social contribution	US$		(2	)		(2	)		(2	)		(1	)		(7	)		(1	)		(1	)		(2	)		—			(4	)

Net income	US$		4			3			3			(2	)		8			1			2			4			(1	)		6

Manganese and Ferroalloys Area — RDME (Additional information — Unaudited) — Consolidated Subsidiary


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

Quantity sold — external market — Sinter	MT (thousand)		47			27			11			25			110			66			86			88			38			278
Quantity sold — external market — Manganese	MT (thousand)		45			6			28			77			156			55			33			68			15			171
Quantity sold — external market — Ferroalloys	MT (thousand)		50			51			38			31			170			64			41			47			41			193
Average sales price — external market — Sinter	US$		134.00			155.00			157.00			120.52			138.39			103.70			108.70			95.68			118.63			104.75
Average sales price — external market — Manganese	US$		122.00			139.00			147.93			99.97			116.43			73.22			78.16			100.35			83.18			85.84
Average sales price — external market — Ferroalloys	US$		1,049.00			739.00			571.87			574.13			762.75			588.12			954.98			1,213.38			1,295.42			968.57
Long-term indebtedness, gross	US$		3			2			2									3			3			3			3			3
Short-term indebtedness, gross	US$					1						4			4			—			—									—

Total indebtedness, gross	US$		3			3			2			4			4			3			3			3			3			3

Stockholders’ equity	US$		107			98			95			87			87			67			67			86			105			105


Net operating revenues	US$		68			52			36			35			191			51			55			72			60			238
Cost of products	US$		(57	)		(48	)		(38	)		(36	)		(179	)		(47	)		(51	)		(46	)		(44	)		(188	)
Other expenses/revenues	US$		(2	)		(4	)		(2	)		(7	)		(15	)		(1	)		(3	)		(8	)		(1	)		(13	)
Depreciation, amortization and depletion	US$		1			1			1			1			4			1			1			2			1			5

EBITDA ————————————>	US$		10			1			(3	)		(7	)		1			4			2			20			16			42
Depreciation, amortization and depletion	US$		(1	)		(1	)		(1	)		(1	)		(4	)		(1	)		(1	)		(2	)		(1	)		(5	)

EBIT ————————————>	US$		9						(4	)		(8	)		(3	)		3			1			18			15			37
Net financial result	US$																	—			—			—			—			—

Income before income tax and social contribution	US$		9						(4	)		(8	)		(3	)		3			1			18			15			37
Income tax and social contribution	US$		(3	)					1			1			(1	)		—			—			—			(5	)		(5	)

Net income	US$		6						(3	)		(7	)		(4	)		3			1			18			10			32

Steel Area — CSI (Additional information — Unaudited)


		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total


Quantity sold — external market	MT (thousand)		448			428			459			479			1,814			566			530			558			452			2,106

Average sales price — external market	US$		746.28			709.09			627.27			627.43			676.01			419.00			539.53			694.15			748.56			592.97

Stockholders’ equity	US$		280			324			307			320			320			205			232			264			298			298


Net operating revenues	US$		339			307			288			300			1234			233			288			389			340			1,250
Cost of products / Other expenses	US$		(291	)		(284	)		(283	)		(262	)		(1120	)		(226	)		(234	)		(287	)		(277	)		(1,024	)
Other expenses/revenues	US$		(7	)		(4	)		(4	)		(8	)		(23	)		—			—			(1	)		—			(1	)
Depreciation, amortization and depletion	US$		7			6			6			7			26			7			6			6			6			25

EBITDA ————————————>	US$		48			25			6			37			117			14			60			107			69			250
Depreciation, amortization and depletion	US$		(7	)		(6	)		(6	)		(7	)		(26	)		(7	)		(6	)		(6	)		(6	)		(25	)

EBIT ————————————>	US$		41			19						30			91			7			54			101			63			225
Net financial result	US$		(3	)		(3	)		(3	)		(2	)		(11	)		(5	)		(11	)		(18	)		(5	)		(39	)
Gain on investments accounted for by the equity method	US$																	(2	)		4			(5	)		1			(2	)

Income (loss) before income tax and social contribution	US$		38			16			(3	)		28			80			—			47			78			59			184
Income tax and social contribution	US$		(16	)		(6	)		1			(16	)		(37	)		(1	)		(18	)		(32	)		(24	)		(75	)

Net income (loss)	US$		22			10			(2	)		12			43			(1	)		29			46			35			109

Logistics Area — Docenave (Additional information — Unaudited) — Consolidated Subsidiary


		2005															2004
		As of and for the three-months ended															As of and for the three-months ended
								September			December												September			December
Information		March 31			June 30			30			31			Total			March 31			June 30			30			31			Total

Shipping: Quantity sold — External market:
. Bulk transportation (ore oil)	MT (thousand)		889			881			777			812			3,359			1,426			1,430			1,047			1,228			5,131
. Containers (TEUS)	TEUS		9,888			8,845			8,907			6,663			34,303			7,444			8,674			10,194			10,991			37,303
. TUG (maneuver)	Maneuver		556			804			991			416			2,767			698			623			617			819			2,757

Shipping: Quantity sold — Domestic market:
. Bulk transportation (ore oil)	MT (thousand)		345			291			330			—			966			129			495			573			411			1,608
. Containers (TEUS)	TEUS		13,826			12,964			14,288			18,432			59,510			14,532			15,916			15,895			15,064			61,407
. TUG (maneuver)	Maneuver		1,126			968			899			1,512			4,505			912			986			1,135			926			3,959

Average sales price — Shipping — external market:
. Bulk transportation (ore oil)	US$		15.55			11.25			14.89			16.85			14.58			10.83			11.83			16.47			16.21			13.55
. Containers (TEUS)	US$		616.40			753.31			713.37			1,048.33			760.78			569.99			585.77			605.55			778.73			644.88
. TUG (maneuver)	US$		3,453.24			3,075.23			3,112.53			5,921.07			3,592.40			3,005.73			3,321.03			3,414.91			3,063.49			3,185.71

Average sales price — Shipping — domestic market:
. Bulk transportation (ore oil)	US$		9.88			7.56			7.00			—			8.20			3.81			8.37			7.23			11.68			8.44
. Containers (TEUS)	US$		817.37			865.17			893.48			794.24			838.89			594.62			619.63			681.54			628.98			632.03
. TUG (maneuver)	US$		3,449.38			3,931.46			4,362.93			2,996.97			3,583.43			3,003.29			3,294.12			3,376.21			3,019.44			3,186.41

Long-term indebtedness, gross	US$		1						—			—			—			1			1			1			1			1
Short-term indebtedness, gross	US$		—			1			1			—			—			1			1			1			1			1

Total indebtedness, gross	US$		1			1			1			—			—			2			2			2			2			2


Stockholders’ equity	US$		102			113			127			137			137			89			95			111			91			91


Net operating revenues	US$		39			35			38			40			152			33			39			44			47			163
Cost of products	US$		(24	)		(22	)		(24	)		(29	)		(99	)		(27	)		(26	)		(30	)		(35	)		(118	)
Other expenses/revenues	US$		(1	)		(1	)		1			(2	)		(3	)		(3	)		(2	)		(1	)		(6	)		(12	)
Depreciation, amortization and depletion	US$		1			1			1			1			4			—			1			1			1			3

EBITDA ——————————>	US$		15			13			16			10			54			3			12			14			7			36
Depreciation, amortization and depletion	US$		(1	)		(1	)		(1	)		(1	)		(4	)		—			(1	)		(1	)		(1	)		(3	)

EBIT ———————————>	US$		14			12			15			9			50			3			11			13			6			33
Net financial result	US$		1			(8	)		(4	)		9			(2	)		5			4			(2	)		(4	)		3

Income (loss) before income tax and social contribution	US$		15			4			11			18			48			8			15			11			2			36
Income tax and social contribution	US$		(4	)		(3	)		(4	)		(2	)		(13	)		(1	)		—			(3	)		(1	)		(5	)

Net income (loss)	US$		11			1			7			16			35			7			15			8			1			31

Logistics Area — FCA (Additional information — Unaudited) — Consolidated Subsidiary


		2005															2004
		As of and for the three-months ended															As of and for the three-months ended
											December												September			December
Information		March 31			June 30			September 30			31			Total			March 31			June 30			30			31			Total


Quantity sold — internal market — Railroad Service	(thousand)		6,103			7,416			7,616			6,425			27,560			5,807			6,943			6,931			7,086			26,767

Average sales price — internal market — Railroad Service	US$		9.82			12.16			13.31			13.00			12.16			7.86			8.19			8.80			8.97			8.48

Long-term indebtedness, gross	US$		127			136			133						—			111			107			109			134			134
Short-term indebtedness, gross	US$		—						—			—			—			18			18			18			—			—


Total indebtedness, gross	US$		127			136			133			—			—			129			125			127			134			134


Stockholders’ equity	US$		19			12			(21	)		(56	)		(56	)		29			19			26			17			17


Net operating revenues	US$		49			76			85			68			278			39			47			51			52			189
Cost of products	US$		(55	)		(71	)		(83	)		(94	)		(303	)		(43	)		(44	)		(52	)		(57	)		(196	)
Other expenses/revenues	US$		—			(7	)		(22	)		(15	)		(44	)		1			(4	)		(3	)		(8	)		(14	)
Depreciation, amortization and depletion	US$		6			7			6			11			30			4			3			4			5			16

EBITDA ————————————>	US$		—			5			(14	)		(30	)		(39	)		1			2			—			(8	)		(5	)
Depreciation, amortization and depletion	US$		(6	)		(7	)		(6	)		(11	)		(30	)		(4	)		(3	)		(4	)		(5	)		(16	)

EBIT ————————————>	US$		(6	)		(2	)		(20	)		(41	)		(69	)		(3	)		(1	)		(4	)		(13	)		(21	)
Net financial result	US$		1			9			(12	)		4			2			(4	)		(7	)		2			2			(7	)

Net income (loss)	US$		(5	)		7			(32	)		(37	)		(67	)		(7	)		(8	)		(2	)		(11	)		(28	)

Others — Caemi (Additional information — Unaudited) — Consolidated Subsidiary



		2005															2004
Information		As of and for the three-months ended															As of and for the three-months ended
		March 31			June 30			September 30			December 31			Total			March 31			June 30			September 30			December 31			Total

IRON ORE
Quantity sold — external market	MT (thousand)		9,560			9,949			10,737			9,174			39,420			7,855			7,407			9,311			9,446			34,019
Quantity sold — internal market	MT (thousand)		1,946			2,388			2,673			2,570			9,577			1,941			2,851			2,525			2,349			9,666

Quantity sold — total	MT (thousand)		11,506			12,337			13,410			11,744			48,997			9,796			10,258			11,836			11,795			43,685


Average sales price — external market	US$		22.49			39.40			38.69			36.52			34.44			18.95			22.68			21.63			22.50			21.48
Average sales price — internal market	US$		17.91			32.29			26.63			27.20			26.42			14.14			14.62			15.33			17.62			15.44
Average sales price — total	US$		21.71			38.02			36.30			34.69			32.92			18.00			20.44			20.28			21.53			20.14

BAUXITE
Quantity sold — external market	MT (thousand)																	19			—			—			—			19
Quantity sold — internal market	MT (thousand)																	1			—			—			—			1

Quantity sold — total	MT (thousand)																	20			—			—			—			20


Average sales price — external market	US$																	148.20			—			—			—			148.20
Average sales price — internal market	US$																	158.00			—			—			—			158.00
Average sales price — total	US$																	148.67			—			—			—			148.67

KAOLIN
Quantity sold — external market	MT (thousand)		253			267			253			321			1,094			169			175			170			156			670
Quantity sold — internal market	MT (thousand)		29			29			32			34			124			18			18			20			18			74

Quantity sold — total	MT (thousand)		282			296			285			355			1,218			187			193			190			174			744


Average sales price — external market	US$		167.32			175.04			175.68			165.27			170.54			153.64			161.84			161.44			164.46			160.28
Average sales price — internal market	US$		197.76			202.59			212.12			249.42			216.76			210.17			184.56			200.15			235.06			207.29
Average sales price — total	US$		170.45			177.74			178.81			173.07			174.94			159.08			163.94			165.51			171.86			164.96
Long-term indebtedness, gross	US$		228			164			156			153			153			189			166			191			181			181
Short-term indebtedness, gross	US$		22			14			4									14			10			6			3			3

Total indebtedness, gross	US$		250			178			160			153			153			203			176			197			184			184


Stockholders’ equity	US$		1,207			1,453			1,732			1,857			1,857			979			967			1,107			1,157			1,157


Net operating revenues	US$		272			564			503			465			1,804			189			214			246			261			910
Cost of products	US$		(162	)		(192	)		(200	)		(231	)		(785	)		(121	)		(98	)		(129	)		(136	)		(484	)
Other expenses/revenues	US$		(33	)		(37	)		(41	)		(48	)		(159	)		(20	)		(23	)		(25	)		(39	)		(107	)
Depreciation, amortization and depletion	US$		34			27			37			51			149			29			17			23			29			98

EBITDA ——————————>	US$		111			362			299			237			1,009			77			110			115			115			417
Depreciation, amortization and depletion	US$		(34	)		(27	)		(37	)		(51	)		(149	)		(29	)		(17	)		(23	)		(29	)		(98	)

EBIT ———————————>	US$		77			335			262			186			860			49			93			92			86			319
Sale of assets	US$		—						126						126			—			—			—			—			—
Gain on investments accounted for by the equity method	US$		13			16			(3	)		7			33			5			5			7			6			23
Net financial result	US$		5			(40	)		(24	)		23			(36	)		(4	)		(1	)		(9	)		(10	)		(24	)

Income before income tax and social contribution	US$		95			311			361			216			983			49			97			90			82			318
Income tax and social contribution	US$		(27	)		(97	)		(90	)		30			(184	)		(16	)		(31	)		(27	)		(21	)		(95	)
Minority interest	US$		(12	)		(37	)		(10	)		(29	)		(88	)		(7	)		(13	)		(10	)		(12	)		(42	)

Net income	US$		56			177			261			217			711			26			53			53			49			181

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.


	COMPANHIA VALE DO RIO DOCE (Registrant)
Date: March 9, 2006	By:	/s/ Fabio de Oliveira Barbosa
		Fabio de Oliveira Barbosa
		Chief Financial Officer